86-1217 WHITE - CiTV CLERK I
PINK - FINANCE GITY OF SAINT PAUL Council �G__ ����
CANARV - DEPARTMENT File NO•
BLUE - MAVOR
. , Co cil Resolution
- • J °i
Presented y
Referred To Committee: Date a � '� �a k?
Out of Commi ee By Date
WHEREA I :
1. On uly 29, 1986 the Port Authority of the City of Saint Paul adopted
Resoluton N . 2696 giving preliminary approval to the issuance of taxable revenue
bonds in th initial principal amount of $16,000,000 to finance the acquisition and
remodeling f the Downtown St. Paul Radisson Hotel which will be supported by St.
Paul Joint enture as General Partners, whose Venturers are the SPH Hotel Company and
Carlson Rea ty Company dba CR Company Minnesota. The bonds will be underwritten by
Miller & Sc roeder Municipals, Inc. The lease is nonrecourse and will be supported by
Port Author ty Resolution 1270 bonds.
2. La s of Minnesota 1976, Chapter 234, provides that any issue of revenue
bonds autho ized by the Port Authority of the City of Saint Paul, shall be issued
only with t e consent of the City Council of the City of Saint Paul, by resolution
adopted in ccordance with law;
3. Th Port Authority of the City of Saint Paul has requested that the City
Council giv its requisite consent pursuant to said law to facilitate the issuance of
said revenu bonds by the Port Authority of the City of Saint Paul, subject to final
approval of the details of said issue by the Port Authority of the City of Saint
Paul.
RESOL D, by the City Council of the City of Saint Paul, that in accordance with
Laws of Min esota 1976, the City Council hereby consents to the issuance of the
aforesaid r venue bonds for the purposes described in the aforesaid Port Authority
Resolution o. 2696 the exact details of which, including, but not limited to,
provisions elating to maturities, interest rates, discount, redemption, and for the
issuance of additional bonds are to be determined by the Port Authority, pursuant to
resolution dopted by the Port Authority, and the City Council hereby authorizes the
issuance of any additional bonds (including refunding bonds) by the Port Authority,
found by th Port Authority to be necessary for carrying out the purposes for which
the aforesa d bonds are issued.
COUNCIL�IEIV Requested by Department of:
Yeas �►�' Na �
-�� ��`yM � [n Favor
tWcos�a
Setre�be I
so�,ne�/ _—c�__ Against BY
Tetiesco
Wil�on
Adopted by Council: Date AUG �8 1986 Form Appr ed by City�mey
Certified P� •s d y cil Se r B '�"'�"' �
By �
Approve y 1+lavor. D e _ � �� Approv yor or Submiss'o to Councii
By � BY �
PUBLISHE� S E P o 1986
, � � . � .
a-�' /�i7
513F
Resolution No. 2696
II
RESOLUTION OF
I THE PORT AUTHORITY OF THE CITY OE SAINT PAUL
WHEREAS, the purpose of Chapters 458 and 474,
Minneso a Statutes (hereinafter called "Act" ) as found and
determi d by the legislature is to promote the welfare of the
state b the active attraction and encouragement and
develop nt of economically sound industry and commerce to
prevent o far as possible the emergence of blighted and
marginal lands and areas of chronic unemployment and to aid in
the deve opment of existing areas of blight, marginal land and
persiste t unemployment; and
WHEREAS, factors necessitating the active promotion
and deve opment of economically sound industry and commerce are
the incr asing concentration of population in the metropolitan
areas an the rapidly rising increase in the amount and cost of
governme tal services required to meet the needs of the
increase population and the need for development of land use
which wi 1 provide an adequate tax base to finance these
increase costs and access to employment opportunities for such
populati n; and
WHEREAS, The Port Authority of the City of Saint Paul
(the "Au hority") has received from St. Paul Joint Venture, a
Minnesot partnership (hereinafter referred to as "Company" ) a
request hat the Authority issue its taxable revenue bonds
(which m be in the form of a single note) to finance the
acquisit' n and renovation of the Radisson hotel currently
located Kellogg Boulevard in the City of Saint Paul and
related sts (the "Project' ) , all as is more fully described
in the s ff report on file; and
I
WHEREAS, the Authority desires to facilitate the
select' e development of the community, to retain and improve
its ta base and to help it provide the range of services and
emplo nt opportunities required by its population, and said
Projec will assist the City in achieving that ob�ective. Said
Project will help to increase the assessed valuation of the
City an help maintain a positive relationship between assessed
valuati n and debt and enhance the image and reputation of the
City; a d
WHEREAS, the Project to be financed by revenue bonds
will re ult in substantial employment opportunities and is
necessa y to the health of the hotel industry in St. Paul;
WHEREAS, the Authority has been advised by repre-
sentati es of the Company that conventional, commercial
financi g to pay the capital cost of the Project is available
only on a limited basis and at such high costs of borrowing
that th economic feasibility of operating the Project would be
signifi antly reduced, but the Company has also advised this
Authori y that but for revenue bond financing, and its
resulti low borrowing cost, the Project would not be
underta n.
