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HomeMy WebLinkAbout11-10-2025 Special EDA Packet SPECIAL ECONOMIC DEVELOPMENT AUTHORITY MEETING City Hall—Shared Vision Room, 3989 Central Ave NE Monday, November 10, 2025 5:00 PM AGENDA ATTENDANCE INFORMATION FOR THE PUBLIC Members of the public who wish to attend may do so in-person, or by using Microsoft Teams and entering meeting ID 211 031 081 944 6 and passcode w5ME2kx9. For questions, please call the Community Development Department at 763-706-3670. Auxiliary aids or other accommodations for individuals with disabilities are available upon request when the request is made at least 72 hours in advance. Please contact Administration at 763 -706-3610 to make arrangements. CALL TO ORDER/ROLL CALL PLEDGE OF ALLEGIANCE BUSINESS ITEMS 1. 4300 Central Avenue – TIF Pledge for General Obligation TIF Revenue Bonds Amended. (pg. 2) MOTION: Move to waive the reading of Resolution 2025-28, there being ample copies available to the public. MOTION: Move to adopt Resolution 2025-28, a resolution authorizing execution of a second amended and restated tax increment pledge agreement with the City of Columbia Heights relating to taxable general obligation tax increment refunding bonds, series 2026a. ADJOURNMENT Auxiliary aids or other accommodations for individuals with disabilities are available upon request when the request is made at least 72 hours in advance. Please contact Administration at 763-706-3610 to make arrangements. 1 ITEM: 4300 Central Avenue – TIF Pledge for General Obligation TIF Revenue Bonds Amended . DEPARTMENT: Community Development BY/DATE: CD Director, 11/03/2025 CORE CITY STRATEGIES: (please indicate areas that apply by adding an “X” in front of the selected text below) _Community that Grows with Purpose and Equity _High Quality Public Spaces _Safe, Accessible and Built for Everyone _Engaged, Effective and Forward-Thinking X Resilient and Prosperous Economy _Inclusive and Connected Community BACKGROUND: During the summer of 2021, the City received word that Hy-Vee was interested in selling the property located at 4300 Central Avenue NE. The City moved to gain control over the site by working with Alatus, who agreed to purchase the property. In order to support the developer, the City provided funding in the form of a loan for the purchase and predevelopment costs related to the project. Alatus requested a total loan of $6,000,000, which covered the following items:  Land Acquisition – $4,500,000  Closing Costs – $105,200  City Fees – $50,000  Demolition – $671,686  Environmental Testing and Reports – $42,156  Geotechnical Testing and Reports – $35,000 Rather than providing a direct loan, the City funded the project using borrowed funds from general obligation tax increment financing (TIF) bonds. Under this structure, the City issued the debt necessar y for Alatus to purchase the property directly from Hy-Vee, with the City acting as the interim lender. Alatus is expected to repay the City’s loan when the project closes with permanent financing. In 2023, as the original bonds approached maturity, the City reissued a new set of temporary general obligation TIF bonds to pay off the original bond series and extend the loan timeline. This reissuance provided additional time for Alatus to complete predevelopment activities and pursue permanent financing for the project. The current bond cycle, issued in 2023, is now set to mature in February 2026. As the City approaches this upcoming maturity date, Alatus has not yet secured permanent financing and continues to work with the City on project planning. The overall scope of the project remains under discussion and is anticipated to be reviewed by the City Council at its December work session. Given the continued predevelopment status, staff are bringing forward the issuance of a new set of permanent general obligation ECONOMIC DEVELOPMENT AUTHORITY AGENDA SECTION BUSINESS ITEMS MEETING DATE 11/10/2025 2 Item 1. City of Columbia Heights - EDA Letter Page 2 TIF bonds to pay off the 2023 bonds and again extend the loan term to allow additional time for project development and financing. The new bonds will remain temporary, similar to the previous issuances, and all bond funds from each series will be repaid at the time of closing on the project’s first phase. Because the general obligation bonds are tax increment bonds, the City will again pledge tax increment to pay the debt service. The EDA administers the City’s TIF districts and receives the increm ent from the County. Therefore, the City is requesting that the EDA pledge increment from the Alatus TIF district to the City for debt service payments on the new bonds. The formal mechanism for this arrangement is an amended TIF Pledge Agreement. The EDA’s counsel has prepared the attached amendment and resolution for the EDA’s review and approval. Looking ahead, the City Council will consider the amended and restated loan documents at one of its meetings in November. Following that, the Council is expected to set the bond sale at its December meeting, with final bond approval anticipated at the first Council meeting in January 2026. STAFF RECOMMENDATION: Staff recommends approval of the attached resolution and amended TIF Pledge Agreement between the City of Columbia Heights and the Columbia Heights Economic Development Authority to support the reis suance of general obligation TIF bonds related to the Alatus project at 4300 Central Avenue NE. RECOMMENDED MOTION(S): MOTION: Move to waive the reading of Resolution 2025-28, there being ample copies available to the public. MOTION: Move to adopt Resolution 2025-28, a resolution authorizing execution of a second amended and restated tax increment pledge agreement with the City of Columbia Heights relating to taxable general obligation tax increment refunding bonds, series 2026a. ATTACHMENT(S) 1. EDA Resolution 2025-28 2. TIF Pledge Agreement Amended 3 Item 1. 