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98-222Council File # g8 �Z 2 Z RESOLUTION CITY OF SAINT PAUL, MINNESOTA Presented by Referred To WHEREAS: Green Sheet # �3/ ZO /3 Committee Date The Port Authority of the City of Saint Paul (the "Authority") has given its approval to the execution of iu $250,000 Tas-Exempt Equipment Lease (the "Lease") to finance the cosu to be incurred in connection with the acquisition of certain manufacturing equipment to be located at 240 Arlington Avenue within the City of Saint Paul (the "EquipmenP') to be subleased by Addco, Inc.; and 2. Approval of the execution of the proposed Lease and Sublease by the "applicable elected representative" of the geographic azea in which the proposed Equipment is located is required by Section 147(� of the Intemal Revenue Code of 1986, as amended and Chapter 234 of Laws of Minnesota 1976, and the Port Authority has therefore requested that the City Council gives iu requisite approval pursuant to said requirements to facilitate the execution of the proposed Lease and Sublease by the Port Authority, subject to fmal approval of the detaiis of said Lease and Sublease by the Port Authority; and NOW, TAEREFORE, BE LT RESOLVED by the Council of the City of Saint Paul that, in accordance with the requirements of Section 147(� of the Intemal Revenue Code of 1986, as amended, and Chapter 234 of Laws of Minnesota 1976, the City Council hereby approves the execution of the aforesaid Lease and Sublease by the Port Authority for the purposes described in the Port Authority resolution adopted Mazch 24, 1998, the exact detaiis of which, including but not limited to, provisions relating to term, payment schedule, interest rate, discount, prepayment, and the issuance of additional revenue obligations are to be determined by the Port Authority, and the City Council hereby authorizes the issuance of any additional revenue obligations (including refunding obligations) by the Port Authority found by the Port Authority to be necessary for carrying out the purposes for which the ' aforedescribed Lease and Sublease aze executed. 9�-Z zz ��:�� , -, : .�� : , . , �� . -,,., �� „ �� Adopted by Council: Date V v� � 5 ��' Adoption Certified by Council Secretary � ApprovF � Form Approv y City Attomey By . �� ,�'° C`„�� 3- ��- Q Approved b yo or Sub ' sio i to C ucil BY . rY1e%2f Requested by Department of. 9� OEPARTMENT/OFFIGE/COUNCIL DATE INITIATED St. Paul Port Authority 3-17-98 GREEN SHEE 1�1°. _13120 CON7ACf PERSON & PHONE m DEPARTMENT DIRE � CITY CAUNCIL �NITIAL/DATE Pete M. Klein ASSIGN rn7CRYATTORNEY //:'G 3-/? �b� CINC�ERK MUSTBE ON CqUNCIL AGENDA BY (DATE) ROUTINGFOR �� BUDGET DIRECTOR � FIN. & MGT. SERVICE DI March 25, 1998 OFOEP MAVOF(ORA$$ISTANn � TOTAI # OF SIGNATURE PAGES (CLIP ALL LOCATIONS POR StGNATIlRE) ION REQU STED' pproval of the execution of an approximate $250,000 conduit tax-exempt lease to finance acquisitio� of manufacturing equipment at ADDCO, INC.'s new office and production facility of approximately 77,000 square feet in the Arlington Business Center, which was approved by the Port Authority Board of Commissioners and City Council in February, 1998. RECOMMENDATIONS: Approve (A) or Reject (R) pERSONAL SERVICE CONTRACTS MUS7 ANSWER THE FOLLOWING QUESTIONS: _ PLANNING COMMISSION _ GNIL SERVICE COMMISSION �- Has this person/firtn ever worked under a contract for this department? _CIBCAMMITfEE �, Port Authorit YES NO _ SiAFF 2. Has this person/firm ever been a city employee? — YES NO ^ olSiRiC7 CoUR7 _ 3. Does this person/firm possess a skill not normally possessed by any current city employee? SUPPORTS WHICH COUNCIL O&IECTIVE? YES NO Explain atl yes answers on separate sheM antl atlach io green sheM INITIATING PROBLEM. ISSUE, OPPORtUNITY(Who, What, When, Where, Why): The execution of the lease will allow the acquisition of manufacturing equipment at ADDCO's new office and production facility in Arlington Business Center. ADVANTAOES IFAPPROVED: The equipment will be used in the manufacturing process at ADDCO's new facility and will enable ADDCO to expand their present production capacity. DISADVANTAGES IFAPPROVED. None. DISAOVANTAGES IF NOT APPqOVEO' The company will be unable to expand their present production capacity. LN.3t�5��P£ �,3�Lt,y�p!`�' �rt??�i �1A� � � 't�� TOTAL AMOUNT OFTRANSACTION $ 25O �OOO COST/REVENUE BUDGEiED (CIRCLE ONE) YES NO Port Authority conduit tax- FUNDING SOURCE exemat 1 ease qC71VI7Y NUMBER FINANCIAL INFORMATION� (EXPLAIN) -� C f ��-2 2 2 � 21N OF THE CIN OF SAINT PAUL .,.,., ., �...,.,ARK TOVJERS • 345 ST. PETER STREEf Ms. Pam Wheelock, Director Planning & Economic Development Department 1300 City Hall Annex 25 West Fourth Street St. Paul, Minnesota 55102 • ST. PAUL MN 55102-1661 March 17, 1998 RE: $250,000 TAX-EXEMPT CONDUIT LEASE ADDCO, IN ��1 Dear Ms.�ie ock: �. FAX (612) 2235198 TOLL FREE (800) 328-8417 • PHONE (612) 224-5686 We submit for your review and referral to the office of the Mayor, City Council, and City Attorney's office, detaiis pertaining to the execution of an approximate $250,000 conduit tax-exempt lease to finance acquisition of manufacturing equipment at ADDCO, INC.'s new office and production facility of approximately 77,000 square feet in the Arlington Business Center, St. Paul, Minnesota which financing was approved by the Port Authority Board of Commissioners and City Council in February, 1998. The Port Authority has received an industrial revenue bond allocation from the State of Minnesota Small Issue Pool, as the project is manufacturing. The City of Saint Paul's entitlement allocation will not be affected by this application. In addition to the staff memorandum, we are attaching a draft copy of the proposed City Council Resolution authorizing the conduit tax exempt equipment lease in the amount of $250,000 that will be considered by the Port Authority's Board on March 24, 1998. City Council action will be required after the Port Authority's Board meeting of March 24, 1998. Your expeditious handling of this matter will be appreciated. Sincerely, � Kenneth R. Johnson President KRJ:jmo Attachment cc: Mayor Coleman g:pmk�addco 9�-z z 2 Resolution No. RESOLUTION OF THE PORT AUTHORITY OF THE CITY OF SAINT PAUL WHEREAS, it has been proposed that the Port Authority of the City of Saint Paul (the "Port Authority'� execute a ta�c-exempt equipment lease (the "Lease") in an amount not to exceed $250,000 and that the L,ease will finance certain manufacturing equipment (the "Equipment") to be subleased to Addco, Inc., a Minnesota corporation (the `Borrower"), and such Equipment will be located in a manufacturing, wazehouse and office facility at 240 Arlington Avenue East (the "Project") in the City of Saint Paui, Mivnesota (the "City"), which is owned by 3N Properties and leased to the Borrower. WHEREAS, the Equipment will be leased by the Port Authority from Carlton Financial Corporation (the "Lessor"), pursuant to a Lease Purchase Agreement to be entered into between the Port Authority and the Lessor; and WHEREAS, the Equipment will be subleased to the Borrower, pursuant to a Sublease Purchase Agreement (the "Sublease") to be entered into between the Port Authority, as Sublessor, and the Borrower, as Sublessee; and WHEREAS, pursuant to the Sublease, the Borrower will assume all of the obligations of the Port Authority as Lessee under the Lease; and WHEREAS, the Port Authority has received an allocation of bonding authority for the Project and the Equipment from the Minnesota Deparhnent of Finance as required by the Internal Revenue Code of 1986, as amended, and Minn. Stat. Ch. 474A; and WHEREAS, the Port Authority's Credit Committee and Board have previously adopted their Resolution Nos. 30 and 3632, respectively, giving preliminary approval to the proposed issuance of revenue bonds for the Project in an amount not to exceed $4,000,000; and WHEREAS, the Port Authority's Boazd has also previously adopted its Resolution No. _, giving final approval to the issuance of a tasable and tax-exempt note in an amount not to exceed $3,000,000, for the acquisition and construcfion of the Project; and WHEREAS, the Port Authority's obligations under the Lease are payabie solely from moneys required to be paid by the Borrower putsuant to the Sublease; and WHEREAS, Port Authority staff has reviewed this proposal