HRA introduces plan to refinance pledged parking bonds, reduce annual debt service

The St. Paul Housing and Redevelopment Authority received an introductory presentation on a proposed refinancing of pledged parking revenue bonds that staff said would reduce annual debt service payments and adjust which parking facilities are pledged to the bond collateral.

Debt Manager Jenny Wolf and the finance team outlined that the current principal balance of the prior bonds is $19,920,000 and that staff proposes issuing up to $19,000,000 in new bonds (two series) to refinance the prior issue. The proposed project principal amount presented was $16,230,000 for the tax-exempt series and a $795,000 taxable series for the Robert Street ramp. Proceeds would defease the prior bonds, fund a debt service reserve and pay issuance costs.

Staff said the refinancing would lower the HRA’s annual debt service from about $2.2 million today to approximately $1.3 million by extending the final maturity roughly 10 years (staff indicated the final maturity would move to February 2045). Wolf noted the trade-off: total interest paid over the longer term will be higher because of extended maturity, but the near-term reduction in annual debt service is needed because pledged ramp net operating income (NOI) has declined since the pandemic.

As part of the proposed restructuring, the HRA would remove the 7A (Gallery Towers adjacent) ramp from the pledged pool to make that facility available for potential redevelopment or reuse; the pledged facilities would include 3,994 spaces (about 56% of the HRA’s total inventory). Staff also intends to sell taxable bonds for the Robert Street ramp to permit long-term contractual arrangements that are restricted under tax-exempt bond rules.

Wolf said the HRA’s $3 million pledge of meter and fine revenue would continue as credit enhancement for the borrowing and that the HRA’s A+ rating from S&P on the 2017 bonds was recently reaffirmed. Staff identified the next steps: two HRA resolutions and related City Council approvals are planned for next week to continue the financing process, offering documents will be distributed, pricing will be set, notice will be given to prior bondholders, and the target closing date is July 9.

Commissioners asked detailed questions about which ramps were pledged, why certain facilities were included or excluded, and whether pledged ramps must be debt-free; staff explained the selection is driven by bonding covenants, revenue capacity and flexibility for future transactions. No action was taken at this meeting; staff will return with formal resolutions and parameters for approval.