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99-267Councif Fiie # sq - ac 1 GreenSheet# G4ca� Presented by Referred To WHEREAS: RESOLUYfON CITY OF SAINT PAUL, MINNESOTA 18 Committee Date Proposed Citv Council Resolution 1. The Port Authority of the City of Saint Pau! (the "Authority") has given its approval to the issuance of up to $4,600,000 of its Economic Development Revenue Bonds (Minnesota Diversified Industries, Inc. Project) Series 1999 (the "Bonds"), to finance the costs to be incurced by Minnesota Diversified Industries, Inc., a Minnesota nonprofit corporation (the "Borrower') in connectlon with the renovation, improvement and equipping of an existing facility located in the City of Saint Paui, Minnesota (the "ProjecY') to be owned by the Borrower; and 2. Laws of Minnesota 1976, Chapter 234, provides that any issue of revenue bonds authorized by the Authority shall be issued only with the consent of the City Council of the City of Saint Paul, by resolution adopted in accordance with law; and 3. Approvai of the issuance of the proposed Bonds by the City Councii is also required by Section 147(� of the Intemai Revenue Code of 1986, as amended; and 4. To meet the requirements of both siate and federai law, the Port Authority has requested that the City Council gives its rec{uisite approval to the issuance of the proposed Sonds by the Port Authority, subject to finai approvai of the details of said Bonds by the Port Authority. NOW, THEREFORE, BE IT RESOLVED by the Councii of the City of Saint Paul that, in accordance with the requirements of Seotion 147(fl of the Intemai Revenue Code of 1986, as amended, and in accordance with Laws of Minnesota 1976, Chapter 234, the Ciry Council hereby approves the issuance of the aforesaid Bonds by the Port Autfiority for the purposes described in the Port Authority resolution adopted March 23, 1999, the exact details of which, including but not limited to, provisions relating to maturities, interest rates, discount, redemption, and the issuance of additional bonds are to be determined by the Port Authority, and the City Council hereby authorizes the issuance of any additional bonds (inciuding refunding bonds) by the Port Authority found by �ne Port Authority to be necessary for carrying out the purposes for which the aforedescribed Bonds are issued. Adopted: March 24, 1999 .�� i�� I�� , :. . �i��' !`��' i � �� ',�i�� see Adopted by Council: Date _�`��,,, �ii �_ Adop6on Certified by Council Secretary By: � � . ��.. � Approved by Mayor. Date A�fl�� [ C (Q � By: ��i�l Requested by Department of: �� n �1/ �ln.-� .sw.w. T�' 7�`A � ' iv �„"`.-"",r�C aq _ a ��i G:\DATA\PMK\mdiCOUN.doc Form Appr�oued by City Attomey ( J Peter PS. Klein, Port Authority Peter M. Klein (651)224-5686 March 24, 1999 TOTAL # OF SIGDIATURE PAGES 3-11-99 xurese wrt ROUi01G !�`.'f.`=?� GREEN SHEET mNn�lr ptrirwe aq • a No 64076 u�� afVCO1NC< ❑ C.IfYA}TOq/EY ❑ CIIYttEPK ❑ wuxanta�sor. ❑ Fauwnu.acrtwattrc � wrw�(wwaasraxn ❑ / L� � (CLIP ALL LOCATIONS FOR SIGNATURE) Approval of the iss�}ance of approximately $4,510,000 of conduit tax exempt 501(c)(3) Revenue Bonds to Minnesota Diversified Industries, Inc. for the renovation and equipping of an office and production facility of approximately 315,000 square feet located south of the fairgrounds along Snelling Avenue in Saint Paul, Minnesota. PLANNING COMMISSION CIB COMMITTEE CIVIL SERVICE CAMMISSION Port Authority Has this persoMrtn e✓er xrorketl uMer a contract fw Mis departmenl? VES NO Has this persoNfirm ever been a city empbyee7 YES NO Dcesthie PQ«�� P� a sldU not normallYP�ssetl 6y any wrteM cib/ emPbYee? YES NO Is this P�saMrm a tar8eted verMOYt YES NO .. The issuance of the bonds will allow the renova±ion and equipping of the o1d War�d�QB distribution facility located south of tfie fairgrounds in Saint Pau1, Minnes� g ,,,, �e�' V"'� s `°� '�g� As a result of the renovated office and production facility, it is ant�cipated that 50 new jobs will be created in the first two years of operation. I3one The new jobs stimulated by this renovated facility will not be created. AMOUNT OF TRANSACTION f �� 510, 000 Por� A�ythority conduit tax exempt icsoursce 501 c)�3) revenue bonds COST/REVENUH BUDGETEU (CIRCLE ON� ncrNm eua�sac - YES NO (�ww alg-1�� 21TY OP THE CITY OF SAINT PAUL FAX (651) 223-5798 TOLL FREE (800) 328-8417 ��.,,, �..�.��.�ARK TOWERS • 345 ST. PEfER STREET • ST. PAUL, MN 55102-1667 • PHONE (657) 224-5686 March 11, 1999 Mr. Brian Sweeney, Director Planning & Economic Development Department 1300 City Hall Annex 25 West Fourth Street Saint Paul, Minnesota 55102 RE: $4,510,000 CONDUIT 501(c)(3) REVENUE BOND ISSUE MINNESOTA DIVERSIFIED INDUSTRfES, INC. Dear Mr. Sweeney: We submit for your review and referral to the o�ce of the Mayor, City Councit, and City Attorney's office, details pertaining to the issuance of conduit 501(c)(3) Revenue Bonds in the approximate amount of $4,510,000 to finance the renovation of an o�ce and production facility of approximately 315,000 square feet located south of the fairgrounds along Snelling Avenue, Saint Paul, Minnesota. The City of Saint Paul's entitlement allocation will not be affected by this application. In addition to the staff memorandum, we are attaching a draft copy of the proposed City Council Resolution and a copy of the Resolution conducting the required public hearing and authorizing the sale of the 501(c)(3) revenue bonds in the amount of $4,510,000 that will be considered by the Port Authority's Board on March 23, 1999. City Council action will be required after the Port Authority's Board meeting of March 23, 1999. Your expeditious handling of this matter will be appreciated. Sincerely, � ----__._ Kenneth R. Johnson President KRJ:sjs Attachment cc: Mayor Coleman G:IDATAIMAI\COUNCIL\I DEALPAM.DOCG:IDATAWlA11COUN CILIIDEALPAM.DOC SAINT PAUL PORT AUTHORITY r ��I�Lr�);7►.��7t��1 TO: FROM: BOARD OF COMMISSIONERS (March 23, 1999 Regular Meeting) { ` Peter M. Klein "� Lau�ie J. Hansen � Kenneth R. Joh s n� qq _ ac.�1 DATE: March 10, 1999 SUBJECT: PUBLIC HEARING - MINNESOTA DIVERSIFIED INDUSTRIES, INC. AUTHORIZATION FOR AN APPROXIMATE $4,510,000 NON-RATED TAX EXEMPT 501(c)(3) REVENUE BONDS RESOLUTION NO. ACTION REQUESTED: Approval of finaf resolution authorizing the issuance of an approximate $4,510,000 conduit bond issue to Minnesota Diversified lndustries, Inc. PROJECT SUMMARY: Estimated Amount:: $4,510,OQ0 Tax Exempt Type: Conduit Non-Rated 501(c)(3) Revenue Bonds Fixed rate serial bonds from 2000-2009 and term bonds thereafter Term: Issuer: Borrower: Trustee: Placement Agents: Remarketing Agent: Borrowe�'s Counsel: Placement Agents' Counsel: Bond Counsel: Ten years on equipment portion and 30 years on the renovation portion Port Authority of the City of Saint Paul Minnesota Diversified Industries, Inc. To be determined Milier & Schroeder Financial, {nc. Piper Jaffray, Inc. Milier & Schroeder Financial, Inc. Oppenheimer, Wolff & Donnelly Briggs and Morgan Leonard, Street & Deinard aa-a�� March 10, 1999 Page -2- BACKGROUND: On December 8, 1998, the Credit Committee preliminarily approved the issuance of up to $14,500,000 of conduit bonds for Minnesota Diversified Industries, inc. This amount included approximately $10,000,000 for acquisition of the building. Minnesota Diversified Industries, Inc. has chosen not to finance the acquisition with bonds and to utilize a contract for deed from the seller. All other factors from the preliminary resolution are the same. The Borrower: Minnesota Diversified industries, lnc. was started in 1968 and makes the packaging for postage stamps and is the sole manufacturer of piastic totes for the U.S. Post Offiice. 7he Post Office accounts for about 90% of the revenue, which was $40,000,000 in the previous fiscal year and is expected to increase to $65,000,000 during the current fiscal year. The company has been consistently profitable for the past five years. The Bonds: The Bonds will be issued in the approximate principal amount of $4,510,000 and will bear interest at a fixed rate currently estimated to be 6.33%. The all-inclusive cost is currently estimated at 6.62%. The Proiect: The new facility (the ofd Wards distribution �enter south of the fairgrounds and west of Snelling) will have about 315,000 square feet, as compared to the o1d facility at 670 Pelham which has about 130,00� square feet. Minnesota Diversified Industries, Inc. is currently in the process of rehabi(itating the new building and purchasing the equipment. Estimated Sources and Uses of Funds: Sources of Funds: Bond Proceeds Estimated Borrower Funds Tota1 Sources of Funds Uses of Funds: Building Construction Equipment Debt Service Reserve Fund Estimated Costs of Issuance Totai Uses of Funds $4,510,000 60.138 $4,570,138 $2,805,000 1,195,000 415,444 154.694 $4,570,138 G:IDATAIPMKIMDICREFE.DOC March 10, 1999 Page -3- aq��-�`� Emoloyment Impact: The company cuRenUy employees about 1,�0� individuals, 70% of whom are disabled or disadvantaged. About 450 are employed in Saint Paul and the remainder are in Minneapolis, Hibbing and Grand