277911 WHITE - CITY CLERK J
PINK - FINANCE COURCII .'I T` ���
CANARY - DEPARTMENT � G I TY O F SA I NT PA U L
BLUE - MAYOR File N O.
ou cil Resolution
Presented By �
Referred To Committee: Date
Out of Committee By Date
WHEREAS:
1 . On December 15, 1981 , the Port Authority of the City of Saint Paul adopted
Resolution No. 1948 giving preliminary approval to the issuance of approximately $737,000
in revenue bonds to finance the construction of a 2-story, 65 bed facility built on a
17,037 Sq. Ft. site that would be acquired from the HRA in the Midway for Keith T. Harstad
Partnership, sublease to Victory House, Inc. Victory House, Inc. presently runs a chemical
dependency treatment facility at 255 North Smith.
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 , subject 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. 1948, 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.
COUNCILMEN Requestgd by Department of:
Yeas Nays ,
Hunt
Levine In Favor
Maddox �
McMahon B
snow�ite� _ Against Y
Tedesco
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JAN 1 ��� Form Ap ed by City Attorney
Adopted by Council: Date �_______, -'
Certified ss by Council , reta BY � ' �_^�—� � f �
B� � ' /
L.-�
Approved b ;Vlavor: Date �A� 8 19$� Ap ed by Mayor fo Su �mission to Council
By - ��(� B
� PUBLISHED AN 16 198�
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' Resolution No. /9y�
RESOLUTION OF
TI�E PORT AUTHORITY OF THE CITY OF SAINT PAUL
WHEREAS, the purpose of Chapter 474, Minnesota
Statutes, known 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 economi-
cally sound industry and comrnerce to prevent so far as. possible
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 unemployment; and
WHEREAS, factors necessitating the active promotion
and development of economically sound industry and commerce are
the increasing concentration of population in the metropolitan
areas and the rapidly rising increase in the amount and cost of
governmental services required to meet the needs of the
increased population and the need for deye].opment 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 Keith T. Harstad
(hereina.fter referred to as "HaYs±ad" ) a request that the
Authority issue its revenue bonds to finance the acquisition,
installation and construction by Harstad or a partnership in
whicl� Harstad is a partner of a 65 bed facility in the City of
St. Paul to be leased to Victory House, Tnc. for its use as a
chemical dependency treatmsnt facility (hereinafter
collectively called the "Project" ) , all as is more fully
described in the staff report on file; and
VTHEREAS, the Authority de5ires to facilitate the
selective development of the community, to retain and improve
its tax base and to help it provide the range of services and
err.ployment 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
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WHEREAS, the Project to be financed by revenue bonds
will result in substantial employment opportunities in the
Project;
WHEREAS, the Authority has been advised by Harstad
that conventianal, 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
Harstad has also advised this Authority that with the aid of
revenue bond financing, and its resulting low borrowing cost,
the Project is economically more feasible;
WHEREAS, 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, Section 474.01, Subdivision 7b did publish a nota.ce,
a copy of which with proof of publication is on f.ile in t�e
office of the Authority, of a public hearing on the proposal of
Harstad that the Authority finance the Project hereinbefore
described by the issuance of its industrial revenue bonds; and
WFiEREAS, the Authority did conduct a public �earing
pursuant to said not�ce, at which hearing the recommendations
contained in the Authority' s staff inemor�ndum to the
Commissioners were reviewed, and all persons who appeared at
the hearing were given an oppartunity 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
follows:
1. On the basis of information available to the
Authority it appears, and the Authority hereby finds, that said
Project constitu.tes properties, used or useful in connection
with one or more revenue producing enterprises engaged in any
business within the meaning of Subdivision lc 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 the Authority to
furnish such financing will be a substantial inducement to
Harstad 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
. ' a� 7 j;l
- will help to prPvent 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 ta prevent the movement of talented
� and educated persons out of the state and to areas within the "
state where their services may not be as effectively used and
will result in more intensive development and use of land
within the City and will eventually result in an increase in
the City' s tax base; and that it is in the best interests of
the port district and the people af the City of Saint Paul and
in £urtherance of the general plan of development to assist .
Harstad in financing the Project.
