Loading...
HomeMy WebLinkAbout2019-118 Council ResolutionCITY OF LINO LAKES RESOLUTION NO. 19-118 ADOPTING REVISED PRIVATE ACTIVITY TAX-EXEMPT FINANCING GUIDELINES WHEREAS, under the Minnesota Municipal Industrial Development Act, Minnesota Statutes, Sections 469.152 to 469.1651 (the "industrial Development Act"), the City of Lino lakes, Minnesota has the authority to issue revenue bonds or notes to attract or promote economically sound industry and commerce to the City, including the development of facilities by qualified 501(c)(3) organizations; and WHEREAS, under Minnesota Statutes, Chapter 462C (the "Housing Act") the City is authorized to issue housing revenue bonds to finance multi -family residential housing projects for low and moderate income persons and elderly persons; and WHEREAS, the City Council is aware that such financing for certain private activities may be of benefit to the City and will consider requests for tax exempt financing subject to such state statutes; and WHEREAS, the City Council considers tax exempt financing to be a privilege, not a right; and WHEREAS, it is the judgment of the City council that tax exempt financing is to be used on a selective basis to encourage certain development that offers a benefit to the City as a whole; and WHEREAS, the City Council of the City of Lino Lakes (the "City) adopted Tax -Exempt Financing Guidelines on August 8, 2005; and WHEREAS, the City has determined that it is necessary and appropriate to adopt revised guidelines. NOW, THEREFORE BE IT RESOLVED that the City Council of the City of Lino Lakes approves the revised Private Activity Tax -Exempt Financing Guidelines in the attached Exhibit A. Adopted by the Council of the City of Lino Lakes this 9th day of September, 2019. The motion for the adoption of the foregoing resolution was introduced by Council Member Rafferty and was duly seconded by Council Member Stoesz and upon vote being taken thereon, the following voted in favor thereof: Rafferty, SToesz, Maher, Manthey, Re The following voted against same: none Reinert or ATTEST: Jilin e Bartell, City Clerk Exhibit A°uaust 18 Draft Revisions LINO LAKES, MINNESOTA PRIVATE ACTIVITY TAX-EXEMPT FINANCING GUIDELINES AUGUSTAdopted August 8, 2005 Revised September_, 2019 607378v1L1`1140 121 Lino Lakes, Minnesota Private Activity Tax -Exempt Financing Guidelines PART I GENERAL Under the Minnesota Municipal Industrial development Act, Minnesota Statutes, Sections 469.152 to 469.1651 (the "Industrial Development Act"), the City of Lino Lakes, Minnesota has authority to issue revenue bonds or notes to attract or promote economically sound industry and commerce to the City, including the development of facilities by qualified 501(c)(3) organizations. Under Minnesota Statutes, Chapter 462C (the "Housing Act") the City is authorized to issue housing revenue bonds to finance multi -family residential housing projects for low and moderate income persona and elderly persons. The City Council is aware that such financing for certain private activities may be of benefit to the City and will consider requests for tax exempt financing subject to these Guidelines. The City Council considers tax exempt financing to be a privilege, not a right. It is the judgment of the City Council that tax exempt financing is to be used on a selective basis to encourage certain development that offers a benefit to the City as a whole, including employment and housing opportunities. It is the applicant's responsibility to demonstrate the benefit to the City. The applicant should understand that although approval may have been granted by the City for the issuance of financing for a similar project or a similar debt structure that is not a basis upon which approval will be granted. Each application will be judged on the merits of the project as it relates to the public purposes of the Housing Act or the Industrial Development Act and the benefit to the City at the time the request for financing is being considered. 607378v 1 LN 110 121 PART II GUIDELINES 1. The City Council will consider tax exempt financing for manufacturing and health care facilities, and other facilities operated by qualified 501(c)(3) organizations, under the Industrial Development Act; and housing projects under the Housing Act. An applicant for tax-exempt financing pursuant to the Industrial Development Act must submit to the City the application contained in Part IV of these Guidelines. 2. The project must be a positive benefit to the City. The project must be of a nature that the City wishes to attract, or an existing business which the City wishes to retain or expand within the City, considering employment opportunities, incentive for further development, impact on City services, and support for the industrial, commercial or health care operations currently located in the City. A housing project must provide significant housing opportunities for low and moderate income persons or the elderly. 