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04-11161 Council File # -� 2 3 Green Sheet # 3024352 a RESOLUTION s CI OF SAINT PAUL, MINNESOTA G} 6 �--� n � �t 7 Presented by 8 F��� -�T�i�lQ.7 Committee Date _� 12 13 74 15 16 WT�REAS: 17 City Council Resolution jSt. Pascal Baylon School Project] 18 1. The Port Authority of the City of Saint Paul (the "Port Authorit}�') has given its approval to the 19 issuance of its tax-exempt "bank qualified" revenue notes (the "Notes'�, in an amount not to exceed $2,800,000 20 to refund debt previously incurred by St. Pascal Baylon School (the "School'� with regard to the construction of 21 its education facilities located at 1757 Conway Street in the City of Saint Paul (the "ProjecP'); and 22 23 2. Minnesota Statutes, Secrion 469.084, Subd. 11, provides that any issue of zevenue notes 24 authorized by the Port Authority shall be issued only with the consent of the City Council of the City of Saint 25 Paul, by resolution adopted in accordance with law; and 26 27 3. Approval of the issuance of the proposed Notes by the City Council is also required by Section 28 147(fl of the Internal Revenue Code of 1986, as amended; and 29 30 4. To meet the requirements ofboth state and £ederal law, the Port Authorityhas requested that the 31 Cily Council gives its requisite approval to the issuance ofthe proposed Notes by the Port Authority, subject to 32 the Port Authority holding a public hearing and final approval of the issuance and details of said Notes by the 33 Port Authority. 34 35 NOW, THEREFORE, BE TT RESOLVED bythe Council ofthe City of Saint Paul that, in accordance 36 with the requirements of Section 147( fl of the Internal Revenue Code of 1986, as amended, and in accordance 37 with Minnesota Statutes, Secrion 469.084, Subd. 11, the City Council hereby approves the issuance of the 38 aforesaid Notes by the Port Authority for the purposes described in the Port Authority resolution adopted 39 November 23, 2004, the �act details of which, including but not limited to, provisions relating to principal 4o amount, maturifies, interest rates, discount, redemption, and the issuance of additionai notes aze to ba 41 deterniined by the Port Authority , the School and the purchaser of the Notes, and the City Council hereby 42 authorizes the issuance of any additional notes (including refunding notes) by the Port Authority found by the a3 Port Authority to be necessary for cairying out the purposes for which the afaredescribed Notes are issued. 44 as 46 47 48 49 Adopted: December 1, 2004 32810.v1 o�/- r �r� Yeas Nays Absent Benanav � Bostrom � Hanis � Helgen � Lantry � Montgomery v Thune �/ � � Adopted by Council: Date ` �f G ivr� r.c /�il� Adoprion Certified by Council Secretary Reque�tcd by Deparhn t of: r� /� � /` By: Form Approv d by City Attomey B ���_ � G - �7-O j' / Apprg�v d y Mayor for Su�iissi � I•.ii ..... 32810.v1 o� �ri� � Green Sheet Green Sheet Green Sheet Green Sheet Green Sheet Green Sheet � DepartmeM/officeleouncil: Date Initiated; PA - p«cAamorsty ,�NO�� Green Sheet NO: 3024352 r Comtact Person 8 Phone• ���e�t Sent To Person lnitialiDate Petet Klein � 0 uthori � � - Assi9n 1 Iao 'u & Ec nomic Develo e artme¢[ Dire to Must Be on Council Agenda by (Date): Number 2 a or•s O e or Por Routing 3 ounc't Order 4 i er 5 Tofal # of Signature Pages _(Glip All loeations fo� Signature) Action Requested: Approvai of the issuance of approx. $2,800,000 of conduit tax exempt 501(c)(3) revenue notes for St. Pascal Baylon School to refinance an addition and improvements to the facility located at 1757Conway ST. Recommendations: Approve (A) or Reject {R): Personat Service CoMracts Must Answer the Following Questions: Planning Commission 1. Has this perso�rm ever worked under a contract for this departmenf? CIB Committee Yes No Civil Service Commission 2. Has this person7firm ever been a city employee? Yes No 3. Does this person/firm possess a skill not normally possessed by any current city employee? Yes No Explain all yes answers on separzte sheet and attach to green sheet Initiating Problem, Issues, Opportunity (Who, What, When, Where, Why): St Pascals is currently paying more than it needs to on debt incurted for the improfement of its faciliries AdvaMages It Approved: The issuance of the notes will allow St. Pascals to improve the educarional environment for its students. Disadvantages If Approved: None Disativantages lf Not Approved: � The educarional experience for approximately 35Q students annually would be lessened. Total AmouM of Transactio�: 2800000 Cost/Revenue Budgeted: Fundinq Source: port Authofity Conduit Activity Number: Financiai I»formation: TaX-eXempt 501(C) (3) (Ezplaih) reven 1909 LandmafkTowers 345 St. Pezer Street Saint Paul, Minnesota i5102-7661 P�RT J � 4 Q � 4 111� S t• � O � 2 bS 1`y November 16, 2004 Ms. 5usan Kimberly, Director Pla�ning & Economic Development