Loading...
HomeMy WebLinkAbout2023-027CITY OF COLUM 31A HEIGHTS, MINNESOTA RESOLUTION NO.2023-27 RESOLUTION APPROVING MODIFICATION OF CERTAIN TERMS OF A LOAN FROM THE CITY TO ALATUS COLUMBIA HEIGHTS H LLC AND APPROVING FORMS OF AMENDED AND RESTATED LOAN DOCUMENTS BE IT RESOLVED by the City Council (the "City Council") of the City of Columbia Heights, Minnesota (the "Cfty") as follows: Section 1. Recitals. 1.01. In order to facilitate the acquisition by Alatus Columbia Heights II LLC, a Delaware limited liability company (the "Borrower"), of certain property located at 4300 Central Avenue NE in the City (the "Pro a "), within the Alatus TIF District (the "TIF District"), a redevelopment district located within the Downtown Central Business Redevelopment Project in the City (the "Redevelopment Project"), the Borrower requested a bridge loan from the City to finance a portion of the purchase price of the Property, legal, closing, and other transaction costs associated therewith, costs of demolition, and costs associated with reports (collectively, the "Project Costs"), all of which are qualified public redevelopment costs reimbursable from tax increment under Minnesota Statutes, Sections 469.174 through 469.1794, as amended (the "TIF Act"). 1.02. Pursuant to the terms and conditions of a Loan Agreement, dated July 29, 2021 (the "OriginalAgreement"), between the City and the Borrower, the City loaned to the Borrower the sum of $5,935,000 (the "Loan"), from proceeds of a Taxable General Obligation Temporary Tax Increment Bond, Series 2021A, issued by the City in the original aggregate principal amount of $5,935,000 (the "Bond"), to finance a portion of the Project Costs. The Loan is evidenced by a Promissory Note, dated July 29, 2021 (the "Original Note'), payable by the Borrower to the City. The Original Note is secured by a Mortgage, dated July 29, 2021 (the "Original Mortgage"), by the Borrower in favor of the City. In addition, the Borrower, the City and Commercial Partners Title ("Title") executed an Escrow Agreement, dated July 29, 2021 (the "Original Escrow Agreement"), pursuant to which Title, as escrow agent, holds a portion of the Loan in escrow for disbursement to the Borrower to pay for Project Costs. 1.03. As provided in Section 2(a) of the Original Loan Agreement, the entire unpaid amount of principal of the Loan, plus interest equal to the amount of interest paid by the City in excess of the par amount of the Bond, if any, is due and payable on July 31, 2023 (the "Orig[pal Loan Payment _Date"), unless prepaid earlier. The maturity date of the Original Note and the Original Mortgage is the Original Loan Payment Date (July 31, 2023). 1.04. Section 2(a) of the Original Loan Agreement also provides that the Columbia Heights Economic Development Authority (the "Authnri . ") and the Borrower (or an affiliate) must in good faith negotiate and work toward execution of a definitive Purchase and Redevelopment Contract (the "Contract 1) as contemplated under the Preliminary Development Agreement (the "PreliminM Agreement") with respect to the redevelopment of the Property for the construction of a mixed -use (multifamily residential and commercial) development thereon, which Contract must set forth the terms of reimbursement by the Authority to the Borrower of qualified redevelopment costs of the Redevelopment Project pursuant to the TIF Act. If the parties are unable to successfully negotiate and execute the Contract prior to the Loan Payment CL162-66-869442.v1 Date, then under Section 2(a) of the Original Loan Agreement the Borrower must convey title to the Property to the City in full satisfaction of the unpaid balance of the Loan and any interest thereon, at which time the Borrower will be released from the Original Loan Agreement, the Original Note and the Original Mortgage, and will have no further liability thereunder and under the Original Escrow Agreement. 1.05. The Borrower has represented to the City that it anticipates repaying the Loan from proceeds of short-term financing, long-term mortgage financing, a bridge loan with a long-term take-out financing commitment, or a combination of the foregoing, but that closing on such financing has been delayed and is now expected to occur after the Loan Payment Date. Accordingly, the Borrower has requested a modification to the terms of the Loan to extend the Loan Payment Date to a date not later than December 15, 2023, and to make a corresponding extension of the final draw date of the Loan to a date not later than October 31, 2023. The parties propose to further modify the terms of the Loan to provide that conveyance of title to the Property shall also occur if the Borrower does not close on the financing described in this Section 1.05 prior to the Loan Payment Date, as hereinafter extended. 1.06. Forms of documents modifying the Loan as provided in Section 1.05 hereof, including an Amended and Restated Loan Agreement, an Amended and Restated Promissory Note, an Amended and Restated Mortgage, and an Amended and Restated Escrow Agreement (collectively, the "Amended and Restated Loan Documents"), have been prepared and are on file with the City. Section 2. Authority Approval, Other Proceedings. 2.01. The Amended and Restated Loan Documents as presented to the City Council are hereby in all respects approved, subject to modifications that do not alter the substance of the transaction and that are approved by the Mayor and the City Manager, provided that execution of the Amended and Restated Loan Agreement and the Amended and Restated Escrow Agreement by such officials shall be conclusive evidence of approval. 2.02. The Mayor and the City Manager are hereby authorized to execute on behalf of the City the Amended and Restated Loan Agreement and the Amended and Restated Escrow Agreement, and any documents referenced therein requiring execution by the City, and to carry out on behalf of the City its obligations thereunder. 2.03. City staff and consultants are authorized to take any actions necessary to carry out the intent of this resolution. Approved this ?I'day of 2023, by the City Council of the City of Columbia Heights, Minnesota. Offered by: James Seconded by: SpriggsA4IZ'f1""'6A1 Roll Call: All Ayes M yor ATTEST: ity Clerk C1,162-66-869442.0 2