HomeMy WebLinkAbout09-28-2020 EDA Minutes
ECONOMIC DEVELOPMENT AUTHORITY (EDA)
MINUTES OF THE MEETING OF
September 28, 2020
The meeting was called to order at 6:30 pm by Chair Szurek.
Members Present: Novitsky, Buesgens, Schmitt, Herringer, Murzyn, Williams and Szurek.
Staff Present: Aaron Chirpich (Community Development Director), Kelly Bourgeois (City
Manager), and Christy Bennett (Recording Secretary).
PLEDGE OF ALLEGIANCE-
RECITED
Business Items:
1.
Approve Subordination and Assignment Agreements as Part of the Purchase and Redevelopment Contract
with BPOZ, LLC for the Redevelopment of the 40th and Central Avenue Redevelopment Site.
BACKGROUND:
Chirpich said the EDA has approved the sale of the redevelopment site located at 40th and Central Avenue to
BPOZ, LLC. As part of the contract terms listed in the purchase and redevelopment agreement, the EDA has
agreed to subordinate its rights under the agreement to the holder of any mortgage that secures construction or
permanent financing for the project. At the time that the purchase and redevelopment agreement was approved,
staff was still working to finalize the details of a subordination agreement that was requested by the first
mortgage lender on the project, Old National Bank. Under the subordination agreement being presented, BPOZ
LLC assigns all of its rights under the redevelopment Contract to Old National Bank as a condition of securing
their loan for construction financing. In turn the EDA agrees to acknowledge the assignment of rights and take a
subordinate position to the lender.
Chirpich said that in addition to the first mortgage financing being provided by Old National Bank, BPOZ LLC
has also secured financing for the project from Colliers Funding LLC. The loan provided by Colliers is in the
form of a tax increment financing loan. Under this arrangement, the loan from Colliers to BPOZ is secured by
an assignment of the TIF note that has been promised to BPOZ through the redevelopment contract. In other
words, BPOZ is using the TIF note to secure construction financing for the project by assigning the future TIF
payments to the lender.
Chirpich said the subordination and assignment requests being made by the lenders on this project are typical
for this type of transaction. The general provisions that support these requests are built into the purchase and
redevelopment agreement that has been approved by the EDA. The EDA is simply being asked to approve the
actual final agreements in preparation of the upcoming closing.
STAFF RECOMMENDATION:
Staff recommends approval of Resolution 2020-17 as presented. Resolution 2020-17 will approve both the
subordination request made by Old National, and the Assignment and Consent agreements proposed by
Colliers.
Questions from members:
Buesgens asked if the EDA is selling to them, what rights would the EDA have. Chirpich said we certainly
don’t have as many as the primary lender at that point. We still have rights under the contract that we don’t
subordinate. It is a subordination of part of our rights. We can still guarantee, for example, that the minimum
improvements get built in the way that we’ve approved. We could withhold the issuance of the TIF note. There
are non-negotiable terms for the assessment agreement. Many of the provisions remain intact and we are the
primary enforcer. Subordination contemplates something going really haywire, at which point, the bank would
have a lot of money into the project and they would get the land back. If we had financial claims against Alatus,
which we might, we could still go after them.
Schmitt asked if there is a reason that the City stayed with Old National. Chirpich said the securing of Old
National was purely a decision made by BPOZ/Alatus. It is the primary lender that they had struck a deal with;
it was not part of the EDA’s decision.
Motion by Schmitt, seconded by Novitsky, to waive the reading of Resolution 2020-17, there being ample copies
available to the public.
All Ayes. MOTION PASSED.
Motion by Schmitt, seconded by Novitsky, to adopt Resolution 2020-17, a resolution approving subordination
of purchase and redevelopment contract between the City, the Columbia Heights Economic Development
Authority, and Old National Bank, and consenting to assignment of tax increment financing documents between
BPOZ Columbia Heights, LLC and Colliers Funding LLC.
All Ayes. MOTION PASSED.
Other Updates
Chirpich said he had an update on next week’s EDA meeting. It’s a very busy night for the City; there are a lot
of different meetings going on. Chirpich said that he is still working on the details for the time. It would be the
regularly scheduled meeting, but the time may need to be amended to account for traffic commission,
assessment hearings, and a work session. There will be a contract for demolition of the single family home at
4441 Central Ave to be reviewed by the EDA at the meeting, so that it can be demolished this fall still. This
meeting, along with all other meetings that evening, will be at the library, due to in person voting.
Motion by Buesgens, seconded Murzyn, to adjourn the meeting at 6:42 pm.
All Ayes. MOTION PASSED.
Respectfully submitted,
Christy Bennett
Secretary