NOW, THEREFORE, BE IT RESOLVED by the Commissioners
of the rt Authority of the City of Saint Paul, Minnesota as
follows•
1. On the basis of information available to the
Authorit it appears, and the Authority hereby finds, that said
Project onstitutes 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 Minnesota
Statutes Section 474.02 and is a project which may be
undertak n pursuant to Minnesota Statutes, Chapter 45t3; that
the Proj ct furthers the purposes stated in the Act and, but
for the illingness of the Authority to furnish such financing,
the Proj ct would not be undertaken, and that the effect of the
Project, if undertaken, will be to encourage the development of
economic lly sound industry and commerce and assist in the
preventi n of the emergence of blighted and marginal land, and
will hel to prevent chronic unemployment, and will help the
City to etain and improve its tax base and provide the range
of servi es and employment opportunities required by its
populati n, and will help to prevent the movement of talented
and educ ted persons out of the state and to areas within the
2 �
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state w ere their services may not be as effectively used and
will re ult in more intensive development and use of land
within he City and will eventually result in an increase in
the Cit 's tax base; and that it is in the best interests of
the por district and the people of the City of Saint Paul and
in furt erance of the general plan of development to assist the
Company in financing the Project.
2. Subject to the mutual agreement of the
Authori y, the Company and the purchaser of the revenue bonds
as to t e details of the lease and other documents necessary to
evidenc and effect the financing of the Pro�ect and the
issuanc of the revenue bonds, the Project is hereby approved
and aut orized and the issuance of taxable revenue bonds of the
Authori y (which may be in the form of a single note) in an
amount t to exceed approximately $16,OUO ,UUU (other than such
additio 1 revenue bonds as are needed to complete the Pro�ect)
is auth ized to finance the costs of the Project and the
recomme ations of the Authority's staff, as set forth in the
staff ine orandum to the Commissioners which was presented to
the Co 'ssioners, are incorporated herein by reference and
approved
3. There has heretofore been filed with the
Authorit a form of Preliminary Agreement between the Authority
and Comp ny, relating to the proposed acquisition, construction
and fina cing of the Project. The form of the Preliminary
Agreemen has been examined by the Commissioners. Sub�ect to
the prov sions of the next succeeding paragraph, said
Prelimin ry Agreement is hereby approved, and the President and
Secretar of the Authority are hereby authorized and directed
to execu e said Preliminary Agreement and such other agreement
as is re uired to authorize Miller & Schroeder Financial, Inc.
to under ake to privately place the revenue bonds (the
"Placeme t Agreement" ) .
4. The approval hereby given to the Preliminary
Agreemen includes approval of such additional details therein
as may b necessary and appropriate and such modifications
thereof, eletions therefrom and additions thereto as may be
necessar and appropriate and approved by Bond Counsel and the
official authorized herein to execute the Preliminary
Agreemen prior to its execution; and said Port Authority
3
. , . � •
officia s are hereby authorized to approve such chanyes on
behalf f the Port Authority. The execution of the Preliminary
Agreeme t and Placement Agreement shall be conclusive evidence
of the pproval of the Preliminary Agreement and Placement
Agreeme t in accordance with the terms thereof. In the absence
of the resident or Secretary, the Preliminary Agreement and
Placeme t Agreement authorized by this Resolution to be
execute may be executed by such officers of the Port Authority
who may act in their behalf.
5. Upon execution of the Preliminary Agreement by
the Com any, the staff of the Authority is authorized and
directe to continue negotiations with the Company so as to
resolve the remaining issues necessary to the preparation of
the lea e and other documents necessary to the adoption by the
Authori y of its final bond resolution and the issuance and
deliver of the revenue bonds.
