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97-409Council File # q`1 —� � '�s [-° � �' � :�ii v � .�` a. i `�.�% 8 ; 'd ;' �i (� � Pzesented By Re£erred To WHEREAS: Green Sheet # �� RESOLUTION 41NT PAUL, MINNESOTA Committee: Date 1. The Port Authority of the City of Saint Paul (the "AUthority") has given its approval to the issuance of up to S3,000,000 of its Variable Rate Demand Industrial Development Revenue Bonds (Harris Contracting Company Project� Series 1997A and Series 1997B (coliectively the "BOnds"), to finance the costs to be incurred by Harris Contracting Company in connection with the acquisition, construction and equipping of a manufacturing facility to be located in tne City of Saint Paul, Minnesota itne "Project"); and 2. Laws of Minnesota 1976, Chapter 234, provides that any issue of revenue bonds authorized by the Authority shall be issued only with tne consent of the City Council of tne City of Saint Paul, by resolution adopted in accordance with law; and 3. Approval of the issuance of the proposed Bonds by the City Council is also required by Section �47(fl of the Internai Revenue Code of 1986, as amended; and 4. To meet the requirements of both state and federai law, the Port Authority has requested that the City Councii gives its requisite approval to the issuance of the proposed Bonds by the Port Authority, subject to final approval of the details of said Bonds by the Port Authority. �i� NOW, THEREFORE, BE IT RESOLVED by the Councit of tne City of Saint Paul that, in accordance with the requirements of Section 147(fl of the internal Revenue Code of 1986, as amended, and in accordance with Laws of Minnesota 1976, Chapter 234, the City Councif hereby approves the issuance of the aforesaid Bonds by the Port Authority for the purposes described in the Port Authority resolution adopted April 1, 1997, the exact details of which, inciuding but not limited to, provisions relating to maturities, interest rates, discount, redemption, and the issuance of additional bonds are to be determined by the Port Authority, and the City Council nereby authorizes the issuance of any additional bonds (inctuding refunding bonds) by the Port Authority found bY the Port Authority to be necessary for carrying out the purposes for which the aforedescribed Bonds are issued. Adopted: ,1997 Requested by ep ent of: �- ��oh.arr.cZ ��. � Adoption Certified by Council Secretary � APF � rm A ed by City Attorney By: �f � = - � . � � 5� �— � � Approved by ayor foz S�bmission to Council ✓: ./ �� Adopted by Councii: Date �\� q_g_`'� �� y ou9 DEPARTMENT/OFFICE/COUNCIL DATE INITIATED Saint Paul Port Authorit 4!3/97 GREEN S N� _ 13111 CONTACT PERSON & PHONE , �NI INRIAVOATE � DEPNATMENT DIpECTOR � CITY CAUNCIL Gregory W. Drehmel �S�N � C17Y ATfOflNEY J � CITY CLERK MUST BE ON COUNqL AGENDA BY (DATE) ROUT NG � BUDGET DIREGTOR O FIN. & MGT. SEpVICES DIR. April 16 � 1997 � ��+YOR (OR ASSISTANn O TOTAL # OF SIGNATURE PAGES (CLIP ALL LOCATIONS FOR SIGNATURE) ACTION FE�UESTED: Approvai of the issuance of an approximate $3,000,000 taxable and tax-exempt conduit bond issue for the construction of a new approximate 64,00� square foot office and production faeility in the Saint Paul Port Authority's Crosby Lake Susiness Park and to acquire and RECOMMENDATIONS: npprwe (A) w Rejeet (R} PERSONAL SERVICE CONTRACTS MUST ANSWER THE FOLLOWING �UESiIONS: _ PLANNING COMMISSION _ CIVIL SERVICE CqMMIS510N �� Has this person/firm ever wofketl under a contraCt for this departmen[? _ CIB COMMfITEE A Port Authorit YES NO _ STAFF Board Of C0117. 2. Has this personlFirm ever been a city employee? — YES NO _ DISTRIC7 CAUR7 _ 3. Does this personRirm possess a skdl not normally possessed by any current ciry employee? SUPPORTS WHICH COUNCIL O&IECTIVE� � YES NO Explaln all yes answers on separate sheet anA attacP to green sheet INITIATING PROBLEM, ISSUE, OPPOflTUNISV (WFro, Whet, When, Where, Why): The issuance of a taxable and tax-exempt eonduit bond issue will allow Harris Contracting Company to construct a new office and production facility and the acquisition and installation of new manufacturing equipment. ADVANTAGES IFAPPROVED: It is anticipated that up to 10 new jobs will be created during the initial 2 years of the project and 65 jobs will be retained in the City of Saint Paul. It is anticipated that the 10 new jobs to be created will result in $400,000.00 addifional annual'payroll to those jobs. DISAOVANTAGES IF APPROVED - None 3e`Lis>�.s>, `�.�',�"��..'4� '4d�viii'ja' 1;6's� � � 1��P� DISADVANTAGES IF NOT APPROVED: -.-.�......sa..»z.w.a� ._ ' _" The new }obs and taxes created by the addition of the financed project may not be ereated. TOTAL AMOUNi OF TRANSAC710N $ 3 OOO > OOO COST/REVENUE BUDGETED iCIRCLE ONE) YES NO Port Authority Taxable and FUNDINGSOURCE '('�g—$��Pt (,',ng1�++�� $611�� Iggy4g ACTIVI7YNUMBER FINANCIAL INFORMATION. (EXPLAIN) ��(� ��-'�-. � �} - `-�° �l tfTY OF THE CiN OF SAfNT PAUL ,,,,., ,,.,.,.�.,ARK TOWERS • 345 5f. PE'fER STREEf Ms. Pam Wheefock, Director Planning & Economic Development Department 1300 City Hall Annex 25 West Fourth Street St. Paul, Minnesota 55102 • SL PAUL MN 55102-1661 April 3, 1997 FAX (b12) 2235198 TOLL FREE (800) 32&8417 • PHONE (612) 224-5686 RE: $3,000,000 TAXASLE AND TAX-EXEMPT CONDUIT BOND ISSUE HARRIS CO COMPANY Dear Ms. �ei � / We submit for your review and referral to the office of the Mayor, City Council, and City Attorney's office, details pertaining to the issuance of a taxable and tax-exempt conduit bond issue in tfie amount o4 $3,000,000 backed by a First Bank National Association Letter of Credit to finance the construction of a new approximate 64,000 square foot office and production facility in the Saint Paul Port Authority's Crosby Lake Business Park and to acquire and install new manufacturing equipment in the same facility for Harris Contracting Company. The Port Authority has received an industrial revenue bond allocation from the State of Minnesota Small Issue Poo{, as the project is manufacturing. The City of Saint Paul's entitiement allocation will not be affected by this application. The closing deadline, because of the allocation, is May 6, 1997. In addition to the staff memorandum, we are attaching a draft copy of the proposed City Council Resolution and a copy of the Resolution conducting the required public hearing and authorizing the sale of the revenue bond issue in the amount of $3,000,000 that was considered by the Port Authority's Board on April 1, 1997. City Council action wil{ be required after the Port Authority's Board meeting of April 1, 1997. Your expeditious handfing of this matter wili be appreciaied. Sincerely, / ".�-..�--- Kenneth R. Johnson President KRJ:ak Attachment cc: Mayor Coleman g ak�qregNartisryx.tloc SAINT PAUL PORT AUTHORITY „� �, . ; : .�. .►„ TO: F4ZOM: BOARD OF COMN{ISSIONERS (March 25, 1997 Regular Meeting) Gregory W. Drehmel �� Kenneth R.Johnson al ,� ' �o q DATE: March 19, 1997 SUBJECT: PUBUC HEARING - HARRtS GONTRACTING COMPANY Authorization for an Approximate $3,000,000 Taxable and Tax-Exempt Conduit Bond issue RESOLUTION NO. 3617 ACTION REQUESTEQ: Approval of final resolution authorizing the issuance of an approximate $3,000,000 conduit bond issue to Harris Contracting Company. PROJECT SUMMARY: Estimated Amount: Up to $3,000,000 Series A up to $1,500,000 Tax-Exempt Series B estimated at $1,500,000 Taxable (Combined Series A and B not to exceed $3,000,000) Type: Term: Issuer: Borrower: Trustee: Letter of Credit Bank: Variable Rate Demand Industrial Development Revenue Bonds 15 to 20 -Year Fully Amortizing Port Authority of the City of Saint Paul Harris Contracting Company To Be Determined (Anticipated to be First Trust National Association) First Bank National Association Underwriters: Piper Jaffray Inc. Miller & Schroeder Financial, Inc. FBS Investment Services Remarketing Agent: Borrower's Counsel: Underwriter's Counsel: Letter of Credit Bank Counsel: Issuer Bond Counsel: FBS Investment Services Fredrikson & Byron, P.A. Kennedy & Graven Dorsey & Whitney Leonard, Street & Deinard, P.A. . Harris Contracting Company Board Memorandum March 19, 1997 Page 2 BACKGROUND: �7 The Borrower. Harris Contracting Company was started in 1954. The company fabricates, instaifs and processes plumbing and HVAC systems. Today they employ approximately 400 employees nationwide. Of that number 222 employees work in Minnesota and 58 of them either live in Saint Paul or are out of the Saint Paul unions. The Bonds: The Bonds will be issued in the approximate principal amount of $3,000,000 and will bear interest at a variabie rate established weekly by the Remarketing Agent. The maacimum interest rate is 12% for the tax-exempt bond series and 18% for the taxable bond series. The Proiect: The proceeds of the Bonds will be loaned to the Borrower, and used to construct a new approximate 64,000 square foot office and production facility in the Saint Paul Port Authority's Crosby Lake Business Park and io acquire and install new manufacturing equipment in the same facility. The availability of tax-exempt financing will enable Harris Contracting Company to expand its present production capacity. As a result, new jobs will also be created to support the revenue and produetion increases. Employment Impact: Under the Port Authority's Workforce and Employment Agreement Harris Contracting Company wili employ 60 full-time employees at the Crosby Lake facility. The company believes it will create 10 new jobs in the first two years of operations at the new facility. As a result of the construction of this new office/production facility, Harris has estimated that there will be an annua{ payroll increase of $400,000 per year when fully operational. Current base wage and fringes paid by Harris are reported as $27.58 per hour for office staff (excluding vice president level and up), $27.45 per hour for the fabrication shop and warehouse staff, and $32.15 per hour for field staff. The Letter of Credit Bank: The initiaf {etter of credit wifl be provided by First Bank Nationaf Association. The letter of credit wiil equal the amount