with the Credit Committee, all as more specifically set forCh in the staff inemorandum on file, and the Credit Committee recommends approval of this Resolution; the execution of the Lease and Sublease; and the execution of all documents ouUined herein and in the staff inemorandum, or othenvise necessary to the consununation of these transacrions; and ' 7649338.01 9�-z z Z WHEREAS, the Port Authority, pursuant to Secrion 147(fl of the Code, published a notice, a copy of which with proof of publication is on file in the office of the Port Authority, of a public hearing on the proposal to issue revenue bonds to finance the Project, including the Equipment; and WHEREAS, the Port Authority conducted a public hearing on February 24, 1998 pursuant to said notice, at which hearing the recommendations contained in the Port Authority's staff memorandum to the Board of Commissioners were reviewed, and all persons who appeazed at the hearing were given an opportunity to ezcpress their views with respect to the proposal; and NOW THEREFORE, BE IT RESOLVED by the Boazd of Commissioners of the Port Authority of the City of Saint Paul as follows: l. The execution of the Lease and Sublease in an amount not to exceed $250,000, is hereby approved, subject to the Project (including the Equipment) and its financing receiving approval from the Department of Trade and Economic Development and the execution of the Lease being approved by the City Council of the City of Saint Paul, Minnesota (the "City"), as described in pazagraph 9, below. 2. Neither the Lease, nor the interest thereon, sha11 constitute indebtedness of the Port Authority or the City within the meaning of any constitutional or statutory debt limitation; nor shall they constitute or give rise to a pecuniary liabiliTy of the City or the Port Authority or a chazge against their general taacing powers and neither the full faith and credit nor the general tazcing powers of the City or the Por[ Authority is pledged to the payment of the Lease or interest thereon. The Port Authority's obligations under the Lease are payable solely from moneys required to be paid by the Borrower pursuant to the Sublease. 3. Forms of the Lease and Sublease have been submitted to the Port Authority for review and/or approval. 4. It is hereby found, determined and declazed that: (a) The execution and delivery by the Port Authority of the Lease and the Sublease, as applicable, and the performance of all covenants and agreements of the Port Authority contained in the Lease and the Sublease, and of all other acts and things required under the Constitution and laws of the State of Minnesota to make the Lease and the Sublease valid and binding obliga6ons of the Port Authority in accordance with their terms, are authorized by Minnesota Statutes, Sections 469.048 through 469.068 and 469.152 through 469.1651, as amended (the "Act"); (b) It is desirable that the Lease and Sublease be executed by the Port Authority; (c) Under the provisions of and as provided in the Lease and the Sublease, the Lease is not to be payable from or a charge upon any funds other than the revenues pledged to the payment thereof; no holder of the Lease shall ever have the right to compel any exercise by the City or the Port Authority of its taxing powers to pay the payments due under the Lease or the interest or premium thereon, or to enforce payment thereof 1649338.01 2 9�'-Z22 against any properry of the City or the Port Authority except the interests of the Port Authority in the Equipment and the Sublease; the Lease shall not constitute a chazge, lien or encumbrance, legal or equitable, upon any properiy of the City or the Port Authority except the interests of the Port Authority in the Equipment and the Sublease; the Lease shall recite that it is issued without moral obligation on the part of the State or its political subdivisions, and that the Lease, including interest thereon, is payable solely from the revenues received pursuant to the Sublease; and the Lease shall not constitute a debt of the City or the Port Authority within the meaning of any constitutional or statutory limitation. 5. The forms of the Lease and the Sublease and exhibits thereto are approved substantially in the forms submitted and on file in the offices of the Port Authority, with such subsequent changes as may be approved by the Port Authority staff, counsel and Bond Counsel as contemplated by pazagraph 7. The Chair and Secretary of the Port Authority, or such other o�cers as may be appropriate in the absence of either the Chair or Secretary, aze hereby authorized and directed to execute the Lease and the Sublease (to the extent the Port Authority is a parry thereto) in substanrially the forms submitted, as modified pursuant to pazagraph 7, and any other documents and certificates which in the opinion of Port Authority staff, counsel and Bond Counsel are necessary to the transactions herein described. The execution of any instrument by the appropriate officer or officers of the Port Authority herein authorized shall be conclusive evidence of the approval of such documents in accordance with the terms hereof. Copies of ali the documents necessary to the transaction described shall be delivered, filed and recorded as provided herein. 6. The President and other officers of the Port Authority aze authorized and directed to prepaze and fiunish to the Lessor and Bond Counsel certified copies of proceedings and records of the Port Authority relating to the Lease and other transactions herein contempiated, and such other affidavits and certificates as may be required to show the facts relating to the legality of the Lease and the other transactions herein contemplated as such facts appeaz from the books and records in the officers' custody and control or as otherwise known to them; and all such certified copies, certificates and �davits, including any heretofore furnished, shall constitute representations of the Port Authority as to the truth of all statements contained therein. 7. The approval hereby given to the various documents referred to above includes approval of such additional details therein as may be necessary and appropriate, and such modifications thereof, deletions therefrom and additions thereto as may be necessary and appropriate and approved by the Port Authority's President and Chief Financial Officer; and includes approval of, among other things: -- (a) establishment of the final principal amount of the Lease and the interest rntes to be borne thereby; provided that the maximum principal amount of the Lease shall not exceed $250,000, and nrovided further that maxiinum interest rate on the Lease shall not exceed _% per annum; (b) the establishment of the payment schedule and prepayment provisions to be applicable to the Lease and the Sublease; and � 1649338.O1 3 9�-zZz (c) such related instruments as may be required to sarisfy the conditions of the Lessor. 8. The proposal of the Lessor to finance the Equipment upon the terms and conditions set forth in the Lease and the Sublease and other materials submitted by Lessor and Bonower to the Port Authority aze hereby found and determined to be reasonable and are hereby accepted. 9. The staff of the Port Authority is authorized to (a) submit the application for approval of the Project (including the Equipment) by the Department of Trade and Economic Development of the State of Miunesota as required by Minn. Stat. Sections 469.152 through 469.1651, and (b) take the steps necessary to obtain the approval of the Lease by the City Councii of the City as required by Section 147(fl of the Internal Revenue Code of 1986, as amended. 10. The authority to approve, execute and deliver future amendments to financing documents entered into by the Port Authority in connection with the Lease and Sublease and the other transactions herein contemplated, is hereby delegated to the President of the Port Authority, subject to the following conditions: (a) such amendments do not materially adversely affect the interests of the Port Authority as the Lessee and Sublessor; (b) such amendments do not contravene or violate any policy of the Port Authority; (c) such amendments are acceptable in form and substance to Bond Counsel; and (d) the Port Authority has received an opinion of Bond Counsel to the efFect that the amendments will not adversely affect the tas-exempt chazacter of interest on the Lease. The execution of any instrument by the President of the Port Authority shall be conclusive evidence of the approval of such instruments in accordance with the terms hereof. 