Purpose

• Establish a financing mechanism to develop the Sears site in St. Paul by issuing appropriation bonds (a type of state bond) and using the proceeds for predesign, design, demolition, environmental remediation, and the construction and equipping of infrastructure for the Sears site.
• Provide a funding framework that can grant money to local entities (the City of St. Paul or Rondo Community Land Trust) and to cover debt service on the bonds.

Main Provisions

• Definitions and scope
  • Define “appropriation bond,” “debt service,” and “infrastructure for the Sears site.”
  • Define “Sears site” as the area in St. Paul bounded by Marion Street, Aurora Avenue, Rice Street, and Rondo Avenue.
• Authorization to issue bonds
  • The Commissioner may issue appropriation bonds up to net $95,000,000 (after issuance costs) to finance the listed Sears site activities.
  • Bonds can cover debt service, including capitalized interest, issuance costs, credit enhancements, and related agreements.
  • Any money recovered from property securing the funds is to be applied to principal and interest.
  • Proceeds must go to the Sears site appropriation bond proceeds fund; investment income is dedicated to debt service.
  • Bonds may be issued in one or more issues/series, with a maximum term of 21 years, and may be public or private placements.
  • Bonds can bear fixed or variable interest, be sold at various prices, and include negotiable features.
• Bond structure and contracts
  • The Commissioner may enter into various ancillary agreements (e.g., trust indentures, credit facilities, leases, liquidity arrangements, insurance, collateral, indexing) related to the bonds.
  • Guarantees and disclosures may be used to meet federal securities requirements.
• Form and refunding
  • Bonds can be issued as bonds, notes, or similar instruments; a conspicuous statement about the statutory limitations must be included on each bond.
  • All bonds are negotiable and subject to applicable law; refunds may be issued to refinance outstanding bonds, including related premiums and interest.
  • Escrow arrangements are allowed, and escrow proceeds may be invested in authorized investments; any balance after terms are satisfied may be returned to the general fund or the Sears site bond proceeds fund.
• Investments and legal status
  • The bonds may be considered legal investments for a broad set of entities (state, banks, trust companies, insurance companies, fiduciaries, etc.).
  • The bonds do not constitute a pledge of the state’s full faith and credit or tax-backed backing; they are not public debt and are payable only from legislatively appropriated debt-service amounts.
  • No statewide tax is pledged for repayment; debt service is contingent on annual legislative appropriations.
• Use of proceeds
  • Proceeds and interest are dedicated to grants for local redevelopment activities and to debt service costs (including capitalized interest and issuance costs).
• Debt service funding
  • An annual appropriation from the General Fund is required to fund debt service payments into the Sears site bond payments account.
• Waiver of immunity
  • The state’s waiver of immunity applies to the appropriation bonds and related contracts.

Significant Changes

• Creates a new, dedicated funding stream (the Sears site appropriation bond proceeds fund) to finance and support development activities on the Sears site through appropriation bonds.
• Establishes a self-contained debt service mechanism funded by annual General Fund appropriations (not a general obligation debt), with no pledge of the state’s full faith and credit or tax powers.
• Enables the use of multiple complex financial tools and agreements (credit enhancements, liquidity facilities, etc.) to support the bond program.
• Allows grants to local entities (City of St. Paul or Rondo Community Land Trust) for site preparation and infrastructure, integrated with debt service obligations.

Relevant Terms - appropriation bond - debt service - Sears site - Sears site appropriation bond proceeds fund - predesign, design, demolition - environmental remediation - infrastructure - capitalized interest - credit enhancement - liquidity facilities - trust indentures - refunding bonds - no full faith and credit - not public debt - annual appropriation - general fund - Rondo Community Land Trust - Metropolitan Council - bond proceeds fund - ancillary arrangements - interest rate (fixed or variable)