HomeMy WebLinkAbout2013-10-16 PACKET 04.G.REQUEST OF CITY COUNCIL ACTION COUNCIL AGENDA
MEETING ITEM # ��
DATE 10/16/13 � «►
PREPARED BY Administration Danette Parr
� ORIGINATING DEPARTMENT DEPARTMENT HEAD
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COUNCIL ACTION REQUEST
Consider authorizing a Joint Powers Agreement between the City of Cottage Grove and the
Saint Paul Port Authority to facilitate the financing of the PACE Program in Cottage Grove.
STAFF RECOMMENDATION
Adopt the resolution authorizing a Joint Powers Agreement between the City of Cottage Grove
and the Saint Paul Port Authority.
BUDGET IMPLICATION
BUDGETED AMOUNT
ADVISORY COMMISSION ACTION
DATE
❑ PLANNING
❑ PUBLIC SAFETY
❑ PUBLIC WORKS
❑ PARKS AND RECREATION
❑ HUMAN SERVICES/RIGHTS
� ECONOMIC DEV. AUTHORITY 9/10/13
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SUPPORTING DOCUMENTS
REVIEWED
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� MEMO/LETTER: Memo from Danette Parr dated 10/10/13
� RESOLUTION: Draft
❑ ORDINANCE:
❑ ENGINEERING RECOMMENDATION:
❑ LEGAL RECOMMENDATION:
� OTHER: Joint Powers Agreement
ADMINISTRATORS COMMENT�
ACTUAL AMOUNT
APPROVED
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DENIED
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Date
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C:\Documents and Settings\nbelscamper\Local Settings\Temporary Internet Files\Content.0utlook\7M17XZQ6\City Council Action Form-
PACE.doc
Cottage
� Grove
� Pride and QrOSPerity Meet
To:
From:
Date:
Subject:
Mayor and Members of the City Council
Ryan Schroeder, City Administrator
Danette Parr, Economic Development Director
October 10, 2013
PACE Program
The purpose of this agenda item is for consideration of a Joint Powers Agreement between the
City of Cottage Grove and the Saint Paul Port Authority (SPPA) to facilitate the Property Assessed
Clean Energy (PACE) Program for the City of Cottage Grove.
The below information is a general introduction to the PACE program:
Background
At a previous All Commission Meeting earlier in the year, the Council was introduced to the PACE
Program. At that meeting, Jeremy Kalin, President of Eutectics Consulting, spoke about the
recognition of our untapped potential to cut greenhouse gas emissions, save our businesses
money, and create economic development opportunities. In recognition of these facts, the
Minnesota Legislature passed a law in 2010 that allowed MN cities, counties, townships, Economic
Development Authorities, or Housing and Redevelopment Authorities to create and implement a
PACE program.
Defining PACE .
The PACE program is a financing tool that allows for up-front, private capital to pay for building
upgrades that facilitate clean energy improvements. The program is currently focused on
commercial, industrial, and non-profit buildings (cannot be used for municipal buildings). The
PACE program is a special assessment-backed loan from the local government (usually a city or
county) to pay for a variety of energy efficiency improvements that are permanent improvements to
the building. The local governmental entity provides the loan, and the building owner voluntarily
agrees to repay that loan over 5 or 10 years on their property taxes. Typically, depending on the
size of the project, the loan interest rates for projects have varied from 4-7%.
Clean Energy Improvements
Clean energy improvements typically fall along the following three categories:
1) Building-related energy efficiency improvements:
• Targeted improvements like upgrading existing lighting to high-performance fluorescent or
LED technology; or
• Broad-scale, multiple-technology building upgrades like new mechanical systems,
upgraded windows, and some advanced lighting and temperature controls, or
• Whole-building renovations, from lighting to HAVC equipment to new elevators to new
insulation and sealing of the building envelope.
2) Renewable Energy Systems attached to or near to the building:
• Solar thermal systems
• Solar photovoltaic systems
• Wind generator systems
• Geothermal (and ground source heat pump) systems.
