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271446 WH17E - CITV CLERK �� r�� PINK - FINANCE /� CANARY - DEPARTMENT GITY OF SAINT PAUL COUIICI k_j BLUE - MAYOR File NO. Council Resolution Presented By Referred To Committee: Date � Out of Committee By Date WHEREAS: 1. On June 20, 1978, the Port Authority of the Cit�y of Saint Paul adopted Resolution No. 1360, giving preliminary approval to the issuance of revenue bonds in the initial principal amount of approximately $745,000 to finance the purchase of the building located at 630 Pierce Butler Route from Beatrice Foods and make approximately $100,000 in improvements in the building. The facility would be leased to a partnership consisting of Mr. James Brown and Mr. James Bjork, Chairman and President of Hart Ski Mfg. Co. Inc. , and i�i' turn subleased to the Hart Ski Mfg. Co. Inc. 2. Laws of Minnesota, 1976, Chapter 234, provides that any issue of revenu� 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 Ci€y 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 . 4. It is estimated that the initial principal. amount,of _�aidT,bonds will be approxi- mately $745,000 and that the net interest cost applicable to' said issuepwil'I not exceed 8�, now, therefore, be it 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. 1360� in the initial principal amount of $745,000 at a net interest cost of not to exceed 8%, the exact details of which, including, but not limited to, provisions relating to maturities, interest rates, discount, redemption, and for the issuance of additional bonds are to be determined by the Port Authority, pursuant to resolution adopted by the Port Authority, and the City Council hereby authorizes the issuance of any additional bonds (including refunding bonds) by the Port Authority, found by the Port Authority to be necessary for carrying out the purposes for which the aforesaid bonds are issued. COU[VCILMEN Yeas Nay�s Requested by Department of: tt;� � oz a ��' _ In Favor t Huet L ne �'� � Against BY �� y—� -M�edox �adda�---- -�wa�"�h�f� - �� Form Approved by City Attorney Adopted y C nc 1: Date — �L ' 5--�— Certified�P• - ed by� ouncil S cretary BY '�1 ` \ Ap by Mayor: at � 2'� �97� Approv Mayor for Su s bn to Clouncil By BY \ �uatist�EO JUL 2 9 197� ,, ',�a-'q`'� �''� . .3y :�"*'� �'�-' k=t�, �h � '� k .� a�'a'g°�S �+�.�� . k � �. = r � � ..t - t ; � . r _ �� , e riv'" ' r�'��....:j �`� , r^ } ,��'„n,ee 7��'} i rry Y .�,e ` � i �, ` . AR;�*''. ��IR 'n� . A '' n�r��R��, 4�• �.. } '' _ ��q� SP 'p �,�' vi.'Y � j� ' - � aR j "' ��v�� g� �. 4., :s < � i �� . ,�,� �r i a �`�� i� ) _ . . '� � � �M .. `�-- '� 1 � � ,nt� . �'�4 �� 4� ' +S�ti.�j''�''� .,6 xY��'�`i��1�;' .�� .�� t T� '� i �h �' y � y��; '� uc,J �t: ,� a ^.� .t,� i�� ,�, ty y . �� f�^� z 4d� �S� ',:t� 1.s*$p, .�..« 3 �.#��` i " S d f . . 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PAU4 Memorandum TO: BOARD OF .COMMI Sj_O��ERS DATE: �une 16, 1978 (June 20, 19 Regular Meeting) ` � � . FROM: D.G. Duns hee SUBJECT: BROWN/BJORK PARTNERSHIP PUBLIC SALE HEARING SUBLEASE TO HART SKI MANUFACTURING COMPANY INC. $745,000 INDUSTRIAL REVENUE BOND ISSUE 1. THE COMPANY In 1977, a group of local investors purchased from Beatrice Foods Co. Hart Ski Manufacturing Company, Inc. , who previously was a division of Beatrice Foods. The �urchaser entered into a 15-year � land lease with Beatrice Foods for the Hart Ski Manufacturing building at 630 Pierce Butler Route. Mr. James Brown and Mr. James Bjork, Chairman and President of Hart Ski Manufacturing Company, Tnc. , have asked that the Port Authority consider the issuance of $745,000 in industrial development revenue bonds to finance the purchase of the building from Beatrice Foods Co. and make approximately $100,000 in improvements in the building to permit them to increase their production. The partnership would in turn sublease the bui1ding to the corporation for the 25-year term of the bond issue. 