87-1147 WHITE - C�TV CIERK
PINK - FINANCE COUIICII �
CANARV - DEPARTMENT G I TY OF SA I NT PA U L File NO. � ` /��
BLUE - MAVOR
y Co n il Resolution
Presented By , �
Re o Committee: Date
Out of Committee By Date
WHEREAS:
1 . On July 21, 1987, the Port Authority of the City of Sa1nt Paul adopted Resolutlon
No. 2842 giving preliminary approval to the issuance of taxable revenue bonds in the
initiai principai amount of $4,050,000 to finance the acquisition of the business and
technology center at 245 East Stxth Street and the Annex Building at 261 East Fifth Street
in Downtown Saint Paul for GMf Corporation. Miller 8, Schroeder Municipals has agreed to
underwrite the taxable revenue bond issue for a term of 30 years.
2. Laws of Minnesota 1976, Chapter 234, provides that any issue of revenue bonds
authorized by the Port Authority of the City of Saint Paul, shali be issued only with the
consent of the City Council ot the City of Saint Paul, by resolution adopted in accordance
with law;
3. The Port Authority of the City of Saint Paul has requested that the City Council
give its requisite consent pursuant to said law to facilitate the issuance of said revenue
bonds by the Port Authority of the City of Saint Paul, subJect to final approvai of the
details of said issue by the Port Authority of the City of Saint Paul .
RESOLVED, by the City Council of the City of Saint Paul, that in accordance with Laws
of Minnesota 1976, Chapter 234, the City Council hereby consents to the issuance of the
aforesaid revenue bonds for the purposes described in the aforesaid Port Authority
Resolution No. 2842 the exact details of which, including, but not limited to, provisions
relating to maturities, interest rates, dtscount, redemption, and for the issuance of
additional bonds are to be determined by the Port Authority, pursuant to resolution
adopted by the Port Authority, and the City Council hereby authorizes the lssuance of any
additionai bonds (including refunding bonds) by the Port Authority, found by the Port
Authority to be necessary for carrying out the purposes for which the aforesaid bonds are
issued.
COUNCILMEN Requested by Department of:
Yeas p�eW Nays � ��
�1°"'a"' [n Favor
Rettman
Scheibel �
�� __ Against
Tad.s�
W ilson
Adopted by Council: Date AUC7 � 1987 Form Approved by City Attorney
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Certified Pass d y u cil Sec r BY
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gy,
Approved Mavor. Date �C'�� Appro d by Mayor for Submis n to ��uncil
By —
ptjBl.IStt�D hu G 1 5 1987
�� ����1'� 060'71
St. Paul Port Authority DEPARTMENT `" ' _ . ._
J.A. Campobasso, E.A. Kraut CONTACT
224-5686 PHONE
Julv 21,, 1987 DATE Q/�� �, Qr
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ASSIGN NUNBER FOR .RQUTIN_G ORDER (.Clip All Locations for �ignature);;
1 Departrr�n� Director 3 Director af Management/Mayor
Finance and Management Services Director � 4 City Clerk
Budget; pi rector �.:�1�,.c�o�T�o�,_
2 City Attorney $4,050,000 TAXABLE REVEN[JE BOND.
ISSUE
WHAT WILL BE ACH�IEVED BY TAKING ACTION ON THE ATTACHED MATERIALS? (Purpose/ _
Rationale) :
The purpose of the taxa�le revenue bond issue is to finance the acquisition of the :business
and technology center at 245 East Sixth Street and the Annex Building at 261 East Fifth
Street in Downtown Saint Paul for GMT Corporati�on.
RECEIt/Ep
�UL 2 31987 .
COST/BENEFIT, BUOGETARY AND PERSONNEL IMPACTS ANTICIPATED:
� ���
The amount of the taxable bond issue is $4,050,000 and,will be for a term��� years.
�'here..�iil b� a�pr�oxitrtate�y 60 new 3obs for St. Paul as a result of this pro�ect.
� .