2. Subject to the mutual agreement of the
Authority, Harstad and the purchaser of the revenue bonds as to
the details of the Iease or other revenue agreement as defined
in the Act, and other document5 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 in the form of a single note) in an amount not to exceed
approximately $737,J00 (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 eommissioners, are
incorporated herein by reterence 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 Commissioner of
Securities, 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.
4. There has heretofore been filed with the
Authority a form of Preliminary Agreement between the Authority
and Harstad, relating to the proposed construction and
financing of the Project and a form of the Undexwriting
Agreement. The form af said Agreements have been examined by
the Commissioners. Zt is the purpose of said Agreements to
evidence the commitment of the parties and their intentions
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.
wZth respect to the px-oposed Project �in order th'at the Company
may proceed without aeiay w�th the commencement of the
acquisition, installd�iOn and construction of the Project witn
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
lincluding, 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 by
Harstad, the staff of the Authority are authorized and directed
to continue negotiations with Harstad so as to resolve the
remaining issues necessary to the preparation of the lease and
other documents necessary to the adoptian by the Authority of
its final bond resolution and the issuance and delivery of the
revenue bonds; provided that the President (or Vice-Fresident
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 grovisions 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 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 (including any interim note or
notes) and interest thereon shall not constitute an
indebtedness of the Authority or the City of S�int Paul within
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
credit or taxing powers and neither the full faith and credit
nor the taxing powers of the Authority or the City is pledged
for the payment of the bonds (and interim note or notes) or ',
interest therean. '
7. In order to facilitate completion of the revenue
bond financing herein contemplated, the City Council is hereby
requested to consent, pursuant to Laws of Minnesota, 1976,
Chapter �34, to the issuance of the revenue bonds (including
any interim note or notes) herein contemplated and any
additional bonds which the Authority may prior to issuance or
from time to time thereafter deem necessary to complete the
Project or to refund such revenue bonds; and for such purpose
the Executive Vice President of the Authority is hereby
authorized and directed to forward to the City Council copies
of this resolution and said Preliminary Agreement and any
additional available information the City Council may request.
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 draft of the proposed
application to the Commissioner of Securities, 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.
f
Adopted December 15, 1981 � -
Attest ,�,�/_�2j - �-. �;._.__.
President �
The�`Ror�,-Authora.ty of the City
,
of Saint Paul
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S tary
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� EXPLANATION OF ADMI�ISTRATIVF 'ORDEt�; ' �"�'����. � '.
RESOLU7IONS� A+iD ORDIN,ANC�
Date:: . � ,
December 15, 1981 ����j�j� '
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T0: MAY EORGE LATIMER
FR: Eu9e . aut, st. Pau� Port autho�i:ty � M�`YORS+OF�'���
�; K�ITH . HARSTAD PARTNERSHIP (SUBLEASE TO VICTORY HQUSE, INC.) �
$737,000 RfVENUE BOMD ISSUE
ACTIOPI REQUESTED: . • .
In accordance with the Laws of Minnesota, Chapter 234, it �s requested that the City
. Council , by Resolution, a draft copy of which is attachedthereto, approve� the issuance
of approx:imately $737,QOO in revenue bonds to finance the eon�trac�ion of a 2-story,
fi5 bed facility on a 17,037 Sg. Ft, site that would �e acquired from :the �IRA �n the �
Midway for Yictory House, Tnc. Victory House, Inc. pres�ritly runs � chemical: depende�cy
treatment fac3lity at 255 North Smith. The site at 255 No�t� Smith would be acqui:red
� � by United Mospitals an which they _propose to construct their `own Community Health
� Genter. The treatment facility is privateiy run and the p��tients pay a monthly fee �
for their meals, lvdging and treatment program. -
PURPOSE AND RATIONALE FOR THIS ACTION: -
The purpose of the bond issue is to permit Keith T. I+arstad to farm a partnership
and s�blease the proposed 2-s�ory,' 65 bed facility to Vict�ry House, Inc. The
patients` manies come fran general welfare checks or pensipns, either soc�al
seeuraty or pr�ivate. The majority of the patients are in tfie -40-60 aqe h�acket. �
Ramsey County has indicated a strong demand for this type �f facility .and ,su:ppc�rts
construction of �h+e:�project at its proposed Midway site. Approximately 4 "new jobs
would be created as a r�sult af this project. :
. - �: ; , : . : ;.
