06-1012Council File # 06 -iaia .
Green Sheet # 3033927 �
CITY OF SAINT P
Presented
Proposed City Council Resolution
[Regions Hospital Parking Ramp Project]
WHEREAS:
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4 1. The Port Authority of the Ciiy of Saint Paul (the "Port Authority') has given its approval to the issuance of
5 its tar-exempt or taxable revenue bonds (the "Bonds"), in the approximate principal amount of $23,000,000 to finance
6 the acquisition and construction by the Port Authority or its a�liate Capital City Properties of a parking ramp (the
7"Project") located on real estate Iocated in the City of Saint Paul to be leased to Regions Hospital ("Regions Hospital");
8 and
9 2. Minnesota Statutes, Section 469.084, Subd. 11, provides that any issue of revenue Bonds authorized by
10 the Port Authority shall be issued only with the consent of the City Council of the City of Saint Paul, by resolution adopted
11 in accordance with law; and
12 3. Approval of the issuance of the proposed Bonds by the City Council is also required by Section 147(� of
13 the Internal Revenue Code of 1986, as amended; and
14 4. To meet the requirements of both state and federal law, the Port Authority has requested that the City
15 Council gives its requisite approval to the issuance of the proposed Bonds by the Port Authority, subject to final approval
16 of the issuance and details of said Bonds by the Port Authority.
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NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Saint Paul that, in accordance with the
requirements of Section 147(fl of the internal Revenue Code of 1986, as amended, and in accordance with Minnesota
Statutes, Section 469.084. Subd. 11, the City Council hereby approves the issuance of the aforesaid Bonds by the Port
Authority for the purposes described in the Port Authority resolution adopted October 24, 2006, the exact details of
which, including but not limited to, provisions relating to principal amount, maturities, interest rates, discount, redemption,
and the issuance of additional Bonds are to be determined by the Port Authority, Capital City Properties, Regions
Hospital and the purchaser of the Bonds, and the City Council hereby authorizes the issuance of any additional Bonds
(including refunding Bonds) by the Port Authority found by the Port Authority to be necessary for carrying out the
purposes for which the aforedescribed Bonds are issued.
26 Adopted: November 1, 2006
Benanav
Boshom
Requested by Depariment of:
By:
Adopted by Council:
�/ Form App�r ,ed by City Attomey
�� � By: � � ` --- � _ �
Date /{'D�/PJS��.s� �, �?dOlo �d °�' �^� 6
Adoption Certified by Council Secretary Form A pr d y ayor f Submis � m to Council
By= � BY ��/ 1 �
Approve y r: Date �
37 By:
� Green Sheet Green Sheet Green Sheet Green Sheet Green Sheet Green Sheet �
06 /D/�
; Departme'M/otficelcou
'� PA — Port AuthoriTy
'� Contact Person 8 Phone:
, Peter M Klein
� 724-5686
' Must Be on Ceuncit Agen�
', Ot-NOV-06
Doc. Type: RESOLUiION W/$ iRANSACI
E-Document Required: N
Document Confact:
ConWM Phone:
Date Initiated:
2�.� Green Sheet NO: 3033927
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1 n' & E o o ' De 1 I D artme t Direct
� inancialServices DfficeFinanciaiServi
(.tiN Attomev ( (,tifv Attomev
M vo 's Office I Mavo /As ' tant
ouncil � Citv Council
ICiN C7erk I C'tv CI Ic_
Action Requested:
Approval of the issuance of approximately $23,OOQ000 of conduit taY exempt lease revenue bonds for the Port Authority's
construction of a 900 stall parking faciliry to service Regions Hospital.
Recommendations: Appro�,e (A) or Reject (R):
Planning Commission ,
CB Committee
_ CiNI Sen�ce Commission
rersona� service i.onvacis musianswe�
1 Has this persoNfirm eeer worked under a contract for this department?
Yes No
2. Has this person/firtn e�er been a city employee?
Yes No
3. Dces this persoNfirtn possess a skill not nortnally possessed by any
current city employee?
Yes No
Expiain all yes answers on separete sheet and attach to green sheet
Initiating Problem, Issues, Opportunity (Who, What, When, Where, Why):
HealthPartners is going to expand and refurbish Regions Hospital and has requested that the Port Authority construct a parking faciliry
that will seroice Yhe hospital.
Advanfages If Approved:
The issuance of the bonds will allow Regions Hospital to improve the medical services provided to St. Paul Residents, create 250 new
jobs, and retain 4,000 jobs in St. Paul.
