276860 WMITE - CITY CLERK j[�� �(�r
PINK - FINANCE COUIICII f s�.,isv
CANARY - DEPARTMENT G I T Y O F S A I N T �A U L -
BLUE - MAYOR File N O.
�
Co ncil Resolution
Presented By
Referred To Committee: Date
Out of Committee By Date
WHEREAS:
1 . On April 21 , 1981 , the Port Authority of the City of Saint Paul adopted Resolution
No. 1805 giving preliminary approval to the issuance of industrial development revenue bonds
in the amount of approximately $10,000,000 to finance the construction of a 750-car, 4-story
underground parking ramp by Mears Park Ramp Associates on Block 40. The developers of the
project are the Boisclair Corporation of Minneapolis and Alpha Enterprises which is owned
by Wyman Nelson and Mike Ruhr.
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. 1805, 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
Yeas Nays - Requestgd by Department of:
Hunt
Levine In Favor
Maddox �
McMahon
�o� __ Against By
w�ti�„ MAY
19 19�1 Form Approved by Cit Attorney
Adopted by Council: Date
Certified Passed uncil S tar BY �
By, c'`� �'� ' \
M�� �� � A r v d by Mayor for i sion to Council
A r d by :Nayor: D I�.-t�.�--G-u-.��
B
PUBLISHED MAY 3 0 �sa�
f
��
,' � � �'s����
Resolution No. 1805
RESOLUTION OF
THE 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 commerce 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 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 MEARS PARK RAMP
ASSOCIATES (hereinafter referred to as "Company") a request
that the Authority issue its revenue bonds (which may be in the
form of a single note) to finance the acquisition, installation
and construction of a 650 stall parking ramp and related equip-
ment in the Block 40 Development of Lowertown (hereinafter
collectively called the "Project") in the City of St. Paul, to
be leased by the Authority to the Company, �all as is more fully
described in the �taff report on file; and
WHEREAS, the Authority desires to facilitate the
selective development of the community, to retain and improve
its tax base and to help it provide the range of services and
employment opportunities required by its population, and said
Project will assist the City in achieving that objective and
said Project w�.11 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
. � '
. 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 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 law 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 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 Project hereinbefore
described by the issuance of its industrial revenue bonds; and
WHEREAS, the Authority did conduct a public hearing
pursuant to said notice, at which hearing the recommendations
contained in the Authority' s staff inemorandum to the
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 1 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 the
Coihpany 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
. 2
.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 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 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 $10,000,000 (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 inemarandum to the Commissioners which was presented to
the Commissioners, are 3neorporated herein by reference and
approved.
3. In accordance with Subdivision 7a of Section
474.01, Minnesota Statutes, the Executive Vice-President of the
AUTHORITY is 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 tlze Commissioner with such preli.minary 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 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 commi.tment of the parties and their intentions
with respect to the proposed Project in order that the Company
may proceed without delay with 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 allaw for the issuance of industrial revenue bonds
(including, if deemed appropriate, any interim note or notes to •
' 3
. , � • � ' �
.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
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 documents necessary to the adoption by the
Authority of its final bond resolution and the issuance and
delivery of the revenue bonds; provided that the President (or
Vice-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
1, 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- for-mal 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 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 thereon.
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 234, 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.
4 �
.' , � ,
, , . , .. , ,
S. The actions of the Executive Vice-President of
the ;Authority in causing public`notice of the public hearinq
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 Prcject, which has Yseen �
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 : April 21, Z981 ;'
.
Attest \ / ' �
Pres t�
The Port uthority of the City
of Saint Paul
r '�
�/ , . � '
���'c.c� - Secretary
5
.•-� GZ���C �.k'i ►��EL.�.��r.:' "�.��,�.��
fi�F����'i'. OI'1�.�'I.^.� O.r '.i•i�il: CL'1'_"Y GOII'1C��.. � ���`-p�
i� .��' ...-,.L:� !�:�,ti '
i: :i i.• :-��; '1 j��, . .
,
1 .; f is_.,�:•. 7 �;.: . .
�`-�V"` � � no�e : � MaY 14, 1981
, ���
.,`, .`�
:w� - !
