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268511 WHITE - CITV CLERK �� PINK - FINANCE COUIICII BLUERV - MAVORTMENT GITY OF SAINT PAITL File NO. � Council Resolution Presented By Referred To Committee: Date Out of Committee By Date WHEREAS; Y l . On January 4, 1977, the Port Authority of the City of Saint Paul , adopted Resolution No. 1141 , giving preliminary approval to the issuance of revenue bonds in the initial principal amount not to exceed $1 ,080,000.00 to finance the expansion of Farmers Union Grain Terminal Association. 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 ini�ial principal amount of said bonds will not be more tfian $1 ,080,000.00 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 her,eby consents to the issuance of the aforesaid revenue bonds for the purposes described in the aforesaid Port Authority Resolution No. 1141 in the initial principal amount of not to exceed $1 ,080,000.00 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 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 Nays Requested by Department of: Butler Hozza [n Favor Hunt Levine � __ Against BY Roedler Sylvester Tedes FEB 3 19� Form Approved Ci Att rney Adopte y Council• Date C tified P d by uncil ,ecretary By � Ap by Mayor. D e C FEB 1 0 1977a Appr e by Mayor for S m' sion to Council gy BY PUBUSHED FEB 1 2 �977 , �. �� `�_ �7 �� :� �.�: PORT AUTHORfTY OF THE CITY OF SAINT PAUL 1130 MINNESOTA BUILDING, 4TH AND CEDAR, SAINT PAUL, MINN. 55101, PHONE (612) 224-5686 January 14, 1977 The Honorable George Latimer Mayor, City of St. Paul City Hall and Court House St. Paul , Minnesota 55102 Dear Mayor Latimer: We submit herewith for your review and recommendation details pertaining to the issuance of revenue bonds in the amount of $1 ,080,000 for additional construction at the Farmers Union Grain Terminal Association elevator at the Port Authority's Barge Terminal No. 1 , all as more specifically described in the attached memorandum. We are also attaching a copy of the Port Authority Resolution No. 1141 , adopted at a Special Meeting of the Board of Commissioners on January 4, 1977. We enclose sufficient copies for distribution to the City Attorney's office and members of the City Council . Yours truly, , ; �k `' �;,�.�C. � �.�-t� Eugen A. Kraut Assistant Executive Vice President EAK:jmo Encl . � ROBERT F. SPRAFKA EUGENE A. KRAUT, C.I.D. DONALD G. DUNSHEE� C.I.D. CLIFFORD E. RAMSTED ROSCOE C. BROWN E%ECUTIVE VICE PftESIDENT ASSISTANT EXECY7IVE VICE PRESIOENT OIRECTOR, INOUSTRIAL DEVEIOPMENT CHIEF ENGINEER CHIEF ACGOUNTANT COM MISSIONERS JOMN L. SEGL PATRICK J. ROEDLER LOUIS N. MEVERS G. RICHARD SLADE GEORGE W. WINTER ROSALIE L. BUTLER ARTMUR N. GOODMAN PRESIDENT VICE PRESIDENT SECRETARV TREASURER LEGISLATIVE ADVISOR RAY W. FARICY� STATE REPRESENTATIVE 2 C.I.D.Certified Industrial Developer _ . . " \� � ``; _ i?M 01: 9,�8176 . EXPLANA�ION OF ADMINISTRAT��TE ORDE�ta�� ; RESf3LUTIQNS, ANA ORDINAi�TC�S ' �� .. �� , R.: ' Uate: Janu�t�Y 14, 197� ' . T0: ls'IAYOR GEORGE LATIMER � � � FR: Robert F. �prafka, S:t. Paul Port Author�ity�i� • , , RE: Fi�RMERS U�OI4N'fRAIN TERMINAL ASSQCIATION:: . '8�4RG� T£RMtNAL N0. 1 �t�?tlSTI�IAL DE,VE�.flPMENT RfYENItE BtNlfl FINANGING Ft)R Pp�.t,Ufii�i CIIt�T�flL . . : :RI� RELATED Et�JIPMENT , � _ , , _ A�r�ort ��s�n: _ . : , . In accordance Mfith Laa�s af �i�rmesota 't476; 'Chapter �34, it is re�uee�tecl tha� #�e City� _ Cauncil 6y �Resviutfit►n,. a draft copy of v�tich is attacF�ed her�t+o, approve t#rt ��su�rrce - a� $1,,�Q,t�1Q i.� r��ren�e bartds. 7he praceeds of tM� .�ever� bond .isswe w�i1;1 be us+�d .�q � ,< � cons�r�� and fnstart'1 pa]lution contrv� equipmen^C ft��r the e�i��ing gr�i� el�vat��., _ ; : ; �, , ,, . , .,. FURPOSE AND RATIONALE� F'OR TAfS ACTI(7N: R�trmers [!ri#�`t 6r��i�r ,Termina] lk.sSac#atf�pn has been r�q�es'�ed by th� Mi�neSV� Ptt�lu�:1t� ;. . C�ttroT f�r�cY tc� fnst�ll� cert�ain dus.t co1_lec�#s�n systen� �t� sompl'y,w��th e��°�t��g 5��; ' iatws. T�►e £o�paaxty ha�s; secured an. f�statlat�fvn permf�t, N�.' �7�-76-��1, fl�th�. Pat��#+� � Co�trol �c,�e�cy arrd waul.c� �omnence �anstt�t�ctt� of the syst� in 3��ruary ��l"f �ti�d �ha�.. �t �anp�et� thfs sprtng. 