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275036 WHITE - C�TY CLERK a ����A C NARV - DEPARTMENT G I TY OF SA I NT PA V L COUI1C11 �� � . BLUE - MAVOR File NO. Council Resolution Presented By Referred To Committee: Date Out of Committee By Date WHEREAS: 1 . On May 20, 1980, the Port Authority of the City of Saint Paul adopted Resolution No. 1649, giving preliminary approval to the issuance of revenue bonds in the initial principal amount of approximately $1,840,000 to finance the acquisition of the existing Brown & Bigelow Office Building at 450 North Syndicate in St. Paul as well as a 12,000 Sq. Ft. garage located approximately one block south of the Administration building for SDA ���s, Sublease to Adhouse Corporation for their marketing, communications and sales promotion business. 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 1aw; . 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. 1649, 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 Na�,t Requested by Department of: Hu � ut er Levine o a [n Favor t M�ddox � ne McMahon __ A gainst BY Ma dox Showalter Sh alter Tedesco Te e o yyitson �uN rj �9a� Form Ap r ved by City Attorne Adopted by C ncil: Date Certified a. � Coun ' Secr ry BY By A�pproved by v�r: Date — �9SO Approved by Mayor for Submission to Council Q" By _ �� BY �iED J U N 2 � 1980 �� • � OM Ol : 12/i975 . • Rev. : 9/$/76 EXPLAfVATION 0� ADMINISTRRTIVE ORDERS, ��(��� RESOLUTIONS, AND ORQINANCES � . l� ECE _OVED oate: r�y 20, i9so MaY 2 71s8o � T0: MAYOR G ORGE LATIMER ' �IqAYQ.�'g Q�� FR: Eugene A � � � RE: SDA ENTERPRISES, SUBIEASE TO ADHOUSE CORPOI�ATION $1,836,000 REVENUE BOND ISSUE - ACTION REQUESTED: • In accordance with the Laws of •P9innesota, Chapter 234, it is re��ested that the City Cauncil , by Resolution, a dr.aft copy of which is attached hereto, approve the issuance of approximately �1,836,000 in revenue bonds for the purpose of' acquiring the existing Brown & Bigelow Office building at 450 North Syndicate � in St. Paul as well as a 12,000 Sq. Ft. garage located approxin�ately one biack south of the Administration building. Adhouse Corporation will be using the faciiity for their marketing, comnunications and sales promotiort business. AURPOSE AND RATIONALE FOR THIS ACTION: The purpose of �the bond issue is to finance the acquisitian of the existing Brown & Bigelaw Office Building at 450 North Syndicate in St. Paul as well as a 12,000 Sq. Ft. garage located approximateYy one black south of the Administratjon Building. Adho.use Corporation is a St. Paul based marketing, conununicatiorts and'sales prorr�tion firm and would consolidate their eperations in th�s building. The pro�ect should increase employment by 10 peaple. ATTACHMENTS: Staff inemorandum - Draft City Cauncil Resolutian Port Authority Resoiution No. 1649 � ' P� RT � . � V AUTHORITY � � OF THE CITY OF ST. PAUL ����ci�� Memorandum � TO: BOARD OF COMMISSIONERS DAT� May 12, 1980 MEETING MAY 20, 1980 FROM: ponal d G. Dunshee SUB.IEG`i: SDA ENTERPRISES SUBLEASE TO ADHOUSE CORPORATION $1 ,840,000 REVENUE BOND ISSUE PUBLIC SALE HEARING - RESOLUTION N0. 1648 PRELIMINARY AND UNDERWRITING AGREEMENTS - RESOLUTION N0. 1649 1 . THE COMPANY Adhouse Corporation is a St. Paul based marketing, communications and sales promotion firm formed in 1970. The Company maintains a staff of copywriters, artists and persons skilled in offset and silk screen printing. They also develop and administer specialty advertising and premium merchandising programs for companies. At the present time Adhouse clients include many of the largest corporations in the country such as3-M, Honeywell , Cargill , Control Data, General Mills, Land 0'Lakes, First Bank Systems of Minneapolis as well as the National Safety Council . Their initial marketing and sales were done in the Twin City area, however, they are now serving clients in a five state area as well as Chicago and Seattle plus work for a Munsingwear subsidiary in Japan. The Company was formed in 1970 and presently employs fifty people. Since 1975 the Company has been experiencing an average annual sales increase of 46�. Adhouse Corporation has recently purchased Industrial Engraved Nameplate Company which they would move into the Brown & Bigelow building as they have purchased all marketing and production functions of the company. The three individuals in the partnership, Wayne A. Schultz, Edward F. Anglo and