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91-1996�RiGI�IAI , Council File T �- �y�/�O_ Green Sheet -� ��j?7� RESOLUTION ' SAINT PAUL, MINNESOTA Presented By Referred To Committee: Date RESOLUTION AUTHORIZING AN AGREEMENT BETWEEN THE CITY OF SAINT PAUL AND THE PARTNERS L. THOMAS AUSTIN, JOHN AUSTIN AND PETER KING ('AUSTIN-KING PARTNERS") IN THE MATTER OF A SETfLEMENT OF THE URBAN DEVELOPMENT ACTION GRANT LOAN FOR THE AUSTIN-KING FORT ROAD PROJECT WHEREAS, the City of Saint Paul loaned the Austin-King partners the proceeds of an Urban Development Action Grant in the amount of$1,200,000 in November, 1980 to assist in the construction of the Fort Road medical and housing project; and WHEREAS, periodic, annual payments were made by the Austin-King partners and its assignee, Lincoln Properties through November, 1986; and WHEREAS, Lincoln Properties and Austin-King partners failed to make the required payments on the UDAG loan on the November, 1987 payment date and has been in default of the Loan Agreement since that time; and WHEREAS, the City of Saint Paul made repeated attempts to collect the payments of the UDAG loan and did finally undertake a lawsuit to secure repayment of the UDAG loan; and WHEREAS, the Austin-King partners have proposed a workout settlement to the City of Saint Paul for the loan; now, therefore, be it RESOLVED, that the City Council of the City of Saint Paul, upon recommendation by the City Attorney, hereby authorizes the following settlement of the Fort Road UDAG loan to the Austin-King partners: 1. The Fort Road loan settlement amount shall be $700,000; 2. Payment of$50,000 on October 18, 1991; 3. Payment, on or before December 11, 1991, of the remaining $650,000 plus interest at one (1) percent over the prime rate on October 18, 1991; 4. The $50,000 payment on October 18, 1991 shall be an offset against the settlement amount of$700,000 if the Partnership makes the payment as provided in 3. above. 5. Should the Partnership fail to make the settlement payment on or before December 11, 1991 then the City of Saint Paul shall recommence the lawsuit ORIGINA� . . �,� �l- ,� � � to collect the full outstanding amount of the loan of$1,200,000 plus interest accruing since November, 1987. The $50,000 payment shall be forfeit and will not be an offset against outstanding principal nor against past due interest nor currently due interest. FURTHER RESOLVED, the monies wi11 be deposited in the UDAG Revolving Fund of which 50$ will be dedicated to Fort Road Project for development projects in that area. Y� Navs Absent Requested by Department of: smon oswitz � on acca ee / ettman � une By: Adopted by Council: Date ��� 1 �� ���� Form Approved by City Attorney Adoption Certified by Council Sec t y gY; �!`.,�,�\��-C� /DI�3,}l�t � BY� Approved by Mayor for Submission to Approved by ayor: � te �l �� `!�_ � � Council ^� �� C7� � � 1�9i ay: By: _ lt�IEQ OCT ���'91 `�t*t o �q�`r�q(o �° '�. CITY OF SAINT PAUL O y ; �_�����p ; OFFICE OF THE CITY ATTORNEY . „o � .... JANE A. MC PEAK, CTTY ATTORNEY 800 Landmark Towers Saint Paul,Minnesota 55102 612-29&5121 JAMES SCHEIBEL FAX 612-298-5619 MAYOR MEMORANDUM TO: Members of the City Council FROM: Walter A. Bowser \iv��� Assistant City Attorney RE: City of St. Paul vs. L. Thomas Austin, et al. DATE: October 14, 1991 The above-referenced lawsuit involves the City of Saint Paul's attempt to collect a $1.2M UDAG loan provided to Austin/King Housing Inc. in 1980. The developer defaulted on the loan in 1987 and the City commenced this lawsuit against the partnership and the individual partners for the outstanding principal of the loan. The partnership and the individual partners have presented several reasons why they are not responsible for the balance of the loan. Included among their arguments is that the proj ect did not maintain a sufficient cash flow for payments to be made; and that the City did not make reasonable attempts to collect the loan from other sources. It is my opinion the City has a very good case to collect on the loan if the lawsuit were to be tried. However, as in any lawsuit, there is a fair amount of uncertainty. One additional concern which has come up is the prospect that the individual partners may not have the financial capability to pay the judgment in the amount of the outstanding debt of 1.2 million dollars. There is a possibility that the partners would be forced to file bankruptcy under which the City would not be able to collect a substantial portion of the debt. To eliminate the uncertainty of an adverse court decision and to reduce the prospect of the partners filing bankruptcy, the staff from PED has reached a settlement with the partners whereby the partners would pay to the City a total of $700, 000 by December 18, 1991 under the terms and conditions reached between the partners and City staff. It is my legal opinion that this settlement is acceptable and I recommend approval by the Mayor and City Council. . - � � Gr-�f�- �R 9� to collect the fuli outstanding amount of the loan of$1,200,000 plus interest accruing since November, 1987. The $50,000 payment shall be forfeit and will not be an offset against outstanding principal nor against past due interest nor currently due interest. 