274800 WHITE - CITV CLERK / �
PINK - FINANCE COUI�CIl ���',
CANARV - DEPARTMENT GITY OF SAINT PAUL File NO. �
BLUE - MAVOR
Council Resolution
Presented By
Referred To Committee: Date
Out of Committee By Date
WHEREAS:
1 . On April 15, 1980, the Port Authority of the City of Saint Paul adopted Resolution
No. 1633 giving preliminary approval to the issuance of revenue bonds in the initial principal
amount of approximately $7,185,000 to finance the construction of a 200-room hotel facility
for Rodeway Inns International , Inc. on a 6.41 acre site at Interstate 94 and Hamline Avenue.
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 .
RESQLVED, 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 Author9ty Resolution
No. 1633, 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 refund�ng bonds) by the Port Authority, found by the Port Authority to be
necessary for ca1^rying out the purposes for which the aforesaid bonds are issued.
COUIVC[LMEN Requested by Department of:
veas MCMAHON Nay�' �t
'� iC7 In Favor ��,/
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Hunt � ����? � � /� t� /
Levine _ __ Against BY � '"J� � G
Maddox
Showalter
Te APR 2 4. 1:980 Form Approv d by City Attorney
Adopte y Coun � . Date B L�I��s�
C ified V•.:ed b ounci! Se et Y �
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t�pprov by Mavor. at _ APR 2 5 �9SO Appr v y Mayor for Su i �on to Council
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B - -- BY
�t.�sttf�P MAY 3 1980
t� o ,RT�
���4l� THORITY
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OF THE CITY OF ST. PAUL c�►� �, , �
� ' Merriorandum
TO: BQARD OF COMMISSIONERS DAT� April 11 , 1980
(April 15, 1980 Regular Meeting)
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_ FROM: J.F. Fa ue
SUBJECT: PUBLIC HEARING - SALE OF LAND AND BUILDING
RODEWAY INNS INTERNATIONAL, INC.
RESOLUTION N0. 1632
PUBLIC HEARING - SALE OF BONDS -
PRELIMINARY & UNDERWRITING AGREEMENT - $7,185,000 REVENUE BOND ISSUE
RODEWAY INNS INTERNATIONAL, INC. �
RESOLUTION N0. 1633
1 . THE COMPANY
The Port Authority has been discussing a hotel/motel development to
be located on a 6.41 acre site at Hamline and University with Rodeway
Inns International , Inc. of Dallas, Texas. The company has reviewed
the market potential of the area, studied the room analysis study con-
ducted by the Port Authority, determined that there is a viable market
and that the site is acceptable for a significant hotel development.
Rodeway Inns International , Inc. has numerous installations throughout
the United States. The company provides reservation and marketing
services and primarily enters into franchise and licensing agreements
with various operators.
In our discussion with the company, it was agreed that they would assist
the Port Authority with assembling a development and management team ac-
ceptable to the Port Authority. The Preliminary Agreement, therefore,
is structured so that the agreement can be assigned to an acceptable
development team and that a market feasibility study must be completed
and acceptable to the company and the Port Authority before proceeding
further with the project.
2. THE PROJECT
The project calls for the construction of a 200-room hotel facility pro-
viding restaurant, lounge and meeting room facilities along with an
enclosed, domed pool and recreation area. The site is part of the
former Brown & Bigelow site which has been acquired by the Port Authority
and is comprised of 6.41 acres, will front on I-94 and have access from
I-94 via Hamline Avenue. The remainder of the site, which is the northern
portion, is under option to Dayton-Hudson/Target stores for the installa-
tion of a major Target Store. .
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BOARD OF COMMISSIONERS
April 11 , 1980 �
Page -2-
Firm construction numbers are not available at this time. Preliminary
estimates indicate construction of $5 million which is the basis for pre-
paring this Preliminary Agreement and the accompanying bond notice which
would result in a total bond issue of $7,185,000. It is expected, however,
that these early construction estimates could increase from 10-20% before
construction would start sometime after July 1 , 1980. An 18 - month con-
struction period is planned.
The project is expected to generate employment for 200 people.
3. FINANCING
Financing is proposed through the issuance of Port Authority industrial
revenue bonds to cover the amount of the construction and the related
soft costs. The development team at this time is made up of Mr. Donald R.
Staley, Mr. Robert A. Baersch, and Mr. Edwin N. Turnquist. It is expected
that other partners will be added before a request for final approval is
brought befare the Commission. The requirements for financing the develop-
ment team provide that they demonstrate a net worth of at least 40� of the
principal amount of the bond issue plus 10% of the principal amount of the
bonds in equity participation. Equity participation can be made up of
funding the fixtures, furniture, and equipment (F, F & E) now estimated
in excess of $600,000, cash or irrevocable letter of credit. At the
present time, the development team proposes to fund the requirement for F,
� F & E plus the architectural , engineering and design now estimated in
excess of $250,000. The development team must also further demonstrate
their ability to provide operating capital in addition to equity.