11. No covenant, stipulation, obligation or agreement contained herein or in the Lease and the Sublease shall be deemed to be a covenant, stipulation, obligation or agreement of any member of the Boazd of Commissioners of the Port Authority, or any officer, agent or employee of the Port Authority in that persons individual capacity, and neither the Board of Commissioners nor any officer executing the Lease or Sublease shall be liable pezsonally on the Lease or Sublease or be subject to any personal liability or accountability by reason of the issuance thereof. Adopted: March 24, 1998. C:�MY�T.YII� B Its Secretary PORT AUTHORITY OF THE CITY OF SAINT PAUL By Its chair 1649338A1 4 SAINT PAUL PORT AUTHORITY � .�� • ► TO: Credit Committee (March 17, 1998 Regular Meeting) FROM: Peter M. Klein � Lorrie J. Louder Kenneth R. Johnson DATE: Mar. 6, 1998 SUBJECT: ADDCO, INC. - Authorization for the Execution of an Approximately $250,000 Conduit Tax Exempt Equipment Lease ACTION REQUESTED: 9�-ZZ2 Approval of final resolution authorizing the execution of an approx+mate $250,000 conduit lease to ADDCO, Inc.. PROJECT SUMMARY: Estimated Amount: Type: Option to Purchase: Term: Conduit Lessee: Lessee: Lessor: Borrower's Counsel: Bond Counsel: BACKGROUND: $250,000 Tax Exempt Lease Fixed Rate Lease (625% effective interest rate) $1 at end of lease term 60 months Port Authority of the City of Saint Paul ADDCO, Inc. Carlton Financial Corporation Rider Bennett Law Firm Leonard, Street & Deinard In January, 1998, ADDCO received a$2,600,000 allocation of tax exempt bonding authority from the Minnesota Small Issue Pool. Last month, the Port Authority approved the issuance o# $2,350,000 of this allocation to finance ADDDCO's new facility. The lender in that transaction would not finance equipment. This lease utilizes the remaining allocation that relates to the manufacturing equipment. March 6, 1998 Page -2- 9�-222 The Borrower: 3N Properties has purchased a site in the Arlington Business Center and constructed a new facility of approximately 77,000 square feet. 3N Properties is the real estate holding entity for ADDCO, Inc.. ADDCO was formed in 1953. Their business is manufacturing trailer-mounted programmable message signs and hand electrical controls for industrial machines. They also customize diesel and gasoline engines for the industrial trade. The Lease: The Lease will finance approximately the principal amount of $250,000 of manufacturing equipment and will provide for interest at a fixed rate of 6.25% for 5 years. The Project: The equipment will be leased to the Port Authority and subleased to ADDCO. The equipment will be used in the manufacturing process at ADDCO's new 77,000 square foot office and production facility in the Saint Paul Port Authority's Ariington Business Center. The availability of this financing will enable ADDCO to expand its present production capacity. As a result, new jobs will also be created to support the revenue and production increases. Employment Impact: The total project, including the $3,000,000 facility financing, is important because it retains the company and its jobs in Saint Paul as well as adds full-time positions. Under the Port Authority's Workforce and Employment Agreement ADDCO, Inc. will transfer its current 91 full-time employees to the Arlington Business Center facility and add an additional 25 full time positions within three years. The company now anticipates creating 34 additional jobs in the first two years of operations at the new facility. As a result of the construction of this new office/production facility, ADDCO has estimated that there will be an annual payroll increase of $1,031,680 per year when fuiiy operational. Most of the jobs wi11 fikely be professionat positions paying an average of $15.00 per hour. The Lessor: The lessor will be Cariton Financial Corporation for the tax-exempt Lease. Estimated Sources and Uses of Funds: Sources of Funds: Lease Proceeds Estimated Borrower Funds Total Sources of Funds Uses of Funds: Equipment Estimated Costs of Issuance Total Uses of Funds $250,000 25.000 $275,000 $250,000 25.000 $275,000 March 6, 1998 F'age -3- SECURITY FOR THE LEASE: 9�-ZZ z Conduit Financina: The lease will be a conduit financing of the Authority and will not constitute or give rise to a liabil'ity of the Authority, the City of Saint Paul or the State of Minnesota or a charge against their general credit or taxing powers. The lessor will not have the right to demand payment on the lease out of any funds to be raised from taxation or from any revenue sources other than those expressly pledged to payment of the lease pursuant to the lease agreement. The Port Authority wiil receive fees in the amount of 1/8th of a point ($312.50) at inception and 1/8th of a point on the outstanding balance, annually, for the life of the lease. Lease Agreement: The Authority will pledge its interest in the sublease agreement to Carlton Financial Corporation to secure its obligations under the lease. DISCLOSURE: Port Authority Commissioners, by S.E.C. rules, are obligated to disclose any risks or facts you may be aware of that would affect the probability of repayment of these notes. RECOMMENDATION: Recommend approval of authorizing execution of an approximate $250,000 conduit equipment lease issued on behalf of ADDCO, Inc.. PMK:jmo g:lpmk�addwcr Council File # g8 �Z 2 Z RESOLUTION CITY OF SAINT PAUL, MINNESOTA Presented by Referred To WHEREAS: Green Sheet # �3/ ZO /3 Committee Date The Port Authority of the City of Saint Paul (the "Authority") has given its approval to the execution of iu $250,000 Tas-Exempt Equipment Lease (the "Lease") to finance the cosu to be incurred in connection with the acquisition of certain manufacturing equipment to be located at 240 Arlington Avenue within the City of Saint Paul (the "EquipmenP') to be subleased by Addco, Inc.; and 2. Approval of the execution of the proposed Lease and Sublease by the "applicable elected representative" of the geographic azea in which the proposed Equipment is located is required by Section 147(� of the Intemal Revenue Code of 1986, as amended and Chapter 234 of Laws of Minnesota 1976, and the Port Authority has therefore requested that the City Council gives iu requisite approval pursuant to said requirements to facilitate the execution of the proposed Lease and Sublease by the Port Authority, subject to fmal approval of the detaiis of said Lease and Sublease by the Port Authority; and NOW, TAEREFORE, BE LT RESOLVED by the Council of the City of Saint Paul that, in accordance with the requirements of Section 147(� of the Intemal Revenue Code of 1986, as amended, and Chapter 234 of Laws of Minnesota 1976, the City Council hereby approves the execution of the aforesaid Lease and Sublease by the Port Authority for the purposes described in the Port Authority resolution adopted Mazch 24, 1998, the exact detaiis of which, including but not limited to, provisions relating to term, payment schedule, interest rate, discount, prepayment, and the issuance of additional revenue obligations are to be determined by the Port Authority, and the City Council hereby authorizes the issuance of any additional revenue obligations (including refunding obligations) by the Port Authority found by the Port Authority to be necessary for carrying out the purposes for which the ' aforedescribed Lease and Sublease aze executed. 9�-Z zz ��:�� , -, : .