97-675Council File � ` 1 '� �
Green Sheet # �_
RESOLUTION
SAINT PAUL M
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Presented
Referred To
INNESOTA
Committee: Date
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4 WHEREAS, a group of Minnesota investors have sabmitted an apptication for an NHL expansion team for
5 consideration by the National Hockey League Board of Governor's on January 13, 1997, and
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7 WHEREAS, the City Council has indicated that professional hockey is an economic and community
8 enhancement to the City of Saint Paul and the larger metropolitan area, and
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10 WHEREAS, the City Council has determined that the 23 year-old Saint Paul Civic Center Arena is in need of
11 substantial renovation in order to maintain a competitive position in the marketplace, and
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13 WHEREAS, based on a recent visit, the NI-IL Expansion Committee has indicated that Saint Paul has an
14 attractive and adequate media market as well as a financially solid investor's group, and
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WF3EREAS, the NHI, Expansion Committee has raised questions as to whether the $51 million in
improvements previously outlined in the HOK Conceptual Design dated December 15, 1996 will be adequate to
bring the Arena up to NHI, standards, and have indicated they would not recommend placing an expansion team
in Saint Paul in a renovated Arena, and �
WHEREAS, a new Arena would benefit the City and its citizens by providing the downtown with an Arena
which would become competitive with other state of the art arenas, �vould provide current tenants of the Civic
Center with an updated facility in which to bring their events and programs, would generate needed revenue to
attract an NHL team and would attract additional non-hockey events to downtown Saint Paul, and
WHEREAS, a new Arena would provide the highest quality facilities for the Minnesota State High School
Tournaments which haue a long tradition of playing in the Saint Paul Civic Center Arena, and would improve the
experience of the many thousands of Minnesotans who attend the tournaments each year, and
WHEREAS, it has been estimated that a new first-class Arena, consistent in quality with other current arenas
recently constructed for use by NHL teams and built on the site of the cunent Civic Center would cost
appro3cimately $130 million which would include the following:
* Up to 650,000 square feet
* A capacity of appro�mately 19,000 seats for hockey including 2,500 club seats and 750 to 1000 seats in
luxury boxes
* A finished Arena club restaurant and bar
* Finished Team Retail Store and Team Offices
* Video scoreboard(s) with advertising panels
* Two new outdoor mazquees
* Finished locker rooms, training rooms and offices
* Finished concessions and novelty stands
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43 * Landscaping
44 * All necessary fixtures, fumiture and equipment
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46 WHEREAS, the Govemor of Minnesota has expressed support for $65 million in State bonding to be
47 appropriated in the 19981egislative session, and
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49 WHEREAS , the City believes an interim financing guarantee for the State's $65 million participation will result
50 in an award by the NHL for an expansion franchise, and
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52 WHEREAS, this $65 million, in addition to the Team's contribution of $35 million and the City's previously
53 approved commitment of $30 million will result in a project budget of $130 million, and
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WHEREAS, this interim financing is secured by future revenue streams available to the City other than a
property t� levy, and now therefore be it
RESOLVED, that the Council of the City of Saint Paul does hereby approve the attached revised Term Sheet
and interim plan of finance for the lease of the new arena to be constructed as part of the Saint Paul Civic Center;
and be it
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62 FURTHER RESOLVED, that the appropriate officials of the City of Saint Paul are hereby authorized to enter
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into, execute and deliver all necessary contracts, orders, agreements, indentures and documents of any kind to
carry out and put into place (1) the terms and conditions in said Term Sheet and its provisions, including the
Binding Letter of Intent, (2) the design and construction of the new arena, (3) the financing requirements for
the said azena, and (4) all other matters required to carry out th e implementation of this project.
�. � 6 �Q-�--�
Department of:
Planning & Economic Development
B y'��
By:
By:
Form
� � �,� By'
�oved by City Attorney
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by ayor for Su s ion to
��� � �� �p
Adopted by Council: Date � � �
Adoption/Certified by Council Secretary
9'T — G� S
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DEPAFTMENTqFFlCECOUNCIL DATE INITIATED
cz� couNC�L 5/28/97 G REEN SH E E
CON7ACT PERSON & PHONE INRIAUDATE INITIAL/DATE
O OEPAFTMENT DIRECTOR O CITV COUNdL
Councilmember Dave Thune q���N OpTVATfORNEV OCRYCLERK
MUST BE ON COUNCIL AGENDA BY (OATE) NUMBEH FOP ❑ BUDGET DIRECTOR � FIN. $ MGT. SEflVICES Dlfl.
flOUTING
M2.�J 28 1997 - Suspension Item OflDER �MAYOR(OFIASSISTANn �
TOTAL # OF SIGNATURE PAGES (CLIP ALL LOCATIONS FOR SIGNATURE)
ACTION REQUESTE�:
Approving the revised Term Sheet and interim plan of finance for the lease of the new
arena to be constructed as part of the Saint Paul Civic Center.
RECOMMENDATIONS: Approve (A) or fiejact (R) PERSONAL SERVICE CONTRACTS MUST ANSWER TNE FOLLOWING QUESTIONS:
_ PLANNING COMMISSION _ CIVIL SERVICE CAMMISSION �� Has thls pefson/fRm BVBf WOfkBtl untlef a Contf2Ct fOf thi5 tlBpffrtrtl8nt?
_ CIB COMMITfEE _ YES NO
_ S7AFF 2. Has this personHirm ever been a city employee?
VES NO
_ DIS7RIC7 COURi _ 3. Does this person/firm possess a skill not normally possessetl by any current ciry employee?
SUPPORTS WHICM COUNqL OBJECTIVE7 YES NO
Explain all yes answers on separate sheet antl attach to green sheet
INITIATING PROBLEM, ISSUE. OPPOFTUNITY (Who, Whet, When, Where, Why):
ADVANTAGES IF APPHOVED:
DISADVANTAGESIFAPPROVED:
DISADVANTAGES IF NOTAPPROVED.
TOTAL AMOUNT OFTRANSACTION $ COST/HEVENUE BUDGETED (CIRCLE ONE) YES NO
FUNDIfBG SOUHCE ACTIVITY NUMBER
FINANCIAL INFOPFnATION: (EXPLAIN)
R `1- `'15
S 0.Mtp� ei
AMENDED AND RESTATED
TERM SHEET
Dated May 28, 1997,
for the I.ease of the
NEW ST. PAUL CIVIC CENTER ARENA ("NEW ARENA")
I. OWNER'S AGENT will be the Saint Paul Civic Center Authority ("Authority"), and
OWNER will be the City of Saint Paul ("Ciry").
II. TENANT will be the NHL expansion team to be owned by
(°Team").
III. LEASED PREMISES will be the New Arena, including all furniture, fiYtures and
equipment necessary for the playing of all NHL home regular season, playoff, All-
Star and other NHL-sanctioned home games and any NHL e�ibition games played
at the New Arena ("NHL Games"), and any other arena events as contemplated
below.
IV. TERM OF LEASE
The term of the Lease shall commence thirty days prior to the first NHL Game of
the regular NHL season which follows the date of substantial completion of the New
Arena (the "Commencement Date" which, if an NHL franchise is granted to the
Team to play in the 1999-2000 NHL season, is anticipated to be approximately
September 1, 1999) and will continue from that date for the later of twenty (20) years
or the final maturity stated date of the City Bonds, but not ]onger than 25 years (the
"L,ease Term"). The Team will have the option to e�rtend the L.ease Term for two
five (5) year periods. Any such extension shall be a part of the Lease Term. The
Team wiil lease the New Arena for the purpose of playing all of its NHL home
Games and will not relocate the Team from the Arena during the L.ease Term;
provided, that the Team shall have the right after the first ten years of the I.ease
Term to terminate the lease by paying the City an amount required to discharge the
outstanding City Bonds (including any related premium or early retirement penalty
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associated with pre-payment). Upon payment of said amount and payment of all
other accrued liabilities under the L.ease, the Team may terminate the Lease.
V. ARENA REVENUES AND EXPENSES
A. Team Revenues. The Team will control and retain 100% of revenues derived
from all events at the New Arena (such events "Arena Events" and such
revenues "Team Arena Revenues"), except as otherwise provided in
Paragraphs V-B and XI-J hereof and except as provided with users of the
New Arena, and 100% of the revenues derived from other operations outside
of the New Arena ("Team Revenues"). Team Arena Revenues and Team
Revenues include the following:
1. sales of tickets for Arena Events
2. sales of tickets for club seats for Arena Events
3. sales of liixury suites for Arena Events
4. New Arena's share of all concession revenues and payments
5. all (permanent and temporary) advertising and promotional revenues
(including naming rights, fuied signage, dasher boards, on-ice
advertising, video boards) at the New Arena
6. merchandising revenues realized from sales at Arena Events and at all
other times at the Team's retail stores at the New Arena and
elsewhere
7. publication revenues realized at Arena Events and at all other times
at the Team's retail stores at the New Arena and elsewhere
8. broadcast, merchandising and other revenues received by the Team
from the NHL
9. revenues from local broadcasts of Arena Events (e.g., local TV, cable
and radio)
10. all other revenues derived from operations of the New Arena and the
Team's business outside of the Arena
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provided, that the City and the Authority make no representations or
warranties about the level of any such revenues; or the availability of any
revenue sources other than from the New Arena. The Team's right to all
Team Arena Revenues accruing after the e�iration or termination of the
Lease shall cease upon such expiration or termination of the L,ease.
Team Arena Revenues and Team Revenues do not include the amounts to be
received by the City from the Team as described in paragraph B below, and any taYes of
general applicability.
In addition, the City shall pay the Team a sum equal to (a) net parking revenues
derived from event parking at the time of NHL Games from the existing 1730 spaces in the
Civic Center Ramp and the 430 spaces in the Civic Center Fxhibit Hall underground ramp,
(b) net parking revenues for event parking received by the Ciry at the time of NHL, Games
derived from approximately 235 surface parking spaces in the "Cleveland Circle" and "Seven
Corners" surface parking lots, and (c) any net parking revenues for event parking received
by the City at the time of NHL Games from surface parking on parcels contiguous to the
New Arena if and to the e�ent actually owned or controlled by the City during the L.ease
Term. In the event the lots in clause (b) become unavailable for event parking during NHL
Games due to sale of property, cancellation of agreements with current property owners, or
development on site(s), the City shall negotiate in good faith to replace that parking
availability and the resulting amounts the Team receives for event parking during NHL
Games with other land available for surface parking contiguous to the New Arena. The City
and the Authority make no representations or warranties about the level of any such
revenues.
B. Citv Arena Revenues. The Team shall pay the City (a) $385,000 per year in
consideration of the advertising revenue from the two replacements of the one
existing outdoor marquee (as provided in Paragraph VII-A including the 5%
annual escalation) regardless of actual advertising revenue received by the
Team and (b) the Ticket Surcharge imposed by the Ciry as described in C
below.
C. Team Arena Eapenses. Fxcept as e�ressly provided for in paragraph E
hereof, the Team will pay for: (1) 100% of the management, operation and
maintenance elcpenses incurred for Arena Events and otherwise in connection
with the New Arena, it being the intention of the parties that the Lease be
absolutely "net" to the City and the Authoriry, except as earpressly provided for
in this Term Sheet, (2) the costs of capital repair and replacement as
described in subparagraph (D) below, and (3) any required collections of
(a) generally applicabie sales taz�es, (b) any other state or city imposed taxes
or assessments, and (c) a facility ticket surcharge or other similar taY or fee
3509689
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imposed by the City or Authority (the "Ticket Surcharge") not to exceed $1.50
per ticket for Arena Events for the first five years of the I.ease Term, with
cumulative increases in the Ticket Surcharge not to exceed $.50 over each
successive five year period thereafter, except as may be mutually agreed to by
the City and Team, provided that if the Ticket Surcharge does not raise at
least $2,100,000 (the "Surcharge Base") in any year of the I,ease Term, then
the City shall have the right to increase the Ticket Surcharge for the following
year to that amount necessary to raise the Surcharge Base (the "Bmergency
Increase"). The Team and the City will keep each other advised during the
year as to the estimated receipts from the Ticket Surcharge and the City will
provide the Team written notice of any decision to increase the Ticket
Surcharge; provided further, that the City agrees not to increase the Ticket
Surcharge during the NHL Hockey season. The City will agree to repeal any
Emergency Increase in the Ticket Surcharge made under this paragraph when
the Ciry has reasonable assurances that the lower Ticket Surcharge will
generate at least the Surcharge Base per year. The timing and mechanism for
any Emergency Increase shall be provided for in more detail in the Lease.
The City will use the increased portion (beyond the Emergency Increase) of
the Ticket Surcharge to provide direct or indirect benefit to the New Arena,
Wilkins Auditorium, or Convention Center. The initial Ticket Surcharge of
$1.50 per ticket will be reduced to $1.00 per ticket and the Surcharge Base
shall be reduced to $1,400,000 if the proceeds of the State Bonds
contemplated in Section IX (C) hereof are granted to the City.
D. Capital Repairs, Replacements and Im�rovements. The Team shall manage,
operate and maintain all aspects of the New Arena consistent with
comparable NHL facilities, including making all capital repairs, replacements
and improvements as and when the Team and the City reasonably deem
necessary, all at the e�ense of the Team, except as ea�pressly provided in
paragraph E below, and consistent with any requirements as set forth in the
Lease to be negotiated in good faith among the Team, City and Authority
("L,ease"). The Team and the Authority shall create a capital replacement
repair and reserve fund ("Arena Reserve Fund") and to be funded by the
Team and spent according to the terms of the L,ease. The moneys in the
Arena Reserve Fund shall be the property of the Team during the Lease
Term; provided that moneys remaining in the Arena Reserve Fund at the end
of the L,ease Term shall be the properry of the City. The Team's annual
contribution to the Arena Reserve Fund shall be (a) $250,000 for the fourth
and fifth years of the L,ease Term, (b) $500,000 in the siYth year, and (c)
commencing in the seventh and in each year thereafter an amount equal to
$500,000, to be escalated annually commencing in the seventh year at the rate
of inflation during the preceding year.
3509669 4
a�-��s
The contributions shall be payable by the Team at the beginning of the
applicable year of the Lease Term. To the extent the money in the Arena
Reserve Fund is insufFicient, the Team shall have the obligation to pay for
capital repairs and repiacements, except as e�ressly provided in paragraph
E hereof.
E. Citv Contribution to Repair and Replacement After Citv Bonds are Paid.
When the City Bonds aze paid or defeased, the City shall continue to receive
100% of the Ticket Surcharge. The City agrees to provide matching funding
(to be held in a separate City account) for necessary capital repairs and
replacements in the following manner:
(1) If the Ticket Surcharge has not been increased since the
commencement of the Lease Term, the City shall make available
during the calendar year, on a one-to-one matchmg basis with the
expenditures made out of the Arena Reserve Fund or otherwise by the
Team during such year the full amount of the T'icket Surcharge up to
$1.4 million. These funds shall only be availabie during the calendar
year, and any unmatched and unspent funds shall revert to the City for
uses which provide direct or indirect benefit to the New Arena,
Convention Center, or Wilkins Auditorium.
(2) If the Ticket Surcharge has been increased during the I.ease Term,
then the City shall make available on a one-to-one matching basis with
the e�enditures made out of the Arena Reserve Fund or otherwise by
the Team during such year, an amount equal to the $1.4 million
inflated annually beginning in the seventh year in an identical manner
to the escalation of the Team's contribution to the Arena Reserve
Fund (the "Escalated Contribution").
In no event shall the annua] match by the City exceed the actual revenue
derived from the Ticket Surcharge. The Team shall provide the City written
evidence of the payment of e�penditures made by the Team prior to the City
making the matching contribution contemplated by this paragraph V available
to the Team.
In any event, notwithstanding the City's annual match under paragraph E
hereof, the Team remains responsible for the payment of and contracting for,
in accordance with law, all necessary repairs and repiacements to the New
Arena.
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F. Namin� Rights — Citv A�proval. The City has the right to reasonably
approve the recipient of the naming rights for the New Arena which rights
shall be granted for no longer than the L,ease Term.
VI. NEW ARENA COMMITMENTS:
The Authority and City believe that the New Arena is and will be on the
Commencement Date free of all contractual obligations relating to New Arena
operations with third parties, which include advertising and concessions, other than
contractual scheduling commitments for certain events and the existing agreement
with Ticket Master Minnesota dated November 5, 1995. The Team has the right to
select and contract with all parties providing products or services for the New Arena
(including the concessionaire), to determine product selection and the service to be
provided by such contracting parties, and to receive all revenues and payments from
such parties. The Team shall also have the opportunity to participate in the selection
process for the parking lot operator at set renewal periods. The City and the
Authority will work with the Team to facilitate the Team's financial and operational
interests in the parking available for NHL Games at the ramps and lots described in
Paragraph V-A hereof.
VII. ADVERTISING
A. The Team shail have the exclusive right to sell and control the advertising on
the outdoor marquees (referred to in Paragraph V-B above). In consideration
thereof, the Team shall pay to the Authoriry or the City $385,000 annually,
beginning on the Commencement Date, with an escalation of 5% annually
thereafter beginning in the second year of the I,ease Term. This obligation
shall be due and owing by the Team regardless of the amount of such
advertising revenue.
B. The Team shall have the exclusive right to sell and control all other
advertising and promotion rights for the New Arena and retain all revenues
received from such sales. The Team shall use its best efforts ta promote
attendance at events in the New Arena. Additionally, the Team shall use its
best efforts to coordinate activities in the New Arena with activities in the
Civic Center complex.
C. This Term Sheet and the Lease shall not affect the rights of the City and
Authority with respect to advertising in other areas of the St. Paul Civic
Center Complex (e.g., Wilkins Auditorium or new Convention Center).
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VIII. NEW ARENA DESIGN AND CONSTRUCTION
A. The Team will contract for the design and construction of the New Arena
without the necessity for advertisement for bids, using a construction method
that e�pedites the construction schedule. Immediately upon the award of an
NHL franchise if it occurs prior to July 11, 1997, the Team shali commence
the design and construction of the New Arena in Saint Paul, and if the Team
is granted a franchise to play in the 1999-2000 NHL Season, such construction
shail be substantially completed by September 1, 1999. Subject to clause (B)
below, the New Arena shail be a first class facility consistent in quality with
other current arenas recently constructed for use by NHL teams, and is
expected to consist of the following major design elements:
1. Approximately 650,000 square feet.
2. A capacity of approximately 19,000 seats for hockey, including:
(a) approximately 2,500 club seats.
(b) approximately 750 to 1000 seats in IwYUry suites.
3. A finished club restaurant and bar.
4. Finished team retail stores and team offices.
5. Video scoreboard(s) with advertising panels.
6. Two or more new outdoor electronic marquees.
7. Finished locker rooms and related training rooms and offices.
8. Finished concessions and novelty stands.
9. I.andscaping.
10. All necessary fumiture, fixtures and equipment.
B. The Team, Ciry and Authority shall mutually agee on the conceptual design
for the New Arena by August i, 1997. There will be a design team that wili
include two representatives from the City and one representative from the
Authority in addition to representatives from the Team. If no agreement is
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reached the Team shall have the right to make final design decisions, which
the Team agrees to make on a timely basis. No material changes may be
made in the conceptual design by the Team, without the approval of the City,
except as required by the project budget of approximately $13Q,000,000. In
such event, the City, Authority and Team shall agree to value engineer the
New Arena project on a timely basis to reduce its costs. If no agreement on
the value engineering can be reached, the Team shaIl have che right to make
final design decisions, subject to the spirit of the Conceptual Design and
project budget constraints.
C. Contingent on receiving the funds from the City under the Plan of Finance,
the Team shall bear all the costs of the New Arena, including design,
construction, finance, cost overruns and demolition of the existing arena. The
City shall bear the costs of the costs of acquisition or off-site infrastructure
improvements. The City and the Team aa ee to consider alternate
construction methods which may reduce project costs and expedite project
schedule. The Ciry agrees to coordinate and help e�:pedite all permits needed
for the construction of the New Arena. In the event the costs of the New
Arena are less than $130,000,000, the savings shall be shared by the respective
parties in the same proportion as their contributions set forth in Section IX.
IX. PLAI`T OF FINANCE:
A. The New Arena shall be financed through the following funds: (1) $35 miilion
from the Team in the form of cash, cash equivalent or an inevocable letter
of credit in form and substance satisfactory to the City (the "Team
Contribution"), and (2) $30 million from the City or its housing and
redevelopment authority plus the cost of land and off-site infrastructure (the
"City Contribution"), and (3) an additional $65,000,000 from the City or its
housing and redevelopment authority, which the City anticipates will be
replaced with State Bonds as provided in paragraph C below (the °Ciry
Guaranty of State Portion"). The funding in clause (2) and (3) is collectively
referred to as the "City Bonds". If necessary, the funding plan for the City
Bonds shall be structured so that contracts for the construction of the New
Arena may be awarded without advertisement for bids.
B. The Team Contribution and City Contribution must be deposited in escrow
with a third party acceptable to the Team and the City by a date reasonably
acceptable to the Team and the City in order to accommodate the letting of
the necessary design and construction contracts. The Team and the City will
mutually agree to the percentage of each draw to be paid by the Team
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Contribution and the City Contribution. The intent of the rarties is that the
City Guaranty of State Portion will not be drawn down unc;i July i, 1998.
C. The Team acknowledges and agrees that the City anticipates that a portion
of the City Bonds will be repiaced with an appropriation or proceeds of bonds
issued by the State of Minnesota (the "State Bonds"). Upon such
replacement, the term "City Bonds" herein shall be deemed to include the
"State Bonds".
X. CHARITABLE CONTRIBUTIONS:
The Team, or its charitable foundation, wiil on the Commencement Date and
annualiy thereafter make annual contributions to existing local organizations that
promote youth programs in Minnesota, such as the Mariucci Inner C�ty Youth
Hockey and Minnesota Amateur Hockey Association (MAHA).
XI. MISCELLANEOUS:
A. Upon the grant of an NHL franchise to the Team, the parties shall commence
negotiations of a definitive L,ease agreement based on this Term Sheet
("L,ease"). If a definitive Lease has not been executed by March 15, 1998, any
outstanding issues (except failure of the parties to agree pursuant to Section
XI-H) shall be submitted to binding arbitration upon the request of the City
or the Team by a panel of three independent persons familiar with the
operations and economics of sports facilities or municipal operations and
finance. One panelist shall be chosen by the Team. The second panelist shall
be chosen by the City, and the third panelist shall be chosen by the other two
panelists. Such panel shall have the right to make a decision solely on the
issue or issues in dispute but shall not have the power to alter the terms
agreed upon by the parties herein or hear or determine any dispute over (i)
the terms or conditions which may be agreed to in the future in the
negotiations over the I,ease, or (ii) the failure of the parties to agree pursuant
to Paragraph XI-H or VIII-B.
B. The Team will maintain its membership in good standing in the NHL
throughout the L.ease Term.
C. The Izase will contain such other terms and conditions (insurance, damage
and destruction, indemnification, financial statements, security, scheduling,
force majeure, events of default, remedies, miscellaneous, etc.) as are
customary in the industry, reasonable, or otherwise agreed to by the City,
Authority and Team. Notwithstanding the foregoing, the Team shall agree to
35p96A9 9
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pay liquidated damages in the event of a breach of its covenant (a) to operate
exclusively at the New Arena during the first ten years of the L.ease Term as
provided in Paragraph N hereof, or (b) after the first ten years of the Lease
Term, to pay the City and State the amounts specified in Paragraph IV hereof
in the event it relocates the Team, in an amount equal to: (x) the unpaid
principal balance of the outstanding City Bonds (including any related
premium or early retirement penalty associated with prepayment), (y) the
amount of money e�ended by the City and the Authority for construction
cost overruns, land acquisition, off-site infrastructure, demolition and other
actual out of pocket costs incurred by the City and the Authority in connection
with the New Arena, and (z) interest from the date of expenditure of the
amounts identified in clause (y) at a rate of interest of seven percent per
annum. Additionally, disputes between the parties under the Lease wili be
venued exclusively in Ramsey County, Minnesota.
D. No term of the Lease shall impair the tax exempt status of outstanding bonds
issued with respect to the Civic Center Complex, and if any term herein
should have that effect, it shall be deemed modified to the e�ent required to
eliminate such effect as long as such modifications remain consistent with the
intent of this Term Sheet.
E. If all or a portion of the City Bonds are issued as t� exempt bonds, the Team
and the City shall make such reasonable modifications to the Term Sheet as
are appropriate to facilitate and not impair such exemption. In order to
accommodate the construction of the New Arena, without advertisement for
bids, the Team and the City shall make such reasonable modifications to the
Term Sheet as necessary to take advantage of any exemption to competitive
bidding, which modifications may include the lessor under the Lease being a
nonprofit corporation, as long as such modifications remain consistent with the
intent of this Term Sheet.
F. The Team and the City agree that the provisions of this Term Sheet are
subject to all federal, state and local laws, rules, regulations or ordinances.
G. A binding letter of intent in substantially the form attached hereto as F�hibit
A shail be promptly executed by the City, Authority and Team.
H. The Team and the City shail coilaborate in good faith on the design,
construction, finance and operation of a new practice facility or the necessary
improvements to an existing facility to be converted into a practice facility for
the Team containing the necessary facilities for an NHL practice facility which
shall be open for use by the public when not being used by the Team.
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Nothing herein shall be construed as a guarantee of City financial assistance
for the practice facility.
I. The Team shall make the New Arena available for lease to the Minnesota
State High Schoo] League (MSHSL) in order that the MSHSL shall be able
to continue to conduct state high school tournaments as they have been
conducted in the past, including giris volley ball, giris danceline, boys wrestling,
boys hockey and boys basketball. T'he MSHSL shall be able to conduct the
toumaments and receive the same revenue streams, and subject to agreement,
any new revenue streams, and pay the types of eJCpenses in the same
categories that are currently in effect.
J. The Team shall make the New Arena available, subject to scheduling of other
events, to the City or its designee for presentation of up to five (5) events per
year not to exceed 10 days, including time for set up and break down (the
"City Events"). Such events shall be of "community or non-commercial
nature" and neither the City nor its designee shall be required to pay rent to
the Team for use of the New Arena for said event(s). However, the City or
its designee shall be required to reimburse the Team for all applicable out-of-
pocket e�enses, incurred in connection with the event(s). The City shall be
entitled to 50 percent of any revenues derived in the New Arena from the City
Events.
K. Any contracts or agreements entered into by the Team which generate Team
Arena Revenues or any agreements with respect to operations at the "New
Arena shall, unless such contracts or agreements were approved prior to their
execution by the City, contain a clause that such contracts or agreements are
immediately terminable by the City at its option upon expiration or
termination of the L,ease.
L. The Team agrees that throughout the term of the Lease, unless the City
otherwise consents in writing, which consent the City agrees will not be
unreasonably withheld (a) will be the sole general
partner of the team, and (b) Robert O. Naegele, Jr. will control the general
partner.
M. The Authority or the Ciry will use its best efforts to provide the Team up to
10,000 square feet of office space commencing on a date as necessary to meet
the Team's needs and continuing through the completion date of the- New
Arena. The Team shall pay rent equal to all utility, any build out costs, and
all other out-of-pocket costs of the Authority or the City.
35096&9 11
�l'1 - C'1S
i�►:�:i�����
BINDING LETTER OF INTENT
This Binding Letter of Intent is entered into this day of _� 1997, by and
among the City of St. Paul, Minnesota (°City"), St. Paul Civic Center Authority ("Authority"),
Housing and Redevelopment Authority of the City of Saint Paul, Minnesota (the "HRA"),
and , a Minnesota limited partnership ("Team")
(collectively "the Parties").
The City, Authority, HRA,, and Team agree to the terms in the attached Amended
and Restated Term Sheet for St. Paul Civic Center Arena dated May 28, 1997 (the "Term
Sheet") and agree that the terms set forth in the Term Sheet wilI be incorporated into a
definitive lease agreement ("L.ease") among the Parties. The Ciry, Authority, HRA, and
Team agree that the Term Sheet reflects the basic business deal among the parties, and is
intended to be binding on the Parties, their respective assigns and successors and that they
will in good faith negotiate the terms of the L,ease consistent with the terms set forth in the
Term Sheet.
The Ciry, Authority, HRA, and Team each represent that the execution and delivery
of this Binding L,etter of Intent and the Term Sheet and the performance and observance
of the terms of this Binding I,etter of Intent and the Term Sheet have been duly authorized
by all necessary action on the part of the City, Authority, HRA, and Team respectively.
This Binding L,etter of Intent shall automatically terminate and be of no effect if (a)
the National Hockey League does not announce the award of an escpansion franchise to the
Team during its next round of e�pansion or approve this Term Sheet on or before July 11,
1997 or (b) the Team's or City's contribution contemplated by Section IX(A) shail not be
available at the time and in the form provided in Paragraph IX(B).
3509669
°i'7 � l. �1 S
The Parties hereby execute this Binding L.etter of Intent as of the date first written
above.
CTTY OF ST. PAUL, MINNESOTA
Titie: Mayor
Approved as to Form: Title: Director, Office of Financial Services
City Attorney By:
Title: Director of Planning and Economic
Development
ST. PAUL CIVIC CENTER AUTHORITY
By:
Title: Chair
B
Title: Executive Director
3S09bfl9
�'� - C� 5
HOUSING AND REDEVELOPMENT AUTHORITY
OF THE CITY OF SAINT PAUL, MINNESQTA
Title: Chair
Titie: Secretary
Title: F�ecutive Director
Title: Director, Office of Financial Services
A LIMITED
PARTNERSHIP
By: , a Minnesota limited
Iiability company, its general partner
By:
Title: Robert O. NaegeIe, Jr.
Managing Member
35096&9
°1'l - �'1 S
SAINT
PAUL
�
AAAA
CITY OF SAINT PAUL
Narm Coleman, Mayor
TO Council President Dave Thune
Councilmember Dan Bostrom
Councilmember Jerry Blakey
Councilmember Joe Collins
Councilmember Mike Harris
Councilmember Roberta Megard
Councilmember Gladys Morton
FROM Mayor Norm Coleman /��-��
DATE: May 30, 1998
RE: Interim Arena Financin� Plan for New Civic Center Arena and NHI, Hockey
390 Cir�� Hafl
IS Wesr Kellogg Bou[evard
Saint Paul, MN 55102
Telephone: 672-266-8510
Facsimile: 612-266-8513
Accompanyin� this memorandum are additional briefing materials that were requested at your
meeting on May 28, 1997. I look forward to your favorable consideration of this proposal and
• the vitality it wiil bring to Saint Paul. If you have any questions about these materials before your
special meetin� scheduled for Monday, June 2, at 9:00 a.m., please contact Deputy Mayor Tim
Manc.
The briefin� materials are tabbed as follows:
L The proposed City Council and Housin� and Redevelopment Authority Resolutions.
2. The revised term sheet with the NHI, Team includin� a redlined version.
3. The interim financin� plan dated May 28, 1997.
4. A le�al opinion on hond related matters from Leonard, Street and Deinard.
5. A report from 5prin�stead, Inc., the City's financial advisor.
6 Construction cash flow projections for the new Civic Center Arena.
7. A potential bond issuance schedule.
8. Commitment letters from business and buildin� trades interests.
• 9. Commitments from the Saint Paul le�islative dele�ation.
�
Council File #
•
RESOLUTION
CITY OF SAINT PAUL, MINNESOTA
Presented By
Referred To
Committee: Date
Green Sheet �
q�- 4�5
4�VHEREAS, a group ofMinnesota investors ha��e submitted an application for an NHL expansion team for
5 consideration by the National Hockey League Board of Governor's on January 13, 1997, and
G7
7 WHEREAS, the City Council has indicated that professional hockey is an economic and community
8 enhancement to the City of Saint Paul and the larger metropolitan area, and
9
10 WHEREAS, the City Council has determined that the 23 year-old Saint Paul Civic Center Arena is in need o:
11 substantial renovation in order to maintain a competitive position in the marketplace, and
12
13 WHEREAS, based on a recent visit, the I�'HL Expansion Committee has indicated that Saint Paul has an
14 attractive and adequate media market as well as a financially solid investor's group, and
1S
16 WHEREAS, the NHI. Expansion Committee has raised questions as to whether the �51 million in
improvements previously outlined in the HOK Conceptual Desi�n dated December 15, 1996 will be adequate to
bring the Arena up to NHI. standards, and have indicated they would not recommend placing an expansion team
19 in Saint Paul in a renovated Arena, and
20
21
22 WHEREAS, a new Arena would benefit the City and its citizens by providing the downtown with an Arena
23 which would become competitive with other state of the art arenas, would provide current tenants of the Civic
24 Center with an updated facility in which to bring their events and programs, would generate needed revenue to
25 attract an NHI, team and would attract additional non-hockey events to downtown Saint Paul, and
26
27 Wf�REAS, a new Arena would provide the highest quality facilities for the Minnesota State High Schooi
28 Tournaments which have a long tradition of playin� in the Saint Paul Civic Center Arena, and would improve the
29
30
31
32
33
34
35
36
37
experience of the many thousands of Minnesotans who attend the toumaments each year, and
WIIEREAS, it has been estimated that a new first-class Arena, consistent in quality with other current arenas
recently constructed for use by I`THI, teams and built on the site of the current Civic Center would cost
appro�cimately $130 million which would include the following:
* Up to 650,000 square feet
* A capacity of approximately 19,000 seats for hockey includin� 2,500 club seats and 750 to 1000 seats in
lu�cury boxes
* A finished Arena club restaurant and bar
� * Finished Team Retail Store and Team Offices
* Video scoreboard(s) with advertising panels
40 * Two new outdoor marquees
41 * Finished locker rooms, training rooms and offices
42 * Finished concessions and novelty stands
q1-C�S
� * Landscaping
* All necessary fixtures, furniture and equipment
46 WHEREAS, the Governor ofh4innesota has expressed support for $65 million in State bonding to be
47 appropriated in the 1998 legislative session, and
48
49 «�f3EREAS , the City believes an interim financing guarantee for the State's 56S million participation �a�ill result
50 in an award by the I�THI, for an expansion franchise, and
51
52 WHEREAS, this $65 million, in addition to the Team's contribution of $35 million and the City's previously
53 approved commitment of $30 million will result in a project bud�et of $130 miliion, and
54
55 ��FIEREAS, this interim financing is secured by fi:ture revenue streams available to the City other than a
56 property tax levy, and now therefore be it
57
�8 RESOLVED, that the Council ofthe City of Saint Paul does hereby approve the zttached revised Term Sheet
59 and interim plan of finance for the lease of the ne��� arena to be constructed as part of the Saint Paul Civic Center;
60 and be it
61
62 FURTHER RESOLVED, that the appropriate officials of the City of Saint Paul are hereby authorized to enter
63 into, execute and deliver all necessary contracts, orders, agreements, indentures and documents of any kind to
64 carry out and put into place (1) the terms and conditions in said
Binding Letter of Intent, (2) the design and construction of the
the said arena, and (4) all other matters required to carry out th�
�
Yeas avs Absent
E a�Tcey Re<
Bostrom
Maver
Term Sheet and its provisions, including the
new arena, (3) the financing requirements for
implementation ofthis project.
. 1►� h c.u--a
Department of:
� ��a�r �s Planning & Economic Develooment
Meqar� �
Rettman
- � Thune �A�""'�""�,
By:
79 Adopted by Council: Date
80
81 Adoption Certified by Council Secretary Form
82
83 By: BY'�
84
8$ Approved by Mayor: Date
86 APPr
87 By: Coun
By:
by City Attorney
by]Mayor for Su�fiyLs�sion to
•
°l7 - C'lS
• Sponsored by:
RESOLUTION 230. 97-5/28
WI��REAS, a group of Minnesota im�esiors have submitted an application for an IrTf-II, expansion
team for consideration by the National Hockey Lea�ue Board of Governor's on 7anuary 13, 1997
and
WHEREAS, the Saint Paul City Council has indicated that professional hockey is an economic
and community enhancement to the City of Saint Paul and the larger metropolitan area, and
WHEREAS, the City Council has determined that the 23 year-old Saint Paul Civic Center Arena
is in need of substantial reno��ation in order to maintain a competitive position in the marketplace,
and
WHEREAS, based on a recent visit, the \ Expansion Committee has indicated that Saint Paul
has an attractive and adequate media market as �vell as a financially solid investor's group, and
WHEREAS, the NF-IL Expansion Committee has raised questions as to whether the $51 million
in improvements previously outlined in the HOK Conceptual Design dated December I5, 1996
will be adequate to bring the Arena up to NHI, standards, and have indicated they would not
recommend placing an expansion team in Saint Paul in a renovated Arena, and
•
WHEREAS, a new Arena would benefit the City and its citizens by providing the downtown with
an Arena which would become competitive with other state-of-the-art arenas, would provide
current tenants of the Civic Center with an updated facility in which to brin� their events and
programs, would generate needed revenue to attract an I�II-IL team and would attract additional
non-hockey events to downtown Saint Paul, and
WHEREAS, a new Arena would provide the hi�hest quality facilities for the Minnesota State
High School Tournaments which have a lon� tradition of playing in the Saint Paul Civic Center
Arena, and would improve the experience of the many thousands of Minnesotans who attend the
tournaments each year, and
WHEREAS, it has been estimated that a new first-class Arena, consistent in quality with other
current arenas recently constnacted for use by I�TFII, teams and built on the site of the current
Civic Center would cost approximate]y $130 million which would include the following:
* Up to 650,000 square feet
* A capacity of approximately 19,000 seats for hockey including 2,500 club seats and 7S0 to
1000 seats in luxury boxes
* A finished Arena club restaurant and bar
* Finished Team Retail Store and Team Offices
• * Video scoreboard(s) with advertising panels
* Two new outdoor marquees
R'1-(.RS
• * Finished locker rooms, training rooms and offices
* Finished concessions and novelty stands
* Landscaping
* All necessary fixtures, furniture and equipment
Wf�REAS, the Governor of Minnesota has ezpressed support for �65 million in State bonding
to be appropriated in the 19931e�islative session, and
WHEREAS , the Housing and Redevelopment Authority of the City of Saint Paul, Minnesota
(HRA) believes an interim financing guarantee for the State's S65 million participation will result
in an award by the NHL for an expansion franchise, and
WI3EREAS, this $65 million, in addition to the Team's contribution of $35 million and the City's
previously approved commitment of S30 million will result in a project bud�et of $130 million,
and
WHEREAS, this interim financin� is secured by future revenue streams available to the City other
than a property tax ]evy, and now therefore be it
RESOLVED, that the Board of Commissioners of the HRA does hereby approve the attached
ammended an restated Term Sheet and interim plan of finance for the lease of the new arena to
be constructed as part of the Saint Paul Ci��ic Center; and be it
• FURTHER RESOLVED, the HRA will, at the request of the City, issue its bonds backed by the
full faith and credit of the Housing and Redevelopment Authority and an annual appropriation
contribution from the City of Saint Paul, and be it
FURTHER RESOLVED, that the appropriate officicers of the HRA and its executive director
and her designees are hereby authorized to enter into, execute and deliver al] necessary contract:,
orders, agreements, indeniures and documents of any kind to carry out and put into place (1) the
terms and conditions in said Term Sheet and its provisions, including the Binding Letter of Intent,
(2) the design and construction of the new arena, (3) the financing requirements for the said
arena, and (4) all other matters required to carry out the implementation of this project.
•
°l`� -��15
�
AIvIENDED AND RESTATED
TERM SHEET
Dated May 28, 1997,
for the I,ease of the
NE,R' ST. PAUL CIVIC CEI�TTER ARENA ("NEW ARENA")
T. OW:�'ER'S AGE\T ��ill be the Saint Paul Ci��ic Center Authority ("Authority"), and
OWNER c�•ill be the Cit}> of Saint Paul ("City").
II. TE\A.\T ��ll be the \HL ea team to be ow�ned by
("Team").
IIL LEASED PRE?v1ISES � be the New Arena, including all furniture, fixtures and
equipment necessary for the pla�zng of all iv`HL home regular season, playoff, All-
Star and other NHL-sanctioned home games and any NHL e�ibition games played
• at the New Arena ("�HL Games"), and any other arena events as contemplated
below.
IV. TER?vI OF LEASE
The term of the L,ease shall commence thirty da}�s prior to the first NHL Game of
the regular NHL season which follows the date of substantial completion of the I�Tew
Arena (the "Commencement Date" which, if an NHL franchise is granted to the
Team to play in the 1999-2000 I�'HL season, is anticipated to be approximately
September 1, 1999) and will continue from that date for the later of twenty (20) years
or the final maturity stated date of the City Bonds, but not longer than 25 years (the
"Lease Term"). The Team will have the option to extend the Lease Term for two
five (5) year periods. Any such extension shall be a part of the Lease Term. The
Team wi11 lease the New Arena for the purpose of playing all of its NHL home
Games and will not relocate the Team from the Arena during the L.ease Term;
provided, that the Team shall have the right after the first ten years of the Lease
Term to terminate the lease by paying the City an amount required to discharge the
autstanding City Bonds (including any related premium or early retirement penalry
• 3509oCa
9�- G�tS
• associated �c�th pre-pa}�nent). Upon pa}�ment of said amount and payment of ail
other accrued liabilities under the I,ease, the Team may terminate the L,ease.
V. ARENA REVENL:ES A.�'D EXPEnSES
A. Team Revenues. The Team a�ill contro] and retain 100% of revenues deri��ed
from all events at the \ew Arena (such events "Arena E��ents" and such
revenues "Team Arena Revenues"), except as othercvise provided in
Paragraphs V-B and XI-7 hereof and except as provided w-ith users of the
New Arena, and 100% of the revenues derived from other operations outside
of the Nea� Arena ("Team Revenues"). Team Arena Revenues and Team
Re��enues include the foilowing:
i. sales of tickets for Arena Events
2. sales of tickets for club seats for Arena Events
3. sales of luxur�� suites for Arena Events
4. New Arena's share of all concession revenues and payments
5. all (permanent and temporary) advertising and promotional revenues
• (including naming rights, fixed signage, dasher boards, on-ice
advenising, �7deo boards) at the New Arena
6. merchandising revenues realized from sales at Arena Events and at all
other times at the Team's retail stores at the New Arena and
elsewhere
7. publication revenues realized at Arena Events and at all other tiines
at the Team's retail stores at the New Arena and elsewhere
8. broadcast, merchandising and other revenues received by the Team
from the NHL
9. revenues from local broadcasts of Arena Events (e.g., local'I`V, cable
and radio)
10. all other revenues derived from operations of the New Arena and the
Team's business outside of the Arena
CJ
3<OOSb 9 2
97-�'15
• pro��ided, that the City and the Authority make no representations or
warranties about the le��el of any such re��enues; or the a�•ailabiliry of an��
revenue sources other than from the New Arena. The Team's right to all
Team Arena Revenues accruing after the erpiration or termination of the
Lease shall cease upon such expiration or termination of the Lease.
Team Arena Revenues and Team Revenues do not include the amounts to be
recei�•ed by the City from the Team as described in paragraph B below, and any taxes of
genera] applicabilin�.
In addition, the City shail pay the Team a sum equal to (a) net parking revenues
derived from e�°ent parkinQ at the time of Iv'HL Games from the existing 1730 spaces in the
Ci��ic Center Ramp and the 430 spaces in the Ci��ic Center F�hibit Hall underground ramp,
(b) net parking revenues for event parking received by the Ciry at the time of NHI. Games
deri�•ed from approtdmateh� 23� surface parking spaces in the `Cleveland Circle" and `'Se��en
Corners" surface parking lots, and (c) any net parking revenues for event parking received
by the Cin� at the time of \HL Games from surface parking on parcels contiguous to the
Ne�x� Arena if and to the estent actually ow�ed or controlled by the City during the L.ease
Term. In the event the lots in clause (b) become unavailable for event parking during ?�'HL
Games due to sale of properry, cancellation of agreements a�th current property owners, or
de��elopment on site(s), the Ciry shal] negotiate in good faith to replace that parking
availabiliry and the resulting amounts the Team receives for event parking during I�THL
• Games «�ith other land available for surface parking contiguous to the New Arena. The City
and the Authority make no representations or warranties about the level of any such
revenues.
B. Citv Arena Revenues. The Team shall pay the City (a) $385,000 per year in
consideration of the advenising revenue from the two replacements of the one
exasting outdoor marquee (as provided in Paragraph VII-A including the 5%
annual escalation) regardless of actual advertising revenue received by the
Team and (b) the Ticket Surcharge imposed by the City as described in C
below.