Miller & Schroeder Municipals have agreed to underwrite the issue. The
proceeds of bonds would be allocated as follows based on preliminary estimates:
Construction $5,000,000
Debt Servlce Reserve 1 ,073,650
Capitalized Interest - 18 Months 850,800
Expenses 45,000
Underwriting 215,550
Total Bond Issue $7,185,000 �
The reserve would be maximized and invested so that it would pay its own
debt service, and any spread between the required debt service and the
investment rate would inure to the benefit of the Port Authority. In
addition, any interest earnings on the construction fund will be held by
the Port Authority as an additional reserve. Assuming a reinvestment rate
of 12%, the construction fund could generate as much as $450,000 in interest
earnings during the construction period. The Port Authority will charge its
normal fiscal and administrative fees which would proYide additional income
to the Port Authority based on the above example as follows :
lst 10 Years - $2,155.50/month (or) �25,866/year
2nd 10 Years - �2,874.00/month (or) �34,488/year
3rd 10 Years - �3,592.50/month (or) �43,110/year
; �-
' � BOARD OF COMMISSIONERS
APRIL 11 , 1980
PAGE -3-
The site will be leased throughout the 30-year term as follaws:
279,219 square feet at $6.345/square foot, or $1 ,771 ,644, at 9�
interest or the rate the Port Authority must pay on its bond to
acquire the site, whichever is greater. Nine percent produces a
monthly land rent of $15,074.51 . Purchase options are 10� of the
principal amount of the bonds plus 1/2 price on the land, or $3.17
per square foot.
It should be noted that final terms and conditions of the Lease are
subject to a positive feasibility report, approval of the credit of
the development team, and an acceptable pro forma for the operation
of the facility. Secondly, a11 terms regarding the financing and
Lease are subject to approval by the Board of Commissioners once the
final numbers are prepared.
The financial statements of the partners are attached as well as the
financial' statements for Rodeway Inns International , Inc.
4. RECOMMENDATIONS �
The Port Authority published public notice in the Legal Ledger and St.' Paul
Dispatch-Pioneer Press on March 29 and 31 respectively as required under the
amendment to Chapter 474. If the project is approved by the Commission, a
formal application will be submitted to the Commissioner of Securities.
Early notice was sent to Districts 11 and 13 on February 22, 1980. The
Port Authority has met with members of both Districts and received �
favorable comments to the h�tel development. Attached is a written
response from District 11 in support of the project.
Staff recommends approval of Resolution Nos. 1632 and 1633.
JFF:ca
Attach.
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Resolution No. 1633 �
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RESOLUTION OF i
THE PORT AUTHORITY OF THE CITY OF SAINT PAUL I
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4�HEREAS, the purpose of Minnesota Statutes, Chapter ��
458, (hereinafter called "Act" ) as found and determined by the I
legislature is to promote the means by which marginal area !
properties may be developed or redeveloped to help cure the ',
problems incident to the existence of such properties as set
forth in Minnesota Statutes, Section 458.191, Subdivision 3;
and
WHEREAS, a sound development of the ecanomic security
of the peoples of the City of Saint Paul is dependent upon
proper development and redevelopment of Marginal properties,
and the general welfare of the inhabitants of the Port District
requires the remedying of such injurious conditions to which
marginal properties are now subject; and
WHEREAS, the development and redevelopment af such
marginal area properties cannot be accomplished by private
enterprise alone �oithout public participation and assistance in ,
the acquisition of land and planning and in the financing of
land assembly in the work of clearance, development and
redevelopment, and in the making of improvements necessary
therefor; and
WHEREAS, to protect and promote sound development and
redevelopment of marginal land and the general welfare of the
inhabitants of the Port District, it is necessary to remedy
such injurious conditions through the employment of all
appropriate means; and
WHEREAS, whenever ttie development or redevelopment of
such marginal lan.ds cannot be accomplished by private
enterprise alone, without public participation and assistance
' in the acquisition of land and planning and in financing of
developnent and redevelopment, it is in the public interest to
advance and expend public moneys for those purposes and to
provide for means by wYiich sucti marginal lands may be developed
or redeveloped; and
WHEREAS, the developrnent or redevelopMent of such
marginal lands and the provision of appropriate continuing land
use constitute public uses and purposes for which public moneys
may be advanced or expended and private property acquired, and
are governmental functions and are af state concern in the
interest of health, safety and welfare of the peoples ot the
state of t�innesota and of the City of Saint Paul; and
WHEREAS, The Port Authority of the City of Saint. Paul
(the "Authority" ) has received from Rodeway Inns International,
Inc. (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 motel and related facilities (hereinafter
collectively called the "Project") in the City of St. Paul in
an economic development district established in accordance with
Section 458.191 of the Act and Laws of Minnesota, 1971, Extra
Session, Chapter 35, Section 9, all as is more fully desc�ibed
in the staff report on file; and