�� : , . , �� . -,,., �� „ �� Adopted by Council: Date V v� � 5 ��' Adoption Certified by Council Secretary � ApprovF � Form Approv y City Attomey By . �� ,�'° C`„�� 3- ��- Q Approved b yo or Sub ' sio i to C ucil BY . rY1e%2f Requested by Department of. 9� OEPARTMENT/OFFIGE/COUNCIL DATE INITIATED St. Paul Port Authority 3-17-98 GREEN SHEE 1�1°. _13120 CON7ACf PERSON & PHONE m DEPARTMENT DIRE � CITY CAUNCIL �NITIAL/DATE Pete M. Klein ASSIGN rn7CRYATTORNEY //:'G 3-/? �b� CINC�ERK MUSTBE ON CqUNCIL AGENDA BY (DATE) ROUTINGFOR �� BUDGET DIRECTOR � FIN. & MGT. SERVICE DI March 25, 1998 OFOEP MAVOF(ORA$$ISTANn � TOTAI # OF SIGNATURE PAGES (CLIP ALL LOCATIONS POR StGNATIlRE) ION REQU STED' pproval of the execution of an approximate $250,000 conduit tax-exempt lease to finance acquisitio� of manufacturing equipment at ADDCO, INC.'s new office and production facility of approximately 77,000 square feet in the Arlington Business Center, which was approved by the Port Authority Board of Commissioners and City Council in February, 1998. RECOMMENDATIONS: Approve (A) or Reject (R) pERSONAL SERVICE CONTRACTS MUS7 ANSWER THE FOLLOWING QUESTIONS: _ PLANNING COMMISSION _ GNIL SERVICE COMMISSION �- Has this person/firtn ever worked under a contract for this department? _CIBCAMMITfEE �, Port Authorit YES NO _ SiAFF 2. Has this person/firm ever been a city employee? — YES NO ^ olSiRiC7 CoUR7 _ 3. Does this person/firm possess a skill not normally possessed by any current city employee? SUPPORTS WHICH COUNCIL O&IECTIVE? YES NO Explain atl yes answers on separate sheM antl atlach io green sheM INITIATING PROBLEM. ISSUE, OPPORtUNITY(Who, What, When, Where, Why): The execution of the lease will allow the acquisition of manufacturing equipment at ADDCO's new office and production facility in Arlington Business Center. ADVANTAOES IFAPPROVED: The equipment will be used in the manufacturing process at ADDCO's new facility and will enable ADDCO to expand their present production capacity. DISADVANTAGES IFAPPROVED. None. DISAOVANTAGES IF NOT APPqOVEO' The company will be unable to expand their present production capacity. LN.3t�5��P£ �,3�Lt,y�p!`�' �rt??�i �1A� � � 't�� TOTAL AMOUNT OFTRANSACTION $ 25O �OOO COST/REVENUE BUDGEiED (CIRCLE ONE) YES NO Port Authority conduit tax- FUNDING SOURCE exemat 1 ease qC71VI7Y NUMBER FINANCIAL INFORMATION� (EXPLAIN) -� C f ��-2 2 2 � 21N OF THE CIN OF SAINT PAUL .,.,., ., �...,.,ARK TOVJERS • 345 ST. PETER STREEf Ms. Pam Wheelock, Director Planning & Economic Development Department 1300 City Hall Annex 25 West Fourth Street St. Paul, Minnesota 55102 • ST. PAUL MN 55102-1661 March 17, 1998 RE: $250,000 TAX-EXEMPT CONDUIT LEASE ADDCO, IN ��1 Dear Ms.�ie ock: �. FAX (612) 2235198 TOLL FREE (800) 328-8417 • PHONE (612) 224-5686 We submit for your review and referral to the office of the Mayor, City Council, and City Attorney's office, detaiis pertaining to the execution of an approximate $250,000 conduit tax-exempt lease to finance acquisition of manufacturing equipment at ADDCO, INC.'s new office and production facility of approximately 77,000 square feet in the Arlington Business Center, St. Paul, Minnesota which financing was approved by the Port Authority Board of Commissioners and City Council in February, 1998. The Port Authority has received an industrial revenue bond allocation from the State of Minnesota Small Issue Pool, as the project is manufacturing. The City of Saint Paul's entitlement allocation will not be affected by this application. In addition to the staff memorandum, we are attaching a draft copy of the proposed City Council Resolution authorizing the conduit tax exempt equipment lease in the amount of $250,000 that will be considered by the Port Authority's Board on March 24, 1998. City Council action will be required after the Port Authority's Board meeting of March 24, 1998. Your expeditious handling of this matter will be appreciated. Sincerely, � Kenneth R. Johnson President KRJ:jmo Attachment cc: Mayor Coleman g:pmk�addco 9�-z z 2 Resolution No. RESOLUTION OF THE PORT AUTHORITY OF THE CITY OF SAINT PAUL WHEREAS, it has been proposed that the Port Authority of the City of Saint Paul (the "Port Authority'� execute a ta�c-exempt equipment lease (the "Lease") in an amount not to exceed $250,000 and that the L,ease will finance certain manufacturing equipment (the "Equipment") to be subleased to Addco, Inc., a Minnesota corporation (the `Borrower"), and such Equipment will be located in a manufacturing, wazehouse and office facility at 240 Arlington Avenue East (the "Project") in the City of Saint Paui, Mivnesota (the "City"), which is owned by 3N Properties and leased to the Borrower. WHEREAS, the Equipment will be leased by the Port Authority from Carlton Financial Corporation (the "Lessor"), pursuant to a Lease Purchase Agreement to be entered into between the Port Authority and the Lessor; and WHEREAS, the Equipment will be subleased to the Borrower, pursuant to a Sublease Purchase Agreement (the "Sublease") to be entered into between the Port Authority, as Sublessor, and the Borrower, as Sublessee; and WHEREAS, pursuant to the Sublease, the Borrower will assume all of the obligations of the Port Authority as Lessee under the Lease; and WHEREAS, the Port Authority has received an allocation of bonding authority for the Project and the Equipment from the Minnesota Deparhnent of Finance as required by the Internal Revenue Code of 1986, as amended, and Minn. Stat. Ch. 474A; and WHEREAS, the Port Authority's Credit Committee and Board have previously adopted their Resolution Nos. 30 and 3632, respectively, giving preliminary approval to the proposed issuance of revenue bonds for the Project in an amount not to exceed $4,000,000; and WHEREAS, the Port Authority's Boazd has also previously adopted its Resolution No. _, giving final approval to the issuance of a tasable and tax-exempt note in an amount not to exceed $3,000,000, for the acquisition and construcfion of the Project; and WHEREAS, the Port Authority's obligations under the Lease are payabie solely from moneys required to be paid by the Borrower putsuant to the Sublease; and WHEREAS, Port Authority staff has reviewed this proposal with the Credit Committee, all as more specifically set forCh in the staff inemorandum on file, and the Credit Committee recommends approval of this Resolution; the execution of the Lease and Sublease; and the execution of all documents ouUined herein and in the staff inemorandum, or othenvise necessary to the consununation of these transacrions; and ' 7649338.01 9�-z z Z WHEREAS, the Port Authority, pursuant to Secrion 147(fl of the Code, published a notice, a copy of which with proof of publication is on file in the office of the Port Authority, of a public hearing on the proposal to issue revenue bonds to finance the Project, including the Equipment; and WHEREAS, the Port Authority conducted a public hearing on February 24, 1998 pursuant to said notice, at which hearing the recommendations contained in the Port Authority's staff memorandum to the Board of Commissioners were reviewed, and all persons who appeazed at the hearing were given an opportunity to ezcpress their views with respect to the proposal; and NOW THEREFORE, BE IT RESOLVED by the Boazd of Commissioners of the Port Authority of the City of Saint Paul as follows: l. The execution of the Lease and Sublease in an amount not to exceed $250,000, is hereby approved, subject to the Project (including the Equipment) and its financing receiving approval from the Department of Trade and Economic Development and the execution of the Lease being approved by the City Council of the City of Saint Paul, Minnesota (the "City"), as described in pazagraph 9, below. 2. Neither the Lease, nor the interest thereon, sha11 constitute indebtedness of the Port Authority or the City within the meaning of any constitutional or statutory debt limitation; nor shall they constitute or give rise to a pecuniary liabiliTy of the City or the Port Authority or a chazge against their general taacing powers and neither the full faith and credit nor the general tazcing powers of the City or the Por[ Authority is pledged to the payment of the Lease or interest thereon. The Port Authority's obligations under the Lease are payable solely from moneys required to be paid by the Borrower pursuant to the Sublease. 3. Forms of the Lease and Sublease have been submitted to the Port Authority for review and/or approval. 