3) Electric Vehicle charging infrastructure:
• Installation of new and upgraded circuits and related equipment to enable vehicle
charging
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The proceeds for the loan from a city or county (or associated Economic Development Authority)
comes from the issuance of a municipal revenue bond. PACE bonds are generally taxable
municipal revenue bonds. In addition, typically, PACE financing in Minnesota allows for a private
placement revenue bond sale, to an investor, thus reducing the cost of a public bond sale. The
municipal bonds are secured by the special assessment on the applicant's property. Different
models exist and recently the Bond Council approved financing changes to the program, which will
allow for ease in facilitating the program. The new model allows for the St Paul Port Authority
(SPPA) to serve as the conduit for the financing of the PACE program in any community where a
Joint Powers Agreement exists between the municipality and the SPPA.
Even though these typical clean energy improvements payback the business within an average of
two and a half years, upfront costs tend to be the biggest hindrance to these projects. In the case
of PACE, financing is limited to 10% of the current assessed value of the parcel and the upfront
costs are taken on by others and no longer impede the business and instead allow for immediate
energy cost savings.
Some necessary requirements include:
• The city must approve and institute a PACE Program
• Either the city or building owner must institute a request
• A PACE application must be approved by the local government
• The building must undergo an energy audit
• The project must be deemed "cost effective"
• An engineer must verify performance after installation
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Currently, the City of Edina is actively working with their businesses to facilitate their PACE
program (the first in MN). Thus far, the City of Edina has successfully completed the following
projects:
• Installation of a solar system at Grandview Tire and Auto
• Installation of a lighting and oven controls upgrade at Salut Bar & Grill
The City of Eagan has recently completed approval of their first PACE project with the St Paul Port
Authority serving as the conduit for the financing of the program.
The Economic Development Authority recommended approval of the institution of the PACE
Program and Joint Powers Agreement with the Saint Paul Port Authority at their September 10
meeting.
Action Required:
Approval of a Joint Powers Agreement between the City of Cottage Grove and the Saint Paul Port
Authority.
Attachments:
Joint Power Agreement / Resolution
JOINT POWERS AGREEMENT
This Agreement, made and entered into as of the 16th day of October, 2013, by and
between the Port Authority of the City of Saint Paul (the "Port Authority"), a body corporate and
politic, and the City of Cottage Grove, Minnesota, a municipal corporation (the "City"), provides
as follows:
WHEREAS, the Poi�t Authority has been engaged in governmental programs for
providing financing in the City of Saint Paul and in other areas of the State of Minnesota (the
"State") by making loans evidenced by various financing leases and loan agreements, and in the
process of operating these program the Pol-t Authority has developed a high degree of financial
expet-tise and strength; and
WHEREAS, Minnesota Statutes, Sections 216C.435 and 216C.436 (the "Act") authorize
the City to provide for the financing of the acquisition and construction or installation of energy
efficiency and conservation improvements (the "Improvements") on propet-ties located within the
boundaries of the City through the use of Minnesota Statutes, Chapter 429 special assessments;
and
WHEREAS, the Act authorizes the City to designate a local government unit other than
the City to implement the program under the Act on behalf of the City; and
WHEREAS, the City has potentially identified one or more projects within the
boundaries of the City that will result in certain Improvements that are in need of financing, and
has adopted its Resolution No. (a copy of which is attached hereto as Exhibit A) to
designate the Port Authority as the implementing entity to implement and administer a program
on behalf of the City to finance such Improvements; and
WHEREAS, the Poi�t Authority has created a program under the Act lcnown as the
Property Assessed Clean Energy Program ("MN PACE") for puiposes of implementing and
administering the activities described in the Act, and the Por�t Authority is willing to implement
and administer that program on behalf of the City as requested herein; and
WHEREAS, the Improvements will serve citizens of the City of Saint Paul and the City,
as well as Ramsey and WashingtonCounties and the State of Minnesota; and
WHEREAS, the pai�ties are authorized to enter into this Agreement pursuant to
Minnesota Statutes, Section 471.59 subd. 1, wherein two or more governmental units may enter
into an Agreement to cooperatively exercise any power common to the contracting parties, and
one of the participating governmental units may exercise one of its powers on behalf of the other
governmental units.