Qepartme�t 1300 City Hali Annex 25 West Fourth Street Saint Pau{, Minnesota 55102 �� r�t� Tel: 657-224-5686 Fax:651-223-5198 Toll Free: 800328-8477 wwwsppa.com RE: $2,800,000 CONDUIT 501(c)(3) REVENUE NOTE ISSUE ST. PASCAL BAYLON SCHOOL Dear . imb�'�� We submit for your review and referral to the o�ce of the Mayor, City Councif, and City Attorney's office, details pertaining to the issuance of conduit 501(c)(3) revenue notes in the approximate amount of $2,800,000 to refinance an addition and improvements, to the facility located at 1757 Conway Street. The City of Saint Paui's entitlement allocation will not be affected by this appiication. {n addition to the stafF memorandurn, we are attaching a draft copy of the proposed City Council Resolution and a copy of the Resolution conducting the required public hearing and authorizing the sale of the 501(c)(3) sevenue bonds in the amount of $2,800,000 that will be considered by the Port Authority's Board on November 23, 2004. G+ty Council action will be required after the Port Authority's Board meeting of November 23, 2004. Your expeditious handiing of this matter will be appreciated. Sincerely, ,���--_ Kenneth R. dohnson President KRJ:ah Attachment cc: Mayor Kefly 32780.vt SAINT PAUL PoRT AUTHORITY MEMORANDUM TO: FROM: SLTBJECT: Board of Commissioners (Meeting of November 23, 2004) Pe La Ke St. Au tllE Re Kodak ds digilalscience° � DATE: o� �/« Nov. 17, 2004 Conduit Tax-Exempt Notes in Action Requested: Provide approvai for the Port Authority to issue approximately $2,800,000 of conduit tax- exempt notes to be used for the refinancing of existing debt incurred to finance an addition and improvements to the facility located at 1757 Conway Street. Public Purpose: The refinancing will aliow SPBS to strengthen its financial position by reducing its debt service obligations. The addition and improvement to the 1757 Conway Street building will enhance SPBS's ability to provide educationa! services to its students. Business Subsidv: The proposed issuance of notes is for a not-for-profit organization and is exempt from treatment as a business subsidy. Backaround; SPSS was started in 1950 and is a Minnesota nonprofit 501(c)(3) corporation, which provides a complete K-8 education fo� families primarily from St. Paui's East Side and adjoining suburbs. SPBS has a staff of 30 empfoyees and a student population of 350. The total cost of the addition and improvements was $8,090,890 and SPBS took on $6,200,000 of debt to pay for it. A detailed analysis of the construction costs and specifiic usage of space determined that $2,790,174 was eiigible to be financed on a tax exempt basis. This represents 35% of the total project cost and 45% of the tofal debt incurred. The allocation beiween taxabie and tax-exempt uses was done on a square foot basis (rather than the number of classrooms). This calculation resulted in 54% of the buiiding area qualifying for tax-exempt financing. 32825.v1 St. Pascal Baylon School Page 2 o� r��t� Earlier this year, the Port Authority proposed to f2amsey County that the county refer to the Port Authority ail 501(c)(3) revenue bond financing requests it receives. The county agreed, but reserved fhe abifiiy to issue up to $10 million in tax-exempt revenue bonds each year. This was done because federal law allows up to $10 million annually to be issued by each focal govemment as "bank qualified" debt. This debt commands a{ower interest rate in the marketpiace because it can be beneficiaAy owned by banks. The county wished to reserve this $10 million amount for 501(c)(3) organizations which are in business for the primary purpose of carrying out the county's social service programs and objectives, thus, all 501(c)(3) organizations which are not of this type are referred to the Port Authority, such as the St. Pascal's School financing. Current Status: SPBS has existing debt ob(+gations of approximately $2,800,000 with Premier Bank. The current interest rate fior the bank obligation is around 6,00%. The Transaction Manager wif{ be representing SPBS in negotiations with Psemier Bank, to arrange for the placemenf of the tax-exempt notes to be issued by the Port Authority. It is anticipated that these notes wili be placed with Premier Sank. Proposat: Type of Notes: Rate: Security: Term: Issuer: Issuer Fee: Sank: Transaction Manager: Bond Counsei: Borrower's Counsel: 32821.v1 The tax-exempt notes will be "bank qualified" under Section 265 of the Code. This wili aliow the bank to hold these notes and realize the full investment yield and not reduce the related interest expense. initially, approximately 4.75%. The rate will be adjusted every five years at a percentage of U.S. Treasuries. First lien mortgages on the property as welf as SPBS's unconditional promise to repay the notes. 