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HomeMy WebLinkAbout06-07-2021 EDA MinutesCL162-59-723643.v1 MINUTES CITY OF COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY (EDA)MEETING JUNE 7, 2021 The meeting was called to order at 6:00 pm by Chair Szurek. Members present:Connie Buesgens,Gerry Herringer,Kt Jacobs, John Murzyn Jr,Nick Novitsky,Amada Márquez-Simula,Marlaine Szurek Members absent:None Staff Present:Aaron Chirpich (Community Development Director),Kelli Bourgeois (City Manager),Chris Osmundson (Alatus LLC),Martha Ingram (Redevelopment Counsel,Kennedy & Graven)via Zoom,Ben Sandell (Communications Coordinator)and Alicia Apanah (Administrative Assistant) PLEDGE OF ALLEGIANCE CONSENT AGENDA 1.Approve the minutes from the executive session meeting of February 1,2021,and regular meeting of May 3, 2021. 2.Approve Financial Reports and Payment of Bills for April 2021 –Resolution No. 2021-07. Motion by Murzyn, Jr., seconded by Buesgens, to approve the consent agenda as presented.All ayes of present. MOTION PASSED. RESOLUTION NO. 2021-07 A RESOLUTION OF THE ECONOMIC DEVELOPMENT AUTHORITY OF COLUMBIA HEIGHTS, MINNESOTA, APPROVING THE FINANCIAL STATEMENTS FOR THE MONTH OF APRIL 2021, AND THE PAYMENT OF THE BILLS FOR THE MONTH OF APRIL 2021 WHEREAS, the Columbia Heights Economic Development Authority (the “EDA”) is required by Minnesota Statutes Section 469.096, Subd. 9, to prepare a detailed financial statement which shows all receipts and disbursements, their nature, the money on hand, the purposes to which the money on hand is to be applied, the EDA's credits and assets and its outstanding liabilities; and WHEREAS, said Statute also requires the EDA to examine the statement and treasurer's vouchers or bills and if correct, to approve them by resolution and enter the resolution in its records; and WHEREAS, the financial statements for the month of April 2021 have been reviewed by the EDA Commission; and CL162-59-723643.v1 2 WHEREAS, the EDA has examined the financial statements and finds them to be acceptable as to both form and accuracy; and WHEREAS, the EDA Commission has other means to verify the intent of Section 469.096, Subd. 9, including but not limited to Comprehensive Annual Financial Reports, Annual City approved Budgets, Audits and similar documentation; and WHEREAS, financials statements are held by the City’s Finance Department in a method outlined by the State of Minnesota’s Records Retention Schedule, NOW, THEREFORE BE IT RESOLVED by the Board of Commissioners of the Columbia Heights Economic Development Authority that it has examined the referenced financial statements including the check history, and they are found to be correct, as to form and content; and BE IT FURTHER RESOLVED the financial statements are acknowledged and received and the check history as presented in writing is approved for payment out of proper funds; and BE IT FURTHER RESOLVED this resolution is made a part of the permanent records of the Columbia Heights Economic Development Authority. ORDER OF ECONOMIC DEVELOPMENT AUTHORITY Passed this 7th day of June, 2021 Offered by: Seconded by: Roll Call: ____________ President Attest: Assistant Secretary BUSINESS ITEMS 3.4300 Central Avenue –Establishment of the Alatus Tax Increment Financing District Chirpich summarized that the evening’s subject would be the first round of development project approvals related to the redevelopment of 4300 Central Avenue in partnership with Alatus, most commonly known as the Hy-Vee site. The evening’s discussion would be to review the steps needed to take as the EDA for the tax increment financing component of the project, as well as an element related to the bonds that the City anticipates issuing for the purchase and some of the redevelopment work on the site. CL162-59-723643.v1 3 Background Alatus LLC, has requested public financial assistance in the form of tax increment financing (TIF) to facilitate the redevelopment of the property located at 4300 Central Avenue NE. The current redevelopment plans for the site include the following base elements: ·400-600 multifamily units on the east end of the site along Central Avenue ·40,000 to 80,000 square feet of retail/commercial space beneath the multifamily housing ·Grocery store as anchor tenant in the commercial space ·Underground parking ·Public open/park space ·Single-family housing on the west side of the site Before the EDA can move to establish a TIF district for Alatus at 4300 Central Avenue NE, the underlying TIF district that was created for Hy-Vee needs to be decertified and the redevelopment contract with Hy-Vee needs to be terminated. In 2016, the City approved the Central Value Center TIF district to facilitate the development of the proposed Hy-Vee grocery store. The TIF agreement with Hy-Vee was amended in 2018 to allow Hy-Vee more time to start their proposed project. Since that amendment, Hy-Vee has failed to execute on their redevelopment plans for the site and Alatus is under contract to purchase the property and deliver the project outlined above. The Central Value Center TIF district needs to be decertified and a new district created in its place because the parameters of the project have