NOW THEREFORE, in consideration of the mutual covenants herein made, the pat�ties to
this Agreement hereby agree as follows: ,
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1. The Port Authority shall exercise the powers of the Act on behalf of the City by
providing financing for certainImprovements located within the boundaries of the City. Except
as otherwise provided in this Joint Powers Agreement, the Port Authority shall be solely
responsible for the implementation and administration of MN PACE and the financing of the
Improvements.
2. In connection with its implementation and administration of MN PACE, and its
financing of the Improvements located within the boundaries of the City, it is anticipated that the
Port Authority will enter into various agreements with property owners seeking to obtain
financing and sources of financing for cer-tain Improvements located within the boundaries of the
City (collectively the "Program Documents").
3. The Poi�t Authority will charge a fee for its implementation and administration of
MN PACE, which fee will be described in, and payable under, the Program Documents.
4. The Port Authority will have the sole duty and responsibility to comply witli or
enforce covenants and agreements contained in the Program Documents. This power shall
specifically include the responsibility for monitoring and enforcing compliance with the
provisions of the Program Documents.
5. The source of funds to finance the Improvements shall be a taxable special
assessment revenue bond (the `Bond") issued by the Port Authority in favor of Bremer Bank (the
"Lender"), pursuant to which the Lender will advance funds under the Program Documents.
6. The Bond shall be a special/limited obligation of the Port Authority, payable
solely from special assessinents levied by the City as provided herein. The Bond and interest
thereon shall neither constitute nor give rise to a general indebtedness or pecuniary liability, or a
general or moral obligation, or a pledge or loan of credit of the Port Authority, the City, the City
of Saint Paul or the State of Minnesota, within the meaning of any constitutional or statutory
provision. To that end, the Port Authority hereby agrees to indemnify and hold hai7nless the City
fiom and against any claims or losses arising out of the failure of the Port Authority to provide
for the payment of principal of, and the interest or any premium on the Bond, from special
assessment payments actually paid to the Port Authority by the City. This indemnity shall not,
however, be construed to relate to any claims or losses which might arise by virtue of the
exercise, by the City, of its governmental powers in connection with the Project, or by virtue of
the failure of the City to levy and collect special assessments with respect to the Improvements
or promptly remit such special assessment payments to the Poi�t Authority as provided in the
Program Documents.
7. As and for its contribution to the financing of the Improvements, and as provided
in the Act, the City shall impose and collect special assessments pursuant to Minnesota Statutes,
Chapter 429, which are necessary to pay debt service on that portion of the Bond attributable to
the Improvements located within the boundaries of the City. Evidence that the City has imposed
such special assessments is a precondition to the Port Authority's obligation to provide financing
to any Improvements located within the boundaries of the City.
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8. Once the City has imposed special assessments to finance the Improvements
located within the boundaries of the City, the City shall collect and transfer all collections of the
assessments upon receipt to the Port Authority for application to the payment of the Bond. The
City will take all actions permitted by law to recover the assessments, including without
limitation, for tax forfeit parcels, reinstating the outstanding balance of assessments when the
property returns to private ownership, in accordance with Minnesota Statutes, Section 429.071,
Subd. 4. The City acknowledges that the Lender is a third-party beneficiary of the City's
covenants herein with respect to the imposition, collection and transfer of special assessments
described herein.
9. Unless otherwise provided by concurrent action of the Port Authority and the
City, this Agreement shall tei�rninate upon the retirement or defeasance of the Bond, and this
Agreement may not be terminated in advance of such retirement or defeasance.
