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CITY OF SHOREWOOD 5755 COUNTRY CLUB ROAD
ECONOMIC DEVELOPMENT <\.UTHORlTY MEETING COUNCIL CHAMBERS
MONDAY, AUGUST 26, 2002 TIME: 8:00 P.M. or Immediately
following Regular Council Meeting
AGENDA
1. CONVENE ECONOMIC DEVELOPMENT AUTHORITY MEETING
A. Roll Call
B. Review Agenda
President Love
Garfunkel
Lizee
Zerby _
Turgeon _
2. APPROVAL OF MINUTES
A. EDA Minutes of August 12, 2002 (Att.-#2A Minutes)
3. NEW BUSINESS
A. Approval of Resolution Regarding Agreements for the Public Safety Facilities (Att.-#3A
Resolution)
B. Set Meeting for August 29,2002 to Approve Financing Issue for Public Safety Facilities
4. OTHER BUSINESS
5. ADJOURN
CITY OF SHOREWOOD
ECONOMIC DEVELOPMENT AUTHORITY MEETING
MONDAY, AUGUST 12,2002
5755 COUNTRY CLUB ROAD
COUNCIL CHAMBERS
8:00 P.M. or Immediately
following Regular Council Meeting
MINUTES
1. CONVENE ECONOMIC DEVELOPMENT AUTHORITY MEETING
~R~fl
Vice President Garfunkel called the meeting to order at 8:45 P.M.
A.
Roll Call
Present:
Vice President Garfunkel; Commissioners Lizee, Turgeon, and Zerby; Assistant
Executive Director Nielsen; Assistant Treasurer Burton; Attorney Keane; and Engineer
Brown
Absent:
President Love; and Executive Director Dawson
B.
Review Agenda
Vice President Garfunkel reviewed the Agenda. Assistant Executive Director Nielsen distributed an
additional agreement, A Sublease Purchase Agreement between the EDA and SLMPD, for Item #7B.
Lizee moved, Zerby seconded, Approving the Agenda as presented. Motion passed 4/0.
2. APPROVAL OF MINUTES
A. EDA Minutes of July 22, 2002
Zerby moved, Turgeon seconded, Approving the EDA Meeting Minutes of July 22, 2002, as
presented. Motion passed 3/0/1, with Lizee abstaining due to absence at that meeting.
3. ARCIDTECTURAL SERVICES AGREEMENT WITH TSP ONE, INC.
Attorney Keane explained negotiations on the Architectural Services Agreement with TSP One, Inc., for
the Joint Public Safety Facility had been concluded. The agreement extended and expanded the
responsibilities and basic services of the architects for the project. The architect's fee would be capped at
approximately 7.64 percent of an estimated construction cost of $8.9 million. This amount was noted to
be slightly less than the original estimate of cost for services.
Zerby moved, Lizee seconded, Approving and Authorizing Execution of the Architectural Services
Agreement for TSP One, Inc. Motion passed 4/0.
4. GENERAL CONTRACTOR CONSTRUCTION MANAGEMENT SERVICES
AGREEMENT WITH KRAUS-ANDERSON CONSTRUCTION COMPANY
Attorney Keane briefly explained the purpose of the construction management services agreement
regarding the defined scope of services and the two-percent fee being included by Kraus-Anderson. This
agreement also capped the cost of additional services, noting revisions could be made throughout the
project as needed. Attorney Keane also explained a bid process would be in place for tlle construction
:# d- Ii
SHOREWOOD ECONOMIC DEVELOPMENT AUTHORITY
August 12, 2002
Page 2 of 3
phase of the project with Kraus-Anderson assigned as a contracting agency for the project. Relationships
were also delineated in this agreement between the EDA, the architects, and Kraus-Anderson.
Zerby moved, Lizee seconded, Approving and Authorizing Execution of the General Contractor
Construction Management Services Agreement with Kraus-Anderson Construction Company.
Motion passed 4/0.
5. COOPERATION AGREEMENT WITH THE CITY OF DEEPHA VEN FOR THE EFD
EAST STATION PROJECT
Attorney Keane explained State law would not permit a municipal EDA to act outside of its corporate
limits, unless permission was granted by the affected municipality. Accordingly, the Shorewood EDA
and the City of Deephaven would need to enter into a Cooperation Agreement with the City of
Deephaven for the construction of the facility with the lease-revenue financing available through the
EDA.
