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City Council Resolution 2002-34CITY OF MONTICELLO WRIGHT COUNTY STATE OF MINNESOTA Council member Brian Stumpf introduced the following resolution and moved its adoption: RESOLUTION NO. 2002-34 RESOLUTION APPROVING THE TERMS OF $125,000 INTERNAL LOAN IN CONNECTION WITH TAX INCREMENT FINANCING DISTRICT NO. 1-30. BE IT RESOLVED by the City Council (the "Council") of the City of Monticello, Minnesota (the "City"), as follows: Section 1. Background. 1.01. The City has heretofore approved the establishment of Tax Increment Financing District No. 1-30 (the "TIF District") within Central Monticello Redevelopment Project No. 1 (the "Project Area"), and has adopted a tax increment financing plan (the "Plan) for the purpose of financing certain costs identified in the TIF Plan within the Project Area (the "Improvements"). 1.02. The City has determined to pay for the Improvements, consisting of land/building acquisition, site improvements/preparation, public utilities, parking facilities, streets and sidewalks, interest, and administrative costs (collectively, the "Qualified Costs"), which costs will be financed on a temporary basis from [identify fund to be borrowed from; or insert: City funds available for such purposes] . 1.03. Under Minnesota Statutes, Section 469.178, Subdivision 7, the City is authorized to advance or loan money from the City's general fund or any other fund from which such advances may be legally made, in order to finance the Qualified Costs. 1.04. The City intends to reimburse itself for the Qualified Costs from tax increments derived from the TIF District [or name other districts that will be source of repayment] in accordance with the terms of this resolution (which terms are referred to collectively as the "TIF Loan"). Section 2. Terns of TIF Loan. 2.01. The City shall repay to the City fund from which the Qualified Costs are initially paid, the principal amount of $125,000 together with interest on the principal amount expended accruing from the date of each initial expenditure, at the greatest of (a) the rate specified under Miivnesota Statutes, Section 270.75, or (c) the rate specified under Minnesota Statutes, Section 549.09. The interest rate for each calendar year during the term of the TIF Loan will be determined as of each January 1, using the maximum rate under clauses (a) or (b) in effect as of that date. 2.02. Principal and interest ("Payments") shall be paid sen --annually on August 1, 2004 and each August 1 and February 1 thereafter to and including the earlier of (a) the date the principal and accrued interest of the City Note is paid un full, or (b) the date of last receipt of tax increment from the TIF District ("Payment Dates") which Payments will be made in the amount and only to the extent of Available Tax Increment as hereinafter defined. Payments shall be applied first to accrued interest, and then to unpaid principal. Interest accruing from the date of each expenditure to the first Payment Date shall be compounded semiannually on February 1 and August 1 of each year and added to principal. 2.03. Payments on this TIF Loan are payable solely from "Available Tax Increment, it which shall mean, on each Payment Date, all of the tax increment generated in the preceding six (6) months with respect to the property within the TIF District [or name other districts] and remitted to the City by Wright County, all in accordance with Minnesota Statutes, Sections 469.174 to 469.179. Payments on this TIF Loan are subordinate 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 TIF Loan are pre -payable in whole or in part at any time by the City without premium or penalty. No partial prepayment shall affect the amount or tuning of any other regular payment otherwise required to be made under this TIF Loan. 2.05. This TIF Loan is evidence of an internal borrowing by the City in accordance with Minnesota Statutes, Section 469.178, subdivision 7, and is a limited obligation payable solely from Available Tax Increment pledged to the payment hereof under this resolution. This TIF 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 City. Neither the State of Minnesota, nor any political subdivision thereof shall be obligated to pay dne principal of or interest on this TIF Loan or other costs incident hereto except out of Available Tax Increment, and neither the full faith and credit nor the taxuig power of the State of Minnesota or any political subdivision thereof is pledged to the payment of the principal of or interest on this TIF Loan or other costs incident hereto. The City shall have no obligation to pay any principal amount of the TIF Loan or accrued interest thereon, which may remain unpaid after the final Payment Date. 2.06. The City may amend the terms of this TIF Loan at any tune by resolution of the City Council, includhig a detennination to forgive the outstanding pruncipal amount and accrued interest to the extent pernnissible under law. Section 3. Effective Date. This resolution is effective upon the date of its approval. Adopted this 24th day of June , 2002 Mayor ATT r? City Clerk This ordinance was amended by Council action of September 9, 2002 to reflect the changes as noted in the amended contract attached. ARTICLE III Acquisition of Propertv; Financial Assistance Section 3.1. Acquisition and Conveyance of the Development Property. As of the date of this Agreement, the Developer has entered into one or more purchase agreements for the acquisition of the Development Property from a third -party. Neither the City nor the Authority shall have any obligation to acquire any part of the Development Property. Section 3.2. Soil Conditions. The Developer acknowledges that neither the Authority nor the City makes any representations or warranties as to the condition of the soils on the Development Property or its fitness for construction of the Minimum Improvements or any other purpose for which the Developer may make use of such property. The Developer further agrees that it will indemnify, defend, and hold harmless the Authority, the City, and their governing body members, officers, agents, servants, and employees, from any claims or actions arising out of the presence, if any, of hazardous wastes or pollutants on the Development Property. The Developer's obligations under this Section 3.2 shall survive termination of this Agreement. Section 3.3. Payment of Administrative Costs. The Authority hereby agrees that it will pay its own Administrative Costs (as hereafter defined). For the purposes