'Ff��e facilfty is u�ed ars a d�irect truck or ra�il ta b��ge :: fnettfty ►�f�t storage in the �t�vatot�s durfing wfr�ter months. fihere is n� p_rt��ss�f�g , ar l�aggit�g �, ait the plant. ., . , , , A�TACHMENTS: _ � _ .,:��. .. �apy of Port autho�^tty. Reso:�utfan No. 1141 � � . ' �cpy of �raft CounciY Resolutian , : - Cv�py �f Rort �c�thori.ty. Memarartdum. to 6oard of Cc�nmis�.fort��s date�i �1ec�nber ]7, l�lfi , ,. . � / - � . . � ,.1PORT � �_ �--.- AUTHORITY OF THE CITY OF 57. RAUL Men�orandun� TO: Board of Commissioners DATE December 17, 1976 Meeting December � 1976 FROM: D. G. Dunsh SUBJEGT: FARMERS UNION GRAIN TERMINAL ASSOCIATION BARGE TERMINAL N0. 1 INDUSTRIAL DEVELOPMENT REVENUE BOND FINANCING FOR POLLUTION CONTROL AND RELATED EQUIPMENT 1 . THE COMPANY Farmers Union Grain Terminal Association is a co-op with members living in Minnesota, North and South Dakota, Montana, Idaho and Wisconsin. They currently operate two facilities on Port Authority property. The first is a loadout facility on Chestnut Street and the second is the Grain Terminal located in Barge Terminal No. 1 . This facility was originally constructed with industrial revenue bonds issued in 1966 and 1967 for Walsh Grain Company. In May of 1975 the Walsh Grain lease was assigned to Farmers Union Grain Terminal Association for the remainder of the term expiring September 30, 1991 . 2. THE PRO�ECT Following Farmers Union Grain Terminal Association's occupancy of the elevator, they were requested by the Minnesota Pollution Contral Agency to install certain dust collection systems in the elevator and chutes � to comply with State laws. They have had all plans for the equipment approved by the Pollution Control Agency and have also received the installation permit (674-76-I-1). The construction cost of the project is estimated to cost $875,000.00. The equipment would be constructed under contracts negotiated by Farmers Union. Construction would commence in January 1977 and be completed by the start of the 1977 shipping season. 3. FINANCING The financing for the project is proposed through the issuance of � industrial development revenue bonds in the amount of $1 ,080,000.00 to be comprised of the following: Construction $ 875,000.00 Legal expenses 26,000.00 Interest during construction 27,000.00 Debt service reserve 125,000.00 Bond discount 27,000.00 TOTAL $1 ,080,000.00 _. _....._ _ __ ._ _. : . t � _ l � ' � Board of Commissioners � Page -2- These bonds will be retired over the remaining term of the lease which terminates in 1991 . Under the authorizing Resolution No. 876 and amendments it is required that a debt service reserve be maintained on the issue. Because of the strong national credit of the company, we are proposing to capitalize the debt service in the bond issue and amortize the d�bt service reserve from earnings thereon and additional rentals to be received from the tenant. At the end of the bond amortization period the estimated $125,000.00 debt service reserve would go to the Port Authority, as would any earnings during the period of the lease and interest earnings on the sinking funds generated from rent payments. 4. UNDERWRITING Miller & Schroeder Municipals have agreed to underwrite the revenue bond issue of $1 ,080,000.00 with the interest rate to be finalized at the time the bonds are delivered. The tentative rate is projected at 6% subject to fluctuations in the bond market. A copy of the underwriting agreement is enclosed for your review. 5. TERM OF THE LEASE Farmers Union's present lease expires September 30, 1991 . The new bond issue would terminate on that date. We also propose to consolidate the original leases on the grain terminal along with the new revenue bond lease into a new single document. To facilitate the company's ability to take advantage of the investment credit, a Public Sale Hearing notice has been published to consider the option to. acquire the equipment at the end of the term for $1 ,000.00. The life expectancy of the equipment installed is 20 years. The $125,000.00 debt service reserve fund is a reserve of the Port Authority and will become a cash asset when amortized in 14 