changed significantly, and the newly proposed project by Alatus includes TIF eligible costs that were not part of the proposed Hy-Vee development. To finalize the plans for the new Alatus TIF district, there are several details still being discussed and reviewed between staff, the EDA’s public financing consultant Ehlers, and Alatus to verify the full extent of TIF assistance needed. The possible uses for which TIF is being considered include; land/building acquisition, public improvements, utilities, and demolition. Within the city of Columbia Heights, the Economic Development Authority is authorized to exercise Tax Increment Financing powers; however,the EDA may not exercise any TIF powers without approval of the City Council. Review and approval by the Council is scheduled for a public hearing at the June 14th regular City Council meeting. Since the EDA is authorized to exercise TIF powers, the EDA must make certain findings of fact that are detailed in the TIF plan ahead of the Council’s consideration of the new district. Therefore, the review of the TIF Plan by the EDA is required prior to the Council’s public hearing. Previously, the EDA and the Council established a redevelopment project designated as the Downtown Central Business District Revitalization Plan. The revitalization plan has encouraged development and redevelopment along Central Avenue; however, modifications to the plan must be made to encompass the potential development being proposed by Alatus. The TIF Plan being reviewed tonight is merely a planning document that reflects the maximum potential of the proposed TIF district. The plan in no way constitutes the terms, length, or dollar amount of the CL162-59-723643.v1 4 proposed TIF district. The term, length, and dollar amount will be part of a separate document, called the Contract for Private Redevelopment. If the City Council approves the TIF Plan at the June 14th public hearing, that Contract will be considered by the EDA at a subsequent meeting. The structure of the proposed TIF district and the general outline of the project being contemplated by Alatus are detailed in the TIF Plan. The project includes the development of 400-600 apartments, 40,000 to 80,000 square feet of retail, and 26 single-family homes. The maximum duration of the TIF District is 26 years, and the estimated maximum annual tax increment is $1,928,397. Ehlers has completed the TIF Plan on behalf of the City and EDA. A full copy of the plan is attached to this report. Before the Alatus TIF district is established, the EDA will incur certain administrative costs related to the creation of the district. These costs are eligible to be paid (reimbursed) with tax increments generated by the district. To ensure repayment of these costs, the EDA must approve an interfund loan as part of the project. This interfund loan will allow the EDA to temporarily finance upfront administrative costs with current EDA fund reserves. Ehlers has recommended setting this loan amount at $25,000. Before the EDA tonight is consideration of three (3) resolutions. Resolution 2021-08, a resolution approving termination of the redevelopment contract with Hy-Vee and decertifying the Central Value TIF district, Resolution 2021-09, a resolution modifying the downtown revitalization plan, establishing the NE Business Center district, and adopting the TIF plan; and Resolution 2021-10, a resolution authorizing an interfund loan for the EDA to be reimbursed for qualified costs from the TIF District. Questions/Comments from Members: Szurek asked if there were costs involved when the City established a TIF District for Hy-Vee. Chirpich explained that it functioned like any other --where a deposit is received on the front end for the first group of costs,for Ehlers Public Finance and Kennedy & Grave, and the City should have been reimbursed for all of those costs.Before the City expends costs,$10,000 is collected for the first core group of costs and the account can be reinvigorated by asking for further deposits. Ingram further explained that the City has the choice of either requiring an escrow from the developer to pay any preliminary costs that the EDA has before the TIF “starts to flow” and you are able to reimburse yourselves from your administrative tax increment; or, alternatively, you do the interfund loan and pay for it out of the EDA’s own pocket and then reimburse yourselves from the increment. As a general rule, it is recommended that one gets the escrow from the developer because it does not make the EDA to pay for anything out of pocket. Szurek asked for clarification that the City would not be out of the $25,000 funding related to the deal struck with Hy-Vee. Chirpich replied that he did not believe so but wished to confirm that before responding. He said the contracts would be same, working with Ehlers and Kennedy & Graven, but he had not gone through the accounting to date, adding that no costs have been incurred for some time on that project. Motion by Buesgens, seconded by Murzyn, Jr., to waive the reading of Resolution 2021-08, there CL162-59-723643.v1 5 being ample copies available to the public.All ayes of present.MOTION PASSED. Motion by Buesgens, seconded by