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97-1060, Council File # 9�t - lo�(� ° Green Sheet $ 1311 � RESOLUTION ITY OF SAtNT PAUL, MINNESOTA 3 � Presented B Re£erred T Committee: Date WHEREAS: 1. The Port Authority of the City of Saint Paul (the "Authority") has given its approvat to ihe issuance of up to $6,000,000 of iis Variable Rate Demand Industrial Oevelopment Revenue Bonds (National Checking Company Project) Series 1997A and Series 19976 (collectively the "Bonds"), to finance the costs to be incurred by National Checking Company in connection with the acquisition and construction of an office and manufacturing facility to be located in the City of Saint Paul, Minnesota (the "Project"); and 2. Laws of Minnesota 1976, Chapter 234, provides that any issue of revenue bonds authorized by the Authority shall be issued only with the consent of the City Council of the City of Saint Paul, by resolution adopted in accordance with law; and 3. Approval of the issuance of the proposed Bonds by the City Council is also required by Section 147(fl of the Internal Revenue Code of 1986, as amended; and 4. To meet the requirements of both state and federal law, the Port Authority has requested that the City Council gives its requisite approval to the issuance of the proposed Bonds by the Port Authority, subject to final approval of the details of said Bonds by the Port Authority. � . �('1- I D L O 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 Laws of Minnesota 1976, Chapter 234, 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 August 26, 1997, the exact details of which, including but not limited to, provisions relating to maturities, interest rates, discount, redemption, and the issuance of additional bonds are to be determined by the Port Authority, 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. By: I \ --._--__��. Approved by Mayor: Date �L 2 P(`+ �' g ` L' `,' �-- Requested by Depaztment of: �1���. �� n�. � �� �' � �o ;r,�,� �J�� � ,���- By: 7 �°"`� ��•c/G" 2�— Form Appro by City Attomey By: C�--�� . �� �-- ��- P7 Approve by M or ub 's il By: Adopted by Cwncil: Date .,�., �'l �`�°�� Adopflon Certified by Council Secretary ° ('i - 10 � b OEPAATMENTlOFFICElCOUNCII OATE INITIATED Saint Paul Port Authority 8/15/97 GREEN SHEE N.° _ 13114 CONTAGT PEflSON & PHONE �` DEPARTMENT DIRE ❑ CITY COUNCIL �NITIALIDATE Peter M. Klein ASSIGN �CITYATfORNc1' �CmlCLERK MUST BE ON COUNCIL AGENDA BY (DATE) qOUTING � BUDGET DIFECiOR � FIN. & MGT. SERVICES DIR. August 27, 1997 (CONSENT AGEN " � MAYOR(ORASSISTAI�IT) � TOTAL # OP SIGNATURE PAGES (CLIP ALL LOCATIONS FOR SIGNATUR� ACTION REQUESTEQ: Approval of the issuance of an approximate $6,000,000 tas-exempt and taxable conduit bond issue to National Checking Company for the acquisition and eonstruetion of a new faeility of approximately 70,000 square feet in the Crosby Lake Business Park. RECOMMENDATIONS: Approve (A) or Reject (R) pERSONAL SERY{CE CONTRACTS MUST ANSWER THE FOLLOWING QUESTIONS: _ PLANNING COMMISS�ON _ qVIL SERVICE GOMMISSION 1. Has this personNirm ever worked under a contract for this department? A Port Authority ves No _ CIB COMMITTEE _ _ STAFF Bd. Of COID. Z, Has this persoNfirm ever been a ciry employee? — YES NO _ DiS7RlC7 COUR7 _ 3. Does ihis person/firm possess a skill not normally possessed by any current city employee? SUPPORTS WHICH COUNCIL O&IECTIVE7 YES NO Explain all yes answers on separate sheet antl attach to green sheet INITIATING PROBLEM. ISSUE, OPPORTUNITV (Who, What, When, Where, Why): The issuance of a bond issue will allow the construction of a new office and production facility in Crosby Lake Business Fark. AOVANTAGES IF APPROVED: As a result of the new office and production facility, it is anticipated that seven new jobs will be created in the first two years of operations. DISADVANTAGES IF APPROVED� None DISADVANTA6ES IF NOTAPPROVE�: The new jobs created by this new facility will not be ereated. TOTAL AMOUNT OFTRANSACTION $ 6� OOO � OOO COST/PEVENUE BUDGE7ED (CIRCLE ONE) VES NO Port Authority Tax-Exempt and — FUNDINGSOURCET Conduit Bond Issue ACTIVITVNUMBER FINANCIAL INFORMATION: (EXPLAIN) _ � �o u-r�,c�2 / �Iua-, �(�.-s. �— q � � '� �� ��w,� I ��.-- 21N OF THE CITY OF SAINT PAUL ,,,,,, ., ,....,.,ARK TOWERS • 345 ST. PEfER STREEf Ms. Pam Wheelock, Director Planning & Economic Development Department 1300 City Hall Annex 25 West Fourth Street St. Paul, Minnesota 55102 • ST. PAUL MN 55102-1661 August 13, 1997 FAX (612) 2235198 TOLL FREE (800) 328-8417 • PHONE (612) 224-5686 RE: $6,000,000 TAX-EXEMPT AND TAXABLE CONDUIT BOND ISSUE NATIONAL CHECKING COMPANY Dear Ms e�e�"�'� We submit for your review and referral to the office of the Mayor, City Council, and City Attorney's office, details pertaining to the issuance of a tax-exempt and taxable conduit bond issue in the approximate amount of $6,000,000 to finance the acquisition and construction of a new facility of approximately 70,000 square feet in the Crosby Lake Business Park, St. Paul, Minnesota. The Port Authority has received an industrial revenue bond allocation from the State of Minnesota Small lssue Pool, as the project is manufacturing. The Gity 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 revenue bond issue in the amount of $6,000,000 that will be considered by the Port Authority's Board on August 26, 1997. City Council action will be required after the Port Authority's Board meeting of August 26, 1997. Your expeditious handling of this matter will be appreciated. Sincerely, ��"'"`_.. Kenneth R. Johnson President KRJ:ak Attachment cc: Mayor Coleman g'flmkMakhePw.tloc SAINT PAUL PORT AUTHORITY �n�ror�vDi.rn�r TO: �'�u CREDIT COMMITTEE DATE: (August 19, 1997 Regular Credit Committee Meeting) Peter M. Klein t ^� Lorrie J. Louder Kenneth R.Johnson ��. 1oCo August13,1997 SUBJECT: NATIONAL CHECKING COMPANY-Authorization for an Approximate $6,000,000 Tau-Exempt and Taxable Bond Issue ACTION REQUESTED: Approval of final resolution authorizing the issuance of an approximate $6,000,000 conduit bond issue to National Checking Company. PROJECT SUMMARY: Estimated Amount: Type: Term: Issuer: Borrower: Trustee: Letter of Credit Bank: Placement Agents: Remarketing Agent: Borrower's Counsel: Placement Agents' Counsel: Letter of Credit Bank Counsel: Bond Counsel: $6,000,000 - Series A - $1,200,000 Tax-Exempt - Series B - $4,800,000 Taxabie Variable Rate Demand Industrial Development Revenue Bonds 20 Years Port Authority of the City of Saint Paul National Checking Company First Trust First Bank National Association Miller & Schroeder Financial, Inc. Piper Jaffray, Inc. Piper Jaffray, Inc. Doherty, Rumble & Butier Oppenhe+mer, Wolff & Donnelly Dorsey & Whitney Leonard, Street & Deinard National Checking Company Credit Committee Memo August 13, 1997 Page -2- BACKGROUND: a�-�° The Borrower. National Checking Company has purchased a site in the Crosby Lake Business Park for the construction of a new facility of approximately 70,000 square feet. The Bonds: The Bonds will be issued in the approximate principal amount of $6,000,000 and will bear interest at a variable rate established weekly by the Remarketing Agent. The maximum interest rate is 12% for the tax-exempt bond series and 18% for the taxable bond series. The Project: The proceeds of the Bonds will be loaned to the Borrower, and used to construct a new approximate 70,000 square foot office and production facility in the Saint Paul Port Authority's Crosby Lake Business Park. The availability of tax-exempt financing will enable National Checki�g Company to expand its present production capacity. As a result, new jobs will also be created to support the revenue and production increases. Employment Impact: Under the Port Authority's Workforce and Employment Agreement National Checking Company wili employ 65 full-time employees at the Crosby Lake facility. The company believes it will create 7 additional jobs in the first two years of operations at the new facility. As a result of the construction of this new office/production facility, National Checking has estimated that there will be an annual payroll increase of $140,000 per year when fully operational. Six of the seven additional jobs will Iikely be union positions paying a minimum of $11.00 per hour. The other position will be managerial. The Letter of Credit Bank: The initial letter of credit will be provided by First Bank National Association. Estimated Sources and Uses of Funds: Sources of Funds: Bond Proceeds Estimated Borrower Funds Total Sources of Funds Uses of Funds: Building Construction Estimated Costs of Issuance Total Uses of Funds $6,000,000 300 000 $6,300,000 $6,000,000 300.000 $6,300,000 �� National Checking Company Credit Committee Memo August 13, 1997 Page �- SECURITY FOR THE BONDS: " � Conduit Financinq; The bonds will be conduit financing of the Authority and will not constitute or give rise to a liability of the Authority, the City of Saint Paul or the State of Minnesota or a charge