273644 WHITE - CITV CLERK C0�1I1C11 2�73644
PINK - FINANCE G I TY OF SA I NT PAU L
CANARV - OEPARTMENT
BIUE - MAVOR File NO.
Council Resolution
Presented By
Referred To Committee: Date
Out of Committee By Date
WHEREAS:
1 . On August 21 , 1919, the Port Authority of the City of Saint PaUI adopted
Resolution No. 1543, giving preliminary approval to the issuance of revenue bonds in the
initial principal amount of approximately $590,000 to finance the purchase from Scholl , Inc.
a 37,506 square foot building on 2.05 acres at 1020 Raymond Avenue for S & S Real Estate
Company with a sub-lease to Swenson Carriage House, Inc.
2. Laws of Minnesota 1976, Chapter 234, provides that any issue of revenue bonds
authorized by the Port Authority of the City of Saint Paul , shall be issued only with the
consent of the City Council of the City of Saint Paul , by resolution adopted in accordance
with law;
3. The Port Authority of the City of Saint Paul has requested that the City Cout�cil
give its requisite consent pursuant to said law to facilitate the issuance of said revenue
bonds by the Port Authority of the City of Saint Paul , subject to final approval of the
details of said issue by the Port Authority of the City of Saint Paul .
RESOLVED, by the City Council of the City of Saint Paul , that in accordance with Laws
of Minnesota 1976, Chapter 234, the City Council hereby consents to the issuance of the
aforesaid revenue bonds for the purposes described in the aforesaid Port Authority Resolution
No. 1543, the exact details of which, including, but not limited to, provisions relating
to maturities, interest rates, discount, redemption, and for the issuance of additional
bonds are to be determined by the Port Authority, pursuant to resolution adopted by the
Port Authority, and the City Council hereby authorizes the issuance of any additional bonds
(including refunding bonds) by the Port Authority, found by the Port Authority to be
necessary for carrying out the purposes for which the aforesaid bonds are issued.
COUNC[LMEN
Yeas Nays Requested by Department of:
Hr$o�����'�017 [n Favor
Hunt .G-°"�%'� / `�
I.evine _ __ Against BY �'"'�'��,���
Maddox
Showalter
Tedesco Form A pproved by City Attorney
Adopted by Council: Date ��—�79
Certified s_ by C uncil cre } By
By -
/App by Mavor. D App o ed by Mayor for m' si n`to Council
i
B — By
�.t�i�i �Ep 15 ,�7q
.:y P� -� T �
AUTHORITY ���;���
OF THE CITY OF ST. P^UL
Memorandum
TO: Board of Comnissioners DATE: Aug. 17, 1979
Meeting August 2 1979
� ,
�, \
FROM: D. G. Dunshee'�
SUBJECT: S & S REAL ESTATE COMPANY
SUB-LEASE TO SWENSON'S CARRIAGE HOUSE, INC.
$590,000 REVENUE BOND ISSUE
RESOLUTION N0. 1542 - PUBLIC SALE HEARING
RESOLUTION N0, 1543 - PRELIMINARY AND UNDERWRITING AGREEMENTS
1 . THE COMPANY
Swenson Carriage House, Inc, operates two retail furniture
stores in the St. Paul area and warehouses their household
furnishings in a facility in Eagan. The company started
in the retail furniture business in St. Paul in 1901 on Payne
Avenue. In T965 they apened the retail store on Highway 36
� and in 1968 the retail store on Highway 110. The company
has warehoused in Eagan since 1974 and wishes to move back
into St. Paul .
The lease on the proposed revenue bond issue would be with
S & S Real Estate Company with a sub-lease to Swens�n Carriage
House, Inc. for the term of the issue and the two partners in
the S & S Real Estate Company would personally guarantee the
bond issue.
2. THE PROJECT
The company proposes to purchase from Scholl , Inc. a building
containing 37,506 sq. ft. situated on 2.05 acres at 1020
Raymond Avenue. The property has rail trackage, is zoned
I-2 (Heavy Industrial ), and the building is 5 and 15 years old.
In addition to acquisition of the building for $580,000, the
� company proposes to remodel the truck loading portion of the
building by enclosing the truck doors and improving the ware-
housing area.
The partnership has agreed to deposit $75,000 equity in
the building at bond closing.
Under amendments to Chapter 474, approved by the Minnesota
legislature this spring, the Port Authority published notice
in the Legal Ledger and the St. Paul Dispatch-Pioneer Press
on August 4 and 6 respectively that the proposed project would
be considered by the Port Authority Corrgnission on Tuesday,
August 21 . If the project is approved by the Com�nission today,
t . . ����'��
Y •
Board of Commissioners
Page 2
8/17/79
a formal application will be submitted to the Corr�nissioner
of Securities before the bond issue is closed,
On June 20, the Port Authority notified District 12 of the
proposed project. Staff has discussed the project with the
community organizer of the district and they have no objection.
The company estimates they will add between three and five
people to their present employment in the warehouse when the
project is completed.
3. FINANCING
The proposed financing of the facility would be done under
Resolution No. 876. Proceeds from the bond issue would be
as follows:
Construction $505,970.00
Bond Issue Expense 15,000.00
Debt Service Reserve 51 ,320.00
Discount 17,700.00
$590,000.00
In addition to the monthly rent, the company wi11 pay a fiscal
and administrative fee as follows:
First 10 years $300 per month or $3,600 per year
Second 10 years 400 per month or 4,800 per year
Final 10 years 500 per month or 6,000 per year
4. UNDERWRITING AGREEMENT
Mi11er & Schroeder Municipals has agreed to underwrite a bond
issue for a 30-year term commencing October l , 1979 and
terminating September 30, 2009. The interest rate for the
. bond issue Vri11 be set 10 days prior to closing.