Jacobs, to adopt Resolution 2021-08, a resolution approving termination of contract for private redevelopment and decertification of Central Value Center tax increment financing district.All ayes of present.MOTION PASSED. Motion by Novitsky, seconded by Márquez-Simula , to waive the reading of Resolution 2021-09, there being ample copies available to the public.All ayes of present.MOTION PASSED. Motion by Novitsky, seconded by Jacobs, to adopt Resolution 2021-09, a resolution adopting a modification to the downtown Central Business District revitalization plan for the Downtown Central Business Redevelopment Project, establishing the Alatus TIF district therein, and adopting a tax increment financing plan therefor.All ayes of present.MOTION PASSED. Motion by Jacobs, seconded by Novitsky, to waive the reading of Resolution 2021-10, there being ample copies available to the public.All ayes of present.MOTION PASSED. Motion by Jacobs, seconded by Novitsky, to adopt Resolution 2021-10, a resolution authorizing an interfund loan for advance of certain costs in connection with the Alatus TIF district.All ayes of present.MOTION PASSED. COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY RESOLUTION NO. 2021-08 RESOLUTION APPROVING TERMINATION OF CONTRACT FOR PRIVATE REDEVELOPMENT AND DECERTIFICATION OF CENTRAL VALU CENTER TAX INCREMENT FINANCING DISTRICT BE IT RESOLVED By the Board of Commissioners (“Board”) of the Columbia Heights Economic Development Authority (the “Authority”) as follows: Section 1.Recitals 1.01. The City of Columbia Heights (the “City”) previously established the Central Valu Center Tax Increment Financing District (the “TIF District”), a redevelopment TIF District, within Downtown Central Business Redevelopment Project in the City and approved a Tax Increment Financing Plan (“TIF Plan”) for the TIF District. The TIF District is administered by the Authority. 1.02. Pursuant to the terms of the Contract for Private Redevelopment between the Authority and Hy-Vee, Inc. (the “Redeveloper”), dated October 24, 2016, as amended by a First Amendment thereto dated as of June 4, 2018 (as so amended, the “Agreement”), the Authority agreed to grant tax increment financing assistance to the Redeveloper in the form of a tax increment revenue note (the “TIF Note”) to reimburse the Redeveloper for certain Public Redevelopment Costs in CL162-59-723643.v1 6 connection with the construction of certain restaurant, retail, and office improvements (the “Minimum Improvements”) on certain property (the “Redevelopment Property”) within the TIF District. The Agreement provided that payments of principal and interest on the TIF Note would commence upon receipt by the Authority of tax increment from the Minimum Improvements to be constructed on the Redevelopment Property. 1.03. Despite an extension of the required dates of commencement and completion of construction of the Minimum Improvements, the Redeveloper has not commenced construction of the Minimum Improvements as of the date hereof, has notified the Authority that Redeveloper will not construct the Minimum Improvements and has requested that the parties terminate the Agreement and decertify the TIF District. 1.04. The Authority agrees that decertification of the TIF District and termination of the Agreement are in the best interest of the Authority and City, because such actions will allow the creation of a new redevelopment tax increment financing district encompassing the Property in which a mixed-use housing and retail development is contemplated, thereby increasing housing options for City residents. Section 2.TIF District Decertified; Agreement Terminated; Filing 2.01. The Authority hereby approves decertification of the TIF District and termination of the Agreement. 2.02. Authority staff is authorized and directed to transmit a copy of this Resolution to the Manager of Property Records and Taxation, as County Auditor, of Anoka County (the “County Auditor”) with instructions to decertify the TIF District as of the date hereof, it being the intent of the City and Authority that any tax increment derived from the TIF District and collected after the date hereof should be redistributed by the County Auditor to the taxing jurisdictions within the TIF District as described below. 2.03. The TIF District has not generated any tax increment as of the date hereof, but if any tax increment derived from the TIF District is generated and received by the Authority after the date hereof, Authority staff is directed to return such tax increment to the County Auditor for distribution to the taxing jurisdictions within the TIF District. Adopted by the Board of Commissioners of the Columbia Heights Economic Development Authority this 7th day of June, 2021. _________________________________________ President ATTEST: __________________________________________ Executive Director CL162-59-723643.v1 7 COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY RESOLUTION NO. 2021-09 RESOLUTION ADOPTING A MODIFICATION TO THE DOWNTOWN CBD REVITALIZATION PLAN FOR THE DOWNTOWN CENTRAL BUSINESS REDEVELOPMENT PROJECT, ESTABLISHING THE ALATUS TIF DISTRICT THEREIN, AND ADOPTING A TAX INCREMENT FINANCING PLAN THEREFOR BE IT RESOLVED by the Board of Commissioners (the “Board”) of the Columbia Heights Economic Development Authority (the “Authority”) as follows: Section 1.Recitals 1.01. The City of Columbia Heights, Minnesota (the “City”) and the Authority have previously approved a Downtown CBD Revitalization Plan (the “Revitalization Plan”) for the Downtown Central Business Redevelopment Project (the “Redevelopment Project”) within the City, pursuant to Minnesota Statutes, Sections 469.001 through 469.047, as amended, and Minnesota Statutes, Sections 469.090 through 469.1081, as amended. 