of the bonds plus 50 days interest. , Harris Contracting Company Board Memorandum March 19, 1997 Page 3 ��_�loq Estimated Sources and Uses of Funds: Sources of Funds: Bond Proceeds Estimated Borrower Funds Total Sources of Funds Uses of Funds: Building Construction Equipment Purchase Estimated Costs of issuance Total Uses of Funds $3,000,000 6Q.000 $3,060,000 $2,800,000 150,000 110.000 $3,060,000 SECURITY FOR THE BONDS: Special. Limited Obligations: The bonds will be speciai, fimited obiigations of the Authoriiy and wiff not constitute or give rise to a liabi(ity of the Authority, the City of Saint Paul or the State of Minnesota or a charge against their general credit or taxing powers. No bondholder will have the right to demand payment of the bonds out of any funds to be raised from taxation or from any revenue sources other than those expressly pledged to payment of the bonds pursuant to the indenture. This includes the amounts drawn on the letter of credit and amounts payable by the borrower under the loan agreement. Loan Agreement: Under the indenture, the Authority has pledged its interest in the loan agreement to the trustee to secure the bonds. The trustee is authorized to exercise the rights of the Authority and to enforce the obligations of the borrower under the loan agreement. Letter of Credit: Payment of the principal amount and purchase price of the bonds, and up to approximately 50 days interest thereon (measured at the 12% maximum rate for the tax-exempt series and 18% for the taxable series) wili be secured initially by the initial letter of credit or, under certain circumstances a substitute letter of credit. The trustee is required to present a draft under the letter of credit to pay principal and inferest when due on the bonds. The bonds are offered primarily on the basis of the financial strength of the bank and not on the basis of the financial strength of the borrower. The letter of credit will have an initial term of one year, and will be renewable annually thereafter, unless the bank provides at least 45 days notice that Harris Contracting Company Board Memorandum March 19, 1997 Page 4 ��d� it will not renew. Ifi the letter of credit is not renewed or replaced, the bonds will be subject to mandatory redemption, and the trustee is instructed to draw on the letter of credit, before it expires, to pay principal and interest then due. RECOMMENDATION: Recommend approval of the above Resolution. GWD:ak g��.� � � � - �10 �1 Resolution No. 3� �' RESOLUTION OF THE PORT Ai3THORITY OF THE CITY OF SAINT PAUL WHEREAS: 1. It has been proposed that the Port Authority of the City of Saint Paul (the "Port Authority") issue its Variable Rate Demand Indushiai Development Revenue Bonds (Harris Contracting Company Project) Series 1997A (the "Series A Bonds") and its Taxable Variable Rate Demand Industrial Deveiopment Revenue Bonds (Harris Contracting Company Project) Series 1997B (the "Series B Bonds" and together with the Series A Bonds, the `Bonds") in an ag�egate principai amount not to exceed $3,OOQ000, and that the ptoceeds of such Bonds be loaned to Harris Contracting Company, a Minnesata corporation (the "Borrower") to finance the acquisition, conslruction and equipping of a manufacturing facility (the "ProjecP') to be owned and operated initially by the Borrower in the City of Saint Paul, Minnesota (the "City"). 2. The Authoriry desires to facilitate the salective development of the City of Saint Paul and the meh�o east community, to retain and improve its tax base and tn heip it provide the range of services and employment opportunities required by its population, and the Project will assisY in achieving that objective by increasing the assessed valuation of the metro east community; helping to maintain a posirive reiationship between assessed valuation and debt; and enhancing the image and reputation of the metro east community. .. 3. The Project will result in additional employment opporhulities in the City of Saint Paul and the metro east community. 4. The Authority has been advised by representatives of the Company that long term conventional, commercial financing to pay the capital cost of the Project is available only on a lunited basis and at such hi,,ah costs of bonowing that the economic feasibility of operating the Project would be significantly reduced, and that it has been acting to date in anucipation that the Authority would favorably consider this fmancing proposal. 5. The Project and its financing has received an allocation of bonding authority from the State of Minnesota Department of Finance. 6. The Authority's Credit Committee and Board have previously adopted their Resolutions No. 25 and 3609, respecrively giving preliminary approval to the proposed issuance of revenue bonds. 7. Pursuant to the requirements of Secfion 147( fl of the Intemal Revenue Code of 1986, as amended, and pursuant to a norice published by the Port Authority noi less than 15 days prior to the public hearing, a public hearing has been held on the date hereof on the issuance of the Bonds, at which public hearing all persons were given an oppommity to speak. 1508303.02 �� -�� 8. The Bonds will be issued and secured by the terms of an Indenture of Trust (the "Indenture") between the Port Authority and � . i�linnesota (the "Trustee") and will be payabie primarily from draws made on an irrevocabie letter of credit issued by First Bank National Association (the "Credit Enhancer") pursuant to a Letter of Credit Reimbursement Agreement to be dated as of April 1, 1997 between the Bosower and the Credit Enhancer (the 'Zetter of Credit Agreement"). 9. The Borrower and the Port Authoriry will also enter into a Loan Agreement (the "Loan Agreement'� in which the Bonower will agree to maintain the Letter of Credit and make all payments due either to the Credit Enhancer or on account of the Bonds. 10. The Bonds and the interest on the Bonds shall be payable solely from the revenue pledged therefor and the Bonds shall not consutute a debt of the Port Authority within the meaning of any constitutional or statutory limitaUon of indebtedness, nor shall the Bonds constitute nor give rise to a pecuruary liability of the Por[ Authority or the City or a chazge against their general credit or taxing powers and shall not consiitute a charge, lien or encumbrance, legal or equitable, upon any property of the Port Authority or the City other than their interest in said Project. 11. It is intended that interest on the Series A Bonds be excluded from gross income of the holders thereof for federal income tax purposes. I30W, THEREFORE, BE IT RESOLVED BY THE BOARD OF COMMISSIONERS OF THE PORT AUTHORITY QF THE CITY QF SAINT PAUL, AS FOLLOWS: 1. On the basis of informarion availabie to the Port Authority it appears, and the Port Authority hereby finds, that: the Project constitutes properties, used or useful in connection with one or more revenue producing enterprises engaged in any business within the meaning of Minnesota Statutes, Sections 469.152 to 469.165 (the "Act"); the Project fiuthers the purposes stated in the Act; and it is in the best interests of the port district and the people of the City of Saint Pau1 and in furtherance of the general pian of development to assist the Company in fmancing the Project. 2. For the purpose of financing the Project, and paying certain costs of issuance aad other expensas in connection with the issuance of the Bonds, and provided that the Project and its financing receive approval by the Deparhnent of Trade and Economic Development ("DTED"), tlie Port Authority hereby authorizes the issuance, sale and delivery of the Bonds in an aggregate principal amount not to exceed $3,000,000. Each Series of Bonds shall be in such principal amounts as shall be determined by the President of the Port Authority and Bond Counsel, provided thaY the aggregate principai amount of Series A Bonds shall not exceed $1,500,000. The Bonds shall bear interest at such rates, shall be numbered, shall be dated, shall mature, shall be subject to redemption prior to maturity, and sha11 be in such form and have such other details and provisions as may be prescribed in the Indenture, substanrially in the form now on file in the offices of the Port Authority. 3. Neither the Bonds, nor the interest thereon, shall constitute an indebtedness of the Port Authority or the City within the meaning of any constitutional or statutory debt limitation; nor _. _. shall_they constitute or give rise to apecuniary liability of the City, the E ort Authouty_ or- charge __�,_ ___-_-, �1�1 - `i,� °1 against their general t�ing powers and neither the full faazth and credit nor the general taxing powers of the City or the Port Authority is pledged to the payment of the Bonds or interest thereon. 4. Forms of the following documents have been submitted to the Port Authority for review and/or approval in connection with the sale, issuance and delivery of the Bonds: a. the Bond Placement Agreement to be entered into between the Port Authority, the Borrower and FBS Investment Services, Inc., Piper Jaf&ay Inc. and Miller & Schroeder Financial, Inc. {collectively, the "Placement Agent") (the "Bond Placement A�reemenY'); b. the Indenture; c. the Loan Agreement dated as of April 1, 1997 to be entered into between the Port Authority and the Borrower; d. the Bonds; e. the Preliminary Officiat Statement to be used in mazketing the Bonds (the "Official Statement"); f. the Remazketing Agreement dated as of April 1, 1997 to be entered into by and between FBS Inves�ient Services, Ina (the "Remazketing Agent") and the Borrower (the "Remazketing Agreement"); and" g. the Letter of Credit Agreement, including a form of the Letter of Credit (collectively, the "Doctunents"). 