CHICAGO -- In the midst of negotiations to avoid a default, the St. Paul Port Authority has surfaced as a campaign issue in the crowded mayoral primary election to be held tomorrow in St. Paul.

One long-shot mayoral candidate is calling for the authority to be abolished. Several front-runners say they support the authority, but some of them want to see its operations improved.

Mike Strand, vice president of communications for the authority, said the authority cannot comment on the positions of any of the candidates because it is in the "final stages" of negotiations with its institutional bondholders over the restructuring of its Resolution 876 bond program.

Last October, the authority unveiled a plan to avert an anticipated default of $322 million of outstanding Resolution 876 bonds. The plan would affect holders of the $258 million of bonds that mature after Dec. 31, 1999. About $63.9 million of bonds that mature before 2000 would not be affected.

Private polls say that the front-runners in the 16-candidate mayoral race are Norm Coleman, Andy Dawkins, John Mannillo, Ray Faricy, and Marlene Johnson, according to D. J. Leary, co-editor of Politics in Minnesota, a statewide nonpartisan newsletter. The two candidates with the most votes in tomorrow's primary will face off in the Nov. 2 general election,

Gerald Isaacs, whom Leary considers a minor candidate, said the authority should be abolished partly because of the financial troubles of the Resolution 876 program.

If elected, Isaacs, who was a commissioner for the authority in the 1960s, said he would support the replacement of the authority with a new economic development agency, which would pledge half of its profits to pay off existing Resolution 876 bondholders.

The authority, which has issued bonds backed by lease payments under Resolution 876 since the 1960s, has used proceeds to help finance 168 commercial and industrial projects in St. Paul. But a sluggish real estate market in recent years has led a number of tenants of the projects to default on the payments.

Several of the leading candidates said that shutting down the authority is not a viable option.

Candidate Norm Coleman, who is an assistant state attorney general, said that it is "foolish to talk about abolishing" the authority because it is needed to foster light industrial development in the city of St. Paul.

"I need a Port Authority that is alive and well that comes out of the shadow of the 876 program," Coleman said, adding that he believes the authority's problems will be resolved under initiatives promoted by the current management.

Coleman also said he would consider consolidating some of the authority's economic development functions with another city department to streamline operations.

Candidate Andy Dawkins, a state legislator, said that he is a "strong supporter" of the authority.

"I think that some of the investments were misguided in the 876 portfolio," Dawkins said. However, current efforts to resolve the problems are "heading in the right direction," he said.

Other candidates felt that the city should keep the authority, but make changes to improve its operations.

John Mannillo, a developer who is a general partner of a building that was financed by Resolution 876 proceeds, said the authority should work more with developers to help retain tenants that are having trouble paying their rent.

Mannillo said he believes the authority has been "too quick to take back property" from tenants that are delinquent on their lease payments.

Working out financing arrangements to keep a tenant in a building would result in less losses for the authority, Mannillo said.

Many of the mayoral candidates said that the development decisions that led to the problems in the Resolution 876 program were made by Port Authority commissioners, who were politically connected to the mayor's office and the City Council. The authority is governed by a seven-member commission whose members are nominated by the mayor and confirmed by the City Council for six-year terms.

Candidate Micheal Angelo Scalze Sr., a publisher who is not among the front-runners, said that the Port Authority needs to be governed by a nonpartisan group of commissioners.

Scalze said that the authority has "roots" in the city and could play a role in building a city-owned casino, which he has proposed as part of his platform.

Bonds could be issued to help build a $20 million to $40 million casino, Scalze said. The casino would add $100 million to $150 million of annual revenues to city coffers, he said.

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