1.02. The City and the Authority have determined to modify the Revitalization Plan for the Redevelopment Project and approve a tax increment financing plan (the “TIF Plan”) for the Alatus TIF District (the “TIF District”), a redevelopment district, pursuant to Minnesota Statutes, Sections 469.174 through 469.1794, as amended (the “TIF Act”), all as described in a plan document presented to the Board on the date hereof. 1.03. Pursuant to Section 469.175, subdivision 2a of the TIF Act, notice of the proposed TIF District was presented to the commissioner of Anoka County, Minnesota (the “County”) representing the area to be included in the TIF District at least thirty (30) days before the publication of the notice of public hearing. 1.04. Pursuant to Section 469.175, subdivision 2 of the TIF Act, the proposed TIF Plan and the estimates of the fiscal and economic implications of the TIF Plan were presented to the Board of Education of the Columbia Heights Public Schools and to the Board of Commissioners of the County at least thirty (30) days before the date of the public hearing. 1.05. On June 14, 2021, the City Council of the City will conduct a duly noticed public hearing on the adoption of the modified Revitalization Plan and the TIF Plan. Section 2.Approvals; Further Actions 2.01. The modified Revitalization Plan is hereby approved in substantially the form now on file with the Board, subject to approval thereof by the City Council. 2.02. The creation of the TIF District and the TIF Plan therefor are hereby approved, subject to CL162-59-723643.v1 8 approval thereof by the City Council. 2.03. The Board hereby transmits the modified Revitalization Plan and the TIF Plan to the City Council and recommends that the City Council approve the modified Revitalization Plan, the creation of the TIF District, and the TIF Plan. 2.04. Upon approval of the TIF Plan by the City Council, Authority staff are hereby authorized and directed to file a request for certification of the TIF District with the Manager of Property Records and Taxation, as County Auditor, of the County (the “County Auditor”) and to file a copy of the TIF Plan with the Minnesota Commissioner of Revenue and the Office of the State Auditor as required by the TIF Act. 2.05. Upon approval of the TIF Plan by the City Council, the County Auditor is requested to certify the original net tax capacity of the TIF District, as described in the TIF Plan, and to certify in each year thereafter the amount by which the original net tax capacity has increased or decreased. Authority staff are hereby authorized and directed to forthwith transmit this request to the County Auditor in such form and content as the County Auditor may specify, together with a list of all properties within the TIF District for which building permits have been issued during the eighteen (18) months immediately preceding the adoption of this resolution. 2.06. Authority staff, consultants, and legal counsel are authorized to take all actions necessary to implement the modified Revitalization Plan and the TIF Plan and to negotiate, draft, prepare and present to the Board for its consideration all further plans, resolutions, documents, and contracts necessary for this purpose. Approval of the modified Revitalization Plan and the TIF Plan does not constitute approval of any project or a development agreement with any developer. Approved this 7th day of June, 2021, by the Board of Commissioners of the Columbia Heights Economic Development Authority. __________________________________________ President ATTEST: __________________________________________ Secretary CL162-59-723643.v1 9 COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY RESOLUTION NO. 2021-10 RESOLUTION AUTHORIZING AN INTERFUND LOAN FOR ADVANCE OF CERTAIN COSTS IN CONNECTION WITH THE ALATUS TIF DISTRICT BE IT RESOLVED by the Board of Commissioners (the “Board”) of the Columbia Heights Economic Development Authority (the “Authority”) as follows: Section 1.Recitals 1.01. On the date hereof, the Authority approved, contingent upon the approval by the City of Columbia Heights, Minnesota (the “City”), the establishment of the Alatus TIF District (the “TIF District”), a redevelopment district within the Downtown Central Business Redevelopment Project (the “Redevelopment Project”), pursuant to Minnesota Statutes, Sections 469.001 through 469.047, as amended, Minnesota Statutes, Sections 469.090 through 469.1081, as amended, and Minnesota Statutes, Sections 469.174 through 469.1794, as amended (the “TIF Act”), and adopted a modification to the Downtown CBD Revitalization Plan (the “Revitalization Plan”) and a Tax Increment Financing Plan for the purpose of financing certain improvements within the Redevelopment Project (the “TIF Plan”). On June 14, 2021,the City Council of the City will conduct a public hearing on the modification to the Revitalization Plan and the TIF Plan. 1.02. The Authority may incur certain costs related to the TIF District, which costs may be financed on a temporary basis from legally available funds of the Authority or the City. 