5. It is hereby found, deternuned and declared that: a. The issuance and sale of the Bonds, the execution and delivery by the Port Authority of the Documents and the performance of all covenants and agreements of the Port Authoriry contained in the Documents, and of a11 other acts and things required under the Constitution and laws of the State of Minnesota to make the Documents and the Bonds valid and binding obligations of the Port Authority in accordance with their terms, are authorized by Minnesota Statutes, Secrions 469152 through 469165, as amended (the "Act")• , b. It is desirabie that the Bonds be issued by the Port Authority upon the general terms set forth in the Aocuments, as applicable; c. Under the provisions of and as provided in the Documents, the Bonds are not to be payable from or a chazge upon any funds other than the revenues pledged to the payment thereof; no holder of the Bonds shall ever have the right to compel any exercise by the City or the Port Authority of its taxing powers to pay the Bonds or the interest or premium thereon, or to enforce payment thereof against any property of the City or the q�-�,� Port Authority except the interests of the Port Authority and the City which have been ptedged to the Trustee under the Indenture; the Bonds sha11 not constitute a chazge, iien or encumbrance, legal or equitable, upon any property of the Ciry or the Port Authority except the interesu of the Port Authority and the City which have been pledged to the Trustee under the Indenture; the Bonds shall each recite that they ue issued without moral obligation on the part of the State or its political subdivisions, and that the Bonds, including interesY thereon, are payable solely from the revenues pledged to the payment thereof; and the Bonds shail not constitute a debt of the City or the Port Authority within the meanin� of any constitutional or statutory Innitation. 6. The forms of the Documents and e�ibits thereto aze approved substantially in the forms submitted and on fiIe in the offices of Port Authority, with such subsequent changes as may be approved by Port Authority staff and Bond Counsei as contemplated by pazagraph 8. The Chair and Secretary of the Port Authority, or such other officer as may be appropriate in the absence of either the Chair or Secretary, are hereby authorized and directed to execute the Documents (to the extent the Port Authority is a party thereto) in substantially the forms submitted, as modified pursuant to paragraph 8, and any other documents and certificates which in the opinion of Port Authority staff and Bond Counsei aze necessary to the transaction herein described The execution of any instrument by the appropriate officer or officers of the Port Authority herein authorized shall be conclusive evidence of the approval of such documents in accordanca with the terms hereof. The executioa of any documents necessary for the transaction herein described by individuals who were at the time of execution thereof the authorized officers of the Port Authority shall bind the Port Authority, notwithstanding that such individuals or any of them has ceased to hoid such office or offices prior to the authentication and detivery of the Bonds. Copies of atl of the documents necessary to the transaction described shall be delivered, filed and recorded as provided herein and in the Indenture. 7. The President and other officers of the Port Authority are authorized and directed to prepare and fiunish to the Piacement Agent and Bond Counsei certified copies of proceedings and records of the Port Authority relating to the issuance of the Bonds and other transactions herein contemplated, and such other affidavits and certificates as may be required to show the facts relating to the legality of the Bonds and the other transactions herein contemplated as such facts appear from the books and records in the officers' custody and control or as otherwise known to them; and all such certified copies, certificates and affidavits, inciuding aciy heretofore fiuiushed, shail consritute representations of the Port Authority as to the truth of all statements contained therein. 8. The approval hereby given to the various Documents referred to above includes approval of such additional details therein as may be necessary and appropriate, and such modifications thereof, deletions therefrom and additions thereto as may be necessary and appropriate and approved by the Port Authority's President and Chief Financial Officer; and includes approval of, among other things: a. esYablishment of the final principal amount of the Sonds and the interest rate to be bome thereby for the initial period; r vided that the maximum aggregate principal amount of the Series A Bonds shall not exceed $1,500,000, and the maximum aggregate principal amount of the Series A Bonds and the Series B Bonds together shall not exceed $3,000,000; and provided fiuther that the maxnnum interest.rate on the Series Bonds__ ____ __- ��1-� shall not exceed 12.00% per annum, and the maximum interest rate on rhe Series B Bonds sha11 not exceed 18.00°/a; b. the establishment of the maturity schedule and cail provisions to be applicahie to the Bonds; and c. such related instruments as may be required to sarisfy the conditions of any purchaser of the Bonds. 9. The Port Authority hereby consents to the distribution of the Official Statement, as such Official Statement is finalized with the participation of Port Authority staff and Bond Counsel. The proposal of the Placement Agent to place the Bonds upon the terms and conditions set forth in the Bond Placement Agreement is hereby found and determined to be reasonable and is hereby accepted. 10. The authority to approve, execute and deliver future amendments to fmancing documents eniered into by the Port Authoriry in connection with the issuance of the Bonds and the other transactions herein contemplated, is hereby deiegated to the President of the Port Authority, provided that: (a) such amendments do not require the consent of the holders of the Bonds; (b) such amendments do not materiaily adversely affect the interests of the Port Authoriry as the issuer of the Bonds; (c) such amendments do not contravene or violate any policy of the Port Authoriry; and (d) such amendmenYS aze acceptable in form and substance to Bond Counsel. The execution of any insri�ument by the President of the Port Authoriry shall be conclusive evidence of the approval of such instruments in accordance with the terms hereof. 11. No covenant, stipularion, obligation or agreement contained herein or in the Documents shall be deemed to be a covenant, stipularion, obligation or agreement of any member of the Boazd of Commissioners of the Port Authoriry, or any officer, agent or empioyee of the Port Authority in that persons individual capacity, and neither the Board of Commissioners nor any officer executing the Bonds shall be liable personally on the Bonds or be subject to any personal liability or accountability by reason of the issuance thereof. Adopted: April 1, 1997 PORT AUTHORITY OF THE CITY OF SAINT PAUL v �d� , �a ��— c� ch� Council File # q`1 —� � '�s [-° � �' � :�ii v � .�` a. i `�.�% 8 ; 'd ;' �i (� � Pzesented By Re£erred To WHEREAS: Green Sheet # �� RESOLUTION 41NT PAUL, MINNESOTA Committee: Date 1. The Port Authority of the City of Saint Paul (the "AUthority") has given its approval to the issuance of up to S3,000,000 of its Variable Rate Demand Industrial Development Revenue Bonds (Harris Contracting Company Project� Series 1997A and Series 1997B (coliectively the "BOnds"), to finance the costs to be incurred by Harris Contracting Company in connection with the acquisition, construction and equipping of a manufacturing facility to be located in tne City of Saint Paul, Minnesota itne "Project"); and 2. Laws of Minnesota 1976, Chapter 234, provides that any issue of revenue bonds authorized by the Authority shall be issued only with tne consent of the City Council of tne City of Saint Paul, by resolution adopted in accordance with law; and 3. Approval of the issuance of the proposed Bonds by the City Council is also required by Section �47(fl of the Internai Revenue Code of 1986, as amended; and 4. To meet the requirements of both state and federai law, the Port Authority has requested that the City Councii gives its requisite approval to the issuance of the proposed Bonds by the Port Authority, subject to final approval of the details of said Bonds by the Port Authority. �i� NOW, THEREFORE, BE IT RESOLVED by the Councit of tne City of Saint Paul that, in accordance with the requirements of Section 147(fl of the internal Revenue Code of 1986, as amended, and in accordance with Laws of Minnesota 1976, Chapter 234, the City Councif hereby approves the issuance of the aforesaid Bonds by the Port Authority for the purposes described in the Port Authority resolution adopted April 1, 1997, the exact details of which, inciuding but not limited to, provisions relating to maturities, interest rates, discount, redemption, and the issuance of additional bonds are to be determined by the Port Authority, and the City Council nereby authorizes the issuance of any additional bonds (inctuding refunding bonds) by the Port Authority found bY the Port Authority to be necessary for carrying out the purposes for which the aforedescribed Bonds are issued. Adopted: ,1997 Requested by ep ent of: �- ��oh.arr.cZ ��. � Adoption Certified by Council Secretary � APF � rm A ed by City Attorney By: �f � = - � . � � 5� �— � � Approved by ayor foz S�bmission to Council ✓: ./ �� Adopted by Councii: Date � � \ q_g_`'� �� y ou9 DEPARTMENT/OFFICE/COUNCIL DATE INITIATED Saint Paul Port Authorit 4!3/97 GREEN S N� _ 13111 CONTACT PERSON & PHONE , �NI INRIAVOATE � DEPNATMENT DIpECTOR � CITY CAUNCIL Gregory W. Drehmel �S�N � C17Y ATfOflNEY J � CITY CLERK MUST BE ON COUNqL AGENDA BY (DATE) ROUT NG � BUDGET DIREGTOR O FIN. & MGT. SEpVICES DIR. April 16 � 1997 � ��+YOR (OR ASSISTANn O TOTAL # OF SIGNATURE PAGES (CLIP ALL LOCATIONS FOR SIGNATURE) ACTION FE�UESTED: Approvai of the issuance of an approximate $3,000,000 taxable and tax-exempt conduit bond issue for the construction of a new approximate 64,00� square foot office and production faeility in the Saint Paul Port Authority's Crosby Lake Susiness Park and to acquire and RECOMMENDATIONS: npprwe (A) w Rejeet (R} PERSONAL SERVICE CONTRACTS MUST ANSWER THE FOLLOWING �UESiIONS: _ PLANNING COMMISSION _ CIVIL SERVICE CqMMIS510N �� Has this person/firm ever wofketl under a contraCt for this departmen[? _ CIB COMMfITEE A Port Authorit YES NO _ STAFF Board Of C0117. 