268995 WHI7E - CITV CLERK ('�'
PINK - FINANCE GITY OF SAINT PAUL Council �`�'��� �
CANARV - DEPARTMENT �.
BLUE - MAVOR File NO. i`
C uncil Resolution ��
c
Presented By
Referred To Committee: Date
Out of Committee By Date
WHEREAS:
1 . On April 19, 1977, the Port Authority of the City of Saint Paul , adopted
Resolution No. 1174, giving p��iminary approval to the issuance of revenue bonds in the
initial principal amount not to exceed $3,500,000 to finance the acquisition and remodel-
ing of the Lowry Hotel;
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 not
more than $3,500,000.00 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 hereby consents to the issuance
of the aforesaid revenue bor�ds for the purposes described in the aforesaid Port Authority
Resolution No. 1174 in the initial principal amount of not to exceed $3,500,000.00 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 (including refunding bonds) by the Port
Authority, found by the Port Authori�y to be necessary for carrying out the purposes
for which the aforesaid bonds are issued.
COU[VCILMEN Requested by Department of:
Yeas Nays
Butler � [n Favor
Hozza
Hunt
Levine � _ Against BY
Roedler
Sylvester MAY 3 1977 '
Tedesco
Form Approved by City Attorney
Adopted b i uncil: � Date .
Ce ' ied Pa se�"6y Co . cretary BY �� //L. .
By, D�-�
Approv by Mayor: Da 6 19�' Approv d by Mayor for Submis 'on t Council
By BY
�uB�ISHEO MAY 14 1977
„ NORTHWESTERN FINANCIAL CENTER, 7900 XERXES AVENUE SOUTH, MINNEAPOLIS, MINNESOTA 55431
' iR�
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BRANCH OfFICES: '
• ■■ q■
Minneapolis.Mmnesota 55402 ' . � � 1•1 � � �T - � LaJolla,California'92037
� 1007 Northwe5lem Bank Build�ng , y�� 1200 Prospect Street Suite 150 �
Chicago,luinois 60604
(714)459-2661
209 South�a Salle Street.Suite 709 C�.ro e der �
(312)346-9446
MUNICIPALS, INC.
' TOLL FREE OUT STA7E B00•328-6122 TEL:812•831-1500 TOIL FREE IN STq7E 1•800-862-6002
April 19, 1977
Honorable Board of Commissioners
Port Authority of the City of
Saint Paul
1130 Minnesota Building
St. Paul, Minnesota 55101
and
Doerfler Construction Co. , Inc. �
1885 Wilson Avenue
St. Paul, Minnesota 55119
Ladies and Gentlemen:
You have advised us that it has been proposed that the Port
Authority of the City of Saint Paul (the "Issuer”) issue its
Industrial Development Revenue Bonds (the "Bonds") under the
provisions of Chapters 458 and 474 Minnesota Revised Statutes
and Bond Resolution No.' 876 of the Port Authority of the
City of Saint Paul to finance a project to be leased by the
Issuer to Doerfler Construction Co. , Inc. , a Minnesota
corporation (the "Company") . On the basis of informat�on
furnished us to date with respect to the project to be
financed by the issuance of the Bonds, and upon the terms
and conditions as generally set forth in this letter and
more specifically described in� the Addendum attached hereto
and fully made a part hereof by reference thereto, we hereby
agree to purchase $3 , 260, 000 principal amount of the Bonds
on the following basis:
A. The Bonds shall bear a date of May 1, 1977 , and
shall mature approximately 25 years from and after the
date thereof, with amortization of the Bonds to be
provided for on a level basis whereby the sum of prin-
ci.pal and inter'est payments due in each year is essentially
constant over the term of the Bonds. The Bonds shall
mature in the years beginning May l, 1979, through May .
l, 2002. The first interest coupon shall be payable
November 1, 1977.
. , .
+. �
i I 1 e r & � :������
chroeder �
,. :, . ��.� �
Port Authority of the City
of Saint Paul
Doerfler Construction Co. , Inc.
April 19 , 1977
Page Two � '
B. The Bonds shall be subject to redemption and pre- .
payment in whole or in part in inverse order of their
serial numbers at the option of the Issuer at a callable
price of 102% of par value at any time on or after May
1, 19,87; at 101o of par value at any time on or after
May 1, 1992; and at 100� of par value at any. time on or
after May l, 1997.
C. The interest rates with respect to the Bonds shall
be determined in the manner as specifically provided
and set forth in paragraph 2 of the attached Addendum.
D. � The proceeds of sale of the Bonds shall be allo-
cated approximately as follows:
Construction ' $ 2, 650, 000
Bond reserve (estimated) 260,000
Capitalized interest (estimated) 194, 600
Bond issuance expense (estimated) 25,000
Underwriting (96) 130,400
Total $ 3, 260, 000
E. We will pay $3,129, 6OO. for thE� Bonds upon their
delivery to us, together with accrtied interest to a now
anticipated Closing Date of May 25, 1977 , all as more .
specifically provided and set forth in paragraph 3 of
the attached Addendum.
