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HRA Resolution 2005-14HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF MONTICELLO RESOLUTION N02005 -14 AUTHORIZING INTERFUND LOAN FOR ADVANCE OF CERTAIN COSTS IN CONNECTION WITH TAX INCREMENT FINANCING DISTRICT NO. 1 -36 BE IT RESOLVED By the Board Of Commissioners of the Housing and Redevelopment Authority in and for the City of Monticello, Minnesota (the "Authority ") as follows: Section 1. Background. 1.01. The Authority has established tax increment financing district no. 1 -36 (the "TIF District ") within the Central Monticello Redevelopment Project No. 1 (the "Redevelopment Project ") pursuant to Minnesota Statutes, Sections 469.174 to 469.179 (the "TIF Act ") and Sections 469.001 to 469.047 (the "HRA Act "). 1.02. The Authority may incur certain costs related to the TIF District, which costs may be financed on a temporary basis from available Authority funds. 1.03. Under Section 469.178, Subdivision 7 of the TIF Act, the Authority is authorized to advance or loan money from any fund from which such advances may be legally made in order to finance expenditures that are eligible to be paid with tax increments under the TIF Act. 1.04. The Authority owns or will acquire certain property (the "Redevelopment Property ") and has incurred or will incur certain costs to prepare such property for redevelopment. The Authority has determined that the market price of the improved Redevelopment Property is at least $998,933, or $2.65 per square foot. 1.05. The Authority proposes to enter into a Purchase and Redevelopment Contract (the "Contract ") with Rocky Mtn Group LLC (the "Redeveloper "), under which the Authority will (among other things) convey the Redevelopment Property to the Redeveloper for a purchase price of $549,095, subject to Redeveloper's obligation to pay a portion of City trunk fees in the amount of $37,914. 1.06. By conveying the Redevelopment Property under the Contract, at Closing the Authority will forgo receipt the full market price of the Redevelopment Property. Such forbearance represents an advance of Authority fiends in the amount of $411,924 (the write -down in purchase price net of Redeveloper's trunk fee payment). In addition, the Authority will expend approximately $27,300 to remove a dirt stockpile on the Redevelopment Property, in accordance with Section 3.6(c) of the Contract, which amount represents an additional advance of Authority funds. 1.07. The Authority intends to designate such advances as an interfund loan in accordance with the terms of this resolution and the TIF Act. Section 2. Repayment of Interfi>nd Loan. 2.01. The Authority will reimburse itself for the land advance and dirt removal in the principal amount of $439,224 together with interest at the rate of 4% per annum (the "Interfund Loan "). Interest accrues on the principal amount from the date of Closing on conveyance of the Redevelopment Property to the Redeveloper under the Development Agreement (hereafter, the "Closing Date "). The interest rate is no more than the greatest of the rate specified under Minnesota Statutes, Section 270.75 and Section 549.09, both in effect for calendar year 2005. The interest rate will, without further action by the Authority, be adjusted on January 1 of each year to reflect the greater of the rate specified under Minnesota Statutes, Section 270.75 and Section 549.09 in effect for that calendar year. 2.02. Principal and interest ( "Payments ") on the Interfund Loan shall be paid semi- annually on each August 1 and February 1 (each a "Payment Date "), commencing on the first Payment Date on which the Authority has Available Tax Increment (defined below), or on any other dates determined by the City Administrator, through the date of last receipt of tax increment from the TIF District. 2.03. Payments on the Interfund Loan will be made solely from Available Tax Increment, defined as tax increment from the TIF District received by the Authority from Wright County in the six -month period before any Payment Date, less any amounts determined by the Authority to be applied toward administrative expenses in accordance with the TIF Act. Payments shall be applied first to accrued interest, and then to unpaid principal. Interest accruing from the Closing Date will be compounded semiannually on February 1 and August 1 of each year and added to principal until the first Payment Date, unless otherwise specified by the City Administrator. 2.04. The principal sum and all accrued interest payable under this resolution is pre- payable in whole or in part at any time by the Authority without premium or penalty. 2.05. This resolution is evidence of an internal borrowing by. the Authority in accordance with Section 469.178, subdivision 7 of the TIF Act, and is a limited obligation payable solely from Available Tax Increment pledged to the payment hereof under this resolution. The Interfund Loan shall not be deemed to constitute a general obligation of the State of Minnesota or any political subdivision thereof, including, without limitation, the Authority and the City. Neither the State of Minnesota, nor any political subdivision thereof shall be obligated to pay the principal of or interest on the Interfund Loan or other costs incident hereto except out of Available Tax Increment. The Authority 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 Authority may at any time make a determination to forgive the outstanding principal amount and accrued interest on the Interfund Loan to the extent permissible under law. SJB- 268676v1 NIN 190 -121 X 2.07. The Authority may from time to time amend the terms of this Resolution to the extent permitted by law, including without limitation amendment to the payment schedule and the interest rate; provided that the interest rate may not be increased above the maximum specified in Section 469.178. subd. 7 of the TIF Act. Section 3. Effective Date. This resolution is effective upon execution in full of the Contract. Adopted this 2�L day of P�o , 2005 ATTEST: Y-AOk'D'- Executive Director S.1B- 268676v 1 MN 190-121 3