2. Has this personlFirm ever been a city employee? — YES NO _ DISTRIC7 CAUR7 _ 3. Does this personRirm possess a skdl not normally possessed by any current ciry employee? SUPPORTS WHICH COUNCIL O&IECTIVE� � YES NO Explaln all yes answers on separate sheet anA attacP to green sheet INITIATING PROBLEM, ISSUE, OPPOflTUNISV (WFro, Whet, When, Where, Why): The issuance of a taxable and tax-exempt eonduit bond issue will allow Harris Contracting Company to construct a new office and production facility and the acquisition and installation of new manufacturing equipment. ADVANTAGES IFAPPROVED: It is anticipated that up to 10 new jobs will be created during the initial 2 years of the project and 65 jobs will be retained in the City of Saint Paul. It is anticipated that the 10 new jobs to be created will result in $400,000.00 addifional annual'payroll to those jobs. DISAOVANTAGES IF APPROVED - None 3e`Lis>�.s>, `�.�',�"��..'4� '4d�viii'ja' 1;6's� � � 1��P� DISADVANTAGES IF NOT APPROVED: -.-.�......sa..»z.w.a� ._ ' _" The new }obs and taxes created by the addition of the financed project may not be ereated. TOTAL AMOUNi OF TRANSAC710N $ 3 OOO > OOO COST/REVENUE BUDGETED iCIRCLE ONE) YES NO Port Authority Taxable and FUNDINGSOURCE '('�g—$��Pt (,',ng1�++�� $611�� Iggy4g ACTIVI7YNUMBER FINANCIAL INFORMATION. (EXPLAIN) ��(� ��-'�-. � �} - `-�° �l tfTY OF THE CiN OF SAfNT PAUL ,,,,., ,,.,.,.�.,ARK TOWERS • 345 5f. PE'fER STREEf Ms. Pam Wheefock, Director Planning & Economic Development Department 1300 City Hall Annex 25 West Fourth Street St. Paul, Minnesota 55102 • SL PAUL MN 55102-1661 April 3, 1997 FAX (b12) 2235198 TOLL FREE (800) 32&8417 • PHONE (612) 224-5686 RE: $3,000,000 TAXASLE AND TAX-EXEMPT CONDUIT BOND ISSUE HARRIS CO COMPANY Dear Ms. �ei � / We submit for your review and referral to the office of the Mayor, City Council, and City Attorney's office, details pertaining to the issuance of a taxable and tax-exempt conduit bond issue in tfie amount o4 $3,000,000 backed by a First Bank National Association Letter of Credit to finance the construction of a new approximate 64,000 square foot office and production facility in the Saint Paul Port Authority's Crosby Lake Business Park and to acquire and install new manufacturing equipment in the same facility for Harris Contracting Company. The Port Authority has received an industrial revenue bond allocation from the State of Minnesota Small Issue Poo{, as the project is manufacturing. The City of Saint Paul's entitiement allocation will not be affected by this application. The closing deadline, because of the allocation, is May 6, 1997. In addition to the staff memorandum, we are attaching a draft copy of the proposed City Council Resolution and a copy of the Resolution conducting the required public hearing and authorizing the sale of the revenue bond issue in the amount of $3,000,000 that was considered by the Port Authority's Board on April 1, 1997. City Council action wil{ be required after the Port Authority's Board meeting of April 1, 1997. Your expeditious handfing of this matter wili be appreciaied. Sincerely, / ".�-..�--- Kenneth R. Johnson President KRJ:ak Attachment cc: Mayor Coleman g ak�qregNartisryx.tloc SAINT PAUL PORT AUTHORITY „� �, . ; : .�. .►„ TO: F4ZOM: BOARD OF COMN{ISSIONERS (March 25, 1997 Regular Meeting) Gregory W. Drehmel �� Kenneth R.Johnson al ,� ' �o q DATE: March 19, 1997 SUBJECT: PUBUC HEARING - HARRtS GONTRACTING COMPANY Authorization for an Approximate $3,000,000 Taxable and Tax-Exempt Conduit Bond issue RESOLUTION NO. 3617 ACTION REQUESTEQ: Approval of final resolution authorizing the issuance of an approximate $3,000,000 conduit bond issue to Harris Contracting Company. PROJECT SUMMARY: Estimated Amount: Up to $3,000,000 Series A up to $1,500,000 Tax-Exempt Series B estimated at $1,500,000 Taxable (Combined Series A and B not to exceed $3,000,000) Type: Term: Issuer: Borrower: Trustee: Letter of Credit Bank: Variable Rate Demand Industrial Development Revenue Bonds 15 to 20 -Year Fully Amortizing Port Authority of the City of Saint Paul Harris Contracting Company To Be Determined (Anticipated to be First Trust National Association) First Bank National Association Underwriters: Piper Jaffray Inc. Miller & Schroeder Financial, Inc. FBS Investment Services Remarketing Agent: Borrower's Counsel: Underwriter's Counsel: Letter of Credit Bank Counsel: Issuer Bond Counsel: FBS Investment Services Fredrikson & Byron, P.A. Kennedy & Graven Dorsey & Whitney Leonard, Street & Deinard, P.A. . Harris Contracting Company Board Memorandum March 19, 1997 Page 2 BACKGROUND: �7 The Borrower. Harris Contracting Company was started in 1954. The company fabricates, instaifs and processes plumbing and HVAC systems. Today they employ approximately 400 employees nationwide. Of that number 222 employees work in Minnesota and 58 of them either live in Saint Paul or are out of the Saint Paul unions. The Bonds: The Bonds will be issued in the approximate principal amount of $3,000,000 and will bear interest at a variabie rate established weekly by the Remarketing Agent. The maacimum interest rate is 12% for the tax-exempt bond series and 18% for the taxable bond series. The Proiect: The proceeds of the Bonds will be loaned to the Borrower, and used to construct a new approximate 64,000 square foot office and production facility in the Saint Paul Port Authority's Crosby Lake Business Park and io acquire and install new manufacturing equipment in the same facility. The availability of tax-exempt financing will enable Harris Contracting Company to expand its present production capacity. As a result, new jobs will also be created to support the revenue and produetion increases. Employment Impact: Under the Port Authority's Workforce and Employment Agreement Harris Contracting Company wili employ 60 full-time employees at the Crosby Lake facility. The company believes it will create 10 new jobs in the first two years of operations at the new facility. As a result of the construction of this new office/production facility, Harris has estimated that there will be an annua{ payroll increase of $400,000 per year when fully operational. Current base wage and fringes paid by Harris are reported as $27.58 per hour for office staff (excluding vice president level and up), $27.45 per hour for the fabrication shop and warehouse staff, and $32.15 per hour for field staff. The Letter of Credit Bank: The initiaf {etter of credit wifl be provided by First Bank Nationaf Association. The letter of credit wiil equal the amount of the bonds plus 50 days interest. , Harris Contracting Company Board Memorandum March 19, 1997 Page 3 ��_�loq Estimated Sources and Uses of Funds: Sources of Funds: Bond Proceeds Estimated Borrower Funds Total Sources of Funds Uses of Funds: Building Construction Equipment Purchase Estimated Costs of issuance Total Uses of Funds $3,000,000 6Q.000 $3,060,000 $2,800,000 150,000 110.000 $3,060,000 SECURITY FOR THE BONDS: Special. Limited Obligations: The bonds will be speciai, fimited obiigations of the Authoriiy and wiff not constitute or give rise to a liabi(ity of the Authority, the City of Saint Paul or the State of Minnesota or a charge against their general credit or taxing powers. No bondholder will have the right to demand payment of the bonds out of any funds to be raised from taxation or from any revenue sources other than those expressly pledged to payment of the bonds pursuant to the indenture. This includes the amounts drawn on the letter of credit and amounts payable by the borrower under the loan agreement. Loan Agreement: Under the indenture, the Authority has pledged its interest in the loan agreement to the trustee to secure the bonds. The trustee is authorized to exercise the rights of the Authority and to enforce the obligations of the borrower under the loan agreement. Letter of Credit: Payment of the principal amount and purchase price of the bonds, and up to approximately 50 days interest thereon (measured at the 12% maximum rate for the tax-exempt series and 18% for the taxable series) wili be secured initially by the initial letter of credit or, under certain circumstances a substitute letter of credit. The trustee is required to present a draft under the letter of credit to pay principal and inferest when due on the bonds. The bonds are offered primarily on the basis of the financial strength of the bank and not on the basis of the financial strength of the borrower. The letter of credit will have an initial term of one year, and will be renewable annually thereafter, unless the bank provides at least 45 days notice that Harris Contracting Company Board Memorandum March 19, 1997 Page 4 ��d� it will not renew. Ifi the letter of credit is not renewed or replaced, the bonds will be subject to mandatory redemption, and the trustee is instructed to draw on the letter of credit, before it expires, to pay principal and interest then due. RECOMMENDATION: Recommend approval of the above Resolution. GWD:ak g��.� � � � - �10 �1 Resolution No. 3� �' RESOLUTION OF THE PORT Ai3THORITY OF THE CITY OF SAINT PAUL WHEREAS: 1. It has been proposed that the Port Authority of the City of Saint Paul (the "Port Authority") issue its Variable Rate Demand Indushiai Development Revenue Bonds (Harris Contracting Company Project) Series 1997A (the "Series A Bonds") and its Taxable Variable Rate Demand Industrial Deveiopment Revenue Bonds (Harris Contracting Company Project) Series 1997B (the "Series B Bonds" and together with the Series A Bonds, the `Bonds") in an ag�egate principai amount not to exceed $3,OOQ000, and that the ptoceeds of such Bonds be loaned to Harris Contracting Company, a Minnesata corporation (the "Borrower") to finance the acquisition, conslruction and equipping of a manufacturing facility (the "ProjecP') to be owned and operated initially by the Borrower in the City of Saint Paul, Minnesota (the "City"). 