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275655 'NH17E - C�TV CLERK COl1QC11 �r���55 PINK ' - FINANCE G I TY OF SA I NT PA LT L CANARV - DEPARTMENT BLUE - MAVOR File NO. Council Resolution Presented By Referred To Committee: Date Out of Committee By Date WHEREAS: 1 . On August 19, 1980, the Port Authority of the City of Saint Paul adopted Resolution No. 1684, giving preliminary approval to the issuance of revenue bonds in the initial principal amount of approximately $720,000 to finance the construction of a 10,000 square foot office building at 1815 Suburban Avenue for Mully Properties. Mully Properties is a partnership comprised of Sherman and James Rutzick. 2. Laws of Minnesota 1976, Chapter 234, provides that any issue of revenue bonds authorized by the Port Authority of the City of Saint Paul , shall be issued only with the consent of the City Council of the City of Saint Paul , by resolution adopted in accordance with law; 3. The Port Authority of the City of Saint Paul has requested that the City Council give its requisite consent pursuant to said law to facilitate the issuance of said revenue bonds by the Port Authority of the City of Saint Paul , subject to final approval of the details of said issue by the Port Authority of the City of Saint Paul . RESOLVED, by the City Council of the City of Saint Paul , that in accordance with Laws of Minnesota 1976, Chapter 234, the City Council hereby consents to the issuance of the aforesajd revenue bonds for the purposes described in the aforesaid Port Authority Resolution No. 1684, the exact details of which, including, but not limited to, provisions relating to maturities, interest rates, discount, redemption, and for the issuance of additional bonds are ta be determined by the Port Authority, pursuant to resolution adopted by the Port Authority, and the City Council hereby authorizes the issuance of any additional bonds (including refunding bonds) by the Port Authority, found by the Port Authority to be neces- sary for carry9ng out the purposes for which the aforesaid bonds are issued. COUNCILMEN Requested by Department of: Yeas Nays ut�l�a Hunt �� In Favor H Levine �ne Maddox � __ Against By a ox McMahon how ter Showalter TedesCO Tedesco SEP � 6 19$� Form Appr ved by City Attorne Adopted by Council: Date ' Witson \ Certified s- d by Counci Se ta B 5 J By� A d by lNavor: ate EP�� 7T1,.�.g� App by Mayor fo S mission to Council By B �iSHED S E P 2 7 i 980 �•�., PO. RT � � AUTHORITY �t���5� OF THE C{TY OF 5T. PNUL �`. Memorondum TO: BOARD OF COMMISSIONERS DATE: pugust 15, 1980 (August 19, 1980 Regular Meeting) ., ; , � FROM: E. A. K SUBJECT: PUBLI1� HEARING - CREATION OF INDUSTRIAL DEVELOPMENT DISTRICT MULLY PROPERTIES RESOLUTION N0. 1682 PUBLIC HEARING - SALE OF LAND AND BUILDINGS MULLY PROPERTIES RESOLUTION N0. 1683 PUBLIC HEARING - SALE OF BONDS PRELIMINARY & UNDERWRITING AGREEMENTS $720,000 REVENUE BOND ISSUE MULLY PROPERTIES RESOLUTION N0. 1684 � 1 . THE PROSPECT Mully Properties is a partnership comprised of Sherman and James Rutzick. The partnership proposes to construct a 10,000 square foot office building at 1815 Suburban Avenue. This project was originally processed by the Planning and Economic Develop- ment Department and the issuance of a tax exempt mortgage note to finance construction approved by the Council of the City of St. Paul . Because the interest rate on the tax exempt mortgage note exceeded 10 1/2� and the proceeds offered by the lender were less than the money needed to make the project feasible, the matter was officially referred to the Port Authority by resolution of the Housing and Redevelopment Authority for consideration. The property has been rezoned by the Board of Zoning Appeals for office purposes and the necessary notices published preparatory to sale of the bonds. Mully Properties has negotiated a lease with the Spring Company who will occupy 50% of the facility at a rental rate of $9.15 per square foot. The balance of the property will be available for lease to others. ��5b55 Board of Commissioners August 15, 1980 Page 2 2. FINANCING Title to the 37,529 square foot parcel will be transferred to the Port Authority for $72,000. Appraised value of the property is $260,000, which represents an equity participation