3. The City Council will, if requested, grant an applicant a pre -application review. The purpose of the pre -application review is to inform applicants of the possibility of rejection or the possible basis for such a rejection. The fact that the project is not rejected at the pre -application stage is not to be construed as approval of the project or as an indication that the project will be approved upon formal request to the Council. Requests for tax-exempt financing may be rejected by the City whether or not the project was submitted to a pre -application review and regardless of the outcome or recommendation of that pre -application review. A request for pre -application review must be in writing, addressed to the City Finance Director, and set forth the name of the project, the type of project intended and the name, address and telephone number of the person who will be representing the applicant at the pre -application review, together with such additional information as the applicant desires to submit. The City will appoint bond counsel for the bond issue, which will normally be the City's regularly retained bond counsel. 4. Pursuant to the Industrial Development Act and the Housing Act, consideration of an application for tax exempt financing must be done at a public hearing held by the Board, unless federal and state law allow for the issuance of bonds without a public hearing. 5. The City is to be reimbursed and held harmless for and from any out-of-pocket expenses related to the tax-exempt financing including, but not limited to, legal fees, financial advisor fees, bond counsel fees, the City's expenses in connection with the application, and any deposits or application fees required under state law in order to secure allocation of bonding authority. A non-refundable application fee in the amount of $2,500 must be included with the submission of the application. 607378v1LN140 121 Prior to closing and delivery of the bonds for the project, the applicant must pay to the City, or commit to pay, as the case may be, a one-time administrative fee equal to 1.0% of the principal amount of the bond issue amount. Notwithstanding anything to the contrary herein, the administrative fees required by this paragraph will be reduced to the extent needed to ensure that the fee does not affect the tax-exempt status of the bonds under Internal Revenue Code of 1986, amended and related regulations. 6. Should the tax exempt financing request cause the City's total bonding for the year to exceed $10,000,000 in a year that the City would otherwise be eligible to issue bank qualified bonds, (bonds with tax incentives to banks), any interest rate differential between bank qualified and non -bank qualified bonds shall be estimated and the difference paid by the borrower. If the City would have exceeded this amount without the tax-exempt issue, no differential would be calculated or paid by the borrower. 7. Applications for financing must be made on the forms attached to these Guidelines. In addition, the applicant must furnish a description of the project, together with a brief description of applicant and the proposed financing in such form as required at the time of application. 8. The City may, in its sole discretion, withdraw its preliminary approval of a project any time if in its judgment the purposes of the Act will not be served by going forward with the project and it's financing. 9. The City may, in its sole discretion, reduce the administrative fee in cases where the borrower's request is related to a partnership with the City and/or provides a public service benefit to the community as a whole. 607378v1LN110 121 PART III MISCELLANEOUS MATTERS 1. Ratings. The City will give its most favorable consideration to proposed tax-exempt bond issues that have the-cameobtained a credit rating as the City's obligations by private placement basis andor private placements. Bonds must be sold in denominations of at least 2. Refundings. The City Council project, or (iii) both (i) and (ii). In the case of refunding of bonds for which the administrative fee listed in paragraph 65 of Part II have been paid in full, no new administrative fees are required; but the non-refundable application fee must be paid together with all City expenses in excess of that fee. If any fees related to the initial bond issue have not been paid, such fees must be paid in full prior to closing the refunding bonds. 