4. It is hereby found, determined and declazed that: (a) The execution and delivery by the Port Authority of the Lease and the Sublease, as applicable, and the performance of all covenants and agreements of the Port Authority contained in the Lease and the Sublease, and of all other acts and things required under the Constitution and laws of the State of Minnesota to make the Lease and the Sublease valid and binding obliga6ons of the Port Authority in accordance with their terms, are authorized by Minnesota Statutes, Sections 469.048 through 469.068 and 469.152 through 469.1651, as amended (the "Act"); (b) It is desirable that the Lease and Sublease be executed by the Port Authority; (c) Under the provisions of and as provided in the Lease and the Sublease, the Lease is not to be payable from or a charge upon any funds other than the revenues pledged to the payment thereof; no holder of the Lease shall ever have the right to compel any exercise by the City or the Port Authority of its taxing powers to pay the payments due under the Lease or the interest or premium thereon, or to enforce payment thereof 1649338.01 2 9�'-Z22 against any properry of the City or the Port Authority except the interests of the Port Authority in the Equipment and the Sublease; the Lease shall not constitute a chazge, lien or encumbrance, legal or equitable, upon any properiy of the City or the Port Authority except the interests of the Port Authority in the Equipment and the Sublease; the Lease shall recite that it is issued without moral obligation on the part of the State or its political subdivisions, and that the Lease, including interest thereon, is payable solely from the revenues received pursuant to the Sublease; and the Lease shall not constitute a debt of the City or the Port Authority within the meaning of any constitutional or statutory limitation. 5. The forms of the Lease and the Sublease and exhibits thereto are approved substantially in the forms submitted and on file in the offices of the Port Authority, with such subsequent changes as may be approved by the Port Authority staff, counsel and Bond Counsel as contemplated by pazagraph 7. The Chair and Secretary of the Port Authority, or such other o�cers as may be appropriate in the absence of either the Chair or Secretary, aze hereby authorized and directed to execute the Lease and the Sublease (to the extent the Port Authority is a parry thereto) in substanrially the forms submitted, as modified pursuant to pazagraph 7, and any other documents and certificates which in the opinion of Port Authority staff, counsel and Bond Counsel are necessary to the transactions herein described. The execution of any instrument by the appropriate officer or officers of the Port Authority herein authorized shall be conclusive evidence of the approval of such documents in accordance with the terms hereof. Copies of ali the documents necessary to the transaction described shall be delivered, filed and recorded as provided herein. 6. The President and other officers of the Port Authority aze authorized and directed to prepaze and fiunish to the Lessor and Bond Counsel certified copies of proceedings and records of the Port Authority relating to the Lease and other transactions herein contempiated, and such other affidavits and certificates as may be required to show the facts relating to the legality of the Lease and the other transactions herein contemplated as such facts appeaz from the books and records in the officers' custody and control or as otherwise known to them; and all such certified copies, certificates and �davits, including any heretofore furnished, shall constitute representations of the Port Authority as to the truth of all statements contained therein. 7. The approval hereby given to the various documents referred to above includes approval of such additional details therein as may be necessary and appropriate, and such modifications thereof, deletions therefrom and additions thereto as may be necessary and appropriate and approved by the Port Authority's President and Chief Financial Officer; and includes approval of, among other things: -- (a) establishment of the final principal amount of the Lease and the interest rntes to be borne thereby; provided that the maximum principal amount of the Lease shall not exceed $250,000, and nrovided further that maxiinum interest rate on the Lease shall not exceed _% per annum; (b) the establishment of the payment schedule and prepayment provisions to be applicable to the Lease and the Sublease; and � 1649338.O1 3 9�-zZz (c) such related instruments as may be required to sarisfy the conditions of the Lessor. 8. The proposal of the Lessor to finance the Equipment upon the terms and conditions set forth in the Lease and the Sublease and other materials submitted by Lessor and Bonower to the Port Authority aze hereby found and determined to be reasonable and are hereby accepted. 9. The staff of the Port Authority is authorized to (a) submit the application for approval of the Project (including the Equipment) by the Department of Trade and Economic Development of the State of Miunesota as required by Minn. Stat. Sections 469.152 through 469.1651, and (b) take the steps necessary to obtain the approval of the Lease by the City Councii of the City as required by Section 147(fl of the Internal Revenue Code of 1986, as amended. 10. The authority to approve, execute and deliver future amendments to financing documents entered into by the Port Authority in connection with the Lease and Sublease and the other transactions herein contemplated, is hereby delegated to the President of the Port Authority, subject to the following conditions: (a) such amendments do not materially adversely affect the interests of the Port Authority as the Lessee and Sublessor; (b) such amendments do not contravene or violate any policy of the Port Authority; (c) such amendments are acceptable in form and substance to Bond Counsel; and (d) the Port Authority has received an opinion of Bond Counsel to the efFect that the amendments will not adversely affect the tas-exempt chazacter of interest on the Lease. The execution of any instrument by the President of the Port Authority shall be conclusive evidence of the approval of such instruments in accordance with the terms hereof. 11. No covenant, stipulation, obligation or agreement contained herein or in the Lease and the Sublease shall be deemed to be a covenant, stipulation, obligation or agreement of any member of the Boazd of Commissioners of the Port Authority, or any officer, agent or employee of the Port Authority in that persons individual capacity, and neither the Board of Commissioners nor any officer executing the Lease or Sublease shall be liable pezsonally on the Lease or Sublease or be subject to any personal liability or accountability by reason of the issuance thereof. Adopted: March 24, 1998. C:�MY�T.YII� B Its Secretary PORT AUTHORITY OF THE CITY OF SAINT PAUL By Its chair 1649338A1 4 SAINT PAUL PORT AUTHORITY � .�� • ► TO: Credit Committee (March 17, 1998 Regular Meeting) FROM: Peter M. Klein � Lorrie J. Louder Kenneth R. Johnson DATE: Mar. 6, 1998 SUBJECT: ADDCO, INC. - Authorization for the Execution of an Approximately $250,000 Conduit Tax Exempt Equipment Lease ACTION REQUESTED: 9�-ZZ2 Approval of final resolution authorizing the execution of an approx+mate $250,000 conduit lease to ADDCO, Inc.. PROJECT SUMMARY: Estimated Amount: Type: Option to Purchase: Term: Conduit Lessee: Lessee: Lessor: Borrower's Counsel: Bond Counsel: BACKGROUND: $250,000 Tax Exempt Lease Fixed Rate Lease (625% effective interest rate) $1 at end of lease term 60 months Port Authority of the City of Saint Paul ADDCO, Inc. Carlton Financial Corporation Rider Bennett Law Firm Leonard, Street & Deinard In January, 1998, ADDCO received a$2,600,000 allocation of tax exempt bonding authority from the Minnesota Small Issue Pool. Last month, the Port Authority approved the issuance o# $2,350,000 of this allocation to finance ADDDCO's new facility. The lender in that transaction would not finance equipment. This lease utilizes the remaining allocation that relates to the manufacturing equipment. March 6, 1998 Page -2- 9�-222 The Borrower: 3N Properties has purchased a site in the Arlington Business Center and constructed a new facility of approximately 77,000 square feet. 3N Properties is the real estate holding entity for ADDCO, Inc.. ADDCO was formed in 1953. Their business is manufacturing trailer-mounted programmable message signs and hand electrical controls for industrial machines. They also customize diesel and gasoline engines for the industrial trade. The Lease: The Lease will finance approximately the principal amount of $250,000 of manufacturing equipment and will provide for interest at a fixed rate of 6.25% for 5 years. The Project: The