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CR 93-201 Refunding Supervalu Industrial Development --~- i..:" - -~, "{ y 0 \ C. ~ , , :ea: . November 17, 1993 o P K I ~ I CR93-201 PUBLIC HEARING REFUNDING SUPERVALU INDUSTRIAL DEVELOPMENT REVENUE BOND Proposed Action. Staff recommends approval of the following action: Apt>roval of . Resolution No. 93-133 relatinq to Industrial Development Revenue Refunding Bonds (SuperValu Inc. project) , Series 1993, authorizinq the sale and issuance of the bonds and the execution and delivery of necessary documents. With approval of this action, the actual sale of the bonds will be able to be undertaken. Overview In 1979 the city of Hopkins approved the sale of an industrial development revenue bond to. assist SuperValu in the financing of improvements of their freezer/warehouse building. SuperValu is now proposing to have the City, on behalf of. SuperValu,sell a new bond to refund the existing bond. This will allow SuperValu . to take advantage of lower interest rates presently available in the market. The amount of the proposed bonds would not exceed $1,000,000. In order to facilitate this undertaking a public hearing needs to be held by .the City to approve the proposed sale. The 'documents for this transaction have been prepared on behalf of the City by the law firm of Holmes and Graven. These documents have subsequently been reviewed by the City Attorney. Primary Issues to Consider 0 What is the purpose of this type of financing? 0 What .are the implications to the City as relates to this action? 0 Does the project meet the requirements of the City's policy as relates to taxable/tax exempt financing? . Supportinq Documents 0 Application form 0 Resolution No. 93-133 ~,. '.. . James Plann ng , Development Director - i~ , CR93-201 Page 2 . Primary Issues to consider 0 What is the purpose of this type of financing? Local units of government are authorized to issue tax exempt revenue bonds in order to facilitate projects which it is felt would be beneficial to the community. In order to utilize this type of financing tool the applicant needs to meet very specific Federal requirements. This bond financing is for the most part only available for certain types of industrial or housing projects. Because the bonds as proposed for use in' the subject transaction are tax exempt the interest rate on the funds secured as a result of the sale are lower than what would be available through conventional financing. This helps to make the project more "financially feasible." 0 Does the project meet the requirements of the city policy as relates to taxable/tax exempt financing? . The city of Hopkins adopted a policy as relates revenue bond financing in 1991. The approval criteria within this policy for the most part relates to new construction projects. At the time that the original bond was sold for SuperValu the city did not have an application process or policy as relates to revenue bond financing. It is assumed that the staff and City council as part of the hearing process at that time felt sufficiently comfortable that the project which was proposed to be undertaken was beneficial to the community and therefore approved the bond sale. The action on this matter presently under consideration has no impact on this project which was constructed as a result of the 1979 action by the City council. 0 What are the implications to the city as relates to this action? By approving the action as recommended by staff the applicant will be able to complete sale of the bond and subsequently undertake a refunding of the 1979 bond and thereby reduce their interest rate on this debt. These . bonds and all such revenue bonds are secured by a pledge of repayment strictly from the company for the City is selling the bonds. The city is not liable to make any payments ~. - . ~" CR93-201 Page 3 should there be a default. In essence the city only is . acting as a facilitation insider to secure the tax exemption on the bond. Even though the City is not liable for any payment it is important that staff determine there are sufficient revenues available from the company to make the required payments. In this case, because repayment will be made by SuperValu Inc., staff feels that this concern is sufficiently addressed. Alternatives City Council has the following alternatives regarding this issue: 0 Approve the action as recommended by staff. This will allow for the sale of the bonds as proposed. 0 Deny approval for the sale of the bonds. Under this action the Council needs to detail the reason for denial. From a legal standpoint this matter should be discussed with the City Attorney prior to undertaking such action. 