03-1049Page 1 of 3
Council File # � 3 - / 0 �
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Green Sheet # .�Db � ��
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Presented By
Refened To
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Committee:
F�
WHEREns, the cash balances witrrin various funds of the City exceed short term needs, and currently are
invested by the Office of Financial Service to yield approximately 3.5% in 2002-03; and
WHF�AS, the city has initiatives that cannot be fmanced under current city or state bonding or bonowing
authority or laws; and
WHEREAS, the city has the authority to borrow between funds, and has established an Internal Bonowing Fund
to control and monitor the transactions between funds; and
WHEREAS, the financing plan for the acquisition, demolition and installation of fill and infrastructure for the
Koch Mobil project involves loans between the City of Saint Paul and the Authority and other actions by the
City, as more fully described in the staff report accompanying this Resolurion as Exhibit A; and
WxEREAS, the city has assigned its Financiai Services Directar and Treasurer as advisory counsel to review and
advise the city on transactions for the use of cash float between funds so as to maintain integrity of the city cash
with the minimuxn risk for the city; and
WHExEAS, the TaY Increment law authorizes interfund loans and advances to be repaid from tas increments but
requires that they first be approved by resolution of the governing body before money is transferred, advanced or
spent, and that the terms and conditions for repayment be provided in writing and include, at a minimum, the
principal amount, the interest rate and masimum term; and
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23 WHEitEAS, the Housing and Redevelopment Authority of the City of Saint Paul, Minnesota ("Authorit}�') has
24 heretofore created the Koch-Mobil Redevelopment Project (the "Project tlrea") and adopted a Redevelopment
25 Plan (the "Plan") therefore pursuant to Minn Chapter 469 (the "HRA AcY') to provide for, among other things,
26 the acquisition and redevelopment of blighted areas within the Project Area; and
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28 WHEREas, the Housing and Redevelopment Authority of the City of Saint Paul, Minnesota ("Authorit}�') wants
29 to raise sufficient financing to provide a short term loan to the Koch-Mobil Redevelopment Pro}ect, and the
30 Office of Financial Services has prepared a"Record of Interfund Loan" agreement to accomplish that financing;
31 and
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33 WI�REAS, an independent analysis has confirmed that the City can provide the financing at a lower cost than
34 the proposed transaction; and
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1 WHEREAS, there will be secure assets with sufficient revenue streams dedicated to the Internal Bonowing Fund
2 to support repayment of principal, with interest, to the funds advancing the use of cash; and
WHEREas, the temporary fmancing for the Koch-Mobil Redevelopment Project provided by the Internal
Borrowing Fund will be replaced by financing provided by the city's issuance of temporary general obligation
tas increment bonds, which bonds will be ultunately be replaced by long term tas increment revenue bonds.;
and
9 WHEREns, the details of the advance from the Intennal Borrowing Fund, and the issuance of the bonds to refund
10 the advance aze set forth in the Record of Interfund L,oan, attached as E�ibit B; and
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12 THEREFORE, BE IT RESOLYED, the City Council approves the use of the Internal Bonowing Fund to lend cash to
13 the Housing and Redevelopment Authority of the City of Saint Paul, Minnesota for the Koch-Mobil
14 RedevelopmentProject; and
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16 BE IT FuRTHER �SOLVED, the Financing Plan far Koch/Mobil Project dated November 26, 2003 attached as
17 Exhibit A is accepted by the City Council; and
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19 BE IT FURTHEx izESOLVED, that the proposal set forth in this resolution is approved and the Director of Financial
20 Services, and the Director of the Housing and Redevelopment Authority of the City of Saint Paul, Minnesota
21 shall execute the Record of Interfund Loan to memorialize the transaction; and
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23 BE IT FURTHEx RESOLVED, that all loans pay interest floating with the city treasury portfolio invesrinent rate, but
24 not to exceed 6.5%; and
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26 BE IT FtntTHER 1t�SOLVED, the Financial Services Director and the Treasurer will adjust the cash float to "cash