2. The Authoriry desires to facilitate the salective development of the City of Saint Paul and the meh�o east community, to retain and improve its tax base and tn heip it provide the range of services and employment opportunities required by its population, and the Project will assisY in achieving that objective by increasing the assessed valuation of the metro east community; helping to maintain a posirive reiationship between assessed valuation and debt; and enhancing the image and reputation of the metro east community. .. 3. The Project will result in additional employment opporhulities in the City of Saint Paul and the metro east community. 4. The Authority has been advised by representatives of the Company that long term conventional, commercial financing to pay the capital cost of the Project is available only on a lunited basis and at such hi,,ah costs of bonowing that the economic feasibility of operating the Project would be significantly reduced, and that it has been acting to date in anucipation that the Authority would favorably consider this fmancing proposal. 5. The Project and its financing has received an allocation of bonding authority from the State of Minnesota Department of Finance. 6. The Authority's Credit Committee and Board have previously adopted their Resolutions No. 25 and 3609, respecrively giving preliminary approval to the proposed issuance of revenue bonds. 7. Pursuant to the requirements of Secfion 147( fl of the Intemal Revenue Code of 1986, as amended, and pursuant to a norice published by the Port Authority noi less than 15 days prior to the public hearing, a public hearing has been held on the date hereof on the issuance of the Bonds, at which public hearing all persons were given an oppommity to speak. 1508303.02 �� -�� 8. The Bonds will be issued and secured by the terms of an Indenture of Trust (the "Indenture") between the Port Authority and � . i�linnesota (the "Trustee") and will be payabie primarily from draws made on an irrevocabie letter of credit issued by First Bank National Association (the "Credit Enhancer") pursuant to a Letter of Credit Reimbursement Agreement to be dated as of April 1, 1997 between the Bosower and the Credit Enhancer (the 'Zetter of Credit Agreement"). 9. The Borrower and the Port Authoriry will also enter into a Loan Agreement (the "Loan Agreement'� in which the Bonower will agree to maintain the Letter of Credit and make all payments due either to the Credit Enhancer or on account of the Bonds. 10. The Bonds and the interest on the Bonds shall be payable solely from the revenue pledged therefor and the Bonds shall not consutute a debt of the Port Authority within the meaning of any constitutional or statutory limitaUon of indebtedness, nor shall the Bonds constitute nor give rise to a pecuruary liability of the Por[ Authority or the City or a chazge against their general credit or taxing powers and shall not consiitute a charge, lien or encumbrance, legal or equitable, upon any property of the Port Authority or the City other than their interest in said Project. 11. It is intended that interest on the Series A Bonds be excluded from gross income of the holders thereof for federal income tax purposes. I30W, THEREFORE, BE IT RESOLVED BY THE BOARD OF COMMISSIONERS OF THE PORT AUTHORITY QF THE CITY QF SAINT PAUL, AS FOLLOWS: 1. On the basis of informarion availabie to the Port Authority it appears, and the Port Authority hereby finds, that: the Project constitutes properties, used or useful in connection with one or more revenue producing enterprises engaged in any business within the meaning of Minnesota Statutes, Sections 469.152 to 469.165 (the "Act"); the Project fiuthers the purposes stated in the Act; and it is in the best interests of the port district and the people of the City of Saint Pau1 and in furtherance of the general pian of development to assist the Company in fmancing the Project. 2. For the purpose of financing the Project, and paying certain costs of issuance aad other expensas in connection with the issuance of the Bonds, and provided that the Project and its financing receive approval by the Deparhnent of Trade and Economic Development ("DTED"), tlie Port Authority hereby authorizes the issuance, sale and delivery of the Bonds in an aggregate principal amount not to exceed $3,000,000. Each Series of Bonds shall be in such principal amounts as shall be determined by the President of the Port Authority and Bond Counsel, provided thaY the aggregate principai amount of Series A Bonds shall not exceed $1,500,000. The Bonds shall bear interest at such rates, shall be numbered, shall be dated, shall mature, shall be subject to redemption prior to maturity, and sha11 be in such form and have such other details and provisions as may be prescribed in the Indenture, substanrially in the form now on file in the offices of the Port Authority. 3. Neither the Bonds, nor the interest thereon, shall constitute an indebtedness of the Port Authority or the City within the meaning of any constitutional or statutory debt limitation; nor _. _. shall_they constitute or give rise to apecuniary liability of the City, the E ort Authouty_ or- charge __�,_ ___-_-, �1�1 - `i,� °1 against their general t�ing powers and neither the full faazth and credit nor the general taxing powers of the City or the Port Authority is pledged to the payment of the Bonds or interest thereon. 4. Forms of the following documents have been submitted to the Port Authority for review and/or approval in connection with the sale, issuance and delivery of the Bonds: a. the Bond Placement Agreement to be entered into between the Port Authority, the Borrower and FBS Investment Services, Inc., Piper Jaf&ay Inc. and Miller & Schroeder Financial, Inc. {collectively, the "Placement Agent") (the "Bond Placement A�reemenY'); b. the Indenture; c. the Loan Agreement dated as of April 1, 1997 to be entered into between the Port Authority and the Borrower; d. the Bonds; e. the Preliminary Officiat Statement to be used in mazketing the Bonds (the "Official Statement"); f. the Remazketing Agreement dated as of April 1, 1997 to be entered into by and between FBS Inves�ient Services, Ina (the "Remazketing Agent") and the Borrower (the "Remazketing Agreement"); and" g. the Letter of Credit Agreement, including a form of the Letter of Credit (collectively, the "Doctunents"). 5. It is hereby found, deternuned and declared that: a. The issuance and sale of the Bonds, the execution and delivery by the Port Authority of the Documents and the performance of all covenants and agreements of the Port Authoriry contained in the Documents, and of a11 other acts and things required under the Constitution and laws of the State of Minnesota to make the Documents and the Bonds valid and binding obligations of the Port Authority in accordance with their terms, are authorized by Minnesota Statutes, Secrions 469152 through 469165, as amended (the "Act")• , b. It is desirabie that the Bonds be issued by the Port Authority upon the general terms set forth in the Aocuments, as applicable; c. Under the provisions of and as provided in the Documents, the Bonds are not to be payable from or a chazge upon any funds other than the revenues pledged to the payment thereof; no holder of the Bonds shall ever have the right to compel any exercise by the City or the Port Authority of its taxing powers to pay the Bonds or the interest or premium thereon, or to enforce payment thereof against any property of the City or the q�-�,� Port Authority except the interests of the Port Authority and the City which have been ptedged to the Trustee under the Indenture; the Bonds sha11 not constitute a chazge, iien or encumbrance, legal or equitable, upon any property of the Ciry or the Port Authority except the interesu of the Port Authority and the City which have been pledged to the Trustee under the Indenture; the Bonds shall each recite that they ue issued without moral obligation on the part of the State or its political subdivisions, and that the Bonds, including interesY thereon, are payable solely from the revenues pledged to the payment thereof; and the Bonds shail not constitute a debt of the City or the Port Authority within the meanin� of any constitutional or statutory Innitation. 6. The forms of the Documents and e�ibits thereto aze approved substantially in the forms submitted and on fiIe in the offices of Port Authority, with such subsequent changes as may be approved by Port Authority staff and Bond Counsei as contemplated by pazagraph 8. The Chair and Secretary of the Port Authority, or such other officer as may be appropriate in the absence of either the Chair or Secretary, are hereby authorized and directed to execute the Documents (to the extent the Port Authority is a party thereto) in substantially the forms submitted, as modified pursuant to paragraph 8, and any other documents and certificates which in the opinion of Port Authority staff and Bond Counsei aze necessary to the transaction herein described The execution of any instrument by the appropriate officer or officers of the Port Authority herein authorized shall be conclusive evidence of the approval of such documents in accordanca with the terms hereof. The executioa of any documents necessary for the transaction herein described by individuals who were at the time of execution thereof the authorized officers of the Port Authority shall bind the Port Authority, notwithstanding that such individuals or any of them has ceased to hoid such office or offices prior to the authentication and detivery of the Bonds. Copies of atl of the documents necessary to the transaction described shall be delivered, filed and recorded as provided herein and in the Indenture. 