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271448 WHI7E - C�TV CLERK COUflC1I �� PINK - FINANCE G I TY OF SA I NT PA ll L CANARV - DEPARTMENT BIUE - MAVOR File NO. ouncil Resolution Presented By Referred To Committee: Date Out of Committee By Date WHEREAS: 1 . On June 20, 1978, the Port Authority of the City of Saint Paul adopted Resolution No. 1358� giving preliminary approval to the issuance of revenue bonds in the initial principal amount of approximately $500,000 to finance the purchase of additional equipment to permit Hart Ski Mfg. Co. to expand their production line at their facility at 630 Pierce Butler Route. 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 . 4. It is estimated that the initial principal amount of said bonds will be approxi- mately $500,000 and that the net interest cost applicable to said issue will 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 bpnds for the purposes described in the aforesaid Port Authority Resolution No. 1358 in the initial principal amount of $500,000 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. 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SUBJECT: PRELIMINARY AND UNDERWRITING AGREEMENT - SALE OF $500 ,000 REVENUE BONDS HART SKI MFG. C0. RESOLUTION N0. 1360 PRIVATE PLACEMENT REVENUE BOND ISSUE Hart Ski Mfg. Co. is planning to expand its production line in the facility they lease at 630 Pierce Butler Route. The additional equipment will perm�t the company to complete the transfer of their winter ski production opera- tion from Europe and also allow them ta corrrtinnence water ski construction in St. Paul. At the present time water ski production is based in Seattle, Washington, and this production will all be transferred to St. Pau1 in the near future. � -._ The new equipment will create up to 50 new jobs in St. Paul . Staff has met with the company, Miller & Schroeder Municipals, The First National Bark of St. Paul , and National City Bank of Minneapolis, to discuss the proposed bond issue which would be equally divided between the two banks. The bonds would be privately placed and the issue would be outside of the Port Authority's Resolution No. 876, and would be issued on the basis of Hart Ski Mfg. Co. 's financial statement and the security of the equipment. The equipment purchases include four double presses for laminating plastic skis; molds; silk screen equipment; milling machines; edge binding equip- ment; cutting machines; grinders; and other equipment needed to increase production and commence the manufacturing of water skis. The lease would be for a period of five years commencing June 1 , 1979 and terminating May 1 , 1984. The interest rate for the bond issue would be 8-1/2q. Income to the Port Authority over the term of the lease would be as follows: Fiscal and Administrative Fee - $149 per Month X 5 Years = $ 8,940 Sinking Fund Earnings - $2,430 per Year X 5 Years = 12,650 Total income to the Port Authority during the term 21 , Staff recomnends approval of the preliminary and underwriting agreement. DGD:jmo �, - . �~��`�� Resolution No. 1358 . RESOT UTION OF THE PORT AUTHORITY OF THE CITY OF SAINT PAUL WHEREAS, the purpose of Chapter 474, iiinnesota Statutes, known as the Minnesota Municipal Industrial Develop- ment Act (hereinafter called "Act") as found and determined by the legislature is to promote the welfare of the state b� the active attraction and encouragement and development of econorni- 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 blight, marginal land and persistent unemployment; and WHEREAS, factors necessitating the active promotion and development of economically sound industry and com,-nerce are the increasing concentration of population in the metropolitan areas and the rapidly rising increase in the amount and cost 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 increas- ed costs and access to employment opportunities for such popu- lation; and WHEREAS, The Port Authority of the City of Saint Paul (the "Authority") has received from Hart Ski Manufac�uring Co. , Inc. (hereinafter referred to as "Company") a request that . the Authority issue its revenue bonds (cahich shall be in the form of one or more notes) to finance the aca,uisition and installation of equipment (the "Project") for manufac- turing facilities to be located in the City of St. Paul � and subleased to the Company, 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 imgrove 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 ancl help maintain a positive relationship between assessed valua- tion and debt and enhanae the image and reputation of the City; and «HEREAS, thsubstantial�employmenteopportunities bonds will result in in the Project; �4HEREAS, the Authority has been advised by repre- seritatives of the Company that conventional, commercial financing to pay the capital cost of the Project is available only on a limited basis and atofuoheraging�the Pro ect aould that the economic feasibilbut the Company has also advised be significantly reduced, this Authority thatowiborrowingdcostretheuProjeat�isaeconom- and its resulting 1 ically more feasible; and . ��JHEREAS, Miller & Schroecler Municipals, Inc. (the "Placement Agent") has made a proposal �-rivategrlacementtot "Placement Agreemenz ) relating to the p P the revenue bonds zo be issued to finance the Project. NO�a, THEREFORE, BE IT RESOLVE� by the Commissioners of the Port Authority of the City of Saint Paul, Ninnesota as follows: 1. pn the basis of information availab le to the Auth�rity it appears, and the Authority hereby finds, that said Project constitutes prop erties, used or useful in connec�ion with one or more revenue producing enterprises engaged in any b�asiness within the meaning of Subdivision 1 of Section 474 .02 of the Act; that the availability of the financing under the Act and willingness of the Authority to furnish such financi�ake1thebProjecbstanai�ha�ndheeeffect of the Company to under the Project, if underso na'industry andecommerce and assistp ment of economically in the prevention of thereventechronicbunemployment,aandnal land, and will help to p will help the City to retain and ir.lprove its tax�btunities provide the range of services and employment opp required by its population, and �vill help to prevent the movement of talented and educated pzrsons out of the state and to areas within the state where their services may not b° as effectively used and ��ill result in more intensive development and use of land wi�hin the City and 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 purchaser of the revenue bonds as to the details of the reence�andreffect the other documents necessary to evid financing of the Project ancl the issuance of the revenue bonds, the Project is hereby approved and authorized and the issuance of revenue bonds of the Authority (which shall be in the form of one or more notes) in an amount not to • I • �~I �`�'3J exceed approxi.mately $500, 000 (other than such additional revenue bonds as are needed to complete the Project} is authorized to finance the costs of the Project. 3. There has heretofore been filed with the Authority a forn of Preliminary Agreement between the Authority and Company, relating to the proposed construction and financing of the Project and a form of the Placement 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 corimencement 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 Agreements are hereby approved, and the President and Secretary of the Authority are hereby authorized and directed to execute said Agreements. 4. Upon execution � of the Preliminary Agreement by tYie 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 dQCUments necessary to the adoption by the Authority of its final bond resolution and the issuance and delivery of the revenue bonds. 5. The revenue bonds and interes�t thereon sha11 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 or interest ther�on. � . . , . . ��"�4�� 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 Minnesotat 1976, Chapter 234, to the issuance of the revenue bonds herein contemplated and an� additional bonds �vhich 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 Execu- tive 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. � Adopted June 20, 1978 � � % ; . Atte s� l�� f, �CL'`' � Presid t � Th� P rt Authority of the City � � � � � � of Saint Paul � i . Se retary .. . . PRELII�IIIJARY AGREEP�IENT THIS AGREEMEyT, made and entered into as of this 20th day of June, 1978, by and between the P�RT AUTHORITY OF THE CITY OF SAINT PAUL, a public corporation organized and existing under the provisions of P�Iinnesota Statutes, Chapter 458, and a � � redevelopment agency �vithin the meaning of Minnesota Statutesr _Chapter 474, hereinafter called "Port Authority" , and Hart Ski Manufacturing Co. , Inc. , a corporation organized under the laws of Minnesota, hereinafter called "Company" ; WITNESSETH: _ WHEREAS: A. The Co:npany and Port Authority intend that equipment be acquired and installed on - premzses described in Exhibit A attached said equipment being hereinafter called "Project" ; B. The parties hereto intend, subject to the terms, covenants and canditions herein Con- tained, to enter into a Loan Agreement (hereinafter called "Loan Agreemen�") relating to the Project in the form and tenor . customary with respect to industrial revenue bond financing in the State of Idinnesota and to finance the acquisition and installation •, � . of the Project through the issuance by the � Port Authority of two Industrial Development Revenue Notes (hereinafter called Notes) in the approximate amount of $250, 000 each, pursuant to Minnesota Statutes, Chapters 458 and 474. � NOW THEREFORE, in consideration of the mutual covenants herein contained, it is hereby agreed by and between the parties hereto as follows : - 1. The Company and the� Port Authority agree ta nego- tiate the Loan Agreement in a form and tenor customary with respect to industrial revenue bond financing in the State of Minnesota, including without limitation the provision for the following: (a) The Loan Agreement term shall commence on the nominal date of the Notes and shall extend throuqh the final maturity date of the Notes. (b) The Company shall agree under the Loan Agreement to make monthly payments in the amoun�s and at such times as are set out in said negotiated Loan Agreement, but