equipment will be leased to the Port Authority and subleased to ADDCO. The equipment will be used in the manufacturing process at ADDCO's new 77,000 square foot office and production facility in the Saint Paul Port Authority's Ariington Business Center. The availability of this financing will enable ADDCO to expand its present production capacity. As a result, new jobs will also be created to support the revenue and production increases. Employment Impact: The total project, including the $3,000,000 facility financing, is important because it retains the company and its jobs in Saint Paul as well as adds full-time positions. Under the Port Authority's Workforce and Employment Agreement ADDCO, Inc. will transfer its current 91 full-time employees to the Arlington Business Center facility and add an additional 25 full time positions within three years. The company now anticipates creating 34 additional jobs in the first two years of operations at the new facility. As a result of the construction of this new office/production facility, ADDCO has estimated that there will be an annual payroll increase of $1,031,680 per year when fuiiy operational. Most of the jobs wi11 fikely be professionat positions paying an average of $15.00 per hour. The Lessor: The lessor will be Cariton Financial Corporation for the tax-exempt Lease. Estimated Sources and Uses of Funds: Sources of Funds: Lease Proceeds Estimated Borrower Funds Total Sources of Funds Uses of Funds: Equipment Estimated Costs of Issuance Total Uses of Funds $250,000 25.000 $275,000 $250,000 25.000 $275,000 March 6, 1998 F'age -3- SECURITY FOR THE LEASE: 9�-ZZ z Conduit Financina: The lease will be a conduit financing of the Authority and will not constitute or give rise to a liabil'ity of the Authority, the City of Saint Paul or the State of Minnesota or a charge against their general credit or taxing powers. The lessor will not have the right to demand payment on the lease out of any funds to be raised from taxation or from any revenue sources other than those expressly pledged to payment of the lease pursuant to the lease agreement. The Port Authority wiil receive fees in the amount of 1/8th of a point ($312.50) at inception and 1/8th of a point on the outstanding balance, annually, for the life of the lease. Lease Agreement: The Authority will pledge its interest in the sublease agreement to Carlton Financial Corporation to secure its obligations under the lease. DISCLOSURE: Port Authority Commissioners, by S.E.C. rules, are obligated to disclose any risks or facts you may be aware of that would affect the probability of repayment of these notes. RECOMMENDATION: Recommend approval of authorizing execution of an approximate $250,000 conduit equipment lease issued on behalf of ADDCO, Inc.. PMK:jmo g:lpmk�addwcr Council File # g8 �Z 2 Z RESOLUTION CITY OF SAINT PAUL, MINNESOTA Presented by Referred To WHEREAS: Green Sheet # �3/ ZO /3 Committee Date The Port Authority of the City of Saint Paul (the "Authority") has given its approval to the execution of iu $250,000 Tas-Exempt Equipment Lease (the "Lease") to finance the cosu to be incurred in connection with the acquisition of certain manufacturing equipment to be located at 240 Arlington Avenue within the City of Saint Paul (the "EquipmenP') to be subleased by Addco, Inc.; and 2. Approval of the execution of the proposed Lease and Sublease by the "applicable elected representative" of the geographic azea in which the proposed Equipment is located is required by Section 147(� of the Intemal Revenue Code of 1986, as amended and Chapter 234 of Laws of Minnesota 1976, and the Port Authority has therefore requested that the City Council gives iu requisite approval pursuant to said requirements to facilitate the execution of the proposed Lease and Sublease by the Port Authority, subject to fmal approval of the detaiis of said Lease and Sublease by the Port Authority; and NOW, TAEREFORE, BE LT RESOLVED by the Council of the City of Saint Paul that, in accordance with the requirements of Section 147(� of the Intemal Revenue Code of 1986, as amended, and Chapter 234 of Laws of Minnesota 1976, the City Council hereby approves the execution of the aforesaid Lease and Sublease by the Port Authority for the purposes described in the Port Authority resolution adopted Mazch 24, 1998, the exact detaiis of which, including but not limited to, provisions relating to term, payment schedule, interest rate, discount, prepayment, and the issuance of additional revenue obligations are to be determined by the Port Authority, and the City Council hereby authorizes the issuance of any additional revenue obligations (including refunding obligations) by the Port Authority found by the Port Authority to be necessary for carrying out the purposes for which the ' aforedescribed Lease and Sublease aze executed. 9�-Z zz ��:�� , -, : .�� : , . , �� . -,,., �� „ �� Adopted by Council: Date V v� � 5 ��' Adoption Certified by Council Secretary � ApprovF � Form Approv y City Attomey By . �� ,�'° C`„�� 3- ��- Q Approved b yo or Sub ' sio i to C ucil BY . rY1e%2f Requested by Department of. 9� OEPARTMENT/OFFIGE/COUNCIL DATE INITIATED St. Paul Port Authority 3-17-98 GREEN SHEE 1�1°. _13120 CON7ACf PERSON & PHONE m DEPARTMENT DIRE � CITY CAUNCIL �NITIAL/DATE Pete M. Klein ASSIGN rn7CRYATTORNEY //:'G 3-/? �b� CINC�ERK MUSTBE ON CqUNCIL AGENDA BY (DATE) ROUTINGFOR �� BUDGET DIRECTOR � FIN. & MGT. SERVICE DI March 25, 1998 OFOEP MAVOF(ORA$$ISTANn � TOTAI # OF SIGNATURE PAGES (CLIP ALL LOCATIONS POR StGNATIlRE) ION REQU STED' pproval of the execution of an approximate $250,000 conduit tax-exempt lease to finance acquisitio� of manufacturing equipment at ADDCO, INC.'s new office and production facility of approximately 77,000 square feet in the Arlington Business Center, which was approved by the Port Authority Board of Commissioners and City Council in February, 1998. RECOMMENDATIONS: Approve (A) or Reject (R) pERSONAL SERVICE CONTRACTS MUS7 ANSWER THE FOLLOWING QUESTIONS: _ PLANNING COMMISSION _ GNIL SERVICE COMMISSION �- Has this person/firtn ever worked under a contract for this department? _CIBCAMMITfEE �, Port Authorit YES NO _ SiAFF 2. Has this person/firm ever been a city employee? — YES NO ^ olSiRiC7 CoUR7 _ 3. Does this person/firm possess a skill not normally possessed by any current city employee? SUPPORTS WHICH COUNCIL O&IECTIVE? YES NO Explain atl yes answers on separate sheM antl atlach io green sheM INITIATING PROBLEM. ISSUE, OPPORtUNITY(Who, What, When, Where, Why): The execution of the lease will allow the acquisition of manufacturing equipment at ADDCO's new office and production facility in Arlington Business Center. ADVANTAOES IFAPPROVED: The equipment will be used in the manufacturing process at ADDCO's new facility and will enable ADDCO to expand their present production capacity. DISADVANTAGES IFAPPROVED. None. DISAOVANTAGES IF NOT APPqOVEO' The company will be unable to expand their present production capacity. LN.3t�5��P£ �,3�Lt,y�p!`�' �rt??�i �1A� � � 't�� TOTAL AMOUNT OFTRANSACTION $ 25O �OOO COST/REVENUE BUDGEiED (CIRCLE ONE) YES NO Port Authority conduit tax- FUNDING SOURCE exemat 1 ease qC71VI7Y NUMBER FINANCIAL INFORMATION� (EXPLAIN) -� C f ��-2 2 2 � 21N OF THE CIN OF SAINT PAUL .,.,., ., �...,.,ARK TOVJERS • 345 ST. PETER STREEf Ms. Pam Wheelock, Director Planning & Economic Development Department 1300 City Hall Annex 25 West Fourth Street St. Paul, Minnesota 55102 • ST. PAUL MN 55102-1661 March 17, 1998 RE: $250,000 TAX-EXEMPT CONDUIT LEASE ADDCO, IN ��1 Dear Ms.