� Ct� i'd� �'a'� � iT � � E� � �' � � �
�' p ; Sdin� F'c�u� Gify Cc�ur���� �': -
�� Q �j : G�;-������4 p n FINANCE, MANAGEMENT & PERSONNEL� . �
George McMahon� ; et�oirmc�n� ma�es 1`h2 follo�r^�ing :�
repor`t' r,n C.F. �� t�rLtir�n��ce
� . (3) � Hesc�lu�ion .
. . , � . • � (�:rt a�' . �
� ���..� : . �
. At its. meeting of May-14, 1981 , the Finance Committee .recommended approval of
the following: - . � ---
9. Resolution approving issuance of revenue bond issue by Port Authority for '
. approximately $10 million to finance construction of parking ramp by �
Mears Park Ramp. Associates on Block 40. (11953-GM)
� l0. Resolution .approving issuance of revenue bond issue by Port Authority for �
approximately $10 million to finance construction of rentable office space � �
� by Mears Park Office Associates on Block 40. (11954-GM) . •
11 . . Resolution approvi�ng issuance of revenue bond issue by Port Authority for -
� approxi.mately $10 million to� finance construction of rentable retail space
� by Mears Park Retail Associates on Block 40. (11955-GM)
CfT�' iI�1LL SE�'E:L'PH FLOrJR S_11�T PA'Ut., i.�(i\'tiFS�JTr1, S�lQ�
.y - -
-
. -. ;y
.:�.'.....,a.....-...•.- ,._,...._.o...,.......,:.......T..�.�..�..,....,.....�.�.-�...�,.....,.�........a..+�+fr7.��.,. .. .
. . .. . . . � j,. �'yn��.i�., y � . . . � . � . � .
.. ''.� , ... . . ���w^�I��� .
t` ' OM Ol: 12/1975
. . Rev. : 9/8/�6
� EXPLANATIQN �OF ADMINISTRATIVE QRDERS, �� ��c �# g/�$
RESOLUTIONS, AND ORDINANCES � �yc p�
. . - . . �1V0V0
' ��"�u�����
, Ar� �19'81 ,
Qate: April 23, 1981 ��-
R_ ����
RECENED �
; T0: MAYOR G RGE LATIMER � APR Z 4 �9$'I - ;� IZ�
FR: � E. A. Kr Pau Port Authority '
�� PlJ1NNMG & ECONOMIC
�; MIEARS PA K RAMP ASSOCIATES � DEtlE1.OPM�NT
' �10,000, 00 REVENU� BOND ISSUE
� , , �
� ACTION _REQUESTED:
;
In accordance with the Laws of Minnesp�a, Chapter 234, it is requested that the City
Council , by Resolution, a draft copy of which is attached hereto, approve the issuance of
a reve�ae bond issue in the amount of approximately $10,000,000 to finance the constructjon
of a 750-car parking ramp by Mears Park Ramp Associates on B1ock 40. The developers of the
pro�ect are the Boisclair Corporation of Minneapolis and Alpha Enterprises which is owned
� by Wyman Nelson and Mike Ruhr.
� PURPOSE AND RATIONALE FOR THIS ACTIQN: � -
The purpose c�� the revenue bond issue is to finance the construction of a 750-car parking
ramp by Mears Park Ramp Associates on Block 40. Also to be included in the overall deve]op-
ment is 80,000 square .feet of net rentable retail space, 90,000 square feet af office space,
100 apartment units, and 250 condominium uni�s. The overall project cost is estimated at
$58,552;000, part of which will be financed by a UDAG grant and a $2 million loan from
Lowertown Redevelopment Corporation for payment of so�t costs during the initial construction
period. The 750-car parking ramp wi11 consist of four stories underground.
ATTACHMENTS:
Staff Memorandum '
` Draft City Council Resolution �
Port Authority Resolution No. 1805
, .
� .P� R T . �������
AUTHORITY
OF THE CITY OF ST. PAUL
Memorandum
TO: Board of Commissioners DATE April 20, 1981
Meeting April 21 , 1981 .