3. Subsequent Proceedings. Where changes to the underlying documents or credit facilities of outstanding bond issues are to be made and require Council action (including changes that are a "deemed reissuance" under Internal Revenue Service regulation), no administrative fee is charged but a non-refundable fee of $2,000 must be deposited with the City to cover administrative costs. No formal application form is required. 4. Issue by Another Political Subdivision. The City will consider requests for tax exempt financing of projects in the City by other political subdivisions. In these cases the non- refundable application fee must be paid and all procedures through the approval of the preliminary resolution followed. No administrative fee is charged. At the Council's discretion, all or part of the application may be waived if there are offsetting benefits resulting from this financing. 5. City Contact. Initial contacts about tax exempt financing are made by contacting: City Finance Director City of Lino Lakes 600 Town Center Parkway Lino Lakes, MN 55014 (651) 982-2410 6. Deadlines. The City Council conducts all tax-exempt financing matters at regularly scheduled City Council meetings held on the second and fourth Mondays of each month. Documents for City Council consideration must be at the City office no later 607378v 1 LN 110 121 than the Friday 10 days prior to next regular Council meeting at which the matter is to be considered. In the case of a publicly offered bond issue, the documents, when submitted, may specify a maximum price and maximum effective interest rate if prices and rates have not yet been established. 607378v 1LN 110 121 PART IV CITY OF LINO LAKES, MINNESOTA APPLICATION FOR TAX EXEMPT FINANCING (Commercial, Industrial, Educational or Health Care) 1. APPLICANT a. Business Name — b. Business Address — c. Business Form (corporation, partnership, sole proprietorship, etc.) d. Authorized Representative — e. Principal contact person and telephone number — 2. PURPOSE OF REQUESTED FINANCING — a. New Facility (describe) — b. Expansion (describe) — c. Refunding (attach explanatory letter) 3. GIVE BRIEF DESCRIPTION OF NATURE OF BUSINESS, PRINCIPAL PRODUCTS, ETC. 4. ESTIMATED SOURCES AND USESPROJECT COSTS: (Not required for refunding) SOURCES: Bond proceeds $ Cash Other Loans Total Sources 607378v1LN110 121 USES: Land Building Equipment Architectural, Engineering Cost of Issuance Capitalized Interest Other Total Uses $ 5. TOTAL FINANCING REQUESTED $ costs) 6. TYPE OF FINANCING PROPOSED: Bonds Tax -Exempt Mortgage Expected Term of Financing Years Security: Mortgage Letter of Credit Guaranty (third party) Guaranty (personal) Unsecured Other (specify) ( % of project 7. BUSINESS PROFILE: (Not required for refunding) a. Is the business located within City Boundaries? b. Number of employees within the City of Lino Lakes geographic boundaries i. Before this project — ii. After this project — c. Approximate annual sales — d. Length of time in business — e. Length of time in City f. Do you have business operations in other locations? If so, where? 8. NAMES OF: a. Underwriter (name and contact person) — 607378v1LN190 121 b. Corporate Counsel — c. Underwriter's Counsel — 9. WHAT IS YOUR TARGET DATE FOR: a. Construction start — b. Construction completion — 10. ATTACHMENTS: a. Project description materials — c. Draft application to Department of Trade and Economic Development necessary attachments Financial feasibility letter — c_,. Is --Initial filing fee (to be set by City Council) — t +—Indemnification Letter of Agreement The applicant further states that it has been furnished a copy of the City of Lino Lakes's Private Activity Tax Exempt Financing Guidelines and is aware of its content and agrees to be bound by its terms and the terms of the indemnification letter. BY DATE For further information, contact: City Finance Director City of Lino Lakes 600 Town Center Parkway Lino Lakes, MN 55014 (651) 982-2410 Applicant 607378v 1 LN 110 121 PART VI INDEMNIFICATION LETTER OF AGREEMENT City of Lino Lakes Mayor And Members of the Council RE: Application of for Tax Exempt Revenue Bond Financing by the City of Lino Lakes Dear Mayor and City Council Members: This letter of agreement is given by , a under the laws of Minnesota ("Applicant") as required by the City of Lino Lakes in connection with its consideration of an application for tax-exempt revenue bond financing for the project described in the application. Applicant hereby covenants, warrants and agrees as follows: 1. Applicant agrees to pay or reimburse the City for any and all costs and expenses which the City may incur in connection with its consideration of the project and the granting of tax-exempt revenue bond financing therefore, whether or not the project is preliminarily approved by the City, whether or not the project is approved by the State of Minnesota, whether or not revenue bond financing is finally approved by the City, whether or not the bonds are issued and sold, and whether or not the project is carried to completion. 