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HomeMy WebLinkAbout06-25-2007 EDA PacketA EC D ELOPM NT AUTHORITY Nitl Y;' June 25, 2007 p; City Council Chambers 1. Call to Order and Roll Call 2. Consideration of Minutes of January 22, 2 3. Consideration of Resolution No. 07-01.. Financing Plan for Tax Increment Ftoi roving the Modification of Tax Increment District No. 1-11, Al Rolek 4. Consideration of Resolution No. 07-02 Authorizii In ri Loan in Connection with Lake Drive 'interchange and Tax I cement financing T istrict No. 1-11, Al Rolek 5. Consideration of Resolution No. 07; 03 Approving 'IF Pledge Agreement, Al Rolek 6. Adjourn -*7 3. EDA MINUTES January 22, 2007 DRAFT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 CITY OF LINO LAKES ECONOMIC DEVELOPMENT AUTHORITY MINUTES DATE TIME STARTED TIME ENDED MEMBERS PRESENT MEMBERS ABSENT OTHERS PRESENT: : January 22, 2007 . 7:50 p.m. . 7:53 p.m. : Commissioners Carlson, O'Donnell, Reinert, Bergeson : Commissioner Stoltz : Gordon Heitke; William Hawkins; Mary Divine, Julie Bartell The meeting was called to order at 7:50 p.m. by Vice President Carlson. CONSIDERATION OF THE MINUTES OF DECEMBER 18, 2006 EDA Member O'Donnell requested that the minutes be corrected to reflect that he was not absent. There was no objection to the correction. EDA Member O'Donnell moved to approve the December 18, 2006 minutes, as corrected. EDA Member Reinert seconded the motion. Motion carried unanimously. CONSIDERATION OF ANNUAL APPOINTMENTS Mary Divine, Economic Development Coordinator, noted each year the EDA is required to make a number of appointments; the list was before the authority for consideration. EDA Member Reinert moved that the 2006 appointments be retained for 2007. EDA Member Bergeson seconded the motion. Motion carried unanimously. ADJOURNMENT There being no further business, EDA Member O'Donnell moved to adjourn. EDA Member Bergeson seconded the motion. Motion carried unanimously. Meeting adjourned at 7:53 p.m. 1 LINO LAKES ECONOMIC DEVELOPMENT AUTHORITY AGENDA ITEM 3 STAFF ORIGINATOR Al Rolek MEETING DATE June 25, 2007 TOPIC Consider Resolution 07-01 Approving the Modification of Tax Increment Financing Plan for Tax Increment Financing District No. 1-11 VOTE REQUIRED Simple Majority The Lino Lakes City Council approved a contract with Lunda Construction for the reconstruction of the interchange of Interstate 35W and Lake Drive. The cost of this reconstruction is to be partially bome by tax increments generated by Tax Increment Financing (TIF) District No. 1-11. This project was originally included in the tax increment financing plan budget for this district. The cost of the interchange project came in higher than original estimates. The TIF plan budget is adequate to accommodate the increased cost. However, it is necessary to adjust the line items within the existing budget to more accurately reflect the costs of improvements within the district. Therefore, it is necessary to approve an administrative modification to the TIF plan to approve the amended budget. Staff recommends the approval of EDA Resolution 07-01. 1. Adopt Resolution 07-01. 2. Refer to Staff for further review. 3. Deny Resolution 07-01. Option 1 A-3 LINO LAKES ECONOMIC DEVELOPMENT AUTHORITY RESOLUTION NO. 07-01 RESOLUTION APPROVING MODIFICATION OF TAX INCREMENT FINANCING PLAN FOR TAX INCREMENT FINANCING DISTRICT NO. 1-11 WHEREAS, by Resolution No. 03-11 approved November 24, 2003, the Economic Development Authority (the "Authority") for the City of Lino Lakes (the "City") approved the Tax Increment Financing Plan (the "Plan") for Tax Increment Financing District No. 1-11 (the "TIF District"), pursuant to and in conformity with Minnesota Statutes, Sections 469.090 through 469.1081 (the "EDA Act") and Sections 469.174 to 469.179 (the "TIF Act"); and WHEREAS, by Resolution No. 03-209 approved November 24, 2003, the City Council of the City, after a duly notice public hearing, approved the Plan for the TIF District; and WHEREAS, by resolutions approved on December 15, 2004 and December 20, 2004, respectively, the City Council and the Authority board of