Loading...
85-1583 WHITE - CITY CLERK � - ' ` PINK - FINANCE COURCII A CANARY - DEPARTMENT G I T Y O F S A I N T PA U L y-e{^ L .� BLUE - MAYOR File NO. U v w /�/ �� . Cou 'l. Resolution Presented y Referred To ,�� N�1JC�'' Committee: Date ` ��� I �-� Out of Committee By Date WEIEREAS: 1. On October 31, 1985 the Port Authority of the City of Saint Paul adopted Resoluton No. 2555 giving preliminary approval to the issuance of revenue bonds in the initial principal amount of $5,000,000 to finance the acquisition and remodelil1g of the Capitol Holiday Inn for HBS Associates. The bonds will be underwritten by Miller & Schroeder Municipals, Inc. 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, shall be issued only with the consent of the City Council of 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, sub�ect to final approval 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, the City Council hereby consents to the issuance of the aforesaid revenue bonds for the purposes described in the aforesaid Port Authority Resolution No. 2555 the exact details of which, including, but not limited to, provisions relating to ma.turities, interest rates, discount, 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 issuance of any additional 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. COUNC[LMEN YB�w Nays Requestgd b epar ment of: Masanz unt � � L vin In Favor x �Scheibel Mc no� _ Against BY �� Sh Iter Tedesco T e ilson �'�- DEC 3 - 1985 Form Approved by City Attorney Adopted by Council: Date — Certified Yas:ed by Council Secretary BY �—�--- -� B � Appr by Ylayor: Dat �+ �� – ���� Appro Mayor for Submission C ' il � By - BY . �����hE� D t C 14198� � � o�;��-� �'��1,�-��0 2 2 4 8 Port Authgr+ty DEPARTMENT . A.Kraut CONTACT� � 224-5686 PHONE Nov. 5. 1985 DATE �Q��� e e ASSIGN NUhBER FOR ROUTING ORDER (Clip All Locations for Signature) : 1 Department Director !,i Director of Management/Mayor Finance and Management Services Director �4 City Clerk Budget Director �'iBS ASSOCIATES (CAPITOL NOLIDAY INN) � City Attorney �5,000.000 REVENUE BOND ISSUE WHAT WILL BE ACHIEVED BY TAKING ACTION ON THE ATTACHED MATERIALS? (Purpose/ The purpose of the bond issue is to finance the acquisition and remoac�e�l°ng o�' the Capitol Holiday Inn by HBS Associates, a partnership. Hershel B. Sarbi.n, general partner in the Sheraton Midway Hotel will be a general partner in HBS Associates. The Partnership �ish to aequire the Capitol Holiday Inn and remodel it to accommodate overflow guests at their Sheraton .Midway Hotel : The Port Authority's rationale is to assure that the facility continues ta operate as a State Capitol oriented facility and is not converted to office space. COST/BENEFIT, BUDGETARY AND PERSONNEL IMPACTS ANTICIPATED: The amount of the bond issue is $5,000,000 which includes $690,000 in remodeling costs and partnership equity of $952,000, or nearly 20�. ��� �� � � � �� FINANCING SOURCE AND BUDGET ACTIVITY NUMBER CHARGED OR CREDITED: (Mayor's signa- ture not re- Total Amount of Transaction; quired if under $10,000) Funding Source: Activity Number: ATTACHMENTS (List and Number All Attachments) : 1 . Staff Memorandum 2. Draft City Council Resolution 3. Port Authority Resolution No. 2555 cc• R. Thorpe DEPARTMENT REVIEW CITY ATTORNEY REVIEW X Yes No Council Resolution Required? Resolution Required? X Yes No Yes X No Insurance Required? Insurance Sufficient? �Yes No Yes �No Insurance Attached: (SEE REVERSE SIDE FOR INSTRUCTIONS) Revised 12/84 � �s-is� .� � ORT ' AUTHOI� ITY OF THE CITY OF ST. PAUL Memorandum TO: Board of Commissioners �A� Oct. 31, 1985 FROM: E. A ��- SUBJECT: pUBLIC HEARING - PRELIMINARY AND UNDERWRITING AGREEMENT HBS ASSOCIATES (CAPITOL HOLIDAY INN) $5,000,000 REVENUE BOND ISSUE - OFF-SITE RESOLUTION N0. 2555 1. THE PROJECT The Holiday Inn at the State Capitol has been placed on the market for sale because of the fact that Holiday lnns has acquired the downtown Radisson Plaza. The facility is currently owned by the Donovan Companies and is operated by Holiday Inns on a Management Contract. The facility has been appraised at $4,250,000 based upon a conventional financing rate of 12.5y. 2. THE PARTNERSHIP Hershel B. Sarbin is the general partner of the Sheraton Midway Hotel . which is currently operating as one of the most successful hotels in the Sheraton chain. This is a general/limited partnership with a group of affluent New York investors. Because of the need frequently to f ind locations for overflow guests, Mr. Sarbin and his partners are interested in acquiring the facility and have requested revenue bond financing assistance. • 3. FINANCING The Partnership will contribute cash equity towards the purchase price of $450,000; deposit with us a letter of credit for the debt service reserve of $502,350; and fund an operating budget of approximately $1,000,000. This will result in a bond issue of $5,000,000, in which the partnership equity would amount of $952,000, or nearly 20%. Included