18 years Saint Paul Port Authority 1/8�' of 1% annuafly on the outstanding principal balance of the notes. The initial fee wili be $3,500. Premier Bank Catholic Finance Corporation Leonard Street & Deinard Briggs & Morgan tj`� J 1 /(o St. Pascal Baylon Schoof Page 3 Workforce Imalications: Nof applicable. Policv Exceptions: Based on a preliminary review of the information provided by the borrower and counsel, management has concfuded that the use of the proposed financing will be consistent with the policy being considered by the Board, in that it wil! provide for the reimbursement of the costs incurred in the portion of the borrower's project related to education and not to any of the secular functions of the church or schooi. Sefore the issuance of the financing, the borrower's information will be provided to the Port Authority in the form of a sworn affidavit from the senior executive or finance officer of the borrower. Disciosure• The Port Authority Commissioners by SEC rules are obligated to disclose any risks or facts you may be aware of that would affect the probability of repayment on these notes. Recommendation: We recommend the exempt notes. PMK:ah authorization to issue approximately $2,800,000 of conduit tax- 32821.vM1 L�t{- 1 /l� Resolurion No. 410 6 RESOLUTION OP TI� AUTI30RITY OF TI� CTfY OF SAINT PAUL [St. Pascal Baylon School Project] Wf�REAS, the purpose of Minnesota Statutes, Secrions 469.152 through 469.1651, lmown as the Mnuiesota Municipal Indushial Development Act (the "AcY'), as found and determined by the legisiature, is to promote the welfare of the state by the active attracrian, encouragement, and development of economically sound indushy and commerce to prevent so far as possible the emergence of blighted and marginal lands and areas of chronic unemployment; WHEREAS, factors necessitating the active promotion and development of economicall� sound industry and commerce are the increasing concentration of population in the metropolitan areas, the rapidly rising increase in the amount and cost of govemmental services required to meet the needs of the increased populafion, the need far development of land use which will provide an adequate taac base to finance these increased costs, and access to employment opporhu�ities for such population; WHEREAS, the Authority of the City of Saint Paul (the "Authorit}T') has received a request from St. Pascal Baylon School (the "School") that the Authority consider the issuance of talc- exempt "bank qualified" revenue notes (which may be in the form of one ar more notes or series) in an amount not to exceed $2,800,000 (the "Notes") to refund debt previously incurred by the School with regard to the construction of its education facilities located at 1757 Conway Street in the City of Saint Paul (the "Project"); WHEREAS, the Authority and the School will enter into a revenue agreement (the "Revenue AgreemenY') in which the School will agree to make all payments due on account of the Notes; WIIEREAS, the Authority desires to facilitate the selective development of the community and to help provide the range of services and employment opportw�iries required by the population, and the Project will assist the Authority in achieving those objectives; WHEREAS, the Credit Cos�unittee has given its appmvai to the proposed issuance of the Note, and together with management recommends Board approval; and WHEREAS, pursuant to notice published in advance as required by state and federal law, a public hearing was heid before the Authority on the proposal of the School to refinance the Project, at wtuch hearing all those who desired to speak were heard, and in connecrion with which written comments were taken in advance. zssoias�� p�/- !/1� NOW, TFIEREFORE, BE Tf RESOLVED by the Authority of the City of Saint Paul, as follows: 1. On the basis of information auailable to the Authority, the Authority hereby finds that the Project constitute properties used or useful in connection with one or more revenue producing enterprises engaged in any business within the meaning of the Act; the Proj ect fiuthers the purposes stated in the Act; and it is in the best interests of the port district and the people of the City of Saint Paul and in furtherance of the general plan of development to assist the School in refinancing the Project. 