WHEREAS, the Authority desires to aid in the
development of marginal land, 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. Said
Project will help to increase the assessed valuation of the
City and help maintain a positve relationship between assessed
valuation and debt and enhance the image and reputation of the
City; and
4VHEREAS, the Project to be financed by revenue bonds
will result in substantial employment opportunities in the City
of Saint Paul; and
WHEREAS, the Authority has been advised by repre-
sentatives of the Company that conventional, commercial
financi:ng 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 the
Authority that with the aid of revenue bond financing, and its
resulting low borrowing cost, the Project is economically more
feasible; and
WHEREAS, P4iller & Schroeder Municipals, Inc. (the
Underwriter) has Made a proposal in an agreement (the
Underwriting Agreement" ) relating to the sale of the revenue
bonds to be issued to finance the Project;
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NOW, THEREFORE, BE IT RESOLVED by the Commissioners �
of the Po�t Authority of the City of Saint Paul, P�Iinnesota as
follows: I
1. On the basis of information available to the �
Authority it appears, and the Authority hereby finds, that the i
premises on which said Project is to be located constitute
marginal land within the meaning of Section 458.91, Subdivision i
4 of the Act; that the availability of the financing under the
Act and willingnes of the Authority to furnish such financing �
will be a substantial inducement to the Company to undertak�
the Project, and that the effect of the Project, if undertaken, i
will be to encourage the development of economically sound i
industry and comr,terce and will help to prevent chronic � � ;
unemployr�ent, 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 result in
more intensive development and use of land within the City and I,
will eventually result in an increase in the City' s tax base.
� 2. Subject to the mutual agreement of the Authority, -
the Company and the Underwriter as to the details of a revenue
agreement and other docur.►ents 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 �
$7,185,000 (other than such additional revenue bonds as are i
needed to complete the Project) is authorized to finance the �
costs of the Project.
3. There has heretofore been filed with the
Authority a form of Preliminary Agreernent 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 Comr�issioners. 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 without delay with the comr.iencement 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
to finance the entire cost of the Project upon agreement being
reached as to the ultimate details of the Project and its
financing. Said Preliminary Agreement is hereby approved, and
the President and Secretary of the Authority are hereby
authorized and directed to execute the same.
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4. 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 Revenue Agreement 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
underwriter to purchase said bonds and to execute an
underwriting agreement setting forth such offer on behalf of
the Authority. Such acceptance shall bind the underwriter to
said offer but shall be subject to approval and ratification by
the Port Authority in a formal supplemen�al bond resolution to
be adopted prior to t.he delivery of said revenue bonds.
5. The revenue bonds and interest thereon shall not
constitute an indebtedness of the Authority or the City ot
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 or interest
thereon.
6. 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 af the revenue bonds herein
contemplated, which may be in the form of a single note, 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.
7. The actions of the Executive Vice-President of
the Authority in causing public notice of the public hearing
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estimating the principal amount of bonds to be issued to �
finance the Project are in all respec ratifi d and confirmed.
Adopted April l5, 1980 - �
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Attest (�t- �
esi t
The Port uthority of the City i
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o£ Sa 'nt Paul �
Zvr� � �
Secreta �
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. ' OM O1 : 12/1975
. ' Rev. : 9/8/76
. EXPLANATION OF ApMINISTRATIVE O�RDERS, ����
RESOLUTIONS, AND ORDINANCES
Date: April 15, 1980
T0: MAYOR GE UATIMER � ,
FR: E.A. Krau , P� aul Port� Authority � �
�---
�''t`RE: RODEM�qY I NS TINTERNATIONAL, INC.
�; $7,185,000 REYENUE BOND ISSUE
� RESOLUTTON N0. 1633 �
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ACTION REQUESTED: • � �
In accordance with the Laws of Minn�sota, Cahpter 234, it is requested �hat the Gity
Council , by Resolution, a draft copy of which is attached her�to, approve the issuance
of revenue bonds 1n the amount of approximately $7,185,000 to finance the construction
of a 200-room hotel 'facility for Rodeway Tnns Internatlorral , Inc. on a 6.41 acre si�t� �
at Iaterstate 94 and Hamlfin� Avenue.
PURPQSE AND RATI0IVALE FOR THIS ACTION: �
The purpose of the b�crnd lssue js to finance the construction a� a 200-room hatel facil9ty
�or Rod�wway ��ns Tnt�rnational , Inc. on a 6.41 acre slte at Interstate 94 and Hamline Avenue.
for a term of 30 years. The pro3ect 9s expected to generate employment for 200 pecipte.
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ATTACHMENTS:
Staff M�rwrandum
Draft City Councf 1 Reso1 ut�lon
Port Author�ity Reso1ution No. 1633
f � �