Disadvantages If Approved:
None.
Disadvantages If Not Approved:
The expansion of Regions Hospital might not occur.
TotalAmountof 23�0�0�� CostlRevenue Budgeted:
_ Transaction:
Fundinn source: pA conduit tar-exempt �rynY Number:
Financial Information: IeaSB 2�Ef1U8 bOf1dS
(Explain) '
�ouncil S3e�atch Cet►tet
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October 25, 2006 12:43 PM Page 1
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SAINT PAUL
PORT AUTHORITY
MEMORANDLTM
TO:
Board of Commissioners
(Meeting of October 24, 2006)
DA'I'E: October 13, 2006
FROM:
SUBJECT:
AGREEMENTS
RESOLUTION NO. 4189
Action Reauested:
Final approvai for the Port Authoriry to:
Peter M. Klein �
Laurie J. Hansen
Kenneth R. John o
REGtONS HOSPtTAL ! HEALTHPARTNERS
PUBLIC HEARING
AUTHORIZATION TO ISSUE APPROXIMATELY $23,000,000 OF CONDUIT
LEASE REVENUE BONDS AND TO EXECUTE RELATED DOCUMENTS,
INCLUDING A GROUND LEASE AND LEASE AND PURCHASE OPTION
Issue conduit, taxable and/or tax-exempt lease revenue bonds in a� approximate
amount of $23,000,000 to finance the construction of an approximately 900 car
parking ramp and the related costs of issuance.
Enter into a loan agreement with Capital City Properties ("CCP") by which CCP
would borrow and disburse Bond proceeds to finance the construction of the ramp
and work with Regions, HeaithPartners and the Saint Paul HRA fo facilitate the
financing and construction of the ramp.
Public Purpose:
Approval of this transaction wifl strengthen Regions' financial position and ailow it to go
forward with a$179,000,000 expansion of its facility in downtown Saint Paul. The
9nvolvement of the Port Authority and CCP to provide needed parking to aliow Regions to
improve the medical care provided to the Saint Paul region and add 250 heaith care jobs.
Business Subsidv:
Not applicable.
Backqround:
In April, the Board gave its preliminary approval to issue approximately $50,000,000 of tax-
exempt bonds for the construction of two parking facilities to be used in connection with
Regions Hospital. We are now being asked to issue bonds for a single parking facility in the
approximate amount of $23,000,000.
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Board Memo: Regions Parking Ramp
October 24, 2006
Page 2
Regions is a 501(c)(3) non-profit company that provides medical services primarily to residents
of Saint Pau1 and the East P�ietro.
Regions is planning a major expansion of its primary Saint Paul hospital. The key components
of their expansion are a tower that will greatly expand Regions' bed capacity and two parking
ramps. The larger parking facility would be owned by CCP and leased to Regions pursuant to
an operating lease. It will have approximately 900 parking spaces, will be located off-campus
at the northeast corner of University and Robert, and be utilized by Regions' employees. The
tower and smalier ramp will be financed as a separate project through the HRA within the next
several months.
Proposal:
1. Description of the Transaction:
The Port Authority's invotvemenf was requested by Regions so that the project financing
couid be accompiished on a tax-exempt basis and without having a detrimental effect on
Region's credit ratings. The tax-exempt financing has a lower interest rate associated with it
and a much longer amortization period, both of which translate into reduced annual
expenditures. Aithough there are some differences, this transaction wiil be similar to the
HealthEast Midway Campus and the two State Office Buiiding financings.
Fee title to the project land is expected to remain with Regions. Regions will enter into a
long-term ground leases with CCP which will, in turn, enter into an operating lease with
Regions providing for the construction and operation of the ramp. The operating lease will
include a fair market value purchase option.
The Port Authority and CCP will not have any financial risk in either the construction or bond
financing of this project.
2. The Ground Lease
Lessor: Regions
Lessee: CCP
Lease Term: 35 years plus a five year renewal option.
Rental Payments: $1.00 per year — passed back to Regions as an operating cost.
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Board Memo: Regions Parking Ramp
October 24, 2006
Pa9e 3
3. The Operatinq Lease:
Lessor:
Lessee:
Lease Term:
CCP
Regions
Approximafely 22 years
Rental Payments: Regions will make payments sufficient to cover ali debt service on the
bonds due during the 22 year term, and all other costs associated with
the occupancy of the property.
