07-16 HRA Resolution No. 1300
HRA RESOLUTION NO. 1300
RESOLUTION AUTHORIZING INTERFUND LOAN FOR ADVANCE OF CERTAIN COSTS IN
CONNECTION WITH PROPERTY LOCATED WITHIN TAX INCREMENT FINANCING
DISTRICT NO. 2018-1 (A HOUSING DISTRICT) (CEDAR POINT II PROJECT)
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. Pursuant to Minnesota Statutes, Sections 469.174 through 469.1794, as
amended (the “TIF Act”), the City of Richfield, Minnesota (the “City”) and the Authority intend to
establish Tax Increment Financing District No. 2018-1 (a housing district) (Cedar Point II
Project) (the “TIF District”) within the Richfield Redevelopment Project Area (the
“Redevelopment Project”), which is administered by the Authority.
1.02. 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 (each
such advance being referred to as an “interfund loan”) in order to finance expenditures that are
eligible to be paid with tax increments under the TIF Act.
1.03. The Authority has determined to advance funds in a maximum amount of
$630,000 to NHH Companies L.L.C., a Minnesota limited liability company (the “Developer”), in
the form of a forgivable loan to acquire various properties within the TIF District for the purpose
of constructing affordable housing (the “Land Loan”). It is the intent of the Authority and the
Developer to enter into a contract for private development pursuant to which the Developer will
construct and develop approximately 80 affordable owner-occupied townhomes (the “Project”)
within the TIF District. If the Developer commences construction of the Project, the Authority
will forgive all or a portion of the Land Loan and will instead reimburse itself with tax increment
derived from the TIF District.
1.04. In order to fund the Land Loan, the Authority has determined to use funds
available in its Development Fund in the amount of $630,000 on a temporary basis through an
interfund loan in accordance with the terms hereof.
1.05. In addition to the Land Loan, the Authority has determined to use funds available
in its General Fund in the amount of $100,000 on a temporary basis to pay for administrative
costs of the TIF District through an interfund loan in accordance with the terms hereof.
1.06. The Land Loan in the amount of $630,000 and temporary loan for administrative
costs in the amount of up to $100,000 are referred to herein as the “Interfund Loan.” Any
reimbursement for the Interfund Loan 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.
1.07. The Authority intends to use tax increment revenues derived from the TIF District
to repay all or a portion of the Interfund Loan.
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Section 2. Terms of Interfund Loan.
2.01. The Interfund Loan shall be made from the two Authority funds described above,
or any other fund designated by the Authority, to the Authority’s TIF Fund for the TIF District.
2.02. The Interfund Loan is repayable solely from and to the extent that Available Tax
Increment is available. “Available Tax Increment” means, on each Payment Date (as defined
herein), 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 Authority by Hennepin County, Minnesota, all in
accordance with the TIF Act. Payments on the Interfund Loan are on parity with any other
outstanding or future interfund loans secured in whole or in part with Available Tax Increment.
2.03. Provided that there is Available Tax Increment to repay the Interfund Loan, principal
and interest (the “Payments”) on the Interfund Loan shall be paid semiannually on February 1 and
August 1 (each a “Payment Date”), commencing on the first Payment Date after the advance of the
Interfund Loan. Payments shall continue until 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. 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 date of each expenditure to the first Payment Date will be
compounded semiannually on February 1 and August 1 of each year and added to principal,
unless otherwise specified by the Interfund Loan form.
2.04. The Interfund Loan shall bear interest at the Authority’s then current internal rate
of return on the principal amount advanced, accruing from the date of each initial expenditure;
provided, however that the interest rate shall not exceed the greater of the interest rates
specified under Minnesota Statutes, Section 270C.40 or Section 549.09 as of the date the
advance is authorized. The maximum interest rate in effect for calendar year 2018 is 4.0%.
2.05. 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.
2.06. 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 from Available Tax Increment pledged to the payment hereof under this resolution or
any other sources of funds the Authority may use to pay the Payments. 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.
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. Interfund Loans Authorized.
3.01. The Interfund Loan with the terms set forth in Section 2 hereof is hereby
approved.
3.02. Authority staff and officials are hereby authorized and directed to execute any
documents and take any other actions necessary to carry out the intent of this resolution.
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HRA Resolution No. 1300
Section 4. Effective Date. This resolution is effective upon approval.
Adopted by the Housing and Redevelopment Authority in and for the City of Richfield,
Minnesota this 16th day of July, 2018.
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Mary Supp , Chair
ATTEST:
Erin Vrieze Daniels, ' dry
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HRA Resolution No. 1300