2. For the purpose of refinancing the Proj ect, and paying certain costs of issuance and other expenses in connecrion w%th the issuance of the Notes, and provided that the Project and its financing receive approval by the Department of Trade and Economic Development ("DTED"), the Authority hereby authorizes the issuance, sale and delivery of the Notes in an aggregate pzincipal amount of up to $2,800,000. The Notes shall beaz interest at such rates, shall be nurnbered, shall be dated, shall mature, shall be subj ect to redemption prior to maturity, and shall be in such form and have such other details and provisions as may be approved by the President and Chief Financial Officer of the Authority, the School and the purchaser of the Notes, currently anticipated to be Premier Bank. 3. The Notes and interest thereon shall not constitute an indebtedness of the Authority or the City of Saint Paul within the meaning of any consritutional or statutory lunitation and shall not constitute or give rise to a pecuniary liability of the AuYhority or the City of Saint Paul or a charge against their general credit or tasing powers and neither the fuli faith and credit nor the taxing powers of the Authority or the City of Saint Paul is pledged for the payment of the Notes or interestthereon. 4. It is hereby found, determined and declared that: a. The issuance and sale of the Notes, the execution and delivery by the Authority of the documents which in the opinion of the President and Chief Financial Officer of the Authority and Bond Counsel are reasonably required in connection with the issuance of the Notes, including specifically the Revenue Agreement and one or mare revenue notes (the "Docuxnents"), and the performance of all covenants and agreements of the Authority contained in such documents, and of all other acts and things required under the Constitution and laws of the State of Minnesota to make the Documents and the Notes valid and binding obligarions of the Authority in accordance with their terms, are authorized by Minnesota Statutes, Sections 469.152 tlarougp 469.165, as amended (the "AcY'�. b. It is desirable that the Notes be issued by the Authority. zssoiasvi D�-11?� 5. The President of the Authority, or such other officer as may be appropriate in the absence of the President, is hereby authorized to execute the Documents (to the extent the Authority is a patty thereto). The execution of any Document by the President of the Authority herein authori2ed shall be conclusive evidence of the approval of such Document in accordance with the terms hereof. 6. The President and other officers of the Authority are authorized and directed to prepare and furnish to Bond Counsel certified copies of proceedings and records of the Authority relating to the issuance of the Notes and other transactions herein contemplated, and such other affidavits and certificates as may be required to show the facts relating to the legality of the Notes and the other transacfions herein contemplated as such facts appear from the books and records in the officers' custody and controi or as otherwise known to them; and all such certified copies, certificates and affidavits, including any heretofore fiunished, sha11 constitute representations of the Authority as to the truth of all statements contained therein. 7. The approval hereby given to includes approval of such details as may be necessary and appropriate and approved by the Authority's President and Chief Financial Officer; and includes approval of, among other things: a, establishment of the final principal amount of the Notes and the interest rate to be borne thereby; rop vided that the maxunum aggregate principal amount of the Notes shall not exceed $2,800,000; b. the establishment of the maturity schedule and call provisions to be applicable to the Notes; and c. such related inshuments as may be required to sarisfy the condirions of any purchaser of the Notes. 8. The authority to approve, execute and deliver future amendments to Documents entered into by the Authority in connecfion with the issuance of the Notes and the other transactions herein contemplated, is hereby delegated to the President of the Authority, provided that (a) such amendments either do not require the consent of the holders of the Notes or, if required, the consent of the requixed percentage of the holders of the Notes has been obtained with respect to such amendment; (b) such amendments do not materially adversely affect the interests of the Authority as the issuer of the Notes; (c) such amendments do not contravene or violate any policy of the Authority�, and (d) such amendments are acceptable in £orm and substance to Bond Counsel. The execution of any insirument by the President of the Authority shall be conclusive evidence of the approvai of such instruments in accordance with the terms hereof. 2550188v] 3 D�-lIl� 9. No covenant, stipulation, obligarion or ageement contained herein or in the Documents shall be deemed to be a covenant, sripulation, obligation or ageement of any member of the Board of Commissioners of the Authority, or any officez, agent or employee of the Authority in that persons individual capacity, and neither the Board of Commissioners nor any officer executing the Notes shall be liabie personally on the Notes or be subject to any personal liability or accountabilityby reason of the issuance thereof. Adopted: November 23, 2004. ATTEST: Its Secretary AUTHQRITY QF THE CITY OF SAINT PAUL Its Chair Kodak ds digilalscience° � zssoLas�i q