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HomeMy WebLinkAbout98-026 r- r RESOLUTION NO. 98-26 RESOLUTION APPROVING AMENDMENT TO TAX INCREMENT FINANCING PLAN FOR TAX INCREMENT FINANCING DISTRICT NO. 3; APPROVING THE EXECUTION OF A REDEVELOPMENT AGREEMENT AMONG THE CITY OF LAKEVILLE, LAKEVILLE FIVE, INC. AND AURORA INVESTMENTS, LLC; APPROVING THE .ISSUANCE OF A TAX INCREMENT REVENUE NOTE AND EXECUTION OF A TAX INCREMENT PLEDGE AGREEMENT RELATED THERETO; AND AUTHORIZING THE EXECUTION OF RELATED DOCUMENTS BE IT RESOLVED by the City Council of the City of Lakeville, Minnesota (the "City"), as follows: Section 1. Recitals• Approval of Amendment to TIF Plan• A.gproval of Redevelopment Agreement. 1.01. Prior Creation of Project Area and TIF District and A,~proval of Redevelopment Plan and TIF Plan. The Housing and Redevelopment Authority of the City of • Lakeville, Minnesota (the "HRA") has heretofore created Redevelopment Project No. 1 (the "Project Area") within the City and the HRA and the City have approved a Redevelopment Project Plan, as amended and modified through the date hereof (the "Redevelopment Plan"), with respect thereto. Further, the HRA has heretofore created Tax Increment Financing District No. 3 (the "TIF District") within the Project Area and the HRA and the City have approved a Tax Increment Financing Plan, as amended and modified through the date hereof (the "TIF Plan"), relating to the TIF District. 1.02. Proposed Development Activities• Amendment to TIF Plan. Aurora Investments, LLC ("Aurora") proposes to undertake a development within the Project Area (the "Aurora Development") more fully described in the Redevelopment Agreement hereinafter referred to and it is proposed that the HRA and City assist Aurora in the cost of acquiring certain land in the Project Area upon which the Aurora Development will be located. Said assistance will be provided by the issuance of the Note referred to in Section 2 below to Lakeville Five, Inc. ("Lakeville Five"), the present owner and seller of the land, and payments of principal and interest on the Note will be made by the City from tax increments derived from the TIF District. To document the transaction and to accomodate the issuance of the Note and the payment thereof from tax increment, there has been prepared and submitted to this Council (i) a form of Redevelopment Agreement (the "Redevelopment Agreement") to be entered into between the City, Aurora and Lakeville Five and (ii) an amendment to the TIF Plan ("TIF Plan Modification #3 which (a) amends the Section of the TIF Plan entitled O "Development Program" and (b) amends the budget contained in Appendix F of the TIF Plan. Since TIF Plan Modification #3 does not increase or decrease the geographic area of the • Project Area or the TIF District, increase the total authorized amount of bonded indebtedness, change the amount of capitalized interest, increase the portion of the captured net tax capacity to be retained by the HRA, increase the total estimated tax increment expenditures or designate additional property to be acquired by the HRA, TIF Plan Modification #3 may be approved by the HRA and the City without the notifications and public hearing otherwise required by Minnesota Statutes, Section 469.175, subdivision 4. 1.03. Approvals. By resolution of the HRA adopted this date, the HRA has authorized the City to act on its behalf and as its agent in facilitating the Aurora Development. Pursuant to such authority, this Council hereby approves the Redevelopment Agreement substantially in the form presented and the Mayor and City Clerk are authorized to execute the Redevelopment Agreement on behalf of the City with such variations, omissions and insertions ' as the Mayor and City Clerk shall approve after consultation with the city attorney, which approval shall be conclusively presumed by the execution and delivery of the Redevelopment Agreement by the Mayor and City Clerk. This Council further approves and adopts TIF Plan Modification #3 in the form presented. 1.04. Authorization of Note. As contemplated by the Redevelopment Agreement and as authorized by the HRA, the City, acting pursuant to Minnesota Statutes, Section 469.178, shall issue its Tax Increment Revenue Note (Aurora Investments Project), Series 1998 (the "Note"), in the principal amount of $1,897,000 to provide a portion of the financing • for the purchase of the land by Aurora from Lakeville Five. The Note shall be substantially in the form attached hereto as Exhibit A and shall be issued to Lakeville Five as the purchaser thereof. Section 2. Terms of Note. Execution and Delivery. 2.01. Terms of the Note. The terms of the Note shall be as set forth in the form of the Note attached hereto as Exhibit A and the Note shall be issued as a single, fully registered instrument in the principal amount of $1,897,000. 2.02. Date of Note. The Note shall be dated as of the date of original issuance thereof. ' 2.03. Execution. The Note shall be executed on behalf of the City by the signatures of the Mayor and City Clerk. 