Rapids. The Saint Paul employment will increase to approximately 500 once the new facilify is operational. Wages are scaled according to production and most production employees earn about $9.35 per hour pius full benefits, including medical. SECURITY FOR THE BONDS: Conduit Financina: The bonds will be conduit financing of the Authority and wiil not constitute or give rise to a liability of the Authority, the City of Saint Paul or the State of Minnesota or a charge against their general credit or taxing powers. No bondholder will have the right to demand payment of the bonds out of any funds to be raised from taxation or from any revenue sources other than those expressly pledged to payment of the bonds pursuant to the indenture. This includes the amounts payable by the borrower under the loan agreement. The $4,510,000 of conduit bonds is below the $14,500,000 prefiminarify approved by the Credit Committee on December 8, 1998. Since then, no information has become available that would indicate that Minnesota Diversified Industries, {nc. will have difficulty in paying these bonds. The Port Authority will receive fees in the amount of 1l8th of a point ($5,637.50) at inception and I/8th of a point on the outstanding balance, annually, for the life of the bonds. Loan Aqreement: Under the indenture, the Authority will pledge its interest in the loan agreement to the trustee to secure the bonds. The trustee is authorized to exercise the rights of the Authority and to enforce the obiigaiions of the borrower under the loan agreement. DISCLOSURE: Port Authority Commissioners, by S.E.C. rules, are obligated to disclose any risks or facts you may be aware of that would affect the probability of repayment of these bonds. RECOMMENDATION: Recommend approval of authorizing issuance of the approximate $4,510,000 conduit bond issue on behalf of Minnesota Diversified Industries, Inc. PMK:sjs G:IDATA�PMKVNDICREFE.DOC �G` qq•�c.'1 �� Resolution No. � RESOLUTION OF THE PORT AUTHORITY OF THE CITY OF SAINT PAUL WE�REAS: 1. It has been proposed that the Port Authority of the City of Saint Paul (the "Port Authority") issue its Economic Development Revenue Bonds (Minnesota Diversified Industries, Inc. Project) Series 1999 (the `Bonds") in an aggregate principal amount of approximately $4,510,000 and that the proceeds of such Bonds be loaned to Minnesota Diversified Industries, Inc., a Minnesota nonprofit corporation (the "Borrower") to finance the renovation and equipping of an e�sting facility (the "Project") located at 1700 Wynne Avenue in the City of Saint Paul, Minnesota (the «Cit� 2. The Authority desires to facilitate the selective development of the City of Saint Paul and the metro east community, to retain and improve its tas base and to help it provide the range of services and employment opportuniries required by its population, and the Project will assist in achieving that objective by increasing the assessed valuation of the metro east community; helping to maintain a posirive relationship between assessed valuation and debt; and enhancing the image and reputation of the metro east community. 3. The Project will result in add'ational employment opportunities in the City of Saint Paul and the metro east community. 4. The Authority has been advised by the Borrower that the economic feasibility of operating the Project would be, significantly reduced without the proposed revenue bond financing, and that it has been acting to date in anticipation that the Authority wouid favorably consider this financing proposal. 5. The Authority's Credit Committee has previously adopted its Resolution No. 38, giving preliminary approval to the proposed issuance of revenue bottds. 6. Pursuant to the requirements of Section 147(f� of the Internal Revenue Code of 1986, as amended, and pursuant to a notice published by the Port Authority not less than 15 days prior to the public hearing, a public hearing was held on March 23, 1999 on the issuance of the Bonds, at wluch public hearing all persons were given an opportunity to speak. 7. The Bonds will be issued and secured by the terms of an Indenture of Trust (the "Indenture") between the Port Authority and in Minnesota (the "Trustee"). c�q.�C�l 8. The Bonower and the Port Authority wili also enter into a Loan Agreement (the "Loan Agreement"� in which the Borrower will agree to make all payments due on account of the Bonds. 9. The Bonds and the interest on the Bonds shall be payable solely from the revenue pledged therefor and the Bonds shall not constitute a debt of the Port Authority within the meaning of any constitutional or statutory limitation of indebtedness, nor shall the Bonds constitute nor give rise to a pecuniary liability of the Port Authority or the City or a chazge against their general eredit or taxing powers and shall not constitute a charge, lien or encumbrance, legal or equitable, upon any properiy of the Port Authority or the City other than their interest in said Project. 10. It is intended that interest on the Bonds be excluded from gross income of the holders thereof for federal income taY purposes. I30W, THEREFORE, BE IT RESOLVED BY THE BOARD OF COMMISSIONERS OF THE PORT AUTHORITY OF THE CITY OF SAINT PAUL, AS FOLLOWS: A. On ihe basis of information available to the Port Authority it appeazs, and the Port Authority hereby finds, that: the Project constitutes properties, used or useful in connection with one or more revenue producing enterprises engaged in any business within the meaning of Minnesota Statutes, Sections 469.152 to 469.165 (the "Act"); the Project fiu�thers the purposes stated in the Act; and it is in the best interests of the port district and the people of the City of Saint Paul and in furtherance of the general plan of development to assist the Bonower in financing the Project. B. For the purpose of financing the Project, and paying certain costs of issuance and other expenses in connection with the issuance of the Bonds, and provided that the Project and its financing receive approvai by the Department of Trade and Economic Development ("DTED"), the Port Authority hereby authorizes the issuance, sale and delivery of the Bonds in an aggregate pzincipal amount of approximately $4,510,000. The Bonds shall be in such finai principat amounts as sha11 be determined by the President of the Port Authority and Bond Counsel. The Bonds shall bear interest at such rates, shall be numbered, shall be dated, shali mature, shall be subject to redemption prior to maturity, and shall be in such form and have such other details and provisions as may be prescribed in the Indenture, substantialiy in the form now on file in the offices of the Port Authority. C. Neither the Bonds, nor the interest thereon, shall constitute an andebtedness of the Port Authority or the City within the meaning of any constitutional or statutory debt limitation; nor shall they constitute or give rise to a pecuniary liability of the City, the Port Authority or a chazge against their general taYing powers and neither the full faith \1SPPA_DELL�DATA�DATA\PMK�[vIDI_PA.doc q� -��t and credit nor the general tasing powers of the City or the Port Authority is pledged to the payment of the Bonds or interest thereon. D. Forms of the foilowing documents have been submitted to the Port Authoriry for review andlor approval in connection with the sale, issuance and delivery of the Bonds: 1. the Bond Purchase Agreement to be entered into between the Port Authority, the Borrower and Miller & Schroeder Financial, Inc. and U.S. Bancorp Piper Jaf&ay, Inc. (together, the "Undenvriter"); 2. the Indenture; 3. the Loan Agreement dated as of April 1, 1999 to be entered into between the Port Authority and the Borrower; 4. the Bonds; 5. the Ta�c Regulatory Agreement dated as of Aprii 1, 1999 to be entered into between the Port Authority the Trustee and the Borrower; and 6. the Preliminary Qfficial Statement to be used in marketing the Bonds (the "Official StatemenP'). (collectively, the "Docuxnents"). E. It is hereby found, determined and declared that: 1. The issuance and sale of the Bonds, the execution and delivery by the Port Authority of the Documents, as applicabie, and the performance of all covenants and agreements of the Port Authority contained in the Documents, as applicable, and of all other acts and things required under the Constiturion and laws of the State of Minnesota to make the Documents and the Bonds valid and binding obligations of the Port Authority in accordance with their terms, aze authorized by Minnesota Statutes, Sections 469.152 through 469.165, as amended (the "Act"); 2. It is desirable that the Bonds be issued by the Port Authority upon ihe general terms set forth in the Documents, as applicable; 3. Under the provisions of and as provided in the Documents, the Bonds are not to be payable from or a charge upon any funds other than the revenues pledged to the payment thereof; no holder of the Bonds sha11 ever have the right to compel any exercise by the City or the Port Authority of its tasing powers to pay the Bonds or the interest or