The URL can be used to link to this page

97-18R �� _ `_ g -� ` Council File # -- p �., f j, p " I-; f " ' " ` ` ' ' ' ` Green Sheet # RESOLUTION CITY Q� SA„INT $�UL, MINNESOTA Presented By Referred To 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 35 36 37 38 39 40 41 42 43 44 45 46 47 48 Committee: � i , 1� Wt�REAS, a group of Minnesota investors have submitted an application for an NHL expansion team for consideration by the National Hockey League Board of Governors on January 13, 1997, to play in a renovated Saint Paul Civic Center, and WHEREAS, the Council sees professional hockey as an economic and community enhancement to the City of Saint Paul and the larqer metropolitan area, and WHEREAS, the twenty-three year old Saint Paul Civic Center Arena is in need of significant improvements in order to maintain a competitive position in the � marketplace, to bring the facility up to NHL standards, generate needed revenue, as well as attract additional non-hockey events to a renovated facility, and WHEREAS, the City Council has directed staff to develop lease terms and a plan of finance in anticipation that a NHL franchise team will be awarded to the investor group to play hockey in a renovated Saint Paul Civic Center, and WHEREAS, the Arena renovations are currently estimated to consist of major improvements as outlined in a recently completed Conceptual Design by HOK Architects dated December 15, 1996 with an estimated cost of $51 million (excluding capitalized intezest and cost of £inancing), and WHEREAS, the proposed Arena improvements include the following: * Addition of up to 63 12-person luxury suites * Addition of seats to bring total seats for NHL games to 18,000 * Addition of Arena club restaurant and bar * Widening of concourses on both ends of the Arena * Enhanced architectural exterior * Addition of Team Store * Addition of Team Offices * New sound system and scoreboard with video panels * Additional and improved restrooms, concessions and novelty stands WHEREAS, the City intends to issue bonds to finance the necessary Arena renovations, and WIiEREAS, the City anticipates it will need approximately $5.7 million per year, as described in the Plan of Finance, to fund the annual debt service on the aforementioned bonds, and WHEREAS, the Proposed Term Sheet outlines a plan of finance which would allow the City and Civic Center Authority to accomplish the needed arena renovations using funds generated by the team without reliance on property taxes, and THEREFORE, BE IT RE50LVED that the of£icials of the City of Saint Paul do hereby approve the attached Term of Lease for an NHL expansion or relocation team, including the enclosed plan of finance and authorize staff to execute a binding letter of intent consistent with these terms, and � (_ 2 -rf? � 2 3 4 5 6 7 8 9 10 11 ia 13 14 15 16 17 18 19 20 21 22 �� BE IT FURTHER RESOLVED that after the granting of a NHL franchise and contingent upon approval of the Saint paul Civic Center Authority, the officials of the City of Saint Paul do hereby approve the proposed Conceptual Design of the Saint Paul Civic Center improvements done by HOK Architects dated December 15, 1996, and 8E IT FINALLY RESOLVED that the officials of the City of Saint Paul do hereby direct staff to do the following : 1. Engage HOK Architects to conduct formal Design Review for the i.mprovements to the Arena. 2. Engage an engineering firn to evaluate the existing condition of the arena to determine necessary maintenance and improvements anticipated during the term of the lease. 3. Engage necessary services to represent the City during the 1997 legislative session in order to secure approval of the reinvestment of State Income Tax and Corporate Franchise revenues for purposes of financing Arena renovations. 4. Develop a plan of finance for deferred maintenance of the Arena, which are items of improvements such as asbestos removal, not covered in the abovementioned improvements identified by HoK Architects. 5. All ouf of reimbursed to ecC t costs to be er or the 4 will be to a maxi� the 6. Explore some form of public ownership of the NHL Team FINALLY RESOLV an award of an e with a financing ogtion that is a revenue bond without a ement Requested by Department of: By: Adopted by Council : Date cf,rr .� ��,� 1 Adoption Certified by Council Secretary E� Appr By: ^ tF� � � al 0 er Form Approved by City Attorney BY: � �.�.� �. , l�� '1 �/ I Approved by Mayor for Submission to Council -o, By: id with other : Saint q� ��' nn��h [ V V u/ v �"� N� oA��NmA�o GREEN SHEET Office of the Ci CauncIl 1-02-97 COtdTACT PEFSpN & PNONE INRIAUDATE 1NR1ALIDATE ODEPARThIENTDIRECTOR �CRYCOUNqL Councilmember Bostrom 266-8660 pS51GN � CfiYATfORNEY � CRV CLERK MUST BE ON CpUNCIL AGENDA BY (DATE) AOUi1NG� O BUOGEf DIliECTOR � FIN. 8 MGT. SERVICES DIP. J3I1�73Ty 8 1997 OHOEH Q MAYOR (OR ASSISTANn ❑ TOTAL # OF SIGNATURE PAGES (CLIP ALL LOCATIONS FOR SICaNATURE) ACflON REQUESTED: Approving a Term of Lease for an NHL eJCpansion or relocarion team including a plan of finance and authorizing staff to execute a binding letter of intent. RECAMMENOA710NS: Approve (n) or Rejeet (R) PEFiSONAL SERVICE CONTHACTS MUST ANSWER TNE FOLLOWING QUESTIONS: _ PLANNINC� CAMMISSIQN _ CIVIL SERVICE CAMMISSION �� Has this person/Firm ever worked under a contract for this department? _ CIB COMMITTEE YES �NO _ STAFF ' Z. Hes Mi5 person/firm eVer been a city employ88? — YES NO _ DISTFiIC7 COUR7 _ 3. Does this persoNfirm possess a skill not normall y possessed by any current ciry employee? SUPPORTS WHICH COUNCII O&IECTIYE? YES N� Expla�� all yes answers on separete sheet and ettech to green sheet INITIATING PqOBLEM, ISSUE, OPPORTUNITY (Who. What, Whan, Where, Why): ADVANTAGESIFAPPROVED: DISADVANTAGES IF APPROVED. DISADVANTAGES IF NOTAPPROVED TO7AL AMOUNT OF TRANSACTION $ GOST/HEVENUE BUDGETED (CIFCLE ONE) YES NO FUNDIfBG SOURCE ACTIVITY NUMBER FINANCIAL INFORFnAT10N: (EXPLAIN) . ��-}8' I-� % �ERM SH&ET ior Lease o£ ST. P�t7L CT42C G'E�TEA ARF. (� ) ��._:�. � ----� u�� 1_ 2 3. 4. QPERTyY08 wy1= be the Seint Pavl Civ1c Cer_ter ALtY:ority (Authority) , and OFStt'3R will b� the City cf Sair_L ?au1 {City). zEPi�.NT svi�l be the D?;?:, expansion ^'=�z �e�m rep:esented by the znvestor group (Team}. �-3� =&"�..s:ISES wi11 be the curr�n� Arena and all �quipment nECess�zy icr =he ccnduct ot N'�FL games, inaluding: (A) Cy:rrenc ?5,5SQ �=_;r_s, inclt;;�ng 1,ZC0 club s°oats i3) Gti,irzent 0 suites - fC) Renovzt=_3 P.rena for N?�, GamFs, as prcvi3ed ia ��§ Paraarava 8 h;lo�.r� i: c7.uding Tea:n SLO=� znd Tea:n OfPices (D) Acee5s to al: ot.�er spaces incid?ntal to conducta.n.g the businass o� a� NF;i, team or_ � c�e and non-� 4ame days, inciudina Icoker roon s�:� and bnx o'_£ice (bax office ren.ains unde_ the supzz and coatrol oP th2 OPERATCR st:b�ect to the Term Sreet). TSHM OB LEA5E: Te_^.n of '_�:,�� Lease wi11 bz equal to the term of the bonds �__a_� �-- zssued *ay the City to finance !or zefivane� the j�rcna u� for � term up to 2o years) fsaid boads taaetb.er with aatr raZU�din,t bonda the Bondsl. Tea� sha7.Z nave th2 rig�!t aftier t�e first t,e�s ears of tha �ase to Fre z-��t re sired to ischar e outstandi: �$cra�s {inolu�_ng any related prerai.ixm or early retirement penalty assaciated with pre-paynant). �.e�n ,,;,, �. ___----' � -- zT3 � �2�P-6=izi�,=�n� puZpose ef and playof �t�� l�ya-1ti� cf t'r.e :�re=.a ID Wlll tease .�'.:?Ild �or the �ar,ks (hom� regvlar seascn t�r1L sezso: or soor_er, s.ioject Co availahility �ne Arena renovation schedule and whEn the II'rII, 3C'. :t.r.ED vs to v� 1�ereT �� -�� I-� ex_pects thz Frzr_chise to beain play_ Tezm reloCata the Team from the Areaa �=-.,:� - -- haye beeu d_ i, s�aec3. =��L �:�oaocasc ana mercnanazsi r2c2ivEd �y Crie Team '-"ar`-nu�a from local brc3nca6t Ioc�I i,r, c�1a and radi�) �� 5. Su�71i IZEVFZvTiES AND E.T.PEl75E5 - CO*7'(�„°PTCt�L OY.7z..RVZESP: {�) T"zm x ti�nu�s. The Tean c.ill ;:cntrol zr3 retain 10�% cE �rena revanues derive3 from regn].ar seasen znd �layof: hockey gaaes (Tea*n Are:�a FcevenLeS) , and 100a o€ th= :ea«< rever_ues derived,from other oo2rations, all er.c=p� as pravidEd in this Ter.n Sheet (Tea� 8=venues). "°� T� .�rcna �s� Revenues inclnde; {1. ) Sa3es ci `_ic',-_ets icr A'?iL GaneS _�excludina £aeilitv - ticket surch�reel (2•) sa'es o£ t_ckz*s for cl� seats for N�IL Games S °dClll�ri t.IC�O� SL:=C�3rQB� {3 • T sales of l��r� suites fcr use at ?,'HL Games {q ,} 3ro;,� � g �hare of co _e�ssioZ sal�s fcr I»I, Gacnes {5.� C=_m�orary a �V°Tt].Eiila r?J2,t1E5 (CIcS::�T �SCdTC�S� on-ice advertisin�, video boards} realizEd by Team ia connecrion �rith N� G�es (6_} nerchandisir_g revenues realized by Team prom sales a:. �'Hi, G�nes and aL aZ1 at�=r ti:*.eo at t<e Team's ret�il �� e� in ty,o psena a^,d else+ahere (7.) p revenues realized by ta2 Team fra:n sales at isHS, Games and elsewhere (8.) net parking revenue� c3erived fram � 2,400 oE the City-cont_olled ranro and surPace parking spaces7 �--� available for sele at I�AL Games (or a¢,�, (9 . ) f10.) t1i_� will agree not �o �---s.� tzale� Bo.^_.a.s es revznue9 of NI?I, games {e•g- a_ other rez•enues dez�ved fraue operztions af the TEam's businsss outsi@e o£ the �era (H) Citv x�e-�a R�Vcn�ipq mi�ye Ci�y sha1Z bs er to aZl other reti�enues d=rived 'rom t?�e Asena, ot�ar than T2sm Arena A,?V27111°Sr 1P_C�t1�1?!� r°�-'-'=e��`. �l'.tic:�.iS�It�� 213tIL2A� rigrts, outdoor m=_r��es, ar.d �c�-�.�'� GaT� e:�e�±s in t�lE AY?R3 (NOn-Hacke $V@^�S� � <��2Ct t`.0 s�d..r��'Z'� hg " 5 (�1 and {G� _ y P {C) ^eam rre: - F;co nscs, i� Team will t:c Gi�� ii} tina aci.ual op� e�:�e�sas _ :c::rre3 £or tTzZ Ga�?s�in or reimtrsrHe '-----" `^-��--"=c° �:-�-LtCi:�1y 23L1[7`RC2C1 d� T16�G00 f02 C7 of ga:�� sc�>ici .� �.:d $4, GGO ior gana pres2ntation c,.,,o„��-� r, < i � -- r""-�" "�'r �� " ac"ttiaZ aLeratioa and 3L�'17,a�n vti co vi �iar9r �� -t� �-�^�� mainte�ance exa�nges a7.loeab2e to the Tea� Of£iCes� Team &tore and occucancy of other areas ef t�xe p.rena �:sed by the Team, such as the ticket office {ir_clu3ir.g furniture, fixtures, and egsipment), a�d (iii) ar�, r°quireH payntents of � genErally applicable Qales tax �^d S,� faci=ity �icket 6urcharge. (�) Citv Ar�:a E ine Anthority shsll manage, �F�=��= z�d :naintain the 3areaa consi t��t Ki 1i ��arable X-!T. facilities, incluaing making all a -�� capital repairs and replacements a� an when exner_se o creat= a (A_Eaa C be Punds agre=rr_ert a1Z at tha pital r.placement repair a:.d resarve�Eund�+ tal P,eoair z'zd Perl��ement r�s��Q gund), �o rnm r; r-.. r�.___ .,____ � �� - -- - � �u=ucrzzv oaiv. _m� City and the Auth�rity will det=rmin� the annual cn_nicram coni.r:.�ution as a resulr o£ an engineering �,-��lysis conducte3 by the City. ':'he annual minir.ru� contribution is expected to be $500,000. The City �--?� �� ree to guarancee the pay�nt and pe:formance of �he �'€'�z ��e= -�r-�'.,� Authoritv's oblioatioaa un,3�r �his suhtiasavraph (D?. (E) Fsena C�e =or I�riL ames, ThiS Tex�f Sheet aesumes. that t'ae :�uthority c:iZ� operate the 3lrena for :�,' U'dTES_ 'i!':2 A*Stllp_1�]Y ki11 use its best effarts to r :ean ;,rena gxpazses. Z"r_e C_ty and Au_YOrity ir_tend for t��E Arana to b° cperated in a coet effj.cient man.ner fcr N:'?, G3'.a_5. Th�_efore, the CiL,v �,3 �uthority will n=_tiotiate in ,c60� �aith with the to uTheth2? th= Te=_m shculd r, a11 or part o P_reP.d OD?T3t.107iS fc2' N'r3T, C-8:fr°S Ly�OT! �ECZ1`l a proposal irom the Team o��tlining :he prcYCSeB relationships of roles and resper.sibi:it=es for Games. (F; Team as f the Wrl, �t2R the T�I, '- ' —' - nCLL V Yc Bonds. Ttie City antici�ar2� that it wil? rsed aporoxi:r�ately $3.95 million �er y�ar pu� �_ �Frtai= Areaa ravam„ES, or frocn tri� Team _£ suc?: re;-cn�es flpw fiir�c'cly to tY.e TEam, to fund a=�star_tial � ef �ne estir:,:Led y�, 7 millier, a�tr_�al debt ser.�ice on th2 �ares. upon r.utual agreemen; �=-_� betu�� ts:e r_t �_� =n3 _ean, the a;r�ount of $3.95 �ill�on per cear to ccve= par� of the d�bt sareice wi�l bs covere3 i= c:�e �� =�irce c;ays, all ef w�,ich come frcm Team 345741.�� Vg to v1 1/B!gT `�� '_�-`�� 2• Th� Team will sell zn3 Lne proceeas of th= m�z� G°_�srated rre,a _..+ Reaovatien FLnds. �ha T_=m wiZZ tr� as rea L:�er the }2j� Lease vg to th_A f;rst $3.97 y million per year of suCh re��er�es to t'�2 nurhority. 3 • `!"-_= Tea:ri w_11 sell axid r��--�� u: cne i��am cenerated Arena ` Rer��•atio� E`ands. '?'ha 'rean wi11 glarar_tee a ray-:ent of S3 . 95 mi'! lion an.^_ua11y �5 rent vndar the 3�� L�ea� to the F�utncrity,�rEgarc�less of the a�ount of Team Geaerated Arzna 3=uzcvation Buncs- Ge:.erated Arer� Rere3ue sa�� fwacls which would x�at exist in t�e absP.*tce of the Team; 1. T�= i�uthori�y will sell �+�d ��z. �,�„E B r ��- �r the naming rights7 � Per�nanent ad��rtising {including r..ew r,�rq�,:.ee(s) 7, and Y.rill setain ecatrol oP the sale araceeds �nd the --��iy ��cilaty tickeC surcnarge :avanues far r�.+ �ar?s (Tean Gcnerated Arena Re,zcvation Funds}. �L, -, -«�-----' 1- t��i �u:zr.— - � . _ - - iG) __ __ :: ru_t' � - �TLcr ii0 C2S '-" Pz��• �f the ?ends are �aid o�f earlizr than the schedul=3 repay�ea� or at the end of tN�e r_c= repay�nt sehedule, the �uthori�y shall receive YOOe of a].I r��enees tro�r, the faci�ity t=cke� surcharge and the Team shall receiv� al'� other Tea- Ge:�erat�3 Arena Renovacior Funds. (A) A7anina xiahts - C� v AoDrova�, � C_��, has the =ight to xeasonablv aDprovs the recip ,ert of tI:e r.am�ng rigY!ts prior to szlection by the Teara. 2 �e T3- rights shzll be g:.ant2d for r�o lenge� tt�z rh_ tErny oE the ':� ��se, (i) r,rena Or,erarion zor 7 von-�S�ck�v g�ent _ Aitn r; - 'C-.�5 �erm Sha="*_ assu^�ee the Futhorzty will op2rate -he P_rena �or 2 �„n-nockey Ev�Rrs an3 for cazturing re=�er_tes from events i: t'r,e adj oi�ing co:�ve, t_en czater, the City an.d :+::th�r�t? wi11 negatiate in aoo3 faith with ene Team �*i crtio : c..__c'r. „osic al � ow cre Tea�r to op2rate the Arer_a 34�':7.R°D Vb n V7 118l97 Y � ��t -i8 �-�-`�� for Nt,i, Games� 2v'on-Hockey EventB or bot?�, upon rqc�ipt of a written proposal £rcm tne Team. P-R:lS�, CQM�STT2�NTS : .ihe Cparstor �n3 TeG; belie�e that �rie Arena is fre� o£ all currer_t caatractual-cbli�cations relating to �rena o�eratione caith third rartizs uhich inciucie advertising, ticket sa2ea, ticket c�i�tr`butien a.3 conceasions, other than con*_raCtual schedulir_v c�;;�tm2:�� for Certain events, ize PinaZ details of CC?;tr�C�ll31 obligatio:s ef the :: -� �. �.i21 be set 'orth �n �_:e ?ti�� Le3se. Tez;n and Oparator will mutually a�re� oa the �warc. pg all thi=3 Fd=ty contracts as they are �=gotiated :n a:�ti�ipati.oa of and afCei tae ce��ncement cf the �eace. �,_ TE=n h�� the righL to determine product s=lection to be sen:� �-� cr;� cor_caESionaire. RDYE&TI6ING: (A} ?f t'-'-° =uthorit}• rarai:_s centro). over aaming rights and g=_m,�.-�ent �dverti.sing sndzr Paragraah 5(F)1. , thsn neither the Authority nor t�e Tea:n shall have tne right to sell '' _ excl�us�� rights for advertisir.g in the Arena that vould adver�eZy af8ect the other (er.cept the grocluct selection zx.clusivi,ty =or concess`_ons as nrovided to the Team in t?�is Terc�. Sheet). {S) If the Team co.^.trols such ite;vs un3er ei�her Paragraph 5(F}? or 5(�}3, rr=n the Team may sell �� exclusivity riq��s �or adc�_�is_zg iB t� Fsena but such rights �� sT�al not ax_tend beycr� the term of the Lease_ (C} This Te^a Sheet zr.3 the Lease e:all not a=�act the rights af the Citv aad Autrcrity wzt?i respeCt �o advertis_ng in ather areas of the St. Pa��l C_vic Center Compl�x. (e.g. Wi_kins Auditorium o, :�er.r Co=avent�on Centerl. &g�'�'. n�s�' 'rPrrFfi3F& IZFNOVAT20N: (A) Upon the award of an I�'3L franChis= aa� s::b�iect fo clause (e) belosc, the City will ��:-Q eroea3 agprn�r� mately S 51 mi l l i�n �==�== -�–raE�� for tne A_ena &enocati.on, sch�3uled to be caase=_ted i*�'� ��s�n�—� �aeteea r�nths after t?�e arantirv of G� �,�r� francnise (anticipat?d for oLening of th� l�a$-1999 IdNL sea�o :i . Shoi:ld a iv*HL fsanchise ba ayrarde3 *_o start �l�y in t:.e 1�97-1998 seaspn, the CiCy a:�d luthority aaree �o procaed a_t� as c:�xiy scheduled improvemants zs Po�si=== �;.r tne i"sy7-1.3y6 23'dL season. TTe xxEna 347'IG1.RflC V3 to 1't 71P.,i47 �� -�� _�-`�� - `- Ren vaficn is curr�r,t22r eatimateti to consist of the r..a�or imFrac��ments a.� attlin=3 _n �e ConceptuaZ Dasign pErfo:med by Y.OK �rchiteets dated DBCembe� 15, 199c': f,l, J (2.i (3 . ) (?.) (5.} (5.) {7.� {8,) (9.) (1Q.) {iz.) 112_) (13.} a3dition of �;p to 63 12- nerson 1Lxu� �uY�2s �4 �� ::sich could be do �or 24 ��rson party snite cuu].L1�Zl Of gE3L5 CO bring total SE3�g �p=- j�j� ga.„�s to Yn,C00, �rrich includes up to 2000 new cl;J� seats— addition a€ ;rer_a ciub rastaurant and bar w=�°aing of co.�cour�es on �oth enns ei the Psena ��= =�i on o: a T�arr, store a33�.ticn ct Tea,;, Officea n°c, scozei�ozrd ;:it ; vidco par.�ls �^= �r T"are :=eu eutdoar electronic marquees and p �f Fxist`_r�g t:�rqu�a i*c:orov�c� loc:�°r roons co;nol=Ee replac_*�=nt pf e,Y_stiny saat'ng addi�ionaZ and i:�*�reved cc�cess�cns and ao�elty sta,�ds additional and improved restrooms enha.r_ced archi�ectural extezioz (�) ido cha.^,�2s in the HOK Conceptual Design for zhe prena =�°��s Renncatian shall be made withotit the approv3l Lrie Tzam, exeept as required by � psena P.en�cratio� project bL3get e� o£ approaimatei., 9. PLAN OB FIh*A�C3: (p) �e S_�ect to Paraarao}� HfET (ii} an� (ii') the City sha11 pay Pcz the trzna "-------�' - � �-=�s Reacvati.ea tl�souo': the foll� •_ng fur.3s: F$S�millio. uD-frcnt �+z�n` b;� the Arena conces�_�:uire made possib'_e by thz Team�s play zn c2e Arena, a�G t�a issLance c� �^5 --'?' ... _ 33?-=7 �6:cfs� d_ DS].TLC12±31 annitnti r.f 4..�.�_ a.s__� —___ . . a_.;� ner�_Ge for th� �:� �i11ic: a year? c.i=_ cone �ia7�G�.c4 V2 ro Y7 1/El97 5 ! , . .%4�.:"... � ':1..�'. :i I .. � .: , ;" . , i= t � . . 1il/�Y(42��... . _ . � csayiliae..[ yRB AZ'EIl3 P.E^OVaC].Ori p=0]@Ci, t0 �2C:".10E 1tS costs. If no agre=mant on the value ergineering can b� reach=d, the City shall have thF right to - r;i:e final design d=cisions. �� -l� �,�� which are also nade possibla by the Tea:n's opez _n t'ne Arena _ D "1Fi78,TY SOi1TC2G- 1• Frena n�nir_g riahts, esrimeted at $l.o �illicn per year; Permanent a�-.rertisi�:g an3 m revent;es, estir��ed at $2.25 million per year; axz3 +P�Ye•1;�g3 _--' , ' �_ . • - - — or Tea*-n'� rnaarantz= 2. � � ��z � ��ei=e< e� �� _ � ate inco�e ax ro Eed fzom teaia ayroll estimatBd zt '��-'�. r 75 mi1_ion par year, and,— '- n �. .- ..,_. Y��.._�y _�_ ,- :.r' -- _..- , Seconda SourCes• Revenue fzQm i�on-g�ckey Events i-� th= Areaa - concessions and garking estimated at $'!_0 million per year,- �and £acility ticket surch�rge estimated at $0.25 millio� per year. p,yy reuenues from secondary soarces not required fo= debt sarvice of the So:�de will be applzed *o £und the �rena Capital Repai; and Rep�acement P,eserve Fund. (H) D_t the point where the �:ir.iary scucee €or payment of Che debt sercice exce=d th� de,t sen;ice requirements, tne excess sha12 be applie3 �_r;t :o fun� the ?,zena Cagital Repair ar3 Reglacer.�e�t �aservz F�uz„ to the aa�e�--�a� _—�- ainim-,x� a�::at es ab2is'�ed vndes P racraah 5(D) above, and secen3 to a�eb� service resenrE fund for early retire^=r.t cf tre '_---- �a� Bonds _ -�"" (C1 The City will deve�op a sez�araee plan oP f_ranca far paying for and performing deferred caainte�ar.ce on the Arena currently ne�essax�r or advisable to pertorm_ 34tiL1.P.�n V3 Yc Vi 1/E/GT i 'r� - . .%•J: . ._- 'U..'.. , i - _ i .. , , 1 i'�l:u` , �i��JPYY£.:�ln'.' . � AlEesaative State �mr��r �1�1-�8' �.-�-�� 1q, ca�,az��sr.s c�rrrxravxzoxs The Team, or its charitaole fovndation, �ail? f�,s:d initia'11y z-=a annLally axi�ting local organizations that promote youth Frp3 �ar= i.�t•:innesota, sucn as �he Mariucci Inner City yeuth Y'�ckey G..-�d ?�:ir.nese�a �;,ate�z noCkey P_ssec_ation IL9AEiA? . 11, 1fISCII,Z�AS80II5 {31 '(Jgnn t?�2 grant ^v` c_^_ �c:`L fraac::isa �6 L.':8 lE3¢t t}1Q parties sra11 coT::eace negatiatie;s o� a de�initive '� TEa5B agre2:a=_nt ba_=e t�0'� ttI1$ �2iui Si12�Gt. 11 .��—�.� er'__'_ __ ' _' ' (b7 If an N;�?, team ag�rees to relocate to the Saint Paul Civic C=_nter Arena be`ore an I�iHL expansion fran_chise is au�arc2ed to the Team, t:�is Term Sheet shall automatically �erminate upen the execution o£ another binding iex7n Sheat vrith the relocaLing NEL Team, fC} 'Phe '1'ean sha11 hace the right to us� the nrena eaa vezr- £or five (5) =eam �romotional ever_ts ca tae sa:na t°rms zs it :nay use the Arena for NH?, Gar..?s, subject to scheduling availa:c�ility. � The Team will., ataa.atain ita mam4,Ara�,a„ ..., ..,�_� _�__��__ �--�E- �gL �iui.Fa l'd to �:1 7f8197 0 C _ T'^"�-. . .. lF�.. ; � . � . . .- , ��-p , ...ii"i:li'.Yi3';P:'t'-- , ..- ��i -�3` 1 �� y " `�.' .�, i:!:iS.@EC Y8 ta V9 :!E/37 0 � -1 �>.i.�>��:...i �!)�..". :�:� ' :j:. I�l -\B' �,�-�� ss�zsix A BIh'DiNG I.ETTER F ?N"iE�iT o�r•i� p�� V5 Lo V1 1/:/47 � � - , . . .._, ':I..'- � I . . . . - . � I-f.� .•,s`1:1CYYS':�:". _. . „ ° . � `l �� CZTY QF ST_ P.�LZ. QiT7ut.,:.cn�ra 3T _ PF_U"'.1 IFLC g��ty&�gy MZ'r.�•rE✓_ : EOCF�c.`c.Y Z.' ODP J i :7.7. P �D Y8 to V1 7/SjS7 ii- 2 f I _ �._''.,>_ L'h.' ��:I . ' ;. � rcv d as to For�� 7 ��4 �. 45 �,,,, i-Z•�Z E��:1�I�YY for lease of ST. PAUL CIVIC CENTER ARENA (ARENA) January 2, 1997 1. OPERATOR will be the Saint Paul Civic Center will be the City of Saint Paul (City). and OWNER 2. TENANT will be the NH[, expansion Team repres �ed by the investor group (Team). 3. LEASED PREMISES will be the current Are and all equipment necessary for the conduct ofNHI, gannes, including: (A) Current 15,680 seats, including 1, 0 club seats (B) Current 0 suites (C) Renovated Arena for NHL G es, as provided in paragraph 8 below including Team Store and Team Offi (D) Access to all other spaces on game and non-game � remains under the Sheet). 4. TERM OF LEASE: idental to conducting the business of an NHL team including locker rooms and box office (box office � and control of the OPERATOR subject to the Term Term of lease will be uai to the term of the bonds (Bonds) issued by the City to finance the Arena Renovati s(up to 20 years). Team shall haue the right to pre-pay outstanding bonds (including related premium or early retirement penalty associated with pre- payment). The T am will be required to payoff any outstanding Bonds (including any related premiu or early retirement penalty associated with pre-payment) as a requirement for any local nsideration of a termination of the ]ease prior to the full term of the lease. Team will le se Arena for the purpose of playing all IVFII, hockey games (home regular season an layoff games) (NI�. Games} commencing with the 1998-1999 NHI� season or soone subject to availability of the Arena, the Arena renovation schedule and when the expects the franchise to hegin play. Team will agree not to relocate the Team from e Arena as long as Bonds aze outstanding. 97 5. ARENA REVENUES AND EXPENSE5 - CONCEPTUAL OVERVIEW: (A) Team Revenues. The Team will control and retain 100% of Arena. revenues derived from regular season and playoff hockey games (Team Arena Revem and 100% of the Team revenues derived from other operarions, all except provided 'm this Term Sheet (Team Revenues). Team Arena revenues inc ud (1.) sales of rickets for NHI. Games (2.) sales of tickets for club seats for NHL Games (3.) sales of luxury suites for use at NHI, Games (4.) Arena's share of concession sales for NHL Games (5.) temporary advertising revenues (dasher boards, on-ic dvertising, video boards) realized by Team (6.) merchandising revenues realized by Team from sa at NHI. Games and at all other times at the Team's retail stores in the ena and elsewhere (7.) publication revenues realized by the Team fro�sales at NHI. Games and � (9.) (10.) (11.) elsewhere net parking revenues derived from the surface parking spaces, to be available NHI, broadcast and merchandising sal revenues from ]ocal broadcast of radio) all other revenues derived from o rat of the Arena z,4 City-controlled ramp and fo sale at T3HI, Games revenues received by the Team games (e.g. local TV, cable and of the Team's business outside (B) Citv Arena Revenues. The City al] be entitled to all other revenues derived from the Arena, other than Te Arena Revenues, including permanent advertising, naming rights, o door marquees, and non-1�iI�II. Game events in the Arena (Non-Hockey E nts), subject to Paragraphs 5(F) and (G). (C) Team Arena Ex�penses. he Team will pay, or reimburse the City for: (i) the actual expenses incurr d for NHL Games (currenUy estimated at $16,000 for �) day ofgame servici and $4,000 for game presentation expenses), (ri) the occupancy of the eam Offices, Team Store and other areas of the Arena used by the Team, su as the ticket office (including furniture, fixtures, and equipment), (ni) any required payments of generally applicable sales t� and facility ti et surcharge. Cit Aren� E enses. The Authority shall manage, operate and maintain the Arena, ' cluding making all necessary capital repairs and replacements, all at the e ense of the Authority. The City and the Authority shall create a capital rep] cement repair and reserve fund (Arena Capital Repair and Replacement R erve Fund), to be spent according to mutual agreement. The City and the 2 97 i�' �) �) (G) Authority will detemrine the annual m;n;n,um contribution as a result of engineering analysis conducted by the City. The annual minimum cont � is expected to be $500,000. 