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PORT AUTHORITY COMMON REVENUE BOND FUND STUDY COMPLETED Springsted Examination Shows Adequate Reserves Into 2000

 PORT AUTHORITY COMMON REVENUE BOND FUND STUDY COMPLETED
 Springsted Examination Shows Adequate Reserves Into 2000
 ST. PAUL, Minn., Jan. 24 /PRNewswire/ -- An independent cash flow analysis of the St. Paul Port Authority's Basic Resolution 876 common Revenue Bond Fund (Common Bond Fund) has been completed and submitted to the development agency's board of commissioners and senior management, the Authority announced today.
 Results of the four-month study, conducted by Springsted Incorporated, indicate that despite an unsettled project portfolio and a depressed real estate sales market, the Port Authority does not face the prospect of an imminent bond default. The study does indicate, however, that the Authority must act now to avoid bond defaults which are otherwise anticipated in the year 2000.
 "The study's findings provide a helpful snapshot from which the Authority will mount an all out effort to avoid any potential of a future bond default," said Kenneth R. Johnson, Port Authority president.
 The study is not a forecast, but is a projection into the future of the facts about the fund as they existed on Dec. 6, 1991. It is entirely based on a static portrait of the fund's current condition and assumes nothing about future changes in the local economy or real estate industry from here forward.
 Based upon its analysis of the Port Authority's current revenues and bond obligations, the study anticipates that the existing $62 million in reserve funds and other revenue sources should be sufficient until at least the year 2000 to meet scheduled debt service payments on the agency's Common Bond Fund, assuming no major adverse changes in existing revenues.
 The Common Bond Fund program has been the Authority's primary financing tool for the past 17 years. During that time, Port Authority projects have generated $180 million in property tax revenues for the City of St. Paul, and have created or retained more than 38,000 jobs. The fund currently consists of $322,870,000 in outstanding bonds, originally issued to finance more than 150 development projects.
 The Springsted study clearly identifies the existing problems and will help management set a course for correction and recovery. The Port Authority is hopeful that by a major refinancing of debt, there will be sufficient time to allow for both assertive measures on the part of the Authority, as well as a comeback in the commercial real estate market. This will enable the Authority to increase future revenues through more advantageous leasing and sales of repossessed properties, along with the financing of new industrial projects.
 "The St. Paul Port Authority has never missed a single payment to its bondholders and there has never been a bond default in the history of this agency," said Johnson. "This study clearly states, however, that if we were to sit on our hands for the next eight years we wouldn't have enough money to pay full debt service thereafter."
 The point is, Johnson added, we have no intention of sitting idle during this time, but will soon take bold steps to avert the projected cash flow scenario in the Springsted study. We have rolled-up our sleeves and are working harder than ever to meet the challenges ahead," he said. Johnson also said the Port Authority has and will continue to take an aggressive approach with respect to both asset management and defaulted projects.
 The president of the Port Authority has issued a formal response to the Springsted study, which accompanies this release. Further questions regarding the analysis should be directed to Michael D. Strand, vice president of communications for the Authority 612-224-5686.
 NOTE: Copies of the Springsted study are being sent to all holders of St. Paul Port Authority Common Revenue Bond Fund bonds. Other individuals or institutions wishing to obtain a duplicate of the study should send a written request along with $20.00. (Those wishing to see both the study and detailed supplements |approx. 1,200 pgs.~, please remit $150.00.) Please indicate whether you are an 876 bond-holder. Send your check or money order, for postage and handling, along with your name, company name, telephone number and return address to: Port Authority of the City of St. Paul, Springsted Study, 1900 Landmark Towers, 345 St. Peter Street, St. Paul, Minn. 55102.
 PORT AUTHORITY RESPONSE TO THE SPRINGSTED STUDY
 January 24, 1992
 Today's release of the Springsted study marks the onset of a momentous challenge for the St. Paul Port Authority. We have been working aggressively toward solving our problems. But the study now more precisely defines the length and limits of the road we must travel.
 The Springsted study results from a four-month, independent analysis of the obligations, cash flows and reserves of the Port Authority's Resolution 876 Common Revenue Bond Fund (Common Bond Fund). It clearly describes the Fund's cash flow status. It also uses conservative assumptions about the potential future draws against the Fund's reserves, and assumes there are no changes in its current condition.
 The time-frame provided by the study confirms that we have an opportunity to implement a restructuring of the Common Bond Fund program. It also provides a reasonable amount of time to allow for an improvement in the stubborn economic conditions that currently beleaguer everyone in the commercial real estate industry, both locally and nationally.
 Let me emphasize, as does the study, that this is not a prediction of the future. It is based on a "snapshot" of the facts regarding the Common Bond Fund program as they existed on Dec. 6, 1991. It does not take into consideration any variables that might affect us in the years to come.
 The Springsted study confirms the Port Authority's conclusion that a major restructuring of the Common Bond Fund portfolio is now in order to prevent a default in the future. I assure you we are losing no time in taking the steps necessary to confront our problems. We have rolled-up our sleeves and are working hard to meet this challenge.
 In summary, let me say that we take the results of the Springsted study very seriously. It has given us a clearer perspective on the full nature and scope of the Common Bond Fund's financial status, and tells us that we have time to properly address the problems ahead, if we act now.
 Kenneth R. Johnson
 President, St. Paul Port Authority
 -0- 1/24/92
 /CONTACT: Michael D. Strand of the St. Paul Port Authority, 612-224-5686/ CO: St. Paul Port Authority ST: Minnesota IN: SU:


DS -- MN003 -- 3252 01/24/92 16:21 EST
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