against their general credit or taxing powers. No bondholder will have the right to demand payment o4 the bonds out of any funds to be raised from t�ation or from any revenue sources other than those expressly pledged to payment of the bonds pursuant to the indenture. This includes the amounts drawn on the letter of credit and amounts payable by the borrower under the loan agreement. Loan Agreement: Under the indenture, the Authority has pledged its interest in the loan agreement to the trustee to secure the bonds. The trustee is authorized to exercise the rights of the Authority and to enforce the obligations of the borrower under the loan agreement. Letter of Credit: Payment of the principal amount and purchase price of the bonds, and up to approximately 50 days interest thereon (measured at the 12% maximum rate for the tax- exempt series and 18% for the taxabie series) will be secured initially by the initial letter of credit or, under certain circumstances a substitute letter of credit. The trustee is required to present a draft under the letter of credit to pay principal and interest when due on the bonds. The bonds are of sred primarily on the basis of the financial strength of the bank and not on the basis of the financial strength of the borrower. The letter of credit will have an initial term of one year, and will be renewable annually thereafter, unless the bank provides at least 45 days notice that it will not renew. If the letter of credit is not renewed or replaced, the bonds will be subject to mandatory redemption, and the trustee is instructed to draw on the letter of credit, before it expires, to pay principal and interest then due. DISCLOSURE: Port Authority Commissioners, by S.E.C. 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: Recommend approval of authorizing issuance of the approximate $6,000,000 conduit bond issue on behalf of National Checking Company. PMK:ak 9'Pmk�riatducutloc q�- �o�o Resolution No. RESOLUTION OF THE PORT AUTHORITY OF THE CITY OF SAINT PAUL ��I:f�:7�T.� 1. it has been proposed that the Port Authority of the City of Saint Paul (the "Port Authorit�') issue ifs Variable Rate Demand Industrial Development Revenue Bonds (National Checking Company Project) Series 1997A (the °Series A Bonds°) and its Ta�cable Variable Rate Demand Industrial Development Revenue Bonds (National Checking Company Project) Series 1997B (the "Series B Bonds" and together with the Series A Bonds, the "Bonds°) in an aggregate principal amount not to exceed $6,000,000, and that the proceeds of such Bonds be loaned to National Checking Company, a Minnesota corporation (the "Borrower�) to finance the ac and office facility (the "ProjecY') to be ovmed City of Saint Paul, Minnesota (the "City'). �quisition and construction of a manufacturing and operated initially by the Borrower in the 2. The Authority desires to facilitate the selective development of the City of Saint Paul and the metro east community, to retain and improve its tax base and to help it provide the range of services and employment opportunities required by its population, and the Project wiil assist in achieving that objective by increasing the assessed valuation of the metro east community; helping to maintain a positive relationship befinreen assessed valuation and debt; and enhancing the image and reputation of the metro east community. 3. The Project will result in additional employment opportunities in the City of Sa+nt Paul and the metro east community. 4. The Authority has been advised by representatives of the Company that long term conventional, commercial financing to pay the capital cost of the Project is availabie only on a limited basis and at such high costs of borrowing that the economic feasibility of operating the Project would be significantly reduced, and that it has been acting to date in anticipation that the Authority would favorably consider this financing proposal. 5. The Project and its financing has received an allocation of bonding authority from the State of Minnesota Department of Finance. 6. The Authority's Credit Committee and Board have previously adopted their Resolutions No. 28 and 3619, respectively giving preliminary approval to the proposed issuance of revenue bonds. A1- lo�o 7. Pursuant to the requirements of Section 147{fl of the Intemal Revenue Code of 1986, as amended, and pursuant to a notice published by the Port Authority not less than 15 days prior to the public hearing, a public hearing has been held on the date hereof on the issuance of the Bonds, at which public hearing all persons were given an opportunity to speak. 8. The Bonds will be issued and secured by the terms of an Indenture of Trust (the "indenture") between the Port Authority and First Trust National Association in St. Paul, Minnesota (the "Trustee") and will be payable primarily from draws made on an irrevocable letter of credit issued by U.S. Bank National Association (the °Credit Enhance�') pursuant to a Reimbursement Agreement to be dated as of September 1, 1997 between the Borrower and the Credit Enhancer (the "Letter of Credit AgreemenY'). 9. The Borrower and the Port Authority will also enter into a Loan Agreement (the "Loan AgreemenY') in which the Borrower wiil agree to maintain the Letter of Credit and make all payments due either to the Credit Enhancer or on account of the Bonds. 1Q. The Bonds and the interest on the Bonds shali be payable solely from the revenue pledged therefor and the Bonds shall not constitute a debt of the Port Authority within the meaning of any constitutional or statutory limitation of indebtedness, nor shall the Bonds constitute nor give rise to a pecuniary liability of the Port Authority or the City or a charge against their generai credit or taxing powers and shall not constitute a charge, lien or encumbrance, legal or equitable, upon any property of the Port Authority or the City other than their interest in said Project. 11. It is intended that interest on the Series A Bonds be excluded from gross income of the holders thereof for federal income tax purposes. NOW, THEREFORE, BE IT RESOLVED SY TNE BOARD OF COMMISSIONERS OF THE PORT AUTHORITY OF THE CITY OF SAINT PAUL, AS FOLLOWS: 1. On the basis of information available to the Port Authority it appears, and the Port Authority hereby finds, that: the Project constitutes properties, used or useful in connection with one or more revenue producing enterprises engaged in any business within the meaning of Minnesota Statutes, Sections 469.152 to 469.165 (the "Act"); the Project furthers 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 developmentto assistthe Company in financing the Project. 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 Project and its financing receive approval by the Department of Trade and Economic Development ("DTED"), the Port Authority hereby authorizes the issuance, sale and delivery of the Bonds in an aggregate principal amount not to exceed $6,000,000. Each Series of Bonds shall be in such principal amounts as shall be determined by the President z 9� - lo�b of the Port Authority and Bond Counsel, provided that the aggregate principal amount of Series A Bonds shall not exceed $1,200,000. The Bonds shall bear interest at such rates, shall be numbered, shall be dated, shall mature, shall be subject to redemption prior to maturity, and shall be in such form and have such other details and provisions as may be prescribed in the Indenture, substantially in the form now on file in the o�ces of the Port Authority. 3. Ne'dher the Bonds, nor the interest thereon, shall consfitute an indebtedness of the Port Authority or the City within the meaning of any constitutional or statutory debt limitation; nor shall they constitute or give rise to a pecuniary liability of the City, the Port Authority or a charge against their general ta�ting powers and neither the fuli faith and credit nor the general taxing powers of the City or the Port Authority is pledged to the payment of the Bonds or interest thereon. 4. Forms of the following documents have been submitted to the Port Authority for review and/or approval in connection with the sale, issuance and delivery of the Bonds: a. the Bond Placement Agreement to be entered into beiween the Port Authority, the Borrower and Piper Jaffray Inc. and Miller & Schroeder Financial, Inc. (collectively, the "Placement AgenY') (the "Bond Placement AgreemenY'); b. the indenture; c. the Loan Agreement dated as of September 1, 1997 to be entered into beiween the Port Authority and the Borrower; d. the Bonds; e. the Private Piacement Memorandum to be used in marketing the Bonds (the "Placement Memorandum"); f. the Remarketing Agreement dated as of September 1, 1997 to be entered into by and befinreen Piper Jaffray, Inc. (the "Remarketing AgenY') and the Borrower (the "Remarketing AgreemenY'); and g. the Letter of Credit Agreement, including a form of the Letter of Credit (collectively, the "Documents"). 