0 continue for additional information. . . ;"';1~~U':''\fi!Wl1ffPR.1\~,:,;-'.';:/''- ". ., . .--TU:_:::-_'~_:_~_~' o-;:;r;_,'_ . _?'~~. =.-..- -,'-"--'-'''-'"",, .-,-. <- . . CITY OF HOPKINS, MINNESOTA RESOLUTION NO. 93-133 RESOLUTION RELATING TO INDUSTRIAL DEVELOPMENT REVENUE REFUNDING BONDS (SUPERVALU INC.. PROJECT), SERIES 1993; AUTHORIZING THE SALE AND ISSUANCE OF THE BONDS AND THE EXECUTION AND DELH1ERY OF NECESSARY DOCUMENTS BE IT RESOLVED by the City Council of the City of Hopkins, Minnesota (the "City"), as follows: . Section 1. Recitals. 1. 01. The City is authorized by Minnesota Statutes, Sections 469.152 to 469.165, as amended (the" Act"), to issue its revenue bonds to refund, in whole or in part, bonds previously issued by the City under the authority of the Act. 1.02. The City has previously issued its Industrial Development Revenue Bonds (Super Valu Stores, Inc. Project), dated, as originally issued, January 1, 1979 (the "Prior Bonds"), in the original principal amount of $1 ,000, 000, all of which remain outstanding on the date hereof. The Prior Bonds were issued for the purpose of financing the construction and equipping of freezer additions to an existing warehouse located at 101 Jefferson Avenue South in the City (the "Facility") on behalf of SUPERVALU INC. (formerly known as Super Valu Stores, Inc.), a . Delaware corporation (the "Company"). 1.03. The Company has proposed that the City issue its revenue bonds (the "Revenue Bonds"), pursuant to the authority of the Act, to refund the Prior Bonds. 1.04. At a public hearing, duly noticed and held on December 7, 1993, on the proposal to issue the Revenue Bonds, aU parties who appeared at the hearing were given an opportunity to express their views with respect to the proposal to issue the Revenue Bonds and interested persons were given the opportunity to submit written comments to the City Manager before the time of the hearing. 1.05. The following documents relating to the refunding and the financing have been submitted to the City and are now on file in the office of the City Manager: (a) an Indenture of Trust (the "Indenture") to be entered into between the City and the First Trust National Association (the "Trustee") ; (b) a Loan Agreement (the "Agreement") to be entered into between the City and the Company; (c) a Bond Purchase Agreement (the "Bond Purchase Agreement") to be entered into between the City, the Company and Piper Jaffray Inc. (the "Underwriter"); and (d) an Official Statement (the "Official Statement") to be used by the . Underwriter in connection with the offer and sale of the Revenue Bonds. 'Section 2. Findings. It is hereby found, determined and declared that: SJB62230 HP110-46 1 - I . ,.,. (a) the refunding of the Prior Bonds, the issuance and sale of the . Revenue Bonds, the execution and delivery of the Loan Agreement, the Indent~re and the Bond Purchase Agreement and any other documents authorIzed hereby to be executed by officers of the City and the performance of all covenants and agreements of the City contained in the Loan Agreement, the Indenture, the Bond Purchase Agreement and any such other documents and all other acts and things required under the Constitution and laws of the State of Minnesota to make the Loan Agreement, the Indenture, the Bond Purchase Agreement and any such other documents and the Revenue Bonds valid and binding obligations of the City in accordance with their terms are authorized by the Act; (b) it is desirable that a series of Revenue Bonds to be entitled Industrial Development Revenue Refunding Bonds ("SUPERVALU INC. Project"), Series 1993 in the aggregate principal amount of $1,000,000 be issued by the City upon the terms set forth in the Indenture, under the provisions of which a pledge of and security interest in the City's interest in the Loan Agreement and the payments thereunder (except for certain expenses and indemnification) will be granted to the Trustee as security for the payment of principal of, premium, if any, and interest on the Revenue Bonds; (c) the loan payments contained in the Loan Agreement are fixed, and required to be revised from time to time as necessary, so as to produce income and revenue sufficient to provide for prompt pflyment of principal of, premium, if any, and interest on the Revenue Bonds when due; and (d) under the provisions of Minnesota Statutes, Section 469.162, and . as provided in the Loan Agreement and Indenture, the Revenue Bonds are not to be payable from nor charged upon any funds of the City