F. Notwithstanding anything herein contained to the
contrary, all of the terms, covenants and conditions of
the Addendum attached hereto and made a part hereof
shall be fully applicable to the issuance of the Bonds �
as if such terms, coveriants and conditions were fully
set forth herein, and to the extent of any conflict
between the terms, covenants and conditions of said
Addendum and the general description of the transactio:�
as contained in this letter, the provisions of said
Addendum shall' be controlling and binding upon all
parties hereto.
If the foregoing proposal is acceptable tc� both of you,
please indicate by endorsing a copy hereof, with the copy so '
endorsed to be returned to us. Until and unless accepted by
. ' �
iller & �, : : y r
chroeder � � ���''�`�
: �;�
Port Authority of the City
of Saint Paul
Doerfler Construction Co. , Inc.
April 19, 1977
Page Three '
both of you, this proposal may be withdrawn by us at any
time by a telegram addressed to both of you. If this
proposal is accepted but for any reason Bonds are not issued
and delivered as herein contemplated, the Issuer shall be
reimbursed by the Company for all expenses theretofore
incurred by the Issuer in connection with the proposed
project.
Very truly yours,
MILLER & SCHROEDER MUNICIPALS, . INC.
. By (/�/
�Date: April /� , 1977 :
Accepted by the Port Authority of the Ci.ty of aint Paul
this day of April, 1977.
� . ' `
�'
By �
Accepted by Doerfler Construction Co. , �In�. this day
_ of April, 1977. `
By �
, •
* ��`�;�r�?�` �
ADDEr1DLM � ` �.yY
��.
THIS ADD�NDUM shall be and is hereby made a part of
that certain letter dated the 19th day of April, 1977 ,
addressed by Miller & Schroeder Municipals, Inc. (the .
"Underwriter") to Port Authority of the City of Saint Paul
(the "Issuer" ) and Doerfler Construction Co. , Inc. , a
Minnesota corporation (the "Company") , and relates to the •
proposed issuance and purchase of $3, 260, 000 Industrial
Development Revenue Bonds (the "Bonds" ) to be issued by the
Issuer to finance a project (the "Project" ) to be leased to
� the Company. �
1. The Company agrees to fully comply with and assume
all expenses incurred in fully complying with all regulatory
requirements imposed by the Securities Division of the
Minnesota Department of Commerce or such other regulatory
authority as may have jurisdiction herein, including, but
not limited to, all expenses incurred and required in the
preparation and filing of such interim and annual financial
information and reports as may be required to maintain the
registration of the. Bonds, copies of all' of which the
Company agrees to promptly furnish to the Underwriter at
such time as the same may be filed in the Office of the
Securities Division of the Minnesota Department of Commerce.
2. Subject to paragraph C of said letter dated April
19, 1977, the Bonds are to bear in.terest payable semi-
annually at a rate or rates to be mutually determined by the
Issuer, the Underwriter and the Company and will be determined
no later than 48 hours after the Securities Division of the
Minnesota Department of Commerce shall have authorized the
public sale of the Bonds in the State of' Minnesota. Notwith- -
standing the final �rate or rates of interest to be borne by
the Bonds, the Underwriter reserves the right to reoffer the
Bonds to the public at prices other than the par value .
thereof, including a premium over par or� a discount below
_ par, as the Underwriter, in its sole judgment �and discretion,
may deem necessary. � �
; , .
3. The Underwriter will pay for �he Boncls upon their
delivery to it if the Bonds are delivered on or before the
proposed Closing Date as specified in the letter to which
this Addendum is attached and made a part thereof by reference
thereto. The Bonds are to be accompanied by the unqualified
approving opinion of Briggs and Morgan, Professional Association,
whose opinion shall, state in substance that the Bonds are
valid and b.inding special obligations of the Issuer under
the Lease payable from revenues pledged to the Common
Revenue Bond Fund and stating that interest payable on the
, .
Bonds in the hands of a person not a user of .the Project is
on the date of their issuanc� exempt from Federal income
taxes under then existing laws, regulations, decisions and
rulings. You agree to cooperate in obtaining this opinion
and will also furnish an opinion of your counsel as to your
authority to enter into this transaction. Further, if
requested by the Issuer or the Underwriter, you agree to
furnish an opinion of your counsel as to the title to the
Project.
4. You agree to cooperate with us, Bond counsel,
counsel for the Underwriter and such others as may be appro-
priate in the preparatian of documents and proceedings :
reasonably necessary to the completion .of this transaction,
and the Company shall make available to the Underwriter such
information and documents with r.espect, to its financial
affairs and operations as requested.
5. Before delivery of the Bonds to the Underwriter,
appropriate officers of the Issuer shall have reviewed the
Official Statement prepared to offer the Bonds for sale so
that they �aill be prepared upon delivery of the Bonds to the
Underwriter to certify that the information furnished by �
them contained therein as of the date thereof is true and
correct and does not contain any untrue statement or misleadir�g
statement of a material fact nor omit tc state any material
fact required to be stated therein or nE:cessary to make the
statements therein not misleading, and authorizing use of
the. Official Statement by the Underwrite:r. .