commissioners approved resolutions modifying the Plan to eliminate a parcel from the TIF District; and WHEREAS, the City and Authority have determined a need to modify the budget of tax increment expenditures in the Plan and make other administrative changes to conform the Plan with current expectations; and WHEREAS, under Section 469.175, subd. 4 of the TIF Act, the Authority may modify the Plan for the TIF District without the notice and hearings required for a new district, if the changes are not those described in Section 469.175, subdivision 4(b), clauses (1) through (6); and WHEREAS, the proposed modifications to the TIF Plan include revised line items of expenditures and revised types of bonded indebtedness, but do not increase the total estimated cost of the project or the total amount of bonded indebtedness. NOW THEREFORE, BE IT RESOLVED by the Economic Development Authority of the City of Lino Lakes as follows: 1. The administrative modification to the Plan is hereby approved in substantially the form on file in City Hall. 2. Upon approval of the modification to the Plan by the City Council, the Community Development Director is authorized to forward a copy of the 311909v1 SJB LN140-100 modified Plan to the Department of Revenue and the State Auditor pursuant to Minnesota Statutes 469.175, subd.4a. 3. The City Clerk is authorized and directed to forward a copy of the Plan to Anoka County for information purposes. DATED: June 25, 2007 President ATTEST: Executive Director 311909v1 SJB LN140-100 2 LINO LAKES ECONOMIC DEVELOPMENT AUTHORITY AGENDA ITEM 4 STAFF ORIGINATOR Al Rolek MEETING DATE June 25, 2007 TOPIC Consider Resolution 07-02 Authorizing Interfund Loan in Connection with Lake Drive Interchange and Tax Increment Financing District No. 1-11 VOTE REQUIRED Simple Majority The Lino Lakes City Council approved a contract with Lunda Construction for the reconstruction of the interchange of Interstate 35W and Lake Drive. As discussed previously, the cost of the interchange project came in higher than original estimates. It is proposed to provide an interfund loan of $556,000 from funds of the City of Lino Lakes to the project and to repay the loan from future tax increments. This interfund loan would be subordinate to the repayment of the G.O. Tax Increment Bonds and the Tax Increment Revenue Note Series 2004 and any prior interfund loans. Staff recommends the approval of EDA Resolution 07-02. 1. Adopt Resolution 07-02. 2. Refer to Staff for further review. 3. Deny Resolution 07-02. Option 1 A-3 RESOLUTION NO. 07-02 LINO LAKES ECONOMIC DEVELOPMENT AUTHORITY AUTHORIZING INTERNAL LOAN IN CONNECTION WITH LAKE DRIVE INTERCHANGE AND TAX INCREMENT FINANCING DISTICT NO. 1-11 BE IT RESOLVED by the Board Of Commissioners of the Lino Lakes Economic Development Authority (the "Authority") as follows: Section 1. Background. 1.01. Pursuant to Minnesota Statutes, Sections 469.174 to 469.179 (the "TIF Act") the Authority and City of Lino Lakes ("City") previously established tax increment financing district no. 1-11 (the "TIF District") within Development District No.1. 1.02. The Authority or City may incur certain costs related to the 1114 District, which costs may be financed on a temporary basis from available Authority or City funds. 1.03. Under Section 469.178, Subdivision 7 of the TIF Act, the Authority or City 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 City currently plans to construct improvements to the I-35W and Lake Drive Interchange within the TIF District (the "Interchange Improvements"), financed by various sources including proceeds of $4,215,000 General Obligation Tax Increment Bonds, Series 2007A (the "l IF Bonds"). 1.05. The Authority will also request the City to advance certain other City funds to finance a portion of Interchange Improvements, and the Authority intends to reimburse the City for the funds so advanced as an interfund loan in accordance with the terms of this resolution. Section 2. Repayment of Interfund Loan. 2.01. The Authority will reimburse the City for funds advanced to pay a portion of the cost of the Interchange Improvements in the maximum principal amount of $556,000 together with interest at the rate of 4% per annum (the "Interfund Loan"). Interest accrues on the principal amount from the date of each disbursement of City funds to pay costs of the Interchange Improvements (hereafter, each such date is referred to as an "Accrual 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 2007. 