other than the revenue pledged to the payment thereof; the City is not subject to any liability thereon; no holders of the Revenue Bonds shall ever have the right to compel any exercise .of the taxing power of the city to pay any of the Revenue Bonds or the interest thereon, nor to enforce payment thereof against any property of the City; the Revenue Bonds shall not constitute a charge, lien or encumbrance, legal or equitable, upon any property of the City; and each Revenue Bond issued under the Indenture shall recite that the Revenue Bonds have been issued under the Act and that the Revenue Bonds, including interest thereon, are payable solely from the revenue pledged to the payment thereof and that no Revenue Bond shall constitute a debt of the City within the meaning of any constitutional or statutory limitation. Section 3. Approval of the Issuance of the Revenue Bonds and Execution of Documents and Revenue Bonds. 3.01. The issuance of the Revenue Bonds for the purpose of refunding the Prior Bonds and the proposal of the Underwriter to purchase the Revenue Bonds on the terms set forth in the Bond Purchase Agreement are hereby approved. The City shall proceed forthwith to issue the Revenue Bonds in the form and upon the terms set forth in the Indenture, which terms are for this purpose incorporated in this Resolution and made a part hereof. The Mayor and the City Manager are authorized to prepare and execute the Revenue Bonds as prescribed by the Indenture and . deliver them to the Trustee, together with a certified copy of this Resolution and S.Jll62230 HPll0-46 2 ",t~=~~'4";,;;:,"';,j".",;,':--,:":'it:::,i' "- "*"-,1W_f4f"!m""_lI]W~-'-:;~-_'~-'-'~~;',,,,,",-,",",,,,,,w, ,.,--,.-" ~ ;,:. . . other documents required by the Indenture, for authentication and delivery to the Underwriter. . .' 3.02. The forms of the Loan Agreement, the Indenture and the Bond Purchase Agreement referred to in Section 1.05 are hereby approved. The Loan Agreement, the Indenture and the Bond Purchase Agreement, substantially in the form submitted but with such variations, insertions and additions as the City Attorney may hereafter approve, are directed to be executed in the name and on behalf of the City by the Mayor and the City Manager. Copies of all of the documents shall be delivered, filed and recorded as provided therein. The Mayor and City Manager are also authorized and directed to execute such other documents and closing certificates as may be necessary or desirable to carry out the transaction and the issuance of the Revenue Bonds, upon review and approval thereof by the City Attorney. 3.03. As provided in the Bond Purchase Agreement, the Revenue Bonds will be offered for sale by the Underwriter to the public by means of the Official Statement. The City approves the distribution of the Official Statement to prospective purchasers of the Revenue Bonds. The City has not participated in the preparation of the Official Statement, has made no independent investigation with respect to the information contained therein and shall have no liability for the sufficiency, accuracy or completeness of such information as contained in the Official Statement. 3.04. The execution of any instrument by the appropriate officer or officers of the City herein authorized shall be conclusive evidence of the approval of such documents in accordance with the terms hereof. In the absence of the Mayor or City . Manager, any of the documents authorized by this resolution to be executed may be executed by such other officer of the City as, in the opinion of the City Attorney, is authorized to execute such documents. 3.05. The Mayor and the City Clerk are authorized and. directed to prepare and furnish to the Underwriter and bond counsel certified copies of all proceedings and records of the City relating to the Revenue Bonds, and such other affidavits and certificates as may be required to show the facts relating to the legality and marketability of the Revenue Bonds as such facts appear from the books and records in the officers' custody and control or as otherwise known to them; and all such certified copies, certificates and affidavits, including any heretofore furnished, shall constitute representations of the City as to the truth of all statements contained therein. Adopted by the City Council of the City of Hopkins, Minnesota on the 7th day of December, 1993. Mayor Attest: t) . City Clerk SJ:B62230 HPll0-46 3 -, .. 