84-1674 WHITE - GTV CLERK
PINK - FINANCE G I TY O F SA I NT PA LT L Council
CANARV - DEPARTMENT
BLUE - MAYOR File NO. ��_ �� �
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, Co nci �esolution
Presented By . �
Referred To `�� ' Committee: Date
Out of Committee By Date
WHEREAS:
1. On December 4, 1984, the Port Authority of the City of Saint Paul adopted
Resolution No. 2390 giving preliminary approval to the issuance of revenue bonds in the
initial principal amount of $9,600,000 to finance the acquisition and rehabilitation for
office use the 435,000 square foor International Harvester building at 2572 University
Avenue in St. Paul for Estes I Limited Partnership whose general partner is the Estes
Company. Estes I will�own the north half of the building and the entire exterior shell.
Miller and Schroeder Municipals has agreed to underwrite the 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, 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, 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. 2390 the exact details of which, including, but not limited to,
provisions relating to maturities, 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.
COU[VCILMEN Requested by Department of:
Yeas ��5o/�lNL-l�{� �-��
Drew � (n Favor
Masanz
Nicosia
scnetbe� __ Against BY
Tedesco
Wilson �
�LC � 8 �98� Form Approved by City Attorney
Adopted by Council: Date ^
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Certified •s e Council et BY� �- � �
gy,
F1p by iNavor: e
� ��C+ Z � ����} Appr by Mayor for Subm ion o Co�ancil
PUSLISHED D E C � � 1984
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St Pa 1 Port A��nri to DEPART(,1�NT '
r M T�w10 F�raut CONTACT
924-56R6 PHONE ���� �� '
December 4, 1984 DATE
(Routing and Explanation Sheet)
Assign Number for Routing Order (Clip All Locations for Mayoral Signature):
��Department Director
City Attorney
� �� �
Director of Mana�ment/Mayor � . \��°b
� Finance and Management Services Director ��� �—
�_ City Clerk
Budget Director
ESTES I LIMITED PARTNERSHIP
$9,600,000 REVENUE BOND ISSUE
i�hat Will be Achieved by iaking Action on the Attached Materi�ls? (Purpose/Rationale):
The purpose of the bond issue is to finance the acquisition and rehabilitation for office
sue the 435,000 square foot International Harvester building `at 2572 University Avenue
for Estes I Limited Partnership whose general partner is the Estes Company. Estes I �will own
the north half of the building and the entire exterior shell .
Financial , Budgetary and Personnel Irr�acts Anticipated:
The amount of the bond issue is $9,600,000 and will be for a term of 30 years.
The Estes I project will house approximately 600 jobs.
Funding Source and Fund Activity Nurr�er Charqed or Credited:
Attachments (List and Nwrd�er all Attachmentsl :
1 . Staff inemorandum'
2. Draft City Council Resolution
3. Port Authority Resolution No.
DEPARTMENT REVIEW CITY �ATTORNEY REVIEW
� Yes No Council Resolution Required? Resolution Required? � Yes No
Yes � No Insurance Required? Insurance Sufficient? �, Yes _ No
Yes � No Insurance Attached?
Revision of October, 1982
(See Reverse Side for �Instructions)
� O R T � � � E���l i���
.
r� � AUTHORITY
OF THE CITY OF ST. PAUL
Memoraedu�n
TO: B0� �F COMMISSIONERS pA�. Nov. 29, 1984
(Dec. 4, 1984 Special Meeting)
FROM: C.M. Towle�
�
SUBJECT:ESTES I LIMITED PARTNERSHIP, A MINNESOTA LIMITED PARTNERSHIP
PUBLIC HEARING — PRELIMINARY AND UNDERWRITING AGREEMENTS
$9,600,000 — 876 INDUSTRIAL REVENUE BOND ISSUE
ST. PAUL -- OFF—SITE
RESOLUTION N0. 2390
ESTES II LIMITED PARTNERSHIP, A MINNESOTA LIMITED PAATNERSHIP
PUBLIC HEARING — PRELIMINARY AGREEMENT
$11,000,000 TAXABLE REVENUE BOND ISSUE — PRIVATE PLACEMENT
ST. PAUL ° UFF—SITE
RESOLUTION N0. 2392
PUBLIC HEARING — SALE OF LAND
RESOLUTION N0. 2391
1. THE PROJECT
The Estes Company plans to acquire and rehabilitate for office use the
435,000 square foot International Harvester manufacturing plant west of
Highway 280 and south of Uni�ersity Avenue. The company is proposing
to create two partnerships to accomplish this in a phased
condominiumized type development. It is currently proposed to have The.