in any event sufficient to pay �vhen due debt service on the Notes, plus an administr�tive 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 the investment of the monthly payments and other monies in the Bond Fund shall inure to the benefit of the Port Authority. (d) The Company sl�all have the option to discharge its obligations under the Loan Agreement by � paying an amount required to discharge the Notes, � including payment of any other liabilities accrued under the Loan Agreement. (e) The Company shall be entitled to credit against its last installments of payments due during the term of the Loan Agreement the principal amount of any surplus construction funds transferred to the Bond Fund. (f) 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 Loan Agreement. (g) The Company shall agree to procure on or before termination of the construction period and maintain in its name and in the name �f the Port Authority, liability and property insurance coith respect to the Project in a,-nounts and against risks customary with respect to such properties. � (h) The Company agrees that prior to the , commencement of the installation of any part of the Project, the Company will cause to be filed with the Port Authority and approved by its duly authorized agent the PI.ans and Specifications for the entire Project certified by an engineer registered in the State of Minnesota and that with respect to at least that part of the Project the Company then wishes to undertake the Company cvill first cause to be filed with the Port _ � � ��J Authority and approved by its duly designated agent, ( i) all payrnent and performance bonds for the ��ork to be � undertaken, ( ii) all installation contracts, ( iii) such builders risk, installation floater, and liability insurance as will fully protect the Company, contractor, purchasers of the Notes and Port Authority (who shall be named as an additional insured or loss payees) as their � interests shall appear, against risk of loss or damaqe to the Project and against claims c�hich may arise from the acquisition and installation of the Project, and ( iv) waivers from the general contractor and a11 subcon- . tractors and suppliers of all rights agai.nst the Fort Authority for damages to property except such rights as they may have to proceeds of such insurance. AI1 __ _ contracts enter�d into for installation of the Project described herein shall include provisions that the wages paid to skilled and unskilled labor shall not be less than the prevailing wage rates currently in effect in the City of Saint Paul. ( i) The Company shall agree to pay all taxes, assessments, and other governmental charges that are or may become due with respect to the Project. (j) A security interest in the Project and sums held and pledged to the payment of the Not�s shall be granted to the purchasers of the P�lotes. • 2. Prior to the comriencement of installation of the Project, the Port Authority and the Company s�iall complete and . - - , ;�� enter into a Project Agreement in substantially the form on file in the office of the Port Authority or into the negotiated Loan Agreement which may substantially incorporate by reference Articles 1 and 2 of such Project Agreement. 3. Upon negotiation of the details of said Loan Agreement and final determination of the terms of the Notes, the Port Authority shall thereafter issue said Notes in accordance � with the terms and conditions set forth in the Loan Agreement; provided that: (a) Details of the sale and issuance of the Notes to be issued by the Port Authority shall be subject to final approval by the Company and the Port Authority. (b) Issuance of said Notes shall be subject to � the issuance of the approving opinion of Briggs and Morgan, Professional Association, Bond Counsel for the Port Authority and for the City of Saint Paul, and the furnishing of aIl documents, resol.utionsr agreements, financial information, certifications, and representations necessary to the sale and delivery of the Notes, 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 Notes are issued, the Company shall upon demand nevertheless � � 8 ��`f� . promptly pay or reimburse the Port Authority for the payment of all out-of-pocket expenses .incurred by the Port Authority in connection with the Project including without limitation all Bond Counsel and other legal fees incurred in the preparation of this Preliminary Agreement, the negotiated Loan �greement, the underwriting agreement, other related docum�nts, and all costs incident to any environmental studies required to be hereafter � made in connection with the Project. - 5. This Agreement is subject to the approval af the Notes by the City Council of the City of Saint Paul as provided by Chapter 234 of the Laws of Minnesota for 1976. IN WITNESS WHEREOF, the parties hereto have caused these presents to be executed as .of the day and year first a.bove written. In the Presence of: PORT AUTHORITY OF THE CITY OF SAIN^ PAUL � G' . � � - � By � L�Gc.�- - zt i /' �-z�' , �. By l' 4�2��%��2,�- I � �(Corporate Seal) � , , . , . . ,�~J��4� . . . . In the Presence of: HART SKI P�ANUFACTURI�IG CO. , INC. By � Its By Its (Corporate Seal} t