HomeMy WebLinkAbout09/27/1989 TENTATIVE AGENDA
SPECIAL SESSION SHAKOPEE, MINNESOTA SEPTEMBER 27, 1989
Mayor Lebens presiding.
11 Roll Call at 5 :00 P.M.
21 Accept the Special Call of the Mayor
31 $44,000,000 Sports Facility Revenue Bonds , Series 1984-B
41 Other business
51 Adjourn.
Dennis R. Kraft
City Administrator
MEMO TO: Dennis R. Kraft, CityAdm' Yr
FROM: Judith S. Cox, City Cler
RE: $44,000,000 Sports Facility evenue Bonds , Series 1984-B
DATE: September 25, 1989
INTRODUCTION:
Attached is a letter dated September 12th from Robyn Hansen,
Briggs and Morgan, requesting the City Council to adopt a resolution
further amending the Indenture of Trust and Loan Agreement currently
in effect with respect to the Bonds. This will allow these Bonds to
be remarketed on October 3, 1989 on the basis of a continued escrow
of the Bond proceeds.
BACKGROUND: 000
1
You may remember that the Council or inally approved the issuance
of $90,000,000 Revenue Bonds. The $46,000 Series 1984-A bonds were
used and have since been retired. The Series 1984-B bonds were parked
and were supposed to be used for future expansion of the racetrack.
As indicated in the attached letter dated September 21, 1989, from
James Lockhart, Popham, Haik, it is desirable to remarket the Series
B Bonds to enable a new owner of the racetrack to make use of them
should the racetrack's overall financial condition improve so as to
enable it to service the debt that would be associated with the
reissuance of the Bonds.
Pursuant to the Second Amended Contract for Private Development
by and among the City, the HRA and Minnesota Racetrack, Inc. , there
are fees due to the City relative to these bonds. According to Mr.
Voxland, City Finance Director and Mr. Tom Hay, City Bonding Attorney,
the current fees due to the City are $416 ,635 .00. According to Mr.
Lockhart, the racetrack is in a position to pay $142,260. 72 due ,
relating to the Series B Bonds, but is not in a position to pay the
remaining $ 274,374-.28 associated with the Series A Bonds which have
been retired. Mr. Lockhart is asking that the City only require pay-
ment of $142,260.72 at this time. According to Mr. Lockhart, the
Series B Bonds could not ultimately be issued so as to create the
necessary debt financing without further cooperation and approval
by the City; therefore, the City would not be waiving its ability
to collect the fee in the furure, but would simply be waiting until
there is some economic ability to actually make the payment.
I understand that Mr. Krass will be at the Council meeting on
Wednesday, September 27th at 5:00 P.M. as well as a representative
from the racetrack; to answer any questions Councilmembers may have.
COUNCIL ACTIONS REQUIRED:
1] Decide on the amount of the fee which must be paid at this
time
2] Offer and adopt Resolution No. 3116
31 Address when the fee is due - ie: certified check due prior
to appropriate city officials executing documents relating
to the remarketing of the Series B Bonds
LAW OFFICES
BRIGGS AND MORGAN
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LE VITT, PALMEa. OwEN, HOTPMAN $PSHARE
C7Il' C ' SFirR;�OPEE
September 12, 1989
City of Shakopee
129 East First Avenue
Shakopee, Minnesota 55379
Attn: Judy Cox, City Clerk
RE: City of Shakopee, Minnesota - $4,000,000
Sports Facility Revenue Bonds, Series 1984-B
Dear Judy:
Enclosed for your review, and distribution to the
members of the Shakopee City Council, is the resolution that
I mentioned to you in our telephone conversation today.
This resolution authorizes the further amendment to the
Indenture of Trust and Loan Agreement currently in effect
with respect to the above Bonds, to allow those Bonds to be
remarketed on October 3, 1989 on the basis of a continued
escrow of Bond proceeds.
As I mentioned in our telephone conversation, the
investment bankers and Minnesota Racetrack, Inc. had
anticipated that, by October 3, 1989, the Series B Bond
proceeds would be able to be released from escrow and applied
to the costs which have previously been incurred by MRI.
The intervening bankruptcy of certain shareholders of MRI
has, however, made the remarketing of these Bonds on a
non-escrowed basis impossible. The plan, comtemplated by
this resolution, is to have the remarketing be accomplished
in the same manner as it was last year, on an escrowed basis
and with an extension of the existing letter of credit, until
a new mandatory purchase date next spring. If the
remarketing on a non-escrowed basis cannot be accomplished
at that time, for any reason, Briggs and Morgan expects that
this issue will be retired. It is hoped, however, that the
Bonds will be able to be utilized by MRI at that point.
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BRIGGS wan MORGAN
September 12, 1989
Page Two
Please feel free to call if you have any questions.
