HomeMy WebLinkAbout2009.05.18 RESO 2009-14Y
RESOLUTION NO. 2009 -14
RESOLUTION APPROVING THE TERMS OF INTERNAL LOAN
IN CONNECTION WITH TAX INCREMENT FINANCING
DISTRICT NO. 1-2
BE IT RESOLVED by the City Council (the "Council") of the City of Hugo, Minnesota
(the "City"), as follows:
Section 1. Back rg_ound.
(a) The City plans to establish Tax Increment Financing District No. 1-2 (the "TIF
District") within its Municipal Development District No. 1 (the "Development District"), and
adopt a tax increment financing plan (the "TIF Plan") for the purpose of acquiring certain land
and financing certain improvements within the TIF District.
(b) The City has determined to pay for certain costs (the "Qualified Costs") identified
in the attached Exhibit A and to be listed in the TIF Plan consisting of the costs of making
infrastructure improvements in the TIF District, which costs will be financed on a temporary
basis from Funds designated by the City's Finance Director.
(c) Under Minnesota Statutes, Section 469.178, Subd. 7, the City is authorized to
advance or loan money from the City's general fund or any other fund from which such advances
may be legally made, in order to finance the Qualified Costs.
(d) The City intends to reimburse itself for the Qualified Costs from tax increments
derived from the TIF District in accordance with the terms of this resolution (which terms are
referred to collectively as the "Interfund Loan").
Section 2. Terms of Interfund Loan.
(a) The City shall repay to the City fund(s) from which the Qualified Costs are
initially paid, the principal amount of approximately $2,372,918.00 together with interest at 4%
per annum [not more than the greater of (a) the rate specified under Minnesota Statutes,
Section 270.75, or (b) the rate specified under Minnesota Statutes, Section 549.09] from the
from the date of each expenditure.
(b) Principal and interest ("Payments") shall be paid semi-annually on each February
1 and August 1 commencing with the first February 1 or August 1 occurring after the date of
receipt of the first increment from the TIF District to and including the earlier of (a) the date the
principal and accrued interest of the Interfund Loan is paid in full, or (b) the date of last receipt
of tax increment from the TIF District ("Payment Dates") which Payments will be made in the
amount and only to the extent of City Available Tax Increment as hereinafter defined. Payments
shall be applied first to accrued interest, and then to unpaid principal.
(c) Payments on this Interfund Loan are payable solely from "Available Tax
Increment," which shall mean, on each Payment Date, all of the tax increment generated in the
preceding six (6) months with respect to the property within the TIF District and remitted to the
City by Washington County, all in accordance with Minnesota Statutes, Sections 469.174 to
469.1799, and applied on a pro -rata basis with other interfund loans of the City secured in whole
or in part with such City Available Tax Increment. Payments on this Interfund Loan are
subordinate to any outstanding or future bonds, notes or contracts secured in whole or in part
with such City Available Tax Increment, and are on parity with any other outstanding or future
interfund loans secured in whole or in part with such City Available Tax Increment.
(d) The principal sum and all accrued interest payable under this Interfund Loan are
pre -payable in whole or in part at any time by the City without premium or penalty. No partial
prepayment shall affect the amount or timing of any other regular payment otherwise required to
be made under this Interfund Loan.
(e) This Interfund Loan is evidence of an internal borrowing by the City in
accordance with Minnesota Statutes, Section 469.178, Subd. 7, and is a limited obligation
payable solely from City Available Tax Increment pledged to the payment hereof under this
resolution. This Interfund Loan and the interest hereon shall not be deemed to constitute a
general obligation of the State of Minnesota or any political subdivision thereof, including,
without limitation, the City. Neither the State of Minnesota, nor any political subdivision thereof
shall be obligated to pay the principal of or interest on this Interfund Loan or other costs incident
hereto except out of City 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. The
City 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.
(f) The City may amend the terms of this Interfund Loan at any time by resolution of
the City Council, including a determination to forgive the outstanding principal amount and
accrued interest to the extent permissible under law.
Section 3. Capitalized Terms. Capitalized terms not otherwise defined in this resolution are
deemed to have the meanings given in the Development Agreement.
Section 4. Effective Date. This resolution is effective upon the date of its approval.
Upon roll call, the following Members voting AYE:
Upon roll call, the following Members voting NAY:
Whereupon said resolution was declared passed and ado 's I r day of May, 2009.
ATTEST:
�A1 ` Q
City Clerk
2
Exhibit A
Qualified Costs
State Construction Aid (General Fund) _ $2,372,918.00
Total $2,372,918.00