5. It is hereby found, determined and deciared that: q1-lo`0 a. The issuance and sale of the Bonds, the execution and delivery by the Port Authority of the Documents and the performance of all covenants and agreements of the Port Authority contained in the 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 "AcY'); b. ft is desirable thaf the Bonds be issued by the Port Aufhority upon the general terms set forth in the Documents, as applicable; c. Under the provisions of and as provided in the Documents, fhe Bonds are not to be payable from or a charge upon any funds other than the revenues pledged to the payment thereof; no holder of the Bonds shall ever have the right to compel any exercise by the City or the Port Authority of its taxing powers to pay the Bonds or the interest or premium thereon, or to enforce payment thereof against any property of the City or the Port Authority except the interests of the Port Authority and the City which have been pledged to the Trustee under the Indenture; the Bonds shall not constitute a charge, lien or encumbrance, legal or equitable, upon any property of the City or the Port Authority except the interests of the Port Authority and the City which have been pledged to the Trustee under the Indenture; the Bonds shalf each recite that they are issued without moral obligat+on on the part of the State or its political subdivisions, and that the Bonds, including interest thereon, are payable sofely from the revenues piedged to the payment thereof; and the Bonds shall not constitute a debt of the City or the Port Authority within the meaning of any constitutionai or statutory limitation. 6. The forms of fhe Documents and exhibits thereto are approved substantiaily in the forms submitted and on file in the o�ces of Port Authority, with such subsequent changes as may be approved by Port Authority staff and Bond Counsel as contemplated by paragraph 8. The Chair and Secretary of the Port Authority, or such other officer as may be appropriate in the absence of either the Chair or Secretary, are hereby authorized and directed to execute the Documents (to the extent the Port Authority is a party thereto) in substantially the forms submitted, as modified pursuant to paragraph 8, and any other documents and certificates which in the opinion of Port Authority staff and Bond Counsel are necessary to the transaction herein described The execution of any instrument by the appropriate officer or officers of the Port Authority herein authorized shall be conclusive evidence of the approval of such docume�ts in accordance with the terms hereof. The execution of any documents necessary for the Vansaction herein described by individuals who were at the time of execution thereof the authorized o�cers of the Po�t Authority shall bind the Port Author+ty, notwithstandirtg that such individuals or any of them has ceased to hold such office or offices prior to the authentication and delivery of the Bonds. Copies of all of the documents necessary to the transaction described shall be delivered, filed and recorded as provided herein and in the Indenture. n a'1. to `o 7. The President and other officers of the Port Authority are authorized and directed to prepare and fumish to the Placement Agent and 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 showthe facts relating to the legality of the Bonds and the other transactions 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 certified copies, certificates and affidavits, including any heretofore fumished, shall constihlte representations of the Port Authority as to the fruth of all statements contained therein. 8. The approval hereby given to the various Documents referred to above includes approva! of such additional details therein as may be necessary and appropriate, and such modifications thereof, deletions therefrom and additions thereto as may be necessary and appropriate and approved by the Port Authority's President and Chief Financial O�cer; 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 for the initial period; roq vided thaf the maximum aggregate principal amount of the Series A Bonds shall not exceed $1,200,000, and the ma�mum aggregate principal amount of the Series A Bonds and the Series B Bonds together shall not exceed $6,000,000; and provided further that the maximum interest rate on the Series A Bonds shall not exceed 12.00% per annum, and the maximum interest rate on the Series B Bonds shall not exceed 18.00%; b. the establishment of the maturity schedule and cail provisions to be appiicable to the Bonds; and c. such related instruments as may be required to satisfy the conditions of any purchaser of the Bonds. 9. The Port Authority hereby consents to the distribution of the Placement Memorandum, as such Placement Memorandum is finalized with the participation of Port Authority staff and Bond Counsel. The proposal of the Piacement Agent to place the Bonds upon the terms and conditions set forth in the Bond Placement Agreement is hereby found and determined to be reasonable and is hereby accepted. 10. The authority to approve, execute and deliver future amendments to financing 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 do not require the consent of the holders of the Bonds; (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 Authority; and (d) such amendments are acceptable in form and substance to Bond Counsel. The execution of any instrument by s a'1-�oco the President of the Port Authority shall be conclusive evidence of the approval of such instruments in acxordance with the terms hereot. 11. 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 Author'ity, or any officer, agent or employee of the Port Authority in that persons individual capacity, and neither the Board of Commissioners nor any officer executing the Bonds shall be liable personally on the Bonds or be subject to any personal liability or acxountabil'�ty by reason of the issuance thereof. Adopted: Auqust 26. 1997 PORT AUTHORITY OF THE CiTY OF SAINT PAUL its Chair ATTEST: its Secretary , Council File # 9�t - lo�(� ° Green Sheet $ 1311 � RESOLUTION ITY OF SAtNT PAUL, MINNESOTA 3 � Presented B Re£erred T Committee: Date WHEREAS: 1. The Port Authority of the City of Saint Paul (the "Authority") has given its approvat to ihe issuance of up to $6,000,000 of iis Variable Rate Demand Industrial Oevelopment Revenue Bonds (National Checking Company Project) Series 1997A and Series 19976 (collectively the "Bonds"), to finance the costs to be incurred by National Checking Company in connection with the acquisition and construction of an office and manufacturing facility to be located in the City of Saint Paul, Minnesota (the "Project"); and 2. Laws of Minnesota 1976, Chapter 234, provides that any issue of revenue bonds authorized by the Authority shall be issued only with the consent of the City Council of the City of Saint Paul, by resolution adopted in accordance with law; and 3. Approval of the issuance of the proposed Bonds by the City Council is also required by Section 147(fl of the Internal Revenue Code of 1986, as amended; and 4. To meet the requirements of both state and federal law, the Port Authority has requested that the City Council gives its requisite approval to the issuance of the proposed Bonds by the Port Authority, subject to final approval of the details of said Bonds by the Port Authority. � . �('1- I D L O 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 Laws of Minnesota 1976, Chapter 234, 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 August 26, 1997, the exact details of which, including but not limited to, provisions relating to maturities, interest rates, discount, redemption, and the issuance of additional bonds are to be determined by the Port Authority, 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. By: I \ --._--__��. Approved by Mayor: Date �L 2 P(`+ �' g ` L' `,' �-- Requested by Depaztment of: �1���. �� n�. � �� �' � �o ;r,�,� �J�� � ,���- By: 7 �°"`� ��•c/G" 2�— Form Appro by City Attomey By: C�--�� . �� �-- ��- P7 Approve by M or ub 's il By: Adopted by Cwncil: Date .,�., �'l �`�°�� Adopflon Certified by Council Secretary ° ('i - 10 � b OEPAATMENTlOFFICElCOUNCII OATE INITIATED Saint Paul Port Authority 8/15/97 GREEN SHEE N.