6. The revenue bonds ( including any interim note or
notes) nd interest thereon shall not constitute an
indebte ness of the Authority or the City of Saint Paul within
the mea ing of any constitutional or statutory limitation and
shall n t constitute or give rise to a pecuniary liability of
the Aut� rity or the City or a charge against their general
credit taxing powers and neither the full faith and credit
nor the axing powers of the Authority or the City is pledged
for the ayment of the bonds (and interim note or notes) or
interes thereon.
7. In order to facilitate completion of the revenue
bond fin ncing herein contemplated, the City Council is hereby
requeste to consent, pursuant to Laws of Minnesota, 1976,
Chapter 34, to the issuance of the revenue bonds ( including
any inte im note or notes) herein contemplated and any
addition 1 bonds which the Authority may prior to issuance or
f rom tim to time thereafter deem necessary to complete the
Project r to refund such revenue bonds; and for such purpose
the Exec tive Vice President of the Authority is hereby
authoriz d and directed to forward to the City Council copies
of this esolution and said Preliminary Ayreement and any
addition 1 available information the Cit C�u cil may request.
Adopted July 29, 1986 �—�--� �� �
�
Attest
Pre
j The Por Authority of the City
' ' of Sai t Paul
� �
/j�,��� _ ����.
� '-�Secretar
4
_ �6 -/�i 7
' ' . , ����
;
PORT AUTH RIN OF THE CIN OF SAINT PAUL TOLL FREE(800) 328-8417
1900 AMH IST TOWER • 345 ST. PETER STREET • ST. PAUL, MN. 55102 • PHONE(612) 224-5686
July 29, 1986
Mr. JI mes Bellus
Direc or
Plann ng and Economic Development Department
City f St. Paul
14th loor, City Hall Annex
St. P ul, Minnesota 55102
SUBJE T: DOWNTOWN ST. PAUL RADISSON $16,000,000 TAXABLE BOND ISSUE
RESOLUTION N0. 2696
Dear im:
We su mit herewith for your review and referral to the office of the
Mayor City Council and City Attorney's office details pertaining to
the i suance of $16,000,000 in taxable revenue bonds to finance the
acqui ition and remodeling of the Downtown St. Paul Radisson Hotel
which will be supported by St. Paul Joint Venture as General Partners,
whose Venturers are the SPH Hotel Company and Carlson Realty Company
dba C Company Minnesota. The lease will be a nonrecourse lease and
will supported by Port Authority Resolution 1270 bonds.
In ad ition to the staff inemorandum, we are attaching a draft copy of
the p posed City Council resolution and a copy of Port Authority
Resol tion No. 2696 which authorized the sale of revenue bonds in the
amoun of $16,000,000.
Your peditious handling of this matter will be appreciated.
Yours truly,
�
Eugene A. Kraut
Executive Vice President
EAK:j
Attach
cc: yor Latimer
EUGENE A KRAUT,C.I.D. NALD G.DUNSHEE.C.I.D. CHARLES M.TOWLE CLIfFORD E.RAMSTED,P.E. PERRY K.FEDERS C.P.A.
EXECUTIVE VICE PRESIDENT CE PRESIDENT DIRECTOR Of INDUSTRIAL DEVELOPMEM CHIEF ENGINEER DIRECTOR OF fINANCE
ASST.�TREASURER
RICHAR A GIERDAL WILLIAM E.McGNERN
PROPERTV MANAGER DIRECiOR OF PUBLIC RELATIONS
COMMISSIONERS GEORGE W.WI R WILLIAM WILSON ARTHUR N.GOODMAN VICTOR P.REIM RAYMOND E.LANGEVIN CHRIS NICOSIA JEAN M.WEST
PRESIDENT VICE PRESIDENT SECREL4RV TREASURER COMMISSIONER COMMISSIONER COMMISSIONER
i
C.I.D.Certified Industrial Developer
O R �'t � �
AUTH RITY
OF THE CITY OF � . PAUL
Memorandum
TO: Board Commissioners DATE: July 25, 1986
Specia� Meeting July 29, 1986
FROM: E• ��
SUBJECT: ACQUISI ION AND REMODELING FINANCING - DOWNTOWN ST. PAUL RADISSON
$16,000 OOU TAXABLE REVENUE BOND ISSUE
RESOLUT ON N0. 2696
BACKGRO ND
The Rad sson St. Paul Hotel is the largest hotel in St. Paul with 475 rooms
and, as such, is the pre-eminent hotel in the attraction of convention�
busines to St. Paul. The Radisson has customarily operated at a
relativ ly high level of occupancy since they joined the SPH Hotel✓ I`�J,
Corpora ion as 50% owners of the facility. It has continuously operated
profita ly since that date and has during the last nine years spun off
other b siness, both upscale and downscale, to the other hotel facilities
in St. aul.
