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99-618e: "' ,., �... - . _. . RESOLUTiON C1TY OF SA{NT PAUt, MINNESOTA Councii File # �� l �p�l� Green Sheet � �-l� Rzfeaed To Committce Date .171: � 1. The Port Authorny of the City of Saint Paul (the "Port Authorit�� has given its approval to the issuance of up to $24,000,000 of its taY-exempt and taxable revenue notes (the "iVotes'� to finance the costs to be incucred in connection vrith the acquisirion of land and construetion thereon of an approximately 1,000 square pazlang ramp to be located in the block bounded by Nrnnesota Street, Cedar Street, Kellogg Boulevazd and Fourth Street in the City of Sairn Paul, �Yt�nnesota (the "Project"), which is to be owned by ihe Port Authority and leased to Capital Ciry Properties, a Mmnesota non-profit corporarion; and Z. I,aws of M'uuiesota 1976, Chapter 234, provides that any issue of revenue bonds authorized by the Port Authoriry shall be issued only with the consent of the City Council ofthe City of Sairn Pau3, by resolution adopted in accordance with law; and 3. To meet the requirements of both state and federal law, the Port Authority has requested that the City Council gives its requisite approval to the issuance of the proposed Notes by the Port Authority, subject to final approval ofthe details of said Notes by the Port Authority. NOW, TE�REFORE, BE TT RESOLVED by the Councd of the City of Saint Paul that, in accordance with Laws of Mnnesota 1976, Chapter 234, the City Council hereby approves the issuance of the aforesaid Notes by the Port Authority for the purposes described in the Port Authority resolution adopted June 15, 1999, the exact details of which, including but not limited to, provisions relating to maturities, imerest rates, discount, redemption, and the issuance of additional bonds ue to be determined by the Port Authority, and the City Council hereby authorizes the issuance of any additional bonds (including refunding bonds) or other refinancing by the Port Authority found by the Port Authority to be necessary for carrying out the puiposes for which the aforedescribed Notes are issued. Adopted: June _, 1999 �� !��_ �i : •' • . _ �__ I '' i • - .� �__' - .��__ I _[�i��! I��'!! S�' ��b�� Adopted by Council: Date � \ Adoption Certified by Council S�:retary BY �\T�� Approved by Mayor. Date �fi � L � /�Q 7 BY- Requested by Department of: I� Form Appyeved by City Attomey B ��'�---- � . G��` G ia 9 p Approved by Mayo for Submission to Council BY � l . . I ! A /� rmw��am � Peter M. Rlein, Port Authority Peter M. Rlein (651) 224-5686 6/18/99 6/10/99 xweo� wn RalIN1C. ORDER AESN:N TOTAL � OF SIGNATURE PAGES GREEN SHEET r•.z*:�:;r:= r�a r.-, �l�-� l� l� �D� No cfrrCOlMCi � CIlYI1TiOP1EY ❑ GIYCIFNK ❑wwsuuasaxcesme. - ❑nuxuu.aEaviaccrc ❑ WvOrt(ORAWI� ❑ {� � (CUP ALL LOCATIONS FOR SIGNATURE) Approval of taxable and tax-exempt economic development revenue bonds in the approximate amount not to exceed $24,000,000 to finance the costs to be incurred by Capital City Properties, in the acquisition of land and construction of a 990-stall parking ramp at Eourth and Minnesota in downtown Saint Paul. PLANNING COMMISSION CIB COMMYTTEE CIVIL SERVICE COMMISSION Port Authority Has ihis personffirtn ever wwked under a wM2ct fw this departmeM? YES NO Has tTis PereoMirtn ever Eeen a city emP�oY�� YES NO Does this persoNfirm possess a sitlll not normallypossesseU by a�ry current a7y empbyee? YES NO Is ihis persoMrm a tarpetetl ventlo(! YES NO The downtown Saint Paul core does not have enough available parking, which is impairing its prosperity. Increase auailable parking in downtown Saint Paul stimulating business. None /ANTAGES IF NOT APPROVED ` ' There will be a greater parking space deficit in the downtown'Saint Paul core. AOUNTOFTRANSACTIONS �24,000,000 Taxable and Tax-exempt economic souRC� Development Revenue Bonds CAST/REVENUE BUD(iETED (CIRCLE ON� AC71VI7YNUMBER YES NO U (EXPINM �S �� 21TY OF THE dN OF SAWT PAUL , ,..., � ,,,....,ARK TOWERS FAX (651) 223-5198 TOLL FREE (800) 328-8417 345 ST. PETER STREET • ST. PAUL, MN 55102-1661 • PHONE (651) 224-5686 June 10, 1999 Mr. Brian Sweeney, Director Planning & Economic Development Department 1300 City Hall Annex 25 West Fourth Street Saint Paul, Minnesota 55102 RE: FOURTH AND MINNESOTA PARKING RAMP FINALIZATION OF THE FINANCING PLAN FOR AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $24,000,000 Dear Mr. Sweeney: We submit for your review and referral to the o�ce of the Mayor, City Council, and City Attomey's office, details pertaining to the issuance of taxable and tax-exempt economic development revenue bonds in the appro�mate amount not to exceed $24,000,000 to finance the costs to be incurred by Capital City Properties, in the acquisition of land and construction of a 990-stall parking ramp at Fourth and Minnesota in downtown Saint Pau{. 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 issuance of taxable and tax-exempt economic development revenue bonds in the appro�mate amount not to exceed $24,000,000 that will be considered by the Port Authority's Board on June 15, 1999. City Council action will be required after the Port Aulhority's Board meeting of June 15, 1999. Your expeditious handling of this matter will be appreciated. Sincerely, KRJ:sjs Attachment cc: Mayor Coleman ��r(,�� M� Kenneth R. Johnson �� President G:�DATA�PMKIBOARDI4THBRIAPI. DOC ��'t-lol g S.AINT PAUL PORT AUTHORITY i .•• . r TO: BOARD OF COMMISSIONERS DAT`E: June 10, 1999 (Special Meeting June 15, 1999) FROM: Peter M.. Klein /�/`"�� Patrick E. Dean �'/ = Laurie J. Hansen Kenneth R. Johnson SUBJECfi: FOURTH AND MINNESOTA PARKING RAMP FfNA�IZATION OF THE FINANCING PLAN FOR AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $24,000,000 RESOLUTtON NO. ACTION REQUESTED: Approval of loans in an aggregate principal amount not to exceed $24,000,000 to finance the construction of the ramp and land acquisition at Fourth and Minnesota. (Note: Due to a restructuring of the relationships among the parties, as described below, there is an opportunity to take advantage of tax exempt financing for a portion of this debt. While we will structure the financing to maximize the tax exempt portion, and the corresponding cost savings to the project, we are not able to provide a precise breakdown of the taxabie versus tax exempt portions of the financing. Our current estimates are that $14,500,000 of the debt will be a taxable first mortgage loan from a national life insurer, with a$5,550,000 tax exempt second mortgage note from a private investor and $3,000,000 in tax-exempt subordinate cash flow notes delivered to the current owners of the land in partial payment for the (and). BACKGROUND: On April 6, 1999, the Board provided preliminary approval of the business agreements for the Ramp project, subject to a financing plan. For many months, we have expiored several financing options and have concluded that the pian described in this memo provides the best sources of financing of the iand acquisition and ramp construction costs currently available. In addition, we have made changes to the business agreements. The changes made to the business agreements approved by the Board in April are: 1. Elimination of the management contract and the rea(acement of that relationship with the issuance of subordinate debt: Based, in part, upon our consultation with Ramsey County, we have concluded that subordinate debt would be an easier, cleaner, and more appropriate structure to memorialize our relationship with the current land owners, Rupp, da Mota, and Luzaich. The management contract as it was originally contemplated did not intend for Rupp, da Mota, and Luzaich to be active in the daily management of the ramp or in control of ramp operations. Fourth and Minnesota Ramp (Speciai Board Meeting June 15, 1999) June 10, 1999 Page 2 Issuing subordinate debt in partial payment for the land more accurately reflects this relationship. As before, the Port Authority wiil lease the land to Capital City Properties which will provide for the construction of the Ramp and contract directly with a parking operator to run the ramp on a daily basis. 1. Purchase of land. The land will be purchased from the current owners for a price of $3,000,000 cash at closing plus a tax-exempt subordinate cash flow note in the amount of $3,000,000 bearing interest at a rafe of 16%. Tiie interest and principal of this cash flow note would only be paid only out of 50% of the ramp nef cash flow after a(1 operafing expenses, debt service on the ftrst and second mortgages, and reserve for replacement funding. The Port Authority would receive the remaining 50% of the cash flow. Rupp, da Mota, and Luzaich wili continae to have a right of first refusal should the Port Authority slect to sell the ramp during the first 15 years. During years 16-30, Rupp, da Mota, and Luzaich will have the option of purchasing the ramp at the greater of fair market value or outstanding debt. It is understood that when the first and second mortgages are paid in full, the purchase price becomes fair market value. 2. Issuance of tax exempt debt: If the current landowners are not parties to a long term management agreement on the ramp, a poRion of the debt can be issued on a tax exempt basis. Because there wili be other contracts giving private parties rights to use the ramp, we currenfly estimate that approximately 40% of the debt issued can be tax exempt. The updated Use of Funds Summary for the project is as fo(lows: Uses of Funds: Construction Costs $13,40Q,000 Purchase of Property 6,000,000 Construction Period lnterest 1,100,000 Architecture, Design, insurance and other costs 585,000 Closing Costs 484,000 Mortgage Payment Reserve 1,481,000 Debt Issuance Sizing Contingency 950.000 7otal $24,000,000 Copies of the Term Sheets for the senior and subordinate notes are attached and the foliowing is a summary of the main points. GIDATA�PMKk4THPAT.DOC ��-b\ g Fourth and Minnesota Ramp (Special Board Meeting June 15, '1999) June 10, 1999 Page 3 TERMS OF FINANCENG: Structure: Private P4acement Fixed Rate First Mortgage Loan (taxable) Private Placement Fixed Rate Second Mortgage Note with a Balloon (tax exempt} Cash Flow Note for Property Acquisition (tax-exempt) Lender: A nationai life insurance company for the First Mortgage A private investor for the Second Mortgage Note Current Landowners for the Cash Flow Notes Borrower: Port Authority of Saint Paul Estimated Amount: $14,50�,000 — First Mortgage $ 5,550,000 — Second Mortgage $3,000,000 — Cash Fiow Notes Tax Status: Taxable — First Mortgage Tax Exempt — Second Mortgage Tax Exempt — Cash Fiow Notes Term of Loan: 21.5 years — First Mortgage 10 years (Balloon) — Second Mortgage The shorter of 30 years or Payment in Fuii — Cash Flow Notes Interest Rate: Fixed for 21.5 years at approximately 7.75% - First Mortgage Fixed for 10 years at approximately 6.375% - Second Mortgage Fixed for 30 Years at 16.00% — Casn Flow Notes Amortization: Beginning in 2001, 20 years — First Mortgage Beginning in 2�01, 20 years— Second Mortgage Depending when Cash is Available, 30 year Maximum — Cash Flow Notes Piacement Agent: Dougherty Summit Securities LLC Pfacement Fee: 150 basis points ($217,b00) on the First Mortgage 300 basis points ($166,500) on the Second Mortgage G\DATA�PMKMTHPAT. DOC Fourth and Minnesota Ramp (Special Boarc! Meeting June 15, 1999) June 1Q, 1899 Page 4 Security: First and Second Mortgages on project (land & structure) Pledge of the Port Authority Low Interest Loan Fund • The Low interest Loan Fund established to heip relocate tenants from MN Mutual . The fund balance is about $210,000 in cash and $100,000 in loans • The on(y time that the use and control of this fund changes is in the event of a default • Loan repayments would aiways be made to the Port Authority, or to a fock box • If these furtds are used, and the defaults which gave rise to their loss are cured, the Port Authority would be entitled Yo repayment, with interest from cash flow, prior to the diversion of excess cash flow • This is necessary to have some Port Authority collateral aY risk. We will attempt to limit this exposure in our negotiations with the lenders, including capping the amount and limiting the duration. Othenvise, non-recourse io Port Authority, the City, and Capital City Properties Key covenants: Debt service reserve fund from proceeds ($1,481,000) Completion Guarantee from fhe Port Auffiority* '` Mitigation of completion guarantee risk: A. Non-perFormance by contractor - Performance bond B. Unforeseen geotechnical issues - Increase in contract amount by $100,000 to cover most costs or - Insurance policy estimated at $65,000 to cover ali costs ($100,000 deductible) C. Unknown environmental matters - Insurance policy estimated at $100,000 ($100,000 deductible) D. Completion of skyways - We believe that agreements are in place and confrollabie by us to assure the completion Some areas of concem that we anficipate that you will have do not directly relate to the financing but rather to the overall projecYs strength. The foliowing is a discussion of these areas of concems. G:�DATA�PMKkITHPAT.DOC �ourth and Minnesota Ramp (Special Board Meeting June 15, 1999) June 10, 1999 Page 5 PROJECT FINANCIAL STRENGTH: c 1� lo` 1) Is there a need for a 1,000-staii ramp in the core of St. Pauf? Last year, the Gity of Saint Pau! hired SRF Gonsultants to update its 1996 parking study. The major changes considered in the 1998 report that were not in the 1996 report include the Lawson block development, expansion of the Worid Trade Center, Robert Street and Minnesota Mutuai ramps, and the construction of the new Science Museum ramp. The conclusion of the study was that there will be an 8,197-space deficit in the downtown core. In addition, this ramp is displacing 250 surFace spaces so the net increase is only 750 spaces. 2) What is the contingency in the budget for cost overruns? The $1,000,000 payment reserve from the first mortgage can be used for cost overruns. It would take priority and be replenished through the first available cash flow. Reimbursement of approximately $170,000 of Port Authority expenses can be delayed until cash flows are available, and could then be paid as a priority before the division of excess cash flow. Combined, the total availabie contingency is $1,170,000. 