1'::> . \ . CITY OF HOPKINS 1010 FIRST STREET SOUTH HOPKINS, MN 55343 OFFICE USE ONLY: . Date Received: Received by: Type of Request: Taxable Bond Issue Tax-Exempt Bond Issue Refunding of Previous Bond Issue X APPLICATION FOR TAXABLE/TAX EXEMPT BOND FINANCING OR BOND REFUNDING (Complete as appropriate) APPLICANT INFORMATION l. Applicant/business name: SUPERVALU INC. Contact person: Steve Johnson Address: 11840 Valley View Road City: Eden Prairie State: MN Zip: 55344 - - - Telephone: (work) 612-828-4731 (home) 724-1843 . Fax: 828-4576 Interest in property: Owner :2 . Applicant's legal counsel: Gary Tygeson and Alison Humphrey Firm: Dorsey & Whitney Address: 220 South Sixth Street city: Minneapolis State: MN Zip: 55402 Telephone: (work) 340-8720 (home) Fax: 340-2644 3. Applicant's architect: N/A - Refunding Address: City: State: zip: . Telephone: (work) (home) Fax: <~_'i':t_";!~dJ::;'!.='-;'i-"'-'--':' . ~:,!m:m::m:;.._..._....,,~..:.:;:.=:Un. ."- -, "___,,,,~.ouc._."" . ;:~, . 2 4. Applicant's contractor: (If selected): N/A Firm: . Address: City: state: Zip: Telephone: (work) (home) Fax: 5. Property owner(s) of record: SUPERVALUINC. Addresses: 11840 Valley View Road city: Eden Prairie state: MN zip: 55344 Telephone: (work) 828-4731 (home) Fax: 828-4576 6. Applicant's business form (corporation, partnership, sole . proprietorship, etc. ) and state of incorporation or organization: Corporation, incorporated in Delaware 7. If the applicant is a corporation, list the officers, directors and stockholders holding more than 5% of the stock of the corporation. state their name, address, telephone and relationship to the applicant. (If a corporation is not formed, list the potential officers, directors and stockholders) : See Schedules attached . c 3 ,:~ . . 8. If the applicant is a partnership, list'the general partners and any limited partners with more than 5% interest. (If the partnership is not formed, give as much data as possible concerning the potential partners): . N/A 9. List any cities to which you have previously applied for taxable/tax exempt bond financing within the last five years: Blaine, MN; Austin, MN; Burnsvi1le, MN; Beloit, WI; Bismark, ND; Moorehead, MN; Great Falls,MT; - - 10. Has the applicant ever been in bankruptcy? If yes, please . explain: No 11. Has the applicant ever defaulted on any bond or mortgage commitment? If yes, please explain: No . "L'a;,_,"""_d'_~_=-"".,~,"',"'-_._,:_,_-" ;lIil;";II:I,,,,,l,l;m.;.;l,l;;ll ,m;;,"'O;; ,,' H'.,.. ,~,"",-"",-,,-, .~;'\.. .~. "'"', . 4 . PROJECT INFORMATION . 1- Project name: Hopkins Warehouse Pteezer Addition 2. Legal description of the site: see attached 3. Brief description of the nature of the business, such as principal services or products, etc.: Grocery Wholesale 4. Amount of bond issue requested: $ 1, 000,000 5. Who is lending interim financing, and in what amount: . Thi~ is a refunding of the City's 1979 bonds BUSINESS INFORMATION 1- Number of employees in Hopkins? Full Time Part Time A. Before this project: B. After this project: usa 50 2. Projected annual sales: $ 1,500,000,000 3. Projected annual payroll: $ 47,000,000 4. Is the project associated with an existing Hopkins business? A. Yes X . B. No r ~- . oJ 5. If this project is associated with an existing Hopkins business, which of the following apply: A. Relocation . B. Expansion 1979 Expansion being refunded C. Rehabilitation 6. will you occupy this project after completion? A. Yes X B. No 7. If no, state name of future lessees and status of commitments or lease agreements: N/A 8. Estimated date of construction: Completion: 5/30/80 9. Will any public official of the City, directly or indirectly, . to the best of your knowledge, benefit by the issuance of the City's tax-exempt financing for this project according, to Minnesota statutes, Section 412.87? No If so, please explain: FILING REQUIREMENTS You must provide all of the following items with your application, unless the Director of Planning & Economic Development waives a requirement: 1- If the project requires approval by the Zoning and Planning Commission, you must apply for these approvals prior to or with this application. If Zoning or Planning Commission approval is . not required, you must submit a list of property owners and their addresses, for your property ,and for all-properties within 350 feet. An abstract company must certify this list. Abstract companies are listed in the yellow,pages. ._. .......,.. ,,,,,,,,'" __m ""_C__~__- ~" -- .....~ " -, 6 . 2. A written opinion, with supporting justificat.ion, from an . expert acceptable to the Director of Planning & Economic Development, to document that the development will not adversely effect similar, existing developments. This requirement may be waived if there are no similar developments in the area of your project. 