277232 I
WHITE - CITY CLERK (((����yyy (�(�
PINK - FINANCE ��/��{,�
CANARY - DEPARTMENT G I TY O F SA I NT PA U L COUt1C1I ����
BLUE - MAYOR
File N .
il Resolution
Presented By
Referred To Committee: Date .
Out of Committee By Date
WHEREAS:
1 . On July 16, 1981 , the Port Authority of the City of Saint Paul adopted
Resolution No. 1844 giving preliminary approval to the. issuance of revenue bonds in the
amount of approximately $3,975,000 to finance the renovation of the 5-story Park Square Court
building into an office-retail-restaurant complex by Park Square Court Associates, a partnership
comprised of Douglas Hayes, Gary Hayes, Gregory Hayes, Richard Hayes, Michael Larson, Hmward
Bergerud, Arthur Nelson and Lewis Merviss, all associated with and owners of Hayes Contractors.
2. Laws of Minnesota 1976, Chapter 234, provides that any issue of revenue bonds
authorized by the Rort Authority of the City of Saint Paul , shall be issued only with tihe
consent of the City Council of the City of Saint Pau1, 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 reveMUe
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 .
RES�LVED, by the City Council of the City of Saint Paul, that in accordance with L�ws
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. 1844, the exact details of which, includ�ng, but not 1imited to, provisions relating
to maturities, interest ra�es,'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 Counci1 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
Yeas Nays r Requestgd by Department of:
Hunt `�
Levine [n Favor
Maddox �
McMahon
�� __ Against BY —��'
Tedesco
Wilson
A��'j 4 ��� Form Approve Ci orn �
Adopted by Council: Date —
Certified P•ss by Council ecre BY _ ���
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S� - f
Ap d by ;Vlayor. a e _ �U� a� �98� Ap ro by Mayor r S ission to Council
By _ BY v �
PUBLISHED AU G 151981
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� �. � �"�'�23�
" Resolution No. 1844
RESOLUTION OF
� THE PORT AUTHORITY OF THE CITY OF SAINT PAUL
WHEREAS, the purpose of Chapter 474, �Iinnesota .
Statu�es, known as the Minnesota t�unicipal IndLStrial Develop-
ment Act (hereinafter called "Act" ) as found and determined by
the legislature is to promote t,'�e welfare of the state by the
active attraction and encouragenent and development of econo:ni-
., cally sound industry and comr.�erce to prevent so far as possible
the emergence of blighted and narginal lands and areas of
chronic unemployment and to aid in the development of existing
.areas of blight, marginal land and persistent unemployrnent; and �
WHEREAS, factors necessitating the active promotion
and develop;nent of economically scund industry and corL-nerce are
the increasing concentration of pcpulation in the metr000litan
areas and the rapidly rising increase in the amount and cost of
. governmental services r�qi�-ired 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 e,�,ploynent opportunities for such
population; and
vJHEREAS, The Port Authority of the City of Saint Pau1
(the "Authority" ) has received �rom Park Square Court
Associates, a P�linnesota partnersnip consisting of Douglas
Y•ayes, Gary Hayes, Gregory Hayes, Richard Hayes, I�;icnael
Larson, i3oward Bergerud, Arthur iJelson and Lewis Merviss
(hereinafter referred to as "Company") a request that the •
Authority issue i�s revenue bonns to finance the re;nofieling of
Park Square Court (hereinafter collectively called the '
"Project" ) in the City of St. Paul, all as is r�ore fully
described in the staff report on file; and
��7HEREAS, the Authority desires to facilitate the
� sele`tive developnent of the co����unity, �o retain and improve
its tax base and to help it provide the range of services and
employnent opportunities required by its population, and said
Project will assist the City in achieving that objec�ive. Said
Project will help to increase tne assessed valuation o� the
City and �-ielp naintain a Positive relations'nip between assessed
valuation and debt and enhance the image and reputation of the
City; and
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� . . WHEREAS, the�Project to be fi�nanced by revenue bonds
- will result in substantial employment opportunities in the
� Project;
�_ WHEREAS, 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 '�
that the economic feasibility of operating the Project would be
significantly reduced, but the Company 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; . �
- WfiEREAS, Miller & Schroeder Municipals, Inc. (the
"Underwriter") has �►ade a proposal in an agreement (the _
"Underwriting Agreement" ) relating to the purchase of the
revenue bonds to be issued to finance the Project;
WFiEREAS, the Authority, pursuant to Aiinnesota
- Statutes, Section 474.01, Subdivision 7b did publish a notice,
a copy o� which with proof of publication is o� file in the �
office of the Authority, of a public hearing on the proposal of
the Company that .the Authority finance the Project hereinbetore
described by the issuance of its industrial revenue bonds; and
WiiEREAS, the Authori�y did conduct a public hearing
pursuant to said notice, at wnicn hearing the recommendations
contained in the Aut7iority ' s stafi memorandurn to tlze
- Corrm-nissioners were revi�ewe�, ar.� all persons who appeared at
the hearing were given an onnor�unity to express their views
with respect to the proposal .