° _ 13114 CONTAGT PEflSON & PHONE �` DEPARTMENT DIRE ❑ CITY COUNCIL �NITIALIDATE Peter M. Klein ASSIGN �CITYATfORNc1' �CmlCLERK MUST BE ON COUNCIL AGENDA BY (DATE) qOUTING � BUDGET DIFECiOR � FIN. & MGT. SERVICES DIR. August 27, 1997 (CONSENT AGEN " � MAYOR(ORASSISTAI�IT) � TOTAL # OP SIGNATURE PAGES (CLIP ALL LOCATIONS FOR SIGNATUR� ACTION REQUESTEQ: Approval of the issuance of an approximate $6,000,000 tas-exempt and taxable conduit bond issue to National Checking Company for the acquisition and eonstruetion of a new faeility of approximately 70,000 square feet in the Crosby Lake Business Park. RECOMMENDATIONS: Approve (A) or Reject (R) pERSONAL SERY{CE CONTRACTS MUST ANSWER THE FOLLOWING QUESTIONS: _ PLANNING COMMISS�ON _ qVIL SERVICE GOMMISSION 1. Has this personNirm ever worked under a contract for this department? A Port Authority ves No _ CIB COMMITTEE _ _ STAFF Bd. Of COID. Z, Has this persoNfirm ever been a ciry employee? — YES NO _ DiS7RlC7 COUR7 _ 3. Does ihis person/firm possess a skill not normally possessed by any current city employee? SUPPORTS WHICH COUNCIL O&IECTIVE7 YES NO Explain all yes answers on separate sheet antl attach to green sheet INITIATING PROBLEM. ISSUE, OPPORTUNITV (Who, What, When, Where, Why): The issuance of a bond issue will allow the construction of a new office and production facility in Crosby Lake Business Fark. AOVANTAGES IF APPROVED: As a result of the new office and production facility, it is anticipated that seven new jobs will be created in the first two years of operations. DISADVANTAGES IF APPROVED� None DISADVANTA6ES IF NOTAPPROVE�: The new jobs created by this new facility will not be ereated. TOTAL AMOUNT OFTRANSACTION $ 6� OOO � OOO COST/PEVENUE BUDGE7ED (CIRCLE ONE) VES NO Port Authority Tax-Exempt and — FUNDINGSOURCET Conduit Bond Issue ACTIVITVNUMBER FINANCIAL INFORMATION: (EXPLAIN) _ � �o u-r�,c�2 / �Iua-, �(�.-s. �— q � � '� �� ��w,� I ��.-- 21N OF THE CITY OF SAINT PAUL ,,,,,, ., ,....,.,ARK TOWERS • 345 ST. PEfER STREEf Ms. Pam Wheelock, Director Planning & Economic Development Department 1300 City Hall Annex 25 West Fourth Street St. Paul, Minnesota 55102 • ST. PAUL MN 55102-1661 August 13, 1997 FAX (612) 2235198 TOLL FREE (800) 328-8417 • PHONE (612) 224-5686 RE: $6,000,000 TAX-EXEMPT AND TAXABLE CONDUIT BOND ISSUE NATIONAL CHECKING COMPANY Dear Ms e�e�"�'� We submit for your review and referral to the office of the Mayor, City Council, and City Attorney's office, details pertaining to the issuance of a tax-exempt and taxable conduit bond issue in the approximate amount of $6,000,000 to finance the acquisition and construction of a new facility of approximately 70,000 square feet in the Crosby Lake Business Park, St. Paul, Minnesota. The Port Authority has received an industrial revenue bond allocation from the State of Minnesota Small lssue Pool, as the project is manufacturing. The Gity 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 revenue bond issue in the amount of $6,000,000 that will be considered by the Port Authority's Board on August 26, 1997. City Council action will be required after the Port Authority's Board meeting of August 26, 1997. Your expeditious handling of this matter will be appreciated. Sincerely, ��"'"`_.. Kenneth R. Johnson President KRJ:ak Attachment cc: Mayor Coleman g'flmkMakhePw.tloc SAINT PAUL PORT AUTHORITY �n�ror�vDi.rn�r TO: �'�u CREDIT COMMITTEE DATE: (August 19, 1997 Regular Credit Committee Meeting) Peter M. Klein t ^� Lorrie J. Louder Kenneth R.Johnson ��. 1oCo August13,1997 SUBJECT: NATIONAL CHECKING COMPANY-Authorization for an Approximate $6,000,000 Tau-Exempt and Taxable Bond Issue ACTION REQUESTED: Approval of final resolution authorizing the issuance of an approximate $6,000,000 conduit bond issue to National Checking Company. PROJECT SUMMARY: Estimated Amount: Type: Term: Issuer: Borrower: Trustee: Letter of Credit Bank: Placement Agents: Remarketing Agent: Borrower's Counsel: Placement Agents' Counsel: Letter of Credit Bank Counsel: Bond Counsel: $6,000,000 - Series A - $1,200,000 Tax-Exempt - Series B - $4,800,000 Taxabie Variable Rate Demand Industrial Development Revenue Bonds 20 Years Port Authority of the City of Saint Paul National Checking Company First Trust First Bank National Association Miller & Schroeder Financial, Inc. Piper Jaffray, Inc. Piper Jaffray, Inc. Doherty, Rumble & Butier Oppenhe+mer, Wolff & Donnelly Dorsey & Whitney Leonard, Street & Deinard National Checking Company Credit Committee Memo August 13, 1997 Page -2- BACKGROUND: a�-�° The Borrower. National Checking Company has purchased a site in the Crosby Lake Business Park for the construction of a new facility of approximately 70,000 square feet. The Bonds: The Bonds will be issued in the approximate principal amount of $6,000,000 and will bear interest at a variable rate established weekly by the Remarketing Agent. The maximum interest rate is 12% for the tax-exempt bond series and 18% for the taxable bond series. The Project: The proceeds of the Bonds will be loaned to the Borrower, and used to construct a new approximate 70,000 square foot office and production facility in the Saint Paul Port Authority's Crosby Lake Business Park. The availability of tax-exempt financing will enable National Checki�g Company to expand its present production capacity. As a result, new jobs will also be created to support the revenue and production increases. Employment Impact: Under the Port Authority's Workforce and Employment Agreement National Checking Company wili employ 65 full-time employees at the Crosby Lake facility. The company believes it will create 7 additional jobs in the first two years of operations at the new facility. As a result of the construction of this new office/production facility, National Checking has estimated that there will be an annual payroll increase of $140,000 per year when fully operational. Six of the seven additional jobs will Iikely be union positions paying a minimum of $11.00 per hour. The other position will be managerial. The Letter of Credit Bank: The initial letter of credit will be provided by First Bank National Association. Estimated Sources and Uses of Funds: Sources of Funds: Bond Proceeds Estimated Borrower Funds Total Sources of Funds Uses of Funds: Building Construction Estimated Costs of Issuance Total Uses of Funds $6,000,000 300 000 $6,300,000 $6,000,000 300.000 $6,300,000 �� National Checking Company Credit Committee Memo August 13, 1997 Page �- SECURITY FOR THE BONDS: " � Conduit Financinq; The bonds will be conduit financing of the Authority and will not constitute or give rise to a liability of the Authority, the City of Saint Paul or the State of Minnesota or a charge against their general credit or taxing powers. No bondholder will have the right to demand payment o4 the bonds out of any funds to be raised from t�ation or from any revenue sources other than those expressly pledged to payment of the bonds pursuant to the indenture. This includes the amounts drawn on the letter of credit and amounts payable by the borrower under the loan agreement. Loan Agreement: Under the indenture, the Authority has pledged its interest in the loan agreement to the trustee to secure the bonds. The trustee is authorized to exercise the rights of the Authority and to enforce the obligations of the borrower under the loan agreement. Letter of Credit: Payment of the principal amount and purchase price of the bonds, and up to approximately 50 days interest thereon (measured at the 12% maximum rate for the tax- exempt series and 18% for the taxabie series) will be secured initially by the initial letter of credit or, under certain circumstances a substitute letter of credit. The trustee is required to present a draft under the letter of credit to pay principal and interest when due on the bonds. The bonds are of sred primarily on the basis of the financial strength of the bank and not on the basis of the financial strength of the borrower. The letter of credit will have an initial term of one year, and will be renewable annually thereafter, unless the bank provides at least 45 days notice that it will not renew. If the letter of credit is not renewed or replaced, the bonds will be subject to mandatory redemption, and the trustee is instructed to draw on the letter of credit, before it expires, to pay principal and interest then due. DISCLOSURE: Port Authority Commissioners, by S.E.C. 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: Recommend approval of authorizing issuance of the approximate $6,000,000 conduit bond issue on behalf of National Checking Company. PMK:ak 9'Pmk�riatducutloc q�- �o�o Resolution No. RESOLUTION OF THE PORT AUTHORITY OF THE CITY OF SAINT PAUL ��I:f�:7�T.� 1. it has been proposed that the Port Authority of the City of Saint Paul (the "Port Authorit�') issue ifs Variable Rate Demand Industrial Development Revenue Bonds (National Checking Company Project) Series 1997A (the °Series A Bonds°) and its Ta�cable Variable Rate Demand Industrial Development Revenue Bonds (National Checking Company Project) Series 1997B (the "Series B Bonds" and together with the Series A Bonds, the "Bonds°) in an aggregate principal amount not to exceed $6,000,000, and that the proceeds of such Bonds be loaned to National Checking Company, a Minnesota corporation (the "Borrower�) to finance the ac and office facility (the "ProjecY') to be ovmed City of Saint Paul, Minnesota (the "City'). �quisition and construction of a manufacturing and operated initially by the Borrower in the 2. The Authority desires to facilitate the selective development of the City of Saint Paul and the metro east community, to retain and improve its tax base and to help it provide the range of services and employment opportunities required by its population, and the Project wiil assist in achieving that objective by increasing the assessed valuation of the metro east community; helping to maintain a positive relationship befinreen assessed valuation and debt; and enhancing the image and reputation of the metro east community. 