1'he City will agree to guarantee the payy�ie performance of the Authority under the lease. f Arena Operation for NHI, Games. This Term Sheet assumes th�t the an FTTI h ty will use its Authority intend f�, Games. i with the Team as operations for NHL Games upon receiving a written proposal from e Team outlining the proposed relationships of roles and responsibilities r the NHI, Games. Authority will operate the Arena for NHL Games. The t! best efforts to m;,,iro;�e Team Arena Expenses. The City for the Arena to be operated in a cost efficient manner for Therefore, the City and Authority wili negotiate in good , to whether the Team should manage all or part of the e Team- n rat Ar n v tion F nds - o P nd . The City anticipates that it will need appro�cimately $3.9 million per year out of certain Arena revenues, or from the Team if such re nues flow directly to the Team, to fund a substantial portion of the estimat d$5.7 million annual debt service on the Bonds. Upon mutual agreement a ong the City, Authority and Team, the amount of $3.95 million per year to over part of the debt service will be covered in one of three ways, all of w ch come from Team Generated Arena Revenue sources which would not e st in the absence of the Team: 2. The Authority will sell retain control of the proceeds of the naming rights, permanent adve sing (including new marquee(s)), and the e�cisting facility ticket urchazge revenues for NHI, Games (Team Generated Arena Re ovation Funds). The City will transfer any amount over $3.95 million per year to the Team. The Team will 11 and retain control of the proceeds of the Team Generated Ar na Renovation Funds. The Team will transfer as rent under the le se up to the first $3.95 million per year of such revenues to the Au oritv. The T m will sell and retain control of the proceeds of the Team Gen ated Arena Renovation Funds. The Team will n arantee a pa ent of $3.95 million annually as rent under the lease to the thority, regardless ofthe amount ofTeam Generated Arena enovation Funds. ;7enerated Arena Renovation Funds - After Bonds are Paid. If the are paid off earlier than the scheduled repayment or at the end of the 9� /� normal repayment schedule, the Authority shall receive 100% of all revenues from the facility ticket surchazge and the Team shall receive all other Team Generated Arena Renovation Funds � 6. 7, (I� Namin,g Riehts - City AR� or val Rig�. The City has the right to a recipient of the naming rights prior to selection by the Team. The rights shall be granted for no longer than the term of the lease. (I) Arena Operation for Non-Hockey Events. Although this Ter the Authority will operate the Arena for Non-Aockey Events revenues from events in the adjoining convention center, th Authority will negotiate in good faith with the Team an o io allow the Team to operate the Arena for NHI, Games, on-1 both, upon receipt of a written proposal from the Tea . ARENA COMMITMENTS: the �heet assumes nd for capturing ity and which would �ckey Events or The Operator and Team believe that the Arena is free all cuttent contractual obligations relating to Arena operations with third p ies which include advertising, ticket sales, ticket distribution and concessions, ot r than contractual scheduling commitments for certain events. The final details f contractual obligations of the Arena will be set forth in the lease. Team and erator will mutually agree on the award of all third party contracts as they are n gotiated in anticipation of and after the commencement of the Lease. The Team has he right to deternune product selection to be served by the concessionaire. ADVERTISING: (A) If the Authority retains contr 1 ovec naming rights and permanent advertising under Paragraph 5(F)1., th neither the Authority nor the Team shall haue the right to sell exclusively th rights for advertising in the Arena that would adversely affect the oth (except the product selection exclusivity for concessions as provid to the Team in this Term Sheet) (B) ffthe Team contro such items under either Paragraph 5(F)2 or 5(F)3, then the Team may se Arena �clusivity for advertising but such rights should not extend beyond e term of the Lease. (C) This Te�eet and the Lease shall not aft'ect the rights of the City and Authonty th respect to advertising in other areas of the St. Paul Civic Center Comple (e.g. Wilkins Auditorium or new Convention Center). � �'7 �� 8. ARENA RENOVATIONS: (A) Upon the award of an NHI. franchise, the City will make approximately $51 million in Arena Renovations to the Arena, scheduled to be completed in eighteen months after the granting of an NHL francMse (anticipated for opening of the 1998-1999 NHI, season). Should a NHI. franchise be a arded to start play in the 1997-1998 season, the City and Authority agree to roceed with as many scheduled improvemems as possible for the 1997-199 I�3I�, season. The Arena Renovations aze currently estimated to consist f ihe major nnprovements as outlined in the Conceptual Design performed y HOK Architects dated December I5, 1996: (1.) �2•) (3.) (4.) (S.) (6.) ��) �$•) (9.) (10.) (11.) (12.) (13.) addition of up to 63 12- person luacury suites (4 double-sized for 24 person party suites) addition of seats to bring total seats for NHL� includes up to 2000 new club seats. addition of Arena club restaurant and bar widening of concourses on both ends of e Arena addition of a Team Store addition of Team Offices new scoreboard with video panels one or more new outdoor marquee improved locker rooms complete replacement of additional and improved � additional and improved � enhanced architectural e�C could be to 18,000, which marquees and purchase of e�sting seating �ns and novelty stands (B) No changes in the HOK Co ceptual Design for the Arena Renovations shall be made without the approv ofthe Team, except as required by Arena Renovation project bud et or State of Minnesota funding deficiencies. In that event, the City, Auth ty and Team shall agree to value engineer the Arena Renovation pro}ect reduce its costs. If no agreement on the value engineering can b reached, the City shall have the right to make final design decisions. 9. PLAN OF (A) The C� shall pay for the Arena Renovations through the following funds: a $5 lion up-front payment by the Arena concessionaire made possible by the T am's play in the Arena, and the issuance of $46 million in bonds. Funding 9 � �� 10. 11. for the debt service for the bonds will come from the following sources which are also made possible by the Team's operations in the Arena: Primary Sources: 2. Arena naming rights, estimated at $1.0 million per year; Permanent advertising and mazquee revenues, estimated at $2.25 million per y ar; or Team's guarantee of $3.95 million annually, and, Revenues from facility ticket surcharge for NHL games, estim ed at $0.7 million per year, and, State income t� proceeds from team payroll estimated at yeaz, and corporate franchise tases paid by the Team est per year. Secondarv Sources: 75 million per :d at $03 million Revenue from Non-Hockey Events in the Arena - c cessians and parking estimated at $1.0 million per year, facility ticket surcharge es mated at $0.25 million per year. Any revenues from secondary sources not requir d for debt service of the Bonds will be applied to fiznd the Arena Capital Repair an Replacement Reserve Fund. (B) At the point where the primary sour es for payment of the debt service exceed the debt service requirements, the xcess shall be applied first to fund the Arena Capital Repair and Repla ment Reserve Fund to the agreed upon amount, and second to a debt s rvice reserve fund for early retirement of the Arena Renovation Bonds. (C) The City will develop a deferred maintenance o perform. CHARITABLE CONT U plan of finance for paying for and performing Arena currently necessary or advisable to The Team, or its ch able foundation, will fund initially and annually existing local organizations that p mote youth programs in Mmiesota, such as the Mariucci Inner City Youth Hocke and Minnesota Amateur Hockey Association (MAHA). 0 9� i� (A) Upon the grant of an NHL franchise to the Team, the parties shall commence negotiations of a deSnirive lease agreement based upon ttris Term Sheet (lease). j (B) ff an NHI. team agrees to relocate to the Saint Paul Civic Center Aren efor an NHL e�cpansion franchise is awazded to the Team, this Term Shee shall automatically terminate upon the execution of another binding Te Sheet with the relocating NHI, Team. (C) The Team shall have the right to use the Arena for five (5) t am promotional events on the same terms as it may use the Arena for Crames, subjeet to scheduling availability. � , . . .. . . � ' . . _ . `�1 � ' � U t _,_._.. _ _ __ .. ..__. . _ __' . _... . _ _' _ . '__ _ _ ' __._'____--.' __ . _. - � �'� � �l � �,�-� � � a�, �- �. _ -• _ . - - -- - .�_. � �� .,� � _��,.��, ��i, _i�-�_, �,i � - - �-- ; .��,��, � _ �.�-.;.�..,n�,.� - � �_ c.-� -_ _ _ _ _ _ _ , _ _ __ . . . � _ � . �5�� . . _ �--_ . G�� _ �,-� -- �- --- _ _-- __� _ ��-.-- `��?av �� .-� _ � c`�.� Q_ _ --- _ ___ _ __. _ - - - 6. �---- �-. � �,.. c��_ _ _ � �, � �.��..,-,� �..� �,� - -- _�.__. �� _ �-� - • �- �__ _ � - _ . _ - . ,. __ -- - _.. ___ _ - - -- _ _ . _ ___ _. �_ _ __ _ _,. _ _ __�. � _._..._- ___ _Q- _m. _ _._ _ ___.._. ,- _ _ __ .. _ .______ _ � _ _ _. __ �� , l� �� 24 �a! Exptore some form of pub{ic ownership of the NtiL Team. � n�� \ �� / � ��U � �� -�� Staff will report back to the City Council within three weeks of an award of an NHL franchise with a financing option that is a revenue bond without a general obligation pledge and with other financing options, including consideration of participation by the locai business community, that staff recommend should be pursued. Such other options may contain credit enhancements, but will not require any direct property tax levy by the City of Saint Paul. The staff wili also present a recommended financing pian. CITY OF SAINT PAUL Office of the City Council �,O< 310 City Hall Saint Paul, Minnesota 55102 (612) 266-8577 Gregory N. Bkcs Fiscat Pplicy D"uector DAT'E: MEMORANDUM January '7, 1997 TO: Council President David Thune Councilmember Jerry Blakey Councilmember Dan Bostrom Counciimember Dino Guerin Councilmember Michael Harris Councilmember Roberta Megard Councilmember Janice Rettman FROM: SUBJECT: Greg Blees, Council's Fiscal Policy Director � � v Civic Center Arena NHL Remodeling - Finaucial Analysis ��_\�' This memo will summarize my analysis of eight bond financing scenarios for the proposed remodeling of the Civic Center Arena to accommodate a NHL Hockey franchise and to make needed maintenance improvements at the arena building. It will also identify some pending work tasks which should be accomplished in order to provide additional information to the City Council for your use in making future decisions related to any remodeling proposal. The three m�jor variables for bond financing which will affect the interest rate applied to the bonds, and thus the corresponding debt service for the azena remodeling proposal, are: 1) Revenue Bonds (Pledging Only Dedicated Revenues) vs. Revenue Bonds With a G.O. Pledge (Promising to Izvy Taaces If Dedicated Revenues Are Insufficient.) 2) Tas-Exempt Bonding ('The investor dces not have to pay income taxes on his / her investment earnings) vs. Taxable Bonding (The investor pays income taxes on earnings.) 3) The Term of the Bonds. I did two structures, one assuming a 15-year NHL Lease and one assuming a 20-year NHL lease. Because bond money would be needed almost immediately for construction, almost two years before a hockey team would start to play its 1998/1999 season in the fall of 1998, my estimates used a 17-year bond schedule for a 15-NHL year lease and a 22-year bond schedule for a 20-year I3HL lease. In addition ta the three above variables, I assamed the following constants for all scenarios: 1) Only interest payments would be made for the first two years of the bond issue; and that capitalized bond monies would be provided as necessary to finance said interest payments which cannot be financed with investment earnings. a �� 2} Bond money for the arena remodeling project was fixed at $46;000,000, assuming a$5 million up-front payment by the Arena Concessionaire. 3) All investment earnings on bonds for Construction would be used for debt service. 4) All investment earnings on bonds for Capitalized. Interest would be used for debt service. 5) All investment earnings on bonds for a Debt Service Reserve would be used for debt service � For ali G.O. Bond 3'ssue Scenarios: a) There would be no Debt Service Reserve. b) Financing Plan Insurance would not be purchased. c} Bond Sale Expenses (fiscal agent, bond counsel, underwriter, discounts, etc.) aze estimated Q1.5% of the total amount bonowed. '� For all Revenue Bond Issue Scenarios: a) There would be a Debt Service Reserve equal to the maximum debt service due for any one year. b) Financing Plan Insurance would be purchased at a cost equal to 2% of the total amount of money borrowed. c) Bond Sale Expenses are es6mated Q 4� of the total amount borrowed. The Administration has initially proposed an annual revenue stream of $5.7 million to finance annual debt service for a Tasable Revenue Bond Issue of $46 million for the arena remodeling proposal. Attached you will find my debt service analysis of eight different bonding scenarios, using different interest rates and the common assumptions identified above. Depending on the type of bonds issued (Revenue vs G.O. Pledge) and (Tax-Exempt vs. Taxable), the $5.7 million in proposed annual revenues identified may or may not support annual debt service. The ANNUAL NET DEBT SEKVICE ESI7MATE (after applying investment earnings) for each scenario is summarized as follows: 1) Tax-Exempt G.O. Pledge, 17 Year Bonds, at 5.5% Interest =$4,695,000 2) Taxable G.O. Pledge, 17 Year Bonds, at 6.5% Interest =$5,037,000 3) Tax-Exempt Revenue, 17 Year Bonds, at 7.5% Interest, _$6,107,000 4) Taxable Revenue, 17 Year Bonds, at 9.0% Ynterest, _$6,907,000 5) Tax-Exempt G.O. Pledge, 22 Year Bonds, at 6.0% Interest, _$4,119,000 6) Taxable G.O. Pledge, 22 Year Bonds, at 7.0% Interest, _$4,484,000 7) Tax-Exempt Revenue, 22 Year Bonds, at 8.0% Interest, _$5,432,000 8) Taxable Revenue, 22 Year Bonds, at 9.5 % Interest, _$6,294,OQ0 If the City Council decided to approve bond financing for the arena remodeling, it would probably be most appropriate to tiave a mix of taeable and tax-exempt bonding. And the term of the bond issue would be most influenced by whether the NHL Team preferred a 15 or 20 year lease. Thus I would guess that the most likely revenue bonding scenario for a shorter time period would be somewhere between option 3 and oprion 4 above, with debt service at roughly $6.5 million. This balipark estimate would suggest that: i) Additional revenues would be needed to support debt service, andlor c��-1� �) The amount of arena remodeling would have to-be scaled back, andJor 3) Revenue Bonds With A G.O. Pledge could be considered. While there seems to be initial resistance to using a General Obligarion Pledge (assuming the I.egislature passed a state law granting Saint Paul the authority to issue g.o. bonds for the azena remodeling), a case can be made for considering such financing. If one assumes that the azena remodeling project should go forward with revenue bonds based on a reasonable level of assurance that annual revenues would be$5,700,000, than one could argue that for the same revenue stream and using a g.o. pledge: the Civic Center Arena could have a larger level of improvements, or the City could spend less for total debt service. The proposition that if the $5,700,000 in annual revenues don't materialize, the City would let the revenue bond default, is questionable, in light of the fact that such a default would have a severe negative impact on the City's ability to issue future bonds (revenue or g.o..) Assuming the same level of improvements, the wtal debt service cost savings using a g.o. pledge could range from 23 to 30 million dollars. The TOTAL NET DBBT SERVICE COST ESTIMATES for the eight different bonding scenearios are as foliows: i) Tax-Exempt G.O. Pledge, 17 Year Bonds, at 5.5% Interest =$69,003,000 2) Taxable G.O. Pledge, 17 Year Bonds, at 6.5% Interest =$74,865,000 3) Tax-Exempt Revenue, 17 Year Bonds, at 7.5% Interest, _$92,195,000 4) Talcabie Revenue, 17 Year Bonds, at 9.d% Interest, _$105,602,000 5) TaC-Exempt G.O. Pledge, 22 Year Bonds, at 6.0% Interest, _$81,312,000 6) Ta�cable G.O. Pledge, 22 Year Bonds, at 7.0% Interest, _$89,352,000 7) Ta�c-Exempt Revenue, 22 Year Bonds, at 8.0% Interest, _$109,649,000 8) Tasable Revenue, 22 Year Bonds, at 9.5°10 Interest, _$128,303,000 Also attached is a spreadsheet which attempts to identify on one page over $71 million in arena remodeling related costs: ?) Project Cost estimates of $51,000,000 (HOK Sport's 12-15-96 Report), 2) Revenue Bond Financing costs of $12,470,OQQ (Blees's estimate) 3) Other Needed Arena Improvements C� $7.5 million (Hanson's 1-3-97) 4) Annual Repair & Replacement Reserve @$500,000 5) Unknown Items and Costs, to be identified by engineering study After discussing the pros and cons of various financing options with the Jce Reid and his staff, Chris Hanson and Martha Larson; I am (we are) of the opinion that the following information is needed to better consider options for an appropriate bonding pian for an azena remodeling project: 1) Cost Estimate Detail for SOFT COSTS of $S,SOQ,OOQ (HOK Sport's 12-15-96). 2) Cost Est. Detail for Fixtures, Furn. & Equip. of $5,500,000 (HOK Sport's 12-15-96). 3) Updated, Detail Estimate of Other Known Needed Improvemenis At Arena (e.g. Asbestos Removal). (Chris Hanson & consultants) 4 ��,1� � Fstimate of how much of the $51,000,000 in project costs identified by HOK Sport's is directly related to NHL improvements (for a taxable bond issue) and how much is related w repairing / replacing existing outdated arena improvements (for a tae-exempt bond issue) (Chris Hanson, consultants, azchitects, bond counsel) 5) The Civic Center Authority's Priority List for all l�ow major azena remodeling cost items, assuming the City cannot finance ail desired azena improvements. For er.ample, is the esthetic appearance of the outside arena walls a more nnportant item than asbestos removai inside on the ceilings. (Joe O'Neill and Chris Hanson) � An option to use a two-year construction temporary financing loan, in lieu of adding capitalized interest to long-term financing, as a way to lower interest expense. (Martha Larson / Jce Reid) C: Mayor Coleman, Mark Shields, Pam Wheelock, Martha Larson, Tim Marx, Chris Hanson, Jce O'Neill, Jce Reid, Shirley Bavis, Tom Cran, Bruce Engelhrekt, Eric Willems, Chuck Repke, Gerry McInerney, Scott Renstrom, Mark Mauer, Tony Schertler, Ann Cieslak, Jce Collins � _ ... . O V W N A W N� x m m v � � a 0 �CDp�<D Z < � m m n � v � m A Z � � O � Z m � z � "i u cAZO� � �m'�-itmot�i�p � o- 3 � Z � s�. m n D tQ O � � m m m I � m N 6 A 0 0� �� I c m v m �� m $ m � _+ N J p � O O O O m m � » a � ° ��=33�t�n z` �` ;;, •* x (el � ' � �i � �. o � ,010 3 rt . ? '° ° ,� �� ^',- A� O < N N ' 'D tD � � 'n �, � o+ � r p o o w�` e' � ['] 1�l J i N N -• � -� � � �1 + O �O W V � (J� � x mmvp p i �yO�c x D � m � N D C� z <�pm�� R '��XZ� � u � �mym-�ic <o=+y�� (�Zm m 1 m n T �i O Z m � m � � �Q ' m m m N o > � � v�� Z � -� m m � � � v W $ m $ V Of ll� A W N� vvc>�o'� a p " � m �tvDC� � c m��"zG� � c r � <n�� m Q �z� � � n � O � � 'a m N m - v r� � �x -� y � Z � m$r"$ A A� A A y A W�� N� V T V � �-+ O N o 4s Cd Z Z Of V O + j Z Z� V o opc�i, o_o�i DDN�° oao DDoa O O O O O O O O O O O O O O O O O O O O O � O O O G O O O O O O O O O O O O O O O O O O O Z m �. ., � � m � � o � >( � � 3 � ° y m � � � � 5 y m...x(g��m�v � m x o p 3� G? '� » •'•(g1 m m� � oo� o� C � ;^?�m m � N Z O p� � � O� Z to N u+ N �oN D ornw W � V � N t�lf C7� m ° � '-�,. n' 7 � p � • o X � °= 3 = ° � m � �O � �' cn» _�� v �� o�;° < c�i• " �' � (F� � m� � ao o � C � ;^?�m m �—�_ � � � � L � � m � �cw Dorn a en o o ra W �[�7� O C O O .�i� A � � w W � W W� A Z V , �� o'oD � � T O O � A � O O O O O O � � �±; �„ , o V W. y w .( !R_ o� w o m � �. o� W 0 4�! A 0 Z A D o w�i O �.1 z m �.»a� m �:. 0 77 K" 'm m m� y. R ��g � y �: y�. �z "�' ". C � .,�. � � � s z� � aoWOZ..; C � N a y ,.,, N .� � ii ' N � u' D fl t0 N � � O f�D � � W N � a ' p u' � co _ o � i J J J A W N -+ O � � � x m m v � � a W - �3=ip��D � m � N D C � �p m � � � Z � � u r �p-�t m , n Z � D � m � T I oZm m � � I m� m � m N o � o va �a� _ � -� im m �� o m�� v v o v v� �+ w � pl (�p N � A � opvN,. �� o 0 4 A O O� O O O O O O W O O� �� a O� � Z D Z D i� � cn ~ w � V A N � w � � 0 O� N Z D Z D � � � � �o�� 1 �� 0 � G fA O � N W W N m' � � � � C ° t77 ° 3 c� m� W T 0 � Z � z= G� s. �� n C O N Z � m N ' N M Z Z r c p N !D -� W 0 0 � � � � J to � ° o 0 0 0 3 � N � � � Z � � tD C oD �. �� 'a> O O O d m `° , m �� j Z �� D p� � w y � D, � O OD � �„� 00 � m _�� Z A' y � y � V � � ��-�� m 177 Z � J W �1 N � � C c r mn < m V/ � � � �m � Z -� � � � � � N Nm � � � " � T N ry � � �v � x• r N�„� Z c� � 1 v ..a � � *A V/ � � � � .�. Z � 2 � r � � � N y� <D r ,. O! f A W N- O� � m m v� O a �p �D ��m�nl�D z<ooma� � m y�c�zo� r"zm�'m-�'i� r�i °�v'a' � �Z� �- m�� O � m� m m r .A ID N � A c ° � n '� Z Q '�'{ m �y � � � o � � "�' � -+ N N � A O N W o O O O O O O O O 0 0 0 0 �m� � ., o'�'m'mm; � Z�� ro�3o :�+ p � n ' <b �j � 7�C 0 II � � '8 �. � y � � y �'� n < a W y �' Q y H �U ID � �T DIaI�IV f � v� N A W� X � m v � Z m Zy��vi� m3-yA� � n � � m i rt -{ �zi� ze �D �<ai�OC Ce1D� ol ID � T �' i O Z m � m�� m m � � O � O 0 o�n� c � � p y �i Z� v �,$�$ m n m�Dppa. aomv �-i3� zm��_� � ' Z<„m�� ppm--i �m� Z O . Om�r�r �n� e� nm�mv r' � m � m 1�C <v='�yA m T Z c�Z� X (� T O � � m m m � m N o , o v��a� � O (A V Z J � m � m � A A �� N� V A Z Z � V N Z 2 � �-+ N O N V� O IV (T V O n o�DD c �?D D_ ° O o O O O N O Ui O O� o U� O O O O O O O O O O O O O O O 0 0 0 0 0 0 0 0 0 o a o 0 0 Zm . v� � m- m °O K ° =m � = v� � m � m � y fn.�.2ng� � � �� x p 9 3 eairt C ? Y ` ! r�i � fD m � ,�o oo' o� Z � �' � N Ci m ymz�o J N •+ �D Z �ro N w j' �o�'DOCOrn� � A O to IJ � � V � �J tn O W "' �p N ^' �o A m -+ N y o� cn rn cn _ ... o 0 �,ow wwoo � o N� N N O O N V O pl � � Cf O O� A Z D N W � W 0 a W Z D � A Z m M �.�i q � m � � o - i � m � o y � � � � N • 2 (8� � � O fyD 7�C O .� 7 �'* n� � � � `d � �� < y N � N f A W N � O t � m��01T1 ao m �'��- zm �n�� "'�Z�czG� -i D f' � m N N O r� <p=�tntn�p "'„ a. �z� � � �� ."I � � m � �, o a�n� p � � � � o � � r" $ v Zm �.»�� m-�1�: � o � X °�m� ° y .. m a � � � � y ". � �. ��"2� p � �`.: �1 � x � a � a ' ' :;. G � � � � � � _.', ZA � m�p2'� m < y p, tA ii :..� v+ A tD ;� � ,�,Z� +y �owDo�o !�� lD C7 V O N O�D N O N O O f�D � � W W N N ° m 0D u�i °� N N ,.. cnu+o o N..r �� 000 0 �oo� oz � � s O O-• O O rt A A � N N A m -t W 0 � N Z D N N A m � W 0 � a N n N e� N � �� O� IV w N O N � `� cn o u+ o o,� � j W N � (l� v t0 A Z W N c w o o D ?. ��oo� , 0000 oS� .. tD �e. Z 'a N -� y -` � � � t,�,Y o w � W 0 o� m a s � N L-' s t0 � � N 0 � A m � --1 0 w N N � � '� �� tn � Nm I11 Z W m � � � m -' � � y � O rll 3 Z " C ° m� 0 0 Z� v� Z � � �. � � � �, Cp Z � V/ N Z r v m � � � n m �1 � � VJ � � � � T N N � N � � � 0 3 � � m � m o � � D � m N CD � R _ r � � N � �� -�i�{m��c � In C r n C D z � i � � m A � m N -�I m � z 2 � � WwWwWWwWW rn rn rn� rn� rn rn rn rn rn rn rn rn rn rn rn rn � � v � � .. ..y v v � � -• N N W � f0 N N OD s A J � W 0 � �I.� 0 � W W W O� W O� W � W O� W O� W O V W O V W O V W 0 � N t a � w 6�i c�o N p V N W � OD O) A IV � O V (N W � N� A N � O V � W �� V A N O O W � W �� _l� �I V V V V V'V �/� � � r z -� m � - D Z z � N ozom��?� m-m O 'i c j ° �m�mm�-�i � _ z�� W 0 z N � O � n O z � c � 0 wWwWwW 0 0 0 0 0 o C rn rn rn rn rn rn rn rn rn rn rn rn N rn rn rn rn rn rn m � v .. � � � N W W W W A� D V O W T �O N �^ � W V OD OD t0 ` O � W O� W � y O� W O al W � Z O� W O � 41 �('� O� W O T W O O V W O V W O m � � r m m � �� 0 � � D 2� G� Z C Z m � � y N rn � �Z � � ('3 m0 Z O � � � � � � V C) � O Z � O \° 0 m W � i� n A J i� � O � N.P N 61 V Z "L' � tn V o w� CD Z p� O V flf 4J �_C+D � v � O V fJ� W � 0� � O V (A W C� V o a � w� c � SAINT PAUL CfVIC CENTER ARENA - REMODELING COST ESTIMATES etai ?9�L � N.H.L. RENOVATION COSTS - HOK Sport's 12-15-96 Estimate n 1 1 LowerConcourseRemodel . - 1,993,085 (� � � 2 Seating Bowl Remodei 7,825,614 ` Score � �l�deo Boards Dasher Boards 8 Nets Are Included Upgrade Sound, Broadcast & Sportlighting Systems 3 Main Conwurse Remodel 4 Main Concourse - New (Pop-Out) 5 Suite Level 6 Club Restaurent & Lounge 7 Club Seating & Concourse 8 Locker Room Remodel 9 Team Office Remodei 10 Press Box Remodel 11 Sitework 12 General Conditions 13 SUBTOTAL-CONSTRUCTION 14 Rounding 15 TOTAL - CONSTRUCTION 16 SOFT COSTS 17 Design & Engineering Fees 18 Tesfing 8� Inspection 19 Building Permft Fees 20 City Administration Costs 21 Other - specify 2,620,000 $ Inciuded 330,000 ?? �� ?? ?? ?? 