N047, THEREFORE, BE IT RESOLVED by the Comr.tissioners
of the Port Authority of the City of Saint Paul, Minnesota as
follows :
1. On the basis of infornation available to the
Aut�iority it appears, and the Authority hereby finds, that said
Project constitutes properties, �,:sed or useful in connection
with one or more� revenue producir.g enternrises engaged in any
business within the meaning of Subdivision la of Section 474.02 ,
of the Act; that the Project fu:thers the purposes stated in
Section 474.01 0` the Act, that the availability of t2ze
financing under the Act and willingness of the Authority to
furnish sucn financing will be a substantial indu�ement to the
Company to undertake the Project, and that the effect of the
Project, if undertaken, will be to encourage the development of
econo*nically sound industry and com*aerce and assist in the �
prevention of the er�ergence of blighted and narginal land, and
. � ' - �� � �� o�
� ' 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 employr�ent opportunities required by its
population, and will help to 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 intere.sts of
tY�e port district and tne 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 riutual agreeraent of the �
� Authority, the Company and the purchaser of the revenue bonds
as to the details of tYse lease or other revenue agreement as
detined in the Act, and other docunents 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 tne Authority in an as�ount.
not to exceed approximately $3,975,000 (other than such
additional revenue bonds as are needed to complete the Project) �
is authorized to finance the costs of the Project and the
reconmendations of the Authority' s staff, as set forth in the
staf� memorandum to the Co:r►.-�issioners which was presented to
tne Co,-cunissioners, are incornorated herein by reference and
approved.
� 3. In accordarice wi�h Subdivision 7a o� Section
474.O1, � Minnesota Statutes, the Executive Vice-President of the
AUTHORITY is hereby authorizec and ,dirzcted to sub:*►it the
prcposal �or the above descri'ved Project to the Co:r4-nissioner o�
Securities, requesting his approval, and other officers,
employees and agents o� the AUTHORITY are hereby authorized to
provide tne Comr.lissioner with sucn preliminary information as
he may require.
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 Projec� and a forn of the Unaerwriting .
Aareement. The form of said Agree�ents have been e�:amined 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 witlzout delay with the conmencement of the
acquisition, installation and construction of the Project with
tne assurance that there has been sufficient "official action"
under Section 103 (b) of the Internal Revenue Code of 1954, as '
amended, to allow for Lhe issuance of industrial revenue bonds
(including, if deened appropriate, any interim note or notes to
. � • . , � � = �"`r'�23�
- provide temporary financing thereof) to finance the entire cost .
of the Project upon agreement being reached as to the ulti.mate
details of the Project and its financing. Said Agreements are
� hereby approved, and the President and Secretary af the
Authority are hereby authorized a.�d directed to execute said
Agreements. .
5. Upon execution of the Preli.minary Agreement by
the Company, the staff of the Authority are authorized and
directed to continue negotiations �vith the Company so as to �
resolve the 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 tne issu�nce and
delivery of the revenue bonds; provided that the President lor �
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 r4innesota Statutes, Section 475. 06, Subdivision
1, to accept a final offer of the Underwriters made by the
Undervrriters 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 f_orr�al supplemental bond resolution to
be adopted �prior to the delivery of said revenue bonds.