2. THE FACILITY � The building was constructed in 1965 and is situated on 118,262 square feet (2,7 acres). It contains 42,914 square feet of space on the first floor w9th 3,270 square feet . in a mezzanine office for a total square footage of 46,184. The building fronts on Pierce Butler Route one block east of Dale Street and is served by rail trackage by the Burlington Northern Railroad. The partnership proposes to construct within the building a filter room and ventilating system to allow them to do their own silk screening for ski pr.oduction, additional electrical service for the equipment they propose to purchase, and construct a 1aboratory testing equipment room. All of these improvements would be within the existing facility and would be done to allow them to increase production and create up to 50 new jobs. , ' , � �� . BOARD OF COI�ii+?ISSIONERS , June 16, 1978 Pag� -2- On January 1 , 1978, Bettendorf Appraisals conducted a market value appraisal or the building and established a value of $625,000. The . ap�raisal indicated the building is well located in the industrial area, is well maintained, and is an exce1l�nt light industrial facility. � Under the agreement with Beatrice Foods, the acquisi,tion pric� of the facility w�uld be $520,000 and proceeds of the bond issue would be as fol l o��vs: Acquisition $520,OOO.Q4 Modifications 98,737.50 Debt Service Reserva 64,700.00 Capitalized Interest During Construction 6 Months 24,212.5Q Bond Issue Expense 15,Q00.00 � Underwriter's Discount 22,350.00 , . �J In addition to the monthly bond retirement cost, the partnership has agr�ed to pay a fiscal and administrative fee based on the standard Por� Authority formula of $200 per million per month which amounts to $149 per month. Base� on 46,184 square feet, the net net net lease cost to the partnership over 25 years is $1 .35 per sauare foot. The partnership would have an option to �� purchase the building for $74,500, or 10q of the bond issue cost, which is ti�e standard Port Authority formula. 3. UNDERi�'RI i IPr'G AGREEMcNT Miller & Schroeder Municipals has agr�ed to underwrite the revenue bond issue. The interest rate would be set prior to bond closing, . and the issue would be done under Resolution 876. 4. SU��t�ARY In k�eping with t�e Port Authority policy of notifying the Districts when a proj�ct is proposed, 4rz have contacted District 6 on May 11 , 1978 regardin3 the proposed project. As of this date, we have received no ��ritten or oral communication from the District regarding the project. The Port Authority has revietived the financial statement of the corpora- tion, the 1978 projzction, and the financial stat�m�nt of the indiViduals of th� parrnership. Based on the age and cor,dition of the building and t�� attractiY� net net net lease cost, staff recommends approval . DGD:ca � r �� Resolution No. 1360 RESOLUTION OF . . THE PORT AUTHORITY OF THE CITY OF S�IIt�T PAUL � �4HEREAS, the purpose of 'Ghapter 474 , . Minnesota � Statutes, known as the iRinnesota Municipal Industrial Develop- ment Act (hereinafter called "Act") as found a.nd determined by the legislature is to promote the welfare of the state by the � active attraction and encouragement and dzvelo��nent of economi- cally sound industry and comr.izrce to prevent so far as possible . the emergence of blighted ana marginal lands a.-�d areas of chronic unemployment and to aid in the development of existing areas of blight, marginal land and persistent t:ne?�tp?ayment; and WHEREAS, factors necessitating the a�tive promotion and developinent of economically sound industr�� and conmerce are the increasing concentra�ion of population in the metropolitan areas and the rapidly rising increase in the a-nount and cost of gotiTernm��ta? services required to mee� the needs of the inc�eased p�pula;ior. and the need for develo�::,�nt of land use " " t•�hich wi1.1 provici� an adequate tax base to fi::ance these increas- ed costs and access� to employment opportuniiies for such popu- lation� and WHEREAS, The Port Authority of tne City of Saint Paul (the "Authority") has receivecT �rom Jars�s F. Bro�•;n and James E. Bjork (hereinafter referred to as "Applicar.ts"� a r�quest that the Authority issue its revenue bonds to finar.ce the acquisi.tion, installation and consicruction of manufac�uring facilities (here- inafter coll.ectively cal.led the "Project") -in the City of St. Paul, said Project to be l.eased to a partnersnip (the "Company"j and subleased to Hart Ski blan�siacturing Co. , Inc. , al]. as i.s more fully described in the staff report o� file; and �aHEREAS, the Authority desires to facilitate the selective development of the comanunity, to xe�ain 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. Sazd Project cvill help to increase the assessed va3uatian of the City and help maintain a positive relationship beL�•;?eil assessed valua-- - tion and debt ana enhance the inage and re�ata�ion of the City; an d � • �'"�'1��i WHERE:AS, the Project to be