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280105 . j WHITE - CITY CLERK PINK - FINANCE `,r CANARY - DEPARTMENT G I T Y O F S A I N T PA U L � Council ���I� BL.UE - MAYOR . R�.� - � � File N 0. ^Co c ' Resolution �� Presented By Re o Committee: Date Out of Committee By Date WHEREAS, 1. On March 31 , 1983, the Port Authority adopted Reso1ution No. 2112 giving preliminary approval to the issuance of taxab1e revenue bonds in the amount of approximate1y $3,020,000 to finance the acquisition of equipment in the Brown & Bigelow Company facility valued at approximate�y $3.5 mi1'lion by the Port Aut}�ority and �ease it back to Brown & Bigelow Com- munications Corp. (Andlinger). The bonds wi�1 be private1y p1aced through the First Nationa1 Bank o�P St. Paul . by Mi11er & Schroeder. No underwriters �Pees wi11 be charged. 2. Laws of Minnesota 1976, Chapter 234, provides that any issue of revenue bonds authorized by the Port Authority of the City of Saint Pau1, sha11 be issued only with the consent of the City Counci1 of the City of Saint Pau1, by reso'lution adopted in accordance with 1aw; 3. The Port Authority of the City of Saint Pau'I has requested that the City Counci� give its requisite consent-pursuant to said 1aw to faci1itate the issuance of-said revenue bonds by the Port Authority of the City of Saint Pau1, sub�ect to fina'I approva1 of the detai1s of ,said issue by the Port Authority of the City of Saint Pau�. RESOI,VED, by the City Council of the City pf Saint Pau1, �hat in accordance with l.aws of Minnesota. 1976, 'Ct�apter 234, the City Council hereby consents to the issuance of the aforesaid revenue bonds for the purposes described in the a�oresaid Por�t Authority Reso1ution No. 2112, the exact details of which, including, �ut not �imited to, provisions re��ting to maturities, interest rates, discount, redemption, and f01^ the issuance o�F additional bonds are to be determined by the Port Authoirty, pursuant to resolution adopted by the Port Authority, and the City Counci'I hereby authorizes the issuance o�P any additiona� bonds (inc�uding refunding bonds) by the-�Port Authority, �Pound by the Port Authority to be necessary for carrying out the purposes �Por which the aforesaid bonds are issued. COUNCILMEN Request d by Department of: Yeas Nays � �r� L ne Fletct�dr � C� � In Favor M dox Gal{es , l M ahon Masani . �o� o ite► - _ Against BY ed co Nicosi� ,�� Scheib�t TedesCO �PR �,��3 Form Ap� by City Attorney Adopted by Council: yy��spqDate � � `�--�� Certified Y•.se b Counci e BY� � ss• �` /' $� ApR q Ap by Mayor f r mi sion to Council Ap ove ;Vlayor: Date — 7 �•,83 BY - – �UBLiSHED APK 1 � 1983 ,• . r ������Jr Resolution No. �//v RESOLUTION OF THE • PORT AUTHORITY OF THE CITY OF SAINT PAUL . WHEREAS, the Port Authority of the City of Saint Paul (the "Authority") has previously issued its Industrial Development Revenue Bonds, Series 1979-1 in the aggregate principal amount of $3, 700,000, Series 1979-2 in the aggregate principal amount of $9, 000,000 and Series 1979-C in the aggregate principal amount of $1,000,000 (collectively the "Bonds" ) to finance the construction, equipping, and improvement of a manufacturing, storage and distribution facility, together with certain related and incidental facilities (collectively, the "Project" ) which was to he occupied by Brown & Bigelow, Inc. ; and WHEREAS, in connection with the issuance of the Bonds the Authority entered into a revenue agreement in the form of a lease with Brown & Bigelow, Znc. dated as of April 1, 1979 (the "Lease" ) ; and WHEREAS, subsequent to the issuance of the Bonds and execution of the Lease, Brown & Bigelow, Inc. was merged into Saxon Industries, Inc. ( "Saxon" ) and the Lease was amended October 28, 1980 by an amendment to lease between the Authority 3nd Saxon; and � � �_ ����.4:'5 .. � � � WHEREAS, the Lease, as amended, requires that Saxon _ pay installments of Basic Rent in an amount suf£icient to pay the principal, interest and any premium on the Bonds and to also pay and perform other obligations relating to the construction of the Project and the use and occupancy thereof; an d WHEREAS, on April 15, 1982 Saxon filed for protection under Chapter 11 of the Bankruptcy Reform Act and is currently acting as debtor-in-possession in the Chapter 11 Reorganization proceeding pending in the United States Bankruptcy Court for the Southern �istrict of New York (the "Reorganization" ) ; and WHEREAS, pursuant to Section 13.1 (b) of the Lease, as amended, the filing of the petition instituting the Reorganization was an event of defaul�C under the Lease for which, because of the automatic stay of actions imposed by Section 362 of the Bankruptcy Reform Act, the Authority has not heretofore taken any remedial action; and WHEREAS, the Authority is required, under the terms of its covenants with the holders of the Bonds, that in the event of a default by the lessee of any facility, it will exercise its best efforts to cause such facility to be operated to provide funds to help pay the principal, interest and any call premium or reserve for the Bonds issued to finance the facility; and i . � . �_ ����.