2,357,950 4,845,171 7,378,888 4,425,660 6,982,272 699,628 536,731 55,784 728,234 2,163,559 39,992,576 7,424 40,000,000 5,500,000 22 PIXTURES, FURNITURE, & EQUIPMENT 5,500,000 23 Includes Balance of FFE and fGtchen Equipment, but no $ for Team Offices and Team Locker Room. 2a HOK Sport's 12-15-96 Cost Estimate 51,000,000 REVENUE BOND FINANCING COSTS: sss,a7o REVENUE BONDS @ 9% FOR 2+ 15 YEARS 25 BOND SALE EXPENSES 2,340,000 26 CAPITALIZED INTEREST EXPENSE - NET OF REVENUE 2,010,000 27 DEBT SERVICE RESERVE (@ Max. Debt Serv.) 6,950,000 28 PREMIUM FOR INSURED FINANCING 1,170,000 28 TOTAL BOND FINANCING COSTS 12,470,000 CHRIS HANSON'S 1-3-97 ROUGH ESTIMATES OF OTHER ARENA COSTS 30 Costs Not Covered In HOK's 12-15-96 Estimate 7,500,000 31 ASBESTOS REMOVAL 3,300,000 32 HACV Controfs to Computer 350,000 33 Directional Signage 325,000 34 Sound Sytem & Other ? ARENA CAPITAL REPAIR � REPLACEMENT RESERVE FUND 35 AfVNUAL MINfMUM CONTRIBUTION, CITY TO GUARANTEE PAYMENT 540,040 NECESSARY MAINT. � IMPROVEMENTS - During The Term Of Lease 36 UNKNOWN - TO BE DETERMINED UNKNOWN TOTAL PROJECT COSTS 71,470,000 Q O F'j ��-f� CTTY OF SAINT PAUL Norm Co(cman, Mayor To: Council President Dave Thune Council member 7erry Blakey Council member Dan Bostrom Council member Dino Guerin Council member IvSke Harris Council member Bobbi Megard Council member Janice Rettman From: Date: A �� MarthaLarson �)�Y/ ' January 6, 1997 Re: Hockey Resolution Follow Up DEPARTMENT OF FINANCE AND V�j MANAGEMENT SERVICES ` Manha la'son, Direcmr �a/r 2Sa0 CFry HaU - Telephone: 612-266-8797 IS W. Ifdtagg Boulevard Facsimi(e: 612-26G-8919 Saint Paul, Mitwsom 55102 The following information was requested by Council members Thune and Megard at the City Council meeting on January 2, 1997, related to the hockey team resolution and proposed term sheet introduced in that meeting: Background information regarding the revenue and debt service amounts reflected in theterm sheet 2. The number and identity of other cities competing for an NF�, expansion team franchise The following is provided in response to that request. Revenue and Debt Service Information Team Arena Expenses ($16,000 day ofgame expenses and $4,000 game presentation expenses): These are the costs ofpersonnel who ready the Arena for hockey games, staffthe facility during games, handle the sound system, scoreboards and other promotional activity, and clean up afterward, as well as other direct expenses associated with the team's use of the facility. These estimates are based on the average expenses of simiSar facilities for similar operations and are reasonable in view of the actual costs for current Arena events. ��l -\ �- Ticket Surcharge - Hockey Games ($700,000): This estimate is based on the current $1 per ticket surcharge, ticket sales for 43 home gaznes, and the expanded 18,�00 seat capacity of the renovated Arena. Based on NF�, industry averages, the estimate also reflects an =``^? average of 90% of total available tickets sold for each game. _ Ticket Surcharge - Non-Hockey Events ($250,000): This estimate is 6ased on the cuttent $1 per ticket surcharge, and ticket sales for 50 events per year, with an average of 5,000 tickets sold per event. Staffbelieve this is a reasonable estimate, based on the enhanced marketability of the renovated Arena and its expected ability to attract more concerts and other events. Arena Naming Righfs ($1,000,000): This estimate is consistent with industry averages and is reasonable, based on discussion with industry consultants and local sports faciliry mazketers. Permanent Advertising and Marquee Revenues ($2,250,000): This estimate is consistent with industry averages and is reasonable, based on discussion with industry consultants and local sports facility marketers. Parking and Concession Revenues ($1,000,000): This estimate is based on a projection of 50 non-hockey events per year, 2400 City-controlled parking spaces at approximately $5.50 to $6.50 net revenue per space, an average attendance of 5,000 per event, and average net concession sales of $1 to $2 per person. Stafffeel this is a reasonable estimate, based on industry averages, the enhanced marketability of the renovated Arena and its expected ability to attract more concerts and other events. (The 2400 parking spaces will be in the e�sting -� Civic Center ramp, the new underground ramp constructed as part of the Civic Center expansion, and the two adjacent surface parking lots.) State Income Taa Rebate ($1,750,000): This estimate is based on an assumed team payroll of $22,000,000, which is consistent with industry averages. $21,000,000 of this payroll is assumed to be for players and team management who eam in excess of $100,000 annuaily, and thus are taxed at the higher state rate of 8.2%, with the remainder tased at 5%. State Franchise Taa Rebate ($300,000): This estimate is based on the increase in corporate income taxes paid to the State of Minnesota, attributabie to increased revenues generated by the presence of the NF�, team. The projected revenue increases, and associated assumptions regarding taxation of that revenue by the State, are supported by the KPMG economic impact study commissioned by the Capital City Partnership. Copies of this study are being delivered to you today, under separate cover. Annual Debt Service ($5,700,000): This amount is based on the $46,000,000 in Arena renovations to be financed, a 9% interest rate and a 15 year term. We have used a conservative interest rate of 9%, assuming that the debt will be a ta�cab]e issue. ✓ Please note that the term sheet provides an option (see #S.F) for the team to guarantee a payment to the City equal to the $3.95 million in team-generated renovation funds that the 2 q�t-« ' City will use for debt service. (These funds are the revenue streams from the naming rights, permanent and marquee advertising, and NHI. ticket surcharge.) Tf there is concern regazding the reasonableness of those revenue estimates, this option would eliminate the risk to the City if the actual revenues are less than grojected. _ �� _' - --= nthPr C;t;PC Competin�for an NHI, E�ansion Franchise Atlanta Houston Hampden Roads (V'uginia) Raleigh-Durham Columbus Oklahoma City Nashville Hamilton (Ontario) 9 'l - l� �._, To: Council President Dave Thune :- = Council member Jerry Blakey Council member Dan Bostrom Council member M�ke Harris Council member Bobbi Megard Council member Janice Rettman From: Martha Lazson 7oe Reid Date: 7anuazy 8, 1997 Re: Hockey Financing Options Attached is a discussion of the factors which influence the City's options for financing the renovations to the Civic Center Arena, and an analysis of a number of financing scenarios to illustrate the impact that those factors will have on annual debt service. Please view these scenarios as alternatives that demonstrate the range of options available to us, rather than as specific staff recommendations about the structure or size of the debt to be issued. This analysis reflects some variations on the scenarios projected by Greg Blees, but in general contains similar assumptions about interest rates, credit enhancement, costs of issuance, etc. Where the assumptions vary, we believe both the assumptions in this analysis and in Greg Blees' - analysis are reasonable and conservative. We apologize for the delay in delivering this material to you. Should you have questions on this prior to the Council meeting this aftemoon, please feel free to call us or page us. Otherwise, we will be prepared to discuss financing further with you at 3:30. Thanks. CC: Pam Wheelock Greg Blees Mark Mauer �� _�� :, N O n � Q a� U �� C � =Cm J �C � = C C Z LL � � � � � o m �r cg� m �n w Ji 25g25 �"' g�8 � � N fA �q Vf W � � m N L U r � cZ 01 � IO N N U � L��..t � a a��e v d � � 9 C N �.�.` m� � �� d N N N — > q O j � W Y� O S LL � C m2 d� Y a ax � n ��.. � d n = H d y`� .�. .. NO a C N ° m a O U W 0 e � d Y � � C O W C C 6 d V N � v j c � t � � ^- .-. a � m a `w o m�oi r�n m a � � N N E N � V O N N y N � y'mClO1NW a �m��a� � � maoao m i " l" m r d �mnB.�n cm u a�i c 6°m 4 m2 II o A �m� W a U � � m V U � U m C C G ° m � p c c m c q��occ �c > 0 a O � p � � a�Vb� X m O 0 L d� d 4E m=j :°.�U �awq a -- N d m t L d L � � � Q @ Ol � Ol J J J J S S�_ W @ m m H � > � V V U � ��. m � A �$� d� N O� b N a p y'� ` « v �8i`n aa E.L =rU0U0a0 � G d 2II � 0 �� ..o C C v c E 2 �' a` W L L O � `o � � U U O O � a q L m— a c � U 'O � R � N D y E� �q � d «�. � m � t° c N o �+ r y m B � `6 � 6 ; m N d V � � d d 3� '. A W m L a v � C1 � XE-, d� � �, � C 0 w m a `o a c a ar 3 d c � C q � L O � > � d$ � U `u � > o � L 9 � � ` � m ` w� N O� � N � C — n E U� c C V dL m � �a N '� m � ~ s � L C b E C .� a N E m � � C A V � a ys d y La A N � _ w w °1 C � U c � C � y o � U N �L U y U � 3 d N � £ � �- O -� 9 Z a w a c � o =� 0 m � m � � S d N � � d ° � m �, 6 f�l U � C y � `m ° a m y R o a n w £ m � O � �a W m � d � m N � J � F � Y a= � C O � � H Q 0 e d y OI C C � a v N O V C � L 0 o A � W - c .= U � d �° C �' U � C G 6 a o � M � � W mya $ w3 S� U C Bi ai L° y `�di�c � O A Ov�.. S a m m � ° a � V U O Q $ a S m c _ a a w � o � o a o o � mcv'c w d w � m ° o` oq a��= O O�? TO � R�� CI �f Q o m E-°. ° �O��Z(7 m N `c E N W � V y c U L m � L a d a � W O `o y u � a � cu �> E 3 �� i d U U U c c o` � Z y Z � c d N q .- R � b— r N N t d q d p� `- n � N � % ° � g � '� m E � E m � � � Y y y �m �d C � � d D > �m 4 N . C y a`o j� �2 `o � o� x i x u? '° v y ° �� o =x�t . � .m.,=y—..d N>. t N� W y C O R;= w d- E � C a > � �U � y A �= mar- uc � C� N N W t� N` y � C� d � � U m d 'p C�t d V�C d 8 N� d'p W Y V 10 > 4 L r J � O v1 U C O V i y � � � � � � u 1' >=� 5av =� d d�m33 taav.....am oonau W o m u a�i m m a� _L % �SA Y� m J V!G}"f}"r�Q T c O 0 U U C 3 4 N O > C � Y O _ d C O C O O L�l � ? { K l9 � 0 in w �� N O l9H � � � � � � � N � H � � N W N W b n � � N � � � N �S W lh W W 69 � °� � � K W m S v w �� S � � .p w � M O � c o ° � O y c O N � N = a <+ o m ¢ U U = V U X C W� C N �p N N t0 � CI }-� H0� H 0 � N a a m � m .A.� r : O u Q 8 fC r � W _ 5Z v 25 Y 8 � r � w � � � � 8 a� N � K O � 8 r u j M b9 g � o a 8 � K . Y . a d 0 � m 6 r L ..�.. N U tv �� -��' �?, c O W g � C 0 v � ° c m u c A � w w 0 N � U N L O R 7 O C Y 2 3 F O 0 C � � � Pv N � N � m w �i g n � m N c� H � � H N m N � n � N M a � W V! d � O K �� .- N H H H t � tV N rn ' m w a9 �� Nt� � N Vf �„� (9 a vi vi � E � � g � � 8 N q O 8 � � g W O 8 r � O 8 W O 8 � K O S � O 8 n w O O N H N G O N �p C O O � C C u u O � � b N � e i Y= g = 0 b � � N � b � = W N Y N 9 9 � E E � 2 Y m L ' `m � y ` � � d d �.�.. � N N A tC N N d F F� � O� � O � Q W � � . y � � �$ � � W n W M w �� W � � � � o W n � O � �� V � O f0 1� N � ti � N b tb N O � N � � � � � � �� 1� K H W V� m N �G (�1 In N N C� vi � O � N O O r N n � �D O 0 Vi W '; K H m W H � � S � � � � g r � � g r � O 8 n � � g H O 8 n N H O 8 W O 8 n N 49 O g � 6 8 n w O 8 N H N C O C � O p > ` O v a U V Z Z �' 0 2 0' 2 h d y � m c d = O a a v � � � i a r `d' p_ � (�J U O� U t�l j ` L W y _ � 2 W c n ? X X C N N�p C b b A � N X �p N W d q N S d O > X 1� !- ! � O f!'� � � I- Q w ��-1�' �� w i d C D m m C. U d 2 - - --: h _,- � Z m N c` 0 N `m } d o` e O > e � d s N N O v � � 3 N b C O > C C O _ � 0 W C O � � � w �� p 8 O �n n�m w N O M ry O O i � m c � o Y a 2 m EE Y N x �r � C 3 = N � f9 �� w�,= w» n O � w �oQ n �� w w � � � 0 m �^ 2 � 'o d � C ` W d N y c y Y o ZvL=m Y q w � C nc.n �� U OF-= ; N N Ol N O O fD � � � �KMI f� A � N A H ? O W W < CI n O m � �WH N N � N � � H O In N N N N f��N � � � � � H W N m � N W �� o� � www � N � �� /iKH v u u d d v � m v ti w N N b S .� O tJ0 Z N a v c R V�- g n H O 8 H O S � � H O 8 n H O S n N W 8 O S N H O 8 N K � $ w � 8 w � g w 2 y N a v � N Q � 0 � N U W C C G � � C U � F- � t N N m � � N � s E x m A � N v � .. 3 N O � W m s� a� y TN .y A d W V C � �' N a �, U O� j C W � CU C S d m E 9 m � c '� T Ets W tn � ��-�� _ �� - CITY OF SAINT PAtJL Norm Colemaix Mayor DATE: January 3, 1997 TO: Mayor Norm Coleman Council President �ave Thune Councilmember Jerry Blakey Councilmember Dan Bostrom Councilmember Dino Guerin Councilmember Mike Harris Councilmember Roberta Megard Councilmember Janice Rettman FROM: RE: OFFICE OF THE CITY ATTORNEY Timothy E Mnrx, Ciry At+omey 1.�' �0 400 Ciry Hall Telephone: 612766-8710 15 WesF Kellogg Blvd Facsimile: 611198-5619� Saint Paul, Mrnnesota SSIO2 �� Tim Marx, City Attorney � Legal Opinion Re: Public Ownership of a Professional Hockey Team Based on the request of councilmember Blakey, I requested the law firm of Briggs and Morgan to provide an opinion on whether the City could acquire an ownership in a professional hockey team. The firm's response in yes. I concur in the response. The opinion is enclosed. attachment cc: Pamela Wheelock Martha Larson (w/attachment) L�W OFFICES BF�IC=GS AND MOI3GAN PROFESSIONAL eSSOCIAYIO=� �.? 2200 FZ85i SASIOR9L HA.\'% HtiZLDII�G SALtiT' p�tiL� MIAF£502A 53101 iEZEP80?:E CBi2) 223-6800 FSCSI`SILS (B32) 223-6430 M�HI2£H5 DIH£Ci DIAL ViJ!d8£8 (612) 223-6625 Mr. Timothy Marx City Attorney Ciry of Saint Paul 400 City Hall 15 West Kellogg Boulevard St. Paul, MN 55102 December 31, 1996 ��-l� *S4T'EAPOLIS OFFIC£ � �ns ��s *sv�v'n'r.ePOsss, amc�ESOxe sswz SEiEP80FE 1912I 336 PACSIMILE 1812) 334'BB50 Re: City of Saint Paul - Acquisition of Ownership Interest in Professional Hockey Team ' Dear Mr. Ma�: You have asked whether there are any legal impediments to the City of Saint Paul (the "City") acquiring an ownership interest in a professional hockey team. For the reasons set forth below, which are supported by existing case law, �ve have concluded that there are no legal impediments to the City acquiring an ownership anterest in a professional hockey team and using public funds for that purpose. Le�al Authoritv. (a) Economic Development Authority Law. Pursuant to I.aws of Minnesota, 1992, Chapter 376, Article 4, the City has been granted the powers of an economic development authority. Minnesota Statutes, Section 469.101, subdivision 6, authorizes an economic development authority to be a limited partner in a partnership whose purpose is consistent with the authority's purpose. (b) City Charter. The City Charter, however, provides even broader authority to the Ciry. Section 1.03 of the City Charter grants to the City ". .. a11 powers which it may no«� or hereafter be possibie for a municipal corporation in 3-10687.1 i: = ' B1?ZGGS avn MOFtGAV � �y^ ,X (/�' I� V � Mr. Timothy Marx "' December 31, 1996 Page 2 this state ta exercise in harmony with the Constitution of the State af Minnesota and the United States ...". In TousleXv. Leach, 230 N.W. 2d 788 (1930), the Minnesota Supreme Court enunciated the principal that charter powers must be liberally construed. Given this broad grant of authority in the City Charter, there are only three areas of inquiry that need to be addressed: 1. Is there anything in the City Charter that limits the exercise of this power; 2. Has the State legislature preempted this area; and 3. Could the State legislature have constitutionality granted such a power to the City? Other than the obvious requirement (articulated in Section 13.01 of the City Charter) that the City's acquisition of property be needed for a public purpose, we have not located any provision of the City Charter or Minnesota law that restricts or preempts the ability of the City to acquire an ownership interest in a professional hockey team. The only other inquiry is whether the Constitution would prohibit the State legislature from granting such a power to the City. Public Pur�ose. The only constitutional restraint on the acquisition of a professional hackey team is the same restraint found in Section 13.01 of the City Charter, namely that the acquisition be for a public purpose. This principle permeates the taking ciauses of both the United States and Minnesota Constitutions and is particularly relevant under the requirement in Article X of the Minnesota Constitution that public money be spent for a public purpose. What constitutes a°public purpose" is a concept that has evolved and changed a great deal over the years. In recognition of the need of municipalities to encourage private investment, to increase their tas base, increase empioyment opportunities, and provide a range of health, housing, educational, recreational and other services, the courts havinQ recognized that the loaning or granting of public funds to private entities is, in appropriate circumstances, a public purpose. ��o6a�.i BAIGCsS s�n MOBGAN c_= =? Ivlr. Timothy Ma� � - December 31, 1996 Page 3 q��l� Whether a public purpose is being furthered by a particular e�enditure is a question of the facts and circumstances surrounding a particular situation. In the case of the City using public funds to acquire an ownership interest in a professional hockey team, there is specific recognition that public investment in professional sports furthers a public purpose. In Lifteau v. Metropolitan �orts Fac. Comm'n, 270 N.W.2d 749, 755 (1978), the Minnesota Supreme Court cited the trial court's finding that the public's desire for sports facilities was great and took judicial notice of the importance of professional sports in our social life. The Supreme Court recob ized that economic development may not be the primary purpose of building a new stadium, but rather entertainment and recreation purposes may predominate. In this instance, in addition to the City investing in a professional hockey team to provide recreational and entertainment opportunities for its residents, we ` believe that a finding by the City Council that acquisition of an interest in a professional hockey team is necessary or desirable in order to attract such a team to the Civic Center wouid provide significant additional grounds for concluding that an adequate public purpose is served by such action, namely use of the Civic Center by other groups, including nonprofessional sports groups, to encourage and promote additional economic development within the downtown area and the City as a whole. In summary, based on the broad grant of authority in the City Charter, on existing case law explicating "public purpose" and on the absence of any statutory or charter provision prohibiting such an acquisition, it is our opinion that the City may acquire an ownership interest in a professional hockey team and use public funds for that purpose. .j��'�-� �._.�/�� sao6s�.i PROFESSIONAL ASSOCIATION R �� _ `_ g -� ` Council File # -- p �., f j, p " I-; f " ' " ` ` ' ' ' ` Green Sheet # RESOLUTION CITY Q� SA„INT $�UL, MINNESOTA Presented By Referred To 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 35 36 37 38 39 40 41 42 43 44 45 46 47 48 Committee: � i , 1� Wt�REAS, a group of Minnesota investors have submitted an application for an NHL expansion team for consideration by the National Hockey League Board of Governors on January 13, 1997, to play in a renovated Saint Paul Civic Center, and WHEREAS, the Council sees professional hockey as an economic and community enhancement to the City of Saint Paul and the larqer metropolitan area, and WHEREAS, the twenty-three year old Saint Paul Civic Center Arena is in need of significant improvements in order to maintain a competitive position in the � marketplace, to bring the facility up to NHL standards, generate needed revenue, as well as attract additional non-hockey events to a renovated facility, and WHEREAS, the City Council has directed staff to develop lease terms and a plan of finance in anticipation that a NHL franchise team will be awarded to the investor group to play hockey in a renovated Saint Paul Civic Center, and WHEREAS, the Arena renovations are currently estimated to consist of major improvements as outlined in a recently completed Conceptual Design by HOK Architects dated December 15, 1996 with an estimated cost of $51 million (excluding capitalized intezest and cost of £inancing), and WHEREAS, the proposed Arena improvements include the following: * Addition of up to 63 12-person luxury suites * Addition of seats to bring total seats for NHL games to 18,000 * Addition of Arena club restaurant and bar * Widening of concourses on both ends of the Arena * Enhanced architectural exterior * Addition of Team Store * Addition of Team Offices * New sound system and scoreboard with video panels * Additional and improved restrooms, concessions and novelty stands WHEREAS, the City intends to issue bonds to finance the necessary Arena renovations, and WIiEREAS, the City anticipates it will need approximately $5.7 million per year, as described in the Plan of Finance, to fund the annual debt service on the aforementioned bonds, and WHEREAS, the Proposed Term Sheet outlines a plan of finance which would allow the City and Civic Center Authority to accomplish the needed arena renovations using funds generated by the team without reliance on property taxes, and THEREFORE, BE IT RE50LVED that the of£icials of the City of Saint Paul do hereby approve the attached Term of Lease for an NHL expansion or relocation team, including the enclosed plan of finance and authorize staff to execute a binding letter of intent consistent with these terms, and � (_ 2 -rf? � 2 3 4 5 6 7 8 9 10 11 ia 13 14 15 16 17 18 19 20 21 22 �� BE IT FURTHER RESOLVED that after the granting of a NHL franchise and contingent upon approval of the Saint paul Civic Center Authority, the officials of the City of Saint Paul do hereby approve the proposed Conceptual Design of the Saint Paul Civic Center improvements done by HOK Architects dated December 15, 1996, and 8E IT FINALLY RESOLVED that the officials of the City of Saint Paul do hereby direct staff to do the following : 1. Engage HOK Architects to conduct formal Design Review for the i.mprovements to the Arena. 2. Engage an engineering firn to evaluate the existing condition of the arena to determine necessary maintenance and improvements anticipated during the term of the lease. 3. Engage necessary services to represent the City during the 1997 legislative session in order to secure approval of the reinvestment of State Income Tax and Corporate Franchise revenues for purposes of financing Arena renovations. 4. Develop a plan of finance for deferred maintenance of the Arena, which are items of improvements such as asbestos removal, not covered in the abovementioned improvements identified by HoK Architects. 5. All ouf of reimbursed to ecC t costs to be er or the 4 will be to a maxi� the 6. Explore some form of public ownership of the NHL Team FINALLY RESOLV an award of an e with a financing ogtion that is a revenue bond without a ement Requested by Department of: By: Adopted by Council : Date cf,rr .� ��,� 1 Adoption Certified by Council Secretary E� Appr By: ^ tF� � � al 0 er Form Approved by City Attorney BY: � �.�.� �. , l�� '1 �/ I Approved by Mayor for Submission to Council -o, By: id with other : Saint q� ��' nn��h [ V V u/ v �"� N� oA��NmA�o GREEN SHEET Office of the Ci CauncIl 1-02-97 COtdTACT PEFSpN & PNONE INRIAUDATE 1NR1ALIDATE ODEPARThIENTDIRECTOR �CRYCOUNqL Councilmember Bostrom 266-8660 pS51GN � CfiYATfORNEY � CRV CLERK MUST BE ON CpUNCIL AGENDA BY (DATE) AOUi1NG� O BUOGEf DIliECTOR � FIN. 8 MGT. SERVICES DIP. J3I1�73Ty 8 1997 OHOEH Q MAYOR (OR ASSISTANn ❑ TOTAL # OF SIGNATURE PAGES (CLIP ALL LOCATIONS FOR SICaNATURE) ACflON REQUESTED: Approving a Term of Lease for an NHL eJCpansion or relocarion team including a plan of finance and authorizing staff to execute a binding letter of intent. RECAMMENOA710NS: Approve (n) or Rejeet (R) PEFiSONAL SERVICE CONTHACTS MUST ANSWER TNE FOLLOWING QUESTIONS: _ PLANNINC� CAMMISSIQN _ CIVIL SERVICE CAMMISSION �� Has this person/Firm ever worked under a contract for this department? _ CIB COMMITTEE YES �NO _ STAFF ' Z. Hes Mi5 person/firm eVer been a city employ88? — YES NO _ DISTFiIC7 COUR7 _ 3. Does this persoNfirm possess a skill not normall y possessed by any current ciry employee? SUPPORTS WHICH COUNCII O&IECTIYE? YES N� Expla�� all yes answers on separete sheet and ettech to green sheet INITIATING PqOBLEM, ISSUE, OPPORTUNITY (Who. What, Whan, Where, Why): ADVANTAGESIFAPPROVED: DISADVANTAGES IF APPROVED. DISADVANTAGES IF NOTAPPROVED TO7AL AMOUNT OF TRANSACTION $ GOST/HEVENUE BUDGETED (CIFCLE ONE) YES NO FUNDIfBG SOURCE ACTIVITY NUMBER FINANCIAL INFORFnAT10N: (EXPLAIN) . ��-}8' I-� % �ERM SH&ET ior Lease o£ ST. P�t7L CT42C G'E�TEA ARF. (� ) ��._:�. � ----� u�� 1_ 2 3. 4. QPERTyY08 wy1= be the Seint Pavl Civ1c Cer_ter ALtY:ority (Authority) , and OFStt'3R will b� the City cf Sair_L ?au1 {City). zEPi�.NT svi�l be the D?;?:, expansion ^'=�z �e�m rep:esented by the znvestor group (Team}. �-3� =&"�..s:ISES wi11 be the curr�n� Arena and all �quipment nECess�zy icr =he ccnduct ot N'�FL games, inaluding: (A) Cy:rrenc ?5,5SQ �=_;r_s, inclt;;�ng 1,ZC0 club s°oats i3) Gti,irzent 0 suites - fC) Renovzt=_3 P.rena for N?�, GamFs, as prcvi3ed ia ��§ Paraarava 8 h;lo�.r� i: c7.uding Tea:n SLO=� znd Tea:n OfPices (D) Acee5s to al: ot.�er spaces incid?ntal to conducta.n.g the businass o� a� NF;i, team or_ � c�e and non-� 4ame days, inciudina Icoker roon s�:� and bnx o'_£ice (bax office ren.ains unde_ the supzz and coatrol oP th2 OPERATCR st:b�ect to the Term Sreet). TSHM OB LEA5E: Te_^.n of '_�:,�� Lease wi11 bz equal to the term of the bonds �__a_� �-- zssued *ay the City to finance !or zefivane� the j�rcna u� for � term up to 2o years) fsaid boads taaetb.er with aatr raZU�din,t bonda the Bondsl. Tea� sha7.Z nave th2 rig�!t aftier t�e first t,e�s ears of tha �ase to Fre z-��t re sired to ischar e outstandi: �$cra�s {inolu�_ng any related prerai.ixm or early retirement penalty assaciated with pre-paynant). �.e�n ,,;,, �. ___----' � -- zT3 � �2�P-6=izi�,=�n� puZpose ef and playof �t�� l�ya-1ti� cf t'r.e :�re=.a ID Wlll tease .�'.:?Ild �or the �ar,ks (hom� regvlar seascn t�r1L sezso: or soor_er, s.ioject Co availahility �ne Arena renovation schedule and whEn the II'rII, 3C'. :t.r.ED vs to v� 1�ereT �� -�� I-� ex_pects thz Frzr_chise to beain play_ Tezm reloCata the Team from the Areaa �=-.,:� - -- haye beeu d_ i, s�aec3. =��L �:�oaocasc ana mercnanazsi r2c2ivEd �y Crie Team '-"ar`-nu�a from local brc3nca6t Ioc�I i,r, c�1a and radi�) �� 5. Su�71i IZEVFZvTiES AND E.T.PEl75E5 - CO*7'(�„°PTCt�L OY.7z..RVZESP: {�) T"zm x ti�nu�s. The Tean c.ill ;:cntrol zr3 retain 10�% cE �rena revanues derive3 from regn].ar seasen znd �layof: hockey gaaes (Tea*n Are:�a FcevenLeS) , and 100a o€ th= :ea«< rever_ues derived,from other oo2rations, all er.c=p� as pravidEd in this Ter.n Sheet (Tea� 8=venues). "°� T� .�rcna �s� Revenues inclnde; {1. ) Sa3es ci `_ic',-_ets icr A'?iL GaneS _�excludina £aeilitv - ticket surch�reel (2•) sa'es o£ t_ckz*s for cl� seats for N�IL Games S °dClll�ri t.IC�O� SL:=C�3rQB� {3 • T sales of l��r� suites fcr use at ?,'HL Games {q ,} 3ro;,� � g �hare of co _e�ssioZ sal�s fcr I»I, Gacnes {5.