EDA Resolution No. 2023-10 (Authorizing an Interfund Loan for Advance of Certain Costs in Connection with a TIF District)CITY OF MONTICELLO
ECONOMIC DEVELOPMENT AUTHORITY
RESOLUTION NO.2023-10
AUTHORIZING AN INTERFUND LOAN FOR ADVANCE OF CERTAIN
COSTS IN CONNECTION WITH A TAX INCREMENT FINANCING DISTRICT
WHEREAS, the City of Monticello, Minnesota (the "City") and the City of Monticello Economic
Development Authority (the "Authority") are considering establishing a tax increment financing district
in the City (the "TIF District"), pursuant to Minnesota Statutes, Sections 469.174 through 469.1794, as
amended (the "TIF Act"); and
WHEREAS, the City and the Authority may incur certain costs related to the TIF District which
costs may be financed on a temporary basis from available City or Authority funds; and
WHEREAS, pursuant to Section 469.178, subdivision 7 of the TIF Act, the City and the
Authority are 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; and
WHEREAS, in connection with the TIF District, the Authority intends to acquire certain property
and existing structures thereon located in the City with an address of 216 Pine Street (the "Property"); and
WHEREAS, the City and the Authority have determined to pay for certain costs of the TIF
District, including administrative costs related to the TIF District, the cost of acquiring the Property, and
demolition costs on the Property, which costs may be financed on a temporary basis from any City or
Authority funds available for such purposes (the "Cost Advances"); and
WHEREAS, the Authority hereby designates the Cost Advances as an interfund loan in
accordance with the terms of this resolution and the TIF Act.
NOW, THEREFORE, BE IT RESOLVED by the Board of Commissioners of the City of Monticello
Economic Development Authority as follows:
1. The Authority and the City will reimburse themselves for the Cost Advances including
without limitation (i) administrative costs incurred prior to the establishment of the TIF District, subject
to the limitations of the TIF Act, including but not limited to the preparation of a blight study, and (ii)
certain costs incurred in connection with acquisition of the Property and any existing structures thereon,
demolition and site preparation costs on the Property, all in an aggregate amount not to exceed the greater
of $500,000 or the adopted and, if applicable, Tax Increment Financing Plan budget for the TIF District
(the "Interfund Loan") 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 and 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 5.0% and will not fluctuate.
2. Principal and interest ("Payments") on the Interfund Loan shall be paid semiannually on
each February 1 and August 1 (each a "Payment Date"), commencing on the first Payment Date on which
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the City or the Authority has received Available Tax Increment (defined below), or on any other dates
determined by the City Finance Director, through the date of last receipt of tax increment from the TIF
District (the "Maturity Date").
3. Payments on the Interfund Loan will be made solely from the tax increment from the TIF
District received by the Authority or the City from Wright County in the 6-month period before any
Payment Date, net of the amount paid under any agreement with a private developer or otherwise pledged
to the payment of any obligation (the "Available Tax Increment"). Payments shall be applied first to
accrued interest, and then to unpaid principal, unless otherwise specified by the City Finance Director.
Interest accruing from the Loan Date will be compounded semiannually on February 1 and August 1 of
each year and added to principal, unless otherwise specified by the City Finance Director. Payments on
this 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 a parity with any other outstanding or future
interfund loans secured in whole or in part with available tax increment.
4. 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.
5. This resolution is evidence of an internal borrowing by the Authority or the City 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 or 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 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.
Neither the Authority nor the City shall have any obligation to pay any principal amount of the Interfund
Loan or accrued interest thereon, which may remain unpaid after the termination or expiration of the TIF
District.
6. The Authority or the City, as applicable, may at any time decide to forgive the
outstanding principal amount and accrued interest on the Interfund Loan, in whole or in part, on any date
from time to time, to the extent permissible under law.
7. 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.
Adopted by the Board of Commissioners of the City of Monticello Economic Development
Authority this 13"' day of September, 2023.
Presiden
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