7. The President and other officers of the Port Authority are authorized and directed to prepare and fiunish to the Piacement Agent and Bond Counsei certified copies of proceedings and records of the Port Authority relating to the issuance of the Bonds and other transactions herein contemplated, and such other affidavits and certificates as may be required to show the facts relating to the legality of the Bonds and the other transactions herein contemplated as such facts appear from the books and records in the officers' custody and control or as otherwise known to them; and all such certified copies, certificates and affidavits, inciuding aciy heretofore fiuiushed, shail consritute representations of the Port Authority as to the truth of all statements contained therein. 8. The approval hereby given to the various Documents referred to above includes approval of such additional details therein as may be necessary and appropriate, and such modifications thereof, deletions therefrom and additions thereto as may be necessary and appropriate and approved by the Port Authority's President and Chief Financial Officer; and includes approval of, among other things: a. esYablishment of the final principal amount of the Sonds and the interest rate to be bome thereby for the initial period; r vided that the maximum aggregate principal amount of the Series A Bonds shall not exceed $1,500,000, and the maximum aggregate principal amount of the Series A Bonds and the Series B Bonds together shall not exceed $3,000,000; and provided fiuther that the maxnnum interest.rate on the Series Bonds__ ____ __- ��1-� shall not exceed 12.00% per annum, and the maximum interest rate on rhe Series B Bonds sha11 not exceed 18.00°/a; b. the establishment of the maturity schedule and cail provisions to be applicahie to the Bonds; and c. such related instruments as may be required to sarisfy the conditions of any purchaser of the Bonds. 9. The Port Authority hereby consents to the distribution of the Official Statement, as such Official Statement is finalized with the participation of Port Authority staff and Bond Counsel. The proposal of the Placement Agent to place the Bonds upon the terms and conditions set forth in the Bond Placement Agreement is hereby found and determined to be reasonable and is hereby accepted. 10. The authority to approve, execute and deliver future amendments to fmancing documents eniered into by the Port Authoriry in connection with the issuance of the Bonds and the other transactions herein contemplated, is hereby deiegated to the President of the Port Authority, provided that: (a) such amendments do not require the consent of the holders of the Bonds; (b) such amendments do not materiaily adversely affect the interests of the Port Authoriry as the issuer of the Bonds; (c) such amendments do not contravene or violate any policy of the Port Authoriry; and (d) such amendmenYS aze acceptable in form and substance to Bond Counsel. The execution of any insri�ument by the President of the Port Authoriry shall be conclusive evidence of the approval of such instruments in accordance with the terms hereof. 11. No covenant, stipularion, obligation or agreement contained herein or in the Documents shall be deemed to be a covenant, stipularion, obligation or agreement of any member of the Boazd of Commissioners of the Port Authoriry, or any officer, agent or empioyee of the Port Authority in that persons individual capacity, and neither the Board of Commissioners nor any officer executing the Bonds shall be liable personally on the Bonds or be subject to any personal liability or accountability by reason of the issuance thereof. Adopted: April 1, 1997 PORT AUTHORITY OF THE CITY OF SAINT PAUL v �d� , �a ��— c� ch� Council File # q`1 —� � '�s [-° � �' � :�ii v � .�` a. i `�.�% 8 ; 'd ;' �i (� � Pzesented By Re£erred To WHEREAS: Green Sheet # �� RESOLUTION 41NT PAUL, MINNESOTA Committee: Date 1. The Port Authority of the City of Saint Paul (the "AUthority") has given its approval to the issuance of up to S3,000,000 of its Variable Rate Demand Industrial Development Revenue Bonds (Harris Contracting Company Project� Series 1997A and Series 1997B (coliectively the "BOnds"), to finance the costs to be incurred by Harris Contracting Company in connection with the acquisition, construction and equipping of a manufacturing facility to be located in tne City of Saint Paul, Minnesota itne "Project"); and 2. Laws of Minnesota 1976, Chapter 234, provides that any issue of revenue bonds authorized by the Authority shall be issued only with tne consent of the City Council of tne City of Saint Paul, by resolution adopted in accordance with law; and 3. Approval of the issuance of the proposed Bonds by the City Council is also required by Section �47(fl of the Internai Revenue Code of 1986, as amended; and 4. To meet the requirements of both state and federai law, the Port Authority has requested that the City Councii gives its requisite approval to the issuance of the proposed Bonds by the Port Authority, subject to final approval of the details of said Bonds by the Port Authority. �i� NOW, THEREFORE, BE IT RESOLVED by the Councit of tne City of Saint Paul that, in accordance with the requirements of Section 147(fl of the internal Revenue Code of 1986, as amended, and in accordance with Laws of Minnesota 1976, Chapter 234, the City Councif hereby approves the issuance of the aforesaid Bonds by the Port Authority for the purposes described in the Port Authority resolution adopted April 1, 1997, the exact details of which, inciuding but not limited to, provisions relating to maturities, interest rates, discount, redemption, and the issuance of additional bonds are to be determined by the Port Authority, and the City Council nereby authorizes the issuance of any additional bonds (inctuding refunding bonds) by the Port Authority found bY the Port Authority to be necessary for carrying out the purposes for which the aforedescribed Bonds are issued. Adopted: ,1997 Requested by ep ent of: �- ��oh.arr.cZ ��. � Adoption Certified by Council Secretary � APF � rm A ed by City Attorney By: �f � = - � . � � 5� �— � � Approved by ayor foz S�bmission to Council ✓: ./ �� Adopted by Councii: Date � � \ q_g_`'� �� y ou9 DEPARTMENT/OFFICE/COUNCIL DATE INITIATED Saint Paul Port Authorit 4!3/97 GREEN S N� _ 13111 CONTACT PERSON & PHONE , �NI INRIAVOATE � DEPNATMENT DIpECTOR � CITY CAUNCIL Gregory W. Drehmel �S�N � C17Y ATfOflNEY J � CITY CLERK MUST BE ON COUNqL AGENDA BY (DATE) ROUT NG � BUDGET DIREGTOR O FIN. & MGT. SEpVICES DIR. April 16 � 1997 � ��+YOR (OR ASSISTANn O TOTAL # OF SIGNATURE PAGES (CLIP ALL LOCATIONS FOR SIGNATURE) ACTION FE�UESTED: Approvai of the issuance of an approximate $3,000,000 taxable and tax-exempt conduit bond issue for the construction of a new approximate 64,00� square foot office and production faeility in the Saint Paul Port Authority's Crosby Lake Susiness Park and to acquire and RECOMMENDATIONS: npprwe (A) w Rejeet (R} PERSONAL SERVICE CONTRACTS MUST ANSWER THE FOLLOWING �UESiIONS: _ PLANNING COMMISSION _ CIVIL SERVICE CqMMIS510N �� Has this person/firm ever wofketl under a contraCt for this departmen[? _ CIB COMMfITEE A Port Authorit YES NO _ STAFF Board Of C0117. 2. Has this personlFirm ever been a city employee? — YES NO _ DISTRIC7 CAUR7 _ 3. Does this personRirm possess a skdl not normally possessed by any current ciry employee? SUPPORTS WHICH COUNCIL O&IECTIVE� � YES NO Explaln all yes answers on separate sheet anA attacP to green sheet INITIATING PROBLEM, ISSUE, OPPOflTUNISV (WFro, Whet, When, Where, Why): The issuance of a taxable and tax-exempt eonduit bond issue will allow Harris Contracting Company to construct a new office and production facility and the acquisition and installation of new manufacturing equipment. ADVANTAGES IFAPPROVED: It is anticipated that up to 10 new jobs will be created during the initial 2 years of the project and 65 jobs will be retained in the City of Saint Paul. It is anticipated that the 10 new jobs to be created will result in $400,000.00 addifional annual'payroll to those jobs. DISAOVANTAGES IF APPROVED - None 3e`Lis>�.s>, `�.�',�"��..'4� '4d�viii'ja' 1;6's� � � 1��P� DISADVANTAGES IF NOT APPROVED: -.-.�......sa..»z.w.a� ._ ' _" The new }obs and taxes created by the addition of the financed project may not be ereated. TOTAL AMOUNi OF TRANSAC710N $ 3 OOO > OOO COST/REVENUE BUDGETED iCIRCLE ONE) YES NO Port Authority Taxable and FUNDINGSOURCE '('�g—$��Pt (,',ng1�++�� $611�� Iggy4g ACTIVI7YNUMBER FINANCIAL INFORMATION. (EXPLAIN) ��(� ��-'�-. � �} - `-�° �l tfTY OF THE CiN OF SAfNT PAUL ,,,,., ,,.,.,.�.,ARK TOWERS • 345 5f. PE'fER STREEf Ms. Pam Wheefock, Director Planning & Economic Development Department 1300 City Hall Annex 25 West Fourth Street St. Paul, Minnesota 55102 • SL PAUL MN 55102-1661 April 3, 1997 FAX (b12) 2235198 TOLL FREE (800) 32&8417 • PHONE (612) 224-5686 RE: $3,000,000 TAXASLE AND TAX-EXEMPT CONDUIT BOND ISSUE HARRIS CO COMPANY Dear Ms. �ei � / We submit for your review and referral to the office of the Mayor, City Council, and City Attorney's office, details pertaining to the issuance of a taxable and tax-exempt conduit bond issue in tfie amount o4 $3,000,000 backed by a First Bank National Association Letter of Credit to finance the construction of a new approximate 64,000 square foot office and production facility in the Saint Paul Port Authority's Crosby Lake Business Park and to acquire and install new manufacturing equipment in the same facility for Harris Contracting Company. The Port Authority has received an industrial revenue bond allocation from the State of Minnesota Small Issue Poo{, as the project is manufacturing. The City of Saint Paul's entitiement allocation will not be affected by this application. The closing deadline, because of the allocation, is May 6, 1997. In addition to the staff memorandum, we are attaching a draft copy of the proposed City Council Resolution and a copy of the Resolution conducting the required public hearing and authorizing the sale of the revenue bond issue in the amount of $3,000,000 that was considered by the Port Authority's Board on April 1, 1997. City Council action wil{ be required after the Port Authority's Board meeting of April 1, 1997. Your expeditious handfing of this matter wili be appreciaied. Sincerely, / ".�-..�--- Kenneth R. Johnson President KRJ:ak Attachment cc: Mayor Coleman g ak�qregNartisryx.tloc SAINT PAUL PORT AUTHORITY „� �, . ; : .