premium thereon, or to enforce payment thereof against any property of the City or the Port Authority except the \\SPPA DELL�DATA�DATA\PMKwIDI PA.doc q°I-�� interests of the Port Authority and the City which have been pledged to the Trustee under the Indenture; the Bonds shall not constitute a chazge, lien or encumbrance, legal or equitable, upon any properiy of the City or the Port Authority except the interests of the Port Authority and the City which have been pledged to the Trustee under the Indenture; the Bonds shall each recite that they aze issued without moral obligation on #he part of the State or its political subdivisions, and that the Bonds, including interest thereon, aze payable solely from the revenues pledged to the payment thereof; and the Bonds shali not constitute a debt of the City or the Port Authority within the meaning of any constitutional or statutory i'unitation. F. The forms of the Documents and e�ibits thereto are approved substantially in the forms submitted and on file in the offices of Port Authority, with such subsequent changes as may be approved by Port Authority staff and Bond Counsel as contemplated by pazagraph H. The Chair and Secretary of the Port Authority, or such other officer as may be appropriate in the absence of either the Chair or Secretary, aze hereby authorized and directed to execute the Documents (to the extent the Port Authority is a pariy thereto) in substantialiy the forms submitted, as modified pursuant to pazagraph H, and any other documents and certificates which in the opinion of Port Authority staff and Bond Counsel aze necessary to the transaction herein described The execution of any inshument by the appropriate officer or officers of the Port Authority herein authorized shall be conclusive evidence of the approval of such documents in accordance with the terms hereof. The execution of any documents necessary for the transaction herein described by individuals who were at the time of execution thereof the authorized officers of the Port Authority shall bind the Port Authority, notwithstanding that such individuals or any of them has ceased to hold such office or o�ces prior to the authentication and delivery of the Bonds. Copies of all of the docwnents necessary to the transaction described shail be delivered, filed and recorded as provided herein and in the Indenture. G. The President and other officers of the Port Authority are authorized and directed to prepaze and fiunish to the Underwriter and Bond Counsel certified copies of proceedings and records of the Port Authority relating to the issuance of the Bonds and other transactions herein contemplated, and such other affidavits and certificates as may be required to show the facts relating to the legality of the Bonds and the other transacfions herein contemplated as such facts appeaz from the books and records in the officers' custody and control or as othenvise known to them; and all such certified copies, certificates and affidavits, including any heretofore fiirnished, shail constitute representations of the Port Authority as to ttte truth of all statements contained therein. H. The approval hereby given to the various Docunnents referred to above includes approval of such additional details therein as may be necessary and appropriate, and such modifications thereof, deletions therefrom and additions thereto as may be necessary and appropriate and approved by the Port Authority's President and Chief Financial Officer; and includes approval of, among other things: �1SPPA DELUDATA�DATAIPMK4btDt PA.doc qg-��7 1. establishment of the final principai amount of the Bonds and the interest rate to be borne thereby; provided that the masimum aggregate principal amount of the Bonds shall not exceed $4,600,000; and provided further that the maximum interest rate on the Bonds shall not exceed 8.00% per annum; 2. the establishment of the maturity schedule and cail provisions to be applicable to the Bonds; and 3. such related instrlmients as may be required to satisfy the conditions of any purchaser of the Bonds. I. The Port Authority hereby consents to the distribution of the Officiai Statement, as such O�cial Statement is finalized with the participation of Port A.uthority stafF and Bond Counsei. The proposal of the Underwriter to purchase the Bonds and reseil the Bonds, in the manner and, upon the terms and condifions set forth in the Bond Purchase Agreement is hereby found and determined to be reasonable and is hereby accepted and approved. J. The authority to approve, execute and deiiver future amendments to financing documents entered into by the Port Authority in connecrion with the issuance of the Bonds and the other transac6ons herein contempiated, is hereby delegated to the President of the Port Authority, provided that: (a) such amendments either do not require the consent of the holders of the Bonds or if such consent is required it has been obtained; (b) such amendments do not materially adversely affect the interests of the Port Authority as the issuer of the Bonds; (c) such amendments do not contravene or violate any policy of the Port Authority; and (d) such amendments are acceptable in form and substance to Bond Counsel. The execution of any instrument by the President of the Port Authority shall be conclusive evidence of the approval of such inshwnents 1n accordance with the terms hereof. K. No covenant, stipulation, abligation or agreement contained herein or in the Documents shali be deemed to be a covenant, stipulation, obligation or agreement of any member of tt�e Boazd of Commissioners of the Port Authority, or any officer, agent or employee of the Port Authority in that persons individual capacity, and neither the Boazd of Commissioners nor any o�cer executing the Bonds shali be liable personally on the Bonds or be subject to any personal liability or accountabiliry by reason of the issuance thereof. \\SPPA DELL�DATA�DATA�PMK\MD[ PA.doc �l�-�� Adopted: Mazch 23, 1999. ATTEST: By Its Secretary PORT AUTHORITY OF TF� CITY OF SA1NT PAUL � Its Chair \\SPPA_DELUDATAIDATA�PMKIMDI PA.doc Councif Fiie # sq - ac 1 GreenSheet# G4ca� Presented by Referred To WHEREAS: RESOLUYfON CITY OF SAINT PAUL, MINNESOTA 18 Committee Date Proposed Citv Council Resolution 1. The Port Authority of the City of Saint Pau! (the "Authority") has given its approval to the issuance of up to $4,600,000 of its Economic Development Revenue Bonds (Minnesota Diversified Industries, Inc. Project) Series 1999 (the "Bonds"), to finance the costs to be incurced by Minnesota Diversified Industries, Inc., a Minnesota nonprofit corporation (the "Borrower') in connectlon with the renovation, improvement and equipping of an existing facility located in the City of Saint Paui, Minnesota (the "ProjecY') to be owned by the Borrower; and 2. Laws of Minnesota 1976, Chapter 234, provides that any issue of revenue bonds authorized by the Authority shall be issued only with the consent of the City Council of the City of Saint Paul, by resolution adopted in accordance with law; and 3. Approvai of the issuance of the proposed Bonds by the City Councii is also required by Section 147(� of the Intemai Revenue Code of 1986, as amended; and 4. To meet the requirements of both siate and federai law, the Port Authority has requested that the City Council gives its rec{uisite approval to the issuance of the proposed Sonds by the Port Authority, subject to finai approvai of the details of said Bonds by the Port Authority. NOW, THEREFORE, BE IT RESOLVED by the Councii of the City of Saint Paul that, in accordance with the requirements of Seotion 147(fl of the Intemai Revenue Code of 1986, as amended, and in accordance with Laws of Minnesota 1976, Chapter 234, the Ciry Council hereby approves the issuance of the aforesaid Bonds by the Port Autfiority for the purposes described in the Port Authority resolution adopted March 23, 1999, the exact details of which, including but not limited to, provisions relating to maturities, interest rates, discount, redemption, and the issuance of additional bonds are to be determined by the Port Authority, and the City Council hereby authorizes the issuance of any additional bonds (inciuding refunding bonds) by the Port Authority found by �ne Port Authority to be necessary for carrying out the purposes for which the aforedescribed Bonds are issued. Adopted: March 24, 1999 .�� i�� I�� , :. . �i��' !`��' i � �� ',�i�� see Adopted by Council: Date _�`��,,, �ii �_ Adop6on Certified by Council Secretary By: � � . ��.. � Approved by Mayor. Date A�fl�� [ C (Q � By: ��i�l Requested by Department of: �� n �1/ �ln.-� .sw.w. T�' 7�`A � ' iv �„"`.-"",r�C aq _ a ��i G:\DATA\PMK\mdiCOUN.doc Form Appr�oued by City Attomey ( J Peter PS. Klein, Port Authority Peter M. Klein (651)224-5686 March 24, 1999 TOTAL # OF SIGDIATURE PAGES 3-11-99 xurese wrt ROUi01G !�`.'f.`=?