4924-5888-2677.1 COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY RESOLUTION NO. 2025-28 RESOLUTION AUTHORIZING EXECUTION OF A SECOND AMENDED AND RESTATED TAX INCREMENT PLEDGE AGREEMENT WITH THE CITY OF COLUMBIA HEIGHTS RELATING TO TAXABLE GENERAL OBLIGATION TAX INCREMENT REFUNDING BONDS, SERIES 2026A 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”) 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”) within the City, 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 (the “TIF Plan”). 1.02. Pursuant to the authority conferred by Section 469.178, subdivision 5 of the TIF Act and Minnesota Statutes, Chapter 475, as amended (the “Municipal Debt Act”), including Section 475.61, subdivision 6, the City issued its Taxable General Obligation Temporary Tax Increment Bonds, Series 2021A (the “Series 2021A Bond”), dated July 29, 2021, in the original aggregate principal amount of $5,935,000, 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 provided to Alatus Columbia Heights II LLC, a Delaware limited liability company (the “Developer”), for land acquisition, demolition, and related costs (the “Project Costs”), and the Developer agreed to pay the City’s financing and other related costs related to issuing the Series 2021A Bond. 1.03. The City and the Authority entered into a Tax Increment Pledge Agreement, dated July 29, 2021 (the “Original Pledge Agreement”), relating to the payment of principal of and interest on the Series 2021A Bond 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 Series 2021A Bond. 1.04. Prior to the maturity of the Series 2021A Bond, the City determined it to be necessary to provide additional temporary financing for the Project Costs and to issue an additional series of temporary bonds for such purpose. 1.05. Pursuant to the authority conferred by the TIF Act, including Section 469.178, subdivision 5, and the Municipal Debt Act, including Sections 475.61, subdivision 6, and 475.67, subdivision 3, and a resolution adopted by the City Council of the City on November 27, 2023, the City issued its Taxable General Obligation Temporary Tax Increment Refunding Bonds, Series 2023A (the “Series 2023A Bond”), in the original aggregate principal amount of $6,615,000, to refund the Series 2021A Bond prior to maturity and provide additional temporary financing for the Project Costs. 1.06. In connection with the issuance of the Series 2023A Bond, the City and the Authority entered into the Amended and Restated Tax Increment Pledge Agreement, dated December 14, 2023 (the “First Amended Agreement”), which amended and restated the Original Agreement, providing for the 4 Item 1. 4924-5888-2677.1 2 pledge of tax increment revenues generated from the TIF District to secure the payment of principal of, premium, if any, and interest on the Series 2023A Bond. 1.07. The Series 2023A Bond matures on February 1, 2026 and is payable on such date from tax increments resulting in increases in the taxable value of real property in the TIF District and/or from proceeds of permanent bonds to be issued by the City prior to such maturity. 1.08. The City has determined the need to issue permanent bonds to refinance the Series 2023A Bond, thereby providing permanent financing for the Project Costs. To that end, at an upcoming meeting of the City Council of the City, but in no event later than February 1, 2026, the City Council will consider a resolution authorizing the issuance and sale of the City’s Taxable General Obligation Tax Increment Refunding Bonds, Series 2026A (the “Bonds”), in the maximum aggregate principal amount sufficient to pay: (i) the principal of, interest on, and premium, if any, on the Series 2023A Bond on the redemption date thereof, (ii) interest on the Bonds for a period not exceeding three years from their date of issue or such other maximum period under the Municipal Debt Act, and (iii) costs of issuance, pursuant to the TIF Act, including Section 469.178, subdivision 5, and the Municipal Debt Act, including Section 475.67, subdivision 3. The proceeds of the Bonds will be used to refund the Series 2023A Bond prior to maturity and provide permanent financing for the Project Costs. 1.09. There has been presented to the Board a Second Amended and Restated Tax Increment Pledge Agreement (the “Pledge Agreement”) between the Authority and the City, which amends and restates the Original Pledge Agreement, as amended and restated by the First Amended Pledge Agreement, 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 Bond. 2.03. This resolution shall be effective as of the date hereof. Approved this 10th day of November, 2025, by the Board of Commissioners of the Columbia Heights Economic Development Authority. President ATTEST: Secretary 5 Item 1. 