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95-492Council File # �I C� Green Sheet # � 19 ° Z Presented By RESOLUTION CITYOF SAINT PAUL, NIIlVNESOTA 56 v Re£erred To Committee: Date 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 BE IT RFSOLVED that the City of Saint Paul act as the legal sponsor for the Merrill Corporation project contained in the Business and Community Development Application to be submitted by May 30, 1995 and that the Director of PED is hereby authorized to apply to the Department of Trade and Economic Development for funding of this project on behalf of the City of Saint Paul. BE IT FURTHER RFSOLVED that the City of Saint Paul has legal authority to apply for financial assistance, and the institutional, managerial, and financiai capability to ensure adequate construction, operation, maintenance and replacement of the proposed project for its design life. BE IT FURTHER RESOLVED that the City of Saint Paul has not incurred any costs, has not entered into any written agreements to purchase property. BE IT FURTHER RESOLVED that the City of Saint Paul has not violated any Federal, State, or local laws pertaining to fraud, bribery, graft, kickback, collusion, conflict of interest or other unlawful or corrupt practice. BE IT FURTHER RESOLVED that upon approval of its application by the State, the City of Saint Paul may enter into an agreement with the State of Minnesota for the above-referenced project, and thatthe City of Saint Paul certifies that it will comply with all applicable laws and regulations as stated in all contract agreements and described in the Compliances Section (FP-20) of the Business and Community Development Application. AS APPLICABLE, BE IT FURTHER RESOLVED that the City of Saint Paul has obtained credit reports and credit information from the Merrill Corporation. Upon review by the City of Saint Paul and Saint Paul City Attomey, no adverse findings or concerns regarding, but not limited to, tax liens judgements, court actions, and filings with state, federal and other regulatory agencies were identified. Failure to disclose any such adverse information could result in revocation or other legal action. NOW, THEREFORE BE IT RFSOLVED that the Director of PED is hereby authorized to execute such agreements as aze necessary to implement the project(s) on behalf of the applicant. I CERTIFY THAT the above resolution was adopted by the City Council of City of Saint Paul on o S °15- y9 �. Requested b Department o£: By: Adopted by Council: Date Adoption Certified by Cou By: � Approved by� }a� / D / ate BY � / /��L L�(/�� Form Approved by City Attorney by Mayor fa'�"Submission to By: Council File # �" � Green Sheet # � L9 � � RE50LUTION CITY OF SAINT PAUL, MINI�TESOTA 56 Presented By Referred To Committee: Date BE IT RESOLVED that the City of Saint Paul act as the legai sponsor for the Merrill Corporation project contained in the Business and Community Development Applicafion to be submitted by May 3Q 1995 and that the D'uector of PED is hereby authorized to apply to the Department of Trade and Economic Development for funding of this project on behaif of the City of Saint Paul. 6 BE IT FURTHER RFSOLVED that the City of Saint Paul has legal authority to apply for financial 7 assistance, and the institutional, managerial, and financial capability to ensure adequate construction, 8 operation, maintenance and replacement of the proposed project for its design life. 9 10 BE IT FURTHER RESOLVED that the City of Saint Paul has not incuned any costs, has not entered 11 into any written agreements to purchase property. 12 13 BE IT FURTHER RESOLVED that the City of Saint Paul has not violated any Federal, State, or local 14 laws pertaining to fraud, bribery, graft, kickback, collusion, conflict of interest or other unlawful or 15 corrupt practice. 16 17 BE IT FURTHER RFSOLVED that upon approvai of its application by the State, the City of Saint Paul 18 may enter into an agreement with the State of Minnesota for the above-referenced project, and that the 19 City of Saint Paul certifies that it will comply with all applicable laws and regulations as stated in all 20 contract agreements and described in the Compliances Section (FP-20) of the Business and Community 21 Development Application. 22 23 AS APPLICABLE, BE IT FURTHER RFSOLVED that the City of Saint Paul has obtaineti credit reports 24 and credit information from the Memll Corporation. Upon review by the City of Saint Paul and Saint 25 Paul City Attomey, no adverse findings or concerns regarding, but not limlted to, t� liens judgements, 26 court actions, and filings with state, federal and other regulatory agencies were identified. Failure to 27 disclose any such adverse information could result in reuocation or other legal action. 28 29 NOW, THEREFORE BE IT RESOLVED that the Director of PED is hereby authorized to execute such 30 agreements as are necessary to implement the project(s) on behalf of the applicant. 31 32 I CERTIFY TAAT the above resolution was adopted by the City Council of City of Saint Paul on 33 o S . 34 °15- H9?