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HomeMy WebLinkAbout2016-01-12 PACKET 04.03.B. COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY CITY OF COTTAGE GROVE WASHINGTON COUNTY STATE OF MINNESOTA RESOLUTION NO. EDA 2016-001 RESOLUTION AUTHORIZING AN INTERFUND LOAN FOR ADVANCE OF CERTAIN COSTS IN CONNECTION WITH TAX INCREMENT FINANCING DISTRICT NO. 1-16 (GARDENWORLD) BE IT RESOLVED by the Board of Commissioners (the “Board”) of the Cottage Grove Economic Development Authority (the “EDA”) as follows: Section 1. Background. 1.01. The EDA has heretofore approved the establishment of Tax Increment Financing District No. 1-16 (Gardenworld) (the "TIF District") within Development District No. 1 (the "Project"), and has adopted a Tax Increment Financing Plan (the "TIF Plan") for the purpose of financing certain improvements within the Project. 1.02. The EDA is authorized to use tax increment to pay for certain costs identified in the TIF Plan consisting of land/building acquisition, site improvements/preparation, public utilities, other qualifying improvements, interest and administrative costs (collectively, the "Qualified Costs"), which costs may be financed on a temporary basis from EDA funds available for such purposes. 1.03. Under Minnesota Statutes, Section 469.178, Subd. 7, the City of Cottage Grove (the “City”) is authorized to advance or loan money from any fund from which such advances may be legally authorized, in order to finance the Qualified Costs. 1.04. The EDA has proposed to borrow funds from the City’s Future Economic Development Fund in the amount of up to $300,000.00 to pay a portion of the costs of the Qualified Costs (the “Interfund Loan”). Such funds are proposed to be deposited to the EDA’S TIF Fund and disbursed to pay a portion of the Qualified Costs. As the EDA receives tax increment revenues from the TIF District or other revenues derived from the Project, it will repay the Interfund Loan. 1.05. It is expected that the City Council of Cottage Grove will approve a resolution on January th 6, 2016, approving the terms of the Interfund Loan to be made to the EDA. Section 2. Terms of Interfund Loan. 2.01. The City shall advance $300,000.00 from the Future Economic Development Fund to the EDA as to be used in accordance with the terms herein. The EDA shall reimburse the City for such advances together with interest at the rate stated below. Interest accrues on the principal amount from the date of each advance. The maximum rate of interest permitted to be charged is limited to the greater of the rates specified under Minnesota Statutes, Section 270C.40 or Section 549.09 as of the date the loan or advance is authorized, unless the written agreement states that the maximum interest rate will fluctuate as the interest rates specified under Minnesota Statutes, Section 270C.40 or Section 549.09 are from time to time adjusted. The interest rate shall be 4% and will not fluctuate. 1 473210v1 CT165-52 2.02. Principal and interest ("Payments") on the Interfund Loan shall be paid semi-annually on each February 1 and August 1 (each a "Payment Date"), commencing on the first Payment Date on which the EDA has Available Tax Increment (defined below), or on any other dates determined by the Executive Director of the EDA, through the date of last receipt of tax increment from the TIF District. 2.03. Payments on this Interfund Loan are payable solely from "Available Tax Increment," which shall mean, on each Payment Date, tax increment available after other obligations have been paid, or as determined by the Executive Director of the EDA, generated in the preceding six (6) months with respect to the property within the TIF District and remitted to the EDA by Washington County, all in accordance with Minnesota Statutes, Sections 469.174 to 469.1794, all inclusive, as amended. Payments on the Interfund Loan may be subordinated to any outstanding or future bonds, notes or contracts secured in whole or in part with Available Tax Increment, and are on parity with any other outstanding or future interfund loans secured in whole or in part with Available Tax Increment. 2.04. The principal sum and all accrued interest payable under this Interfund Loan are pre-payable in whole or in part at any time by the EDA without premium or penalty. No partial prepayment shall affect the amount or timing of any other regular payment otherwise required to be made under this Interfund Loan. 2.05. This Interfund Loan is evidence of an internal borrowing by the EDA in accordance with Minnesota Statutes, Section 469.178, Subd. 7, and is a limited obligation payable solely from Available Tax Increment pledged to the payment hereof under this resolution. This Interfund Loan and the interest hereon shall not be deemed to constitute a general obligation of the State of Minnesota or any political subdivision thereof, including, without limitation, the EDA. Neither the State of Minnesota, nor any political subdivision thereof shall be obligated to pay the principal of or interest on this Interfund Loan or other costs incident hereto except out of Available Tax Increment, and neither the full faith and credit nor the taxing power of the State of Minnesota or any political subdivision thereof is pledged to the payment of the principal of or interest on this Interfund Loan or other costs incident hereto. The EDA shall have no obligation to pay any principal amount of the Interfund Loan or accrued interest thereon, which may remain unpaid after the final Payment Date. 2.06. The City may amend the terms of this Interfund Loan, with permission from the EDA, at any time by resolution of the City Council, including a determination to forgive all or a portion of the outstanding principal amount and accrued interest to the extent permissible under law. 2.07. EDA staff and officials are hereby authorized and directed to execute any collateral documents and take any other actions necessary to carry out the intent of this resolution. Section 3. Interfund Loan Approved. 3.01. The Interfund Loan with the terms set forth in Section 2 hereof is hereby approved subject to the approval of the Interfund Loan by the City Council. 3.02. EDA Staff and officials are hereby authorized and directed to execute any collateral documents and take any other actions necessary to carry out the intent of this resolution. Section 4. Effective Date. This resolution is effective upon the date of its approval. 473210v1 CT165-52 Approved by the Economic Development Authority on January __, 2016. By: Myron Bailey, President Attest: Charlene R. Stevens, Executive Director 473210v1 CT165-52