financed by revenue bonds will result in substantial employm°nt opportunities in the Project; . WHEREAS, the Authority has been advised by repre- sentatives o� the Applicants that conventional, cammercial financir_g to pay the eapital 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 �Prajecf'�6u1� � be significantly reduced, but the Applicants have also advised this Authority that with the aid of revenue bond fa.n ancing, and its resulting low borrowing cost, the Project is econom- ically more feasible; and . WHERr.AS, Niiller & Schroeder P-iunicipals, 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. _ NOW, THEREFORE, BE IT RESOLVED by the Comr�issianers of the Port Authority of the City af Saint Paul, Minnesota as follows: - 1. On the basis of information available to the Authority it appears, and the t�uthority hexeby �inds, that said Project constitutes propsrties, used or useful in - connection c:ith one or more revenue producing entexprises engaged ir. any business within the meaning of Subaivision ]. of Section 474.02 of the Act; that the availabil:ity of the financing un4�r the Act and willingness of the Authority to furnish such financing will be a substantial in�fucement to the Company to undertake the Project, and that the effect of the Project, if undertaken, will be to encaurage the develop- nent of economically sound industry and commerce and assist in the prevention of the emergence of blighted and riarginal land, and will help to prevent chronic unemplo�rment, and will help the City to retain and improve its tax base and provide the range of services and emplo��ment opportunities required by its population, and �oill .help to prev�nt 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 resu].t in an increase in the City' s tax base. 2. Subject to the mutual agreerient of the Authority, the Company and the purchaser of the revenue bonds as to the details of the lease and other docur,lents necessary to evidence and effect the financing af the , ,, . � , �N�� Project and the issuance of the revenue bonds, the Praject is hereb}� approved and authorized and tr� issuance of revenue bonds of the Authority in an amoun� not to exceed appro�imately $Z45,000 needecl to complete the Project) is authorized to finance the costs of the Project. � 3. There has heretofore been filed with the Authoriti� a form of Preliriinary Agreement betw�en the Authority and Company, relating to the propos�d construction and finaneing of the Project and a foxri of the Underwriting Agreement. The form of said Agreements have been exami.ned by the Co�nmissioners. It is the purpose of said Agreements to evidence the commitmenL of the �parties and their intentions with respect to the proposed Project in order that the Company may proceed without delay �aith the commencement of � the acquisition, installation and construction of the Project �aith the assurance that there has been sufficient "official action" under Section 103 (b) of the Internal Revenue Code of 195�, 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. Saia Agreements are hereby approved, and the President and Secretary of the Authority are hereby authorized and directed t�o �xecute said Agr°2;j°I2t5. . � 4 . Upon e�ecution of the Preliminar_y Agreement by the Co:�:�ar.y, the stafi of the Au�hority are authorized �nd direc�ed to continue negotiations with the Company so as to resolve the remaining issues necessary to the preparati.on of the lease and other documents necessary to i:he adoption by � the Authority of its final bonc� resolution and the a.ssuance � and delivery of the revenue bonds; provided that the President (or Vice-President if the President is absent) and the Secretary (or t�ssistant Secretary i� the Secretary is absent) of the Authority, or if either of such officers (and his alternative) are absent, the Treasurer of the Authox�.ty in lieu of such abser.t officers, are hereby authorized i.n accordance ��ith the provisions of rsinnesota Statutes, Seetion � 475.60, Subdivision 1, to accept a final offer of the Underwritexs to purchase the revenue bonds at such time as such offer is made by the Under�•�riters to purchase said bonds and to exe cute an under�ariting aqreement setting forth such offex an b�half of the Authority. Such acceptance shall bind the Underwri ters ,. . .- • said offer but shall be subject to approval and ratification by the Port Authority in a forrial supplemen-tal bond resolu- tion to bz adopted prior to the �delivery of said revenue bonds. 