2.04. Registration of Transfer. The City will cause to be kept at the office of the City Clerk a Note Register in which, subject to such reasonable regulations as it may prescribe, the City shall provide for the registration or transfer of ownership of the Note. The Note shall be transferable upon the books of the City by the registered owner thereof in person or by its attorney duly authorized in writing, upon surrender of the Note together with a • -2- written instrument of transfer satisfactory to the City Clerk, duly executed by the registered owner thereof or its duly authorized attorney, together with (i) an executed investment letter • from the new registered owner in form satisfactory to the City, (ii) if requested by the Ciry, an opinion of counsel addressed to the City and in form satisfactory to the Ciry that such transfer complies with all applicable federal and State of Minnesota securities laws and (iii) if requested by the City, an indemnity agreement in form~and substance satisfactory to the City executed by the registered owner. Upon such transfer the City Clerk shall note the date of registration and the name and address of the new registered owner on the books of the City and in the registration blank appearing on the Note. The Ciry may deem and treat the person in whose name the Note is last registered upon the books of the City with such registration noted on the Note as the absolute owner thereof, whether or not overdue, for the purpose of receiving payment of or on account of the principal or interest and for all other purposes, and all such payments so made to the registered owner or upon its order shall be valid and effectual to satisfy and discharge the liability upon such Note to the extent of the sum or sums so paid, and the City shall not be affected by any notice to the contrary. 2.05. el've The Note shall be delivered to the Lakeville Five as the purchaser thereof and as evidence of the obligation of the City to fund a portion of the purchase price of the Land on behalf of Aurora. Section 3. Security Provisions. 3.01. Bond Fund. The principal of and interest on the Note shall be payable from • the Tax Increment Revenue Note, Series 1998 Bond Fund (the "Bond Fund") to be established by the City Finance Director on the books and records of the City. The City hereby irrevocably appropriates to the Bond Fund the tax increments from the TIF District to be received by the Ciry from the HRA pursuant to the Tax Increment Pledge Agreement (the "Pledge Agreement") to be entered into between the City and the HRA, a draft of which has been presented to this Council. The Pledge Agreement is hereby approved substantially in the form presented and the Mayor and City Clerk are authorized to execute the Pledge Agreement on behalf of the City with such variations, omissions and insertions as the Mayor and City Clerk shall approve after consultation with the city attorney, which approval shall be conclusively presumed by the execution and delivery of the Pledge Agreement by the Mayor and City Clerk. So long as the Note is outstanding, the City will not, without the prior written consent of the registered owner, issue any additional obligations payable from the tax increment provided pursuant to the Pledge Agreement and will not take any action which results in a reduction in the amount of such tax increments except to the extent required by law. 3.02. Ito Representations or Warranties of Citv. The City makes no representation or warranty as to the sufficiency or availability of the tax increments from the TIF District to pay the principal of or interest on the Note when due. -3- Section 4. Tax Certifications. County Auditor Registration. Certification of Proceeding. 4.01. General Tax Covenant. The City covenants and agrees with the registered owner of the Note that it will not take, or permit to be taken by any of its officers, employees or agents, any action which would cause the interest payable on the Note to become subject to taxation under the Internal Revenue Code of 1986, as amended (the Code) and applicable Treasury Regulations (the Regulations), and covenants to take any and all actions within its powers to ensure that the interest on the Note will not become includible in gross income of the recipient under the Code and the Regulations. While all or a portion of the land financed with the proceeds of the Note may be used in the trade or business ofnon-governmental persons, the City covenants that it will not enter into any lease, use agreement, management agreement, development contract or other agreement or contract with any non-governmental person which would cause the Note to meet the private security or payment test of Section 141(b) of the Code or the private loan financing test of Section 141(c) of the Code. 4.02. Arbitrage Certification. The Mayor and City Clerk, being the officers of the City charged with the responsibility for issuing the Note pursuant to this resolution, are authorized and directed to execute and deliver as part of the closing transcript a certificate in accordance with the provisions of Section 148 of the Code, and Section 1.148-2(b) of the Regulations, stating the facts, estimates and circumstances in existence on the date of issue and delivery of the Note which make it reasonable to expect that the proceeds of the Note will not be used in a manner that would cause the Note to be arbitrage bond within the meaning of the Code and Regulations. • 4.03. Arbitra a Re ate. The Ci acknowled es that the Note is subject to the rebate t3' ~ requirements of Section 148(f) ofthe Code. The City covenants and agrees to retain such records, make such determinations, file such reports and documents and pay such amounts at such times as are required under said Section 148(f) and applicable Regulations to preserve the exclusion of interest on the Note from gross income for federal income tax purposes. 