3) fs there enough cash flow to service the debt in the initiai stages of operations? In the first year, the projections estimate the following: Current 65% of Projected Proiection Revenues Revenue $3,100,000 $2,000,000 Operating Expenses 500,000 500,000 Debt Service - First Mortgage* 1,127,000 1,127,000 Debt Service - Second Mortgage' 354.000 354,000 Net Cash Flow $1,119,000 $ 19,000 For the first months of operations, revenues must be at least 65% of the projected amount to cover operating expenses and debt service. That equates to 550 monthly contracts of the projected 840 contract spaces. We currently know of 500 probabie contracts that have been requested without any marketing of the ramps. These contracts together with probabfe transient revenues should reach the 65°l0 of projection level. 'First year interest only payment is required. DISCLOSURE: Port Authority Commissioners, by S.E.C. rules, are obligated to disclose any risks or facts you may be aware of that wouid affect the probability of repaymeni of these loans. GIDATA1PMKk1THPAT. �OC Fourth and Minnesota Ramp (Special 8oard Meeting June 15, 1998) June 10, 9999 Page 6 SUMMARY: The debt structure will be finalized to minimize debt service and maximize cash flow distribution from the ramp. We will structure the debt within the parameters estabiished in this proposal. Any material variances wilf be broughf back to Credit Committee for approval. RECOMMENDATiON: Recommend approval of taxable and tax exempt financing in an aggregate principal amount not to exceed $24,000,000 to be structured as described in this memorandum. sjs G:IDATA�PMKWTHPAT.DOC �i�-t�� _.�:��: SATNT PAUL PORT AIITHORITY PARKII�FG RAMP �14,500,OU0 CONSTRIICTFON LOAN AND PERMANEIQT MORTGAGE LOAN SiJMNFARY OF FINANCIlYG T'ERMS OBLIGATIOl� Amount: $I4,500,000 (approximately) based upon satisfaction of Lending Criteria described herein. Praject: 'I'he Proce�cls of the Loan will be used to acquire two pazcels o£ iand located on t6e southwest and noztheast corners of the block bounded by Minnesota, Fourth, Cedar, and TCellogg Boulevard in downtown Saittt Paul, demolish the existing building nn the southwest cASiter of the site, and constiutt a new 990 space pazking facility. Loan Putpose: The Loan v+iil 5rst provide conshvction financing for the Project (the "ConstrucGon Loan"). Such construction financing will allow for periodic disbursement of I..oan proceeds to pay actual constzuction and retated costs. IJpon completion, Completion"), the Mortgage Loan, certification and occupancy of the Project ("Project Constmction Loan will be converted ta a Permanent T.oau Term: The Consfruction Loan term is anticipated to accommodace the 18-month consttuction schedule and ce.rtificatinn of completion. TJpon Project Completion, the Constnzction Loan will be converted to a 20-year kermanent Mortgage Loan (t6e "Permanent Loatt"). The total combined Loan Term will be 21.5 years. Amortizafion: The Construction Loan wiil dis6ursed from I.oan reserve. amortized pursuant to levei over a period of 20 years. require only interest payments that will be After Project Completion, principal witi be monthly payments of principaJ and interest Interect Ftate: Fixed interest nte equal to the imputed i4-year Treasuzy rate plus 255 basis points. The interest rate will be fixed for the emire 21.5-year Loan term. Based on;oday's mazket rates, the interest rate Evould equate to approximately 7_75°/a. -i- ZO'd b90b9L£Zt9 'ON XB.� 'IHIOHdAI3 1,183t19f104 Wd 8Z:Z0 IB.� 66-IZ-dBW PrepaymentPenalty: I.oan will he subject to yield maintenance or defeasance provisipns as defined by Lender. C6IIStCUCGOtI 1..08II Aisbursements: Aisbursements of Construction Loan proceeds will begn once the equity to be contributed to the Project has been expended. The disbursement process wili be administered by a title or tzusc company on behalf of the iender. The disbwsement process, which will monitor the expenditures of both equity and Loan proceeds, will allow for the direct payment to contractors and supplier £or work biiled and completed. TLe disbursemeirt process wiil utiIize engineer' reports to verify wozk, require iien waivers and employ oiher customary praccices agreed upon by all parties. Recourse: I,oan will be non-recourse with the exception of staz�dard carve-outs. Standard carve-outs include, but aze not limited to &aud, waste, and environmental indemnity. The Borrower and Generai Partner witt pravide a comple8on guaranYee. PAR3TCIPANTS $orrower: Guarantor: Placeatent Agent: The Port Authority of the City of Saint Paut (the "Authority") The Port Authority of the City of $aint Paul (the "Authorit�'} as it relases to the Recourse definitian above. Dougherty Summit Securities LLC wilt atrange for ptacement of the Loan oa a best efforts basis. SOURCES A2QD USES OF FUI�TDS Sources uf F�ends: Sources of funds available for the Project include: Construction Loan Proceeds Subordinate Mortgage Notes Total Sources ofFunds $14,500,000 S.SSO.00Q $20,OSO,OOD -Z- £0'd b9059L£Zt9 'ON Xd� 'IdIOFIEi�Ij A,��I9H�(lOQ Gld 8Z I8� 6B-iZ-AMW ��t-- Use of Fnnds: TJses of funds to complete the Project are as foliows: Conshtsdion Costs* Purchase of Land Construction Period Interest Predevelopment Costs Ramp Equipment Soil Conditions Fees �nvironmental Assessmenx Fees Aschitect Fees Port Authority Legal Hxpenses Mortgage Registration Tax Design Costs Senior Aebt Placement Fees*" Subordinate Debt Placement Fees Contingencies/Senior Reserve Subotdinate Reserve Total Uses of Funds $1i,400,000 3,000,000 1,I00,o00 165,00� IOQ,000 100,000 100,000 100,000 60,000 40,000 20,000 217,500 266,500 1,000,000 481 000 $20,050,000 �` It is assumed that Borrowar's esrimates include adequate amounts for legai expenses associated with the financin�. ** Placement Fee of ].50% on Rirst Mortgage Loan of $14,500,000 and Pfacement Fee of 3.60°Jo on Sabordinate Loan oF $5,550,000 LENAING CRITERLI The Loan will be funded upon completion, preparation or provision of the following items. Items must be provided prior to funding by par[ies and in a fozm acceptable to Placement Agent and I.ender. � Appraisal: "As built" appraisai in an amount of at least $21,350,000, or such other amount which supports a maximum Loan to 'Vaiue o£ 68°/u, from an MAI certified appraiser. Feasibility Study: Enviraumenta[; Constraction Contracts: A feasibility study projecting that debt service coverage will be at least 1.45:1 based upon operaiion of the Project as planned. Phase I environmental survey. Sworn constnxction statements, guuanteed maximum price comracts and constr�ction bonds aze requised by Lender. � 60'd 690b9C£zt9 'ON XB.� "IBIONdNI.� A,L83H9004 Wd BZ.ZO IB.� 66—IZ—I,dW Security: First mortgaga on all reat property and first lien security interests in all personal propv�rty. AssignuYent of teases and rents. Assigamem of pia.ns, specifications and construction contracts. Assignment of appraisat, environmental and all other reports. Assignment of management and option ageements_ Pled�e of reserve fund. Titie: Disbursements of constmdion funds tl�rough titie compaay according to process to be agreed upon by a11 parties. Placement Fee: Placement Agent will be paid a Placement Fee equal to 1.50% of the amount of the Loan described herein. The payment of this Placeme� Fee witl be made in accordance with the teims of tbe Engagement I.etter for Ptacement A�ent Services e�cecuted by Borrower and Fiacement Agenf. Governing Lsw: Loan wilI be governed by the Iaws oPthe State ofMtnnesota. Covenants: Loan wilt inclucie covenants reIating to debt seroiee coverage, key financial ratios, and management continnity to be agreed upon hy aii pazties. Reporting Reqnirements: Representation and Warrandes: Additional Terms And Conditions: Borrower will be re�uired w subnut periodic operating statements and other financial information to be agreed upon by all parties. ReasonabSe and customazy for Loans ofthis type, inctuding but not limited to: ettfarceability of Loan documentadoa, accuracy of financial srate- ments, corporate power end suthority, no material adverse cha.nge, no material litigatioa, no envuonmentai issues, no de£au1t, etc. 1, 2, � 5, � 7. � Guaranteed maximuzn price conbact for construction of the groject. Completion guarantee from the Authority. A Loan reserve fund of $1,000,000 to be funded at project complerion_ A separate repair and replacement reserve tq he funded at 2% of sross revenues annually fsom project cash flow beginning one year after compietion of the project. The Authority wiil ma[�e the Iender an additiorial insured party on the environmenta! remediadon policy being purchased in connection with EEFe conslruclion of the project. The Auihority will also assign to lender all ather contracts designed to mitigate eost ovemtn risks. Authority to maintain ownershig and property tax exemption during the term of the Loan. Subject to Lender approving loan structvre allowing for continuation of property tar� exemption in the event of a defauti or foreclosure. AuYhoriYy will set parking raYes at a level necessary to cover all expenses and deht sexvlce. Review and acceptance by Lender of i�To Ackion Letter from the 3tate of NGnnesota regazding outstanding environmental issues on the subject site. 50'd 690b9�EZt9 'ON Xd� lHIONdNI� A.L83H9110Q Wd 6Z.Z0 I2I3 66-iZ-A�W ag ,�� , �,,: : SAINT PAUL PORT AUTHORTTY PARKIlVG RAMP $5,550,000 TAX-EXEMPT 5UBORDINATE MORTGAGE NOTE SUMMARY OF �'IlVANCING TERMS OBLIGATION Amount: $5,550,000 (approximately) based upon satisfaction of Lending Criteria described herein. Project: The Proceeds of the Loan will be used to acquire two pazcels of ]and ]ocated on the southwest and northeast corners of the block bounded by Minnesota, Fourth, Cedaz, and Kellogg Boulevard in downtown Saint Paul, demolish the existing building on the southwest corner of the site, and construct a new 990 space parking facility. Loan Purpose: The Loan will first provide $5,550,000 in Subordinate Mortgage Note financing (the "Subordinate Notes") for the Project in conjunction with a $14,500,000 loan arranged by Dougherty (the "Construction Loan" and "Permanent Mortgage Loan" or collectively referred to a"First Mortgage Loan") as described in Exhibit "A". Note Term: Amortization: Interest R zte: Prepayment Penalty: 1� Yeazs (balloon) 20 Years (straight-line) Fixed interest rates in serial and term bonds. Approacimately 6375% based on current market rates. Notes aze cailable in the event of a sale of the Project at any time on or after January 1, 2005. Recourse: Loan wili be non-recourse with the exception of standard carve-outs. Standard carve-outs include, hut are not limited to fraud, waste, and environmental indemnity. The Borrower and General Partner will provide a completion guarantee. 1 PARTICIPANTS Borrower: Guarantor: Piacemenf Agent: The Port Authority of the City of Saint Paul (the "Authority") The Port Authority of the City of Saint Paul (the "Authority") as it retates to the Recourse definition above. Dougherty Summit Securities LLC wi21 arrange for placement of the Notes on a best efforts basis. SOURCES AND USES OF FUNDS Sources of Funds: Use of Funds: Sources of funds available for the Project include: Subordinate Notes Proceeds Total Sources ofFunds $5,550,000 $5,550,000 Uses of funds to complete the Project are as follows: Construction Costs Subordinate Note Reserve Placement Fee* Legal Fees/Additional Contingency* $4,958,000 481,000 56,000 55.000 Total Uses of Funds $5,550,000 * Fees and COI in excess of 2% of the Note amount will be paid from the Senior Mortgage I.oan. (See E�ibit A.) LENDING CRITERIA The Loan witl be fimded upon comptetion, preparation or provision of the following items. Items must be provided prior to funding by parties and in a form acceptable to Placement Agent and Lender. Appraisai: "As built" appraisal in an amount of at least $21,350,000, or such other amount which supports a maximum Loan to Value of 68%, (based on a $14,500,000 First Mortgage Loan) from an MAI certified appraiser. Feasibility Study: A feasibility study projecting that First Mortgage I.oan (estimated to be $I4,500,000) debt service coverage will be at Ieast 1.45:1 based upon operation of the Project as pianned. Environmeutal: Phase I environcnental survey. �G-�� Construction Cantracts: Swom construction statements, guaranteed ma�mum price contracts and construction bonds are required by Lender, Securit}: Second mongage on att reat property and second lien security interests in all personal properry. Assignment of leases and rents. Assignment of plans, specifications and construction contracts. Assignment of appraisal, environmental and all other reports. Assignment of mana�ement and option a�eements. Pledge of reserve fund. Placement Fee: Placement Agent will be paid a Placement Fee equal to 3.00% of the amount of the Subordinate Notes described herein. The payment of this Placement Fee will be made in accordance with the terms of the Engagement Letter for Placement A�eni Services executed by Boirower and Placement Agent. Governing Law: The Subordinate Notes wil] be �overned by the laws of the State of Minnesota. Covenants: The Subordinate Notes will include covenants relating to debt service coverage, key financial ratios, and management continuity to be agreed upon by all parties. Reporting Requirements: Representation and Warranties: Additionai Terms And Conditions: Borrower will be required to submit periodic operating statements and other financial information to be agreed upon by ail parties. Reasonable and customary for Financings of this type, including but not limited to: enforceability of Financings documentation, Opinion of Bond Counsel on tax-exemption, accuracy of financiat statements, corporate power and authority, no material adverse change, no material litigation, no environmental issues, no default, etc. 1. Subject to Dougherty arranging First Mort�age Loan and the loan terms as outlined in Exhibit "A". 2. Subject to approval of Subordinate Notes by First Mortgage Lender and execution of appropriate Intercreditor Agreements. 3. Subject to full undenvriting due dilieence by Dougherty. 3 �� Resolution No. 3781 .' RESOLUTION OR THE PO12T AUTHORITX OF TIiE CITY OF SAIl\T PAUL WHEREAS: I. On Aprii 6, 1999 the Port Authority of the City of Saint Paul (the "Port Authoriry") adopted its Resolution No. 3771 approving the execution by the Port Authority of a Purchase Agreement relating to properiy in the block bounded by Minnesota Street, Cedar Street, Kellogg Boulevazd and 4th Street (the "Land") for the purpose of leasing the same to Capital Ciry Properties and providing for the construction thereon by Capital Ciry Properties of approximately 990 caz pazking ramp (the "Ratnp"}. 