Estes Company acquire the project and allocate ownership to Estes I who
will own the north half of the building and the entire exterior shell
with the second partnership, Estes II, to be responsible for
rehabilitating the interior of the south half of the building.
Both halves of the condominiumized office structure will contain an
atrium through the entire four levels of the project with a glass roof
to permit the entry of natural light. The ceiling heights within the
structure will permit the addition of inezzanine type office space and
allow for a range of between 280,000 and 370,000 square feet of
rentable space. The basement will be converted to a parking garage
with additional parking provided by a bi—level deck east of the
building.
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BOARD OF COMMISSIONERS
November 29, 1984
Page —2—
2. THE DEVELOPER
The Estes Company is one of the largest home builders in Arizona and
has developed a variety of business parks in the State and commercial
projects throughout the United States. We have been advised by their
financial references that the Estes Company is one of the finest
developers in Arizona and are very sound financially.
Estes I Limited Partnership will have as its general partner the Estes
Company, an Arizona general partnership consisting of WE7, Inc.;
Shedco, Inc. ; and Guardian Development, Inc. and initial limited
partners, Othello Limited Partnership and Redevelopment Resources Inc.
Estes II Limited Partnership would have the Estes Company as its
general partner and as initial limited partner, Plaza Limited
Partnership.
3. FINANCING
Financing for Estes I would be a $9,600,000 876 industrial revenue bond
issue for a 30—year term.
The Estes Company will provide an equity package consisting of the
following:
(a) A Master Lease or comparable document will cover projected
operating shortfalls and remain in effect to cover 105% of the
annual debt service of the bond issue. The guarantee will remain
in effect until one year after each tenant takes occupancy with the
obligation correspondingly reduced.
(b) The partnership will raise $500,000 in cash as equity in the
project.
(c) The debt service reserve will be funded with an irrevocable Letter
of Assurance (comparable to a bank letter of credit and is the
instrument utilized by Savings & Loan institutions) furnished by
First Federal Savings and Loan Association of Arizona.
Initially the Estes I bond financing will be privately placed and the
rate allowed to float at 657 of prime until a Target Rate has been
achieved at which time the borrower will have the opportunity to either
go out long—term or call the issue. The objective in this structure is
to lock in the bond issue this year, permit structural details to be
worked out and permit the developer to secure lease commitments.
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BOARD OF COMMISSIONERS
Nov. 29, 1984
Page —3—
The proceeds from the bond issue will be as foTlows:
Construction $8,196,000
Capitalized Interest 1,056,000
(Letter of' Assurance) (1,112,550)
Expenses 60,000
Discount 288,000
TOTAL $9,600,000
The Port Authority will receive its usual and customary fiscal and
adc�inistrative fees as well as full earnings on the sinking fund.
The Estes II Limited Partnership $11,000,000 taxable bond issue will be
privately placed and, if Resolution 876 is involved, will carry credit
enhancement to achieve a AA or AAA rating.
The property has been appraised in an "as is" condition by the Muske
Company for $2,650,000, and James B. McComb and Associates has
conducted a preliminary feasibility study and has concluded that at
projected rental rates of about $9 to $10.75 per square foot net, they
could achieve a 90% occupancy of the first phase by the end of the
second year.
The Estes Company has $90,000 on deposit with the State of Minnesota to
reserve their bond allocation for issuance in 1985.
4. UNDERWRITING
Miller & Schroeder Municipals has agreed to underwrite the 30—year bond
issue, and the initial private placement will be at b5Y of prime with
the long—term interest rate set the date the bonds are sold long term
which we anticipate to take place at our regular December 18 Commission
meeting.
5. RECOMMENDATIONS
The developer and staff have reviewed this project with District 12,
and the full committee endorsed the project unanimously. Staff has
interviewed the officers of this company, reviewed their financial
statements, considered the preliminary feasibility and pro forma data
and given the guarantee provided and recommends approval of Resolution
Nos. 2390 � 2391 , and 2392.