C. Team Arena E�enses. Faccept as er.pressly provided for in paragraph E
hereof, the Team will pay for: (1) 100% of the management, operation and
maintenance expenses incurred for Arena Events and otherwise in connection
with the New Arena, it being the intention of the parties that the Lease be
absolutely "net" to the City and the Authority, except as expressly provided for
in this Term Sheet, (2) the costs of capital repair and repiacement as
described in subparagraph (D) below, and (3) any required collections of
(a) generally applicable sales taxes, (b) any other state or city imposed taxes
or assessments, and (c) a faciliry ticket surcharge or other similar tax or fee
•
3tpyy,�9
3
q7- C�15
• imposed by the Ciry or Authoriri• (the "Ticket Surcharge") not to exceed �1.�0
per ticket for Arena E��ents for the first five years of the Lease Term, a�ith
cumulati��e increases in the Ticket Surcharge not to exceed �.50 over each
successi�°e fi��e year period thereafter, except as may be mutually agreed to by
the Ciry and Team, pro��ded that if the Ticket Surcharge does not raise at
least $2,100 (the "Surcharge Base") in any year of the L.ease Term, then
the City shal] ha��e the right to increase the Ticket Surcharge for the following
year to that amount necessary to raise the Surcharge Base (the "Emergency
Increase"). The Team and the City will keep each other advised during the
}�ear as to the estimated receipts from the Ticket Surcharge and the City a�ill
provide the Team w�ritten notice of any decision to increase the Ticket
Surcharge; pro«ded funher, that the City agrees not to increase the Ticket
SurcharQe during the NHL Hockey season. The City will agree to repeal any
Emergency Increase in the Tieket Surchar�e made under this paragraph when
the Cit�� has reasonable assurances that the lower Ticket Surcharge w�il
generate at least the Surcharge Base per year. The timing and mechanism for
any Emergency Increase shall be provided for in more detail in the L,ease.
The City �vil] use the increased portion (beyond the Emergency Increase) of
the Ticket Surcharge to pro��de direct or indirect benefit to the New Arena,
Wilkins Auditorium, or Convention Center. The initial Ticket Surcharge of
�L�O per ticket w�ll be reduced to $1.00 per ticket and the Surcharge Base
shall be reduced to 51,400,000 if the proceeds of the State Bonds
• contemplated in Section JX (C) hereof are granted to the City.
D. Capita] Repairs, Replacements and Improvements. The Team shall manage,
operate and maintain all aspects of the New Arena consistent with
comparable NHL facilities, including making all capital repairs, replacements
and improvements as and when the Team and the City reasonably deem
necessary, ail at the elcpense of the Team, except as expressly provided in
paragraph E below, and consistent with any requirements as set forth in the
Lease to be negotiated in good faith among the Team, City and Authority
("Lease"). The Team and the Authoriry shall create a capital rep]acement
repair and reserve fund ("Arena Reserve Fund") and to be funded by the
Team and spent according to the terms of the Lease. The moneys in the
Arena Reserve Fund shall be the property of the Team during the Lease
Term; provided that moneys remain3ng in the Arena Reserve Pund at the end
of the Lease Term shall be the property of the City. The Team's annual
contribution to the Arena Reserve Fund shall be (a) �250,000 for the fourth
and fi8h years of the Lease Term, (b) $500,000 in the sixth year, and (c)
commencing in the seventh and in each year thereafter an amount equal to
$500,000, to be escalated annually commencing in the seventh year at the rate
of inflation during the preceding year.
•
aso�v 4
a�-C�S
: The contributions shall be payable by the Team at the beginning of the
applicable }'zar of the I.ease Term. To the e�ent the money in the Arena
Resen�e Fund is insufficient, the Team shall have the obligation to pay for
capital repairs and replacements, except as expressiy provided in paragraph
E hereof.
E. Citv Contribution to Repair and Re�lacement After Citv Bonds are Paid
When the Cin Bonds are paid or defeased, the City shali continue to receive
100% of the Ticket Surcharge. The City agrees to provide matchin� fundin�
(to be held in a separate City account) for necessary capital repairs and
replacements in the folloRing manner:
(i) If the Ticket Surcharge has not been increased since the
commencement of the Lease Term, the City shall make a��ailable
durino the calendar year, on a one-to-one matching basis with the
expenditures made out of the Arena Reserve Fund or otherwise by the
Team during such year the full amount of the Ticket Surcharge up to
�1.4 million. These funds shal] only be available during the calendar
year, and any unmatched and unspent funds shall revert to the City for
uses which pro�-ide direct or indirect benefit to the New Arena,
Com�ention Center, or Wilkins Auditorium.
• (2) If the Ticket Surcharge has been inereased during the Lease Term,
then the City shall make available on a one-to-one matching basis with
the expenditures made out of the Arena Reseive Fund or otherwise by
the Team during such year, an amount equal to the $1.4 million
inflated annually beginning in the seventh year in an identical manner
to the escalation of the Team's contribution to the Arena Reserve
Fund (the "Escalated Contribution").
In no event shall the annual match by the City exceed the actual revenue
derived from the Ticket Surcharge. The Team shall provide the City written
evidence of the payment of e�enditures made by the Team prior to the City
making the matching contribution contemplated by this paragraph V available
to the Team.
In any event, notwithstanding the City's annual match under paragraph E
hereof, the Team remains responsible for the payment of and contracting for,
in accordance with law, all necessary repairs and replacements to the New
Arena.
r 1
U
3509659 5
q� -C�1S
• F. Namine Riehts — Citv Approval. Tt�e City has the right to reasonably
approve the recipient of the naming rights for the New Arena which rights
shall be granted for no longer than the L,ease Term.
VI. NE��J ARENA CO'�4MITMENTS:
The Authoiin> and City belie� that the New Arena is and u�ill be on the
Commencement Date free of all cont7actual obligations relating to New Arena
operations R�ith third panies, which include advertising and concessions, other than
contractual scheduling commitments for certain events and the existing agreement
«�ith Ticket Master'�4innesota dated'�ovember 5, 199�. The Team has the right to
select and contract a�ith ali parties pro��ding products or services for the New Arena
(includino the concessionaire), to determine product selection and the service to be
pro��ided b}� such contractin; parties, and to receive a11 revenues and payments from
such parties. The Team shall also have the opponunity to participate in the selection
process for the parking lot operator at set renewal periods. The City and the
Authority will work n the Team to facilitate the Team's financial and operationa]
interests in the parkin� a�•ailable for �HL Games at the ramps and lots described in
Para�raph V-A hereof.
• VII. ADVERTISI:�G
A. The Team shall have the exclusive right to sell and control the advertising on
the outdoor marquees (referred to in Paragraph V-B above). In consideration
thereof, the Team shall pay to the Authority or the City $385,000 annually,
beginning on the Commencement Date, with an escalation of 5% annuallv
thereafter be�inning in the second year of the Lease Term. This obligation
shall be due and owing by the Team regardless of the amount of such
advertising revenue.
B. The Team shall have the exclusive right to sell and control all other
advertising and promotion rights for the New Arena and retain all revenues
received from such sales. The Team shall use its best efforts to promote
attendance at events in the New Arena. Additionally, the Team shall use its
best efforts to coordinate activities in the New Arena with activities in the
Civic Center compiex.
C. This Term Sheet and the Lease shall not affeci the rights of the City and
Authority with respect to advertising in other areas of the St. Paul Civic
Center Complex (e.g, Wilkins Auditorium or new Convention Center).
•
350 V
a'1-C�tS
�
VIII. NE�� ARENA DESIGN AI�D CONSTRUCTION
A. The Team v.�ill contract for the design and construction of the New Arena
��ithout the necessity for advertisement for bids, using a construction method
that espedites the construction schedu]e. Immediately upon the award of an
i�THL franchise if it occurs prior to July 11, 1997, the Team shall commence
the design and construction of the New Arena in Saint Paul, and if the Team
is granted a franchise to play in the 1999-200� 2�HL Season, such construction
shall be substantially completed by September i, 1499. Subject to clause (B)
below, the New Arena sha11 be a first class facility consistent in quality w
other current arenas recently constructed for use by I�'HL teams, and is
expected to consist of the following major design elements:
•
1.
2.
Appro�mately 6�0.000 square feet.
approximately 2,500 club seats.
approximately 750 to 1000 seais in luxury suites.
3.
4.
5.
6.
7.
8.
9.
10.
A capacity of appro�mately 19,000 seats for hockey, including:
(a)
(b}
A finished club restaurant and bar.
Finished team retail stores and team offices.
Video scoreboard(s) with advertising panels.
Two or more new outdoor electronic marquees.
Finished locker rooms and related training rooms and offices.
Finished concessions and novelty stands.
Landscaping.
All necessary fumiture, £ixtures and equipment.
B. The Team, City and Authority shall mutually agree on the conceptual design
for the New Arena by August 1, 1997. There wil] be a design team that w�ill
include two representatives from the City and one representative from the
Authority in addition to representatives from the Team. If no agreement is
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• reached the Team shall ha��e ihe right to make final design decisions, which
the Team a�rees to make on a timely basis. I�TO material changes may be
made in the conceptual dzsign by the Team, a�thout the approvai of the City,
except as required by the project budget of approximately $130,000,000. In
such event, the City, Authorit�� and Team shall agree to ealue engineer the
New Arena project on a timely basis to reduce its costs. If no agreement on
the aalue enQineering can be reached, the Team shall have the right to make
final desiQn decisions, subject to the spirit of the Conceptual Design and
project budeet constraints.
C. Contingent on recei«ng the funds from the City under the Plan of Finance,
the Team shall bear ali the costs of the New Arena, including desien,
construction. finance, cost o��erruns and demolition of the existing arena. The
Ciry shail bear the costs of the costs of acquisition or off-site infrastructure
impro��ements. T'he City and the Team agree to consider alternate
construction methods �hich may reduce project costs and expedite project
schedule. The Ciry aerees to coordinate and help eapedite all permits needed
for the construction of the New ,4rena. In the event the costs of the New
Arena are ]ess than 5130.000,000, the sa��ngs shall be shared by the respective
parties in the same proportion as their contributions set forth in Section IX.
• IX. PLA'� OF FINA.\CE:
A. The New Arena shall be financed through the following funds: (1} $35 million
from the Team in the form of cash, cash equivalent or an irrevocable letter
of credit in form and substance satisfactory to the City (the "Team
Contribution"), and (2) �30 million from the City or its housing and
redevelopment authority plus the cost of land and off-site infrastructure (the
"Ciry Contribution"), and (3) an additional $65,000,000 from the City or its
housing and redevelopmeni authoriry, which the City anticipates will be
replaced a�th State Bonds as provided in paragraph C below (the "Ciry
Guaranry of State Portion"). The funding in clause (2) and (3) is collectively
referred to as the "City Bonds". If necessary, the funding plan for the City
Bonds shall be structured so that contracts for the construction of the New
Arena may be awarded without advertisement for bids.
B. The Team Contribution and City Contribution must be deposited in escrow
with a third party acceptable to the Team and the City by a date reasonabiy
acceptable to the Team and the City in order to accommodate the leiting of
the necessary design and construction contracts. The Team and the City will
mutually agree to the percentage of each draw to be paid by the Team
n
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35096F9
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• Contribution and the Cin- Contribution. The intent of the parties is that the
City Guarann� of State Portion «�ll not be drak�n dow�n until July 1, 1998.
C. The Team acknowledges and agrees that the City anticipates that a portion
of the City Bonds will be replaced a�ith an appropriation or proceeds of bonds
issued by the State of Minnesota (the "State Bonds"). Upon such
replacement, the term "City Bonds" herein shall be deemed to include the
"State Bonds".
X. CH,ARITABLE CONTRIBUTIONS:
The Team, or its charitable foundation, will on the Commencement Date and
annually thereafter make annua] contributions to existing local organizations that
promote youth programs in D4innesota, such as the Mariucci Inner Ciry Youth
Hocke�• and ?�4innesota Amateur Hockec Association (MAHA).
XL MISCELLA.'�EOUS:
A. Upon the grant of an NHL franchise to the Team, the parties shall commence
ne;otiations of a definitive Lease agreement based on this Term Sheet
("L.ease"). If a definitive Lease has not been executed by March 15, 1998, any
outstanding issues (except failure of the parties to agree pursuant to Section
• XI-H) shall be submitted to binding arbitration upon the request of the City
or the Team by a panel of three independent persons familiar with the
operations and economics of sports facilities or municipal operations and
finance. One panelist shall be chosen by the Team. The second panelist shall
be chosen by the City, and the third panelist shall be chosen by the other two
panelists. Such panel shall ha��e the right to make a decision solely on the
issue or issues in dispute but shall not have the power to alter the terms
agreed upon by the parties herein or hear or determine any dispute over (i)
the terms or conditions which may be agreed to in the future in the
negotiations over the Lease, or (ii) the failure of the parties to agree pursuant
to Paragraph XI-H or VIII-B.
B. The Team will maintain its membership in good standing in the NHL
throughout the Lease Term.
C. The Lease will contain such other terms and conditions (insurance, damage
and destruction, indemnification, financial statements, securaty, scheduling,
force majeure, events of default, remedies, miscellaneous, etc.) as are
customary in the industry, reasonable, or otherwise agreed to by the City,
Authority and Team. Notwithstanding the foregoing, the Team shail agree to
�J
3S096E.9
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• pay liquldated damages in the e��ent of a breach of its covenant (a) to operate
exclusively at the Iv'ew Arena during the first ten years of the I.ease Term as
pro��ided in Paragraph IV hereof, or (b) after the first ten years of the Lease
Term, to pap the City and State the amounts specified in Paragraph IV hereof
in the event it relocates the Team, in an amount equal to: (x) the unpaid
principal balance of the outstanding City Bonds (inciuding any related
premium or early retirement penalty assocaated with prepayment), (y) the
amount of money expended by the Ciry and the Authoriry for construction
cost o��erruns, land acquisition, off-site infrastructure, demolition and other
actua] out of pocket costs incurred by the City and the Authority in connection
with the New Arena, and (z) interest from tbe date of expenditure of the
amounts identified in clause (y) at a rate of interest of seven percent per
annum. Additionall}�, disputes beta�een the parties under ihe J_,ease R�ill be
��enued esdusively in Ramsey Counry, Minnesota.
D. No term of the Lease shali impair the tax exempt status of outstanding bonds
issued ��ith respect to the Ci��ic Center Compler,, and if any term herein
should ha�e that effect, it shall be deemed modified to the e�rtent required to
eliminate such effect as long as such modifications remain consistent with the
intent of this Term Sheet.
E. If al] or a portion of the City Bonds are issued as tax exempt bonds, the Team
• and the Cin� shall make such reasonable modifications to the Term Sheet as
are appropriate to facilitate and not impair such exemption. In order to
accommodate the construction of the New Arena, without advertisement for
bids, the Team and the City shall make such reasonable modifications to the
Term Sheet as necessare to take advantage of any exemption to competit9ve
bidding, which modifications may include the lessor under the L.ease being a
nonprofit corporation, as long as such modifications remain consistent with the
intent of this Tertn Sheet.
F. The Team and the City agree that the provisions of this Term Sheet are
subject to all federal, state and loca] laws, rules, regulations or ordinances.
G. A binding letter of intent in substantialiy the form attached hereto as F�hibit
A shall be promptly executed by the City, Authority and Team.
H. The Team and the City shall collaborate in good faith on the design,
construction, finance and operation of a new p7actice facility or the necessary
improvements to an existing facility to be converted into a practice facility for
the Team containing the necessary facilities for an NHL practice facility which
shal] be open for use by the public when not being used by the Team.
�
3509569 1 Q
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:�'othin, herein shall be construed as a guarantee of City financial assistance
� for the practice facility.
I. The Team shall make the New Arena a��ailable for lease to the Minnesota
State Hieh Schoo] I.eawe (MSHSL) in order that the MSHSL shall be able
to continue to conduct state high school tournaments as they have been
conducted in the past, includine girls volley ball, girls danceline, boys a�restling,
boys hocke}� and boys basketball. The MSHSL shall be able to conduct the
tournaments and receive the same revenue streams, and subject to agreement,
any new re��enue streams, and pay the npes of expenses in the same
categories that are cunently in effect.
3. The Team shal] make the '�Tew Arena aeailable, subject to scheduling of other
events, to the City or its designee for presentation of up to five (5) events per
year not to e�ceed 10 da}•s, including time for set up and break down (the
"Ciry E�ents"). Such e��ents shall be of "community or non-commercial
nature" and neither the City nor its designee shall be required to pay rent to
the Team for use of the \Tew Arena for said event(s). However, the City or
its designee shall be required to reimburse the Team for all applicable out-of-
pocket expenses, incurred in connection with the event(s). The City shall be
entitled to �0 percent of any re��enues derived in the New Arena from the Cirv
Events. "
i K. Any contracts or agreements entered into by the Team which generate Team
Arena Revenues or any agreements a�th respect to operations at the New
Arena shall, unless such contracts or agreements were approved prior to their
execution by the City, contain a clause that such contracts or agreements are
immediatelp terminable by the City at its option upon e�iration or
termination of the L,ease.
L. The Team agrees that throughout the term of the L.ease, un]ess the City
othenvise consents in a�riting, which consent the City agrees will not be
unreasonably R�ithheld (a} will be the sole general
partner of the team, and (b) Robert O. Naegele, Jr. will control the general
partner.
M. The Authority or the City will use its best efforts to provide the Team up to
10,000 square feet of office space commencing on a date as necessary to meet
the Team's needs and continuing through the completion date of the New
Arena. The Team shall pay rent equal to all utility, any build out costs, and
all other out-of-pocket costs of the Authority or the City.
• 350a66.9 11
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�
EXHIBIT A
BINDI'�G LETTER OF INT'ENT
This Binding I,etter of Intent is entered into this day of _, 1997, by and
amon� the City of St. Paul, Minnesota ("Ciry"), St. Paul Civic Center Authority ("Authority"),
Housing and Redevelopment Authorin� of the City of Saint Paul, Minnesota (the "HRA").
and , a Minnesota limited partnership ("Team")
(collectively "the Parties").
The City, Authorin�, HRA, and Team agree to the terms in the attached Amended
and Restated Term Sheet for St. Paul Ci�ric Center Arena dated May 28 1997 (the "Term
Sheet") and agree that the terms set forth in the Term Sheet wil] be incorporated into a
definitive lease agreement ("L,ease") among the Pariies. The Citt=, Authority, HRA, and
Team aQree that the Term Sheet reflects the basic business deal among the parties, and is
intended to be binding on the Parties, their respective assigns and successors and that they
��ill in good faith negotiate the terms of the Lease consistent with the terms set forth in the
Term Sheet.
The Cin�, Authority, HRA, and Team each represent that the execution and delivery
of this Binding L,etter of Intent and the Term Sheet and the performance and observance
of the terms of this Binding Letter of Intent and the Term Sheet have been duly authorized
. by all necessary action on the part of the City, Authoriry, HRA, and Team respectively.
.
This Binding Letter of Intent shall automatically terminate and be of no effect if (a)
the National Hockey I,eague does not announce the award of an e�cpansion franchise to the
Team during its next round of expansion or approve this Term Sheet on or before 3uly 11,
1997 or (b) the Team's or City's contribution contemplated by Section IX(A) shaii not be
available at the time and in the form provided in Paragraph IX(B).
3509ot.o
9'1-CTlS
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The Parties hereb}• execute this Binding L.etter of Intent as of the date first written
abo��e.
CITY OF ST. PAUL, MINi�'ESOTA
Bv:
Title: Mavor
•
Appro�•ed as to Form:
Citv Attornev
Title: Director, Office of Financial Sen�ces
Bv:
Title: Director of Planning and Economic
Development
ST. PAUL CIVIC CEN'I'ER AUTHORITY
Title: Chair
F�ecutive Director
•
35po5Ci9
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i
HOL�SI�G A.'�D REAEVELOPMENT AUTHORITY
OF THE CITY OF SAI?vTT PAUL, MINNESaTA
Title: Chair
By:
Title: Secretarv
B�•:
Title: Executive Director
Title: Director, Office of Financial Services
A LIMITED
•
PART:'�ERSHIP
By: , a Minnesota limited
liability company, its general partner
By:
Title: Robert O. I�aegele, Jr.
Managing Member
•
iS�'� 0
•
A.�1E'��ED �'�'D RESTATED
TERM SHEET
Dated A'Ia�� 28. 1997.
for the Lease of the
� n d.�s cc r�a�
� �� a�
NEW ST. PAUL CIVIC CENTER AREf�'A ('NEW AREI�'A")
•
I.
II.
III
IV
OW?�ER'S AGE\T w�ill be the Saint Paul Civic Center Authority ("Authority"), and
OVJtiER will be the City of Saint Paul ("Ciry'�.
TE'��\T ��11 be the '�HL eap�nsion team to be oc�ned by
("Teani'}.
LEASED PRE?�4ISES �ill be the New Arena, including all furniture, fixtures and
equipment necessary for the pla} of all h'HL home regular season, pla}�off, All-
Star and other NHL-sanctioned home games and any ?�THL e�ibition games pia}=ed
at the New Arena ("NHL Games"), and any other arena events as contemplated
below.
TERM OF LEASE
The term of the L.ease shall commence thirty days prior to the first Tv'HL Game of
the regular NHL �se� season which follows the date of substantial completion of
the New Arena (the °Commencement Date" which if an NHL franchise is Qranted
to the Team to nlav in the 1999-2000 I�HL season, is anticipated to be approximately
September 1, 1999) and will continue from that date for the later of twenty (20) years
or the final maturity stated date of the City Bonds, but not longer than 25 years (the
"Lease Term"). The Team will have the option to extend the Lease Term for two
five (5) year periods. Any such e�ension shall be a part of the Lease Term. The
Team will lease the New Arena for the purpose of playing all of its NHL home
Games and w�ill not relocate the Team from the Arena during the Lease Term;
provided, that the Team shali have the right after the first ten years of the Lease
Term to terminate the lease by paying the Ciry ��a •��m� an amount required to
discharge the outstanding Ciry Bonds , including any
related premium or early retirement penalty associated with pre-payment). Upon
_L�S
• 3509GSRed
pa co Cb. OS?69'
Q1-G4S
•
C�
V.
pa�•ment of said amount and pa� of all other accrued liabilities under the L,ease.
the Team may terminate the I.ease.
ARE'_v'A REVE'�"[rES AI�TI7 E}:PEi�SES
A. Team Re�•enues. T'he Team will control and retain 100% of revenues deri<<ed
from all e�•ents at the \ew Arena (such e��ents "Arena Events" and such
re��enues "Team Arena Revenues"), except as otherckzse provided in
Paragraphs V-B and XI-3 hereof and except as pro��ided «�th users of the
New Arena, and 100% of the revenues derived from other operations`outside
of the \eR• �rena ("Team Revenues"). Team Arena Revenues and Team
Re��enues include the following:
1.
�
3.
4.
sa]es of tickets for rlrena Events
sales of tickets for club seats for Arena Eeents
sales of luxury suites for Arena Events
\ew Arena's share of all concession revenues and pa}ments
5. all (permanent and temporary} advertising and promotional revenues
(includine namino rights, fixed signage, dasher boards, on-ice
advertising, ��deo boards) at the ?��ew Arena
6. merchandisin� re��enues zealized from sales at Arena Events and at all
other times at the Team's retail stores at the New Arena and
elsewhere
7
8.
�
10.
publication revenues realized at Arena Events and at all other times
at the Team's retail stores at the New Arena and elsewhere
broadcast, merchandising and other revenues received by the Team
from the NHL
revenues from local broadcasts of Arena Events (e.g., local TV, cable
and radio)
all other revenues derived from operations of the New Arena and the
Team s business outside of the Arena
pro��ided, that the City and the Authority make no representations or
warranties about the leve] of any such revenues; or the availability of any
• 35WSERed
Y9 m YE. 0>.26'9i �
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re��enue sources other than from the New Arena. The Team's ri2ht to all
• Team Arena Revenues accruing after the ea or termination of the
Lease shal] cease upon such e� or termination of the L,ease.
Team Arena Re� and Team Re��enues do not include the amounts to be
received by the City from the Team as described in paragraph B below, and any taxes of
general applicability.
In addition, the City shall pay the Team a sum equal to (a) r.et parking revenues
derived from event parking at the time of fiHL Games from the existing 1730 spaces in che
Ci��ic Center Ramp and the 430 spaces in the Ci��c Center E�ibit Hali underground ramp,
(b} net parking rerenues for event parking receiced by the City at the time of NHL Games
derived from approximately� 235 surface parkine spaces in the "Cleveland Circle" and "Se��en
Corners" surface parkinJ lots, and (c) any net parking revenues for event parking recei��ed
by the Ciry at the time of '�HL Games from surface parking on parcels contiguous to the
�ec� Arena if and to the e� actuall}• ocened or controlled by the C;n durina the Lease
Term. In the e��ent the lots in clause (b) become una��ailable for event parking during i�HL
Games due to sale of property, canceliation of aQreements w�ith current property owners, or
development on site(s), the City shall negotiate in �ood faith to replace that parking
avai]abi]irn and the resultin2 amounts the Team receives for event parking during NHL
Games with other land a��ailable for surface parking contiguous to the :v'ew Arena. The City
and the Authority make no representations or warranties about the level of any such
revenues.
• B. Citt� Arena Revenues. The Team shall pay the Ciry (a) �385,000 per year in
consideration of the advertising revenue from the two replacements of the one
e�sting outdoor marquee (as pro��ided in Paragraph VII-A including the 5%
annual escalation) regardless of actual advertising revenue received by the
Team and (b) the Ticket Surcharge imposed by the City as described in C
below.
C. Team Arena Expenses. Eaccept as e�ressly provided for in paragraph E
hereof, the Team will pay for: (1) 100% of the management, operation and
maintenance expenses incurred for Arena Events and otherwise in connection
with the New Arena, it being the intention of the parties that the L,ease be
absolutely "net" to the Cit�� and the Authoriry, except as expressly provided for
in this Term Sheet, (2) the costs of capital repair and replacement as
described in subparagraph (D) below, and (3) any required collections of
(a) generally appiicable sales taees, (b) any other state or city imposed t�es
or assessments, and (c} a facility ticket surcharge or other similar tax or fee
imposed by the Ciry or Authoriry (the "Ticket Surcharge") not to exceed �}
1�.50 per ticket for Arena Events for the first five years of the L.ease Term,
w�ith cumulative increases in the Ticket Surcharge not to exceed $.50 over each
• 3509iF.Re2 1
\'Y �c \'6. Ot ;[.'9" J
a�-cns
successi�•e fi�•e }•ear period thereafter, except as may be mutually agreed to b}�
• the Cin� and Team, prorided that if the Ticket Surcharge does not raise at
least �} $2100.000 (the "SurcharQe Base") in any }'ear of the Lease
Term, then the City shall ha��e the right to increase the Ticket Surcharge for
the follow�no ��ear to that amount necessary to raise , , e�-}ea� the
Surcharae Base (the "Emergency Increase"). The Team and the City will keep
each other ad��ised durin� the year as to the estimated receipts from the
Ticket Surcharge and the Cit�� will pro�lde the Team wricten notice of anv
decision to increase the Ticket Surcharge; pro��ided further, that the Citt�
agrees not to increase the Ticket Surcharge during the h'HL Hockey season.
The Ciry Rill agree to repeal any Emergency Increase in the Ticket Surcharee
made under this para�raph when the City has reasonable assurances that the
lower Ticket Surcharge a-ili generate at least �888 the Surchar2e Base
per year. The timing and mechanism for any Emergency Increase shall be
provided for in more detail in the Lease. The City w�ill use the increased
portion (becond the Emzroency Increase} of the Ticket Surcharge to pro��ide
direct or indirect benefit to the Iv'ew Arena, Wilkins Auditorium, or
D. Ca ital Repairs. Replacements and Imvrovements. The Team shall manage,
• operate and maintain all aspects of the New Azena consistent with
comparable :�'HL facilities, inciuding making all capital repairs, zeplacements
and improvements as and when the Team and the City reasonably deem
necessarq, all at che e�ense of the Team, except as eapressly provided in
paragraph E below, and consistent with any requirements as set forth in the
L,ease to be negotiated in eood faith among the Team, Ciry and Authority
("L,ease"). The Team and the Authoriry shall create a capital replacement
repair and reserve fund ("Arena Reserve Fund") and to be funded by the
Team and spent accordin� to the terms of the Lease. The monevs in the
Arena Resen�e Fund shall be the properry of the Team during the I.ease
Term; provided that moneys remaining in the Arena Reserve Fund at the end
of the Lease Term shall be the property of the City. The Team's annual
contribution to the Arena Reserve Fund shall be (a) $250,000 for the fourth
and fifth years of the Lease Term, (b) $500,000 in the sixth year, and (c)
commencing in the seventh and in each year thereafter an amount equal to
$500,000, to be escalated annual}y commencing in the seventh year at the rate
of inflation during the preceding year.
The contributions shall be payable by the Team at the beginning of the
applicable year of the Lease Term. To the extent the money in the Arena
• 35096fiRcd A
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a�-��s
Resen�e Fund is insufficient, the Team shall have the obligation to pay for
• cagital repairs and replacements, except as e�pressly prov�ded in paraQraph
E hereof.
E. Ciri� Contribution to ReDair and Re placement Afcer Citv Bonds are Paid
�Vhen the Cin� Bonds are paid or defeased, the City shall continue to receiee
100% of the Ticket Surcharge. The City agrees to provide matching funding
(to be held in a separate City accountj for necessary capital repairs and
replacements in the following manner:
(1) If the Ticket Surcharge has not been increased since the
commencement of the L.ease Term, the City shall make available
durina the calendar year, on a one-to-one matching basis a�ith the
expenditures made out of the Arena Reserve Fund or otherc�7se bv the
Team durino such year the full amount of the Ticket Surcharge up to
S1.4 miilion.� These funds shali only be available during the calendar
year, and anv unmatched and unspent funds shall revert to the City for
uses «�hich pro�ide direct or indirect benefit to the I�'ew Arena,
Com�ention Center, or Wilkins Auditorium.
(2) lf the Ticket Surcharge has been increased during the Lease Term,
then the Cin� shall make available on a one-to-one matching basis alth
• the ea�penditures made out of the Arena Reserve Fund or otherwise by
the Team during such year, an amount equal to the $1.4 million
inflated annually beginning in the seventh year in an identical manner
to the escalation of the Team's contribution to the Arena Reserve
Fund (the "Escalated Contribution").
In no event shail the annual match by the City exceed the actual revenue
derived from the Ticket Surcharge. The Team shall provide the Ciry written
e«dence of the pay�nent of e�enditures made by the Team prior to the Ciry
making the matching contribution contemplated by this paragraph V available
to the Team.
In any event, notwithstanding the City's annual match under paragraph E
hereof, the Team remains responsible for the payment of and contracting for,
in accordance with law, all necessary repairs and replacements to the �`ew
Arena.
F. iv�amin¢ Ri¢hts — Citv Approval. The Ciry has the right to reasonably
approve the recipient of the naming rights for the New Arena which rights
shall be granted for no ]onger than the Lease Term.
• ?�uvsa.A�a $
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VI. :�'EW AREl�A C0�4D4ITD4E;��I'S:
i The Authorirn and Ciry belie��e that the New Arena is and �zli be on the
Commencement Date free of all contractual obligations relating to New Arena
operations kzth third parties, a�hich include advenising and concessions, other than
contractual scheduling commitments for certain events and the existing agreement
�;�ith Ticket R4aster'�4innesota dated November 5, 199�. The Team has the right to
select and contract azth all parties pro�lding products or sen�ices for the IVew �ena
(includin� the concessionaire), to determine product selection and the service to be
pro��ided by such contracting parties, and to receive all revenues and payments from
such parties. The Team shall also have the opportuniry to participate in the selection
process for the parking lot operator at set renewai periods. The City and the
Authority cr111 work �zth the Team to facilitate the Team's financiai and operational
interests in the parl:ing a��ailable for I�HL Games at the ramps and lots described in
Paraoraph V-A hereof.
VII. ADVERTISING
A, The Team shall have the exclusive right to sell and control the advertising on
the outdoor marquees (referred to in Paragraph V-B abo��e). In consideration
thereof the Team sha11 pay to the Authority or the City �385,000 annually,
beginning on the Commencement Date, with an escalation of 5% annually
� thereafter beeinning in the second year of the Lease Term. This obligation
shall be due and ow�inQ by the Team regardless of the amount of such
advertising revenue. �
B. The Team shall have the exclusive right to sell and control all other
advertising and promotion rights for the Iv�ew Arena and retain all revenues
received from such sales. The Team shall use its best efforts to promote
attendance at events in the New Arena. Additionally, the Team shall use its
best efforts to coordinate acti�lties in the New Arena with activities in the
Ci�zc Center complex.
C. This Term Sheet and the Lease shall not affect the rights of the City and
Authority with respect to advertising in other areas of the St. Paul Civic
Center Camplex (e.g., Wilkins Auditorium or new Convention Center).
i 3�096CR�d 6
�'9 ic \'f. Oi:S'99
a�-��.s
•
VIII. :�EW ARE;�,� DESIG\ A.'�D CO'�'STRUCTION
�. c..�.: ,.. .�,e r i t ,� l
- �- . r
h:�iA' ..A ..�: 1 �A 1' C t l.
� r ,- The Team
will contract for the desi¢n and construction of the New Arena without the
es edites the construcrion schedule. Immediately upon the aa�ard of an NHL
franchise if it occurs prior to July 11, 1997, the Team shall commence the
design and construction of the New Arena in Saint Paui, and if the Team is
�ranted a franchise to rla� in the 1999-Z000 NHL Season such construction
shall be substantially completed by September 1, 1999. Subject to clause (B)
below, the \ew Arena shall be a first class facility consistent in quality with
ofher current arenas recently constructed for use by nTHL teams, and is
expected to consist of the folloa�ng major design elements:
L�
1.
�
Appro�mate]y 6�o.000 square feet.
appro�mately 2,�00 club seats.
appro:�mately 7�0 to 1000 seats in luxury suites.
3.
4.
5.
6.
7.
8.
9.
10.
A capacit�� of appro�mately 19,000 seats for hockey, including:
(a)
(b)
A finished club restaurant and bar.
Finished team retail stores and team offices.
Video scoreboard(s) with advertising panels.
Two or more new outdoor electzanic marquees.
Finished locker rooms and related training rooms and offices.
Finished concessions and novelty stands.
L.andscaping.
All necessary furniture, fixtures and equipment.
B. The Team, City and Authority shall mutually agree on the conceptual design
for the New Arena by 3� A�u�ust 1, 1947. There will be a design team that
will include two representatives from the City and one representative from the
Authority in addition to representatives from the Team. If no agreement is
• 35MCSRed
�'9 a �'F. 05:1.'9' �
�� -��s
reached the Team shall haae the right to make final design decisions, which
• the Team a;rees to make on a timely basis. \'o material changes mav be
made in the conceptual design by the Team, �s the approval of the City,
except as required by the project budget of approximately �,130,000,000. In
such event. the City, Authority and Team shall aeree to value engineer the
1�'ew Arena project on a timely basis to reduce its costs. If no agreement on
the value en;ineering can be reached, the Team shall have the right to make
final design decisions, subject to the spirit of the Conceptual Design and
project budQet constraints.
C. Contingent on recei«ng the funds from the ����-� City under the Plan of
Finance, the Team shall bear all the costs of the New Arena, including design,
construction, finance, cost ovenuns and demolition of the existing arena. The
City shall bear the costs of the costs of acquisition or off-site infrastructure
improvements. The Cicy and the Team aeree to consider alternate
construction methods � ma�� reduce project costs and expedite project
schedule. The Ciry agrees to coordinate and help expedite all permits needed
for the construction of the New Arena. In the event the ensts nf rhP NPw
IX. PLAN OF FI:��A.�CE:
• A. The New Arena shall be financed through the following funds: (1) ���� �'��
" " _ $35 million from the
- �
Team�3} in the form of cash, cash eouivalent or an irrevocable letter of
$30 million from the City ���°��e�} or its
nent avthoritv plus the cost of land and off-site
from the Citv
bids.
' �• - - - - - - - -
= --- -----_ -: --- --: -- �a
acceptable to the
by a
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• TA �P_� r=��«-� r-�:��� � Team and the Citv in order to accommodate
- r -r-. _�.......�....
the lettin2 of the necessan° desiea and construcrion contracts. The Team and
1998.
C.
X. CHARITABLE CO\'TRIBUTIONS:
The Team, or its charitable foundation, ��iil on the Commencement Date and
annually thereafter make annual contributions to existing local organizations that
promote youth programs in ?�4innesota, such as the Mariucci Inner Ciry Youth
Hockey and Minnesota Amateur Hockey Association (MAHA).
XI. MISCELLANEOLS:
• A. Upon the grant of an NHL franchise to the Team, the parties shall commence
negotiations of a definitive L,ease agreement based on this Term Sheet
("Lzase"). If a definitive L.ease has not been executed by March 15, 1998, any
outstanding issues (except failure of the parties to agree pursuant to Section
XI-H) shall be submitted to binding arbitration upon the request of the City
or the Team by a panel of three independent persons familiar with the
operations and economics of sports facilities or municipal operations and
finance. One panelist shall be chosen by the Team. The second panelist shall
be chosen by the City, and the third panelist shall be chosen by the other two
panelists. Such panel shall have the right to make a decision solely on the
issue or issues in dispute but shall not have the power to alter the terms
agreed upon by the parties herein or hear or determine any dispute over (i)
the terms or conditions which may be agreed to in the future in the
negotiations over the Lease, or (ii) the faIlure of the parties to agree pursuant
to Paragraph XI-H or VIII-B.
B. The Team a�ll maintain its membership in good standing in the NHL
throughout the Lease Term.
• 3SW6F.Rcd
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a� -c�s
C. The Lease « contain such other terms and conditions (insurance, damage
• and destruction, indemnification, financial statements, security, scheduling.
force majeure, e��ents of default remedies, miscellaneous, etc.) as are
customary in the industn�, reasonable, or otherwise agreed to by the Cin,
Authority and Team. ;�otcc�ithstanding the foregoing, the Team shall agree to
pay liquidated damaQes in the event of a breach of its covenant (a) to operate
exclusiaely at tbe New Arena during the first ten years of the Lease Term as
pro��ided in Paragraph IV hereof, or (b) after the first ten years of the Lease
Term, to pay the City and State the amounts specified in Paragraph I�' hereof
in the e�•ent it relocates the Team, in an amount equal to: (x) the unpaid
principal balance of the outstanding Ciry Bonds ^^ a ����-�;(includin� any
related premium or earl�� retirement penalty associated with prepa}rznent), (y}
the amount of money expended by the City and the Authoriry for construction
cost o��erruns, land acquisition, off-site infrastructure, demolition and other
actual out of pocket costs incurred by the Ciry and the Authorin� in connection
ulth thz \ew Arena, and (z) interest from the date of ea�penditure of the
amounts identified in clause (y) at a rate of interest of seven percent per
annum. Additionaily, disputes between the parties under the L,ease will be
venued exclusively in Ramsey County, Minnesota.
D. No rerm of the L,ease shall impair the tax exempt status of outstanding bonds
issued u�ith respect to the Civic Center Complex, and if any term herein
should have that effect, it shall be deemed modified to the extent required to
• eliminate such effect as lona as such modifications remain consi�tent with thP
intent oF this Term Sheet.
E. If all or a portion of the Ciry $onds ^- °a����, are issued as ta�c exempt
bonds, the Team and the City shall make such reasonable modifications to the
Term Sheet as are appropriate to facilitate and not impair such exemvtion.
F
G. A binding ]etter of intent in substantially the form attached hereto as F�hibit
A shall be promptly executed by the City, Authority and Team.
• 350WSRW 1�
ti'9 io �'F, OS ^i:9i
The Team and the City agree that the provisions of this Term Sheet are
subject to all federal, state and local laws, rules, regulations or ordinances.
q�-Ln5
H. The Team and the Cin� shall collaborate in �ood faith on the desi;n.
• construction. finance and operation of a new practice facility or the necessarv
improvements to an e3asting facility to be converted into a practice facilin- for
the Team containing the necessary facilities for an NHL practice facility a
shal] be open for use by the public when not being used by the Team.
Nothine herein shall be construed as a guarantee of Ciry financial assistance
for the practice facility.
I. The Team shall make the I�Tew Arena available for lease to the Minnesota
State High School League (MSHSL) in order that the MSHSL shall be abie
to continue to conduct state high school tournaments as they have been
conducted in the past, including girls volley ball, eirls danceline, boys wrestlinQ,
boys hockey and bops basketball. The MSHSL shall be able to conduct the
tournaments and receive the same revenue streams, and subject to agreement,
any ne«� re��enue streams, and pay the types of expenses in the same
careQories that are currently in effect.
J. The Team shall make the '�'ew Arena available, subject to scheduling of other
events, to the City or its designee for presentation of up to five (5) events per
year not to exceed 10 dacs, including time for set up and break down (the
"Ciry Events"). Such ecents shall be of "community or non-commercial
nature" and neither the City nor its designee shall be required to pay rent to
the Team for use of the \'ew ?,rena for said event(s). However, the City or
• its designee shall be required to reimburse the Team for all applicable out-of-
pocket expenses, incurred in connection with the event(s). The City shall be
entitled to 50 percent of any revenues derived in the New Arena from the City
Evenfs.
K. A.ny contracts or agreements entered into by the Team which generate Team
Arena Revenues or any agreements with respect to operations at the New
Arena shall, unless such contracts or agreements were approved prior to their
execution by the City, contain a clause that such contracts or agreements are
immediately terminable by the City at its option upon expiration or
termination of the Lease.
L. The Team agees that throughout the term of the Lease, unless the City
othera�ise consents in writing, which consent the City agrees will not be
unreasonably withhe]d (a) will be the sole general
partner of the team, and (b) Robezt O. Naegele, Jr. will control the general
partner.
M.
• 35096.CRea 11
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• r�rena. ine ieam snatt nav ren[ eouat to al! utilitv anv t
a33 other out-of-nocket costs of the Authoritv or the Cite.
�
• 35096ER<d
�'9co�'E 059G9'1 12
9 � -L�1 S
EXHIBIT A
i
BL'vDI?v'G LETTER OF INTEi�T
This Bandine Letter of Intent is entered into this day af _, 1997, by and
amono the City of St. Paul. 'vlinnesota ("City"), St. Paul Ci��c Center Authoriry ("Authori� "),
and . a Minnesota limited partnership
(collectively "the Parties").
The City, Authorin�. HRA, and Team a2ree to the terms in the attached Amended
and Restated Term Sheet for St. Paul Ci� Center Arena dated May �28, 1497 (the "Term
Sheet") and agree that the terms set forth in the Term Sheet will be incorporated into a
definiti��e lease agreement ("L�ase") among the Parties. The Ciry, Authority, HRA, and
Team agree that the Term Sheei reflects the basic business deal among the parties, and is
intended to be bindina on che Parties. cheir respectice assiQns and sueeessors and that the��
c�i11 in 000d faith neQotiate the terms of the Lease consistent with the terms set forth in the
Term Sheet.
The Ciri�, Authoritt�. � and Team each represent that the execution and delivery
of this Binding Letter of Intent and the Term Sheet and the performance and obsen�ance
of the terms of this BindinQ Letter of Intent and the Terzn Sheet have been duly authorized
by all necessary action on the part of the City, Authority, HRA, and Team respectively.
• This Binding Lxtter of Intent shall automatically terminate and be of no effect if e(a}
. -,
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r � _ _ '_
t , , the Iv`ational Hockey
L.eaQue does not g� announce the award of an eacpansion franchise to the Team during
its next round of expansion or approve this Term Sheet on or before 3uly 11, 1997 or ��b
the Team's or Citv's contribution contemplated by Seciion IX(A) shall not be available at
the time and in the form provided in Paragraph IX-��B .
• �5096.CRcC
\'9�0 \'b. 059F'99
9'1-G�IS
The Parties hereb� execute this Binding Letter of Intent as of the date first �Titten
•
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abo��e.
approved as to Form:
City Attorney
39p96SRcd
V9 w VA, OS:�C57
CITY OF ST. PAUL, MINNBSOTA
By:
Title: Mavor
Title: Director, Office of Financial Services
Title: Director of Planning and Economic
Development
ST. PAUL CIVIC CENTER AUTHORITY
Title: Chair
By:
Title: Executive Director
�' � -G�tS
�
�
, A LIMITED
PARTNERSHIP
By: , a Minnesota limited
liabIlity compaz�y, its general partner
B
Title: Robert O. Naegele, Jr.
Managing Member
. �t0?eSReE
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•
CITY OF SAINT PAUL
Norm Coleman, M¢yor
TO: Council President Dave Thune
Councilmember Dan Bostrom
Councilmember Jerry Blakey
Councilmember 7oe Coilins
Councilmember Mike Harris
Councilmember Roberta Megard
Councilmember Gladys Morton
390 Ciry HaU
I S West Ke!logg Boulevard
Sairtt Paul, Minnesota 55102
FROM: Mayor Norm Coleman�
DATE: May 28, 1997
RE: Interim Arena Financing Plan for NHL Hockey
7'e(ephone: (6I2) 266-8510
Facsimile: (612J 266-8513
Attached are briefing materials which set forth a proposed interim financing plan to
allow the City to proceed with the effort to obtain an NHL franchise. This financing
plan identifies revenue sources which will allows us to assure the NHL that the team
will play in a new state-of-the-art arena which, as a community facility, will benefit the
entire City and State and enhance our urban vitality. Given Governor Carlson's
commitment to support a$65 million bonding appropriation next year for the new
arena, there is little risk that this interim financing plan would ever have to be
implemented.
The NHL expansion committee will act on June 4th. We need to have City action and
approval of this plan as soon as possibie to accommodate this deadline.