- Adopted by Council: Adoption Certified by Byc Approved by a . Department of: Form Approved by City Attorney Submission to qs - �t9�� DEPARTMENT/OFFICE/COUNCIL DATE INfTIATED rEO 4/17/95 GREEN SH� N_ Z 4 9 2 2 ir+m wmnware CANTACf PEq50N & PHONE � DEPARTMENT DIRECTOR CI7Y CAUNCIL Me azd Marie Franchett 266-6702 A�C+N �CRYATfOFiNEY o�JSti CT'CLEFK NUYBEFlFON MUST BE ON COUNCIL AGENDA BY (DAT� pp�� ^ DIREGTOR O FIN. & MGT. SEFiVICES DIR � �j�L� ORUER �p'7Mqypq(ORASSISTANT) � KK � TOTAL # OF SIGNATURE PAGES � (CLIP ALL LOCATfONS FOR SIGNATl7HE) ACTION flEQUESTED: Public Heari_ng and City Council authorization to submit an application to the Minnesota Depart�ent of Trade and Economic Development for �500,000 f=om the Economi.c Recovery Fund ro ram for the Merrill Co oration ro"ect. RECOMMEN�qT1�NS: Approve (A) or Rejeci (R) PERSONAL SERVICE CONTRACTS MUST ANSWEA THE FOLLOW fNG QUESTIONS: _ PLANNINCa COMMISSION _ CIVIL SEqVICE COMMISSION �� Has this perso�rm ever worketl under a contract for this department? _ CIB COMMI77EE YES NO — 2. Has fhis person/firm ever been a ciry employee? — S7pFF — YES NO _ DISTFiICT COURT _ 3. D085 thiS PBfson/Firm po55E55 8 Skill OOt nOfrtldlly POSSeSSBd by 30y Cull00[ Clty BrtIPI0y88? SUPPOqTSWHICHCOUNqLOOJECTNE? YES NO Explain all yes answers on separate sheet and attech to green sheet INITIATING PqOBLEM, ISSUE, OPPORTUNIN (Who, Whe[, When, Where, Why): The Pferrill Corporation was considering locating outside oP Minnesota_ To ensure that Merrill is provided with a financial incentive to remain in Saint Paul, City staff have worked with Merrill on the proposed application to DTED. The Port Authority has been working with Merrill on additional strategies for retaining the company. �E���� 1995 ADVANTAGES IF APPROVED: Provide Merrill Corporation with an incentive to remain in Saint'Paul, ���,���;' DISADVANTAGESIFAPPROVED: Staff has proposed to move forward with the Mesrill project, but only within the conteat af stricter guidelines for future projects. We would like to see better repayment , terms for funds received from the State. DISAOVANTAGES IF NOTAFPROVED: These is a possibility that Merrill may reconsider its option to leave Saint Paul. �����=;� ��=��Po�,� ,�.�.� � ��C��V�� g;��� ° 2 y��� �1PR 19 1�95 TOTAI AMOUNT OF 7RANSACTION $ N�A � � G`aST7REVENUE"9flD`GETED (qRCLE ONE) YES NO FUNDING SOURCE N�A ACTIVITY NUMBER N�A FINANCIAL INFORMATION: (EXPLAIN) & ECOI30MIC DEVELOPMENr DP,PARTMENf OF PLANNING _F 5� y�� �D.B���.��, RECEfV�D � 26 1995 C11'Y OF SAINr PAUL Nornx Coleman, Mayor 25Wc¢FourthSVeu �y�T� � Saint Pmd MN 55102 � F TO: Councilmember Jerry Blakey Councilmember Dave Thune Councilmember Michael Harris Councilmember Roberta Megard Councilmember Janice Rettman Councilmember Marie Grimm Councilmember Dino Guerin FROM: Marie Franchett �!! � DATE: May 10, 1995 RE: Menill Corporation ose Staff is requesting that the City Council authorize the Department of Planning and Economic Development to submit an application to the Minnesota Department of Trade and Economic Development for $SOQ000 in financial assistance for the Merrill Corporation project. Saint Paul Ooerations Merrill is headquartered at One lvlerrill Circle in Energy Park. Menill has a long term facilities lease with the Port Authority for this 50,000 SF building. As the company has grown, it has leased approaumately 40,000 SF of space in the adjacent Energy Park Business Center West building. Merrill employs 637 individuals on three shifts. Two hundred ninety four (294) of these employees live in Saint Paul. �pansion Proiect To accommodate employee growth over the next 10 years, Menill Corporation is plannnig to purchase the Energy Pazk Business Center West and East buildings from the current owner, Metropolitan Life Insurance Company, and enter into a licensing agreement with Ramsey County to share the Oscar Johnson Ice Arena parking lot. Energy Park Business Center would provide 149,500 SF of elcpansion space in its two buildings (86,000 SF in the West Building and 63,500 SF in the East Building) and the Oscar 7ohnson Ice Arena provides an additional 184 stalls of pazldng. Integral to the long term viability of the Energy Pazk location aze: (1) negotiating a mutually acceptable purchase agreement with Metropolitan Life Insurance Company; (2) finalizSng a mutually acceptable licensing agreement with Ramsey County; and (3) working with the Port Authority to improve the level of service of the ventflation and air conditioning (HVAC) provided by the Energ� Park Utiliry Company. `l5 - �19�- Companv Pmfile Mem71 Corporation provides a full range of printing services to customers in the corporate, legal and fmancial azeas. They have been based in St. Paul for a number of years and the Port Authority financed the One Merrill Circle project in 1984. Marketed through the company's owa sales force, Mem71's services include 24-hour-a-day typesetting, printing, distnbution, reproduction and publishing. Over the last few yeazs, the company has evolved from a regional paper printing operation to an international company that creates, produces and distnbutes documents — both in printed and electronic form With this evolution, Merrill's revenues have jumped from $69 million in 1990 to over $230 million in 1995, and total U.S. employment has exceeded 2,000. In 1981, Merrill adopted a"spoke and hub" production network. As a result, Menill has retained typesetting equipment and production personnel at its Saint Paul headquarters, dispersed its sales and service functions to 20 North America locations, and