�5 . , � WHEREAS, the Authority and Saxon have been negotiating with several entities interested in leasing or otherwise using the Project and have tentatively agreed to enter into various agreements and undertakings which wouTd result in the use of the Project by B & B Communications Corp. ( "B & B") , which agreements include: (a) the termination of the Lease by Saxon; (b) the sale of certain equipment by Saxon to the Authority; (c) the lease of Project and certain equipmen�t by the Authority to B & B, all as more fully set forth in the staff inemorandum presented to the Commissioners at this meeting; and WHEREAS, the Authority has studied the marketability and usefulness of the Project and has �ietermined that under the terms and conditions of a lease, in substantially the form attached as Exhibit A (the "B & B Lease" ) , it will receive a fair and reasonable return to help pay the principal and interest on its Bonds; and WHEREAS, Authority has determined that the facility can best be operated by B & B, and B & B is willing to operate the facility under the terms and conditions of the B & 8 Lease. WHEREAS, the approval of the transactions outlined above is contingent upon Saxon receivin3 the approval of the Bankruptcy Court presiding over the Reorganization; and WHEREAS, the Authority desires to support �axon in its application for approval of this transaction. , . � ` . . . �'.����.���� r � NOW THEREFORE, BE IT RESOLVED BY THE PORT AUTHORITY OF THE CITY OF SAINT PAUL AS FOLLOWS: - 1. The lease between the Authority and B & B Communica- tions Corp. , in substantially the form attached hereto as Exhibit A, is approved, subject to such modifications as staff feels are in the best interest of the Project and the holders of the Bonds. 2. The President and Secretary of the Authority, or such other officers as are appropriate in the absence of either the President or Secretary, are hereby authorized and directed to execute any and all documentation necessary to effect the lease of the Project to B & B Communications Corp. , incli�ding any documentation required by Saxon prior to seeking the approval of this transaction from the Bankruptcy Court. 3 . The entering into of the lease with B & B Communica- tions Corp. and the purchase of certain equipment from Saxon is all dependent on Saxon receiving approval of these transactions from the bankruptcy court, evidenced by an order o.f that court in form and substance satisfactory to counsel to the Authority, and the expiration of any applicable appeal period. Adopted: March 28, 1983 ,� , PORT AUTHOR � Y O CITY OF SAI L � � -� � �La- %� Pr nt Attes. �-� �. � , /�� �s��'�'�� �'" t - Secretary , � � . , �����5 � Resolution No. , l/� RESOLUTION OF THE PORT AUTHORITY OF THE CITY OF SAINT PAUL WHEREAS, the purpose of Chapter 474, Minnesota � Statutes, knc�n as the Minnesota Municipal 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 and encouragement and development of ecor�omi- cally sound industry and commerce to prevent so far as pos�sible the emergence of blighted and marginal lands and areas of chronic unemployment and to aid in the development of existing areas of blight, marginal land and persistent unempl.oyment; 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 ta 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 the B & B Communications Corp. (hereinafter referred to as "Company") a request that the Authority issue its revenue bonds to finance the acquisition of certain items of equipment to be purchased by the Authority from Saxon Industries and leased to the Company (the "Project" ) ; and WHEREAS, the Authority desires to facilitate the selective development of the community, to retain and improve its tax base arid to help it provide the range of services and employment opportunities required by its population, and said Project will assist the City in achieving that objectiv�. Said Project will help to increase the