Ronald De La Hunt are owners of the Corporation and would comprise the partnership that would sublease the building to the Corporation for the term of the lease. � 2. THE PROJECT The Company proposes to acquire the existing Brown & Bigelow Office building at 450 North Syndicate in St. Paul as well as a 12,000 Sq. Ft. garage located approximately one block south of the Administration building. Adhouse would consolidate their operations in the building with executive offices on the second floor, production on the lower level and storage and distribution on the third floor. The cafeteria/ restaurant on the first floor would be subleased to a restaurant operator who would operate it as a public restaurant. The remaining space on the first floor would be available for sublease until such time as Adhouse requires the space. . BOARD OF COMMISSIONERS ADHOUSE CORPORATION MEETIN� MAY 20, 1980 PAGE 2 � The Company has agreed to purchase the building and the garage for $1 ,380,000.00 and has asked the Port Authority to include in the bond issue up to $200,000 to repair the 275 car parking lot, remodel , insulate and heat the receiving dock, convert the freight elevator from DC to AC, install six insulated windows on the second floor for the executive offices, construct a new security entrance for the first floor cafeteria/restaurant and modify the existing elevator system for security purposes. The Company has also asked that the Port Authority pay for the instal- lation of carpeting on the second floor and other second floor executive office modifications amounting to $50,000 which would not be included in the bond issue. The money for the improvements would come from the property sale and rental fund. Under amendments to Chapter 474 the Port Authority published notices in the Legal Ledger and St. Paul Dispatch-Pioneer Press on May 3 and 5 respectively that the proposed project would be considered by the Port Authority Commission on Tuesday, May 20. If the project is approved by the Commission on Tuesday, May 20, a formal application will be sub- mitted to the Commissioner of Securities berore the bond issue is closed. � 3. FINANCING The proposed financing of the facility would be done under Resolution No. 876. Proceeds from the bond issue would be as follows: Acquisition of Building $1 ,380,000.00 Remodeling $ 200,000.00 Bond Issue Expense 23,050.00 Debt Service Reserve 181 ,750.00 Discount 55,200.00 1 ,840,000.00 In addition to the monthly �rent, the Company will pay a fiscal and administrative fee as follows: First 10 Years �552.00 per month Second 10 Years $736.00 per month Final 10 Years �920.00 per month 4. UidDERWRITING AGREEMENT Miller 8: Schroeder h9unicipals has agreed to underwrite a bond issue commencing November 1 , 1980 and terminating October 31 , 2010. The interest rate for the bond issue will be set ten days prior to closing. . � BOARD OF COMMISSIONERS ADHOUSE CORPORATION . MEETING MAY 20, i980 PAGE 3 5. TERMS OF THE LEASE The proposed lease is for a term of 30 years and provides an option to purchase at the end of the lease for 10% of the bond issue cost. In addition to the option to purchase at the end of the lease, the Company would have an option at the end of the tenth and t��entieth year for 10% plus discharging the outstanding bonds. The Port Authority has asked SDA Enterprises and the Adhouse Corporation to provide a 10% Irrevocable Letter of Credit in the amount of �138,000.00. This Letter of Credit has been provided and will remain in force until the b�nd issue is closed. At the present time Brown & Bigelow estimates they wi11 vacate the office building in early November and the bond closing will be scheduled for late October to coQrdinate with the vacation of the building. 