3. A public hearing notice and resolution of preliminary approval. You must have these items prepared by the City's bond counsel. 4. An application fee of, $5,000. Make your check out to the City of Hopkins. This fee is not refundable and is separate from the Bond Counsels', City Attorneys', or closing fees. PROCEDURE 1. Return this application to the Community Development Department. 2. The city Council will hold a public hearing and decide whether to approve your application. city staff will notify you of'the . meeting. REQUIREMENTS FOR TAX-EXEMPT/TAXABLE BOND FINANCING Your application must meet the following requirements for approval of taxable/tax-exempt bond financing: 1. The project shall not require a significant amount of public money for city improvements if the City Council determines that the site is premature for development. 2. The notes or bonds shall be for an issue not less than $250,000. 3. Construction must begin within one year of preliminary approval. The City Council may grant a time extension if just cause is shown. 4. Contractors doing work on projects funded in whole or in part . by tax-exempt financing: a. Shall not discriminate in the hiring and firing of employees on the basis of race, color, creed, religion, national origin, sex, marital status, age, disability or the need for public assistance. - . .' <7~- b. Shall pay employees as provided under the United States Code, Section 276A, as amended through June 23, 1986, and under Minnesota Statutes 1985, sections 177.41 - 177.44.' ~ c. Shall employ Minnesota residents in at least 80% of the jobs created by the project. In addition, at least 60% of these employees shall be residents of the seven-county metropolitan area. Residential status shall be determined as of the date of the projectts approval by the City Council. However, if the contractor can show that these quotas are not possible because of a shortage of qualified personnel in specific skills, the contractor may request a release from the City Council of the two residency requirements. These requirements shall continue for the length of the construction project. d. Shall be active participants in a State of Minnesota : apprentice program, approved by the Department of Labor and Industry. e. The above requirements shall apply .to all subcontractors working on the project. 5. You must use the City's Bond Counsel. 6. The project must involve an existing business that the City wishes to expand ora new business which the City wishes to . attract. A business is the manufacturing, distribution~ sale, storage or making of any merchandise, real estate, produce food, housing or services which will produce income for one or more individuals. An existing business is a commercial project that has operated for at least one year in the city. A new business is a commercial project which does not qualify as an existing business. a. Existing business criteria: The city will consider any expansion, relocation or rehabilitation of an existing business for approval. b. New business criteria: The City will only consider a new business for approval if it: (1) Offers at least 400 hours per week of new, year-around employment, or (2) Involves the rehabilitation of a vacant or scheduled to be vacated structure, or (3) Is within a designated development or redevelopment target area, and (4) Has a low potential for creating pollution. . 7. The project must exceed minimum code requirements by including at least five of the fOllowing features into the project: .,_"'.""".,,,_..........0"" . ___"... ><." '",-, ...,-- '. ~ 8 a. Brick b. Building design shoti.ld'b~adistinctive, non-generic . style. A noticeable increase in the size and quantity of c. landscape plantings over what the City normally requires. d. Underground irrigation of all landscaping. e. Open space, other than required setbacks. f. At least 10% more parking than code requires. g. Walkway along street frontages. h. All parking stall widths at least ten feet. i. :AII signs shall be at least 20% smaller or fewer than allowed by code. 8. City staff shall review compliance with the appropriate request for refunding of previous bond issues. 9. You must pay an administrative fee to the City of one quarter percent of the bond issue with a maximum of $10,000 at closing. . The City will credit the application fee against the administrative fee. AGREEMENT I, by signing this application, agree to the following: 1. I have read and will abide by all the requirements of the city for taxable/tax-exempt financing. I will also commit all contractors, subcontractors and any other major contributors to the project to all segments applicable to them. I am aware that failure to comply by myself or any of the above can result in cancellation of the resolution. 