6. Between the date hereof and tr.e date of delivery . ,
of the Bonds to the Underwriter, there shall not have been
any material adverse change in the busir.ess, properties,
financial position or results of operati.on of the Company,
nor shall there be pending or threatenec, on such date any
legal proceedings to which the Issuer or the Company is a
party and which will have a material ad��erse effect on the
transactions contemplated by the Lease and resolution,
except any such action of which we shall. have been advised
prior to the date hereof. .
� 7 . The Company agrees to indemnif�y and hold the
Underwriter harmless from and against any and all claims,
demands, actions, causes of action, damages, liabilities and
judgments (including attorneys ' fees and expenses) arising
from or in any way connected with any statement or information
contained in the Official Statement concerning or related to
the Company, the Project and/or the use of Bond proceeds.
8 . The Company will pay all expenses in connection
with the proposed offering, including, among others, fees
and expenses of Company counsel, counse� for the Issuer, _
. -2- � �
. •
� ' ������
� .
- Bond counsel, Blue Sky counsel, Blue Sky fees, Accountants,
and Investment Rating Agency fees, together with all costs
and expenses incurred in conjunction with the preparation .
and printing of all documents required to consummate this
offering including, but not limited to, the Official State-
ment, all of the same to be paid by the Company without
regard to whether the Bonds as contemplated herein are
issued. The Company and the Underwriter acknowledge that
: they have estimates of the tees and expenses of (a) Bond
counsel, (b) Blue Sky counsel, (c) Blue Sky fees, (d) �
- investment rating agency fees, (e) auditors, (f) the normal
costs and expenses incurred in conjunction with the preparation
• and printing of all documents required to consummate the �
offering, including (1) the official statement, and (2) the
printing of the Bonds. The fees of Underwriter' s counsel
shall be paid by the Underwriter. �
9. The Port Authority of the City of Saint Paul and
the City Council of the City of Saint Paul shall do nothing
to impair the obligations or covenants made or entered into
by the Port Authority with Doerfler Construction Co. , Inc.
by reason of the Port Authority issuing its revenue bonds to
finance a project for poerfler Construction Co. , Inc.
including but not limited to: (a) supervision of the
covenants relating to rents, insurance, repairs, maintenance
and taxes; (b) management of separate accounts as reguired
by the Bond authorizing resolutions; and (c) auditing of
Port Authority accounts by a qualified Ce�tified Public -
Accountant.
10. Upon delivery of the Bonds to the .Underwriter, the
Underwriter shall pay to the Issuer the purchase price of
the Bonds pius accrued interest from thei�' date of issue to
the Closing Date all as more specifically provided in Paragraph
E of the letter to which this Addendum is attached and made
a part thereof by reference thereto, provided the Official
Statement with respect to this Bond offE.ring required to
permit public sales to individuals in the State of Minnesota
has been accepted for registration. If not so accepted for .
reqistration prior to the Closing Date, we may accept and
place the Bonds at our option, but are riot required to do -
so. The Underwriter shall apply for the registration of the
Bonds as soon as practicable after the date hereof and the
representatives of the Issuer and the Underwriter shall
diligently pursue the registration of the Bonds.
-3-
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•. ' � � � � DOERFLER BUSINESS OFFiCE � � - � .
, � - � � . 1885 WILSON AVENUE•SWNT PAUI,MINNE50TA 55119 • • • • • •
�;' . • `' (6121 7350018 . . .
. . ,. � , . ; - .
' . ; ` , .
. . . . � . . , ' � :� riarch 30, 1977 . . .
. . . . ! . -
. , , ' � ,.::�ES�IMATED' OFERATING STATEMENT .
,.
: . . _ . . ;. ::_LOWRY OFFICE. BUILDING
.. . . , ,. . . .
. , . . � - . 339 Wabasha St. ,' � .
. ' . . ; .St. Paul,' �Iinnesota, ' . - _ . . ,
I�'COME � � � . _ � � . .. ,
� . .Monthlv Annual
- lst Floor - Restaurant, bar� and lounge ' � $ 4,000 � �
. Bookstand ' '' � �
. . . ;.:. 480 .
, Aqailable Space . � � , 1,200 �. �� :'
� . Available Space: ' : " � � 2,200 �
> . _
. � . . .. ,$ 7,880 , . $ � .:94,56Q >:
. � .. . �. . ..
� � ;�.
� 2nd Floor - Rental � . � �: ,.$ 104,000.�
. � ` , . , -
.`° Apartments - 3rd, 4th, 5th Floors ; : Per �Unit, ' � �. ' �
�. 99 . Efficiency: . $ 105 �: :. � $ � 10,395 $ 124,740 ;�-
3 . � Z Bedroom ' . 230 .�.;. 690 . . .8,280 .
S ._ : 3 . . � 1� Bedroom� ' ,' j ::.,..I' , 185 . . 555 . . 6,6b0 '
� '��.�Apartments� - 6th thru lOth Floors � -
' S 2 Bedroom = � -.; � ` • : .250��- � 1,2�0 - 15,OOQ' .
� ;.;`SO � � • 1 Bedroom � , , ' ,. 180 � � 9,000 108,000 � .
�.�: 25 Efficiency �" . 160 `` ; � � 4,000 ' � G8,�000
' � : 15 : Efficiency� -. • 150..` ' ��: 2,2�0 � 27,000 .