5. The revenue bonds and interest thereon shall not constitute an indebtedness of the Authority or the City of Saint Paul within the meaiiing 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 po�aers and neither the full faith and credit nor the taxing po�•�ers 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 h�reby 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 co�ntemp?ated and any additional bonds ��hich the Authority may prior ta 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 forcaard to the City �ouncil copiss of this resolution and said Preliminary � . Agreement and any additional available information the City Council may request. Adopted June 20, 978 / � Atte s t�' G, � , ' �� z ✓ � � , Pre �cl n ` The F�or Authority of the City � , � of Saint Paul ecretary PRELIMINARY AGREEI4ENT �r��t�� THIS AGREEMENT, made and entered into as of this �Q� day o f ,��-c,e� , 19 7 8, by ana be tcve en the PORT ____--- AUTHORITY OF THE CITY �OF SAINT PAUL, a public corporation organized and existing under the provisions of Minnesota Sta�utes, Chapter 458, and a redevelopment agency within the meaning of Minnesota Statutes, Chapter 474, hereinafter called "Port Authority" , and James F. Brown and James E. Bjork, hereinafter called "Applicants" ; WITNESSETH: WHEREAS: A. The Applicants and Port Authority intend -- -- that a manufacturing facility b� acquired and improved on premises described in Exhibit A attached hereto and incorporated herein by reference, said �acility and premisesbeing hereinafter called "Project° ; B. The parties hereto intend to forn a partner- ship (hereinafter called "Company") , and, as such and subject to the terms, covenants and conditions herein contained, to enter into a Lease (hereinafter called "Lease") of the Project in the form and tenor customary with respect to industrial revenue bond financing in the State of P-iinne- sota, to sublease the Project tc� Hart Ski � � Manufacturing Co. , Inc. under a "true lease" (hereinafter called "Sublease�w�,�� and to finance the acquisition, installa- tion and construction of the Project through the issuance by the Port Auth- � ority of Industrial Development Revenue Bonds (hereinafter called Bonds) , in the approxzmate amount of $745,000, pur- suant to �iinnesota Statutes, Chapters 458 and 474. NOW THEREFORE, in consideration of the mutual covenants herein contained, it is hereby agreed by and betvaeen the parties hereto as follows: 1. The Applicants and the Port Authority agree to nego- tiate the terms of Lease and Sublease in a form and tenor cus- tomary ��ith respect ta industrial revenue bond financing in the State of Minnesota, iricluding without limitation the provision for the following: (a) The term of the Lease and Sublease shall commence on the nominal date of the Bonds and shall extend through the final maturity date of the Bonds. (b) The Lease and Sublease shall provide for monthly payments in the amounts and at such tir�es as are set out in said negotiated Lease and Sublease, but in any event sufficient to pay when due debt service on the Bonds, plus an administrative fee per month determined on the basis of $200.00 per $1,000, 000 of Bonds computed in accordance with the actual principal amount of Bonds issued. � (c) Interest on earnings derived from .�}�a ' �+`T�� investment of the monthly payments and other monies in the Bond Fund and the Reserve established therefor shall inure to the benefit of the Port Authority. (d) The terms of the Sublease shall be such that for federal. income tax purposes the Sublease shall be regarded as a "lease" of the Project as distinguished from a "sale" of the Project � to Company. � (e) The Company shall have the option to purchase the Project at an amount required to discharge the Bonds, including payment of Paying Agent and Escrow � Agent fees and any other liabilities accrued under the Lease; plus such additional amaunt determined in the Lease to be required to reimburse the Port _ _ Authority for its equity in the Project. � (f) The Company shall be entitled to credit against its last installments of payments due during the term of the Revenue Agreement the principal amount of any surplus construction funds transferred to zhe Bond Fund and any Rese�ve established out of bond proceeds. (g) The Company shall agree to cause the Pro- ject to be maintained in good working order and free of liens to the extent provided in the