� GREEN SHEET mNn�lr ptrirwe aq • a No 64076 u�� afVCO1NC< ❑ C.IfYA}TOq/EY ❑ CIIYttEPK ❑ wuxanta�sor. ❑ Fauwnu.acrtwattrc � wrw�(wwaasraxn ❑ / L� � (CLIP ALL LOCATIONS FOR SIGNATURE) Approval of the iss�}ance of approximately $4,510,000 of conduit tax exempt 501(c)(3) Revenue Bonds to Minnesota Diversified Industries, Inc. for the renovation and equipping of an office and production facility of approximately 315,000 square feet located south of the fairgrounds along Snelling Avenue in Saint Paul, Minnesota. PLANNING COMMISSION CIB COMMITTEE CIVIL SERVICE CAMMISSION Port Authority Has this persoMrtn e✓er xrorketl uMer a contract fw Mis departmenl? VES NO Has this persoNfirm ever been a city empbyee7 YES NO Dcesthie PQ«�� P� a sldU not normallYP�ssetl 6y any wrteM cib/ emPbYee? YES NO Is this P�saMrm a tar8eted verMOYt YES NO .. The issuance of the bonds will allow the renova±ion and equipping of the o1d War�d�QB distribution facility located south of tfie fairgrounds in Saint Pau1, Minnes� g ,,,, �e�' V"'� s `°� '�g� As a result of the renovated office and production facility, it is ant�cipated that 50 new jobs will be created in the first two years of operation. I3one The new jobs stimulated by this renovated facility will not be created. AMOUNT OF TRANSACTION f �� 510, 000 Por� A�ythority conduit tax exempt icsoursce 501 c)�3) revenue bonds COST/REVENUH BUDGETEU (CIRCLE ON� ncrNm eua�sac - YES NO (�ww alg-1�� 21TY OP THE CITY OF SAINT PAUL FAX (651) 223-5798 TOLL FREE (800) 328-8417 ��.,,, �..�.��.�ARK TOWERS • 345 ST. PEfER STREET • ST. PAUL, MN 55102-1667 • PHONE (657) 224-5686 March 11, 1999 Mr. Brian Sweeney, Director Planning & Economic Development Department 1300 City Hall Annex 25 West Fourth Street Saint Paul, Minnesota 55102 RE: $4,510,000 CONDUIT 501(c)(3) REVENUE BOND ISSUE MINNESOTA DIVERSIFIED INDUSTRfES, INC. Dear Mr. Sweeney: We submit for your review and referral to the o�ce of the Mayor, City Councit, and City Attorney's office, details pertaining to the issuance of conduit 501(c)(3) Revenue Bonds in the approximate amount of $4,510,000 to finance the renovation of an o�ce and production facility of approximately 315,000 square feet located south of the fairgrounds along Snelling Avenue, Saint Paul, Minnesota. The City of Saint Paul's entitlement allocation will not be affected by this application. In addition to the staff memorandum, we are attaching a draft copy of the proposed City Council Resolution and a copy of the Resolution conducting the required public hearing and authorizing the sale of the 501(c)(3) revenue bonds in the amount of $4,510,000 that will be considered by the Port Authority's Board on March 23, 1999. City Council action will be required after the Port Authority's Board meeting of March 23, 1999. Your expeditious handling of this matter will be appreciated. Sincerely, � ----__._ Kenneth R. Johnson President KRJ:sjs Attachment cc: Mayor Coleman G:IDATAIMAI\COUNCIL\I DEALPAM.DOCG:IDATAWlA11COUN CILIIDEALPAM.DOC SAINT PAUL PORT AUTHORITY r ��I�Lr�);7►.��7t��1 TO: FROM: BOARD OF COMMISSIONERS (March 23, 1999 Regular Meeting) { ` Peter M. Klein "� Lau�ie J. Hansen � Kenneth R. Joh s n� qq _ ac.�1 DATE: March 10, 1999 SUBJECT: PUBLIC HEARING - MINNESOTA DIVERSIFIED INDUSTRIES, INC. AUTHORIZATION FOR AN APPROXIMATE $4,510,000 NON-RATED TAX EXEMPT 501(c)(3) REVENUE BONDS RESOLUTION NO. ACTION REQUESTED: Approval of finaf resolution authorizing the issuance of an approximate $4,510,000 conduit bond issue to Minnesota Diversified lndustries, Inc. PROJECT SUMMARY: Estimated Amount:: $4,510,OQ0 Tax Exempt Type: Conduit Non-Rated 501(c)(3) Revenue Bonds Fixed rate serial bonds from 2000-2009 and term bonds thereafter Term: Issuer: Borrower: Trustee: Placement Agents: Remarketing Agent: Borrowe�'s Counsel: Placement Agents' Counsel: Bond Counsel: Ten years on equipment portion and 30 years on the renovation portion Port Authority of the City of Saint Paul Minnesota Diversified Industries, Inc. To be determined Milier & Schroeder Financial, {nc. Piper Jaffray, Inc. Milier & Schroeder Financial, Inc. Oppenheimer, Wolff & Donnelly Briggs and Morgan Leonard, Street & Deinard aa-a�� March 10, 1999 Page -2- BACKGROUND: On December 8, 1998, the Credit Committee preliminarily approved the issuance of up to $14,500,000 of conduit bonds for Minnesota Diversified Industries, inc. This amount included approximately $10,000,000 for acquisition of the building. Minnesota Diversified Industries, Inc. has chosen not to finance the acquisition with bonds and to utilize a contract for deed from the seller. All other factors from the preliminary resolution are the same. The Borrower: Minnesota Diversified industries, lnc. was started in 1968 and makes the packaging for postage stamps and is the sole manufacturer of piastic totes for the U.S. Post Offiice. 7he Post Office accounts for about 90% of the revenue, which was $40,000,000 in the previous fiscal year and is expected to increase to $65,000,000 during the current fiscal year. The company has been consistently profitable for the past five years. The Bonds: The Bonds will be issued in the approximate principal amount of $4,510,000 and will bear interest at a fixed rate currently estimated to be 6.33%. The all-inclusive cost is currently estimated at 6.62%. The Proiect: The new facility (the ofd Wards distribution �enter south of the fairgrounds and west of Snelling) will have about 315,000 square feet, as compared to the o1d facility at 670 Pelham which has about 130,00� square feet. Minnesota Diversified Industries, Inc. is currently in the process of rehabi(itating the new building and purchasing the equipment. Estimated Sources and Uses of Funds: Sources of Funds: Bond Proceeds Estimated Borrower Funds Tota1 Sources of Funds Uses of Funds: Building Construction Equipment Debt Service Reserve Fund Estimated Costs of Issuance Totai Uses of Funds $4,510,000 60.138 $4,570,138 $2,805,000 1,195,000 415,444 154.694 $4,570,138 G:IDATAIPMKIMDICREFE.DOC March 10, 1999 Page -3- aq��-�`� Emoloyment Impact: The company cuRenUy employees about 1,�0� individuals, 70% of whom are disabled or disadvantaged. About 450 are employed in Saint Paul and the remainder are in Minneapolis, Hibbing and Grand Rapids. The Saint Paul employment will increase to approximately 500 once the new facilify is operational. Wages are scaled according to production and most production employees earn about $9.35 per hour pius full benefits, including medical. SECURITY FOR THE BONDS: Conduit Financina: The bonds will be conduit financing of the Authority and wiil not constitute or give rise to a liability of the Authority, the City of Saint Paul or the State of Minnesota or a charge against their general credit or taxing powers. No bondholder will have the right to demand payment of the bonds out of any funds to be raised from taxation or from any revenue sources other than those expressly pledged to payment of the bonds pursuant to the indenture. This includes the amounts payable by the borrower under the loan agreement. The $4,510,000 of conduit bonds is below the $14,500,000 prefiminarify approved by the Credit Committee on December 8, 1998. Since then, no information has become available that would indicate that Minnesota Diversified Industries, {nc. will have difficulty in paying these bonds. The Port Authority will receive fees in the amount of 1l8th of a point ($5,637.50) at inception and I/8th of a point on the outstanding balance, annually, for the life of the bonds. Loan Aqreement: Under the indenture, the Authority will pledge its interest in the loan agreement to the trustee to secure the bonds. The trustee is authorized to exercise the rights of the Authority and to enforce the obiigaiions of the borrower under the loan agreement. DISCLOSURE: Port Authority Commissioners, by S.E.C. rules, are obligated to disclose any risks or facts you may be aware of that would affect the probability of repayment of these bonds. RECOMMENDATION: Recommend approval of authorizing issuance of the approximate $4,510,000 conduit bond issue on behalf of Minnesota Diversified Industries, Inc. PMK:sjs G:IDATA�PMKVNDICREFE.DOC �G` qq•�c.'1 �� Resolution No. � RESOLUTION OF THE PORT AUTHORITY OF THE CITY OF SAINT PAUL WE�REAS: 1. It has been proposed that the Port Authority of the City of Saint Paul (the "Port Authority") issue its Economic Development Revenue Bonds (Minnesota Diversified Industries, Inc. Project) Series 1999 (the `Bonds") in an aggregate principal amount of approximately $4,510,000 and that the proceeds of such Bonds be loaned to Minnesota Diversified Industries, Inc., a Minnesota nonprofit corporation (the "Borrower") to finance the renovation and equipping of an e�sting facility (the "Project") located at 1700 Wynne Avenue in the City of Saint Paul, Minnesota (the «Cit� 2. The Authority desires to facilitate the selective development of the City of Saint Paul and the metro east community, to retain and improve its tas base and to help it provide the range of services and employment opportuniries required by its population, and the Project will assist in achieving that objective by increasing the assessed valuation of the metro east community; helping to maintain a posirive relationship between assessed valuation and debt; and enhancing the image and reputation of the metro east community. 