FROM: E. A. Kraut
SUBJECT: MEARS PARK OFFICE ASSOCIATES
PUBLIC HEARING - SALE OF BONDS - PRELIMINARY AND UNDERWRITING AGREEMENT -
$10,000,000 REVENUE BOND ISSUE - BLOCK 40 - RESOLUTION N0. 1801
PUBLIC SALE HEARING - SALE OF LAND - RESOLUTION N0. 1802
MEARS PARK RETAIL ASSOCIATES -
PUBLIC HEARING - SALE OF BONDS - PRELIMINARY AND UNDERWRITING AGREEMENT
$10,000,000 REVENUE BOND ISSUE - BLOCK 40 - RESOLUTION N0. 1803
PUBLIC SALE HEARING - SALE OF LAND - RESOLUTION N0. 1804
MEARS PARK RAMP ASSOCIATES
PUBLIC HEARING - SALE OF BONDS - PRELIMINARY AND UNDERWRITING AGREEMENT
$10,000,000 REVENUE BOND ISSUE - BLOCK 40 - RESOLUTION N0. 1805
PUBLIC SALE HEARING - SALE OF LAND - RESOLUTION N0. 1806
1 . THE DEVELOPERS
The City of St. Paul has entered into a developer status agreement on
Block 40 with Robert Boisclair of the Boisclair Corporation of Minneapolis,
and Alpha Enterprises which is owned by Wyman Nelson and Mike Ruhr. Messrs.
Nelson and Ruhr recently sold Perkins Cake & Steak to Holiday Inns for
879,902 shares of Holiday Inn stock valued as of April 1 at more than
$24 million.
The agreement with the City of St. Paul provides for the development of
a 5-phase project comprised of the following:
, A. 750-car parking ramp
B. 80,fl00 square feet of retail space
C. 90;U00 square feet of office space
D. 100 apartment units
E. 250 condominium units.
The overall project cost is estimated at $58,552,000. The development has
been awarded a $4.8 million UDAG grant which was negotiated during the
N.I.S. sessions at the same time funding was obtained for Energy Park.
It was one of St. Paul 's two new projects that were granted funds in
that program.
Board of Commissioners •
April 20, 1981
Page -2-
The Port Authority previously approved a $5,255,000 bond issue for the
Carley Group, the previous developers, and certified to UDAG that it
would finance that issue. Subsequent to this action, the City entered �
into the agreement after screening a number of potential developers with
the Boisclair group and asked the Port Authority staff to evaluate the
. project and to consider financing the first three phases of the program
by the issuance of tax exempt revenue bonds.
The Port Authority was requested to participate because of the difficulty
in marketing unrated bonds at the present time and the fact that the
Port Authority's 876 bonds are marketable.
In addition to the UDAG grants, Lowertown Redevelopment Corporation
has agreed to loan the project $2 million for paym2nt of soft costs
during the initial construction period.
The City of St. Paul, currently the owner of the land and the grantee
of the UDAG funds, will receive $1 ,000,000 for the sale of the land
exclusive of $250,000 which will be paid when the housing development
is in place.
� In essence, the project includes four partners: (1 ) the City of St.
Paul representing the land and the UDAG funds, (2) Lowertown Corporation,
with their investment, _(3) ,the Port Authority as the proposed issuing
agency for the tax exempt bonds, and (4) the Boisclair and Alpha groups
as the general partners in all three projects in which 50% of the project
Nrill by syndicated to limited partners.
The Block 40 development includes all of the block bounded by Fifth, Jackson,
Sibley and Sixth, except for the McColl Building now owned by Deil
Gustafson and the Mears Building now owned by Cochrane-Bresnahan. It is
planned that this building will become a part of the prgject specifically
as it pertains to the rental housing.
The plan calls for the total redevelopment of the block with the above
exclusions, razing of the Sib7ey Company building (now owned by the City)
and partial razing and rehabilitation of the Aslesen and Sperry buildings.
The parking ramp will consist of four stories underground with 750
stalls. This will be kno4vn as Mears Park Ramp Associates. The office
building containing 90,000 square feet of net rentable space will be
known as Mears Park Office Associates, and the retail space containing
80,000 sqware feet of net rentable space will be known as Mears Park
Retail Associates.