2. The current owners of the Land aze CCV-1, LLC and Metro Real Estate Services L.L.C., both Minnesota limited liability companies (collectively the "Sellers"). 3. The execution of the documents approved by the Port Authority in Resolution No. 3771 were specifically stated to be contingent on the development and approval of a financing plan for the acquisition of the Land and the construction of the Ramp. 4. It has now been proposed that the Ramp be financed through the issuance of :§ approximately $24,000,000 of ta�:able and tax-exempt debt as more fully provided in the staff memorandum presented to the Board at this meeting (the "Financing Plan"). 5. The Credit Committee has reviewed the Financing Plan, and has recommended approval. 6. Pursuant to notice published in advance as required by state law, a public hearing was held at a special meeting before the Port Authority on the proposal to finance the Project through the issuance of revenue bonds by the Port Authority in the approximate principal amount of $24,000,000, at which heazing all those who desired to speak were heard, and in connection with which written comments were taken in advance. NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF COMMISSIONERS OF THE PORT AUTHORITY OF THE CITY OF SAINT PAUL, AS FOLLOWS: A. On the basis of information available to the Port Authority it appeazs, and the Port Authority hereby finds, that: the Ramp constitutes properties, used or useful in connection with one or more revenue producing enterprises engaged in any.business within the meaning of Minnesota Statutes, Section 469.152 to 469.165 (the "Act"); the Ramp furthers 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 Paui for the Fort Authority to participate in the orvnership and financing of the Ramp, �y because the costs and expenses of private ownership and conventional financing would make the construction and successful operation of the Ramp unlikely. 7805479 �S �� B. For the purpose of fmancing the costs of acquiring the Land and constructing the Ramp, and paying certain costs of issuance and other ehpenses in connection with the issuance of the debt as contemplated by the Financing Plan, the Port Authority hereby authorizes the issuance, sale and delivery of tax-exempt and taxable notes in an aggregate principal amount not to exceed approxunately $24,000,000 {the "Notes'�, and the loan of the proceeds of the Senior and Subordinate Notes to Capital City Properties to finance the cost of the construction of the Ramp. The Notes shall beaz interest at such rates, shall be dated, shall mature, shall be subject to prepayment prior to maturity, and shall be in such form and have such other details and provisions as may be prescribed in the docutnenu prepared in connection with the issuance of the Notes. C. The President and the Chief Financial Officer of the Port Authority aze hereby authorized to work w2th bond counsel and Dougherty Sununit Securities LLC, as the placement agent for the senior and subordinate lien Notes to be issued pursuant to the Financing Plan (the "Placement AgenP'), with the Sellers with respect to the cash flow notes to be issued to the Sellers pursuant to the financing plan, and as part of the purchase price for the Land, and with Capital Ciry Properties, to negotiate and finalize the documents, certificates and any other matters necessary to the issuance of the debt pursuant to the Financing Plan, as well as the final structure and details of the Notes themselves, and the lease to Capital City Properties. The maximum interest rate on any portion of the debt that is issued on a taxable basis shall not exceed 10% per annum, the m�imum interest rate on any portion of the debt that is issued on a tax-exempt basis shall not exceed 8% per annum, and the maximum interest rate on the cash flow notes issued to the Sellers shall not exceed 16% per annum, whether or not such notes are issued on a tax-eaempt or taxable basis. 1 D. 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 which are submitted to them by the President and Chief Financial O�cer of the Port Authority pursuant to the Financing Plan (to the extent the Port Authority is a party thereto). E. It is hereby found, determined and declared that: 1. The issuance of the Notes, the execution and delivery by the Port Authority of the docutnents negotiated and finalized by the President and Chief Financial Officer as described in pazagraph C, above (the "Documents"), and the performance of all covenants and agreements of the Port AuthoriTy contained in such Documents, as applicable, and of all other acts and things required under the Constitution and laws of the State of Minnesota to make the Documents and the Notes 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 "AcP'); 2. It is desirable that the Notes be issued by the Port Authority upon the general terms set forth in the staff inemorandum presented to the Boazd at this meeting, as applicable; ,� !SU&i79 ��i- le l� 3. The Notes aze not to be payable from or a charge upon any funds other than the revenues pledged to the payment thereof; no holder of the Notes shall ever have the ri�ht to compel any exercise by the City or the Port Authority of their taxing powers to pay the Notes or the interest or premium thereon, or to enforce payment thereof against any property of the City or the Port Authority except the interests of the Port Authority which have been specifically pledged to the payment of the Notes; the Notes shall not constitute a chazge, lien or encumbrance, legal or equitable, upon any properry of the City or the Port Authority eacept the interests of the Port Authority which have been specifically pledged to the payment of the Notes; the Notes shall each recite that they are issued without moral obli�ation on the part of the State or its political subdivisaons, and that the Notes, including interest thereon, are payable solely from the revenues pledged to the payment thereof; and the Notes shall not constitute a debt of the City or the Port Authority within the meaning of any constitutional or statutory limitation. 4. Based on all information available, the purchase price which has been neQotiated for the Land, including both the cash payment to be made at closing and the cash flow notes to be issued to the Sellers, represents a fair negotiated purchase price, and is the amount necessary to obtain access to the Land for purposes of construction of the Ramp, and to compensate the Sellers for loss of development rights and diminution in value of adjacent property. F. The President and other officers of the Port Authority aze authorized and directed to prepaze and fumish to the Placement Agent and Bond Counsel certified copies of proceedings and : records of the Port Authority relating to the issuance of the Notes 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 Notes and the other transactions herein contemplated as such facts appeaz from the books and records in the officers' custody and control or as otherwise known to them; and all such certified copies, certificates and �davits, including any heretofore fiunished, shall constitute representations of the Port Authority as to the truth of all statements contained therein. G. The Port Authority hereby consents to the distribution of a Private Placement Memorandum in connection with the issuance and sale of the Notes, provided such Private Placement Memorandum is finalized with the participation of the Port Authority's President, Chief Financial Officer and Bond Counsel. The proposal of the Placement Agent to place the senior and subordinate lien Notes upon the terms and conditions set forth in the staff memorandum presented to the Boazd at this meeting is hereby found and determined to be reasonable and is hereby accepted_ H. The authority to approve, execute and deliver fixture amendments to financing documents entered into by the Port Authority in connection with the issuance of the Notes and the other trazisactions herein contemplated, is hereby delegated to the President of the Port .4uthority, provided that: (a) such amendments either do not require the consent of the hoIders of the Notes or, if required, such consent has been obtained, (b) such amendments do not materially adversely affect the interests of the Port Authority as the issuer of the Notes; (c) such amendments do not "' contravene or violate any policy of the Port Authority; and (d) such amendments are acceptable in 7805479 ��1 h« form and substance to Bond Counsel. The eaecution of any instrument by the President of the Port Authority shall be conclusi��e evidence of the approval of such instruments in accordance with the terms hereof. I. No covenant, stipulation, obligation or agreement contained herein or in the Documents shall be deemed to be a covenant, stipulation, obligation or agreement of any member of the Board 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 officer eaecuting the Notes shall be liable personally on the Notes or be subject to any personal liabiiity or accountability by reason of the issuance thereof. J. Port Authoriry staff is hereby authorized to submit a request to the Saint Paul Ciry Council that it approve the issuance of the Notes, as required by Minnesota Statutes, Section 469.OS4, Subdivision I 1. Adopted: June I �, 1999 PORT AUTHORITY OF THE CITY OF SA1NT PAUL � By � �L-(J� i u� lts Chair ' ATTEST: By '' � . Its cretary 1808479 e: "' ,., �... - . _. . RESOLUTiON C1TY OF SA{NT PAUt, MINNESOTA Councii File # �� l �p�l� Green Sheet � �-l� Rzfeaed To Committce Date .171: � 1. The Port Authorny of the City of Saint Paul (the "Port Authorit�� has given its approval to the issuance of up to $24,000,000 of its taY-exempt and taxable revenue notes (the "iVotes'� to finance the costs to be incucred in connection vrith the acquisirion of land and construetion thereon of an approximately 1,000 square pazlang ramp to be located in the block bounded by Nrnnesota Street, Cedar Street, Kellogg Boulevazd and Fourth Street in the City of Sairn Paul, �Yt�nnesota (the "Project"), which is to be owned by ihe Port Authority and leased to Capital Ciry Properties, a Mmnesota non-profit corporarion; and Z. I,aws of M'uuiesota 1976, Chapter 234, provides that any issue of revenue bonds authorized by the Port Authoriry shall be issued only with the consent of the City Council ofthe City of Sairn Pau3, by resolution adopted in accordance with law; and 3. To meet the requirements of both state and federal law, the Port Authority has requested that the City Council gives its requisite approval to the issuance of the proposed Notes by the Port Authority, subject to final approval ofthe details of said Notes by the Port Authority. NOW, TE�REFORE, BE TT RESOLVED by the Councd of the City of Saint Paul that, in accordance with Laws of Mnnesota 1976, Chapter 234, the City Council hereby approves the issuance of the aforesaid Notes by the Port Authority for the purposes described in the Port Authority resolution adopted June 15, 1999, the exact details of which, including but not limited to, provisions relating to maturities, imerest rates, discount, redemption, and the issuance of additional bonds ue to be determined by the Port Authority, and the City Council hereby authorizes the issuance of any additional bonds (including refunding bonds) or other refinancing by the Port Authority found by the Port Authority to be necessary for carrying out the puiposes for which the aforedescribed Notes are issued. Adopted: June _, 1999 �� !��_ �i : •' • . _ �__ I '' i • - .� �__' - .��__ I _[�i��! I��'!! S�' ��b�� Adopted by Council: Date � \ Adoption Certified by Council S�:retary BY �\T�� Approved by Mayor. Date �fi � L � /�Q 7 BY- Requested by Department of: I� Form Appyeved by City Attomey B ��'�---- � . G��` G ia 9 p Approved by Mayo for Submission to Council BY � l . . I ! A /� rmw��am � Peter M. Rlein, Port Authority Peter M. Rlein (651) 224-5686 6/18/99 6/10/99 xweo� wn RalIN1C. ORDER AESN:N TOTAL � OF SIGNATURE PAGES GREEN SHEET r•.z*:�:;r:= r�a r.-, �l�-� l� l� �D� No cfrrCOlMCi � CIlYI1TiOP1EY ❑ GIYCIFNK ❑wwsuuasaxcesme. - ❑nuxuu.aEaviaccrc ❑ WvOrt(ORAWI� ❑ {� � (CUP ALL LOCATIONS FOR SIGNATURE) Approval of taxable and tax-exempt economic development revenue bonds in the approximate amount not to exceed $24,000,000 to finance the costs to be incurred by Capital City Properties, in the acquisition of land and construction of a 990-stall parking ramp at Eourth and Minnesota in downtown Saint Paul. PLANNING COMMISSION CIB COMMYTTEE CIVIL SERVICE COMMISSION Port Authority Has ihis personffirtn ever wwked under a wM2ct fw this departmeM? YES NO Has tTis PereoMirtn ever Eeen a city emP�oY�� YES NO Does this persoNfirm possess a sitlll not normallypossesseU by a�ry current a7y empbyee? YES NO Is ihis persoMrm a tarpetetl ventlo(! YES NO The downtown Saint Paul core does not have enough available parking, which is impairing its prosperity. Increase auailable parking in downtown Saint Paul stimulating business. None /ANTAGES IF NOT APPROVED ` ' There will be a greater parking space deficit in the downtown'Saint Paul core. AOUNTOFTRANSACTIONS �24,000,000 Taxable and Tax-exempt economic souRC� Development Revenue Bonds CAST/REVENUE BUD(iETED (CIRCLE ON� AC71VI7YNUMBER YES NO U (EXPINM �S �� 21TY OF THE dN OF SAWT PAUL , ,..., � ,,,....,ARK TOWERS FAX (651) 223-5198 TOLL FREE (800) 328-8417 345 ST. PETER STREET • ST. PAUL, MN 55102-1661 • PHONE (651) 224-5686 June 10, 1999 Mr. Brian Sweeney, Director Planning & Economic Development Department 1300 City Hall Annex 25 West Fourth Street Saint Paul, Minnesota 55102 RE: FOURTH AND MINNESOTA PARKING RAMP FINALIZATION OF THE FINANCING PLAN FOR AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $24,000,000 Dear Mr. Sweeney: We submit for your review and referral to the o�ce of the Mayor, City Council, and City Attomey's office, details pertaining to the issuance of taxable and tax-exempt economic development revenue bonds in the appro�mate amount not to exceed $24,000,000 to finance the costs to be incurred by Capital City Properties, in the acquisition of land and construction of a 990-stall parking ramp at Fourth and Minnesota in downtown Saint Pau{. 