CMT:ca
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Resolution t1o. '�� C�
RESOLUTION OF
THE PORT AUTHORITY OF THE CITY OF` SAIt�TT PRUL
WHEREAS, the purpose of C1lapter 474, Minnesota
Statutes, known as the yinnesota �tunicipal Industrial Develop-
ment Act (hereinafter called "Act") as found and determined by
the legislature is to promote the welfare of the state by the
active attraction 3nd encouragement and development of economi-
cally sound industry and commerce to �orevent so far as possible
the emergence of blighted and raarginal lands and areas of
chronic unemployment and to aid in the development of existing
areas of blight, marginal land and persistent unemployment; and
WEiEREAS, factors necessitating the active promotion
and development of economically sound industry and commerce are
the increasing concentration of population in the netropolitan
areas and the rapidly rising increase in the amount and cost of
governmental services required to meet t'ne needs of the
increased population 3nd the need for development �f land use
tahich will orovide an adequate tax base to finance these
increased costs and access to e:nployment opportunities for such
population; and
WHEREAS, The Port Authvrity of the City of Saint Paul
(the "Authority") has received from Estes I Limited
Partnership, a Minnesota limited partnership (hereinafter
referred to as "Company") a request that the Authority issue
its revenue bonds (which may be initially in the form of a
single bond) to finance the acquisition of the exterior shell
and north one-half of the former I:�ternational Harvester
Building at Highway 280 and University Avenue, and the
renovation thereof f�r use as an office building and related
parking facilities ('nereinafter collectively called the
"Project" ) all in the City of St. Paul, a11 as is �ore fully
3escribed in the staff report on file; and
4�-IEREAS, the Authority desirzs to facilitate the
selective development of the community, to retain and improve
its tax base and to 'nelp it provide the range of services and
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employment opportunities required by its population, and said
Project will assist the City in achieving that objective. 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
inIHEREAS, the Project to be financed by revenue bonds
will result in substantial employment opportunities in the
Project;
WHER�AS, the Authority has been advised by repre-
sentatives 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
t�1at the economic feasibility of operating the Project woul3 be
significantly reduced, but the Company has also advised this
�uthority that but for revenue bond financing, and its
resultin3 low borrowing cost, the Project would not be
undertaken;
WHEREAS, Miller & Schroeder �lunicipals, Inc. ( the
"'Jnderwriter") has made a proposal in an agreement ( the
"Underwriting Agrzement") relating to the purchase of the
revenue bonds to be issued to finance the Project;:
TaHEREAS, the Authority, �ursuant to �linnesota
Statutes, Section 474.01, Subdivision 7b did publish a notice,
a cony of which with proof of publication is on file in the
office of the Authority, of a public hearing on the proposal of
the Company that the Authority finance the Project hereinbefore
described by the issuance of its industrial revenue bonds; and
��JHEREAS, the Authority 3id conduct a oublic hearing
pursuant to said notice, at which hearing the recommendations
contained in the Authority' s staff �emoran3um to the
Cammissioners were reviewed, and all oersons who appeared at
the hearing were given an opportunity to express their views
�aith respect to the proposal.
NOW, THEREFORE, BE IT RESOLVED by the Commissioners
of the Port Authority of the City of Saint Paul, P�innesota as
follows:
1 . On the basis of information available to the
Authority it appears, and the Authority hereby finds, that said
Project constitutes properties, use3 or useful in connection
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with one or more revenue producing enterprises engaged in any
business within the meaning of Subdivision la of Section 474.02
of the Act; that the Project furthers the purposes stated in
Section 474.01 of the Act and, but for the willingness of the
Authority to furnish such financing, the Company would not
undertake the Project, 3nd that the effect of the Project, if
undertaken, will be to encourage the cievelopment of
econo�nically sound industry and commerce and assist in the
prevention of the eriergence of blighted and marginal 13nd, and
will help to prevent chronic unemploymezt, and will help the
City to retain 3nd improve its tax base and provic3e the range
of services and employment opportunities required by its
population, and will help to prevent the mover�ent of talented
and educated persons out of the state and to areas within the
state where their services may not be as effectively use3 and
will result in more intensive develo�nent 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 peopLe of 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
�uthority, 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 the
revenue bonds, the Project is hereby approved and authorized
and the issuance of revenue bonds of the Authority (which may
be initially in the form of a single bond) in an amount not to
exceed approximately $9,600,000 (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 . In accordance with Subdivision 7a �f Section
474.01, yinnesota Statutes, the Executive Vice-President of tne
AUTHORITY is hereby authorized and directed to submit the
proposal for the above described Project to the Commissioner of
�nergy and Economic Development, requesting his approval, and
other officers, employees and agents of the AUTHORITY are
hereby authorized to provide the Commissioner with such
preliminary information as he may require.
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4. There has heretofore been filed with the
Authority a form of Preliminary Agreement between the Authority
and Company, relating to the proposed construction and
financing of the Project and a form of the Underwriting
Agreement. The fortn of said Agreements have been examined by
the Co:nmissioners. It is: the purpose of said Agreements to
evidence the commitment of the parties and their intentions
with respect to the proposed Project in order that the Company
may proceed without delay w�th the commencement of the
acquisition, installation and construction of the Project with
the assurance that there has been sufficient "official action"
under Section 103(b) of the Internal Revenue Code of 1954, as
amended, to allow for the issuance of industrial revenue bonds
( including, if deemed appropriate, any interim note or notes to
provide temporary financing thereof) to finance the entire cost
of the Project upon agreement being reached as to the ultimate
details of the Project and its financing. Said Agreements are
hereby approved, and the President and Secretary of the
Authority are hereby authorized and directed to execute said
Agreements. .