FINANCING SOURCE AND BUDGET ACTIVITY NUhI6ER CHARGE OR CREDITED: (Mayor's signa-
ture nox re-
Tota1 Amount of "Transaction: quired if under
� $10,00Q) .
Funding. Source; _
Activity Number:
ATTACHMENTS (List and Number All Attachments) :
1. Staff Memorandum •
2. Draft City Council �
3. Part Authority Resolution No. 2842
cc. J. Shoholm
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DEPARTMENT REVIEW CIT�f, ATTORNEY REVIEW
xYesy No Council Resolution Required? ' Resolution Required? x Yes No
Yes'.; x No Insurance Req�ired? Insurance Suffirient? X Yes No
' Yes x No Insurance Attached:
(SEE •REVERSE SIDE FOR INS RUCTIONS) �
Reyised 12/84 -
� � 7 � ii�7
� PORT
' AUTHORITY
• OF THE CITY OF ST. PAUL
Memoroedum
TO: BOARD OF COMMISSIONERS DATE July 14, 1987
(July 21, 1987 Regular Meeting)
FROM: J.A. Campobasso
,
SUBJECT: GMT CORPORATION
PUBLIC HEARING - PRELIMINARY AND UNDERWRITING AGREEMENT
$4,050,000 TAXABLE REVENUE BOND ISSUE
OFF-SITE
RESOLUTION N0. 2842
PUBLIC HEARING - SALE OF LAND
RESOLUTION N0. 2843
1. THE COMPANY
• GMT Corporation is a Minnesota corporation owned by Mr. Henry Zaidan and
his immediate family. The company has been structured to own and operate
the Control Data Business Development and Technology Center. GMT will
operate the BTC under a five-year license agreement with Control Data sup-
plying all of the present support services for the small businesses oc-
cupying the facility. Mr. Zaidan has extensive experience in real estate
developing nearly 3,000 units of office and residential projects in
Houston; Toronto; London, Ontario; Ottawa and Montreal. He is also a mem-
ber of the Zaidan Group which is an organization consisting of five family
members with assets of over $79 million and a net worth of over $6.7
million.
2. THE PROJECT
GMT Corporation proposes to acquire the Control Data BTC properties for
$5,250,000. Aa appraisal by Muske Company indicates a value of $6,405,000
for the property. The purchase price reflects a $12.51 per square foot
price based on gross rentable area or $16.38 per square foot of net usable
space. The property to be acquired includes the BTC located at 245 East
Sixth Street and the Annex building at 261 East Fifth Street in Downtown F
St. Paul. The BTC complex is located on 59,928 square feet of land and
contains three buildings.
The eight-story building on Sixth Street contains 202,500 square feet and
was constructed in 1905 and remodeled in 1979. The fire barn at 416
Wacouta contains 12,594 square feet and the parking ramp with 245 spaces
� plus two floors of office/industrial space totaling 60,006 feet at the top
of the ramp. Total gross space is 275,100 and net usable is 209,999 for
the complex.
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BOARD OF COMMISSIONERS
• July 14, 1987
Page -2-
The seven-story Annex building on Fifth Street is located on 21,000 square
feet of land and was constructed in 1909. The Annex is a loft type
office/warehouse building containing 144,660 gross square feet with net
usable space of approximately 110,570 square feet.
At the present time, the BTC is leased to 38 tenants while the Annex has
26 tenants. With the exception of Buckbee Mears (136,021 square feet) and
Multi-Arc (49,899 square feet) , no tenant occupies more than 7,000 square
feet of usable area. The majority of the tenants actually take less than
1,000 square feet. With the exception of two of the Buckbee Mears leases,
all leases expire within three years. The two Buckbee Mears leases mature
on November 30, 1992. Total annual contract rent based on the June 18,
1987, rental roll amounts to $1,091,826. The rental rates for average of-
fice space range from $11 to 12.50 per usable square foot on a gross
basis. The range for the Annex building is $2.95 to $4 per square foot.