3. The Project will result in additional employment opportunities in the City of Sa+nt Paul and the metro east community. 4. The Authority has been advised by representatives of the Company that long term conventional, commercial financing to pay the capital cost of the Project is availabie only on a limited basis and at such high costs of borrowing that the economic feasibility of operating the Project would be significantly reduced, and that it has been acting to date in anticipation that the Authority would favorably consider this financing proposal. 5. The Project and its financing has received an allocation of bonding authority from the State of Minnesota Department of Finance. 6. The Authority's Credit Committee and Board have previously adopted their Resolutions No. 28 and 3619, respectively giving preliminary approval to the proposed issuance of revenue bonds. A1- lo�o 7. Pursuant to the requirements of Section 147{fl of the Intemal Revenue Code of 1986, as amended, and pursuant to a notice published by the Port Authority not less than 15 days prior to the public hearing, a public hearing has been held on the date hereof on the issuance of the Bonds, at which public hearing all persons were given an opportunity to speak. 8. The Bonds will be issued and secured by the terms of an Indenture of Trust (the "indenture") between the Port Authority and First Trust National Association in St. Paul, Minnesota (the "Trustee") and will be payable primarily from draws made on an irrevocable letter of credit issued by U.S. Bank National Association (the °Credit Enhance�') pursuant to a Reimbursement Agreement to be dated as of September 1, 1997 between the Borrower and the Credit Enhancer (the "Letter of Credit AgreemenY'). 9. The Borrower and the Port Authority will also enter into a Loan Agreement (the "Loan AgreemenY') in which the Borrower wiil agree to maintain the Letter of Credit and make all payments due either to the Credit Enhancer or on account of the Bonds. 1Q. The Bonds and the interest on the Bonds shali be payable solely from the revenue pledged therefor and the Bonds shall not constitute a debt of the Port Authority within the meaning of any constitutional or statutory limitation of indebtedness, nor shall the Bonds constitute nor give rise to a pecuniary liability of the Port Authority or the City or a charge against their generai credit or taxing powers and shall not constitute a charge, lien or encumbrance, legal or equitable, upon any property of the Port Authority or the City other than their interest in said Project. 11. It is intended that interest on the Series A Bonds be excluded from gross income of the holders thereof for federal income tax purposes. NOW, THEREFORE, BE IT RESOLVED SY TNE BOARD OF COMMISSIONERS OF THE PORT AUTHORITY OF THE CITY OF SAINT PAUL, AS FOLLOWS: 1. On the basis of information available to the Port Authority it appears, and the Port Authority hereby finds, that: the Project constitutes properties, used or useful in connection with one or more revenue producing enterprises engaged in any business within the meaning of Minnesota Statutes, Sections 469.152 to 469.165 (the "Act"); the Project furthers 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 developmentto assistthe Company in financing the Project. 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 Project and its financing receive approval by the Department of Trade and Economic Development ("DTED"), the Port Authority hereby authorizes the issuance, sale and delivery of the Bonds in an aggregate principal amount not to exceed $6,000,000. Each Series of Bonds shall be in such principal amounts as shall be determined by the President z 9� - lo�b of the Port Authority and Bond Counsel, provided that the aggregate principal amount of Series A Bonds shall not exceed $1,200,000. The Bonds shall bear interest at such rates, shall be numbered, shall be dated, shall mature, shall be subject to redemption prior to maturity, and shall be in such form and have such other details and provisions as may be prescribed in the Indenture, substantially in the form now on file in the o�ces of the Port Authority. 3. Ne'dher the Bonds, nor the interest thereon, shall consfitute an indebtedness of the Port Authority or the City within the meaning of any constitutional or statutory debt limitation; nor shall they constitute or give rise to a pecuniary liability of the City, the Port Authority or a charge against their general ta�ting powers and neither the fuli faith and credit nor the general taxing powers of the City or the Port Authority is pledged to the payment of the Bonds or interest thereon. 4. Forms of the following documents have been submitted to the Port Authority for review and/or approval in connection with the sale, issuance and delivery of the Bonds: a. the Bond Placement Agreement to be entered into beiween the Port Authority, the Borrower and Piper Jaffray Inc. and Miller & Schroeder Financial, Inc. (collectively, the "Placement AgenY') (the "Bond Placement AgreemenY'); b. the indenture; c. the Loan Agreement dated as of September 1, 1997 to be entered into beiween the Port Authority and the Borrower; d. the Bonds; e. the Private Piacement Memorandum to be used in marketing the Bonds (the "Placement Memorandum"); f. the Remarketing Agreement dated as of September 1, 1997 to be entered into by and befinreen Piper Jaffray, Inc. (the "Remarketing AgenY') and the Borrower (the "Remarketing AgreemenY'); and g. the Letter of Credit Agreement, including a form of the Letter of Credit (collectively, the "Documents"). 5. It is hereby found, determined and deciared that: q1-lo`0 a. The issuance and sale of the Bonds, the execution and delivery by the Port Authority of the Documents and the performance of all covenants and agreements of the Port Authority contained in the 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 "AcY'); b. ft is desirable thaf the Bonds be issued by the Port Aufhority upon the general terms set forth in the Documents, as applicable; c. Under the provisions of and as provided in the Documents, fhe Bonds are not to be payable from or a charge upon any funds other than the revenues pledged to the payment thereof; no holder of the Bonds shall ever have the right to compel any exercise by the City or the Port Authority of its taxing powers to pay the Bonds or the interest or premium thereon, or to enforce payment thereof against any property of the City or the Port Authority except the interests of the Port Authority and the City which have been pledged to the Trustee under the Indenture; the Bonds shall not constitute a charge, lien or encumbrance, legal or equitable, upon any property of the City or the Port Authority except the interests of the Port Authority and the City which have been pledged to the Trustee under the Indenture; the Bonds shalf each recite that they are issued without moral obligat+on on the part of the State or its political subdivisions, and that the Bonds, including interest thereon, are payable sofely from the revenues piedged to the payment thereof; and the Bonds shall not constitute a debt of the City or the Port Authority within the meaning of any constitutionai or statutory limitation. 6. The forms of fhe Documents and exhibits thereto are approved substantiaily in the forms submitted and on file in the o�ces of Port Authority, with such subsequent changes as may be approved by Port Authority staff and Bond Counsel as contemplated by paragraph 8. The Chair and Secretary of the Port Authority, or such other officer as may be appropriate in the absence of either the Chair or Secretary, are hereby authorized and directed to execute the Documents (to the extent the Port Authority is a party thereto) in substantially the forms submitted, as modified pursuant to paragraph 8, and any other documents and certificates which in the opinion of Port Authority staff and Bond Counsel are necessary to the transaction herein described The execution of any instrument by the appropriate officer or officers of the Port Authority herein authorized shall be conclusive evidence of the approval of such docume�ts in accordance with the terms hereof. The execution of any documents necessary for the Vansaction herein described by individuals who were at the time of execution thereof the authorized o�cers of the Po�t Authority shall bind the Port Author+ty, notwithstandirtg that such individuals or any of them has ceased to hold such office or offices prior to the authentication and delivery of the Bonds. Copies of all of the documents necessary to the transaction described shall be delivered, filed and recorded as provided herein and in the Indenture. n a'1. to `o 7. The President and other officers of the Port Authority are authorized and directed to prepare and fumish to the Placement Agent and 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 showthe facts relating to the legality of the Bonds and the other transactions 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 certified copies, certificates and affidavits, including any heretofore fumished, shall constihlte representations of the Port Authority as to the fruth of all statements contained therein. 