years. Shown below are the projected interest earnings for the � Port Author�ty and interest payment required ta amortize the debt service reserve. tklso noted is the estimated profit to the Port Authority from the debt service reserve over the term of the issue. Port Authority earnings at 7� $ 8,750.00 (Annual ) Port Ruthority sinking fund earnings 1 ,875.00 TOTAL 10,625.00 Required to amortize bonds $ 7,500.00 . Net profit from debt service reserve estlmate from Port Authority - 14 years 57,750.00 Staff has reviewed the financial statement of Farmers Union Grain Terminal Association and a copy is attached for your review. Since Farmers Union took � over the operation of the facility in July 1975, they have loaded 331 barges. This compares to a total barge loadout over the first 12 years by Walsh Grain of 398 barges. They have made excellent use of the facility and it is in good condition. Staff recommends approval . . - , ` � � � � � �► � � � o � r � � OF THE CITY OF ST. PnUL �� +Jernoro»dunn 70: Board of Commissioners DATE: December 17, 1976 Meeti ng December `:2i,� 1976 ��J \�� l�,�'�� FROM: D. G. Dunsh2 ' SUQJECT: FARP�ERS UNION GRAIN TERMINAL ASSOCIATION BARGE TERMINAL N0. 1 INDUSTRIAL DEUELOPi�ENT REVENUE BOND FINANCI�G FOR POLLUTIO�! � CONTROL APJD RELATED EQUIPMENT 1 . THE COMPANY Farmers Union Grain Terminal Association is a co-op with members living in Minnesota, North and South Dakota, Montana, Idaho and Wisconsin. They currently operate two facilities on Port Authority property. The first is a loadout facility on Chestnut Street and the second is the Grain Terminal located in Barge Terminal No, l . This facility was originally constructed with industrial revenue bonds issued in 196b and 1967 for �lalsh Grain Company. In May of 1975 the �Jalsh Grain lease was assigned to Farmers Union Grain Terminal Association for the remainder of the term expiring September 30, 1991 . 2. THE PROJECT Following Farmers Union Grain Terminal Association's occupancy of the elevator, they were requested by the Minnesota Pollution Control Agency to install certain dust collection systems in the elevator and chutes to comply with State laws. They have had all plans for the equipment appro�ed by the Pollution Control Agency and have also received the installation permit (674-76-I-1 ) . The construction cost of the project is estimated to cost $875,000.00. 7he equipment would be constructed under contracts negotiated by Farmers Union. Construction would commence in January 1977 and be completed by the start of the 1977 shipping season. 3. FINANCING The financing for the project is proposed through the issuance of industrial development revenue bonds in the amount of 51 ,080,000.00 to be comprised of the following: Construction $ 875,000.00 Legal expenses 26,000.00 Interest during construction 27,000.00 Debt service reserve 125,000.00 Bond discount 27,000.00 TOTAL $1 ,080,000.00 ! . ,�� ..� � n �y�� t • � Board of Commissioners Page -2- These bonds will be retired over th� remaining term o` the lease ��rhich terminates in 1991 . Under the authorizing Resolution '+o. 876 and amendments ii is required that a debt service re�erve ce maintained on the issue. Because ofi the strong national credit of the co��any, a�e are proposing to ca�italize the debt service in the bond issue and a!�ortize the debt service reserve from earnings thereon and addi�ional rentals to be received from the tenant. At the end of the bond amortization period the estimated $125,000.00 debt service reserve 4��ou1d ao to the Port Authority, as would any earnings during the period of the lease and interest earnings on the sinking fu�ds generated from rent payments. 4. UNDERWRITING Miller & Schro�der Municipals have agreed to underwrite the revenu� bond issue of $1 ,080,000.00 with the interest rate to be finalized at the time the bonds are delivered. The tentative rate is projected at o% subject to fluctuations in the bond market. A copy of the underwriting agreement is enclosed for your review. 5. TERM OF THE LEASE Farmers Union's present lease expires September 30, 1991 . 