EDA Resolution 2020-03CITY OF MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY
RESOLUTION NO. 2020-03
AUTHORIZING INTERFUND LOAN FOR
ADVANCE OF CERTAIN COSTS
IN CONNECTION WITH TAX INCREMENT
FINANCING DISTRICT NO. 1-41
BE IT RESOLVED By the Board of Commissioners of the City of Monticello Economic
Development Authority (the "Authority") as follows:
Section 1. Background.
1.01. The Authority has established tax increment financing district no. 1-41 (the "TIF
District") within the Central Monticello Development Project No. 1 (the "Development Project")
pursuant to Minnesota Statutes, Sections 469.174 to 469.1794 (the "TIF Act"), Sections 469.001
to 469.047, and Sections 469.090 to 469.1081, all as amended.
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 "Development
Property"). The Authority has determined that the fair market value of the Development
Property, as determined by the purchase price to be paid by the Authority to acquire the
Development Property, is $1,031,000.
1.05. The Authority proposes to enter into a Purchase and Development Contract (the
"Contract") with UMC Real Estate, LLC (the "Developer"), under which the Authority will
(among other things) convey the Development Property to the Developer for a purchase price of
$300,000, such payment to be deferred until February 2021.
1.06. By conveying the Development Property under the Contract and deferring
payment of the purchase price, at Closing the Authority will forgo receipt of the full fair market
value of the Development Property. Such forbearance represents an advance of Authority funds
in the amount of $1,031,000.
1.07. In addition, the Authority may incur certain administrative costs related to the TIF
District in an aggregate amount of up to $33,486, which may be paid from any legally available
fund and reimbursed from tax increments under the TIF Act.
1.08. The Authority intends to designate the advances described herein as an interfund
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loan in accordance with the terms of this resolution and the TIF Act.
Section 2. Repayment of Interfund Loan.
2.01. The Authority will reimburse itself for the land advance in the principal amount
of $1,031,000, and for administrative costs in the principal amount of up to $33,486, together
with interest at the rate of 3.0% per annum (together, the "Interfund Loan"). Interest accrues on
the land advance portion of the Interfund Loan from the date of Closing on conveyance of the
Development Property to the Developer under the Development Agreement (hereafter, the
"Closing Date"), and on the administrative costs portion of the Interfund Loan from the date of
any advance of funds to pay such administrative costs. 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 2020. The interest rate will not fluctuate.
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 Executive Director, 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 all or a portion of
the outstanding principal amount and accrued interest on the Interfund Loan to the extent
permissible under law.
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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 26th day of February, 2020.
President
ATTEST:
Ex utiv Director
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