Thank you for consideration.
Enclosures
u
a �-��5
• AN NHL HOCKEY FRANCHISE FOR SAINT PAUL:
INTERIM CITY FINANCING PLAN POR
STATE'S $65 MII.LION COMMITMENT
On May 27, 1997, Governor Carlson reiterated his commitment to support $65 million of state
bonding for renovating the Saint Paul Civic Center during the 19981egislative session. On May 6,
1997, Governor Carlson provided NHL Commissioner Bettman a similar written commitment.
(See attachment 1.) The Govemor's ability to influence the composition of any bonding bill,
leaves little risk that the Governor will not be successful in fulfilling this commitment.
The $65 million in state funds will not become available until after the 19981egislative session.
In order to be awarded an expansion franchise on June 4, 1997, Saint Paul needs to demonstrate
to the NHL that it has a legally binding financing plan in place to constnxct the new $130 million
arena. The Team's existing $35 million commitment is lega(ly binding and secure as is the City's
$30 million commitment What must be done now is to demonstrate a legally bindin�
commitment to the State's $6.5 million which wili not become avai]able until Summer, 1998.
To accomplish the legally bindin� commitment for the State's $65 million, the City has identified
approximately $65 million of future revenue that could become available if the worst, but very
unlikely, case occurred and the State provided no fundin�. These revenue sources provide the
necessary interim financin� plan necessary to obtain an NI�, franchise. This interim financing plan
(see attachment 2):
• 0 Does not involve the use of p�operty tax dolSars or take money from
neighborhoods.
0 Utilizes $44.5 million of additional City's sales tax bonding authority to help
provide the interim financin� for the arena nnd to increase the amount auailable for
the City's nei�hborhoods throu�h an extension of the sales tax for an additional six
years to 2029 .
0 With the Team's agreement, increases the ticket surcharge the effect of which is
to increase City revenue and reduce Team revenue. This is in addition to the
Team's commitment (a) of $35 million for the new arena and (b) the additional
$80 miliion that the team will have to spend once it is awarded a franchise.
In addition to the $65 million of revenue identified, the plan contemplates potential
commitments the labor and business community are pursuing to financially
contribute to the interim financin� plan as part of a partnership that recognizes the
si�nificant economic and social benefits that NHI, Hockey will bring to Saint Paul.
Adoptin� this interim financin� plan by approving a revised term sheet (forthcoming) will bring to
Saint Paul millions of dollars of investment and spendin�, hundreds of jobs, and inereased urban
vitality.
•
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6122283z61
ST'ATE O�' �I�TN�SOTd.
QFPIOE OF TH$ GOV'E7f2N08
SAINT P,A,ZTL � 551•i�i
' 812-289-3393
a�� n. c��R
C.0
May 6, ] 997
Deaz Commissioner Bettman:
P.B2i02
�7� L�S
Ic is with a great deal of pleasure that I wtitc to inform you that the State of Minnesota
will paztner in Saint Paul's efforts to attract an NHT, fianchise back to Minnesota.
•
To demonstrate the State's partnership with the Ciry of Saint Paul and the tocal
ownership group, ! will subtnit a Proposat in th: 1998 bonding bilI to sccurc $65
miUion as the State's portion of tbe construction costs of a new arena. I have
inekrucced top members of my staff to wntinue to work with City staff and the Mayor
to develop the bonding bill proposal for presentation to the 1993 Legislacure.
Tl�c Statc'a commitmcnt, couplcd with dtt ownrrship group conCibution aud thc local
share offered hy the City of Saint Paul, will allow for the aonst�uction of a state-of-
the-art, N(-IL quality areaa to be ready for season pfay in 1499. The members of the
NHL Boazd of Governo:s should feel quite confident that The State of Minnesota, thc
ownership group and the City of Saint Paul will build a new arena to be ready for
seasvn play iu 1999.
Please fcel free to contact me if You would like to discuss this matter in more detail.
armesc regazds,
�
A FI. CARLSON
Govemor
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TELEPHONE (6�2i222.7455
FPCSiMRE (6i2� 222-�64<
May 30, 1997
Honorable Mayor and Members of the City Council
City of Saint Paul
IS West Ketlogg Boulevazd
St. Paul, MN 55102
RE: Authority to Issue Sales Tux Bonds
Dear Mayor and Members of the City Council:
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WRITER'S CIRECT Dln� NUMBEs
(612)335-1577
You havc requested this firm's opinion on whether the City may issue up to $65 million
of gener�I obligation bonds undcr the authority of Minnesota Laws 1993, Chapfer 375, Article 9,
Section 46 (the "Sales Tax Law"). For the reasons stated belnw, hut subject to the qualifications
stated below, our conclusion is that the City may do so.
Tn 1993, the Housing tind Redcvclopmcnt Authority of the City of Saint Paul, Minnesota
(the "HRA'� issued $65 million of Sales Ta�c Revenue Bondt to finance improvements to the
Saint Paul Civic Center. In 1995, the HRA issued approximately $55 miltion of advance
refundirtg bonds to defease the entire remaining outstanding amount of the 1993 issue. Both the
1993 and 1995 issues were securcd by a pledge of the revenues of the sales tax imposed under
the Sales Tax Law. That statute st2tes (subd. 2) that revenues derived from the sales tax may be
used only for (a) capital expenses of the Saint Pau] Civic Center {"Civic Center"), or {b) capita]
projects for residential, cultural, commercial and economic development pro}ects in the
downtown or the neighborhoods. Since the 1993 Bonds were issued to finance improvements to
the Civic Center, the pledge of the sales rax revenues to secure those bonds (and the 1995
refunding bonds) was permitted by the Sales Tax Law.
•
��,-��s
Honorable Mayor and
• Member5 of the Cily Council
May 30, 1997
Page 2
Subd. 3 of the Sales Tax Law authori�es the City to issue up to $65 million in general
obligation bonds secured by the sales tax (and other available funds) for the purposes of ciause
2(a) [ Civic Center costs ]. '1'hese bonds may be issued without an elecrion, and do not count
against net debt.
Neither the Salcs Tax Revenue Bonds issued by die HRA in 1993, nor the 1995 refunding
bonds wue general obligation bonds. Instead, the bonds were issued as revenue bonds under the
I3RA's borrowing authority in Minn. Stat. Secs. 469.001 to 469.047, with a pledge of sates tax
revenues as security. 40% of the sales tax was allocated by tfie City to this purpose, with the
remaining 60% allocated to accounts created to hold and disbuzse funds to be used for
neigl�borhood and cultural prujccts.
The Ciry has never used the authority granted in Subd. 3 of the Sales Tax Law to issue up
to $65 million of general obligation bonds. That authority therefore remains available for the
Ciry to use in the proposed issuance of general obligation bonds to fund tha construction of a
ncw azcna, subject to the Tolluwing limitations:
• i. The proceeds of the bonds must be used for capital costs of the Civic Center. No
other use is allowed under the Sa[es 7ax Law.
2. 7']ze new arena must coniinue to be part of the "Civic Center." The exisung arena
is under the same ownership as the rest of the Civic Center complex and funerions
as part of the overall Civic Center facility. In the structure that is currently under
consideration, the new arena will con6nue to be owned by the Ci�7c Center
Authority (CCA), and �rill be leased to the NHL franchisec,' and �vill conunue to
fwiction zu part uf the cvmplex for prograznming purposes. While a reservation of
dates for practice and home games by the hockey teazn would be required, there
must be a cooperative arrangement between CCA and the franchisee to book the
arena for use in connertion with non-hockey events or shows using ttze other parts
of the Civic Center as their venue at umes when the fianchisee is not using the
arena for hockcy purposes. That arrangement need not disturb the economic
arrangements; the franchisee could continue to receive the revenues arising from
use of the uena.
• � A le�se co a non-profit corpora[ion which in tum leues the arena tu thc fra�uhisee woutd also be an acc�ptablc
structure.
�sae�as
• Honorable Mayor and
Members of the City Council
M�y 30, 1997
Page 3
We also wish to point ou[ some other aspects of our conclusion:
° I'1 -1.r15
a. Subd. 3 of the Sales Ta�c law states that the general obligation bonds " may be
paid from or secured by any funds available to the city, including the [ sales tax �..:'
VJhile we believe that the pledge of sales tax ptoceeds must constitute a significant
element of the security of the general obligarion bonds, the Sales Tax law expressly
authorizes the City to pledge other funds as well. The current version of the financing
plan for the new arena mentions several other revenue sources. Mixing other rcvenue
sources with sales taxes to secure the bonds and avoid the need to levy property taxes to
pay the bonds is expressly permitted by the Sales Tax Law.
b. Subd. 3 of the Sales Tax Law further states that the general obligation bonds may
be issued "without election on the question of issuance of the bonds or a property tax to
pay them." The Sales Tax Law therefore overrides conuary provisions of Minnesota
Statutes, Chapter 475 (which otherwise governs assuance of the bonds) or of the Saint
Paul City Charter which might require an election. The resolurion authorizang the bonds
• will not be subject to referendum.
Th9s opinion addresses the spccific question posed to us, and certain ramificarions of our
response. Nothing in this opinion should be understood to mean or imply that bonds may not be
issued for the puiposes of the new arena under other or different 1ega1 authority. The specifics of
sueh other authority aze beyond the scope of this opinion.
Very truly yours,
LEONARD, STREET AND DBINARD
B � � z:(-G. �-�^'�
Richazd H. Martin
Ri-fiM/kl
cc: Timothy Mazx
Joe Reid
Pam Wheelock
Martha T.arson
• Pe� Birk
ISd01a5
MAY-30-97 13=45 FROM=SPRINGS=ED INC 1D:6122233093 PAGE 2/3
!/
•
SS E. SEVEDfIld PLACE SInTE 100
SAII�T PAIII., MN SS701-214i
612-22:•1.000 F�tX:612-2233002
- ` 1 � � 1� S
l._J
.
SPRINGSTED
Pubsc Firrana t3dvisors
May 30, 1997
Mr. Joe Reid, Director of Financiai Services
Cify of Saint Paul
City Fi811
15 West Kellogg Boulevard
Saint Pau(, MN 55102
Ms. Pam Wheelock. Executive Oirector
Saint Paul Housing and Redevetopment Authorily
25 West Fourth Sireet
Saint Paul, MN 55102
Re: Civic Center Arena Financing
Potential Credit Rating Impact
Dear Mr. Reid and Ms. Wheelock:
;^�'
. �
Question:
We have been asked to respond to the quest[on of the potential effect of this financing on the
City's general obligation credit rating.
Discussion_
This financing is ceirrentty proposed to be in two parts: a long-ferm $30.0 million general
obligafion �evenue bond, and a short-tertn (less than 13 months) $65.0 million bond anticipatian
note (BAN}. lt is anticipated the BAN would be financed Iong-term during the 13-month period,
either in whole or in part by the State or by fhe City. This would only occur if the City was
awarded an NHL franchise.
The City currently has general obtigafion credif ratings from Standard & Poor's (SS�P), Moody's
and Fitch of AA+/AA 2/qA+ respectivety. To respond to this quesiion, Springsted and the City's
and HRA's senior management staff had a direct conversation with SEP's analytical sl�ff
assigned to Saint Paul. S&P was cFtosen rather than fhe other fwo rating agencies because
their analyfical sYaff has the longest tenure in working with Sairrt Paul, and also the City and
HRA have used S&P 4o a greater extent on financings than the ofher two agencies.
The purpose of the convecsation was to update S&P on this financing and obtain their reaction
and input, so as to structure the transactions with minimal adverse impact on the City`s rating.
We did not expect a definitive answer as to the status of the rating, but rather their degree of
comfort or discomEort wifh fhe proposed financings and its benefits and costs to the City.
SAQJI PAtlL. MN • M4�7VE1PplIS, MN • EROOIGIEID.`x'1 • O�'ERLN�D PARK.I6 '`x'A9iC�C+iON.00 ' IOWA C17X L�
MAY-30-97 13:45 FROM:SPRINGSTED 3NC ID=6122233093 PAGE 3/3
City of Saint Paul
May 3Q, 1997
Paqe 2
q�-c.�s
• '�he rating agenaes view these transacFions in two ways: first, as add�ionai debt, potentially
guaranteed by a general obligation backing, it wiil increase the debt burden, whicfi is an
adverse impact; and second, the resulting asset can generate economic benefi4s for itseif and
other related activities, which is a positive_ The negative aspect of debt burden can be reduced
'rf the primary revenue sources are reasonaby structured so as to make the possbility of having
to exerase the gerteral obligation ptedge remote.
Mswer:
SS�P made the foliowing commen�.s: based on other arena financing throughout the countrY, if
the primary revenue sources are "reasonably constructed" with suEficiertt room to insulate the
general obtiga5ori piedge and the finanang dces not marKedly commit existing revenues that
are now going to the City's General Fund, the City's present S&P generai obligation ratinq
would be reaffirmed (unchanged). Obviously, a primary revenue stream that is not "reasonably
structured" could lead S&.P to a downgrading of the rating.
Although we have not directly discussed this financing with Moodys and Fitch, we believe their
approacfi would be simila� to SB�P's.
From these discussions, we do not believe tfie issuance of the $30.0 million general obligation
issue and the $65.0 million BAN would, in and of itself, lead to a credit rating downgrading. We
believe that after the Legislature acts on the SYafe's Ievel of participation, then, if necessary, the
C'rty should proc�ed to structure the second transaction so that primary revenue sources are
reaso�ably structured to the Cit�l's and the age�aes' satis(action.
. We would be glad to respond any questia�s as to this subject.
Respeciiully,
� .���-i� �--C `��`�.��
David N. MacGillivray
Principal
Director of Project Management
/Cjb
cc: Mr. Mike Forester, Standard & Poor's
�
OFFICE OF THE MAYOR
FINANCIAL SERVICES OFFICE, &udge[ Section
Joseph Reid, Budget Director � � � � ^ �
.
CI`TY OF SAINT PAUL
Narm Coteman, Mayor
Saint Paul, Minnerota 55102-763I
240 City Hall
IS West Ketlogg Boulev¢rd
Telephone: (672) 266-8543
Facsimile: (6I2) 266-8541
MEMORANDi7M
Ta Interim Financing Plan Fite
From: Joe Reid
Re: Item 6: Construction Cash Flow Projections
Aate: May 30, 1997
The projec6ons, as developed by Thomas E Gunke, Executive Vice President, Mortenson, are
contained on the pages that follow.
r 1
LJ
•
St. Paul Hockey Arena Cash Fiow �� 5�«
• 7999 Season Completion
DESIGN PHASE CONSTRUCTiON PHASE SOFT COSTS T�TAL
Month Monthly Cumulatfve Monthly Cumulative MoMhly Cumutative A'lonthiy Cumulativa
u - . , - - - - . .
Aug-97 8B5,974 1,608234 - - - - 985,974 '1,606,234
Sep-97 l,'108 °18 2.715,152 - - - - 1.108,918 2,715.�52
Oct-97 t.'1�5,152 3,830.303 - - • - 1,115,152 3,830.303
NOV-99 901.126 4,731.428 ' - ' - 90'1.'I26 4.731,429
Dea97 808,658 5,540,087 - - - - B08.658 5,540,087
Jan-88 609,52d 6149,6'10 260,377 260.3)7 - - 869.901 6,4�9,988
Feb-98 546,147 6 895,758 433,982 69a,3a0 - - 980.�09 7,390,097
Mar-98 529,�78 7,224,935 728,057 1,a23,396 - - 1,25B,23a B,6a6,331
Apr-98 456.450 7,681,385 954.717 2,378,�13 - - 1,411,'16J '10.059,499
May-98 290.909 7 972,294 t,705,d72 4.083,585 - - 1,996,381 12,055.B79
Jun-9B �52�0"0 8.'125,000 2.3967H3 6.470,377 - - 2.539,438 14,585,377
dul-98 t53,750 8,268?50 a,743,209 �1213,585 - - 4,BB6,958 19.482,335
Aug-98 131,250 8400,000 6,467,925 t6,681,509 • - 5.599.175 25,Q8�,508
Sep-9E '137,500 8,537,500 7.399,057 2C,080.566 - • 7.536,557 32.8�8,086
Oct-98 137.SOD 8,675.000 8,715,095 32.i95,660 - - 8,252,595 40.B�D.860
Nov-HB '131,250 8.806,250 8A93,396 40.289,056 - - 8.224.5a6 49A95.306
Dea98 143,750 8,950,000 8,883.019 49,272,075 - - 9,126,769 58,222,075
Jan-99 131,250 9,D61,250 7,820,OOD 57,092,075 • - 7,951.250 66,173.325
• Feb-99 '125.00D 9,208,250 7,37J,359 64,469,434 1,769,445 1,769,445 8,277,803 75,445,128
Mar-99 '143,750 9.350,000 6.904,3<0 71,373,773 3,130.556 4,900.000 10.178.645 85,623,773
Ap�-9B '137,500 9.AB7,500 6,205,66� 77,579,434 2,994,445 7.894,445 9,337,605 94,965,378
May-99 'I3'1,256 9,618,750 5,'.07,�36 82,68T,'170 3,675,040 11,569,445 8,913,988 103875,364
Jun-99 i37,500 9,756,250 5,250,944 87,938,�13 5,56�,�11 17,130,556 10,949,555 'I14.824,919
Jui-g9 'I37,500 9,883,750 2,152t53 90,080,566 5,567,1�1 22,691,667 ),851,064 122,675.983
Aug-99 106,250 70,000,000 1.809,434 92,000.000 5,306,334 28,000,000 7.324,018 73D.OD0,000
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OFFICE OF THE MAYOR
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7oseph Reid, Budget Director A� .. 4'(
SA[N2
PAVL
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AAAA
CITY OF SAINT PAUL
Norm Coleman, Mayor
240 City Hal[
IS West Ke!logg Boulevard
Saint Paul, Minnesota SSIO2-1631
TeZephone: (6l2) 2668543
Facsimile: (612) 266-8545
•
To: Interim Financing Plan File
MEMORANDUM
From: Joe Reid
Re: Item 7: Potential Schedule for Issuance of Debt
Date: May 30, 1997
It is estimated that the City's $30 million commitment would necessitate a bond issuance of
some combination of taxable and ta�c exempt bonds in late July or early August, 1997. The
timing would be subject to the decision of the Boazd of C:overnors regarding the first season
yeaz of the NfIL franchise awazded to Saint Paul and the design and construcfion schedule that
would follow from that decision.
Subject to the same qualifications noted above, it is estimated that the City's $65 million
commitment of interim financing would result in the issuance of a bond anticipation note of
$65 million at the most advantageous time and subject to the interest rates auailable in the
bond market. The timing would also be subject to the issuance of arena construction contracts
and could occur anytime between late July, 1997 and early 1998.
•
612/22A-9445
s�t n�t
Builaiing and Construction Trades
May 3Q, 1997
Mayor Norm Coleman
Council President Dave Thune
Members of the Saint Paul City Council
Office of Mayor
390 City Hall
St. Paul, MN 55102
Fax No. 266-8513
Re: Interim Financing Pian for New Civic Center Arena
��,C�S
council
LABOR CENTRE, 411 MAIN STREET, ROOM 206
SAINT PAUL, MINNESOTA 55102
�
Dear Mayor Coleman, Council President Thune and Council members:
We have reviewed the "Interim Arena Financing Plan for NFIL Hockey" as presented to the City
• Council on May 28, 1997. The plan identifies potential labor union participation in the amount of
$5 miilion to provide collateral for the City's commitment under the plan. I have been in contact
with officers, business managers, labor trustees and management trustees of at least seven of our
larger unions and have received enthusiastic support for our attempts to participate in the
collateralization effort.
While none of the unions that we are working with can make a binding legal commitment at this
time due to the review process necessary for transactions such as these, you can be assured of two
things. First, we wi(1 work with you diligently and in good faith in an attempt to agree to terms
and conditions for a binding legal commitment under which unions would participate in the
interim plan of finance. Second, we will aggressively support our efforts during the 1448
legislative session to obtain $65 million of state bonding for construction of the new arena for
NFII, hockey.
•
We applaud your persistent efforts to provide a new Civic Center Arena for use by the entire
community and the state to bring IVI�, hockey to Minnesota and to enhance the urban vitality of
Saint Paul.
�� rely,
,� `� �°�' �,�.��`S�-z ��-z-
Dick Anfang Alfred J. Schmitt Robert Schwartzbauer R t���
Executive Se .efary President Treasurer
PA/df
opeiu#12
��- G?S
�
2490 Minnesota World Trzde Center 30 East Seventh Street
$aint Paul MN 55101 672.29L5600 6122915606(Fax)
May 29, 1997
Mayor Norm Coleman
Council President Dave Thune
Members of the Saint Paul City Council
Oftice of the Mayor
390 City Hall
Saint Paul, MN 55102
Re: Interim Financing Plan for the New Civic Center Arena
Dear Mayor Coleman, Council President Thune, and Councilmembers;
��v} ��=r�
ARY 3 p 1397
::' -�
, M+^
We have reviewed the "Interim Arena Financing Plan for NHI, Hockey" as presented to the City Council
on May 28, 1997. The plan identifies potential business participation in the amount of $5 million to
provide collateral for the CiTy's commitment under the plan.
While none of the businesses that we are working with can make a binding legal commihnent at this time
• due to the review process necessary for transactions such as these, you can be assured of two things.
First, we will work with you diligently and in good faith in an attempt to agree to terms and conditions for
a binding legal commitment under which businesses would participate in the interim plan of finance.
Second, we will aggressively support your efforts during the 1998 legislative sessioa to obtain $65
million of State bonding for construction of the new arena for NHL hockey.
The Capital City Parinership strongly supports the return of the NHL to Minnesota. We believe the NHL
would provide our community with high quality family entertainment, which would benefit our
communiry and help revitalize our downtown core. We have led efforts to demonstrate the necessary
corporate support by securing letters of interest to purchase luxury suites, advertising and sponsorship
opportunities, naming rights, etc. We are also pleased to have raised $300,000 from businesses to help
cover preliminary marketing, legal, and other consulting services to help position St. Paul to be awarded a
new NHL expansion team.
We applaud your efforts to provide a new Civic Center Arena for use by the entire community and the
state, to bring NHL hockey to Minnesota, and to enhance the urban vitality of Saint Paul. We appreciate
our working relationship and look forward to new public(private partnerships to help revitalize the urban
core of our State's Capital CiTy.
r�
L_J
,
Ve�y tr q o y
�) /
Dougl W. Leatherdale
Chairman
�
n J. Labosky
President
� Saint Paul
Area Chamber
of Commerce
•
May 30, 1997
Flrst National Bank Building, Suite N-205
332 Minnesota Street
Saint Paui, MN 55107
Mayor Norm Coleman
Council President David Thune
Members of the Saint Paul City Councii
Office of the Mayor
390 City Hall
Saint Paul, NIN 55102
Deaz Mayor Coleman, Council President Thune and Councilmembers:
Tel: 672/223-s000
FaY:612/223-5119
�
We have reviewed the Interim Arena Financing Plan for NHL Hockey that was presented to the
City Council on May 28, 1997. We understand that the plan calls for the business community
to participate in the amount of $5 million as collateral for the Ciry's commitment under the
plan.
Representing the business community, we enthusiastically pledge to support and cooperate with
other business organizations, specifically the Capitai City Partnership, in their direct efforts to
secure financial commitments from businesses. While we are not in a position to make a bind-
ing legal commitment at this time, we will work diligently to complete such an agreement and
will provide the assistance necessary to raise the funds. Furthermore, we will aggressively sup-
port your efforts to secure $65 miilion in state bonding for the new arena during the 19981eg-
islative session.
We commend your efforts to provide a new Civic Center Arena for use by the entire community
as well as your work to bring NHL hockey back to Minnesota. The new azena will make down-
town Saint Paul more vital and will enhance the business climate of the entire region.
Sinc ely yours,
Kaze Himle, Chair
Saint Paul Area Chamber of Commerce
/° l
Larry Dowell, President
Saint Paul Area Chamber of Commerce
•
��� ���
CITY OF SAINT PAUL
Norm Coleman, Mayor
Friday, May 30, 1997
MEMO
TO: Tim Marx, Chief of Staff
390 Cit}• Na(1 Telephone: 612d66-8510
IS Wesr Kel(ogg Boulevard Facsimile: 612-266-8513
Saint Paul, MN 55702
FROM: Erich Mische, Director of Strategic Planning
RE: Commitment from Saint Paul Legislative Delegation
As you might expect, it has been difficult to actually contact our legislative delegation
• members so shortly after the legislative session. However, I want to share with you
those legislators I've spoken to, or, we've received a signed letter of commitment to
secure bonding authority of $65 miliion in next year's bonding bill.
Senator Randy Kelly - Letter
Senator Chuck Wiger - Letter
Representative Tom Osthoff - Spoke to by phone
Representative Alice Hausman - Spoke to by phone
Representative Steve Trimble - Spoke to by phane
We have attempted to contact all of our Saint Paul delegation members and will
continue to do so in time for next Monday's 9:00 City Council meeting.
•
�
•
MEMO
TO:
Mayor Norm Coleman
Councii President Dave Thune
Councilmember Jerry Blakey
Councilmember IvTilce Harris
Councilmember Roberta Megard
Councilmember Joe Collins
Councilmember Dan Bostrom
Councilmember Gladys Morton
FROM:
Senator Randy Kelly
Senator Richazd Cohen
• Senator Ellen Anderson
Senator Sandy Pappas
Senator Chuck Wiger
Representative Tom Osthoff
Representative Steve Trimble
Representative Alice Hausman
Representative Jim Farrell
Representative Betty McCollum
Representative Andy Dawkins
Representative Carlos Mariani
Representative Matt Entenza
Representative Michael Paymar
a �.��s
The Saint Paul Legislative Delegation is prepared to work towards ensuring
that the Governor's commitment of $65 million for the Saint Paul Civic Center
in the 1998 Bonding Bill is upheld and supported in the 19981egislative session.
(Please sign the attached page and fax back to 266-8513.)
n
U
SF�'T BY
�.. ,., .
5-29 : 16�17 � MN. SE��TEy 612 266 H513�= 1' 1
� s�.�x�ay xeuy sa►. x���a ca,on
�-w��; ,Li''�°,�. --------
5en. Cf�uekYJi�er 5af. Ssndypappaa
Rep. Stwe Trimbla
�,,. _�.__......
Rt�p. Alice Fixus�nntl
Rop. Botty MeCollum
R,ep, Me�tc Bnte�zr
•
•
s�. Euen a�a��
Rep. Tam Osthoff
Rap. Jim Furell
Rep. Ivfitheel pnytnar
Post-iY Fax Nole 7671
�(�6-n533 ��o�aw
_ S � 3 F�,c x
Rop. Andy Dew3tins
Rep. Carloa Masianl .
L � S
a'�'
:9117�oa9�' I
G-KLAQ l...i.� c
>yf�. (�cjao
SENT BY�
5-29-97 : 16�50
• sen: -+ _ sen. co»ec,
Sen Chuck Wi�or Son Ssndy I'appas
Rep. Steve Trimble Rep. Aiice Hauemau►
--._..�-._---------- ---- _.....
Rep. Betty McCo]lum Rep. A�sdy Dawlrins
Rep. Matt Emenxa Rep. Carlus Mariani
•
l J
n��, seNaTe-� siz 2ss asi�:» i i
� ���
a�
Sen. Ellen Anderson
Aep.1'om Qsthoff
Rep. Jim Farcetl
Rep. IvSct�ael Paymar
TOTAL P.03
CITY OF SAINT PAUL
Office of the Ciry Council
:O,'- 310 City Hall
Saint Paul, Minnesota 55102
(612) 266-8577
Gregary N. Elees
Fiscai Policy D'uector
DATE: June 2, 1997
: MEMORANDUM
TO: Council President David Thune
Councilmember Jerry Blakey
Councilmember Dan Bostrom
Councilmember Joseph Collins
Councilmember Michael Harris
Counciimember Roberta Megard
Councilmember Gladys Morton
FROM: Greg Blees, Council's Fiscal Policy Director
� � -
�
SUBJECT: New Civic Center Arena - Requested Cash Flow
�'1-G� �
Attached are two versions of a City Debt Service Cash-Flow for a worst case City financing
scenario which assumes that the 1998 Minnesota Legislature would not appropriate any of the
anticipated $65 million for the propased construction of a$130 million NAL Hockey Arena.
One cash-flow assumes the City's i/2% sales talc revenues will grow at 3% per year, while the
other assumes that tax revenues will grow at 5% per year.
The proposed revenue stream is such that a City Backup $65 million bond issue would have to
have a customized maturity schedule. 'The City would have to issue some form of Capitai
Appreciation Bonds, where no debt service is paid for the first couple of years, some interest
payments are deferred for the first half of the maturity schedule, and principal payments are made
in the last half of the maturity schedule.
Under both cash flow scenarios, proposed (estimated) revenue streams should be adequate to meet
debt service. The two debt service cash-flows attached do not show debt service for a$65 million
bond issue structured for Capital Appreciation Bonds, but they do indicate that proposed back up
revenue should be adequate.
Also attached is an estimate of interest earnings on bond proceeds.
C: Mayor Coleman, Tim Manc, Pam Wheelock, Martha Larson, Jce Reid,
Shirley Davis, Tom Cran, Bruce Engelbrekt, Eric Willems,
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Council File � ` 1 '� �
Green Sheet # �_
RESOLUTION
SAINT PAUL M
�.. ., A �.1
2
Presented
Referred To
INNESOTA
Committee: Date
J�
._�
4 WHEREAS, a group of Minnesota investors have sabmitted an apptication for an NHL expansion team for
5 consideration by the National Hockey League Board of Governor's on January 13, 1997, and
6
7 WHEREAS, the City Council has indicated that professional hockey is an economic and community
8 enhancement to the City of Saint Paul and the larger metropolitan area, and
9
10 WHEREAS, the City Council has determined that the 23 year-old Saint Paul Civic Center Arena is in need of
11 substantial renovation in order to maintain a competitive position in the marketplace, and
12
13 WHEREAS, based on a recent visit, the NI-IL Expansion Committee has indicated that Saint Paul has an
14 attractive and adequate media market as well as a financially solid investor's group, and
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
WF3EREAS, the NHI, Expansion Committee has raised questions as to whether the $51 million in
improvements previously outlined in the HOK Conceptual Design dated December 15, 1996 will be adequate to
bring the Arena up to NHI, standards, and have indicated they would not recommend placing an expansion team
in Saint Paul in a renovated Arena, and �
WHEREAS, a new Arena would benefit the City and its citizens by providing the downtown with an Arena
which would become competitive with other state of the art arenas, �vould provide current tenants of the Civic
Center with an updated facility in which to bring their events and programs, would generate needed revenue to
attract an NHL team and would attract additional non-hockey events to downtown Saint Paul, and
WHEREAS, a new Arena would provide the highest quality facilities for the Minnesota State High School
Tournaments which haue a long tradition of playing in the Saint Paul Civic Center Arena, and would improve the
experience of the many thousands of Minnesotans who attend the tournaments each year, and
WHEREAS, it has been estimated that a new first-class Arena, consistent in quality with other current arenas
recently constructed for use by NHL teams and built on the site of the cunent Civic Center would cost
appro3cimately $130 million which would include the following:
* Up to 650,000 square feet
* A capacity of appro�mately 19,000 seats for hockey including 2,500 club seats and 750 to 1000 seats in
luxury boxes
* A finished Arena club restaurant and bar
* Finished Team Retail Store and Team Offices
* Video scoreboard(s) with advertising panels
* Two new outdoor mazquees
* Finished locker rooms, training rooms and offices
* Finished concessions and novelty stands
°l'i -��S
43 * Landscaping
44 * All necessary fixtures, fumiture and equipment
45
46 WHEREAS, the Govemor of Minnesota has expressed support for $65 million in State bonding to be
47 appropriated in the 19981egislative session, and
48
49 WHEREAS , the City believes an interim financing guarantee for the State's $65 million participation will result
50 in an award by the NHL for an expansion franchise, and
51
52 WHEREAS, this $65 million, in addition to the Team's contribution of $35 million and the City's previously
53 approved commitment of $30 million will result in a project budget of $130 million, and
54
55
56
57
58
59
60
WHEREAS, this interim financing is secured by future revenue streams available to the City other than a
property t� levy, and now therefore be it
RESOLVED, that the Council of the City of Saint Paul does hereby approve the attached revised Term Sheet
and interim plan of finance for the lease of the new arena to be constructed as part of the Saint Paul Civic Center;
and be it
61
62 FURTHER RESOLVED, that the appropriate officials of the City of Saint Paul are hereby authorized to enter
.-
..
.
.:
.
1
.
.
:.
into, execute and deliver all necessary contracts, orders, agreements, indentures and documents of any kind to
carry out and put into place (1) the terms and conditions in said Term Sheet and its provisions, including the
Binding Letter of Intent, (2) the design and construction of the new arena, (3) the financing requirements for
the said azena, and (4) all other matters required to carry out th e implementation of this project.
�. � 6 �Q-�--�
Department of:
Planning & Economic Development
B y'��
By:
By:
Form
� � �,� By'
�oved by City Attorney
� '
by ayor for Su s ion to
��� � �� �p
Adopted by Council: Date � � �
Adoption/Certified by Council Secretary
9'T — G� S
���14
DEPAFTMENTqFFlCECOUNCIL DATE INITIATED
cz� couNC�L 5/28/97 G REEN SH E E
CON7ACT PERSON & PHONE INRIAUDATE INITIAL/DATE
O OEPAFTMENT DIRECTOR O CITV COUNdL
Councilmember Dave Thune q���N OpTVATfORNEV OCRYCLERK
MUST BE ON COUNCIL AGENDA BY (OATE) NUMBEH FOP ❑ BUDGET DIRECTOR � FIN. $ MGT. SEflVICES Dlfl.
flOUTING
M2.�J 28 1997 - Suspension Item OflDER �MAYOR(OFIASSISTANn �
TOTAL # OF SIGNATURE PAGES (CLIP ALL LOCATIONS FOR SIGNATURE)
ACTION REQUESTE�:
Approving the revised Term Sheet and interim plan of finance for the lease of the new
arena to be constructed as part of the Saint Paul Civic Center.
RECOMMENDATIONS: Approve (A) or fiejact (R) PERSONAL SERVICE CONTRACTS MUST ANSWER TNE FOLLOWING QUESTIONS:
_ PLANNING COMMISSION _ CIVIL SERVICE CAMMISSION �� Has thls pefson/fRm BVBf WOfkBtl untlef a Contf2Ct fOf thi5 tlBpffrtrtl8nt?
_ CIB COMMITfEE _ YES NO
_ S7AFF 2. Has this personHirm ever been a city employee?
VES NO
_ DIS7RIC7 COURi _ 3. Does this person/firm possess a skill not normally possessetl by any current ciry employee?
SUPPORTS WHICM COUNqL OBJECTIVE7 YES NO
Explain all yes answers on separate sheet antl attach to green sheet
INITIATING PROBLEM, ISSUE. OPPOFTUNITY (Who, Whet, When, Where, Why):
ADVANTAGES IF APPHOVED:
DISADVANTAGESIFAPPROVED:
DISADVANTAGES IF NOTAPPROVED.
TOTAL AMOUNT OFTRANSACTION $ COST/HEVENUE BUDGETED (CIRCLE ONE) YES NO
FUNDIfBG SOUHCE ACTIVITY NUMBER
FINANCIAL INFOPFnATION: (EXPLAIN)
R `1- `'15
S 0.Mtp� ei
AMENDED AND RESTATED
TERM SHEET
Dated May 28, 1997,
for the I.ease of the
NEW ST. PAUL CIVIC CENTER ARENA ("NEW ARENA")
I. OWNER'S AGENT will be the Saint Paul Civic Center Authority ("Authority"), and
OWNER will be the City of Saint Paul ("Ciry").
II. TENANT will be the NHL expansion team to be owned by
(°Team").
III. LEASED PREMISES will be the New Arena, including all furniture, fiYtures and
equipment necessary for the playing of all NHL home regular season, playoff, All-
Star and other NHL-sanctioned home games and any NHL e�ibition games played
at the New Arena ("NHL Games"), and any other arena events as contemplated
below.
IV. TERM OF LEASE
The term of the Lease shall commence thirty days prior to the first NHL Game of
the regular NHL season which follows the date of substantial completion of the New
Arena (the "Commencement Date" which, if an NHL franchise is granted to the
Team to play in the 1999-2000 NHL season, is anticipated to be approximately
September 1, 1999) and will continue from that date for the later of twenty (20) years
or the final maturity stated date of the City Bonds, but not ]onger than 25 years (the
"L,ease Term"). The Team will have the option to e�rtend the L.ease Term for two
five (5) year periods. Any such extension shall be a part of the Lease Term. The
Team wiil lease the New Arena for the purpose of playing all of its NHL home
Games and will not relocate the Team from the Arena during the L.ease Term;
provided, that the Team shall have the right after the first ten years of the I.ease
Term to terminate the lease by paying the City an amount required to discharge the
outstanding City Bonds (including any related premium or early retirement penalty
35096R9
��-C15
associated with pre-payment). Upon payment of said amount and payment of all
other accrued liabilities under the L.ease, the Team may terminate the Lease.
V. ARENA REVENUES AND EXPENSES
A. Team Revenues. The Team will control and retain 100% of revenues derived
from all events at the New Arena (such events "Arena Events" and such
revenues "Team Arena Revenues"), except as otherwise provided in
Paragraphs V-B and XI-J hereof and except as provided with users of the
New Arena, and 100% of the revenues derived from other operations outside
of the New Arena ("Team Revenues"). Team Arena Revenues and Team
Revenues include the following:
1. sales of tickets for Arena Events
2. sales of tickets for club seats for Arena Events
3. sales of liixury suites for Arena Events
4. New Arena's share of all concession revenues and payments
5. all (permanent and temporary) advertising and promotional revenues
(including naming rights, fuied signage, dasher boards, on-ice
advertising, video boards) at the New Arena
6. merchandising revenues realized from sales at Arena Events and at all
other times at the Team's retail stores at the New Arena and
elsewhere
7. publication revenues realized at Arena Events and at all other times
at the Team's retail stores at the New Arena and elsewhere
8. broadcast, merchandising and other revenues received by the Team
from the NHL
9. revenues from local broadcasts of Arena Events (e.g., local TV, cable
and radio)
10. all other revenues derived from operations of the New Arena and the
Team's business outside of the Arena
sso�a9 2
q� - C�15
provided, that the City and the Authority make no representations or
warranties about the level of any such revenues; or the availability of any
revenue sources other than from the New Arena. The Team's right to all
Team Arena Revenues accruing after the e�iration or termination of the
Lease shall cease upon such expiration or termination of the L,ease.
Team Arena Revenues and Team Revenues do not include the amounts to be
received by the City from the Team as described in paragraph B below, and any taYes of
general applicability.
In addition, the City shall pay the Team a sum equal to (a) net parking revenues
derived from event parking at the time of NHL Games from the existing 1730 spaces in the
Civic Center Ramp and the 430 spaces in the Civic Center Fxhibit Hall underground ramp,
(b) net parking revenues for event parking received by the Ciry at the time of NHL, Games
derived from approximately 235 surface parking spaces in the "Cleveland Circle" and "Seven
Corners" surface parking lots, and (c) any net parking revenues for event parking received
by the City at the time of NHL Games from surface parking on parcels contiguous to the
New Arena if and to the e�ent actually owned or controlled by the City during the L.ease
Term. In the event the lots in clause (b) become unavailable for event parking during NHL
Games due to sale of property, cancellation of agreements with current property owners, or
development on site(s), the City shall negotiate in good faith to replace that parking
availability and the resulting amounts the Team receives for event parking during NHL
Games with other land available for surface parking contiguous to the New Arena. The City
and the Authority make no representations or warranties about the level of any such
revenues.
B. Citv Arena Revenues. The Team shall pay the City (a) $385,000 per year in
consideration of the advertising revenue from the two replacements of the one
existing outdoor marquee (as provided in Paragraph VII-A including the 5%
annual escalation) regardless of actual advertising revenue received by the
Team and (b) the Ticket Surcharge imposed by the Ciry as described in C
below.
C. Team Arena Eapenses. Fxcept as e�ressly provided for in paragraph E
hereof, the Team will pay for: (1) 100% of the management, operation and
maintenance elcpenses incurred for Arena Events and otherwise in connection
with the New Arena, it being the intention of the parties that the Lease be
absolutely "net" to the City and the Authoriry, except as earpressly provided for
in this Term Sheet, (2) the costs of capital repair and replacement as
described in subparagraph (D) below, and (3) any required collections of
(a) generally applicabie sales taz�es, (b) any other state or city imposed taxes
or assessments, and (c) a facility ticket surcharge or other similar taY or fee
3509689
`('l - C�IS
imposed by the City or Authority (the "Ticket Surcharge") not to exceed $1.50
per ticket for Arena Events for the first five years of the I.ease Term, with
cumulative increases in the Ticket Surcharge not to exceed $.50 over each
successive five year period thereafter, except as may be mutually agreed to by
the City and Team, provided that if the Ticket Surcharge does not raise at
least $2,100,000 (the "Surcharge Base") in any year of the I,ease Term, then
the City shall have the right to increase the Ticket Surcharge for the following
year to that amount necessary to raise the Surcharge Base (the "Bmergency
Increase"). The Team and the City will keep each other advised during the
year as to the estimated receipts from the Ticket Surcharge and the City will
provide the Team written notice of any decision to increase the Ticket
Surcharge; provided further, that the City agrees not to increase the Ticket
Surcharge during the NHL Hockey season. The City will agree to repeal any
Emergency Increase in the Ticket Surcharge made under this paragraph when
the Ciry has reasonable assurances that the lower Ticket Surcharge will
generate at least the Surcharge Base per year. The timing and mechanism for
any Emergency Increase shall be provided for in more detail in the Lease.
The City will use the increased portion (beyond the Emergency Increase) of
the Ticket Surcharge to provide direct or indirect benefit to the New Arena,
Wilkins Auditorium, or Convention Center. The initial Ticket Surcharge of
$1.50 per ticket will be reduced to $1.00 per ticket and the Surcharge Base
shall be reduced to $1,400,000 if the proceeds of the State Bonds
contemplated in Section IX (C) hereof are granted to the City.
D. Capital Repairs, Replacements and Im�rovements. The Team shall manage,
operate and maintain all aspects of the New Arena consistent with
comparable NHL facilities, including making all capital repairs, replacements
and improvements as and when the Team and the City reasonably deem
necessary, all at the e�ense of the Team, except as ea�pressly provided in
paragraph E below, and consistent with any requirements as set forth in the
Lease to be negotiated in good faith among the Team, City and Authority
("L,ease"). The Team and the Authority shall create a capital replacement
repair and reserve fund ("Arena Reserve Fund") and to be funded by the
Team and spent according to the terms of the L,ease. The moneys in the
Arena Reserve Fund shall be the property of the Team during the Lease
Term; provided that moneys remaining in the Arena Reserve Fund at the end
of the L,ease Term shall be the properry of the City. The Team's annual
contribution to the Arena Reserve Fund shall be (a) $250,000 for the fourth
and fifth years of the L,ease Term, (b) $500,000 in the siYth year, and (c)
commencing in the seventh and in each year thereafter an amount equal to
$500,000, to be escalated annually commencing in the seventh year at the rate
of inflation during the preceding year.
3509669 4
a�-��s
The contributions shall be payable by the Team at the beginning of the
applicable year of the Lease Term. To the extent the money in the Arena
Reserve Fund is insufFicient, the Team shall have the obligation to pay for
capital repairs and repiacements, except as e�ressly provided in paragraph
E hereof.
E. Citv Contribution to Repair and Replacement After Citv Bonds are Paid.
When the City Bonds aze paid or defeased, the City shall continue to receive
100% of the Ticket Surcharge. The City agrees to provide matching funding
(to be held in a separate City account) for necessary capital repairs and
replacements in the following manner:
(1) If the Ticket Surcharge has not been increased since the
commencement of the Lease Term, the City shall make available
during the calendar year, on a one-to-one matchmg basis with the
expenditures made out of the Arena Reserve Fund or otherwise by the
Team during such year the full amount of the T'icket Surcharge up to
$1.4 million. These funds shall only be availabie during the calendar
year, and any unmatched and unspent funds shall revert to the City for
uses which provide direct or indirect benefit to the New Arena,
Convention Center, or Wilkins Auditorium.
(2) If the Ticket Surcharge has been increased during the I.ease Term,
then the City shall make available on a one-to-one matching basis with
the e�enditures made out of the Arena Reserve Fund or otherwise by
the Team during such year, an amount equal to the $1.4 million
inflated annually beginning in the seventh year in an identical manner
to the escalation of the Team's contribution to the Arena Reserve
Fund (the "Escalated Contribution").
In no event shall the annua] match by the City exceed the actual revenue
derived from the Ticket Surcharge. The Team shall provide the City written
evidence of the payment of e�penditures made by the Team prior to the City
making the matching contribution contemplated by this paragraph V available
to the Team.
In any event, notwithstanding the City's annual match under paragraph E
hereof, the Team remains responsible for the payment of and contracting for,
in accordance with law, all necessary repairs and repiacements to the New
Arena.