3. The Project will result in add'ational employment opportunities in the City of Saint Paul and the metro east community. 4. The Authority has been advised by the Borrower that the economic feasibility of operating the Project would be, significantly reduced without the proposed revenue bond financing, and that it has been acting to date in anticipation that the Authority wouid favorably consider this financing proposal. 5. The Authority's Credit Committee has previously adopted its Resolution No. 38, giving preliminary approval to the proposed issuance of revenue bottds. 6. Pursuant to the requirements of Section 147(f� of the Internal Revenue Code of 1986, as amended, and pursuant to a notice published by the Port Authority not less than 15 days prior to the public hearing, a public hearing was held on March 23, 1999 on the issuance of the Bonds, at wluch public hearing all persons were given an opportunity to speak. 7. The Bonds will be issued and secured by the terms of an Indenture of Trust (the "Indenture") between the Port Authority and in Minnesota (the "Trustee"). c�q.�C�l 8. The Bonower and the Port Authority wili also enter into a Loan Agreement (the "Loan Agreement"� in which the Borrower will agree to make all payments due on account of the Bonds. 9. The Bonds and the interest on the Bonds shall be payable solely from the revenue pledged therefor and the Bonds shall not constitute a debt of the Port Authority within the meaning of any constitutional or statutory limitation of indebtedness, nor shall the Bonds constitute nor give rise to a pecuniary liability of the Port Authority or the City or a chazge against their general eredit or taxing powers and shall not constitute a charge, lien or encumbrance, legal or equitable, upon any properiy of the Port Authority or the City other than their interest in said Project. 10. It is intended that interest on the Bonds be excluded from gross income of the holders thereof for federal income taY purposes. I30W, THEREFORE, BE IT RESOLVED BY THE BOARD OF COMMISSIONERS OF THE PORT AUTHORITY OF THE CITY OF SAINT PAUL, AS FOLLOWS: A. On ihe basis of information available to the Port Authority it appeazs, and the Port Authority hereby finds, that: the Project constitutes properties, used or useful in connection with one or more revenue producing enterprises engaged in any business within the meaning of Minnesota Statutes, Sections 469.152 to 469.165 (the "Act"); the Project fiu�thers the purposes stated in the Act; and it is in the best interests of the port district and the people of the City of Saint Paul and in furtherance of the general plan of development to assist the Bonower in financing the Project. B. For the purpose of financing the Project, and paying certain costs of issuance and other expenses in connection with the issuance of the Bonds, and provided that the Project and its financing receive approvai by the Department of Trade and Economic Development ("DTED"), the Port Authority hereby authorizes the issuance, sale and delivery of the Bonds in an aggregate pzincipal amount of approximately $4,510,000. The Bonds shall be in such finai principat amounts as sha11 be determined by the President of the Port Authority and Bond Counsel. The Bonds shall bear interest at such rates, shall be numbered, shall be dated, shali mature, shall be subject to redemption prior to maturity, and shall be in such form and have such other details and provisions as may be prescribed in the Indenture, substantialiy in the form now on file in the offices of the Port Authority. C. Neither the Bonds, nor the interest thereon, shall constitute an andebtedness of the Port Authority or the City within the meaning of any constitutional or statutory debt limitation; nor shall they constitute or give rise to a pecuniary liability of the City, the Port Authority or a chazge against their general taYing powers and neither the full faith \1SPPA_DELL�DATA�DATA\PMK�[vIDI_PA.doc q� -��t and credit nor the general tasing powers of the City or the Port Authority is pledged to the payment of the Bonds or interest thereon. D. Forms of the foilowing documents have been submitted to the Port Authoriry for review andlor approval in connection with the sale, issuance and delivery of the Bonds: 1. the Bond Purchase Agreement to be entered into between the Port Authority, the Borrower and Miller & Schroeder Financial, Inc. and U.S. Bancorp Piper Jaf&ay, Inc. (together, the "Undenvriter"); 2. the Indenture; 3. the Loan Agreement dated as of April 1, 1999 to be entered into between the Port Authority and the Borrower; 4. the Bonds; 5. the Ta�c Regulatory Agreement dated as of Aprii 1, 1999 to be entered into between the Port Authority the Trustee and the Borrower; and 6. the Preliminary Qfficial Statement to be used in marketing the Bonds (the "Official StatemenP'). (collectively, the "Docuxnents"). E. It is hereby found, determined and declared that: 1. The issuance and sale of the Bonds, the execution and delivery by the Port Authority of the Documents, as applicabie, and the performance of all covenants and agreements of the Port Authority contained in the Documents, as applicable, and of all other acts and things required under the Constiturion and laws of the State of Minnesota to make the Documents and the Bonds valid and binding obligations of the Port Authority in accordance with their terms, aze authorized by Minnesota Statutes, Sections 469.152 through 469.165, as amended (the "Act"); 2. It is desirable that the Bonds be issued by the Port Authority upon ihe general terms set forth in the Documents, as applicable; 3. Under the provisions of and as provided in the Documents, the Bonds are not to be payable from or a charge upon any funds other than the revenues pledged to the payment thereof; no holder of the Bonds sha11 ever have the right to compel any exercise by the City or the Port Authority of its tasing powers to pay the Bonds or the interest or premium thereon, or to enforce payment thereof against any property of the City or the Port Authority except the \\SPPA DELL�DATA�DATA\PMKwIDI PA.doc q°I-�� interests of the Port Authority and the City which have been pledged to the Trustee under the Indenture; the Bonds shall not constitute a chazge, lien or encumbrance, legal or equitable, upon any properiy of the City or the Port Authority except the interests of the Port Authority and the City which have been pledged to the Trustee under the Indenture; the Bonds shall each recite that they aze issued without moral obligation on #he part of the State or its political subdivisions, and that the Bonds, including interest thereon, aze payable solely from the revenues pledged to the payment thereof; and the Bonds shali not constitute a debt of the City or the Port Authority within the meaning of any constitutional or statutory i'unitation. F. The forms of the Documents and e�ibits thereto are approved substantially in the forms submitted and on file in the offices of Port Authority, with such subsequent changes as may be approved by Port Authority staff and Bond Counsel as contemplated by pazagraph H. The Chair and Secretary of the Port Authority, or such other officer as may be appropriate in the absence of either the Chair or Secretary, aze hereby authorized and directed to execute the Documents (to the extent the Port Authority is a pariy thereto) in substantialiy the forms submitted, as modified pursuant to pazagraph H, and any other documents and certificates which in the opinion of Port Authority staff and Bond Counsel aze necessary to the transaction herein described The execution of any inshument by the appropriate officer or officers of the Port Authority herein authorized shall be conclusive evidence of the approval of such documents in accordance with the terms hereof. The execution of any documents necessary for the transaction herein described by individuals who were at the time of execution thereof the authorized officers of the Port Authority shall bind the Port Authority, notwithstanding that such individuals or any of them has ceased to hold such office or o�ces prior to the authentication and delivery of the Bonds. Copies of all of the docwnents necessary to the transaction described shail be delivered, filed and recorded as provided herein and in the Indenture. G. The President and other officers of the Port Authority are authorized and directed to prepaze and fiunish to the Underwriter and Bond Counsel certified copies of proceedings and records of the Port Authority relating to the issuance of the Bonds and other transactions herein contemplated, and such other affidavits and certificates as may be required to show the facts relating to the legality of the Bonds and the other transacfions herein contemplated as such facts appeaz from the books and records in the officers' custody and control or as othenvise known to them; and all such certified copies, certificates and affidavits, including any heretofore fiirnished, shail constitute