by the partnership of $188,000. The property is appraised at $7.00 per square foot. The bond totaling $720,000 to be amortized over a 29 year and 3 month period, will be allocated as follows: Construction and land $562,125 Debt Service Reserve 70,375 � 9 mos. Capitalized Interest 45,900 Expenses 20,000 Underwriting 21 ,600 $720,000 This results in a monthly rental based on 8.5� interest of $5,646.23 or $67,754.76 per year. We are advised by the underwriters that this rate may escalate slightly which would result in a slightly higher cost. In addition, the Port Authority would earn the interest on the reserve fund, fiscal fees of $2,592 per year for the first 10 years, $3,456 per year for the second 10 years and $4,320 per year for the finai 10 years. The option to purchase at the end of the term would be the customary lOq of the face of the bond issue or $12,000. Because the total building is not yet leased, the income and operating costs result in a shortfall and the partners will provide as a condition to approval in closing, an irrevocable letter of credit equal to $30,000 per year until sufficient amount of the additional space is rented to pay debt service, maintenance and taxes. Project construction costs will result in a net net net lease price of $6.51 per sq.ft. There is an extreme shortage of available office space in the immediate vicinity, and we believe that the project is a viable ane with these condi- tions. The partners will personally guarantee the debt on this project. Sherman and James Rutzick are two of six partners in the Port Authority financed Department of Agriculture Building on Plato Blvd. , which is fully occupied and all rents and taxes are current. a-�� �S S Bfl�rd of Commissioners August 15, 1980 Page 3 3. UNDERWRITING Miller & Schroeder Municipals has submitted an underwriting agreement in the normal form for underwriting 876 issues. As indicated earlier, the rate will be set based upon markez value at the time of closing. 4. TERMS OF THE LEASE The lease agreement will be for 30 years from the nominal date of the bonds and interest has been capitalized for a 9-month construction period. 5. RECOMMENDATIONS Staff has conferred with the Department of Planning and Economic Develop- ment who have referred this project to us through the HRA Commissioners and have been advised that the zoning has been accomplished and that the neighborhood expressed no objection and, as a matter of fact, approved the project. It is on this basis that we recommend approval of the adoption of Resolutions Nos. 1682, 1683 and 1684. EAK:jed � . . . . • . y � . • . � . , . , . � 2���55 . . , . • � ' Resol'ution No. 1684 , � ,` . • . � � RESOLUTION OF � . � THE PORT 'AUTHORITY OF THE CITY OF SAINT PAQi� ' . • . � • . . � � - � . r � � � ' WAEREAS, the purpose of� Chapter 474, Minnesota , . � � � . � : _ Statutes;� known as the Minnesota Municipal Industrial Develop-� . . ment .Act (hereinafter called "Act") as fpund .and determined by � . �the legislature- is to promo�e 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 bligh t, marginal land and persistent unemployment; and - ' � � WHEREAS, factors necessitating the act�ive 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 servic�es required to meet the needs of the ' � � � increased population and the need :for aevelopment 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� Mully Properties, a partner- ship comprised of Sherman .and James Rutzick (hereinafter referre� to as "Company" ) a request that the Authority issue • �its revenue bonds to finance the acquisition,,_ installation and• � construction of a 10,000 square� foot office builaing ,. (hereinafter collectiveTy called .the "Project") in the City of St. Paul,, all as is more fully` described in the staff report on f ile; and � � . • � WAEREAS, �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 . � � � , . � � Projeck 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 - � valaation and debt and enhance the"image and reputation of the . . Ci ty.; and � - . . � . ' � ,. WAEREAS, the Project to be financed by� revenue bonds � . . w�ll result in substantial employment opportunities in the. � , • � • ' � Project; . � . . _ � . �. � WHEREAS, : the Au thori ty Yias _ been advised b� ,repre= • -• sentatives of the Company that conventional, commercial �. . � � � f inancing to pay the capi tal cos t of the Proj ec't 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 . Au thori ty tha� wi th the �aid of revenue bond �f inancing,: and i ts � �=���%Y� - � '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 f inance . 