35096ft9 S
9.''1-�n5
F. Namin� Rights — Citv A�proval. The City has the right to reasonably
approve the recipient of the naming rights for the New Arena which rights
shall be granted for no longer than the L,ease Term.
VI. NEW ARENA COMMITMENTS:
The Authority and City believe that the New Arena is and will be on the
Commencement Date free of all contractual obligations relating to New Arena
operations with third parties, which include advertising and concessions, other than
contractual scheduling commitments for certain events and the existing agreement
with Ticket Master Minnesota dated November 5, 1995. The Team has the right to
select and contract with all parties providing products or services for the New Arena
(including the concessionaire), to determine product selection and the service to be
provided by such contracting parties, and to receive all revenues and payments from
such parties. The Team shall also have the opportunity to participate in the selection
process for the parking lot operator at set renewal periods. The City and the
Authority will work with the Team to facilitate the Team's financial and operational
interests in the parking available for NHL Games at the ramps and lots described in
Paragraph V-A hereof.
VII. ADVERTISING
A. The Team shail have the exclusive right to sell and control the advertising on
the outdoor marquees (referred to in Paragraph V-B above). In consideration
thereof, the Team shall pay to the Authoriry or the City $385,000 annually,
beginning on the Commencement Date, with an escalation of 5% annually
thereafter beginning in the second year of the I,ease Term. This obligation
shall be due and owing by the Team regardless of the amount of such
advertising revenue.
B. The Team shall have the exclusive right to sell and control all other
advertising and promotion rights for the New Arena and retain all revenues
received from such sales. The Team shall use its best efforts ta promote
attendance at events in the New Arena. Additionally, the Team shall use its
best efforts to coordinate activities in the New Arena with activities in the
Civic Center complex.
C. This Term Sheet and the Lease shall not affect the rights of the City and
Authority with respect to advertising in other areas of the St. Paul Civic
Center Complex (e.g., Wilkins Auditorium or new Convention Center).
35W689 6
°t'1 - C�1 S
VIII. NEW ARENA DESIGN AND CONSTRUCTION
A. The Team will contract for the design and construction of the New Arena
without the necessity for advertisement for bids, using a construction method
that e�pedites the construction schedule. Immediately upon the award of an
NHL franchise if it occurs prior to July 11, 1997, the Team shali commence
the design and construction of the New Arena in Saint Paul, and if the Team
is granted a franchise to play in the 1999-2000 NHL Season, such construction
shail be substantially completed by September 1, 1999. Subject to clause (B)
below, the New Arena shail be a first class facility consistent in quality with
other current arenas recently constructed for use by NHL teams, and is
expected to consist of the following major design elements:
1. Approximately 650,000 square feet.
2. A capacity of approximately 19,000 seats for hockey, including:
(a) approximately 2,500 club seats.
(b) approximately 750 to 1000 seats in IwYUry suites.
3. A finished club restaurant and bar.
4. Finished team retail stores and team offices.
5. Video scoreboard(s) with advertising panels.
6. Two or more new outdoor electronic marquees.
7. Finished locker rooms and related training rooms and offices.
8. Finished concessions and novelty stands.
9. I.andscaping.
10. All necessary fumiture, fixtures and equipment.
B. The Team, Ciry and Authority shall mutually agee on the conceptual design
for the New Arena by August i, 1997. There will be a design team that wili
include two representatives from the City and one representative from the
Authority in addition to representatives from the Team. If no agreement is
35096E9 7
9.'�. c.�s
reached the Team shall have the right to make final design decisions, which
the Team agrees to make on a timely basis. No material changes may be
made in the conceptual design by the Team, without the approval of the City,
except as required by the project budget of approximately $13Q,000,000. In
such event, the City, Authority and Team shall agree to value engineer the
New Arena project on a timely basis to reduce its costs. If no agreement on
the value engineering can be reached, the Team shaIl have che right to make
final design decisions, subject to the spirit of the Conceptual Design and
project budget constraints.
C. Contingent on receiving the funds from the City under the Plan of Finance,
the Team shall bear all the costs of the New Arena, including design,
construction, finance, cost overruns and demolition of the existing arena. The
City shall bear the costs of the costs of acquisition or off-site infrastructure
improvements. The City and the Team aa ee to consider alternate
construction methods which may reduce project costs and expedite project
schedule. The Ciry agrees to coordinate and help e�:pedite all permits needed
for the construction of the New Arena. In the event the costs of the New
Arena are less than $130,000,000, the savings shall be shared by the respective
parties in the same proportion as their contributions set forth in Section IX.
IX. PLAI`T OF FINANCE:
A. The New Arena shall be financed through the following funds: (1) $35 miilion
from the Team in the form of cash, cash equivalent or an inevocable letter
of credit in form and substance satisfactory to the City (the "Team
Contribution"), and (2) $30 million from the City or its housing and
redevelopment authority plus the cost of land and off-site infrastructure (the
"City Contribution"), and (3) an additional $65,000,000 from the City or its
housing and redevelopment authority, which the City anticipates will be
replaced with State Bonds as provided in paragraph C below (the °Ciry
Guaranty of State Portion"). The funding in clause (2) and (3) is collectively
referred to as the "City Bonds". If necessary, the funding plan for the City
Bonds shall be structured so that contracts for the construction of the New
Arena may be awarded without advertisement for bids.
B. The Team Contribution and City Contribution must be deposited in escrow
with a third party acceptable to the Team and the City by a date reasonably
acceptable to the Team and the City in order to accommodate the letting of
the necessary design and construction contracts. The Team and the City will
mutually agree to the percentage of each draw to be paid by the Team
3509669 p
�1'1 - CR 5
Contribution and the City Contribution. The intent of the rarties is that the
City Guaranty of State Portion will not be drawn down unc;i July i, 1998.
C. The Team acknowledges and agrees that the City anticipates that a portion
of the City Bonds will be repiaced with an appropriation or proceeds of bonds
issued by the State of Minnesota (the "State Bonds"). Upon such
replacement, the term "City Bonds" herein shall be deemed to include the
"State Bonds".
X. CHARITABLE CONTRIBUTIONS:
The Team, or its charitable foundation, wiil on the Commencement Date and
annualiy thereafter make annual contributions to existing local organizations that
promote youth programs in Minnesota, such as the Mariucci Inner C�ty Youth
Hockey and Minnesota Amateur Hockey Association (MAHA).
XI. MISCELLANEOUS:
A. Upon the grant of an NHL franchise to the Team, the parties shall commence
negotiations of a definitive L,ease agreement based on this Term Sheet
("L,ease"). If a definitive Lease has not been executed by March 15, 1998, any
outstanding issues (except failure of the parties to agree pursuant to Section
XI-H) shall be submitted to binding arbitration upon the request of the City
or the Team by a panel of three independent persons familiar with the
operations and economics of sports facilities or municipal operations and
finance. One panelist shall be chosen by the Team. The second panelist shall
be chosen by the City, and the third panelist shall be chosen by the other two
panelists. Such panel shall have the right to make a decision solely on the
issue or issues in dispute but shall not have the power to alter the terms
agreed upon by the parties herein or hear or determine any dispute over (i)
the terms or conditions which may be agreed to in the future in the
negotiations over the I,ease, or (ii) the failure of the parties to agree pursuant
to Paragraph XI-H or VIII-B.
B. The Team will maintain its membership in good standing in the NHL
throughout the L.ease Term.
C. The Izase will contain such other terms and conditions (insurance, damage
and destruction, indemnification, financial statements, security, scheduling,
force majeure, events of default, remedies, miscellaneous, etc.) as are
customary in the industry, reasonable, or otherwise agreed to by the City,
Authority and Team. Notwithstanding the foregoing, the Team shall agree to
35p96A9 9
�l'1- C�l S
pay liquidated damages in the event of a breach of its covenant (a) to operate
exclusively at the New Arena during the first ten years of the L.ease Term as
provided in Paragraph N hereof, or (b) after the first ten years of the Lease
Term, to pay the City and State the amounts specified in Paragraph IV hereof
in the event it relocates the Team, in an amount equal to: (x) the unpaid
principal balance of the outstanding City Bonds (including any related
premium or early retirement penalty associated with prepayment), (y) the
amount of money e�ended by the City and the Authority for construction
cost overruns, land acquisition, off-site infrastructure, demolition and other
actual out of pocket costs incurred by the City and the Authority in connection
with the New Arena, and (z) interest from the date of expenditure of the
amounts identified in clause (y) at a rate of interest of seven percent per
annum. Additionally, disputes between the parties under the Lease wili be
venued exclusively in Ramsey County, Minnesota.
D. No term of the Lease shall impair the tax exempt status of outstanding bonds
issued with respect to the Civic Center Complex, and if any term herein
should have that effect, it shall be deemed modified to the e�ent required to
eliminate such effect as long as such modifications remain consistent with the
intent of this Term Sheet.
E. If all or a portion of the City Bonds are issued as t� exempt bonds, the Team
and the City shall make such reasonable modifications to the Term Sheet as
are appropriate to facilitate and not impair such exemption. In order to
accommodate the construction of the New Arena, without advertisement for
bids, the Team and the City shall make such reasonable modifications to the
Term Sheet as necessary to take advantage of any exemption to competitive
bidding, which modifications may include the lessor under the Lease being a
nonprofit corporation, as long as such modifications remain consistent with the
intent of this Term Sheet.
F. The Team and the City agree that the provisions of this Term Sheet are
subject to all federal, state and local laws, rules, regulations or ordinances.
G. A binding letter of intent in substantially the form attached hereto as F�hibit
A shail be promptly executed by the City, Authority and Team.
H. The Team and the City shail coilaborate in good faith on the design,
construction, finance and operation of a new practice facility or the necessary
improvements to an existing facility to be converted into a practice facility for
the Team containing the necessary facilities for an NHL practice facility which
shall be open for use by the public when not being used by the Team.
35096&9 10
�l� • C+1S
Nothing herein shall be construed as a guarantee of City financial assistance
for the practice facility.
I. The Team shall make the New Arena available for lease to the Minnesota
State High Schoo] League (MSHSL) in order that the MSHSL shall be able
to continue to conduct state high school tournaments as they have been
conducted in the past, including giris volley ball, giris danceline, boys wrestling,
boys hockey and boys basketball. T'he MSHSL shall be able to conduct the
toumaments and receive the same revenue streams, and subject to agreement,
any new revenue streams, and pay the types of eJCpenses in the same
categories that are currently in effect.
J. The Team shall make the New Arena available, subject to scheduling of other
events, to the City or its designee for presentation of up to five (5) events per
year not to exceed 10 days, including time for set up and break down (the
"City Events"). Such events shall be of "community or non-commercial
nature" and neither the City nor its designee shall be required to pay rent to
the Team for use of the New Arena for said event(s). However, the City or
its designee shall be required to reimburse the Team for all applicable out-of-
pocket e�enses, incurred in connection with the event(s). The City shall be
entitled to 50 percent of any revenues derived in the New Arena from the City
Events.
K. Any contracts or agreements entered into by the Team which generate Team
Arena Revenues or any agreements with respect to operations at the "New
Arena shall, unless such contracts or agreements were approved prior to their
execution by the City, contain a clause that such contracts or agreements are
immediately terminable by the City at its option upon expiration or
termination of the L,ease.
L. The Team agrees that throughout the term of the Lease, unless the City
otherwise consents in writing, which consent the City agrees will not be
unreasonably withheld (a) will be the sole general
partner of the team, and (b) Robert O. Naegele, Jr. will control the general
partner.
M. The Authority or the Ciry will use its best efforts to provide the Team up to
10,000 square feet of office space commencing on a date as necessary to meet
the Team's needs and continuing through the completion date of the- New
Arena. The Team shall pay rent equal to all utility, any build out costs, and
all other out-of-pocket costs of the Authority or the City.
35096&9 11
�l'1 - C'1S
i�►:�:i�����
BINDING LETTER OF INTENT
This Binding Letter of Intent is entered into this day of _� 1997, by and
among the City of St. Paul, Minnesota (°City"), St. Paul Civic Center Authority ("Authority"),
Housing and Redevelopment Authority of the City of Saint Paul, Minnesota (the "HRA"),
and , a Minnesota limited partnership ("Team")
(collectively "the Parties").
The City, Authority, HRA,, and Team agree to the terms in the attached Amended
and Restated Term Sheet for St. Paul Civic Center Arena dated May 28, 1997 (the "Term
Sheet") and agree that the terms set forth in the Term Sheet wilI be incorporated into a
definitive lease agreement ("L.ease") among the Parties. The Ciry, Authority, HRA, and
Team agree that the Term Sheet reflects the basic business deal among the parties, and is
intended to be binding on the Parties, their respective assigns and successors and that they
will in good faith negotiate the terms of the L,ease consistent with the terms set forth in the
Term Sheet.
The Ciry, Authority, HRA, and Team each represent that the execution and delivery
of this Binding L,etter of Intent and the Term Sheet and the performance and observance
of the terms of this Binding I,etter of Intent and the Term Sheet have been duly authorized
by all necessary action on the part of the City, Authority, HRA, and Team respectively.
This Binding L,etter of Intent shall automatically terminate and be of no effect if (a)
the National Hockey League does not announce the award of an escpansion franchise to the
Team during its next round of e�pansion or approve this Term Sheet on or before July 11,
1997 or (b) the Team's or City's contribution contemplated by Section IX(A) shail not be
available at the time and in the form provided in Paragraph IX(B).
3509669
°i'7 � l. �1 S
The Parties hereby execute this Binding L.etter of Intent as of the date first written
above.
CTTY OF ST. PAUL, MINNESOTA
Titie: Mayor
Approved as to Form: Title: Director, Office of Financial Services
City Attorney By:
Title: Director of Planning and Economic
Development
ST. PAUL CIVIC CENTER AUTHORITY
By:
Title: Chair
B
Title: Executive Director
3S09bfl9
�'� - C� 5
HOUSING AND REDEVELOPMENT AUTHORITY
OF THE CITY OF SAINT PAUL, MINNESQTA
Title: Chair
Titie: Secretary
Title: F�ecutive Director
Title: Director, Office of Financial Services
A LIMITED
PARTNERSHIP
By: , a Minnesota limited
Iiability company, its general partner
By:
Title: Robert O. NaegeIe, Jr.
Managing Member
35096&9
°1'l - �'1 S
SAINT
PAUL
�
AAAA
CITY OF SAINT PAUL
Narm Coleman, Mayor
TO Council President Dave Thune
Councilmember Dan Bostrom
Councilmember Jerry Blakey
Councilmember Joe Collins
Councilmember Mike Harris
Councilmember Roberta Megard
Councilmember Gladys Morton
FROM Mayor Norm Coleman /��-��
DATE: May 30, 1998
RE: Interim Arena Financin� Plan for New Civic Center Arena and NHI, Hockey
390 Cir�� Hafl
IS Wesr Kellogg Bou[evard
Saint Paul, MN 55102
Telephone: 672-266-8510
Facsimile: 612-266-8513
Accompanyin� this memorandum are additional briefing materials that were requested at your
meeting on May 28, 1997. I look forward to your favorable consideration of this proposal and
• the vitality it wiil bring to Saint Paul. If you have any questions about these materials before your
special meetin� scheduled for Monday, June 2, at 9:00 a.m., please contact Deputy Mayor Tim
Manc.
The briefin� materials are tabbed as follows:
L The proposed City Council and Housin� and Redevelopment Authority Resolutions.
2. The revised term sheet with the NHI, Team includin� a redlined version.
3. The interim financin� plan dated May 28, 1997.
4. A le�al opinion on hond related matters from Leonard, Street and Deinard.
5. A report from 5prin�stead, Inc., the City's financial advisor.
6 Construction cash flow projections for the new Civic Center Arena.
7. A potential bond issuance schedule.
8. Commitment letters from business and buildin� trades interests.
• 9. Commitments from the Saint Paul le�islative dele�ation.
�
Council File #
•
RESOLUTION
CITY OF SAINT PAUL, MINNESOTA
Presented By
Referred To
Committee: Date
Green Sheet �
q�- 4�5
4�VHEREAS, a group ofMinnesota investors ha��e submitted an application for an NHL expansion team for
5 consideration by the National Hockey League Board of Governor's on January 13, 1997, and
G7
7 WHEREAS, the City Council has indicated that professional hockey is an economic and community
8 enhancement to the City of Saint Paul and the larger metropolitan area, and
9
10 WHEREAS, the City Council has determined that the 23 year-old Saint Paul Civic Center Arena is in need o:
11 substantial renovation in order to maintain a competitive position in the marketplace, and
12
13 WHEREAS, based on a recent visit, the I�'HL Expansion Committee has indicated that Saint Paul has an
14 attractive and adequate media market as well as a financially solid investor's group, and
1S
16 WHEREAS, the NHI. Expansion Committee has raised questions as to whether the �51 million in
improvements previously outlined in the HOK Conceptual Desi�n dated December 15, 1996 will be adequate to
bring the Arena up to NHI. standards, and have indicated they would not recommend placing an expansion team
19 in Saint Paul in a renovated Arena, and
20
21
22 WHEREAS, a new Arena would benefit the City and its citizens by providing the downtown with an Arena
23 which would become competitive with other state of the art arenas, would provide current tenants of the Civic
24 Center with an updated facility in which to bring their events and programs, would generate needed revenue to
25 attract an NHI, team and would attract additional non-hockey events to downtown Saint Paul, and
26
27 Wf�REAS, a new Arena would provide the highest quality facilities for the Minnesota State High Schooi
28 Tournaments which have a long tradition of playin� in the Saint Paul Civic Center Arena, and would improve the
29
30
31
32
33
34
35
36
37
experience of the many thousands of Minnesotans who attend the toumaments each year, and
WIIEREAS, it has been estimated that a new first-class Arena, consistent in quality with other current arenas
recently constructed for use by I`THI, teams and built on the site of the current Civic Center would cost
appro�cimately $130 million which would include the following:
* Up to 650,000 square feet
* A capacity of approximately 19,000 seats for hockey includin� 2,500 club seats and 750 to 1000 seats in
lu�cury boxes
* A finished Arena club restaurant and bar
� * Finished Team Retail Store and Team Offices
* Video scoreboard(s) with advertising panels
40 * Two new outdoor marquees
41 * Finished locker rooms, training rooms and offices
42 * Finished concessions and novelty stands
q1-C�S
� * Landscaping
* All necessary fixtures, furniture and equipment
46 WHEREAS, the Governor ofh4innesota has expressed support for $65 million in State bonding to be
47 appropriated in the 1998 legislative session, and
48
49 «�f3EREAS , the City believes an interim financing guarantee for the State's 56S million participation �a�ill result
50 in an award by the I�THI, for an expansion franchise, and
51
52 WHEREAS, this $65 million, in addition to the Team's contribution of $35 million and the City's previously
53 approved commitment of $30 million will result in a project bud�et of $130 miliion, and
54
55 ��FIEREAS, this interim financing is secured by fi:ture revenue streams available to the City other than a
56 property tax levy, and now therefore be it
57
�8 RESOLVED, that the Council ofthe City of Saint Paul does hereby approve the zttached revised Term Sheet
59 and interim plan of finance for the lease of the ne��� arena to be constructed as part of the Saint Paul Civic Center;
60 and be it
61
62 FURTHER RESOLVED, that the appropriate officials of the City of Saint Paul are hereby authorized to enter
63 into, execute and deliver all necessary contracts, orders, agreements, indentures and documents of any kind to
64 carry out and put into place (1) the terms and conditions in said
Binding Letter of Intent, (2) the design and construction of the
the said arena, and (4) all other matters required to carry out th�
�
Yeas avs Absent
E a�Tcey Re<
Bostrom
Maver
Term Sheet and its provisions, including the
new arena, (3) the financing requirements for
implementation ofthis project.
. 1►� h c.u--a
Department of:
� ��a�r �s Planning & Economic Develooment
Meqar� �
Rettman
- � Thune �A�""'�""�,
By:
79 Adopted by Council: Date
80
81 Adoption Certified by Council Secretary Form
82
83 By: BY'�
84
8$ Approved by Mayor: Date
86 APPr
87 By: Coun
By:
by City Attorney
by]Mayor for Su�fiyLs�sion to
•
°l7 - C'lS
• Sponsored by:
RESOLUTION 230. 97-5/28
WI��REAS, a group of Minnesota im�esiors have submitted an application for an IrTf-II, expansion
team for consideration by the National Hockey Lea�ue Board of Governor's on 7anuary 13, 1997
and
WHEREAS, the Saint Paul City Council has indicated that professional hockey is an economic
and community enhancement to the City of Saint Paul and the larger metropolitan area, and
WHEREAS, the City Council has determined that the 23 year-old Saint Paul Civic Center Arena
is in need of substantial reno��ation in order to maintain a competitive position in the marketplace,
and
WHEREAS, based on a recent visit, the \ Expansion Committee has indicated that Saint Paul
has an attractive and adequate media market as �vell as a financially solid investor's group, and
WHEREAS, the NF-IL Expansion Committee has raised questions as to whether the $51 million
in improvements previously outlined in the HOK Conceptual Design dated December I5, 1996
will be adequate to bring the Arena up to NHI, standards, and have indicated they would not
recommend placing an expansion team in Saint Paul in a renovated Arena, and
•
WHEREAS, a new Arena would benefit the City and its citizens by providing the downtown with
an Arena which would become competitive with other state-of-the-art arenas, would provide
current tenants of the Civic Center with an updated facility in which to brin� their events and
programs, would generate needed revenue to attract an I�II-IL team and would attract additional
non-hockey events to downtown Saint Paul, and
WHEREAS, a new Arena would provide the hi�hest quality facilities for the Minnesota State
High School Tournaments which have a lon� tradition of playing in the Saint Paul Civic Center
Arena, and would improve the experience of the many thousands of Minnesotans who attend the
tournaments each year, and
WHEREAS, it has been estimated that a new first-class Arena, consistent in quality with other
current arenas recently constnacted for use by I�TFII, teams and built on the site of the current
Civic Center would cost approximate]y $130 million which would include the following:
* Up to 650,000 square feet
* A capacity of approximately 19,000 seats for hockey including 2,500 club seats and 7S0 to
1000 seats in luxury boxes
* A finished Arena club restaurant and bar
* Finished Team Retail Store and Team Offices
• * Video scoreboard(s) with advertising panels
* Two new outdoor marquees
R'1-(.RS
• * Finished locker rooms, training rooms and offices
* Finished concessions and novelty stands
* Landscaping
* All necessary fixtures, furniture and equipment
Wf�REAS, the Governor of Minnesota has ezpressed support for �65 million in State bonding
to be appropriated in the 19931e�islative session, and
WHEREAS , the Housing and Redevelopment Authority of the City of Saint Paul, Minnesota
(HRA) believes an interim financing guarantee for the State's S65 million participation will result
in an award by the NHL for an expansion franchise, and
WI3EREAS, this $65 million, in addition to the Team's contribution of $35 million and the City's
previously approved commitment of S30 million will result in a project bud�et of $130 million,
and
WHEREAS, this interim financin� is secured by future revenue streams available to the City other
than a property tax ]evy, and now therefore be it
RESOLVED, that the Board of Commissioners of the HRA does hereby approve the attached
ammended an restated Term Sheet and interim plan of finance for the lease of the new arena to
be constructed as part of the Saint Paul Ci��ic Center; and be it
• FURTHER RESOLVED, the HRA will, at the request of the City, issue its bonds backed by the
full faith and credit of the Housing and Redevelopment Authority and an annual appropriation
contribution from the City of Saint Paul, and be it
FURTHER RESOLVED, that the appropriate officicers of the HRA and its executive director
and her designees are hereby authorized to enter into, execute and deliver al] necessary contract:,
orders, agreements, indeniures and documents of any kind to carry out and put into place (1) the
terms and conditions in said Term Sheet and its provisions, including the Binding Letter of Intent,
(2) the design and construction of the new arena, (3) the financing requirements for the said
arena, and (4) all other matters required to carry out the implementation of this project.
•
°l`� -��15
�
AIvIENDED AND RESTATED
TERM SHEET
Dated May 28, 1997,
for the I,ease of the
NE,R' ST. PAUL CIVIC CEI�TTER ARENA ("NEW ARENA")
T. OW:�'ER'S AGE\T ��ill be the Saint Paul Ci��ic Center Authority ("Authority"), and
OWNER c�•ill be the Cit}> of Saint Paul ("City").
II. TE\A.\T ��ll be the \HL ea team to be ow�ned by
("Team").
IIL LEASED PRE?v1ISES � be the New Arena, including all furniture, fixtures and
equipment necessary for the pla�zng of all iv`HL home regular season, playoff, All-
Star and other NHL-sanctioned home games and any NHL e�ibition games played
• at the New Arena ("�HL Games"), and any other arena events as contemplated
below.
IV. TER?vI OF LEASE
The term of the L,ease shall commence thirty da}�s prior to the first NHL Game of
the regular NHL season which follows the date of substantial completion of the I�Tew
Arena (the "Commencement Date" which, if an NHL franchise is granted to the
Team to play in the 1999-2000 I�'HL season, is anticipated to be approximately
September 1, 1999) and will continue from that date for the later of twenty (20) years
or the final maturity stated date of the City Bonds, but not longer than 25 years (the
"Lease Term"). The Team will have the option to extend the Lease Term for two
five (5) year periods. Any such extension shall be a part of the Lease Term. The
Team wi11 lease the New Arena for the purpose of playing all of its NHL home
Games and will not relocate the Team from the Arena during the L.ease Term;
provided, that the Team shall have the right after the first ten years of the Lease
Term to terminate the lease by paying the City an amount required to discharge the
autstanding City Bonds (including any related premium or early retirement penalry
• 3509oCa
9�- G�tS
• associated �c�th pre-pa}�nent). Upon pa}�ment of said amount and payment of ail
other accrued liabilities under the I,ease, the Team may terminate the L,ease.
V. ARENA REVENL:ES A.�'D EXPEnSES
A. Team Revenues. The Team a�ill contro] and retain 100% of revenues deri��ed
from all events at the \ew Arena (such events "Arena E��ents" and such
revenues "Team Arena Revenues"), except as othercvise provided in
Paragraphs V-B and XI-7 hereof and except as provided w-ith users of the
New Arena, and 100% of the revenues derived from other operations outside
of the Nea� Arena ("Team Revenues"). Team Arena Revenues and Team
Re��enues include the foilowing:
i. sales of tickets for Arena Events
2. sales of tickets for club seats for Arena Events
3. sales of luxur�� suites for Arena Events
4. New Arena's share of all concession revenues and payments
5. all (permanent and temporary) advertising and promotional revenues
• (including naming rights, fixed signage, dasher boards, on-ice
advenising, �7deo boards) at the New Arena
6. merchandising revenues realized from sales at Arena Events and at all
other times at the Team's retail stores at the New Arena and
elsewhere
7. publication revenues realized at Arena Events and at all other tiines
at the Team's retail stores at the New Arena and elsewhere
8. broadcast, merchandising and other revenues received by the Team
from the NHL
9. revenues from local broadcasts of Arena Events (e.g., local'I`V, cable
and radio)
10. all other revenues derived from operations of the New Arena and the
Team's business outside of the Arena
CJ
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97-�'15
• pro��ided, that the City and the Authority make no representations or
warranties about the le��el of any such re��enues; or the a�•ailabiliry of an��
revenue sources other than from the New Arena. The Team's right to all
Team Arena Revenues accruing after the erpiration or termination of the
Lease shall cease upon such expiration or termination of the Lease.
Team Arena Revenues and Team Revenues do not include the amounts to be
recei�•ed by the City from the Team as described in paragraph B below, and any taxes of
genera] applicabilin�.
In addition, the City shail pay the Team a sum equal to (a) net parking revenues
derived from e�°ent parkinQ at the time of Iv'HL Games from the existing 1730 spaces in the
Ci��ic Center Ramp and the 430 spaces in the Ci��ic Center F�hibit Hall underground ramp,
(b) net parking revenues for event parking received by the Ciry at the time of NHI. Games
deri�•ed from approtdmateh� 23� surface parking spaces in the `Cleveland Circle" and `'Se��en
Corners" surface parking lots, and (c) any net parking revenues for event parking received
by the Cin� at the time of \HL Games from surface parking on parcels contiguous to the
Ne�x� Arena if and to the estent actually ow�ed or controlled by the City during the L.ease
Term. In the event the lots in clause (b) become unavailable for event parking during ?�'HL
Games due to sale of properry, cancellation of agreements a�th current property owners, or
de��elopment on site(s), the Ciry shal] negotiate in good faith to replace that parking
availabiliry and the resulting amounts the Team receives for event parking during I�THL
• Games «�ith other land available for surface parking contiguous to the New Arena. The City
and the Authority make no representations or warranties about the level of any such
revenues.
B. Citv Arena Revenues. The Team shall pay the City (a) $385,000 per year in
consideration of the advenising revenue from the two replacements of the one
exasting outdoor marquee (as provided in Paragraph VII-A including the 5%
annual escalation) regardless of actual advertising revenue received by the
Team and (b) the Ticket Surcharge imposed by the City as described in C
below.
C. Team Arena E�enses. Faccept as er.pressly provided for in paragraph E
hereof, the Team will pay for: (1) 100% of the management, operation and
maintenance expenses incurred for Arena Events and otherwise in connection
with the New Arena, it being the intention of the parties that the Lease be
absolutely "net" to the City and the Authority, except as expressly provided for
in this Term Sheet, (2) the costs of capital repair and repiacement as
described in subparagraph (D) below, and (3) any required collections of
(a) generally applicable sales taxes, (b) any other state or city imposed taxes
or assessments, and (c) a faciliry ticket surcharge or other similar tax or fee
•
3tpyy,�9
3
q7- C�15
• imposed by the Ciry or Authoriri• (the "Ticket Surcharge") not to exceed �1.�0
per ticket for Arena E��ents for the first five years of the Lease Term, a�ith
cumulati��e increases in the Ticket Surcharge not to exceed �.50 over each
successi�°e fi��e year period thereafter, except as may be mutually agreed to by
the Ciry and Team, pro��ded that if the Ticket Surcharge does not raise at
least $2,100 (the "Surcharge Base") in any year of the L.ease Term, then
the City shal] ha��e the right to increase the Ticket Surcharge for the following
year to that amount necessary to raise the Surcharge Base (the "Emergency
Increase"). The Team and the City will keep each other advised during the
}�ear as to the estimated receipts from the Ticket Surcharge and the City a�ill
provide the Team w�ritten notice of any decision to increase the Ticket
Surcharge; pro«ded funher, that the City agrees not to increase the Ticket
SurcharQe during the NHL Hockey season. The City will agree to repeal any
Emergency Increase in the Tieket Surchar�e made under this paragraph when
the Cit�� has reasonable assurances that the lower Ticket Surcharge w�il
generate at least the Surcharge Base per year. The timing and mechanism for
any Emergency Increase shall be provided for in more detail in the L,ease.
The City �vil] use the increased portion (beyond the Emergency Increase) of
the Ticket Surcharge to pro��de direct or indirect benefit to the New Arena,
Wilkins Auditorium, or Convention Center. The initial Ticket Surcharge of
�L�O per ticket w�ll be reduced to $1.00 per ticket and the Surcharge Base
shall be reduced to 51,400,000 if the proceeds of the State Bonds
• contemplated in Section JX (C) hereof are granted to the City.
D. Capita] Repairs, Replacements and Improvements. The Team shall manage,
operate and maintain all aspects of the New Arena consistent with
comparable NHL facilities, including making all capital repairs, replacements
and improvements as and when the Team and the City reasonably deem
necessary, ail at the elcpense of the Team, except as expressly provided in
paragraph E below, and consistent with any requirements as set forth in the
Lease to be negotiated in good faith among the Team, City and Authority
("Lease"). The Team and the Authoriry shall create a capital rep]acement
repair and reserve fund ("Arena Reserve Fund") and to be funded by the
Team and spent according to the terms of the Lease. The moneys in the
Arena Reserve Fund shall be the property of the Team during the Lease
Term; provided that moneys remain3ng in the Arena Reserve Pund at the end
of the Lease Term shall be the property of the City. The Team's annual
contribution to the Arena Reserve Fund shall be (a) �250,000 for the fourth
and fi8h years of the Lease Term, (b) $500,000 in the sixth year, and (c)
commencing in the seventh and in each year thereafter an amount equal to
$500,000, to be escalated annually commencing in the seventh year at the rate
of inflation during the preceding year.
•
aso�v 4
a�-C�S
: The contributions shall be payable by the Team at the beginning of the
applicable }'zar of the I.ease Term. To the e�ent the money in the Arena
Resen�e Fund is insufficient, the Team shall have the obligation to pay for
capital repairs and replacements, except as expressiy provided in paragraph
E hereof.
E. Citv Contribution to Repair and Re�lacement After Citv Bonds are Paid
When the Cin Bonds are paid or defeased, the City shali continue to receive
100% of the Ticket Surcharge. The City agrees to provide matchin� fundin�
(to be held in a separate City account) for necessary capital repairs and
replacements in the folloRing manner:
(i) If the Ticket Surcharge has not been increased since the
commencement of the Lease Term, the City shall make a��ailable
durino the calendar year, on a one-to-one matching basis with the
expenditures made out of the Arena Reserve Fund or otherwise by the
Team during such year the full amount of the Ticket Surcharge up to
�1.4 million. These funds shal] only be available during the calendar
year, and any unmatched and unspent funds shall revert to the City for
uses which pro�-ide direct or indirect benefit to the New Arena,
Com�ention Center, or Wilkins Auditorium.
• (2) If the Ticket Surcharge has been inereased during the Lease Term,
then the City shall make available on a one-to-one matching basis with
the expenditures made out of the Arena Reseive Fund or otherwise by
the Team during such year, an amount equal to the $1.4 million
inflated annually beginning in the seventh year in an identical manner
to the escalation of the Team's contribution to the Arena Reserve
Fund (the "Escalated Contribution").
In no event shall the annual match by the City exceed the actual revenue
derived from the Ticket Surcharge. The Team shall provide the City written
evidence of the payment of e�enditures made by the Team prior to the City
making the matching contribution contemplated by this paragraph V available
to the Team.
In any event, notwithstanding the City's annual match under paragraph E
hereof, the Team remains responsible for the payment of and contracting for,
in accordance with law, all necessary repairs and replacements to the New
Arena.
r 1
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3509659 5
q� -C�1S
• F. Namine Riehts — Citv Approval. Tt�e City has the right to reasonably
approve the recipient of the naming rights for the New Arena which rights
shall be granted for no longer than the L,ease Term.
VI. NE��J ARENA CO'�4MITMENTS:
The Authoiin> and City belie� that the New Arena is and u�ill be on the
Commencement Date free of all cont7actual obligations relating to New Arena
operations R�ith third panies, which include advertising and concessions, other than
contractual scheduling commitments for certain events and the existing agreement
«�ith Ticket Master'�4innesota dated'�ovember 5, 199�. The Team has the right to
select and contract a�ith ali parties pro��ding products or services for the New Arena
(includino the concessionaire), to determine product selection and the service to be
pro��ided b}� such contractin; parties, and to receive a11 revenues and payments from
such parties. The Team shall also have the opponunity to participate in the selection
process for the parking lot operator at set renewal periods. The City and the
Authority will work n the Team to facilitate the Team's financial and operationa]
interests in the parkin� a�•ailable for �HL Games at the ramps and lots described in
Para�raph V-A hereof.
• VII. ADVERTISI:�G
A. The Team shall have the exclusive right to sell and control the advertising on
the outdoor marquees (referred to in Paragraph V-B above). In consideration
thereof, the Team shall pay to the Authority or the City $385,000 annually,
beginning on the Commencement Date, with an escalation of 5% annuallv
thereafter be�inning in the second year of the Lease Term. This obligation
shall be due and owing by the Team regardless of the amount of such
advertising revenue.
B. The Team shall have the exclusive right to sell and control all other
advertising and promotion rights for the New Arena and retain all revenues
received from such sales. The Team shall use its best efforts to promote
attendance at events in the New Arena. Additionally, the Team shall use its
best efforts to coordinate activities in the New Arena with activities in the
Civic Center compiex.
C. This Term Sheet and the Lease shall not affeci the rights of the City and
Authority with respect to advertising in other areas of the St. Paul Civic
Center Complex (e.g, Wilkins Auditorium or new Convention Center).
•
350 V
a'1-C�tS
�
VIII. NE�� ARENA DESIGN AI�D CONSTRUCTION
A. The Team v.�ill contract for the design and construction of the New Arena
��ithout the necessity for advertisement for bids, using a construction method
that espedites the construction schedu]e. Immediately upon the award of an
i�THL franchise if it occurs prior to July 11, 1997, the Team shall commence
the design and construction of the New Arena in Saint Paul, and if the Team
is granted a franchise to play in the 1999-200� 2�HL Season, such construction
shall be substantially completed by September i, 1499. Subject to clause (B)
below, the New Arena sha11 be a first class facility consistent in quality w
other current arenas recently constructed for use by I�'HL teams, and is
expected to consist of the following major design elements:
•
1.
2.
Appro�mately 6�0.000 square feet.
approximately 2,500 club seats.
approximately 750 to 1000 seais in luxury suites.
3.
4.
5.
6.
7.
8.
9.
10.
A capacity of appro�mately 19,000 seats for hockey, including:
(a)
(b}
A finished club restaurant and bar.
Finished team retail stores and team offices.
Video scoreboard(s) with advertising panels.
Two or more new outdoor electronic marquees.
Finished locker rooms and related training rooms and offices.
Finished concessions and novelty stands.
Landscaping.
All necessary fumiture, £ixtures and equipment.
B. The Team, City and Authority shall mutually agree on the conceptual design
for the New Arena by August 1, 1997. There wil] be a design team that w�ill
include two representatives from the City and one representative from the
Authority in addition to representatives from the Team. If no agreement is
n
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3509669
Il
9'1- C�IS
• reached the Team shall ha��e ihe right to make final design decisions, which
the Team a�rees to make on a timely basis. I�TO material changes may be
made in the conceptual dzsign by the Team, a�thout the approvai of the City,
except as required by the project budget of approximately $130,000,000. In
such event, the City, Authorit�� and Team shall agree to ealue engineer the
New Arena project on a timely basis to reduce its costs. If no agreement on
the aalue enQineering can be reached, the Team shall have the right to make
final desiQn decisions, subject to the spirit of the Conceptual Design and
project budeet constraints.
C. Contingent on recei«ng the funds from the City under the Plan of Finance,
the Team shall bear ali the costs of the New Arena, including desien,
construction. finance, cost o��erruns and demolition of the existing arena. The
Ciry shail bear the costs of the costs of acquisition or off-site infrastructure
impro��ements. T'he City and the Team agree to consider alternate
construction methods �hich may reduce project costs and expedite project
schedule. The Ciry aerees to coordinate and help eapedite all permits needed
for the construction of the New ,4rena. In the event the costs of the New
Arena are ]ess than 5130.000,000, the sa��ngs shall be shared by the respective
parties in the same proportion as their contributions set forth in Section IX.
• IX. PLA'� OF FINA.\CE:
A. The New Arena shall be financed through the following funds: (1} $35 million
from the Team in the form of cash, cash equivalent or an irrevocable letter
of credit in form and substance satisfactory to the City (the "Team
Contribution"), and (2) �30 million from the City or its housing and
redevelopment authority plus the cost of land and off-site infrastructure (the
"Ciry Contribution"), and (3) an additional $65,000,000 from the City or its
housing and redevelopmeni authoriry, which the City anticipates will be
replaced a�th State Bonds as provided in paragraph C below (the "Ciry
Guaranry of State Portion"). The funding in clause (2) and (3) is collectively
referred to as the "City Bonds". If necessary, the funding plan for the City
Bonds shall be structured so that contracts for the construction of the New
Arena may be awarded without advertisement for bids.
B. The Team Contribution and City Contribution must be deposited in escrow
with a third party acceptable to the Team and the City by a date reasonabiy
acceptable to the Team and the City in order to accommodate the leiting of
the necessary design and construction contracts. The Team and the City will
mutually agree to the percentage of each draw to be paid by the Team
n
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35096F9
0
97-GRS
• Contribution and the Cin- Contribution. The intent of the parties is that the
City Guarann� of State Portion «�ll not be drak�n dow�n until July 1, 1998.
C. The Team acknowledges and agrees that the City anticipates that a portion
of the City Bonds will be replaced a�ith an appropriation or proceeds of bonds
issued by the State of Minnesota (the "State Bonds"). Upon such
replacement, the term "City Bonds" herein shall be deemed to include the
"State Bonds".
X. CH,ARITABLE CONTRIBUTIONS:
The Team, or its charitable foundation, will on the Commencement Date and
annually thereafter make annua] contributions to existing local organizations that
promote youth programs in D4innesota, such as the Mariucci Inner Ciry Youth
Hocke�• and ?�4innesota Amateur Hockec Association (MAHA).
XL MISCELLA.'�EOUS:
A. Upon the grant of an NHL franchise to the Team, the parties shall commence
ne;otiations of a definitive Lease agreement based on this Term Sheet
("L.ease"). If a definitive Lease has not been executed by March 15, 1998, any
outstanding issues (except failure of the parties to agree pursuant to Section
• XI-H) shall be submitted to binding arbitration upon the request of the City
or the Team by a panel of three independent persons familiar with the
operations and economics of sports facilities or municipal operations and
finance. One panelist shall be chosen by the Team. The second panelist shall
be chosen by the City, and the third panelist shall be chosen by the other two
panelists. Such panel shall ha��e the right to make a decision solely on the
issue or issues in dispute but shall not have the power to alter the terms
agreed upon by the parties herein or hear or determine any dispute over (i)
the terms or conditions which may be agreed to in the future in the
negotiations over the Lease, or (ii) the failure of the parties to agree pursuant
to Paragraph XI-H or VIII-B.
B. The Team will maintain its membership in good standing in the NHL
throughout the Lease Term.
C. The Lease will contain such other terms and conditions (insurance, damage
and destruction, indemnification, financial statements, securaty, scheduling,
force majeure, events of default, remedies, miscellaneous, etc.) as are
customary in the industry, reasonable, or otherwise agreed to by the City,
Authority and Team. Notwithstanding the foregoing, the Team shail agree to
�J
3S096E.9
�
9� -C�s
• pay liquldated damages in the e��ent of a breach of its covenant (a) to operate
exclusively at the Iv'ew Arena during the first ten years of the I.ease Term as
pro��ided in Paragraph IV hereof, or (b) after the first ten years of the Lease
Term, to pap the City and State the amounts specified in Paragraph IV hereof
in the event it relocates the Team, in an amount equal to: (x) the unpaid
principal balance of the outstanding City Bonds (inciuding any related
premium or early retirement penalty assocaated with prepayment), (y) the
amount of money expended by the Ciry and the Authoriry for construction
cost o��erruns, land acquisition, off-site infrastructure, demolition and other
actua] out of pocket costs incurred by the City and the Authority in connection
with the New Arena, and (z) interest from tbe date of expenditure of the
amounts identified in clause (y) at a rate of interest of seven percent per
annum. Additionall}�, disputes beta�een the parties under ihe J_,ease R�ill be
��enued esdusively in Ramsey Counry, Minnesota.
D. No term of the Lease shali impair the tax exempt status of outstanding bonds
issued ��ith respect to the Ci��ic Center Compler,, and if any term herein
should ha�e that effect, it shall be deemed modified to the e�rtent required to
eliminate such effect as long as such modifications remain consistent with the
intent of this Term Sheet.
E. If al] or a portion of the City Bonds are issued as tax exempt bonds, the Team
• and the Cin� shall make such reasonable modifications to the Term Sheet as
are appropriate to facilitate and not impair such exemption. In order to
accommodate the construction of the New Arena, without advertisement for
bids, the Team and the City shall make such reasonable modifications to the
Term Sheet as necessare to take advantage of any exemption to competit9ve
bidding, which modifications may include the lessor under the L.ease being a
nonprofit corporation, as long as such modifications remain consistent with the
intent of this Tertn Sheet.
F. The Team and the City agree that the provisions of this Term Sheet are
subject to all federal, state and loca] laws, rules, regulations or ordinances.
G. A binding letter of intent in substantialiy the form attached hereto as F�hibit
A shall be promptly executed by the City, Authority and Team.
H. The Team and the City shall collaborate in good faith on the design,
construction, finance and operation of a new p7actice facility or the necessary
improvements to an existing facility to be converted into a practice facility for
the Team containing the necessary facilities for an NHL practice facility which
shal] be open for use by the public when not being used by the Team.
�
3509569 1 Q
9'1- (.'1 S
:�'othin, herein shall be construed as a guarantee of City financial assistance
� for the practice facility.
I. The Team shall make the New Arena a��ailable for lease to the Minnesota
State Hieh Schoo] I.eawe (MSHSL) in order that the MSHSL shall be able
to continue to conduct state high school tournaments as they have been
conducted in the past, includine girls volley ball, girls danceline, boys a�restling,
boys hocke}� and boys basketball. The MSHSL shall be able to conduct the
tournaments and receive the same revenue streams, and subject to agreement,
any new re��enue streams, and pay the npes of expenses in the same
categories that are cunently in effect.