2? rich" funds allowed by law, to provide secure financing for the transactions and assure that interest is paid and
28 properly credited; and
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30 BE TT FUxTHER �SOLVED, that all internal borrowing and pledges of repayment be reviewed and rated for
31 inveshnent quality by an impartial Saint Paul financial institution and that information be provided to the City
32 Council for consideration in its decision; and
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34 THEREFO�, the Mayor, pursuant to sec. 10.07.1 of the City Charter, certifies that $3,875,000 is a�ailable for
35 appropriation in the 2003 budget and recommends the following changes:
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40 FINANCING PLAN: Internal Borrowing Fund
41 GL 070 10303 6928 Advance from Other Funds
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All Other Fund Financing
Current
Budeet
0
0
0
Chanees
3,875,000
0
3,875,000
Amended
Bud�et
3,875,000
0
3,875,000
03 -/D'f�
1 Current
2 Bud�et
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4 SPENDING PLAN: Internal Borrowing Fund
5 GL 070 10303 0535 Advance to 0
6 All Other Fund Spending 0
7 0
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9 FINANCING PLAN:
10 GL 117 00000 6202 Cash Advance (HRA Enterprise Fund) 0
11 GL 145 00000 6202 Cash Advance (HRA General Fund) 0
12 All Other Fund Financing 0
13 0
14
15 SPENDING PLAN:
16 GL 117 00000 0535 Advance to Internal Borrowing Fund 0
17 GL 145 00000 0535 Advance to Internal Borrowing Fund 0
18 All Other Fund Spending 0
19 0
20
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22 RESOLVED, that the City Council approves these changes to the 2003 budget.
23
Benanav
Blakey
Bo strom
Coleman
Harris
Lanhy
Yeas Nays
✓
✓
Form Approved by City Attorney
� Approved by�Financial Services
` / 4'��X�
� By: { �I
✓
Adopted by Council:
Changes
3,875,000
0
3,875.000
2,375,000
1,500,000
0
3,875,000
2,375,000
1,500,000
0
3.875.000
Abse„r Requested by Office of Financial Services
By'--f� '
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Adoption Certified by Council Secretary
Page 3 of 3
Amended
Budeet
3,875,000
0
3.875,000
2,375,000
1,500,000
0
3,875,000
2,375,000
1,500,000
0
3,875,000
��
: ��` ii � ✓
Approved
:
for Submission to Council
Approved lyy/Iv�ayor: Date / �' K^
b 3 - �0�9
November26, 2003
FINANCING PLAN FOR KOCH/MOBIL PROJECT
OVERVIEW
The following is the proposed Financing Plan for the Koch/Mobil project.
EXHIBIT A
The approximate $30 million for the acquisition, demolition, and infrastructure of the 65 acre site
relies on interim inter-governmental borrowing from the City, the issuance of Tax Increment
Financing Bonds, and proceeds from the HRA Land Assembly Bonds.
FINANCING STRUCTURE
Land Assembly Bond Proceeds
The HRA wili use approximately $14 million of the $25 million in Land Assembly Bond Proceeds
for this Project (part of the $25 million Housing 5000 initiative). The proceeds will be for acquisition
costs, fiil, possible soil correction and to reimburse the HRA for previous interim funds advanced
for acquisition costs. The bond proceeds will be paid back when the land is soid for housing
construction under a future development contract.
Short Term Inter-Governmental Borrowing
The City will lend to the HRA, from Fund 070, up to $3.875 million for up to 180 days to provide
funds to fll the 22 acre Koch site (north of the railroad tracks) and begin building the infrastructure.
The inter-governmental loan will be repaid with TIF bond proceeds as early as mid-March, 2004.
Repayment of Inter-Governmental Loan
During the next sixyears, the HRA or City may issue one or more series of short-term City General
Obligation Tax Increment Bonds for the three phases that will be repaid or refinanced with
permanent TIF Revenue Bonds beginning in 2010. The first series will be for the 22 acres of the
Koch site (Phase 1), with the future series earmarked for the remainder of the Koch site (6
acres/Phase 2) and the Mobil property (Phase 3). The permanent TIF revenue bond issues will
occur once each phase of the project is complete and the increment is generated.
PRELIMINARY SOURCES AND USES
See Attachment I, which provides a summary of the preliminary Sources and Uses for the
Koch/Mobil Project.
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SECURITY/CITY FEES
The lntervGovernmental Loan will be secured by the future tax increment revenues and the HRA's
promise of repayment. The TIF Bonds will be secured by the same tax increment revenues and
future development contracts, and to further protect the City, the short-term TIF bonds debt service
will be fully capitalized. The City will be paid a credit enhancement fee on each of the short-term
Tax Increment Bonds.