Zerby moved, Lizee seconded, Approving and Authorizing Execution of the Cooperation ~
Agreement with the City of Deephaven for the fire facility for use by the Excelsior Fire District.
Motion passed 4/0.
6. METHOD OF SALE FOR LEASE-REVENUE FINANCING
Attorney Keane noted at the July 24, 2002, Joint City Councils Meeting, the financial advisor discussed
the benefits and disadvantages of negotiated public placement of lease-revenue financing for the fire and
police facilities. At this meeting direction was given by the EFD and SLMPD governing boards
regarding the preferred method oflease-revenue financing. Deephaven Councilmember Thompson
questioned the possibility of exploration of private placement in effort to save underwriting expenses at
that meeting. It was noted, however, by AssistantTreasurer Burton that negotiated public placement was
considered appropriate in this matter, and the same method of financing had the approval of both the EFD
and SLMPD governing boards.
Zerby moved, Turgeon seconded, Approving the negotiated public placement of lease-revenue
financing for the Joint Public Safety Facility project. Motion passed 4/0.
7. AGREEMENTS FOR PUBLIC SAFETY FACILITIES PROJECT
A. EFD East Facility
B. EFD WestlSLMPD Facility
Attorney Keane reviewed the agreements related to the Public Safety Facilities project.
Zerby moved, Lizee seconded, Preliminary Approval for the EFD East Facility, EFD WestlSLMPD
Facility, and the SLMPD Sublease Purchase Agreement. Motion passed 4/0.
8. FINANCING SCHEDULES FOR PROJECT
Assistant Treasurer Burton and Attorney Keane provided a brief report on the percentage of costs
allocated to each member city comprising the Excelsior Fire District. Percentages were noted to be in
SHOREWOOD ECONOMIC DEVELOPMENT AUTHORITY
August 12, 2002
Page 3 of 3
need of refinement, and thus, slight change could occur over the neXt few months. More information
would be provided at a later date.
9. SET EDA MEETING - AUGUST 26,2002
Lizee moved, Ze.'by seconded, Setting a Meeting date of August 26, 2002, for the next EDA Board
Meeting. Motion passed 4/0.
10. OTHER BUSINESS
No other business was presented this evening.
11. ADJOURN
Turgeon moved, Zerby seconded, Adjourning the Economic Development Authority Meeting of
August 12, 2002, at 9:10 P.M. Motion passed 4/0.
RESPECTFULL Y SUBMITTED,
Sally Keefe,
Recording Secretary
Woody Love, President
Craig W. Dawson, Executive Director
SHOREWOOD ECONOMIC DEVELOPMENT AUTHORITY
5755 Country Club Road
Shorewood, Minnesota 55331-8926
952.474.3236 FAX: 952.474.0128
MEMORANDUM
TO:
FROM:
DATE:
SUBJECT:
Shorewood EDA Commissioners
Craig W. Dawson, Executive Director A.[\
August 22, 2002 lJl)
Approval of Agreements for New Fire and Police Facilities
According to the February 2002 amendment to the joint powers agreement of the South Lake
Minnetonka Police Department, the councils of the member cities must approve the all of the lease
agreements and the construction contract prior to the commitments being made to fmancing a new
facility for the SLMPD. As the SLMPD and EFD governing boards have proceeded on the project,
they have decided that parallel approvals by the councils are appropriate for the new fire facilities.
The agreements are going through these approval processes. On August 12, the Shorewood
Economic Development Authority gave approval and, if appropriate, conditions for execution of
these agreements. The EFD and SLMPD governing boards completed their approvals on August 20.
The councils of the cities of Deephaven, Greenwood, and Tonka Bay have approved the documents.
The councils of the cities of Excelsior and Shorewood are scheduled to consider them on August 26.
Issuance of fmancing for the project is proceeding with August 29, 2002, as the date of sale, with
September 9,2002, as an alternate date.
Since the Shorewood EDA reviewed the agreements, there have been a very few minor changes to
the agreements, largely to clarify intentions.
The agreements are not included under this memorandum as they are lengthy, and the commissioners
have received them at the August 12 EDA meeting. A resolution has been prepa.red to formalize the
EDA's approval of the documents.
RECOMMENDATION:
Staff recommends that the EDA adopt the proposed Resolution approving the agreements
related to the EFD and SLMPD public safety facUities.
