10-16 HRA Resolution No. 1271 HRA RESOLUTION NO. 1271
RESOLUTION AUTHORIZING INTERFUND LOAN FOR ADVANCE OF CERTAIN COSTS
IN CONNECTION WITH TAX INCREMENT FINANCING DISTRICT NO.2017-1 (THE
CHAMBERLAIN)
BE IT RESOLVED By the Board of Commissioners of the Housing and Redevelopment Authority
in and for the City of Richfield,Minnesota(the"Authority")as follows:
Section 1. Background.
1.01. The Authority intends to establish Housing Tax Increment Financing District No. 2017-1
(The Chamberlain), a housing district, within the Richfield Redevelopment Project, located in the City of
Richfield, Minnesota(the "City"),pursuant to Minnesota Statutes, Sections 469.174 through 469.1794, as
amended(the"TIF Act"), and Sections 469.001 through 469.047,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 certain property(the"Redevelopment Property")and has incurred or
will incur certain costs to prepare such property for redevelopment. The Authority has determined that
the market price of the improved Redevelopment Property is at least$1,711,445.
1.05. It is proposed that the Authority enter into a Contract for Private Development (the
"Contract")with Chamberlain Apartments, LLC, a Delaware limited liability company(the"Developer"),
pursuant to which the Authority will convey the Redevelopment Property to the Developer for a price of
$300,000 and the Developer will pay the Authority over time the additional $1,411,445 (the "Land
Costs")from surplus cash derived from the project to be built on the Redevelopment Property pursuant to
a Developer Surplus Cash Note provided to the Authority.
1.06. If the Developer does not pay to the Authority any portion of the $1,411,445 due and
owing under the Developer Surplus Cash Note, plus any accrued interest, the Authority shall have the
ability to reimburse itself for such Land Costs (plus accrued interest) with tax increment from the TIF
District. Interest shall commence on the date the Redevelopment Property is conveyed to the Developer.
Any reimbursement from tax increment from the TIF District for Land Costs is subordinate to payments
due and owing to the Developer under the tax increment pay as you go note to be issued to the Developer
pursuant to Section 3.5 of the Contract for Private Development between the Authority and the
Developer.
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1.07. In addition to the land write-down, the Authority has determined to pay for other costs
identified in the TIF Plan consisting of land/building acquisition, site improvements/preparation, interest,
and administrative costs (collectively, the "Qualified Costs"), which costs may be financed on a
temporary basis from funds of the Authority available for such purposes. Any reimbursement for
Qualified Costs is not subordinate to payments due and owing to the Developer under the tax increment
pay as you go note to be issued to the Developer.
1.08. The Authority intends to reimburse itself for the Land Costs, if necessary, and Qualified
508009v2 JAE RC125-348
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. Repayment of Interfund Loan.
2.01. The Authority will reimburse itself for the Land Costs in the amount of up to $1,411,445
(if necessary) and other Qualified Costs in the amount of up to $200,000 (a total of$1,611,445),together
with interest at the rate per annum described below. Interest accrues on the principal amount of the
Interfund Loan from the date the property is conveyed (hereafter, the "Closing Date"). The Interfund
Loan shall bear interest at the rate of 4.0% per annum, which is the greater of the rate specified under
Minnesota Statutes, Sections 270C.40 and Section 549.09, in effect for the calendar year in which the
Closing Date occurs.
2.02. Principal and interest (the "Payments") on the Interfund Loan shall be paid annually on
December 31 ("Payment Date"), commencing on the first Payment Date on which the Authority has
Available Tax Increment(defined below), or on any other dates that Available Tax Increment is available
to pay Land Costs or the Qualified Costs,through the date of last receipt of Available Tax Increment from
the TIF District.
2.03. Payments on the Interfund Loan will be made from Available Tax Increment, defined as
tax increment from the TIF District received by the Authority from Hennepin County in the six-month
period before any Payment Date which is not otherwise pledged to the Developer's pay as you go note.
Payments on the Interfund Loan will be made in the amount and only to the extent of Available Tax
Increment. Payments shall be applied first to accrued interest, and then to unpaid principal. Interest
accruing from the Closing Date will be compounded semiannually on December 31 of each year and
added to principal until the first Payment Date, unless otherwise specified by the Executive Director.
2.04. The principal sum and all accrued interest payable under this resolution is prepayable 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 any
interfund loan.
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 the outstanding principal
amount and accrued interest on the Interfund Loan to the extent permissible under law.
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.
subdivision 7 of the TIF Act.
Section 3. Effective Date. This resolution is effective upon approval.
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Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota
this 16th day of October,2017.
4 I4J zLi,i
Mary B. Sup ,Chair
ATTEST:
Doris Rubenstein, Secretary
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