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Home My WebLink AboutEDA AGN 12-08-08 Special CITY OF COLUMBIA HEIGHTS 590 40th Avenue N.E" Columbia Heights, MN 55421-3878 (763) 706-3600 TDD (763) 706-3692 Visit Our Website at; www.ci.colmnbia.heights.mn.us AGENDA COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY Monday, December 8, 2008 SPECIAL MEETING IMMEDIATELY FOllOWING THE CITY COUNCil WORKSESSION City Hall, Conference Room 1 1. Call to Order/Roll Call 2. Pledge of Allegiance 3. Resolution 2008-16, Approving the Terms of Interfund loan in Connection with K-MartlCentral Avenue TIF District Move to waive the reading of Resolution 2008-16, there being an ample amount of copies available to the public. Move to Adopt Resolution 2008-16, a Resolution Approving the terms of an Interfund loan in connection with K-MartlCentral Avenue T1F District. 4. Adjournment THE CITY OF COLUMBIA HEIGHTS DOES NOT DISCRIMINATE ON THE BASIS OF DISABILITY IN EMPLOYMENT OR THE PROVISION OF SERVICES EQUAL OPPORTUNITY EMPLOYER COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY (EDA) Special Meeting of: December 8, 2008 AGENDA SECTION: Business Itcm ORIGINATING EXECUTIVE NO: 3 DEPARTMENT: EDA DIRECTOR APPROVAL ITEM: Adopt Resolution 2008-16, BY: Scott Clark BY: Approving terms ofInter-Fund Loan DATE: December 3, 2008 in connection with K-martlCentral Avenue TIF District BACKGROUND: Thc EDA will only have to act on the attached inter-fund loan if a serics of assumptions are agreed to by thc City Council as part of the December 8, 2008 Work Scssion. These assumptions are I) Willingness to want to proceed in purchasing properties in the Sheffield neighborhood 2) A desire to fund future purchases through an extension ofthe K-Mart Tax Increment district (this will be the Work Session's main subject) and 3) Agreement to purchase a duplex at 4636 Polk Street as specificd in the resolution. The importance of the inter-fund loan is that it gives flexibility as to how the City Council and the EDA would handle future unobligated tax increment receipts if the K-Mart District is expanded for housing acquisition purposes. At this time, the City's (not the EDA) Sheffield Fund would be the source of funding for the Polk duplex purchase. The inter-fund loan would grant the EDA (the EDA was the City body that created this subject District) the ability to repay the City, at a future time with tax increment funds, for the subject purchase. Since no modifications have been made to expand the K-Mali District (this will be done in 2009) but the Polk purchase is being made in 2008, prior to the modifications, an inter-fund loan is necessary to qualify this purchase as a future tax increment obligation of the "new" district. An action by the City Council acknowledging this inter-fund loan, along with the action to purchase the Polk property, will be on the regular Council agenda. RECOMMENDATION: StafIrecommends the board adopt Resolution 2008-16, a resolution approving terms of an Interfund Loan in connection with K-mart/Central Avenue TIF district. RECOMMENDED MOTION: Move to waive the reading of Resolution 2008-16, there being an ample amount of copies available to the public. Move to Adopt Resolution 2008-16, a Resolution Approving the terms of Interfund Loan in connection with K-mart/Central Avenue TIF District. Attachments: Resolution 2008-16 EDA ACTION: G:\Comll111nity DcYclopmcllt\EDA\2008\Rcs.2008~ 16 Interflllld loan for acq.of 4636 Polk St. COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY RESOLUTION NO. 2008-16 APPROVING THE TERMS OF INTERFUND LOAN IN CONNECTION WITH K-MART/CENTRAL AVENUE TIF DISTRICT BE IT RESOLVED BY THE BOARD OF COMMISSIONERS OF THE COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY (THE "AUTHORITY") AS FOLLOWS: Section 1. Background. 1.01. The Authority and City of Columbia Heights ("City") have established the K- Mart/Central Avenue Tax Increment Financing District (the "TIF District") within the Central Business District Redevclopment Project (the "Project"), and have adopted a tax increment financing plan ("TIF Plan") for the purpose of financing ccrtain improvements within the Project. 1.02. The Authority 01' City may incur certain costs related to the TIF District or Project, which costs may be financed on a temporary basis from available Authority 01' City funds. 1.03 The City, using available City hmds, intends to acquire certain propelty in the City located at 4636 Polk Street (the "Property") within the Project, all 01' a portion of which Property the Authority or City may use to huther redevelopment of the Project. 