� C=_m�orary a �V°Tt].Eiila r?J2,t1E5 (CIcS::�T �SCdTC�S� on-ice advertisin�, video boards} realizEd by Team ia connecrion �rith N� G�es (6_} nerchandisir_g revenues realized by Team prom sales a:. �'Hi, G�nes and aL aZ1 at�=r ti:*.eo at t<e Team's ret�il �� e� in ty,o psena a^,d else+ahere (7.) p revenues realized by ta2 Team fra:n sales at isHS, Games and elsewhere (8.) net parking revenue� c3erived fram � 2,400 oE the City-cont_olled ranro and surPace parking spaces7 �--� available for sele at I�AL Games (or a¢,�, (9 . ) f10.) t1i_� will agree not �o �---s.� tzale� Bo.^_.a.s es revznue9 of NI?I, games {e•g- a_ other rez•enues dez�ved fraue operztions af the TEam's businsss outsi@e o£ the �era (H) Citv x�e-�a R�Vcn�ipq mi�ye Ci�y sha1Z bs er to aZl other reti�enues d=rived 'rom t?�e Asena, ot�ar than T2sm Arena A,?V27111°Sr 1P_C�t1�1?!� r°�-'-'=e��`. �l'.tic:�.iS�It�� 213tIL2A� rigrts, outdoor m=_r��es, ar.d �c�-�.�'� GaT� e:�e�±s in t�lE AY?R3 (NOn-Hacke $V@^�S� � <��2Ct t`.0 s�d..r��'Z'� hg " 5 (�1 and {G� _ y P {C) ^eam rre: - F;co nscs, i� Team will t:c Gi�� ii} tina aci.ual op� e�:�e�sas _ :c::rre3 £or tTzZ Ga�?s�in or reimtrsrHe '-----" `^-��--"=c° �:-�-LtCi:�1y 23L1[7`RC2C1 d� T16�G00 f02 C7 of ga:�� sc�>ici .� �.:d $4, GGO ior gana pres2ntation c,.,,o„��-� r, < i � -- r""-�" "�'r �� " ac"ttiaZ aLeratioa and 3L�'17,a�n vti co vi �iar9r �� -t� �-�^�� mainte�ance exa�nges a7.loeab2e to the Tea� Of£iCes� Team &tore and occucancy of other areas ef t�xe p.rena �:sed by the Team, such as the ticket office {ir_clu3ir.g furniture, fixtures, and egsipment), a�d (iii) ar�, r°quireH payntents of � genErally applicable Qales tax �^d S,� faci=ity �icket 6urcharge. (�) Citv Ar�:a E ine Anthority shsll manage, �F�=��= z�d :naintain the 3areaa consi t��t Ki 1i ��arable X-!T. facilities, incluaing making all a -�� capital repairs and replacements a� an when exner_se o creat= a (A_Eaa C be Punds agre=rr_ert a1Z at tha pital r.placement repair a:.d resarve�Eund�+ tal P,eoair z'zd Perl��ement r�s��Q gund), �o rnm r; r-.. r�.___ .,____ � �� - -- - � �u=ucrzzv oaiv. _m� City and the Auth�rity will det=rmin� the annual cn_nicram coni.r:.�ution as a resulr o£ an engineering �,-��lysis conducte3 by the City. ':'he annual minir.ru� contribution is expected to be $500,000. The City �--?� �� ree to guarancee the pay�nt and pe:formance of �he �'€'�z ��e= -�r-�'.,� Authoritv's oblioatioaa un,3�r �his suhtiasavraph (D?. (E) Fsena C�e =or I�riL ames, ThiS Tex�f Sheet aesumes. that t'ae :�uthority c:iZ� operate the 3lrena for :�,' U'dTES_ 'i!':2 A*Stllp_1�]Y ki11 use its best effarts to r :ean ;,rena gxpazses. Z"r_e C_ty and Au_YOrity ir_tend for t��E Arana to b° cperated in a coet effj.cient man.ner fcr N:'?, G3'.a_5. Th�_efore, the CiL,v �,3 �uthority will n=_tiotiate in ,c60� �aith with the to uTheth2? th= Te=_m shculd r, a11 or part o P_reP.d OD?T3t.107iS fc2' N'r3T, C-8:fr°S Ly�OT! �ECZ1`l a proposal irom the Team o��tlining :he prcYCSeB relationships of roles and resper.sibi:it=es for Games. (F; Team as f the Wrl, �t2R the T�I, '- ' —' - nCLL V Yc Bonds. Ttie City antici�ar2� that it wil? rsed aporoxi:r�ately $3.95 million �er y�ar pu� �_ �Frtai= Areaa ravam„ES, or frocn tri� Team _£ suc?: re;-cn�es flpw fiir�c'cly to tY.e TEam, to fund a=�star_tial � ef �ne estir:,:Led y�, 7 millier, a�tr_�al debt ser.�ice on th2 �ares. upon r.utual agreemen; �=-_� betu�� ts:e r_t �_� =n3 _ean, the a;r�ount of $3.95 �ill�on per cear to ccve= par� of the d�bt sareice wi�l bs covere3 i= c:�e �� =�irce c;ays, all ef w�,ich come frcm Team 345741.�� Vg to v1 1/B!gT `�� '_�-`�� 2• Th� Team will sell zn3 Lne proceeas of th= m�z� G°_�srated rre,a _..+ Reaovatien FLnds. �ha T_=m wiZZ tr� as rea L:�er the }2j� Lease vg to th_A f;rst $3.97 y million per year of suCh re��er�es to t'�2 nurhority. 3 • `!"-_= Tea:ri w_11 sell axid r��--�� u: cne i��am cenerated Arena ` Rer��•atio� E`ands. '?'ha 'rean wi11 glarar_tee a ray-:ent of S3 . 95 mi'! lion an.^_ua11y �5 rent vndar the 3�� L�ea� to the F�utncrity,�rEgarc�less of the a�ount of Team Geaerated Arzna 3=uzcvation Buncs- Ge:.erated Arer� Rere3ue sa�� fwacls which would x�at exist in t�e absP.*tce of the Team; 1. T�= i�uthori�y will sell �+�d ��z. �,�„E B r ��- �r the naming rights7 � Per�nanent ad��rtising {including r..ew r,�rq�,:.ee(s) 7, and Y.rill setain ecatrol oP the sale araceeds �nd the --��iy ��cilaty tickeC surcnarge :avanues far r�.+ �ar?s (Tean Gcnerated Arena Re,zcvation Funds}. �L, -, -«�-----' 1- t��i �u:zr.— - � . _ - - iG) __ __ :: ru_t' � - �TLcr ii0 C2S '-" Pz��• �f the ?ends are �aid o�f earlizr than the schedul=3 repay�ea� or at the end of tN�e r_c= repay�nt sehedule, the �uthori�y shall receive YOOe of a].I r��enees tro�r, the faci�ity t=cke� surcharge and the Team shall receiv� al'� other Tea- Ge:�erat�3 Arena Renovacior Funds. (A) A7anina xiahts - C� v AoDrova�, � C_��, has the =ight to xeasonablv aDprovs the recip ,ert of tI:e r.am�ng rigY!ts prior to szlection by the Teara. 2 �e T3- rights shzll be g:.ant2d for r�o lenge� tt�z rh_ tErny oE the ':� ��se, (i) r,rena Or,erarion zor 7 von-�S�ck�v g�ent _ Aitn r; - 'C-.�5 �erm Sha="*_ assu^�ee the Futhorzty will op2rate -he P_rena �or 2 �„n-nockey Ev�Rrs an3 for cazturing re=�er_tes from events i: t'r,e adj oi�ing co:�ve, t_en czater, the City an.d :+::th�r�t? wi11 negatiate in aoo3 faith with ene Team �*i crtio : c..__c'r. „osic al � ow cre Tea�r to op2rate the Arer_a 34�':7.R°D Vb n V7 118l97 Y � ��t -i8 �-�-`�� for Nt,i, Games� 2v'on-Hockey EventB or bot?�, upon rqc�ipt of a written proposal £rcm tne Team. P-R:lS�, CQM�STT2�NTS : .ihe Cparstor �n3 TeG; belie�e that �rie Arena is fre� o£ all currer_t caatractual-cbli�cations relating to �rena o�eratione caith third rartizs uhich inciucie advertising, ticket sa2ea, ticket c�i�tr`butien a.3 conceasions, other than con*_raCtual schedulir_v c�;;�tm2:�� for Certain events, ize PinaZ details of CC?;tr�C�ll31 obligatio:s ef the :: -� �. �.i21 be set 'orth �n �_:e ?ti�� Le3se. Tez;n and Oparator will mutually a�re� oa the �warc. pg all thi=3 Fd=ty contracts as they are �=gotiated :n a:�ti�ipati.oa of and afCei tae ce��ncement cf the �eace. �,_ TE=n h�� the righL to determine product s=lection to be sen:� �-� cr;� cor_caESionaire. RDYE&TI6ING: (A} ?f t'-'-° =uthorit}• rarai:_s centro). over aaming rights and g=_m,�.-�ent �dverti.sing sndzr Paragraah 5(F)1. , thsn neither the Authority nor t�e Tea:n shall have tne right to sell '' _ excl�us�� rights for advertisir.g in the Arena that vould adver�eZy af8ect the other (er.cept the grocluct selection zx.clusivi,ty =or concess`_ons as nrovided to the Team in t?�is Terc�. Sheet). {S) If the Team co.^.trols such ite;vs un3er ei�her Paragraph 5(F}? or 5(�}3, rr=n the Team may sell �� exclusivity riq��s �or adc�_�is_zg iB t� Fsena but such rights �� sT�al not ax_tend beycr� the term of the Lease_ (C} This Te^a Sheet zr.3 the Lease e:all not a=�act the rights af the Citv aad Autrcrity wzt?i respeCt �o advertis_ng in ather areas of the St. Pa��l C_vic Center Compl�x. (e.g. Wi_kins Auditorium o, :�er.r Co=avent�on Centerl. &g�'�'. n�s�' 'rPrrFfi3F& IZFNOVAT20N: (A) Upon the award of an I�'3L franChis= aa� s::b�iect fo clause (e) belosc, the City will ��:-Q eroea3 agprn�r� mately S 51 mi l l i�n �==�== -�–raE�� for tne A_ena &enocati.on, sch�3uled to be caase=_ted i*�'� ��s�n�—� �aeteea r�nths after t?�e arantirv of G� �,�r� francnise (anticipat?d for oLening of th� l�a$-1999 IdNL sea�o :i . Shoi:ld a iv*HL fsanchise ba ayrarde3 *_o start �l�y in t:.e 1�97-1998 seaspn, the CiCy a:�d luthority aaree �o procaed a_t� as c:�xiy scheduled improvemants zs Po�si=== �;.r tne i"sy7-1.3y6 23'dL season. TTe xxEna 347'IG1.RflC V3 to 1't 71P.,i47 �� -�� _�-`�� - `- Ren vaficn is curr�r,t22r eatimateti to consist of the r..a�or imFrac��ments a.� attlin=3 _n �e ConceptuaZ Dasign pErfo:med by Y.OK �rchiteets dated DBCembe� 15, 199c': f,l, J (2.i (3 . ) (?.) (5.} (5.) {7.� {8,) (9.) (1Q.) {iz.) 112_) (13.} a3dition of �;p to 63 12- nerson 1Lxu� �uY�2s �4 �� ::sich could be do �or 24 ��rson party snite cuu].L1�Zl Of gE3L5 CO bring total SE3�g �p=- j�j� ga.„�s to Yn,C00, �rrich includes up to 2000 new cl;J� seats— addition a€ ;rer_a ciub rastaurant and bar w=�°aing of co.�cour�es on �oth enns ei the Psena ��= =�i on o: a T�arr, store a33�.ticn ct Tea,;, Officea n°c, scozei�ozrd ;:it ; vidco par.�ls �^= �r T"are :=eu eutdoar electronic marquees and p �f Fxist`_r�g t:�rqu�a i*c:orov�c� loc:�°r roons co;nol=Ee replac_*�=nt pf e,Y_stiny saat'ng addi�ionaZ and i:�*�reved cc�cess�cns and ao�elty sta,�ds additional and improved restrooms enha.r_ced archi�ectural extezioz (�) ido cha.^,�2s in the HOK Conceptual Design for zhe prena =�°��s Renncatian shall be made withotit the approv3l Lrie Tzam, exeept as required by � psena P.en�cratio� project bL3get e� o£ approaimatei., 9. PLAN OB FIh*A�C3: (p) �e S_�ect to Paraarao}� HfET (ii} an� (ii') the City sha11 pay Pcz the trzna "-------�' - � �-=�s Reacvati.ea tl�souo': the foll� •_ng fur.3s: F$S�millio. uD-frcnt �+z�n` b;� the Arena conces�_�:uire made possib'_e by thz Team�s play zn c2e Arena, a�G t�a issLance c� �^5 --'?' ... _ 33?-=7 �6:cfs� d_ DS].TLC12±31 annitnti r.f 4..�.�_ a.s__� —___ . . a_.;� ner�_Ge for th� �:� �i11ic: a year? c.i=_ cone �ia7�G�.c4 V2 ro Y7 1/El97 5 ! , . .%4�.:"... � ':1..�'. :i I .. � .: , ;" . , i= t � . . 1il/�Y(42��... . _ . � csayiliae..[ yRB AZ'EIl3 P.E^OVaC].Ori p=0]@Ci, t0 �2C:".10E 1tS costs. If no agre=mant on the value ergineering can b� reach=d, the City shall have thF right to - r;i:e final design d=cisions. �� -l� �,�� which are also nade possibla by the Tea:n's opez _n t'ne Arena _ D "1Fi78,TY SOi1TC2G- 1• Frena n�nir_g riahts, esrimeted at $l.o �illicn per year; Permanent a�-.rertisi�:g an3 m revent;es, estir��ed at $2.25 million per year; axz3 +P�Ye•1;�g3 _--' , ' �_ . • - - — or Tea*-n'� rnaarantz= 2. � � ��z � ��ei=e< e� �� _ � ate inco�e ax ro Eed fzom teaia ayroll estimatBd zt '��-'�. r 75 mi1_ion par year, and,— '- n �. .- ..,_. Y��.._�y _�_ ,- :.r' -- _..- , Seconda SourCes• Revenue fzQm i�on-g�ckey Events i-� th= Areaa - concessions and garking estimated at $'!_0 million per year,- �and £acility ticket surch�rge estimated at $0.25 millio� per year. p,yy reuenues from secondary soarces not required fo= debt sarvice of the So:�de will be applzed *o £und the �rena Capital Repai; and Rep�acement P,eserve Fund. (H) D_t the point where the �:ir.iary scucee €or payment of Che debt sercice exce=d th� de,t sen;ice requirements, tne excess sha12 be applie3 �_r;t :o fun� the ?,zena Cagital Repair ar3 Reglacer.�e�t �aservz F�uz„ to the aa�e�--�a� _—�- ainim-,x� a�::at es ab2is'�ed vndes P racraah 5(D) above, and secen3 to a�eb� service resenrE fund for early retire^=r.t cf tre '_---- �a� Bonds _ -�"" (C1 The City will deve�op a sez�araee plan oP f_ranca far paying for and performing deferred caainte�ar.ce on the Arena currently ne�essax�r or advisable to pertorm_ 34tiL1.P.�n V3 Yc Vi 1/E/GT i 'r� - . .%•J: . ._- 'U..'.. , i - _ i .. , , 1 i'�l:u` , �i��JPYY£.:�ln'.' . � AlEesaative State �mr��r �1�1-�8' �.-�-�� 1q, ca�,az��sr.s c�rrrxravxzoxs The Team, or its charitaole fovndation, �ail? f�,s:d initia'11y z-=a annLally axi�ting local organizations that promote youth Frp3 �ar= i.�t•:innesota, sucn as �he Mariucci Inner City yeuth Y'�ckey G..-�d ?�:ir.nese�a �;,ate�z noCkey P_ssec_ation IL9AEiA? . 11, 1fISCII,Z�AS80II5 {31 '(Jgnn t?�2 grant ^v` c_^_ �c:`L fraac::isa �6 L.':8 lE3¢t t}1Q parties sra11 coT::eace negatiatie;s o� a de�initive '� TEa5B agre2:a=_nt ba_=e t�0'� ttI1$ �2iui Si12�Gt. 11 .��—�.� er'__'_ __ ' _' ' (b7 If an N;�?, team ag�rees to relocate to the Saint Paul Civic C=_nter Arena be`ore an I�iHL expansion fran_chise is au�arc2ed to the Team, t:�is Term Sheet shall automatically �erminate upen the execution o£ another binding iex7n Sheat vrith the relocaLing NEL Team, fC} 'Phe '1'ean sha11 hace the right to us� the nrena eaa vezr- £or five (5) =eam �romotional ever_ts ca tae sa:na t°rms zs it :nay use the Arena for NH?, Gar..?s, subject to scheduling availa:c�ility. � The Team will., ataa.atain ita mam4,Ara�,a„ ..., ..,�_� _�__��__ �--�E- �gL �iui.Fa l'd to �:1 7f8197 0 C _ T'^"�-. . .. lF�.. ; � . � . . .- , ��-p , ...ii"i:li'.Yi3';P:'t'-- , ..- ��i -�3` 1 �� y " `�.' .�, i:!:iS.@EC Y8 ta V9 :!E/37 0 � -1 �>.i.�>��:...i �!)�..". :�:� ' :j:. I�l -\B' �,�-�� ss�zsix A BIh'DiNG I.ETTER F ?N"iE�iT o�r•i� p�� V5 Lo V1 1/:/47 � � - , . . .._, ':I..'- � I . . . . - . � I-f.� .•,s`1:1CYYS':�:". _. . „ ° . � `l �� CZTY QF ST_ P.�LZ. QiT7ut.,:.cn�ra 3T _ PF_U"'.1 IFLC g��ty&�gy MZ'r.�•rE✓_ : EOCF�c.`c.Y Z.' ODP J i :7.7. P �D Y8 to V1 7/SjS7 ii- 2 f I _ �._''.,>_ L'h.' ��:I . ' ;. � rcv d as to For�� 7 ��4 �. 45 �,,,, i-Z•�Z E��:1�I�YY for lease of ST. PAUL CIVIC CENTER ARENA (ARENA) January 2, 1997 1. OPERATOR will be the Saint Paul Civic Center will be the City of Saint Paul (City). and OWNER 2. TENANT will be the NH[, expansion Team repres �ed by the investor group (Team). 3. LEASED PREMISES will be the current Are and all equipment necessary for the conduct ofNHI, gannes, including: (A) Current 15,680 seats, including 1, 0 club seats (B) Current 0 suites (C) Renovated Arena for NHL G es, as provided in paragraph 8 below including Team Store and Team Offi (D) Access to all other spaces on game and non-game � remains under the Sheet). 4. TERM OF LEASE: idental to conducting the business of an NHL team including locker rooms and box office (box office � and control of the OPERATOR subject to the Term Term of lease will be uai to the term of the bonds (Bonds) issued by the City to finance the Arena Renovati s(up to 20 years). Team shall haue the right to pre-pay outstanding bonds (including related premium or early retirement penalty associated with pre- payment). The T am will be required to payoff any outstanding Bonds (including any related premiu or early retirement penalty associated with pre-payment) as a requirement for any local nsideration of a termination of the ]ease prior to the full term of the lease. Team will le se Arena for the purpose of playing all IVFII, hockey games (home regular season an layoff games) (NI�. Games} commencing with the 1998-1999 NHI� season or soone subject to availability of the Arena, the Arena renovation schedule and when the expects the franchise to hegin play. Team will agree not to relocate the Team from e Arena as long as Bonds aze outstanding. 97 5. ARENA REVENUES AND EXPENSE5 - CONCEPTUAL OVERVIEW: (A) Team Revenues. The Team will control and retain 100% of Arena. revenues derived from regular season and playoff hockey games (Team Arena Revem and 100% of the Team revenues derived from other operarions, all except provided 'm this Term Sheet (Team Revenues). Team Arena revenues inc ud (1.) sales of rickets for NHI. Games (2.) sales of tickets for club seats for NHL Games (3.) sales of luxury suites for use at NHI, Games (4.) Arena's share of concession sales for NHL Games (5.) temporary advertising revenues (dasher boards, on-ic dvertising, video boards) realized by Team (6.) merchandising revenues realized by Team from sa at NHI. Games and at all other times at the Team's retail stores in the ena and elsewhere (7.) publication revenues realized by the Team fro�sales at NHI. Games and � (9.) (10.) (11.) elsewhere net parking revenues derived from the surface parking spaces, to be available NHI, broadcast and merchandising sal revenues from ]ocal broadcast of radio) all other revenues derived from o rat of the Arena z,4 City-controlled ramp and fo sale at T3HI, Games revenues received by the Team games (e.g. local TV, cable and of the Team's business outside (B) Citv Arena Revenues. The City al] be entitled to all other revenues derived from the Arena, other than Te Arena Revenues, including permanent advertising, naming rights, o door marquees, and non-1�iI�II. Game events in the Arena (Non-Hockey E nts), subject to Paragraphs 5(F) and (G). (C) Team Arena Ex�penses. he Team will pay, or reimburse the City for: (i) the actual expenses incurr d for NHL Games (currenUy estimated at $16,000 for �) day ofgame servici and $4,000 for game presentation expenses), (ri) the occupancy of the eam Offices, Team Store and other areas of the Arena used by the Team, su as the ticket office (including furniture, fixtures, and equipment), (ni) any required payments of generally applicable sales t� and facility ti et surcharge. Cit Aren� E enses. The Authority shall manage, operate and maintain the Arena, ' cluding making all necessary capital repairs and replacements, all at the e ense of the Authority. The City and the Authority shall create a capital rep] cement repair and reserve fund (Arena Capital Repair and Replacement R erve Fund), to be spent according to mutual agreement. The City and the 2 97 i�' �) �) (G) Authority will detemrine the annual m;n;n,um contribution as a result of engineering analysis conducted by the City. The annual minimum cont � is expected to be $500,000. 1'he City will agree to guarantee the payy�ie performance of the Authority under the lease. f Arena Operation for NHI, Games. This Term Sheet assumes th�t the an FTTI h ty will use its Authority intend f�, Games. i with the Team as operations for NHL Games upon receiving a written proposal from e Team outlining the proposed relationships of roles and responsibilities r the NHI, Games. Authority will operate the Arena for NHL Games. The t! best efforts to m;,,iro;�e Team Arena Expenses. The City for the Arena to be operated in a cost efficient manner for Therefore, the City and Authority wili negotiate in good , to whether the Team should manage all or part of the e Team- n rat Ar n v tion F nds - o P nd . The City anticipates that it will need appro�cimately $3.9 million per year out of certain Arena revenues, or from the Team if such re nues flow directly to the Team, to fund a substantial portion of the estimat d$5.7 million annual debt service on the Bonds. Upon mutual agreement a ong the City, Authority and Team, the amount of $3.95 million per year to over part of the debt service will be covered in one of three ways, all of w ch come from Team Generated Arena Revenue sources which would not e st in the absence of the Team: 2. The Authority will sell retain control of the proceeds of the naming rights, permanent adve sing (including new marquee(s)), and the e�cisting facility ticket urchazge revenues for NHI, Games (Team Generated Arena Re ovation Funds). The City will transfer any amount over $3.95 million per year to the Team. The Team will 11 and retain control of the proceeds of the Team Generated Ar na Renovation Funds. The Team will transfer as rent under the le se up to the first $3.95 million per year of such revenues to the Au oritv. The T m will sell and retain control of the proceeds of the Team Gen ated Arena Renovation Funds. The Team will n arantee a pa ent of $3.95 million annually as rent under the lease to the thority, regardless ofthe amount ofTeam Generated Arena enovation Funds. ;7enerated Arena Renovation Funds - After Bonds are Paid. If the are paid off earlier than the scheduled repayment or at the end of the 9� /� normal repayment schedule, the Authority shall receive 100% of all revenues from the facility ticket surchazge and the Team shall receive all other Team Generated Arena Renovation Funds � 6. 7, (I� Namin,g Riehts - City AR� or val Rig�. The City has the right to a recipient of the naming rights prior to selection by the Team. The rights shall be granted for no longer than the term of the lease. (I) Arena Operation for Non-Hockey Events. Although this Ter the Authority will operate the Arena for Non-Aockey Events revenues from events in the adjoining convention center, th Authority will negotiate in good faith with the Team an o io allow the Team to operate the Arena for NHI, Games, on-1 both, upon receipt of a written proposal from the Tea . ARENA COMMITMENTS: the �heet assumes nd for capturing ity and which would �ckey Events or The Operator and Team believe that the Arena is free all cuttent contractual obligations relating to Arena operations with third p ies which include advertising, ticket sales, ticket distribution and concessions, ot r than contractual scheduling commitments for certain events. The final details f contractual obligations of the Arena will be set forth in the lease. Team and erator will mutually agree on the award of all third party contracts as they are n gotiated in anticipation of and after the commencement of the Lease. The Team has he right to deternune product selection to be served by the concessionaire. ADVERTISING: (A) If the Authority retains contr 1 ovec naming rights and permanent advertising under Paragraph 5(F)1., th neither the Authority nor the Team shall haue the right to sell exclusively th rights for advertising in the Arena that would adversely affect the oth (except the product selection exclusivity for concessions as provid to the Team in this Term Sheet) (B) ffthe Team contro such items under either Paragraph 5(F)2 or 5(F)3, then the Team may se Arena �clusivity for advertising but such rights should not extend beyond e term of the Lease. (C) This Te�eet and the Lease shall not aft'ect the rights of the City and Authonty th respect to advertising in other areas of the St. Paul Civic Center Comple (e.g. Wilkins Auditorium or new Convention Center). � �'7 �� 8. ARENA RENOVATIONS: (A) Upon the award of an NHI. franchise, the City will make approximately $51 million in Arena Renovations to the Arena, scheduled to be completed in eighteen months after the granting of an NHL francMse (anticipated for opening of the 1998-1999 NHI, season). Should a NHI. franchise be a arded to start play in the 1997-1998 season, the City and Authority agree to roceed with as many scheduled improvemems as possible for the 1997-199 I�3I�, season. The Arena Renovations aze currently estimated to consist f ihe major nnprovements as outlined in the Conceptual Design performed y HOK Architects dated December I5, 1996: (1.) �2•) (3.) (4.) (S.) (6.) ��) �$•) (9.) (10.) (11.) (12.) (13.) addition of up to 63 12- person luacury suites (4 double-sized for 24 person party suites) addition of seats to bring total seats for NHL� includes up to 2000 new club seats. addition of Arena club restaurant and bar widening of concourses on both ends of e Arena addition of a Team Store addition of Team Offices new scoreboard with video panels one or more new outdoor marquee improved locker rooms complete replacement of additional and improved � additional and improved � enhanced architectural e�C could be to 18,000, which marquees and purchase of e�sting seating �ns and novelty stands (B) No changes in the HOK Co ceptual Design for the Arena Renovations shall be made without the approv ofthe Team, except as required by Arena Renovation project bud et or State of Minnesota funding deficiencies. In that event, the City, Auth ty and Team shall agree to value engineer the Arena Renovation pro}ect reduce its costs. If no agreement on the value engineering can b reached, the City shall have the right to make final design decisions. 9. PLAN OF (A) The C� shall pay for the Arena Renovations through the following funds: a $5 lion up-front payment by the Arena concessionaire made possible by the T am's play in the Arena, and the issuance of $46 million in bonds. Funding 9 � �� 10. 11. for the debt service for the bonds will come from the following sources which are also made possible by the Team's operations in the Arena: Primary Sources: 2. Arena naming rights, estimated at $1.0 million per year; Permanent advertising and mazquee revenues, estimated at $2.25 million per y ar; or Team's guarantee of $3.95 million annually, and, Revenues from facility ticket surcharge for NHL games, estim ed at $0.7 million per year, and, State income t� proceeds from team payroll estimated at yeaz, and corporate franchise tases paid by the Team est per year. Secondarv Sources: 75 million per :d at $03 million Revenue from Non-Hockey Events in the Arena - c cessians and parking estimated at $1.0 million per year, facility ticket surcharge es mated at $0.25 million per year. Any revenues from secondary sources not requir d for debt service of the Bonds will be applied to fiznd the Arena Capital Repair an Replacement Reserve Fund. (B) At the point where the primary sour es for payment of the debt service exceed the debt service requirements, the xcess shall be applied first to fund the Arena Capital Repair and Repla ment Reserve Fund to the agreed upon amount, and second to a debt s rvice reserve fund for early retirement of the Arena Renovation Bonds. (C) The City will develop a deferred maintenance o perform. CHARITABLE CONT U plan of finance for paying for and performing Arena currently necessary or advisable to The Team, or its ch able foundation, will fund initially and annually existing local organizations that p mote youth programs in Mmiesota, such as the Mariucci Inner City Youth Hocke and Minnesota Amateur Hockey Association (MAHA). 0 9� i� (A) Upon the grant of an NHL franchise to the Team, the parties shall commence negotiations of a deSnirive lease agreement based upon ttris Term Sheet (lease). j (B) ff an NHI. team agrees to relocate to the Saint Paul Civic Center Aren efor an NHL e�cpansion franchise is awazded to the Team, this Term Shee shall automatically terminate upon the execution of another binding Te Sheet with the relocating NHI, Team. (C) The Team shall have the right to use the Arena for five (5) t am promotional events on the same terms as it may use the Arena for Crames, subjeet to scheduling availability. � , . . .. . . � ' . . _ . `�1 � ' � U t _,_._.. _ _ __ .. ..__. . _ __' . _... . _ _' _ . '__ _ _ ' __._'____--.' __ . _. - � �'� � �l � �,�-� � � a�, �- �. _ -• _ . - - -- - .�_. � �� .,� � _��,.��, ��i, _i�-�_, �,i � - - �-- ; .��,��, � _ �.�-.;.�..,n�,.� - � �_ c.