assessed valuation af 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 Authority has been advised by repre- � sentatives of the Company that conventional, commercial �,,�Q���� � financing to pay the capital cost of the Project is available only on a limited basis and at such high costs of '4orrowing that the economi.c feasibility of operating the Project would be significantly reduced, but the Company has also advised the Authority that with the aid of revenue bond financing, and its resulting low borrowing cost, the Project is economically more feasible; WHEREP,S�, Miller & Schroeder Municipals, 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; WHEREAS, the Authority, pursuant to Minnesota Statutes, Sectio� 474.01, Subdivision 7b did publish a notice, a copy 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 Pro�ect 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 Commissioners were reviewed, and all persons who appeared at the hearing were given an opportunity to express their views with 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: 1. 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 la of Section 474.02 of the Act; that the Project furthers the purposes stated in Section 474.01 of the Act, that the availability of the financing under the Act and willingness of tYte Authority to furnish such financing will be a substantial inducement to the Company to undertake the Project, 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 . � � ������.�5 ' � 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 prevent the movement of ta].ented and educated persons out of the state and to areas wi.thin 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 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 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 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 $3,000,000 (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 Authority' s staff, as set forth in the staff inemorandum to the Commissioners which was presented to the Commissioners, are incorporated herein by �seference and approved. 3. In accordance with Subdivision 7a of Section 474.01, Minnesota Statutes, the Executive Vice-President of the AUTHORITY is hereby authorized and directed to submit the proposal for the above described Project to the Deoartment of Com�nerce, requesting approval, and other officers, employees and agents of the AUTHORITY are hereby authorized to provide the Department of Commerce with such preliminary information as it may requi.re. 4. There has heretofore been filed wi.th the Authority a form of Preliminary Agreement between the Authority and Company, relating to the proposed financing of the Project and a form of the Underwriting Agreement. The form of said Agreements have been examined by the Commissioners. It is the purpose of said Agreements to evidence the commitment of the parties and their intentions with respect to the gronosed Project in order that the Company may proceed without delay with the commencement of the acquisition, of the. Project with the assurance that there has been sufficient "official action" under Section Z03(b) of the Internal Revenue Code of 1954, as amended, to allow for the issuance of industrial revenue bonds . �,, ,g� F�� . � �c►���� � ' 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 A3reements. ' 5. Upon execution of the Preliminary Agreement by the Company, the staff of the Authority are authorized and directed to continue negotiations with the Company so as to resolve the remaining issues necessary to the preparation of the lease and other doeuments 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 Seeretary (or Assistant Secretary if the Secretary is absent) of the Authority, or if either of such otficers (a�d his al.ternative) a=e 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 Underwriters made by the Underwriters to purchase said bonds and to execute an unde�writing agreement setting forth such offer on behalf of the Authority. Such acceptance shall bind the Underwriters 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 and interest thereon shall not constitute an indebted�ess of the Authority or the City of Saint Paul wi.thin the meaning of any constitutional or statutory limitation and shall not constitute or give rise to a pecuniary liability of the Authority or the City or a charge against their general c=edit or taxing powers and neither the full faith and credit nor the taxing powers of the Authority o� the City is pledged for the payment of the bonds or interest thereon. 