HomeMy WebLinkAbout4.a.5. Report on Wachter Property Purchase CITY OF ROSEMOUNT
EXECIITIVE SUNIlKARY FOR ACTION
PORT AUTHORITY MEETING DATE: APRIL 5, 1994
AGENDA ITEM: REPORT ON WACHTER PROPERTY AGENDA SECTION:
PURCHASE OLD BUSINESS
PREPARED BY: JOHN MILLER, AGENDA NO.
ECONOMIC DEVELOPMENT COORDINATOR 4 . A. (�)
ATTACHMENTS: CORRESPONDENCE FROM DAN 0'NEIL, _ APPROVED BY:
SPRINGSTED, INC.
The port authority legal counsel, Mike Miles, and I have an April 4 meeting
scheduled with Harold Wachter. At the meeting we will continue to visit
with Mr. Wachter about the purchase of his property adjacent to the
Rosemount Business Park. Mr. Miles has received correspondence from Mr.
0'Neil regarding funding of the purchase. We will discuss these options
with Mr. Wachter and also the port authority concern about prematurely
purchasing large parcels of land. In any event, the trail and utility
easement at the north end of the Wachter land will again be discussed.
Mr. Miles and I will be able to provide you with an oral report at the
April 5 meeting.
RECOD�Il�lENDED ACTION: None. Discussion item.
PORT AUTHORITY ACTION:
�� SPRINGSTED
120 South Sixth Street
�, PUBLIC FINANCE ADVISORS Suite 2507
Minneapoiis, MN 55402•1800
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M21'Ch 22, 1994 Washington. DC 20006-2200
(202) 466-3344
Fax: (202) 223-1362
Mr. Michael Miles, Attorney
1303 South Frontage Road
Hastings, MN 55033
Re: Wachter Property Finance Options
Dear Mike:
As we discussed the other day, I believe there are three basic options available to us to fund
the acquisition of the above-captioned property. The three options are as follows: -
Option 1:
Cash -- The City of Rosemount could lend to the Port Authority cash sufficient to cover
the cost of the land acquisition and recover principal from the resale of the property or
from some future bond issue. Any lost investment eamings that the City would incur
could be recovered by exacting an interest payment from the Port Authority. I would
expect that an interest rate pegged to a U.S. Treasury maturity would make the City
whole.
Option 2 :
Bonds -- The Port Authority could issue additional bonds at the time that they finance
the infrastructure for the industrial park. The subset of this bond issue could be for an
amount sufficient to cover the cost of land acquisition. These bonds would be taxable
and the interest rate would be something slightly in excess of the interest rate on a U.S.
Treasury.
Option 3 :
Contract -- The City could enter into an agreement to purchase the Wachter property;
and in exchange for the property they could issue a note to the Wachters that would
have a term of, say, five years or 10 years, whatever was reasonable to both the City
and to the Wachters. An interest rate could be pegged to a U.S. Treasury security for
the term, or the average life, that would be represented by that note. I would think that
City of Rosemount Port Authority
Rosemount, Minnesota
March 22, 1994
Page 2
in order to be sensitive to the Wachters' own estate planning needs, the City may wish
to offer, as an option, the ability of the Wachters to call that note with some reasonable
notice. The note could be pegged to some reasonable term that the Wachters are
willing to hold it and the City's need to amortize it.
I believe that the three options outlined above fairly well represent the options that the City
could employ to finance the Wachter property; and if some further definition is required or if
you would like some type of amortization schedules to employ in your offering letter to the
Wachters, please do not hesitate to contact me. We look forward to working with you on this
matter.
Since.�eiy yours,
. , �
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Da el �. O't�7eill
Executive Vice President
sms
/Saint Paul Office
cc: Mr. John Miller, Economic Development Director, Rosemount Port Authority