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HomeMy WebLinkAboutResolution No. 131-20 C.1 - TIF District 74-1 Discovery Square Resolution EDA RESOLUTION NO. ______ COUNCIL RESOLUTION NO. ______ ROCHESTER ECONOMIC DEVELOPMENT AUTHORITY COUNTY OF OLMSTED STATE OF MINNESOTA RESOLUTION APPROVING AN ECONOMIC DEVELOPMENT DISTRICT AND ECONOMIC DEVELOPMENT PLAN THEREFOR, APPROVING A REDEVELOPMENT TAX INCREMENT FINANCING DISTRICT AND A TAX INCREMENT FINANCING PLAN THEREFOR AND AUTHORIZING THE EXECUTION OF A DEVELOPMENT ASSISTANCE AGREEMENT BE IT RESOLVED by the Board of Commissioners (the “Board”) of the Rochester Economic Development Authority (the “EDA”), as follows: Section 1. Recitals. 1.01. It has been proposed that the EDA establish Economic Development District No. 74 (the “Development District”), adopt the Economic Development Plan for the Development District (the “Development Plan”), establish DMC Redevelopment Tax Increment Financing District No. 74-1 (Two Discovery Square) within the Development District (the “TIF District”) and adopt a Tax Increment Financing Plan therefor (the “TIF Plan” and, together with the Development Plan, the “Plans”), all pursuant to and in conformity with applicable law, including Minnesota Statutes, Sections 469.001 through 469.047, Sections 469.090 through 469.1082, Sections 469.174 through 469.1794 (the “TIF Act”), and Minnesota Statutes, Sections 469.40 to 469.47 (the “DMC Act”), all as amended (collectively, the “Act”); all as reflected in that certain document entitled in part “Economic Development Plan for Economic Development District No. 74 of the Rochester Economic Development Authority and Tax Increment Financing Plan for DMC Redevelopment Tax Increment Financing District No. 74-1 (Two Discovery Square),” dated April 20, 2020, and presented for the Board’s consideration. 1.02. The Board has investigated the facts relating to the establishment of the Development District, the adoption of the Development Plan, the establishment of the TIF District and the adoption of the TIF Plan. 1.03. The TIF District is being established to facilitate the construction of an approximately 5-story, 130,000 square foot building which will include office, lab, event and collaborative spaces to be located at the northwest quadrant of the intersection of 2nd Avenue SW and 5th Street SW in the City of Rochester (the “City”). The Developer will lease the Development land from the fee owners, the Mayo Clinic and the Mayo Foundation. RC110-114-612084.v3 1.04. Certain written reports and other documentation (collectively, the “Reports”) relating to the Plans, including the tax increment application made and other information supplied by Mortenson Development, Inc., a Minnesota corporation (or an affiliate thereof (the “Developer”) as to the activities contemplated therein have heretofore been assembled or prepared by staff or others and submitted to the Board and/or made a part of the City and EDA files and proceedings on the Plans. The Reports include data, information and/or substantiation constituting or relating to (1) why the assistance satisfies the so-called “but for” test and (2) the bases for the other findings and determinations made in this resolution. The Board hereby confirms, ratifies and adopts the Reports, which are hereby incorporated into and made as fully a part of this resolution to the same extent as if set forth in full herein. 1.05. The TIF District is located within the boundaries of the Destination Medical Center Development District as defined in Minnesota Statutes, Section 469.40, Subdivision 5, as amended (the “DMC District”) as adopted in the Destination Medical Center Development Plan as defined in Minnesota Statutes, Section 469.40, Subdivision 6, as amended (the “DMC Development Plan”) and within the Discovery Square subdistrict as described in the DMC Development Plan. The DMCC has approved the Development. 1.06. The EDA or the City has performed all actions required by law to be performed prior to the adoption and approval of the TIF Plan, including but not limited to notice to the County Commissioner representing the area of the County to be included in the TIF District, delivery of the TIF Plan to the County and School Board and the holding of a joint public hearing thereon by the City and the EDA following notice thereof published in the City’s official newspaper at least 10 but not more than 30 days prior to the public hearing. Section 2. Findings for the Adoption and Approval of the Plans. 2.01. The Board hereby finds that the Development District is proper and desirable to establish in the City and the Development Plan will afford maximum opportunity, consistent with the needs of the City as a whole, for the development of the Development District by private enterprise. 2.02. The Board hereby finds that the TIF District is in the public interest and is a “redevelopment tax increment financing district within the area of the destination medical center development district to fund public infrastructure projects” within the meaning of Minnesota Statutes, Section 469.45, Subd. 4. Pursuant to the DMC Act, the EDA may establish a redevelopment tax increment financing district within the DMC District without meeting the requirements for redevelopment districts created pursuant to the general TIF Act, specifically, Minnesota Statutes, Sections 469.174, subdivision 10. 