�ie ock: �. FAX (612) 2235198 TOLL FREE (800) 328-8417 • PHONE (612) 224-5686 We submit for your review and referral to the office of the Mayor, City Council, and City Attorney's office, detaiis pertaining to the execution of an approximate $250,000 conduit tax-exempt lease to finance acquisition of manufacturing equipment at ADDCO, INC.'s new office and production facility of approximately 77,000 square feet in the Arlington Business Center, St. Paul, Minnesota which financing was approved by the Port Authority Board of Commissioners and City Council in February, 1998. The Port Authority has received an industrial revenue bond allocation from the State of Minnesota Small Issue Pool, as the project is manufacturing. The City of Saint Paul's entitlement allocation will not be affected by this application. In addition to the staff memorandum, we are attaching a draft copy of the proposed City Council Resolution authorizing the conduit tax exempt equipment lease in the amount of $250,000 that will be considered by the Port Authority's Board on March 24, 1998. City Council action will be required after the Port Authority's Board meeting of March 24, 1998. Your expeditious handling of this matter will be appreciated. Sincerely, � Kenneth R. Johnson President KRJ:jmo Attachment cc: Mayor Coleman g:pmk�addco 9�-z z 2 Resolution No. RESOLUTION OF THE PORT AUTHORITY OF THE CITY OF SAINT PAUL WHEREAS, it has been proposed that the Port Authority of the City of Saint Paul (the "Port Authority'� execute a ta�c-exempt equipment lease (the "Lease") in an amount not to exceed $250,000 and that the L,ease will finance certain manufacturing equipment (the "Equipment") to be subleased to Addco, Inc., a Minnesota corporation (the `Borrower"), and such Equipment will be located in a manufacturing, wazehouse and office facility at 240 Arlington Avenue East (the "Project") in the City of Saint Paui, Mivnesota (the "City"), which is owned by 3N Properties and leased to the Borrower. WHEREAS, the Equipment will be leased by the Port Authority from Carlton Financial Corporation (the "Lessor"), pursuant to a Lease Purchase Agreement to be entered into between the Port Authority and the Lessor; and WHEREAS, the Equipment will be subleased to the Borrower, pursuant to a Sublease Purchase Agreement (the "Sublease") to be entered into between the Port Authority, as Sublessor, and the Borrower, as Sublessee; and WHEREAS, pursuant to the Sublease, the Borrower will assume all of the obligations of the Port Authority as Lessee under the Lease; and WHEREAS, the Port Authority has received an allocation of bonding authority for the Project and the Equipment from the Minnesota Deparhnent of Finance as required by the Internal Revenue Code of 1986, as amended, and Minn. Stat. Ch. 474A; and WHEREAS, the Port Authority's Credit Committee and Board have previously adopted their Resolution Nos. 30 and 3632, respectively, giving preliminary approval to the proposed issuance of revenue bonds for the Project in an amount not to exceed $4,000,000; and WHEREAS, the Port Authority's Boazd has also previously adopted its Resolution No. _, giving final approval to the issuance of a tasable and tax-exempt note in an amount not to exceed $3,000,000, for the acquisition and construcfion of the Project; and WHEREAS, the Port Authority's obligations under the Lease are payabie solely from moneys required to be paid by the Borrower putsuant to the Sublease; and WHEREAS, Port Authority staff has reviewed this proposal with the Credit Committee, all as more specifically set forCh in the staff inemorandum on file, and the Credit Committee recommends approval of this Resolution; the execution of the Lease and Sublease; and the execution of all documents ouUined herein and in the staff inemorandum, or othenvise necessary to the consununation of these transacrions; and ' 7649338.01 9�-z z Z WHEREAS, the Port Authority, pursuant to Secrion 147(fl of the Code, published a notice, a copy of which with proof of publication is on file in the office of the Port Authority, of a public hearing on the proposal to issue revenue bonds to finance the Project, including the Equipment; and WHEREAS, the Port Authority conducted a public hearing on February 24, 1998 pursuant to said notice, at which hearing the recommendations contained in the Port Authority's staff memorandum to the Board of Commissioners were reviewed, and all persons who appeazed at the hearing were given an opportunity to ezcpress their views with respect to the proposal; and NOW THEREFORE, BE IT RESOLVED by the Boazd of Commissioners of the Port Authority of the City of Saint Paul as follows: l. The execution of the Lease and Sublease in an amount not to exceed $250,000, is hereby approved, subject to the Project (including the Equipment) and its financing receiving approval from the Department of Trade and Economic Development and the execution of the Lease being approved by the City Council of the City of Saint Paul, Minnesota (the "City"), as described in pazagraph 9, below. 2. Neither the Lease, nor the interest thereon, sha11 constitute indebtedness of the Port Authority or the City within the meaning of any constitutional or statutory debt limitation; nor shall they constitute or give rise to a pecuniary liabiliTy of the City or the Port Authority or a chazge against their general taacing powers and neither the full faith and credit nor the general tazcing powers of the City or the Por[ Authority is pledged to the payment of the Lease or interest thereon. The Port Authority's obligations under the Lease are payable solely from moneys required to be paid by the Borrower pursuant to the Sublease. 3. Forms of the Lease and Sublease have been submitted to the Port Authority for review and/or approval. 4. It is hereby found, determined and declazed that: (a) The execution and delivery by the Port Authority of the Lease and the Sublease, as applicable, and the performance of all covenants and agreements of the Port Authority contained in the Lease and the Sublease, and of all other acts and things required under the Constitution and laws of the State of Minnesota to make the Lease and the Sublease valid and binding obliga6ons of the Port Authority in accordance with their terms, are authorized by Minnesota Statutes, Sections 469.048 through 469.068 and 469.152 through 469.1651, as amended (the "Act"); (b) It is desirable that the Lease and Sublease be executed by the Port Authority; (c) Under the provisions of and as provided in the Lease and the Sublease, the Lease is not to be payable from or a charge upon any funds other than the revenues pledged to the payment thereof; no holder of the Lease shall ever have the right to compel any exercise by the City or the Port Authority of its taxing powers to pay the payments due under the Lease or the interest or premium thereon, or to enforce payment thereof 1649338.01 2 9�'-Z22 against any properry of the City or the Port Authority except the interests of the Port Authority in the Equipment and the Sublease; the Lease shall not constitute a chazge, lien or encumbrance, legal or equitable, upon any properiy of the City or the Port Authority except the interests of the Port Authority in the Equipment and the Sublease; the Lease shall recite that it is issued without moral obligation on the part of the State or its political subdivisions, and that the Lease, including interest thereon, is payable solely from the revenues received pursuant to the Sublease; and the Lease shall not constitute a debt of the City or the Port Authority within the meaning of any constitutional or statutory limitation. 5. The forms of the Lease and the Sublease and exhibits thereto are approved substantially in the forms submitted and on file in the offices of the Port Authority, with such subsequent changes as may be approved by the Port Authority staff, counsel and Bond Counsel as contemplated by pazagraph 7. The Chair and Secretary of the Port Authority, or such other o�cers as may be appropriate in the absence of either the Chair or Secretary, aze hereby authorized and directed to execute the Lease and the Sublease (to the extent the Port Authority is a parry thereto) in substanrially the forms submitted, as modified pursuant to pazagraph 7, and any other documents and certificates which in the opinion of Port Authority staff, counsel and Bond Counsel are necessary to the transactions herein described. The execution of any instrument by the appropriate officer or officers of the Port Authority herein authorized shall be conclusive evidence of the approval of such documents in accordance with the terms hereof. Copies of ali the documents necessary to the transaction described shall be delivered, filed and recorded as provided herein. 