2. FINANCING
Each of these projects will require a bond issue of $10,000,000, proceeds
of which are proposed to be applied as follows:
Board of Commissioners
April 20, 1981
- Page -3-
OFFICE RETAIL PARKING
Construction $ 6,259,800 $ 6,259,800 $ 6,809,800 �
Reserve 1 .190,2QQ 1.,190,200 1 ,190,200
Capitalized Interest 2,200,000 2,200,�00 1 ,650,000
� Bond Expenses (Estimated) 50,000 50,000 50,000
Underwriter's Fee 300,000 300,000 300,000
TOTAL BOND ISSUE $10,000,000 $10,000,000 �10,000,000
SOURCE OF FUNDS
OFFICE RETAIL PARKING
Bond $ 6,259,800 $6,259,800 $ 6,809,8Q0
Int. Earnings 1 ,369,933 1 ,187,630 646,738
UDAG 1 ,146,920 3,085,080 568,000
L.R.C. 1 ,168,774 291 ,490 745,844
Equity � 200,000 200,000 2,800,000
FUNDS AVAILABLE �10,145,427 $11 ,024,000 �11 ,570,382
GUARANTEE - � 1 ,400,000 � 1 ,400,000 $ 1 ,400,000
The overall development costs of the project as indicated are �58,552,000
of which Y30 million is proposed to be financed with three series of Port
Authority 876 revenue bonds. The equity contribution from the partners
is $3.2 million; UDAG $4.8 million; Lowertown �2 million; plus interest
earned on all of the contributed funds and the bond proceeds . Therefore,
the total equity and earnings available for the project equal $13,157,262.
Total Port Authority bonds less debt service reserve equals 526,427,000
which results in equity related to debt on a l to 1 ratio.
Al1 of the equities, generated funds, and the land will be subordinated
to the Port Authority's debt. Provision will be made for a calamity call
in the event that all three issues will not be closed.
As a result of negotiations over the past 30 days, the following are
conditions precedent to closing of the issues:
A . Letter of credit (equity) �3,200,000
to be available and applied against anticipated
short fall in the parking ramp issue
B. Corporate and personal guaranty from Boisclair 1 ,400,000
Corporation and Alpha Enterprises and Robert Boisclair
C. Parking lot debt service guarantees
1 . Mears Park Office Associates 120,000
2. Mears Park Retail Associates 120,000
3. Mears Park Housing Associates 120,000
� � Board of Cortvnissioners
April 20, 1981
Page -4- �
The parking ramp is required to support the other phases of the project
� � and, as such, must be constructed in a size which would permit parking
from each of the other developments to be contained on the site. It is
the parking ramp where the most significant shortfall is evidenced,
therefore, the items innumerated A through C above are equity contributed
primarily to the parking ramp project. �
Further conditions:
D. An extension of the UDAG grants and assurance of their 4,800,000
availability
E. Acquisition of title to the land from the City of St.
Paul and payment as indicated
l . Parking $ 250,000
2. Retail 335,200
3. Office 414,800
F. A tentative commitment from the City of St. Paul for
the housing developments
1 . Condominiums 10,000,000
2. Apartments - M.H.F.A. • 5,200,000
G. Commitment from the YMCA that they plan to proceed
�vith their project � 5,076,500
H. Standard & Poor's 'A' rating
Under the terms of the preliminary agreement and the documentation that
will result if the proposed project is approved, all of the funds will
be deposited and disbursed by the Port Authority.
�'e have provided under separate cover copies of the financial statements
of the principa�� partners along with a copy of a letter from the First
National Bank of Minneapolis indicating the line of credit available
to the Alpha Corporation.
The letter of credit for $3,200,000 mentioned above will be available
at closing and will be reducible by an amount equal to the cash equity
replacement that occurs when the limited partners are in place. The
cash equity replacement will also be escrowed to take care of the short
fall . All of the bond proceeds available for this project will be used
for hard costs only.
The prelimina�y agreement will provide that in n� event will bonds be
sold if an underwriting cannot be obtained at��a coupon rate of 11� or
less.
3. UNDERWRITING
Miller & Schroeder Municipals has presented us with an underwriting
commitment to purchase the bonds. The rate of interest will be based
on the market rate for 876 issues at the time of closing with the
exception of the maximum rate as stipulated above.