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 expects to incur costs related to administrative costs of the TIF District (the “Qualified Costs”) using Authority or City funds legally authorized for such purpose, and to reimburse such funds from tax increments from the TIF District when received. 1.05. The Authority intends to designate such advances as an interfund loan in accordance with the terms of this resolution and the TIF Act. Section 2.Interfund Loan 2.01. The Authority hereby authorizes the advance of up to $25,000 in legally available Authority or City funds, including but not limited to the Economic Development Fund, to pay the Qualified Costs, together with interest at the rate of 4% per annum (the “Interfund Loan”). Interest shall accrue on the principal amount of each advance from the date of such advance. The interest rate is no more than the greatest of the rate specified under Minnesota Statutes, Section CL162-59-723643.v1 10 270C.40 and Section 549.09, both in effect for calendar year 2021, and will not be adjusted. 2.02. Principal and interest (the “Payments”) on the Interfund Loan shall be paid semiannually on each August 1 and February 1 (each a “Payment Date”), commencing on the first Payment Date on which the Authority receives Available Tax Increment (defined below), or on any other dates determined by the Executive Director, through the date of last receipt of tax increment from the TIF District. 2.03. Payments on the Interfund Loan will be made solely from Available Tax Increment, defined as tax increment from the TIF District received by the Authority from Anoka County, Minnesota in the six-month period before any Payment Date. Payments shall be applied first to accrued interest, and then to unpaid principal. Payments on the Interfund Loan may be subordinated to any outstanding or future bonds, notes or contracts secured in whole or in part with Available Tax Increment, and are on a parity with any other outstanding or future interfund loans secured in whole or in part with Available Tax Increment. 2.04. The principal sum and all accrued interest payable under this Interfund Loan are 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 this 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 the date of its approval. Approved this 7th day of June, 2021, by the Board of Commissioners of the Columbia Heights Economic Development Authority. CL162-59-723643.v1 11 ______________________________ President ATTEST: __________________________________________ Secretary 4.4300 Central Avenue –TIF Pledge for General Obligation TIF Revenue Bonds Chirpich explained that staff had been directed by the City Council and EDA to work with Alatus LLC, the developer, as it has requested that the City assist in the acquisition of 4300 Central Avenue NE by providing the funding necessary to purchase the property from Hy-Vee and provide the funding for predevelopment costs related to environmental testing, and demolition of the existing buildings. The total amount requested by Alatus is $6,000,000. The proposed uses of the funding are as follows: ·Land Acquisition -$4,500,000 ·Property Taxes (3 years)-$395,957 ·Closing Costs -$105,200 ·City Fees -$50,000 ·Demolition -$671,686 ·Environmental Testing and Reports -$42,156 ·Geotechnical Testing and Reports –35,000 During an executive session on February 1, 2021, the EDA discussed the Alatus project proposal and explored potential public funding options available to the EDA and City. Two primary options were presented by staff; financing with internal funds and borrowing through the issuance of general obligation tax increment financing (TIF) bonds. Following discussion on the two options, the EDA directed staff to move forward with the borrowing option and take the necessary steps to issue the TIF bonds to fund the acquisition and predevelopment costs. Under this scenario, the City would issue the debt necessary for Alatus to purchase the property directly from Hy-Vee with the City acting as interim lender. Alatus would then pay off the City’s loan when the project is ready to close with permanent financing. Since the February 1, 2021 meeting, staff has worked with the City’s public finance consultant, Ehlers, and the City’s bond counsel, Kennedy &Graven,to prepare for the bond sale and debt issuance. The bond sale by the City Council is scheduled for July 12, 2021. Although the City has the authority to issue general obligation TIF bonds, the EDA administers TIF districts for the City, and therefore the County remits increment generated from TIF districts directly to the EDA. Because the general obligation bonds being issued are tax increment bonds, the City will be pledging tax increment for the payment of the bonds. Therefore, the