� 6. The revenue bcnds ( 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 s�atutory lir!iitation and
shall not constitute or give rise to a pecuniary liability of
the Autl-iority or the City or a charge against tneir general
credit or taxing po�aers and neither the full faith arid credit
nor the taxing powers of the Authority or the City is plenged
for the pa .�ent of the bonds (and interim note or notes) or
interest thereon.
7. In order to facilitate co�pletion of the revenue
bond financing herein contempla�ed, the City Council is hereby •
requested to consent, pursuant to i�aws of i�iinnesota, 1976,
Chapter 234, to the issuance of the revenue bonds (including
any interim note or notes) herein contem�lated and any
addi�ional bonds which the Autrority may prior to issuance or
from time to time thereafter aeEn necessary to conplete the
Project or to refund sucn revenLe bonds; and for such purpose
� the £xecutive Vice President of the Au�hority is hereby
authorized and directed to fo�ward to the City Council copies
of this resolution and said Preliminary Agreernent and any
additional available information the City Council may reaue5t.
� � , F � = . � � �3�
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' 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 tne principal amount of bonds to be issued to
finance the Project and in preparing a draft of t'he proposed
� application to the Commissioner of Securities, State of
t4innesota, 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. I
Adopted �ul�i 6,__ 1981
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Attest \
Pr
The Port thority� of the City
of Saint iPaul
.�%� ` ,
S retary
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PORT AUTHORITY OF THE CITY OF SAINT PAUL
25 WEST FOURTH STREET • SUITE 1305 • ST. PAUL, MINN. 55102 • PHONE (612) 224-56$6
July 16, 1981
Mr. James Be11us
Director
Planning and Economic Deve1opment Department .
City of St. Paul
14th F1oor, City Hall Annex
St. Paul,Minnesota 55102
SUBJECT: PARK SQUARE COURT ASSOCIATES
$3,975,000 REVENUE BOND ISSUE
Dear Jim:
We submit herewith for your review and referral to the office of the
Mayor, City Council and the City Attorney's office details pertaining
to the issuance of revenue-bonds to finance the remodeling of the
Park Square Court building by the Park Square Court Associates, a _ �
partnership comprised of Douglas Hayes, Gary Hayes, Gregory Hayes,
Richard Hayes, Michael Larson, Howard Bergerud, Arthur Nelson, and
Lewis Merviss, all associated with and owners of Hayes Contractors.
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. 1844 which authorized the sale of bonds in the amount
of $3,975,000.
Your expeditious handling of this matter will be appreciated.
Yours truly, '
, �•
Euge e A. Kraut
Assistant Executive
Vice President
EAK:jmo
Encl .
cc: R. Broeker
�OBERT F.SPRAFKA EUGENE A KRAUT,C.I.D. DONALD G.WNSHEE,C.I.D. CUFFORD E.RAMS7ED RONALD O.SCHETTLE
:XECUfNE VICE FREADEPl1 ASySTANT EXECIlfNE VICE PRESIDEM � DIRECTOR.WDIA*�Al DEVEL0I+MEM GuEF ENGiNEER ' C�ACCOUNiANT
�OMMISSIONERS 6EORGE W.WINTER GEORGE R.McMAHON ARTHUR N.GOODMAN VICTOR P. REIM JEAN M.WEST WIWANi WILSON WIILIAM J.SEIFERI
PRESIDEM VICE PRESIDEM SECRETARV iREASURER
C.I.D. Certified Industrial Developer �
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. ��O �1f� : �{,�j�'j i'��'{E E°' Ci�'1 ..FINANCE, MANAGEMEN� ANp PERSONNEL . . - .,� _ .
� George �McMahori ; ehoirmctn, tnakes the �n3io��•ling .�
reparf �n �C.•F. . � �. �Jrdinatzce . "
• . �. (3) � Resolution � . .