2. The above information is true and correct. 3. I agree to pay all costs involved in the legal and fiscal review of this project. These costs include the Bond Counsel and city Attorney, and all costs involved in the issuance of the bonds to finance the project. 4. I understand that the City reserves the right to deny final approval, regardless of preliminary approval or the degree of construction completed. . ();ud ~~AaXf;- }7(}f.:-11; /t19-3 Applicant Date financap ~, , ...,.AlIlItii SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS I, The following table sets forth information with respect to the only persons or groups known to the Company as of April 1, 1993 to be the beneficial owner of more than 5 % of its Common Stock. in th Amount and The Name and Nature of pers Address of Beneficial Percent pow Beneficial Owner Ownership of Class - day:: INVESCO MIM PLC 9,072,200(1 ) 12.75% 11 Devonshire Square London, EC2M 4YR England FMR Corp. 3,626,436(2) 5.10% Herr 82 Devonshire Street Stej: Boston, MA 02109 Willi Edw (1) Based on information in a Schedule 13G Report dated January 25, 1993 delivered to the Company SUrT and indicating that INVESCO MIM PLC and certain of its subsidiaries are the beneficial owners of Verr 9,072,200 shares of Common Stock and possess shared voting and dispositive power with respect Willi to such shares. Gar: (2) Based on information in a Schedule 13G Report dated February 14, 1993 delivered to. the Company Ricr and indicating that 3,626,436 shares of Common Stock are beneficially owned by FMR Corp. Har: ("FMR"), certain of FMR's subsidiaries, and the following other related persons: (i) Kelso Carr Management Company, Inc., and (ii) Edward C. Johnson, Chairman and 34% owner of FMR. Win According to such report, such entities and related persons possess sole voting power with respect Tee to 318,879 of such shares and sole dispositive power with respect to all of such shares. Mic .~ Jeff Aile ottic - (1 ) (2) 2 . . ---. _. c"-",-'_""_..,Q,,-,:":_::_-<7~-:-::':=~ ..."",---",---- '-'.....~~~~-~-,,~- ..~., >---,.--, J:.~.~ DUifCT,ORS AN D OFFICERS Directors Corporate Officers .erman Cain Carole F. St. Mark Michael W. Wright Isaiah Harris . resident & CEO President Chairman, Preszdent & CEO Vice President r;odfather's Pizza, Inc. Pitney Bowes Logistics Systems Ted. C. Wetterau Controller Stephen I. D'Agostino and Business Services Vice Chairman; Gregory C. Heying ( Chairman Winston R. Wallin Chairman & CEO Vice President . D'Agostino Enterprises Chairman 'M!tterau Incorporated Distribution; I William E.C.Dearden Medtronic, Inc. Laurence L. Anderson R"Cecutive Vice President I Retired Chairman Ted C. Wetterau R"Cecutive Vice President Human Resources & 1 l Hershey Foods Corporation VIce Chairman Regional President, Administration 'M!tterau Incorporated i Edwin C. (Skip) Gage SUPERVALUINC; Retail Support Companies; r:bairman & CEO Chairman & CEO Vice Chairman John H. Hooley ,AGE Marketing Group, LIC Wetterau Incorporated Wetterau Incorporated Vice .President; President & CEO Sumner H. Goldman Michael W. Wright Phillip A. Dabill Cub Foods Retired Vice Chairman .Chainnan, President & CEO E:r:ecutive Vice President SUPERVALU INe. SUPERVALUINC. Regional President, Michael L. Mulligan Retail Support Companies Vice President Vernon H. Heath Jeffrey C. Girard Sales Chairman of the Board R"Cecutive Vice President Jonathan M. Seltzer I Rosemount, Inc. Chief Financial Officer VIce President I w'lIiam A. Hodder Jeffrey Noddle Industry & Government (.,xzz'rman, President & CEO R-cecutive Vice President Relations Donaldson Compan}\ Inc. Marketing E. Wayne Shives Garnett L. Keith, Jr. David L. Boehnen Vice President .ice Chairman & Chief Senior Vice President Employee Relations nvestment Officer Law & R\1ernal Relations H.S. (Skip) Smith III The Prudential Insurance Company of America Gordon W. Hippen Vice President Information Services I Plc;hard D. McCormick Senior VIce President . lairman & CEO Market Det'elopment Lloyd K. Stenbeck US WESt Inc. George Z. Lopucb Vice President Store Engineering Senior Vice President Harriet K. Perlmutter Corporate Strategic James A. Strom I BtlSinessperson Planning & Research Secretary Ronald C. Tortelli Carol Lenhart Senior Vice President Assistant Treasurer Human Resources DavidA. Cairns Vice President Treasurer George Chirtea . VIce President Merchandising ~ I . i P.: I 39:' I I