8. The approval hereby given to the various Documents referred to above includes approva! of such additional details therein as may be necessary and appropriate, and such modifications thereof, deletions therefrom and additions thereto as may be necessary and appropriate and approved by the Port Authority's President and Chief Financial O�cer; 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 for the initial period; roq vided thaf the maximum aggregate principal amount of the Series A Bonds shall not exceed $1,200,000, and the ma�mum aggregate principal amount of the Series A Bonds and the Series B Bonds together shall not exceed $6,000,000; and provided further that the maximum interest rate on the Series A Bonds shall not exceed 12.00% per annum, and the maximum interest rate on the Series B Bonds shall not exceed 18.00%; b. the establishment of the maturity schedule and cail provisions to be appiicable to the Bonds; and c. such related instruments as may be required to satisfy the conditions of any purchaser of the Bonds. 9. The Port Authority hereby consents to the distribution of the Placement Memorandum, as such Placement Memorandum is finalized with the participation of Port Authority staff and Bond Counsel. The proposal of the Piacement Agent to place the Bonds upon the terms and conditions set forth in the Bond Placement Agreement is hereby found and determined to be reasonable and is hereby accepted. 10. The authority to approve, execute and deliver future amendments to financing 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 do not require the consent of the holders of the Bonds; (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 Authority; and (d) such amendments are acceptable in form and substance to Bond Counsel. The execution of any instrument by s a'1-�oco the President of the Port Authority shall be conclusive evidence of the approval of such instruments in acxordance with the terms hereot. 11. 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 Author'ity, or any officer, agent or employee of the Port Authority in that persons individual capacity, and neither the Board of Commissioners nor any officer executing the Bonds shall be liable personally on the Bonds or be subject to any personal liability or acxountabil'�ty by reason of the issuance thereof. Adopted: Auqust 26. 1997 PORT AUTHORITY OF THE CiTY OF SAINT PAUL its Chair ATTEST: its Secretary , Council File # 9�t - lo�(� ° Green Sheet $ 1311 � RESOLUTION ITY OF SAtNT PAUL, MINNESOTA 3 � Presented B Re£erred T Committee: Date WHEREAS: 1. The Port Authority of the City of Saint Paul (the "Authority") has given its approvat to ihe issuance of up to $6,000,000 of iis Variable Rate Demand Industrial Oevelopment Revenue Bonds (National Checking Company Project) Series 1997A and Series 19976 (collectively the "Bonds"), to finance the costs to be incurred by National Checking Company in connection with the acquisition and construction of an office and manufacturing facility to be located in the City of Saint Paul, Minnesota (the "Project"); and 2. Laws of Minnesota 1976, Chapter 234, provides that any issue of revenue bonds authorized by the Authority shall be issued only with the consent of the City Council of the City of Saint Paul, by resolution adopted in accordance with law; and 3. Approval of the issuance of the proposed Bonds by the City Council is also required by Section 147(fl of the Internal Revenue Code of 1986, as amended; and 4. To meet the requirements of both state and federal law, the Port Authority has requested that the City Council gives its requisite approval to the issuance of the proposed Bonds by the Port Authority, subject to final approval of the details of said Bonds by the Port Authority. � . �('1- I D L O 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 Laws of Minnesota 1976, Chapter 234, 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 August 26, 1997, the exact details of which, including but not limited to, provisions relating to maturities, interest rates, discount, redemption, and the issuance of additional bonds are to be determined by the Port Authority, 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. By: I \ --._--__��. Approved by Mayor: Date �L 2 P(`+ �' g ` L' `,' �-- Requested by Depaztment of: �1���. �� n�. � �� �' � �o ;r,�,� �J�� � ,���- By: 7 �°"`� ��•c/G" 2�— Form Appro by City Attomey By: C�--�� . �� �-- ��- P7 Approve by M or ub 's il By: Adopted by Cwncil: Date .,�., �'l �`�°�� Adopflon Certified by Council Secretary ° ('i - 10 � b OEPAATMENTlOFFICElCOUNCII OATE INITIATED Saint Paul Port Authority 8/15/97 GREEN SHEE N.° _ 13114 CONTAGT PEflSON & PHONE �` DEPARTMENT DIRE ❑ CITY COUNCIL �NITIALIDATE Peter M. Klein ASSIGN �CITYATfORNc1' �CmlCLERK MUST BE ON COUNCIL AGENDA BY (DATE) qOUTING � BUDGET DIFECiOR � FIN. & MGT. SERVICES DIR. August 27, 1997 (CONSENT AGEN " � MAYOR(ORASSISTAI�IT) � TOTAL # OP SIGNATURE PAGES (CLIP ALL LOCATIONS FOR SIGNATUR� ACTION REQUESTEQ: Approval of the issuance of an approximate $6,000,000 tas-exempt and taxable conduit bond issue to National Checking Company for the acquisition and eonstruetion of a new faeility of approximately 70,000 square feet in the Crosby Lake Business Park. RECOMMENDATIONS: Approve (A) or Reject (R) pERSONAL SERY{CE CONTRACTS MUST ANSWER THE FOLLOWING QUESTIONS: _ PLANNING COMMISS�ON _ qVIL SERVICE GOMMISSION 1. Has this personNirm ever worked under a contract for this department? A Port Authority ves No _ CIB COMMITTEE _ _ STAFF Bd. Of COID. Z, Has this persoNfirm ever been a ciry employee? — YES NO _ DiS7RlC7 COUR7 _ 3. Does ihis person/firm possess a skill not normally possessed by any current city employee? SUPPORTS WHICH COUNCIL O&IECTIVE7 YES NO Explain all yes answers on separate sheet antl attach to green sheet INITIATING PROBLEM. ISSUE, OPPORTUNITV (Who, What, When, Where, Why): The issuance of a bond issue will allow the construction of a new office and production facility in Crosby Lake Business Fark. AOVANTAGES IF APPROVED: As a result of the new office and production facility, it is anticipated that seven new jobs will be created in the first two years of operations. DISADVANTAGES IF APPROVED� None DISADVANTA6ES IF NOTAPPROVE�: The new jobs created by this new facility will not be ereated. TOTAL AMOUNT OFTRANSACTION $ 6� OOO � OOO COST/PEVENUE BUDGE7ED (CIRCLE ONE) VES NO Port Authority Tax-Exempt and — FUNDINGSOURCET Conduit Bond Issue ACTIVITVNUMBER FINANCIAL INFORMATION: (EXPLAIN) _ � �o u-r�,c�2 / �Iua-, �(�.-s. �— q � � '� �� ��w,� I ��.-- 21N OF THE CITY OF SAINT PAUL ,,,,,, ., ,....,.,ARK TOWERS • 345 ST. PEfER STREEf Ms. Pam Wheelock, Director Planning & Economic Development Department 1300 City Hall Annex 25 West Fourth Street St. Paul, Minnesota 55102 • ST. PAUL MN 55102-1661 August 13, 1997 FAX (612) 2235198 TOLL FREE (800) 328-8417 • PHONE (612) 224-5686 RE: $6,000,000 TAX-EXEMPT AND TAXABLE CONDUIT BOND ISSUE NATIONAL CHECKING COMPANY Dear Ms e�e�"�'� We submit for your review and referral to the office of the Mayor, City Council, and City Attorney's office, details pertaining to the issuance of a tax-exempt and taxable conduit bond issue in the approximate amount of $6,000,000 to finance the acquisition and construction of a new facility of approximately 70,000 square feet in the Crosby Lake Business Park, St. Paul, Minnesota. The Port Authority has received an industrial revenue bond allocation from the State of Minnesota Small lssue Pool, as the project is manufacturing. The Gity 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 revenue bond issue in the amount of $6,000,000 that will be considered by the Port Authority's Board on August 26, 1997. City Council action will be required after the Port Authority's Board meeting of August 26, 1997. Your expeditious handling of this matter will be appreciated. Sincerely, ��"'"`_.. Kenneth R. Johnson President KRJ:ak Attachment cc: Mayor Coleman g'flmkMakhePw.tloc SAINT PAUL PORT AUTHORITY �n�ror�vDi.rn�r TO: �'�u CREDIT COMMITTEE DATE: (August 19, 1997 Regular Credit Committee Meeting) Peter M. Klein t ^� Lorrie J. Louder Kenneth R.Johnson ��. 