EDA is being asked by the City to pledge increment to the City from the newly created Alatus TIF district, so the City can CL162-59-723643.v1 12 use the increment to pay debt service on the bonds. The formal way to create this arrangement is through a TIF Pledge Agreement.Kennedy & Graven has prepared a pledge agreement for review and approval by the EDA. Questions/Comments from Members: Szurek asked if a closing date had been scheduled. Chirpich said the bonds would be issued on July 12 and closing for the purchase of Alatus LLC from Hy-Vee would be by the end of July and then close on the permanent financing project sometime next year. Szurek asked Osmundson if Alatus would be doing the work on Central Avenue first, and he confirmed so. She asked whether the two businesses in that area would remain in working order until the work is completed.Osmundson said he believed the Dollar Store’s lease expires in 2023 and Frattalone’s lease expires in 2028; there are about $600,000 in associated demolition costs for the Rainbow load-bearing wall and there needs to be some accessibility for the two businesses. Szurek asked if Alatus expects to be applying for some grant money to deal with what is in the ground.Osmundson said he believed so but it depends on how the project comes together, but there may be opportunity to seek transit-oriented development funds and possibly two or three Minnesota deed grants for either stormwater retention, relocation,cleanup, and enhancements. He added that Alatus just began the first environmental studies but a larger one is needed to scope the site, which is called the EAW (Environmental Assistance Worksheet). Herringer asked what exposure the City may be risking with the project. Chirpich responded that if Alatus fails to close, the land is collateral and the City would take that back as lender. It is staff’s opinion that would be the right move because it is such a pivotal site for the community, with so much opportunity, and the acquisition cost is manageable. The City could extend the bonds for another three years if Alatus fell out in the first three-year period.Then get the property back and figure out a new development partner, hopefully within six years --otherwise the bonds could be rolled from temporary to permanent and then have to find a way to pay for the debt service on those or use cash reserves at that point to just pay for the land. If Alatus would pull out, it would likely be in the scenario where the predevelopment costs had not been fully expended. Ingram added that the worst-case scenario is that Alatus purchases the property and, for whatever reason, is unable to close on permanent financing and pay the City back. In that scenario, the City would have a mortgage as security for the bonds and would be able to foreclose on that mortgage and get the property back. So the bonds would still be outstanding but the City would also have a piece of property worth a considerable amount of money and, most likely, other interested developers would be able to step in and built something that would generate the increment needed to pay those bonds off over a longer term. Herringer said he thinks it is such an innovative project and looks great to him on paper; however, he thinks it is a high-risk deal and is concerned that Alatus may not proceed with the project given the amount of money needed to construct it. Chirpich concurred and said the City is relying on a trusted partner. Osmundson added that, with the current macro-economic environment and the designated federal CL162-59-723643.v1 13 opportunity zone, he anticipates the Biden Administration is going to make some substantial changes to the tax code that will change the way real estate investments look, so it is likely that parcel of land will be worth considerably more than it is now. From a risk mitigation standpoint, Alatus will get it done but if not completed,for an unexpected reason, he believes the City would have a parcel worth nearly double in value. Herringer asked what the opportunity zone would do for Alatus.Osmundson said it is a way for investors to ultimately realize a tax-free opportunity with respect to their investments. As an example, if an investor makes an investment and the dollars stay in for ten years, he or she receives whatever the windfall is at that time and no taxes are paid on it. With the proposed modifications to the 1031 exchange program, there may be changes to the corporate tax levies and possibly 15% global tax rate. Chirpich added that there has to be discussion at least about what alternatives there may be; if the City and EDA do not drive development the site for a vision beyond what is currently there, what could happen --as the price of entry right now is pretty low and the City could be stuck with the existing conditions and no “Hy-Vee”for a long time. Herringer said his reluctance is about the existing environmental and soil conditions because he knew what went into that area when Grand Central was built and there could be some conditions there that could below the costs up.Szurek expressed her concern as well about the soil conditions. Márquez-Simula asked whether this is the similar arrangement as 40th and