2.02. Principal and interest ("Payments") on the Interfund Loan shall be paid semi- annually on each February 1 and August 1, commencing August 1, 2008 (each a "Payment Date") and continuing through the earlier of the date the Interfund Loan together with interest thereon is paid in full or the date of last receipt of tax increment from the TIF District. 2.03. Payments on the Interfund Loan will be made solely from and to the extent of Available Tax Increment, which terms means 95 percent of the tax increments (as defined in the TIF Act) generated by the TIF District and received by the City from the County pursuant to the '1 ll Act in the six-month period before such payment date, subject to the following: (a) The pledge of Available Tax Increment under this resolution is subordinate to the prior pledge of tax increment to the TIF Bonds, the Authority's $1,000,000 Taxable Tax Increment Revenue Note, Series 2004, and any other obligation secured in whole or in part by tax increments from the TIF District to which the Authority, in its discretion, elects to make a pledge on a superior basis to this Interfund Loan. (b) The Authority has also, by Resolution No. 04-07, approved an interfund loan in the outstanding principal amount of $950,000 (the "Prior Interfund Loan") that is payable with tax increments form the TIF District; the Authority may in its sole discretion, apply Available Tax Increment under this resolution on a parity, superior or subordinate basis with the Prior Interfund Loan and any other interfund loan hereafter approved in connection with the TIF District. 2.04. Payments shall be applied first to accrued interest, and then to unpaid principal. Interest accruing from each Accrual Date will be compounded semiannually on February 1 and August 1 of each year and added to principal, unless otherwise specified by the Executive Director. 2.05. 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. No partial prepayment shall affect the amount or timing of any other regular payment otherwise required to be made under Exhibit A. 2.06. This resolution is evidence of an interfund loan 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. 2.07. Authority staff and officials are authorized and directed to execute any collateral documents and take any other actions necessary to carry out the intent of this resolution. 2.08. The Authority may from time to time, with approval by the City, amend the terms of this Resolution to the extent permitted by law, including without limitation amendment to 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. 311948v1 SJB LN140-100 2 Section 3. Effective Date. This resolution is effective upon approval. Approved by the Board of Commissioners of the Lino Lakes Economic Development Authority this 25th day of June, 2007. ATTEST: Secretary 311948v1 SJB LNI40-100 3 President LINO LAKES ECONOMIC DEVELOPMENT AUTHORITY AGENDA ITEM 5 STAFF ORIGINATOR Al Rolek MEETING DATE June 25, 2007 TOPIC Consider Resolution 07-03 Authorizing Execution of a Tax Increment Pledge Agreement with the City of Lino lakes Relating to $4,215,000 G.O. Tax Increment Bonds, Series 2007A VOTE REQUIRED Simple Majority The Lino Lakes City Council approved a contract with Lunda Construction for the reconstruction of the interchange of Interstate 35W and Lake Drive. The cost of this reconstruction is to be partially borne by tax increments generated by Tax Increment Financing (TIF) District Nos. 1-10 and 1-11. Resolution 07-03 authorizes the execution of a Tax Increment Pledge Agreement with the City of Lino Lakes in which the EDA is pledging available tax increments generated from TIF Districts 1- 10 and 1-11, as outlined in the agreement, toward the payment of payment of principal and interest of $4,215,000 G.O. Tax Increment Bonds, Series 2007A and setting out the method of providing for such payments. This action was provided for and included in the TIF Plans for each of the above TIF districts. Staff recommends the approval of EDA Resolution 07-03. 