7he new bond issue would terminate an that date. �de also propose to consolidate the original leases on the grain terminal along with the new revenue bond lease into a new single document. To facilitate the company's ability to take advantage of the investment credit, a Public Sale Hearing notice has been published to consider the option to acquire the equipment at the end of the term for $1 ,000.00. The life expectancy of the e�uipr�ent installed is 20 years. The $125,000.00 debt service reserve fund is a reserve of tne Port Authority and wiil become a cash asset when a�:;ortized in 14 years. Shown below are the projected interest earnings for the Port Authority and interest payment required to amartize the debt service reserve. Also noted is the estimated profit to the Port Authority from the debt service reserve over the term of the issue. Port Authority earnings at 7% $ 8,750.00 (Annual ) Port Au�thority sinking fund earnings 1 ,875.00 TOTAL �10,625.00 Required to amortize bonds $ 7,500.00 Net profit from debt service reserve estimate from Port Authority - 14 years 57,750.00 Staff has reviewed the financial statement of Farmers Union Grain Terrinal Association an� a copy is attached for your review. Sinc� Farmers Unien took � over the operation af the facili�y in July 1975, they have loaded 331 barges. This compares to a total barge loadout ov�r the first 12 years by �rJalsh Grain of 398 barges. They have made excellent use of the facility and it is ;n good condition. Staff recommends approval . . ' �� Resolution No. 1141 January 4, 1977 RESOLUTTON Or THE PORT AUTHORITY OF THE CITY OF SAINT PAUL WHEREAS the ur I , p pose of Chapter �74, Minnesota Statutes, known as the Minnesota Municipal Tndustrial 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 encoura�ement 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 chron�c ' unemployment and to aid in the development of exis�ing areas of blight , marginal land and persistent unemployment; and WHEREAS, factors necessitating the active promotion � and development of economically sound industry and cor.unerce 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 wi11 provide an adequate tax base to finance these increas- ed costs and access to employmerit opportunities for such popu- lation; and WHEREAS , The Port Authority o`' the City of Saint Paul (the "Authority") has received from the �'armers Un�on Grain Terminal Association (hereinafter referred to as "Company" ) a !� request that the Authority issue its revenue bonds to finance ( the acquisition, installation and construction of pollution control equipment for existing grain terminal facilities and other facilities related thereto (hereinafter collectively ' called the :'�Pro�ject") in the City of St: Paul, all as is more fully described in the staff report on file; and ti1HEREAS, the Company has represented that said Pro- � �ject shall be a par� of a dock and wharf and other related �` facilities within the meaning of Section 103(b ) (4) (D) of the � Internal Revenue Code oi 1954, as amended; and � `� , � � � � i } �� . . �� WHEREAS , the Authority desires to eliminate air and water pollution and fac3litate the selective development of the community to retain and improve its tax base and to he�lp it provide the range of services and employment opportun'.ties required by its population, and said Pro,ject will assist the City in achieving that ob�ec�ive. Said Projec� will tielp 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 the retention by the Company of employees to operate existing facilities rented by the Company; and WHEREAS, the Authority has been advised by representa- tives of the Company that conventional, commercial financing to pay the capital cost of the Pro�ect is available only on a limited basis and at such high costs of borrowing that the economic feasibility of operating the Pro�ect would be signi- ficantly reduced, but the Compan5� has also advised th3s Author- ity that .with the aid of revenue bond financing, and its re- sulting low borrowing cost, the Pro�ect is economicall.y more feasible . • NOW, THEREFORE, BE TT RESOLVED by the Commissioners of' the Port Authority of the City of Saint Paul, Minnesota as follows : 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 