3. The Team shal] make the '�Tew Arena aeailable, subject to scheduling of other
events, to the City or its designee for presentation of up to five (5) events per
year not to e�ceed 10 da}•s, including time for set up and break down (the
"Ciry E�ents"). Such e��ents shall be of "community or non-commercial
nature" and neither the City nor its designee shall be required to pay rent to
the Team for use of the \Tew Arena for said event(s). However, the City or
its designee shall be required to reimburse the Team for all applicable out-of-
pocket expenses, incurred in connection with the event(s). The City shall be
entitled to �0 percent of any re��enues derived in the New Arena from the Cirv
Events. "
i K. Any contracts or agreements entered into by the Team which generate Team
Arena Revenues or any agreements a�th respect to operations at the New
Arena shall, unless such contracts or agreements were approved prior to their
execution by the City, contain a clause that such contracts or agreements are
immediatelp terminable by the City at its option upon e�iration or
termination of the L,ease.
L. The Team agrees that throughout the term of the L.ease, un]ess the City
othenvise consents in a�riting, which consent the City agrees will not be
unreasonably R�ithheld (a} will be the sole general
partner of the team, and (b) Robert O. Naegele, Jr. will control the general
partner.
M. The Authority or the City will use its best efforts to provide the Team up to
10,000 square feet of office space commencing on a date as necessary to meet
the Team's needs and continuing through the completion date of the New
Arena. The Team shall pay rent equal to all utility, any build out costs, and
all other out-of-pocket costs of the Authority or the City.
• 350a66.9 11
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�
EXHIBIT A
BINDI'�G LETTER OF INT'ENT
This Binding I,etter of Intent is entered into this day of _, 1997, by and
amon� the City of St. Paul, Minnesota ("Ciry"), St. Paul Civic Center Authority ("Authority"),
Housing and Redevelopment Authorin� of the City of Saint Paul, Minnesota (the "HRA").
and , a Minnesota limited partnership ("Team")
(collectively "the Parties").
The City, Authorin�, HRA, and Team agree to the terms in the attached Amended
and Restated Term Sheet for St. Paul Ci�ric Center Arena dated May 28 1997 (the "Term
Sheet") and agree that the terms set forth in the Term Sheet wil] be incorporated into a
definitive lease agreement ("L,ease") among the Pariies. The Citt=, Authority, HRA, and
Team aQree that the Term Sheet reflects the basic business deal among the parties, and is
intended to be binding on the Parties, their respective assigns and successors and that they
��ill in good faith negotiate the terms of the Lease consistent with the terms set forth in the
Term Sheet.
The Cin�, Authority, HRA, and Team each represent that the execution and delivery
of this Binding L,etter of Intent and the Term Sheet and the performance and observance
of the terms of this Binding Letter of Intent and the Term Sheet have been duly authorized
. by all necessary action on the part of the City, Authoriry, HRA, and Team respectively.
.
This Binding Letter of Intent shall automatically terminate and be of no effect if (a)
the National Hockey I,eague does not announce the award of an e�cpansion franchise to the
Team during its next round of expansion or approve this Term Sheet on or before 3uly 11,
1997 or (b) the Team's or City's contribution contemplated by Section IX(A) shaii not be
available at the time and in the form provided in Paragraph IX(B).
3509ot.o
9'1-CTlS
r1
LJ
The Parties hereb}• execute this Binding L.etter of Intent as of the date first written
abo��e.
CITY OF ST. PAUL, MINi�'ESOTA
Bv:
Title: Mavor
•
Appro�•ed as to Form:
Citv Attornev
Title: Director, Office of Financial Sen�ces
Bv:
Title: Director of Planning and Economic
Development
ST. PAUL CIVIC CEN'I'ER AUTHORITY
Title: Chair
F�ecutive Director
•
35po5Ci9
�t� - �� s
i
HOL�SI�G A.'�D REAEVELOPMENT AUTHORITY
OF THE CITY OF SAI?vTT PAUL, MINNESaTA
Title: Chair
By:
Title: Secretarv
B�•:
Title: Executive Director
Title: Director, Office of Financial Services
A LIMITED
•
PART:'�ERSHIP
By: , a Minnesota limited
liability company, its general partner
By:
Title: Robert O. I�aegele, Jr.
Managing Member
•
iS�'� 0
•
A.�1E'��ED �'�'D RESTATED
TERM SHEET
Dated A'Ia�� 28. 1997.
for the Lease of the
� n d.�s cc r�a�
� �� a�
NEW ST. PAUL CIVIC CENTER AREf�'A ('NEW AREI�'A")
•
I.
II.
III
IV
OW?�ER'S AGE\T w�ill be the Saint Paul Civic Center Authority ("Authority"), and
OVJtiER will be the City of Saint Paul ("Ciry'�.
TE'��\T ��11 be the '�HL eap�nsion team to be oc�ned by
("Teani'}.
LEASED PRE?�4ISES �ill be the New Arena, including all furniture, fixtures and
equipment necessary for the pla} of all h'HL home regular season, pla}�off, All-
Star and other NHL-sanctioned home games and any ?�THL e�ibition games pia}=ed
at the New Arena ("NHL Games"), and any other arena events as contemplated
below.
TERM OF LEASE
The term of the L.ease shall commence thirty days prior to the first Tv'HL Game of
the regular NHL �se� season which follows the date of substantial completion of
the New Arena (the °Commencement Date" which if an NHL franchise is Qranted
to the Team to nlav in the 1999-2000 I�HL season, is anticipated to be approximately
September 1, 1999) and will continue from that date for the later of twenty (20) years
or the final maturity stated date of the City Bonds, but not longer than 25 years (the
"Lease Term"). The Team will have the option to extend the Lease Term for two
five (5) year periods. Any such e�ension shall be a part of the Lease Term. The
Team will lease the New Arena for the purpose of playing all of its NHL home
Games and w�ill not relocate the Team from the Arena during the Lease Term;
provided, that the Team shali have the right after the first ten years of the Lease
Term to terminate the lease by paying the Ciry ��a •��m� an amount required to
discharge the outstanding Ciry Bonds , including any
related premium or early retirement penalty associated with pre-payment). Upon
_L�S
• 3509GSRed
pa co Cb. OS?69'
Q1-G4S
•
C�
V.
pa�•ment of said amount and pa� of all other accrued liabilities under the L,ease.
the Team may terminate the I.ease.
ARE'_v'A REVE'�"[rES AI�TI7 E}:PEi�SES
A. Team Re�•enues. T'he Team will control and retain 100% of revenues deri<<ed
from all e�•ents at the \ew Arena (such e��ents "Arena Events" and such
re��enues "Team Arena Revenues"), except as otherckzse provided in
Paragraphs V-B and XI-3 hereof and except as pro��ided «�th users of the
New Arena, and 100% of the revenues derived from other operations`outside
of the \eR• �rena ("Team Revenues"). Team Arena Revenues and Team
Re��enues include the following:
1.
�
3.
4.
sa]es of tickets for rlrena Events
sales of tickets for club seats for Arena Eeents
sales of luxury suites for Arena Events
\ew Arena's share of all concession revenues and pa}ments
5. all (permanent and temporary} advertising and promotional revenues
(includine namino rights, fixed signage, dasher boards, on-ice
advertising, ��deo boards) at the ?��ew Arena
6. merchandisin� re��enues zealized from sales at Arena Events and at all
other times at the Team's retail stores at the New Arena and
elsewhere
7
8.
�
10.
publication revenues realized at Arena Events and at all other times
at the Team's retail stores at the New Arena and elsewhere
broadcast, merchandising and other revenues received by the Team
from the NHL
revenues from local broadcasts of Arena Events (e.g., local TV, cable
and radio)
all other revenues derived from operations of the New Arena and the
Team s business outside of the Arena
pro��ided, that the City and the Authority make no representations or
warranties about the leve] of any such revenues; or the availability of any
• 35WSERed
Y9 m YE. 0>.26'9i �
a�-G'►S
re��enue sources other than from the New Arena. The Team's ri2ht to all
• Team Arena Revenues accruing after the ea or termination of the
Lease shal] cease upon such e� or termination of the L,ease.
Team Arena Re� and Team Re��enues do not include the amounts to be
received by the City from the Team as described in paragraph B below, and any taxes of
general applicability.
In addition, the City shall pay the Team a sum equal to (a) r.et parking revenues
derived from event parking at the time of fiHL Games from the existing 1730 spaces in che
Ci��ic Center Ramp and the 430 spaces in the Ci��c Center E�ibit Hali underground ramp,
(b} net parking rerenues for event parking receiced by the City at the time of NHL Games
derived from approximately� 235 surface parkine spaces in the "Cleveland Circle" and "Se��en
Corners" surface parkinJ lots, and (c) any net parking revenues for event parking recei��ed
by the Ciry at the time of '�HL Games from surface parking on parcels contiguous to the
�ec� Arena if and to the e� actuall}• ocened or controlled by the C;n durina the Lease
Term. In the e��ent the lots in clause (b) become una��ailable for event parking during i�HL
Games due to sale of property, canceliation of aQreements w�ith current property owners, or
development on site(s), the City shall negotiate in �ood faith to replace that parking
avai]abi]irn and the resultin2 amounts the Team receives for event parking during NHL
Games with other land a��ailable for surface parking contiguous to the :v'ew Arena. The City
and the Authority make no representations or warranties about the level of any such
revenues.
• B. Citt� Arena Revenues. The Team shall pay the Ciry (a) �385,000 per year in
consideration of the advertising revenue from the two replacements of the one
e�sting outdoor marquee (as pro��ided in Paragraph VII-A including the 5%
annual escalation) regardless of actual advertising revenue received by the
Team and (b) the Ticket Surcharge imposed by the City as described in C
below.
C. Team Arena Expenses. Eaccept as e�ressly provided for in paragraph E
hereof, the Team will pay for: (1) 100% of the management, operation and
maintenance expenses incurred for Arena Events and otherwise in connection
with the New Arena, it being the intention of the parties that the L,ease be
absolutely "net" to the Cit�� and the Authoriry, except as expressly provided for
in this Term Sheet, (2) the costs of capital repair and replacement as
described in subparagraph (D) below, and (3) any required collections of
(a) generally appiicable sales taees, (b) any other state or city imposed t�es
or assessments, and (c} a facility ticket surcharge or other similar tax or fee
imposed by the Ciry or Authoriry (the "Ticket Surcharge") not to exceed �}
1�.50 per ticket for Arena Events for the first five years of the L.ease Term,
w�ith cumulative increases in the Ticket Surcharge not to exceed $.50 over each
• 3509iF.Re2 1
\'Y �c \'6. Ot ;[.'9" J
a�-cns
successi�•e fi�•e }•ear period thereafter, except as may be mutually agreed to b}�
• the Cin� and Team, prorided that if the Ticket Surcharge does not raise at
least �} $2100.000 (the "SurcharQe Base") in any }'ear of the Lease
Term, then the City shall ha��e the right to increase the Ticket Surcharge for
the follow�no ��ear to that amount necessary to raise , , e�-}ea� the
Surcharae Base (the "Emergency Increase"). The Team and the City will keep
each other ad��ised durin� the year as to the estimated receipts from the
Ticket Surcharge and the Cit�� will pro�lde the Team wricten notice of anv
decision to increase the Ticket Surcharge; pro��ided further, that the Citt�
agrees not to increase the Ticket Surcharge during the h'HL Hockey season.
The Ciry Rill agree to repeal any Emergency Increase in the Ticket Surcharee
made under this para�raph when the City has reasonable assurances that the
lower Ticket Surcharge a-ili generate at least �888 the Surchar2e Base
per year. The timing and mechanism for any Emergency Increase shall be
provided for in more detail in the Lease. The City w�ill use the increased
portion (becond the Emzroency Increase} of the Ticket Surcharge to pro��ide
direct or indirect benefit to the Iv'ew Arena, Wilkins Auditorium, or
D. Ca ital Repairs. Replacements and Imvrovements. The Team shall manage,
• operate and maintain all aspects of the New Azena consistent with
comparable :�'HL facilities, inciuding making all capital repairs, zeplacements
and improvements as and when the Team and the City reasonably deem
necessarq, all at che e�ense of the Team, except as eapressly provided in
paragraph E below, and consistent with any requirements as set forth in the
L,ease to be negotiated in eood faith among the Team, Ciry and Authority
("L,ease"). The Team and the Authoriry shall create a capital replacement
repair and reserve fund ("Arena Reserve Fund") and to be funded by the
Team and spent accordin� to the terms of the Lease. The monevs in the
Arena Resen�e Fund shall be the properry of the Team during the I.ease
Term; provided that moneys remaining in the Arena Reserve Fund at the end
of the Lease Term shall be the property of the City. The Team's annual
contribution to the Arena Reserve Fund shall be (a) $250,000 for the fourth
and fifth years of the Lease Term, (b) $500,000 in the sixth year, and (c)
commencing in the seventh and in each year thereafter an amount equal to
$500,000, to be escalated annual}y commencing in the seventh year at the rate
of inflation during the preceding year.
The contributions shall be payable by the Team at the beginning of the
applicable year of the Lease Term. To the extent the money in the Arena
• 35096fiRcd A
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a�-��s
Resen�e Fund is insufficient, the Team shall have the obligation to pay for
• cagital repairs and replacements, except as e�pressly prov�ded in paraQraph
E hereof.
E. Ciri� Contribution to ReDair and Re placement Afcer Citv Bonds are Paid
�Vhen the Cin� Bonds are paid or defeased, the City shall continue to receiee
100% of the Ticket Surcharge. The City agrees to provide matching funding
(to be held in a separate City accountj for necessary capital repairs and
replacements in the following manner:
(1) If the Ticket Surcharge has not been increased since the
commencement of the L.ease Term, the City shall make available
durina the calendar year, on a one-to-one matching basis a�ith the
expenditures made out of the Arena Reserve Fund or otherc�7se bv the
Team durino such year the full amount of the Ticket Surcharge up to
S1.4 miilion.� These funds shali only be available during the calendar
year, and anv unmatched and unspent funds shall revert to the City for
uses «�hich pro�ide direct or indirect benefit to the I�'ew Arena,
Com�ention Center, or Wilkins Auditorium.
(2) lf the Ticket Surcharge has been increased during the Lease Term,
then the Cin� shall make available on a one-to-one matching basis alth
• the ea�penditures made out of the Arena Reserve Fund or otherwise by
the Team during such year, an amount equal to the $1.4 million
inflated annually beginning in the seventh year in an identical manner
to the escalation of the Team's contribution to the Arena Reserve
Fund (the "Escalated Contribution").
In no event shail the annual match by the City exceed the actual revenue
derived from the Ticket Surcharge. The Team shall provide the Ciry written
e«dence of the pay�nent of e�enditures made by the Team prior to the Ciry
making the matching contribution contemplated by this paragraph V available
to the Team.
In any event, notwithstanding the City's annual match under paragraph E
hereof, the Team remains responsible for the payment of and contracting for,
in accordance with law, all necessary repairs and replacements to the �`ew
Arena.
F. iv�amin¢ Ri¢hts — Citv Approval. The Ciry has the right to reasonably
approve the recipient of the naming rights for the New Arena which rights
shall be granted for no ]onger than the Lease Term.
• ?�uvsa.A�a $
V9 ro \'E. 05,2fiN]
a �l -GR 5
VI. :�'EW AREl�A C0�4D4ITD4E;��I'S:
i The Authorirn and Ciry belie��e that the New Arena is and �zli be on the
Commencement Date free of all contractual obligations relating to New Arena
operations kzth third parties, a�hich include advenising and concessions, other than
contractual scheduling commitments for certain events and the existing agreement
�;�ith Ticket R4aster'�4innesota dated November 5, 199�. The Team has the right to
select and contract azth all parties pro�lding products or sen�ices for the IVew �ena
(includin� the concessionaire), to determine product selection and the service to be
pro��ided by such contracting parties, and to receive all revenues and payments from
such parties. The Team shall also have the opportuniry to participate in the selection
process for the parking lot operator at set renewai periods. The City and the
Authority cr111 work �zth the Team to facilitate the Team's financiai and operational
interests in the parl:ing a��ailable for I�HL Games at the ramps and lots described in
Paraoraph V-A hereof.
VII. ADVERTISING
A, The Team shall have the exclusive right to sell and control the advertising on
the outdoor marquees (referred to in Paragraph V-B abo��e). In consideration
thereof the Team sha11 pay to the Authority or the City �385,000 annually,
beginning on the Commencement Date, with an escalation of 5% annually
� thereafter beeinning in the second year of the Lease Term. This obligation
shall be due and ow�inQ by the Team regardless of the amount of such
advertising revenue. �
B. The Team shall have the exclusive right to sell and control all other
advertising and promotion rights for the Iv�ew Arena and retain all revenues
received from such sales. The Team shall use its best efforts to promote
attendance at events in the New Arena. Additionally, the Team shall use its
best efforts to coordinate acti�lties in the New Arena with activities in the
Ci�zc Center complex.
C. This Term Sheet and the Lease shall not affect the rights of the City and
Authority with respect to advertising in other areas of the St. Paul Civic
Center Camplex (e.g., Wilkins Auditorium or new Convention Center).
i 3�096CR�d 6
�'9 ic \'f. Oi:S'99
a�-��.s
•
VIII. :�EW ARE;�,� DESIG\ A.'�D CO'�'STRUCTION
�. c..�.: ,.. .�,e r i t ,� l
- �- . r
h:�iA' ..A ..�: 1 �A 1' C t l.
� r ,- The Team
will contract for the desi¢n and construction of the New Arena without the
es edites the construcrion schedule. Immediately upon the aa�ard of an NHL
franchise if it occurs prior to July 11, 1997, the Team shall commence the
design and construction of the New Arena in Saint Paui, and if the Team is
�ranted a franchise to rla� in the 1999-Z000 NHL Season such construction
shall be substantially completed by September 1, 1999. Subject to clause (B)
below, the \ew Arena shall be a first class facility consistent in quality with
ofher current arenas recently constructed for use by nTHL teams, and is
expected to consist of the folloa�ng major design elements:
L�
1.
�
Appro�mate]y 6�o.000 square feet.
appro�mately 2,�00 club seats.
appro:�mately 7�0 to 1000 seats in luxury suites.
3.
4.
5.
6.
7.
8.
9.
10.
A capacit�� of appro�mately 19,000 seats for hockey, including:
(a)
(b)
A finished club restaurant and bar.
Finished team retail stores and team offices.
Video scoreboard(s) with advertising panels.
Two or more new outdoor electzanic marquees.
Finished locker rooms and related training rooms and offices.
Finished concessions and novelty stands.
L.andscaping.
All necessary furniture, fixtures and equipment.
B. The Team, City and Authority shall mutually agree on the conceptual design
for the New Arena by 3� A�u�ust 1, 1947. There will be a design team that
will include two representatives from the City and one representative from the
Authority in addition to representatives from the Team. If no agreement is
• 35MCSRed
�'9 a �'F. 05:1.'9' �
�� -��s
reached the Team shall haae the right to make final design decisions, which
• the Team a;rees to make on a timely basis. \'o material changes mav be
made in the conceptual design by the Team, �s the approval of the City,
except as required by the project budget of approximately �,130,000,000. In
such event. the City, Authority and Team shall aeree to value engineer the
1�'ew Arena project on a timely basis to reduce its costs. If no agreement on
the value en;ineering can be reached, the Team shall have the right to make
final design decisions, subject to the spirit of the Conceptual Design and
project budQet constraints.
C. Contingent on recei«ng the funds from the ����-� City under the Plan of
Finance, the Team shall bear all the costs of the New Arena, including design,
construction, finance, cost ovenuns and demolition of the existing arena. The
City shall bear the costs of the costs of acquisition or off-site infrastructure
improvements. The Cicy and the Team aeree to consider alternate
construction methods � ma�� reduce project costs and expedite project
schedule. The Ciry agrees to coordinate and help expedite all permits needed
for the construction of the New Arena. In the event the ensts nf rhP NPw
IX. PLAN OF FI:��A.�CE:
• A. The New Arena shall be financed through the following funds: (1) ���� �'��
" " _ $35 million from the
- �
Team�3} in the form of cash, cash eouivalent or an irrevocable letter of
$30 million from the City ���°��e�} or its
nent avthoritv plus the cost of land and off-site
from the Citv
bids.
' �• - - - - - - - -
= --- -----_ -: --- --: -- �a
acceptable to the
by a
• ?SW6SRea o
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..:i..Ll� ., f..�... ..,7 n-r3�to r ..Y.1.... ..Lia �i. T f]
J �Y�
• TA �P_� r=��«-� r-�:��� � Team and the Citv in order to accommodate
- r -r-. _�.......�....
the lettin2 of the necessan° desiea and construcrion contracts. The Team and
1998.
C.
X. CHARITABLE CO\'TRIBUTIONS:
The Team, or its charitable foundation, ��iil on the Commencement Date and
annually thereafter make annual contributions to existing local organizations that
promote youth programs in ?�4innesota, such as the Mariucci Inner Ciry Youth
Hockey and Minnesota Amateur Hockey Association (MAHA).
XI. MISCELLANEOLS:
• A. Upon the grant of an NHL franchise to the Team, the parties shall commence
negotiations of a definitive L,ease agreement based on this Term Sheet
("Lzase"). If a definitive L.ease has not been executed by March 15, 1998, any
outstanding issues (except failure of the parties to agree pursuant to Section
XI-H) shall be submitted to binding arbitration upon the request of the City
or the Team by a panel of three independent persons familiar with the
operations and economics of sports facilities or municipal operations and
finance. One panelist shall be chosen by the Team. The second panelist shall
be chosen by the City, and the third panelist shall be chosen by the other two
panelists. Such panel shall have the right to make a decision solely on the
issue or issues in dispute but shall not have the power to alter the terms
agreed upon by the parties herein or hear or determine any dispute over (i)
the terms or conditions which may be agreed to in the future in the
negotiations over the Lease, or (ii) the faIlure of the parties to agree pursuant
to Paragraph XI-H or VIII-B.
B. The Team a�ll maintain its membership in good standing in the NHL
throughout the Lease Term.
• 3SW6F.Rcd
\'9 w VE. 0>^SV" 9
a� -c�s
C. The Lease « contain such other terms and conditions (insurance, damage
• and destruction, indemnification, financial statements, security, scheduling.
force majeure, e��ents of default remedies, miscellaneous, etc.) as are
customary in the industn�, reasonable, or otherwise agreed to by the Cin,
Authority and Team. ;�otcc�ithstanding the foregoing, the Team shall agree to
pay liquidated damaQes in the event of a breach of its covenant (a) to operate
exclusiaely at tbe New Arena during the first ten years of the Lease Term as
pro��ided in Paragraph IV hereof, or (b) after the first ten years of the Lease
Term, to pay the City and State the amounts specified in Paragraph I�' hereof
in the e�•ent it relocates the Team, in an amount equal to: (x) the unpaid
principal balance of the outstanding Ciry Bonds ^^ a ����-�;(includin� any
related premium or earl�� retirement penalty associated with prepa}rznent), (y}
the amount of money expended by the City and the Authoriry for construction
cost o��erruns, land acquisition, off-site infrastructure, demolition and other
actual out of pocket costs incurred by the Ciry and the Authorin� in connection
ulth thz \ew Arena, and (z) interest from the date of ea�penditure of the
amounts identified in clause (y) at a rate of interest of seven percent per
annum. Additionaily, disputes between the parties under the L,ease will be
venued exclusively in Ramsey County, Minnesota.
D. No rerm of the L,ease shall impair the tax exempt status of outstanding bonds
issued u�ith respect to the Civic Center Complex, and if any term herein
should have that effect, it shall be deemed modified to the extent required to
• eliminate such effect as lona as such modifications remain consi�tent with thP
intent oF this Term Sheet.
E. If all or a portion of the Ciry $onds ^- °a����, are issued as ta�c exempt
bonds, the Team and the City shall make such reasonable modifications to the
Term Sheet as are appropriate to facilitate and not impair such exemvtion.
F
G. A binding ]etter of intent in substantially the form attached hereto as F�hibit
A shall be promptly executed by the City, Authority and Team.
• 350WSRW 1�
ti'9 io �'F, OS ^i:9i
The Team and the City agree that the provisions of this Term Sheet are
subject to all federal, state and local laws, rules, regulations or ordinances.
q�-Ln5
H. The Team and the Cin� shall collaborate in �ood faith on the desi;n.
• construction. finance and operation of a new practice facility or the necessarv
improvements to an e3asting facility to be converted into a practice facilin- for
the Team containing the necessary facilities for an NHL practice facility a
shal] be open for use by the public when not being used by the Team.
Nothine herein shall be construed as a guarantee of Ciry financial assistance
for the practice facility.
I. The Team shall make the I�Tew Arena available for lease to the Minnesota
State High School League (MSHSL) in order that the MSHSL shall be abie
to continue to conduct state high school tournaments as they have been
conducted in the past, including girls volley ball, eirls danceline, boys wrestlinQ,
boys hockey and bops basketball. The MSHSL shall be able to conduct the
tournaments and receive the same revenue streams, and subject to agreement,
any ne«� re��enue streams, and pay the types of expenses in the same
careQories that are currently in effect.
J. The Team shall make the '�'ew Arena available, subject to scheduling of other
events, to the City or its designee for presentation of up to five (5) events per
year not to exceed 10 dacs, including time for set up and break down (the
"Ciry Events"). Such ecents shall be of "community or non-commercial
nature" and neither the City nor its designee shall be required to pay rent to
the Team for use of the \'ew ?,rena for said event(s). However, the City or
• its designee shall be required to reimburse the Team for all applicable out-of-
pocket expenses, incurred in connection with the event(s). The City shall be
entitled to 50 percent of any revenues derived in the New Arena from the City
Evenfs.
K. A.ny contracts or agreements entered into by the Team which generate Team
Arena Revenues or any agreements with respect to operations at the New
Arena shall, unless such contracts or agreements were approved prior to their
execution by the City, contain a clause that such contracts or agreements are
immediately terminable by the City at its option upon expiration or
termination of the Lease.
L. The Team agees that throughout the term of the Lease, unless the City
othera�ise consents in writing, which consent the City agrees will not be
unreasonably withhe]d (a) will be the sole general
partner of the team, and (b) Robezt O. Naegele, Jr. will control the general
partner.
M.
• 35096.CRea 11
V9 w �'F. 0$,:$qt
q�-��S
• r�rena. ine ieam snatt nav ren[ eouat to al! utilitv anv t
a33 other out-of-nocket costs of the Authoritv or the Cite.
�
• 35096ER<d
�'9co�'E 059G9'1 12
9 � -L�1 S
EXHIBIT A
i
BL'vDI?v'G LETTER OF INTEi�T
This Bandine Letter of Intent is entered into this day af _, 1997, by and
amono the City of St. Paul. 'vlinnesota ("City"), St. Paul Ci��c Center Authoriry ("Authori� "),
and . a Minnesota limited partnership
(collectively "the Parties").
The City, Authorin�. HRA, and Team a2ree to the terms in the attached Amended
and Restated Term Sheet for St. Paul Ci� Center Arena dated May �28, 1497 (the "Term
Sheet") and agree that the terms set forth in the Term Sheet will be incorporated into a
definiti��e lease agreement ("L�ase") among the Parties. The Ciry, Authority, HRA, and
Team agree that the Term Sheei reflects the basic business deal among the parties, and is
intended to be bindina on che Parties. cheir respectice assiQns and sueeessors and that the��
c�i11 in 000d faith neQotiate the terms of the Lease consistent with the terms set forth in the
Term Sheet.
The Ciri�, Authoritt�. � and Team each represent that the execution and delivery
of this Binding Letter of Intent and the Term Sheet and the performance and obsen�ance
of the terms of this BindinQ Letter of Intent and the Terzn Sheet have been duly authorized
by all necessary action on the part of the City, Authority, HRA, and Team respectively.
• This Binding Lxtter of Intent shall automatically terminate and be of no effect if e(a}
. -,
- ->
��+3�'i�e rhri.r�te F.,..a:..,. .. , a ]�__co,..:,,., iv n ,.c .�.., �r^,._..., cti,.,.. .._� - - -�-
r � _ _ '_
t , , the Iv`ational Hockey
L.eaQue does not g� announce the award of an eacpansion franchise to the Team during
its next round of expansion or approve this Term Sheet on or before 3uly 11, 1997 or ��b
the Team's or Citv's contribution contemplated by Seciion IX(A) shall not be available at
the time and in the form provided in Paragraph IX-��B .
• �5096.CRcC
\'9�0 \'b. 059F'99
9'1-G�IS
The Parties hereb� execute this Binding Letter of Intent as of the date first �Titten
•
n
U
��
abo��e.
approved as to Form:
City Attorney
39p96SRcd
V9 w VA, OS:�C57
CITY OF ST. PAUL, MINNBSOTA
By:
Title: Mavor
Title: Director, Office of Financial Services
Title: Director of Planning and Economic
Development
ST. PAUL CIVIC CENTER AUTHORITY
Title: Chair
By:
Title: Executive Director
�' � -G�tS
�
�
, A LIMITED
PARTNERSHIP
By: , a Minnesota limited
liabIlity compaz�y, its general partner
B
Title: Robert O. Naegele, Jr.
Managing Member
. �t0?eSReE
\'o w Vh. Oi:.F'9]
q�- (��t S
�
u
•
CITY OF SAINT PAUL
Norm Coleman, M¢yor
TO: Council President Dave Thune
Councilmember Dan Bostrom
Councilmember Jerry Blakey
Councilmember 7oe Coilins
Councilmember Mike Harris
Councilmember Roberta Megard
Councilmember Gladys Morton
390 Ciry HaU
I S West Ke!logg Boulevard
Sairtt Paul, Minnesota 55102
FROM: Mayor Norm Coleman�
DATE: May 28, 1997
RE: Interim Arena Financing Plan for NHL Hockey
7'e(ephone: (6I2) 266-8510
Facsimile: (612J 266-8513
Attached are briefing materials which set forth a proposed interim financing plan to
allow the City to proceed with the effort to obtain an NHL franchise. This financing
plan identifies revenue sources which will allows us to assure the NHL that the team
will play in a new state-of-the-art arena which, as a community facility, will benefit the
entire City and State and enhance our urban vitality. Given Governor Carlson's
commitment to support a$65 million bonding appropriation next year for the new
arena, there is little risk that this interim financing plan would ever have to be
implemented.
The NHL expansion committee will act on June 4th. We need to have City action and
approval of this plan as soon as possibie to accommodate this deadline.
Thank you for consideration.
Enclosures
u
a �-��5
• AN NHL HOCKEY FRANCHISE FOR SAINT PAUL:
INTERIM CITY FINANCING PLAN POR
STATE'S $65 MII.LION COMMITMENT
On May 27, 1997, Governor Carlson reiterated his commitment to support $65 million of state
bonding for renovating the Saint Paul Civic Center during the 19981egislative session. On May 6,
1997, Governor Carlson provided NHL Commissioner Bettman a similar written commitment.
(See attachment 1.) The Govemor's ability to influence the composition of any bonding bill,
leaves little risk that the Governor will not be successful in fulfilling this commitment.
The $65 million in state funds will not become available until after the 19981egislative session.
In order to be awarded an expansion franchise on June 4, 1997, Saint Paul needs to demonstrate
to the NHL that it has a legally binding financing plan in place to constnxct the new $130 million
arena. The Team's existing $35 million commitment is lega(ly binding and secure as is the City's
$30 million commitment What must be done now is to demonstrate a legally bindin�
commitment to the State's $6.5 million which wili not become avai]able until Summer, 1998.
To accomplish the legally bindin� commitment for the State's $65 million, the City has identified
approximately $65 million of future revenue that could become available if the worst, but very
unlikely, case occurred and the State provided no fundin�. These revenue sources provide the
necessary interim financin� plan necessary to obtain an NI�, franchise. This interim financing plan
(see attachment 2):
• 0 Does not involve the use of p�operty tax dolSars or take money from
neighborhoods.
0 Utilizes $44.5 million of additional City's sales tax bonding authority to help
provide the interim financin� for the arena nnd to increase the amount auailable for
the City's nei�hborhoods throu�h an extension of the sales tax for an additional six
years to 2029 .
0 With the Team's agreement, increases the ticket surcharge the effect of which is
to increase City revenue and reduce Team revenue. This is in addition to the
Team's commitment (a) of $35 million for the new arena and (b) the additional
$80 miliion that the team will have to spend once it is awarded a franchise.
In addition to the $65 million of revenue identified, the plan contemplates potential
commitments the labor and business community are pursuing to financially
contribute to the interim financin� plan as part of a partnership that recognizes the
si�nificant economic and social benefits that NHI, Hockey will bring to Saint Paul.
Adoptin� this interim financin� plan by approving a revised term sheet (forthcoming) will bring to
Saint Paul millions of dollars of investment and spendin�, hundreds of jobs, and inereased urban
vitality.
•
r �
� J
� � c1 1�DI lY•Gl
�ll
6122283z61
ST'ATE O�' �I�TN�SOTd.
QFPIOE OF TH$ GOV'E7f2N08
SAINT P,A,ZTL � 551•i�i
' 812-289-3393
a�� n. c��R
C.0
May 6, ] 997
Deaz Commissioner Bettman:
P.B2i02
�7� L�S
Ic is with a great deal of pleasure that I wtitc to inform you that the State of Minnesota
will paztner in Saint Paul's efforts to attract an NHT, fianchise back to Minnesota.
•
To demonstrate the State's partnership with the Ciry of Saint Paul and the tocal
ownership group, ! will subtnit a Proposat in th: 1998 bonding bilI to sccurc $65
miUion as the State's portion of tbe construction costs of a new arena. I have
inekrucced top members of my staff to wntinue to work with City staff and the Mayor
to develop the bonding bill proposal for presentation to the 1993 Legislacure.
Tl�c Statc'a commitmcnt, couplcd with dtt ownrrship group conCibution aud thc local
share offered hy the City of Saint Paul, will allow for the aonst�uction of a state-of-
the-art, N(-IL quality areaa to be ready for season pfay in 1499. The members of the
NHL Boazd of Governo:s should feel quite confident that The State of Minnesota, thc
ownership group and the City of Saint Paul will build a new arena to be ready for
seasvn play iu 1999.
Please fcel free to contact me if You would like to discuss this matter in more detail.
armesc regazds,
�
A FI. CARLSON
Govemor
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�50 SOUTH �IFTH STREET
MINNEPPOL15, MINNESOTA Sb402
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�4CS�MILE �6121 g35 165�
SU17E 2270
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ST. PAVL� MINNESO7A SSIOI
TELEPHONE (6�2i222.7455
FPCSiMRE (6i2� 222-�64<
May 30, 1997
Honorable Mayor and Members of the City Council
City of Saint Paul
IS West Ketlogg Boulevazd
St. Paul, MN 55102
RE: Authority to Issue Sales Tux Bonds
Dear Mayor and Members of the City Council:
OcoP} C S'NEA�OW
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WRITER'S CIRECT Dln� NUMBEs
(612)335-1577
You havc requested this firm's opinion on whether the City may issue up to $65 million
of gener�I obligation bonds undcr the authority of Minnesota Laws 1993, Chapfer 375, Article 9,
Section 46 (the "Sales Tax Law"). For the reasons stated belnw, hut subject to the qualifications
stated below, our conclusion is that the City may do so.
Tn 1993, the Housing tind Redcvclopmcnt Authority of the City of Saint Paul, Minnesota
(the "HRA'� issued $65 million of Sales Ta�c Revenue Bondt to finance improvements to the
Saint Paul Civic Center. In 1995, the HRA issued approximately $55 miltion of advance
refundirtg bonds to defease the entire remaining outstanding amount of the 1993 issue. Both the
1993 and 1995 issues were securcd by a pledge of the revenues of the sales tax imposed under
the Sales Tax Law. That statute st2tes (subd. 2) that revenues derived from the sales tax may be
used only for (a) capital expenses of the Saint Pau] Civic Center {"Civic Center"), or {b) capita]
projects for residential, cultural, commercial and economic development pro}ects in the
downtown or the neighborhoods. Since the 1993 Bonds were issued to finance improvements to
the Civic Center, the pledge of the sales rax revenues to secure those bonds (and the 1995
refunding bonds) was permitted by the Sales Tax Law.
•
��,-��s
Honorable Mayor and
• Member5 of the Cily Council
May 30, 1997
Page 2
Subd. 3 of the Sales Tax Law authori�es the City to issue up to $65 million in general
obligation bonds secured by the sales tax (and other available funds) for the purposes of ciause
2(a) [ Civic Center costs ]. '1'hese bonds may be issued without an elecrion, and do not count
against net debt.
Neither the Salcs Tax Revenue Bonds issued by die HRA in 1993, nor the 1995 refunding
bonds wue general obligation bonds. Instead, the bonds were issued as revenue bonds under the
I3RA's borrowing authority in Minn. Stat. Secs. 469.001 to 469.047, with a pledge of sates tax
revenues as security. 40% of the sales tax was allocated by tfie City to this purpose, with the
remaining 60% allocated to accounts created to hold and disbuzse funds to be used for
neigl�borhood and cultural prujccts.
The Ciry has never used the authority granted in Subd. 3 of the Sales Tax Law to issue up
to $65 million of general obligation bonds. That authority therefore remains available for the
Ciry to use in the proposed issuance of general obligation bonds to fund tha construction of a
ncw azcna, subject to the Tolluwing limitations:
• i. The proceeds of the bonds must be used for capital costs of the Civic Center. No
other use is allowed under the Sa[es 7ax Law.
2. 7']ze new arena must coniinue to be part of the "Civic Center." The exisung arena
is under the same ownership as the rest of the Civic Center complex and funerions
as part of the overall Civic Center facility. In the structure that is currently under
consideration, the new arena will con6nue to be owned by the Ci�7c Center
Authority (CCA), and �rill be leased to the NHL franchisec,' and �vill conunue to
fwiction zu part uf the cvmplex for prograznming purposes. While a reservation of
dates for practice and home games by the hockey teazn would be required, there
must be a cooperative arrangement between CCA and the franchisee to book the
arena for use in connertion with non-hockey events or shows using ttze other parts
of the Civic Center as their venue at umes when the fianchisee is not using the
arena for hockcy purposes. That arrangement need not disturb the economic
arrangements; the franchisee could continue to receive the revenues arising from
use of the uena.
• � A le�se co a non-profit corpora[ion which in tum leues the arena tu thc fra�uhisee woutd also be an acc�ptablc
structure.
�sae�as
• Honorable Mayor and
Members of the City Council
M�y 30, 1997
Page 3
We also wish to point ou[ some other aspects of our conclusion:
° I'1 -1.r15
a. Subd. 3 of the Sales Ta�c law states that the general obligation bonds " may be
paid from or secured by any funds available to the city, including the [ sales tax �..:'
VJhile we believe that the pledge of sales tax ptoceeds must constitute a significant
element of the security of the general obligarion bonds, the Sales Tax law expressly
authorizes the City to pledge other funds as well. The current version of the financing
plan for the new arena mentions several other revenue sources. Mixing other rcvenue
sources with sales taxes to secure the bonds and avoid the need to levy property taxes to
pay the bonds is expressly permitted by the Sales Tax Law.
b. Subd. 3 of the Sales Tax Law further states that the general obligation bonds may
be issued "without election on the question of issuance of the bonds or a property tax to
pay them." The Sales Tax Law therefore overrides conuary provisions of Minnesota
Statutes, Chapter 475 (which otherwise governs assuance of the bonds) or of the Saint
Paul City Charter which might require an election. The resolurion authorizang the bonds
• will not be subject to referendum.
Th9s opinion addresses the spccific question posed to us, and certain ramificarions of our
response. Nothing in this opinion should be understood to mean or imply that bonds may not be
issued for the puiposes of the new arena under other or different 1ega1 authority. The specifics of
sueh other authority aze beyond the scope of this opinion.
Very truly yours,
LEONARD, STREET AND DBINARD
B � � z:(-G. �-�^'�
Richazd H. Martin
Ri-fiM/kl
cc: Timothy Mazx
Joe Reid
Pam Wheelock
Martha T.arson
• Pe� Birk
ISd01a5
MAY-30-97 13=45 FROM=SPRINGS=ED INC 1D:6122233093 PAGE 2/3
!/
•
SS E. SEVEDfIld PLACE SInTE 100
SAII�T PAIII., MN SS701-214i
612-22:•1.000 F�tX:612-2233002
- ` 1 � � 1� S
l._J
.
SPRINGSTED
Pubsc Firrana t3dvisors
May 30, 1997
Mr. Joe Reid, Director of Financiai Services
Cify of Saint Paul
City Fi811
15 West Kellogg Boulevard
Saint Pau(, MN 55102
Ms. Pam Wheelock. Executive Oirector
Saint Paul Housing and Redevetopment Authorily
25 West Fourth Sireet
Saint Paul, MN 55102
Re: Civic Center Arena Financing
Potential Credit Rating Impact
Dear Mr. Reid and Ms. Wheelock:
;^�'
. �
Question:
We have been asked to respond to the quest[on of the potential effect of this financing on the
City's general obligation credit rating.
Discussion_
This financing is ceirrentty proposed to be in two parts: a long-ferm $30.0 million general
obligafion �evenue bond, and a short-tertn (less than 13 months) $65.0 million bond anticipatian
note (BAN}. lt is anticipated the BAN would be financed Iong-term during the 13-month period,
either in whole or in part by the State or by fhe City. This would only occur if the City was
awarded an NHL franchise.
The City currently has general obtigafion credif ratings from Standard & Poor's (SS�P), Moody's
and Fitch of AA+/AA 2/qA+ respectivety. To respond to this quesiion, Springsted and the City's
and HRA's senior management staff had a direct conversation with SEP's analytical sl�ff
assigned to Saint Paul. S&P was cFtosen rather than fhe other fwo rating agencies because
their analyfical sYaff has the longest tenure in working with Sairrt Paul, and also the City and
HRA have used S&P 4o a greater extent on financings than the ofher two agencies.
The purpose of the convecsation was to update S&P on this financing and obtain their reaction
and input, so as to structure the transactions with minimal adverse impact on the City`s rating.
We did not expect a definitive answer as to the status of the rating, but rather their degree of
comfort or discomEort wifh fhe proposed financings and its benefits and costs to the City.
SAQJI PAtlL. MN • M4�7VE1PplIS, MN • EROOIGIEID.`x'1 • O�'ERLN�D PARK.I6 '`x'A9iC�C+iON.00 ' IOWA C17X L�
MAY-30-97 13:45 FROM:SPRINGSTED 3NC ID=6122233093 PAGE 3/3
City of Saint Paul
May 3Q, 1997
Paqe 2
q�-c.�s
• '�he rating agenaes view these transacFions in two ways: first, as add�ionai debt, potentially
guaranteed by a general obligation backing, it wiil increase the debt burden, whicfi is an
adverse impact; and second, the resulting asset can generate economic benefi4s for itseif and
other related activities, which is a positive_ The negative aspect of debt burden can be reduced
'rf the primary revenue sources are reasonaby structured so as to make the possbility of having
to exerase the gerteral obligation ptedge remote.
Mswer:
SS�P made the foliowing commen�.s: based on other arena financing throughout the countrY, if
the primary revenue sources are "reasonably constructed" with suEficiertt room to insulate the
general obtiga5ori piedge and the finanang dces not marKedly commit existing revenues that
are now going to the City's General Fund, the City's present S&P generai obligation ratinq
would be reaffirmed (unchanged). Obviously, a primary revenue stream that is not "reasonably
structured" could lead S&.P to a downgrading of the rating.
Although we have not directly discussed this financing with Moodys and Fitch, we believe their
approacfi would be simila� to SB�P's.
From these discussions, we do not believe tfie issuance of the $30.0 million general obligation
issue and the $65.0 million BAN would, in and of itself, lead to a credit rating downgrading. We
believe that after the Legislature acts on the SYafe's Ievel of participation, then, if necessary, the
C'rty should proc�ed to structure the second transaction so that primary revenue sources are
reaso�ably structured to the Cit�l's and the age�aes' satis(action.
. We would be glad to respond any questia�s as to this subject.
Respeciiully,
� .���-i� �--C `��`�.��
David N. MacGillivray
Principal
Director of Project Management
/Cjb
cc: Mr. Mike Forester, Standard & Poor's
�
OFFICE OF THE MAYOR
FINANCIAL SERVICES OFFICE, &udge[ Section
Joseph Reid, Budget Director � � � � ^ �
.
CI`TY OF SAINT PAUL
Narm Coteman, Mayor
Saint Paul, Minnerota 55102-763I
240 City Hall
IS West Ketlogg Boulev¢rd
Telephone: (672) 266-8543
Facsimile: (6I2) 266-8541
MEMORANDi7M
Ta Interim Financing Plan Fite
From: Joe Reid
Re: Item 6: Construction Cash Flow Projections
Aate: May 30, 1997
The projec6ons, as developed by Thomas E Gunke, Executive Vice President, Mortenson, are
contained on the pages that follow.
r 1
LJ
•
St. Paul Hockey Arena Cash Fiow �� 5�«
• 7999 Season Completion
DESIGN PHASE CONSTRUCTiON PHASE SOFT COSTS T�TAL
Month Monthly Cumulatfve Monthly Cumulative MoMhly Cumutative A'lonthiy Cumulativa
u - . , - - - - . .