Very truly yours,
Rob ,liansen
RH:jl/25 ! I
Enclosure J
cc: Rod Krass --
John Clarey
Frank Fairman
Jim Lockhart
RESOLUTION NO. 3116
A RESOLUTION FURTHER AMENDING THE SUPPLEMENTAL INDENTURE
OF TRUST DATED AS OF OCTOBER 15, 1984 FOR $44,000,000
SPORTS FACILITY REVENUE BONDS, SERIES 1984-B AND THE
LOAN AGREEMENT EXECUTED IN CONNECTION THEREWITH
WHEREAS, on October 15, 1984, the City of Shakopee,
Minnesota (the "City" ) issued its $44,000,000 Sports Facility
Revenue Bonds, Series 1984-B (the "Bonds" ) and loaned the
proceeds derived from the sale thereof to Minnesota
Racetrack, Inc. ( "MRI" ) to finance a portion of a horse
racing facility in the City of Shakopee now known as
Canterbury Downs; and
WHEREAS, the Bonds were issued and are outstanding
pursuant to the terms of a Supplemental Indenture of Trust
originally executed by the City and First Trust Company, Inc.
(the "Trustee" ) October 15, 1984, and amended on December
18, 1984, December 27, 1984, April 1, 1988 and October 3,
1988 (Collectively the "Indenture") ; and
WHEREAS, MRI has advised the City and the Trustee that
it wishes to further amend the Indenture and Loan Agreement
currently in effect with respect to the Bonds to accommodate
(a) the remarketing of some or all of the Bonds on October
3, 1989 on an escrowed basis, either through the extension
of the existing letter of credit or otherwise, and (b) the
document revisions required by Standard & Poor 's Corporation
or Moody's Investors Services in order for that rating agency
to continue to rate the Bonds on the credit of the letter
of credit bank; and
WHEREAS, Section 10-2 of the Indenture provides that
the City and the Trustee may, from time to time, enter into
supplemental or amendatory indentures so as to thereby, among
other things, either (a) grant to or confer upon the Trustee
for the benefit of the Holders any additional rights,
remedies, powers, authority or security that may lawfully
be granted to or conferred upon the Holders or the Trustee
(b) subject to the lien and pledge of this Indenture
additional revenues, property or collateral or (c) make any
other change which in the judgment of the Trustee is
necessary or desireable and will not materially prejudice
any non-consenting Holder of a Bond; and
WHEREAS, the Bonds are to be purchased from the existing
Holder on October 3, 1989 for remarketing to new holders;
and
WHEREAS, the amendments to be made to the documents to
accommodate a continuation of the escrow, whether accompanied
by an extension of the existing letter of credit or
otherwise, will not materially prejudice any of the existing
holders, since those holders are required to relinquish their
Bonds on October 3, 1989 .
NOW, THEREFORE, it is resolved by the City Council of
the City of Shakopee that:
1. The Indenture described above should be further
amended to allow for the remarketing of some or all the
City' s $44,000,000 Sports Facility Revenue Bonds on an
' escrowed basis, whether through the extension of the existing
irrevocable letter of credit or otherwise, including any
document revisions required by Standard & Poor 's Corporation
or Moody's Investors Services in order to allow either such
rating agency to rate the Bonds on the basis of the credit
of any letter of credit provider.
2. The Mayor and City Clerk are hereby authorized and
directed to execute a Fourth Supplemental Indenture of Trust
and Third Amended Loan Agreement, subject to review of the
final forms of such documents by the City Attorney, as well
as any other documents which in the reasonable opinion of
its City Attorney are necessary to carry out the intention
and purpose described herein.
Adopted: September 19, 1989
CITY OF SHAKOPEE, MINNESOTA
By
Its Mayor
ATTEST:
Approved as to form this
City Clerk day of , 19T8—
Assistant
988Assistant City Attorney
20/06
3
WHEREAS, the amendments to be made to the documents to
accommodate a continuation of the escrow, whether accompanied
by an extension of the existing letter of credit or
otherwise, will not materially prejudice any of the existing
holders, since those holders are required to relinquish their
Bonds on October 3, 1989 .
NOW, THEREFORE, it is resolved by the City Council of
the City of Shakopee that :
1. The Indenture described above should be further
amended to allow for the remarketing of some or all the
City's $44,000,000 Sports Facility Revenue Bonds on an
escrowed basis, whether through the extension of the existing
irrevocable letter of credit or otherwise, including any
document revisions required by Standard 6 Poor 's Corporation
or Moody's Investors Services in order to allow either such
rating agency to rate the Bonds on the basis of the credit
of any letter of credit provider.
2. The Mayor and City Clerk are hereby authorized and
directed to execute a Fourth Supplemental Indenture of Trust
and Third Amended Loan Agreement, subject to review of the
final forms of such documents by the City Attorney, as well
as any other documents which in the reasonable opinion of
its City Attorney are necessary to carry out the intention
and purpose described herein.