7. In order to facilitate completion of the revenue bond financing herein contemplated, the City Council is 'nereby requested to consent, pursuant to Laws of Minnesota, 1976, Chapter 234, to the issuance of the revenue bonds 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. y �V�i���� * , - 8. The actions of the Executive Vice-Przsident 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 draft of the proposed application to the Department of Commerce, State of Mi.nnesota, 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 Mar�ch 31, 1983 � , C \ Attest �/ Presiden � The Port uthority of the City ' '` of Sain Paul i ✓��f�i% � ,� . !i ` Secreta Port �iuthoritv DEPARTt�1ENT 4' .. •' ` E. A. Kra ut -�'-ONTACT � � ;,,�------s r ' : 224,5686 : _ _ PHONE i ��'� ` �7✓ 4-1-83 - DATE � (Routing artd Explanation� Sheet) . A ,. . _. .. ,. . : Assig,n Tiva�ber far Routing Order (Clip All Locatlans for MayaraT Si4nature): . _�� _ � , 3 Di rector of Mana�ement/Mayar �` ; Fi nance and l�lanac,�:n�nt Servi ces Dj recto . _.._._ 5 City Clerk : B:udget Director . � i�hat Wi 1 I be A�hi eved�7ak_ i ng Acti on on the attached Nlateri a]s? (Pu ose Rational e : TMe p!eirpose of the bond issue is to finance the acquisition of t1� �quipment in the Brown & Bigelow facility and lease�:it back to Br�vn &�Bige1ow Communications Corp. (Andlinger,�, . which' wiil keep �the plant operating and ultimately increase the �rtptoyment as the busirtess activities o� Brown & Bigelow are reactivated. The faci1ity wou1d be 9eased on a la-year lease with two 10-year�renewa1 o�ptions. The equipment acquisition wou1d be fi:nanced by a $3,020,000 taxab�e revenue bond issue which will be private1y p1aced. The equi�nt is valued at approximate1y $3.5 mi11ion. � . F3nancial�, Sudgetary and Personnei In�pacts Anti�ipated: - N/A ''Fus�ding Source and Fund Activity Nu�er Char�ed or Creditedr N/A Attachments (List and Number all Attachments) : � Staff Memorandum praft City Counci1 Reso1ution Part Authority �eso1u�ion No. 2110 and 2112 � DEPARTMEN� REVIEW CITY ATTQ�thtEY REYI�1+l X Yes No Caun�il Resolution Required? Resolution :Required? x` Yes� No � , �, Yes � No Insurance Required? Insurance Sufftcient? Yes � No Yes � Na Insurance Attached? ec• R. Th�tpe Revision of October, ]982. � ��PP RPVPI"SP .Sil(fP f�r �Tnstructions) � � �, OilT � A�VTHORITY ��������' OF THE CITY OF ST. PAUL Memo�andum TO: Board of Commissioners DAT� March 28, 1983 (Special Meeting March 28, '1983) 1. � FROlA; E.A , r . SUBJ6CTsBROWN & BIGELOW COMMUNICATIONS, INC. 10-YEAR LEASE ANDLINGER GROUP RESOLUTION N0. 2910 After extensive negotiations with Saxon Industries, Inc. and the Andlinger Group, we have arrived at an agreement subject to Corrannission approval which wi11 keep the plant operating and u1timately increase the employment as the business activities of Brown & Bigelow are reactivated. The Andlinger Group, as previously out1ined, operates eight different companies in the United States and Europe and in our opinion represents the best opportunity for continued operations and growth in the Brown & Bige1ow plant. We have negotiated with others , but in the final analysis the only group that produced the financia� commitments in time to meet the Creditor's Comnittee deadline of Apri'I � was the Andlinger Group. In a11 of our negotiations from the outset we were 'looking to abatement of taxes for t�he initia'1 three years. After detailed analysis of this issue and the problems it caused, such as a minimum three-year lease and a recurring negotiation at the end of three years, we concluded that this was not the best approach even though it would have helped share the cost burden for some of the subsidies that are required to keep this plant in operation and to give it a fair chance to succeed i n t1ie future as i t has i n the past. We, therefore, proposed to the And1inger Group that they enter into a 'lease for a `longer term and continue to pay the real estate taxes as is customary. We are recommending approval of a 10-year lease based upon the rental schedule set forth below. The Lease provides two 10-year options to renew at an arbitrated fair market value. All equity in the plant would inure to the Port Authority and no option to purchase is granted at this time. � �� � � � � . ����.