In our elationships with the other hotels in which the Port Authority has
partici ated in the financing, it became evident that the room rates at the
Radisso appeared to be lower than normal for such a facility and that the
occupan y rate was dropping dramatically.
Subsequ nt meetings i dis on officials and discussions with
represe tatives of t e SPH H Corporation indicated that the reasons for
this we e due to the nee to undertake a substantial remodeling effort.
Because of certain commitments by the SPH Hotel portion of the partnership
partici ation in the financing of this remodeling did not appear to be
possibl . In essence, an impasse developed and the possibility for sale of
the hot 1 was considered. After numerous meetings, which included
discuss ons with a representative group of executives from the companies
that or ginally participated in the SPH Hotel financing, methods of
accompl shing the remodeling were explored.
�'�- ���7
Board f Commissioners
July 2 , 1986
Page -
The in bility to syndicate, which was eliminated by the Senate passage of
the ve sion of H.F. 3838, eliminated one of the primary methods of
financ g hotels.
The pr 'ect is of greater magnitude than permitted under tax exempt
financ g regulations. Carlson Companies could not �ustify financing the
partne hip without a substantial alteration to the partnership agreement
which d not seem possible.
PROPOS
At the ort Authority's suggestion� that evidence of financial viability
might ke the issuance of taxable bonds possible Carlson Real Estate
Compan employed Pannell, Kerr, Forster to evaluate feasibility of the
projec We are attaching the financing projections evidencing this �
feasib' ity and will be providing the Pannell, Kerr, Forster report prior
to the oard meeting as well as the appraisal of the facility by Harold W.
Perry, r. ,, MAI, Appraiser for Pannell, Kerr, Forster.
This i icates a remodeled value of $22 million. We are proposing, subject
to fin figures and establishment of an interest rate the acquisition and
remodei ng of the hotel through the issuance of a $16 million taxable bond
issue. The proceeds are to be used as follows:
Ac uisition $ 8,500,000
Re odeling 4,500,000
Re erve Fund and Additional
emodeling - Second Phase 2,000,000
Mi cellaneous Expenses 1,000,000
TO AL $16,000,000
This wo ld represent an investment of $33,684 per room against an appraised
value r modeled of $46,315 per room.
In addi ion to a relatively moderate per room investment, the agreement
would c ntain a provision whereby the St. Paul Joint Venture would continue
their 1 ng term operating contract but the Port Authority would require
that al fees normally inuring to the operator of the facility would be
subordi ate to cash flow. In addition, the contract would require a
Replace ent Reserve Fund be established and held by the Port Authority
equal t 4y of gross sales.
Applyin a debt coverage ratio based upon $16 million at lOX results in a
reasona le debt coverage ratio .
Under o r general guidelines for taxable financing the Port Authority fee
normall is 1X.
Board o Commissioners
July 25 1986
Page -3
We prop se that the amount of this fee be subject to some adjustment or
deferra . Such adjustment or deferral, if any, to be determined once the
interes rate and the principal amount are firm and the placement of these
bonds i certain.
In shor , the amount of our fee is somewhat dependent upon the above
factors and since the operator is willing to defer to cash flow any fees,
some ad ustment on the Port Authority's income may be justified.
The pro osal is an acquisition and a leaseback with an option to purchase
the fac lity for $1.00 plus retirement of the bonds at any time during the
30-year agreement. The agreement will contain a provision to permit sale
upon ap roval of the Port Authority, with specific provisions that the
success r company will only be granted an assignment if the type of
operati n is at least equivalent to Radisson from the standpoint of
reserva ion service and operating history.