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 issuance of taxable and tax-exempt economic development revenue bonds in the appro�mate amount not to exceed $24,000,000 that will be considered by the Port Authority's Board on June 15, 1999. City Council action will be required after the Port Aulhority's Board meeting of June 15, 1999. Your expeditious handling of this matter will be appreciated. Sincerely, KRJ:sjs Attachment cc: Mayor Coleman ��r(,�� M� Kenneth R. Johnson �� President G:�DATA�PMKIBOARDI4THBRIAPI. DOC ��'t-lol g S.AINT PAUL PORT AUTHORITY i .•• . r TO: BOARD OF COMMISSIONERS DAT`E: June 10, 1999 (Special Meeting June 15, 1999) FROM: Peter M.. Klein /�/`"�� Patrick E. Dean �'/ = Laurie J. Hansen Kenneth R. Johnson SUBJECfi: FOURTH AND MINNESOTA PARKING RAMP FfNA�IZATION OF THE FINANCING PLAN FOR AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $24,000,000 RESOLUTtON NO. ACTION REQUESTED: Approval of loans in an aggregate principal amount not to exceed $24,000,000 to finance the construction of the ramp and land acquisition at Fourth and Minnesota. (Note: Due to a restructuring of the relationships among the parties, as described below, there is an opportunity to take advantage of tax exempt financing for a portion of this debt. While we will structure the financing to maximize the tax exempt portion, and the corresponding cost savings to the project, we are not able to provide a precise breakdown of the taxabie versus tax exempt portions of the financing. Our current estimates are that $14,500,000 of the debt will be a taxable first mortgage loan from a national life insurer, with a$5,550,000 tax exempt second mortgage note from a private investor and $3,000,000 in tax-exempt subordinate cash flow notes delivered to the current owners of the land in partial payment for the (and). BACKGROUND: On April 6, 1999, the Board provided preliminary approval of the business agreements for the Ramp project, subject to a financing plan. For many months, we have expiored several financing options and have concluded that the pian described in this memo provides the best sources of financing of the iand acquisition and ramp construction costs currently available. In addition, we have made changes to the business agreements. The changes made to the business agreements approved by the Board in April are: 1. Elimination of the management contract and the rea(acement of that relationship with the issuance of subordinate debt: Based, in part, upon our consultation with Ramsey County, we have concluded that subordinate debt would be an easier, cleaner, and more appropriate structure to memorialize our relationship with the current land owners, Rupp, da Mota, and Luzaich. The management contract as it was originally contemplated did not intend for Rupp, da Mota, and Luzaich to be active in the daily management of the ramp or in control of ramp operations. Fourth and Minnesota Ramp (Speciai Board Meeting June 15, 1999) June 10, 1999 Page 2 Issuing subordinate debt in partial payment for the land more accurately reflects this relationship. As before, the Port Authority wiil lease the land to Capital City Properties which will provide for the construction of the Ramp and contract directly with a parking operator to run the ramp on a daily basis. 1. Purchase of land. The land will be purchased from the current owners for a price of $3,000,000 cash at closing plus a tax-exempt subordinate cash flow note in the amount of $3,000,000 bearing interest at a rafe of 16%. Tiie interest and principal of this cash flow note would only be paid only out of 50% of the ramp nef cash flow after a(1 operafing expenses, debt service on the ftrst and second mortgages, and reserve for replacement funding. The Port Authority would receive the remaining 50% of the cash flow. Rupp, da Mota, and Luzaich wili continae to have a right of first refusal should the Port Authority slect to sell the ramp during the first 15 years. During years 16-30, Rupp, da Mota, and Luzaich will have the option of purchasing the ramp at the greater of fair market value or outstanding debt. It is understood that when the first and second mortgages are paid in full, the purchase price becomes fair market value. 2. Issuance of tax exempt debt: If the current landowners are not parties to a long term management agreement on the ramp, a poRion of the debt can be issued on a tax exempt basis. Because there wili be other contracts giving private parties rights to use the ramp, we currenfly estimate that approximately 40% of the debt issued can be tax exempt. The updated Use of Funds Summary for the project is as fo(lows: Uses of Funds: Construction Costs $13,40Q,000 Purchase of Property 6,000,000 Construction Period lnterest 1,100,000 Architecture, Design, insurance and other costs 585,000 Closing Costs 484,000 Mortgage Payment Reserve 1,481,000 Debt Issuance Sizing Contingency 950.000 7otal $24,000,000 Copies of the Term Sheets for the senior and subordinate notes are attached and the foliowing is a summary of the main points. GIDATA�PMKk4THPAT.DOC ��-b\ g Fourth and Minnesota Ramp (Special Board Meeting June 15, '1999) June 10, 1999 Page 3 TERMS OF FINANCENG: Structure: Private P4acement Fixed Rate First Mortgage Loan (taxable) Private Placement Fixed Rate Second Mortgage Note with a Balloon (tax exempt} Cash Flow Note for Property Acquisition (tax-exempt) Lender: A nationai life insurance company for the First Mortgage A private investor for the Second Mortgage Note Current Landowners for the Cash Flow Notes Borrower: Port Authority of Saint Paul Estimated Amount: $14,50�,000 — First Mortgage $ 5,550,000 — Second Mortgage $3,000,000 — Cash Fiow Notes Tax Status: Taxable — First Mortgage Tax Exempt — Second Mortgage Tax Exempt — Cash Fiow Notes Term of Loan: 21.5 years — First Mortgage 10 years (Balloon) — Second Mortgage The shorter of 30 years or Payment in Fuii — Cash Flow Notes Interest Rate: Fixed for 21.5 years at approximately 7.75% - First Mortgage Fixed for 10 years at approximately 6.375% - Second Mortgage Fixed for 30 Years at 16.00% — Casn Flow Notes Amortization: Beginning in 2001, 20 years — First Mortgage Beginning in 2�01, 20 years— Second Mortgage Depending when Cash is Available, 30 year Maximum — Cash Flow Notes Piacement Agent: Dougherty Summit Securities LLC Pfacement Fee: 150 basis points ($217,b00) on the First Mortgage 300 basis points ($166,500) on the Second Mortgage G\DATA�PMKMTHPAT. DOC Fourth and Minnesota Ramp (Special Boarc! Meeting June 15, 1999) June 1Q, 1899 Page 4 Security: First and Second Mortgages on project (land & structure) Pledge of the Port Authority Low Interest Loan Fund • The Low interest Loan Fund established to heip relocate tenants from MN Mutual . The fund balance is about $210,000 in cash and $100,000 in loans • The on(y time that the use and control of this fund changes is in the event of a default • Loan repayments would aiways be made to the Port Authority, or to a fock box • If these furtds are used, and the defaults which gave rise to their loss are cured, the Port Authority would be entitled Yo repayment, with interest from cash flow, prior to the diversion of excess cash flow • This is necessary to have some Port Authority collateral aY risk. We will attempt to limit this exposure in our negotiations with the lenders, including capping the amount and limiting the duration. Othenvise, non-recourse io Port Authority, the City, and Capital City Properties Key covenants: Debt service reserve fund from proceeds ($1,481,000) Completion Guarantee from fhe Port Auffiority* '` Mitigation of completion guarantee risk: A. Non-perFormance by contractor - Performance bond B. Unforeseen geotechnical issues - Increase in contract amount by $100,000 to cover most costs or - Insurance policy estimated at $65,000 to cover ali costs ($100,000 deductible) C. Unknown environmental matters - Insurance policy estimated at $100,000 ($100,000 deductible) D. Completion of skyways - We believe that agreements are in place and confrollabie by us to assure the completion Some areas of concem that we anficipate that you will have do not directly relate to the financing but rather to the overall projecYs strength. The foliowing is a discussion of these areas of concems. G:�DATA�PMKkITHPAT.DOC �ourth and Minnesota Ramp (Special Board Meeting June 15, 1999) June 10, 1999 Page 5 PROJECT FINANCIAL STRENGTH: c 1� lo` 1) Is there a need for a 1,000-staii ramp in the core of St. Pauf? Last year, the Gity of Saint Pau! hired SRF Gonsultants to update its 1996 parking study. The major changes considered in the 1998 report that were not in the 1996 report include the Lawson block development, expansion of the Worid Trade Center, Robert Street and Minnesota Mutuai ramps, and the construction of the new Science Museum ramp. The conclusion of the study was that there will be an 8,197-space deficit in the downtown core. In addition, this ramp is displacing 250 surFace spaces so the net increase is only 750 spaces. 2) What is the contingency in the budget for cost overruns? The $1,000,000 payment reserve from the first mortgage can be used for cost overruns. It would take priority and be replenished through the first available cash flow. Reimbursement of approximately $170,000 of Port Authority expenses can be delayed until cash flows are available, and could then be paid as a priority before the division of excess cash flow. Combined, the total availabie contingency is $1,170,000. 3) fs there enough cash flow to service the debt in the initiai stages of operations? In the first year, the projections estimate the following: Current 65% of Projected Proiection Revenues Revenue $3,100,000 $2,000,000 Operating Expenses 500,000 500,000 Debt Service - First Mortgage* 1,127,000 1,127,000 Debt Service - Second Mortgage' 354.000 354,000 Net Cash Flow $1,119,000 $ 19,000 For the first months of operations, revenues must be at least 65% of the projected amount to cover operating expenses and debt service. That equates to 550 monthly contracts of the projected 840 contract spaces. We currently know of 500 probabie contracts that have been requested without any marketing of the ramps. These contracts together with probabfe transient revenues should reach the 65°l0 of projection level. 'First year interest only payment is required. DISCLOSURE: Port Authority Commissioners, by S.E.C. rules, are obligated to disclose any risks or facts you may be aware of that wouid affect the probability of repaymeni of these loans. GIDATA1PMKk1THPAT. �OC Fourth and Minnesota Ramp (Special 8oard Meeting June 15, 1998) June 10, 9999 Page 6 SUMMARY: The debt structure will be finalized to minimize debt service and maximize cash flow distribution from the ramp. We will structure the debt within the parameters estabiished in this proposal. Any material variances wilf be broughf back to Credit Committee for approval. RECOMMENDATiON: Recommend approval of taxable and tax exempt financing in an aggregate principal amount not to exceed $24,000,000 to be structured as described in this memorandum. sjs G:IDATA�PMKWTHPAT.DOC �i�-t�� _.�:��: SATNT PAUL PORT AIITHORITY PARKII�FG RAMP �14,500,OU0 CONSTRIICTFON LOAN AND PERMANEIQT MORTGAGE LOAN SiJMNFARY OF FINANCIlYG T'ERMS OBLIGATIOl� Amount: $I4,500,000 (approximately) based upon satisfaction of Lending Criteria described herein. Praject: 'I'he Proce�cls of the Loan will be used to acquire two pazcels o£ iand located on t6e southwest and noztheast corners of the block bounded by Minnesota, Fourth, Cedar, and TCellogg Boulevard in downtown Saittt Paul, demolish the existing building nn the southwest cASiter of the site, and constiutt a new 990 space pazking facility. Loan Putpose: The Loan v+iil 5rst provide conshvction financing for the Project (the "ConstrucGon Loan"). Such construction financing will allow for periodic disbursement of I..oan proceeds to pay actual constzuction and retated costs. IJpon completion, Completion"), the Mortgage Loan, certification and occupancy of the Project ("Project Constmction Loan will be converted ta a Permanent T.oau Term: The Consfruction Loan term is anticipated to accommodace the 18-month consttuction schedule and ce.rtificatinn of completion. TJpon Project Completion, the Constnzction Loan will be converted to a 20-year kermanent Mortgage Loan (t6e "Permanent Loatt"). The total combined Loan Term will be 21.5 years. Amortizafion: The Construction Loan wiil dis6ursed from I.oan reserve. amortized pursuant to levei over a period of 20 years. require only interest payments that will be After Project Completion, principal witi be monthly payments of principaJ and interest Interect Ftate: Fixed interest nte equal to the imputed i4-year Treasuzy rate plus 255 basis points. The interest rate will be fixed for the emire 21.5-year Loan term. Based on;oday's mazket rates, the interest rate Evould equate to approximately 7_75°/a. -i- ZO'd b90b9L£Zt9 'ON XB.� 'IHIOHdAI3 1,183t19f104 Wd 8Z:Z0 IB.