of this Agreement, the term "Administrative Costs" means out-of-pocket costs incurred by the Authority and attributable to or incurred in connection with the negotiation and preparation of this Agreement and other documents and agreements in connection with the development contemplated hereunder. Section 3.4. Land Acquisition. In order to make development of the Minimum Improvements economically feasible, the Authority will reimburse the Developer, in the manner and amounts set forth herein, for up to $158,000 of the Land Acquisition Costs, hereby defined as up to $158,000 of the Developer's cost of acquiring the Development Property. Any costs in excess of these respective amounts shall be the responsibility of the Developer. Neither the Authority nor the City shall have any obligation to the Developer or to any third party with respect to any defects in the construction of the Minimum Improvements. Section 3.5. Financing of Land Acquisition Costs. The Authority will reimburse the Developer for the Land Acquisition Costs in accordance with the following terms and conditions: (a) Subject to the terms and conditions of this Agreement, the Land Acquisition Costs will be paid by the Authority to the Developer in accordance with the following schedule: (i) $53,000 will be paid within 30 days of the date on which the Developer has received a Certificate of Completion for at least 3 Houses on the Development Property pursuant to Section 4.4 of this Agreement; (ii) an additional $52,500 will be paid within 30 days of the date on which the Developer has received a Certificate of Completion for at least an additional 4 Houses (for a total of 7 Houses) on the Development Property pursuant to Section 4.4 of this Agreement; and (iii) an additional $52,500 will be paid within 30 days of the date on which the Developer has received a Certificate of Completion for at least an additional 4 Houses (for a total of 11 Houses) DJG-216337v5 MN 190-99 7 on the Development Property pursuant to Section 4.4 of this Agreement. As a precondition to receiving each payment hereunder, the Developer must provide the Authority with a payment request certificate signed by its duly authorized representative stating that the Developer has paid Land Acquisition Costs in at least the amount of $158,000 and that no Event of Default has occurred and is continuing under this Agreement. The payment request certificate must be accompanied by evidence satisfactory to the Authority that the Land Acquisition Costs have been incurred and paid by the Developer. (b) The Authority shall not be obligated to make any payment under this Section if. (i) there is an Event of Default on the Developer's part under this Agreement that has not been cured; or (ii) the Developer has failed to comply with the payment procedures described herein. Section 3.6. Fee Waivers. The City will forgive up to $42,750 of permit application and other fees (the "Fees") that would otherwise be due to the City and borne by the Developer in connection with development of the Development Property, provided that if the Developer does not receive a Certificate of Completion for the Minimum Improvements pursuant to Section 4.4(a) of this Agreement, the Developer shall pay to the City any Fees forgiven pursuant to this Section 3.6. Section 3.7. Business Subsidy Agreement. The Business Subsidy Act does not apply to this Agreement because the assistance being provided hereunder is to promote housing opportunities within the City. Section 3.8. City and Authority Internal Financing Arrangements. (a) In order to enable the Authority to provide the Land Acquisition Costs financing to the Developer described herein, the City shall loan the Authority $158.000 (the "Loan") on or before the date on which the Authority becomes obligated to pay such amount to the Developer. The Authority shall repay the City for the Loan, with interest thereon at 5.00% per annum commencing to accrue on the date such loan is made. Repayments will be made solely from and to the extent of Available Tax Increment, hereby defined as 90% of Tax Increment, and will be paid by the Authority to the City on each February 1 and August 1 (each such date a "Payment Date") commencing on August 1, 2004 and terminating on the earlier of February 1, 2030 or the date the Authority has repaid the Loan in full pursuant to this Section 3.8. (b) The Authority shall additionally reimburse the City for the Fees forgiven by the City pursuant to Section 3.6 of this Agreement (the "Waived Amount"). with no interest accruing on the Waived Amount. Such reimbursements shall be made from excess tax increment generated by one or more of the Authority's other housing tax increment districts in the City to the extent that such tax increment may lawfully used for such purpose and shall be made no later than a reasonable time after the Developer has received a Certificate of Completion for the Minimum Improvements. (c) The Authority shall have no obligation to pay any portion of the Loan that remains unpaid after the Termination Date. The Authority may prepay all or part of the Loan or the Waived Amount at anv time. (d) The provisions of this Section 3.8 are for the sole benefit of the City and the DJG-216337vi MN 190-99 $ Authority and shall not be deemed to create any right in any person not a party to this Agreement. Section 3.9. Tax Increment Deficiencies. (a) If, on the Termination Date, the City has not been filly reimbursed for the Loan pursuant to Section 3.8 of this Agreement, the Developer shall pay to the City, within 10 days of demand therefor, an amount equal to the difference between the sum of the Loan (and interest thereon as described in Section 3.8(a)) and the amount of Available Tax Increment paid to the City by the Authority pursuant to Section -3 .8(a). (b) The Developer understands and acknowledges that the Authority makes no representations or warranties regarding the amount of Tax Increment that will be generated by the Minimum Improvements. Any estimates of Tax Increment prepared by the Authority, its financial advisors, or its other officers, agents, or employees in connection with the TIF District or this Agreement are for the benefit of the Authority, and are not intended as representations on which the Developer may rely. The Developer further understands and acknowledges that no assistance is being provided by the Authority or the City hereunder except as set forth herein, and that the Developer shall have no other claim against any funds of the Authority or the City. DJG-?16337%j MN 190-99 9