Approved Minutes 6-2-1997 SUMMARY MINUTES OF THE SAINT PAUL CITY COUNCIL
MONDAY, JUNE 2, 1997 - 9:00 A.M.
CONTINUATION MEETING FROM MAY 28
CITY COUNCIL CHAMBERS, 3RD FLOOR
City Hall and Court House
15 West Kellogg Boulevard
Council President Thune called the meeting to order at 9:15 a.m.
Present - 7 - Blakey, Bostrom, Collins, Harris, Megard, Morton, Thune
Absent - 0
1. Resolution - 97-675 - 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. (Laid over from May 28)
Pam Wheelock, Director of Planning and Economic Development, appeared and stated that the Civic
Center Authority unanimously approved the term sheet on this date subject to City Council and Housing
and Redevelopment Authority (HRA) approval. Ms. Wheelock provided information in response to
questions raised by Councilmembers the previous Wednesday.
Joe Reid, Budget Director, appeared and stated the City's financing plan of$30 million remains
unchanged. The City has to make sure there is sufficient coverage for ticket surcharge and the marquee
so the mix of revenues in the interim plan would be $1.8 million for the marquee, $15.4 million for the
lodging tax, and $3.3 million for tax increment financing. After the year 2008 and the assumptions for
the lodging tax, there will be an additional $220,000 that is not being devoted to paying off debt for the
Civic Center.
Councilmember Megard asked if the $220,000 will be freed up from current debt service on the Civic
Center to finance the interim plan instead of replacing that money in the general fund. Pam Wheelock
responded it is with the understanding that the State will allocate the $65 million in which case the
$220,000 would become available for other purposes. Ms. Wheelock suggested the funds used for debt
service will continue to be used for that purpose. Ms. Megard expressed concern about taking $700,000
out of the general fund as it would mean cutting City services and having to fmd other revenues to
replace those services.
Councilmember Megard asked why it went from $1.2 million to $3.3 million on the tax increment
financing. Joe Reid responded that this is a package proposed for interim financing. If it becomes
necessary to reissue bonds, the components would be reevaluated. It is considered to be the last source
of financing for this proposal. Pam Wheelock added that there are two possibilities for the use of tax
increment fmancing: 1) excess revenues from the Downtown District that will be available as the /
downtown tax increment district financing is being finalized, 2) redefining Block 39 as a redevelopment
district that would extend the term. If the State fails to perform on the $65 million that the Governor is
supporting, a financing plan will come back before the Council.
June 2, 1997, City Council Summary Minutes Page 2
Councilmember Megard asked about the plans for demolishing the Civic Center. Pam Wheelock
responded that it is assumed play will begin in the 1999-2000 season. Work would begin immediately
with demolition of the existing site. Ms. Megard noted the Civic Center would be demolished before any
financial assurance from the State. Ms. Wheelock responded that is the risk, but there is a strong
assurance from the Governor.
Joe Reid said in the interim it would be supported by a 13 month note to tide the city over until there is a
final decision by the Legislature. Ms. Wheelock said the teams contribution of$35 million would have
to be evidenced at the time the bond is issued.
Councilmember Megard stated there has been assurance from bond counsel and public financing advisor
Springsted that this should have no effect on the City's credit rating. Also, the Council has the authority
to do the bonding without a special referendum. The City Council's fiscal policy director has figured the
revenue streams to cover the debt service should the $65 million not become available.
Councilmember Megard moved approval of the resolution.
Councilmember Blakey asked where the $35 million is from that the team is putting in. Pam Wheelock
responded she does not know but the team has a legal requirement to provide that amount in 18 months
before they begin to play. Mr. Blakey asked if any corporate support has come forward to purchase club
seats or luxury boxes. Ms. Wheelock stated there were a number of letters of support for suite
purchases, but she does not expect them to make a legally binding commitment before the arena has been
designed and financed. Mr. Blakey asked about the ten year lease. The lease is for the term of the City's
bonds, Ms. Wheelock said. There is a release mechanism after the first ten years but only to the extent
they pay off any City or State debt that may be outstanding. Mr. Blakey asked about the charity cause
because there is no amount listed. Ms. Wheelock stated there is no minimum or maximum requirement
for that.
Councilmember Blakey said he could not support the resolution. If a municipality is going to put public
dollars into a professional team, there should be some sort of equity interest, he said. There has to be a
balance as to what a public entity can do. One hundred percent of the concessions are going to the team
along with one hundred percent of the revenue for parking, luxury boxes, and club seats. He feels Saint
Paul is putting in too much. Also, this affects the general fund and other services will have to be
curtailed. In addition, the ticket prices are too high. He said he would like to see 15% to 20% of
revenues go back into community organizations.
Councilmember Morton said it appears that Saint Paul is not going to lose. It is workable even if the
State decides not to go with the $65 million bond. It has been laid out very well and it will be for the
benefit of Saint Paul.
Councilmember Harris asked for clarification on the marquee. Pamela Wheelock responded the Saint
Paul Civic Center Authority purchased the outdoor marquee for $90,000. It generates close to $30,000
in advertising revenues per year. Under the term sheet, there will be two outdoor marquees and the team
is contractually obligated to pay the City $385,000 for the first year and escalate for inflation annually at
5%. In response to Councilmember Harris, Ms. Wheelock said the cost for a franchise is $80 million.
June 2, 1997, City Council Summary Minutes Page 3
Councilmember Collins stated this is not just a hockey issue. The worse case scenario is having a
building with no tenants for which $30 million has to be paid. The Civic Center needs major repair and
if Saint Paul had to pay for it, it would be paid out of local resources.
Councilmember Megard stated that under the term sheet, the team has agreed not only to the $115
million dollars investment but also pledged to cover any overrun on the construction which could be
significant. They have agreed to raising the surcharge on the tickets.
Councilmember Bostrom stated if the opportunity is missed to get a national hockey league franchise in
Saint Paul, there will not be another opportunity for quite awhile. This will be a state facility, not just
metropolitan.
Councilmember Blakey asked why the arena will not be put out for competitive bid. Ms. Wheelock
responded that using a typical competitive bidding process requires going through the design process,
completing architectural drawings, and submitting drawings for bid. That is a much more time
consuming process than a design build process. The $130 million project must be completed by 1999.
Council President Thune concurred with Councilmember Collins that if the Council does not act, the
taxpayers will have to pay for renovating the existing arena. It also assures a future for the Civic
Center.
Adopted Yeas - 6 Nays - 1 (Blakey)
iikCouncilmember Harris moved to adjourn the meeting.
' :,DJO R ' D A ':50 A.M.
David Th r uncil President
ATTEST:
Minutes approved by Council
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Assistant Council Secretary " `t qi
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