RES 11-01;;
ROUSTING ANA REDEVELOPI\'IENT AUTHORITY OF THE
CITY OF ELK RIVER, R'IIrTI\~SOTA
SHERBI~`RNE COU1vTY
STATE OF 11'iIl~'NESOTA
Commissioner Toth introduced the following resolution and moved its adoption:
RESOLUTION NO. 11-01
RESOLUTION AUTHORIZII~TG AN INTERFU~ND LOAN FOR ADVAI~TCE OF
CERTAIN COSTS IN CONNECTION WITH TAX INCRE11'IENT FINAl\TCING
DISTRICT NO. 16 SPENDING PLAN AND AUTHORIZING A LOAN FOR THE
ELK RIVER PIZZA RANCH PROJECT.
BE IT RESOLVED by the Board of Commissioners (the `'Board") of the Housing and
Redevelopment Authority of the City of Elk River, Mimlesota, Minnesota (the "HRA"), as foliows:
Section 1. Background.
1.01. The HRA has heretofore established Tax Increment Financing District No. 16 (the "TIF
District'') and has adopted a Spending Plan (the "Spending Plan") pursuant to Minnesota Statutes, Section
469.176 Subd. 4m.
1.02. The HRA has determined to pay for certain costs identified in the Spending Plan consisting
of land acquisition, public utilities, interest, administrative costs and other costs incurred in connection
with the Loan for the Pizza Ranch Project described in Section 4 below (collectively, the "Qualified
Costs"), which costs lnay be financed on a temporary basis from HRA funds or funds of the City of Elk
River, Minnesota, Minnesota (the "City") available for such purposes.
1.03. Under Minnesota Statutes, Section 469.178, Subd. 7, the HRA is authorized to advance or
loan money from the HRA's general fund or any other fund from which such advances may be legally
authorized, in order to fmance the Qualified Costs.
1.04. The HRA intends to reimburse itself for the Qualified Costs from tax increments derived
from the TIF District in accordance with the terms of this resolution (which terms are referred to
collectively as the "Interfund Loan").
Section 2. Terms of Interfund Loan.
2:01. The HRA hereby authorizes the advance of up to $51,000 from the HRA fund or so much
thereof as may be paid as Qualified Costs. The HRA shall reimburse itself for such advances together
with interest at the rate stated below. Interest accrues on the principal amount from the date of each
advance. The maximum rate of interest permitted to be charged is limited to the greater of the rates
specified under Minnesota Statutes, Section 270C.40 or Section 549.09 as of the date the loan or advance
is authorized, unless the written agreement states that the maximum interest rate will fluctuate as the
interest rates specified under Minnesota Statutes, Section 270C.40 or Section 549.09 are from time to
time adjusted. The interest rate shall be 2% or such other rate determined by the City Finance Director
~ and will not fluctuate.
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2.02. Principal and interest ("Payments") on the Interfund Loan shall be paid semi-annually on
each August 1 and February 1 (each a "Payment Date"); connnencing on the first Payment Date on which
the Authority has Available Tax lncrement (defined belo«~), or on any other dates determined by the City
Finance Director; through the date of last receipt of tax increment from the TIF' District.
2.03. Payments on this Interfund Loan are payable solely from "Available Tax Increment,"
«-hick shall mean, on each Payment Date, tax increment available after other obligations have been paid,
or as determined by the City Finance Director, generated in the preceding six~(6) months with respect to
the property within the T1F District and remitted to the HRA by Sherburne County; all in accordance with
Minnesota Statutes, Sections 469.174 to 469.1799, all inclusive, as amended. Payments on this 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 parity with any other outstanding or future ilterfund loans
secured in whole or in part «-ith Available Tax 111crement.
2.04. The principal sum and all accrued interest payable under this Interfund Loan are pre-
payable in whole or in part at any time by the HRA 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 Interfund Loan is evidence of an internal borrowing by the HRA in accordance with
Minnesota Statutes, Section 469.178, Subd. 7, and is a limited obligation payable solely from Available
Tax Increment pledged to the payment hereof under this resolution. This Interfund Loan and the interest
hereon shall not be deemed to constitute a general obligation of the State of Minnesota or any political
subdivision thereof, including, without limitation, the HRA. Neither the State of Minnesota, nor any
political subdivision thereof shall be obligated to pay the principal of or interest on this Interfund Loan or
• other costs incident hereto except out of Available Tax Increment, and neither the full faith and credit nor
the taxing power of the State of Minnesota or any political subdivision thereof is pledged to the payment
of the principal of or interest on this Interfund Loan or other costs incident hereto. The HRA 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 HRA may amend the terms of this Interfund Loan at any time by resolution of the
HRA Board, including a determination to forgive the outstanding principal amount and accrued interest to
the extent permissible under law.
Section 3. Effective Date. This resolution is effective upon the date of its approval.
Section 4. Approval of Loan for the Elk River Pizza Ranch Project.
4.01. Robert G. McDonald (as an individual or through an entity to be created, the "Borrower'')
has applied to the HRA for a loan in the principal amount of $90,000.00 to finance SAC
and WAC fees and a portion of the cost of land for additional parking (the "Loan") in
connection with substantial renovations to and equipping of the building located at 19141
Freeport St NW, Elk River, Minnesota, which will be operated by the Borrower as Class I
restaurant of approximately 220 seats (the "Pizza Ranch Project").
4.02. The HRA believes that the development of the Pizza Ranch Project subject to all of the
terms and conditions of a Loan Agreement to be entered into between the HRA and the
Borrower (the "Loan Agreement"), and fulfillment generally of the Loan Agreement, are
in the vital and best interests of the City and the health, safety, morals, and welfare of its
residents, and in accord with the public purposes and provisions of the applicable State
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and local laws and requirements under which the Pizza Ranch Project ~~~ill be undertaken
and is being assisted.
4.03. Contemporaneously with the execution of the Loan Agreement; the HRA will receive the
follo~~-ing security documents (the "Collateral Documents''):
(i) A Promissory Note ("Note') effective as of the date herewith made by Borrower and
payable to the order of the HRA, in the original principal amount of $90;000.00.
(ii) A Mortgage and Assignment of Rents and Security Agreement and Fixture Financing
Statement securing the Note ("Mortgage") executed by Borrower and Robert McDonald,
as mortgagor, in favor of the HRA, as mortgagee, and covering the Pizza Ranch Project
site.
(iii) A Personal Guaranty executed by Robert G. McDonald, Denise A. McDonald and Gerald
H. McDonald (jointly and severally as "Guarantors").
4.04. The Loan to the Borrower in accordance with the Spending Plan, the Loan Agreement
and the Collateral Documents as presented to the Board is hereby in all respects
approved, subject to modifications that do not alter the substance of the transaction and
that are approved by the President and Executive Director of the HRA; provided that
execution of the Agreement by the President, Vice President and Executive Director of
the HRA shall be conclusive evidence of approval.
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2.02. The President, Vice President and Executive Director of the HRA are hereby authorized
to execute the Loan Agreement on behalf of the HRA and to carry out on behalf of the
HRA the HRA's obligations thereunder.
The motion for the adoption of the foregoing resolution ~~as duly seconded by Commissioner
Lieser ,and upon a vote being taken thereon, the following voted in favor thereof:
and the following voted against the same:
Dated: May 2, 2011
-~
President
ATTEST:
' dy2lt-
Executive Director
(Seal)
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