5. Upon execution of the Preliminary Agreement oy
the Company, the staff of the Authority are authorized and
3irecte3 to continue negotiations with the Company so as to
resolve the remaining issues necessary to the preparation of
�'ne lease and other documents necessary to the adoption by the
Authority of its final 'nond resolution and the issuance and
delivery of the revenue bonds; �rovided 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 the
provisions of Minnesota Statutes, Section 475 .06, Subdivision
l, to accept a final offer of the Underwriters made by the
Underwriters to purchase said bonds and to execute an
underwriting agreement setting forth such offer on behalf of
the Authority. Such acceptance shall bind the Underwrit�rs 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 .
6. The revenue bonds ( 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 �neaning of any constitutional or statutory limitation and
shall not constitute �r give rise to a pecuniary liability of
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the Authority or thg City or a charg� aqainst their general
credit or taxing powers and neither the full faith and credit
nor the taxinq powers of th� Authority or the City is pledged
for the payment of the bonds (and interi� note or notes) or
interest thereor�.
T. Ir� order to faci.litate caapZetion of the• revenue
bond financinq herein contemplated,. the City Counci.l is hereby
requested to consent; pursuant to Laws of ylinnesota, 1976,
Chapter 234, to the issuance of the revenue bonds ( including
any interim note or notes) herein coatemplated and any
additional bonde �rhich the Authority may prior to issuance or
from time to time thereafter deem necessary to canplete the
Project or to refund such revenue bonds; and for such purpose
th� Executi.ve� Vice Presi3ent 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 describinq the general nature of the Project and
estimating the principal amount of bonds to be� issued to
finance� the• Project and in preparing a draft of the proposed
application to the Cosnmissioner of Energy and Economic
Developcaent, State of �tinnesota, for approval of the Project,
which hag beea 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.-
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Adopted December 4,- 1984 j�
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Attest
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P �
The Po Authvrity of the City
of S t F�ul
L-�aa-t. Secr ary
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RECEIVED
DEC 10 1984
CITY ATTORNEY
PORT AUTHORITY OF THE CITY OF SAINT PAUL
25 WEST FOURTH STREET • SUITE 1305 • ST, PAUL, MINN. 55102 • PHONE (612) 224-5686
December 4, 1984
Mr. James Bellus
Director RECEIVED
Planning aad Economic Development Department
Citq of St. Paul ��C �1119a4
14th Floor, City Hall Annes
St. Paul, Minnesota 55102 MpYOR'S OFFICE
SUBJECT: ESTES I LIMITED PARTNERSflIP
$9,600,000 B,EVENUE BOND ISSUE
Dear Jim:
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 $9,600,000 in revenue bonds to finance the acquisition and
rehabilitatioa for office use the 435,000 square foot International
Iiarvester building at 2572 University Avenue for Estes I Limited
Partnership whose general partner is the Estes Company. Estes I will own
the north half of the building and the entire egterior shell.
The Port Authority staff has conducted a thorough evaluation of the firms
and/or indiniduals that are involved in this pro�ect or in which the
principals have an interest. This investigation has included detailed
credit analysis, Dun and Bradstreet reports, direct communication with
representatives of financial institutions with whom the participants have
done busiaess and data base checks to determine if any principal(s) have
been in any way involved in legal proceedings as a result 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. 2390 which authorized the sale of reveaue bonds in the amount of
$9,600,000.
Your expeditious handling of this matter will be appreciated.
ours truly,
Eu ene A. Kraut
Executive Vice President
EAK:ca
cc« Mayor Latimer
�BERT F. SPRAFKA &16HVE A KRAUf.C.I.D. DONALD G. DUNSHEE.C.I.D. CLIFFORD E. RAMSTED PERRV K.FEDERS
�cwn��vrx�oe+r c�n�MnNnc�a a� ow�croa.iriarsmvy oe��oPnne�r cr��crc�e out�crat oF�
FSSf.IXEC.VK:E PRESIDENT
JMMISSIONERS GEORGE W.WINTER WILLIAM WILSON ARiHUR N. GOODMAN VICTOR P. REIM JFAN M.WE5f CHRIS NICOSIA WILLIAM J. SSFEaT
a�oaor wcevr�oavr sECr�rnRV menvmeR
C.I.D. Certified Industrial Developer