representations of the Port Authority as to ttte truth of all statements contained therein. H. The approval hereby given to the various Docunnents referred to above includes approval of such additional details therein as may be necessary and appropriate, and such modifications thereof, deletions therefrom and additions thereto as may be necessary and appropriate and approved by the Port Authority's President and Chief Financial Officer; and includes approval of, among other things: �1SPPA DELUDATA�DATAIPMK4btDt PA.doc qg-��7 1. establishment of the final principai amount of the Bonds and the interest rate to be borne thereby; provided that the masimum aggregate principal amount of the Bonds shall not exceed $4,600,000; and provided further that the maximum interest rate on the Bonds shall not exceed 8.00% per annum; 2. the establishment of the maturity schedule and cail provisions to be applicable to the Bonds; and 3. such related instrlmients as may be required to satisfy the conditions of any purchaser of the Bonds. I. The Port Authority hereby consents to the distribution of the Officiai Statement, as such O�cial Statement is finalized with the participation of Port A.uthority stafF and Bond Counsei. The proposal of the Underwriter to purchase the Bonds and reseil the Bonds, in the manner and, upon the terms and condifions set forth in the Bond Purchase Agreement is hereby found and determined to be reasonable and is hereby accepted and approved. J. The authority to approve, execute and deiiver future amendments to financing documents entered into by the Port Authority in connecrion with the issuance of the Bonds and the other transac6ons herein contempiated, is hereby delegated to the President of the Port Authority, provided that: (a) such amendments either do not require the consent of the holders of the Bonds or if such consent is required it has been obtained; (b) such amendments do not materially adversely affect the interests of the Port Authority as the issuer of the Bonds; (c) such amendments do not contravene or violate any policy of the Port Authority; and (d) such amendments are acceptable in form and substance to Bond Counsel. The execution of any instrument by the President of the Port Authority shall be conclusive evidence of the approval of such inshwnents 1n accordance with the terms hereof. K. No covenant, stipulation, abligation or agreement contained herein or in the Documents shali be deemed to be a covenant, stipulation, obligation or agreement of any member of tt�e Boazd of Commissioners of the Port Authority, or any officer, agent or employee of the Port Authority in that persons individual capacity, and neither the Boazd of Commissioners nor any o�cer executing the Bonds shali be liable personally on the Bonds or be subject to any personal liability or accountabiliry by reason of the issuance thereof. \\SPPA DELL�DATA�DATA�PMK\MD[ PA.doc �l�-�� Adopted: Mazch 23, 1999. ATTEST: By Its Secretary PORT AUTHORITY OF TF� CITY OF SA1NT PAUL � Its Chair \\SPPA_DELUDATAIDATA�PMKIMDI PA.doc Councif Fiie # sq - ac 1 GreenSheet# G4ca� Presented by Referred To WHEREAS: RESOLUYfON CITY OF SAINT PAUL, MINNESOTA 18 Committee Date Proposed Citv Council Resolution 1. The Port Authority of the City of Saint Pau! (the "Authority") has given its approval to the issuance of up to $4,600,000 of its Economic Development Revenue Bonds (Minnesota Diversified Industries, Inc. Project) Series 1999 (the "Bonds"), to finance the costs to be incurced by Minnesota Diversified Industries, Inc., a Minnesota nonprofit corporation (the "Borrower') in connectlon with the renovation, improvement and equipping of an existing facility located in the City of Saint Paui, Minnesota (the "ProjecY') to be owned by the Borrower; and 2. Laws of Minnesota 1976, Chapter 234, provides that any issue of revenue bonds authorized by the Authority shall be issued only with the consent of the City Council of the City of Saint Paul, by resolution adopted in accordance with law; and 3. Approvai of the issuance of the proposed Bonds by the City Councii is also required by Section 147(� of the Intemai Revenue Code of 1986, as amended; and 4. To meet the requirements of both siate and federai law, the Port Authority has requested that the City Council gives its rec{uisite approval to the issuance of the proposed Sonds by the Port Authority, subject to finai approvai of the details of said Bonds by the Port Authority. NOW, THEREFORE, BE IT RESOLVED by the Councii of the City of Saint Paul that, in accordance with the requirements of Seotion 147(fl of the Intemai Revenue Code of 1986, as amended, and in accordance with Laws of Minnesota 1976, Chapter 234, the Ciry Council hereby approves the issuance of the aforesaid Bonds by the Port Autfiority for the purposes described in the Port Authority resolution adopted March 23, 1999, the exact details of which, including but not limited to, provisions relating to maturities, interest rates, discount, redemption, and the issuance of additional bonds are to be determined by the Port Authority, and the City Council hereby authorizes the issuance of any additional bonds (inciuding refunding bonds) by the Port Authority found by �ne Port Authority to be necessary for carrying out the purposes for which the aforedescribed Bonds are issued. Adopted: March 24, 1999 .�� i�� I�� , :. . �i��' !`��' i � �� ',�i�� see Adopted by Council: Date _�`��,,, �ii �_ Adop6on Certified by Council Secretary By: � � . ��.. � Approved by Mayor. Date A�fl�� [ C (Q � By: ��i�l Requested by Department of: �� n �1/ �ln.-� .sw.w. T�' 7�`A � ' iv �„"`.-"",r�C aq _ a ��i G:\DATA\PMK\mdiCOUN.doc Form Appr�oued by City Attomey ( J Peter PS. Klein, Port Authority Peter M. Klein (651)224-5686 March 24, 1999 TOTAL # OF SIGDIATURE PAGES 3-11-99 xurese wrt ROUi01G !�`.'f.`=?� GREEN SHEET mNn�lr ptrirwe aq • a No 64076 u�� afVCO1NC< ❑ C.IfYA}TOq/EY ❑ CIIYttEPK ❑ wuxanta�sor. ❑ Fauwnu.acrtwattrc � wrw�(wwaasraxn ❑ / L� � (CLIP ALL LOCATIONS FOR SIGNATURE) Approval of the iss�}ance of approximately $4,510,000 of conduit tax exempt 501(c)(3) Revenue Bonds to Minnesota Diversified Industries, Inc. for the renovation and equipping of an office and production facility of approximately 315,000 square feet located south of the fairgrounds along Snelling Avenue in Saint Paul, Minnesota. PLANNING COMMISSION CIB COMMITTEE CIVIL SERVICE CAMMISSION Port Authority Has this persoMrtn e✓er xrorketl uMer a contract fw Mis departmenl? VES NO Has this persoNfirm ever been a city empbyee7 YES NO Dcesthie PQ«�� P� a sldU not normallYP�ssetl 6y any wrteM cib/ emPbYee? YES NO Is this P�saMrm a tar8eted verMOYt YES NO .. The issuance of the bonds will allow the renova±ion and equipping of the o1d War�d�QB distribution facility located south of tfie fairgrounds in Saint Pau1, Minnes� g ,,,, �e�' V"'� s `°� '�g� As a result of the renovated office and production facility, it is ant�cipated that 50 new jobs will be created in the first two years of operation. I3one The new jobs stimulated by this renovated facility will not be created. AMOUNT OF TRANSACTION f �� 510, 000 Por� A�ythority conduit tax exempt icsoursce 501 c)�3) revenue bonds COST/REVENUH BUDGETEU (CIRCLE ON� ncrNm eua�sac - YES NO (�ww alg-1�� 21TY OP THE CITY OF SAINT PAUL FAX (651) 223-5798 TOLL FREE (800) 328-8417 ��.,,, �..�.��.�ARK TOWERS • 345 ST. PEfER STREET • ST. PAUL, MN 55102-1667 • PHONE (657) 224-5686 March 11, 1999 Mr. Brian Sweeney, Director Planning & Economic Development Department 1300 City Hall Annex 25 West Fourth Street Saint Paul, Minnesota 55102 RE: $4,510,000 CONDUIT 501(c)(3) REVENUE BOND ISSUE MINNESOTA DIVERSIFIED INDUSTRfES, INC. Dear Mr. Sweeney: We submit for your review and referral to the o�ce of the Mayor, City Councit, and City Attorney's office, details pertaining to the issuance of conduit 501(c)(3) Revenue Bonds in the approximate amount of $4,510,000 to finance the renovation of an o�ce and production facility of approximately 315,000 square feet located south of the fairgrounds along Snelling Avenue, Saint Paul, Minnesota. The City of Saint Paul's entitlement allocation will not be affected by this application. In addition to the staff memorandum, we are attaching a draft copy of the proposed City Council Resolution and a copy of the Resolution conducting the required public hearing and authorizing the sale of the 501(c)(3) revenue bonds in the amount of $4,510,000 that will be considered by the Port Authority's Board on March 23, 1999. City Council action will be required after the Port Authority's Board meeting of March 23, 1999. Your expeditious handling of this matter will be appreciated. Sincerely, � ----__._ Kenneth R. Johnson President KRJ:sjs Attachment cc: Mayor Coleman G:IDATAIMAI\COUNCIL\I DEALPAM.DOCG:IDATAWlA11COUN CILIIDEALPAM.DOC SAINT PAUL PORT AUTHORITY r ��I�Lr�);7►.��7t��1 TO: FROM: BOARD OF COMMISSIONERS (March 23, 1999 Regular Meeting) { ` Peter M. Klein "� Lau�ie J. Hansen � Kenneth R. Joh s n� qq _ ac.