274699 WMITE - CITV GLERK COUflCIl ����
PINK � - FINANCE G I TY O�F SA I NT PALT L
GANARV - DEPARTMENT
BI.UE - MAYOR File NO.
C uncil Resolution
Presented By
Referred To � Committee: Date
Out of Committee By Date
WHEREAS:
1 . On March 25, 1980, the Port Authority of the City of Saint Paul adopted Resolution
No. 1618, giving preliminary approval to the issuance of revenue bonds in the initial principal
amount of approximately $9,950,000 to finance the construction of 136 market rate apartments,
up to 60,000 square feet o# commercial , medical , library and health club space for Austin/
King Enterprises on West 7th Street and Sherman Street. Austin/King Enterprises is a part-
nership comprised of Drs. Thomas and John Austin and Peter King, who currently own properties
at West 7th and Sherman Streets valued at approximately $750,000.
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.1618, 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 au�horizes the issuance of any additional bonds
(including refunding bonds) by the Port Authority, found by the Rort Authority to be
necessary for carrying out the purposes for which the aforesatid bonds are issued.
COUIVCILMEN Requested by Department of:
Yeas ��„��� �N Nays �
��
Hozza In Favor
Hunt d
Levine _ __ Against BY
Maddox
Showalter ApR $ t
Tedesco � � Form App o d by City Attorne /
Adopted by uncil: Date ` -' /�/,��/('O `
Certif "d Passe y Cou .il Secr�tary BY ( r�C ` f
�
I�1pp by i4lavor: D -AP
R �1 0 �gg� Ap v d by Mayor for S mi sion to Council
B — B
!�lS�k1tD A P R 1 9 1980
� � � . . � .
� ,- •`. . . . . •
Resolution No. 1618
M • • � . •
, a
, ' . �����' . .
RESOLUTION OF �
THE PORT AUTHORIiY OF THE CITY OF SAINT PAUL �
WHEREAS, �the purpose of Chapter 474, Minnesota
� Statutes, known as the Minnesota t�lunicipal Industrial Develop-- � .
ment Act (hereinafter called "Act") as found and c3etermined by , -
the legislarure is to promote the welfare of the state by the
active attraction and encouragement and development of economi-
cally sound industry and commerce to preve�t so far as possible
the e,�ergence of blighted and marginal l�nds and areas of
chronic unenploynent and to aid in the c3evelopment of existing
areas of b�ight, marginal land anci persistent unemployment; and
t��_�iEREAS, factors necessitating the active promotion �
and develop:nent 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 neec3 for development of land use
. which will provide an adequate tax base to finance these
increased costs and access =o employ;nent opnortunities for such
population; and .
� �•7H£RE�AS, The Port .Authority of the Ci`y of Saint Paul
( the "I�uthority" ) has received fron Austin/King Enterprises
_ (hereinafter refe.rred to as "Company" ) a request that the
Authority issue its revenue bonc3s to finance the acquisition,
installation and construction oi facilities including a 136
unit apartment building and 6fl,u00 � square feet of commercial
rental space (hereinafter collectively called the "Project" ) in
the City of St. Paul, all as is more fully describec3 in the
sTaff report on file; and • ,
.
W�EREAS, the Project is to be constructed as part of
a construction an� rehabilit�`ion program ior which the City of
Sair,t Paul is seekina an Urban �evelopnent Action Grant, and
also contains residential housing facilities which are subject
�o the provision oi t�iinneso`a Statues ChaPter �62C;
�
WHEREAS, the Authority desires to facilit_ate the E
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. 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 �
s
ti�HEREAS, 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 Projecr would be ;
significantly reduced, but the Co;npany 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; 4
�
WHEREAS, Miller & Schroeder A4unicipals, Inc. ( the
"Underwriter") has made a proposal in an agreement ( the t
"Underwriting Agreement" ) relating to the purchase of the t
. 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 co of which with �
py proof of publication is on file in the
office of the Authority, of a public hearing on the proposal of 1
the Company that the Authority finance the Project hereinbefore t
described by the issuance of its industrial revenue bonds; and '
WHEREAS the Authorit did conduct a �
, y public hearing �
pursuan+� to said notice, at which hearing the recommendations
contained in the Authority' s staff inemorandum to the
Commissioners were revie�aed, 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
follows :
., �� � - . ������.�
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 the 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
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 i�s
population, and will help to prevent the rnovement 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 $9,950,000 (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 incorparated herein by reference anc3
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 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 comMitment of the parties and their intentions
� with respect to the proposec7 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 allow for the issuance of industrial revenue bonds
( including, if deemed appropriate, any interim note or notes to
provide temporary financing thereof) to finance the entire cost
of the Project upon agreement being reached as to the ultima+:e
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 P4innesota 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 formal supplemental bond resolution to
be adopted prior to the delivery of said revenue bonds.