1. Adopt Resolution 07-0%' 2. Refer to Staff for further eview. 3. Deny Resolution 07-02. Option 1 A-3 LINO LAKES ECONOMIC DEVELOPMENT AUTHORITY RESOLUTION NO. 07-03 RESOLUTION AUTHORIZING EXECUTION OF A TAX INCREMENT PLEDGE AGREEMENT WITH THE CITY OF LINO LAKES RELATING TO $4,215,000 GENERAL OBLIGATION TAX INCREMENT BONDS, SERIES 2007A BE IT RESOLVED by the Board of Commissioners (the "Board") of the Lino Lakes Economic Development Authority (the "Authority"), as follows: 1. The President and Executive Director of the Authority are hereby authorized to execute and deliver a Tax Increment Pledge Agreement with the City of Lino Lakes, Minnesota (the "City") substantially in the form on file in City Hall, providing for the pledge of tax increment for the payment of the principal of, premium, if any, and interest on, the City of Lino Lakes, Minnesota $4,215,000 General Obligation Tax Increment Bonds, Series 2007A. 2. This resolution shall be effective as of the date hereof. Adopted this 25th day of June, 2007. President Attest: Secretary 312698v1 SJB LN140-100 General Obligation Tax Increment Bonds, Series 2007A in the original principal amount of $4,215,000 (the ("Series 2007A Bonds"), pursuant to Resolution No. 07-96 approved June 25, 2007 (the "Bond Resolution"); and WHEREAS, pursuant to resolutions of the City and Authority approved June 25, 2007, the City and Authority also propose to finance a portion of the cost of the Interchange Improvements through an additional interfund loan in the maximum principal amount of $556,000 (the "Interchange Interfund Loan"), secured by certain tax increment revenues from HP District No. 1- 11. WHEREAS, the EDA has agreed to pledge tax increment revenues from the TIF Districts to the City for the payment of the principal of and interest on the Series 2007A Bonds as further described in this Agreement; and WHEREAS, pursuant to Minnesota Statues, Section 469.178, Subdivision 2, any agreement to pledge tax increment revenues must be made by written agreement by and between the EDA and the City and must be filed with the Manager of Property Records and Taxation of Anoka County; and NOW, THEREFORE, the City and the EDA mutually agree to the following: (1) The City will sell the Series 2007A Bonds. (2) Net proceeds of the Series 2007A Bonds will be deposited in the Project Fund established under the Bond Resolution, and disbursed by the City to pay or reimburse costs of construction of the Interchange Improvements, including any costs of issuance of the Bonds. (3) The EDA hereby pledges to the payment of the principal and interest on the Series 2007A Bonds, all "Available Tax Increment," which term has the following meaning and is subject to the following conditions: (a) Available Tax Increment includes 95% of the Tax Increment derived from TIF District No. 1-11 and received by the City from Anoka County pursuant to the HP Act in the six-month period before each payment date on the TIF Bonds. The term "Tax Increment" means the portion of real property taxes paid with respect to property in TIF District No. 1-11 and remitted to the EDA pursuant to the TIF Act, provided that the term Tax Increment does not include any amounts retained by or payable to the State auditor under Section 469.177, subd. 11 of the Tax Increment Act, or any amounts described in Section 469.174, subd. 25, clauses (2) through (4) of the TIF Act. (b) 312429v1 SJB LN140-100 The pledge of Available Tax Increment from TIF District No. 1-11 to the Series 2007A Bonds is prior to the pledge of any Tax Increment to the TIF Note, but only to the extent of the "Contract Portion" of the Series 2007A 2 TAX INCREMENT PLEDGE AGREEMENT by and between CITY OF LINO LAKES MINNESOTA and LINO LAKES ECONOMIC DEVELOPMENT AUTHORITY THIS AGREEMENT is made and entered into on or as of the 15th day of July, 2007, by and between the City of Lino Lakes, Minnesota (the "City"), and Lino Lakes Economic Development Authority (the "EDA"). WHEREAS, the City and EDA have established Development District No. 1 (the "Project") pursuant to Minnesota Statutes, Sections 469.124 to 469.134 and Sections 469.090 to 469.1081 (together, the "Act"); and WHEREAS, within the Project the EDA and City established Tax Increment Financing District Nos. 1-10 ("TIF District No. 1-10") and Tax Increment Financing District No. 1-11 ("Ilk District No. 1-11") (together, the "TIF Districts") pursuant to Minnesota Statutes, Sections 469.174 to 469.1799 (the "TIF Act"); and WHEREAS, in connection with TIF District No. 1-11, the City, EDA and Hartford Development, Inc. dated December 20, 2004, as amended by a First Amendment thereto dated September 13, 2005 (the "Contract"), providing for redevelopment of property within TIF District No. 1-11 and adjacent property within the Project; and WHEREAS, pursuant to the Contract, the City issued its $1,000,000 Taxable Tax Increment Revenue Note, Series 2004 (the " HF Note") to Legacy Holdings-LL, LLC (the "Development Property Owner" under the Contract), which 111-,' Note is secured solely certain tax increments from TIF District No. 1-11; and WHEREAS, pursuant to the Contract and Resolution No. 04-07 approved December 20, 2004, the EDA also provided proceeds of an interfund loan to the Development Property Owner in the amount of $950,000 after adjustment for receipt of certain grant proceeds (the "Contract Interfund Loan") to finance a portion of the cost of acquisition of certain land in TIF District No. I- ll; and WHEREAS, pursuant to the Contract, the City proposes to construct certain improvements to the I-35W and Lake Drive Interchange (the "Interchange Improvements"); and WHEREAS, the City has further determined that the Interchange Improvements, in part, directly benefit the developments within TIF District No. 1-10; and WHEREAS, pursuant to authority conferred by Minnesota Statutes, Section 469.178, and Minnesota Statues, Chapter 475, the City has determined to finance construction of the Interchange Improvements in part through the issuance of general obligation bonds of the City designated as the 312429v1 SJB LN140-100 Bonds. The "Contract Portion" is the principal amount of the Series 2007A Bonds that provides $2,286,000 in proceeds net of costs of issuance, bond discount and capitalized interest. The Contract Portion of the Series 2007A Bonds is $ . To the extent Available Tax Increment from TIF District No. 1-11 exceeds the amount necessary to pay when due the Contract Portion of the TIF Bonds (allocated pro rata as of each payment date on the Series 2007A Bonds), such Available Tax Increment is pledged first to the Contract Interfund Loan, and second to the TIF Note (subject to the provisions for parity treatment of the TIF Note and the Contract Interfund Loan on satisfaction of the conditions described in Section 3.6(b) of the Contract). (c) Available Tax Increment also includes 20% of the Tax Increment (as defined in clause (a) above) derived from TIF District No. 1-10 and received by the City from Anoka County pursuant to the TIF Act in the six-month period before each payment date on the TIF Bonds; provided that: (i) such pledge is subordinate to the pledge of Tax Increments from specific parcels of property within TIF District No. 1-10 to any notes or other obligations issued by the EDA prior to the date of this Agreement, including without limitation the $91,715 Tax Increment Revenue Note, Series 2006 issued to Schwann's Home Service, Inc. and the $638,400 Tax Increment Revenue Note, Series 2005 issued to Lino Lakes Realty, LLC; and (ii) in no event will the annual Tax Increment from TIF District No. 1-10 paid to the City under this Agreement, together with any administrative costs paid with such Tax Increment, exceed 20% of the total Tax Increment received by the City in that year, all in accordance with Section 469.1763, subd. 2 of the TIF Act. (d) The Interchange Interfund Loan is secured by Available Tax Increment on a subordinate basis to the Series 2007A Bonds and the TIF Note; the Authority may apply