developed a network of printing facilities in St. Cloud, St. Paul, Chicago, Dallas, Los Angeles and Union N.7. In addition, Merrill has a joint marketing and service agreement with Burrups, a company with the largest share of the international financial printing market. A by-product of Menill's hub-and-spoke network is the development of a sophisticated electronic telecommunications network which links its spoke offices and financial centers around the world with its Saint Paul headquarters. This facilitates the movement of camera-ready documents between sites and �*+inimi��c the need for redundant typesetting equipment and personnel in each office. Sources and Uses of �u►ds Merrill is requesting financial assistance of $500,000 from the State to mitigate the foIlowing costs associated with resolving the heating, ventilation, and air conditioning (HVAC) problems. Uses of Funds: Renovation Expenses HVAC Improvements.....••••• .............................. Tenant Improvements ........................................ Roof Replacement ............................................ Ice Arena Pazking Lot Upgrades .................... Pazking Lot Overlay ......................................... Code/ADA Compliance ................................... Tota1 $ $ $ $ $ $ $ 775,500 535,400 442,000 228,000 47,500 38,700 2,067,100 Purchase of Energy Park Business Center.. $ Total Project Cost ............................................ $ 5,500,000 7,567,100 Sources of Funds: Bank Financing ................................................... $ 5,500,000 Ramsey County ................................................. $ 100,000 DTED Loan ....................................................... $ 500,000 Equity .................................................................. $ 1.467.100 Tota1 $ 7,567,100 �s- 4q� Merrill anticipates obra''� bank financing at an interest rate one hundred basis points over the LIBOR nte wluch is typically below prime. They aze seeldng a 7 yeaz term for the financing. Merrill plans to make debt service payments out of intemal cash flow. Incentive Financine Due to the present labor shortages in the Twin Cities and the cost of doing business in Minnesota, Mem71 began invesdgating the possibiliry of moving some or all of its operations out of the state. Because of its central location and the presence of the Federal Express hub, Merrill narrowed its search to Memphis, Tennessee. Fxcluding the cost of labor, Merrill estimates a relocation to Memphis would save Merrill over $840,000 in annual operating e�cpenses due to lower property taxes, workers compensation premiums and taz incentives. These savings would likely increase if Menill completed negotiations with developers and conducted a wage/benefit study. In addition to the operational savings, location near the Federal Express hub would extend Merrill's production by six hours a day, giving it a significant competitive advantage. DTED Loan Terms PED staff propose that the $SOQ000 in financial assistance be structured as a forgivable loan. The proposed terms for the loan include a 7% interest rate and a ten year amortization period. If the company retains at least 637 jobs for five years, and creates a total of 60 jobs over the first two years, then all loan payments for the previous five yeazs would be forgiven, and if the jobs are maintained for 10 years then the entire loan would be forgiven. In any year that the average annual employee base falls below 637, the company w71 be requited to make a loan payment for that year. If for any reason the employment base falls below 340 or if the company were to move out of St. Paul, then the entire loan amount would be immediately due and payable. The PED Credit Committee has approved the project and recommended terms Other Contem�lated Pu6lic Assistance The Port Authority has been worldng with Menill, the City and Ramsey County on a licensing agreement for shared use of the Oscar Johnson Ice Arena. It is proposed that the County provide $100,000 for improvements to the parlang lot. The County owns the Ice Arena, while the City owns the land upon which the Arena is locaxed. As a part of the incentive package coordinated by the Port Authoriry, it is proposed that Menill be provided with an option to purchase the 99,000 S.F. Ice Arena site from the City for $1.00, if for any reason in the future the County discontinues use of the site for ice skating. If that event occurs, Merrill would also have the option to purchase an adjacent City owned 44,000 S.F. oudot for $1.00. The estimated current mazket value of the two sites is between $266,000 and $316,000. Pablic Benefits Merrill's continued investment in Energy Pazk offers the following benefits to Saint Paul: retention of 637 jobs (294 of these employees live in Saint Paul) an employer who projects 5% annual employee growth over the ne�ct five yeazs. an employer whose average annual salary exceeds $12.50 per hour. °15- �l°►�. Etonomic Rernver�Ebnd Gnidelines According to the proposed ERF guidelines, which will be considered by the City Council at iu Apri119th meeting, the Merrill Corporation project would achieve a rating of 300 points. To be eligible for assistance projects must aclueve a minimum of 250 points. Recommendation Staff recommends that the City Council approve the attached resolution.