Adopted: September 19, 1989
CITY OF SHAKOPEE, MINNESOTA
By
Its Mayor
ATTEST:
Approved as to form this
City Clerk day of , 1988.
Assistant City Attorney
20/06
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September 21, 1989
Phillip R. Krass, Esq. Via T_ elecopy
Suite 300
327 South Marshall Road
Shakopee, Minnesota 55379
Re: Series B Bonds
Dear Rod:
As I indicated to you, and as I am sure you are already
aware, the current financial condition of Canterbury Downs is not
good, As a result, Canterbury Downs is not in a financial
position to pay to the City of Shakopee the annual fee due of
$142, 260.72, along with the fee due in connection with the
collapse of the Series A Bonds, both of which I understand the
City has demanded as a pre-condition to the remarketing of the
- Series B Bonds. As 1 indicated to you, the remarketing of the
Series B Bonds is being done solely for the purpose of enabling a
new owner of the Track to make use of the Series B financing
should the Track's overall financial condition improve so as to
enable it to service the debt that would be associated with the
reissuance of the Series B Bonds. At this time, it is clear that
the Track does not have the ability to service any debt that would
be associated with the Series B Bonds, and whether or not they
would have the ability to service such debt in the future is
unknown. However, it is believed by the current Track owners that
continuing to have the potential for the Series B Bond financing
would be attractive to a potential buyer and enhance their ability
to find an economically capable buyer to purchase the Track so as
to ensure its continued operation, -
I would propose at this point that Canterbury Downs
immediately pay to the City of Shakopee the $142, 260. 72 annual fee
that is due the City and that the City not rewire the payment of
Phillip R. Kress, Esq.
September 21, 1989
Page 2
the fee due in connection with the collapse of the Series A Bonds
at this time . Should the Series B Bonds ultimately be used by a
subsequent owner, the City would still have a claim against the
Track for the fee due in connection with the collapse of Series A
Bonds and would be in a position to negotiate with the new owners
as to the terms for payment of that fee. Since the Series B Bonds
could not ultimately be issued so as to create the necessary debt
financing without further cooperation and approval by the City,
the City would not be waiving its ability to collect the fee in
the future, but would simply be waiting until there is some
economic ability to actually make the payment.
If the City refuses to accept this proposal, I would expect
that the Series B Bonds would not be remarketed at this time and
simply cancelled on the October 2rd date. obviously, this would
result in no .additional payment at this time to the City of
Shakopee and could ultimately have a significant impact on the
current owners' ability to structure an attractive package for a
new buyer. As I am sure the City is aware, if a new buyer for the
Track is not found, the long-term financial consequences to all
concerned, including the City of Shakopee, could be very
significant .
I would appreciate it if you would let me know yet today what
the City' s position will be on this issue. It is my understanding
that notice of a special meeting must be given today. I
appreciate your willingness to at least consider our proposal, and
I am hopeful that we can work something out, since I believe that
that is in the best interest of all concerned.
Very trul yours,
JBL/kds/l315ZKDS
13
TO: Dennis R. Kraft, City Administrator
FROM: Gregg Voxland, Finance Director
RE: Administrative Fees For Racetrack IDB's
DATE: September 22, 1989
Introduction
I have been pursuing collection of the IDB administrative fees from the
Racetrack since last spring. This was approached through Rod Kress since he
was involved in the original negotiations. It appears to me that the amount
due to the City is about $416,635 at this time.
Track IR bonds
Series A called for redemption 1/6/88.
27-Sep-89
8.08
Track IRB Track IRB
Series A Bonds Interest Principal Series B Bonds Interest
30-Jun-87 28,750.00 5,238.89 28,750.00 6,815.18 1,241.88
31-Dec-87 28,750.00 4,063.33 28,750.00 6,815.18 963.21
30-Jun-88 28,750.00 2,900.56 28,750.00 6,815.18 687.58
31-Dec-88 28,750.00 1,725.00 28,750.00 6,815.18 408.91
30-Jun-89 28,750.00 568.61 28,750.00 6,815.18 134.79
31-Dec-89 Discount 28,750.00
30-Jun-90 Discount 28,750.00
31-Dec-90 Discount 28,750.00
30-Jun-91 Discount 28,750.00
31-Dec-91 Discount 28,750.00
30-Jun-92 Discount 28,750.00
31-Dec-92 Discount 28,750.00
30-Jun-93 Discount 28,750.00
31-Dec-93 Discount 28,750.00
30-Jun-94 Discount 28,750.00
31-Dec-94 Discount 28,750.00
--------------------------------------------------
238,809.41
14,496.39 143,750.00 34,075.90 3,436.37
'
w/o interest 416,635.31
w/interest 434,568.06