1.04. The Propelty is not currently within the TIF District, but the Authority intends to expand the TIF District boundaries to include the Property, as such expansion will further the Authority's redevelopment goals and objectives. 1.05. The Authority intends to reimburse the City for the cost of acquisition of the Propelty, closing costs, and demolition (together, the "Qualified Costs") from tax increments derived fi'om the TIF District in accordance with the terms of this resolution (which terms are referred to collectively as the "TIF Loan"). Section 2. Terms ofTIF Loan. 2.01. Subject to the conditions described in Section 2.07, the Authority shall repay, to the City fund fi'om which the Qualified Costs are initially paid or advanced, the principal amount of funds advanced not to exceed $ I 16,500 together with interest on the principal amount advanced, accruing from the date of each initial expenditure or advance. For expenditures made in 2008, the interest rate shall be 8.0%, which is the greater of (a) the rate specified under Minnesota Statutes, Section 270C.40 or (b) the rate specified under Minnesota Statutes, Section 549.09 for 2008. For expenditures made in 2009, the interest rate shall be reset to the greater of (a) the rate specified under Mirmesota Statutes, Section 270C.40 or (b) the rate specified under Minnesota Statutes, Section 549.09 for 2009. 2.02. Principal and interest ("Payments") shall be paid semi-annually on each August I and February I ("Payment Dates"), commencing on the first Payment Date after the first advance of Qualified Costs and continuing through the earlier of (a) the date the principal and accrued interest of the TIF Loan is paid in full, or (b) the date oflast receipt of tax increment from the TIF District. Payments will be made in the amount and only to the extent of Available Tax Increment as hereinafter defined. 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 shall be compounded semia11l1ually on February I and August I of each year and added to principal, unless otherwise specified by the Executive Director. 2.03. Payments on this TIF 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 Authority by Anoka County, after deduction of any tax increment allocated to administrative expenses, all in accordance with Mi11l1esota Statutes, Sections 469.174 to 469.179. Payments on this TIF Loan are subordinate to any outstanding or future notes or obligations issued to developers or third parties secured in whole or in part with Available Tax Increment, and are on parity with any other outstanding or future interflmd loans secured in whole or in part with Available Tax Increment. 2.04. The principal sum and all accrued interest payable under this TIF Loan are pre- payable 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 this TIF Loan. 2.05. This TIF Loan is evidence of an internal borrowing by the Authority in accordance with Minnesota Statutes, Section 469.178, subdivision 7, and is a limited obligation payable solely from Available Tax Increment pledged to the payment hereof under this resolution. This TIF Loan and the interest hereon shall not be deemed to constitute a general obligation of the State of Mi11l1esota or any political subdivision thereof, including, without limitation, the City. Neither the State ofMi11l1esota, nor any political subdivision thereof shall be obligated to pay the principal of or interest on this TIF Loan or other costs incident hereto except out of 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 TIF Loan or other costs incident hereto. The Authority shall have no obligation to pay any principal amount of the TIF Loan or accrued interest thereon, which may remain unpaid after the final Payment Date. 2.06. The Authority may amend the terms of this TIF Loan at any time by resolution of the Board, including a determination to forgive the outstanding principal amount and accrued interest to the extent permissible under law. 2.07. Notwithstanding anything to the contrary herein, as a condition to making any payment under the TIF Loan, the Authority shall approve, and obtain City approval of a modification ofthe TIF Plan to include the Property within the TIF District area. 2 Section 3. Effective Date. This resolution is effective upon the date of its approval. Adopted this 8th day of December, 2008. President-Gary 1. Peterson ATTEST: Acting Secretary 3