Central. Chirpich said it is not. In this case, TIF revenue would be pledged to pay for qualified development costs and bond funding sought to pay for the acquisition and preliminary development costs. The bond layer is in addition to what was done at 40th and Central. Motion by Jacobs,seconded by Buesgens, to waive the reading of Resolution 2021-11, there being ample copies available to the public.All ayes of present.MOTION PASSED. Motion by Jacobs, seconded by Murzyn, Jr., to adopt Resolution 2021-11, a resolution authorizing execution of a tax increment pledge agreement with the City of Columbia Heights relating to taxable general obligation temporary tax increment bonds, series 2021A, to be issued in the estimated aggregate principal amount of $6,000,000.A roll call vote was taken. Ayes: 6 (Buesgens, Jacobs, Márquez-Simula,Murzyn Jr., Novitsky, Szurek)Abstain: 1 (Herringer). MOTION PASSED 6-1. COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY RESOLUTION NO. 2021-11 RESOLUTION AUTHORIZING EXECUTION OF A TAX INCREMENT PLEDGE AGREEMENT WITH THE CITY OF COLUMBIA HEIGHTS RELATING TO TAXABLE GENERAL OBLIGATION TEMPORARY TAX INCREMENT BONDS, CL162-59-723643.v1 14 SERIES 2021A, TO BE ISSUED IN THE ESTIMATED AGGREGATE PRINCIPAL AMOUNT OF $6,000,000 BE IT RESOLVED by the Board of Commissioners (the “Board”) of the Columbia Heights Economic Development Authority (the “Authority”) as follows: Section 1.Recitals 1.01. On the date hereof, the Board approved the establishment of the Alatus TIF District (the “TIF District”), a redevelopment district within Downtown Central Business Redevelopment Project (the “Redevelopment Project”) within the City, contingent upon the approval by the City Council of the City (the “City Council”) on June 14, 2021, pursuant to Minnesota Statutes, Sections 469.174 through 469.1794, as amended (the “TIF Act”), and adopted a tax increment financing plan for the TIF District. 1.02. Pursuant to the authority conferred by Section 469.178 of the TIF Act and Minnesota Statutes, Chapter 475, as amended, and a resolution to be adopted by the City Council on July 12, 2021, the City will issue its Taxable General Obligation Temporary Tax Increment Bonds, Series 2021A (the “Bonds”), in the estimated aggregate principal amount of $6,000,000, to pay all or a portion of the public redevelopment costs incurred or to be incurred within the Redevelopment Project as identified in the TIF Plan, including but not limited to a bridge loan to be provided to Alatus LLC, a Minnesota limited liability company, for land acquisition costs, costs of demolition, and costs associated with reports, and Alatus LLC has agreed to pay the City’s financing and other related costs related to issuing the Bonds and making the loan. 1.03. There has been presented to the Board a Tax Increment Pledge Agreement (the “Pledge Agreement”) between the Authority and the City relating to the payment of principal and interest on the Bonds and providing for the pledge of tax increment revenues generated from the TIF District to secure the payment of principal of, premium, if any, and interest on the Bonds. Section 2.Approval 2.01. The Board hereby approves the pledge to the City of tax increment revenues attributable to the TIF District for the payment of principal of, premium, if any, and interest on the Bonds. 2.02. The President and Executive Director of the Authority are hereby authorized to execute and deliver the Pledge Agreement substantially in the form on file with the Board, providing for the pledge of tax increment derived from property in the TIF District for the payment of the principal of, premium, if any, and interest on the Bonds. 2.03. This resolution shall be effective as of the date hereof. Approved this 7th day of June, 2021, by the Board of Commissioners of the Columbia Heights Economic Development Authority. CL162-59-723643.v1 15 ____________________________________ President ATTEST: __________________________________________ Secretary TAX INCREMENT PLEDGE AGREEMENT between CITY OF COLUMBIA HEIGHTS, MINNESOTA and COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY THIS TAX INCREMENT PLEDGE AGREEMENT is made and entered into on or as of the ___ day of July,2021 (the “Agreement”), between the City of Columbia Heights, Minnesota (the “City”), and the Columbia Heights Economic Development Authority (the “Authority”). RECITALS WHEREAS, the City has established and the Authority administers the Alatus TIF District (the “TIF District”), a redevelopment district within the Downtown Central Business Redevelopment Project (the “Redevelopment Project”), pursuant to Minnesota Statutes,Sections 469.174 through 469.1794, as amended (the “TIF Act”), and the Authority and the City have approved a tax increment financing plan for the TIF District (the “TIF Plan”); and WHEREAS,pursuant to the authority conferred by Section 469.178 of the TIF Act and Minnesota Statutes, Chapter 475, as amended, and a resolution to be adopted by the City Council of the City on July 12, 2021 (the “Bond Resolution”), the City will issue its Taxable General Obligation Temporary Tax Increment Bonds, Series 2021A (the “Bonds”), in the original aggregate principal amount of $6,000,000,to pay all or a portion of the public redevelopment costs incurred or to be incurred within the Redevelopment Project as identified in the TIF Plan, including but not limited to a bridge loan to be provided to Alatus LLC, a Minnesota limited liability company, for land acquisition costs (the “Project Costs”); and WHEREAS, pursuant to a resolution adopted by the Board of Commissioners of the Authority (the “Board”) on June 7, 2021, the Authority has agreed to pledge tax increment revenues attributable to the TIF District to the City to secure the payment of principal of, premium, if any, and interest on the Bonds; and WHEREAS, pursuant to Section 469.178, subdivision 2 of the TIF Act,any agreement to pledge tax increment revenues must be made by written agreement by and between the Authority and the City and must be filed with the Manager of Property Records and Taxation, as County Auditor (the “County Auditor”), of Anoka County, Minnesota (the “County”). CL162-59-723643.v1 16 NOW, THEREFORE, the City and the Authority mutually agree to the following: (1)The City will issue the Bonds in accordance with the Bond Resolution. (2)The proceeds from the sale of the Bonds will be used to finance the Project Costs. (3)The Authority hereby pledges ninety percent (90%) of the tax increment revenues generated by the property in the TIF District and received by the Authority (the “Pledged Tax Increments”)to the payment of principal of and interest on the Bonds, subject to the terms of this Agreement. At least three (3) business days prior to each debt service payment date for the Bonds, there shall be transferred from the account of the TIF District to the Debt Service Fund maintained by the City for the payment of the Bonds, an amount of Available Tax Increment (as defined below), which when taken together with taxes levied for such purposes in accordance with the Bond Resolution, if any,and amounts to be deposited in the Debt Service Fund for the Bonds, is equal to the principal of and interest on the Bonds to become due on the subject payment date. Any Available Tax Increment in excess of one hundred five percent (105%) of the principal and interest due with respect to the Bonds on any payment date may be retained by the Authority in the account for the TIF District and applied to any costs of the Project in accordance with law, including the payment of principal of and interest on any interfund loans (the “Interfund Loans”). (4)Without regard to anything in this Agreement to the contrary, Available Tax Increment may be pledged (at the Authority’s option on a parity, superior or subordinate basis) to pay principal of and interest on the Bonds and any other obligations issued by the City, the Authority, including the payment of principal of and interest on the Interfund Loans, or any other public body to finance public redevelopment costs paid or incurred by the Authority in the Project or any other pledge permitted by law. The Authority reserves the right to release all or any portion of Available Tax Increment from the pledge under this Agreement (including without limitation the release of Available Tax Increment from any specific parcel within the TIF District) to the extent permitted by law, provided that in no event may the Authority reduce the pledge such that Available Tax Increment is reasonably expected to pay less than twenty percent (20%) of principal of and interest on the Bonds. (5)For purposes of this Agreement, “Available Tax Increment” means, on each February 1 and August 1 (the “Payment Dates”) during the term of the Bonds, ninety percent (90%) of the tax increment attributable to the property in the TIF District which is paid to the Authority by the County in the six (6) months preceding the Payment Date. (6)This Agreement supplements any prior agreements between the City and the Authority with respect to pledges of Available Tax Increment. (7)An executed copy of this Agreement shall be filed with the County Auditor pursuant to Section 469.178, subdivision 2 of the TIF Act. (The remainder of this page is intentionally left blank.) CL162-59-723643.v1 IN WITNESS WHEREOF, the City and the Authority have caused this Tax Increment Pledge Agreement to be duly executed on their behalf as of the date and year first written above. CITY OF COLUMBIA HEIGHTS, MINNESOTA By Its Mayor By Its City Manager Szurek inquired as to why there is so much height space,at the northeast portion of the building, between the base of the building and the first layer of concrete.Osmundson said the first parking deck is 18 feet clear to accommodate vehicles such as box trucks, so it is pretty tall, but it will make more sense when construction begins on City Hall. Szurek asked, given the current lumbar industry situation, whether construction would be delayed or if Alatus has stockpiled a supply of lumber.Osmundson said Alatus’ contract price in January was locked in at that time, 40% lower than it is now. Framing is expected to begin in late June or July. ADJOURNMENT Motion by Buesgens,seconded by Murzyn, Jr., to adjourn the meeting at 6:42 pm.All ayes. MOTION PASSED. Respectfully submitted, _______________________________ Alicia Apanah,Recording Secretary