4938-8599-4613.1 SECOND AMENDED AND RESTATED TAX INCREMENT PLEDGE AGREEMENT between CITY OF COLUMBIA HEIGHTS, MINNESOTA and COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY THIS SECOND AMENDED AND RESTATED TAX INCREMENT PLEDGE AGREEMENT is made and entered into on or as of the ____ day of _____________, 2026 (the “Agreement”), between the City of Columbia Heights, Minnesota (the “City”), and the Columbia Heights Economic Development Authority (the “Authority”), and amends and restates the Tax Increment Pledge Agreement, dated July 29, 2021 (the “Original Agreement”), between the City and the Authority, as amended and restated by the Amended and Restated Tax Increment Pledge Agreement, dated December 14, 2023 (the “First Amended Agreement”), between the City and 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, subdivision 5 of the TIF Act and Minnesota Statutes, Chapter 475, as amended (the “Municipal Debt Act”), including Section 475.61, subdivision 6, the City issued its Taxable General Obligation Temporary Tax Increment Bonds, Series 2021A (the “Series 2021A Bond”), dated July 29, 2021, in the original aggregate principal amount of $5,935,000, 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 provided to Alatus Columbia Heights II LLC, a Delaware limited liability company (the “Developer”), for land acquisition, demolition, and related cots (the “Project Costs”), and the Developer agreed to pay the City’s financing and other related costs related to issuing the Series 2021A Bond; and WHEREAS, the City and the Authority entered into the Original Agreement relating to the payment of principal of and interest on the Series 2021A Bond 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 Series 2021A Bond; and WHEREAS, prior to the maturity of the Series 2021A Bond, the City determined it to be necessary to provide additional temporary financing for the Project Costs and to issue an additional series of temporary bonds for such purpose; and WHEREAS, pursuant to the authority conferred by the TIF Act, including Section 469.178, subdivision 5, and the Municipal Debt Act, including Sections 475.61, subdivision 6, and 475.67, subdivision 3, and a resolution adopted by the City Council of the City on November 27, 2023, the City issued its Taxable General Obligation Temporary Tax Increment Refunding Bonds, Series 2023A (the 6 Item 1. 4938-8599-4613.1 2 “Series 2023A Bond”), in the original aggregate principal amount of $6,615,000, to refund the Series 2021A Bond prior to maturity and provide additional temporary financing for the Project Costs; and WHEREAS, in connection with the issuance of the Series 2023A Bond, the City and the Authority entered into the First Amended Agreement, which amended and restated the Original Agreement, 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 Series 2023A Bond; and WHEREAS, the Series 2023A Bond matures on February 1, 2026 and is payable on such date from tax increments resulting in increases in the taxable value of real property in the TIF District and/or from proceeds of permanent bonds to be issued by the City prior to such maturity; and WHEREAS, the City has determined the need to issue permanent bonds to refinance the Series 2023A Bond, thereby providing permanent financing for the Project Costs; and WHEREAS, pursuant to the authority conferred by the TIF Act, including Section 469.178, subdivision 5, and the Municipal Debt Act, including Section 475.67, subdivision 3 , and a resolution adopted by the City Council of the City on ____________, 20___ (the “Bond Resolution”), the City will issue its Taxable General Obligation Tax Increment Refunding Bonds, Series 2026A (the “Bonds”), in the original aggregate principal amount of $___________, to refund the Series 2023A Bond prior to maturity and provide permanent financing for the Project Costs; and WHEREAS, pursuant to a resolution adopted by the Board of Commissioners of the Authority (the “Board”) on November 3, 2025, 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”). 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 Series 2021A Bond were used to provide temporary financing for the Project Costs, and the proceeds from the sale of the Series 2023A Bond were used to provide additional temporary financing for the Project Costs by refunding the Series 2021A Bond. (3) The proceeds from the sale of the Bonds will be used to refund the Series 2023A Bond and provide permanent financing for the Project Costs. (4) 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, 7 Item 1. 4938-8599-4613.1 3 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 Project Costs in accordance with law, including the payment of principal of and interest on any interfund loans (the “Interfund Loans”). (5) 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. (6) For purposes of this Agreement, “Available Tax Increment” means, on each February 1 and August 1 (the “Payment Dates”) during the term of the Bond s, 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. (7) This Agreement amends and restates the Original Agreement, as amended by the First Amended Agreement, with respect to pledges of Available Tax Increment. (8) 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.) 8 Item 1. S-1 4938-8599-4613.1 IN WITNESS WHEREOF, the City and the Authority have caused this Second Amended and Restated 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 9 Item 1. S-2 4938-8599-4613.1 Execution page of the Authority to the Second Amended and Restated Tax Increment Pledge Agreement, dated as of the date and year first written above. COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY By Its President By Its Executive Director 10 Item 1.