7.2. HRSR 04-06-2020
Request for Action
To Item Number
Housing and Redevelopment Authority 7.2
Agenda Section Meeting Date Prepared by
General Business April 6, 2020 Amanda Othoudt, ED Director
Item Description Reviewed by
Interfund Loan Resolution for Main and Gates Cal Portner, City Administrator
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
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NW and 3 Street. As part of this project, the HRA will incur certain costs related to the creation of a
TIF District which may be financed on a temporary basis from available HRA funds.
At their December 1, 2017, meeting, the HRA and the City Council adopted an interfund loan resolution
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.
At their February 3, 2020, meeting, the HRA directed staff to include 406 Main Street into the proposed
redevelopment project. The HRA directed staff to amend the Original Interfund Loan Resolution to
request an additional interfund loan in the maximum principal amount of $200,000 to finance additional
qualified costs.
Financial Impact
N/A
Attachments
Interfund Loan Resolution
The Elk River Vision
A welcoming community with revolutionary and spirited resourcefulness, exceptional
service, and community engagement that encourages and inspires prosperity
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 real
property located near the intersection of Main St NW and Gates Ave 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. On December 1, 2017, City Council of the City and the Board adopted interfund
loan resolutions (collectively, the “First Interfund Loan Resolution”) authorizing the payment of
certain costs by the HRA and the City 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") in an aggregate amount not to exceed the greater of $1,100,000 or the
adopted and, if applicable, the Tax Increment Financing Plan budget for the TIF District pursuant
to Minnesota Statutes, Section 469.178, Subd. 7. Such costs included without limitation (i)
administrative costs incurred prior to the establishment of the TIF District, 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 (the
“Qualified Costs”).
1.05. On October 7, 2019, the City Council of the City and the Board adopted resolutions
supplementing the First Interfund Loan Resolution (the “Second Interfund Loan Resolution, and
together with the First Interfund Loan Resolution, the “Original Interfund Loan Resolution”).
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1.06. The HRA and the City propose to amend the Original Interfund Loan Resolution to
request an additional interfund loan in the maximum principal amount of $200,000 to finance
additional Qualified Costs (the “Additional Interfund Loan”) in accordance with the terms of this
resolution.
1.07. The Original Interfund Loan and the Additional Interfund Loan will be referred to
collectively as the “Interfund Loan.”
Section 2. Repayment of Interfund Loan.
2.01. The amount of the Interfund Loan is increased to $1,300,000. 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”). Interest shall
accrue 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. Payments on the Interfund Loan will be made from the tax increment from the
proposed 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”),
from proceeds of the sale of the property in the proposed TIF Distract (if any), and from any other
revenues available to the HRA and the City. 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.
2.03. 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.
2.04. To the extent that a TIF District is created, 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 revenues 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 revenues pledged hereunder.
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2.05. 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.
2.06. 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.
2.07. This resolution supplements, but does not supersede, the Original Loan Resolution.
Section 3. Effective Date. This resolution is effective upon adoption.
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Adopted this 6 day of April, 2020.
_____________________________
Chair
ATTEST:
Secretary
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