GMT Corporation will continue to operate the facility in a similar manner
to Control Data in assisting start-up companies and developing new employ-
ment opportunities in the City. Since the opening of the facility, 173
new businesses were started of which only 20 have f ailed or closed. The
success rate of 88X is outstanding in comparison to the the national
• average of 20%. The new jobs created by these companies has reached 2,110.
Mr. Zaidan also expects to relocate the headquarters of Energx, a company
he owns from Eden Prairie, to the BTC. Energx employs 60 at its head-
quarters and an additional 200 at its manufacturing facility in LeCenter,
Minnesota. Mr. Zaidan acquired the generator manufacturing business about
a year ago from Earth Energy Systems, Inc. which was 74X owned by Control
Data. Mr. Zaidan indicated he is in the process of acquiring at least one
other business and expects to relocate their headquarters into the
facility as well. If this acquisition is completed and a relocation
package can be put together, it would bring in another 90 jobs. Mr.
Zaidan anticipates cQnverting and upgrading space in the Annex on a pre-
lease basis and expects to improve the cash flow of the facility in doing
so. Presently both facilities have approximately a 20X vacancy rate.
3. FINANCING
The proposed finaacing would be done as a taxable industrial development
revenue bond for a 30-year term. Proceeds from the bond issue would be as
follows:
Purchase $3,937,500
Bond Issuance Expense 31,500
Bond Discount 81.000
TOTAL $4,050,000
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• BOARD OF COMMISSIONERS
July 14, 1987
Page -2-
The Port Authority would receive earnings on the sinking fund as well as
its customary 1X fiscal and administrative fee. Control Data will be
financing $1,365,000 of the acquisition price on a subordinated mortgage
at a floating rate of 1/2 percent in excess of the prime rate with the
First National Bank of St. Paul adjusted annually but not to exceed lOX.
That financiag will be amortized over 30 years and will become due and
payable five years from the date of closing. Mr. Zaidan will also per-
sonally guarantee $250,000 of the second mortgage. Control Data would
also have the ability to step back into the property in the event of a
' default.
4. TERMS OF THE LEASE
The term of the lease would be for thirty years with options to purchase
in years ten, twenty and thirty for the outstanding principal balance as
well as 10% of the original bond issue.
5. UNDERWRITING
Miller & Schroeder Financial has agreed to underwrite the 30-year bond
issue at a rate of interest to be set at the time the bonds are sold. We
• anticipate bonds will be sold at our regular August Board meeting.
6. RECOMMENDATIONS
Staff has interviewed the officers of the corporation, reviewed Mr.
Zaidan's financial statements and has reviewed the lease rolls on the
properties and recommends approval of Resolution Nos. 2842 and 2843.
JAC:ca
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Resolution No. ���/-,,�
RESOLUTION OF
THE PORT AUTHORTTY OF THE CITY OF SAINT PAUL
WHEREAS, the purpose oF Minnesota Statutes, Chapter
474 , known as the Minnesota Municipal Industrial Development
Act ( hereinafter called "Act" ) as Eound and determined by the
legislature is to promote the welfare of the state by the
active attraction and encouragement and development of
economically sound industry and commerce to prevent so far as
possible the emergence oF blighted and marginal lands and
areas of chronic unemployment and to ai.d in the deveLopment of
existing areas of blight , marginal land and persistent '
unemployment; and
WHEREAS, Factors necessitating the active promotion
and development of economically sound industry and commerce
are the increasing concentration of population in the
metropolitan areas and the rapidly rising increase in the
amount and cost of governmental services required to meet the
needs of the increased population and the need for development
of land use which will provide an adequate tax base to finance
these increased costs and access to employment opportunities
for such population; and
WHEREAS , the Port Authority of the Cit�� of Saint
Paul ( the "Authority" ) has received From the GMT Corporation
(hereinafter referred to as "Company" ) a request that the
Authority issue its full faith and credit taxable revenue
bonds to finance the acquisition of the Control Data Business
Development and Technology Center properties loc:ated at 245
East Sixth Street, 416 Wacouta Avenue, and 261 East Fifth
Street, which facilities are for the support and development
of small businesses in Saint Paul in the City of St. Paul
(hereinafter collectively called the "Project" ) , all as is
more fully described in the staff report on file; and
WHEREAS, the Authority desires to facilitate the
selective development of the community, to retain and improve
its tax base and to help it provi.de the range of services and
C���-���7�
employment opportunities required by its population , and said
Project will assist the City in achieving that objecti.ve.