in the purchase and financing of the facility would be $690,000 in remodeling costs, which is required when an existing building is acquired. In our search for allocation under the per capita regulation.s of bond issuance in Minnesota and nationwide we have acquired sufficient cap to d:, t�:i� pro�ect, ther�by utilizin� all of the cap t�at is avaiiabie to complete all of the projects proposed and those previously approved. � . � , . � �/�f�Ja 4 Board of Commissioners Oct. 31, 1985 Page -2- The acquisition would be on a financed lease and the bond issue would be comprised as follows: Acquisition and remodeling $4,830,000 Expenses 30,000 Discount 140,000 TOTAL $5,000,000 4. TERMS OF THE AGREEMENT The terms of the agreement would be for 30 years with the Port Authority to receive its normal fiscal and administrative fees based on the following: .42% per million for the first ten years .54y per million for the second ten years .66� per million for the final ten years. The payments would be made monthly in advance which will result in significant sinking fund earnings over the terms of the agreement. 5. RECOMMENDATION We have had extensive dealings with the members of the New York syndication group and Hershel Sarbin and many of the partners who will be involved in this project. The limited partners along with Mr. Sarbin have assets in excess of $300,000,000. Staff recommends approval of the above project. EAK:�mo � . �,s"_ �,s�,3 .. � . * 566S � Resolution No. ���5� RESOLUTION OF THE PORT AUTHORI'I'Y OF THE CITY OF SAINT PAL7L WHEREAS, the purpose of Chapter 474, Minnesota Statutes, known as the Minnesota Municipal Industrial Develo.p- ment Act (hereinafter called "Act" ) as found and determined by the legis lature is to promote the welfare of the state by the active attraction and encouragement and development of economi- cally sound industry and commerce to prevent so far as possible the emergence of blighted and marginal lands and areas of chronic unemplayment and to aid in the development of existing areas of blight, marginal land and persistent uner.iployment; and WHEREAS, factors necessitating the active promotion and development of economically sound industxy 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 City of Saint Paul. (the "Authority" ) has received from HBS Associates (hereinafter referred to as "Company" ) a request that the Authority issue its revenue bonds to finance the acquisition and renovation of the Holiday Inn (Capitol) hereinafter collectively called the ' Project" in the City of St. Paul, 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 he3.p it provide the range of services and employment opportunities required by its population, and said � � ' � . . ��,S��s�3 �' , Project will assist the City in a�hieving that objective. Said Project will help •to increase the assessed valuatior. of the City and hel� maintain a positive r�lationship between assessed valuation and debt and enhance the image and reputation of the City; and WIzEREAS, the Project to be finar.ced by revenue bonds will result in substantial employment opportunities in the Project; WHEREAS, the Authority has been advised by repre— s�ntatives of the Company that conventional, commercial financing to pay the capital cost of the Project is available only on a limited basis and at such high costs of borrowing that the economic feasibility of operating the Project would be significantly reduced, but the Company has also advised this Authority that but for rever.ue bond financing, and its resulting low borrowing cost, the Project would not be undertaken; WHEREP►S, Miller & Schroeder Financial, Inc. ( the "Underwriter" ) has :nade a proposal in an agre�nent (the "Underwriting Agreement" ) relating to the purchase of the revenue bonds to be issued to finance the Project; WEiEREAS, the Authority, pursuant to yl.innesota Statutes, Section 474.01, Subdivision 7b did publish a notice, a copy of which �ith proof of publication is on file in the office of the Authority, of a public hearing on the proposal of the Cor.ipany that the Authority finance the Project hereinbefore described by the issuance of its industrial revenue bonds ; and WHEREAS, the Authority did conduct a public hearing pursuant to said notice, at which hearing the recommendations contained in the Authority' s staff inemorandum to the C�mmissioners were reviewed, and all persons who appeared at the hearing were given an opportunity to express their views wi.th respect to the� proposal. NOW, THEREFORE, BE IT RESOLVED by the Commissioners of the Port Authority of the City of Saint Paul, Minnesota as follaws: 2 �.. � � � . ��s-���3 J 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 ia connection csith one or more revenue producing enterprises engaged in any business within the meaning of Subdivision 1 of Section 474.02. of the Act; that the Project furthers the purposes stated in , Section 474.01 of the P,ct and, but for the willingness of