-:It 3 A
SHOREWOOD ECONOMIC DEVELOPMENT AUTHORITY
Hennepin County, Minnesota
RESOLUTION NO. 02 -
RESOLUTION APPROVING AGREEMENTS RELATING TO THE FINANCING OF
CERTAIN PUBLIC SAFETY FACILITIES
BE IT RESOLVED by the Board of Commissioners (Board) of the Shorewood Economic
Development Authority (Authority) as follows:
Section 1. Recitals.
1.01. The City of Shore wood, Minnesota (Shorewood), the City of Deephaven,
Minnesota (Deephaven), the South Lake Minnetonka Police Department (Department), the
Excelsior Fire District (District) and the Shorewood Economic Development Authority
(Authority), have proposed to fmance and construct a fire facility located in the City of
Deephaven and a fire and police facility located in the City of Shorewood (the "Projects").
1.02. In order to facilitate this financing, the following documents have been prepared:
a.' Ground Lease (East Side) between Deephaven and the District
b. Subground Lease (East Side) between the District and the Authority
c. Lease Purchase Agreement (East Side) between the Authority and
Deephaven
d. Sublease Purchase Agreement (East Side) between Deephaven and the
District
e. Ground Lease (West Side) between the District and the Authority
f. Lease Purchase Agreement (West Side Fire Facilities) between 'the
Authority and Shorewood
g. Sublease Purchase Agreement (West Side Fire Facilities) between
Shorewood and the District
h. Lease Purchase Agreement (West Side Police Facilities) between the
Authority and Shorewood
1. Sublease Purchase Agreement (West Side Police Facilities) between
Shorewood and the Department
j. Declaration Of Cross Easements And Restrictive Covenants between the
District and the Department
("Financing Documents").
k. General Contractor Construction Management Services Agreement (East
Side and West Side Facilities)
1. Architectural Services Agreement (East Side and West Side Facilities)
("Construction Documents").
1.03. The Board has reviewed the Financing and Construction Documents and has
determined that approval of the Financing and Construction Documents will be in the best
interests of the Authority and will further the public health, safety, and welfare and objectives of
the Authority.
DJG-218796vl
SH230-33
Section 2. Approvals.
2.01. The Financing Documents are hereby approved, and the authorized officials
. directed to execute the Financing Documents to which the Authority is a party,
subject to modifications that do not alter the substance of the transactions and are
approved by such officials. Such officials are hereby authorized in their
discretion to execute and deliver, on behalf of the Authority, such other consents,
affidavits, certificates, and other documents in connection with the Projects and
the issuance, sale, and delivery of bonds, the proceeds of which will be used to
finance the Projects. Execution of the Financing Documents and any other
consents, affidavits, certificates, and other documents is conclusive evidence of
their approval.
2.02. 2.02 The Construction Documents are hereby approved, and the authorized
officials directed to execute the Construction Documents to which the Authority
isa party, subject to modifications that do not alter the substance of the
transactions and are approved by such officials. Such officials are hereby
authorized in their discretion to execute and deliver, on behalf of the Authority,
such other consents, affidavits, certificates, and other documents in connection
with the Projects and the issuance, sale, and delivery of bonds, the proceeds of
which will be used to finance the Projects. Execution of the Construction
Documents and any other consents, affidavits, certificates, and other documents is
conclusive evidence of their approval.
2.02. Authority staff and consultants are authorized to take all actions necessary to
implement the agreements hereby approved.
ADOPTED BY THE BOARD OF COMMISSIONERS OF THE SHOREWOOD
ECONOMIC DEVELOPMENT AUTHORITY this 26th day of August, 2002.
Woody Love, President
ATTEST:
Craig W. Dawson, Executive Director
DJG-218796vl
SH230-33
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470 Pillsbury Center
200 South Sixth Street
Minneapolis MN 55402
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CHARTERED
(612) 337-9300 telephone
(612) 337-9310 fax
http://www.kennedy-graven.com
DANIEL J. GREENSWEIG
Attorney at Law
Direct Dial (612) 337-9231
e-mail: de:reenswehz@kennedv~aven.com
MEMORANDUM
VIA E-MAIL
TO:
Craig Dawson, City of Shorewood
cc:
Paul Donna, Juran & Moody
Tim Keane, Larkin Hoffman Daly & Lindgren
Jerry Gilligan, Dorsey & Whitney
FROM:
Daniel J. Greensweig
DATE:
July23,2002
RE:
Summary of Finance Documents
As you requested, I have prepared a short summary of the primary documents that will be required for the
police and fire financing. The East and West Site financings are very similar in most ways, so there is
necessarily a fair amount of repetition in the'summaries. '
There are a number of other certifications and similar documents that will be required at closing, involving
agreements to provide ongoing information to bondholders about the parties involved in the transaction,
investment of bond proceeds, and the like, but these relatively short documents do not affect the substance
of the agreements and are typically prepared closer to the time of closing on the bonds.
