7.2. HRSR 12-01-2017Request for Action
To Item Number
Housing and Redevelopment Authority 7.2
Agenda Section Meeting Date Prepared by
General Business December 1, 2017 Amanda Othoudt, Economic Development
Director
Item Description Reviewed by
Main Street Redevelopment Project Interfund Loan Cal Portner, City Administrator
Resolution
Reviewed by
Action Requested
Approve, by motion, an interfund loan resolution authorizing advance of funds to be reimbursed with
future tax increment.
Background/Discussion
At their April 3, 2017, meeting, the HRA directed staff to move forward with the steps necessary to
create a redevelopment plan for the property located at the intersection of Main Street, Gates Avenue
rd
NW and 3 Street. As part of this project, the HRA may incur certain costs related to the creation of a
TIF District which may be financed on a temporary basis from available HRA funds.
The HRA is proposing to reimburse itself for the costs advances including administrative costs incurred
prior to the establishment of the TIF District, subject to the limitations of the TIF Act, and certain costs
incurred in connection with a study of blighting conditions, engineering, land and building acquisition,
demolition and site preparation costs in an aggregate amount not to exceed the greater of $1,100,00 or
the adopted and, if applicable, amended Tax Increment Financing Plan budget for the TIF District.
Financial Impact
N/A
Attachments
Interfund Loan Resolution
HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR
THE CITY OF ELK RIVER, MINNESOTA
CITY OF ELK RIVER
SHERBURNE COUNTY
STATE OF MINNESOTA
RESOLUTION NO. _____________
AUTHORIZING AN INTERFUND LOAN FOR ADVANCE OF CERTAIN COSTS
IN CONNECTION WITH A TAX INCREMENT FINANCING DISTRICT
BE IT RESOLVED By the Board of Commissioners of the Housing and Redevelopment
Authority in and for the City of Elk River, Minnesota (the “HRA”) as follows:
Section 1. Background.
1.01. The HRA and the City of Elk River (the “City”) are considering establishing a
Tax Increment Financing District which is anticipated to include certain blighted and underused
rd
real property located near the intersection of Main St NW, Gates Ave NW, and 3 St NW (the
“TIF District”) pursuant to Minnesota Statutes, Sections 469.174 to 469.1794, as amended (the
“TIF Act”).
1.02. The HRA or the City may incur certain costs related to the TIF District which
may be financed on a temporary basis from available HRA funds.
1.03. Under Section 469.178, Subdivision 7 of the TIF Act, the HRA and the City are
authorized to advance or loan money from any fund from which such advances may be legally
made in order to finance expenditures that are eligible to be paid with tax increments under the
TIF Act.
1.04. The HRA has determined that it or the City may pay for administrative costs
associated with the establishment of the TIF District and certain other costs incurred in
connection with the proposed development of the TIF District, including but not limited to a
study of blighting conditions, engineering, land and building acquisition of properties along
rd
Main St NW, Gates Ave NW and 3 St NW, demolition and site preparation costs (the “Costs
Advances”) on a temporary basis from the City’s General Fund, the HRA’s General Fund or any
other fund from which such advances, from time to time, may be legally made (the “Fund”) as an
interfund loan pursuant to Minnesota Statutes, Section 469.178, Subd. 7.
1.05. The HRA hereby designates the Costs Advances as an interfund loan in
accordance with the terms of this resolution and the TIF Act.
Section 2. Repayment of Interfund Loan.
2.01. The HRA will reimburse itself or the City for the Costs Advances including
without limitation (i) administrative costs incurred prior to the establishment of the TIF District,
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subject to the limitations of the TIF Act, and (ii) certain costs incurred in connection with a study
of blighting conditions, engineering, land and building acquisition, demolition and site
preparation costs in an aggregate amount not to exceed the greater of $1,100,00 or the adopted
and, if applicable, amended Tax Increment Financing Plan budget for the TIF District (the
“Interfund Loan”), together with interest at the rate prescribed by the statute (Minnesota Statutes,
Section 469.178, Subdivision 7), which is the greater of the rates specified under Sections
270C.40 or 549.09 at the time a Interfund Loan, or any part of it, is first made; provided,
however, the City Finance Director is authorized to specify a lower rate.
2.02. Principal and interest (“Payments”) on the Interfund Loan shall be paid annually
on February 1 (the “Payment Date”), commencing on the first Payment Date on which the City
or the HRA has received Available Tax Increment (defined below), or on any other dates
determined by the City Finance Director, through the date of last receipt of tax increment from
the TIF District (the “Maturity Date”).
2.03. Payments on the Interfund Loan will be made solely from the tax increment from
the TIF District received by the HRA or the City from Sherburne County in the 6-month period
before any Payment Date, net of the amount paid under any agreement with a private developer
or otherwise pledged to the payment of any obligation (the “Available Tax Increment”).
Payments shall be applied first to accrued interest, and then to unpaid principal, unless otherwise
specified by the City Finance Director. Interest accruing from the Loan Date will be
compounded semiannually on February 1 and August 1 of each year and added to principal,
unless otherwise specified by the City Finance Director. 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 a parity with any other outstanding or future
interfund loans secured in whole or in part with available tax increment.
2.04. The principal sum and all accrued interest payable under this resolution is pre-
payable in whole or in part at any time by the HRA without premium or penalty.
2.05. This resolution is evidence of an internal borrowing by the HRA or the City in
accordance with Section 469.178, subdivision 7 of the TIF Act, and is a limited obligation
payable solely from Available Tax Increment pledged to the payment hereof under this
resolution. The Interfund Loan shall not be deemed to constitute a general obligation of the State
of Minnesota or any political subdivision thereof, including, without limitation, the HRA or the
City. Neither the State of Minnesota, nor any political subdivision thereof shall be obligated to
pay the principal of or interest on the Interfund Loan or other costs incident hereto except out of
Available Tax Increment. Neither the HRA nor the City shall have any obligation to pay any
principal amount of the Interfund Loan or accrued interest thereon, which may remain unpaid
after the termination or expiration of the TIF District.
2.06. The HRA or the City, as applicable, may at any time make a determination to
forgive the outstanding principal amount and accrued interest on the Interfund Loan, in whole or
in part, on any date from time to time, to the extent permissible under law.
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2.07. The HRA may from time to time amend the terms of this Resolution to the extent
permitted by law, including without limitation amendment to the payment schedule and the
interest rate; provided that the interest rate may not be increased above the maximum specified in
Section 469.178. subd. 7 of the TIF Act.
Section 3. Effective Date. This resolution is effective upon adoption.
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Adopted this 1 day of December, 2017.
_____________________________
Chair
ATTEST:
Secretary
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