Option to Purchase: At any time during the Lease Term, Regions may offer to purchase the
Ieasehold improvements from CCP for the greater of fair market value
(as defined in the documents) or the outstanding debt on the bonds
plus re{ated expenditures.
Lease End
Provisions:
4. The Financinp:
Bond Issue:
Type of Bonds:
Rate:
Regions may:
1. Renew for an eight-year term.
2. Purchase the facility at the greater of the fair market value, as
defined in the documents, or the amount of the outstanding debt.
3. Vacate and surrender the facility to CCP. If Regions chose to
surrender the property, CCP will have the option to either operate
or sell the facility, subject to the requirement of the HRA standby
lease, described below.
Approximately $23,000,000
The bonds will be conduit tax-exempt lease revenue bonds.
Approximately 6.25% for tax-exempt fixed rate.
Security: First mortgage in the facility.
Assignment of all operating lease and purchase option payments.
Construction Reserve — One Year Debt Service.
Debt Service Reserve — One Year Debt Service.
HRA Standby Lease — whereby the HRA will agree to make payments
sufficient to pay principal and interest due after approximately 2028
(the Base Term of the Pro}ect Lease) on that portion of the Bonds
which mature in approximately 2036, if Regions has not either
extended the Operating Lease or purchased the ramp. The HRA will
also have an option to purchase in this standby lease.
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Board Memo: Regions Parking Ramp
Oqober 24, 2006
Page 4
Term:
Borrower:
Issuer:
issuer Fee:
Construction
Contractor:
Underwriter:
Bond Counsel:
Underwriters'
Counsel:
Guarantor:
Trustee:
30 years
Capital City Properties
Saint Paul Port Authority
Approximately $28,000 at inception and 1/8`� of 1% annualiy on the
outstanding balance of the bonds (to be shared with the HRA).
Kraus Anderson
Piper Jaffray
Leonard, Street and Deinard
Kennedy and Graven
HealthPartners Care System
S&P — BBB+
�1_3�:
Workforce Imqlications:
Approximately 250 new health care related jobs wiil be created by 2013 and 450 construction
jobs during the construction period of 3 years. Regions currently employs over 4,000
individuals. Approximately 1,000 live in St. Paul and 1,500 in Ramsey County.
Disclosure:
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 of these bonds.
Recommendation:
We recommend the final authorization to issue approximately $23,000,000 of conduit lease
revenue bonds and the execution of related documents, including ground leases and lease and
purchase option agreements, and the sale of the properly pursuant to one or the other of these
purchase options.
PMK:ah
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Resolurion No. 4189
RESOLtiTION OF
THE PORT AIJTHORITY OF THE CITY OF SAINT PAUL
[Regions Hospital Parking Ramp Project]
Wi�REAS, pursuant to Minnesota Statutes Sections 469.048 through 469.060 and 469.152
through 469.165 (the "AcY'), the Port Authority of the City of Saint Paul (the "Port Authorit}�') is
authorized to promote the welfare of the state through the development of marginal property and the
act of attraction, encouragement and development of economically sound industry and commerce to
prevent, so faz as possible, the emergence of blighted and marginal lands and areas of chronic
unemployment;
WHEREAS, factors necessitating the active promotion and development of economically
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 population, the need for access to employment and health caze
opporhanities for such population;
WHEREAS, pursuant to Section 469.059, Subdivision 15 of the Act, the Port Authority has
the authority to exercise the powers and duties of a housing and redevelopment authority as set forth
in Sections 469.001 to 469.047 (the "FIftA Act") for other purposes in the Act;
WHEREAS, the Port Authority has received a request from Regions Hospital ("Regions")
that the Port Authority consider the issuance of tax-exempt revenue bonds (which may be in the
form of one or more bonds or series) in an amount not to exceed $23,000,000 (the "Bonds") to
finance the acquisition and construction of an approximately 900 car parking ramp to be located at
the northeast comer of University Avenue and Robert Street in the City of Saint Paul (the "Ramp'�;
WHEREAS, proceeds of the Bonds will be loaned by the Port Authority to Capital City
Properties ("CCP"), a nonprofit affiliate of the Port Authority pursuant to the terms of a loan
agreement (the "I,oan AgreemenY');
WHEREAS, in connection with the issuance of the Bonds, Regions will enter into a long
term ground lease with CCP, whereby Regions will lease to CCP the real properiy on which the
Ramp is to be constructed (the "Ground L,ease");
WIIEREAS, concurrently with the execurion of the Ground Lease, CCP and Regions will
enter into a lease and purchase option agreement (the "Project Lease'� relating to the Land and
Ramp (collectively the "ProjecP'), whereby CCP will lease the Project to Regions for a term of
approximately 22 years, at rents sufficient to pay principal and interest coxning due on the Bonds