-� -_ _ _ _ _ _ _ , _ _ __ . . . � _ � . �5�� . . _ �--_ . G�� _ �,-� -- �- --- _ _-- __� _ ��-.-- `��?av �� .-� _ � c`�.� Q_ _ --- _ ___ _ __. _ - - - 6. �---- �-. � �,.. c��_ _ _ � �, � �.��..,-,� �..� �,� - -- _�.__. �� _ �-� - • �- �__ _ � - _ . _ - . ,. __ -- - _.. ___ _ - - -- _ _ . _ ___ _. �_ _ __ _ _,. _ _ __�. � _._..._- ___ _Q- _m. _ _._ _ ___.._. ,- _ _ __ .. _ .______ _ � _ _ _. __ �� , l� �� 24 �a! Exptore some form of pub{ic ownership of the NtiL Team. � n�� \ �� / � ��U � �� -�� Staff will report back to the City Council within three weeks of an award of an NHL franchise with a financing option that is a revenue bond without a general obligation pledge and with other financing options, including consideration of participation by the locai business community, that staff recommend should be pursued. Such other options may contain credit enhancements, but will not require any direct property tax levy by the City of Saint Paul. The staff wili also present a recommended financing pian. CITY OF SAINT PAUL Office of the City Council �,O< 310 City Hall Saint Paul, Minnesota 55102 (612) 266-8577 Gregory N. Bkcs Fiscat Pplicy D"uector DAT'E: MEMORANDUM January '7, 1997 TO: Council President David Thune Councilmember Jerry Blakey Councilmember Dan Bostrom Counciimember Dino Guerin Councilmember Michael Harris Councilmember Roberta Megard Councilmember Janice Rettman FROM: SUBJECT: Greg Blees, Council's Fiscal Policy Director � � v Civic Center Arena NHL Remodeling - Finaucial Analysis ��_\�' This memo will summarize my analysis of eight bond financing scenarios for the proposed remodeling of the Civic Center Arena to accommodate a NHL Hockey franchise and to make needed maintenance improvements at the arena building. It will also identify some pending work tasks which should be accomplished in order to provide additional information to the City Council for your use in making future decisions related to any remodeling proposal. The three m�jor variables for bond financing which will affect the interest rate applied to the bonds, and thus the corresponding debt service for the azena remodeling proposal, are: 1) Revenue Bonds (Pledging Only Dedicated Revenues) vs. Revenue Bonds With a G.O. Pledge (Promising to Izvy Taaces If Dedicated Revenues Are Insufficient.) 2) Tas-Exempt Bonding ('The investor dces not have to pay income taxes on his / her investment earnings) vs. Taxable Bonding (The investor pays income taxes on earnings.) 3) The Term of the Bonds. I did two structures, one assuming a 15-year NHL Lease and one assuming a 20-year NHL lease. Because bond money would be needed almost immediately for construction, almost two years before a hockey team would start to play its 1998/1999 season in the fall of 1998, my estimates used a 17-year bond schedule for a 15-NHL year lease and a 22-year bond schedule for a 20-year I3HL lease. In addition ta the three above variables, I assamed the following constants for all scenarios: 1) Only interest payments would be made for the first two years of the bond issue; and that capitalized bond monies would be provided as necessary to finance said interest payments which cannot be financed with investment earnings. a �� 2} Bond money for the arena remodeling project was fixed at $46;000,000, assuming a$5 million up-front payment by the Arena Concessionaire. 3) All investment earnings on bonds for Construction would be used for debt service. 4) All investment earnings on bonds for Capitalized. Interest would be used for debt service. 5) All investment earnings on bonds for a Debt Service Reserve would be used for debt service � For ali G.O. Bond 3'ssue Scenarios: a) There would be no Debt Service Reserve. b) Financing Plan Insurance would not be purchased. c} Bond Sale Expenses (fiscal agent, bond counsel, underwriter, discounts, etc.) aze estimated Q1.5% of the total amount bonowed. '� For all Revenue Bond Issue Scenarios: a) There would be a Debt Service Reserve equal to the maximum debt service due for any one year. b) Financing Plan Insurance would be purchased at a cost equal to 2% of the total amount of money borrowed. c) Bond Sale Expenses are es6mated Q 4� of the total amount borrowed. The Administration has initially proposed an annual revenue stream of $5.7 million to finance annual debt service for a Tasable Revenue Bond Issue of $46 million for the arena remodeling proposal. Attached you will find my debt service analysis of eight different bonding scenarios, using different interest rates and the common assumptions identified above. Depending on the type of bonds issued (Revenue vs G.O. Pledge) and (Tax-Exempt vs. Taxable), the $5.7 million in proposed annual revenues identified may or may not support annual debt service. The ANNUAL NET DEBT SEKVICE ESI7MATE (after applying investment earnings) for each scenario is summarized as follows: 1) Tax-Exempt G.O. Pledge, 17 Year Bonds, at 5.5% Interest =$4,695,000 2) Taxable G.O. Pledge, 17 Year Bonds, at 6.5% Interest =$5,037,000 3) Tax-Exempt Revenue, 17 Year Bonds, at 7.5% Interest, _$6,107,000 4) Taxable Revenue, 17 Year Bonds, at 9.0% Ynterest, _$6,907,000 5) Tax-Exempt G.O. Pledge, 22 Year Bonds, at 6.0% Interest, _$4,119,000 6) Taxable G.O. Pledge, 22 Year Bonds, at 7.0% Interest, _$4,484,000 7) Tax-Exempt Revenue, 22 Year Bonds, at 8.0% Interest, _$5,432,000 8) Taxable Revenue, 22 Year Bonds, at 9.5 % Interest, _$6,294,OQ0 If the City Council decided to approve bond financing for the arena remodeling, it would probably be most appropriate to tiave a mix of taeable and tax-exempt bonding. And the term of the bond issue would be most influenced by whether the NHL Team preferred a 15 or 20 year lease. Thus I would guess that the most likely revenue bonding scenario for a shorter time period would be somewhere between option 3 and oprion 4 above, with debt service at roughly $6.5 million. This balipark estimate would suggest that: i) Additional revenues would be needed to support debt service, andlor c��-1� �) The amount of arena remodeling would have to-be scaled back, andJor 3) Revenue Bonds With A G.O. Pledge could be considered. While there seems to be initial resistance to using a General Obligarion Pledge (assuming the I.egislature passed a state law granting Saint Paul the authority to issue g.o. bonds for the azena remodeling), a case can be made for considering such financing. If one assumes that the azena remodeling project should go forward with revenue bonds based on a reasonable level of assurance that annual revenues would be$5,700,000, than one could argue that for the same revenue stream and using a g.o. pledge: the Civic Center Arena could have a larger level of improvements, or the City could spend less for total debt service. The proposition that if the $5,700,000 in annual revenues don't materialize, the City would let the revenue bond default, is questionable, in light of the fact that such a default would have a severe negative impact on the City's ability to issue future bonds (revenue or g.o..) Assuming the same level of improvements, the wtal debt service cost savings using a g.o. pledge could range from 23 to 30 million dollars. The TOTAL NET DBBT SERVICE COST ESTIMATES for the eight different bonding scenearios are as foliows: i) Tax-Exempt G.O. Pledge, 17 Year Bonds, at 5.5% Interest =$69,003,000 2) Taxable G.O. Pledge, 17 Year Bonds, at 6.5% Interest =$74,865,000 3) Tax-Exempt Revenue, 17 Year Bonds, at 7.5% Interest, _$92,195,000 4) Talcabie Revenue, 17 Year Bonds, at 9.d% Interest, _$105,602,000 5) TaC-Exempt G.O. Pledge, 22 Year Bonds, at 6.0% Interest, _$81,312,000 6) Ta�cable G.O. Pledge, 22 Year Bonds, at 7.0% Interest, _$89,352,000 7) Ta�c-Exempt Revenue, 22 Year Bonds, at 8.0% Interest, _$109,649,000 8) Tasable Revenue, 22 Year Bonds, at 9.5°10 Interest, _$128,303,000 Also attached is a spreadsheet which attempts to identify on one page over $71 million in arena remodeling related costs: ?) Project Cost estimates of $51,000,000 (HOK Sport's 12-15-96 Report), 2) Revenue Bond Financing costs of $12,470,OQQ (Blees's estimate) 3) Other Needed Arena Improvements C� $7.5 million (Hanson's 1-3-97) 4) Annual Repair & Replacement Reserve @$500,000 5) Unknown Items and Costs, to be identified by engineering study After discussing the pros and cons of various financing options with the Jce Reid and his staff, Chris Hanson and Martha Larson; I am (we are) of the opinion that the following information is needed to better consider options for an appropriate bonding pian for an azena remodeling project: 1) Cost Estimate Detail for SOFT COSTS of $S,SOQ,OOQ (HOK Sport's 12-15-96). 2) Cost Est. Detail for Fixtures, Furn. & Equip. of $5,500,000 (HOK Sport's 12-15-96). 3) Updated, Detail Estimate of Other Known Needed Improvemenis At Arena (e.g. Asbestos Removal). (Chris Hanson & consultants) 4 ��,1� � Fstimate of how much of the $51,000,000 in project costs identified by HOK Sport's is directly related to NHL improvements (for a taxable bond issue) and how much is related w repairing / replacing existing outdated arena improvements (for a tae-exempt bond issue) (Chris Hanson, consultants, azchitects, bond counsel) 5) The Civic Center Authority's Priority List for all l�ow major azena remodeling cost items, assuming the City cannot finance ail desired azena improvements. For er.ample, is the esthetic appearance of the outside arena walls a more nnportant item than asbestos removai inside on the ceilings. (Joe O'Neill and Chris Hanson) � An option to use a two-year construction temporary financing loan, in lieu of adding capitalized interest to long-term financing, as a way to lower interest expense. (Martha Larson / Jce Reid) C: Mayor Coleman, Mark Shields, Pam Wheelock, Martha Larson, Tim Marx, Chris Hanson, Jce O'Neill, Jce Reid, Shirley Bavis, Tom Cran, Bruce Engelhrekt, Eric Willems, Chuck Repke, Gerry McInerney, Scott Renstrom, Mark Mauer, Tony Schertler, Ann Cieslak, Jce Collins � _ ... . O V W N A W N� x m m v � � a 0 �CDp�<D Z < � m m n � v � m A Z � � O � Z m � z � "i u cAZO� � �m'�-itmot�i�p � o- 3 � Z � s�. m n D tQ O � � m m m I � m N 6 A 0 0� �� I c m v m �� m $ m � _+ N J p � O O O O m m � » a � ° ��=33�t�n z` �` ;;, •* x (el � ' � �i � �. o � ,010 3 rt . ? '° ° ,� �� ^',- A� O < N N ' 'D tD � � 'n �, � o+ � r p o o w�` e' � ['] 1�l J i N N -• � -� � � �1 + O �O W V � (J� � x mmvp p i �yO�c x D � m � N D C� z <�pm�� R '��XZ� � u � �mym-�ic <o=+y�� (�Zm m 1 m n T �i O Z m � m � � �Q ' m m m N o > � � v�� Z � -� m m � � � v W $ m $ V Of ll� A W N� vvc>�o'� a p " � m �tvDC� � c m��"zG� � c r � <n�� m Q �z� � � n � O � � 'a m N m - v r� � �x -� y � Z � m$r"$ A A� A A y A W�� N� V T V � �-+ O N o 4s Cd Z Z Of V O + j Z Z� V o opc�i, o_o�i DDN�° oao DDoa O O O O O O O O O O O O O O O O O O O O O � O O O G O O O O O O O O O O O O O O O O O O O Z m �. ., � � m � � o � >( � � 3 � ° y m � � � � 5 y m...x(g��m�v � m x o p 3� G? '� » •'•(g1 m m� � oo� o� C � ;^?�m m � N Z O p� � � O� Z to N u+ N �oN D ornw W � V � N t�lf C7� m ° � '-�,. n' 7 � p � • o X � °= 3 = ° � m � �O � �' cn» _�� v �� o�;° < c�i• " �' � (F� � m� � ao o � C � ;^?�m m �—�_ � � � � L � � m � �cw Dorn a en o o ra W �[�7� O C O O .�i� A � � w W � W W� A Z V , �� o'oD � � T O O � A � O O O O O O � � �±; �„ , o V W. y w .( !R_ o� w o m � �. o� W 0 4�! A 0 Z A D o w�i O �.1 z m �.»a� m �:. 0 77 K" 'm m m� y. R ��g � y �: y�. �z "�' ". C � .,�. � � � s z� � aoWOZ..; C � N a y ,.,, N .� � ii ' N � u' D fl t0 N � � O f�D � � W N � a ' p u' � co _ o � i J J J A W N -+ O � � � x m m v � � a W - �3=ip��D � m � N D C � �p m � � � Z � � u r �p-�t m , n Z � D � m � T I oZm m � � I m� m � m N o � o va �a� _ � -� im m �� o m�� v v o v v� �+ w � pl (�p N � A � opvN,. �� o 0 4 A O O� O O O O O O W O O� �� a O� � Z D Z D i� � cn ~ w � V A N � w � � 0 O� N Z D Z D � � � � �o�� 1 �� 0 � G fA O � N W W N m' � � � � C ° t77 ° 3 c� m� W T 0 � Z � z= G� s. �� n C O N Z � m N ' N M Z Z r c p N !D -� W 0 0 � � � � J to � ° o 0 0 0 3 � N � � � Z � � tD C oD �. �� 'a> O O O d m `° , m �� j Z �� D p� � w y � D, � O OD � �„� 00 � m _�� Z A' y � y � V � � ��-�� m 177 Z � J W �1 N � � C c r mn < m V/ � � � �m � Z -� � � � � � N Nm � � � " � T N ry � � �v � x• r N�„� Z c� � 1 v ..a � � *A V/ � � � � .�. Z � 2 � r � � � N y� <D r ,. O! f A W N- O� � m m v� O a �p �D ��m�nl�D z<ooma� � m y�c�zo� r"zm�'m-�'i� r�i °�v'a' � �Z� �- m�� O � m� m m r .A ID N � A c ° � n '� Z Q '�'{ m �y � � � o � � "�' � -+ N N � A O N W o O O O O O O O O 0 0 0 0 �m� � ., o'�'m'mm; � Z�� ro�3o :�+ p � n ' <b �j � 7�C 0 II � � '8 �. � y � � y �'� n < a W y �' Q y H �U ID � �T DIaI�IV f � v� N A W� X � m v � Z m Zy��vi� m3-yA� � n � � m i rt -{ �zi� ze �D �<ai�OC Ce1D� ol ID � T �' i O Z m � m�� m m � � O � O 0 o�n� c � � p y �i Z� v �,$�$ m n m�Dppa. aomv �-i3� zm��_� � ' Z<„m�� ppm--i �m� Z O . Om�r�r �n� e� nm�mv r' � m � m 1�C <v='�yA m T Z c�Z� X (� T O � � m m m � m N o , o v��a� � O (A V Z J � m � m � A A �� N� V A Z Z � V N Z 2 � �-+ N O N V� O IV (T V O n o�DD c �?D D_ ° O o O O O N O Ui O O� o U� O O O O O O O O O O O O O O O 0 0 0 0 0 0 0 0 0 o a o 0 0 Zm . v� � m- m °O K ° =m � = v� � m � m � y fn.�.2ng� � � �� x p 9 3 eairt C ? Y ` ! r�i � fD m � ,�o oo' o� Z � �' � N Ci m ymz�o J N •+ �D Z �ro N w j' �o�'DOCOrn� � A O to IJ � � V � �J tn O W "' �p N ^' �o A m -+ N y o� cn rn cn _ ... o 0 �,ow wwoo � o N� N N O O N V O pl � � Cf O O� A Z D N W � W 0 a W Z D � A Z m M �.�i q � m � � o - i � m � o y � � � � N • 2 (8� � � O fyD 7�C O .� 7 �'* n� � � � `d � �� < y N � N f A W N � O t � m��01T1 ao m �'��- zm �n�� "'�Z�czG� -i D f' � m N N O r� <p=�tntn�p "'„ a. �z� � � �� ."I � � m � �, o a�n� p � � � � o � � r" $ v Zm �.»�� m-�1�: � o � X °�m� ° y .. m a � � � � y ". � �. ��"2� p � �`.: �1 � x � a � a ' ' :;. G � � � � � � _.', ZA � m�p2'� m < y p, tA ii :..� v+ A tD ;� � ,�,Z� +y �owDo�o !�� lD C7 V O N O�D N O N O O f�D � � W W N N ° m 0D u�i °� N N ,.. cnu+o o N..r �� 000 0 �oo� oz � � s O O-• O O rt A A � N N A m -t W 0 � N Z D N N A m � W 0 � a N n N e� N � �� O� IV w N O N � `� cn o u+ o o,� � j W N � (l� v t0 A Z W N c w o o D ?. ��oo� , 0000 oS� .. tD �e. Z 'a N -� y -` � � � t,�,Y o w � W 0 o� m a s � N L-' s t0 � � N 0 � A m � --1 0 w N N � � '� �� tn � Nm I11 Z W m � � � m -' � � y � O rll 3 Z " C ° m� 0 0 Z� v� Z � � �. � � � �, Cp Z � V/ N Z r v m � � � n m �1 � � VJ � � � � T N N � N � � � 0 3 � � m � m o � � D � m N CD � R _ r � � N � �� -�i�{m��c � In C r n C D z � i � � m A � m N -�I m � z 2 � � WwWwWWwWW rn rn rn� rn� rn rn rn rn rn rn rn rn rn rn rn rn � � v � � .. ..y v v � � -• N N W � f0 N N OD s A J � W 0 � �I.� 0 � W W W O� W O� W � W O� W O� W O V W O V W O V W 0 � N t a � w 6�i c�o N p V N W � OD O) A IV � O V (N W � N� A N � O V � W �� V A N O O W � W �� _l� �I V V V V V'V �/� � � r z -� m � - D Z z � N ozom��?� m-m O 'i c j ° �m�mm�-�i � _ z�� W 0 z N � O � n O z � c � 0 wWwWwW 0 0 0 0 0 o C rn rn rn rn rn rn rn rn rn rn rn rn N rn rn rn rn rn rn m � v .. � � � N W W W W A� D V O W T �O N �^ � W V OD OD t0 ` O � W O� W � y O� W O al W � Z O� W O � 41 �('� O� W O T W O O V W O V W O m � � r m m � �� 0 � � D 2� G� Z C Z m � � y N rn � �Z � � ('3 m0 Z O � � � � � � V C) � O Z � O \° 0 m W � i� n A J i� � O � N.P N 61 V Z "L' � tn V o w� CD Z p� O V flf 4J �_C+D � v � O V fJ� W � 0� � O V (A W C� V o a � w� c � SAINT PAUL CfVIC CENTER ARENA - REMODELING COST ESTIMATES etai ?9�L � N.H.L. RENOVATION COSTS - HOK Sport's 12-15-96 Estimate n 1 1 LowerConcourseRemodel . - 1,993,085 (� � � 2 Seating Bowl Remodei 7,825,614 ` Score � �l�deo Boards Dasher Boards 8 Nets Are Included Upgrade Sound, Broadcast & Sportlighting Systems 3 Main Conwurse Remodel 4 Main Concourse - New (Pop-Out) 5 Suite Level 6 Club Restaurent & Lounge 7 Club Seating & Concourse 8 Locker Room Remodel 9 Team Office Remodei 10 Press Box Remodel 11 Sitework 12 General Conditions 13 SUBTOTAL-CONSTRUCTION 14 Rounding 15 TOTAL - CONSTRUCTION 16 SOFT COSTS 17 Design & Engineering Fees 18 Tesfing 8� Inspection 19 Building Permft Fees 20 City Administration Costs 21 Other - specify 2,620,000 $ Inciuded 330,000 ?? �� ?? ?? ?? 2,357,950 4,845,171 7,378,888 4,425,660 6,982,272 699,628 536,731 55,784 728,234 2,163,559 39,992,576 7,424 40,000,000 5,500,000 22 PIXTURES, FURNITURE, & EQUIPMENT 5,500,000 23 Includes Balance of FFE and fGtchen Equipment, but no $ for Team Offices and Team Locker Room. 2a HOK Sport's 12-15-96 Cost Estimate 51,000,000 REVENUE BOND FINANCING COSTS: sss,a7o REVENUE BONDS @ 9% FOR 2+ 15 YEARS 25 BOND SALE EXPENSES 2,340,000 26 CAPITALIZED INTEREST EXPENSE - NET OF REVENUE 2,010,000 27 DEBT SERVICE RESERVE (@ Max. Debt Serv.) 6,950,000 28 PREMIUM FOR INSURED FINANCING 1,170,000 28 TOTAL BOND FINANCING COSTS 12,470,000 CHRIS HANSON'S 1-3-97 ROUGH ESTIMATES OF OTHER ARENA COSTS 30 Costs Not Covered In HOK's 12-15-96 Estimate 7,500,000 31 ASBESTOS REMOVAL 3,300,000 32 HACV Controfs to Computer 350,000 33 Directional Signage 325,000 34 Sound Sytem & Other ? ARENA CAPITAL REPAIR � REPLACEMENT RESERVE FUND 35 AfVNUAL MINfMUM CONTRIBUTION, CITY TO GUARANTEE PAYMENT 540,040 NECESSARY MAINT. � IMPROVEMENTS - During The Term Of Lease 36 UNKNOWN - TO BE DETERMINED UNKNOWN TOTAL PROJECT COSTS 71,470,000 Q O F'j ��-f� CTTY OF SAINT PAUL Norm Co(cman, Mayor To: Council President Dave Thune Council member 7erry Blakey Council member Dan Bostrom Council member Dino Guerin Council member IvSke Harris Council member Bobbi Megard Council member Janice Rettman From: Date: A �� MarthaLarson �)�Y/ ' January 6, 1997 Re: Hockey Resolution Follow Up DEPARTMENT OF FINANCE AND V�j MANAGEMENT SERVICES ` Manha la'son, Direcmr �a/r 2Sa0 CFry HaU - Telephone: 612-266-8797 IS W. Ifdtagg Boulevard Facsimi(e: 612-26G-8919 Saint Paul, Mitwsom 55102 The following information was requested by Council members Thune and Megard at the City Council meeting on January 2, 1997, related to the hockey team resolution and proposed term sheet introduced in that meeting: Background information regarding the revenue and debt service amounts reflected in theterm sheet 2. The number and identity of other cities competing for an NF�, expansion team franchise The following is provided in response to that request. Revenue and Debt Service Information Team Arena Expenses ($16,000 day ofgame expenses and $4,000 game presentation expenses): These are the costs ofpersonnel who ready the Arena for hockey games, staffthe facility during games, handle the sound system, scoreboards and other promotional activity, and clean up afterward, as well as other direct expenses associated with the team's use of the facility. These estimates are based on the average expenses of simiSar facilities for similar operations and are reasonable in view of the actual costs for current Arena events. ��l -\ �- Ticket Surcharge - Hockey Games ($700,000): This estimate is based on the current $1 per ticket surcharge, ticket sales for 43 home gaznes, and the expanded 18,�00 seat capacity of the renovated Arena. Based on NF�, industry averages, the estimate also reflects an =``^? average of 90% of total available tickets sold for each game. _ Ticket Surcharge - Non-Hockey Events ($250,000): This estimate is 6ased on the cuttent $1 per ticket surcharge, and ticket sales for 50 events per year, with an average of 5,000 tickets sold per event. Staffbelieve this is a reasonable estimate, based on the enhanced marketability of the renovated Arena and its expected ability to attract more concerts and other events. Arena Naming Righfs ($1,000,000): This estimate is consistent with industry averages and is reasonable, based on discussion with industry consultants and local sports faciliry mazketers. Permanent Advertising and Marquee Revenues ($2,250,000): This estimate is consistent with industry averages and is reasonable, based on discussion with industry consultants and local sports facility marketers. Parking and Concession Revenues ($1,000,000): This estimate is based on a projection of 50 non-hockey events per year, 2400 City-controlled parking spaces at approximately $5.50 to $6.50 net revenue per space, an average attendance of 5,000 per event, and average net concession sales of $1 to $2 per person. Stafffeel this is a reasonable estimate, based on industry averages, the enhanced marketability of the renovated Arena and its expected ability to attract more concerts and other events. (The 2400 parking spaces will be in the e�sting -� Civic Center ramp, the new underground ramp constructed as part of the Civic Center expansion, and the two adjacent surface parking lots.) State Income Taa Rebate ($1,750,000): This estimate is based on an assumed team payroll of $22,000,000, which is consistent with industry averages. $21,000,000 of this payroll is assumed to be for players and team management who eam in excess of $100,000 annuaily, and thus are taxed at the higher state rate of 8.2%, with the remainder tased at 5%. State Franchise Taa Rebate ($300,000): This estimate is based on the increase in corporate income taxes paid to the State of Minnesota, attributabie to increased revenues generated by the presence of the NF�, team. The projected revenue increases, and associated assumptions regarding taxation of that revenue by the State, are supported by the KPMG economic impact study commissioned by the Capital City Partnership. Copies of this study are being delivered to you today, under separate cover. Annual Debt Service ($5,700,000): This amount is based on the $46,000,000 in Arena renovations to be financed, a 9% interest rate and a 15 year term. We have used a conservative interest rate of 9%, assuming that the debt will be a ta�cab]e issue. ✓ Please note that the term sheet provides an option (see #S.F) for the team to guarantee a payment to the City equal to the $3.95 million in team-generated renovation funds that the 2 q�t-« ' City will use for debt service. (These funds are the revenue streams from the naming rights, permanent and marquee advertising, and NHI. ticket surcharge.) Tf there is concern regazding the reasonableness of those revenue estimates, this option would eliminate the risk to the City if the actual revenues are less than grojected. _ �� _' - --= nthPr C;t;PC Competin�for an NHI, E�ansion Franchise Atlanta Houston Hampden Roads (V'uginia) Raleigh-Durham Columbus Oklahoma City Nashville Hamilton (Ontario) 9 'l - l� �._, To: Council President Dave Thune :- = Council member Jerry Blakey Council member Dan Bostrom Council member M�ke Harris Council member Bobbi Megard Council member Janice Rettman From: Martha Lazson 7oe Reid Date: 7anuazy 8, 1997 Re: Hockey Financing Options Attached is a discussion of the factors which influence the City's options for financing the renovations to the Civic Center Arena, and an analysis of a number of financing scenarios to illustrate the impact that those factors will have on annual debt service. Please view these scenarios as alternatives that demonstrate the range of options available to us, rather than as specific staff recommendations about the structure or size of the debt to be issued. This analysis reflects some variations on the scenarios projected by Greg Blees, but in general contains similar assumptions about interest rates, credit enhancement, costs of issuance, etc. Where the assumptions vary, we believe both the assumptions in this analysis and in Greg Blees' - analysis are reasonable and conservative. We apologize for the delay in delivering this material to you. Should you have questions on this prior to the Council meeting this aftemoon, please feel free to call us or page us. Otherwise, we will be prepared to discuss financing further with you at 3:30. Thanks. CC: Pam Wheelock Greg Blees Mark Mauer �� _�� :, N O n � Q a� U �� C � =Cm J �C � = C C Z LL � � � � � o m �r cg� m �n w Ji 25g25 �"' g�8 � � N fA �q Vf W � � m N L U r � cZ 01 � IO N N U � L��..t � a a��e v d � � 9 C N �.�.` m� � �� d N N N — > q O j � W Y� O S LL � C m2 d� Y a ax � n ��.. � d n = H d y`� .�. .. NO a C N ° m a O U W 0 e � d Y � � C O W C C 6 d V N � v j c � t � � ^- .-. a � m a `w o m�oi r�n m a � � N N E N � V O N N y N � y'mClO1NW a �m��a� � � maoao m i " l" m r d �mnB.�n cm u a�i c 6°m 4 m2 II o A �m� W a U � � m V U � U m C C G ° m � p c c m c q��occ �c > 0 a O � p � � a�Vb� X m O 0 L d� d 4E m=j :°.�U �awq a -- N d m t L d L � � � Q @ Ol � Ol J J J J S S�_ W @ m m H � > � V V U � ��. m � A �$� d� N O� b N a p y'� ` « v �8i`n aa E.L =rU0U0a0 � G d 2II � 0 �� ..o C C v c E 2 �' a` W L L O � `o � � U U O O � a q L m— a c � U 'O � R � N D y E� �q � d «�. � m � t° c N o �+ r y m B � `6 � 6 ; m N d V � � d d 3� '. A W m L a v � C1 � XE-, d� � �, � C 0 w m a `o a c a ar 3 d c � C q � L O � > � d$ � U `u � > o � L 9 � � ` � m ` w� N O� � N � C — n E U� c C V dL m � �a N '� m � ~ s � L C b E C .� a N E m � � C A V � a ys d y La A N � _ w w °1 C � U c � C � y o � U N �L U y U � 3 d N � £ � �- O -� 9 Z a w a c � o =� 0 m � m � � S d N � � d ° � m �, 6 f�l U � C y � `m ° a m y R o a n w £ m � O � �a W m � d � m N � J � F � Y a= � C O � � H Q 0 e d y OI C C � a v N O V C � L 0 o A � W - c .= U � d �° C �' U � C G 6 a o � M � � W mya $ w3 S� U C Bi ai L° y `�di�c � O A Ov�.. S a m m � ° a � V U O Q $ a S m c _ a a w � o � o a o o � mcv'c w d w � m ° o` oq a��= O O�? TO � R�� CI �f Q o m E-°. ° �O��Z(7 m N `c E N W � V y c U L m � L a d a � W O `o y u � a � cu �> E 3 �� i d U U U c c o` � Z y Z � c d N q .- R � b— r N N t d q d p� `- n � N � % ° � g � '� m E � E m � � � Y y y �m �d C � � d D > �m 4 N . C y a`o j� �2 `o � o� x i x u? '° v y ° �� o =x�t . � .m.,=y—..d N>. t N� W y C O R;= w d- E � C a > � �U � y A �= mar- uc � C� N N W t� N` y � C� d � � U m d 'p C�t d V�C d 8 N� d'p W Y V 10 > 4 L r J � O v1 U C O V i y � � � � � � u 1' >=� 5av =� d d�m33 taav.....am oonau W o m u a�i m m a� _L % �SA Y� m J V!G}"f}"r�Q T c O 0 U U C 3 4 N O > C � Y O _ d C O C O O L�l � ? { K l9 � 0 in w �� N O l9H � � � � � � � N � H � � N W N W b n � � N � � � N �S W lh W W 69 � °� � � K W m S v w �� S � � .p w � M O � c o ° � O y c O N � N = a <+ o m ¢ U U = V U X C W� C N �p N N t0 � CI }-� H0� H 0 � N a a m � m .A.