=: Apartments - llth Floor ��x � ., . .
: 3 2 Bedroom � , ". : 350 � � 1,0�0 12,600
� � .. . 1 . . .. .. .. . .
203 Units . •� � . i� . . . . .
''� .Laundry (203 Units x:� $3.50 guaranteed.)� � `' 710 8,52Q' .
: , , . - _ $. 557,360
- . � .;.::
. . .
= EXPENSES � . • . _ ' ' � .
�- ` , Utilities' ; � ., . , .
. .$ 46,000 ,
. � Payroll ..: : . . . � 20,000 .. . .
f Maintenance �- � ' . . 12,000 . _�:�=. .
� License &< Permits 'r ' '� � 1,000
{ - � .� �- Real Estate Taxes � � $0,000 .
.. � Rubbish Removal � , . � ' . . � � 5,000. .
. , . Insurance , � � � . .. . . � 10,OOQ
. . _ Advertising ° , ' �- � : 2,000 � ..
. . . Miscellaneous ' - .. � 6,30a
_. Management Fee 5% - . - � 28,145
` . � $ 210,4+5
� � ; . . . - . .. . . .
:. ' CASH FLO?� $ : 346,915 � • ';
. . , :, .. . .
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��` - . . �:�� DOERFLER BUSINESS OFF►CE • � � � � : � . � .
'" �� • • ' •1885 WILSON AVENtJE�SAlNT PAUL,MINNESOTA 55119. .
• ' � � I6127 735-0018 � _ •
, . .. . •. ' ` . . . ... . • '
1�•. . . � ' � . . . ' , ' . � � - .
. . . ..1 , . :.` .. •• � . . . . • ' ' - .
.. . . . . ,� � .. . , . .. ... . •
.'y . ' ' � '; CONSTRUCTION RECAP : . ' �
,. .
� . � .. �' ' •LOWRY �HOTEL �. : ; � .
. . REMODELING . , .� . -
. , .; • ' c
- .:'' . �,.., � ' ��' :�. y . � '�'.; . '..
. . � .. . . .�F.
� �Contractor: Doerfler Construction Co. , ;Inc. �:: - ,�.
�. . � _
- �. ;� r � . • -
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Item _ � 'e - ., .. ,Cost � ' , ,-
� Carpet . . . . ` $ 80,000 .. . �,.
. �
_ `:Elevators. (2) r..- , • . 220,0�0 - �
� -.'::�;.. .:�.Reconstruct.Fire Escape_ (lst to Ilth F1r�.) ��118,000 �
` •�Cabinets ' 32,000 ' �
T " � Demolition . ? : � j �2�.0,000 ' �
Ceramic ', ' , ' 2b,000 .
' . Bathroom Fixtures � � :. :; �;18,000 ,
,
Labor ��.� ' �158,000 � �
} � ` Plumbing,' Bathrooms. & Rit�hens.� ? ' ' 49,000 - , � '
�'Smoke Detectors % . �� • �15,000 � � .
`.Fire Alarm � � :, ' � 51,000 _
Drywall � � ';� } 120,000 � � , -
�` , �Electrical � . t ' 88,000
Heating � � ,: 30,000 ' . -:
. � Painting - ' . • . r 35,000 � ,
,. � Doors & Hardware ' �` � :,:40,000 - ' ' �'
, L �,: �' Appliances . . . . , { ., � �,50,000 - . �
�.Windows (Outside� � � � � , �48,000 : � ..
, � Architect � . �' r ' S0,000 � �
� .'{ :�� �Doerfler Const. Up�.to Date �Expenses �' 42,000 � . ,�.;,
� � �.umber } �20,000 � . "
. � , ��
\ ; ,,,:.
' ` �$ '1,500,000 . . �
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-`• �, `LOWRY HOTEL. , .:•• ,: �;: ' ..
. . � i ,. - ' ' ' . .
t ��CONTRACTOR: - Doer£ler Constructiori�Co ;;, Inc, , � � . . �
_ ,,`' 3 � � �
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r :Purchase Price of Property� ': $ � 1;254,000 - .
} Remodeling Cost . : • �` 1 •S00 000 . . _
� 1 .
? a � . $ :�2��5����0 . . -
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,,. : Less.� lst Mortgage. � ' , i ` . � :$ .. 1>500,000 . -
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Resolut�,on No. 1174
RESOLUTION OF
THE PORT AUTHORITY OF THE CITY OF SAINT PAUI,
WHEREAS , the purpose of Chapter 474, Niinnesota
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 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 blight, marginal land and persistent unemployment; and
WHEREAS , factors necessitating the active promotion
and development of econom�.cally 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 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 the Doerfler Construction
Company, Incorporated (hereinafter referred to as "Company") a
request that the Authority issue its revenue bonds (which may be
in the form of a single note) to finance the acquisition and
renovation of a building for use as a residential apartment
facility and as a commercial and office facility (herein-
after called the "Project") in the City o£ St. Paul, aIl 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 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 ��aluation of the City
and help maintain a positive relationship between assessed valua-
tion 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 employment of appro�imately eighty persons
in the new facilities; and
WHEFtEAS , the Authority has been advised by representa-
tives of the Company 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 signi-
ficantly reduced, but the Company has also advised this Author-
ity that with the aid of revenue bond financing, and its re-
sulting low borrowing cost, the Project is economically more
feasible.