6. RECON6'�ENDATION In addition to reviewing the financial statements of the partnership and corporation, Staff has interviewed the members of the partnership and discussed the project with their banker. Staff recorr�nends approval of Resolution �umbers 1648 and 1649" authorizing the issuance of bonds in the amount of $1 ,840,000. The individuals in the SDA Enterprises have personally guaranteed the bond issue and Adhouse Corporation will sign a sublease for the term of the bond issue. sjs � � � . , � Resolution No. 1649 ������ RESOLUTION OF THE PORT AUTHORITY OF THE CITY OF SAINT PAUL WHEREAS, the purpose of Chapter 474, idinnesota - Statutes, known as the Minnesota Municipal Industrial Develop- nent 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 developnent of economi- cally sound industry and cor:unerce to prevent so far as possible the emerger�ce of blighted and marginal lands and areas of chronic un.er:lploynenL anc� to aid in the development of existing areas of biight, marginal land and persistent unemploy,.ient; and V7�iEREAS, factors necessitating the active promotion and deve�.opment of econonically sounC industry and comr:ierce are the increasing concentration of population in the metropolitan areas and the rapidly rising increase in the amount and cost of governnental services required to r�eet the needs of the increased popLlatior. and the need for development of land use which will provide an adequate tax base to finance these increased �osts and access to employment opportunities for such population; and WHEREAS, The Port Authority of the City of Saint Paul (the "Authority") has received fror� SDA Enterprises, a Minnesota general partnership conprised of �Vayne A. Schultz, Edward F. Anglo and Ronald J. DeLaHunt (hereinaf ter referred to as "Company" ) a request that the Authority issue its revenue bonds (which may be in the forrn of a s ingle note) to f inance the acquisition and renovation of the three story office building and adjacent parking garage which are currently used as headquarters for the Brown & •Bigelow Division of Saxon Industries (hereinafter collectively called the "Project") in the CiLy of St. Paul, all as is more fully described in the staff 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. Said Proj.ect 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 WHEREAS, the Project to be financed by revenue bonds will result in substantial employment opportunities in the Proj ec t; 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; ` 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 ?b 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 inemorand�un 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 � 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 2 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 its population, and will help to prevent the movement of talented and educa ted persons ou t of the s ta te and to areas wi th in 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 (which may be in the form .of a single note) in an amount not to exceed approximately $1, 840,000 (other than such additional revenue bonds as are needed to complete the Project) is authorized to finance the cos ts of the Proj ec t and the recommendations of the Au thori ty' s staff, as set forth in the staff inemorandum to the Commissioners which was presented to the Commissioners, are incorporated herein by reference and approved. 3. In accordance wi th Subd iv is ion 7a of Sec tion � 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 3 . � ' ' , - . 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 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 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 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 d irec ted to con tinue negotia tions wi th 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 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 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. 4 .W • - - 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 thereaf ter deem necessary to complete the Project or to refund such revenue bonds; and for such purpose the Executive Vice President of the Authority is hereby authorized and directed to forward to the City Council copies of this resolution and said Preliminary Agreement and any additional available information the City Council may request. 8. The actions of the Executive Vice-President of the Authority in causing public notice of the public hearing and in describing the general nature of the Project and estimating the principal amount of bonds to be issued to finance the Project and in preparing, a draft of the proposed application to the Commissioner of Securities, State of Minnesota, for approval of the Project, which has been available for inspection by the public at the office of the Au thori ty from and af ter the publ ica t ion of no t ice of the hearing, are in all respects ratified and confirmed. Adopted May 20, 1980 � . Attest LJ�� Pres ' n The rt Authority of the City � of Sain t Paul ��� . S re tary - 5