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HomeMy WebLinkAbout2023-087BE IT RESOLVED by the City Council of the City of Columbia Heights., Minnesota (the "City") as follows: Section 1. Recitals. 1.01. In order to facilitate the acquisition by Alatus Columbia Heights 11 LLC, a Delaware limited liability company (the "Borrower"), of certain property located at 4300 Central Avenue NE in the City (the "Property"), within the Mains 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 "Original Loan Agreement"), between the City and the Borrower, the City loaned to the Borrower the sum of $5,935,000 (the "Loan"), from proceeds of the Taxable General Obligation Temporary Tax Increment Bonds, Series 2021A (the "Series 2021A Bond"), issued by the City in the original aggregate principal amount of $5,935,000, to finance a portion of the Project Costs. 1.03. The Series 2021A Bond matures on February 1, 2024. The principal of the Series 2021A Bond and interest thereon are payable primarily from tax increments resulting in increases in the taxable value of real property in the TIF District (the "Tax Increment Revenues") and from proceeds of definitive bonds or additional temporary bonds to be issued by the City prior to the maturity of the Series 2021A Bond, as set forth in the resolution adopted by the City Council of the City on July 12, 2021, awarding the sale of the Series 2021A Bond (the "Series 2021A Bond Resolution"). As provided in the Series 2021A Bond and Series 2021A Bond Resolution, if the Series 2021A Bond cannot be paid at maturity from Tax Increment Revenues or from other funds appropriated by the City Council, the Series 202 1 A Bond will be paid from the proceeds of definitive or additional temporary bonds that will be issued and sold prior to the maturity date of the Series 202 1 A Bond. 1.04. To evidence the Loan, the Borrower delivered a Promissory Note, dated July 29, 2021 (the "Original Note"), to the City, which Original Noe 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. As provided in the Original Escrow Agreement, the date of the final draw on the Loan was June 30, 2023 (the "Original Final Draw Date"). C1,162-68-914720A 1.05. Section 2(a) of the Original Loan Agreement provided that 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 Series 2021A Bond, if any, would be due and payable on July 31, 2023 (the "Original Loan Payment Date"), unless prepaid earlier. The maturity date of the Original Note and the Original Mortgage, as set forth in such documents, was the Original Loan Payment Date (July 31, 2023). 1.06. Section 2(a) of the Original Loan Agreement also provided that the Columbia Heights Economic Development Authority (tile "Authority") and the Borrower (or an affiliate) must in good faith negotiate and work toward execution of a definitive Purchase and Redevelopment Contract (the "Contract") as contemplated under the Preliminary Development Agreement (the "Preliminary 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 Date, then Section 2(a) of the Original Loan Agreement provided that 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. 1.07. The Borrower previously 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 (the "Other Financing"), but that closing on the Other Financing was delayed and was expected to occur after the Original Loan Payment Date. Accordingly, the Borrower requested a modification to the terms of the Loan to extend the Original Loan Payment Date to a date not later than December 15, 2023 (the "Modified Loan Payment Date"), to make a corresponding extension of the Original Final Draw Date of the Loan to a date not later than October 31, 2023 (the "Modified Final Draw Date"), and to amend 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 Other Financing prior to the Modified Loan Payment Date. 1.08. On May 22, 2023, the City Council of the City adopted a resolution approving, among other things, the extension of the Original Loan Payment Date and the Original Final Draw Date and the execution and delivery of amended and restated loan documents. To memorialize the modifications to the Loan, the City and the Borrower entered into an Amended and Restated Loan Agreement, dated June 30, 2023, which amended and restated the Original Loan Agreement. As security, the Borrower executed and delivered to the City an Amended and Restated Promissory Note, dated June 30, 2023, which amended and restated the Original Note, and an Amended and Restated Mortgage, dated June 30, 2023, which amended and restated the Original Mortgage. The City, the Borrower, and Title entered into an Amended and Restated Escrow Agreement, dated June 30, 2023, which amended and restated the Original Escrow Agreement. The amended and restated loan documents describe in this Section 1.08 are referred to collectively as the "Amended and Restated Loan Documents." 1.09. The Borrower has represented to the City that a portion of the proceeds of the Loan funded with the proceeds of the Series 2021A Bond on deposit with Title remains unexpended; as such, the Borrower has requested that the Modified Final Draw Date be extended. CL162-68-914720A 1.10. The Borrower has also represented to the City that the Other Financing has been further delayed; as such, the Borrower has requested that the Modified Loan Payment Date be extended to a date later than the maturity date of the Series 2021A Bond of February 1, 2024. Accordingly, because the Series 2021A Bond cannot be paid at maturity, the City Council has determined to pay the Series 2021A Bond from the proceeds of additional temporary bonds that will be issued and sold prior to the maturity date of the Series 2021A Bond, pursuant a resolution adopted by the City Council of the City on November 27, 2023, awarding the sale of the City's Taxable General Obligation Temporary Tax Increment Refunding Bonds, Series 2023A (the "Series 2023A Bond"). The Series 2023A Bond will redeem and prepay the Series 2021A Bond, and thereby provide additional temporary financing for the Project Costs. The Series 2023A Bond matures on February 1, 2026, but is subject to optional redemption on or after August 1, 2024. 1.11. The City is proposing to: (i) increase the principal amount of the Loan payable by the Borrower under the Amended and Restated Loan Documents to $6,615,000, representing the principal amount of the Series 2023A Bond to be issued by the City, the proceeds of which will be used to redeem and prepay the Series 2021A Bond and to pay financing and other related costs with respect to the Series 2023A Bond, (ii) extend the Modified Loan Payment Date to a date not later than July 31, 1, 2025, and (iii) extend the Modified Final Draw Date of the Loan to a date not later December 31, 2024. 1.1.2. Forms of documents further modifying the Loan, including a Second Amended and Restated Loan Agreement, a Second Amended and Restated Promissory Note, a Second Amended and Restated Mortgage, and a Second Amended and Restated Escrow Agreement (collectively, the °`Second Amended and Restated Loan Documents"), have been prepared and are on file with the City. It is the intention of the City that the Second Amended and Restated Loan Documents will amend and restate the Amended and Restated Loan Documents. Section 2. Authority Approval; Other Proceedim4s. 2.01. The City Council hereby approves: (i) the increase in the principal amount of the Loan payable by the Borrower to $6,615,000, representing the principal amount of the Series 2023A Bond to be issued by the City, the proceeds of which will be used to redeem and prepay the Series 2021A Bond and to pay financing and other related costs with respect to issuing the Series 2023A Bond, and thereby provide additional temporary financing for the Project Costs, (ii) the extension of the Modified Loan Payment Date to a date not later than July 31, 2025, and (iii) the extension of the Modified Final Draw Date to a date not later than December 31, 2024, all as set forth in the Second Amended and Restated Loan Documents. 2.02. The Second 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 Second Amended and Restated Loan Agreement and the Second Amended and Restated Escrow Agreement by such officials shall be conclusive evidence of approval. 2.03. The Mayor and the City Manager are hereby authorized to execute on behalf of the City the Second Amended and Restated Loan Agreement and the Second 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. CL162-68-914720A 2.04. City staff and consultants are authorized to take any actions necessary to carry out the intent of this resolution. Approved this 11" day of December, 2023, by the City Council of the City of Columbia Heights, Minnesota. Offered by: Jacobs Seconded by: Spriggs Roll Call: All Ayes md&a Marquez`Simula, NN*or ATTEST: a Ion, City Clerk CL162-68-914720.0 4