04-099 RES
RESOLUTION 04-~
RESOLUTION APPROVING THE TERMS OF INTERNAL LOAN IN
CONNECTION WITH DOWNTOWN PHASE I TAX INCREMENT
FINANCING DISTRICT NO. 22 (LAND)
BE IT RESOLVED by the City Council (the "Council") of the City of Elk River,
Minnesota (the "City"), as follows:
Section 1.
Background.
(a) The City has heretofore approved the establishment of Downtown Phase I Tax
Increment Financing District No. 22 (the "TIP District") within its Municipal Development
District No. 1 (the "Development District"), and has adopted a tax increment financing plan for
the purpose of financing certain improvements within the TIP District.
(b) The City has determined to pay for certain costs (the "Qualified Costs") identified
in the TIP Plan consisting of the costs of the Jackson Block Property for the Jackson Block
Development, both as defined in the Development Agreement, dated as of December 6, 2004,
between the City and MetroPlains Development, LLC (the "Development Agreement"), which
costs will be financed on a temporary basis from City funds available for such purposes.
(c) Under Minnesota Statutes, Section 469.178, Subd. 7, the City is authorized to
advance or loan money from the City's general fund or any other fund from which such advances
may be legally made, in order to finance the Qualified Costs.
(d) The City intends to reimburse itself for the Qualified Costs from tax increments
derived ITom the TIP District in accordance with the terms of this resolution (which terms are
referred to collectively as the "Interfund Loan").
Section 2.
Terms ofInterfund Loan.
(a) The City shall repay to the City fund from which the Qualified Costs are initially
paid, the principal amount of approximately $500,000 together with interest at 4.00% per annum
ITom the later of December 6, 2004 or the date of the sale of the Land.
(b) Principal and interest ("Payments") shall be paid semi-annually on each February
I and August I commencing with the first February 1 or August I occurring after the date of
issuance of a certificate of completion for the shell of the Bluff Block Development (as defined
in the Development Agreement) to and including the earlier of (a) the date the principal and
accrued interest of the Interfund Loan is paid in full, or (b) the date of last receipt of tax
increment from the TIP District ("Payment Dates") which Payments will be made in the amount
and only to the extent of City Pledged Tax Increment as hereinafter defined. Payments shall be
applied first to accrued interest, and then to unpaid principal.
(c) Payments on this Interfund Loan are payable solely ITom "City Pledged Tax
Increment," which shall mean, on each Payment Date, 4% of the actual Available Tax Increment
(as defined in the Development Agreement) received by the City since the last Payment Date
S:\Resolutions\2004 Resolutions\Unapproved\EDA Dee 6\INTERFUND _LOAN_RESOLUTION _(LAND). DOC
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plus any Tax Increment received by the City since the last Payment Date generated by the excess
of the current actual Market Value of the Minimum Improvements as dete=ined by the County
Assessor over the County Assessor's Market Value of the Minimum Improvements as of the
January 2 immediately following the Completion Date and applied on a prorata basis with other
interfund loans of the City secured in whole or in part with such City Pledged Tax Increment.
Payments on this Interfund Loan are subordinate to any outstanding or future bonds, notes or
contracts secured in whole or in part with such City Pledged Tax Increment, and are on parity
with any other outstanding or future interfund loans secured in whole or in part with such City
Pledged Tax Increment.
(d) 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 City 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.
(e) This Interfund Loan is evidence of an internal borrowing by the City in
accordance with Minnesota Statutes, Section 469.178, Subd. 7, and is a limited obligation
payable solely from City Pledged 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 City. 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 City Pledged 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
City 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.
(1) The City may amend the te=s of this Interfund Loan at any time by resolution of
the City Council, including a dete=ination to forgive the outstanding principal amount and
accrued interest to the extent pe=issible under law.
Section 3. Capitalized Te=s. Capitalized te=s not otherwise defined in this resolution are
deemed to have the meanings given in the Development Agreement.
Section 4.
Effective Date. This resolution is effective upon the date of its approval.
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