�1 DATE: March 10, 1999 SUBJECT: PUBLIC HEARING - MINNESOTA DIVERSIFIED INDUSTRIES, INC. AUTHORIZATION FOR AN APPROXIMATE $4,510,000 NON-RATED TAX EXEMPT 501(c)(3) REVENUE BONDS RESOLUTION NO. ACTION REQUESTED: Approval of finaf resolution authorizing the issuance of an approximate $4,510,000 conduit bond issue to Minnesota Diversified lndustries, Inc. PROJECT SUMMARY: Estimated Amount:: $4,510,OQ0 Tax Exempt Type: Conduit Non-Rated 501(c)(3) Revenue Bonds Fixed rate serial bonds from 2000-2009 and term bonds thereafter Term: Issuer: Borrower: Trustee: Placement Agents: Remarketing Agent: Borrowe�'s Counsel: Placement Agents' Counsel: Bond Counsel: Ten years on equipment portion and 30 years on the renovation portion Port Authority of the City of Saint Paul Minnesota Diversified Industries, Inc. To be determined Milier & Schroeder Financial, {nc. Piper Jaffray, Inc. Milier & Schroeder Financial, Inc. Oppenheimer, Wolff & Donnelly Briggs and Morgan Leonard, Street & Deinard aa-a�� March 10, 1999 Page -2- BACKGROUND: On December 8, 1998, the Credit Committee preliminarily approved the issuance of up to $14,500,000 of conduit bonds for Minnesota Diversified Industries, inc. This amount included approximately $10,000,000 for acquisition of the building. Minnesota Diversified Industries, Inc. has chosen not to finance the acquisition with bonds and to utilize a contract for deed from the seller. All other factors from the preliminary resolution are the same. The Borrower: Minnesota Diversified industries, lnc. was started in 1968 and makes the packaging for postage stamps and is the sole manufacturer of piastic totes for the U.S. Post Offiice. 7he Post Office accounts for about 90% of the revenue, which was $40,000,000 in the previous fiscal year and is expected to increase to $65,000,000 during the current fiscal year. The company has been consistently profitable for the past five years. The Bonds: The Bonds will be issued in the approximate principal amount of $4,510,000 and will bear interest at a fixed rate currently estimated to be 6.33%. The all-inclusive cost is currently estimated at 6.62%. The Proiect: The new facility (the ofd Wards distribution �enter south of the fairgrounds and west of Snelling) will have about 315,000 square feet, as compared to the o1d facility at 670 Pelham which has about 130,00� square feet. Minnesota Diversified Industries, Inc. is currently in the process of rehabi(itating the new building and purchasing the equipment. Estimated Sources and Uses of Funds: Sources of Funds: Bond Proceeds Estimated Borrower Funds Tota1 Sources of Funds Uses of Funds: Building Construction Equipment Debt Service Reserve Fund Estimated Costs of Issuance Totai Uses of Funds $4,510,000 60.138 $4,570,138 $2,805,000 1,195,000 415,444 154.694 $4,570,138 G:IDATAIPMKIMDICREFE.DOC March 10, 1999 Page -3- aq��-�`� Emoloyment Impact: The company cuRenUy employees about 1,�0� individuals, 70% of whom are disabled or disadvantaged. About 450 are employed in Saint Paul and the remainder are in Minneapolis, Hibbing and Grand Rapids. The Saint Paul employment will increase to approximately 500 once the new facilify is operational. Wages are scaled according to production and most production employees earn about $9.35 per hour pius full benefits, including medical. SECURITY FOR THE BONDS: Conduit Financina: The bonds will be conduit financing of the Authority and wiil not constitute or give rise to a liability of the Authority, the City of Saint Paul or the State of Minnesota or a charge against their general credit or taxing powers. No bondholder will have the right to demand payment of the bonds out of any funds to be raised from taxation or from any revenue sources other than those expressly pledged to payment of the bonds pursuant to the indenture. This includes the amounts payable by the borrower under the loan agreement. The $4,510,000 of conduit bonds is below the $14,500,000 prefiminarify approved by the Credit Committee on December 8, 1998. Since then, no information has become available that would indicate that Minnesota Diversified Industries, {nc. will have difficulty in paying these bonds. The Port Authority will receive fees in the amount of 1l8th of a point ($5,637.50) at inception and I/8th of a point on the outstanding balance, annually, for the life of the bonds. Loan Aqreement: Under the indenture, the Authority will pledge its interest in the loan agreement to the trustee to secure the bonds. The trustee is authorized to exercise the rights of the Authority and to enforce the obiigaiions of the borrower under the loan agreement. DISCLOSURE: Port Authority Commissioners, by S.E.C. rules, are obligated to disclose any risks or facts you may be aware of that would affect the probability of repayment of these bonds. RECOMMENDATION: Recommend approval of authorizing issuance of the approximate $4,510,000 conduit bond issue on behalf of Minnesota Diversified Industries, Inc. PMK:sjs G:IDATA�PMKVNDICREFE.DOC �G` qq•�c.'1 �� Resolution No. � RESOLUTION OF THE PORT AUTHORITY OF THE CITY OF SAINT PAUL WE�REAS: 1. It has been proposed that the Port Authority of the City of Saint Paul (the "Port Authority") issue its Economic Development Revenue Bonds (Minnesota Diversified Industries, Inc. Project) Series 1999 (the `Bonds") in an aggregate principal amount of approximately $4,510,000 and that the proceeds of such Bonds be loaned to Minnesota Diversified Industries, Inc., a Minnesota nonprofit corporation (the "Borrower") to finance the renovation and equipping of an e�sting facility (the "Project") located at 1700 Wynne Avenue in the City of Saint Paul, Minnesota (the «Cit� 2. The Authority desires to facilitate the selective development of the City of Saint Paul and the metro east community, to retain and improve its tas base and to help it provide the range of services and employment opportuniries required by its population, and the Project will assist in achieving that objective by increasing the assessed valuation of the metro east community; helping to maintain a posirive relationship between assessed valuation and debt; and enhancing the image and reputation of the metro east community. 3. The Project will result in add'ational employment opportunities in the City of Saint Paul and the metro east community. 4. The Authority has been advised by the Borrower that the economic feasibility of operating the Project would be, significantly reduced without the proposed revenue bond financing, and that it has been acting to date in anticipation that the Authority wouid favorably consider this financing proposal. 5. The Authority's Credit Committee has previously adopted its Resolution No. 38, giving preliminary approval to the proposed issuance of revenue bottds. 6. Pursuant to the requirements of Section 147(f� of the Internal Revenue Code of 1986, as amended, and pursuant to a notice published by the Port Authority not less than 15 days prior to the public hearing, a public hearing was held on March 23, 1999 on the issuance of the Bonds, at wluch public hearing all persons were given an opportunity to speak. 7. The Bonds will be issued and secured by the terms of an Indenture of Trust (the "Indenture") between the Port Authority and in Minnesota (the "Trustee"). c�q.�C�l 8. The Bonower and the Port Authority wili also enter into a Loan Agreement (the "Loan Agreement"� in which the Borrower will agree to make all payments due on account of the Bonds. 9. The Bonds and the interest on the Bonds shall be payable solely from the revenue pledged therefor and the Bonds shall not constitute a debt of the Port Authority within the meaning of any constitutional or statutory limitation of indebtedness, nor shall the Bonds constitute nor give rise to a pecuniary liability of the Port Authority or the City or a chazge against their general eredit or taxing powers and shall not constitute a charge, lien or encumbrance, legal or equitable, upon any properiy of the Port Authority or the City other than their interest in said Project. 