5. TERMS OF THE LEASE
The proposed lease is for a term of 30 years and provides
an option to purchase at the end af tne lease for 10% of the
bond issue cost. In addition to the optian to purchase at
the end of the lease, the company would have an option at
the end of the tenth and twentieth year fcr 10°� plus dis-
charging the outstanding bonds.
� - . .
Board of Commissioners
Page 3
8/17/79
Staff has reviewed the financial statements of S & S Real
Estate Company, Swenson Carriage House Furniture and the
personal financial statements of the partnership.
In July, 1979 Mr. ��Jilliam Muske of Muske Company, Inc.
appraised the land and building and established a current
market value of $590,000. This market value is the same
as the proposed bond issue, and the Port Authority would
be holding a debt service reserve of $51 ,320 as additional
security. This means the Port Authority would have an
asset of $641 ,320 and a liability of only �590,000.
6. RECOMMENDATION
The sta€f has reviewed the project in detail , the financial
statements, the appraisa7 of the property, and recommends
approval of Resolution Nos. 1542 and 1543 authorizing the
issuance of bonds in the amount of $590,000.
DGD:jed
. � • � .
�����
Resolution No. 1543
RESOLUTION OF
THE PORT AUTHORITY OF THE CITY OF SAINT PAUL
WHEREAS, the purpose of Chapter 474, Minnesota
Statutes, known as the Minnesota Municipal Ind ustrial 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 energence 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
FVHEREAS, factors necessitating the active promotion
an� development of econoinically sound industry and commerce are
the increasing concentration of nopulation in the metropolitan
. areas and the rapidly rising increase in the amount and cQSt 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 casts and access to employment opportunities for such
. population; and
WHEREAS, The Port Authority of the City of Saint Paul
( the "Authority") has received from S & �S Real Estate Company,
a Minnesota partnership consisting of Dale M. Swenson and Duane
M. Swenson (hereinafter referred to as "Company") a request
that the Authority issue its revenue bonds to finance the
acquisition of an existing 37, 506 square foot office and
warehouse facility (hereinafter collectively called .the
"Project") in the City 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 prouide 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; an�
4dHEREAS, the Project to be financed by revenue bonds
will result in substantial enployrient opportunities in the
Project;
WHEREAS, the Authority has been advised by repre- _
sentatives of the Campany 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 Conpany 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;
6JHEREAS, Miller & Schroeder riunicipals, Inc. ( the
"Underwriter" ) has made a proposal in an agreernent ( the
"Underwriting Agreement" ) relating to the purchase of the
revenue bonds to be issued to finance the Project;
��HEREAS, the Authority, pursuant to s�iinnesota
Statutes, Section 474 .01, Subdivision 7b did place 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; anc�
WHEREAS, the Authority did conduct a public hearing
pursuant to said notice at which hearing all nersons who
appeared at the hearing were given an opportunity to express
their views with respect to the proposal .
NOGJ, THEREFORE, BE IT RESOLVED by the Commissioners
of the Port Authority of the City of Saint Paul, Minnesota as
fol�ows : �
l . 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 enternrises 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 tne
financiny 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 in�ustry and comraerce and assist in the
prevention of the emergence of blighted and narginal 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 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 developnent 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, and other d�cuments 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 Autnority in an amount
not to exceed approximately $590, 000 (other than such
additional revenue bonds as are needed to complete the Project)
is authorized to finance the costs of the Project.
3 . In accordance with Subdivision 7a of Section
474.01, Minnesota Statutes, the Exec�tive Vice-President of the
AUTHURITY 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,
em�loyees and agents of the AUTHORITY are hereby authorized to
provide the Cc�missioner 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
financiny of the Project and a form of the Underwriting
Agreement. The form of said Agreements have �een exanined by
the Co,unissioners . 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, insLallation and construction of the Project with
� the assurance that there has been sufficien� "official action"
under Section 103 (b) of the Internal Revenue Code of 1954, as
amended , to allow for the issuance of industrial revenue bonds
( includiny, if deemed appropriate, any interin note or notes to
. r � .
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
Agreenents.
5. Upon execution of the Preliminary Agreement by
the Co�pany, 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 docurnents 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 ar,y constitutional or statutory limitation and
shall not constitute or give rise to a pecuniary liability of
the Auttiority or the City or a charge against their general
credit or taxing powers and neither the full faith and credit
nor the taxiny 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 conpletion 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 tne revenue bonds ( including
- any interirn note or notes) herein contemplated and any
additional bonds which the Authority may prior to issuance or
from time to time thereaf ter dee:-� necessary to complete the
Project or to refund such revenue bonds; and ior 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 causiny public notice of the public hearing
and in describiny 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
appZication to the Commissioner of Securities, State of
hlinnesota, for approval of the Project, which has been
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 confirrned.
,
� A�opted August 21, 1979 �'�� '��
;
� � /
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Attest `-tj�'� � : � ���-i
��re s i n�t
'� The Por� Authority of the City
/'"� of Saint Paul
! ���2/� �
S etary
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