1 �zs� � �� `` � T� � _ � � �-�- . , _ . �,.--r2lz- �`` ___ _ S �� .--a--�- °� ��`��� . �� � �, . � �____� . ! �,� Yeas Navs Absent Requested by Department of: imon oswitz on acca ee ettman une s. son BY� Adopted by Council: Date Form Approved by City Attorney Adoption Certified by Council Secretary By: BY= Approved by Mayor for Submission to � Council Approved by Mayor: Date By: By� '/ k:� � DEPARTMENT/OFFICE/COUNCIL DATEINITIATED *�0 �1�/���� GREEN SHEET �` � v CONTACT PER30N&PHONE INITIAUDATE INITIAL/DATE �DEPARTMENT DIRECTOR �CITY COUNCIL � ASSIGN �CITY ATTORNEY �CITY CLERK MUST BE ON COUNCIL GENDA BY(DATE) NUMBER FOR ❑BUDGET DIRECTOR a FIN.8 MGT.SERVICES DIR. ROUTIN(i October 17 1991 ORDER �MAYOR(OR ASSISTANT) � TOTAL#OF SIGNATURE PAGES (CLIP ALL LOCATIONS FOR SIGNATURE) ACTION REQUESTED: Authorization to settle Fort Road/UDAG lawsuit for $700,000.00. REC;OMMENDATIONS:Approve(A)or ReJect(R) PERSONAL SERVICE CONTRACTS MUST ANSWER THE FOLLOWIN(i QUESTIONS: _PLANNINO COMMISSION _ CIVIL SERVICE COMMI3SION �• Has this personRirm ever worked under e cOntreCt for this department4 _CIB COMMITTEE _ YES NO 2. Has this person/firm ever been a city employee? _STAFF • — YES NO _DIS7RICTCOURT — 3. Does this person/firm possess e skill not normally possessed by any current ciry employse7 SUPPORTS WHICH COUNCIL OBJECTIVE? YES NO Explaln all yes answers on separate sheet and attach to grosn shest INITIATINO PROBLEM,13SUE,OPPORTUNITY(Who,What,When,Where,Why): Default on the Fort Road UDAG loan to Austin-King. ADVANTAOE3 IF APPROVED: City recovers $700,000.00 of the $1,200,000.00 UDAG grant loan. DISADVANTAGE3 IF APPROVED: City foregoes the possible judgment of the full $1,200,000 loan, plus approximately $700,000.00 in past due interest. DI3ADVANTAGES IF NOT APPROVED: Possibility of losing the lawsuit and/or forcing one or more of the partners into bankruptcy. TOTAL AMOUNT OF TRANSACTION s N�A COST/REVENUE BUDGETED(CIRCLE ONE) YES NO FUNDING SOURCE ��A ACTIVITY NUMBER N/A FINANCIAL INFORMATION:(EXPLAIN) "'� ��.. NOTE: COMPLETE bIRECTIONS ARE INCLUDED IN THE GREEN SHEET INSTRUCTIONAL MANUAL AVAILABLE IN THE PURCHASING OFFICE(PHONE NO. 298-4225). ROUTING ORDER: Below are correct routings for the five most frequent types of documents: CONTRACTS(assumes authorized budget exists) COUNCIL RESOLUTION(Amend Budgets/Accept. Grants) 1. Outside Agency 1. Department Director 2. Department Dfrector 2. City Attorney 3. City Attorney 3. Budget Director 4. Mayor(for contracts over$15,000) 4. Mayor/Assistant 5. Human Rights(for contracts over$50,000) 5. City Council 6. Finance and Management Services Director 6. Chief Accountant, Finance and Management Services 7. Finance Axounting ADMINISTRATIVE ORDERS(Budget Revision) COUNCIL RESOLUTION (all others,and Ordinances) 1. Activity Manager 1. Department Director 2. Department Accountant 2. City Attorney • 3. Department Director 3. Mayor Assistant 4. Budget Director 4. City Council 5. City Clerk 6. Chief Accountant, Finance and Management Services ADMINISTRATIVE ORDERS(all others) 1. Department Director 2. Clty Attorney 3. Finance and Management Services Director 4. City Clerk TOTAL NUMBER OF SIGNATURE PAGES Indicate the#of pages on which signatures are required and paperclip or flag sach of these pa�es. ACTION REQUESTED Describe what the proJecUrequest seeks to accomplish in either chronologi- cal order or order of importance,whichever is most appropriate for the issue. Do not write complete sentences. Begin each item in your list with a verb. RECOMMENDATIONS Complete if the issue In question has been presented before any body, public or private. SUPPORTS WHICH COUNCIL OBJECTIVE? Indicate which Council objective(s)your projecUrequest supports by listing the key word(s)(HOUSING, RECREATION, NEIGHBORHOODS, ECONOMIC DEVELOPMENT, BUDQET, SEWER SEPARATION). (SEE COMPLETE LIST IN INSTRUCTIONAL MANUAL.) PERSONAL SERVICE CONTRACTS: This information will be used to determine the ciry's liability for workers compensation claims,taxes and proper civil service hiring rules. INITIATING PROBLEM, ISSUE, OPPORTUNITY Explain the situation or conditions that created a need for your project or request. ADVANTAGES IF APPROVED Indicate whether this is simply an annual budget procedure required by Iaw/ charter or whether there are specific ways in which the Ciry of Saint Paul and its citizens will benefit from this projecUaction. DISADVANTAQES IF APPROVED What negative effects or major changes to existing or past processes might this projecUrequest produce if it is passed(e.g.,traffic delays, noise, tax increases or assessments)?To Whom?When? For how long? DISADVANTAGES IF NOT APPROVED What will be the negative consequences if the promised action is not approved?Inability to deliver service?Continued high traffic, noise, accident rate? Loss of revenue? FINANCIAL IMPACT Although you must tailor the information you provide here to the issue you are addressing, in general you must answer two questions: How much is it going to cost?Who is going to pay?