1oCo August13,1997 SUBJECT: NATIONAL CHECKING COMPANY-Authorization for an Approximate $6,000,000 Tau-Exempt and Taxable Bond Issue ACTION REQUESTED: Approval of final resolution authorizing the issuance of an approximate $6,000,000 conduit bond issue to National Checking Company. PROJECT SUMMARY: Estimated Amount: Type: Term: Issuer: Borrower: Trustee: Letter of Credit Bank: Placement Agents: Remarketing Agent: Borrower's Counsel: Placement Agents' Counsel: Letter of Credit Bank Counsel: Bond Counsel: $6,000,000 - Series A - $1,200,000 Tax-Exempt - Series B - $4,800,000 Taxabie Variable Rate Demand Industrial Development Revenue Bonds 20 Years Port Authority of the City of Saint Paul National Checking Company First Trust First Bank National Association Miller & Schroeder Financial, Inc. Piper Jaffray, Inc. Piper Jaffray, Inc. Doherty, Rumble & Butier Oppenhe+mer, Wolff & Donnelly Dorsey & Whitney Leonard, Street & Deinard National Checking Company Credit Committee Memo August 13, 1997 Page -2- BACKGROUND: a�-�° The Borrower. National Checking Company has purchased a site in the Crosby Lake Business Park for the construction of a new facility of approximately 70,000 square feet. The Bonds: The Bonds will be issued in the approximate principal amount of $6,000,000 and will bear interest at a variable rate established weekly by the Remarketing Agent. The maximum interest rate is 12% for the tax-exempt bond series and 18% for the taxable bond series. The Project: The proceeds of the Bonds will be loaned to the Borrower, and used to construct a new approximate 70,000 square foot office and production facility in the Saint Paul Port Authority's Crosby Lake Business Park. The availability of tax-exempt financing will enable National Checki�g Company to expand its present production capacity. As a result, new jobs will also be created to support the revenue and production increases. Employment Impact: Under the Port Authority's Workforce and Employment Agreement National Checking Company wili employ 65 full-time employees at the Crosby Lake facility. The company believes it will create 7 additional jobs in the first two years of operations at the new facility. As a result of the construction of this new office/production facility, National Checking has estimated that there will be an annual payroll increase of $140,000 per year when fully operational. Six of the seven additional jobs will Iikely be union positions paying a minimum of $11.00 per hour. The other position will be managerial. The Letter of Credit Bank: The initial letter of credit will be provided by First Bank National Association. Estimated Sources and Uses of Funds: Sources of Funds: Bond Proceeds Estimated Borrower Funds Total Sources of Funds Uses of Funds: Building Construction Estimated Costs of Issuance Total Uses of Funds $6,000,000 300 000 $6,300,000 $6,000,000 300.000 $6,300,000 �� National Checking Company Credit Committee Memo August 13, 1997 Page �- SECURITY FOR THE BONDS: " � Conduit Financinq; The bonds will be conduit financing of the Authority and will not constitute or give rise to a liability of the Authority, the City of Saint Paul or the State of Minnesota or a charge against their general credit or taxing powers. No bondholder will have the right to demand payment o4 the bonds out of any funds to be raised from t�ation or from any revenue sources other than those expressly pledged to payment of the bonds pursuant to the indenture. This includes the amounts drawn on the letter of credit and amounts payable by the borrower under the loan agreement. Loan Agreement: Under the indenture, the Authority has pledged its interest in the loan agreement to the trustee to secure the bonds. The trustee is authorized to exercise the rights of the Authority and to enforce the obligations of the borrower under the loan agreement. Letter of Credit: Payment of the principal amount and purchase price of the bonds, and up to approximately 50 days interest thereon (measured at the 12% maximum rate for the tax- exempt series and 18% for the taxabie series) will be secured initially by the initial letter of credit or, under certain circumstances a substitute letter of credit. The trustee is required to present a draft under the letter of credit to pay principal and interest when due on the bonds. The bonds are of sred primarily on the basis of the financial strength of the bank and not on the basis of the financial strength of the borrower. The letter of credit will have an initial term of one year, and will be renewable annually thereafter, unless the bank provides at least 45 days notice that it will not renew. If the letter of credit is not renewed or replaced, the bonds will be subject to mandatory redemption, and the trustee is instructed to draw on the letter of credit, before it expires, to pay principal and interest then due. DISCLOSURE: Port Authority Commissioners, by S.E.C. 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: Recommend approval of authorizing issuance of the approximate $6,000,000 conduit bond issue on behalf of National Checking Company. PMK:ak 9'Pmk�riatducutloc q�- �o�o Resolution No. RESOLUTION OF THE PORT AUTHORITY OF THE CITY OF SAINT PAUL ��I:f�:7�T.� 1. it has been proposed that the Port Authority of the City of Saint Paul (the "Port Authorit�') issue ifs Variable Rate Demand Industrial Development Revenue Bonds (National Checking Company Project) Series 1997A (the °Series A Bonds°) and its Ta�cable Variable Rate Demand Industrial Development Revenue Bonds (National Checking Company Project) Series 1997B (the "Series B Bonds" and together with the Series A Bonds, the "Bonds°) in an aggregate principal amount not to exceed $6,000,000, and that the proceeds of such Bonds be loaned to National Checking Company, a Minnesota corporation (the "Borrower�) to finance the ac and office facility (the "ProjecY') to be ovmed City of Saint Paul, Minnesota (the "City'). �quisition and construction of a manufacturing and operated initially by the Borrower in the 2. The Authority desires to facilitate the selective development of the City of Saint Paul and the metro east community, to retain and improve its tax base and to help it provide the range of services and employment opportunities required by its population, and the Project wiil assist in achieving that objective by increasing the assessed valuation of the metro east community; helping to maintain a positive relationship befinreen assessed valuation and debt; and enhancing the image and reputation of the metro east community. 3. The Project will result in additional employment opportunities in the City of Sa+nt Paul and the metro east community. 4. The Authority has been advised by representatives of the Company that long term conventional, commercial financing to pay the capital cost of the Project is availabie only on a limited basis and at such high costs of borrowing that the economic feasibility of operating the Project would be significantly reduced, and that it has been acting to date in anticipation that the Authority would favorably consider this financing proposal. 5. The Project and its financing has received an allocation of bonding authority from the State of Minnesota Department of Finance. 6. The Authority's Credit Committee and Board have previously adopted their Resolutions No. 28 and 3619, respectively giving preliminary approval to the proposed issuance of revenue bonds. A1- lo�o 7. Pursuant to the requirements of Section 147{fl of the Intemal Revenue Code of 1986, as amended, and pursuant to a notice published by the Port Authority not less than 15 days prior to the public hearing, a public hearing has been held on the date hereof on the issuance of the Bonds, at which public hearing all persons were given an opportunity to speak. 8. The Bonds will be issued and secured by the terms of an Indenture of Trust (the "indenture") between the Port Authority and First Trust National Association in St. Paul, Minnesota (the "Trustee") and will be payable primarily from draws made on an irrevocable letter of credit issued by U.S. Bank National Association (the °Credit Enhance�') pursuant to a Reimbursement Agreement to be dated as of September 1, 1997 between the Borrower and the Credit Enhancer (the "Letter of Credit AgreemenY'). 9. The Borrower and the Port Authority will also enter into a Loan Agreement (the "Loan AgreemenY') in which the Borrower wiil agree to maintain the Letter of Credit and make all payments due either to the Credit Enhancer or on account of the Bonds. 1Q. The Bonds and the interest on the Bonds shali be payable solely from the revenue pledged therefor and the Bonds shall not constitute a debt of the Port Authority within the meaning of any constitutional or statutory limitation of indebtedness, nor shall the Bonds constitute nor give rise to a pecuniary liability of the Port Authority or the City or a charge against their generai credit or taxing powers and shall not constitute a charge, lien or encumbrance, legal or equitable, upon any property of the Port Authority or the City other than their interest in said Project. 