Aug-97 8B5,974 1,608234 - - - - 985,974 '1,606,234
Sep-97 l,'108 °18 2.715,152 - - - - 1.108,918 2,715.�52
Oct-97 t.'1�5,152 3,830.303 - - • - 1,115,152 3,830.303
NOV-99 901.126 4,731.428 ' - ' - 90'1.'I26 4.731,429
Dea97 808,658 5,540,087 - - - - B08.658 5,540,087
Jan-88 609,52d 6149,6'10 260,377 260.3)7 - - 869.901 6,4�9,988
Feb-98 546,147 6 895,758 433,982 69a,3a0 - - 980.�09 7,390,097
Mar-98 529,�78 7,224,935 728,057 1,a23,396 - - 1,25B,23a B,6a6,331
Apr-98 456.450 7,681,385 954.717 2,378,�13 - - 1,411,'16J '10.059,499
May-98 290.909 7 972,294 t,705,d72 4.083,585 - - 1,996,381 12,055.B79
Jun-9B �52�0"0 8.'125,000 2.3967H3 6.470,377 - - 2.539,438 14,585,377
dul-98 t53,750 8,268?50 a,743,209 �1213,585 - - 4,BB6,958 19.482,335
Aug-98 131,250 8400,000 6,467,925 t6,681,509 • - 5.599.175 25,Q8�,508
Sep-9E '137,500 8,537,500 7.399,057 2C,080.566 - • 7.536,557 32.8�8,086
Oct-98 137.SOD 8,675.000 8,715,095 32.i95,660 - - 8,252,595 40.B�D.860
Nov-HB '131,250 8.806,250 8A93,396 40.289,056 - - 8.224.5a6 49A95.306
Dea98 143,750 8,950,000 8,883.019 49,272,075 - - 9,126,769 58,222,075
Jan-99 131,250 9,D61,250 7,820,OOD 57,092,075 • - 7,951.250 66,173.325
• Feb-99 '125.00D 9,208,250 7,37J,359 64,469,434 1,769,445 1,769,445 8,277,803 75,445,128
Mar-99 '143,750 9.350,000 6.904,3<0 71,373,773 3,130.556 4,900.000 10.178.645 85,623,773
Ap�-9B '137,500 9.AB7,500 6,205,66� 77,579,434 2,994,445 7.894,445 9,337,605 94,965,378
May-99 'I3'1,256 9,618,750 5,'.07,�36 82,68T,'170 3,675,040 11,569,445 8,913,988 103875,364
Jun-99 i37,500 9,756,250 5,250,944 87,938,�13 5,56�,�11 17,130,556 10,949,555 'I14.824,919
Jui-g9 'I37,500 9,883,750 2,152t53 90,080,566 5,567,1�1 22,691,667 ),851,064 122,675.983
Aug-99 106,250 70,000,000 1.809,434 92,000.000 5,306,334 28,000,000 7.324,018 73D.OD0,000
Sap-99
Oct•99
Nov-99
Deo-99
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OFFICE OF THE MAYOR
FINANCL4L SERVICES OFFICE, Budget Section ^�
7oseph Reid, Budget Director A� .. 4'(
SA[N2
PAVL
�
AAAA
CITY OF SAINT PAUL
Norm Coleman, Mayor
240 City Hal[
IS West Ke!logg Boulevard
Saint Paul, Minnesota SSIO2-1631
TeZephone: (6l2) 2668543
Facsimile: (612) 266-8545
•
To: Interim Financing Plan File
MEMORANDUM
From: Joe Reid
Re: Item 7: Potential Schedule for Issuance of Debt
Date: May 30, 1997
It is estimated that the City's $30 million commitment would necessitate a bond issuance of
some combination of taxable and ta�c exempt bonds in late July or early August, 1997. The
timing would be subject to the decision of the Boazd of C:overnors regarding the first season
yeaz of the NfIL franchise awazded to Saint Paul and the design and construcfion schedule that
would follow from that decision.
Subject to the same qualifications noted above, it is estimated that the City's $65 million
commitment of interim financing would result in the issuance of a bond anticipation note of
$65 million at the most advantageous time and subject to the interest rates auailable in the
bond market. The timing would also be subject to the issuance of arena construction contracts
and could occur anytime between late July, 1997 and early 1998.
•
612/22A-9445
s�t n�t
Builaiing and Construction Trades
May 3Q, 1997
Mayor Norm Coleman
Council President Dave Thune
Members of the Saint Paul City Council
Office of Mayor
390 City Hall
St. Paul, MN 55102
Fax No. 266-8513
Re: Interim Financing Pian for New Civic Center Arena
��,C�S
council
LABOR CENTRE, 411 MAIN STREET, ROOM 206
SAINT PAUL, MINNESOTA 55102
�
Dear Mayor Coleman, Council President Thune and Council members:
We have reviewed the "Interim Arena Financing Plan for NFIL Hockey" as presented to the City
• Council on May 28, 1997. The plan identifies potential labor union participation in the amount of
$5 miilion to provide collateral for the City's commitment under the plan. I have been in contact
with officers, business managers, labor trustees and management trustees of at least seven of our
larger unions and have received enthusiastic support for our attempts to participate in the
collateralization effort.
While none of the unions that we are working with can make a binding legal commitment at this
time due to the review process necessary for transactions such as these, you can be assured of two
things. First, we wi(1 work with you diligently and in good faith in an attempt to agree to terms
and conditions for a binding legal commitment under which unions would participate in the
interim plan of finance. Second, we will aggressively support our efforts during the 1448
legislative session to obtain $65 million of state bonding for construction of the new arena for
NFII, hockey.
•
We applaud your persistent efforts to provide a new Civic Center Arena for use by the entire
community and the state to bring IVI�, hockey to Minnesota and to enhance the urban vitality of
Saint Paul.
�� rely,
,� `� �°�' �,�.��`S�-z ��-z-
Dick Anfang Alfred J. Schmitt Robert Schwartzbauer R t���
Executive Se .efary President Treasurer
PA/df
opeiu#12
��- G?S
�
2490 Minnesota World Trzde Center 30 East Seventh Street
$aint Paul MN 55101 672.29L5600 6122915606(Fax)
May 29, 1997
Mayor Norm Coleman
Council President Dave Thune
Members of the Saint Paul City Council
Oftice of the Mayor
390 City Hall
Saint Paul, MN 55102
Re: Interim Financing Plan for the New Civic Center Arena
Dear Mayor Coleman, Council President Thune, and Councilmembers;
��v} ��=r�
ARY 3 p 1397
::' -�
, M+^
We have reviewed the "Interim Arena Financing Plan for NHI, Hockey" as presented to the City Council
on May 28, 1997. The plan identifies potential business participation in the amount of $5 million to
provide collateral for the CiTy's commitment under the plan.
While none of the businesses that we are working with can make a binding legal commihnent at this time
• due to the review process necessary for transactions such as these, you can be assured of two things.
First, we will work with you diligently and in good faith in an attempt to agree to terms and conditions for
a binding legal commitment under which businesses would participate in the interim plan of finance.
Second, we will aggressively support your efforts during the 1998 legislative sessioa to obtain $65
million of State bonding for construction of the new arena for NHL hockey.
The Capital City Parinership strongly supports the return of the NHL to Minnesota. We believe the NHL
would provide our community with high quality family entertainment, which would benefit our
communiry and help revitalize our downtown core. We have led efforts to demonstrate the necessary
corporate support by securing letters of interest to purchase luxury suites, advertising and sponsorship
opportunities, naming rights, etc. We are also pleased to have raised $300,000 from businesses to help
cover preliminary marketing, legal, and other consulting services to help position St. Paul to be awarded a
new NHL expansion team.
We applaud your efforts to provide a new Civic Center Arena for use by the entire community and the
state, to bring NHL hockey to Minnesota, and to enhance the urban vitality of Saint Paul. We appreciate
our working relationship and look forward to new public(private partnerships to help revitalize the urban
core of our State's Capital CiTy.
r�
L_J
,
Ve�y tr q o y
�) /
Dougl W. Leatherdale
Chairman
�
n J. Labosky
President
� Saint Paul
Area Chamber
of Commerce
•
May 30, 1997
Flrst National Bank Building, Suite N-205
332 Minnesota Street
Saint Paui, MN 55107
Mayor Norm Coleman
Council President David Thune
Members of the Saint Paul City Councii
Office of the Mayor
390 City Hall
Saint Paul, NIN 55102
Deaz Mayor Coleman, Council President Thune and Councilmembers:
Tel: 672/223-s000
FaY:612/223-5119
�
We have reviewed the Interim Arena Financing Plan for NHL Hockey that was presented to the
City Council on May 28, 1997. We understand that the plan calls for the business community
to participate in the amount of $5 million as collateral for the Ciry's commitment under the
plan.
Representing the business community, we enthusiastically pledge to support and cooperate with
other business organizations, specifically the Capitai City Partnership, in their direct efforts to
secure financial commitments from businesses. While we are not in a position to make a bind-
ing legal commitment at this time, we will work diligently to complete such an agreement and
will provide the assistance necessary to raise the funds. Furthermore, we will aggressively sup-
port your efforts to secure $65 miilion in state bonding for the new arena during the 19981eg-
islative session.
We commend your efforts to provide a new Civic Center Arena for use by the entire community
as well as your work to bring NHL hockey back to Minnesota. The new azena will make down-
town Saint Paul more vital and will enhance the business climate of the entire region.
Sinc ely yours,
Kaze Himle, Chair
Saint Paul Area Chamber of Commerce
/° l
Larry Dowell, President
Saint Paul Area Chamber of Commerce
•
��� ���
CITY OF SAINT PAUL
Norm Coleman, Mayor
Friday, May 30, 1997
MEMO
TO: Tim Marx, Chief of Staff
390 Cit}• Na(1 Telephone: 612d66-8510
IS Wesr Kel(ogg Boulevard Facsimile: 612-266-8513
Saint Paul, MN 55702
FROM: Erich Mische, Director of Strategic Planning
RE: Commitment from Saint Paul Legislative Delegation
As you might expect, it has been difficult to actually contact our legislative delegation
• members so shortly after the legislative session. However, I want to share with you
those legislators I've spoken to, or, we've received a signed letter of commitment to
secure bonding authority of $65 miliion in next year's bonding bill.
Senator Randy Kelly - Letter
Senator Chuck Wiger - Letter
Representative Tom Osthoff - Spoke to by phone
Representative Alice Hausman - Spoke to by phone
Representative Steve Trimble - Spoke to by phane
We have attempted to contact all of our Saint Paul delegation members and will
continue to do so in time for next Monday's 9:00 City Council meeting.
•
�
•
MEMO
TO:
Mayor Norm Coleman
Councii President Dave Thune
Councilmember Jerry Blakey
Councilmember IvTilce Harris
Councilmember Roberta Megard
Councilmember Joe Collins
Councilmember Dan Bostrom
Councilmember Gladys Morton
FROM:
Senator Randy Kelly
Senator Richazd Cohen
• Senator Ellen Anderson
Senator Sandy Pappas
Senator Chuck Wiger
Representative Tom Osthoff
Representative Steve Trimble
Representative Alice Hausman
Representative Jim Farrell
Representative Betty McCollum
Representative Andy Dawkins
Representative Carlos Mariani
Representative Matt Entenza
Representative Michael Paymar
a �.��s
The Saint Paul Legislative Delegation is prepared to work towards ensuring
that the Governor's commitment of $65 million for the Saint Paul Civic Center
in the 1998 Bonding Bill is upheld and supported in the 19981egislative session.
(Please sign the attached page and fax back to 266-8513.)
n
U
SF�'T BY
�.. ,., .
5-29 : 16�17 � MN. SE��TEy 612 266 H513�= 1' 1
� s�.�x�ay xeuy sa►. x���a ca,on
�-w��; ,Li''�°,�. --------
5en. Cf�uekYJi�er 5af. Ssndypappaa
Rep. Stwe Trimbla
�,,. _�.__......
Rt�p. Alice Fixus�nntl
Rop. Botty MeCollum
R,ep, Me�tc Bnte�zr
•
•
s�. Euen a�a��
Rep. Tam Osthoff
Rap. Jim Furell
Rep. Ivfitheel pnytnar
Post-iY Fax Nole 7671
�(�6-n533 ��o�aw
_ S � 3 F�,c x
Rop. Andy Dew3tins
Rep. Carloa Masianl .
L � S
a'�'
:9117�oa9�' I
G-KLAQ l...i.� c
>yf�. (�cjao
SENT BY�
5-29-97 : 16�50
• sen: -+ _ sen. co»ec,
Sen Chuck Wi�or Son Ssndy I'appas
Rep. Steve Trimble Rep. Aiice Hauemau►
--._..�-._---------- ---- _.....
Rep. Betty McCo]lum Rep. A�sdy Dawlrins
Rep. Matt Emenxa Rep. Carlus Mariani
•
l J
n��, seNaTe-� siz 2ss asi�:» i i
� ���
a�
Sen. Ellen Anderson
Aep.1'om Qsthoff
Rep. Jim Farcetl
Rep. IvSct�ael Paymar
TOTAL P.03
CITY OF SAINT PAUL
Office of the Ciry Council
:O,'- 310 City Hall
Saint Paul, Minnesota 55102
(612) 266-8577
Gregary N. Elees
Fiscai Policy D'uector
DATE: June 2, 1997
: MEMORANDUM
TO: Council President David Thune
Councilmember Jerry Blakey
Councilmember Dan Bostrom
Councilmember Joseph Collins
Councilmember Michael Harris
Counciimember Roberta Megard
Councilmember Gladys Morton
FROM: Greg Blees, Council's Fiscal Policy Director
� � -
�
SUBJECT: New Civic Center Arena - Requested Cash Flow
�'1-G� �
Attached are two versions of a City Debt Service Cash-Flow for a worst case City financing
scenario which assumes that the 1998 Minnesota Legislature would not appropriate any of the
anticipated $65 million for the propased construction of a$130 million NAL Hockey Arena.
One cash-flow assumes the City's i/2% sales talc revenues will grow at 3% per year, while the
other assumes that tax revenues will grow at 5% per year.
The proposed revenue stream is such that a City Backup $65 million bond issue would have to
have a customized maturity schedule. 'The City would have to issue some form of Capitai
Appreciation Bonds, where no debt service is paid for the first couple of years, some interest
payments are deferred for the first half of the maturity schedule, and principal payments are made
in the last half of the maturity schedule.
Under both cash flow scenarios, proposed (estimated) revenue streams should be adequate to meet
debt service. The two debt service cash-flows attached do not show debt service for a$65 million
bond issue structured for Capital Appreciation Bonds, but they do indicate that proposed back up
revenue should be adequate.
Also attached is an estimate of interest earnings on bond proceeds.
C: Mayor Coleman, Tim Manc, Pam Wheelock, Martha Larson, Jce Reid,
Shirley Davis, Tom Cran, Bruce Engelbrekt, Eric Willems,
0 2�����
W� W V N N
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Council File � ` 1 '� �
Green Sheet # �_
RESOLUTION
SAINT PAUL M
�.. ., A �.1
2
Presented
Referred To
INNESOTA
Committee: Date
J�
._�
4 WHEREAS, a group of Minnesota investors have sabmitted an apptication for an NHL expansion team for
5 consideration by the National Hockey League Board of Governor's on January 13, 1997, and
6
7 WHEREAS, the City Council has indicated that professional hockey is an economic and community
8 enhancement to the City of Saint Paul and the larger metropolitan area, and
9
10 WHEREAS, the City Council has determined that the 23 year-old Saint Paul Civic Center Arena is in need of
11 substantial renovation in order to maintain a competitive position in the marketplace, and
12
13 WHEREAS, based on a recent visit, the NI-IL Expansion Committee has indicated that Saint Paul has an
14 attractive and adequate media market as well as a financially solid investor's group, and
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
WF3EREAS, the NHI, Expansion Committee has raised questions as to whether the $51 million in
improvements previously outlined in the HOK Conceptual Design dated December 15, 1996 will be adequate to
bring the Arena up to NHI, standards, and have indicated they would not recommend placing an expansion team
in Saint Paul in a renovated Arena, and �
WHEREAS, a new Arena would benefit the City and its citizens by providing the downtown with an Arena
which would become competitive with other state of the art arenas, �vould provide current tenants of the Civic
Center with an updated facility in which to bring their events and programs, would generate needed revenue to
attract an NHL team and would attract additional non-hockey events to downtown Saint Paul, and
WHEREAS, a new Arena would provide the highest quality facilities for the Minnesota State High School
Tournaments which haue a long tradition of playing in the Saint Paul Civic Center Arena, and would improve the
experience of the many thousands of Minnesotans who attend the tournaments each year, and
WHEREAS, it has been estimated that a new first-class Arena, consistent in quality with other current arenas
recently constructed for use by NHL teams and built on the site of the cunent Civic Center would cost
appro3cimately $130 million which would include the following:
* Up to 650,000 square feet
* A capacity of appro�mately 19,000 seats for hockey including 2,500 club seats and 750 to 1000 seats in
luxury boxes
* A finished Arena club restaurant and bar
* Finished Team Retail Store and Team Offices
* Video scoreboard(s) with advertising panels
* Two new outdoor mazquees
* Finished locker rooms, training rooms and offices
* Finished concessions and novelty stands
°l'i -��S
43 * Landscaping
44 * All necessary fixtures, fumiture and equipment
45
46 WHEREAS, the Govemor of Minnesota has expressed support for $65 million in State bonding to be
47 appropriated in the 19981egislative session, and
48
49 WHEREAS , the City believes an interim financing guarantee for the State's $65 million participation will result
50 in an award by the NHL for an expansion franchise, and
51
52 WHEREAS, this $65 million, in addition to the Team's contribution of $35 million and the City's previously
53 approved commitment of $30 million will result in a project budget of $130 million, and
54
55
56
57
58
59
60
WHEREAS, this interim financing is secured by future revenue streams available to the City other than a
property t� levy, and now therefore be it
RESOLVED, that the Council of the City of Saint Paul does hereby approve the attached revised Term Sheet
and interim plan of finance for the lease of the new arena to be constructed as part of the Saint Paul Civic Center;
and be it
61
62 FURTHER RESOLVED, that the appropriate officials of the City of Saint Paul are hereby authorized to enter
.-
..
.
.:
.
1
.
.
:.
into, execute and deliver all necessary contracts, orders, agreements, indentures and documents of any kind to
carry out and put into place (1) the terms and conditions in said Term Sheet and its provisions, including the
Binding Letter of Intent, (2) the design and construction of the new arena, (3) the financing requirements for
the said azena, and (4) all other matters required to carry out th e implementation of this project.
�. � 6 �Q-�--�
Department of:
Planning & Economic Development
B y'��
By:
By:
Form
� � �,� By'
�oved by City Attorney
� '
by ayor for Su s ion to
��� � �� �p
Adopted by Council: Date � � �
Adoption/Certified by Council Secretary
9'T — G� S
���14
DEPAFTMENTqFFlCECOUNCIL DATE INITIATED
cz� couNC�L 5/28/97 G REEN SH E E
CON7ACT PERSON & PHONE INRIAUDATE INITIAL/DATE
O OEPAFTMENT DIRECTOR O CITV COUNdL
Councilmember Dave Thune q���N OpTVATfORNEV OCRYCLERK
MUST BE ON COUNCIL AGENDA BY (OATE) NUMBEH FOP ❑ BUDGET DIRECTOR � FIN. $ MGT. SEflVICES Dlfl.
flOUTING
M2.�J 28 1997 - Suspension Item OflDER �MAYOR(OFIASSISTANn �
TOTAL # OF SIGNATURE PAGES (CLIP ALL LOCATIONS FOR SIGNATURE)
ACTION REQUESTE�:
Approving the revised Term Sheet and interim plan of finance for the lease of the new
arena to be constructed as part of the Saint Paul Civic Center.
RECOMMENDATIONS: Approve (A) or fiejact (R) PERSONAL SERVICE CONTRACTS MUST ANSWER TNE FOLLOWING QUESTIONS:
_ PLANNING COMMISSION _ CIVIL SERVICE CAMMISSION �� Has thls pefson/fRm BVBf WOfkBtl untlef a Contf2Ct fOf thi5 tlBpffrtrtl8nt?
_ CIB COMMITfEE _ YES NO
_ S7AFF 2. Has this personHirm ever been a city employee?
VES NO
_ DIS7RIC7 COURi _ 3. Does this person/firm possess a skill not normally possessetl by any current ciry employee?
SUPPORTS WHICM COUNqL OBJECTIVE7 YES NO
Explain all yes answers on separate sheet antl attach to green sheet
INITIATING PROBLEM, ISSUE. OPPOFTUNITY (Who, Whet, When, Where, Why):
ADVANTAGES IF APPHOVED:
DISADVANTAGESIFAPPROVED:
DISADVANTAGES IF NOTAPPROVED.
TOTAL AMOUNT OFTRANSACTION $ COST/HEVENUE BUDGETED (CIRCLE ONE) YES NO
FUNDIfBG SOUHCE ACTIVITY NUMBER
FINANCIAL INFOPFnATION: (EXPLAIN)
R `1- `'15
S 0.Mtp� ei
AMENDED AND RESTATED
TERM SHEET
Dated May 28, 1997,
for the I.ease of the
NEW ST. PAUL CIVIC CENTER ARENA ("NEW ARENA")
I. OWNER'S AGENT will be the Saint Paul Civic Center Authority ("Authority"), and
OWNER will be the City of Saint Paul ("Ciry").
II. TENANT will be the NHL expansion team to be owned by
(°Team").
III. LEASED PREMISES will be the New Arena, including all furniture, fiYtures and
equipment necessary for the playing of all NHL home regular season, playoff, All-
Star and other NHL-sanctioned home games and any NHL e�ibition games played
at the New Arena ("NHL Games"), and any other arena events as contemplated
below.
IV. TERM OF LEASE
The term of the Lease shall commence thirty days prior to the first NHL Game of
the regular NHL season which follows the date of substantial completion of the New
Arena (the "Commencement Date" which, if an NHL franchise is granted to the
Team to play in the 1999-2000 NHL season, is anticipated to be approximately
September 1, 1999) and will continue from that date for the later of twenty (20) years
or the final maturity stated date of the City Bonds, but not ]onger than 25 years (the
"L,ease Term"). The Team will have the option to e�rtend the L.ease Term for two
five (5) year periods. Any such extension shall be a part of the Lease Term. The
Team wiil lease the New Arena for the purpose of playing all of its NHL home
Games and will not relocate the Team from the Arena during the L.ease Term;
provided, that the Team shall have the right after the first ten years of the I.ease
Term to terminate the lease by paying the City an amount required to discharge the
outstanding City Bonds (including any related premium or early retirement penalty
35096R9
��-C15
associated with pre-payment). Upon payment of said amount and payment of all
other accrued liabilities under the L.ease, the Team may terminate the Lease.
V. ARENA REVENUES AND EXPENSES
A. Team Revenues. The Team will control and retain 100% of revenues derived
from all events at the New Arena (such events "Arena Events" and such
revenues "Team Arena Revenues"), except as otherwise provided in
Paragraphs V-B and XI-J hereof and except as provided with users of the
New Arena, and 100% of the revenues derived from other operations outside
of the New Arena ("Team Revenues"). Team Arena Revenues and Team
Revenues include the following:
1. sales of tickets for Arena Events
2. sales of tickets for club seats for Arena Events
3. sales of liixury suites for Arena Events
4. New Arena's share of all concession revenues and payments
5. all (permanent and temporary) advertising and promotional revenues
(including naming rights, fuied signage, dasher boards, on-ice
advertising, video boards) at the New Arena
6. merchandising revenues realized from sales at Arena Events and at all
other times at the Team's retail stores at the New Arena and
elsewhere
7. publication revenues realized at Arena Events and at all other times
at the Team's retail stores at the New Arena and elsewhere
8. broadcast, merchandising and other revenues received by the Team
from the NHL
9. revenues from local broadcasts of Arena Events (e.g., local TV, cable
and radio)
10. all other revenues derived from operations of the New Arena and the
Team's business outside of the Arena
sso�a9 2
q� - C�15
provided, that the City and the Authority make no representations or
warranties about the level of any such revenues; or the availability of any
revenue sources other than from the New Arena. The Team's right to all
Team Arena Revenues accruing after the e�iration or termination of the
Lease shall cease upon such expiration or termination of the L,ease.
Team Arena Revenues and Team Revenues do not include the amounts to be
received by the City from the Team as described in paragraph B below, and any taYes of
general applicability.
In addition, the City shall pay the Team a sum equal to (a) net parking revenues
derived from event parking at the time of NHL Games from the existing 1730 spaces in the
Civic Center Ramp and the 430 spaces in the Civic Center Fxhibit Hall underground ramp,
(b) net parking revenues for event parking received by the Ciry at the time of NHL, Games
derived from approximately 235 surface parking spaces in the "Cleveland Circle" and "Seven
Corners" surface parking lots, and (c) any net parking revenues for event parking received
by the City at the time of NHL Games from surface parking on parcels contiguous to the
New Arena if and to the e�ent actually owned or controlled by the City during the L.ease
Term. In the event the lots in clause (b) become unavailable for event parking during NHL
Games due to sale of property, cancellation of agreements with current property owners, or
development on site(s), the City shall negotiate in good faith to replace that parking
availability and the resulting amounts the Team receives for event parking during NHL
Games with other land available for surface parking contiguous to the New Arena. The City
and the Authority make no representations or warranties about the level of any such
revenues.
B. Citv Arena Revenues. The Team shall pay the City (a) $385,000 per year in
consideration of the advertising revenue from the two replacements of the one
existing outdoor marquee (as provided in Paragraph VII-A including the 5%
annual escalation) regardless of actual advertising revenue received by the
Team and (b) the Ticket Surcharge imposed by the Ciry as described in C
below.
C. Team Arena Eapenses. Fxcept as e�ressly provided for in paragraph E
hereof, the Team will pay for: (1) 100% of the management, operation and
maintenance elcpenses incurred for Arena Events and otherwise in connection
with the New Arena, it being the intention of the parties that the Lease be
absolutely "net" to the City and the Authoriry, except as earpressly provided for
in this Term Sheet, (2) the costs of capital repair and replacement as
described in subparagraph (D) below, and (3) any required collections of
(a) generally applicabie sales taz�es, (b) any other state or city imposed taxes
or assessments, and (c) a facility ticket surcharge or other similar taY or fee
3509689
`('l - C�IS
imposed by the City or Authority (the "Ticket Surcharge") not to exceed $1.50
per ticket for Arena Events for the first five years of the I.ease Term, with
cumulative increases in the Ticket Surcharge not to exceed $.50 over each
successive five year period thereafter, except as may be mutually agreed to by
the City and Team, provided that if the Ticket Surcharge does not raise at
least $2,100,000 (the "Surcharge Base") in any year of the I,ease Term, then
the City shall have the right to increase the Ticket Surcharge for the following
year to that amount necessary to raise the Surcharge Base (the "Bmergency
Increase"). The Team and the City will keep each other advised during the
year as to the estimated receipts from the Ticket Surcharge and the City will
provide the Team written notice of any decision to increase the Ticket
Surcharge; provided further, that the City agrees not to increase the Ticket
Surcharge during the NHL Hockey season. The City will agree to repeal any
Emergency Increase in the Ticket Surcharge made under this paragraph when
the Ciry has reasonable assurances that the lower Ticket Surcharge will
generate at least the Surcharge Base per year. The timing and mechanism for
any Emergency Increase shall be provided for in more detail in the Lease.
The City will use the increased portion (beyond the Emergency Increase) of
the Ticket Surcharge to provide direct or indirect benefit to the New Arena,
Wilkins Auditorium, or Convention Center. The initial Ticket Surcharge of
$1.50 per ticket will be reduced to $1.00 per ticket and the Surcharge Base
shall be reduced to $1,400,000 if the proceeds of the State Bonds
contemplated in Section IX (C) hereof are granted to the City.
D. Capital Repairs, Replacements and Im�rovements. The Team shall manage,
operate and maintain all aspects of the New Arena consistent with
comparable NHL facilities, including making all capital repairs, replacements
and improvements as and when the Team and the City reasonably deem
necessary, all at the e�ense of the Team, except as ea�pressly provided in
paragraph E below, and consistent with any requirements as set forth in the
Lease to be negotiated in good faith among the Team, City and Authority
("L,ease"). The Team and the Authority shall create a capital replacement
repair and reserve fund ("Arena Reserve Fund") and to be funded by the
Team and spent according to the terms of the L,ease. The moneys in the
Arena Reserve Fund shall be the property of the Team during the Lease
Term; provided that moneys remaining in the Arena Reserve Fund at the end
of the L,ease Term shall be the properry of the City. The Team's annual
contribution to the Arena Reserve Fund shall be (a) $250,000 for the fourth
and fifth years of the L,ease Term, (b) $500,000 in the siYth year, and (c)
commencing in the seventh and in each year thereafter an amount equal to
$500,000, to be escalated annually commencing in the seventh year at the rate
of inflation during the preceding year.
3509669 4
a�-��s
The contributions shall be payable by the Team at the beginning of the
applicable year of the Lease Term. To the extent the money in the Arena
Reserve Fund is insufFicient, the Team shall have the obligation to pay for
capital repairs and repiacements, except as e�ressly provided in paragraph
E hereof.
E. Citv Contribution to Repair and Replacement After Citv Bonds are Paid.
When the City Bonds aze paid or defeased, the City shall continue to receive
100% of the Ticket Surcharge. The City agrees to provide matching funding
(to be held in a separate City account) for necessary capital repairs and
replacements in the following manner:
(1) If the Ticket Surcharge has not been increased since the
commencement of the Lease Term, the City shall make available
during the calendar year, on a one-to-one matchmg basis with the
expenditures made out of the Arena Reserve Fund or otherwise by the
Team during such year the full amount of the T'icket Surcharge up to
$1.4 million. These funds shall only be availabie during the calendar
year, and any unmatched and unspent funds shall revert to the City for
uses which provide direct or indirect benefit to the New Arena,
Convention Center, or Wilkins Auditorium.
(2) If the Ticket Surcharge has been increased during the I.ease Term,
then the City shall make available on a one-to-one matching basis with
the e�enditures made out of the Arena Reserve Fund or otherwise by
the Team during such year, an amount equal to the $1.4 million
inflated annually beginning in the seventh year in an identical manner
to the escalation of the Team's contribution to the Arena Reserve
Fund (the "Escalated Contribution").
In no event shall the annua] match by the City exceed the actual revenue
derived from the Ticket Surcharge. The Team shall provide the City written
evidence of the payment of e�penditures made by the Team prior to the City
making the matching contribution contemplated by this paragraph V available
to the Team.
In any event, notwithstanding the City's annual match under paragraph E
hereof, the Team remains responsible for the payment of and contracting for,
in accordance with law, all necessary repairs and repiacements to the New
Arena.
35096ft9 S
9.''1-�n5
F. Namin� Rights — Citv A�proval. The City has the right to reasonably
approve the recipient of the naming rights for the New Arena which rights
shall be granted for no longer than the L,ease Term.
VI. NEW ARENA COMMITMENTS:
The Authority and City believe that the New Arena is and will be on the
Commencement Date free of all contractual obligations relating to New Arena
operations with third parties, which include advertising and concessions, other than
contractual scheduling commitments for certain events and the existing agreement
with Ticket Master Minnesota dated November 5, 1995. The Team has the right to
select and contract with all parties providing products or services for the New Arena
(including the concessionaire), to determine product selection and the service to be
provided by such contracting parties, and to receive all revenues and payments from
such parties. The Team shall also have the opportunity to participate in the selection
process for the parking lot operator at set renewal periods. The City and the
Authority will work with the Team to facilitate the Team's financial and operational
interests in the parking available for NHL Games at the ramps and lots described in
Paragraph V-A hereof.
VII. ADVERTISING
A. The Team shail have the exclusive right to sell and control the advertising on
the outdoor marquees (referred to in Paragraph V-B above). In consideration
thereof, the Team shall pay to the Authoriry or the City $385,000 annually,
beginning on the Commencement Date, with an escalation of 5% annually
thereafter beginning in the second year of the I,ease Term. This obligation
shall be due and owing by the Team regardless of the amount of such
advertising revenue.
B. The Team shall have the exclusive right to sell and control all other
advertising and promotion rights for the New Arena and retain all revenues
received from such sales. The Team shall use its best efforts ta promote
attendance at events in the New Arena. Additionally, the Team shall use its
best efforts to coordinate activities in the New Arena with activities in the
Civic Center complex.
C. This Term Sheet and the Lease shall not affect the rights of the City and
Authority with respect to advertising in other areas of the St. Paul Civic
Center Complex (e.g., Wilkins Auditorium or new Convention Center).
35W689 6
°t'1 - C�1 S
VIII. NEW ARENA DESIGN AND CONSTRUCTION
A. The Team will contract for the design and construction of the New Arena
without the necessity for advertisement for bids, using a construction method
that e�pedites the construction schedule. Immediately upon the award of an
NHL franchise if it occurs prior to July 11, 1997, the Team shali commence
the design and construction of the New Arena in Saint Paul, and if the Team
is granted a franchise to play in the 1999-2000 NHL Season, such construction
shail be substantially completed by September 1, 1999. Subject to clause (B)
below, the New Arena shail be a first class facility consistent in quality with
other current arenas recently constructed for use by NHL teams, and is
expected to consist of the following major design elements:
1. Approximately 650,000 square feet.
2. A capacity of approximately 19,000 seats for hockey, including:
(a) approximately 2,500 club seats.
(b) approximately 750 to 1000 seats in IwYUry suites.
3. A finished club restaurant and bar.
4. Finished team retail stores and team offices.
5. Video scoreboard(s) with advertising panels.
6. Two or more new outdoor electronic marquees.
7. Finished locker rooms and related training rooms and offices.
8. Finished concessions and novelty stands.
9. I.andscaping.
10. All necessary fumiture, fixtures and equipment.
B. The Team, Ciry and Authority shall mutually agee on the conceptual design
for the New Arena by August i, 1997. There will be a design team that wili
include two representatives from the City and one representative from the
Authority in addition to representatives from the Team. If no agreement is
35096E9 7
9.'�. c.�s
reached the Team shall have the right to make final design decisions, which
the Team agrees to make on a timely basis. No material changes may be
made in the conceptual design by the Team, without the approval of the City,
except as required by the project budget of approximately $13Q,000,000. In
such event, the City, Authority and Team shall agree to value engineer the
New Arena project on a timely basis to reduce its costs. If no agreement on
the value engineering can be reached, the Team shaIl have che right to make
final design decisions, subject to the spirit of the Conceptual Design and
project budget constraints.
C. Contingent on receiving the funds from the City under the Plan of Finance,
the Team shall bear all the costs of the New Arena, including design,
construction, finance, cost overruns and demolition of the existing arena. The
City shall bear the costs of the costs of acquisition or off-site infrastructure
improvements. The City and the Team aa ee to consider alternate
construction methods which may reduce project costs and expedite project
schedule. The Ciry agrees to coordinate and help e�:pedite all permits needed
for the construction of the New Arena. In the event the costs of the New
Arena are less than $130,000,000, the savings shall be shared by the respective
parties in the same proportion as their contributions set forth in Section IX.
IX. PLAI`T OF FINANCE:
A. The New Arena shall be financed through the following funds: (1) $35 miilion
from the Team in the form of cash, cash equivalent or an inevocable letter
of credit in form and substance satisfactory to the City (the "Team
Contribution"), and (2) $30 million from the City or its housing and
redevelopment authority plus the cost of land and off-site infrastructure (the
"City Contribution"), and (3) an additional $65,000,000 from the City or its
housing and redevelopment authority, which the City anticipates will be
replaced with State Bonds as provided in paragraph C below (the °Ciry
Guaranty of State Portion"). The funding in clause (2) and (3) is collectively
referred to as the "City Bonds". If necessary, the funding plan for the City
Bonds shall be structured so that contracts for the construction of the New
Arena may be awarded without advertisement for bids.
B. The Team Contribution and City Contribution must be deposited in escrow
with a third party acceptable to the Team and the City by a date reasonably
acceptable to the Team and the City in order to accommodate the letting of
the necessary design and construction contracts. The Team and the City will
mutually agree to the percentage of each draw to be paid by the Team
3509669 p
�1'1 - CR 5
Contribution and the City Contribution. The intent of the rarties is that the
City Guaranty of State Portion will not be drawn down unc;i July i, 1998.
C. The Team acknowledges and agrees that the City anticipates that a portion
of the City Bonds will be repiaced with an appropriation or proceeds of bonds
issued by the State of Minnesota (the "State Bonds"). Upon such
replacement, the term "City Bonds" herein shall be deemed to include the
"State Bonds".
X. CHARITABLE CONTRIBUTIONS:
The Team, or its charitable foundation, wiil on the Commencement Date and
annualiy thereafter make annual contributions to existing local organizations that
promote youth programs in Minnesota, such as the Mariucci Inner C�ty Youth
Hockey and Minnesota Amateur Hockey Association (MAHA).
XI. MISCELLANEOUS:
A. Upon the grant of an NHL franchise to the Team, the parties shall commence
negotiations of a definitive L,ease agreement based on this Term Sheet
("L,ease"). If a definitive Lease has not been executed by March 15, 1998, any
outstanding issues (except failure of the parties to agree pursuant to Section
XI-H) shall be submitted to binding arbitration upon the request of the City
or the Team by a panel of three independent persons familiar with the
operations and economics of sports facilities or municipal operations and
finance. One panelist shall be chosen by the Team. The second panelist shall
be chosen by the City, and the third panelist shall be chosen by the other two
panelists. Such panel shall have the right to make a decision solely on the
issue or issues in dispute but shall not have the power to alter the terms
agreed upon by the parties herein or hear or determine any dispute over (i)
the terms or conditions which may be agreed to in the future in the
negotiations over the I,ease, or (ii) the failure of the parties to agree pursuant
to Paragraph XI-H or VIII-B.
B. The Team will maintain its membership in good standing in the NHL
throughout the L.ease Term.
C. The Izase will contain such other terms and conditions (insurance, damage
and destruction, indemnification, financial statements, security, scheduling,
force majeure, events of default, remedies, miscellaneous, etc.) as are
customary in the industry, reasonable, or otherwise agreed to by the City,
Authority and Team. Notwithstanding the foregoing, the Team shall agree to
35p96A9 9
�l'1- C�l S
pay liquidated damages in the event of a breach of its covenant (a) to operate
exclusively at the New Arena during the first ten years of the L.ease Term as
provided in Paragraph N hereof, or (b) after the first ten years of the Lease
Term, to pay the City and State the amounts specified in Paragraph IV hereof
in the event it relocates the Team, in an amount equal to: (x) the unpaid
principal balance of the outstanding City Bonds (including any related
premium or early retirement penalty associated with prepayment), (y) the
amount of money e�ended by the City and the Authority for construction
cost overruns, land acquisition, off-site infrastructure, demolition and other
actual out of pocket costs incurred by the City and the Authority in connection
with the New Arena, and (z) interest from the date of expenditure of the
amounts identified in clause (y) at a rate of interest of seven percent per
annum. Additionally, disputes between the parties under the Lease wili be
venued exclusively in Ramsey County, Minnesota.
D. No term of the Lease shall impair the tax exempt status of outstanding bonds
issued with respect to the Civic Center Complex, and if any term herein
should have that effect, it shall be deemed modified to the e�ent required to
eliminate such effect as long as such modifications remain consistent with the
intent of this Term Sheet.
E. If all or a portion of the City Bonds are issued as t� exempt bonds, the Team
and the City shall make such reasonable modifications to the Term Sheet as
are appropriate to facilitate and not impair such exemption. In order to
accommodate the construction of the New Arena, without advertisement for
bids, the Team and the City shall make such reasonable modifications to the
Term Sheet as necessary to take advantage of any exemption to competitive
bidding, which modifications may include the lessor under the Lease being a
nonprofit corporation, as long as such modifications remain consistent with the
intent of this Term Sheet.
F. The Team and the City agree that the provisions of this Term Sheet are
subject to all federal, state and local laws, rules, regulations or ordinances.
G. A binding letter of intent in substantially the form attached hereto as F�hibit
A shail be promptly executed by the City, Authority and Team.
H. The Team and the City shail coilaborate in good faith on the design,
construction, finance and operation of a new practice facility or the necessary
improvements to an existing facility to be converted into a practice facility for
the Team containing the necessary facilities for an NHL practice facility which
shall be open for use by the public when not being used by the Team.
35096&9 10
�l� • C+1S
Nothing herein shall be construed as a guarantee of City financial assistance
for the practice facility.
I. The Team shall make the New Arena available for lease to the Minnesota
State High Schoo] League (MSHSL) in order that the MSHSL shall be able
to continue to conduct state high school tournaments as they have been
conducted in the past, including giris volley ball, giris danceline, boys wrestling,
boys hockey and boys basketball. T'he MSHSL shall be able to conduct the
toumaments and receive the same revenue streams, and subject to agreement,
any new revenue streams, and pay the types of eJCpenses in the same
categories that are currently in effect.
J. The Team shall make the New Arena available, subject to scheduling of other
events, to the City or its designee for presentation of up to five (5) events per
year not to exceed 10 days, including time for set up and break down (the
"City Events"). Such events shall be of "community or non-commercial
nature" and neither the City nor its designee shall be required to pay rent to
the Team for use of the New Arena for said event(s). However, the City or
its designee shall be required to reimburse the Team for all applicable out-of-
pocket e�enses, incurred in connection with the event(s). The City shall be
entitled to 50 percent of any revenues derived in the New Arena from the City
Events.
K. Any contracts or agreements entered into by the Team which generate Team
Arena Revenues or any agreements with respect to operations at the "New
Arena shall, unless such contracts or agreements were approved prior to their
execution by the City, contain a clause that such contracts or agreements are
immediately terminable by the City at its option upon expiration or
termination of the L,ease.
L. The Team agrees that throughout the term of the Lease, unless the City
otherwise consents in writing, which consent the City agrees will not be
unreasonably withheld (a) will be the sole general
partner of the team, and (b) Robert O. Naegele, Jr. will control the general
partner.
M. The Authority or the Ciry will use its best efforts to provide the Team up to
10,000 square feet of office space commencing on a date as necessary to meet
the Team's needs and continuing through the completion date of the- New
Arena. The Team shall pay rent equal to all utility, any build out costs, and
all other out-of-pocket costs of the Authority or the City.
35096&9 11
�l'1 - C'1S
i�►:�:i�����
BINDING LETTER OF INTENT
This Binding Letter of Intent is entered into this day of _� 1997, by and
among the City of St. Paul, Minnesota (°City"), St. Paul Civic Center Authority ("Authority"),
Housing and Redevelopment Authority of the City of Saint Paul, Minnesota (the "HRA"),
and , a Minnesota limited partnership ("Team")
(collectively "the Parties").
The City, Authority, HRA,, and Team agree to the terms in the attached Amended
and Restated Term Sheet for St. Paul Civic Center Arena dated May 28, 1997 (the "Term
Sheet") and agree that the terms set forth in the Term Sheet wilI be incorporated into a
definitive lease agreement ("L.ease") among the Parties. The Ciry, Authority, HRA, and
Team agree that the Term Sheet reflects the basic business deal among the parties, and is
intended to be binding on the Parties, their respective assigns and successors and that they
will in good faith negotiate the terms of the L,ease consistent with the terms set forth in the
Term Sheet.
The Ciry, Authority, HRA, and Team each represent that the execution and delivery
of this Binding L,etter of Intent and the Term Sheet and the performance and observance
of the terms of this Binding I,etter of Intent and the Term Sheet have been duly authorized
by all necessary action on the part of the City, Authority, HRA, and Team respectively.
This Binding L,etter of Intent shall automatically terminate and be of no effect if (a)
the National Hockey League does not announce the award of an escpansion franchise to the
Team during its next round of e�pansion or approve this Term Sheet on or before July 11,
1997 or (b) the Team's or City's contribution contemplated by Section IX(A) shail not be
available at the time and in the form provided in Paragraph IX(B).
3509669
°i'7 � l. �1 S
The Parties hereby execute this Binding L.etter of Intent as of the date first written
above.
CTTY OF ST. PAUL, MINNESOTA
Titie: Mayor
Approved as to Form: Title: Director, Office of Financial Services
City Attorney By:
Title: Director of Planning and Economic
Development
ST. PAUL CIVIC CENTER AUTHORITY
By:
Title: Chair
B
Title: Executive Director
3S09bfl9
�'� - C� 5
HOUSING AND REDEVELOPMENT AUTHORITY
OF THE CITY OF SAINT PAUL, MINNESQTA
Title: Chair
Titie: Secretary
Title: F�ecutive Director
Title: Director, Office of Financial Services
A LIMITED
PARTNERSHIP
By: , a Minnesota limited
Iiability company, its general partner
By:
Title: Robert O. NaegeIe, Jr.