� 66-IZ-dBW PrepaymentPenalty: I.oan will he subject to yield maintenance or defeasance provisipns as defined by Lender. C6IIStCUCGOtI 1..08II Aisbursements: Aisbursements of Construction Loan proceeds will begn once the equity to be contributed to the Project has been expended. The disbursement process wili be administered by a title or tzusc company on behalf of the iender. The disbwsement process, which will monitor the expenditures of both equity and Loan proceeds, will allow for the direct payment to contractors and supplier £or work biiled and completed. TLe disbursemeirt process wiil utiIize engineer' reports to verify wozk, require iien waivers and employ oiher customary praccices agreed upon by all parties. Recourse: I,oan will be non-recourse with the exception of staz�dard carve-outs. Standard carve-outs include, but aze not limited to &aud, waste, and environmental indemnity. The Borrower and Generai Partner witt pravide a comple8on guaranYee. PAR3TCIPANTS $orrower: Guarantor: Placeatent Agent: The Port Authority of the City of Saint Paut (the "Authority") The Port Authority of the City of $aint Paul (the "Authorit�'} as it relases to the Recourse definitian above. Dougherty Summit Securities LLC wilt atrange for ptacement of the Loan oa a best efforts basis. SOURCES A2QD USES OF FUI�TDS Sources uf F�ends: Sources of funds available for the Project include: Construction Loan Proceeds Subordinate Mortgage Notes Total Sources ofFunds $14,500,000 S.SSO.00Q $20,OSO,OOD -Z- £0'd b9059L£Zt9 'ON Xd� 'IdIOFIEi�Ij A,��I9H�(lOQ Gld 8Z I8� 6B-iZ-AMW ��t-- Use of Fnnds: TJses of funds to complete the Project are as foliows: Conshtsdion Costs* Purchase of Land Construction Period Interest Predevelopment Costs Ramp Equipment Soil Conditions Fees �nvironmental Assessmenx Fees Aschitect Fees Port Authority Legal Hxpenses Mortgage Registration Tax Design Costs Senior Aebt Placement Fees*" Subordinate Debt Placement Fees Contingencies/Senior Reserve Subotdinate Reserve Total Uses of Funds $1i,400,000 3,000,000 1,I00,o00 165,00� IOQ,000 100,000 100,000 100,000 60,000 40,000 20,000 217,500 266,500 1,000,000 481 000 $20,050,000 �` It is assumed that Borrowar's esrimates include adequate amounts for legai expenses associated with the financin�. ** Placement Fee of ].50% on Rirst Mortgage Loan of $14,500,000 and Pfacement Fee of 3.60°Jo on Sabordinate Loan oF $5,550,000 LENAING CRITERLI The Loan will be funded upon completion, preparation or provision of the following items. Items must be provided prior to funding by par[ies and in a fozm acceptable to Placement Agent and I.ender. � Appraisal: "As built" appraisai in an amount of at least $21,350,000, or such other amount which supports a maximum Loan to 'Vaiue o£ 68°/u, from an MAI certified appraiser. Feasibility Study: Enviraumenta[; Constraction Contracts: A feasibility study projecting that debt service coverage will be at least 1.45:1 based upon operaiion of the Project as planned. Phase I environmental survey. Sworn constnxction statements, guuanteed maximum price comracts and constr�ction bonds aze requised by Lender. � 60'd 690b9C£zt9 'ON XB.� "IBIONdNI.� A,L83H9004 Wd BZ.ZO IB.� 66—IZ—I,dW Security: First mortgaga on all reat property and first lien security interests in all personal propv�rty. AssignuYent of teases and rents. Assigamem of pia.ns, specifications and construction contracts. Assignment of appraisat, environmental and all other reports. Assignment of management and option ageements_ Pled�e of reserve fund. Titie: Disbursements of constmdion funds tl�rough titie compaay according to process to be agreed upon by a11 parties. Placement Fee: Placement Agent will be paid a Placement Fee equal to 1.50% of the amount of the Loan described herein. The payment of this Placeme� Fee witl be made in accordance with the teims of tbe Engagement I.etter for Ptacement A�ent Services e�cecuted by Borrower and Fiacement Agenf. Governing Lsw: Loan wilI be governed by the Iaws oPthe State ofMtnnesota. Covenants: Loan wilt inclucie covenants reIating to debt seroiee coverage, key financial ratios, and management continnity to be agreed upon hy aii pazties. Reporting Reqnirements: Representation and Warrandes: Additional Terms And Conditions: Borrower will be re�uired w subnut periodic operating statements and other financial information to be agreed upon by all parties. ReasonabSe and customazy for Loans ofthis type, inctuding but not limited to: ettfarceability of Loan documentadoa, accuracy of financial srate- ments, corporate power end suthority, no material adverse cha.nge, no material litigatioa, no envuonmentai issues, no de£au1t, etc. 1, 2, � 5, � 7. � Guaranteed maximuzn price conbact for construction of the groject. Completion guarantee from the Authority. A Loan reserve fund of $1,000,000 to be funded at project complerion_ A separate repair and replacement reserve tq he funded at 2% of sross revenues annually fsom project cash flow beginning one year after compietion of the project. The Authority wiil ma[�e the Iender an additiorial insured party on the environmenta! remediadon policy being purchased in connection with EEFe conslruclion of the project. The Auihority will also assign to lender all ather contracts designed to mitigate eost ovemtn risks. Authority to maintain ownershig and property tax exemption during the term of the Loan. Subject to Lender approving loan structvre allowing for continuation of property tar� exemption in the event of a defauti or foreclosure. AuYhoriYy will set parking raYes at a level necessary to cover all expenses and deht sexvlce. Review and acceptance by Lender of i�To Ackion Letter from the 3tate of NGnnesota regazding outstanding environmental issues on the subject site. 50'd 690b9�EZt9 'ON Xd� lHIONdNI� A.L83H9110Q Wd 6Z.Z0 I2I3 66-iZ-A�W ag ,�� , �,,: : SAINT PAUL PORT AUTHORTTY PARKIlVG RAMP $5,550,000 TAX-EXEMPT 5UBORDINATE MORTGAGE NOTE SUMMARY OF �'IlVANCING TERMS OBLIGATION Amount: $5,550,000 (approximately) based upon satisfaction of Lending Criteria described herein. Project: The Proceeds of the Loan will be used to acquire two pazcels of ]and ]ocated on the southwest and northeast corners of the block bounded by Minnesota, Fourth, Cedaz, and Kellogg Boulevard in downtown Saint Paul, demolish the existing building on the southwest corner of the site, and construct a new 990 space parking facility. Loan Purpose: The Loan will first provide $5,550,000 in Subordinate Mortgage Note financing (the "Subordinate Notes") for the Project in conjunction with a $14,500,000 loan arranged by Dougherty (the "Construction Loan" and "Permanent Mortgage Loan" or collectively referred to a"First Mortgage Loan") as described in Exhibit "A". Note Term: Amortization: Interest R zte: Prepayment Penalty: 1� Yeazs (balloon) 20 Years (straight-line) Fixed interest rates in serial and term bonds. Approacimately 6375% based on current market rates. Notes aze cailable in the event of a sale of the Project at any time on or after January 1, 2005. Recourse: Loan wili be non-recourse with the exception of standard carve-outs. Standard carve-outs include, hut are not limited to fraud, waste, and environmental indemnity. The Borrower and General Partner will provide a completion guarantee. 1 PARTICIPANTS Borrower: Guarantor: Piacemenf Agent: The Port Authority of the City of Saint Paul (the "Authority") The Port Authority of the City of Saint Paul (the "Authority") as it retates to the Recourse definition above. Dougherty Summit Securities LLC wi21 arrange for placement of the Notes on a best efforts basis. SOURCES AND USES OF FUNDS Sources of Funds: Use of Funds: Sources of funds available for the Project include: Subordinate Notes Proceeds Total Sources ofFunds $5,550,000 $5,550,000 Uses of funds to complete the Project are as follows: Construction Costs Subordinate Note Reserve Placement Fee* Legal Fees/Additional Contingency* $4,958,000 481,000 56,000 55.000 Total Uses of Funds $5,550,000 * Fees and COI in excess of 2% of the Note amount will be paid from the Senior Mortgage I.oan. (See E�ibit A.) LENDING CRITERIA The Loan witl be fimded upon comptetion, preparation or provision of the following items. Items must be provided prior to funding by parties and in a form acceptable to Placement Agent and Lender. Appraisai: "As built" appraisal in an amount of at least $21,350,000, or such other amount which supports a maximum Loan to Value of 68%, (based on a $14,500,000 First Mortgage Loan) from an MAI certified appraiser. Feasibility Study: A feasibility study projecting that First Mortgage I.oan (estimated to be $I4,500,000) debt service coverage will be at Ieast 1.45:1 based upon operation of the Project as pianned. Environmeutal: Phase I environcnental survey. �G-�� Construction Cantracts: Swom construction statements, guaranteed ma�mum price contracts and construction bonds are required by Lender, Securit}: Second mongage on att reat property and second lien security interests in all personal properry. Assignment of leases and rents. Assignment of plans, specifications and construction contracts. Assignment of appraisal, environmental and all other reports. Assignment of mana�ement and option a�eements. Pledge of reserve fund. Placement Fee: Placement Agent will be paid a Placement Fee equal to 3.00% of the amount of the Subordinate Notes described herein. The payment of this Placement Fee will be made in accordance with the terms of the Engagement Letter for Placement A�eni Services executed by Boirower and Placement Agent. Governing Law: The Subordinate Notes wil] be �overned by the laws of the State of Minnesota. Covenants: The Subordinate Notes will include covenants relating to debt service coverage, key financial ratios, and management continuity to be agreed upon by all parties. Reporting Requirements: Representation and Warranties: Additionai Terms And Conditions: Borrower will be required to submit periodic operating statements and other financial information to be agreed upon by ail parties. Reasonable and customary for Financings of this type, including but not limited to: enforceability of Financings documentation, Opinion of Bond Counsel on tax-exemption, accuracy of financiat statements, corporate power and authority, no material adverse change, no material litigation, no environmental issues, no default, etc. 1. Subject to Dougherty arranging First Mort�age Loan and the loan terms as outlined in Exhibit "A". 2. Subject to approval of Subordinate Notes by First Mortgage Lender and execution of appropriate Intercreditor Agreements. 3. Subject to full undenvriting due dilieence by Dougherty. 3 �� Resolution No. 3781 .' RESOLUTION OR THE PO12T AUTHORITX OF TIiE CITY OF SAIl\T PAUL WHEREAS: I. On Aprii 6, 1999 the Port Authority of the City of Saint Paul (the "Port Authoriry") adopted its Resolution No. 3771 approving the execution by the Port Authority of a Purchase Agreement relating to properiy in the block bounded by Minnesota Street, Cedar Street, Kellogg Boulevazd and 4th Street (the "Land") for the purpose of leasing the same to Capital Ciry Properties and providing for the construction thereon by Capital Ciry Properties of approximately 990 caz pazking ramp (the "Ratnp"}. 2. The current owners of the Land aze CCV-1, LLC and Metro Real Estate Services L.L.C., both Minnesota limited liability companies (collectively the "Sellers"). 3. The execution of the documents approved by the Port Authority in Resolution No. 3771 were specifically stated to be contingent on the development and approval of a financing plan for the acquisition of the Land and the construction of the Ramp. 4. It has now been proposed that the Ramp be financed through the issuance of :§ approximately $24,000,000 of ta�:able and tax-exempt debt as more fully provided in the staff memorandum presented to the Board at this meeting (the "Financing Plan"). 5. The Credit Committee has reviewed the Financing Plan, and has recommended approval. 6. Pursuant to notice published in advance as required by state law, a public hearing was held at a special meeting before the Port Authority on the proposal to finance the Project through the issuance of revenue bonds by the Port Authority in the approximate principal amount of $24,000,000, at which heazing all those who desired to speak were heard, and in connection with which written comments were taken in advance. NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF COMMISSIONERS OF THE PORT AUTHORITY OF THE CITY OF SAINT PAUL, AS FOLLOWS: A. On the basis of information available to the Port Authority it appeazs, and the Port Authority hereby finds, that: the Ramp constitutes properties, used or useful in connection with one or more revenue producing enterprises engaged in any.business within the meaning of Minnesota Statutes, Section 469.152 to 469.165 (the "Act"); the Ramp furthers 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 Paui for the Fort Authority to participate in the orvnership and financing of the Ramp, �y because the costs and expenses of private ownership and conventional financing would make the construction and successful operation of the Ramp unlikely. 7805479 �S �� B. For the purpose of fmancing the costs of acquiring the Land and constructing the Ramp, and paying certain costs of issuance and other ehpenses in connection with the issuance of the debt as contemplated by the Financing Plan, the Port Authority hereby authorizes the issuance, sale and delivery of tax-exempt and taxable notes in an aggregate principal amount not to exceed approxunately $24,000,000 {the "Notes'�, and the loan of the proceeds of the Senior and Subordinate Notes to Capital City Properties to finance the cost of the construction of the Ramp. The Notes shall beaz interest at such rates, shall be dated, shall mature, shall be subject to prepayment prior to maturity, and shall be in such form and have such other details and provisions as may be prescribed in the docutnenu prepared in connection with the issuance of the Notes. C. The President and the Chief Financial Officer of the Port Authority aze hereby authorized to work w2th bond counsel and Dougherty Sununit Securities LLC, as the placement agent for the senior and subordinate lien Notes to be issued pursuant to the Financing Plan (the "Placement AgenP'), with the Sellers with respect to the cash flow notes to be issued to the Sellers pursuant to the financing plan, and as part of the purchase price for the Land, and with Capital Ciry Properties, to negotiate and finalize the documents, certificates and any other matters necessary to the issuance of the debt pursuant to the Financing Plan, as well as the final structure and details of the Notes themselves, and the lease to Capital City Properties. The maximum interest rate on any portion of the debt that is issued on a taxable basis shall not exceed 10% per annum, the m�imum interest rate on any portion of the debt that is issued on a tax-exempt basis shall not exceed 8% per annum, and the maximum interest rate on the cash flow notes issued to the Sellers shall not exceed 16% per annum, whether or not such notes are issued on a tax-eaempt or taxable basis. 1 D. 