NOW, THEREFORE, BE TT RESOLV�D 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 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 la of Section 474. 02
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 development 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
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.
2. Subject to the mutual agr.eement 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 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 Authority (which may be in the
form of a single note) in an amount not to exceed $3,500 ,000
(other than such additional revenue bonds as are needed to
complete the Project) is authorized to finance the costs of the
Project.
-2-
.
. � •
3. There has heretofore been filed with the Authority
a form of Preliminary Agreement between the Authority and Com-
pany, relating to the proposed construction of the Project. The
form of said Agreement has been examined by the Commissioners.
It is the purpose of said Agreement to evidence the commitment of
the parties and their intention with respect to the proposed
Project in order that the Company may proceed without delay
with the commencement of the acquisition, installation and
construction of the Project and the temporary financing thereof
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 long term indus-
trial 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 Agreement is hereby approved,
and the President and Secretary of the Authority are hereby
authorized and directed to execute said Agreement. Upon exe-
cution of the Agreement by the Company, the staff of the Author-
ity are authorized and directed to continue negotiations with the
Company so as to resolve the remaining issues necessary to the
preparation of the lease or other revenue agreement and other
documents necessary to the adoption by the Authority of its final
bond resolution and the issuance and delivery of the bonds .
4. The revenue bonds and interest thereon shall not
constitute an indebtedness of the Authority or the City of
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 Authority or the City nor a charge
against their general credit or taxing powers and n�either 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
thereon.
5. In order to facilitate completion of the revenue
bond financing herein contemplated, the City Council is herebv
requested to consent, pursuant to Laws of Minnesota, 1976 ,
Chapter 234, to the issuance of the revenue bonds herein con-
templated and any additional bonds which the Authority may
from time to time 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.
� Adopted ���� /9, �97 7 ,
;
�
�
Attes �
Preside
� The Port A thority of the City
• of Saint Paul
ecretary
-3-
. ,....
� �
PRELIMINARY AGREEMENT
THIS AGREEMENT, made and entered into this 19tYi day
of April, 1977, by and between the PORT AUTHORITY OF THE CITY OF
SAINT PAUL, a public carporati.on organi.zed arid existinq under the
provisions o� Minnesota Statutes, Ghapter 458, and a redevelop-�
ment agency with3.n the meana.ng of Minnesota Statutes, Chapter
474, hereinafter aalled "Part Autk�o�ity" , Doerf ler Construction
Company, Incorporatedr a corpo�ation organized under the I.aws of .
Minnesota, hereinafter called "Company" , and Mr, Virgii Doerfler�
hereinafter called '°Doerfler"e
WIT�TESSETH:
WHEREAS: �
A. The parties hereto intend that a building
�.ocated on the premi.ses described in Exhibit _ .
A attached hereto and incorporated herein by
� reference, be acquired and renovated for use
as a residential apartment facility and
as a commercial and .office facility,
said building and premises being herein--
after called "Project";
B. The Company and the Port Authority intend,
subject to the terms, covenants and condi-
tions herein contained, to enter into a
Lease (hereinafter. called "Lease") of the
., � �����-�,�.
.
. :..v_
� Project in the form and tenor customary with
respect to industrial revenue bond financing
in the State of Minnesota and to finance the
acquisit3.on, installation and construction of
the Project through the issuance by the Port
Authority of Industrial Development Revenue
Bonds (hereinafter called Bonds) 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 to nego-
tiate. the Lease 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 Lease term shall commence on the nominal
date of the Bonds and shall extend through the final
mat•urity date of the Bonds.
(b) The Company shall agree under the Lease tQ
make monthly payments commencing on the first day of
the month in the amounts set out in said neqotiated
Lease, but in any event sufficient to pay when due debt
service on the Bonds. •
(c)� The Company shall agree under the Lease to
pay the monthly administrative fee of the Port Authority �
in the amounts set out in the negotiated Lease.
�2_
, ,
� ,,- . . . . . .. . . .
(d) Interest on earnings derived from the
investment of the monthly payments and other monies
in the Bond Fund and any Reserve shall inure to the
benefi.t of the Port Authority, subject, however, to
such credit, if any, for earnings derived from the
investment of such monies as is necessary to prevent
the Bonds from becoming arbitrage bonds under Secti.on
103 (d) of the Internal Revenue Code.
(e) The Company may 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 amount, if any, deter-
mined 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 Lease the principal amount of any �
surplus construction funds transferred to the Bond Fund � �
and any Reserve 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 Lease. �
(h) The Company shall agree to procure on or
before termination of the construction period and
maintain in its name and in the name of the Port
-3- .
.
Authority, liability and property insurance with
respect to the Project in amounts and against risks
customary with respect to such properties.