� r : O u Q 8 fC r � W _ 5Z v 25 Y 8 � r � w � � � � 8 a� N � K O � 8 r u j M b9 g � o a 8 � K . Y . a d 0 � m 6 r L ..�.. N U tv �� -��' �?, c O W g � C 0 v � ° c m u c A � w w 0 N � U N L O R 7 O C Y 2 3 F O 0 C � � � Pv N � N � m w �i g n � m N c� H � � H N m N � n � N M a � W V! d � O K �� .- N H H H t � tV N rn ' m w a9 �� Nt� � N Vf �„� (9 a vi vi � E � � g � � 8 N q O 8 � � g W O 8 r � O 8 W O 8 � K O S � O 8 n w O O N H N G O N �p C O O � C C u u O � � b N � e i Y= g = 0 b � � N � b � = W N Y N 9 9 � E E � 2 Y m L ' `m � y ` � � d d �.�.. � N N A tC N N d F F� � O� � O � Q W � � . y � � �$ � � W n W M w �� W � � � � o W n � O � �� V � O f0 1� N � ti � N b tb N O � N � � � � � � �� 1� K H W V� m N �G (�1 In N N C� vi � O � N O O r N n � �D O 0 Vi W '; K H m W H � � S � � � � g r � � g r � O 8 n � � g H O 8 n N H O 8 W O 8 n N 49 O g � 6 8 n w O 8 N H N C O C � O p > ` O v a U V Z Z �' 0 2 0' 2 h d y � m c d = O a a v � � � i a r `d' p_ � (�J U O� U t�l j ` L W y _ � 2 W c n ? X X C N N�p C b b A � N X �p N W d q N S d O > X 1� !- ! � O f!'� � � I- Q w ��-1�' �� w i d C D m m C. U d 2 - - --: h _,- � Z m N c` 0 N `m } d o` e O > e � d s N N O v � � 3 N b C O > C C O _ � 0 W C O � � � w �� p 8 O �n n�m w N O M ry O O i � m c � o Y a 2 m EE Y N x �r � C 3 = N � f9 �� w�,= w» n O � w �oQ n �� w w � � � 0 m �^ 2 � 'o d � C ` W d N y c y Y o ZvL=m Y q w � C nc.n �� U OF-= ; N N Ol N O O fD � � � �KMI f� A � N A H ? O W W < CI n O m � �WH N N � N � � H O In N N N N f��N � � � � � H W N m � N W �� o� � www � N � �� /iKH v u u d d v � m v ti w N N b S .� O tJ0 Z N a v c R V�- g n H O 8 H O S � � H O 8 n H O S n N W 8 O S N H O 8 N K � $ w � 8 w � g w 2 y N a v � N Q � 0 � N U W C C G � � C U � F- � t N N m � � N � s E x m A � N v � .. 3 N O � W m s� a� y TN .y A d W V C � �' N a �, U O� j C W � CU C S d m E 9 m � c '� T Ets W tn � ��-�� _ �� - CITY OF SAINT PAtJL Norm Colemaix Mayor DATE: January 3, 1997 TO: Mayor Norm Coleman Council President �ave Thune Councilmember Jerry Blakey Councilmember Dan Bostrom Councilmember Dino Guerin Councilmember Mike Harris Councilmember Roberta Megard Councilmember Janice Rettman FROM: RE: OFFICE OF THE CITY ATTORNEY Timothy E Mnrx, Ciry At+omey 1.�' �0 400 Ciry Hall Telephone: 612766-8710 15 WesF Kellogg Blvd Facsimile: 611198-5619� Saint Paul, Mrnnesota SSIO2 �� Tim Marx, City Attorney � Legal Opinion Re: Public Ownership of a Professional Hockey Team Based on the request of councilmember Blakey, I requested the law firm of Briggs and Morgan to provide an opinion on whether the City could acquire an ownership in a professional hockey team. The firm's response in yes. I concur in the response. The opinion is enclosed. attachment cc: Pamela Wheelock Martha Larson (w/attachment) L�W OFFICES BF�IC=GS AND MOI3GAN PROFESSIONAL eSSOCIAYIO=� �.? 2200 FZ85i SASIOR9L HA.\'% HtiZLDII�G SALtiT' p�tiL� MIAF£502A 53101 iEZEP80?:E CBi2) 223-6800 FSCSI`SILS (B32) 223-6430 M�HI2£H5 DIH£Ci DIAL ViJ!d8£8 (612) 223-6625 Mr. Timothy Marx City Attorney Ciry of Saint Paul 400 City Hall 15 West Kellogg Boulevard St. Paul, MN 55102 December 31, 1996 ��-l� *S4T'EAPOLIS OFFIC£ � �ns ��s *sv�v'n'r.ePOsss, amc�ESOxe sswz SEiEP80FE 1912I 336 PACSIMILE 1812) 334'BB50 Re: City of Saint Paul - Acquisition of Ownership Interest in Professional Hockey Team ' Dear Mr. Ma�: You have asked whether there are any legal impediments to the City of Saint Paul (the "City") acquiring an ownership interest in a professional hockey team. For the reasons set forth below, which are supported by existing case law, �ve have concluded that there are no legal impediments to the City acquiring an ownership anterest in a professional hockey team and using public funds for that purpose. Le�al Authoritv. (a) Economic Development Authority Law. Pursuant to I.aws of Minnesota, 1992, Chapter 376, Article 4, the City has been granted the powers of an economic development authority. Minnesota Statutes, Section 469.101, subdivision 6, authorizes an economic development authority to be a limited partner in a partnership whose purpose is consistent with the authority's purpose. (b) City Charter. The City Charter, however, provides even broader authority to the Ciry. Section 1.03 of the City Charter grants to the City ". .. a11 powers which it may no«� or hereafter be possibie for a municipal corporation in 3-10687.1 i: = ' B1?ZGGS avn MOFtGAV � �y^ ,X (/�' I� V � Mr. Timothy Marx "' December 31, 1996 Page 2 this state ta exercise in harmony with the Constitution of the State af Minnesota and the United States ...". In TousleXv. Leach, 230 N.W. 2d 788 (1930), the Minnesota Supreme Court enunciated the principal that charter powers must be liberally construed. Given this broad grant of authority in the City Charter, there are only three areas of inquiry that need to be addressed: 1. Is there anything in the City Charter that limits the exercise of this power; 2. Has the State legislature preempted this area; and 3. Could the State legislature have constitutionality granted such a power to the City? Other than the obvious requirement (articulated in Section 13.01 of the City Charter) that the City's acquisition of property be needed for a public purpose, we have not located any provision of the City Charter or Minnesota law that restricts or preempts the ability of the City to acquire an ownership interest in a professional hockey team. The only other inquiry is whether the Constitution would prohibit the State legislature from granting such a power to the City. Public Pur�ose. The only constitutional restraint on the acquisition of a professional hackey team is the same restraint found in Section 13.01 of the City Charter, namely that the acquisition be for a public purpose. This principle permeates the taking ciauses of both the United States and Minnesota Constitutions and is particularly relevant under the requirement in Article X of the Minnesota Constitution that public money be spent for a public purpose. What constitutes a°public purpose" is a concept that has evolved and changed a great deal over the years. In recognition of the need of municipalities to encourage private investment, to increase their tas base, increase empioyment opportunities, and provide a range of health, housing, educational, recreational and other services, the courts havinQ recognized that the loaning or granting of public funds to private entities is, in appropriate circumstances, a public purpose. ��o6a�.i BAIGCsS s�n MOBGAN c_= =? Ivlr. Timothy Ma� � - December 31, 1996 Page 3 q��l� Whether a public purpose is being furthered by a particular e�enditure is a question of the facts and circumstances surrounding a particular situation. In the case of the City using public funds to acquire an ownership interest in a professional hockey team, there is specific recognition that public investment in professional sports furthers a public purpose. In Lifteau v. Metropolitan �orts Fac. Comm'n, 270 N.W.2d 749, 755 (1978), the Minnesota Supreme Court cited the trial court's finding that the public's desire for sports facilities was great and took judicial notice of the importance of professional sports in our social life. The Supreme Court recob ized that economic development may not be the primary purpose of building a new stadium, but rather entertainment and recreation purposes may predominate. In this instance, in addition to the City investing in a professional hockey team to provide recreational and entertainment opportunities for its residents, we ` believe that a finding by the City Council that acquisition of an interest in a professional hockey team is necessary or desirable in order to attract such a team to the Civic Center wouid provide significant additional grounds for concluding that an adequate public purpose is served by such action, namely use of the Civic Center by other groups, including nonprofessional sports groups, to encourage and promote additional economic development within the downtown area and the City as a whole. In summary, based on the broad grant of authority in the City Charter, on existing case law explicating "public purpose" and on the absence of any statutory or charter provision prohibiting such an acquisition, it is our opinion that the City may acquire an ownership interest in a professional hockey team and use public funds for that purpose. .j��'�-� �._.�/�� sao6s�.i PROFESSIONAL ASSOCIATION R �� _ `_ g -� ` Council File # -- p �., f j, p " I-; f " ' " ` ` ' ' ' ` Green Sheet # RESOLUTION CITY Q� SA„INT $�UL, MINNESOTA Presented By Referred To 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 35 36 37 38 39 40 41 42 43 44 45 46 47 48 Committee: � i , 1� Wt�REAS, a group of Minnesota investors have submitted an application for an NHL expansion team for consideration by the National Hockey League Board of Governors on January 13, 1997, to play in a renovated Saint Paul Civic Center, and WHEREAS, the Council sees professional hockey as an economic and community enhancement to the City of Saint Paul and the larqer metropolitan area, and WHEREAS, the twenty-three year old Saint Paul Civic Center Arena is in need of significant improvements in order to maintain a competitive position in the � marketplace, to bring the facility up to NHL standards, generate needed revenue, as well as attract additional non-hockey events to a renovated facility, and WHEREAS, the City Council has directed staff to develop lease terms and a plan of finance in anticipation that a NHL franchise team will be awarded to the investor group to play hockey in a renovated Saint Paul Civic Center, and WHEREAS, the Arena renovations are currently estimated to consist of major improvements as outlined in a recently completed Conceptual Design by HOK Architects dated December 15, 1996 with an estimated cost of $51 million (excluding capitalized intezest and cost of £inancing), and WHEREAS, the proposed Arena improvements include the following: * Addition of up to 63 12-person luxury suites * Addition of seats to bring total seats for NHL games to 18,000 * Addition of Arena club restaurant and bar * Widening of concourses on both ends of the Arena * Enhanced architectural exterior * Addition of Team Store * Addition of Team Offices * New sound system and scoreboard with video panels * Additional and improved restrooms, concessions and novelty stands WHEREAS, the City intends to issue bonds to finance the necessary Arena renovations, and WIiEREAS, the City anticipates it will need approximately $5.7 million per year, as described in the Plan of Finance, to fund the annual debt service on the aforementioned bonds, and WHEREAS, the Proposed Term Sheet outlines a plan of finance which would allow the City and Civic Center Authority to accomplish the needed arena renovations using funds generated by the team without reliance on property taxes, and THEREFORE, BE IT RE50LVED that the of£icials of the City of Saint Paul do hereby approve the attached Term of Lease for an NHL expansion or relocation team, including the enclosed plan of finance and authorize staff to execute a binding letter of intent consistent with these terms, and � (_ 2 -rf? � 2 3 4 5 6 7 8 9 10 11 ia 13 14 15 16 17 18 19 20 21 22 �� BE IT FURTHER RESOLVED that after the granting of a NHL franchise and contingent upon approval of the Saint paul Civic Center Authority, the officials of the City of Saint Paul do hereby approve the proposed Conceptual Design of the Saint Paul Civic Center improvements done by HOK Architects dated December 15, 1996, and 8E IT FINALLY RESOLVED that the officials of the City of Saint Paul do hereby direct staff to do the following : 1. Engage HOK Architects to conduct formal Design Review for the i.mprovements to the Arena. 2. Engage an engineering firn to evaluate the existing condition of the arena to determine necessary maintenance and improvements anticipated during the term of the lease. 3. Engage necessary services to represent the City during the 1997 legislative session in order to secure approval of the reinvestment of State Income Tax and Corporate Franchise revenues for purposes of financing Arena renovations. 4. Develop a plan of finance for deferred maintenance of the Arena, which are items of improvements such as asbestos removal, not covered in the abovementioned improvements identified by HoK Architects. 5. All ouf of reimbursed to ecC t costs to be er or the 4 will be to a maxi� the 6. Explore some form of public ownership of the NHL Team FINALLY RESOLV an award of an e with a financing ogtion that is a revenue bond without a ement Requested by Department of: By: Adopted by Council : Date cf,rr .� ��,� 1 Adoption Certified by Council Secretary E� Appr By: ^ tF� � � al 0 er Form Approved by City Attorney BY: � �.�.� �. , l�� '1 �/ I Approved by Mayor for Submission to Council -o, By: id with other : Saint q� ��' nn��h [ V V u/ v �"� N� oA��NmA�o GREEN SHEET Office of the Ci CauncIl 1-02-97 COtdTACT PEFSpN & PNONE INRIAUDATE 1NR1ALIDATE ODEPARThIENTDIRECTOR �CRYCOUNqL Councilmember Bostrom 266-8660 pS51GN � CfiYATfORNEY � CRV CLERK MUST BE ON CpUNCIL AGENDA BY (DATE) AOUi1NG� O BUOGEf DIliECTOR � FIN. 8 MGT. SERVICES DIP. J3I1�73Ty 8 1997 OHOEH Q MAYOR (OR ASSISTANn ❑ TOTAL # OF SIGNATURE PAGES (CLIP ALL LOCATIONS FOR SICaNATURE) ACflON REQUESTED: Approving a Term of Lease for an NHL eJCpansion or relocarion team including a plan of finance and authorizing staff to execute a binding letter of intent. RECAMMENOA710NS: Approve (n) or Rejeet (R) PEFiSONAL SERVICE CONTHACTS MUST ANSWER TNE FOLLOWING QUESTIONS: _ PLANNINC� CAMMISSIQN _ CIVIL SERVICE CAMMISSION �� Has this person/Firm ever worked under a contract for this department? _ CIB COMMITTEE YES �NO _ STAFF ' Z. Hes Mi5 person/firm eVer been a city employ88? — YES NO _ DISTFiIC7 COUR7 _ 3. Does this persoNfirm possess a skill not normall y possessed by any current ciry employee? SUPPORTS WHICH COUNCII O&IECTIYE? YES N� Expla�� all yes answers on separete sheet and ettech to green sheet INITIATING PqOBLEM, ISSUE, OPPORTUNITY (Who. What, Whan, Where, Why): ADVANTAGESIFAPPROVED: DISADVANTAGES IF APPROVED. DISADVANTAGES IF NOTAPPROVED TO7AL AMOUNT OF TRANSACTION $ GOST/HEVENUE BUDGETED (CIFCLE ONE) YES NO FUNDIfBG SOURCE ACTIVITY NUMBER FINANCIAL INFORFnAT10N: (EXPLAIN) . ��-}8' I-� % �ERM SH&ET ior Lease o£ ST. P�t7L CT42C G'E�TEA ARF. (� ) ��._:�. � ----� u�� 1_ 2 3. 4. QPERTyY08 wy1= be the Seint Pavl Civ1c Cer_ter ALtY:ority (Authority) , and OFStt'3R will b� the City cf Sair_L ?au1 {City). zEPi�.NT svi�l be the D?;?:, expansion ^'=�z �e�m rep:esented by the znvestor group (Team}. �-3� =&"�..s:ISES wi11 be the curr�n� Arena and all �quipment nECess�zy icr =he ccnduct ot N'�FL games, inaluding: (A) Cy:rrenc ?5,5SQ �=_;r_s, inclt;;�ng 1,ZC0 club s°oats i3) Gti,irzent 0 suites - fC) Renovzt=_3 P.rena for N?�, GamFs, as prcvi3ed ia ��§ Paraarava 8 h;lo�.r� i: c7.uding Tea:n SLO=� znd Tea:n OfPices (D) Acee5s to al: ot.�er spaces incid?ntal to conducta.n.g the businass o� a� NF;i, team or_ � c�e and non-� 4ame days, inciudina Icoker roon s�:� and bnx o'_£ice (bax office ren.ains unde_ the supzz and coatrol oP th2 OPERATCR st:b�ect to the Term Sreet). TSHM OB LEA5E: Te_^.n of '_�:,�� Lease wi11 bz equal to the term of the bonds �__a_� �-- zssued *ay the City to finance !or zefivane� the j�rcna u� for � term up to 2o years) fsaid boads taaetb.er with aatr raZU�din,t bonda the Bondsl. Tea� sha7.Z nave th2 rig�!t aftier t�e first t,e�s ears of tha �ase to Fre z-��t re sired to ischar e outstandi: �$cra�s {inolu�_ng any related prerai.ixm or early retirement penalty assaciated with pre-paynant). �.e�n ,,;,, �. ___----' � -- zT3 � �2�P-6=izi�,=�n� puZpose ef and playof �t�� l�ya-1ti� cf t'r.e :�re=.a ID Wlll tease .�'.:?Ild �or the �ar,ks (hom� regvlar seascn t�r1L sezso: or soor_er, s.ioject Co availahility �ne Arena renovation schedule and whEn the II'rII, 3C'. :t.r.ED vs to v� 1�ereT �� -�� I-� ex_pects thz Frzr_chise to beain play_ Tezm reloCata the Team from the Areaa �=-.,:� - -- haye beeu d_ i, s�aec3. =��L �:�oaocasc ana mercnanazsi r2c2ivEd �y Crie Team '-"ar`-nu�a from local brc3nca6t Ioc�I i,r, c�1a and radi�) �� 5. Su�71i IZEVFZvTiES AND E.T.PEl75E5 - CO*7'(�„°PTCt�L OY.7z..RVZESP: {�) T"zm x ti�nu�s. The Tean c.ill ;:cntrol zr3 retain 10�% cE �rena revanues derive3 from regn].ar seasen znd �layof: hockey gaaes (Tea*n Are:�a FcevenLeS) , and 100a o€ th= :ea«< rever_ues derived,from other oo2rations, all er.c=p� as pravidEd in this Ter.n Sheet (Tea� 8=venues). "°� T� .�rcna �s� Revenues inclnde; {1. ) Sa3es ci `_ic',-_ets icr A'?iL GaneS _�excludina £aeilitv - ticket surch�reel (2•) sa'es o£ t_ckz*s for cl� seats for N�IL Games S °dClll�ri t.IC�O� SL:=C�3rQB� {3 • T sales of l��r� suites fcr use at ?,'HL Games {q ,} 3ro;,� � g �hare of co _e�ssioZ sal�s fcr I»I, Gacnes {5.� C=_m�orary a �V°Tt].Eiila r?J2,t1E5 (CIcS::�T �SCdTC�S� on-ice advertisin�, video boards} realizEd by Team ia connecrion �rith N� G�es (6_} nerchandisir_g revenues realized by Team prom sales a:. �'Hi, G�nes and aL aZ1 at�=r ti:*.eo at t<e Team's ret�il �� e� in ty,o psena a^,d else+ahere (7.) p revenues realized by ta2 Team fra:n sales at isHS, Games and elsewhere (8.) net parking revenue� c3erived fram � 2,400 oE the City-cont_olled ranro and surPace parking spaces7 �--� available for sele at I�AL Games (or a¢,�, (9 . ) f10.) t1i_� will agree not �o �---s.� tzale� Bo.^_.a.s es revznue9 of NI?I, games {e•g- a_ other rez•enues dez�ved fraue operztions af the TEam's businsss outsi@e o£ the �era (H) Citv x�e-�a R�Vcn�ipq mi�ye Ci�y sha1Z bs er to aZl other reti�enues d=rived 'rom t?�e Asena, ot�ar than T2sm Arena A,?V27111°Sr 1P_C�t1�1?!� r°�-'-'=e��`. �l'.tic:�.iS�It�� 213tIL2A� rigrts, outdoor m=_r��es, ar.d �c�-�.�'� GaT� e:�e�±s in t�lE AY?R3 (NOn-Hacke $V@^�S� � <��2Ct t`.0 s�d..r��'Z'� hg " 5 (�1 and {G� _ y P {C) ^eam rre: - F;co nscs, i� Team will t:c Gi�� ii} tina aci.ual op� e�:�e�sas _ :c::rre3 £or tTzZ Ga�?s�in or reimtrsrHe '-----" `^-��--"=c° �:-�-LtCi:�1y 23L1[7`RC2C1 d� T16�G00 f02 C7 of ga:�� sc�>ici .� �.:d $4, GGO ior gana pres2ntation c,.,,o„��-� r, < i � -- r""-�" "�'r �� " ac"ttiaZ aLeratioa and 3L�'17,a�n vti co vi �iar9r �� -t� �-�^�� mainte�ance exa�nges a7.loeab2e to the Tea� Of£iCes� Team &tore and occucancy of other areas ef t�xe p.rena �:sed by the Team, such as the ticket office {ir_clu3ir.g furniture, fixtures, and egsipment), a�d (iii) ar�, r°quireH payntents of � genErally applicable Qales tax �^d S,� faci=ity �icket 6urcharge. (�) Citv Ar�:a E ine Anthority shsll manage, �F�=��= z�d :naintain the 3areaa consi t��t Ki 1i ��arable X-!T. facilities, incluaing making all a -�� capital repairs and replacements a� an when exner_se o creat= a (A_Eaa C be Punds agre=rr_ert a1Z at tha pital r.placement repair a:.d resarve�Eund�+ tal P,eoair z'zd Perl��ement r�s��Q gund), �o rnm r; r-.. r�.___ .,____ � �� - -- - � �u=ucrzzv oaiv. _m� City and the Auth�rity will det=rmin� the annual cn_nicram coni.r:.�ution as a resulr o£ an engineering �,-��lysis conducte3 by the City. ':'he annual minir.ru� contribution is expected to be $500,000. The City �--?� �� ree to guarancee the pay�nt and pe:formance of �he �'€'�z ��e= -�r-�'.,� Authoritv's oblioatioaa un,3�r �his suhtiasavraph (D?. (E) Fsena C�e =or I�riL ames, ThiS Tex�f Sheet aesumes. that t'ae :�uthority c:iZ� operate the 3lrena for :�,' U'dTES_ 'i!':2 A*Stllp_1�]Y ki11 use its best effarts to r :ean ;,rena gxpazses. Z"r_e C_ty and Au_YOrity ir_tend for t��E Arana to b° cperated in a coet effj.cient man.ner fcr N:'?, G3'.a_5. Th�_efore, the CiL,v �,3 �uthority will n=_tiotiate in ,c60� �aith with the to uTheth2? th= Te=_m shculd r, a11 or part o P_reP.d OD?T3t.107iS fc2' N'r3T, C-8:fr°S Ly�OT! �ECZ1`l a proposal irom the Team o��tlining :he prcYCSeB relationships of roles and resper.sibi:it=es for Games. (F; Team as f the Wrl, �t2R the T�I, '- ' —' - nCLL V Yc Bonds. Ttie City antici�ar2� that it wil? rsed aporoxi:r�ately $3.95 million �er y�ar pu� �_ �Frtai= Areaa ravam„ES, or frocn tri� Team _£ suc?: re;-cn�es flpw fiir�c'cly to tY.e TEam, to fund a=�star_tial � ef �ne estir:,:Led y�, 7 millier, a�tr_�al debt ser.�ice on th2 �ares. upon r.utual agreemen; �=-_� betu�� ts:e r_t �_� =n3 _ean, the a;r�ount of $3.95 �ill�on per cear to ccve= par� of the d�bt sareice wi�l bs covere3 i= c:�e �� =�irce c;ays, all ef w�,ich come frcm Team 345741.�� Vg to v1 1/B!gT `�� '_�-`�� 2• Th� Team will sell zn3 Lne proceeas of th= m�z� G°_�srated rre,a _..+ Reaovatien FLnds. �ha T_=m wiZZ tr� as rea L:�er the }2j� Lease vg to th_A f;rst $3.97 y million per year of suCh re��er�es to t'�2 nurhority. 3 • `!"-_= Tea:ri w_11 sell axid r��--�� u: cne i��am cenerated Arena ` Rer��•atio� E`ands. '?'ha 'rean wi11 glarar_tee a ray-:ent of S3 . 95 mi'! lion an.^_ua11y �5 rent vndar the 3�� L�ea� to the F�utncrity,�rEgarc�less of the a�ount of Team Geaerated Arzna 3=uzcvation Buncs- Ge:.erated Arer� Rere3ue sa�� fwacls which would x�at exist in t�e absP.*tce of the Team; 1. T�= i�uthori�y will sell �+�d ��z. �,�„E B r ��- �r the naming rights7 � Per�nanent ad��rtising {including r..ew r,�rq�,:.ee(s) 7, and Y.rill setain ecatrol oP the sale araceeds �nd the --��iy ��cilaty tickeC surcnarge :avanues far r�.+ �ar?s (Tean Gcnerated Arena Re,zcvation Funds}. �L, -, -«�-----' 1- t��i �u:zr.— - � . _ - - iG) __ __ :: ru_t' � - �TLcr ii0 C2S '-" Pz��• �f the ?ends are �aid o�f earlizr than the schedul=3 repay�ea� or at the end of tN�e r_c= repay�nt sehedule, the �uthori�y shall receive YOOe of a].I r��enees tro�r, the faci�ity t=cke� surcharge and the Team shall receiv� al'� other Tea- Ge:�erat�3 Arena Renovacior Funds. (A) A7anina xiahts - C� v AoDrova�, � C_��, has the =ight to xeasonablv aDprovs the recip ,ert of tI:e r.am�ng rigY!ts prior to szlection by the Teara. 2 �e T3- rights shzll be g:.ant2d for r�o lenge� tt�z rh_ tErny oE the ':� ��se, (i) r,rena Or,erarion zor 7 von-�S�ck�v g�ent _ Aitn r; - 'C-.�5 �erm Sha="*_ assu^�ee the Futhorzty will op2rate -he P_rena �or 2 �„n-nockey Ev�Rrs an3 for cazturing re=�er_tes from events i: t'r,e adj oi�ing co:�ve, t_en czater, the City an.d :+::th�r�t? wi11 negatiate in aoo3 faith with ene Team �*i crtio : c..__c'r. „osic al � ow cre Tea�r to op2rate the Arer_a 34�':7.R°D Vb n V7 118l97 Y � ��t -i8 �-�-`�� for Nt,i, Games� 2v'on-Hockey EventB or bot?�, upon rqc�ipt of a written proposal £rcm tne Team. P-R:lS�, CQM�STT2�NTS : .ihe Cparstor �n3 TeG; belie�e that �rie Arena is fre� o£ all currer_t caatractual-cbli�cations relating to �rena o�eratione caith third rartizs uhich inciucie advertising, ticket sa2ea, ticket c�i�tr`butien a.3 conceasions, other than con*_raCtual schedulir_v c�;;�tm2:�� for Certain events, ize PinaZ details of CC?;tr�C�ll31 obligatio:s ef the :: -� �. �.i21 be set 'orth �n �_:e ?ti�� Le3se. Tez;n and Oparator will mutually a�re� oa the �warc. pg all thi=3 Fd=ty contracts as they are �=gotiated :n a:�ti�ipati.oa of and afCei tae ce��ncement cf the �eace. �,_ TE=n h�� the righL to determine product s=lection to be sen:� �-� cr;� cor_caESionaire. RDYE&TI6ING: (A} ?f t'-'-° =uthorit}• rarai:_s centro). over aaming rights and g=_m,�.-�ent �dverti.sing sndzr Paragraah 5(F)1. , thsn neither the Authority nor t�e Tea:n shall have tne right to sell '' _ excl�us�� rights for advertisir.g in the Arena that vould adver�eZy af8ect the other (er.cept the grocluct selection zx.clusivi,ty =or concess`_ons as nrovided to the Team in t?�is Terc�. Sheet). {S) If the Team co.^.trols such ite;vs un3er ei�her Paragraph 5(F}? or 5(�}3, rr=n the Team may sell �� exclusivity riq��s �or adc�_�is_zg iB t� Fsena but such rights �� sT�al not ax_tend beycr� the term of the Lease_ (C} This Te^a Sheet zr.3 the Lease e:all not a=�act the rights af the Citv aad Autrcrity wzt?i respeCt �o advertis_ng in ather areas of the St. Pa��l C_vic Center Compl�x. (e.g. Wi_kins Auditorium o, :�er.r Co=avent�on Centerl. &g�'�'. n�s�' 'rPrrFfi3F& IZFNOVAT20N: (A) Upon the award of an I�'3L franChis= aa� s::b�iect fo clause (e) belosc, the City will ��:-Q eroea3 agprn�r� mately S 51 mi l l i�n �==�== -�–raE�� for tne A_ena &enocati.on, sch�3uled to be caase=_ted i*�'� ��s�n�—� �aeteea r�nths after t?�e arantirv of G� �,�r� francnise (anticipat?d for oLening of th� l�a$-1999 IdNL sea�o :i . Shoi:ld a iv*HL fsanchise ba ayrarde3 *_o start �l�y in t:.e 1�97-1998 seaspn, the CiCy a:�d luthority aaree �o procaed a_t� as c:�xiy scheduled improvemants zs Po�si=== �;.r tne i"sy7-1.3y6 23'dL season. TTe xxEna 347'IG1.RflC V3 to 1't 71P.,i47 �� -�� _�-`�� - `- Ren vaficn is curr�r,t22r eatimateti to consist of the r..a�or imFrac��ments a.� attlin=3 _n �e ConceptuaZ Dasign pErfo:med by Y.OK �rchiteets dated DBCembe� 15, 199c': f,l, J (2.i (3 . ) (?.) (5.} (5.) {7.� {8,) (9.) (1Q.) {iz.) 112_) (13.} a3dition of �;p to 63 12- nerson 1Lxu� �uY�2s �4 �� ::sich could be do �or 24 ��rson party snite cuu].L1�Zl Of gE3L5 CO bring total SE3�g �p=- j�j� ga.„�s to Yn,C00, �rrich includes up to 2000 new cl;J� seats— addition a€ ;rer_a ciub rastaurant and bar w=�°aing of co.�cour�es on �oth enns ei the Psena ��= =�i on o: a T�arr, store a33�.ticn ct Tea,;, Officea n°c, scozei�ozrd ;:it ; vidco par.�ls �^= �r T"are :=eu eutdoar electronic marquees and p �f Fxist`_r�g t:�rqu�a i*c:orov�c� loc:�°r roons co;nol=Ee replac_*�=nt pf e,Y_stiny saat'ng addi�ionaZ and i:�*�reved cc�cess�cns and ao�elty sta,�ds additional and improved restrooms enha.r_ced archi�ectural extezioz (�) ido cha.