The lea e is proposed to be a nonrecourse lease which will be supported by
gurante s of the St. Paul Joint Venture as General Partners, whose
Venture s are the SPH Hotel Company and Carlson Realty Company dba CR
Company Minnesota.
In maki g this recommendation, staff has considered the welfare of all of
the hot ls in St. Paul who rely on convention business to any degree
whatsoe er. We have also considered the relatively low investment per
room re uired to make this 475 room facility once against a First Class
hotel. We have considered as well the alternatives if this hotel were to
be sold to one of the economy chains who are currently on a great hotel
buying inge, which could result in a substantially downscaled operation,
which w ld have a drastic and permanent effect on St. Paul's convention
and cor rate business.
It shou d be specifically noted that the attached material from Pannell,
Kerr, F rster did not include the debt service coverage ratio, which was
added t their figures for illustration purposes.
Staff r � ommends approval of the Preliminary Agreement by adoption of
Resolut n No. 2696 which is sub�ect to due notice of public sale hearing
which i required to be conducted prior to the sale of bonds and the
closing f the acquisition.
- � Q'lG�`����"` � "'
E�x:�mo , � ��[-. ,�;w�� y �
Attach. � �
i.;Q;!1�IJ_T�E�.' REPORT
:�=iAh��, MANAGEMENT & PERSONNEL COrIMZTTEE
.":ugust 21, 1986 .
a3C� 2
11. Resolutiln amending the 1986 budget and adding $111,864 to the Financing Plan
and to t e Spending Plan (Governmental Employment and Training - Refugee
Targeted Assistance Plan). approved
12. Resoluti n amending the 1986 budget by adding $33,243 to the Financing Plan
and to t e Spending Plan for Finance and Management Services - Purchasing
Services - City Share. approved
_ � -
13. Resoluti n amending the 1982 Capital Improvement Budget by transferring
$560,Q00 from Metro Parks Grant (Battle Creek Park Reimbursement) to Log � ' - '
Parks an Recreation - Central Service Facility. laid over 8/28
14. Resoluti n amending the Capital Improvement Budget by transferring $97,000
from act vities as listed to Fire Station 24 Addition. laid over 8/28
15. R�soluti n amending the 198b Capital Improvement Budget and transferring
$500,000 from Low-Income Housing Development Fund to Acquisition of Blighted
Properti s - Riverfront. laid over 8/28
16: ` R�1uti co�sentiag to tYEe issuaace of_ Port Authority Rc�renue:Boads: #.n.fihe
amount o �1b,t�,�0' to finance the acquisitiv�n and remodeling of th�:D'o�atown
Sain$ � � .Ra�.i.sso� i�t��el. approved
17. c'ldminis t ative Orders: - - -- --
D-8065: Budget revision in the Public Works - Capital Improvement Bond
�und (laid over from August 7, 1986). discussed
D-8072: Addition o� $11,887.85 to the contract for tuckpainting at Fire
Station No. 20 (laid over from August 7, 1986). laid over 8/28
D-8080: Approval of payment to Personnel Decisions Inc. for Assessment
Center testing for Library Public Services Managers. laid over 8/28
D-8087: Budget revision in the Pt�blic Works - Engineering Fund. discussed
D-8088: Budget revision in the Public Works - Traffic Operations Fund.
discussed
D-8092: Additions of $2,078,83 to the contract for bituminous overlay and
reconstruction of Como Avenue - Capitol Heights. discussed
D-8093: Additions of $3,012 to the contract for Galtier Plaza to Farm
Credit Services Skyway Bridge over Jackson Street. discussed
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M. CITY OF SAINT P�.UL
� '� � OE`FIC� OF TH� CITY COUNCIL
.::iii tli�111
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...
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. •
C�n1Il'llttee RepOrt
F:' anee l�ana ement & P�rso�nel Committee.
_
SPECIAL MEETING - �
1. Resolutio amending the 1986 budget and adding $666,670 to the Financing Plan
and to th Spending Plan for General Government Accounts - CH/CH Building
Maintenan (elevator automation) . approved as amended
REGULAR MEETING
_ .
