CR 96-136 Commercial Development Revenue BondSeptember 3, 1996
Proposed Action
Staff recommends approval of the following motion: Adoption of Resolution 96 -68, amending
commercial development revenue bond (Standal Projectl subject to the following conditions
Overview
Council Report 96 -136
COMMERCIAL DEVELOPMENT REVENUE BOND (STANDAL PROJECT)
• Anplicantpays all legal costs incurred by the City in conjunction with this action
Bondholders consent to such extension of the final maturity of the bond
In 1982, the City of Hopkins issued a commercial development revenue bond in the amount of
$900,000 to facilitate construction of a retail/office building located at 150 -176 Blake Road
(north of Arby's, south of railroad tracks). Under the terms of the present bond agreement,
the borrower is required to pay off the bonds in 1996.
The request under the proposed action is to extend the time for payment of these bonds to
December 31, 2007. With this action, the outstanding bonds would be purchased from the
existing holders.
The purpose for the applicant's request is to keep the lower interest rate provided through the
bond financing, which helps to ensure the overall economic viability of the project.
Primary Issue to Consider
o What is the impact of this action?
Supporting Documents
o Letter from Faegre and Benson dated August 21, 1996
o Resolution 96 -68
D. Keiri
ng & Economi , ' elopment Director
Council Report 96 -136 - Page 2
Primary Issue to Consider
What is the impact of this action?
The only impact to the City as relates to this action is that the bond will remain
outstanding for a longer period of time; however, the borrower has always been current on
payment to bondholders, and there is no reason to expect that there will be any change in
the future.
Alternatives
The City Council has the following alternatives regarding this matter:
1. Approve the action as recommended by staff.
2. Continue for additional information. If there is support for this alternative, the Council
should discuss with the applicant the impact from a timing perspective.
3. Deny the request. Under this alternative, the borrower will be required to pay off the
bonds in accordance with the original agreement.
Dear Jim:
FAEGRE & BENSON 1.1.P
2200 NORwasr CENTER, 9Q SOu'rH SEVENTH STREET
MINNEAPOLIS, MINNESOTA $$4024901
7#LEPHC#SE 512. 336 -3000
VA :SMILE 512436 -3026
August 21, 1996
Mr. Tim Kerrigan
Director of Planning & Economic Development
City of Hopkins
City Hall, 1010 South lst Street
Hopkins, MN 55343
Piaui Huss c
6131336.15
BY TELECOPY
612/935 -1834
Re: City of Hopkins Commercial Development Revenue Bond (Stands!. Project)
As we discussed, Western Properties, a Minnesota general partnership (the
"Borrower') and the obligor with respect to the City's loan of the proceeds from the sale of
the above- referenced Bond, desires to amend the Bond by eliminating the stated "balloon"
maturity of the Bond and extending the repayment period to a future date. To extend the final
maturity date of the Bond, the City, the Borrower, and the sole owner of the Bond will enter
into an Amendment and Consent agreement. First Farmers & Merchants National Bank (the
"Bank") has agreed to purchase the outstanding Bond at a discount from the current holders
and has agreed to extend the final maturity as set forth in the Amendment and Consent. I
have also drafted an amendment to the mortgage to reflect the changed maturity date ands
City Council resolution approving the amendment.
At the request of Stephanie Galey, I have also drafted certificates for the Borrower and
the Bank that contain representations requested by Ms. Daley. Please call me if can be of
any further assistance.
cc: Mr. Terry Kingston
Mr. Robert Strachota
Mt:17012 1
RESOLUTION NO. 96 -68
WHEREAS, the City of Hopkins (the "City "), on February 24, 1982, issued its Commercial
Development Revenue Bond (Standal Project) in the original principal amount of $900,000 (the
"Bond "); and
WHEREAS, the proceeds of issuance of the Bond were loaned to John B Standal, an
individual residing in Minnesota (the "Original Borrower") pursuant to a Loan and Purchase
Agreement dated as of February 1, 1982, which Agreement was amended as of February 1, 1986 (as
so amended, the "Loan Agreement "), between the City and the Original Borrower, and, pursuant to
the Loan Agreement, the Original Borrower agreed to make payments at times and in amounts
sufficient to provide for full and timely payment of all principal of, premium, if any, on, and interest
on the Bond when due; and
WHEREAS, Western Properties, a Minnesota general partnership (the "Borrower"), has
assumed the Original Borrower's obligations under the Loan Agreement
WHEREAS, at the request of the Borrower, the owner of the Bond (the "Bondholder") has
consented to an adjustment of the terms of the Bond which are to be modified as provided in the
form of Amendment and Consent (the "Bond Amendment") previously furnished to the City and
now on file in the offices of the City Clerk;
NOW, THEREFORE, BE IT RESOLVED, as follows:
1. The Bond Amendment is hereby approved.
2. Upon receipt by the City of such executed certifirates and opinions as deemed
necessary upon advice of counsel and payment by the Borrower of all costs and expenses of the City
in connection therewith, the officers of the City are hereby authorized and directed to execute and
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deliver the Bond Amendment, as provided therein, in substantially the form now on file, together
with such modifications thereto as the officers executing the same shall approve, such approval to be
conclusively evidenced by the execution thereof, together with such additional certifications and
other matters as may be necessary or desirable.
Adopted: September 3, 1996
Attest:
City Clerk
Mayor
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