That said, the operating documents and a brief description of each are as follows:
n''''' ....1 "Tn A 0...")
Craig Dawson Memorandum
July 23, 2002
Page 2 of 4
1. East Site
a. Ground Lease between the City of Deephaven and the Excelsior Fire District (EFD)
This agreement is simply a standard 99-year land lease of the east side site by the City of
Deephaven to the District. It will continue in force after the financing is complete and would be
required regardless of whether this project was to be paid for with bond proceeds, or with cash.
b. Subground Lease between the EFD and the Shorewood Economic Develo\,ment Authority (BDA)
This agreement transfers the District's interest in the land (as acquired through the 99-year lease) to
the EDA. This transfer is effective for the duration of the financing term and is necessary to permit
the EDA to construct the fire station on the land (with construction to take place in accordance with
the previously executed agreement outlining design, bidding, and related responsibilities). The City
of Deephaven will need to execute a consent to and agreement to be bound by this Subground
Lease.
c. Lease Purchase Agreement between the EDA and the City of Deep haven
This agreement is a lease of the land and the fire station from the EDA to the City of Deephaven.
Its terms require lease payments equal to the payments of debt service due on the bonds. It is
subject to the City's right to decide not to appropriate in its budget for these payments, in which
case the City will lose its right to use the facilities. The City can acquire an ownership interest in
the facility and in the 99-year land lease by paying off the full amount of outstanding principal and
interest on the bonds, either over the full term of the financing or by prepaying the bonds as
peimitted by their terms. The City's right to acquire this ownership interest, however, is
subordinate to the EFD's rights under the Sublease Purchase Agreement, and the City wiD
not be able to exercise its right to obtain ownership unless the EFD decides to terminate that
Sublease Purchase Agreement. Effectively, the City has a right of first refusal on the property if
the EFD or the SLMPD decide to terminate the Sublease PUrchase Agreements.
d. Sublease Purchase Agreement between the City and the EFD .
This agreement is essentially an assignment to the EFD of the' City's rights. under the 'Lease
Purchase Agreement. The EFD will assume the City's rights and obligations under the Lease
Purchase Agreement, on the same terms and including the City's right to acquire ownership
interests in the facilities and land lease. If, however, the EFD decides not to appropriate its own
funds to continue its sublease of the facilities, the City can still make an independent decision to
resume making lease payments from its own funds and thereby maintain control of the facilities.
The EDA will need to execute a consent to and agreement to' be bound by this Sublease Purchase
Agreement.
DJG-217948v3
SH230-33
Craig Dawson Memorandum
July 23, 2002
Page 3 of 4
e. Cooperation Agreement between the City and the EDA
'This agreement permits the EDA to act in cooperation with the City of Deephaven in financing the
east side facility and is required because, as a general rule, economic development authorities can
otherwise operate only within their own cities. It pertains only to this transaction and does not give
the EDA any additional authority to operate within Deephaven.
2. West Site
a. Ground Lease between the EFD and the EDA
'This agreement leases the District's interest in the west site property (which it owns outright) to the
EDA. This transfer is effective for the duration of the financing term and is necessary to permit the
EDA to construct the fire and police stations on the land (again, with construction to take place in
accordance with the previously executed agreement outlining design., bidding, and related
responsibilities).
b. Lease Purchase Agreement between the EDA and the City of Shorewood
This agreement is a lease of the land and the fire and police stations from the EDA to the City of
Shorewood. Its terms require lease payments equal to the payments of debt service due on the
bonds. It is subject to the City's right to decide not to appropriate in its budget for these payments,
in which case the City wiUlose its right to use the facilities. The City can acquire an ownership
interest in the facilities and the land by paying off the full amount of outstanding principal and
interest on the bonds, either over the full term of the financing or by prepaying the bonds as
permitted by their terms. The City's right to acquire this ownership interest, however, is
subordinate to the rights of the EFD and the SLMPD under their Sublease Purchase
Agreements, and the City will not be able to exercise its right to obtain ownership of any party
of the property unless the EFD, the SLMPD, or both decide to terminate those Sublease
Purchase Agreements. Effectively, the City has a right of first refusal on the property ifth~.EFD
or the SLMPD decide to tenninate the Sublease Purchase Agreements.
