08-20 HRA Resolution No. 1303
HRA RESOLUTION NO. 1303
RESOLUTION AMENDING RESOLUTION NO. 1300 REGARDING AN 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, 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”)
on certain property owned by the Authority (the “Property”) 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. On July 16, 2018, the Board of Commissioners of the Authority adopted
Resolution No. 1300 (the “Original Interfund Loan Resolution”), pursuant to which the Authority
approved an interfund loan in the amount of $630,000 to fund the Land Loan and an interfund
loan in the amount of $100,000 to pay for administrative costs of the TIF District (together, the
“Original Interfund Loan”).
1.05. The Authority has proposed to convey the Property to the Developer for a
purchase price of $184,000 (the “Purchase Price”), with the Purchase Price to be paid no later
than the date that the Developer sells at least 8 townhome units, plus interest in the amount of
4.0% per annum.
1.06. In order to fund the land write-down in the amount of $184,000 on a temporary
basis, the has determined to amend the Original Interfund Loan Resolution in order to use funds
available in the amount of $184,000, which will constitute an additional interfund loan. Such
additional interfund loan shall be designated the “Additional Interfund Loan.”
1.07. The Original Interfund Loan and the Additional Interfund Loan shall be referred to
herein as the “Interfund Loan” and is made in the amount of $914,000. 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.
1.08. The Authority intends to use tax increment revenues derived from the TIF District
to repay all or a portion of the Interfund Loan.
Section 2. Terms of Additional Interfund Loan.
2.01. The Additional Interfund Loan shall be made from the Authority fund described
above, or any other fund designated by the Authority, to the Authority’s TIF Fund for the TIF
District.
2.02. The Additional 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 Additional Interfund Loan are on parity with
the Original Interfund Loan and 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 Additional Interfund
Loan, principal and interest (the “Payments”) on the Additional 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 Additional Interfund Loan. Payments shall continue until
the earlier of (a) the date the principal and accrued interest of the Additional Interfund Loan is paid
in full, or (b) the date of last receipt of tax increment from the TIF District. Payments on the
Additional 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 Additional Interfund Loan form.
2.04. The Additional 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 Additional 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
HRA Resolution No. 1303
specified in Section 469.178. subdivision 7 of the TIF Act.
Section 3. Additional Interfund Loans Authorized.
3.01. The Additional 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.
3.03. Unless otherwise amended by this resolution, the Original Interfund Loan
Resolution shall remain in full force and effect.
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 20th day of August, 2018.
Mary Supple, Chair
ATTEST:
0 /kJ),
Erin Das, Secretary
HRA Resolution No. 1303