Managing Member
35096&9
°1'l - �'1 S
SAINT
PAUL
�
AAAA
CITY OF SAINT PAUL
Narm Coleman, Mayor
TO Council President Dave Thune
Councilmember Dan Bostrom
Councilmember Jerry Blakey
Councilmember Joe Collins
Councilmember Mike Harris
Councilmember Roberta Megard
Councilmember Gladys Morton
FROM Mayor Norm Coleman /��-��
DATE: May 30, 1998
RE: Interim Arena Financin� Plan for New Civic Center Arena and NHI, Hockey
390 Cir�� Hafl
IS Wesr Kellogg Bou[evard
Saint Paul, MN 55102
Telephone: 672-266-8510
Facsimile: 612-266-8513
Accompanyin� this memorandum are additional briefing materials that were requested at your
meeting on May 28, 1997. I look forward to your favorable consideration of this proposal and
• the vitality it wiil bring to Saint Paul. If you have any questions about these materials before your
special meetin� scheduled for Monday, June 2, at 9:00 a.m., please contact Deputy Mayor Tim
Manc.
The briefin� materials are tabbed as follows:
L The proposed City Council and Housin� and Redevelopment Authority Resolutions.
2. The revised term sheet with the NHI, Team includin� a redlined version.
3. The interim financin� plan dated May 28, 1997.
4. A le�al opinion on hond related matters from Leonard, Street and Deinard.
5. A report from 5prin�stead, Inc., the City's financial advisor.
6 Construction cash flow projections for the new Civic Center Arena.
7. A potential bond issuance schedule.
8. Commitment letters from business and buildin� trades interests.
• 9. Commitments from the Saint Paul le�islative dele�ation.
�
Council File #
•
RESOLUTION
CITY OF SAINT PAUL, MINNESOTA
Presented By
Referred To
Committee: Date
Green Sheet �
q�- 4�5
4�VHEREAS, a group ofMinnesota investors ha��e submitted an application for an NHL expansion team for
5 consideration by the National Hockey League Board of Governor's on January 13, 1997, and
G7
7 WHEREAS, the City Council has indicated that professional hockey is an economic and community
8 enhancement to the City of Saint Paul and the larger metropolitan area, and
9
10 WHEREAS, the City Council has determined that the 23 year-old Saint Paul Civic Center Arena is in need o:
11 substantial renovation in order to maintain a competitive position in the marketplace, and
12
13 WHEREAS, based on a recent visit, the I�'HL Expansion Committee has indicated that Saint Paul has an
14 attractive and adequate media market as well as a financially solid investor's group, and
1S
16 WHEREAS, the NHI. Expansion Committee has raised questions as to whether the �51 million in
improvements previously outlined in the HOK Conceptual Desi�n dated December 15, 1996 will be adequate to
bring the Arena up to NHI. standards, and have indicated they would not recommend placing an expansion team
19 in Saint Paul in a renovated Arena, and
20
21
22 WHEREAS, a new Arena would benefit the City and its citizens by providing the downtown with an Arena
23 which would become competitive with other state of the art arenas, would provide current tenants of the Civic
24 Center with an updated facility in which to bring their events and programs, would generate needed revenue to
25 attract an NHI, team and would attract additional non-hockey events to downtown Saint Paul, and
26
27 Wf�REAS, a new Arena would provide the highest quality facilities for the Minnesota State High Schooi
28 Tournaments which have a long tradition of playin� in the Saint Paul Civic Center Arena, and would improve the
29
30
31
32
33
34
35
36
37
experience of the many thousands of Minnesotans who attend the toumaments each year, and
WIIEREAS, it has been estimated that a new first-class Arena, consistent in quality with other current arenas
recently constructed for use by I`THI, teams and built on the site of the current Civic Center would cost
appro�cimately $130 million which would include the following:
* Up to 650,000 square feet
* A capacity of approximately 19,000 seats for hockey includin� 2,500 club seats and 750 to 1000 seats in
lu�cury boxes
* A finished Arena club restaurant and bar
� * Finished Team Retail Store and Team Offices
* Video scoreboard(s) with advertising panels
40 * Two new outdoor marquees
41 * Finished locker rooms, training rooms and offices
42 * Finished concessions and novelty stands
q1-C�S
� * Landscaping
* All necessary fixtures, furniture and equipment
46 WHEREAS, the Governor ofh4innesota has expressed support for $65 million in State bonding to be
47 appropriated in the 1998 legislative session, and
48
49 «�f3EREAS , the City believes an interim financing guarantee for the State's 56S million participation �a�ill result
50 in an award by the I�THI, for an expansion franchise, and
51
52 WHEREAS, this $65 million, in addition to the Team's contribution of $35 million and the City's previously
53 approved commitment of $30 million will result in a project bud�et of $130 miliion, and
54
55 ��FIEREAS, this interim financing is secured by fi:ture revenue streams available to the City other than a
56 property tax levy, and now therefore be it
57
�8 RESOLVED, that the Council ofthe City of Saint Paul does hereby approve the zttached revised Term Sheet
59 and interim plan of finance for the lease of the ne��� arena to be constructed as part of the Saint Paul Civic Center;
60 and be it
61
62 FURTHER RESOLVED, that the appropriate officials of the City of Saint Paul are hereby authorized to enter
63 into, execute and deliver all necessary contracts, orders, agreements, indentures and documents of any kind to
64 carry out and put into place (1) the terms and conditions in said
Binding Letter of Intent, (2) the design and construction of the
the said arena, and (4) all other matters required to carry out th�
�
Yeas avs Absent
E a�Tcey Re<
Bostrom
Maver
Term Sheet and its provisions, including the
new arena, (3) the financing requirements for
implementation ofthis project.
. 1►� h c.u--a
Department of:
� ��a�r �s Planning & Economic Develooment
Meqar� �
Rettman
- � Thune �A�""'�""�,
By:
79 Adopted by Council: Date
80
81 Adoption Certified by Council Secretary Form
82
83 By: BY'�
84
8$ Approved by Mayor: Date
86 APPr
87 By: Coun
By:
by City Attorney
by]Mayor for Su�fiyLs�sion to
•
°l7 - C'lS
• Sponsored by:
RESOLUTION 230. 97-5/28
WI��REAS, a group of Minnesota im�esiors have submitted an application for an IrTf-II, expansion
team for consideration by the National Hockey Lea�ue Board of Governor's on 7anuary 13, 1997
and
WHEREAS, the Saint Paul City Council has indicated that professional hockey is an economic
and community enhancement to the City of Saint Paul and the larger metropolitan area, and
WHEREAS, the City Council has determined that the 23 year-old Saint Paul Civic Center Arena
is in need of substantial reno��ation in order to maintain a competitive position in the marketplace,
and
WHEREAS, based on a recent visit, the \ Expansion Committee has indicated that Saint Paul
has an attractive and adequate media market as �vell as a financially solid investor's group, and
WHEREAS, the NF-IL Expansion Committee has raised questions as to whether the $51 million
in improvements previously outlined in the HOK Conceptual Design dated December I5, 1996
will be adequate to bring the Arena up to NHI, standards, and have indicated they would not
recommend placing an expansion team in Saint Paul in a renovated Arena, and
•
WHEREAS, a new Arena would benefit the City and its citizens by providing the downtown with
an Arena which would become competitive with other state-of-the-art arenas, would provide
current tenants of the Civic Center with an updated facility in which to brin� their events and
programs, would generate needed revenue to attract an I�II-IL team and would attract additional
non-hockey events to downtown Saint Paul, and
WHEREAS, a new Arena would provide the hi�hest quality facilities for the Minnesota State
High School Tournaments which have a lon� tradition of playing in the Saint Paul Civic Center
Arena, and would improve the experience of the many thousands of Minnesotans who attend the
tournaments each year, and
WHEREAS, it has been estimated that a new first-class Arena, consistent in quality with other
current arenas recently constnacted for use by I�TFII, teams and built on the site of the current
Civic Center would cost approximate]y $130 million which would include the following:
* Up to 650,000 square feet
* A capacity of approximately 19,000 seats for hockey including 2,500 club seats and 7S0 to
1000 seats in luxury boxes
* A finished Arena club restaurant and bar
* Finished Team Retail Store and Team Offices
• * Video scoreboard(s) with advertising panels
* Two new outdoor marquees
R'1-(.RS
• * Finished locker rooms, training rooms and offices
* Finished concessions and novelty stands
* Landscaping
* All necessary fixtures, furniture and equipment
Wf�REAS, the Governor of Minnesota has ezpressed support for �65 million in State bonding
to be appropriated in the 19931e�islative session, and
WHEREAS , the Housing and Redevelopment Authority of the City of Saint Paul, Minnesota
(HRA) believes an interim financing guarantee for the State's S65 million participation will result
in an award by the NHL for an expansion franchise, and
WI3EREAS, this $65 million, in addition to the Team's contribution of $35 million and the City's
previously approved commitment of S30 million will result in a project bud�et of $130 million,
and
WHEREAS, this interim financin� is secured by future revenue streams available to the City other
than a property tax ]evy, and now therefore be it
RESOLVED, that the Board of Commissioners of the HRA does hereby approve the attached
ammended an restated Term Sheet and interim plan of finance for the lease of the new arena to
be constructed as part of the Saint Paul Ci��ic Center; and be it
• FURTHER RESOLVED, the HRA will, at the request of the City, issue its bonds backed by the
full faith and credit of the Housing and Redevelopment Authority and an annual appropriation
contribution from the City of Saint Paul, and be it
FURTHER RESOLVED, that the appropriate officicers of the HRA and its executive director
and her designees are hereby authorized to enter into, execute and deliver al] necessary contract:,
orders, agreements, indeniures and documents of any kind to carry out and put into place (1) the
terms and conditions in said Term Sheet and its provisions, including the Binding Letter of Intent,
(2) the design and construction of the new arena, (3) the financing requirements for the said
arena, and (4) all other matters required to carry out the implementation of this project.
•
°l`� -��15
�
AIvIENDED AND RESTATED
TERM SHEET
Dated May 28, 1997,
for the I,ease of the
NE,R' ST. PAUL CIVIC CEI�TTER ARENA ("NEW ARENA")
T. OW:�'ER'S AGE\T ��ill be the Saint Paul Ci��ic Center Authority ("Authority"), and
OWNER c�•ill be the Cit}> of Saint Paul ("City").
II. TE\A.\T ��ll be the \HL ea team to be ow�ned by
("Team").
IIL LEASED PRE?v1ISES � be the New Arena, including all furniture, fixtures and
equipment necessary for the pla�zng of all iv`HL home regular season, playoff, All-
Star and other NHL-sanctioned home games and any NHL e�ibition games played
• at the New Arena ("�HL Games"), and any other arena events as contemplated
below.
IV. TER?vI OF LEASE
The term of the L,ease shall commence thirty da}�s prior to the first NHL Game of
the regular NHL season which follows the date of substantial completion of the I�Tew
Arena (the "Commencement Date" which, if an NHL franchise is granted to the
Team to play in the 1999-2000 I�'HL season, is anticipated to be approximately
September 1, 1999) and will continue from that date for the later of twenty (20) years
or the final maturity stated date of the City Bonds, but not longer than 25 years (the
"Lease Term"). The Team will have the option to extend the Lease Term for two
five (5) year periods. Any such extension shall be a part of the Lease Term. The
Team wi11 lease the New Arena for the purpose of playing all of its NHL home
Games and will not relocate the Team from the Arena during the L.ease Term;
provided, that the Team shall have the right after the first ten years of the Lease
Term to terminate the lease by paying the City an amount required to discharge the
autstanding City Bonds (including any related premium or early retirement penalry
• 3509oCa
9�- G�tS
• associated �c�th pre-pa}�nent). Upon pa}�ment of said amount and payment of ail
other accrued liabilities under the I,ease, the Team may terminate the L,ease.
V. ARENA REVENL:ES A.�'D EXPEnSES
A. Team Revenues. The Team a�ill contro] and retain 100% of revenues deri��ed
from all events at the \ew Arena (such events "Arena E��ents" and such
revenues "Team Arena Revenues"), except as othercvise provided in
Paragraphs V-B and XI-7 hereof and except as provided w-ith users of the
New Arena, and 100% of the revenues derived from other operations outside
of the Nea� Arena ("Team Revenues"). Team Arena Revenues and Team
Re��enues include the foilowing:
i. sales of tickets for Arena Events
2. sales of tickets for club seats for Arena Events
3. sales of luxur�� suites for Arena Events
4. New Arena's share of all concession revenues and payments
5. all (permanent and temporary) advertising and promotional revenues
• (including naming rights, fixed signage, dasher boards, on-ice
advenising, �7deo boards) at the New Arena
6. merchandising revenues realized from sales at Arena Events and at all
other times at the Team's retail stores at the New Arena and
elsewhere
7. publication revenues realized at Arena Events and at all other tiines
at the Team's retail stores at the New Arena and elsewhere
8. broadcast, merchandising and other revenues received by the Team
from the NHL
9. revenues from local broadcasts of Arena Events (e.g., local'I`V, cable
and radio)
10. all other revenues derived from operations of the New Arena and the
Team's business outside of the Arena
CJ
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• pro��ided, that the City and the Authority make no representations or
warranties about the le��el of any such re��enues; or the a�•ailabiliry of an��
revenue sources other than from the New Arena. The Team's right to all
Team Arena Revenues accruing after the erpiration or termination of the
Lease shall cease upon such expiration or termination of the Lease.
Team Arena Revenues and Team Revenues do not include the amounts to be
recei�•ed by the City from the Team as described in paragraph B below, and any taxes of
genera] applicabilin�.
In addition, the City shail pay the Team a sum equal to (a) net parking revenues
derived from e�°ent parkinQ at the time of Iv'HL Games from the existing 1730 spaces in the
Ci��ic Center Ramp and the 430 spaces in the Ci��ic Center F�hibit Hall underground ramp,
(b) net parking revenues for event parking received by the Ciry at the time of NHI. Games
deri�•ed from approtdmateh� 23� surface parking spaces in the `Cleveland Circle" and `'Se��en
Corners" surface parking lots, and (c) any net parking revenues for event parking received
by the Cin� at the time of \HL Games from surface parking on parcels contiguous to the
Ne�x� Arena if and to the estent actually ow�ed or controlled by the City during the L.ease
Term. In the event the lots in clause (b) become unavailable for event parking during ?�'HL
Games due to sale of properry, cancellation of agreements a�th current property owners, or
de��elopment on site(s), the Ciry shal] negotiate in good faith to replace that parking
availabiliry and the resulting amounts the Team receives for event parking during I�THL
• Games «�ith other land available for surface parking contiguous to the New Arena. The City
and the Authority make no representations or warranties about the level of any such
revenues.
B. Citv Arena Revenues. The Team shall pay the City (a) $385,000 per year in
consideration of the advenising revenue from the two replacements of the one
exasting outdoor marquee (as provided in Paragraph VII-A including the 5%
annual escalation) regardless of actual advertising revenue received by the
Team and (b) the Ticket Surcharge imposed by the City as described in C
below.
C. Team Arena E�enses. Faccept as er.pressly provided for in paragraph E
hereof, the Team will pay for: (1) 100% of the management, operation and
maintenance expenses incurred for Arena Events and otherwise in connection
with the New Arena, it being the intention of the parties that the Lease be
absolutely "net" to the City and the Authority, except as expressly provided for
in this Term Sheet, (2) the costs of capital repair and repiacement as
described in subparagraph (D) below, and (3) any required collections of
(a) generally applicable sales taxes, (b) any other state or city imposed taxes
or assessments, and (c) a faciliry ticket surcharge or other similar tax or fee
•
3tpyy,�9
3
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• imposed by the Ciry or Authoriri• (the "Ticket Surcharge") not to exceed �1.�0
per ticket for Arena E��ents for the first five years of the Lease Term, a�ith
cumulati��e increases in the Ticket Surcharge not to exceed �.50 over each
successi�°e fi��e year period thereafter, except as may be mutually agreed to by
the Ciry and Team, pro��ded that if the Ticket Surcharge does not raise at
least $2,100 (the "Surcharge Base") in any year of the L.ease Term, then
the City shal] ha��e the right to increase the Ticket Surcharge for the following
year to that amount necessary to raise the Surcharge Base (the "Emergency
Increase"). The Team and the City will keep each other advised during the
}�ear as to the estimated receipts from the Ticket Surcharge and the City a�ill
provide the Team w�ritten notice of any decision to increase the Ticket
Surcharge; pro«ded funher, that the City agrees not to increase the Ticket
SurcharQe during the NHL Hockey season. The City will agree to repeal any
Emergency Increase in the Tieket Surchar�e made under this paragraph when
the Cit�� has reasonable assurances that the lower Ticket Surcharge w�il
generate at least the Surcharge Base per year. The timing and mechanism for
any Emergency Increase shall be provided for in more detail in the L,ease.
The City �vil] use the increased portion (beyond the Emergency Increase) of
the Ticket Surcharge to pro��de direct or indirect benefit to the New Arena,
Wilkins Auditorium, or Convention Center. The initial Ticket Surcharge of
�L�O per ticket w�ll be reduced to $1.00 per ticket and the Surcharge Base
shall be reduced to 51,400,000 if the proceeds of the State Bonds
• contemplated in Section JX (C) hereof are granted to the City.
D. Capita] Repairs, Replacements and Improvements. The Team shall manage,
operate and maintain all aspects of the New Arena consistent with
comparable NHL facilities, including making all capital repairs, replacements
and improvements as and when the Team and the City reasonably deem
necessary, ail at the elcpense of the Team, except as expressly provided in
paragraph E below, and consistent with any requirements as set forth in the
Lease to be negotiated in good faith among the Team, City and Authority
("Lease"). The Team and the Authoriry shall create a capital rep]acement
repair and reserve fund ("Arena Reserve Fund") and to be funded by the
Team and spent according to the terms of the Lease. The moneys in the
Arena Reserve Fund shall be the property of the Team during the Lease
Term; provided that moneys remain3ng in the Arena Reserve Pund at the end
of the Lease Term shall be the property of the City. The Team's annual
contribution to the Arena Reserve Fund shall be (a) �250,000 for the fourth
and fi8h years of the Lease Term, (b) $500,000 in the sixth year, and (c)
commencing in the seventh and in each year thereafter an amount equal to
$500,000, to be escalated annually commencing in the seventh year at the rate
of inflation during the preceding year.
•
aso�v 4
a�-C�S
: The contributions shall be payable by the Team at the beginning of the
applicable }'zar of the I.ease Term. To the e�ent the money in the Arena
Resen�e Fund is insufficient, the Team shall have the obligation to pay for
capital repairs and replacements, except as expressiy provided in paragraph
E hereof.
E. Citv Contribution to Repair and Re�lacement After Citv Bonds are Paid
When the Cin Bonds are paid or defeased, the City shali continue to receive
100% of the Ticket Surcharge. The City agrees to provide matchin� fundin�
(to be held in a separate City account) for necessary capital repairs and
replacements in the folloRing manner:
(i) If the Ticket Surcharge has not been increased since the
commencement of the Lease Term, the City shall make a��ailable
durino the calendar year, on a one-to-one matching basis with the
expenditures made out of the Arena Reserve Fund or otherwise by the
Team during such year the full amount of the Ticket Surcharge up to
�1.4 million. These funds shal] only be available during the calendar
year, and any unmatched and unspent funds shall revert to the City for
uses which pro�-ide direct or indirect benefit to the New Arena,
Com�ention Center, or Wilkins Auditorium.
• (2) If the Ticket Surcharge has been inereased during the Lease Term,
then the City shall make available on a one-to-one matching basis with
the expenditures made out of the Arena Reseive Fund or otherwise by
the Team during such year, an amount equal to the $1.4 million
inflated annually beginning in the seventh year in an identical manner
to the escalation of the Team's contribution to the Arena Reserve
Fund (the "Escalated Contribution").
In no event shall the annual match by the City exceed the actual revenue
derived from the Ticket Surcharge. The Team shall provide the City written
evidence of the payment of e�enditures made by the Team prior to the City
making the matching contribution contemplated by this paragraph V available
to the Team.
In any event, notwithstanding the City's annual match under paragraph E
hereof, the Team remains responsible for the payment of and contracting for,
in accordance with law, all necessary repairs and replacements to the New
Arena.
r 1
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• F. Namine Riehts — Citv Approval. Tt�e City has the right to reasonably
approve the recipient of the naming rights for the New Arena which rights
shall be granted for no longer than the L,ease Term.
VI. NE��J ARENA CO'�4MITMENTS:
The Authoiin> and City belie� that the New Arena is and u�ill be on the
Commencement Date free of all cont7actual obligations relating to New Arena
operations R�ith third panies, which include advertising and concessions, other than
contractual scheduling commitments for certain events and the existing agreement
«�ith Ticket Master'�4innesota dated'�ovember 5, 199�. The Team has the right to
select and contract a�ith ali parties pro��ding products or services for the New Arena
(includino the concessionaire), to determine product selection and the service to be
pro��ided b}� such contractin; parties, and to receive a11 revenues and payments from
such parties. The Team shall also have the opponunity to participate in the selection
process for the parking lot operator at set renewal periods. The City and the
Authority will work n the Team to facilitate the Team's financial and operationa]
interests in the parkin� a�•ailable for �HL Games at the ramps and lots described in
Para�raph V-A hereof.
• VII. ADVERTISI:�G
A. The Team shall have the exclusive right to sell and control the advertising on
the outdoor marquees (referred to in Paragraph V-B above). In consideration
thereof, the Team shall pay to the Authority or the City $385,000 annually,
beginning on the Commencement Date, with an escalation of 5% annuallv
thereafter be�inning in the second year of the Lease Term. This obligation
shall be due and owing by the Team regardless of the amount of such
advertising revenue.
B. The Team shall have the exclusive right to sell and control all other
advertising and promotion rights for the New Arena and retain all revenues
received from such sales. The Team shall use its best efforts to promote
attendance at events in the New Arena. Additionally, the Team shall use its
best efforts to coordinate activities in the New Arena with activities in the
Civic Center compiex.
C. This Term Sheet and the Lease shall not affeci the rights of the City and
Authority with respect to advertising in other areas of the St. Paul Civic
Center Complex (e.g, Wilkins Auditorium or new Convention Center).
•
350 V
a'1-C�tS
�
VIII. NE�� ARENA DESIGN AI�D CONSTRUCTION
A. The Team v.�ill contract for the design and construction of the New Arena
��ithout the necessity for advertisement for bids, using a construction method
that espedites the construction schedu]e. Immediately upon the award of an
i�THL franchise if it occurs prior to July 11, 1997, the Team shall commence
the design and construction of the New Arena in Saint Paul, and if the Team
is granted a franchise to play in the 1999-200� 2�HL Season, such construction
shall be substantially completed by September i, 1499. Subject to clause (B)
below, the New Arena sha11 be a first class facility consistent in quality w
other current arenas recently constructed for use by I�'HL teams, and is
expected to consist of the following major design elements:
•
1.
2.
Appro�mately 6�0.000 square feet.
approximately 2,500 club seats.
approximately 750 to 1000 seais in luxury suites.
3.
4.
5.
6.
7.
8.
9.
10.
A capacity of appro�mately 19,000 seats for hockey, including:
(a)
(b}
A finished club restaurant and bar.
Finished team retail stores and team offices.
Video scoreboard(s) with advertising panels.
Two or more new outdoor electronic marquees.
Finished locker rooms and related training rooms and offices.
Finished concessions and novelty stands.
Landscaping.
All necessary fumiture, £ixtures and equipment.
B. The Team, City and Authority shall mutually agree on the conceptual design
for the New Arena by August 1, 1997. There wil] be a design team that w�ill
include two representatives from the City and one representative from the
Authority in addition to representatives from the Team. If no agreement is
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3509669
Il
9'1- C�IS
• reached the Team shall ha��e ihe right to make final design decisions, which
the Team a�rees to make on a timely basis. I�TO material changes may be
made in the conceptual dzsign by the Team, a�thout the approvai of the City,
except as required by the project budget of approximately $130,000,000. In
such event, the City, Authorit�� and Team shall agree to ealue engineer the
New Arena project on a timely basis to reduce its costs. If no agreement on
the aalue enQineering can be reached, the Team shall have the right to make
final desiQn decisions, subject to the spirit of the Conceptual Design and
project budeet constraints.
C. Contingent on recei«ng the funds from the City under the Plan of Finance,
the Team shall bear ali the costs of the New Arena, including desien,
construction. finance, cost o��erruns and demolition of the existing arena. The
Ciry shail bear the costs of the costs of acquisition or off-site infrastructure
impro��ements. T'he City and the Team agree to consider alternate
construction methods �hich may reduce project costs and expedite project
schedule. The Ciry aerees to coordinate and help eapedite all permits needed
for the construction of the New ,4rena. In the event the costs of the New
Arena are ]ess than 5130.000,000, the sa��ngs shall be shared by the respective
parties in the same proportion as their contributions set forth in Section IX.
• IX. PLA'� OF FINA.\CE:
A. The New Arena shall be financed through the following funds: (1} $35 million
from the Team in the form of cash, cash equivalent or an irrevocable letter
of credit in form and substance satisfactory to the City (the "Team
Contribution"), and (2) �30 million from the City or its housing and
redevelopment authority plus the cost of land and off-site infrastructure (the
"Ciry Contribution"), and (3) an additional $65,000,000 from the City or its
housing and redevelopmeni authoriry, which the City anticipates will be
replaced a�th State Bonds as provided in paragraph C below (the "Ciry
Guaranry of State Portion"). The funding in clause (2) and (3) is collectively
referred to as the "City Bonds". If necessary, the funding plan for the City
Bonds shall be structured so that contracts for the construction of the New
Arena may be awarded without advertisement for bids.
B. The Team Contribution and City Contribution must be deposited in escrow
with a third party acceptable to the Team and the City by a date reasonabiy
acceptable to the Team and the City in order to accommodate the leiting of
the necessary design and construction contracts. The Team and the City will
mutually agree to the percentage of each draw to be paid by the Team
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35096F9
0
97-GRS
• Contribution and the Cin- Contribution. The intent of the parties is that the
City Guarann� of State Portion «�ll not be drak�n dow�n until July 1, 1998.
C. The Team acknowledges and agrees that the City anticipates that a portion
of the City Bonds will be replaced a�ith an appropriation or proceeds of bonds
issued by the State of Minnesota (the "State Bonds"). Upon such
replacement, the term "City Bonds" herein shall be deemed to include the
"State Bonds".
X. CH,ARITABLE CONTRIBUTIONS:
The Team, or its charitable foundation, will on the Commencement Date and
annually thereafter make annua] contributions to existing local organizations that
promote youth programs in D4innesota, such as the Mariucci Inner Ciry Youth
Hocke�• and ?�4innesota Amateur Hockec Association (MAHA).
XL MISCELLA.'�EOUS:
A. Upon the grant of an NHL franchise to the Team, the parties shall commence
ne;otiations of a definitive Lease agreement based on this Term Sheet
("L.ease"). If a definitive Lease has not been executed by March 15, 1998, any
outstanding issues (except failure of the parties to agree pursuant to Section
• XI-H) shall be submitted to binding arbitration upon the request of the City
or the Team by a panel of three independent persons familiar with the
operations and economics of sports facilities or municipal operations and
finance. One panelist shall be chosen by the Team. The second panelist shall
be chosen by the City, and the third panelist shall be chosen by the other two
panelists. Such panel shall ha��e the right to make a decision solely on the
issue or issues in dispute but shall not have the power to alter the terms
agreed upon by the parties herein or hear or determine any dispute over (i)
the terms or conditions which may be agreed to in the future in the
negotiations over the Lease, or (ii) the failure of the parties to agree pursuant
to Paragraph XI-H or VIII-B.
B. The Team will maintain its membership in good standing in the NHL
throughout the Lease Term.
C. The Lease will contain such other terms and conditions (insurance, damage
and destruction, indemnification, financial statements, securaty, scheduling,
force majeure, events of default, remedies, miscellaneous, etc.) as are
customary in the industry, reasonable, or otherwise agreed to by the City,
Authority and Team. Notwithstanding the foregoing, the Team shail agree to
�J
3S096E.9
�
9� -C�s
• pay liquldated damages in the e��ent of a breach of its covenant (a) to operate
exclusively at the Iv'ew Arena during the first ten years of the I.ease Term as
pro��ided in Paragraph IV hereof, or (b) after the first ten years of the Lease
Term, to pap the City and State the amounts specified in Paragraph IV hereof
in the event it relocates the Team, in an amount equal to: (x) the unpaid
principal balance of the outstanding City Bonds (inciuding any related
premium or early retirement penalty assocaated with prepayment), (y) the
amount of money expended by the Ciry and the Authoriry for construction
cost o��erruns, land acquisition, off-site infrastructure, demolition and other
actua] out of pocket costs incurred by the City and the Authority in connection
with the New Arena, and (z) interest from tbe date of expenditure of the
amounts identified in clause (y) at a rate of interest of seven percent per
annum. Additionall}�, disputes beta�een the parties under ihe J_,ease R�ill be
��enued esdusively in Ramsey Counry, Minnesota.
D. No term of the Lease shali impair the tax exempt status of outstanding bonds
issued ��ith respect to the Ci��ic Center Compler,, and if any term herein
should ha�e that effect, it shall be deemed modified to the e�rtent required to
eliminate such effect as long as such modifications remain consistent with the
intent of this Term Sheet.
E. If al] or a portion of the City Bonds are issued as tax exempt bonds, the Team
• and the Cin� shall make such reasonable modifications to the Term Sheet as
are appropriate to facilitate and not impair such exemption. In order to
accommodate the construction of the New Arena, without advertisement for
bids, the Team and the City shall make such reasonable modifications to the
Term Sheet as necessare to take advantage of any exemption to competit9ve
bidding, which modifications may include the lessor under the L.ease being a
nonprofit corporation, as long as such modifications remain consistent with the
intent of this Tertn Sheet.
F. The Team and the City agree that the provisions of this Term Sheet are
subject to all federal, state and loca] laws, rules, regulations or ordinances.
G. A binding letter of intent in substantialiy the form attached hereto as F�hibit
A shall be promptly executed by the City, Authority and Team.
H. The Team and the City shall collaborate in good faith on the design,
construction, finance and operation of a new p7actice facility or the necessary
improvements to an existing facility to be converted into a practice facility for
the Team containing the necessary facilities for an NHL practice facility which
shal] be open for use by the public when not being used by the Team.
�
3509569 1 Q
9'1- (.'1 S
:�'othin, herein shall be construed as a guarantee of City financial assistance
� for the practice facility.
I. The Team shall make the New Arena a��ailable for lease to the Minnesota
State Hieh Schoo] I.eawe (MSHSL) in order that the MSHSL shall be able
to continue to conduct state high school tournaments as they have been
conducted in the past, includine girls volley ball, girls danceline, boys a�restling,
boys hocke}� and boys basketball. The MSHSL shall be able to conduct the
tournaments and receive the same revenue streams, and subject to agreement,
any new re��enue streams, and pay the npes of expenses in the same
categories that are cunently in effect.
3. The Team shal] make the '�Tew Arena aeailable, subject to scheduling of other
events, to the City or its designee for presentation of up to five (5) events per
year not to e�ceed 10 da}•s, including time for set up and break down (the
"Ciry E�ents"). Such e��ents shall be of "community or non-commercial
nature" and neither the City nor its designee shall be required to pay rent to
the Team for use of the \Tew Arena for said event(s). However, the City or
its designee shall be required to reimburse the Team for all applicable out-of-
pocket expenses, incurred in connection with the event(s). The City shall be
entitled to �0 percent of any re��enues derived in the New Arena from the Cirv
Events. "
i K. Any contracts or agreements entered into by the Team which generate Team
Arena Revenues or any agreements a�th respect to operations at the New
Arena shall, unless such contracts or agreements were approved prior to their
execution by the City, contain a clause that such contracts or agreements are
immediatelp terminable by the City at its option upon e�iration or
termination of the L,ease.
L. The Team agrees that throughout the term of the L.ease, un]ess the City
othenvise consents in a�riting, which consent the City agrees will not be
unreasonably R�ithheld (a} will be the sole general
partner of the team, and (b) Robert O. Naegele, Jr. will control the general
partner.
M. The Authority or the City will use its best efforts to provide the Team up to
10,000 square feet of office space commencing on a date as necessary to meet
the Team's needs and continuing through the completion date of the New
Arena. The Team shall pay rent equal to all utility, any build out costs, and
all other out-of-pocket costs of the Authority or the City.
• 350a66.9 11
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�
EXHIBIT A
BINDI'�G LETTER OF INT'ENT
This Binding I,etter of Intent is entered into this day of _, 1997, by and
amon� the City of St. Paul, Minnesota ("Ciry"), St. Paul Civic Center Authority ("Authority"),
Housing and Redevelopment Authorin� of the City of Saint Paul, Minnesota (the "HRA").
and , a Minnesota limited partnership ("Team")
(collectively "the Parties").
The City, Authorin�, HRA, and Team agree to the terms in the attached Amended
and Restated Term Sheet for St. Paul Ci�ric Center Arena dated May 28 1997 (the "Term
Sheet") and agree that the terms set forth in the Term Sheet wil] be incorporated into a
definitive lease agreement ("L,ease") among the Pariies. The Citt=, Authority, HRA, and
Team aQree that the Term Sheet reflects the basic business deal among the parties, and is
intended to be binding on the Parties, their respective assigns and successors and that they
��ill in good faith negotiate the terms of the Lease consistent with the terms set forth in the
Term Sheet.
The Cin�, Authority, HRA, and Team each represent that the execution and delivery
of this Binding L,etter of Intent and the Term Sheet and the performance and observance
of the terms of this Binding Letter of Intent and the Term Sheet have been duly authorized
. by all necessary action on the part of the City, Authoriry, HRA, and Team respectively.
.
This Binding Letter of Intent shall automatically terminate and be of no effect if (a)
the National Hockey I,eague does not announce the award of an e�cpansion franchise to the
Team during its next round of expansion or approve this Term Sheet on or before 3uly 11,
1997 or (b) the Team's or City's contribution contemplated by Section IX(A) shaii not be
available at the time and in the form provided in Paragraph IX(B).
3509ot.o
9'1-CTlS
r1
LJ
The Parties hereb}• execute this Binding L.etter of Intent as of the date first written
abo��e.
CITY OF ST. PAUL, MINi�'ESOTA
Bv:
Title: Mavor
•
Appro�•ed as to Form:
Citv Attornev
Title: Director, Office of Financial Sen�ces
Bv:
Title: Director of Planning and Economic
Development
ST. PAUL CIVIC CEN'I'ER AUTHORITY
Title: Chair
F�ecutive Director
•
35po5Ci9
�t� - �� s
i
HOL�SI�G A.'�D REAEVELOPMENT AUTHORITY
OF THE CITY OF SAI?vTT PAUL, MINNESaTA
Title: Chair
By:
Title: Secretarv
B�•:
Title: Executive Director
Title: Director, Office of Financial Services
A LIMITED
•
PART:'�ERSHIP
By: , a Minnesota limited
liability company, its general partner
By:
Title: Robert O. I�aegele, Jr.
Managing Member
•
iS�'� 0
•
A.�1E'��ED �'�'D RESTATED
TERM SHEET
Dated A'Ia�� 28. 1997.
for the Lease of the
� n d.�s cc r�a�
� �� a�
NEW ST. PAUL CIVIC CENTER AREf�'A ('NEW AREI�'A")
•
I.
II.
III
IV
OW?�ER'S AGE\T w�ill be the Saint Paul Civic Center Authority ("Authority"), and
OVJtiER will be the City of Saint Paul ("Ciry'�.
TE'��\T ��11 be the '�HL eap�nsion team to be oc�ned by
("Teani'}.
LEASED PRE?�4ISES �ill be the New Arena, including all furniture, fixtures and
equipment necessary for the pla} of all h'HL home regular season, pla}�off, All-
Star and other NHL-sanctioned home games and any ?�THL e�ibition games pia}=ed
at the New Arena ("NHL Games"), and any other arena events as contemplated
below.
TERM OF LEASE
The term of the L.ease shall commence thirty days prior to the first Tv'HL Game of
the regular NHL �se� season which follows the date of substantial completion of
the New Arena (the °Commencement Date" which if an NHL franchise is Qranted
to the Team to nlav in the 1999-2000 I�HL season, is anticipated to be approximately
September 1, 1999) and will continue from that date for the later of twenty (20) years
or the final maturity stated date of the City Bonds, but not longer than 25 years (the
"Lease Term"). The Team will have the option to extend the Lease Term for two
five (5) year periods. Any such e�ension shall be a part of the Lease Term. The
Team will lease the New Arena for the purpose of playing all of its NHL home
Games and w�ill not relocate the Team from the Arena during the Lease Term;
provided, that the Team shali have the right after the first ten years of the Lease
Term to terminate the lease by paying the Ciry ��a •��m� an amount required to
discharge the outstanding Ciry Bonds , including any
related premium or early retirement penalty associated with pre-payment). Upon
_L�S
• 3509GSRed
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Q1-G4S
•
C�
V.
pa�•ment of said amount and pa� of all other accrued liabilities under the L,ease.
the Team may terminate the I.ease.
ARE'_v'A REVE'�"[rES AI�TI7 E}:PEi�SES
A. Team Re�•enues. T'he Team will control and retain 100% of revenues deri<<ed
from all e�•ents at the \ew Arena (such e��ents "Arena Events" and such
re��enues "Team Arena Revenues"), except as otherckzse provided in
Paragraphs V-B and XI-3 hereof and except as pro��ided «�th users of the
New Arena, and 100% of the revenues derived from other operations`outside
of the \eR• �rena ("Team Revenues"). Team Arena Revenues and Team
Re��enues include the following:
1.
�
3.
4.
sa]es of tickets for rlrena Events
sales of tickets for club seats for Arena Eeents
sales of luxury suites for Arena Events
\ew Arena's share of all concession revenues and pa}ments
5. all (permanent and temporary} advertising and promotional revenues
(includine namino rights, fixed signage, dasher boards, on-ice
advertising, ��deo boards) at the ?��ew Arena
6. merchandisin� re��enues zealized from sales at Arena Events and at all
other times at the Team's retail stores at the New Arena and
elsewhere
7
8.
�
10.
publication revenues realized at Arena Events and at all other times
at the Team's retail stores at the New Arena and elsewhere
broadcast, merchandising and other revenues received by the Team
from the NHL
revenues from local broadcasts of Arena Events (e.g., local TV, cable
and radio)
all other revenues derived from operations of the New Arena and the
Team s business outside of the Arena
pro��ided, that the City and the Authority make no representations or
warranties about the leve] of any such revenues; or the availability of any
• 35WSERed
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re��enue sources other than from the New Arena. The Team's ri2ht to all
• Team Arena Revenues accruing after the ea or termination of the
Lease shal] cease upon such e� or termination of the L,ease.
Team Arena Re� and Team Re��enues do not include the amounts to be
received by the City from the Team as described in paragraph B below, and any taxes of
general applicability.
In addition, the City shall pay the Team a sum equal to (a) r.et parking revenues
derived from event parking at the time of fiHL Games from the existing 1730 spaces in che
Ci��ic Center Ramp and the 430 spaces in the Ci��c Center E�ibit Hali underground ramp,
(b} net parking rerenues for event parking receiced by the City at the time of NHL Games
derived from approximately� 235 surface parkine spaces in the "Cleveland Circle" and "Se��en
Corners" surface parkinJ lots, and (c) any net parking revenues for event parking recei��ed
by the Ciry at the time of '�HL Games from surface parking on parcels contiguous to the
�ec� Arena if and to the e� actuall}• ocened or controlled by the C;n durina the Lease
Term. In the e��ent the lots in clause (b) become una��ailable for event parking during i�HL
Games due to sale of property, canceliation of aQreements w�ith current property owners, or
development on site(s), the City shall negotiate in �ood faith to replace that parking
avai]abi]irn and the resultin2 amounts the Team receives for event parking during NHL
Games with other land a��ailable for surface parking contiguous to the :v'ew Arena. The City
and the Authority make no representations or warranties about the level of any such
revenues.
• B. Citt� Arena Revenues. The Team shall pay the Ciry (a) �385,000 per year in
consideration of the advertising revenue from the two replacements of the one
e�sting outdoor marquee (as pro��ided in Paragraph VII-A including the 5%
annual escalation) regardless of actual advertising revenue received by the
Team and (b) the Ticket Surcharge imposed by the City as described in C
below.
C. Team Arena Expenses. Eaccept as e�ressly provided for in paragraph E
hereof, the Team will pay for: (1) 100% of the management, operation and
maintenance expenses incurred for Arena Events and otherwise in connection
with the New Arena, it being the intention of the parties that the L,ease be
absolutely "net" to the Cit�� and the Authoriry, except as expressly provided for
in this Term Sheet, (2) the costs of capital repair and replacement as
described in subparagraph (D) below, and (3) any required collections of
(a) generally appiicable sales taees, (b) any other state or city imposed t�es
or assessments, and (c} a facility ticket surcharge or other similar tax or fee
imposed by the Ciry or Authoriry (the "Ticket Surcharge") not to exceed �}
1�.50 per ticket for Arena Events for the first five years of the L.ease Term,
w�ith cumulative increases in the Ticket Surcharge not to exceed $.50 over each
• 3509iF.Re2 1
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successi�•e fi�•e }•ear period thereafter, except as may be mutually agreed to b}�
• the Cin� and Team, prorided that if the Ticket Surcharge does not raise at
least �} $2100.000 (the "SurcharQe Base") in any }'ear of the Lease
Term, then the City shall ha��e the right to increase the Ticket Surcharge for
the follow�no ��ear to that amount necessary to raise , , e�-}ea� the
Surcharae Base (the "Emergency Increase"). The Team and the City will keep
each other ad��ised durin� the year as to the estimated receipts from the
Ticket Surcharge and the Cit�� will pro�lde the Team wricten notice of anv
decision to increase the Ticket Surcharge; pro��ided further, that the Citt�
agrees not to increase the Ticket Surcharge during the h'HL Hockey season.
The Ciry Rill agree to repeal any Emergency Increase in the Ticket Surcharee
made under this para�raph when the City has reasonable assurances that the
lower Ticket Surcharge a-ili generate at least �888 the Surchar2e Base
per year. The timing and mechanism for any Emergency Increase shall be
provided for in more detail in the Lease. The City w�ill use the increased
portion (becond the Emzroency Increase} of the Ticket Surcharge to pro��ide
direct or indirect benefit to the Iv'ew Arena, Wilkins Auditorium, or
D. Ca ital Repairs. Replacements and Imvrovements. The Team shall manage,
• operate and maintain all aspects of the New Azena consistent with
comparable :�'HL facilities, inciuding making all capital repairs, zeplacements
and improvements as and when the Team and the City reasonably deem
necessarq, all at che e�ense of the Team, except as eapressly provided in
paragraph E below, and consistent with any requirements as set forth in the
L,ease to be negotiated in eood faith among the Team, Ciry and Authority
("L,ease"). The Team and the Authoriry shall create a capital replacement
repair and reserve fund ("Arena Reserve Fund") and to be funded by the
Team and spent accordin� to the terms of the Lease. The monevs in the
Arena Resen�e Fund shall be the properry of the Team during the I.ease
Term; provided that moneys remaining in the Arena Reserve Fund at the end
of the Lease Term shall be the property of the City. The Team's annual
contribution to the Arena Reserve Fund shall be (a) $250,000 for the fourth
and fifth years of the Lease Term, (b) $500,000 in the sixth year, and (c)
commencing in the seventh and in each year thereafter an amount equal to
$500,000, to be escalated annual}y commencing in the seventh year at the rate
of inflation during the preceding year.
The contributions shall be payable by the Team at the beginning of the
applicable year of the Lease Term. To the extent the money in the Arena
• 35096fiRcd A
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a�-��s
Resen�e Fund is insufficient, the Team shall have the obligation to pay for
• cagital repairs and replacements, except as e�pressly prov�ded in paraQraph
E hereof.
E. Ciri� Contribution to ReDair and Re placement Afcer Citv Bonds are Paid
�Vhen the Cin� Bonds are paid or defeased, the City shall continue to receiee
100% of the Ticket Surcharge. The City agrees to provide matching funding
(to be held in a separate City accountj for necessary capital repairs and
replacements in the following manner:
(1) If the Ticket Surcharge has not been increased since the
commencement of the L.ease Term, the City shall make available
durina the calendar year, on a one-to-one matching basis a�ith the
expenditures made out of the Arena Reserve Fund or otherc�7se bv the
Team durino such year the full amount of the Ticket Surcharge up to
S1.4 miilion.� These funds shali only be available during the calendar
year, and anv unmatched and unspent funds shall revert to the City for
uses «�hich pro�ide direct or indirect benefit to the I�'ew Arena,
Com�ention Center, or Wilkins Auditorium.
(2) lf the Ticket Surcharge has been increased during the Lease Term,
then the Cin� shall make available on a one-to-one matching basis alth
• the ea�penditures made out of the Arena Reserve Fund or otherwise by
the Team during such year, an amount equal to the $1.4 million
inflated annually beginning in the seventh year in an identical manner
to the escalation of the Team's contribution to the Arena Reserve
Fund (the "Escalated Contribution").
