HomeMy WebLinkAboutIV.B - Interfund Loan - Confluence
HEDRA MEMORANDUM
To: HEDRA Commissioners
From: Rusty Fifield, Economic Development Coordinator
Date: November 26, 2019
Item: TIF Reimbursement for Remediation Costs
Action Requested
Adopt the attached resolution authorizing an interfund loan for HEDRA monies advanced to pay
for completion of VIMS and wood encapsulation at The Confluence.
Background
The additional vapor mitigation and wood encapsulation costs at The Confluence will be paid
from HEDRA funds. These costs are eligible for payment with tax increments from TIF District
#7. T the primary use of tax increments from this district is to pay the debt service on the Bonds
issue to refinance the acquisition of the property. After the Bonds are retired, the tax increments
will be used to reimburse property taxes used to pay debt service. These uses may consume all
available tax increment. It is, however, prudence to preserve the option of reimbursing HEDRA
for these additional remediation costs. The creation of an interfund loan representing the
monies advanced by HEDRA is needed to create this opportunity.
Financial Considerations
Positive impact – preserve future ability to reimburse expenditures.
Attachments
Resolution 2019-6
TIF Interfund Loan
November 26, 2019
Page 2
HASTINGS ECONOMIC DEVELOPMENT AND REDEVELOPMENT AUTHORITY
RESOLUTION NO. 2019-6
RESOLUTION AUTHORIZING AN INTERFUND LOAN FOR ADVANCE OF
CERTAIN COSTS IN CONNECTION WITII TAX INCREMENT FINANCING
DISTRICT NO. 7.
Commissioner __________ introduced the following resolution and moved its adoption:
WHEREAS, the City Council for the City of Hastings, Minnesota (the "City"), has
established Tax Increment Financing District No. 7 (the "TIF District") within the Hastings
Downtown Redevelopment Area (the "Project"), pursuant to Minnesota Statutes, Sections
469.174 to 469.1794, as amended (the “TIF Act”) and Sections 469.124 to 469.134, as amended.
WHEREAS, the Hastings Economic Development and Redevelopment Authority (the
"HEDRA") will incur certain expenses in connection with the environmental remediation of
property in the TIF District and related activities (collectively, the "Qualified Costs"), which
costs will be financed on a temporary basis from HEDRA funds available for such purposes.
WHEREAS, under Minnesota Statutes, Section 469.178, Subd. 7, the HEDRA is
authorized to advance or loan money from the HEDRA's general fund or any other fund from
which such advances may be legally authorized, in order to finance the Qualified Costs.
NOW THEREFORE BE IT RESOLVED by the Board of Commissioners as follows:
1. HEDRA hereby establishes an interfund loan in an amount up to $_______. The HEDRA
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 4% and will not
fluctuate.
2. Principal and interest ("Payments") on the Interfund Loan shall be paid semi-annually on
each August 1 and February 1 (each a “Payment Date”), commencing on the first Payment
Date on which the City has Available Tax Increment (defined below), or on any other dates
determined by the City Administrator, through the date of last receipt of tax increment
from the TIF District.
3. Payments on the Interfund Loan will be made solely from Available Tax Increment, which
is defined tax increment from the TIF District received by the City from Dakota County,
TIF Interfund Loan
November 26, 2019
Page 3
Minnesota in the six-month period before any Payment Date and remaining after the pay
of obligations incurred prior to this Interfund Loan. Payments shall be applied first to
accrued interest, and then to unpaid principal. Simple interest will accrue from the
Closing Date, unless otherwise specified by the City Administrator.
4. The principal sum and all accrued interest payable under this resolution is pre-payable in
whole or in part at any time by HEDRA without premium or penalty.
5. This resolution is evidence of an internal borrowing by HEDRA 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, HEDRA and
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. HEDRA 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.
6. HEDRA may at any time make a determination to forgive the outstanding principal
amount and accrued interest on the Interfund Loan to the extent permissible under law.
7. HEDRA 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.
Commissioner ______ seconded the resolution and upon being put to a vote it was adopted:
Ayes:
Nays:
Absent:
Abstention:
The resolution was duly adopted this 5th day of December, 2019.
________________________
Scott Sinclair, President
ATTEST:
_______________________________
John Hinzman, Secretary