�. .►„ TO: F4ZOM: BOARD OF COMN{ISSIONERS (March 25, 1997 Regular Meeting) Gregory W. Drehmel �� Kenneth R.Johnson al ,� ' �o q DATE: March 19, 1997 SUBJECT: PUBUC HEARING - HARRtS GONTRACTING COMPANY Authorization for an Approximate $3,000,000 Taxable and Tax-Exempt Conduit Bond issue RESOLUTION NO. 3617 ACTION REQUESTEQ: Approval of final resolution authorizing the issuance of an approximate $3,000,000 conduit bond issue to Harris Contracting Company. PROJECT SUMMARY: Estimated Amount: Up to $3,000,000 Series A up to $1,500,000 Tax-Exempt Series B estimated at $1,500,000 Taxable (Combined Series A and B not to exceed $3,000,000) Type: Term: Issuer: Borrower: Trustee: Letter of Credit Bank: Variable Rate Demand Industrial Development Revenue Bonds 15 to 20 -Year Fully Amortizing Port Authority of the City of Saint Paul Harris Contracting Company To Be Determined (Anticipated to be First Trust National Association) First Bank National Association Underwriters: Piper Jaffray Inc. Miller & Schroeder Financial, Inc. FBS Investment Services Remarketing Agent: Borrower's Counsel: Underwriter's Counsel: Letter of Credit Bank Counsel: Issuer Bond Counsel: FBS Investment Services Fredrikson & Byron, P.A. Kennedy & Graven Dorsey & Whitney Leonard, Street & Deinard, P.A. . Harris Contracting Company Board Memorandum March 19, 1997 Page 2 BACKGROUND: �7 The Borrower. Harris Contracting Company was started in 1954. The company fabricates, instaifs and processes plumbing and HVAC systems. Today they employ approximately 400 employees nationwide. Of that number 222 employees work in Minnesota and 58 of them either live in Saint Paul or are out of the Saint Paul unions. The Bonds: The Bonds will be issued in the approximate principal amount of $3,000,000 and will bear interest at a variabie rate established weekly by the Remarketing Agent. The maacimum interest rate is 12% for the tax-exempt bond series and 18% for the taxable bond series. The Proiect: The proceeds of the Bonds will be loaned to the Borrower, and used to construct a new approximate 64,000 square foot office and production facility in the Saint Paul Port Authority's Crosby Lake Business Park and io acquire and install new manufacturing equipment in the same facility. The availability of tax-exempt financing will enable Harris Contracting Company to expand its present production capacity. As a result, new jobs will also be created to support the revenue and produetion increases. Employment Impact: Under the Port Authority's Workforce and Employment Agreement Harris Contracting Company wili employ 60 full-time employees at the Crosby Lake facility. The company believes it will create 10 new jobs in the first two years of operations at the new facility. As a result of the construction of this new office/production facility, Harris has estimated that there will be an annua{ payroll increase of $400,000 per year when fully operational. Current base wage and fringes paid by Harris are reported as $27.58 per hour for office staff (excluding vice president level and up), $27.45 per hour for the fabrication shop and warehouse staff, and $32.15 per hour for field staff. The Letter of Credit Bank: The initiaf {etter of credit wifl be provided by First Bank Nationaf Association. The letter of credit wiil equal the amount of the bonds plus 50 days interest. , Harris Contracting Company Board Memorandum March 19, 1997 Page 3 ��_�loq Estimated Sources and Uses of Funds: Sources of Funds: Bond Proceeds Estimated Borrower Funds Total Sources of Funds Uses of Funds: Building Construction Equipment Purchase Estimated Costs of issuance Total Uses of Funds $3,000,000 6Q.000 $3,060,000 $2,800,000 150,000 110.000 $3,060,000 SECURITY FOR THE BONDS: Special. Limited Obligations: The bonds will be speciai, fimited obiigations of the Authoriiy and wiff not constitute or give rise to a liabi(ity of the Authority, the City of Saint Paul or the State of Minnesota or a charge against their general credit or taxing powers. No bondholder will have the right to demand payment of the bonds out of any funds to be raised from taxation or from any revenue sources other than those expressly pledged to payment of the bonds pursuant to the indenture. This includes the amounts drawn on the letter of credit and amounts payable by the borrower under the loan agreement. Loan Agreement: Under the indenture, the Authority has pledged its interest in the loan agreement to the trustee to secure the bonds. The trustee is authorized to exercise the rights of the Authority and to enforce the obligations of the borrower under the loan agreement. Letter of Credit: Payment of the principal amount and purchase price of the bonds, and up to approximately 50 days interest thereon (measured at the 12% maximum rate for the tax-exempt series and 18% for the taxable series) wili be secured initially by the initial letter of credit or, under certain circumstances a substitute letter of credit. The trustee is required to present a draft under the letter of credit to pay principal and inferest when due on the bonds. The bonds are offered primarily on the basis of the financial strength of the bank and not on the basis of the financial strength of the borrower. The letter of credit will have an initial term of one year, and will be renewable annually thereafter, unless the bank provides at least 45 days notice that Harris Contracting Company Board Memorandum March 19, 1997 Page 4 ��d� it will not renew. Ifi the letter of credit is not renewed or replaced, the bonds will be subject to mandatory redemption, and the trustee is instructed to draw on the letter of credit, before it expires, to pay principal and interest then due. RECOMMENDATION: Recommend approval of the above Resolution. GWD:ak g��.� � � � - �10 �1 Resolution No. 3� �' RESOLUTION OF THE PORT Ai3THORITY OF THE CITY OF SAINT PAUL WHEREAS: 1. It has been proposed that the Port Authority of the City of Saint Paul (the "Port Authority") issue its Variable Rate Demand Indushiai Development Revenue Bonds (Harris Contracting Company Project) Series 1997A (the "Series A Bonds") and its Taxable Variable Rate Demand Industrial Deveiopment Revenue Bonds (Harris Contracting Company Project) Series 1997B (the "Series B Bonds" and together with the Series A Bonds, the `Bonds") in an ag�egate principai amount not to exceed $3,OOQ000, and that the ptoceeds of such Bonds be loaned to Harris Contracting Company, a Minnesata corporation (the "Borrower") to finance the acquisition, conslruction and equipping of a manufacturing facility (the "ProjecP') to be owned and operated initially by the Borrower in the City of Saint Paul, Minnesota (the "City"). 2. The Authoriry desires to facilitate the salective development of the City of Saint Paul and the meh�o east community, to retain and improve its tax base and tn heip it provide the range of services and employment opportunities required by its population, and the Project will assisY in achieving that objective by increasing the assessed valuation of the metro east community; helping to maintain a posirive reiationship between assessed valuation and debt; and enhancing the image and reputation of the metro east community. .. 3. The Project will result in additional employment opporhulities in the City of Saint Paul and the metro east community. 4. The Authority has been advised by representatives of the Company that long term conventional, commercial financing to pay the capital cost of the Project is available only on a lunited basis and at such hi,,ah costs of bonowing that the economic feasibility of operating the Project would be significantly reduced, and that it has been acting to date in anucipation that the Authority would favorably consider this fmancing proposal. 5. The Project and its financing has received an allocation of bonding authority from the State of Minnesota Department of Finance. 6. The Authority's Credit Committee and Board have previously adopted their Resolutions No. 25 and 3609, respecrively giving preliminary approval to the proposed issuance of revenue bonds. 7. Pursuant to the requirements of Secfion 147( fl of the Intemal Revenue Code of 1986, as amended, and pursuant to a norice published by the Port Authority noi less than 15 days prior to the public hearing, a public hearing has been held on the date hereof on the issuance of the Bonds, at which public hearing all persons were given an oppommity to speak. 1508303.02 �� -�� 8. The Bonds will be issued and secured by the terms of an Indenture of Trust (the "Indenture") between the Port Authority and � . i�linnesota (the "Trustee") and will be payabie primarily from draws made on an irrevocabie letter of credit issued by First Bank National Association (the "Credit Enhancer") pursuant to a Letter of Credit Reimbursement Agreement to be dated as of April 1, 1997 between the Bosower and the Credit Enhancer (the 'Zetter of Credit Agreement"). 9. The Borrower and the Port Authoriry will also enter into a Loan Agreement (the "Loan Agreement'� in which the Bonower will agree to maintain the Letter of Credit and make all payments due either to the Credit Enhancer or on account of the Bonds. 10. The Bonds and the interest on the Bonds shall be payable solely from the revenue pledged therefor and the Bonds shall not consutute a debt of the Port Authority within the meaning of any constitutional or statutory limitaUon of indebtedness, nor shall the Bonds constitute nor give rise to a pecuruary liability of the Por[ Authority or the City or a chazge against their general credit or taxing powers and shall not consiitute a charge, lien or encumbrance, legal or equitable, upon any property of the Port Authority or the City other than their interest in said Project. 