: • . . . � � _ . • � Oaher . ' .�
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At its meeting of July.30, 1981; the Finance Committee :recommended approval of
--t,he_following: . . �
1. Resolution approving issuance of .a $3,975,000 revenue bond by the. Port - -
� Authority to finance renovation of 5-story. Park Square Court,..BuiZding• into • �
an office-retail-restauranr complex. (12146-GM) . � . � � -
2. Resolution.•amending T981 Capital Improvement Budget to provide 'funding for ' . .
. Summit Avenue `Overlay. (12124-GM) . �. � - - .
3. Resolution amending Section 7, lst paragraph, in Civil Service.��tules for
. purpose of expediting filling of vacant positions i.n areas where 'shortage �
. of qualified applicants exists: (12036-GM) � � -
.^iT� ��1LL SE�'E;tiT�i F1_O�TZ S:111T PA:FL, 3�fi\��e,.CJ�'� S�lQ�
`` . . , . F, l'Y� �t-ln� a'� $l-�a--9
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� R�v. : 9/8/75
EXPLANATION OF ADMINISTRATIVE OROERS, � �
,r RESOLUTIONS, ANQ ORQINANCES
E�
_ oa�: �u�y �6, 1s8� RECEIVED
JUL 2 21981
"'T0: MAYOR ORGE LATIMER MAYORS OFFICE -
FR: E. A. St. Paul Port Authority � �
�E: PARK S RE COURT ASSOCIATES
$3,975,000 REVENUE BOND ISSUE �
ACTION REQUESTED: • �
In accordance with the Laws of Minnesota, Chapter 234, it is requested that the City Co cil ,
by Resolution, a draft copy of which is attached hereto, approve tMe issuance of a $3,9 ,00£1
revenue bond issue to finance the renovation of the 5-story Park Square Court building to
an office-retail-restaurant complex.by Park Square Court Associates, a partnership comp ised
of Douglas Hayes, Gary Hayes, Gregory Hayes, Richard Mayes, Michael Larson, Howard Berg r'ud,
Arthur Nelson and Lewis Mer.Viss, a11 associated with and owners of Hayes Contractors.
PURPOSE AND RATIONALE FOR THIS ACTIO�}: � -
The purpose of the bond issue is to finance the renovation of the 5-story Fark Square C urt �
building into an office-ratail-restaurant complex by Park Square Caurt Associates. Off ce
space will be concentrated on the third, fourth, and fifth floors. The lower level , fi st
and second (skyway level) floors willbe used primarily for retail and restaurant space.
This buTlding is a direct skyway link to_:Lowertown from downtawn St. Paul and• is curren ly
being extended to include the Control Data Business Technology Center. Once the Minnes ta
Mutual building is complete and the skyway connections to the Bremer building are apera itrnal ,
the building will have uninterrupted access by sl�yway to all of downtown St. Paul.
When completed, it is estimated that 300 persons wi11 be employed in the facility and i
will generate an estimated $130,000 per year in income �axes for the City.
ATTACHMENTS:
Staff M�norandum
Draft City Council Resolution
Port Authority Resolution No. 1844
�.�� �w�• � � � - i.-..... f
... � � i� THQR� tTY � ���23d�
OF THE CITY OF ST. P^UL
Memorandum
TO: Board of Commissioners DATE June 24, 1981
Special Meeting June 30, 1981
FROM: E. A. �
. / ,
SUBJEGR: PaRK SQUARE COURT ASSOCIATES
PUBLIC HEARING - PRELIMINARY AND UNDERWRITING AGREEMENT
RESOLUTION 876 BOND FINANCING - $3,975,000
RESOLUTION N0. 1844
PUBLIC SALE HEARING - SALE OF LAND
RESOLUTION N0. 1845
1 . THE PROJECT/
The Park Square Court was purchased in 1981 from the Mears Estate and
- financingon the basis of a tax exempt mortgage note was processed
through the Planning and Economic Development Department and approved
by the City Council . Because of the inability to obtain tax exempt
mortgage note financing.,�due—to the unstable conditions existing in
the mortgage market, the project has been referred to the Port Authority
for consideration. The current o�rners of the building and the partners
in the partnership are Douglas Hayes; Gary Hayes, Gregory Nayes; Richard
Hayes; Michael Larson; Howard Bergerud;. Arthur Nelson; and Lewis Merviss;
all associated with and owners of Hayes Contractors. Currently the
building enjoys a 46% occupancy rate and when remodeled will have
approximately 54% of the space, or 40,000 square feet, for lease.