��5 ' Board of Commissioners March 28, 1983 Page -2- A B C D E RENT TO P.A. RENT TO P.A. PROPOSED FROM SUBLETTING FROM SUBLETTING YEAR REN1' B&B OFFICE SPACE (1 ) FACTORY SPACE TAX OFFSET TOTAL 1 300,000 300,000 2 400,000 240,000 100,000 740,000 3 500,000 230,000 175,000 100,000 1 ,005,000 4 600,000 220,000 150,000 100,000 1 ,070,000 5 600,000 220,000 150,000 100,000 1 ,070,000 6 600,000 220,000 150,000 100,000 1 ,070,000 7 1 ,000,000 180,000 50,000 100,000 1 ,330,000 8 1 ,000,000 180,000 50,000 100,000 1 ,330,000 9 1 ,000,000 180,000 50,000 100,000 1 ,330,000 10 1 ,000,000 180,000 50,000 100,000 1 ,330,000 7,000,000 1 ,850,OOQ 825,000 900,000 10,575,000 9,675,000 Sinking Fund Earnings 258,000 TOTAL INCOME - 10 YEARS $10,833,000 The debt service on the bonds through the term of this 10-year lease will equal $12,215,958. Therefore, the Port Authority's 10-year contribution, provided we are successful in leasing the space that And1inger considers excess,at the rate projected be1ow would be $1 ,392,958. This does n�t in�clude, however, the loss of investment income from the f unds that will be needed to fi11 the gap in the early years. It has been determined that the building has an excess of office space of approximate1y 40,000 square feet and the agreement provides that �he Port t'�uthority and the company will jointly exert their best efforts to lease the space. The estimated rental is $7.00 per square foot. This space would �e made, avai1able at the beginning of year 2. Pending further evaluation it appears that the p1ant itse1f may have an excess of approximately 100,000 square feet of manufacturing space. In the event that space is also made availab'le, it would be rented at an estimated $3.00 per square foot with $1 .75 credited to the Port Authority's account, so the rental wou�d then be the same as that being paid for the bulk of the space by Andlinger. In the event that space is not available Andlinger's rent would increase by the amount stipulated in Column C. It is hoped that the business volume will be increased rapidly enough so that this space does not become avai1able in year 3. .,- , , � . . ����.�� Board of Commissioners March 28, 1983 Page -3- The lease also contains a provision that by mutua1 agreement the operations would be 1ocated to a smaller faci1ity in St. Pau1 at any time during the 10-year lease that a suitab1e buyer and other suitab1e space becomes available. In addition, the Port Authority wi11 acquire from Saxon Industries and lease back to Brown & Bige1ow the equipment valued at approximately $3.5 million, and such 1ease will be financed by the sale of a $3,020,000 taxab1e revenue bond issue which wi11 be placed private1y. Subject to Cormnission approva7, this matter will then be approved by the Saxon Board and the Creditor's Corr�nittee and recommended to the Bankruptcy Court. It should be pointed out that there are other companies still interested in acquiring the company but the pressure from the creditors on Saxon to se11 has created the deadline. By approving this action and with approval of the court, liquidation would be avoided. Under the terms of the building 1ease and the equipment lease, all of the assets of Brown & Bige1ow wi�l be pledged to the Port Authority subordinate on1y to the borrowing from the Chase Manhattan Bank. Staff reconanends approval of Resolution No. 2110. EAK:jmo ,� _P 4 R T ��;���:.� , � AU �THORITY OF THE CITY OF ST. PAUL Memo�aadurn TO: Board of Commissioners �A'� MARCH 31 , 1983 FROM: E. A sveJECT: PUBLiC HEARING - SALE OF BONDS - $3,020,000 TAXABLE REVENUE BONOS BROWN & BIGELOW COMMUNICATIONS CORP (ANDLINGER) RESOLUTION N0. 2112 Under the terms of the lease agreement with Brown & Bige1ow Communications Corp. (Andlinger) the Po'rt Authority wi11 acquire equipment presently located in the Brown & Bigelow plant for $3,020,000 by issuance of a taxab1e revenue bond issue in that amount. The terms of the pre1iminary agreement are a 10-year lease back of this equipment to Brown & Bige1ow Communications Corp. with appropriate provisions for adequate maintenance and rep1acement as needed. A11 of the equipment proposed to be acquired has a life in excess of 10 years or more. As a condition of financing this equipment all of the assets of Brown & Bigelow, including the subsidiary entities , wi11 be pledged to the Port Authority subordinated on1y to the 1oan from the Chase Manhattan Bank. This provides that in the event t:he Bankruptcy Court approves the sale to Brown & Bige1ow Communications Corp. bonds will be sold and the purchase for that equipment, a 1ist of which is on file with the Port Authority, would be made direct1y from Saxon. Staff recommends approval o�f the preliminary agreement by adoption of Resolution No. 21�12. EAK:jmo