2. Applicant agrees to indemnify and hold the City, its officers, employees and agents harmless against any and all losses, claims, damages, expenses or liabilities, including attorneys fees incurred in their defense, to which the City, its officers, employees and agents may become subject in connection with the City's consideration, issuance or sale of the bonds for Applicant's project and the carrying out of the transactions contemplated by this agreement and any resolutions adopted, or agreements executed by the City in connection with the issuance of its bonds for this project. 3. Applicant here by releases the City, its officers, agents and employees from any claims, causes of action, losses, damages, or liabilities which it may have against the City, its officers, agents, and employees or which it may incur in connection with: the City's consideration of the application for industrial development revenue bond financing for Applicant's project; the failure of the City, in its discretion, to issue tax exempt revenue bonds for Applicant's project; the issuance and sale of the bonds; the construction of the project; or any other matter or thing of any type or nature whatsoever which may arise in connection with the foregoing. 4. Applicant is aware of the City's application and administrative fee structure for tax exempt financing and agrees and covenants that all such fees will be paid in the amount and at the times required. 5. Applicant understands and acknowledges that Minnesota Statutes, Chapter 13 (Minnesota Government Data Practices Act) governs whether the information that you provide to the City is public or private. If financial assistance is provided, the information submitted in connection with your application may become public, except for those items treated as private data under the Minnesota Government Data Practices Act. 607378v 1 LN 110 121 Dated: (Applicant) By Its 607378v 1 LN 110 121 Document comparison by Workshare Compare on Sunday, August 18, 2019 1:07:05 PM Rendering set Standard Insertion Deletion Moved to Style change Format change Inserted cell Deleted cell Moved cell Split/Merged cell Padding cell Count Insertions 15 Deletions 19 Moved from 0 Moved to 0 Style change 0 Format changed 0 Total changes 34 CITY COUNCIL AGENDA ITEM 1I STAFF ORIGINATOR: Sarah Cotton, Finance Director MEETING DATE: September 9, 2019 TOPIC: Resolution No. 19-118, Adopting Revised Private Activity Tax - Exempt Financing Guidelines VOTE REQUIRED: Simple Majority BACKGROUND In August of 2005, the City Council adopted Private Activity Tax -Exempt Financing Guidelines. The YMCA had approached the City of Lino Lakes with a request to utilize private activity revenue bonds to finance a portion of their Lino Lakes facility. At the time, it came to light that the City did not have any guidelines in place for this type of financing. Staff worked with Springsted, Inc. and Kennedy and Graven, to write a set of guidelines to establish criteria under which the City would allow this type of financing and set forth fees for such activity. In 2018, the City granted host approval on the issuance of a note by the City of Columbia Heights to finance the construction of the Love to Grow on facility in Lino Lakes and the issuance of a note by the City of Falcon Heights to finance, in part, a senior living campus in Lino Lakes. The City of Lino Lakes was not the issuer of these two notes; however, was required to grant host approval to the issuance of the notes as the properties were physically located within the boundaries of Lino Lakes. During the discussion regarding granting host approval on these two projects, the City Council expressed a desire to update the city's policy, so that the city was a in a position to consider tax exempt financing as a tool to facilitate future economic development within the community. Staff worked with Julie Eddington, Kennedy and Graven, to prepare the suggested revisions to the guidelines. The City Council reviewed the revisions at the September 3, 2019 City Council Work Session. RECOMMENDATION Staff recommends that the revised guidelines be established by resolution. Resolution No. 19- 118 adopts revised private activity tax-exempt financing guidelines for the City that will apply to any future requests for financing. ATTACHMENTS Resolution No. 19-118 Revised Private Activity Tax -Exempt Financing Guidelines