. (i) The Company agrees that prior to the
commencement of the construction 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 Plans and Specifications for the entire Pro-
ject 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 ta
undertake tYie Company will first cause to be filed
with the Port Authority and approved by its duly
designated agent, (i) all payment and performance
bonds for the work to be undertaken, (ii) all con-
struction contracts, including any installation
contract, (iii) such builders risk, installation
floater, and liability insurance as will fully
protect the Company, contractor and Port Authority
(who shall be named as an additional insured) 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
-4-
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 i� the City of
Saint Paul.
(j) The Company shall . agree to pay all taxes, .
assessments, and other governmental charges that are
or may become due with respect to the Project.
2. Prior to the commencement of construction of the
. Project, the Port Au�thority and the Company shall complete and
enter into the Project Agreement in substantially the form
attached hereto as Exhibit B or into the negotiated Lease which
may substantially incorporate by reference Articles 1 and 2 of
such Project Agreement.
3. • Prior to issuance of the Bonds Mr. Virgil Doerflex
will execute a Guaranty in a form to be agreed upon by and
between P�Ir. Doerfler and the Port Authority.
4. Upon negotiation of the details of said Lease and
Guaranty and final determination of the terms of the Bonds ,
the Port Authority sha11 thereafter issue said Bonds in �ccor-
dance with the terms and conditions set forth in an underwriting
agreement and the Project Agreement; provided that:
-5-
• (a) Details 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
Morgan, 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, certifications, and
representati,ons necessary to the sale and delivery of
the Bonds, including thase which are customariZy used
and those which are customary and necessary to comply
with all state and federal laws, regulations, rulings
and decisions.
5. Regardless of whether or not for any reason the
Bonds are issued, the Company shall upon demand nevertheless
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 Lease, the under-
writing agreement, the Guaranty and other related documents.
6. This Agreement is subject to the approval of
the City Council o� the City of Saint Paul as provided by
Chapter 234 of the Laws of Minnesota for 1976.
-6-
IN WITNESS WHEREOF, the part�es hereto have caused
these presents to be executed as of the day and year first
above written.
In the Presence of: PORT AUTHORITY OF THE CITY '
OF SAINT AUL
�'..�0�-�' l - �-Z`�'L� B / L \
Y �-�
Its �
�i,
,�; ;t i�",''�,. /
�': � BY �
.,����c\1�. ��i ,' S . .
, , ` �(Corporate Seal)
�, . � ,�`+ 4+ � � � .
� �
�`�' �� . . . � .
i.�.� �.1 � � -
.. r�,,, ����� �,�,"' �,,l�ti . .
//�illl�dt11��1,` . _ . . � .
Tn the Presence of: DOERFLER CONSTRUCTION COMPANY,
. TNCORPORATED
By - .
I ts . . . .
By
I ts
� (Corporate Seal) �
�7_
M. n•4
In the Presence of: Virgil Doerfler
-8-
'
�t .. , .�.
,
EXHIBIT A
PROPERTY LOCATED IN RA.MSEY COUNTY, r4INNESOTA
Lots 11 and 12 and the rear or Southerly 25 feet af . -
Lots 1 and 2, Block 21, City of St. Paul, commonly �
referred to as . "St. P�aul Proper" , according to the
�- plat thereof on file and of record in the office of
� the Register of Deeds in and for Ramsey County,
Minnesota, together with the �benefits and subject
to the burdens of easements created by Deed, dated
June 14, 1949 from The Arcade Investment Company, a
Minnesota Corporation, to Stat� Hotel Corporation
of Delaware, filed for record in �the office of said
Register of Deeds, and recorded in Book 1310 of Deeds,
Page 505. � .
Subject to that certain Party Wall Agreement, dated
June 23, 1909, between its Adolph T. Rosen and Anna
Sofia Rosen, parties of the first gart and Lucius P.
Ordway and Jessie G. Ordway, parties of the second
part, and filed for record in the office �of said
Register of Deeds on Sept. 4 , I909, and recorded in -_ -
Book 60 of Miscellaneous Records at. page 579.
.
�������
PORT AUTHORITY OF THE CITY OF SAINT PAUL
1130 MINNESOTA BUILDING, 4TH AND CEDAR, SAINT PAUL, MINN. 55101, PHONE (612) 224-5686
April 22, 1977
The Honorable George Latimer
Mayor, City of St. Paul
City Hall and Court House
St. Paul , Minnesota 55102
SUBJECT: DOERFLER CONSTRUCTION COMPANY
LOWRY HOTEL PROJECT
$3,500,000 REVENUE BOND ISSUE
Dear Mayor Latimer:
We submit herewith for your review and consideration, details pertaining
to the issuance of revenue bonds for the above project in an amount not
to exceed $3,500,000 for acquisition and remodeling of the Lowry Hotel .
Details of the project are attached in the Port Authority Staff inemorandum
and a copy of the proposed remodeling plans are on file in the office of
the Port Authority.
In addition to the attached staff inemorandum, we attach a draft copy of
the proposed City Council Resolution, a copy of the preliminary under-
writing agreement, the preliminary agreement, an outline of the operating
projections for the facility, a list of the construction proposed, and a
copy of Port Authority Resolut�non No. 1174 which authorized the execution
of a preliminary agreement with the Doerfler Construction Company to
finance the project subject to the approval of the Cou�cil of the City
of St. Paul .