The Land Assembly Bonds will be secured by $10 millio� in STAR funds and the HRA balance
sheet.
FINANCING TEAM
The City's Financing Team will consist ofTodd Hurley (OFS), Mary Dyrseth/TIF (Briggs & Morgan),
Robyn Hansen/Land Assembly (Leonard Street), KathyAho (Springsted), and PED/HRAstaff (Bob
Geurs, Jenny Wolfe, Bob Schreier, Joan Trulsen, Patty Lilledahl).
BENEFI'TS OF FINANCING PLAN
(1) The HRA will realize significant cost savings from the low interest rate short-term borrowing
from the City's inter-governmental loan fund and the short-term general obligation TIF bonds.
(2) The HRA will expedite site preparation and completion of public infrastructure necessary for
the development of housing.
ESTIMATED SCHEDULE
October 22, 2003
November 19, 2003
December1,2003
December 10, 2003
January 7, 2004
January 14, 2004
February 10, 2004
March 15, 2004
November, 2004
April, 2005
2008-2010
ATTACHMENTS
Attachment I
NRA action approving financing plan and inter-governmental borrowing
City Council action approving financing plan and inter-governmental borrowing
Execution of Inter-Governmental Fund Loan
Contract to start filling the 22 acre site
Public Hearing on Tax Increment Financing Plan
HR4 Approval of Tax Increment Financing Plan
Public Bond Sale (Series A)
Earliest Repayment of Inter-Governmental Loan (could be extended until 2010)
Issue Series B Bonds (tentative)
Issue Series C Bonds (tentative)
Refund short-term TIF Debt with Permanent TIF Revenue Bond issue
Preliminary Sources and Uses
-2-
Koch/Mobil Project Preliminary Sources & Uses Summary
HRA Builds Infrastructure, Selis Pads
USES
Land Assembly & Related
Parks/Trail
Infrastructure & Related - Privately Owned
Infrastructure & Related - Publicly Owned
Subtotal Costs
Financing Costs/Interest Payments'
�esf3
uto Sh
2,70C
2c
2,181
3,65£
8,570
1.62C
Phases
11
oc as
acres)/SF House
1,400,000
03 - lb`l9
Attachmentl
Draft Ver. 2.1
11/7/2003
acres)/SF House
2,590,000
2,156,463
1,950,116
77,378
�
11
Total Uses � 10,190,824 � 3,956,126
' Assumes fully cap�talizing TlF debi for up to 6 years • no inte�est earning assumptions
SOURCES
Land Assembly Bond Proceeds Acquisition
Land Assembly Bond Proceeds Infras[mcture
TIF Bonds
Series A" 03/2004
Series B" 01/2005
Series C & D"' 01/2006
f� .i4iWfliiP': ,iiillifBiM".,Ii�Hi4�IA"...i�iF::".:.EiT+liliBF
acres)/Auto
2 ,
acres)ISf House
1,400,0�
681,1:
Total Sources
10,19Q824
1
3,956,126
16,066,579 � $30,213,529
acres)ISF House
4,
7
1
16,066,579 � $30,213,529
" Series A, 2.0-3.25% blended mterest for 6 years, rollmg hvice; Senes B, 3% interest for 6 years, rolling hvice, Senes C&D, 3.5% mterest for 3 years. AA+ credit,
tax exempt COI -$41,000 per issue. AMOUNT REFlEC7ED IS FOR THE PERMANENT TAKE OUT F/NANCING.
Timinq of TIF Debt
HRA Action
City Action
Series A
Series B
Series C&D
10/22/2003 (Interim Inter-Governmental Borrowing F 070)
11/19l2003 (Interim Inter-Governmental Borzowing F 070)
As early as Feb/March of 2004 to repay IntervGovernmental Loan
Fall/Winter 2004/2005
Fall/Winter 2005/2006
up to $3.875M
$5.3M
$1.9M
$9.3M
$16.SM
EXHIBIT B
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RECORD OF INTERFUND LOAN
This Record of Interfund Loan is executed by the City of Saint Paul's Director, Office of
Financial Services, and its Director of the Housing and Redevelopment Authority of the City of
Saint Paul, Minnesota , to memorialize an interfiuid loan and its payment and replacement.