during the term of the Proj ect L,ease;
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WI�REAS, as security for the payment of the Bonds, among other things, CCP will assign
its rights to receive lease payments made by Reb ons under the Project I,ease;
WI�REAS, as additional security for the payment of the Bonds, the Port Authority will
enter into a Standby Lease (the "FIRA Standby Lease") with the Housing and Redevelopment
Authority of the City of Saint Paui, Minnesota (the "HRA") whereby the HRA will agree to lease
the Project for an amount sufficient to pay Bonds maturing after the termination of the base term of
the Project Lease in the event that Regions does not either extend the Project Lease or purchase the
Project at the end of the term;
WHEREAS, the issuance of the Bonds, the construction of the Ramp, and the lease of the
Ramp to Regions will provide needed parking facilities and facilitate the expansion by Regions of
its hospital facilities in Saint Paul;
WHEREAS, the Port Authority desires to facilitate the selective development of the
community and to help provide the range of services, employment and health care opportunities
required by the popularion, and the Project will assist the Port Authority in achieving those
objecrives;
WHEREAS, the Port Authority and the FIl2[1 propose to establish a redevelopment project
area pursuant to Minnesota Statutes, Section 469.027, and to adopt a redevelopment plan therefore,
in order to undertake this Project, and to prevent the emergence of biight and provide for the
construction of the Ramp;
WHEREAS, the Credit Committee has given its approval to the proposed issuance of the
Bonds, and together with management recommends Board approval as more fully described in the
Memorandum provided to the Board; and
WHEREAS, pursuant to notice published in advance as required by state and federal law,
a public hearing was held before the Port Authority on the proposal of the Port Authority to
finance the Project, at which hearing all those who desired to speak were heard, and in
connection with which written comments were taken in advance.
NOW, THEREFORE, BE IT RESOLVED by the Port Authority of the City of Saint Paul,
as follows:
1. On the basis of information available to the Port Authoriry, the Port 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 Project
fiu•thers the ptuposes stated in the Act; and it is in the best interests of fhe port district and the people
of the City of Saint Paul and in furkherance of the general plan of development to assist Regions in
financing the Project.
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2. For the purpose of financing the Project, and paying certain costs of issuance and
other expenses in connection with the issuance of the Bonds, and provided that the Proj ect and its
financing receive approval by the Department of Employment and Economic Development
("DEED'�, the Port Authority hereby authorizes the issuance, sale and delivery of the Bonds in an
aggregate principal amount of up to �23,000,000. The Bonds shall bear interest at such rates, shall
be numbered, shall be dated, shall mature, shall be subject to redemption prior to mahu and shall
be in such form and have such other details and provisions as may be approved by the President and
Chief Financial Of&cer of the Port Authority, Regions and the purchaser of the Bonds, currenfly
anticipated to be Piper 7af&ay & Co.
3. I'he Bonds and interest thereon shall not consritute an indebtedness of the Port
Authority ar the City of Saint Paul within the meaning of any constitutional or statutory limitation
and shall not constitute or a ve rise to a pecuniary liability of the Port Authority or the City of Saint
Paul or a charge against their general credit or taacing powers and neither the full faith and credit nor
the taxing powers of the Port Authority or the City of Saint Paul is pledged for the payment of the
Bonds or interest thereon.
4. It is hereby found, determined and declared that:
a. The issuance and sale of the Bonds, the execurion and delivery by the Port
Authority of the documents which in the opinion of the President and Chief
Financial Officer of the Port Authority and Bond Counsel are reasonably required in
connection with the issuance of the Bonds, including specifically the L,oan
Agreement, an Indenture, the Ground Lease, the Project Lease, the HRA Standby
Lease, and one or more revenue bonds, a Redevelopment Plan and a Joint Powers
Agreement with the HRA (collectively, with other documents determined by the
President and Chief Financial Officer of the Port Authority to be necessary to effect
the purposes of this resolurion, the "Documents"), and fhe performance of ail
covenants and agreements of the Port 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 Bonds valid and binding obligations of
the Port Authority in accordance with their terms, are authorized by Minnesota
Statutes, Sections 469.152 through 469.165, as amended (the "AcP').
b. It is desirable that the Bonds be issued by the Port Authority.