Said Project will help to increase the assessed valuation of
the City and help maintain a positive relationship between
assessed valuation and debt and enhance the image and
reputation of the City; and
WHEREAS, the Project to be financed by revenue bonds
will result in substantial employment opportunities in the
Project;
- WHEREAS, Miller & Schroeder Financial , Inc. ( the
"Underwriter" ) has made a proposal in an agreement ( the
• "Underwriting Agreement" ) relating to the purchase of the
• revenue bonds to be issued to finance the Project;
NOW, THEREFORE, BE IT RESOLVED by the Commissioners
of the Port Authority of the City of Saint Paul , Minnesota as
follows:
l . On the basis of information available to the
Authority it appears, and the Authority hereby finds , that �
said Project constitutes properties , used or useful in
connection with one or more revenue producing enterprises
engaged in any business within the meaning of Subdivision 1 (a )
of Section 474 . 02 of the Act; that the Project furthers the
purposes stated in Section 474 . 01 of the Act and, and that the
effect of the Project, if undertaken, will be to encourage the
development of economically sound industry and commerce and
assist in the prevention of the emergence of blighted and
marginal land, and will help to prevent chronic unemployment,
and will help the City to retain and improve its tax base and
provide the range of services and employment opportunities
required by its population, and will help to pr. event the
movement of talented and educated persons out of the state and
to areas within the state where their services may not be as
effectively used and will result in more intensive development
and use of land within the City and will eventually result in
an increase in the City' s tax base; and that it is in the best
interests of the port district and the peop.le of the Cii:y oL-
Saint Paul and in furtherance of the general plan of
development to assist the Company in financing the Project.
2 . Subject to the mutual agreement of the
Authority, the Company and the purchaser of the revenue bonds
as to the details of the lease or other revenue agreement as
defined in the Act, and other documents necessary to evidence
and effect the financing of the Project and the issuance of
2 .
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the revenue bonds, the Project is hereby approved and
authorized and the issuance oF Laxable revenue bonds of the
Authority in an amount not to exceed approximately $4 , 050 , 000
(other than such additional revenue bonds as are needed to
complete the Project) is authorized to finance the costs oF
the Project and the recommendations of the Authority' s staff ,
as set forth in the staff inemorandum to the Commissioners
which was presented to the Commissioners , are incorporated
herein by reference and approved.
3 . There has heretofore been filed with the
, Authority a form of Preliminary Agreement between the
Authority and Company, relating to the proposed acquisition of
the Project and a form of the Underwriting Agreement. The
forms of the aqreements have been examined by the
Commissioners . Said Agreements are hereby approved, and the
President and Secretary of the Authority are hereby authorized
and directed to execute said Agreements .
4 . � Upon execution of the Preliminary Agreement by,
the Company, the staff of the Authority is authorized and
directed to continue negotiations with the Company so as to
resolve the remaining issues necessary to the preparati.on of
the lease and other documents necessary to the adoption by the .
Authority of its final bond resolution and the issuance and
delivery of the revenue bonds; provided that the President (or
vice-President if the President is absent) and the Secretary
(or Assistant Secretary if the Secretary is absent) of the
Authority, or if either of such officers (and his alternative?
are absent, the Treasurer of the Authority in lieu of such
absent officers, are hereby authorized in accordance with khe
provisions of Minnesota Statutes , Section 475 . 06 , Subdi.vision
l , to accept a final offer of the Underwriter made by the
Underwriter to purchase said bonds and to execute an
Underwriting Agreement setting forth such offer on behalf of
the Authority. Such acceptance shall bind the Underwriter to
said offer but shall be subject to approval and ratification
by the Port Authority in a formal supplemental bond resolu-
tion to be adopte�] prior to the delivery of said revenue
bonds.