The market value by appraisal by Howard E. Shenehon & Rssociates, M.A. I. ,
is �5,200,000 when complete (see Exhibit III) . It is estimated that the
conversion and rehabilitation of the facility will take 9 months.
2. FINANCING
In considering this project and in evaluating the ecanomics, the equity
position and the security for the Port Authority has been carefully
considered. We are proposing the issuance of a bond issue in the amount
of $3,975,000, which will include the capitalization of a debt service
reserve in the amount of �477,400 as is customary in our 876 agreements.
Supporting this is the finished value of the building of �5,200,000 and
the participation by Lowertown and the equity contribution by the partners
which are as follows:
....1 � ,
�. � June 24, 1981 �� `����
Page -2-
L�wertown Re�evelopment Corporation has agreed toguarantee one half
of �he annual debt service for the first five years. i
Equity - Lowertown Redevelopment Corp. - 5 Years $1 ,187,760
Partnership Equity 1 ,632,631
Reserve Fund - Additional Security 477,400
TOTAL $2,110,031
This represents an equity or a security position equal to 54q of the out-
standino debt.
A11 of this wi11 be subordinated to the Port Authority and guaranteed.
The booklet �vhich is being presented herewith contains the details of the
property, the transaction, and outlines in Exhibit VI the existing tenants,
the ne�� revenue to be derived from tenants who have committed to take either
new space or additional space, and details the amount of space that will
be required to be leased. One of the most significant tenants committed
to occupy space is Rudolph' s Sar-B-Que, who hav� agreed to install a 10,000
square foc� restaurant. T�e exoerience with Rudolph' s in Miinneapolis is
that they oenerate a ���r;� significant circulation of people, �vhich should
be an im�oriant additior, to do�,Nntovrn St. Paul .
3. LNDERWRITI'vG - - �
4liller & Schroeder 1lunicirGls has submitted an undervrriting agreement based
upon a rat� which is an;;icipGted to be 11-1/2%, such underwriting is
subject to obtaining a �'���carG & Poor's 'A' rating as is customary on
875 bond issues.
4. TERMS OF T.,t LEASE
The terms of the lease as p��oposed are to be 30 years and there will be
an o�tion io purchase the facility wher the bonds are amortized at 10%
o` the fac2 amount of the bond issu?. In additio�i, the interest earnings
on the sinking funds and the debt s�rvice reserve will inure to the bene�it
or th2 Port Authority.
Fiscal and administrative fees of .36°� per million per year for the first
10 years , .G8°� Fer million per year for the second 10 years; and .60,a
per million per year for the last 10 years will be charged, as is customary.
5. REC0��1ME��Dr;TI01�
Thi s bui 1 di ng i s a di rect skyway 1 i nk to Lovrerto���n from downto►,m St.
Paul and is currently being extended to include the Control Data Business
Technoloey Center (Buckbee 1�1ears building) . Once the Nfinnesota Mutual
building is complete and the sky�•ray connectio�s to the Brener building
are operational , the building wili have uninterrupted access by skyway
to all of do��rnto4,�n St. Paul .
...
._....' . .. .::::::� 4::::::�
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J�ne 25, 1981
Pa ae -3-
The Port Authority recently approved the 81ock 40 development, a primary
part of which is the proposed parking ramp, and it is anticipated that
this facility will use a significant amount of space in the parking
ranp, especially in the evening. Daily use is anticipated to be approxi-
mately 50 additional stalls.
In light of the fact that the equity position is significant and the
Lowertown guaranty was of significant value, and in view of the viability
of the partnership who have a colle�tive net worth of in excess of $5
million, stafr recommends approval of Resolution No. 3844 and 1�845
In accordance with Minnesota Statutes Chapter 474 and 458 a public hearing
notice was published and the public sale hearing is schedul�d for 2:00 p.m. ,
Tt�ursday,,��"Ju'�y 16, 198� ,
EAK:jmo