6. The revenue bonds ( including any interim note or
notes) and interest thereon shall not constitute an
indebtedness of the Authority or the City of Saint Paul within .
' ° ' ; 2'������
- ' �� , .tl;e 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 paynent of the bonds (and interim note or notes)• or
interest thereon. '
� � 7 . In orc7er � 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 to approve the
�roject in accordance with the provisions of Plinnesota
Statutes, Chapter 462C; and for such purpose the Executive
Vice President of the Authority is hereby authorized and
directec3 to forward to the City Council copies of this
resolution and said Preliminary Agreer�ent 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 t��e public hearing
and in describing the general nature of the Project and
estimafiing the principal amount oi bonds to be issued to
finance the Project and in preparing a drait of the proposed
application to the Commissioner of Securities, State of
� Minnesota, for approval of the Pro�ect, which has been
ava�.lable 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 ratiiied and coniirr�ed.
Adopted : March 25, 1980
,
; �
Attest ` -��t • �, ��`
Pres t �
The Port Authority of the City
of Saint Paul
� „�'r/�'�% , . i���.
e etary
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� R .0 R T . ��,�,��,�
. AUTHORITY -
OF THE CITY OF ST. P/\UL
� Memorondum � �
TO: Board of Commissioners DATE March 20, 1980
Meeting March 25, 1980
FROM: E. A, a ��
SUB.lEC7: AUSTIN/KING ENTERPRISES
PUBLIC HEARING--CREATION OF INDUSTRIAL DEVELOPMENT DISTRICT
PUBLIC HEARING--SALE OF LAND AND BUILDING
PUBLIC HEARING--SALE OF BONDS--PRELIMINARY AND UNDERWRITING AGREEMENT
$9,950,000 REVENUE BOND ISSUE
RESOLUTION NO'S. 1616, 1617, AND 1618
In the Port Authority consideration of this project the following actions
are necessary:
A. Public Hearing concerning the Creation of an '.Industrial Development
District by adoption of Resolution No. 1616
. B. A Public Hearing to consider the sale of the land and buildings upon
the amortization of the bonds to the partnership by adoption of
Resolution No. 1617
C. Approval of a Preliminary Agreement authorizing the issuance of
revenue bonds to finance the project by adoption of Resolution No. 1618.
1 . THE PROJECT
Austin King Enterprises is comprised of a general partnership of Drs.
Thomas and John Austin and Peter King, who currently own properties
at West 7th Street and Sherman valued at approximately $750,000. The
Drs. Austin operate the Austin Clinic in two separate build-ings on
Sherman which, if this project is approved, would be demolished and
the facilities relocated in the proposed complex.
The partnership while currently comprised of three individuals may
be enlarged if it is considered necessary. The current partnership
has a combined net worth along with that of Peter King Enterprises,
also a guarantor, of approximately $5,000,000.
The proposed proje�t will contain 136 market rate apartments, up to
60,000 square feet of commercial , medical , library, and health club
space, and a 400-car parking ramp.
Board of Commissioners �
March 20, 1980
Page -2- .
The parking� ramp is an integral part of the overall complex to
accomnodate the parking for the residents, commercial tenants, and
patients and will be constructed from the proceeds of a revenue bond
issue on behalf of United Hospitals. The overall project is a co-
ordinated development with other actions on West 7th Street (now Old
Fort Road) , which are a part of a substantial program being undertaken
by the West 7th Street Federation and the Department of Economic Develop-
ment of the City of St. Paul . "
The Port Authority has been asked to consider financing of this project
because of the lower interest rates available through the Port Authority
due to its 'A' rating under Resolution 876, and because it has the
flexibility to finance both the parking ramp and the apartment project
and market the bonds needed to fund construction.