In no event shail the annual match by the City exceed the actual revenue
derived from the Ticket Surcharge. The Team shall provide the Ciry written
e«dence of the pay�nent of e�enditures made by the Team prior to the Ciry
making the matching contribution contemplated by this paragraph V available
to the Team.
In any event, notwithstanding the City's annual match under paragraph E
hereof, the Team remains responsible for the payment of and contracting for,
in accordance with law, all necessary repairs and replacements to the �`ew
Arena.
F. iv�amin¢ Ri¢hts — Citv Approval. The Ciry has the right to reasonably
approve the recipient of the naming rights for the New Arena which rights
shall be granted for no ]onger than the Lease Term.
• ?�uvsa.A�a $
V9 ro \'E. 05,2fiN]
a �l -GR 5
VI. :�'EW AREl�A C0�4D4ITD4E;��I'S:
i The Authorirn and Ciry belie��e that the New Arena is and �zli be on the
Commencement Date free of all contractual obligations relating to New Arena
operations kzth third parties, a�hich include advenising and concessions, other than
contractual scheduling commitments for certain events and the existing agreement
�;�ith Ticket R4aster'�4innesota dated November 5, 199�. The Team has the right to
select and contract azth all parties pro�lding products or sen�ices for the IVew �ena
(includin� the concessionaire), to determine product selection and the service to be
pro��ided by such contracting parties, and to receive all revenues and payments from
such parties. The Team shall also have the opportuniry to participate in the selection
process for the parking lot operator at set renewai periods. The City and the
Authority cr111 work �zth the Team to facilitate the Team's financiai and operational
interests in the parl:ing a��ailable for I�HL Games at the ramps and lots described in
Paraoraph V-A hereof.
VII. ADVERTISING
A, The Team shall have the exclusive right to sell and control the advertising on
the outdoor marquees (referred to in Paragraph V-B abo��e). In consideration
thereof the Team sha11 pay to the Authority or the City �385,000 annually,
beginning on the Commencement Date, with an escalation of 5% annually
� thereafter beeinning in the second year of the Lease Term. This obligation
shall be due and ow�inQ by the Team regardless of the amount of such
advertising revenue. �
B. The Team shall have the exclusive right to sell and control all other
advertising and promotion rights for the Iv�ew Arena and retain all revenues
received from such sales. The Team shall use its best efforts to promote
attendance at events in the New Arena. Additionally, the Team shall use its
best efforts to coordinate acti�lties in the New Arena with activities in the
Ci�zc Center complex.
C. This Term Sheet and the Lease shall not affect the rights of the City and
Authority with respect to advertising in other areas of the St. Paul Civic
Center Camplex (e.g., Wilkins Auditorium or new Convention Center).
i 3�096CR�d 6
�'9 ic \'f. Oi:S'99
a�-��.s
•
VIII. :�EW ARE;�,� DESIG\ A.'�D CO'�'STRUCTION
�. c..�.: ,.. .�,e r i t ,� l
- �- . r
h:�iA' ..A ..�: 1 �A 1' C t l.
� r ,- The Team
will contract for the desi¢n and construction of the New Arena without the
es edites the construcrion schedule. Immediately upon the aa�ard of an NHL
franchise if it occurs prior to July 11, 1997, the Team shall commence the
design and construction of the New Arena in Saint Paui, and if the Team is
�ranted a franchise to rla� in the 1999-Z000 NHL Season such construction
shall be substantially completed by September 1, 1999. Subject to clause (B)
below, the \ew Arena shall be a first class facility consistent in quality with
ofher current arenas recently constructed for use by nTHL teams, and is
expected to consist of the folloa�ng major design elements:
L�
1.
�
Appro�mate]y 6�o.000 square feet.
appro�mately 2,�00 club seats.
appro:�mately 7�0 to 1000 seats in luxury suites.
3.
4.
5.
6.
7.
8.
9.
10.
A capacit�� of appro�mately 19,000 seats for hockey, including:
(a)
(b)
A finished club restaurant and bar.
Finished team retail stores and team offices.
Video scoreboard(s) with advertising panels.
Two or more new outdoor electzanic marquees.
Finished locker rooms and related training rooms and offices.
Finished concessions and novelty stands.
L.andscaping.
All necessary furniture, fixtures and equipment.
B. The Team, City and Authority shall mutually agree on the conceptual design
for the New Arena by 3� A�u�ust 1, 1947. There will be a design team that
will include two representatives from the City and one representative from the
Authority in addition to representatives from the Team. If no agreement is
• 35MCSRed
�'9 a �'F. 05:1.'9' �
�� -��s
reached the Team shall haae the right to make final design decisions, which
• the Team a;rees to make on a timely basis. \'o material changes mav be
made in the conceptual design by the Team, �s the approval of the City,
except as required by the project budget of approximately �,130,000,000. In
such event. the City, Authority and Team shall aeree to value engineer the
1�'ew Arena project on a timely basis to reduce its costs. If no agreement on
the value en;ineering can be reached, the Team shall have the right to make
final design decisions, subject to the spirit of the Conceptual Design and
project budQet constraints.
C. Contingent on recei«ng the funds from the ����-� City under the Plan of
Finance, the Team shall bear all the costs of the New Arena, including design,
construction, finance, cost ovenuns and demolition of the existing arena. The
City shall bear the costs of the costs of acquisition or off-site infrastructure
improvements. The Cicy and the Team aeree to consider alternate
construction methods � ma�� reduce project costs and expedite project
schedule. The Ciry agrees to coordinate and help expedite all permits needed
for the construction of the New Arena. In the event the ensts nf rhP NPw
IX. PLAN OF FI:��A.�CE:
• A. The New Arena shall be financed through the following funds: (1) ���� �'��
" " _ $35 million from the
- �
Team�3} in the form of cash, cash eouivalent or an irrevocable letter of
$30 million from the City ���°��e�} or its
nent avthoritv plus the cost of land and off-site
from the Citv
bids.
' �• - - - - - - - -
= --- -----_ -: --- --: -- �a
acceptable to the
by a
• ?SW6SRea o
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• TA �P_� r=��«-� r-�:��� � Team and the Citv in order to accommodate
- r -r-. _�.......�....
the lettin2 of the necessan° desiea and construcrion contracts. The Team and
1998.
C.
X. CHARITABLE CO\'TRIBUTIONS:
The Team, or its charitable foundation, ��iil on the Commencement Date and
annually thereafter make annual contributions to existing local organizations that
promote youth programs in ?�4innesota, such as the Mariucci Inner Ciry Youth
Hockey and Minnesota Amateur Hockey Association (MAHA).
XI. MISCELLANEOLS:
• A. Upon the grant of an NHL franchise to the Team, the parties shall commence
negotiations of a definitive L,ease agreement based on this Term Sheet
("Lzase"). If a definitive L.ease has not been executed by March 15, 1998, any
outstanding issues (except failure of the parties to agree pursuant to Section
XI-H) shall be submitted to binding arbitration upon the request of the City
or the Team by a panel of three independent persons familiar with the
operations and economics of sports facilities or municipal operations and
finance. One panelist shall be chosen by the Team. The second panelist shall
be chosen by the City, and the third panelist shall be chosen by the other two
panelists. Such panel shall have the right to make a decision solely on the
issue or issues in dispute but shall not have the power to alter the terms
agreed upon by the parties herein or hear or determine any dispute over (i)
the terms or conditions which may be agreed to in the future in the
negotiations over the Lease, or (ii) the faIlure of the parties to agree pursuant
to Paragraph XI-H or VIII-B.
B. The Team a�ll maintain its membership in good standing in the NHL
throughout the Lease Term.
• 3SW6F.Rcd
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a� -c�s
C. The Lease « contain such other terms and conditions (insurance, damage
• and destruction, indemnification, financial statements, security, scheduling.
force majeure, e��ents of default remedies, miscellaneous, etc.) as are
customary in the industn�, reasonable, or otherwise agreed to by the Cin,
Authority and Team. ;�otcc�ithstanding the foregoing, the Team shall agree to
pay liquidated damaQes in the event of a breach of its covenant (a) to operate
exclusiaely at tbe New Arena during the first ten years of the Lease Term as
pro��ided in Paragraph IV hereof, or (b) after the first ten years of the Lease
Term, to pay the City and State the amounts specified in Paragraph I�' hereof
in the e�•ent it relocates the Team, in an amount equal to: (x) the unpaid
principal balance of the outstanding Ciry Bonds ^^ a ����-�;(includin� any
related premium or earl�� retirement penalty associated with prepa}rznent), (y}
the amount of money expended by the City and the Authoriry for construction
cost o��erruns, land acquisition, off-site infrastructure, demolition and other
actual out of pocket costs incurred by the Ciry and the Authorin� in connection
ulth thz \ew Arena, and (z) interest from the date of ea�penditure of the
amounts identified in clause (y) at a rate of interest of seven percent per
annum. Additionaily, disputes between the parties under the L,ease will be
venued exclusively in Ramsey County, Minnesota.
D. No rerm of the L,ease shall impair the tax exempt status of outstanding bonds
issued u�ith respect to the Civic Center Complex, and if any term herein
should have that effect, it shall be deemed modified to the extent required to
• eliminate such effect as lona as such modifications remain consi�tent with thP
intent oF this Term Sheet.
E. If all or a portion of the Ciry $onds ^- °a����, are issued as ta�c exempt
bonds, the Team and the City shall make such reasonable modifications to the
Term Sheet as are appropriate to facilitate and not impair such exemvtion.
F
G. A binding ]etter of intent in substantially the form attached hereto as F�hibit
A shall be promptly executed by the City, Authority and Team.
• 350WSRW 1�
ti'9 io �'F, OS ^i:9i
The Team and the City agree that the provisions of this Term Sheet are
subject to all federal, state and local laws, rules, regulations or ordinances.
q�-Ln5
H. The Team and the Cin� shall collaborate in �ood faith on the desi;n.
• construction. finance and operation of a new practice facility or the necessarv
improvements to an e3asting facility to be converted into a practice facilin- for
the Team containing the necessary facilities for an NHL practice facility a
shal] be open for use by the public when not being used by the Team.
Nothine herein shall be construed as a guarantee of Ciry financial assistance
for the practice facility.
I. The Team shall make the I�Tew Arena available for lease to the Minnesota
State High School League (MSHSL) in order that the MSHSL shall be abie
to continue to conduct state high school tournaments as they have been
conducted in the past, including girls volley ball, eirls danceline, boys wrestlinQ,
boys hockey and bops basketball. The MSHSL shall be able to conduct the
tournaments and receive the same revenue streams, and subject to agreement,
any ne«� re��enue streams, and pay the types of expenses in the same
careQories that are currently in effect.
J. The Team shall make the '�'ew Arena available, subject to scheduling of other
events, to the City or its designee for presentation of up to five (5) events per
year not to exceed 10 dacs, including time for set up and break down (the
"Ciry Events"). Such ecents shall be of "community or non-commercial
nature" and neither the City nor its designee shall be required to pay rent to
the Team for use of the \'ew ?,rena for said event(s). However, the City or
• its designee shall be required to reimburse the Team for all applicable out-of-
pocket expenses, incurred in connection with the event(s). The City shall be
entitled to 50 percent of any revenues derived in the New Arena from the City
Evenfs.
K. A.ny contracts or agreements entered into by the Team which generate Team
Arena Revenues or any agreements with respect to operations at the New
Arena shall, unless such contracts or agreements were approved prior to their
execution by the City, contain a clause that such contracts or agreements are
immediately terminable by the City at its option upon expiration or
termination of the Lease.
L. The Team agees that throughout the term of the Lease, unless the City
othera�ise consents in writing, which consent the City agrees will not be
unreasonably withhe]d (a) will be the sole general
partner of the team, and (b) Robezt O. Naegele, Jr. will control the general
partner.
M.
• 35096.CRea 11
V9 w �'F. 0$,:$qt
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• r�rena. ine ieam snatt nav ren[ eouat to al! utilitv anv t
a33 other out-of-nocket costs of the Authoritv or the Cite.
�
• 35096ER<d
�'9co�'E 059G9'1 12
9 � -L�1 S
EXHIBIT A
i
BL'vDI?v'G LETTER OF INTEi�T
This Bandine Letter of Intent is entered into this day af _, 1997, by and
amono the City of St. Paul. 'vlinnesota ("City"), St. Paul Ci��c Center Authoriry ("Authori� "),
and . a Minnesota limited partnership
(collectively "the Parties").
The City, Authorin�. HRA, and Team a2ree to the terms in the attached Amended
and Restated Term Sheet for St. Paul Ci� Center Arena dated May �28, 1497 (the "Term
Sheet") and agree that the terms set forth in the Term Sheet will be incorporated into a
definiti��e lease agreement ("L�ase") among the Parties. The Ciry, Authority, HRA, and
Team agree that the Term Sheei reflects the basic business deal among the parties, and is
intended to be bindina on che Parties. cheir respectice assiQns and sueeessors and that the��
c�i11 in 000d faith neQotiate the terms of the Lease consistent with the terms set forth in the
Term Sheet.
The Ciri�, Authoritt�. � and Team each represent that the execution and delivery
of this Binding Letter of Intent and the Term Sheet and the performance and obsen�ance
of the terms of this BindinQ Letter of Intent and the Terzn Sheet have been duly authorized
by all necessary action on the part of the City, Authority, HRA, and Team respectively.
• This Binding Lxtter of Intent shall automatically terminate and be of no effect if e(a}
. -,
- ->
��+3�'i�e rhri.r�te F.,..a:..,. .. , a ]�__co,..:,,., iv n ,.c .�.., �r^,._..., cti,.,.. .._� - - -�-
r � _ _ '_
t , , the Iv`ational Hockey
L.eaQue does not g� announce the award of an eacpansion franchise to the Team during
its next round of expansion or approve this Term Sheet on or before 3uly 11, 1997 or ��b
the Team's or Citv's contribution contemplated by Seciion IX(A) shall not be available at
the time and in the form provided in Paragraph IX-��B .
• �5096.CRcC
\'9�0 \'b. 059F'99
9'1-G�IS
The Parties hereb� execute this Binding Letter of Intent as of the date first �Titten
•
n
U
��
abo��e.
approved as to Form:
City Attorney
39p96SRcd
V9 w VA, OS:�C57
CITY OF ST. PAUL, MINNBSOTA
By:
Title: Mavor
Title: Director, Office of Financial Services
Title: Director of Planning and Economic
Development
ST. PAUL CIVIC CENTER AUTHORITY
Title: Chair
By:
Title: Executive Director
�' � -G�tS
�
�
, A LIMITED
PARTNERSHIP
By: , a Minnesota limited
liabIlity compaz�y, its general partner
B
Title: Robert O. Naegele, Jr.
Managing Member
. �t0?eSReE
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u
•
CITY OF SAINT PAUL
Norm Coleman, M¢yor
TO: Council President Dave Thune
Councilmember Dan Bostrom
Councilmember Jerry Blakey
Councilmember 7oe Coilins
Councilmember Mike Harris
Councilmember Roberta Megard
Councilmember Gladys Morton
390 Ciry HaU
I S West Ke!logg Boulevard
Sairtt Paul, Minnesota 55102
FROM: Mayor Norm Coleman�
DATE: May 28, 1997
RE: Interim Arena Financing Plan for NHL Hockey
7'e(ephone: (6I2) 266-8510
Facsimile: (612J 266-8513
Attached are briefing materials which set forth a proposed interim financing plan to
allow the City to proceed with the effort to obtain an NHL franchise. This financing
plan identifies revenue sources which will allows us to assure the NHL that the team
will play in a new state-of-the-art arena which, as a community facility, will benefit the
entire City and State and enhance our urban vitality. Given Governor Carlson's
commitment to support a$65 million bonding appropriation next year for the new
arena, there is little risk that this interim financing plan would ever have to be
implemented.
The NHL expansion committee will act on June 4th. We need to have City action and
approval of this plan as soon as possibie to accommodate this deadline.
Thank you for consideration.
Enclosures
u
a �-��5
• AN NHL HOCKEY FRANCHISE FOR SAINT PAUL:
INTERIM CITY FINANCING PLAN POR
STATE'S $65 MII.LION COMMITMENT
On May 27, 1997, Governor Carlson reiterated his commitment to support $65 million of state
bonding for renovating the Saint Paul Civic Center during the 19981egislative session. On May 6,
1997, Governor Carlson provided NHL Commissioner Bettman a similar written commitment.
(See attachment 1.) The Govemor's ability to influence the composition of any bonding bill,
leaves little risk that the Governor will not be successful in fulfilling this commitment.
The $65 million in state funds will not become available until after the 19981egislative session.
In order to be awarded an expansion franchise on June 4, 1997, Saint Paul needs to demonstrate
to the NHL that it has a legally binding financing plan in place to constnxct the new $130 million
arena. The Team's existing $35 million commitment is lega(ly binding and secure as is the City's
$30 million commitment What must be done now is to demonstrate a legally bindin�
commitment to the State's $6.5 million which wili not become avai]able until Summer, 1998.
To accomplish the legally bindin� commitment for the State's $65 million, the City has identified
approximately $65 million of future revenue that could become available if the worst, but very
unlikely, case occurred and the State provided no fundin�. These revenue sources provide the
necessary interim financin� plan necessary to obtain an NI�, franchise. This interim financing plan
(see attachment 2):
• 0 Does not involve the use of p�operty tax dolSars or take money from
neighborhoods.
0 Utilizes $44.5 million of additional City's sales tax bonding authority to help
provide the interim financin� for the arena nnd to increase the amount auailable for
the City's nei�hborhoods throu�h an extension of the sales tax for an additional six
years to 2029 .
0 With the Team's agreement, increases the ticket surcharge the effect of which is
to increase City revenue and reduce Team revenue. This is in addition to the
Team's commitment (a) of $35 million for the new arena and (b) the additional
$80 miliion that the team will have to spend once it is awarded a franchise.
In addition to the $65 million of revenue identified, the plan contemplates potential
commitments the labor and business community are pursuing to financially
contribute to the interim financin� plan as part of a partnership that recognizes the
si�nificant economic and social benefits that NHI, Hockey will bring to Saint Paul.
Adoptin� this interim financin� plan by approving a revised term sheet (forthcoming) will bring to
Saint Paul millions of dollars of investment and spendin�, hundreds of jobs, and inereased urban
vitality.
•
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ST'ATE O�' �I�TN�SOTd.
QFPIOE OF TH$ GOV'E7f2N08
SAINT P,A,ZTL � 551•i�i
' 812-289-3393
a�� n. c��R
C.0
May 6, ] 997
Deaz Commissioner Bettman:
P.B2i02
�7� L�S
Ic is with a great deal of pleasure that I wtitc to inform you that the State of Minnesota
will paztner in Saint Paul's efforts to attract an NHT, fianchise back to Minnesota.
•
To demonstrate the State's partnership with the Ciry of Saint Paul and the tocal
ownership group, ! will subtnit a Proposat in th: 1998 bonding bilI to sccurc $65
miUion as the State's portion of tbe construction costs of a new arena. I have
inekrucced top members of my staff to wntinue to work with City staff and the Mayor
to develop the bonding bill proposal for presentation to the 1993 Legislacure.
Tl�c Statc'a commitmcnt, couplcd with dtt ownrrship group conCibution aud thc local
share offered hy the City of Saint Paul, will allow for the aonst�uction of a state-of-
the-art, N(-IL quality areaa to be ready for season pfay in 1499. The members of the
NHL Boazd of Governo:s should feel quite confident that The State of Minnesota, thc
ownership group and the City of Saint Paul will build a new arena to be ready for
seasvn play iu 1999.
Please fcel free to contact me if You would like to discuss this matter in more detail.
armesc regazds,
�
A FI. CARLSON
Govemor
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LAW OFFICES
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�50 SOUTH �IFTH STREET
MINNEPPOL15, MINNESOTA Sb402
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�4CS�MILE �6121 g35 165�
SU17E 2270
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ST. PAVL� MINNESO7A SSIOI
TELEPHONE (6�2i222.7455
FPCSiMRE (6i2� 222-�64<
May 30, 1997
Honorable Mayor and Members of the City Council
City of Saint Paul
IS West Ketlogg Boulevazd
St. Paul, MN 55102
RE: Authority to Issue Sales Tux Bonds
Dear Mayor and Members of the City Council:
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WRITER'S CIRECT Dln� NUMBEs
(612)335-1577
You havc requested this firm's opinion on whether the City may issue up to $65 million
of gener�I obligation bonds undcr the authority of Minnesota Laws 1993, Chapfer 375, Article 9,
Section 46 (the "Sales Tax Law"). For the reasons stated belnw, hut subject to the qualifications
stated below, our conclusion is that the City may do so.
Tn 1993, the Housing tind Redcvclopmcnt Authority of the City of Saint Paul, Minnesota
(the "HRA'� issued $65 million of Sales Ta�c Revenue Bondt to finance improvements to the
Saint Paul Civic Center. In 1995, the HRA issued approximately $55 miltion of advance
refundirtg bonds to defease the entire remaining outstanding amount of the 1993 issue. Both the
1993 and 1995 issues were securcd by a pledge of the revenues of the sales tax imposed under
the Sales Tax Law. That statute st2tes (subd. 2) that revenues derived from the sales tax may be
used only for (a) capital expenses of the Saint Pau] Civic Center {"Civic Center"), or {b) capita]
projects for residential, cultural, commercial and economic development pro}ects in the
downtown or the neighborhoods. Since the 1993 Bonds were issued to finance improvements to
the Civic Center, the pledge of the sales rax revenues to secure those bonds (and the 1995
refunding bonds) was permitted by the Sales Tax Law.
•
��,-��s
Honorable Mayor and
• Member5 of the Cily Council
May 30, 1997
Page 2
Subd. 3 of the Sales Tax Law authori�es the City to issue up to $65 million in general
obligation bonds secured by the sales tax (and other available funds) for the purposes of ciause
2(a) [ Civic Center costs ]. '1'hese bonds may be issued without an elecrion, and do not count
against net debt.
Neither the Salcs Tax Revenue Bonds issued by die HRA in 1993, nor the 1995 refunding
bonds wue general obligation bonds. Instead, the bonds were issued as revenue bonds under the
I3RA's borrowing authority in Minn. Stat. Secs. 469.001 to 469.047, with a pledge of sates tax
revenues as security. 40% of the sales tax was allocated by tfie City to this purpose, with the
remaining 60% allocated to accounts created to hold and disbuzse funds to be used for
neigl�borhood and cultural prujccts.
The Ciry has never used the authority granted in Subd. 3 of the Sales Tax Law to issue up
to $65 million of general obligation bonds. That authority therefore remains available for the
Ciry to use in the proposed issuance of general obligation bonds to fund tha construction of a
ncw azcna, subject to the Tolluwing limitations:
• i. The proceeds of the bonds must be used for capital costs of the Civic Center. No
other use is allowed under the Sa[es 7ax Law.
2. 7']ze new arena must coniinue to be part of the "Civic Center." The exisung arena
is under the same ownership as the rest of the Civic Center complex and funerions
as part of the overall Civic Center facility. In the structure that is currently under
consideration, the new arena will con6nue to be owned by the Ci�7c Center
Authority (CCA), and �rill be leased to the NHL franchisec,' and �vill conunue to
fwiction zu part uf the cvmplex for prograznming purposes. While a reservation of
dates for practice and home games by the hockey teazn would be required, there
must be a cooperative arrangement between CCA and the franchisee to book the
arena for use in connertion with non-hockey events or shows using ttze other parts
of the Civic Center as their venue at umes when the fianchisee is not using the
arena for hockcy purposes. That arrangement need not disturb the economic
arrangements; the franchisee could continue to receive the revenues arising from
use of the uena.
• � A le�se co a non-profit corpora[ion which in tum leues the arena tu thc fra�uhisee woutd also be an acc�ptablc
structure.
�sae�as
• Honorable Mayor and
Members of the City Council
M�y 30, 1997
Page 3
We also wish to point ou[ some other aspects of our conclusion:
° I'1 -1.r15
a. Subd. 3 of the Sales Ta�c law states that the general obligation bonds " may be
paid from or secured by any funds available to the city, including the [ sales tax �..:'
VJhile we believe that the pledge of sales tax ptoceeds must constitute a significant
element of the security of the general obligarion bonds, the Sales Tax law expressly
authorizes the City to pledge other funds as well. The current version of the financing
plan for the new arena mentions several other revenue sources. Mixing other rcvenue
sources with sales taxes to secure the bonds and avoid the need to levy property taxes to
pay the bonds is expressly permitted by the Sales Tax Law.
b. Subd. 3 of the Sales Tax Law further states that the general obligation bonds may
be issued "without election on the question of issuance of the bonds or a property tax to
pay them." The Sales Tax Law therefore overrides conuary provisions of Minnesota
Statutes, Chapter 475 (which otherwise governs assuance of the bonds) or of the Saint
Paul City Charter which might require an election. The resolurion authorizang the bonds
• will not be subject to referendum.
Th9s opinion addresses the spccific question posed to us, and certain ramificarions of our
response. Nothing in this opinion should be understood to mean or imply that bonds may not be
issued for the puiposes of the new arena under other or different 1ega1 authority. The specifics of
sueh other authority aze beyond the scope of this opinion.
Very truly yours,
LEONARD, STREET AND DBINARD
B � � z:(-G. �-�^'�
Richazd H. Martin
Ri-fiM/kl
cc: Timothy Mazx
Joe Reid
Pam Wheelock
Martha T.arson
• Pe� Birk
ISd01a5
MAY-30-97 13=45 FROM=SPRINGS=ED INC 1D:6122233093 PAGE 2/3
!/
•
SS E. SEVEDfIld PLACE SInTE 100
SAII�T PAIII., MN SS701-214i
612-22:•1.000 F�tX:612-2233002
- ` 1 � � 1� S
l._J
.
SPRINGSTED
Pubsc Firrana t3dvisors
May 30, 1997
Mr. Joe Reid, Director of Financiai Services
Cify of Saint Paul
City Fi811
15 West Kellogg Boulevard
Saint Pau(, MN 55102
Ms. Pam Wheelock. Executive Oirector
Saint Paul Housing and Redevetopment Authorily
25 West Fourth Sireet
Saint Paul, MN 55102
Re: Civic Center Arena Financing
Potential Credit Rating Impact
Dear Mr. Reid and Ms. Wheelock:
;^�'
. �
Question:
We have been asked to respond to the quest[on of the potential effect of this financing on the
City's general obligation credit rating.
Discussion_
This financing is ceirrentty proposed to be in two parts: a long-ferm $30.0 million general
obligafion �evenue bond, and a short-tertn (less than 13 months) $65.0 million bond anticipatian
note (BAN}. lt is anticipated the BAN would be financed Iong-term during the 13-month period,
either in whole or in part by the State or by fhe City. This would only occur if the City was
awarded an NHL franchise.
The City currently has general obtigafion credif ratings from Standard & Poor's (SS�P), Moody's
and Fitch of AA+/AA 2/qA+ respectivety. To respond to this quesiion, Springsted and the City's
and HRA's senior management staff had a direct conversation with SEP's analytical sl�ff
assigned to Saint Paul. S&P was cFtosen rather than fhe other fwo rating agencies because
their analyfical sYaff has the longest tenure in working with Sairrt Paul, and also the City and
HRA have used S&P 4o a greater extent on financings than the ofher two agencies.
The purpose of the convecsation was to update S&P on this financing and obtain their reaction
and input, so as to structure the transactions with minimal adverse impact on the City`s rating.
We did not expect a definitive answer as to the status of the rating, but rather their degree of
comfort or discomEort wifh fhe proposed financings and its benefits and costs to the City.
SAQJI PAtlL. MN • M4�7VE1PplIS, MN • EROOIGIEID.`x'1 • O�'ERLN�D PARK.I6 '`x'A9iC�C+iON.00 ' IOWA C17X L�
MAY-30-97 13:45 FROM:SPRINGSTED 3NC ID=6122233093 PAGE 3/3
City of Saint Paul
May 3Q, 1997
Paqe 2
q�-c.�s
• '�he rating agenaes view these transacFions in two ways: first, as add�ionai debt, potentially
guaranteed by a general obligation backing, it wiil increase the debt burden, whicfi is an
adverse impact; and second, the resulting asset can generate economic benefi4s for itseif and
other related activities, which is a positive_ The negative aspect of debt burden can be reduced
'rf the primary revenue sources are reasonaby structured so as to make the possbility of having
to exerase the gerteral obligation ptedge remote.
Mswer:
SS�P made the foliowing commen�.s: based on other arena financing throughout the countrY, if
the primary revenue sources are "reasonably constructed" with suEficiertt room to insulate the
general obtiga5ori piedge and the finanang dces not marKedly commit existing revenues that
are now going to the City's General Fund, the City's present S&P generai obligation ratinq
would be reaffirmed (unchanged). Obviously, a primary revenue stream that is not "reasonably
structured" could lead S&.P to a downgrading of the rating.
Although we have not directly discussed this financing with Moodys and Fitch, we believe their
approacfi would be simila� to SB�P's.
From these discussions, we do not believe tfie issuance of the $30.0 million general obligation
issue and the $65.0 million BAN would, in and of itself, lead to a credit rating downgrading. We
believe that after the Legislature acts on the SYafe's Ievel of participation, then, if necessary, the
C'rty should proc�ed to structure the second transaction so that primary revenue sources are
reaso�ably structured to the Cit�l's and the age�aes' satis(action.
. We would be glad to respond any questia�s as to this subject.
Respeciiully,
� .���-i� �--C `��`�.��
David N. MacGillivray
Principal
Director of Project Management
/Cjb
cc: Mr. Mike Forester, Standard & Poor's
�
OFFICE OF THE MAYOR
FINANCIAL SERVICES OFFICE, &udge[ Section
Joseph Reid, Budget Director � � � � ^ �
.
CI`TY OF SAINT PAUL
Narm Coteman, Mayor
Saint Paul, Minnerota 55102-763I
240 City Hall
IS West Ketlogg Boulev¢rd
Telephone: (672) 266-8543
Facsimile: (6I2) 266-8541
MEMORANDi7M
Ta Interim Financing Plan Fite
From: Joe Reid
Re: Item 6: Construction Cash Flow Projections
Aate: May 30, 1997
The projec6ons, as developed by Thomas E Gunke, Executive Vice President, Mortenson, are
contained on the pages that follow.
r 1
LJ
•
St. Paul Hockey Arena Cash Fiow �� 5�«
• 7999 Season Completion
DESIGN PHASE CONSTRUCTiON PHASE SOFT COSTS T�TAL
Month Monthly Cumulatfve Monthly Cumulative MoMhly Cumutative A'lonthiy Cumulativa
u - . , - - - - . .
Aug-97 8B5,974 1,608234 - - - - 985,974 '1,606,234
Sep-97 l,'108 °18 2.715,152 - - - - 1.108,918 2,715.�52
Oct-97 t.'1�5,152 3,830.303 - - • - 1,115,152 3,830.303
NOV-99 901.126 4,731.428 ' - ' - 90'1.'I26 4.731,429
Dea97 808,658 5,540,087 - - - - B08.658 5,540,087
Jan-88 609,52d 6149,6'10 260,377 260.3)7 - - 869.901 6,4�9,988
Feb-98 546,147 6 895,758 433,982 69a,3a0 - - 980.�09 7,390,097
Mar-98 529,�78 7,224,935 728,057 1,a23,396 - - 1,25B,23a B,6a6,331
Apr-98 456.450 7,681,385 954.717 2,378,�13 - - 1,411,'16J '10.059,499
May-98 290.909 7 972,294 t,705,d72 4.083,585 - - 1,996,381 12,055.B79
Jun-9B �52�0"0 8.'125,000 2.3967H3 6.470,377 - - 2.539,438 14,585,377
dul-98 t53,750 8,268?50 a,743,209 �1213,585 - - 4,BB6,958 19.482,335
Aug-98 131,250 8400,000 6,467,925 t6,681,509 • - 5.599.175 25,Q8�,508
Sep-9E '137,500 8,537,500 7.399,057 2C,080.566 - • 7.536,557 32.8�8,086
Oct-98 137.SOD 8,675.000 8,715,095 32.i95,660 - - 8,252,595 40.B�D.860
Nov-HB '131,250 8.806,250 8A93,396 40.289,056 - - 8.224.5a6 49A95.306
Dea98 143,750 8,950,000 8,883.019 49,272,075 - - 9,126,769 58,222,075
Jan-99 131,250 9,D61,250 7,820,OOD 57,092,075 • - 7,951.250 66,173.325
• Feb-99 '125.00D 9,208,250 7,37J,359 64,469,434 1,769,445 1,769,445 8,277,803 75,445,128
Mar-99 '143,750 9.350,000 6.904,3<0 71,373,773 3,130.556 4,900.000 10.178.645 85,623,773
Ap�-9B '137,500 9.AB7,500 6,205,66� 77,579,434 2,994,445 7.894,445 9,337,605 94,965,378
May-99 'I3'1,256 9,618,750 5,'.07,�36 82,68T,'170 3,675,040 11,569,445 8,913,988 103875,364
Jun-99 i37,500 9,756,250 5,250,944 87,938,�13 5,56�,�11 17,130,556 10,949,555 'I14.824,919
Jui-g9 'I37,500 9,883,750 2,152t53 90,080,566 5,567,1�1 22,691,667 ),851,064 122,675.983
Aug-99 106,250 70,000,000 1.809,434 92,000.000 5,306,334 28,000,000 7.324,018 73D.OD0,000
Sap-99
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OFFICE OF THE MAYOR
FINANCL4L SERVICES OFFICE, Budget Section ^�
7oseph Reid, Budget Director A� .. 4'(
SA[N2
PAVL
�
AAAA
CITY OF SAINT PAUL
Norm Coleman, Mayor
240 City Hal[
IS West Ke!logg Boulevard
Saint Paul, Minnesota SSIO2-1631
TeZephone: (6l2) 2668543
Facsimile: (612) 266-8545
•
To: Interim Financing Plan File
MEMORANDUM
From: Joe Reid
Re: Item 7: Potential Schedule for Issuance of Debt
Date: May 30, 1997
It is estimated that the City's $30 million commitment would necessitate a bond issuance of
some combination of taxable and ta�c exempt bonds in late July or early August, 1997. The
timing would be subject to the decision of the Boazd of C:overnors regarding the first season
yeaz of the NfIL franchise awazded to Saint Paul and the design and construcfion schedule that
would follow from that decision.
Subject to the same qualifications noted above, it is estimated that the City's $65 million
commitment of interim financing would result in the issuance of a bond anticipation note of
$65 million at the most advantageous time and subject to the interest rates auailable in the
bond market. The timing would also be subject to the issuance of arena construction contracts
and could occur anytime between late July, 1997 and early 1998.
•
612/22A-9445
s�t n�t
Builaiing and Construction Trades
May 3Q, 1997
Mayor Norm Coleman
Council President Dave Thune
Members of the Saint Paul City Council
Office of Mayor
390 City Hall
St. Paul, MN 55102
Fax No. 266-8513
Re: Interim Financing Pian for New Civic Center Arena
��,C�S
council
LABOR CENTRE, 411 MAIN STREET, ROOM 206
SAINT PAUL, MINNESOTA 55102
�
Dear Mayor Coleman, Council President Thune and Council members:
We have reviewed the "Interim Arena Financing Plan for NFIL Hockey" as presented to the City
• Council on May 28, 1997. The plan identifies potential labor union participation in the amount of
$5 miilion to provide collateral for the City's commitment under the plan. I have been in contact
with officers, business managers, labor trustees and management trustees of at least seven of our
larger unions and have received enthusiastic support for our attempts to participate in the
collateralization effort.
While none of the unions that we are working with can make a binding legal commitment at this
time due to the review process necessary for transactions such as these, you can be assured of two
things. First, we wi(1 work with you diligently and in good faith in an attempt to agree to terms
and conditions for a binding legal commitment under which unions would participate in the
interim plan of finance. Second, we will aggressively support our efforts during the 1448
legislative session to obtain $65 million of state bonding for construction of the new arena for
NFII, hockey.
•
We applaud your persistent efforts to provide a new Civic Center Arena for use by the entire
community and the state to bring IVI�, hockey to Minnesota and to enhance the urban vitality of
Saint Paul.
�� rely,
,� `� �°�' �,�.��`S�-z ��-z-
Dick Anfang Alfred J. Schmitt Robert Schwartzbauer R t���
Executive Se .efary President Treasurer
PA/df
opeiu#12
��- G?S
�
2490 Minnesota World Trzde Center 30 East Seventh Street
$aint Paul MN 55101 672.29L5600 6122915606(Fax)
May 29, 1997
Mayor Norm Coleman
Council President Dave Thune
Members of the Saint Paul City Council
Oftice of the Mayor
390 City Hall
Saint Paul, MN 55102
Re: Interim Financing Plan for the New Civic Center Arena
Dear Mayor Coleman, Council President Thune, and Councilmembers;
��v} ��=r�
ARY 3 p 1397
::' -�
, M+^
We have reviewed the "Interim Arena Financing Plan for NHI, Hockey" as presented to the City Council
on May 28, 1997. The plan identifies potential business participation in the amount of $5 million to
provide collateral for the CiTy's commitment under the plan.
While none of the businesses that we are working with can make a binding legal commihnent at this time
• due to the review process necessary for transactions such as these, you can be assured of two things.
First, we will work with you diligently and in good faith in an attempt to agree to terms and conditions for
a binding legal commitment under which businesses would participate in the interim plan of finance.
Second, we will aggressively support your efforts during the 1998 legislative sessioa to obtain $65
million of State bonding for construction of the new arena for NHL hockey.
The Capital City Parinership strongly supports the return of the NHL to Minnesota. We believe the NHL
would provide our community with high quality family entertainment, which would benefit our
communiry and help revitalize our downtown core. We have led efforts to demonstrate the necessary
corporate support by securing letters of interest to purchase luxury suites, advertising and sponsorship
opportunities, naming rights, etc. We are also pleased to have raised $300,000 from businesses to help
cover preliminary marketing, legal, and other consulting services to help position St. Paul to be awarded a
new NHL expansion team.
We applaud your efforts to provide a new Civic Center Arena for use by the entire community and the
state, to bring NHL hockey to Minnesota, and to enhance the urban vitality of Saint Paul. We appreciate
our working relationship and look forward to new public(private partnerships to help revitalize the urban
core of our State's Capital CiTy.
r�
L_J
,
Ve�y tr q o y
�) /
Dougl W. Leatherdale
Chairman
�
n J. Labosky
President
� Saint Paul
Area Chamber
of Commerce
•
May 30, 1997
Flrst National Bank Building, Suite N-205
332 Minnesota Street
Saint Paui, MN 55107
Mayor Norm Coleman
Council President David Thune
Members of the Saint Paul City Councii
Office of the Mayor
390 City Hall
Saint Paul, NIN 55102
Deaz Mayor Coleman, Council President Thune and Councilmembers:
Tel: 672/223-s000
FaY:612/223-5119
�
We have reviewed the Interim Arena Financing Plan for NHL Hockey that was presented to the
City Council on May 28, 1997. We understand that the plan calls for the business community
to participate in the amount of $5 million as collateral for the Ciry's commitment under the
plan.
Representing the business community, we enthusiastically pledge to support and cooperate with
other business organizations, specifically the Capitai City Partnership, in their direct efforts to
secure financial commitments from businesses. While we are not in a position to make a bind-
ing legal commitment at this time, we will work diligently to complete such an agreement and
will provide the assistance necessary to raise the funds. Furthermore, we will aggressively sup-
port your efforts to secure $65 miilion in state bonding for the new arena during the 19981eg-
islative session.
We commend your efforts to provide a new Civic Center Arena for use by the entire community
as well as your work to bring NHL hockey back to Minnesota. The new azena will make down-
town Saint Paul more vital and will enhance the business climate of the entire region.
Sinc ely yours,
Kaze Himle, Chair
Saint Paul Area Chamber of Commerce
/° l
Larry Dowell, President
Saint Paul Area Chamber of Commerce
•
��� ���
CITY OF SAINT PAUL
Norm Coleman, Mayor
Friday, May 30, 1997
MEMO
TO: Tim Marx, Chief of Staff
390 Cit}• Na(1 Telephone: 612d66-8510
IS Wesr Kel(ogg Boulevard Facsimile: 612-266-8513
Saint Paul, MN 55702
FROM: Erich Mische, Director of Strategic Planning
RE: Commitment from Saint Paul Legislative Delegation
As you might expect, it has been difficult to actually contact our legislative delegation
• members so shortly after the legislative session. However, I want to share with you
those legislators I've spoken to, or, we've received a signed letter of commitment to
secure bonding authority of $65 miliion in next year's bonding bill.
Senator Randy Kelly - Letter
Senator Chuck Wiger - Letter
Representative Tom Osthoff - Spoke to by phone
Representative Alice Hausman - Spoke to by phone
Representative Steve Trimble - Spoke to by phane
We have attempted to contact all of our Saint Paul delegation members and will
continue to do so in time for next Monday's 9:00 City Council meeting.
•
�
•
MEMO
TO:
Mayor Norm Coleman
Councii President Dave Thune
Councilmember Jerry Blakey
Councilmember IvTilce Harris
Councilmember Roberta Megard
Councilmember Joe Collins
Councilmember Dan Bostrom
Councilmember Gladys Morton
FROM:
Senator Randy Kelly
Senator Richazd Cohen
• Senator Ellen Anderson
Senator Sandy Pappas
Senator Chuck Wiger
Representative Tom Osthoff
Representative Steve Trimble
Representative Alice Hausman
Representative Jim Farrell
Representative Betty McCollum
Representative Andy Dawkins
Representative Carlos Mariani
Representative Matt Entenza
Representative Michael Paymar
a �.��s
The Saint Paul Legislative Delegation is prepared to work towards ensuring
that the Governor's commitment of $65 million for the Saint Paul Civic Center
in the 1998 Bonding Bill is upheld and supported in the 19981egislative session.
(Please sign the attached page and fax back to 266-8513.)
n
U
SF�'T BY
�.. ,., .
5-29 : 16�17 � MN. SE��TEy 612 266 H513�= 1' 1
� s�.�x�ay xeuy sa►. x���a ca,on
�-w��; ,Li''�°,�. --------
5en. Cf�uekYJi�er 5af. Ssndypappaa
Rep. Stwe Trimbla
�,,. _�.__......
Rt�p. Alice Fixus�nntl
Rop. Botty MeCollum
R,ep, Me�tc Bnte�zr
•
•
s�. Euen a�a��
Rep. Tam Osthoff
Rap. Jim Furell
Rep. Ivfitheel pnytnar
Post-iY Fax Nole 7671
�(�6-n533 ��o�aw
_ S � 3 F�,c x
Rop. Andy Dew3tins
Rep. Carloa Masianl .
L � S
a'�'
:9117�oa9�' I
G-KLAQ l...i.� c
>yf�. (�cjao
SENT BY�
5-29-97 : 16�50
• sen: -+ _ sen. co»ec,
Sen Chuck Wi�or Son Ssndy I'appas
Rep. Steve Trimble Rep. Aiice Hauemau►
--._..�-._---------- ---- _.....
Rep. Betty McCo]lum Rep. A�sdy Dawlrins
Rep. Matt Emenxa Rep. Carlus Mariani
•
l J
n��, seNaTe-� siz 2ss asi�:» i i
� ���
a�
Sen. Ellen Anderson
Aep.1'om Qsthoff
Rep. Jim Farcetl
Rep. IvSct�ael Paymar
TOTAL P.03
CITY OF SAINT PAUL
Office of the Ciry Council
:O,'- 310 City Hall
Saint Paul, Minnesota 55102
(612) 266-8577
Gregary N. Elees
Fiscai Policy D'uector
DATE: June 2, 1997
: MEMORANDUM
TO: Council President David Thune
Councilmember Jerry Blakey
Councilmember Dan Bostrom
Councilmember Joseph Collins
Councilmember Michael Harris
Counciimember Roberta Megard
Councilmember Gladys Morton
FROM: Greg Blees, Council's Fiscal Policy Director
� � -
�
SUBJECT: New Civic Center Arena - Requested Cash Flow
�'1-G� �
Attached are two versions of a City Debt Service Cash-Flow for a worst case City financing
scenario which assumes that the 1998 Minnesota Legislature would not appropriate any of the
anticipated $65 million for the propased construction of a$130 million NAL Hockey Arena.
One cash-flow assumes the City's i/2% sales talc revenues will grow at 3% per year, while the
other assumes that tax revenues will grow at 5% per year.
The proposed revenue stream is such that a City Backup $65 million bond issue would have to
have a customized maturity schedule. 'The City would have to issue some form of Capitai
Appreciation Bonds, where no debt service is paid for the first couple of years, some interest
payments are deferred for the first half of the maturity schedule, and principal payments are made
in the last half of the maturity schedule.
Under both cash flow scenarios, proposed (estimated) revenue streams should be adequate to meet
debt service. The two debt service cash-flows attached do not show debt service for a$65 million
bond issue structured for Capital Appreciation Bonds, but they do indicate that proposed back up
revenue should be adequate.
Also attached is an estimate of interest earnings on bond proceeds.
C: Mayor Coleman, Tim Manc, Pam Wheelock, Martha Larson, Jce Reid,
Shirley Davis, Tom Cran, Bruce Engelbrekt, Eric Willems,
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