c. Sublease Purchase Agreements between the City and the EFD and the City and the South Lake
Minnetonka Police Dq>artment (SLMPD)
These agreements are essentially assignments to the EFD and the SLMPD of the City's rights under
the Lease Purchase Agreement. The EFD and the SLMPD wiU assume the City's rights and
obligations under the Lease Purchase Agreement, on the same terms and including the right to
acquire ownership interests in the facilities and property. If either or both the EFD or the
SLMPD decide not to appropriate funds to continue their respective subleases, the City can still
make an independent decision to resume making lease payments from its own funds and thereby
DJG-217948v3
SH230-33
Craig Dawson Memorandum
July 23, 2002
Page 4 of 4
maintain control of either or both portions of the facilities. The EDA will need to execute consents
to and agreements to be bound by these Sublease Purchase Agreements. .
d. Common Interest Community Agreement between the EFD and the SLMPD
This agreement, a draft of which is being prepared by Tim Keane, the Shorewood City Attorney,
will establish the ownership arrangement of the west side property. The facilities will be owned
along the lines of a cooperative or condominium arrangement. This is necessary so that the EFD
and the SLMPD (or any successor tenant or owner of either part of the facilities) can own and use
either the EFD's or the SLMPD's facilities independent of what happens with the other's portion. It
will also. incorporate an operating agreement pertaining to ongoing maintenance, janitorial services,
and related matters.
3. Other Documents
a. Indenture
This document assigns to a trustee the EDA's interests created by the lease purchase agreements
(except for the EDA's rights to indemnification). This is required so that if payments are not made
on all or some of the leases, or if certain other defaults occur, the trustee has the ability to take
control of the portion of the facilities to which the default applies and re-lease it to a third party for
the purpose of obtaining funds to pay to the owners of the bonds.
b. Official Statements
These documents will provide potential buyers of the bonds with information about the transaction
and the parties to it. This type of disclosure is required by federal securities laws and is standard in
any financing of this kind.
Please let me know if you would like any additional information. I look forward to seeing everyone on July
24,2002. In the meantime, if there are others who should receive a copy of this, please feel free to circulate
it further or let me know and I will do so for you.
DJG-217948v3
SH230-33
SHOREWOOD ECONOMIC DEVELOPMENT AUTHORITY
5755 Country Club Road
Shorewood, Minnesota 55331-8926
952.474.3236 FAX: 952.474.0128
MEMORANDUM
TO:
EDA Board of Commissioners
Excelsior Fire District Chief Mark DuCharme
South Lake Minnetonka Police ChiefB~ Litsey
Craig W. Dawson, Executive Director
August 23, 2002
Date for Action to Approve Terms of Financing
FROM:
DATE:
SUBJECT:
On August 22, 2002, fmancial advisor Paul Donna recommended that action on the "bond sale" be
postponed from August 29 and rescheduled for September 9, 2002.
The primary reason for this recommendation has to do with market conditions.
"Our trading desk would prefer to price the bonds on September 9 versus August 29 primarily
because:
1) Over $150 million of Minnesota and Wisconsin paper will have been issued by the
end of the day tomorrow [August 23,] including $45 million of "AAA"[-rated bonds
from] Hennepin County, Minnesota. This volume and the direct competition from
Hennepin County will cause a hangover for next week.
2) It is a week preceding a holiday weekend; thereby, many potential investors may be
hard to reach."
There are also practical benefits to postpone the sale:
. The schedule to gain the approvals by the eight units of government has been very aggressive,
and has not given as much time for the bond insurer to perform due diligence as properly as
its analyst would prefer. Additional time to perform this analysis would be in the public's and
investors' interest, and would lessen the probability that the bond insurer would add a
premium risk due to lack of full information.
. . The City of Deephaven has expressed a preference that the issue for the EFD East facility be
sized based on refined estimates of probable project costs. For an August 29 placement, this
information would need to be available no later than the end of the day on Monday, August
26. It is questionable whether this task will be completed by that time. With the delay, both
the issues for both the East and West facilities can be properly sized.
With the September 9 schedule, the preliminary pricing of the financing would take place between
September 5 and 9, with final terms presented at the respective meetings of the EFD and SLMPD
Boards, and the EDA, on September 9.
The boards have had discussion about September 9 as an alternate date to conclude financing. Given
this strong recommendation from the fmancial advisor, this is the schedule we should follow.
.3J5