ATTACttMENTS: . _
Staff Me�rrorandum'' : .
Draft City Council Resol.ution _
Port Authori ty Resol utiQrt ,No. 1948` : �,� :
_ cc: R. Thorpe, Manpar�r 5ervices � -
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AUTHORITY
OF THE CITY OF ST. PAUL �
Memorandur�t
TO: BOARD OF CO"hS:SSIONERS DATE: December 11 , 1981
(Meeting Decerber 15, 1981 )
FROM: Donald G. Dunshee
SUBJECT: PUBLIC HEAR:NG - PRELIMINARY AND UNDERWRITING AGREEMENT
�737,000 RE1'EP�UE BOND ISSUE
KEITH T. HAP,S-AD PARTNERSHIP SUBLEASE TO VICTORY HOUSE, INC.
RESOLUTION !;0. 1948
PUBLIC SALE HEAP,I�:G - SALE OF LAND
KEITH T. HAFS-AD PARTNERSHIP SUBLEASE TO VICTORY HOUSE, INC.
RESOLUTION i;0. 1950
l . COMPANY
Victory �ouse, Inc. presently runs a chemical dependency treatment
facility at 255 North Smith. They have operated the program for
nine years. The existing facility has thirty-seven beds of which
ten are �or Section 8 use. The treatment facility is privately run
and rece�ves patients referred to it from Ramsey County, the City
of Minr.e�pelis as well as United, Bethesda, St. Joseph' s and St.
Paul Ramsey Hospitals. The patients pay a monthly fee for their
meals, lcdcing and treatment program. Their monies come from
general a:elfare checks or pensions, either social security or
private. �he majority of the patients are in the 40-60 age bracket.
Ramsey Ccunty has indicated a strong demand for this type of facility
and supacrts construction of the project at its proposed Midway site.
2. PROJECT
Keith �. Narstad who is one of the partners involved in the 333-On-Sibley
project t-:as agreed to form a partnership and sublease the facility to
Victory F-ouse, Inc. The proposed 2-story, 65 bed facility will contain
sleepirg, dining and family rooms. The project would be built on a
17,037 Sc. Ft. site that would be acquired from the HRA.
The present Victory House, Inc. site at 255 North Smith will be acquired
by Unitec 1=ospitals on which they propose to construct their own
Corr�nunity Health Center which would be constructed next year. The
Hospital vrill not be requesting that industrial development revenue
bonds be used to finance the project.
- � �� ���i1
BOARD OF COMMISSIONERS
. (Neeting December 15,)
1981
UICTORY HOUSE, INC.
Page Z
3. FINF�'VCING
The proposed financir.g would be done as an 876 industrial development
revenue bond issue with a 30 year term. Proceeds from the bond issue
�rould be as follows:
Land 5 25,000
Building j27,000
Bond Issue ExFense 15,000
Capitalized Irterest 43,000
Debt Service r�serve 100,000
Discount 22,000
Total Bond Issue 5737,000
In addition to tFe �onthly rent the Company will pay the customary fiscal
and administrative fee based on the formula of .425: per million per year
for the first 10 years, . 54% per million per year for the second 10 years
and . 66% per miliicn per year for the third 10 years of the lease.
The interest earr.irgs on the sinking fund and deb� service reserve would
inure to the benef;t of the Port Authority.
4. UNDERWRITING
Miller and Schroeder '�lunicipals has agreed to under►•rrite the bond issue
with the interest rate to be set at the time the �onds are sold.
5. TERMS OF THE LEASE
The lease would be far a term of 30 years and the Company would have an
option to purchase the property at the end of the lOth, 20th and 30th
years for 10`� of t're original bond issue cost plus retirement of any out-
standing bonds. Tre bend issue would be personally guaranteed by Mr. Harstad.
6. RECOMMENDATIOt�
Staff has reviewed tP,e project, interviewed Mr. Keith.T. Harstad and Mr.
Lyle Tollefson, Director of Victory House and recorrr•nends approval of
Resolutions No. 1��8 and 1950.
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