Available Tax Increment to the Interchange Interfund Loan on a parity, superior or subordinate basis with the Contract Interfund Loan. (4) Not less than three (3) business days prior to each debt service payment date for the Series 2007A Bonds, there shall be transferred from the account for the 1'J1~ Districts to the debt service fund maintained by the City for the payment of the Series 2007A Bonds an amount of Available Tax Increment that, when taken together with amounts already on deposit in such debt service fund, is equal to 105% of principal of and interest on the Series 2007A Bonds when due or to become due on the following date. To the extent Available Tax Increment exceeds the amount due hereunder on any payment date, the City Finance Director may determine which TIF 312429v1 SJB LN140-100 3 (5) District account to draw money from in order to make the payment to the City under this Section, and the EDA may retain the balance for any purpose under law. In the event the City is required to advance money from the City general fund in order to pay debt service on the Series 2007A Bonds in accordance with Section 4.02 of the Bond Resolution, on any payment date thereafter on which the EDA has Available Tax Increment in excess of the amount otherwise due on such payment date under this Agreement, the EDA will transfer from the account for the TIF Districts (or either HE District, at the Finance Director's discretion) to the City, as reimbursement of City general funds advanced, Available Tax Increment in the amount of the deficiency, together with interest at the rate of 4% per annum accrued from the date of each City advance of general funds. The City and EDA agree and understand that this clause represents an interfund loan within the meaning of Section 469.178, subdivision 7 of the TIF Act, and that the interest rate is within the maximum interest rate permissible under such statute for calendar year 2007. The pledge of Available Tax Increment under this clause is prior to the TIF Note, but subject to the provisions of Section 3(b) hereof. (6) Except as otherwise provided in Section 3 hereof, Available Tax Increment shall be available (at the EDA's option on a parity, superior or subordinate basis) to pay principal of and interest on both the Series 2007A Bonds and any other obligations issued by the City, EDA or any other public body to finance public redevelopment costs paid or incurred by the EDA in the Project. The EDA reserves the right to release all or any portion of Available Tax Increment from the pledge under this Agreement (including without limitation the release of increment from any specified parcel) to the extent permitted by law; provided that in no event may the EDA reduce the pledge such that Available Tax Increment is reasonably expected to pay less than 20 percent of principal and interest on the Series 2007A Bonds. (7) An executed copy of this Agreement shall be filed with the Manager of Property Records and Taxation of Anoka County pursuant to the requirement contained in Minnesota Statues, Section 469.178, Subdivision 2. 312429v1 SJB LN140-100 4 IN WITNESS WHEREOF, the City and the EDA have caused this Agreement to be duly executed on their behalf and their seals to be hereunto affixed and such signatures and seals to be attested, as of the day and year first above written. ATTEST: CITY OF LINO LAKES, MINNESOTA By City Administrator Mayor (SEAL) ATTEST: LINO LAKES ECONOMIC DEVELOPMENT AUTHORITY By Executive Director President (SEAL) 312429v1 SJB LNI40-100 5 STATE OF MINNESOTA COUNTY OF ANOKA MANAGER OF PROPERTY RECORDS AND TAXATION'S CER 1't ICATE I, the undersigned Manager of Property Records and Taxation of Anoka County, Minnesota, hereby certify that a Tax Increment Pledge Agreement by and between the City of Lino Lakes, Minnesota and the Lino Lakes Economic Development Authority, relating to General Obligation Tax Increment Bonds, Series 2007A, dated July 15, 2007 has been filed in my office. WITNESS my hand and official seal this day of , 2007. Manager of Property Records and Taxation (SEAL) Anoka County, Minnesota By Deputy 312429v1 SJB LNI40-100