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 which are submitted to them by the President and Chief Financial O�cer of the Port Authority pursuant to the Financing Plan (to the extent the Port Authority is a party thereto). E. It is hereby found, determined and declared that: 1. The issuance of the Notes, the execution and delivery by the Port Authority of the docutnents negotiated and finalized by the President and Chief Financial Officer as described in pazagraph C, above (the "Documents"), and the performance of all covenants and agreements of the Port AuthoriTy contained in such Documents, as applicable, and of all other acts and things required under the Constitution and laws of the State of Minnesota to make the Documents and the Notes 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 "AcP'); 2. It is desirable that the Notes be issued by the Port Authority upon the general terms set forth in the staff inemorandum presented to the Boazd at this meeting, as applicable; ,� !SU&i79 ��i- le l� 3. The Notes aze not to be payable from or a charge upon any funds other than the revenues pledged to the payment thereof; no holder of the Notes shall ever have the ri�ht to compel any exercise by the City or the Port Authority of their taxing powers to pay the Notes or the interest or premium thereon, or to enforce payment thereof against any property of the City or the Port Authority except the interests of the Port Authority which have been specifically pledged to the payment of the Notes; the Notes shall not constitute a chazge, lien or encumbrance, legal or equitable, upon any properry of the City or the Port Authority eacept the interests of the Port Authority which have been specifically pledged to the payment of the Notes; the Notes shall each recite that they are issued without moral obli�ation on the part of the State or its political subdivisaons, and that the Notes, including interest thereon, are payable solely from the revenues pledged to the payment thereof; and the Notes shall not constitute a debt of the City or the Port Authority within the meaning of any constitutional or statutory limitation. 4. Based on all information available, the purchase price which has been neQotiated for the Land, including both the cash payment to be made at closing and the cash flow notes to be issued to the Sellers, represents a fair negotiated purchase price, and is the amount necessary to obtain access to the Land for purposes of construction of the Ramp, and to compensate the Sellers for loss of development rights and diminution in value of adjacent property. F. The President and other officers of the Port Authority aze authorized and directed to prepaze and fumish to the Placement Agent and Bond Counsel certified copies of proceedings and : records of the Port Authority relating to the issuance of the Notes 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 Notes and the other transactions herein contemplated as such facts appeaz from the books and records in the officers' custody and control or as otherwise known to them; and all such certified copies, certificates and �davits, including any heretofore fiunished, shall constitute representations of the Port Authority as to the truth of all statements contained therein. G. The Port Authority hereby consents to the distribution of a Private Placement Memorandum in connection with the issuance and sale of the Notes, provided such Private Placement Memorandum is finalized with the participation of the Port Authority's President, Chief Financial Officer and Bond Counsel. The proposal of the Placement Agent to place the senior and subordinate lien Notes upon the terms and conditions set forth in the staff memorandum presented to the Boazd at this meeting is hereby found and determined to be reasonable and is hereby accepted_ H. The authority to approve, execute and deliver fixture amendments to financing documents entered into by the Port Authority in connection with the issuance of the Notes and the other trazisactions herein contemplated, is hereby delegated to the President of the Port .4uthority, provided that: (a) such amendments either do not require the consent of the hoIders of the Notes or, if required, such consent has been obtained, (b) such amendments do not materially adversely affect the interests of the Port Authority as the issuer of the Notes; (c) such amendments do not "' contravene or violate any policy of the Port Authority; and (d) such amendments are acceptable in 7805479 ��1 h« form and substance to Bond Counsel. The eaecution of any instrument by the President of the Port Authority shall be conclusi��e evidence of the approval of such instruments in accordance with the terms hereof. I. No covenant, stipulation, obligation or agreement contained herein or in the Documents shall be deemed to be a covenant, stipulation, obligation or agreement of any member of the Board 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 officer eaecuting the Notes shall be liable personally on the Notes or be subject to any personal liabiiity or accountability by reason of the issuance thereof. J. Port Authoriry staff is hereby authorized to submit a request to the Saint Paul Ciry Council that it approve the issuance of the Notes, as required by Minnesota Statutes, Section 469.OS4, Subdivision I 1. Adopted: June I �, 1999 PORT AUTHORITY OF THE CITY OF SA1NT PAUL � By � �L-(J� i u� lts Chair ' ATTEST: By '' � . Its cretary 1808479 e: "' ,., �... - . _. . RESOLUTiON C1TY OF SA{NT PAUt, MINNESOTA Councii File # �� l �p�l� Green Sheet � �-l� Rzfeaed To Committce Date .171: � 1. The Port Authorny of the City of Saint Paul (the "Port Authorit�� has given its approval to the issuance of up to $24,000,000 of its taY-exempt and taxable revenue notes (the "iVotes'� to finance the costs to be incucred in connection vrith the acquisirion of land and construetion thereon of an approximately 1,000 square pazlang ramp to be located in the block bounded by Nrnnesota Street, Cedar Street, Kellogg Boulevazd and Fourth Street in the City of Sairn Paul, �Yt�nnesota (the "Project"), which is to be owned by ihe Port Authority and leased to Capital Ciry Properties, a Mmnesota non-profit corporarion; and Z. I,aws of M'uuiesota 1976, Chapter 234, provides that any issue of revenue bonds authorized by the Port Authoriry shall be issued only with the consent of the City Council ofthe City of Sairn Pau3, by resolution adopted in accordance with law; and 3. To meet the requirements of both state and federal law, the Port Authority has requested that the City Council gives its requisite approval to the issuance of the proposed Notes by the Port Authority, subject to final approval ofthe details of said Notes by the Port Authority. NOW, TE�REFORE, BE TT RESOLVED by the Councd of the City of Saint Paul that, in accordance with Laws of Mnnesota 1976, Chapter 234, the City Council hereby approves the issuance of the aforesaid Notes by the Port Authority for the purposes described in the Port Authority resolution adopted June 15, 1999, the exact details of which, including but not limited to, provisions relating to maturities, imerest rates, discount, redemption, and the issuance of additional bonds ue to be determined by the Port Authority, and the City Council hereby authorizes the issuance of any additional bonds (including refunding bonds) or other refinancing by the Port Authority found by the Port Authority to be necessary for carrying out the puiposes for which the aforedescribed Notes are issued. Adopted: June _, 1999 �� !��_ �i : •' • . _ �__ I '' i • - .� �__' - .��__ I _[�i��! I��'!! S�' ��b�� Adopted by Council: Date � \ Adoption Certified by Council S�:retary BY �\T�-�' 1� � � Approved by Mayor. Date �fi � L � /�Q 7 BY- Requested by Department of: I� Form Appyeved by City Attomey B ��'�---- � . G��` G ia 9 p Approved by Mayo for Submission to Council BY � l . . I ! A /� rmw��am � Peter M. Rlein, Port Authority Peter M. Rlein (651) 224-5686 6/18/99 6/10/99 xweo� wn RalIN1C. ORDER AESN:N TOTAL � OF SIGNATURE PAGES GREEN SHEET r•.z*:�:;r:= r�a r.-, �l�-� l� l� �D� No cfrrCOlMCi � CIlYI1TiOP1EY ❑ GIYCIFNK ❑wwsuuasaxcesme. - ❑nuxuu.aEaviaccrc ❑ WvOrt(ORAWI� ❑ {� � (CUP ALL LOCATIONS FOR SIGNATURE) Approval of taxable and tax-exempt economic development revenue bonds in the approximate amount not to exceed $24,000,000 to finance the costs to be incurred by Capital City Properties, in the acquisition of land and construction of a 990-stall parking ramp at Eourth and Minnesota in downtown Saint Paul. PLANNING COMMISSION CIB COMMYTTEE CIVIL SERVICE COMMISSION Port Authority Has ihis personffirtn ever wwked under a wM2ct fw this departmeM? YES NO Has tTis PereoMirtn ever Eeen a city emP�oY�� YES NO Does this persoNfirm possess a sitlll not normallypossesseU by a�ry current a7y empbyee? YES NO Is ihis persoMrm a tarpetetl ventlo(! YES NO The downtown Saint Paul core does not have enough available parking, which is impairing its prosperity. Increase auailable parking in downtown Saint Paul stimulating business. None /ANTAGES IF NOT APPROVED ` ' There will be a greater parking space deficit in the downtown'Saint Paul core. AOUNTOFTRANSACTIONS �24,000,000 Taxable and Tax-exempt economic souRC� Development Revenue Bonds CAST/REVENUE BUD(iETED (CIRCLE ON� AC71VI7YNUMBER YES NO U (EXPINM �S �� 21TY OF THE dN OF SAWT PAUL , ,..., � ,,,....,ARK TOWERS FAX (651) 223-5198 TOLL FREE (800) 328-8417 345 ST. PETER STREET • ST. PAUL, MN 55102-1661 • PHONE (651) 224-5686 June 10, 1999 Mr. Brian Sweeney, Director Planning & Economic Development Department 1300 City Hall Annex 25 West Fourth Street Saint Paul, Minnesota 55102 RE: FOURTH AND MINNESOTA PARKING RAMP FINALIZATION OF THE FINANCING PLAN FOR AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $24,000,000 Dear Mr. Sweeney: We submit for your review and referral to the o�ce of the Mayor, City Council, and City Attomey's office, details pertaining to the issuance of taxable and tax-exempt economic development revenue bonds in the appro�mate amount not to exceed $24,000,000 to finance the costs to be incurred by Capital City Properties, in the acquisition of land and construction of a 990-stall parking ramp at Fourth and Minnesota in downtown Saint Pau{. 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 issuance of taxable and tax-exempt economic development revenue bonds in the appro�mate amount not to exceed $24,000,000 that will be considered by the Port Authority's Board on June 15, 1999. City Council action will be required after the Port Aulhority's Board meeting of June 15, 1999. Your expeditious handling of this matter will be appreciated. Sincerely, KRJ:sjs Attachment cc: Mayor Coleman ��r(,�� M� Kenneth R. Johnson �� President G:�DATA�PMKIBOARDI4THBRIAPI. DOC ��'t-lol g S.AINT PAUL PORT AUTHORITY i .•• . r TO: BOARD OF COMMISSIONERS DAT`E: June 10, 1999 (Special Meeting June 15, 1999) FROM: Peter M.. Klein /�/`"�� Patrick E. Dean �'/ = Laurie J. Hansen Kenneth R. Johnson SUBJECfi: FOURTH AND MINNESOTA PARKING RAMP FfNA�IZATION OF THE FINANCING PLAN FOR AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $24,000,000 RESOLUTtON NO. ACTION REQUESTED: Approval of loans in an aggregate principal amount not to exceed $24,000,000 to finance the construction of the ramp and land acquisition at Fourth and Minnesota. (Note: Due to a restructuring of the relationships among the parties, as described below, there is an opportunity to take advantage of tax exempt financing for a portion of this debt. While we will structure the financing to maximize the tax exempt portion, and the corresponding cost savings to the project, we are not able to provide a precise breakdown of the taxabie versus tax exempt portions of the financing. Our current estimates are that $14,500,000 of the debt will be a taxable first mortgage loan from a national life insurer, with a$5,550,000 tax exempt second mortgage note from a private investor and $3,000,000 in tax-exempt subordinate cash flow notes delivered to the current owners of the land in partial payment for the (and). BACKGROUND: On April 6, 1999, the Board provided preliminary approval of the business agreements for the Ramp project, subject to a financing plan. For many months, we have expiored several financing options and have concluded that the pian described in this memo provides the best sources of financing of the iand acquisition and ramp construction costs currently available. In addition, we have made changes to the business agreements. The changes made to the business agreements approved by the Board in April are: 1. Elimination of the management contract and the rea(acement of that relationship with the issuance of subordinate debt: Based, in part, upon our consultation with Ramsey County, we have concluded that subordinate debt would be an easier, cleaner, and more appropriate structure to memorialize our relationship with the current land owners, Rupp, da Mota, and Luzaich. The management contract as it was originally contemplated did not intend for Rupp, da Mota, and Luzaich to be active in the daily management of the ramp or in control of ramp operations. Fourth and Minnesota Ramp (Speciai Board Meeting June 15, 1999) June 10, 1999 Page 2 Issuing subordinate debt in partial payment for the land more accurately reflects this relationship. As before, the Port Authority wiil lease the land to Capital City Properties which will provide for the construction of the Ramp and contract directly with a parking operator to run the ramp on a daily basis. 1. Purchase of land. The land will be purchased from the current owners for a price of $3,000,000 cash at closing plus a tax-exempt subordinate cash flow note in the amount of $3,000,000 bearing interest at a rafe of 16%. Tiie interest and principal of this cash flow note would only be paid only out of 50% of the ramp nef cash flow after a(1 operafing expenses, debt service on the ftrst and second mortgages, and reserve for replacement funding. The Port Authority would receive the remaining 50% of the cash flow. Rupp, da Mota, and Luzaich wili continae to have a right of first refusal should the Port Authority slect to sell the ramp during the first 15 years. During years 16-30, Rupp, da Mota, and Luzaich will have the option of purchasing the ramp at the greater of fair market value or outstanding debt. It is understood that when the first and second mortgages are paid in full, the purchase price becomes fair market value. 