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 � • � � of f ice of the Au.thori ty, of • a �ubl ic hearing on the proposal of - � the Company that the Aukhority finance the Project hereinbefore � � � : described �by the issuance of its industrial revenue bonds; and ' . � WHEREAS, ' the Authority did conc3uct a public hearing " � pursuant .to said notice, at which hearing �the recommendations • � • . � con ta inec7 in the Au thori ty' s s taf f� memorandum to the • Commissioners were r.eviewed, and all persons who appeared at - � � the hearing were given an opportunity to � express their views : . with respect to the� proposal. � �_ � . � . � � � NOW, TAEREFORE, •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� f.inds, that said � . Project constitutes properties, used or useful in connection � . with one or more revenue producing enterprises engaged in any - ' . '. . ' ��i��V ' � business. within the meaning of Subdivision la 'of Section 474�.02 � . of. the Act; that the Project furthers �the purpose� 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 develbpment 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 �educated persons out of the state and .to areas within the . � � � � state where. their se�vices 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 mutuaT 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 effec�t � � the financing of the Project and the issuance �of .the revenue `: . bonds, . the Project is hereby approved and authorized and the . - � � issuance of reve�nue bonds of the Authority in an amount not to � � exceed approximately� $720, 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 �incorporated herein by reference and . , . approved.• • : . � � � . � 3. In accordance with Subaivision 7a of Section _ � � � 474.01; Minnesota Statutes, . the Execu�tive Vice-President of the , AUTHORITY iS hereby authorized � and directed to submit the � � � proposal for the above descr.ibed �Project to the Commissipner 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 b�en 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 proposed Project in order that the Company � may proceed without delay wit�h the commencement of the . � ' . acquisition, installation and construction of the Project with � . ' � the assur.ance that there has been sufficient "official action" ' � under Section 103(b)' of .the Internal Revenue Code of 1954, as � amendec3, 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,. ana the �President and Secretary of the � . '� Authority are hereby authorized and directed to exe�cute said • . . Agreements. . . . . � � �� 5. � Upon execution of . .the :Prelimir.ary Agreement by �. � the Company, the staff of the Authority _are authorized arid directed to continue negotiations with� the Company, so as to . � - - resolve the remaining issues necessary to the preparation of • the �lease � and other documents necessa'ry 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 Preside�nt 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, SecEion 475.06, Subdivision . '� 1,� to accept a f inal of fer of the Underwri ters made by. the . Underwriters to purchase said bonds and to execute an � . , � underwriting agreement setting forth ::uch offer on behalf of • the Authority. Such acceptance sh�all' bind the Underwriters to . , � • said offer but shall. be subject to. approval and ratification by � ' � the Port Authority in a forma3 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 constiEute an . � � indebtec�ness of the Authority or the City of Saint Paul. within . the meaning of any constitutional or statutory limitation and � � . . . . : . . - . ����55 • � 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 � �or '�he payment of the bonds (and interim note or notes) or - � interest thereon. ' � . ' . � 7�. In order to facil�itate completion of the revenue � . � bond f inancing herein contemplated, ti�e City Council is hereby� � " requested to consent, pursuant to Laws of. Minnesota, 1976, �� Chapter 234, to the issuance of the revenue bonds {inclucling . ' - � , any interim note or notes) herein contemplated and any . ' additional bonas 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. � � 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 � . : Authority fr�m and after the publication of notice of the hearing, are. in all respects ratified and confirmed. . . . . . � . . - � . �j • . • � . Adopted August 19, 1980 � � � •i, / j . . . . . . . . _ j, / . . . I . . / ��/' � .