WHEREAS, the City wishes to finance the Koch-Mobil Redevelopment Project, but
cannot execute wntracts until funds and budget authority have been authorized; and
WIIEREAS, it has been agreed that the City make an interfund loan of $3,875,000 to
Fund 148 from Fund 070, to beaz interest at the City treasury portfolio inveshnent rate and to be
repaid from proceeds of a temporary general obligation tax increment bond to be issued within
180 day of the execution of this agreement; and
NOW, THEREFORE, THE OFFICE AND AUTHORITY memorialize the interfund loan
as follows:
1. Authori . This document was authorized by, and carries out, resolution No.
adopted by the City Council on November 26, 2003.
2. Advances. Fund 148 will be advanced $3,875,000 to finance the Koch-Mobil
Redevelopment Proj ect.
3. Interest; Pavments. Interest will accrued on the advances at the City treasury
portfolio investment rate. The Authority will use proceeds of the temporary general obligarion
tas increment bonds to be issued within 180 day of the execution of this agreement to repay this
interfund loan it its enrirety.
If the bonds described below are not issued, continued payments on the interfund loan will be
determined by the City Council.
4. Tax Increment Bonds. The City will issue temporary generai obligation tas
increment bonds and use the proceeds to and use the proceeds of the bonds to reimburse the
advances and discharge the interfund loan. Upon the maturity of the temporary general
obligation taac increment bonds, the City/I1RA will determine the terms and detaiis of the
definitive bonds at the time they are issued, and will endeavor to issue them as obligations
payable wholly and solely from revenues of the Koch-Mobil Taac Increment District.
5. Piu ose. The purpose of this document is to memorialize the basis on which the
City advanced moneys from other sources to Fund 148, and to serve as guidance in coordinating
actions of the City and its Office of Financial Services and its Housing and Redevelopment
Authority with respect to such advances and with respect to debt financang therefor.
6. Official Tntent. This document also serves as an"official intent" for purposes of
the reimbursement regulations relating to tax-exempt bonds.
Signed this _ day of
Director, Office of Financial5ervices
2003
Director, Housing and Redevelopment
Authority of Saint Paul
� 0 3 �oy9 �
Green Sheet Green Sheet Green Sheet Green Sheet Green Sheet Green Sheet
Departmentloffice/council: Date Initiated:
FS — FinancialServices 19-NOV-03 Green Sheet NO: 3008075
Contact Person 8 Phone: Deoar}ment Sent To Person Initial/Date
7odd HUdey � 0 'nanci ervic
266-8837 p�j 3 inancial Services De artment Director
Must Be on Council Agenda by (DaM): Number 2 in ciai rvi es ffce FSnancial Se '
����� � For 3 i Attorne
Routing
Order 4 a or' ffice Ma r istan
5 ouncil Ci Council
6 i Clerk ' C9erk
Total # of SignaWre Pages _(Clip Ali Locations for Signature)
Action Requested:
Establish a budget and authorize fmancing from the intemal borrowing fund (070) to the I3RA for the Koch-Mobil Redevelopment
Project and to provide authorizarion to the D'uector, Office of Financial Services and D'uector, HRA to execute the record of interfund
loan to memorialize the h�ansaction.
Recommendations: Approve (A) or Reject (R): Personal Service Contracts Must Answer the Following Questions:
Planning Commission 1. Has this personffirm ever worked under a contrad for this department?
CiB Commiitee Yes No
Civil Service Commission 2. Has this person/firm ever been a city employee?
Yes No
3. Does this person/firm possess a skill not nortnally possessed by any
current ciry employee?
Yes No
Explain all yes answers on separate sheet and attach to green sheet
Initiating Problem, Issues, OppoRunity (Who, What, When, Where, Why):
The HRA needs to raise sufficient financing to provide short-term funds to the Koch-Mobil Redevelopment Project.
Advantaaes If Approved:
The HRA will have a financing source and budget to provide short-term funds to the Koch-Mobil project.
DisadvaMaqes If Approved:
None.
DisadvanWges If Not Approved:
The Koch-Mobil project will not be funded and the project wIll not move forwazd.
Total Amount of 3875000 CosVRevenue Budgeted: (�
Transaction:
Fundinp Source: 070 Ac6vity Number: 10303
Financial Information:
(Explain)