The City of St. Paul in its overall program for West 7th Street has
applied for an Urban Development Action Grant (UDAG) which would provide
a loan of $1 ,200,000 for the apartment project, and our recommendation
for Port Authority financing of this project is contingent upon receipt
of the UDAG funds. This application is for this quarter and the City
will be advised on or about April 1 if this project is funded.
2. FINANCING
� The partnership has agreed to provide 10� equity in the project. This
equity will be contributed in the form of fee title to the land valued
at $8.00 per square foot, or approximately $750,000, to both the parking
� ramp s.ite and the a�artment complex, and the balance in cash to provide
coverage for any short fall anticipated in the early stages of this
project. Reference to the 5-year pro forma will indicate the short fall
anticipated. It is staff's opinion that the additional $400,000 in cash
equity will be adequate to carry the project provided that conditians
stipulated for carrying the commercial space are met. These conditions
are as follows:
A. The partnership shall provide executed commitments for J5� of the
commercial space prior to closing,
B. If thase commitments are not avail.able to cover 75� of the space
then a Master Lease Guaranty for the balance be provided, or
C. That the partnership provide a letter of credit equal to the total
debt service for 75% of the unleased commercial space for a 3-year
period with a provision that any space leased for three years will
reduce the total letter of credit by a like amount, or
D. Reduction of the amount of commercial space.
• Board of Commissioners �
March 20, 1980 �
Page -�3-
The UDAG Grant of $1 ,200,000 will be a loan agreement and will be
subordinate to the Port Authority's revenue bond debt. The terms of
the loan agreement as established by the Department of Economic
Development of the City of St. Paul are based upon 2� interest in year
1 escalating by 2q per year until the partnership retires the $1 ,200,000
with a balloon payment. In effect, the $1 ,100,000 in equity and the
$1 ,200,000 in UDAG funds represent equity in excess of 20�. The
bond issue wi11 be comprised as follows unless the amount of �commercial
space is reduced. In any event, the bond issue cannot exceed �10
million.
Construction $7,196,250
Debt Service Reserve 1 ,474,875
Capitalized Interest - 1 Year 920,375
Expenses 60,000
Underwriting 298,500
$9,950,000
The above figures are based upon a coupon rate of 9.25%. This rate
will be established on the closing and may result in an adjustment up
or down of the above figures.
. Please note that in structuring this issue we have maximized the
. reserve fund to the full 15� limit, which has the effect of reducing
the annual debt by approximately $11 ,368 per month or $136,416 per year.
Because of IRS regulations this is the maximum credit that can be
credited the company. Using this method based upon current reinvestment
rates it will develop fee earnings for the Fort Authority of �3,995
per month or �47,940 per year. In addition, the contract would contain
a provision that for the last 10 years the partnership pay $1 ,000 per
month as additional fiscal and administrative fees.
3. UNDEP.WRITING
Miller & Schroeder Municipals• has submitted an underwriting agreement
in the normal form for underwriting 876 issues. As indicated earlier,
the interest rate will be set based upon market at the time of closing.
Under the provisions af UDAG grants, construction must be underway not
later than six months from April 1 .
4. TERMS OF THE LEASE
The lease agreement will be for 30 years from the nominal date of the
bonds and the interest has been capitalized for a one year construction
period. ,
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Board of Corr�nissioners
March �0, 1980
Page -4- ' � �
5. RECOMMENDATIONS
Staff has conferred with United Hospitals, the Department of Economic
Development of the City of St. Paul , and has reviewed the finances of
the members of the general partnership. We have obtained a letter from
the neighborhood council wherein the Board has unanimously approved
the project, and on this basis recommend approval of the adoption of
Resolution Nos. 1616, 1617 and 1618.
The bond issue will be personally guaranteed for a period of five years.
Taxes during the term of the bonds are estimated at $6,525,000.
EAK:jmo �