10. This Agreement may be amended by the Port Authority and the City, at any time,
by an instrument executed by both of them. No amendment hereof may be entered into by the
Poi�t Authority or the City, however, if the effect of such amendment would impair the rights of
the holder of the Bond, unless such holder hasconsented to such amendment.
11. This Agreement may be executed in any number of counterparts, each of which
when taken together shall constitute a single agreement.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the Port Authority and the City have caused this Agreement
to be executed on their behalf, by their duly authorized officers, as of the day and year first above
written.
PORT AUTHORITY OF THE
CITY OF SA1NT PAUL
By:
Its: President
B
Its: Chief Financial Officer
CITY OF COTTAGE GROVE, MINNESOTA
By:
Its: Mayor, Myron Bailey
By:
Its: City Clerlc, Caron M. Stranlcsy
EXHIBIT A
RESOLUTION NO.
RESOLUTION DESIGNATING THE PORT AUTHORITY TO
IMPLEMENT AND ADMINISTER A PROJECT ASSESSED
CLEAN ENERGY IMPROVEMENT FINANCING ON BEHALF
OF THE CITY, AND PROVIDING FOR THE IMPOSITION OF
SPECIAL ASSESSMENTS AS NEEDED IN CONNECTION
WITH THAT PROGRAM
WHEREAS, the Port Authority of the City of Saint Paul (the "Port Authority") has
established the Propei�ty Assessed Clean Energy Program ("MN PACE") to finance the
acquisition and constiuction or installation of energy efficiency and conservation improvements
(the "Improvements"), on properties located throughout the State of Minnesota through the use
of special assessments pursuant tothe authority granted by Minnesota Statutes, Sections
216C.435 and 216C.436 ("the Act") and Minnesota Statutes, Chapter 429; and
WHEREAS, the City anticipates receiving one or more applications from owners of
property located in the City desiring to participate in and receive financing pursuant to the Act;
and
WHEREAS,in order to finance the Improvements, the City findsthat it is beneficial to
participate in MN PACE, and to designate the Port Authority as the "implementing entity"
pursuant to Minnesota Statutes, Section 216C.435 subd. 6, to implement and administer the
program on behalf of the City for puiposes of financingthe Irnprovements located within the
City; and
WHEREAS, the City understands that the Port Authority will issue its MN PACE special
assessment revenue bond to finance the Improvements, and that the sole security for that bond
will be special assessments imposed by the other cities pai�ticipating in MN PACE;
WHEREAS, the parties have agreed to enter into a Joint Powers Agreement to
memorialize the agreement.
NOW THEREFORE BE IT RESOLVED by the City Council of the City of Cottage
Grove, County of Washington, and State of Minnesota as follows:
l. That the City shall enter into a Joint Powers Agreement with the St. Paul Port
Authority for the purposes described in the Act and hereby authorizes the
execution of the Joint Powers Agreement; and
2. That the City hereby designates the St. Paul Port Authority as the "implementing
entity" under Minnesota Statutes, Section 216C.435 subd. 6, to implement and
administer programs described in Minnesota Statutes, Section 216C.436.
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3. That in order to facilitate and encourage the financing of the Improvements
located within the City, the City covenants to levy assessments for said
Improvements on the property so benefitted, in accordance with Minnesota
Statutes, Chapter 429 and the Program Documents, as defined in the Joint Powers
Agreement, as approved by the Poi�t Authority. The interest rate on the special
assessments shall be the interest rate on the Bond, plus %.
4. After imposition of the special assessments, the City agrees tocollect such
assessments and remit them to the Port Authority for use in the repayment of the
Bond.The City will talce all actions pei�rnitted by law to recover the assessments,
including without limitation, for tax-forfeit parcels, reinstating the outstanding
balance of assessments when the propertyreturns to private ownership, in
accordance with Minnesota Statutes, Section 429.071, Subd. 4.
Passed this _ day of , 2013.
Myron Bailey, Mayor
Attest:
Caron M. Stranslcy, City Clerlc