Revenue Agree- ment. (h) The Company shall agree ta procure on or before termination of the construction period and ��/ �� maintain in its name and in the name of the Port Authority, liability and property insurance with respect to the Project in amounts and against risks customary with respect to such properties and business � interruption or rental value insurance. (i) The Applicants agree that prior ta the commencement of the construction of any part of the Project, the Company w'ill cause to ba filed with the Port Authority and approved by its duly authorized agent the Plans and Specifications for the entire Project certified by an engineer registered in the State of �Zinnesota and that with respect to at least that part of the Project the Company then wishes to undertake the Company will first - cause to be filed �oith the Port Authority and approved by its duly designated agent, (i) all payment and performance bonds for the work to � be undertaken, (ii) all construction . contracts, including any installation contract, (iii) such builders risk, installation floater, and liabil— ity insurance as will fu1l.y pratect the Company, contractor and Port Authority (who shall be . named as an additional insured or loss payees? as their interests shall appear, against risk of loss or damage to the Project and Project premises and � against claims which may arise from the construction, . acquisition and installation of the Project, and (iv) waivers from the general contractor and all subcon- tractors and suppliers of all rights against the Port Authority for damages to property except such rights as they may have to proceeds of such insurance. All construction contracts entered into for construc- ting the Project described herein shall include provisions that the wages paid to skilled and un- skilled labor shall not be less than the prevailing wage rates currently in effect in the City of Saint Paul. (j) The Company shall agree to pay all taxes, assessments, and other governmental charges that aze or may become due with respect to the Project. 2. Prior to the co < <encement of construction of the Project, the Port Authority and the Company shall complete and enter into a Project Agreement in substantially the form on file in the office of the Port Authority or into the negotiated Lease which may substantially incorporate by reference Artic�es 1 and 2 of such Project Agreement. 3. Upon negotiation of the details of said Lease and final determination o� the terms of the Bonds, the Port Authority shall thereafter issue said Bon�s in accordance with the terms and conditions set forth in an underwriting agreenent and the Lease; provided that: (a) Detail5 of the sale and issuance of the Bonds to be issued by the Port Authority shall be subject to final approval by the Company and the Port Authority. (b) Issuance of said Bonds shall be subject to the issuance of the approving opinion of Briggs and . rlorgan, Professional Association, Bond Counsel for the Port Authority and for the City of Saint Paul, and � the furnishing of all documents, resolutions, agree- ments, financial information, certif ications, and representations necessary to the sal.e and delivery af the Bonds, including those which are customarily used and those which are customary and necessary to comply with all state and federal laws, regulations, rulings and decisions. 4. Regardless of whether or not for any reason the Bonds are issued, the Company or Applicants shall upon demand nevertheless promptly pay or reimburse the Port Authority far the payment of all out-of-pocket expenses incurred by the Port Authority in connection with the Project including without limitation a1J. Bond Counsel and other legal fees incurred in the preparation of this Preliminary Agreement, the negotiated , Lease, the underwriting agreement, other related docunents, and all costs incident to any environmental studies required to be hereafter made in connection with the Project. v , � . �� Y�,� 5. This Agreement is subject to the approval of the Bonds by the City Council of the City of Saint Paul as . provided by Chapter 234 of the Laws of 1�Iinnesota for 1976. " IN WITI�TESS WHEREOF, the parties hereto have caused these p�-esents to be executed as of the day and year first above written. '• ' In the Presence of: PORT AUlHORITY OF THE CITY OF SAINT P UL � n /6" � � / . � , -� gy lY LL� � Its ; ;,/ � . ' r�� ,- , _ __ By � � rt (Corporate Seal) , � / . , � , . 1,