^,�2s in the HOK Conceptual Design for zhe prena =�°��s Renncatian shall be made withotit the approv3l Lrie Tzam, exeept as required by � psena P.en�cratio� project bL3get e� o£ approaimatei., 9. PLAN OB FIh*A�C3: (p) �e S_�ect to Paraarao}� HfET (ii} an� (ii') the City sha11 pay Pcz the trzna "-------�' - � �-=�s Reacvati.ea tl�souo': the foll� •_ng fur.3s: F$S�millio. uD-frcnt �+z�n` b;� the Arena conces�_�:uire made possib'_e by thz Team�s play zn c2e Arena, a�G t�a issLance c� �^5 --'?' ... _ 33?-=7 �6:cfs� d_ DS].TLC12±31 annitnti r.f 4..�.�_ a.s__� —___ . . a_.;� ner�_Ge for th� �:� �i11ic: a year? c.i=_ cone �ia7�G�.c4 V2 ro Y7 1/El97 5 ! , . .%4�.:"... � ':1..�'. :i I .. � .: , ;" . , i= t � . . 1il/�Y(42��... . _ . � csayiliae..[ yRB AZ'EIl3 P.E^OVaC].Ori p=0]@Ci, t0 �2C:".10E 1tS costs. If no agre=mant on the value ergineering can b� reach=d, the City shall have thF right to - r;i:e final design d=cisions. �� -l� �,�� which are also nade possibla by the Tea:n's opez _n t'ne Arena _ D "1Fi78,TY SOi1TC2G- 1• Frena n�nir_g riahts, esrimeted at $l.o �illicn per year; Permanent a�-.rertisi�:g an3 m revent;es, estir��ed at $2.25 million per year; axz3 +P�Ye•1;�g3 _--' , ' �_ . • - - — or Tea*-n'� rnaarantz= 2. � � ��z � ��ei=e< e� �� _ � ate inco�e ax ro Eed fzom teaia ayroll estimatBd zt '��-'�. r 75 mi1_ion par year, and,— '- n �. .- ..,_. Y��.._�y _�_ ,- :.r' -- _..- , Seconda SourCes• Revenue fzQm i�on-g�ckey Events i-� th= Areaa - concessions and garking estimated at $'!_0 million per year,- �and £acility ticket surch�rge estimated at $0.25 millio� per year. p,yy reuenues from secondary soarces not required fo= debt sarvice of the So:�de will be applzed *o £und the �rena Capital Repai; and Rep�acement P,eserve Fund. (H) D_t the point where the �:ir.iary scucee €or payment of Che debt sercice exce=d th� de,t sen;ice requirements, tne excess sha12 be applie3 �_r;t :o fun� the ?,zena Cagital Repair ar3 Reglacer.�e�t �aservz F�uz„ to the aa�e�--�a� _—�- ainim-,x� a�::at es ab2is'�ed vndes P racraah 5(D) above, and secen3 to a�eb� service resenrE fund for early retire^=r.t cf tre '_---- �a� Bonds _ -�"" (C1 The City will deve�op a sez�araee plan oP f_ranca far paying for and performing deferred caainte�ar.ce on the Arena currently ne�essax�r or advisable to pertorm_ 34tiL1.P.�n V3 Yc Vi 1/E/GT i 'r� - . .%•J: . ._- 'U..'.. , i - _ i .. , , 1 i'�l:u` , �i��JPYY£.:�ln'.' . � AlEesaative State �mr��r �1�1-�8' �.-�-�� 1q, ca�,az��sr.s c�rrrxravxzoxs The Team, or its charitaole fovndation, �ail? f�,s:d initia'11y z-=a annLally axi�ting local organizations that promote youth Frp3 �ar= i.�t•:innesota, sucn as �he Mariucci Inner City yeuth Y'�ckey G..-�d ?�:ir.nese�a �;,ate�z noCkey P_ssec_ation IL9AEiA? . 11, 1fISCII,Z�AS80II5 {31 '(Jgnn t?�2 grant ^v` c_^_ �c:`L fraac::isa �6 L.':8 lE3¢t t}1Q parties sra11 coT::eace negatiatie;s o� a de�initive '� TEa5B agre2:a=_nt ba_=e t�0'� ttI1$ �2iui Si12�Gt. 11 .��—�.� er'__'_ __ ' _' ' (b7 If an N;�?, team ag�rees to relocate to the Saint Paul Civic C=_nter Arena be`ore an I�iHL expansion fran_chise is au�arc2ed to the Team, t:�is Term Sheet shall automatically �erminate upen the execution o£ another binding iex7n Sheat vrith the relocaLing NEL Team, fC} 'Phe '1'ean sha11 hace the right to us� the nrena eaa vezr- £or five (5) =eam �romotional ever_ts ca tae sa:na t°rms zs it :nay use the Arena for NH?, Gar..?s, subject to scheduling availa:c�ility. � The Team will., ataa.atain ita mam4,Ara�,a„ ..., ..,�_� _�__��__ �--�E- �gL �iui.Fa l'd to �:1 7f8197 0 C _ T'^"�-. . .. lF�.. ; � . � . . .- , ��-p , ...ii"i:li'.Yi3';P:'t'-- , ..- ��i -�3` 1 �� y " `�.' .�, i:!:iS.@EC Y8 ta V9 :!E/37 0 � -1 �>.i.�>��:...i �!)�..". :�:� ' :j:. I�l -\B' �,�-�� ss�zsix A BIh'DiNG I.ETTER F ?N"iE�iT o�r•i� p�� V5 Lo V1 1/:/47 � � - , . . .._, ':I..'- � I . . . . - . � I-f.� .•,s`1:1CYYS':�:". _. . „ ° . � `l �� CZTY QF ST_ P.�LZ. QiT7ut.,:.cn�ra 3T _ PF_U"'.1 IFLC g��ty&�gy MZ'r.�•rE✓_ : EOCF�c.`c.Y Z.' ODP J i :7.7. P �D Y8 to V1 7/SjS7 ii- 2 f I _ �._''.,>_ L'h.' ��:I . ' ;. � rcv d as to For�� 7 ��4 �. 45 �,,,, i-Z•�Z E��:1�I�YY for lease of ST. PAUL CIVIC CENTER ARENA (ARENA) January 2, 1997 1. OPERATOR will be the Saint Paul Civic Center will be the City of Saint Paul (City). and OWNER 2. TENANT will be the NH[, expansion Team repres �ed by the investor group (Team). 3. LEASED PREMISES will be the current Are and all equipment necessary for the conduct ofNHI, gannes, including: (A) Current 15,680 seats, including 1, 0 club seats (B) Current 0 suites (C) Renovated Arena for NHL G es, as provided in paragraph 8 below including Team Store and Team Offi (D) Access to all other spaces on game and non-game � remains under the Sheet). 4. TERM OF LEASE: idental to conducting the business of an NHL team including locker rooms and box office (box office � and control of the OPERATOR subject to the Term Term of lease will be uai to the term of the bonds (Bonds) issued by the City to finance the Arena Renovati s(up to 20 years). Team shall haue the right to pre-pay outstanding bonds (including related premium or early retirement penalty associated with pre- payment). The T am will be required to payoff any outstanding Bonds (including any related premiu or early retirement penalty associated with pre-payment) as a requirement for any local nsideration of a termination of the ]ease prior to the full term of the lease. Team will le se Arena for the purpose of playing all IVFII, hockey games (home regular season an layoff games) (NI�. Games} commencing with the 1998-1999 NHI� season or soone subject to availability of the Arena, the Arena renovation schedule and when the expects the franchise to hegin play. Team will agree not to relocate the Team from e Arena as long as Bonds aze outstanding. 97 5. ARENA REVENUES AND EXPENSE5 - CONCEPTUAL OVERVIEW: (A) Team Revenues. The Team will control and retain 100% of Arena. revenues derived from regular season and playoff hockey games (Team Arena Revem and 100% of the Team revenues derived from other operarions, all except provided 'm this Term Sheet (Team Revenues). Team Arena revenues inc ud (1.) sales of rickets for NHI. Games (2.) sales of tickets for club seats for NHL Games (3.) sales of luxury suites for use at NHI, Games (4.) Arena's share of concession sales for NHL Games (5.) temporary advertising revenues (dasher boards, on-ic dvertising, video boards) realized by Team (6.) merchandising revenues realized by Team from sa at NHI. Games and at all other times at the Team's retail stores in the ena and elsewhere (7.) publication revenues realized by the Team fro�sales at NHI. Games and � (9.) (10.) (11.) elsewhere net parking revenues derived from the surface parking spaces, to be available NHI, broadcast and merchandising sal revenues from ]ocal broadcast of radio) all other revenues derived from o rat of the Arena z,4 City-controlled ramp and fo sale at T3HI, Games revenues received by the Team games (e.g. local TV, cable and of the Team's business outside (B) Citv Arena Revenues. The City al] be entitled to all other revenues derived from the Arena, other than Te Arena Revenues, including permanent advertising, naming rights, o door marquees, and non-1�iI�II. Game events in the Arena (Non-Hockey E nts), subject to Paragraphs 5(F) and (G). (C) Team Arena Ex�penses. he Team will pay, or reimburse the City for: (i) the actual expenses incurr d for NHL Games (currenUy estimated at $16,000 for �) day ofgame servici and $4,000 for game presentation expenses), (ri) the occupancy of the eam Offices, Team Store and other areas of the Arena used by the Team, su as the ticket office (including furniture, fixtures, and equipment), (ni) any required payments of generally applicable sales t� and facility ti et surcharge. Cit Aren� E enses. The Authority shall manage, operate and maintain the Arena, ' cluding making all necessary capital repairs and replacements, all at the e ense of the Authority. The City and the Authority shall create a capital rep] cement repair and reserve fund (Arena Capital Repair and Replacement R erve Fund), to be spent according to mutual agreement. The City and the 2 97 i�' �) �) (G) Authority will detemrine the annual m;n;n,um contribution as a result of engineering analysis conducted by the City. The annual minimum cont � is expected to be $500,000. 1'he City will agree to guarantee the payy�ie performance of the Authority under the lease. f Arena Operation for NHI, Games. This Term Sheet assumes th�t the an FTTI h ty will use its Authority intend f�, Games. i with the Team as operations for NHL Games upon receiving a written proposal from e Team outlining the proposed relationships of roles and responsibilities r the NHI, Games. Authority will operate the Arena for NHL Games. The t! best efforts to m;,,iro;�e Team Arena Expenses. The City for the Arena to be operated in a cost efficient manner for Therefore, the City and Authority wili negotiate in good , to whether the Team should manage all or part of the e Team- n rat Ar n v tion F nds - o P nd . The City anticipates that it will need appro�cimately $3.9 million per year out of certain Arena revenues, or from the Team if such re nues flow directly to the Team, to fund a substantial portion of the estimat d$5.7 million annual debt service on the Bonds. Upon mutual agreement a ong the City, Authority and Team, the amount of $3.95 million per year to over part of the debt service will be covered in one of three ways, all of w ch come from Team Generated Arena Revenue sources which would not e st in the absence of the Team: 2. The Authority will sell retain control of the proceeds of the naming rights, permanent adve sing (including new marquee(s)), and the e�cisting facility ticket urchazge revenues for NHI, Games (Team Generated Arena Re ovation Funds). The City will transfer any amount over $3.95 million per year to the Team. The Team will 11 and retain control of the proceeds of the Team Generated Ar na Renovation Funds. The Team will transfer as rent under the le se up to the first $3.95 million per year of such revenues to the Au oritv. The T m will sell and retain control of the proceeds of the Team Gen ated Arena Renovation Funds. The Team will n arantee a pa ent of $3.95 million annually as rent under the lease to the thority, regardless ofthe amount ofTeam Generated Arena enovation Funds. ;7enerated Arena Renovation Funds - After Bonds are Paid. If the are paid off earlier than the scheduled repayment or at the end of the 9� /� normal repayment schedule, the Authority shall receive 100% of all revenues from the facility ticket surchazge and the Team shall receive all other Team Generated Arena Renovation Funds � 6. 7, (I� Namin,g Riehts - City AR� or val Rig�. The City has the right to a recipient of the naming rights prior to selection by the Team. The rights shall be granted for no longer than the term of the lease. (I) Arena Operation for Non-Hockey Events. Although this Ter the Authority will operate the Arena for Non-Aockey Events revenues from events in the adjoining convention center, th Authority will negotiate in good faith with the Team an o io allow the Team to operate the Arena for NHI, Games, on-1 both, upon receipt of a written proposal from the Tea . ARENA COMMITMENTS: the �heet assumes nd for capturing ity and which would �ckey Events or The Operator and Team believe that the Arena is free all cuttent contractual obligations relating to Arena operations with third p ies which include advertising, ticket sales, ticket distribution and concessions, ot r than contractual scheduling commitments for certain events. The final details f contractual obligations of the Arena will be set forth in the lease. Team and erator will mutually agree on the award of all third party contracts as they are n gotiated in anticipation of and after the commencement of the Lease. The Team has he right to deternune product selection to be served by the concessionaire. ADVERTISING: (A) If the Authority retains contr 1 ovec naming rights and permanent advertising under Paragraph 5(F)1., th neither the Authority nor the Team shall haue the right to sell exclusively th rights for advertising in the Arena that would adversely affect the oth (except the product selection exclusivity for concessions as provid to the Team in this Term Sheet) (B) ffthe Team contro such items under either Paragraph 5(F)2 or 5(F)3, then the Team may se Arena �clusivity for advertising but such rights should not extend beyond e term of the Lease. (C) This Te�eet and the Lease shall not aft'ect the rights of the City and Authonty th respect to advertising in other areas of the St. Paul Civic Center Comple (e.g. Wilkins Auditorium or new Convention Center). � �'7 �� 8. ARENA RENOVATIONS: (A) Upon the award of an NHI. franchise, the City will make approximately $51 million in Arena Renovations to the Arena, scheduled to be completed in eighteen months after the granting of an NHL francMse (anticipated for opening of the 1998-1999 NHI, season). Should a NHI. franchise be a arded to start play in the 1997-1998 season, the City and Authority agree to roceed with as many scheduled improvemems as possible for the 1997-199 I�3I�, season. The Arena Renovations aze currently estimated to consist f ihe major nnprovements as outlined in the Conceptual Design performed y HOK Architects dated December I5, 1996: (1.) �2•) (3.) (4.) (S.) (6.) ��) �$•) (9.) (10.) (11.) (12.) (13.) addition of up to 63 12- person luacury suites (4 double-sized for 24 person party suites) addition of seats to bring total seats for NHL� includes up to 2000 new club seats. addition of Arena club restaurant and bar widening of concourses on both ends of e Arena addition of a Team Store addition of Team Offices new scoreboard with video panels one or more new outdoor marquee improved locker rooms complete replacement of additional and improved � additional and improved � enhanced architectural e�C could be to 18,000, which marquees and purchase of e�sting seating �ns and novelty stands (B) No changes in the HOK Co ceptual Design for the Arena Renovations shall be made without the approv ofthe Team, except as required by Arena Renovation project bud et or State of Minnesota funding deficiencies. In that event, the City, Auth ty and Team shall agree to value engineer the Arena Renovation pro}ect reduce its costs. If no agreement on the value engineering can b reached, the City shall have the right to make final design decisions. 9. PLAN OF (A) The C� shall pay for the Arena Renovations through the following funds: a $5 lion up-front payment by the Arena concessionaire made possible by the T am's play in the Arena, and the issuance of $46 million in bonds. Funding 9 � �� 10. 11. for the debt service for the bonds will come from the following sources which are also made possible by the Team's operations in the Arena: Primary Sources: 2. Arena naming rights, estimated at $1.0 million per year; Permanent advertising and mazquee revenues, estimated at $2.25 million per y ar; or Team's guarantee of $3.95 million annually, and, Revenues from facility ticket surcharge for NHL games, estim ed at $0.7 million per year, and, State income t� proceeds from team payroll estimated at yeaz, and corporate franchise tases paid by the Team est per year. Secondarv Sources: 75 million per :d at $03 million Revenue from Non-Hockey Events in the Arena - c cessians and parking estimated at $1.0 million per year, facility ticket surcharge es mated at $0.25 million per year. Any revenues from secondary sources not requir d for debt service of the Bonds will be applied to fiznd the Arena Capital Repair an Replacement Reserve Fund. (B) At the point where the primary sour es for payment of the debt service exceed the debt service requirements, the xcess shall be applied first to fund the Arena Capital Repair and Repla ment Reserve Fund to the agreed upon amount, and second to a debt s rvice reserve fund for early retirement of the Arena Renovation Bonds. (C) The City will develop a deferred maintenance o perform. CHARITABLE CONT U plan of finance for paying for and performing Arena currently necessary or advisable to The Team, or its ch able foundation, will fund initially and annually existing local organizations that p mote youth programs in Mmiesota, such as the Mariucci Inner City Youth Hocke and Minnesota Amateur Hockey Association (MAHA). 0 9� i� (A) Upon the grant of an NHL franchise to the Team, the parties shall commence negotiations of a deSnirive lease agreement based upon ttris Term Sheet (lease). j (B) ff an NHI. team agrees to relocate to the Saint Paul Civic Center Aren efor an NHL e�cpansion franchise is awazded to the Team, this Term Shee shall automatically terminate upon the execution of another binding Te Sheet with the relocating NHI, Team. (C) The Team shall have the right to use the Arena for five (5) t am promotional events on the same terms as it may use the Arena for Crames, subjeet to scheduling availability. � , . . .. . . � ' . . _ . `�1 � ' � U t _,_._.. _ _ __ .. ..__. . _ __' . _... . _ _' _ . '__ _ _ ' __._'____--.' __ . _. - � �'� � �l � �,�-� � � a�, �- �. _ -• _ . - - -- - .�_. � �� .,� � _��,.��, ��i, _i�-�_, �,i � - - �-- ; .��,��, � _ �.�-.;.�..,n�,.� - � �_ c.-� -_ _ _ _ _ _ _ , _ _ __ . . . � _ � . �5�� . . _ �--_ . G�� _ �,-� -- �- --- _ _-- __� _ ��-.-- `��?av �� .-� _ � c`�.� Q_ _ --- _ ___ _ __. _ - - - 6. �---- �-. � �,.. c��_ _ _ � �, � �.��..,-,� �..� �,� - -- _�.__. �� _ �-� - • �- �__ _ � - _ . _ - . ,. __ -- - _.. ___ _ - - -- _ _ . _ ___ _. �_ _ __ _ _,. _ _ __�. � _._..._- ___ _Q- _m. _ _._ _ ___.._. ,- _ _ __ .. _ .______ _ � _ _ _. __ �� , l� �� 24 �a! Exptore some form of pub{ic ownership of the NtiL Team. � n�� \ �� / � ��U � �� -�� Staff will report back to the City Council within three weeks of an award of an NHL franchise with a financing option that is a revenue bond without a general obligation pledge and with other financing options, including consideration of participation by the locai business community, that staff recommend should be pursued. Such other options may contain credit enhancements, but will not require any direct property tax levy by the City of Saint Paul. The staff wili also present a recommended financing pian. CITY OF SAINT PAUL Office of the City Council �,O< 310 City Hall Saint Paul, Minnesota 55102 (612) 266-8577 Gregory N. Bkcs Fiscat Pplicy D"uector DAT'E: MEMORANDUM January '7, 1997 TO: Council President David Thune Councilmember Jerry Blakey Councilmember Dan Bostrom Counciimember Dino Guerin Councilmember Michael Harris Councilmember Roberta Megard Councilmember Janice Rettman FROM: SUBJECT: Greg Blees, Council's Fiscal Policy Director � � v Civic Center Arena NHL Remodeling - Finaucial Analysis ��_\�' This memo will summarize my analysis of eight bond financing scenarios for the proposed remodeling of the Civic Center Arena to accommodate a NHL Hockey franchise and to make needed maintenance improvements at the arena building. It will also identify some pending work tasks which should be accomplished in order to provide additional information to the City Council for your use in making future decisions related to any remodeling proposal. The three m�jor variables for bond financing which will affect the interest rate applied to the bonds, and thus the corresponding debt service for the azena remodeling proposal, are: 1) Revenue Bonds (Pledging Only Dedicated Revenues) vs. Revenue Bonds With a G.O. Pledge (Promising to Izvy Taaces If Dedicated Revenues Are Insufficient.) 2) Tas-Exempt Bonding ('The investor dces not have to pay income taxes on his / her investment earnings) vs. Taxable Bonding (The investor pays income taxes on earnings.) 3) The Term of the Bonds. I did two structures, one assuming a 15-year NHL Lease and one assuming a 20-year NHL lease. Because bond money would be needed almost immediately for construction, almost two years before a hockey team would start to play its 1998/1999 season in the fall of 1998, my estimates used a 17-year bond schedule for a 15-NHL year lease and a 22-year bond schedule for a 20-year I3HL lease. In addition ta the three above variables, I assamed the following constants for all scenarios: 1) Only interest payments would be made for the first two years of the bond issue; and that capitalized bond monies would be provided as necessary to finance said interest payments which cannot be financed with investment earnings. a �� 2} Bond money for the arena remodeling project was fixed at $46;000,000, assuming a$5 million up-front payment by the Arena Concessionaire. 3) All investment earnings on bonds for Construction would be used for debt service. 4) All investment earnings on bonds for Capitalized. Interest would be used for debt service. 5) All investment earnings on bonds for a Debt Service Reserve would be used for debt service � For ali G.O. Bond 3'ssue Scenarios: a) There would be no Debt Service Reserve. b) Financing Plan Insurance would not be purchased. c} Bond Sale Expenses (fiscal agent, bond counsel, underwriter, discounts, etc.) aze estimated Q1.5% of the total amount bonowed. '� For all Revenue Bond Issue Scenarios: a) There would be a Debt Service Reserve equal to the maximum debt service due for any one year. b) Financing Plan Insurance would be purchased at a cost equal to 2% of the total amount of money borrowed. c) Bond Sale Expenses are es6mated Q 4� of the total amount borrowed. The Administration has initially proposed an annual revenue stream of $5.7 million to finance annual debt service for a Tasable Revenue Bond Issue of $46 million for the arena remodeling proposal. Attached you will find my debt service analysis of eight different bonding scenarios, using different interest rates and the common assumptions identified above. Depending on the type of bonds issued (Revenue vs G.O. Pledge) and (Tax-Exempt vs. Taxable), the $5.7 million in proposed annual revenues identified may or may not support annual debt service. The ANNUAL NET DEBT SEKVICE ESI7MATE (after applying investment earnings) for each scenario is summarized as follows: 1) Tax-Exempt G.O. Pledge, 17 Year Bonds, at 5.5% Interest =$4,695,000 2) Taxable G.O. Pledge, 17 Year Bonds, at 6.5% Interest =$5,037,000 3) Tax-Exempt Revenue, 17 Year Bonds, at 7.5% Interest, _$6,107,000 4) Taxable Revenue, 17 Year Bonds, at 9.0% Ynterest, _$6,907,000 5) Tax-Exempt G.O. Pledge, 22 Year Bonds, at 6.0% Interest, _$4,119,000 6) Taxable G.O. Pledge, 22 Year Bonds, at 7.0% Interest, _$4,484,000 7) Tax-Exempt Revenue, 22 Year Bonds, at 8.0% Interest, _$5,432,000 8) Taxable Revenue, 22 Year Bonds, at 9.5 % Interest, _$6,294,OQ0 If the City Council decided to approve bond financing for the arena remodeling, it would probably be most appropriate to tiave a mix of taeable and tax-exempt bonding. And the term of the bond issue would be most influenced by whether the NHL Team preferred a 15 or 20 year lease. Thus I would guess that the most likely revenue bonding scenario for a shorter time period would be somewhere between option 3 and oprion 4 above, with debt service at roughly $6.5 million. This balipark estimate would suggest that: i) Additional revenues would be needed to support debt service, andlor c��-1� �) The amount of arena remodeling would have to-be scaled back, andJor 3) Revenue Bonds With A G.O. Pledge could be considered. While there seems to be initial resistance to using a General Obligarion Pledge (assuming the I.egislature passed a state law granting Saint Paul the authority to issue g.o. bonds for the azena remodeling), a case can be made for considering such financing. If one assumes that the azena remodeling project should go forward with revenue bonds based on a reasonable level of assurance that annual revenues would be$5,700,000, than one could argue that for the same revenue stream and using a g.o. pledge: the Civic Center Arena could have a larger level of improvements, or the City could spend less for total debt service. The proposition that if the $5,700,000 in annual revenues don't materialize, the City would let the revenue bond default, is questionable, in light of the fact that such a default would have a severe negative impact on the City's ability to issue future bonds (revenue or g.o..) Assuming the same level of improvements, the wtal debt service cost savings using a g.o. pledge could range from 23 to 30 million dollars. The TOTAL NET DBBT SERVICE COST ESTIMATES for the eight different bonding scenearios are as foliows: i) Tax-Exempt G.O. Pledge, 17 Year Bonds, at 5.5% Interest =$69,003,000 2) Taxable G.O. Pledge, 17 Year Bonds, at 6.5% Interest =$74,865,000 3) Tax-Exempt Revenue, 17 Year Bonds, at 7.5% Interest, _$92,195,000 4) Talcabie Revenue, 17 Year Bonds, at 9.d% Interest, _$105,602,000 5) TaC-Exempt G.O. Pledge, 22 Year Bonds, at 6.0% Interest, _$81,312,000 6) Ta�cable G.O. Pledge, 22 Year Bonds, at 7.0% Interest, _$89,352,000 7) Ta�c-Exempt Revenue, 22 Year Bonds, at 8.0% Interest, _$109,649,000 8) Tasable Revenue, 22 Year Bonds, at 9.5°10 Interest, _$128,303,000 Also attached is a spreadsheet which attempts to identify on one page over $71 million in arena remodeling related costs: ?) Project Cost estimates of $51,000,000 (HOK Sport's 12-15-96 Report), 2) Revenue Bond Financing costs of $12,470,OQQ (Blees's estimate) 3) Other Needed Arena Improvements C� $7.5 million (Hanson's 1-3-97) 4) Annual Repair & Replacement Reserve @$500,000 5) Unknown Items and Costs, to be identified by engineering study After discussing the pros and cons of various financing options with the Jce Reid and his staff, Chris Hanson and Martha Larson; I am (we are) of the opinion that the following information is needed to better consider options for an appropriate bonding pian for an azena remodeling project: 1) Cost Estimate Detail for SOFT COSTS of $S,SOQ,OOQ (HOK Sport's 12-15-96). 