�',.
'�, Yours truly,
� - j
,
� _ ,
� �� • , �
, \ _ a., , ,,�
�-.�..._�-._ 1, , : ': '\_,. ;_i._7✓
� Eugene A. Kraut
Assistant Executive
Vice President
EAK:jmo
Attach.
HOBERT i. SPRAFKA EUGENE A. KRAUT. C.I.D. DONAID G. DUNSMEE, C.I.D. CL�FFORD E. RAMSTED ROSCOE C. BROWN
E%ECUTIVE VICE PRESIDENT P.SSISTpNI E%ECUTIVE VICE PRESIDENT DIRECTOR. INDUSTRIRL DEVELOPMENT CHIEi ENGINEEq CNIEF ACCOUNTANT
COMMISSIONER$ GEORGE W. WINTER P�TRICN J. ROEOLER LOUIS M. MEVERS G. RICHAqD SL�DE ROSALIE L. BUTIER ARTMUR N. GOODMAN WILLIAM J. SEIFERT
PRESIDENT VICE PRESIDENT SECRETARY TREASURER �
C.I.D.Certified Industrial Developer __:�z
4
PART
A �lTHORITY
, ��°����
.. �. ., . .
OF THE CIN OF ST. PAUL
Memorandum
TO: Board of Corr�nissioners DATE: April 15, 1977
Meeting April 19, 1977
��� j
FROM: E. A. Kra� �„ ;�'
��
��
,
SUBJEC7: DOERFLER•CONSTRUCTION COMPANY, INCORPORATED
PRELIMINARY AGREEMENT
RESOLUTION N0. 1174
At the request of Mayor George Latimer and the Economic Development Department
of the City of St. Paul , the Port Authority staff has been in negotiation with
Virgil Doerfler, who proposes to rehabilitate the Lowry Hotel as a downtown
residential apartment and commercial facilities and office space. The cost
of the project including the acquisitian of the building is as foilows:
1 . Purchase price of property $1 ,250,000
2. Remodeling costs 1 600,000
Total Cost 2,850,000
Equity by owner $ 200,000
The proposed bond issue would be comprised of the following:
1 . Construction Fund $2,650,000
2. Debt Service Reserve Fund 259,000
3. Legal and Bond Issue Expense 25,000
� 4. Capitalized interest during construction -
one year 195,600
5. Underwriter's discount - 4� 130,000
TOTAL BOND ISSUE 3,260,000
6. Interest 3,115,477
TOTAL 6,375,477
7. Less Capitalized Interest 195,600
6, 9,87
The abov� based upon a 25-year lease from the nominal date of the bonds,
will result in an annual debt service of $257,495, and a monthly rental
equal to $21 ,458. The above figures have been submitted by Miller & Schroeder
Municipals and are subject to minor variations. They are based upon a Port
Authority 876 bond issue calculated at 6� interest.
;
,
Board of Corr�nissioners
April 15, 1977
Page -2-
Attached hereto is an operating cost projection. These projections indicate
a potential gross income of $557,360 when fully occu�ied, producing a cash
flow of $346,915. Based upon our discussions with various repres�ntatives
of local financial institutions who have previously done business with Mr.
Doerfler, it is staff's opinion that he is a capabin and financially success-
ful developer, and with the rents to be paid for at least a 3-year periad by
the City of St. Paul feel confident that this project is a feasible one. The
costs of remodeling are attached here in a construction recap provided by
the Doerfler Company. There will be added to the $1 ,500,000 shown a�.
additional $100,000 for efficiency kitchens in 99 of the efficiency units ��
bringing the remodeling costs �Q approximately $1 ,600,000.
Mr. Doerfler, in accordance with the requirements of the Port Authority that
all funds be an hand at the bond closing, has agreed to provide $200,000 in
equity on the front end that will incorporate expenditures to date covering
the earnest money contract and preliminary work on plans and specifications.
There will be an additional $133,000 in cash or other pre-bond closing
expenditures.
Mr. Doerfler's financial statement reflects substantial net worth in properties
located primarily in the St. Paul area. The statements provided by the company
are attached and indicate the assets and liabilities and project a net worth
at $3,053,95Q. poerfler's personal net worth is shown at $5,492,200.
In negotiations with the prospective tenant, an agreement has been reached
whereby Mr. Doerfler will give the Port Authority a security interest on th�
three properties listed below:
1 . 1905 Wilson Ave. (41 units) - equity $253,000
2. 1885 Wilson Ave. (50 units) - equity 425,000
3. 1871 Wilson Ave. (50 units} - equity 395,000
TOTAL $1 ,073,000
This security interest will be subject to release with the consent of the
Soard of Corr�nissioners of the Port Authority when the net income from
operations of the facility before debt service is equal to the maximum annual
debt service requirement to service the bond issue debt..
In addition to this security interest, the proposed agreement with Virgil
Doerfler Construction Company, Incorporated will be p�rsonally guaranteed
for the duration of the band issue by Virgil Doerfler. We attach hereto
the financial data furnished by Virgil Doerfler for your review. This
contains assets and liabilities of Virgil Doerfler personally as well as
assets and liabilities of Doerfler Construction Company, Incorporated, of
which Virgil Doerfler is the principal stock holder.
