HomeMy WebLinkAbout2016-09-13 PACKET 04.03.
Offices in
470 U.S. Bank Plaza
200 South Sixth Street
Minneapolis
Minneapolis, MN 55402
(612) 337-9300 telephone
Saint Paul
(612) 337-9310 fax
www.kennedy-graven.com
St. Cloud
Affirmative Action, Equal Opportunity Employer
JA. E
ULIE DDINGTON
Attorney at Law
Direct Dial (612) 337-9213
Email: jeddington@kennedy-graven.com
September 8, 2016
Christine Costello
Economic Development Director
City of Cottage Grove
12800 Ravine Parkway South
Cottage Grove, MN 55016
Re: Resolutions relating to Dominium project in the City of Cottage Grove
Dear Christine,
As you know, Cottage Grove Leased Housing Associates I, LLLP, a Minnesota limited liability limited
partnership, or any of its affiliates (collectively, the “Developer”), is working with the City of Cottage
Grove (the “City”) to finance the acquisition, construction, and equipping of an approximately 184-unit
housing facility and functionally related facilities with underground parking to be located on East Point
th
Douglas Road South near the intersection of Highway 61 and 80 Street in the City (the “Project”). The
Project will be owned and operated by the Developer. The Developer, the City, and the Cottage Grove
Economic Development Authority (the “EDA”) have entered into a Contract for Private Development
(the “Contract”) pursuant to which the Developer will develop the Project, and the EDA will issue and
sell to the Developer the EDA’s Taxable Tax Increment Revenue Note (Cottage Grove Leased Housing
Associates I Senior Housing Project) (the “TIF Note”), in the maximum principal amount of $1,695,000,
to reimburse the Developer for certain qualifying costs. The TIF Note will be payable from available tax
increment collected from Tax Increment Financing District No. 1-17 (Dominium), a housing tax
increment financing district (“Available Tax Increment”). A portion of the Project is also expected to be
financed with the proceeds of one or more series of multifamily housing revenue obligations (the
“Notes”) to be issued by the City for the benefit of the Developer.
Enclosed are two resolutions that the Developer is requesting that the Board of Commissioners of the
EDA consider at its meeting on September 13, 2016. A brief explanation of each resolution follows.
The first resolution approves the issuance of the TIF Note by the EDA to the Developer on the date of
closing on the Notes. The TIF Note will be executed by the President and Executive Director of the EDA
following the Developer’s satisfaction of the conditions precedent in Section 3.3 of the Contract, which is
expected to occur on or prior to the date of closing on the Notes. Such conditions include but are not
limited to approval by the EDA of construction plans, acquisition of the development property by the
Developer, the Developer’s certification of qualifying costs, and the execution and delivery of the
Declaration of Restrictive Covenants and the Assessment Agreement described in the Contract. In
addition to approving the issuance of the TIF Note, this resolution provides written approval of the
486050v1 JAE CT165-53
construction plans by the EDA, which satisfies one of the conditions precedent to the issuance of the TIF
Note.
As a condition to the purchase of the Notes, the temporary lender (BMO Harris) and the permanent lender
(Freddie Mac) require that the City and the EDA subordinate their interests in the Contract and consent to
the assignment of the TIF Note to an agent of the lenders. The second resolution approves the execution
and delivery of consents by the EDA of the following documents: (i) a Subordination Agreement
(Governmental Entity), subordinating certain of the City’s and EDA’s rights in the Contract to the rights
of U.S. Bank National Association (the “Fiscal Agent”) under the mortgage agreement with respect to the
Notes; (ii) a Collateral Assignment and Subordination of Development Agreement, assigning the
Developer’s interest and rights under the Contract to BMO Bank, N.A., as the initial funding lender for
the Notes, and subordinating the Contract, the Declaration of Restrictive Covenants, and the Assessment
Agreement to liens, terms, covenants, and conditions of the documents executed in conjunction with the
issuance of the Notes; and (iii) a Collateral Assignment of Tax Increment Financing Note and Available
Tax Increment, assigning the Developer’s interest in the TIF Note and the Available Tax Increment to the
Fiscal Agent.
I will attend the Board of Commissioners meeting on September 13, 2016 and can answer any questions
that may arise during the meeting. Please contact me with any questions you may have prior to the Board
of Commissioners meeting.
Sincerely,
Julie A. Eddington
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