10. It is intended that interest on the Bonds be excluded from gross income of the holders thereof for federal income taY purposes. I30W, THEREFORE, BE IT RESOLVED BY THE BOARD OF COMMISSIONERS OF THE PORT AUTHORITY OF THE CITY OF SAINT PAUL, AS FOLLOWS: A. On ihe basis of information available to the Port Authority it appeazs, and the Port Authority hereby finds, that: the Project constitutes properties, used or useful in connection with one or more revenue producing enterprises engaged in any business within the meaning of Minnesota Statutes, Sections 469.152 to 469.165 (the "Act"); the Project fiu�thers the purposes stated in the Act; and it is in the best interests of the port district and the people of the City of Saint Paul and in furtherance of the general plan of development to assist the Bonower in financing the Project. B. For the purpose of financing the Project, and paying certain costs of issuance and other expenses in connection with the issuance of the Bonds, and provided that the Project and its financing receive approvai by the Department of Trade and Economic Development ("DTED"), the Port Authority hereby authorizes the issuance, sale and delivery of the Bonds in an aggregate pzincipal amount of approximately $4,510,000. The Bonds shall be in such finai principat amounts as sha11 be determined by the President of the Port Authority and Bond Counsel. The Bonds shall bear interest at such rates, shall be numbered, shall be dated, shali mature, shall be subject to redemption prior to maturity, and shall be in such form and have such other details and provisions as may be prescribed in the Indenture, substantialiy in the form now on file in the offices of the Port Authority. C. Neither the Bonds, nor the interest thereon, shall constitute an andebtedness of the Port Authority or the City within the meaning of any constitutional or statutory debt limitation; nor shall they constitute or give rise to a pecuniary liability of the City, the Port Authority or a chazge against their general taYing powers and neither the full faith \1SPPA_DELL�DATA�DATA\PMK�[vIDI_PA.doc q� -��t and credit nor the general tasing powers of the City or the Port Authority is pledged to the payment of the Bonds or interest thereon. D. Forms of the foilowing documents have been submitted to the Port Authoriry for review andlor approval in connection with the sale, issuance and delivery of the Bonds: 1. the Bond Purchase Agreement to be entered into between the Port Authority, the Borrower and Miller & Schroeder Financial, Inc. and U.S. Bancorp Piper Jaf&ay, Inc. (together, the "Undenvriter"); 2. the Indenture; 3. the Loan Agreement dated as of April 1, 1999 to be entered into between the Port Authority and the Borrower; 4. the Bonds; 5. the Ta�c Regulatory Agreement dated as of Aprii 1, 1999 to be entered into between the Port Authority the Trustee and the Borrower; and 6. the Preliminary Qfficial Statement to be used in marketing the Bonds (the "Official StatemenP'). (collectively, the "Docuxnents"). E. It is hereby found, determined and declared that: 1. The issuance and sale of the Bonds, the execution and delivery by the Port Authority of the Documents, as applicabie, and the performance of all covenants and agreements of the Port Authority contained in the Documents, as applicable, and of all other acts and things required under the Constiturion and laws of the State of Minnesota to make the Documents and the Bonds valid and binding obligations of the Port Authority in accordance with their terms, aze authorized by Minnesota Statutes, Sections 469.152 through 469.165, as amended (the "Act"); 2. It is desirable that the Bonds be issued by the Port Authority upon ihe general terms set forth in the Documents, as applicable; 3. Under the provisions of and as provided in the Documents, the Bonds are not to be payable from or a charge upon any funds other than the revenues pledged to the payment thereof; no holder of the Bonds sha11 ever have the right to compel any exercise by the City or the Port Authority of its tasing powers to pay the Bonds or the interest or premium thereon, or to enforce payment thereof against any property of the City or the Port Authority except the \\SPPA DELL�DATA�DATA\PMKwIDI PA.doc q°I-�� interests of the Port Authority and the City which have been pledged to the Trustee under the Indenture; the Bonds shall not constitute a chazge, lien or encumbrance, legal or equitable, upon any properiy of the City or the Port Authority except the interests of the Port Authority and the City which have been pledged to the Trustee under the Indenture; the Bonds shall each recite that they aze issued without moral obligation on #he part of the State or its political subdivisions, and that the Bonds, including interest thereon, aze payable solely from the revenues pledged to the payment thereof; and the Bonds shali not constitute a debt of the City or the Port Authority within the meaning of any constitutional or statutory i'unitation. F. The forms of the Documents and e�ibits thereto are approved substantially in the forms submitted and on file in the offices of Port Authority, with such subsequent changes as may be approved by Port Authority staff and Bond Counsel as contemplated by pazagraph H. The Chair and Secretary of the Port Authority, or such other officer as may be appropriate in the absence of either the Chair or Secretary, aze hereby authorized and directed to execute the Documents (to the extent the Port Authority is a pariy thereto) in substantialiy the forms submitted, as modified pursuant to pazagraph H, and any other documents and certificates which in the opinion of Port Authority staff and Bond Counsel aze necessary to the transaction herein described The execution of any inshument by the appropriate officer or officers of the Port Authority herein authorized shall be conclusive evidence of the approval of such documents in accordance with the terms hereof. The execution of any documents necessary for the transaction herein described by individuals who were at the time of execution thereof the authorized officers of the Port Authority shall bind the Port Authority, notwithstanding that such individuals or any of them has ceased to hold such office or o�ces prior to the authentication and delivery of the Bonds. Copies of all of the docwnents necessary to the transaction described shail be delivered, filed and recorded as provided herein and in the Indenture. G. The President and other officers of the Port Authority are authorized and directed to prepaze and fiunish to the Underwriter and Bond Counsel certified copies of proceedings and records of the Port Authority relating to the issuance of the Bonds and other transactions herein contemplated, and such other affidavits and certificates as may be required to show the facts relating to the legality of the Bonds and the other transacfions herein contemplated as such facts appeaz from the books and records in the officers' custody and control or as othenvise known to them; and all such certified copies, certificates and affidavits, including any heretofore fiirnished, shail constitute representations of the Port Authority as to ttte truth of all statements contained therein. H. The approval hereby given to the various Docunnents referred to above includes approval of such additional details therein as may be necessary and appropriate, and such modifications thereof, deletions therefrom and additions thereto as may be necessary and appropriate and approved by the Port Authority's President and Chief Financial Officer; and includes approval of, among other things: �1SPPA DELUDATA�DATAIPMK4btDt PA.doc qg-��7 1. establishment of the final principai amount of the Bonds and the interest rate to be borne thereby; provided that the masimum aggregate principal amount of the Bonds shall not exceed $4,600,000; and provided further that the maximum interest rate on the Bonds shall not exceed 8.00% per annum; 2. the establishment of the maturity schedule and cail provisions to be applicable to the Bonds; and 3. such related instrlmients as may be required to satisfy the conditions of any purchaser of the Bonds. I. The Port Authority hereby consents to the distribution of the Officiai Statement, as such O�cial Statement is finalized with the participation of Port A.uthority stafF and Bond Counsei. The proposal of the Underwriter to purchase the Bonds and reseil the Bonds, in the manner and, upon the terms and condifions set forth in the Bond Purchase Agreement is hereby found and determined to be reasonable and is hereby accepted and approved. J. The authority to approve, execute and deiiver future amendments to financing documents entered into by the Port Authority in connecrion with the issuance of the Bonds and the other transac6ons herein contempiated, is hereby delegated to the President of the Port Authority, provided that: (a) such amendments either do not require the consent of the holders of the Bonds or if such consent is required it has been obtained; (b) such amendments do not materially adversely affect the interests of the Port Authority as the issuer of the Bonds; (c) such amendments do not contravene or violate any policy of the Port Authority; and (d) such amendments are acceptable in form and substance to Bond Counsel. The execution of any instrument by the President of the Port Authority shall be conclusive evidence of the approval of such inshwnents 1n accordance with the terms hereof. K. No covenant, stipulation, abligation or agreement contained herein or in the Documents shali be deemed to be a covenant, stipulation, obligation or agreement of any member of tt�e Boazd of Commissioners of the Port Authority, or any officer, agent or employee of the Port Authority in that persons individual capacity, and neither the Boazd of Commissioners nor any o�cer executing the Bonds shali be liable personally on the Bonds or be subject to any personal liability or accountabiliry by reason of the issuance thereof. \\SPPA DELL�DATA�DATA�PMK\MD[ PA.doc �l�-�� Adopted: Mazch 23, 1999. ATTEST: By Its Secretary PORT AUTHORITY OF TF� CITY OF SA1NT PAUL � Its Chair \\SPPA_DELUDATAIDATA�PMKIMDI PA.doc