03-477Q�fG�►�AL
Presented By
Resolution #
Green Sheet # 200935
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Referred To
Council File # � 1
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Committee: Date
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RESOLUTION AUTHORIZING THE SUBORDINATION OF CERTAIN SECURITY
DOCUMENTS SECURING THE STAR LOAN TO THE MINNESOTA BUSINESS ACADEMY
WHEREAS, the Saint Paul City Council on November 3, 1999, by Resolution Number 99-1070, approved a
$1 million STAR loan (the "STAR loan") to the Minnesota Business Academy (MBA); and
WHEREAS, the MBA's repayment of the STAR loan is secured by, among other things, an Assignment of
Leases and Rents dated March 14, 2000, and a UCC-1 Financing Statement (hereinafter collectively referred
to as the "Security Documents") with the Charter School Building Corporation, which owns the building
which the MBA leases; and
WHEREAS, revenue to sustain the MBA and repay the STAR loan comes from the State of Minnesota,
which witt�holds 17% of their payments until the auhumi after the close of the schooi yeaz in June, creating a
cash flow problem for the MBA during the suminer and early fall; and
WHEREAS, University Bank (the `Bank") has agreed to provide the MBA a$300,000 short term line of
credit (the "Bank loan") to alleviate this cash-flow problem; and
WfIEREAS, the Minnesota Business Academy and the Bank have requested that the City of Saint Paul agree
to subordinate the City's interest in the Security Documents to the Bank loan for at least a seven month period
commencing with the date of the Bank loan; and
WHEREAS, alleviating this cash-flow problem will increase the likelihood of repayment of the City's STAR
loan; and
WHEREAS, the PED Credit Committee at its meeting on May 12, 2003 has reviewed this proposal and
reconnmended subordinating $300,000 of the City's Security Documents for the term of the University Bank
line of credit;
30 NOW THEREFORE, BE IT RESOLVED that the Saint Paul City Council approves subordinating the
31 Security Documents to the Bank loan for the term of said Bank loan; and
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33 BE IT FURTHER RESOLVED, that PED staff and its legal counsel are furtizer directed and authorized to
34 take all actions necessary to unplement this Resolution.
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� ��IGlNAL
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By:
Approved by
By'
Date ` � � �
lE�A�/�i�7�
03 •'�`�1
council File #
Resolution #
Green Sheet # 200935
Requested by Department of:
Plannin Economic Dev 1 me �
BY: Q ��
Approved 6y Financial Services
By'
Fornt Approve
By:
p oved by
By:
Adopted by Council: Date ap0,'
Adoption Certified Y/p� Council Secre ry
L' ' '
YIEPARTMENT/OFFICE/COUNCIL: DATE INITIATED GREEN SHEET No.: 200935 03 -`I'11
PED May 8, 2003
CONTACC PERSON & PHONE: ��/11ATE WITTAI.IDATE
Craig Blakely, 66697 �
MOST BE ON COUNCQ. AGENDA BY (DATE) �� �� DEPARTMENT DII2. 5 C1TY COUNCII,
May 21, 2003, Consent Agenda FoR �
ROUTING
ORDER 3 C1TY ATTORNEY CITY CLERK
(John Kelly)
FIN. SERVICES DII2. FIN. SERVICES ACCTG.
4 MAYOR OR ASSISTANT 1 ACTIVITY MANAGER
TOTAL # OF SIGNATURE PAGES 2(CLIP AI.L LOCATIONS FOR SIGNATURE)
acr�oN �QUES�n: Approve subordination of $ 300,000 of the City's Assignment of Leases and Rents which is part
of the security for repayment of the $1 million STAR Tban made to the Minuesota Business Academy in Mazch 14,
2000.
RECOA�IIv1ENDATIONS: Approve (A) or Reject (R) S �^�, ��ONAL SERVICE CONTRACTS MUST AIVSWER THE FOLLOWING
e,�'cl?�% QUESTIONS:
PLANNING COMIvIISSION �� 1. Has this person/fim� ever worked wder a contract for tfiis department?
CIB COMbIITTEE Yes No
CNiL SEAVICE COMIvIISSION ,� v�,, ��� . Has this person/fimi ever been a city employee?
' ��� � �' Yes No
3. Does this person/firm possess a sldll not norn�ally possessed by any current city employee?
Yes No
Explain aIl yes answers on separate sheet and attach to green sheet
INTI7ATING PROBLEM, ISSUE, OPPORTUNTTY (Whq Whay When, Where, Why):
The State of Minnesota withholds 17% of their payments to the Minnesota Business Academy until the autiumi
following the close of the school yeaz in June of each year, creating a cash flow problem which they seek to solve
with a$•��00,000 line of credit from University Bank, which wants the City to subordinate its Assignment ofLeases
and Rents in that amount.
ADVANTAGES IF APPROVED:
The Minnesota Business Academy will be more likely to repay the loan in the future.
DISADVANTAGES IF APPROVED:
The City's collateral secured by an Assignment of Leases and Rents will be reduced by $�00,000.
DISADVAN'1'AGES IF NOT APPROVED:
The schook will not be able to secure a line of credit, the cash flow problem will get worse, decreasing the
likelihood that the MBA will repay the $1 STAR loan.
TOTAL AMOiJN1' OF TRANSACTTON: COST/REVENUE BUDGETED: Not Applicable.
F�INDINGSOURCE: N.A. ACTIVITYNUMBERS:
FINANCIAL INFORMATION: (EXPLAII�
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