1. Approval minutes from meeting held August 7, 1986. approved
2. An ordina e amending Chapter 331.30, Subd. 3, of the Legislative Code per-
taining to exemption from license fees for certain itinerant food establishments
(laid over from August 7, 1986) . approved
_ _3.,., Resolution adjusting the �rate_of pay__for the title of Public Information _
- -__ —_.._.__ ---
Specialist I and II in Section I D 3 of the Salary Plan and Rates of Compen-
sation Res lution. laid over 8/28 '
4. Ordinance 6-1015 establishing the title of Intergovernmental Relations
Coordinato as specified by Chapter 12 of the Charter, Section 12.03(H)
thereof. laid over 8/28
5. Resolutionlestablishing the rate of pay for Intergovernmental Relations
Coordinato in Grade 53, Section V, Subsection D, "Professional Group" Un-
' classified of the Salary Plan and Rates of Compensation Resolution. laid over 8/28
6. Resolutionlestablishing the rate of pay for Water Billing Operator in Grade 18,
Section I 1 of the Salary Plan and Rates of Compensation Resolution. laid over 8/28
7. Resolutionlamending Section 16 of the Civil Service Rules concerning Grievance
Procedures (laid over from December 26, 1985). approved
8. Resolution amending the 1986 budget and adding $29,920 to the Financing Plan
and to the Spending Plan for Community Services - Housing Inspection -
Complaints (enforcement of energy conservation for rental housing). approved
9. Resolution amending the 1986 budget and adding $3,950 to the Financing Plan and
to the Spe ding Plan for Police ID Card Deposit. approved
10. Resolution amending the 1986 budget and adding $70,000 to the Financing Plan
and to the Spending Plan for Finance and Management Services -• Citywide
Informatio Serivices (computer center). laid over 8/28
�� �I-I- SEVENTH FLOOR SAINT PAUL MINNF�c�Ta 55102
St Paul Port Aut rity DEPARTMENT �����7 N� 3635
E. •A. Kraut ' CONTACT •
224,-5686' PHONE
7-30-86 DATE �Q,/�� e Qi
ASSIGN NUh�ER FOR RO TING ORDER Cli All Locations for Si nature :
Department Direc or 3 Director of Management/Mayor
Finance and Mana ement Services Director � City Clerk
Budget Director DOWNTOWN ST PAUL RADISSON
2 City Attorney $16,000,000 REVENUE BOND ISSUE
WHAT WILL BE ACHIEVE BY TAKING ACTION ON THE ATTACHED MATERIALS? (Purpose/
Rationale) :
The purpose of th bond issue is the finance the acquisition and remodeling of the 475-room
Downtown St. Paul Radisson Hotel which will be supported by St. Paul Joint Venture as General
Partners, whose V nturers are the SPH Hotel Company and Carlson Realty Company dba CR
Gompany Minnesota Because the project is of greater magnitude than permitted under tax
exempt financing egulations, taxable revenue bonds will be issued. When the remodeling is
completed, the ho el will once again be a 'First Class' hotel, which will help St. Paul's
convention busine s. This is a nonrecourse lease supported by Port Authority Resolution 1270
bonds.
COST/BENEFIT BUDGET RY AND PERSONNEL IMPACTS ANTICIPATED:
The amount of the taxable bond issue is $1b,000,000 and will be for a term of 30 years.
����.!'v`�,l�
� r�.i�;; �: i�'�'� �
Fa1;�Y(:s��'� ilt�(f CE �
FINANCING SOURCE AND BUDGET ACTIVITY NUMBER CHARGED OR CREDITED: (Mayor's signa-
ture not re-
Total Amount of T ansaction: quired if under
$10,00Q)
Funding Source:
Activity Number:
ATTACHMENTS List an Number All Attachments :
1. Staff Memoran m
2. Draft City Co cil Resolution
3. Port Authorit Resolution No. 2696
cc: J. Shoholm
DEPARTMENT REVIEW CITY ATTORNEY REVIEW
�es No Counci Resolution Required? Resolution Required? X Yes No
Yes x No Insura ce Required? Insurance Sufficient? �Yes No
Yes XNo Insura ce Attached:
(SEE REVERSE SIDE FOR INSTRUCTIONS)
Revised 12/84
� � . ,� �- s� � 7
� ��•� �. CITY OF SAINT PAUL
B'�� ':� OFFICE OF THE CITY ATfORNEY
�, � "= .