� ' . 4 `�"�G � /�/ ! . l � . k -�-�,. � �. Attest . •� : . .. . . . � . ' • � -' Pr-e.S.,�d�rrt / . � , � � � The Port �uthority of the City . � �� of Saint Paul � ' ; , • � / ��.lti � � Secretary � . . . , . � ' • . � . � . . OM 01: 12/19i5 - . Rev. : : 9/8/76 � � ,G /�',d- ��a=�6�, . EXPLANATION OF ADMINISTRATIVE ORDERS, � RESOLUTIONS, AND QRDINANCES � � 2'�5655 Date: August 19, �9so ` �R E C E 8 V E p T0: MRYQ EORGE LATIMER A�� 2� 1�$�1 �MlA��� �� FR: E.A. . Paul Port� Authority � RE: MULL PROPERTIES -: $720�OOQ REVENUE BOND ISSUE "� RESOL;UTION N0. 1684 � ACTIQN REQII�STEDt • In accordarrc� with the Laws of Minnesota, Chapter 234, it is �requested that th� City Council , by Resolution, a draft copy of which is attached hereto, approve the issuance of rev�nue �onds in the amount of approximately $720,000 to finance the construction . of a 10,00a square foot office building for Mully Properties at 1815 Suburban Avenue. Mully Propehties is a partnersMip comprised of Sherman and James Rutzick. PURPOSE ANQ�RATIONALE -FOR THiS ACTION: � The purposejof the bond issue is to finance the construction of a 10,000 square foot office buil�ing for Mully Properties on a 37,529 square foot parcel at 18'�5 Suburba�r� Avenue. Terhns of the lease agreement will be for Z9 ye�r� and 3 months. The partnership will per�son�lly guarantee the pro3ect and deposit a letter of credit with tb�•Port Authority equal to th� taxes, operating cost and rent for the space not cortmitted at eanpletiori of _ constructiorl. This pro3ect is being financed because the Spring Cor�any, the primar�y tenant, would be for►ced to locate its office east of the City limits since no rentaT office space now exists dn the east side to meet their needs. There would be approximately 25 p�ople employed in 'this location. ATTACFiMENTS: Staff Memoradndum Draft City Cbuncil �esolution . Port Authori!ty Resotution No. 1684 , 3,. .-, :-:., � �IT� t��'-�' ►.�A3NT �AUL �5�55 � �• . ��� OFFICE OF TH£+� GI'1TY CflIINCIL �=- t {., � r::��� �asa...,r.,. � . � ��siMs''. -_, +�-� �`,'r:� Y�, �� Date : Se��ember 12, 1980 ' _.�. co � � i-��r� � � � � � �� TO : Soint Paul Cit��t Councii F R� � = C OIY1 Rt i'�'�F:� O C! FIPJANCE, MANAGEMENT & PERSOI��EL George McMahon , chairman, ma�kes the following � : report on C.F. � � O�dinance (8) X� Resolutican � Other T 1TLE : : . At its meeting of September 11 , 198�, the Finance Committee recorr�ended approuaT of the following: _ �. Reso7ution amending 1979 Capital Im�rovement Budget for Mattocks School - Demol i ti on (11318-Gt�9) - . . . . 2. Resolution transferring funds from t�Jorkers' Compensation Account to Tort Liability Account to cover court costs and costs of audgments against the city - for the remainder of 1980 (11322-GM) -- - . - � � �a Resolution approving appropriation of an additional $20,OO�� to the Lexington- Hamline Housing Development Corporation for program�operation; - 4. Resolution approving the application of Richard K� Parr for abatement, submitted on behalf of the Housing and Redevelopment Authority (11327-GS1) 5. Resolution transferring $122,927 from l4Jorkers` Compensation to_ various activities . - in the Uivision of Parks and Recreation to cover utility costs. 6. Resolu�ion approving 1981 HRA Tax Levy Budgets.. � � � ° - 7. Resolution approving issuance of revenue bonds of approximately $1 ,00�,000 to finance construction of additional warehcusing space for Anchor Paper Company, Inc., � 480 Braadway (11323-GM) 8. Resolution approvi�g �ssuance of revenue bonds of approximately $720,J00 to finance construction of office building for Mully Properties at 1815 Suburban (11328-G�1). CITY HALL SEVENTH FL'OOR SAINT PAUL, MINYFSUTA 55102 ,„y :..��`�%