�
� Board of Commissioners
Apri1 15, 1977
Page -3-
A Notice of Sale has been published in accordance with �4innesota Statutes
Chapter 458, and it is reco�unended that the sale price when the bonds are
amortized at the end of the 25-year term be $1 .00.
As is customary in off-site projects requiring staff inspections to satisfy
the indenture with the bond holders, an additional rental charge of .02� of
the face amount of the bond issue will be charged monthly. This will equal
$7,824 annually. The property will remain on the tax rolls and upon completion �
are estimated at more than double those presently being collected.
Staff recommends approval of the preliminary agreement authorized under
Resolution No. 1174 and sale of the property under the terms outlined above.
EAK:jmo
Attach.
i
C?M Q 1: 9 8 �6 � �
j � � :
�
- : � ':
EXPLANATIC�N OF ADMINSSTRATIVE ORDERS� t �
RESOLUTIOI�S, AND ORDINANCES � "
, , �. �,
� � , �
s . i
Date: April 22, 19y7 , '� �,
- �_ ,.�
� _ :�
.. TO: MAYOR � OR�GE TIMEI�, ` , � �
' � � �
- . :
. .. - . . .. .� . .. . .'.. - .� .. - .. .� . ._� � � . , - �. . . . . t , .. . .,F
Fx: Eugene A St. Pa.ut ;Part Autharity � �
�
RE e� Df}ER�`Lf.� (1NSTRUCT I4N COMP�1t�lY �. �
: LOi�tY `�T� PR4J ECT _ i �
$3,5�,(� T�EVENUE 60�lD I5SUE � `
� _:�
- � �
_ : � �
, . �
- :
�,
. . . ..�. . - � �- � � - . . � � , i
' ' • . .. .... . �' . 3.
. . . .. . � . . . � . . � . . � . . . . . . .f. ',f
3
ACTION 1�EQEIESTED: �
In accordance with Laws of Minr�esota� 1g76, Chapter 234.,: i.t i� r�que�ted ttu�t ths ` � �
City Council by Resa�utiort, a draf� cop�r of whtch is �.ttached� heret�, �pprq�e tl�e , � �
issuance of �p t� $3,50±O,Q00 fn -revenue bonds for the ►^emcrde�i.ng a� the L�wry Hotel s �
pro�e�t. At tftis ttme it would ,appear that the bona �ssue:w�trald t� for �3,2.�,�dQO. > ��
It is requ�sted tFrat ap{�roval I� granted or� up to.�3,50�,0#� because u�t�1'. the t9me � �
of closinq the actual .in�erest ra�e and the �ffects� or���the` so�t costs whtch may' be ,`': ;
caused by variances fn the calcul;,ated rate may requ#re a bor►d issue la�ger than � f
$3,`260,�0. The construction fund, hawever� wi11. not. b� inc�+easect �ver $2,f>�0,�0a. j �
Any costs aborre this am�un� required to complete �t� pro�ect will be pai� �For �y the '
tenant, It ts request�d tE�at pracessing of t�#s ap��ltcation. far appr4va;1 be e�e�#fted� ' �
beca�se of ti� require�nts t�� �Rdbert Short`; t�fiat .tfie sale of. the pro�erty t�e �lasect i a
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not later �tian Ma� 25, 1977. . . � ,�
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PURPOSE AftD` RATIONAZ.E Ff}R �'F3IS ACfiIQN: � ,
The Lor�ry t�otel p�,esents an oppart�rnity to create �dditiona� c�dwntaw�.�us�ng. at a � � -
reT.arti�reiy low cos,t per wnit. The Gfty of St. Pau1 and its vari�u� ��etaci�� ar�d � 1
� departments .ha� been endeavarirtg ta cr�ate ad�ittonal down�own h4usir�g to spur;ot�er f �
` developmen� `f�r son� tfine:� an�l �hts p�ro3ect wtl l contrib�te. to popu'I�tiarr grow�h:in �
. the doMmtt�rm area. Ft is• desirable to make t#�1s f9nanc�tng available to the �1rx�i�
Doerfler Constructi� :Company because of tbe. r��d�to tacrease the nr�er af" r�s�de�tia� . ' �
units in dow�toMm St. Paul and because the develt�per has .an excell-rnt tracic record, , �
has pledged � substantlal �et wortfi to�-the Author,ity�as-a cond#tion of issr�fng �e � t
bands, and ,has furthe� agweed to proVide a mo��gage and serurlty interest �ra va�fous � °
properties:ta. provf.de �ddttiarral guarante�s.. _ � '
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� ATTACHMENTS: ' .:..,:.-� � '
S�'f.f Memorar�du� , �
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. Qra►ft City C+�u�ci1' :Resolutian , �
' Rreliminary tlrad�rWr'iting �Egreement �
1�1 fmf'nary 14gr�een�nt . - ` .
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�t1 ine of Qperating Pro�ectfions i , {
' List of Prt�sed C�nstruction _ � ��
Port Authpr�i� Resniutit�n No. 117� 3
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