2. Issuance of tax exempt debt: If the current landowners are not parties to a long term management agreement on the ramp, a poRion of the debt can be issued on a tax exempt basis. Because there wili be other contracts giving private parties rights to use the ramp, we currenfly estimate that approximately 40% of the debt issued can be tax exempt. The updated Use of Funds Summary for the project is as fo(lows: Uses of Funds: Construction Costs $13,40Q,000 Purchase of Property 6,000,000 Construction Period lnterest 1,100,000 Architecture, Design, insurance and other costs 585,000 Closing Costs 484,000 Mortgage Payment Reserve 1,481,000 Debt Issuance Sizing Contingency 950.000 7otal $24,000,000 Copies of the Term Sheets for the senior and subordinate notes are attached and the foliowing is a summary of the main points. GIDATA�PMKk4THPAT.DOC ��-b\ g Fourth and Minnesota Ramp (Special Board Meeting June 15, '1999) June 10, 1999 Page 3 TERMS OF FINANCENG: Structure: Private P4acement Fixed Rate First Mortgage Loan (taxable) Private Placement Fixed Rate Second Mortgage Note with a Balloon (tax exempt} Cash Flow Note for Property Acquisition (tax-exempt) Lender: A nationai life insurance company for the First Mortgage A private investor for the Second Mortgage Note Current Landowners for the Cash Flow Notes Borrower: Port Authority of Saint Paul Estimated Amount: $14,50�,000 — First Mortgage $ 5,550,000 — Second Mortgage $3,000,000 — Cash Fiow Notes Tax Status: Taxable — First Mortgage Tax Exempt — Second Mortgage Tax Exempt — Cash Fiow Notes Term of Loan: 21.5 years — First Mortgage 10 years (Balloon) — Second Mortgage The shorter of 30 years or Payment in Fuii — Cash Flow Notes Interest Rate: Fixed for 21.5 years at approximately 7.75% - First Mortgage Fixed for 10 years at approximately 6.375% - Second Mortgage Fixed for 30 Years at 16.00% — Casn Flow Notes Amortization: Beginning in 2001, 20 years — First Mortgage Beginning in 2�01, 20 years— Second Mortgage Depending when Cash is Available, 30 year Maximum — Cash Flow Notes Piacement Agent: Dougherty Summit Securities LLC Pfacement Fee: 150 basis points ($217,b00) on the First Mortgage 300 basis points ($166,500) on the Second Mortgage G\DATA�PMKMTHPAT. DOC Fourth and Minnesota Ramp (Special Boarc! Meeting June 15, 1999) June 1Q, 1899 Page 4 Security: First and Second Mortgages on project (land & structure) Pledge of the Port Authority Low Interest Loan Fund • The Low interest Loan Fund established to heip relocate tenants from MN Mutual . The fund balance is about $210,000 in cash and $100,000 in loans • The on(y time that the use and control of this fund changes is in the event of a default • Loan repayments would aiways be made to the Port Authority, or to a fock box • If these furtds are used, and the defaults which gave rise to their loss are cured, the Port Authority would be entitled Yo repayment, with interest from cash flow, prior to the diversion of excess cash flow • This is necessary to have some Port Authority collateral aY risk. We will attempt to limit this exposure in our negotiations with the lenders, including capping the amount and limiting the duration. Othenvise, non-recourse io Port Authority, the City, and Capital City Properties Key covenants: Debt service reserve fund from proceeds ($1,481,000) Completion Guarantee from fhe Port Auffiority* '` Mitigation of completion guarantee risk: A. Non-perFormance by contractor - Performance bond B. Unforeseen geotechnical issues - Increase in contract amount by $100,000 to cover most costs or - Insurance policy estimated at $65,000 to cover ali costs ($100,000 deductible) C. Unknown environmental matters - Insurance policy estimated at $100,000 ($100,000 deductible) D. Completion of skyways - We believe that agreements are in place and confrollabie by us to assure the completion Some areas of concem that we anficipate that you will have do not directly relate to the financing but rather to the overall projecYs strength. The foliowing is a discussion of these areas of concems. G:�DATA�PMKkITHPAT.DOC �ourth and Minnesota Ramp (Special Board Meeting June 15, 1999) June 10, 1999 Page 5 PROJECT FINANCIAL STRENGTH: c 1� lo` 1) Is there a need for a 1,000-staii ramp in the core of St. Pauf? Last year, the Gity of Saint Pau! hired SRF Gonsultants to update its 1996 parking study. The major changes considered in the 1998 report that were not in the 1996 report include the Lawson block development, expansion of the Worid Trade Center, Robert Street and Minnesota Mutuai ramps, and the construction of the new Science Museum ramp. The conclusion of the study was that there will be an 8,197-space deficit in the downtown core. In addition, this ramp is displacing 250 surFace spaces so the net increase is only 750 spaces. 2) What is the contingency in the budget for cost overruns? The $1,000,000 payment reserve from the first mortgage can be used for cost overruns. It would take priority and be replenished through the first available cash flow. Reimbursement of approximately $170,000 of Port Authority expenses can be delayed until cash flows are available, and could then be paid as a priority before the division of excess cash flow. Combined, the total availabie contingency is $1,170,000. 3) fs there enough cash flow to service the debt in the initiai stages of operations? In the first year, the projections estimate the following: Current 65% of Projected Proiection Revenues Revenue $3,100,000 $2,000,000 Operating Expenses 500,000 500,000 Debt Service - First Mortgage* 1,127,000 1,127,000 Debt Service - Second Mortgage' 354.000 354,000 Net Cash Flow $1,119,000 $ 19,000 For the first months of operations, revenues must be at least 65% of the projected amount to cover operating expenses and debt service. That equates to 550 monthly contracts of the projected 840 contract spaces. We currently know of 500 probabie contracts that have been requested without any marketing of the ramps. These contracts together with probabfe transient revenues should reach the 65°l0 of projection level. 'First year interest only payment is required. DISCLOSURE: Port Authority Commissioners, by S.E.C. rules, are obligated to disclose any risks or facts you may be aware of that wouid affect the probability of repaymeni of these loans. GIDATA1PMKk1THPAT. �OC Fourth and Minnesota Ramp (Special 8oard Meeting June 15, 1998) June 10, 9999 Page 6 SUMMARY: The debt structure will be finalized to minimize debt service and maximize cash flow distribution from the ramp. We will structure the debt within the parameters estabiished in this proposal. Any material variances wilf be broughf back to Credit Committee for approval. RECOMMENDATiON: Recommend approval of taxable and tax exempt financing in an aggregate principal amount not to exceed $24,000,000 to be structured as described in this memorandum. sjs G:IDATA�PMKWTHPAT.DOC �i�-t�� _.�:��: SATNT PAUL PORT AIITHORITY PARKII�FG RAMP �14,500,OU0 CONSTRIICTFON LOAN AND PERMANEIQT MORTGAGE LOAN SiJMNFARY OF FINANCIlYG T'ERMS OBLIGATIOl� Amount: $I4,500,000 (approximately) based upon satisfaction of Lending Criteria described herein. Praject: 'I'he Proce�cls of the Loan will be used to acquire two pazcels o£ iand located on t6e southwest and noztheast corners of the block bounded by Minnesota, Fourth, Cedar, and TCellogg Boulevard in downtown Saittt Paul, demolish the existing building nn the southwest cASiter of the site, and constiutt a new 990 space pazking facility. Loan Putpose: The Loan v+iil 5rst provide conshvction financing for the Project (the "ConstrucGon Loan"). Such construction financing will allow for periodic disbursement of I..oan proceeds to pay actual constzuction and retated costs. IJpon completion, Completion"), the Mortgage Loan, certification and occupancy of the Project ("Project Constmction Loan will be converted ta a Permanent T.oau Term: The Consfruction Loan term is anticipated to accommodace the 18-month consttuction schedule and ce.rtificatinn of completion. TJpon Project Completion, the Constnzction Loan will be converted to a 20-year kermanent Mortgage Loan (t6e "Permanent Loatt"). The total combined Loan Term will be 21.5 years. Amortizafion: The Construction Loan wiil dis6ursed from I.oan reserve. amortized pursuant to levei over a period of 20 years. require only interest payments that will be After Project Completion, principal witi be monthly payments of principaJ and interest Interect Ftate: Fixed interest nte equal to the imputed i4-year Treasuzy rate plus 255 basis points. The interest rate will be fixed for the emire 21.5-year Loan term. Based on;oday's mazket rates, the interest rate Evould equate to approximately 7_75°/a. -i- ZO'd b90b9L£Zt9 'ON XB.� 'IHIOHdAI3 1,183t19f104 Wd 8Z:Z0 IB.� 66-IZ-dBW PrepaymentPenalty: I.oan will he subject to yield maintenance or defeasance provisipns as defined by Lender. C6IIStCUCGOtI 1..08II Aisbursements: Aisbursements of Construction Loan proceeds will begn once the equity to be contributed to the Project has been expended. The disbursement process wili be administered by a title or tzusc company on behalf of the iender. The disbwsement process, which will monitor the expenditures of both equity and Loan proceeds, will allow for the direct payment to contractors and supplier £or work biiled and completed. TLe disbursemeirt process wiil utiIize engineer' reports to verify wozk, require iien waivers and employ oiher customary praccices agreed upon by all parties. Recourse: I,oan will be non-recourse with the exception of staz�dard carve-outs. Standard carve-outs include, but aze not limited to &aud, waste, and environmental indemnity. The Borrower and Generai Partner witt pravide a comple8on guaranYee. PAR3TCIPANTS $orrower: Guarantor: Placeatent Agent: The Port Authority of the City of Saint Paut (the "Authority") The Port Authority of the City of $aint Paul (the "Authorit�'} as it relases to the Recourse definitian above. Dougherty Summit Securities LLC wilt atrange for ptacement of the Loan oa a best efforts basis. SOURCES A2QD USES OF FUI�TDS Sources uf F�ends: Sources of funds available for the Project include: Construction Loan Proceeds Subordinate Mortgage Notes Total Sources ofFunds $14,500,000 S.SSO.00Q $20,OSO,OOD -Z- £0'd b9059L£Zt9 'ON Xd� 'IdIOFIEi�Ij A,��I9H�(lOQ Gld 8Z I8� 6B-iZ-AMW ��t-- Use of Fnnds: TJses of funds to complete the Project are as foliows: Conshtsdion Costs* Purchase of Land Construction Period Interest Predevelopment Costs Ramp Equipment Soil Conditions Fees �nvironmental Assessmenx Fees Aschitect Fees Port Authority Legal Hxpenses Mortgage Registration Tax Design Costs Senior Aebt Placement Fees*" Subordinate Debt Placement Fees Contingencies/Senior Reserve Subotdinate Reserve Total Uses of Funds $1i,400,000 3,000,000 1,I00,o00 165,00� IOQ,000 100,000 100,000 100,000 60,000 40,000 20,000 217,500 266,500 1,000,000 481 000 $20,050,000 �` It is assumed that Borrowar's esrimates include adequate amounts for legai expenses associated with the financin�. ** Placement Fee of ].50% on Rirst Mortgage Loan of $14,500,000 and Pfacement Fee of 3.60°Jo on Sabordinate Loan oF $5,550,000 LENAING CRITERLI The Loan will be funded upon completion, preparation or provision of the following items. Items must be provided prior to funding by par[ies and in a fozm acceptable to Placement Agent and I.ender. � Appraisal: "As built" appraisai in an amount of at least $21,350,000, or such other amount which supports a maximum Loan to 'Vaiue o£ 68°/u, from an MAI certified appraiser. Feasibility Study: Enviraumenta[; Constraction Contracts: A feasibility study projecting that debt service coverage will be at least 1.45:1 based upon operaiion of the Project as planned. Phase I environmental survey. Sworn constnxction statements, guuanteed maximum price comracts and constr�ction bonds aze requised by Lender. � 60'd 690b9C£zt9 'ON XB.� "IBIONdNI.� A,L83H9004 Wd BZ.ZO IB.� 66—IZ—I,dW Security: First mortgaga on all reat property and first lien security interests in all personal propv�rty. AssignuYent of teases and rents. Assigamem of pia.ns, specifications and construction contracts. Assignment of appraisat, environmental and all other reports. Assignment of management and option ageements_ Pled�e of reserve fund. Titie: Disbursements of constmdion funds tl�rough titie compaay according to process to be agreed upon by a11 parties. Placement Fee: Placement Agent will be paid a Placement Fee equal to 1.50% of the amount of the Loan described herein. The payment of this Placeme� Fee witl be made in accordance with the teims of tbe Engagement I.etter for Ptacement A�ent Services e�cecuted by Borrower and Fiacement Agenf. Governing Lsw: Loan wilI be governed by the Iaws oPthe State ofMtnnesota. Covenants: Loan wilt inclucie covenants reIating to debt seroiee coverage, key financial ratios, and management continnity to be agreed upon hy aii pazties. Reporting Reqnirements: Representation and Warrandes: Additional Terms And Conditions: Borrower will be re�uired w subnut periodic operating statements and other financial information to be agreed upon by all parties. ReasonabSe and customazy for Loans ofthis type, inctuding but not limited to: ettfarceability of Loan documentadoa, accuracy of financial srate- ments, corporate power end suthority, no material adverse cha.nge, no material litigatioa, no envuonmentai issues, no de£au1t, etc. 1, 2, � 5, � 7. � Guaranteed maximuzn price conbact for construction of the groject. Completion guarantee from the Authority. A Loan reserve fund of $1,000,000 to be funded at project complerion_ A separate repair and replacement reserve tq he funded at 2% of sross revenues annually fsom project cash flow beginning one year after compietion of the project. The Authority wiil ma[�e the Iender an additiorial insured party on the environmenta! remediadon policy being purchased in connection with EEFe conslruclion of the project. The Auihority will also assign to lender all ather contracts designed to mitigate eost ovemtn risks. Authority to maintain ownershig and property tax exemption during the term of the Loan. Subject to Lender approving loan structvre allowing for continuation of property tar� exemption in the event of a defauti or foreclosure. AuYhoriYy will set parking raYes at a level necessary to cover all expenses and deht sexvlce. Review and acceptance by Lender of i�To Ackion Letter from the 3tate of NGnnesota regazding outstanding environmental issues on the subject site. 50'd 690b9�EZt9 'ON Xd� lHIONdNI� A.L83H9110Q Wd 6Z.Z0 I2I3 66-iZ-A�W ag ,�� , �,,: : SAINT PAUL PORT AUTHORTTY PARKIlVG RAMP $5,550,000 TAX-EXEMPT 5UBORDINATE MORTGAGE NOTE SUMMARY OF �'IlVANCING TERMS OBLIGATION Amount: $5,550,000 (approximately) based upon satisfaction of Lending Criteria described herein. Project: The Proceeds of the Loan will be used to acquire two pazcels of ]and ]ocated on the southwest and northeast corners of the block bounded by Minnesota, Fourth, Cedaz, and Kellogg Boulevard in downtown Saint Paul, demolish the existing building on the southwest corner of the site, and construct a new 990 space parking facility. Loan Purpose: The Loan will first provide $5,550,000 in Subordinate Mortgage Note financing (the "Subordinate Notes") for the Project in conjunction with a $14,500,000 loan arranged by Dougherty (the "Construction Loan" and "Permanent Mortgage Loan" or collectively referred to a"First Mortgage Loan") as described in Exhibit "A". Note Term: Amortization: Interest R zte: Prepayment Penalty: 1� Yeazs (balloon) 20 Years (straight-line) Fixed interest rates in serial and term bonds. Approacimately 6375% based on current market rates. Notes aze cailable in the event of a sale of the Project at any time on or after January 1, 2005. Recourse: Loan wili be non-recourse with the exception of standard carve-outs. Standard carve-outs include, hut are not limited to fraud, waste, and environmental indemnity. The Borrower and General Partner will provide a completion guarantee. 