11. It is intended that interest on the Series A Bonds be excluded from gross income of the holders thereof for federal income tax purposes. I30W, THEREFORE, BE IT RESOLVED BY THE BOARD OF COMMISSIONERS OF THE PORT AUTHORITY QF THE CITY QF SAINT PAUL, AS FOLLOWS: 1. On the basis of informarion availabie to the Port Authority it appears, and the Port Authority hereby finds, that: the Project constitutes properties, used or useful in connection with one or more revenue producing enterprises engaged in any business within the meaning of Minnesota Statutes, Sections 469.152 to 469.165 (the "Act"); the Project fiuthers the purposes stated in the Act; and it is in the best interests of the port district and the people of the City of Saint Pau1 and in furtherance of the general pian of development to assist the Company in fmancing the Project. 2. For the purpose of financing the Project, and paying certain costs of issuance aad other expensas in connection with the issuance of the Bonds, and provided that the Project and its financing receive approval by the Deparhnent of Trade and Economic Development ("DTED"), tlie Port Authority hereby authorizes the issuance, sale and delivery of the Bonds in an aggregate principal amount not to exceed $3,000,000. Each Series of Bonds shall be in such principal amounts as shall be determined by the President of the Port Authority and Bond Counsel, provided thaY the aggregate principai amount of Series A Bonds shall not exceed $1,500,000. The Bonds shall bear interest at such rates, shall be numbered, shall be dated, shall mature, shall be subject to redemption prior to maturity, and sha11 be in such form and have such other details and provisions as may be prescribed in the Indenture, substanrially in the form now on file in the offices of the Port Authority. 3. Neither the Bonds, nor the interest thereon, shall constitute an indebtedness of the Port Authority or the City within the meaning of any constitutional or statutory debt limitation; nor _. _. shall_they constitute or give rise to apecuniary liability of the City, the E ort Authouty_ or- charge __�,_ ___-_-, �1�1 - `i,� °1 against their general t�ing powers and neither the full faazth and credit nor the general taxing powers of the City or the Port Authority is pledged to the payment of the Bonds or interest thereon. 4. Forms of the following documents have been submitted to the Port Authority for review and/or approval in connection with the sale, issuance and delivery of the Bonds: a. the Bond Placement Agreement to be entered into between the Port Authority, the Borrower and FBS Investment Services, Inc., Piper Jaf&ay Inc. and Miller & Schroeder Financial, Inc. {collectively, the "Placement Agent") (the "Bond Placement A�reemenY'); b. the Indenture; c. the Loan Agreement dated as of April 1, 1997 to be entered into between the Port Authority and the Borrower; d. the Bonds; e. the Preliminary Officiat Statement to be used in mazketing the Bonds (the "Official Statement"); f. the Remazketing Agreement dated as of April 1, 1997 to be entered into by and between FBS Inves�ient Services, Ina (the "Remazketing Agent") and the Borrower (the "Remazketing Agreement"); and" g. the Letter of Credit Agreement, including a form of the Letter of Credit (collectively, the "Doctunents"). 5. It is hereby found, deternuned and declared that: a. The issuance and sale of the Bonds, the execution and delivery by the Port Authority of the Documents and the performance of all covenants and agreements of the Port Authoriry contained in the Documents, and of a11 other acts and things required under the Constitution and laws of the State of Minnesota to make the Documents and the Bonds valid and binding obligations of the Port Authority in accordance with their terms, are authorized by Minnesota Statutes, Secrions 469152 through 469165, as amended (the "Act")• , b. It is desirabie that the Bonds be issued by the Port Authority upon the general terms set forth in the Aocuments, as applicable; c. Under the provisions of and as provided in the Documents, the Bonds are not to be payable from or a chazge upon any funds other than the revenues pledged to the payment thereof; no holder of the Bonds shall ever have the right to compel any exercise by the City or the Port Authority of its taxing powers to pay the Bonds or the interest or premium thereon, or to enforce payment thereof against any property of the City or the q�-�,� Port Authority except the interests of the Port Authority and the City which have been ptedged to the Trustee under the Indenture; the Bonds sha11 not constitute a chazge, iien or encumbrance, legal or equitable, upon any property of the Ciry or the Port Authority except the interesu of the Port Authority and the City which have been pledged to the Trustee under the Indenture; the Bonds shall each recite that they ue issued without moral obligation on the part of the State or its political subdivisions, and that the Bonds, including interesY thereon, are payable solely from the revenues pledged to the payment thereof; and the Bonds shail not constitute a debt of the City or the Port Authority within the meanin� of any constitutional or statutory Innitation. 6. The forms of the Documents and e�ibits thereto aze approved substantially in the forms submitted and on fiIe in the offices of Port Authority, with such subsequent changes as may be approved by Port Authority staff and Bond Counsei as contemplated by pazagraph 8. The Chair and Secretary of the Port Authority, or such other officer as may be appropriate in the absence of either the Chair or Secretary, are hereby authorized and directed to execute the Documents (to the extent the Port Authority is a party thereto) in substantially the forms submitted, as modified pursuant to paragraph 8, and any other documents and certificates which in the opinion of Port Authority staff and Bond Counsei aze necessary to the transaction herein described The execution of any instrument by the appropriate officer or officers of the Port Authority herein authorized shall be conclusive evidence of the approval of such documents in accordanca with the terms hereof. The executioa of any documents necessary for the transaction herein described by individuals who were at the time of execution thereof the authorized officers of the Port Authority shall bind the Port Authority, notwithstanding that such individuals or any of them has ceased to hoid such office or offices prior to the authentication and detivery of the Bonds. Copies of atl of the documents necessary to the transaction described shall be delivered, filed and recorded as provided herein and in the Indenture. 7. The President and other officers of the Port Authority are authorized and directed to prepare and fiunish to the Piacement Agent and Bond Counsei certified copies of proceedings and records of the Port Authority relating to the issuance of the Bonds and other transactions herein contemplated, and such other affidavits and certificates as may be required to show the facts relating to the legality of the Bonds and the other transactions herein contemplated as such facts appear from the books and records in the officers' custody and control or as otherwise known to them; and all such certified copies, certificates and affidavits, inciuding aciy heretofore fiuiushed, shail consritute representations of the Port Authority as to the truth of all statements contained therein. 8. The approval hereby given to the various Documents referred to above includes approval of such additional details therein as may be necessary and appropriate, and such modifications thereof, deletions therefrom and additions thereto as may be necessary and appropriate and approved by the Port Authority's President and Chief Financial Officer; and includes approval of, among other things: a. esYablishment of the final principal amount of the Sonds and the interest rate to be bome thereby for the initial period; r vided that the maximum aggregate principal amount of the Series A Bonds shall not exceed $1,500,000, and the maximum aggregate principal amount of the Series A Bonds and the Series B Bonds together shall not exceed $3,000,000; and provided fiuther that the maxnnum interest.rate on the Series Bonds__ ____ __- ��1-� shall not exceed 12.00% per annum, and the maximum interest rate on rhe Series B Bonds sha11 not exceed 18.00°/a; b. the establishment of the maturity schedule and cail provisions to be applicahie to the Bonds; and c. such related instruments as may be required to sarisfy the conditions of any purchaser of the Bonds. 9. The Port Authority hereby consents to the distribution of the Official Statement, as such Official Statement is finalized with the participation of Port Authority staff and Bond Counsel. The proposal of the Placement Agent to place the Bonds upon the terms and conditions set forth in the Bond Placement Agreement is hereby found and determined to be reasonable and is hereby accepted. 10. The authority to approve, execute and deliver future amendments to fmancing documents eniered into by the Port Authoriry in connection with the issuance of the Bonds and the other transactions herein contemplated, is hereby deiegated to the President of the Port Authority, provided that: (a) such amendments do not require the consent of the holders of the Bonds; (b) such amendments do not materiaily adversely affect the interests of the Port Authoriry as the issuer of the Bonds; (c) such amendments do not contravene or violate any policy of the Port Authoriry; and (d) such amendmenYS aze acceptable in form and substance to Bond Counsel. The execution of any insri�ument by the President of the Port Authoriry shall be conclusive evidence of the approval of such instruments in accordance with the terms hereof. 11. No covenant, stipularion, obligation or agreement contained herein or in the Documents shall be deemed to be a covenant, stipularion, obligation or agreement of any member of the Boazd of Commissioners of the Port Authoriry, or any officer, agent or empioyee of the Port Authority in that persons individual capacity, and neither the Board of Commissioners nor any officer executing the Bonds shall be liable personally on the Bonds or be subject to any personal liability or accountability by reason of the issuance thereof. Adopted: April 1, 1997 PORT AUTHORITY OF THE CITY OF SAINT PAUL v �d� , �a ��— c� ch