11. It is intended that interest on the Series A Bonds be excluded from gross income of the holders thereof for federal income tax purposes. NOW, THEREFORE, BE IT RESOLVED SY TNE BOARD OF COMMISSIONERS OF THE PORT AUTHORITY OF THE CITY OF SAINT PAUL, AS FOLLOWS: 1. On the basis of information available to the Port Authority it appears, and the Port Authority hereby finds, that: the Project constitutes properties, used or useful in connection with one or more revenue producing enterprises engaged in any business within the meaning of Minnesota Statutes, Sections 469.152 to 469.165 (the "Act"); the Project furthers 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 developmentto assistthe Company in financing the Project. 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 Project and its financing receive approval by the Department of Trade and Economic Development ("DTED"), the Port Authority hereby authorizes the issuance, sale and delivery of the Bonds in an aggregate principal amount not to exceed $6,000,000. Each Series of Bonds shall be in such principal amounts as shall be determined by the President z 9� - lo�b of the Port Authority and Bond Counsel, provided that the aggregate principal amount of Series A Bonds shall not exceed $1,200,000. The Bonds shall bear interest at such rates, shall be numbered, shall be dated, shall mature, shall be subject to redemption prior to maturity, and shall be in such form and have such other details and provisions as may be prescribed in the Indenture, substantially in the form now on file in the o�ces of the Port Authority. 3. Ne'dher the Bonds, nor the interest thereon, shall consfitute an indebtedness of the Port Authority or the City within the meaning of any constitutional or statutory debt limitation; nor shall they constitute or give rise to a pecuniary liability of the City, the Port Authority or a charge against their general ta�ting powers and neither the fuli faith and credit nor the general taxing powers of the City or the Port Authority is pledged to the payment of the Bonds or interest thereon. 4. Forms of the following documents have been submitted to the Port Authority for review and/or approval in connection with the sale, issuance and delivery of the Bonds: a. the Bond Placement Agreement to be entered into beiween the Port Authority, the Borrower and Piper Jaffray Inc. and Miller & Schroeder Financial, Inc. (collectively, the "Placement AgenY') (the "Bond Placement AgreemenY'); b. the indenture; c. the Loan Agreement dated as of September 1, 1997 to be entered into beiween the Port Authority and the Borrower; d. the Bonds; e. the Private Piacement Memorandum to be used in marketing the Bonds (the "Placement Memorandum"); f. the Remarketing Agreement dated as of September 1, 1997 to be entered into by and befinreen Piper Jaffray, Inc. (the "Remarketing AgenY') and the Borrower (the "Remarketing AgreemenY'); and g. the Letter of Credit Agreement, including a form of the Letter of Credit (collectively, the "Documents"). 5. It is hereby found, determined and deciared that: q1-lo`0 a. The issuance and sale of the Bonds, the execution and delivery by the Port Authority of the Documents and the performance of all covenants and agreements of the Port Authority contained in the 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 "AcY'); b. ft is desirable thaf the Bonds be issued by the Port Aufhority upon the general terms set forth in the Documents, as applicable; c. Under the provisions of and as provided in the Documents, fhe Bonds are not to be payable from or a charge upon any funds other than the revenues pledged to the payment thereof; no holder of the Bonds shall ever have the right to compel any exercise by the City or the Port Authority of its taxing powers to pay the Bonds or the interest or premium thereon, or to enforce payment thereof against any property of the City or the Port Authority except the interests of the Port Authority and the City which have been pledged to the Trustee under the Indenture; the Bonds shall not constitute a charge, lien or encumbrance, legal or equitable, upon any property of the City or the Port Authority except the interests of the Port Authority and the City which have been pledged to the Trustee under the Indenture; the Bonds shalf each recite that they are issued without moral obligat+on on the part of the State or its political subdivisions, and that the Bonds, including interest thereon, are payable sofely from the revenues piedged to the payment thereof; and the Bonds shall not constitute a debt of the City or the Port Authority within the meaning of any constitutionai or statutory limitation. 6. The forms of fhe Documents and exhibits thereto are approved substantiaily in the forms submitted and on file in the o�ces of Port Authority, with such subsequent changes as may be approved by Port Authority staff and Bond Counsel as contemplated by paragraph 8. The Chair and Secretary of the Port Authority, or such other officer as may be appropriate in the absence of either the Chair or Secretary, are hereby authorized and directed to execute the Documents (to the extent the Port Authority is a party thereto) in substantially the forms submitted, as modified pursuant to paragraph 8, and any other documents and certificates which in the opinion of Port Authority staff and Bond Counsel are necessary to the transaction herein described The execution of any instrument by the appropriate officer or officers of the Port Authority herein authorized shall be conclusive evidence of the approval of such docume�ts in accordance with the terms hereof. The execution of any documents necessary for the Vansaction herein described by individuals who were at the time of execution thereof the authorized o�cers of the Po�t Authority shall bind the Port Author+ty, notwithstandirtg that such individuals or any of them has ceased to hold such office or offices prior to the authentication and delivery of the Bonds. Copies of all of the documents necessary to the transaction described shall be delivered, filed and recorded as provided herein and in the Indenture. n a'1. to `o 7. The President and other officers of the Port Authority are authorized and directed to prepare and fumish to the Placement Agent and 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 showthe facts relating to the legality of the Bonds and the other transactions 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 certified copies, certificates and affidavits, including any heretofore fumished, shall constihlte representations of the Port Authority as to the fruth of all statements contained therein. 8. The approval hereby given to the various Documents referred to above includes approva! of such additional details therein as may be necessary and appropriate, and such modifications thereof, deletions therefrom and additions thereto as may be necessary and appropriate and approved by the Port Authority's President and Chief Financial O�cer; 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 for the initial period; roq vided thaf the maximum aggregate principal amount of the Series A Bonds shall not exceed $1,200,000, and the ma�mum aggregate principal amount of the Series A Bonds and the Series B Bonds together shall not exceed $6,000,000; and provided further that the maximum interest rate on the Series A Bonds shall not exceed 12.00% per annum, and the maximum interest rate on the Series B Bonds shall not exceed 18.00%; b. the establishment of the maturity schedule and cail provisions to be appiicable to the Bonds; and c. such related instruments as may be required to satisfy the conditions of any purchaser of the Bonds. 9. The Port Authority hereby consents to the distribution of the Placement Memorandum, as such Placement Memorandum is finalized with the participation of Port Authority staff and Bond Counsel. The proposal of the Piacement Agent to place the Bonds upon the terms and conditions set forth in the Bond Placement Agreement is hereby found and determined to be reasonable and is hereby accepted. 10. The authority to approve, execute and deliver future amendments to financing 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 do not require the consent of the holders of the Bonds; (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 Authority; and (d) such amendments are acceptable in form and substance to Bond Counsel. The execution of any instrument by s a'1-�oco the President of the Port Authority shall be conclusive evidence of the approval of such instruments in acxordance with the terms hereot. 11. 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 Author'ity, or any officer, agent or employee of the Port Authority in that persons individual capacity, and neither the Board of Commissioners nor any officer executing the Bonds shall be liable personally on the Bonds or be subject to any personal liability or acxountabil'�ty by reason of the issuance thereof. Adopted: Auqust 26. 1997 PORT AUTHORITY OF THE CiTY OF SAINT PAUL its Chair ATTEST: its Secretary