the Authority to furnish such finan�cing, the Company would not undertake the Proiect, and that the effec� of the Project, if undertaken, will be tc encourage the development of economically sound industry and commerce and assist in the prevention of the emergence of blighted and marginal land, and �ill help to preveat 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 �ill heip to prevent the movement of talented and educated persons out of the state and to areas within the state where their services may r.ot be as effectively used and will result in more intensive development and usa of land within the City and will eventually result in an increase in the City' s tax base; and that it is in �he best interests of the port district and �he people cf the City of 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, tr.e 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 the revenue bonds, the Project is hereby approved and authorized and the issuance of revenue bonds of the Authority in an amount not to exceed approximately $5 :000,000 (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 Ruthority' 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 . In accordance with Subdivision 7a of Section 474.01, Minnesota Statutes, the Executive Vice-President of the AUTHORITY is here5y authorized and directed to submit the proposal for the above described Project to the Commissioner of Energy and Economic Development, requesting his approval, and other officers, e�rpioyees and agents of the AUTHORITY are hereby authorized to provide the Commissioner with such preliminary information as he may require. 3 , ' , ' _ ��s=�s-�3 4. There has heretofore been filed with the Authority a form of Prel.iminary Agreement between the Authority and Company, relating to the proposed construction and financing of the Project and a form of the Undeiwriting Agreement. The forms of the agreements have been examined by the �ommissioners. It is the purpose of the agreements to evidence the �ommitment of the pazties and their intentions �ith respect to thz proposed Project in: order that the Company may proceed without delay �ith the co�encement of the acquisition, installation and construction of the Project with the assurance that there has been sufficient "official action" under Section 1031b) of the Internal Revesiue Code of 1954, as amended, to allova for the issuance of industrial revenue bonds (including, if deemed agpropriate, any interim nc,te or notes to provide temporaiy financing thereof) to finance the entire cost of the Project �.xpon agreement being reached as to the ultimate details of the Proje�t and its financinq. Said Acresments are hereby approved, and the President and Secretary of the Authority are hereby authorized and directed to execute said Agreements. 5. LTpon 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 }he remaining issues necessary to the preparation 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-Presi3ent if the Presid�nt 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 the provisions of Minnesota Statutes, Section 475 .06, Subdivision 1, to accept a final offer of the Underwriter made by the Underwriter to purchase said bonds and to execute an Under,�riting 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 resolution to be adopted prior to the delivery of said revenue bonds. 4 ' . , . �' -is�3' . � � - � • � � 6. Tha revenue bands (including any interim note or notes) and interest thereon shall not constitute an indebtedness of the Authority or the City of Saint Paul within. the� meaning ot any constitutional or statutory limitation and shall not constitute or give rise to a pecuniary liability of the P,uthority or the City or a charge against their general credit or taxing powers and neither the ful 1 faith and credit nor the taxing powers of the Authority or the Gity is pledye3. for the payr►tent of the bonds (and interim note or notes) or interest thereon. ?. In order to facilitate completion of the revenue bond financing herein contemplated, the City Council is hereby requested to consent, pursuar.t to Laws of Mirinesota, 1976, Chapter 234, to the issuance of the revenue bonds ( including ariy 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. 8. The actions of the Executive Vice–President of the Authority in causing public notice: of the public hearing and in describing the general nature of the Project and estimating the principal amount of bonds to be issued to finance the Project and in preparing a draf� of the proposed application to the Commissioner of Energy and Economic Development, State of Minnesota, for approval of the Project, which has been available for inspection by the public at the office of the Authority from and after the publication of notice of the hearing, are in all respects ratified and confirmed. Adopted October 31, 1985 - . / Attest : '% •� — Pres.iden$ / ` The Po�if A�uthority of the City �� of S�int Paul S �c.-?��`'• Se tary 5