2) Cost Est. Detail for Fixtures, Furn. & Equip. of $5,500,000 (HOK Sport's 12-15-96). 3) Updated, Detail Estimate of Other Known Needed Improvemenis At Arena (e.g. Asbestos Removal). (Chris Hanson & consultants) 4 ��,1� � Fstimate of how much of the $51,000,000 in project costs identified by HOK Sport's is directly related to NHL improvements (for a taxable bond issue) and how much is related w repairing / replacing existing outdated arena improvements (for a tae-exempt bond issue) (Chris Hanson, consultants, azchitects, bond counsel) 5) The Civic Center Authority's Priority List for all l�ow major azena remodeling cost items, assuming the City cannot finance ail desired azena improvements. For er.ample, is the esthetic appearance of the outside arena walls a more nnportant item than asbestos removai inside on the ceilings. (Joe O'Neill and Chris Hanson) � An option to use a two-year construction temporary financing loan, in lieu of adding capitalized interest to long-term financing, as a way to lower interest expense. (Martha Larson / Jce Reid) C: Mayor Coleman, Mark Shields, Pam Wheelock, Martha Larson, Tim Marx, Chris Hanson, Jce O'Neill, Jce Reid, Shirley Bavis, Tom Cran, Bruce Engelhrekt, Eric Willems, Chuck Repke, Gerry McInerney, Scott Renstrom, Mark Mauer, Tony Schertler, Ann Cieslak, Jce Collins � _ ... . O V W N A W N� x m m v � � a 0 �CDp�<D Z < � m m n � v � m A Z � � O � Z m � z � "i u cAZO� � �m'�-itmot�i�p � o- 3 � Z � s�. m n D tQ O � � m m m I � m N 6 A 0 0� �� I c m v m �� m $ m � _+ N J p � O O O O m m � » a � ° ��=33�t�n z` �` ;;, •* x (el � ' � �i � �. o � ,010 3 rt . ? '° ° ,� �� ^',- A� O < N N ' 'D tD � � 'n �, � o+ � r p o o w�` e' � ['] 1�l J i N N -• � -� � � �1 + O �O W V � (J� � x mmvp p i �yO�c x D � m � N D C� z <�pm�� R '��XZ� � u � �mym-�ic <o=+y�� (�Zm m 1 m n T �i O Z m � m � � �Q ' m m m N o > � � v�� Z � -� m m � � � v W $ m $ V Of ll� A W N� vvc>�o'� a p " � m �tvDC� � c m��"zG� � c r � <n�� m Q �z� � � n � O � � 'a m N m - v r� � �x -� y � Z � m$r"$ A A� A A y A W�� N� V T V � �-+ O N o 4s Cd Z Z Of V O + j Z Z� V o opc�i, o_o�i DDN�° oao DDoa O O O O O O O O O O O O O O O O O O O O O � O O O G O O O O O O O O O O O O O O O O O O O Z m �. ., � � m � � o � >( � � 3 � ° y m � � � � 5 y m...x(g��m�v � m x o p 3� G? '� » •'•(g1 m m� � oo� o� C � ;^?�m m � N Z O p� � � O� Z to N u+ N �oN D ornw W � V � N t�lf C7� m ° � '-�,. n' 7 � p � • o X � °= 3 = ° � m � �O � �' cn» _�� v �� o�;° < c�i• " �' � (F� � m� � ao o � C � ;^?�m m �—�_ � � � � L � � m � �cw Dorn a en o o ra W �[�7� O C O O .�i� A � � w W � W W� A Z V , �� o'oD � � T O O � A � O O O O O O � � �±; �„ , o V W. y w .( !R_ o� w o m � �. o� W 0 4�! A 0 Z A D o w�i O �.1 z m �.»a� m �:. 0 77 K" 'm m m� y. R ��g � y �: y�. �z "�' ". C � .,�. � � � s z� � aoWOZ..; C � N a y ,.,, N .� � ii ' N � u' D fl t0 N � � O f�D � � W N � a ' p u' � co _ o � i J J J A W N -+ O � � � x m m v � � a W - �3=ip��D � m � N D C � �p m � � � Z � � u r �p-�t m , n Z � D � m � T I oZm m � � I m� m � m N o � o va �a� _ � -� im m �� o m�� v v o v v� �+ w � pl (�p N � A � opvN,. �� o 0 4 A O O� O O O O O O W O O� �� a O� � Z D Z D i� � cn ~ w � V A N � w � � 0 O� N Z D Z D � � � � �o�� 1 �� 0 � G fA O � N W W N m' � � � � C ° t77 ° 3 c� m� W T 0 � Z � z= G� s. �� n C O N Z � m N ' N M Z Z r c p N !D -� W 0 0 � � � � J to � ° o 0 0 0 3 � N � � � Z � � tD C oD �. �� 'a> O O O d m `° , m �� j Z �� D p� � w y � D, � O OD � �„� 00 � m _�� Z A' y � y � V � � ��-�� m 177 Z � J W �1 N � � C c r mn < m V/ � � � �m � Z -� � � � � � N Nm � � � " � T N ry � � �v � x• r N�„� Z c� � 1 v ..a � � *A V/ � � � � .�. Z � 2 � r � � � N y� <D r ,. O! f A W N- O� � m m v� O a �p �D ��m�nl�D z<ooma� � m y�c�zo� r"zm�'m-�'i� r�i °�v'a' � �Z� �- m�� O � m� m m r .A ID N � A c ° � n '� Z Q '�'{ m �y � � � o � � "�' � -+ N N � A O N W o O O O O O O O O 0 0 0 0 �m� � ., o'�'m'mm; � Z�� ro�3o :�+ p � n ' <b �j � 7�C 0 II � � '8 �. � y � � y �'� n < a W y �' Q y H �U ID � �T DIaI�IV f � v� N A W� X � m v � Z m Zy��vi� m3-yA� � n � � m i rt -{ �zi� ze �D �<ai�OC Ce1D� ol ID � T �' i O Z m � m�� m m � � O � O 0 o�n� c � � p y �i Z� v �,$�$ m n m�Dppa. aomv �-i3� zm��_� � ' Z<„m�� ppm--i �m� Z O . Om�r�r �n� e� nm�mv r' � m � m 1�C <v='�yA m T Z c�Z� X (� T O � � m m m � m N o , o v��a� � O (A V Z J � m � m � A A �� N� V A Z Z � V N Z 2 � �-+ N O N V� O IV (T V O n o�DD c �?D D_ ° O o O O O N O Ui O O� o U� O O O O O O O O O O O O O O O 0 0 0 0 0 0 0 0 0 o a o 0 0 Zm . v� � m- m °O K ° =m � = v� � m � m � y fn.�.2ng� � � �� x p 9 3 eairt C ? Y ` ! r�i � fD m � ,�o oo' o� Z � �' � N Ci m ymz�o J N •+ �D Z �ro N w j' �o�'DOCOrn� � A O to IJ � � V � �J tn O W "' �p N ^' �o A m -+ N y o� cn rn cn _ ... o 0 �,ow wwoo � o N� N N O O N V O pl � � Cf O O� A Z D N W � W 0 a W Z D � A Z m M �.�i q � m � � o - i � m � o y � � � � N • 2 (8� � � O fyD 7�C O .� 7 �'* n� � � � `d � �� < y N � N f A W N � O t � m��01T1 ao m �'��- zm �n�� "'�Z�czG� -i D f' � m N N O r� <p=�tntn�p "'„ a. �z� � � �� ."I � � m � �, o a�n� p � � � � o � � r" $ v Zm �.»�� m-�1�: � o � X °�m� ° y .. m a � � � � y ". � �. ��"2� p � �`.: �1 � x � a � a ' ' :;. G � � � � � � _.', ZA � m�p2'� m < y p, tA ii :..� v+ A tD ;� � ,�,Z� +y �owDo�o !�� lD C7 V O N O�D N O N O O f�D � � W W N N ° m 0D u�i °� N N ,.. cnu+o o N..r �� 000 0 �oo� oz � � s O O-• O O rt A A � N N A m -t W 0 � N Z D N N A m � W 0 � a N n N e� N � �� O� IV w N O N � `� cn o u+ o o,� � j W N � (l� v t0 A Z W N c w o o D ?. ��oo� , 0000 oS� .. tD �e. Z 'a N -� y -` � � � t,�,Y o w � W 0 o� m a s � N L-' s t0 � � N 0 � A m � --1 0 w N N � � '� �� tn � Nm I11 Z W m � � � m -' � � y � O rll 3 Z " C ° m� 0 0 Z� v� Z � � �. � � � �, Cp Z � V/ N Z r v m � � � n m �1 � � VJ � � � � T N N � N � � � 0 3 � � m � m o � � D � m N CD � R _ r � � N � �� -�i�{m��c � In C r n C D z � i � � m A � m N -�I m � z 2 � � WwWwWWwWW rn rn rn� rn� rn rn rn rn rn rn rn rn rn rn rn rn � � v � � .. ..y v v � � -• N N W � f0 N N OD s A J � W 0 � �I.� 0 � W W W O� W O� W � W O� W O� W O V W O V W O V W 0 � N t a � w 6�i c�o N p V N W � OD O) A IV � O V (N W � N� A N � O V � W �� V A N O O W � W �� _l� �I V V V V V'V �/� � � r z -� m � - D Z z � N ozom��?� m-m O 'i c j ° �m�mm�-�i � _ z�� W 0 z N � O � n O z � c � 0 wWwWwW 0 0 0 0 0 o C rn rn rn rn rn rn rn rn rn rn rn rn N rn rn rn rn rn rn m � v .. � � � N W W W W A� D V O W T �O N �^ � W V OD OD t0 ` O � W O� W � y O� W O al W � Z O� W O � 41 �('� O� W O T W O O V W O V W O m � � r m m � �� 0 � � D 2� G� Z C Z m � � y N rn � �Z � � ('3 m0 Z O � � � � � � V C) � O Z � O \° 0 m W � i� n A J i� � O � N.P N 61 V Z "L' � tn V o w� CD Z p� O V flf 4J �_C+D � v � O V fJ� W � 0� � O V (A W C� V o a � w� c � SAINT PAUL CfVIC CENTER ARENA - REMODELING COST ESTIMATES etai ?9�L � N.H.L. RENOVATION COSTS - HOK Sport's 12-15-96 Estimate n 1 1 LowerConcourseRemodel . - 1,993,085 (� � � 2 Seating Bowl Remodei 7,825,614 ` Score � �l�deo Boards Dasher Boards 8 Nets Are Included Upgrade Sound, Broadcast & Sportlighting Systems 3 Main Conwurse Remodel 4 Main Concourse - New (Pop-Out) 5 Suite Level 6 Club Restaurent & Lounge 7 Club Seating & Concourse 8 Locker Room Remodel 9 Team Office Remodei 10 Press Box Remodel 11 Sitework 12 General Conditions 13 SUBTOTAL-CONSTRUCTION 14 Rounding 15 TOTAL - CONSTRUCTION 16 SOFT COSTS 17 Design & Engineering Fees 18 Tesfing 8� Inspection 19 Building Permft Fees 20 City Administration Costs 21 Other - specify 2,620,000 $ Inciuded 330,000 ?? �� ?? ?? ?? 2,357,950 4,845,171 7,378,888 4,425,660 6,982,272 699,628 536,731 55,784 728,234 2,163,559 39,992,576 7,424 40,000,000 5,500,000 22 PIXTURES, FURNITURE, & EQUIPMENT 5,500,000 23 Includes Balance of FFE and fGtchen Equipment, but no $ for Team Offices and Team Locker Room. 2a HOK Sport's 12-15-96 Cost Estimate 51,000,000 REVENUE BOND FINANCING COSTS: sss,a7o REVENUE BONDS @ 9% FOR 2+ 15 YEARS 25 BOND SALE EXPENSES 2,340,000 26 CAPITALIZED INTEREST EXPENSE - NET OF REVENUE 2,010,000 27 DEBT SERVICE RESERVE (@ Max. Debt Serv.) 6,950,000 28 PREMIUM FOR INSURED FINANCING 1,170,000 28 TOTAL BOND FINANCING COSTS 12,470,000 CHRIS HANSON'S 1-3-97 ROUGH ESTIMATES OF OTHER ARENA COSTS 30 Costs Not Covered In HOK's 12-15-96 Estimate 7,500,000 31 ASBESTOS REMOVAL 3,300,000 32 HACV Controfs to Computer 350,000 33 Directional Signage 325,000 34 Sound Sytem & Other ? ARENA CAPITAL REPAIR � REPLACEMENT RESERVE FUND 35 AfVNUAL MINfMUM CONTRIBUTION, CITY TO GUARANTEE PAYMENT 540,040 NECESSARY MAINT. � IMPROVEMENTS - During The Term Of Lease 36 UNKNOWN - TO BE DETERMINED UNKNOWN TOTAL PROJECT COSTS 71,470,000 Q O F'j ��-f� CTTY OF SAINT PAUL Norm Co(cman, Mayor To: Council President Dave Thune Council member 7erry Blakey Council member Dan Bostrom Council member Dino Guerin Council member IvSke Harris Council member Bobbi Megard Council member Janice Rettman From: Date: A �� MarthaLarson �)�Y/ ' January 6, 1997 Re: Hockey Resolution Follow Up DEPARTMENT OF FINANCE AND V�j MANAGEMENT SERVICES ` Manha la'son, Direcmr �a/r 2Sa0 CFry HaU - Telephone: 612-266-8797 IS W. Ifdtagg Boulevard Facsimi(e: 612-26G-8919 Saint Paul, Mitwsom 55102 The following information was requested by Council members Thune and Megard at the City Council meeting on January 2, 1997, related to the hockey team resolution and proposed term sheet introduced in that meeting: Background information regarding the revenue and debt service amounts reflected in theterm sheet 2. The number and identity of other cities competing for an NF�, expansion team franchise The following is provided in response to that request. Revenue and Debt Service Information Team Arena Expenses ($16,000 day ofgame expenses and $4,000 game presentation expenses): These are the costs ofpersonnel who ready the Arena for hockey games, staffthe facility during games, handle the sound system, scoreboards and other promotional activity, and clean up afterward, as well as other direct expenses associated with the team's use of the facility. These estimates are based on the average expenses of simiSar facilities for similar operations and are reasonable in view of the actual costs for current Arena events. ��l -\ �- Ticket Surcharge - Hockey Games ($700,000): This estimate is based on the current $1 per ticket surcharge, ticket sales for 43 home gaznes, and the expanded 18,�00 seat capacity of the renovated Arena. Based on NF�, industry averages, the estimate also reflects an =``^? average of 90% of total available tickets sold for each game. _ Ticket Surcharge - Non-Hockey Events ($250,000): This estimate is 6ased on the cuttent $1 per ticket surcharge, and ticket sales for 50 events per year, with an average of 5,000 tickets sold per event. Staffbelieve this is a reasonable estimate, based on the enhanced marketability of the renovated Arena and its expected ability to attract more concerts and other events. Arena Naming Righfs ($1,000,000): This estimate is consistent with industry averages and is reasonable, based on discussion with industry consultants and local sports faciliry mazketers. Permanent Advertising and Marquee Revenues ($2,250,000): This estimate is consistent with industry averages and is reasonable, based on discussion with industry consultants and local sports facility marketers. Parking and Concession Revenues ($1,000,000): This estimate is based on a projection of 50 non-hockey events per year, 2400 City-controlled parking spaces at approximately $5.50 to $6.50 net revenue per space, an average attendance of 5,000 per event, and average net concession sales of $1 to $2 per person. Stafffeel this is a reasonable estimate, based on industry averages, the enhanced marketability of the renovated Arena and its expected ability to attract more concerts and other events. (The 2400 parking spaces will be in the e�sting -� Civic Center ramp, the new underground ramp constructed as part of the Civic Center expansion, and the two adjacent surface parking lots.) State Income Taa Rebate ($1,750,000): This estimate is based on an assumed team payroll of $22,000,000, which is consistent with industry averages. $21,000,000 of this payroll is assumed to be for players and team management who eam in excess of $100,000 annuaily, and thus are taxed at the higher state rate of 8.2%, with the remainder tased at 5%. State Franchise Taa Rebate ($300,000): This estimate is based on the increase in corporate income taxes paid to the State of Minnesota, attributabie to increased revenues generated by the presence of the NF�, team. The projected revenue increases, and associated assumptions regarding taxation of that revenue by the State, are supported by the KPMG economic impact study commissioned by the Capital City Partnership. Copies of this study are being delivered to you today, under separate cover. Annual Debt Service ($5,700,000): This amount is based on the $46,000,000 in Arena renovations to be financed, a 9% interest rate and a 15 year term. We have used a conservative interest rate of 9%, assuming that the debt will be a ta�cab]e issue. ✓ Please note that the term sheet provides an option (see #S.F) for the team to guarantee a payment to the City equal to the $3.95 million in team-generated renovation funds that the 2 q�t-« ' City will use for debt service. (These funds are the revenue streams from the naming rights, permanent and marquee advertising, and NHI. ticket surcharge.) Tf there is concern regazding the reasonableness of those revenue estimates, this option would eliminate the risk to the City if the actual revenues are less than grojected. _ �� _' - --= nthPr C;t;PC Competin�for an NHI, E�ansion Franchise Atlanta Houston Hampden Roads (V'uginia) Raleigh-Durham Columbus Oklahoma City Nashville Hamilton (Ontario) 9 'l - l� �._, To: Council President Dave Thune :- = Council member Jerry Blakey Council member Dan Bostrom Council member M�ke Harris Council member Bobbi Megard Council member Janice Rettman From: Martha Lazson 7oe Reid Date: 7anuazy 8, 1997 Re: Hockey Financing Options Attached is a discussion of the factors which influence the City's options for financing the renovations to the Civic Center Arena, and an analysis of a number of financing scenarios to illustrate the impact that those factors will have on annual debt service. Please view these scenarios as alternatives that demonstrate the range of options available to us, rather than as specific staff recommendations about the structure or size of the debt to be issued. This analysis reflects some variations on the scenarios projected by Greg Blees, but in general contains similar assumptions about interest rates, credit enhancement, costs of issuance, etc. Where the assumptions vary, we believe both the assumptions in this analysis and in Greg Blees' - analysis are reasonable and conservative. We apologize for the delay in delivering this material to you. Should you have questions on this prior to the Council meeting this aftemoon, please feel free to call us or page us. Otherwise, we will be prepared to discuss financing further with you at 3:30. Thanks. CC: Pam Wheelock Greg Blees Mark Mauer �� _�� :, N O n � Q a� U �� C � =Cm J �C � = C C Z LL � � � � � o m �r cg� m �n w Ji 25g25 �"' g�8 � � N fA �q Vf W � � m N L U r � cZ 01 � IO N N U � L��..t � a a��e v d � � 9 C N �.�.` m� � �� d N N N — > q O j � W Y� O S LL � C m2 d� Y a ax � n ��.. � d n = H d y`� .�. .. NO a C N ° m a O U W 0 e � d Y � � C O W C C 6 d V N � v j c � t � � ^- .-. a � m a `w o m�oi r�n m a � � N N E N � V O N N y N � y'mClO1NW a �m��a� � � maoao m i " l" m r d �mnB.�n cm u a�i c 6°m 4 m2 II o A �m� W a U � � m V U � U m C C G ° m � p c c m c q��occ �c > 0 a O � p � � a�Vb� X m O 0 L d� d 4E m=j :°.�U �awq a -- N d m t L d L � � � Q @ Ol � Ol J J J J S S�_ W @ m m H � > � V V U � ��. m � A �$� d� N O� b N a p y'� ` « v �8i`n aa E.L =rU0U0a0 � G d 2II � 0 �� ..o C C v c E 2 �' a` W L L O � `o � � U U O O � a q L m— a c � U 'O � R � N D y E� �q � d «�. � m � t° c N o �+ r y m B � `6 � 6 ; m N d V � � d d 3� '. A W m L a v � C1 � XE-, d� � �, � C 0 w m a `o a c a ar 3 d c � C q � L O � > � d$ � U `u � > o � L 9 � � ` � m ` w� N O� � N � C — n E U� c C V dL m � �a N '� m � ~ s � L C b E C .� a N E m � � C A V � a ys d y La A N � _ w w °1 C � U c � C � y o � U N �L U y U � 3 d N � £ � �- O -� 9 Z a w a c � o =� 0 m � m � � S d N � � d ° � m �, 6 f�l U � C y � `m ° a m y R o a n w £ m � O � �a W m � d � m N � J � F � Y a= � C O � � H Q 0 e d y OI C C � a v N O V C � L 0 o A � W - c .= U � d �° C �' U � C G 6 a o � M � � W mya $ w3 S� U C Bi ai L° y `�di�c � O A Ov�.. S a m m � ° a � V U O Q $ a S m c _ a a w � o � o a o o � mcv'c w d w � m ° o` oq a��= O O�? TO � R�� CI �f Q o m E-°. ° �O��Z(7 m N `c E N W � V y c U L m � L a d a � W O `o y u � a � cu �> E 3 �� i d U U U c c o` � Z y Z � c d N q .- R � b— r N N t d q d p� `- n � N � % ° � g � '� m E � E m � � � Y y y �m �d C � � d D > �m 4 N . C y a`o j� �2 `o � o� x i x u? '° v y ° �� o =x�t . � .m.,=y—..d N>. t N� W y C O R;= w d- E � C a > � �U � y A �= mar- uc � C� N N W t� N` y � C� d � � U m d 'p C�t d V�C d 8 N� d'p W Y V 10 > 4 L r J � O v1 U C O V i y � � � � � � u 1' >=� 5av =� d d�m33 taav.....am oonau W o m u a�i m m a� _L % �SA Y� m J V!G}"f}"r�Q T c O 0 U U C 3 4 N O > C � Y O _ d C O C O O L�l � ? { K l9 � 0 in w �� N O l9H � � � � � � � N � H � � N W N W b n � � N � � � N �S W lh W W 69 � °� � � K W m S v w �� S � � .p w � M O � c o ° � O y c O N � N = a <+ o m ¢ U U = V U X C W� C N �p N N t0 � CI }-� H0� H 0 � N a a m � m .A.� r : O u Q 8 fC r � W _ 5Z v 25 Y 8 � r � w � � � � 8 a� N � K O � 8 r u j M b9 g � o a 8 � K . Y . a d 0 � m 6 r L ..�.. N U tv �� -��' �?, c O W g � C 0 v � ° c m u c A � w w 0 N � U N L O R 7 O C Y 2 3 F O 0 C � � � Pv N � N � m w �i g n � m N c� H � � H N m N � n � N M a � W V! d � O K �� .- N H H H t � tV N rn ' m w a9 �� Nt� � N Vf �„� (9 a vi vi � E � � g � � 8 N q O 8 � � g W O 8 r � O 8 W O 8 � K O S � O 8 n w O O N H N G O N �p C O O � C C u u O � � b N � e i Y= g = 0 b � � N � b � = W N Y N 9 9 � E E � 2 Y m L ' `m � y ` � � d d �.�.. � N N A tC N N d F F� � O� � O � Q W � � . y � � �$ � � W n W M w �� W � � � � o W n � O � �� V � O f0 1� N � ti � N b tb N O � N � � � � � � �� 1� K H W V� m N �G (�1 In N N C� vi � O � N O O r N n � �D O 0 Vi W '; K H m W H � � S � � � � g r � � g r � O 8 n � � g H O 8 n N H O 8 W O 8 n N 49 O g � 6 8 n w O 8 N H N C O C � O p > ` O v a U V Z Z �' 0 2 0' 2 h d y � m c d = O a a v � � � i a r `d' p_ � (�J U O� U t�l j ` L W y _ � 2 W c n ? X X C N N�p C b b A � N X �p N W d q N S d O > X 1� !- ! � O f!'� � � I- Q w ��-1�' �� w i d C D m m C. U d 2 - - --: h _,- � Z m N c` 0 N `m } d o` e O > e � d s N N O v � � 3 N b C O > C C O _ � 0 W C O � � � w �� p 8 O �n n�m w N O M ry O O i � m c � o Y a 2 m EE Y N x �r � C 3 = N � f9 �� w�,= w» n O � w �oQ n �� w w � � � 0 m �^ 2 � 'o d � C ` W d N y c y Y o ZvL=m Y q w � C nc.n �� U OF-= ; N N Ol N O O fD � � � �KMI f� A � N A H ? O W W < CI n O m � �WH N N � N � � H O In N N N N f��N � � � � � H W N m � N W �� o� � www � N � �� /iKH v u u d d v � m v ti w N N b S .� O tJ0 Z N a v c R V�- g n H O 8 H O S � � H O 8 n H O S n N W 8 O S N H O 8 N K � $ w � 8 w � g w 2 y N a v � N Q � 0 � N U W C C G � � C U � F- � t N N m � � N � s E x m A � N v � .. 3 N O � W m s� a� y TN .y A d W V C � �' N a �, U O� j C W � CU C S d m E 9 m � c '� T Ets W tn � ��-�� _ �� - CITY OF SAINT PAtJL Norm Colemaix Mayor DATE: January 3, 1997 TO: Mayor Norm Coleman Council President �ave Thune Councilmember Jerry Blakey Councilmember Dan Bostrom Councilmember Dino Guerin Councilmember Mike Harris Councilmember Roberta Megard Councilmember Janice Rettman FROM: RE: OFFICE OF THE CITY ATTORNEY Timothy E Mnrx, Ciry At+omey 1.�' �0 400 Ciry Hall Telephone: 612766-8710 15 WesF Kellogg Blvd Facsimile: 611198-5619� Saint Paul, Mrnnesota SSIO2 �� Tim Marx, City Attorney � Legal Opinion Re: Public Ownership of a Professional Hockey Team Based on the request of councilmember Blakey, I requested the law firm of Briggs and Morgan to provide an opinion on whether the City could acquire an ownership in a professional hockey team. The firm's response in yes. I concur in the response. The opinion is enclosed. attachment cc: Pamela Wheelock Martha Larson (w/attachment) L�W OFFICES BF�IC=GS AND MOI3GAN PROFESSIONAL eSSOCIAYIO=� �.? 2200 FZ85i SASIOR9L HA.\'% HtiZLDII�G SALtiT' p�tiL� MIAF£502A 53101 iEZEP80?:E CBi2) 223-6800 FSCSI`SILS (B32) 223-6430 M�HI2£H5 DIH£Ci DIAL ViJ!d8£8 (612) 223-6625 Mr. Timothy Marx City Attorney Ciry of Saint Paul 400 City Hall 15 West Kellogg Boulevard St. Paul, MN 55102 December 31, 1996 ��-l� *S4T'EAPOLIS OFFIC£ � �ns ��s *sv�v'n'r.ePOsss, amc�ESOxe sswz SEiEP80FE 1912I 336 PACSIMILE 1812) 334'BB50 Re: City of Saint Paul - Acquisition of Ownership Interest in Professional Hockey Team ' Dear Mr. Ma�: You have asked whether there are any legal impediments to the City of Saint Paul (the "City") acquiring an ownership interest in a professional hockey team. For the reasons set forth below, which are supported by existing case law, �ve have concluded that there are no legal impediments to the City acquiring an ownership anterest in a professional hockey team and using public funds for that purpose. Le�al Authoritv. (a) Economic Development Authority Law. Pursuant to I.aws of Minnesota, 1992, Chapter 376, Article 4, the City has been granted the powers of an economic development authority. Minnesota Statutes, Section 469.101, subdivision 6, authorizes an economic development authority to be a limited partner in a partnership whose purpose is consistent with the authority's purpose. (b) City Charter. The City Charter, however, provides even broader authority to the Ciry. Section 1.03 of the City Charter grants to the City ". .. a11 powers which it may no«� or hereafter be possibie for a municipal corporation in 3-10687.1 i: = ' B1?ZGGS avn MOFtGAV � �y^ ,X (/�' I� V � Mr. Timothy Marx "' December 31, 1996 Page 2 this state ta exercise in harmony with the Constitution of the State af Minnesota and the United States ...". In TousleXv. Leach, 230 N.W. 2d 788 (1930), the Minnesota Supreme Court enunciated the principal that charter powers must be liberally construed. Given this broad grant of authority in the City Charter, there are only three areas of inquiry that need to be addressed: 1. Is there anything in the City Charter that limits the exercise of this power; 2. Has the State legislature preempted this area; and 3. Could the State legislature have constitutionality granted such a power to the City? Other than the obvious requirement (articulated in Section 13.01 of the City Charter) that the City's acquisition of property be needed for a public purpose, we have not located any provision of the City Charter or Minnesota law that restricts or preempts the ability of the City to acquire an ownership interest in a professional hockey team. The only other inquiry is whether the Constitution would prohibit the State legislature from granting such a power to the City. Public Pur�ose. The only constitutional restraint on the acquisition of a professional hackey team is the same restraint found in Section 13.01 of the City Charter, namely that the acquisition be for a public purpose. This principle permeates the taking ciauses of both the United States and Minnesota Constitutions and is particularly relevant under the requirement in Article X of the Minnesota Constitution that public money be spent for a public purpose. What constitutes a°public purpose" is a concept that has evolved and changed a great deal over the years. In recognition of the need of municipalities to encourage private investment, to increase their tas base, increase empioyment opportunities, and provide a range of health, housing, educational, recreational and other services, the courts havinQ recognized that the loaning or granting of public funds to private entities is, in appropriate circumstances, a public purpose. ��o6a�.i BAIGCsS s�n MOBGAN c_= =? Ivlr. Timothy Ma� � - December 31, 1996 Page 3 q��l� Whether a public purpose is being furthered by a particular e�enditure is a question of the facts and circumstances surrounding a particular situation. In the case of the City using public funds to acquire an ownership interest in a professional hockey team, there is specific recognition that public investment in professional sports furthers a public purpose. In Lifteau v. Metropolitan �orts Fac. Comm'n, 270 N.W.2d 749, 755 (1978), the Minnesota Supreme Court cited the trial court's finding that the public's desire for sports facilities was great and took judicial notice of the importance of professional sports in our social life. The Supreme Court recob ized that economic development may not be the primary purpose of building a new stadium, but rather entertainment and recreation purposes may predominate. In this instance, in addition to the City investing in a professional hockey team to provide recreational and entertainment opportunities for its residents, we ` believe that a finding by the City Council that acquisition of an interest in a professional hockey team is necessary or desirable in order to attract such a team to the Civic Center wouid provide significant additional grounds for concluding that an adequate public purpose is served by such action, namely use of the Civic Center by other groups, including nonprofessional sports groups, to encourage and promote additional economic development within the downtown area and the City as a whole. In summary, based on the broad grant of authority in the City Charter, on existing case law explicating "public purpose" and on the absence of any statutory or charter provision prohibiting such an acquisition, it is our opinion that the City may acquire an ownership interest in a professional hockey team and use public funds for that purpose. .j��'�-� �._.�/�� sao6s�.i PROFESSIONAL ASSOCIATION