5. The Chair and the Secretary of the Port Authozity, or such other officer as may be
appropriate in the absence of the Chair or Secretary, aze hereby authorized to execute the Bonds.
The President of the Port Authority, or such other officer as may be appropriate in the absence of
the President, is hereby authorized to execute all of the other pocuments (to the extent the Port
Authority is a party thereto). The execution of any the Bonds by the Chair and Secretary, and the
execution of any Docuxnent by the President of the Port Authority shall be conclusive evidence of
the approval of such Document in accordance with the terms hereof.
37381.vt 3
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6. The President and other officers of the Port Authority are authorized and directed to
prepare and fiunish to Bond Counsel certified copies of proceedings and records of the Port
Authority relating to the issuance of the Bonds 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
Bonds and the other h herein contemplated as such facts appear from the books and
records in the officers' custody and control or as otherwise known to them; and all such cerkified
copies, certificates and affidavits, including any heretofore furnished, shall consritute
representations of the Port 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 Port Authority's President and Chief Financial Officer; and
includes approval of, among other things:
a. establishment of the final principal amount of the Bonds and the interest rate
to be borne thereby; provided that the maximum aggregate principal amount of the
Bonds shall not exceed $23,000,000;
b. the establishment of the maturity schedule and call provisions to be
applicable to the Bonds; and
c. the establishment of the final terms of the Aocuments; and
d. the identity and terms of such related instruments as may be required to
satisfy the condirions of any purchaser of tke Bonds.
8. The authority to approve, execute and deliver future amendments to Documents
entered into by the Port Authority in connection with the issuance of the Bonds and the other
transactions herein contemplated, is hereby delegated to the President of the Port Authority,
provided that: (a) such amendments either do not require the consent of the holders of the Bonds or,
if required, the consent of the required percentage of the holders of the Bonds has been obtained
with respect to such amendment; (b) such amendments do not materially adversely affect the
interests of the Port Authority as the issuer of the Bonds; (c) such amendments do not contravene or
violate any policy of the Port AutYaority; and (d) such amendments are acceptable in form and
substance to Bond Counsel. The execution of any instnxment by the President of the Port Authority
shall be conclusive evidence of the approval of such insfiunents in accordance with the terms
hereof.
9. No covenant, stipulation, obligation or agreement contained herein or in the
Documents shall be deemed to be a covenant, stipulation, obligation or agreement of any member of
the Board of Commissioners of the Port Authority, or any officer, agent or employee of the Port
Authority in that persons individual capacity, and neither the Boazd of Commissioners nor any
37381.v1 �
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officer executing the Bonds shall be liable personally on the Bonds or be subject to any personal
liability or accountability by reason of the issuance thereof.
10. The actions previously taken by manageanent of the Port Authority in connecrion
with this transaction, including specifically the approval of the terxn sheets describing the proposed
h'ansaction, are hereby ratified and affirmed.
Adopted: October 24, 2006
PORT AUTHORITY OF THE CTI'Y
OF SAINT PAUL
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ATTEST:
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3738t.v1
1900 Landmark Towers
345 St. Peter Street
Samt Paul, Minnesota
55102-1661
pORT
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October 25, 2006
Ms. Cecile Bedor
Direcior
Pianning & Economic Development Department _
1300 City Half Annex-
25 West Fourth Street
Saint Pau1, Minnesota 55102
RE: REGIONS HOSP{TAL
Dear Ms dor: `�'
�
7e1:651-224-5686
Fax 651-223-5198
Toll Free:800-328-8417
www sppa.mm
�h —�d��
We submit for your review and referra! to the office of the Mayor, City Council,
and City Attorney's office, details pertaining to the issuance of conduit lease
revenue bonds in an approximate amount of $23,000,000 to finance the Port
Authority's construction of a 900 stall parking facility for Regions Hospital. The
City of Saint Paul's entitlement allocation will not be affected by this application.
in addition to the staff memorandum, 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 lease revenue bonds in an
amount not to exceed $23,000,000 that was approved by the Port Authority's
Board on October 24, 2006. City Council action will be required after the Port
Authority's Board meeting of October 24, 2006.
Your expeditious handling of this matter wiil be appreciated.
Sincerei� '
��
Kenneth R. Johnson
President
KRJ:ah
Attachment
cc: Mayor Coleman
Pete Klein
36212.v7