Board of Cor�nissioners - �
April 20, 1981
Page -5-
4. ' TERMS OF THE LEASE
The proposed lease agreements will be for a period of 30 years with interest
on the park,ing ramp bond issue capitalized for 18 months and interest ,
on the Mears Park Office and Retail bond issues to be capitalized for
24 months.
The Port Authority will charge fiscal and administrative fees on the
entire project based upon the following schedule:
.36� per million per month for the first 10 years $108,000
.48q per million per month for the second 10 years 144,000
.60q per million per month for the last 10 years 180,000
The Port Authority ►vill also retain all earnings on the sinking funds
and the rentals shall be paid monthly in advance.
For the first 17 years from the date of the bonds the debt service
reserve fund shall be amortized by its reinvestment. Thereafter re-
sponsibility for retirement of the debt service reserve shall be that of
each tenan�t and the earnings on the debt service reserve fund shall
inure to the benefit of the Port Authority. During this period 1/17th
of the total combined debt service reserve shall inure to the benefit
of the Port Authority so that if bonds are prepaid the amount available
to the company shall be-adjusted by dividing the debt service reserve
funds into 30 equal parts of which 17 parts will become assets of the
Port Authority.
It is anticipated that taxes on this project, exclusive of the housing
facilities ►vhich v�ill be built on the air rights, will be approximately
$1 ,100,000 per year.
The contract will also provide that the developers comply with federal
and local affirmative action and any set aside program which may be adopted
by the Port Authority prior to commencement of construction.
5. RECOMMENDATIO�S
The staff has very carefully reviewed this project particularly due to
not only its significant size from a financing point of view but from
its potential impact on the downtown community. Except for new construction
the amount of vacant space now available is not substantial . New space is
not substantial when addressed over a 3-year period. New space coming on
on the market from Conwed, Minnesota Mutual , and the existing Minnesota
Mutual building will come on-stream on a gradual basis. This space which
will not be available for nearly 30 months wouid, in our opinion, be timely
in its availability.
�n reviewing the Hammer, Siler & George report, the Economic Research
Associates and James h�cComb report, it appears that the absorption rate
in downto��an St. Paul is approximately 200,000 square feet per year.
The space coming on stream and the vacant space available does not, in
our opinion, constitute over-buiiding for the long run, and even the
space now available or being opened shortly is being done on a basis
that appears to be in orderly sequence.
- . • . � � � �'����Q
Board of Commissioners
April 20, 1981
. Page -6-
Admittedly, there are various properties in the loop that have not
rented up as fast as might be deemed desirable this, however, is pre-
dominantly in the retail area and occasioned largely by the opening �
of the Town Square at a time when other developments or redevelopments
were also struggling to lease their space.
Further, the projections of the Mears Park projects have addressed the
rent up on an extremely conservative basis to allow for a realistic �
rent up period.
The land and buildings in this project with only the two afore-mentioned
exceptions are owned by the City of St. Paul and were funded in such a
manner that it is important that the City be able to recapture the
$1 million investment as quickly as possible.
District Council 17 (the Downtown District Council--DCDC) endorsed
this development by Board action on April 16 as they have done on three
previous occasions. We issued an Early Notification on this project
to not only District 17 but other districts and have had no adverse
response.
This is a cornerstone project for the redevelopment of the Lowertown
area and has been a primary. goal of the Lowertown Redevelopment Corporation
since its inception, and their financial participation along with that
of UDAG contributes significantly to our ability to recommend the
financing. It is based upon these factors and the review of this project
which we have made that motivates a staff recommendation to adopt the
following resolutions:
Resolution No. 1801 - Mears Park Office Associates - Preliminary and
Underwriting Agreement - �10,000,000 Revenue �Band Issue
Resolution No. 18Q2 - Mears Park Office Assocaites - Public Sale
Hearing - Sale or Land
Resolution No. 1803 - Mears Park Retail Associates - Preliminary and
Underwriting Agreement - �10,000,000 Revenue 'Bond_ Issue
Resolution No. 1804 - Mears Park Retail Associates - Public Sale
Nearing - Sale of La�d
Resolution No. 1805 - Mears Park Ramp Associates - Preliminary and
Underwriting Agreement - $10,000,000 �Revenue 'Bond Issue
Resolution No. 1806 - Mears Park Ramp Associates - Public Sale
Hearing - Sale of Land
EAK:jmo