4.04. Qualified Tax-Exempt Obli__ at~ions. The City Council hereby designates the Note as a "qualified tax-exempt obligation" for purposes of Section 265(b)(3) of the Code relating to the disallowance of interest expense for financial institutions, and hereby finds that the reasonably anticipated amount of qualified tax-exempt obligations (within the meaning of Section 26~(b)(3) of the Code) which will be issued by the City and all subordinate entities during calendar year 1998 does not exceed $10,000,000. 4.0~. Reimbursement. The City certifies that the proceeds of the Note will not be used by the City to reimburse itself for any expenditure with respect to the land which. the City paid or will have paid more than 60 days prior to the issuance of the Note. 4.06. County Auditor Registration. The City Clerk is hereby authorized and directed to file a certified copy of this resolution with the County Auditor of Dakota County, e together with such other information as the County Auditor shall require, and to obtain from the County Auditor a certificate that the Note has been entered on the County Auditor's bond register as required by law. 4.07. Certification of Proceeding.. The officers of the City and the County Auditor of Dakota County are hereby authorized and 'directed to prepare and furnish to the Purchasers and to Dorsey & Whitney LLP, Bond Counsel, certified copies of all proceedings and records of the City, and such other affidavits, certificates and information as may be required to show the facts relating to the legality and marketability of the Note as the same appear from the books and records under their custody and control or as otherwise known to them, and all such certified copies, certificates and affidavits, including any heretofore furnished, shall be deemed representations of the City as to the facts recited therein. Adopted by the City Council of the City of Lakeville, Minnesota, this 17 day of February, 1998. • -5- STATE OF M]fNNESOTA COUNTY OF DAKOTA The undersigned, being the duly appointed, qualified and acting City Clerk of the City of Lakeville, Minnesota, hereby certifies that the foregoing is a full, true and correct copy of a resolution duly passed and adopted by the City Council of said City at its meeting duly called and held on February 17 1998, by the following. roll call vote: Ayes: Zaun, Sindt, Mulvihill, Holberg, Ryan Nays: N/A Absent: N/A and that said resolution has not subsequently been amended and is now in full force and effect. IN WITNESS WHEREOF, I have hereunto set my hand officially this 17 .day of February, 199$. City Clerk • -6- • Ta.~ Increment Financing Plan Tax Increment Financing District No. 3, Modification #3 The Tax Increment Financing Plan heretofore prepared and approved through January 21, 1997 (i.e. through Modification #2) is hereby further amended as follows: 1. Section C - "Development Program" is amended by adding the following clause S: "5. See also the Redevelopment Agreement by and between the City of Lakeville, Minnesota, Aurora Investments, LLC and Lakeville Five, .Inc., which is incorporated herein by reference, for a description of additional development activities to be undertaken in the Project by Aurora Investments, Inc. 2. The maximum budget set forth in Appendix F to the Plan (and the corresponding budget in the redevelopment plan for the Project) is amended to read as follows: Land Acquisition: $1,597,000 Capitalized Interest: $300,000 Public Improvements: $123,000 The total principal amount of the foregoing ($2,025,000) does not exceed the amount presently in the budget. In connection with the development to be undertaken by Aurora Investments, LLC, It is anticipated that the City will finance the land acquisition activities by the issuance of a tax increment revenue note in the principal amount of $1,897,000. It is further anticipated that interest will be payable on the unpaid balance of the note at the approximate rate of 8% per annum through the term of the note. As presently set forth in Exhibit E to the Plan, which calculates borrowing capacity based upon expected increment receipts from the District, the HRA and City have previously anticipated that tax increments will be used to pay interest on any borrowings as well as discharge the principal amount thereof The City reasonably estimates that the aggregate amount of interest to be paid on the note, together with any other interest expenditures, will not exceed the aggregate amount of interest heretofore authorized and anticipated to be expended pursuant to the Plan.