enterprises engaged in any business within the meaning of Subdivision 1 of Section �74 .02 of the Act; that the availability of the financing under the Act and willingness of the Authority to furnish such financing wil.l be a substantial inducemen� to the Company to undertake the Pro,�ect, and that the effect of the Project, if undertaken, wi11 be to eliminate pollution and encourage the development of economically sound industry and co mnerce and assist in the prevention of the emergence of blighted and marginal land, and will help to prevent chronic unemployment, and �,vill help the City to retain and improve its tax base and provide the range of services and employment opportunities required by its popula- tion, 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 ar�d use of land �,�rithin the City will eventually result �.n an increase in the City � s tax base . -2- ` , : �� 2. Stzbject to the mutual agreement of the Authority, the Company and ;he purchaser of the revenue bonds as to the details of the l�ase and other documents necessary to evidence and effect the financing of the Pro,ject and the issuance of the revenue bonds, tLze Pro,ject is hereby approved and authorized and the issuance of revenue bonds of the Authority in an amount not to exceed �1, 080, 000 (other than such additional revenue bonds as are needed to complete the Pro�ect ) is authorized to finance the costs of the Project. 3. There have ;been presented to the Authority a form of Preliminary Agreement between the Authority and Company and Underwriting Agreement, between the Authority, Company and Miller & Schroeder Municipals, Tnc . , relating to the proposed � construction of the Pro�ect and the financing thereof. The fox�m . 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 intention with respect to the proposed Pro,ject in order that the Company m�ay proceed without delay with the commencement of the acquisition, installation and construction of �he Pro,ject and the temporary financing thereof with the assurance that there has been sufficient "official action" under Section 103(b) af the Tnternal Revenue Code of 195�, as amended, to allow for the issuance of lon; �erm in, dustrial revenue bonds to finance the entire cost of the Pro�ject upon agreement being reached as ta the .ultimate details of the Projec� and its financing. Said Agreements are hereby approved, and the President and Secretary of the Author�ty are hereby author�zed and directed to execute said� Agreements . Upon exe-- � cution of the Agreements by the Company, the staf� of the Author- ity are authorized and directed to continue negotia,tions with the Company so as to resolve the remain3.ng issues necessary to the preparation of the lease and other documents necessary to the adoption by the Authority of its final bond resolu�3.on and the issuance and delivery of the bonds . 4. The revenue bonds and interest thereon shall not constitute an indebtedness o� the Authority or the City oi Saint Paul within the meaning of any constitutional or statu- tory limitation and shall not constitute nor give rise to a pecuniary liability of the Authorit� or the City nor a charge � against their general credit or taxing powers and neither the full faith and credit nor the taxing po��rers of the Authority or the City is pledged for the payment o� the bonds or interest tnereon. -3- . � � ' . . ��.1 5. In order to facilitate completion of the reveMUe bond financing herein contemplated, the C.Lty Council is hereby requested to consent , pursuant to Laws of Minnesota, 197b, Chapter 234, to the issuance of the reven�ae bonds he?''�in comtemplated and any additional bonds which the Autharit;� may from time to time deem necessary to complete the Pro�ect or to refund such revenue bonds ; and for such purpose the E:�ecutive Vice President of the Authority is hereby authorized and directed to forward to the City Council copies of this re- solution and said Preliminary Agreement and any addit�onal available information the City Council may reques� . Adopted January 4, 1977 � � � � � Pre t T ort Authorit of the Ci�y of Saint Paul Attest � �.' Sec etary ' � � _�_