1 PARTICIPANTS Borrower: Guarantor: Piacemenf Agent: The Port Authority of the City of Saint Paul (the "Authority") The Port Authority of the City of Saint Paul (the "Authority") as it retates to the Recourse definition above. Dougherty Summit Securities LLC wi21 arrange for placement of the Notes on a best efforts basis. SOURCES AND USES OF FUNDS Sources of Funds: Use of Funds: Sources of funds available for the Project include: Subordinate Notes Proceeds Total Sources ofFunds $5,550,000 $5,550,000 Uses of funds to complete the Project are as follows: Construction Costs Subordinate Note Reserve Placement Fee* Legal Fees/Additional Contingency* $4,958,000 481,000 56,000 55.000 Total Uses of Funds $5,550,000 * Fees and COI in excess of 2% of the Note amount will be paid from the Senior Mortgage I.oan. (See E�ibit A.) LENDING CRITERIA The Loan witl be fimded upon comptetion, preparation or provision of the following items. Items must be provided prior to funding by parties and in a form acceptable to Placement Agent and Lender. Appraisai: "As built" appraisal in an amount of at least $21,350,000, or such other amount which supports a maximum Loan to Value of 68%, (based on a $14,500,000 First Mortgage Loan) from an MAI certified appraiser. Feasibility Study: A feasibility study projecting that First Mortgage I.oan (estimated to be $I4,500,000) debt service coverage will be at Ieast 1.45:1 based upon operation of the Project as pianned. Environmeutal: Phase I environcnental survey. �G-�� Construction Cantracts: Swom construction statements, guaranteed ma�mum price contracts and construction bonds are required by Lender, Securit}: Second mongage on att reat property and second lien security interests in all personal properry. Assignment of leases and rents. Assignment of plans, specifications and construction contracts. Assignment of appraisal, environmental and all other reports. Assignment of mana�ement and option a�eements. Pledge of reserve fund. Placement Fee: Placement Agent will be paid a Placement Fee equal to 3.00% of the amount of the Subordinate Notes described herein. The payment of this Placement Fee will be made in accordance with the terms of the Engagement Letter for Placement A�eni Services executed by Boirower and Placement Agent. Governing Law: The Subordinate Notes wil] be �overned by the laws of the State of Minnesota. Covenants: The Subordinate Notes will include covenants relating to debt service coverage, key financial ratios, and management continuity to be agreed upon by all parties. Reporting Requirements: Representation and Warranties: Additionai Terms And Conditions: Borrower will be required to submit periodic operating statements and other financial information to be agreed upon by ail parties. Reasonable and customary for Financings of this type, including but not limited to: enforceability of Financings documentation, Opinion of Bond Counsel on tax-exemption, accuracy of financiat statements, corporate power and authority, no material adverse change, no material litigation, no environmental issues, no default, etc. 1. Subject to Dougherty arranging First Mort�age Loan and the loan terms as outlined in Exhibit "A". 2. Subject to approval of Subordinate Notes by First Mortgage Lender and execution of appropriate Intercreditor Agreements. 3. Subject to full undenvriting due dilieence by Dougherty. 3 �� Resolution No. 3781 .' RESOLUTION OR THE PO12T AUTHORITX OF TIiE CITY OF SAIl\T PAUL WHEREAS: I. On Aprii 6, 1999 the Port Authority of the City of Saint Paul (the "Port Authoriry") adopted its Resolution No. 3771 approving the execution by the Port Authority of a Purchase Agreement relating to properiy in the block bounded by Minnesota Street, Cedar Street, Kellogg Boulevazd and 4th Street (the "Land") for the purpose of leasing the same to Capital Ciry Properties and providing for the construction thereon by Capital Ciry Properties of approximately 990 caz pazking ramp (the "Ratnp"}. 2. The current owners of the Land aze CCV-1, LLC and Metro Real Estate Services L.L.C., both Minnesota limited liability companies (collectively the "Sellers"). 3. The execution of the documents approved by the Port Authority in Resolution No. 3771 were specifically stated to be contingent on the development and approval of a financing plan for the acquisition of the Land and the construction of the Ramp. 4. It has now been proposed that the Ramp be financed through the issuance of :§ approximately $24,000,000 of ta�:able and tax-exempt debt as more fully provided in the staff memorandum presented to the Board at this meeting (the "Financing Plan"). 5. The Credit Committee has reviewed the Financing Plan, and has recommended approval. 6. Pursuant to notice published in advance as required by state law, a public hearing was held at a special meeting before the Port Authority on the proposal to finance the Project through the issuance of revenue bonds by the Port Authority in the approximate principal amount of $24,000,000, at which heazing all those who desired to speak were heard, and in connection with which written comments were taken in advance. NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF COMMISSIONERS OF THE PORT AUTHORITY OF THE CITY OF SAINT PAUL, AS FOLLOWS: A. On the basis of information available to the Port Authority it appeazs, and the Port Authority hereby finds, that: the Ramp constitutes properties, used or useful in connection with one or more revenue producing enterprises engaged in any.business within the meaning of Minnesota Statutes, Section 469.152 to 469.165 (the "Act"); the Ramp furthers 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 Paui for the Fort Authority to participate in the orvnership and financing of the Ramp, �y because the costs and expenses of private ownership and conventional financing would make the construction and successful operation of the Ramp unlikely. 7805479 �S �� B. For the purpose of fmancing the costs of acquiring the Land and constructing the Ramp, and paying certain costs of issuance and other ehpenses in connection with the issuance of the debt as contemplated by the Financing Plan, the Port Authority hereby authorizes the issuance, sale and delivery of tax-exempt and taxable notes in an aggregate principal amount not to exceed approxunately $24,000,000 {the "Notes'�, and the loan of the proceeds of the Senior and Subordinate Notes to Capital City Properties to finance the cost of the construction of the Ramp. The Notes shall beaz interest at such rates, shall be dated, shall mature, shall be subject to prepayment prior to maturity, and shall be in such form and have such other details and provisions as may be prescribed in the docutnenu prepared in connection with the issuance of the Notes. C. The President and the Chief Financial Officer of the Port Authority aze hereby authorized to work w2th bond counsel and Dougherty Sununit Securities LLC, as the placement agent for the senior and subordinate lien Notes to be issued pursuant to the Financing Plan (the "Placement AgenP'), with the Sellers with respect to the cash flow notes to be issued to the Sellers pursuant to the financing plan, and as part of the purchase price for the Land, and with Capital Ciry Properties, to negotiate and finalize the documents, certificates and any other matters necessary to the issuance of the debt pursuant to the Financing Plan, as well as the final structure and details of the Notes themselves, and the lease to Capital City Properties. The maximum interest rate on any portion of the debt that is issued on a taxable basis shall not exceed 10% per annum, the m�imum interest rate on any portion of the debt that is issued on a tax-exempt basis shall not exceed 8% per annum, and the maximum interest rate on the cash flow notes issued to the Sellers shall not exceed 16% per annum, whether or not such notes are issued on a tax-eaempt or taxable basis. 1 D. 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 which are submitted to them by the President and Chief Financial O�cer of the Port Authority pursuant to the Financing Plan (to the extent the Port Authority is a party thereto). E. It is hereby found, determined and declared that: 1. The issuance of the Notes, the execution and delivery by the Port Authority of the docutnents negotiated and finalized by the President and Chief Financial Officer as described in pazagraph C, above (the "Documents"), and the performance of all covenants and agreements of the Port AuthoriTy contained in such Documents, as applicable, and of all other acts and things required under the Constitution and laws of the State of Minnesota to make the Documents and the Notes 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 "AcP'); 2. It is desirable that the Notes be issued by the Port Authority upon the general terms set forth in the staff inemorandum presented to the Boazd at this meeting, as applicable; ,� !SU&i79 ��i- le l� 3. The Notes aze not to be payable from or a charge upon any funds other than the revenues pledged to the payment thereof; no holder of the Notes shall ever have the ri�ht to compel any exercise by the City or the Port Authority of their taxing powers to pay the Notes or the interest or premium thereon, or to enforce payment thereof against any property of the City or the Port Authority except the interests of the Port Authority which have been specifically pledged to the payment of the Notes; the Notes shall not constitute a chazge, lien or encumbrance, legal or equitable, upon any properry of the City or the Port Authority eacept the interests of the Port Authority which have been specifically pledged to the payment of the Notes; the Notes shall each recite that they are issued without moral obli�ation on the part of the State or its political subdivisaons, and that the Notes, including interest thereon, are payable solely from the revenues pledged to the payment thereof; and the Notes shall not constitute a debt of the City or the Port Authority within the meaning of any constitutional or statutory limitation. 4. Based on all information available, the purchase price which has been neQotiated for the Land, including both the cash payment to be made at closing and the cash flow notes to be issued to the Sellers, represents a fair negotiated purchase price, and is the amount necessary to obtain access to the Land for purposes of construction of the Ramp, and to compensate the Sellers for loss of development rights and diminution in value of adjacent property. F. The President and other officers of the Port Authority aze authorized and directed to prepaze and fumish to the Placement Agent and Bond Counsel certified copies of proceedings and : records of the Port Authority relating to the issuance of the Notes 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 Notes and the other transactions herein contemplated as such facts appeaz from the books and records in the officers' custody and control or as otherwise known to them; and all such certified copies, certificates and �davits, including any heretofore fiunished, shall constitute representations of the Port Authority as to the truth of all statements contained therein. G. The Port Authority hereby consents to the distribution of a Private Placement Memorandum in connection with the issuance and sale of the Notes, provided such Private Placement Memorandum is finalized with the participation of the Port Authority's President, Chief Financial Officer and Bond Counsel. The proposal of the Placement Agent to place the senior and subordinate lien Notes upon the terms and conditions set forth in the staff memorandum presented to the Boazd at this meeting is hereby found and determined to be reasonable and is hereby accepted_ H. The authority to approve, execute and deliver fixture amendments to financing documents entered into by the Port Authority in connection with the issuance of the Notes and the other trazisactions herein contemplated, is hereby delegated to the President of the Port .4uthority, provided that: (a) such amendments either do not require the consent of the hoIders of the Notes or, if required, such consent has been obtained, (b) such amendments do not materially adversely affect the interests of the Port Authority as the issuer of the Notes; (c) such amendments do not "' contravene or violate any policy of the Port Authority; and (d) such amendments are acceptable in 7805479 ��1 h« form and substance to Bond Counsel. The eaecution of any instrument by the President of the Port Authority shall be conclusi��e evidence of the approval of such instruments in accordance with the terms hereof. I. No covenant, stipulation, obligation or agreement contained herein or in the Documents shall be deemed to be a covenant, stipulation, obligation or agreement of any member of the Board 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 officer eaecuting the Notes shall be liable personally on the Notes or be subject to any personal liabiiity or accountability by reason of the issuance thereof. J. Port Authoriry staff is hereby authorized to submit a request to the Saint Paul Ciry Council that it approve the issuance of the Notes, as required by Minnesota Statutes, Section 469.OS4, Subdivision I 1. Adopted: June I �, 1999 PORT AUTHORITY OF THE CITY OF SA1NT PAUL � By � �L-(J� i u� lts Chair ' ATTEST: By '' � . Its cretary 1808479