6. The President and other officers of the Port Authority aze authorized and directed to prepaze and fiunish to the Lessor and Bond Counsel certified copies of proceedings and records of the Port Authority relating to the Lease and other transactions herein contempiated, and such other affidavits and certificates as may be required to show the facts relating to the legality of the Lease and the other transactions herein contemplated as such facts appeaz from the books and records in the officers' custody and control or as otherwise known to them; and all such certified copies, certificates and �davits, including any heretofore furnished, shall constitute representations of the Port Authority as to the truth of all statements contained therein. 7. The approval hereby given to the various documents referred to above includes approval of such additional details therein as may be necessary and appropriate, and such modifications thereof, deletions therefrom and additions thereto as may be necessary and appropriate and approved by the Port Authority's President and Chief Financial Officer; and includes approval of, among other things: -- (a) establishment of the final principal amount of the Lease and the interest rntes to be borne thereby; provided that the maximum principal amount of the Lease shall not exceed $250,000, and nrovided further that maxiinum interest rate on the Lease shall not exceed _% per annum; (b) the establishment of the payment schedule and prepayment provisions to be applicable to the Lease and the Sublease; and � 1649338.O1 3 9�-zZz (c) such related instruments as may be required to sarisfy the conditions of the Lessor. 8. The proposal of the Lessor to finance the Equipment upon the terms and conditions set forth in the Lease and the Sublease and other materials submitted by Lessor and Bonower to the Port Authority aze hereby found and determined to be reasonable and are hereby accepted. 9. The staff of the Port Authority is authorized to (a) submit the application for approval of the Project (including the Equipment) by the Department of Trade and Economic Development of the State of Miunesota as required by Minn. Stat. Sections 469.152 through 469.1651, and (b) take the steps necessary to obtain the approval of the Lease by the City Councii of the City as required by Section 147(fl of the Internal Revenue Code of 1986, as amended. 10. The authority to approve, execute and deliver future amendments to financing documents entered into by the Port Authority in connection with the Lease and Sublease and the other transactions herein contemplated, is hereby delegated to the President of the Port Authority, subject to the following conditions: (a) such amendments do not materially adversely affect the interests of the Port Authority as the Lessee and Sublessor; (b) such amendments do not contravene or violate any policy of the Port Authority; (c) such amendments are acceptable in form and substance to Bond Counsel; and (d) the Port Authority has received an opinion of Bond Counsel to the efFect that the amendments will not adversely affect the tas-exempt chazacter of interest on the Lease. The execution of any instrument by the President of the Port Authority shall be conclusive evidence of the approval of such instruments in accordance with the terms hereof. 11. No covenant, stipulation, obligation or agreement contained herein or in the Lease and the Sublease shall be deemed to be a covenant, stipulation, obligation or agreement of any member of the Boazd of Commissioners of the Port Authority, or any officer, agent or employee of the Port Authority in that persons individual capacity, and neither the Board of Commissioners nor any officer executing the Lease or Sublease shall be liable pezsonally on the Lease or Sublease or be subject to any personal liability or accountability by reason of the issuance thereof. Adopted: March 24, 1998. C:�MY�T.YII� B Its Secretary PORT AUTHORITY OF THE CITY OF SAINT PAUL By Its chair 1649338A1 4 SAINT PAUL PORT AUTHORITY � .�� • ► TO: Credit Committee (March 17, 1998 Regular Meeting) FROM: Peter M. Klein � Lorrie J. Louder Kenneth R. Johnson DATE: Mar. 6, 1998 SUBJECT: ADDCO, INC. - Authorization for the Execution of an Approximately $250,000 Conduit Tax Exempt Equipment Lease ACTION REQUESTED: 9�-ZZ2 Approval of final resolution authorizing the execution of an approx+mate $250,000 conduit lease to ADDCO, Inc.. PROJECT SUMMARY: Estimated Amount: Type: Option to Purchase: Term: Conduit Lessee: Lessee: Lessor: Borrower's Counsel: Bond Counsel: BACKGROUND: $250,000 Tax Exempt Lease Fixed Rate Lease (625% effective interest rate) $1 at end of lease term 60 months Port Authority of the City of Saint Paul ADDCO, Inc. Carlton Financial Corporation Rider Bennett Law Firm Leonard, Street & Deinard In January, 1998, ADDCO received a$2,600,000 allocation of tax exempt bonding authority from the Minnesota Small Issue Pool. Last month, the Port Authority approved the issuance o# $2,350,000 of this allocation to finance ADDDCO's new facility. The lender in that transaction would not finance equipment. This lease utilizes the remaining allocation that relates to the manufacturing equipment. March 6, 1998 Page -2- 9�-222 The Borrower: 3N Properties has purchased a site in the Arlington Business Center and constructed a new facility of approximately 77,000 square feet. 3N Properties is the real estate holding entity for ADDCO, Inc.. ADDCO was formed in 1953. Their business is manufacturing trailer-mounted programmable message signs and hand electrical controls for industrial machines. They also customize diesel and gasoline engines for the industrial trade. The Lease: The Lease will finance approximately the principal amount of $250,000 of manufacturing equipment and will provide for interest at a fixed rate of 6.25% for 5 years. The Project: The equipment will be leased to the Port Authority and subleased to ADDCO. The equipment will be used in the manufacturing process at ADDCO's new 77,000 square foot office and production facility in the Saint Paul Port Authority's Ariington Business Center. The availability of this financing will enable ADDCO to expand its present production capacity. As a result, new jobs will also be created to support the revenue and production increases. Employment Impact: The total project, including the $3,000,000 facility financing, is important because it retains the company and its jobs in Saint Paul as well as adds full-time positions. Under the Port Authority's Workforce and Employment Agreement ADDCO, Inc. will transfer its current 91 full-time employees to the Arlington Business Center facility and add an additional 25 full time positions within three years. The company now anticipates creating 34 additional jobs in the first two years of operations at the new facility. As a result of the construction of this new office/production facility, ADDCO has estimated that there will be an annual payroll increase of $1,031,680 per year when fuiiy operational. Most of the jobs wi11 fikely be professionat positions paying an average of $15.00 per hour. The Lessor: The lessor will be Cariton Financial Corporation for the tax-exempt Lease. Estimated Sources and Uses of Funds: Sources of Funds: Lease Proceeds Estimated Borrower Funds Total Sources of Funds Uses of Funds: Equipment Estimated Costs of Issuance Total Uses of Funds $250,000 25.000 $275,000 $250,000 25.000 $275,000 March 6, 1998 F'age -3- SECURITY FOR THE LEASE: 9�-ZZ z Conduit Financina: The lease will be a conduit financing of the Authority and will not constitute or give rise to a liabil'ity of the Authority, the City of Saint Paul or the State of Minnesota or a charge against their general credit or taxing powers. The lessor will not have the right to demand payment on the lease out of any funds to be raised from taxation or from any revenue sources other than those expressly pledged to payment of the lease pursuant to the lease agreement. The Port Authority wiil receive fees in the amount of 1/8th of a point ($312.50) at inception and 1/8th of a point on the outstanding balance, annually, for the life of the lease. Lease Agreement: The Authority will pledge its interest in the sublease agreement to Carlton Financial Corporation to secure its obligations under the lease. DISCLOSURE: Port Authority Commissioners, by S.E.C. rules, are obligated to disclose any risks or facts you may be aware of that would affect the probability of repayment of these notes. RECOMMENDATION: Recommend approval of authorizing execution of an approximate $250,000 conduit equipment lease issued on behalf of ADDCO, Inc.. PMK:jmo g:lpmk�addwcr