5 . The revenue bonds ( including any interim note
or notes) and interest thereon shall constitute an
indebtedness of the Authority but shall not constitute an
indebtedness the City of Saint Paul ( the "City" ) within the
meaning of any constitutional or statutory limitation and
shall not constitute or give rise to a pecuniary liability of
the City or a charge against its genera.l credit or taxing
3
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powers and neither the full faith and credit nor the taxing
powers of the City is pledged for the payment of the bonds
(and interim note or notes) or interest thereon.
7. In order to facili.tate completion of the
revenue bond financing herein contemplated, the City Council
is hereby requested to consent, pursuant to Laws of Minnesota ,
1976 , Chapter 234 , to the issuance of the revenue bonds
( including any interim note or notes) herein contemplated and
any additional bonds which the Authority may prior to issuance
or from time to time thereafter deem necessary to complete the
Project or to refund such revenue bonds; and for such purpose
the Executive Vice President of the Authority is hereby
authorized and directed to forward to the City Council copies
of this resolution and said Preliminary Agreement and any
additional available information the City Council may request .
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Adopted : July 21 , 1987� �/ !� �
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Attest: � `?
i t
The Po t Authority of the City
/ of S� nt Paul
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�"�� S�c etary
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� PORT AUTHORIN OF THE CIN OF SAINT PAUL TOLL FREE(800) 328-8417
1900 AMHOIST TOWER • 345 ST. PETER STREET • ST. PAUL, MN. 55102 • PHONE(612)224-5686
July 21, 1987
Mr. James Bellus, Director
Planning and Economic Development Department
City of St. Paul
14th Floor - City Hall Annex
St. Paul, Mi nnesota 55102 n ,�,�� ���
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SUBJ ECT: GMT CORPORAT I ON �1"� �
$4,050,000 TAXABLE REVENUE BOND ISSUE
Dear Jims
We submit herewith for your review and referral to the office of the Mayor,
City Council and City Attorney's office details pertaining to the issuance of
$4,050,000 in taxable revenue bonds to finance the acquisition of the business
and technology center at 245 East Sixth Street and the Annex Building at 261
East Fifth Street in Downtown Satnt Paul for GMT Corporation.
The Port Authority staff has conducted a thorough evaluation of the firms
and/or individuals that are tnvolved in this proJect or in which the prin-
cipals have an interest. This investfgation has included Dun and Bradstreet
reports, direct communication with representatives of financial institutions
with whom the participants have done business and database checks to determine
if any principal (s) have been in any way involved in legal proceedings as a
resuit of securities fraud, extortion, embezzlement or financial
misrepresentation.
In addition to the staff inemorandum, we are attaching a draft copy of the
proposed City Council resolution and a copy of Port Authority Resolution No.
2842 which authorized the sale of taxable revenue bonds in the amount of
amount.
Your expeditious handling of this matter will be appreciated.
Yours truly,
ugene A. Kraut
EAK:ca Executive Vice President
cc. Mayor Lat i mer
EUGENE A KRAUT,C.I.D. DONALD G.DUNSHEE,C.I.D. CHARLES M.TOWLE CLIFFORD E.RAMSTED,P.E. PERRV K.FEDERS C.PA
EXECUTIVE VICE PRESIDENT ASST.EXEC.VICE PRESIDENT DIRECTOR OF INDUSTR�AL DEVELOPMENT CHIEF ENGINEER DIRECTOR OF FINANCE
ASST.TREASURER
RICHARO A GIERDAL WILLIAM E.McGNERN
PROPERN MANAGER. DIRECTOR OF PUBUC RELATIONS
COMMISSIONERS GEORGE W.WINTER WILLIAM WILSON ARTHUR N.GOODMAN VICTOR P.REIM RAYMOND E.LANGEVIN CHRIS NICOSIA JEAN M.WEST
PRESIDENT VICE PRESIDENT SECREfARV TREASURER COMMISSIONER COMMISSIONER COMMISSIONER
C.I.D. Certified Industrial Developer