-.• riii�i'ii ii' :�
'��: �E EDWARD P. STARR, CITY ATTORNEY
°��•�r� 647 City Hall, Saint Paul, Minnesota 55102
GEORGE LATIMER ' '—=�J 612-298-5121
MAYOR - � �-, , ,
. ..; I�,; ;? -
August 28 , 1986 .:. - ;��
• 'J..
Councilman James Scheibel and
Members of the Finance Committee
At your m eting of August 21st you asked that the City Attorney
advise wh her the Auditor ' s report contained evidence of anti- '
trust viol tions on the part of the Port Authority in Financing
the remod ling of the Radison Hotel . I have examined the
Auditor' s report and the statements made therein regarding
the financ ng proposal , and have also examined the legal opinion
issued by he law firm of Briggs and Morgan (copy attached) .
I concur n the opinion expressed by Briggs and Morgan. The
Auditor' s eport does not contain evidence to indicate to me �
-M" that the �� o`rt Authority is guilty of any anti-trust or price �
fixing co usion with the hotel owners in the downtown area
of the Cit of Saint Paul . _,.
Your very truly, �
/• �
JE C�ME J . I�iL "
' As�istant � ' ty Attorney
JJS :cg — - H
Enc1 . .
cc: Mayor
� �_ ' • City C uncilmembers
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August 2 5 , 19 8 6 �'�.s��
Mr. George Winter
President �
Port Autho ity of the City
of Sain Paul
1900 Amhoi t Tower
345 St. Pe er Street
Saint Paul Minnesota 55102
� Dear Mr. W' nter: .
At y ur request, we have reviewed the questions raised
by Mr. Ar e Carlson, State Auditor, in his August 20, 1985 audit
of the P rt Authority of the City of Saint Paul (Authority) �
relating o possible antitrust actions by the Authority in
financing he rehabilitation of the Saint Paul Radisson Hotel.
We h ve (1 ) reviewed the audit reports, (2 ) interviewed
the Autho ity staff, and (3 ) reviewed the proposed resolution
authorizin the financing of the transaction. Under the �
� : applicable provisions of State and Federal antitrust statutes __
� a : as interp ted by case law, there must be an• agreement or other -� _
. = concerted � action by competitors which ' results in an _.
anti-compe itive_ or unreasonable restraint of trade. Our review
of the fa ts and �'recent decisions of the United States Supreme
Court rev als no evidence of unlawful .antitrust activity by �
the Author ty. � _ - - '
The roposed resolution which provides for the Authority
. to refina e the Radisson Hotel through the issuance of taxable
bonds by. he Authority does nat appear to be anti-competitive
and should not constitute a violation of the applicable antitrust
statutes the absence of a prior agreement with other hotel
operators s . a mechanism whose express purpose is to raise or �
.
asoo xs�t .wno�wc nwxR HmtniNO a.00 J ns ccxrz�
s �r PwCi,vn+x�sotw eo�a x�xvcwPOS.TS.xiNNtsarw am��
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�- . . �� � r'��`%
F ^ .
i I
BRIGGS .+x � �fORGAN
Mr. George winter '
August 25, 1986 , .
Page Two '
stabilize 'I� hotel room rates in the City of Saint Paul. �ae
understand, the �'resolution to be unilateral in nature and designed
to be pro-'� ompetitive in purpose.
To b ' unlawfLl , such resolution would have to be adopted
pursuant o an agreement providing for joint anti-competitive
action ori acts by others in concert with the Authority. In
the absen e of any such agreement, the Authority could not be
acting in an unlawful manner. Zn addition, the Authority has
the defen es available under Local Government Antitrust Act
of 1984 (1 U. S.C. §� 34-36 ) .
Furth r, the Authority is a body politic and corporate
under Min . Stat. § 458 . Under principles of Minnesota statutory
and commo law, the Authority can act only by resolution of
its memberl acted on in a public meeting held for that purpose.
Sincerely, - ' . _
--,� �� �::.�. �: - '��Z %� --�✓�1.�yt � ,
�
M. J. Galvin, Jr.
MJG: jw
cc: Port uthority Staff ,
Atlention: Eugene A. Kraut -
- Executive Vice President : -
_ • . -City ' ttorney, . -
"`-� - � At'I ention: Edward P. Starr, City Attorney _ ,
" Serrence J. Garvey, Assistant -- �
� � City Attorney
�ommii sion Members
. , � .
_
.
, �
� , .