2.03. The Board hereby makes the following additional findings in connection with the TIF District: 2 RC110-114-612084.v3 (a) The Board further finds that the proposed Development, in the opinion of the Board, would not occur solely through private investment within the reasonably foreseeable future and, therefore, the use of tax increment financing is deemed necessary. (b) The Board further finds that the TIF Plan conforms to the general plan for the development or redevelopment of the City as a whole. (c) The Board further finds that the TIF Plan will afford maximum opportunity consistent with the sound needs of the City as a whole for the development of the TIF District by private enterprise. (d) For purposes of compliance with Minnesota Statutes, Section 469.175, Subdivision 3(b)(2)(ii), the Board hereby finds that the increased market value of the site that could reasonably be expected to occur without the use of tax increment financing is approximately $0, which is less than $10,270,067 which is the increase in the market value estimated to result from the proposed development (approximately $28,601,549, assuming no annual inflation) after subtracting the present value of the projected tax increments for the maximum duration of the TIF District (approximately $18,331,482). Thus, the use of tax increment financing will be a positive net gain to the City, the School District, and the County, and the tax increment assistance does not exceed the benefit which will be derived therefrom. 2.04. The EDA elects to retain all of the captured tax capacity to finance the costs of the TIF District and the Development District. 2.05. The provisions of this Section 2 are hereby incorporated by reference into and made a part of the TIF Plan. 2.06. The Board further finds that the Plans are intended and in the judgment of the Board its effect will be to promote the public purposes and accomplish the objectives specified therein. The EDA also intends that it shall have and enjoy, with respect to the DMC Development District, the full range of powers and duties conferred upon the EDA pursuant to the Development Plan, the TIF Act, the DMC Act and such other legal authority as the EDA may have or enjoy from time to time. 2.07. The Development District and the TIF District are hereby established and the Plans, as presented to the Board on this date, including without limitation the findings and statements of objectives contained therein, are hereby approved, ratified, established, and adopted and shall be placed on file in the office of the Executive Director of the EDA. City or EDA staff shall, in writing, request the Olmsted County Auditor to certify the new TIF District and file the Plans with the Commissioner of Revenue and the Office of the State Auditor. 2.08. The Board finds that the Development is a public infrastructure project within the meaning of Minnesota Statutes, Section 469.40, subdivision 11, which provides for: acquiring real property and other assets associated with the real property; 3 RC110-114-612084.v3 demolishing, repairing or rehabilitating buildings; installing, constructing or reconstructing elements of public infrastructure required to support the overall development of the DMC Development District; acquiring, constructing or reconstructing, or equipping parking facilities and other facilities to encourage intermodal transportation and public transit; making related site improvements; and preparing land for private development; and that the EDA approves the Development as consistent with the DMC Development Plan. Section 3. Interfund Loans. 3.01. The Board hereby approves a policy on interfund loans or advances (“Loans”) for the TIF District, as follows: (a) The authorized tax increment eligible costs (including without limitation out-of-pocket administrative expenses in an amount up to $916,574, interest in an amount up to $5,951,329 and other project costs in an amount up to $11,463,574) payable from the TIF District, as its TIF Plan is originally adopted or may be amended, may need to be financed on a short-term and/or long-term basis via one or more Loans, as may be determined by the City Finance Director from time to time. (b) The Loans may be advanced if and as needed from available monies in the City’s or EDA’s general fund or other City or EDA fund designated by the City Finance Director. Loans may be structured as draw-down or “line of credit” obligations of the lending fund(s). (c) Neither the maximum principal amount of any one Loan nor the aggregate principal amount of all Loans may exceed $18,331,477 outstanding at any time. (d) All Loans shall mature not later than February 1, 2049 or such earlier date as the City Finance Director may specify in writing. All Loans may be pre- paid, in whole or in part, whether from tax increment revenue, tax increment revenue bond proceeds or other eligible sources. (e) The outstanding and unpaid principal amount of each Loan shall bear 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 Loan, or any part of it, is first made, subject to the right of the City Finance Director to specify a lower rate (but not less than the City’s then- current average investment return for similar amount and term). (f) Such Loans within the above guidelines are pre-approved. The Loans need not take any particular form and may be undocumented, except that the City Finance Director shall specify the principal amount and interest rate and maintain all necessary or applicable data on the Loans. Section 4. Approval of Development Assistance Agreement. 4 RC110-114-612084.v3 4.01. The Developer has presented the EDA with a proposal for the Development, and there has been prepared and presented to the Board for its consideration a certain Development Assistance Agreement (the “Agreement”) between the EDA and the Developer, regarding the Development and the terms and conditions of the EDA’s assistance with financing certain costs of the Development. 4.02. The Board hereby approves the Agreement in substantially the form presented to the Board, together with any related documents necessary in connection therewith, including but not limited to any documents, exhibits, certifications or consents referenced in or attached to the Agreement including without limitation the TIF Note as defined therein, (collectively, the “Development Documents”) and hereby authorizes the President and Secretary to negotiate the final terms thereof and, in their discretion and at such time, if any, as they may deem appropriate, to execute the same on behalf of the EDA, and to carry out, on behalf of the EDA, the EDA’s obligations thereunder; provided however that this authorization by the EDA shall expire if the Developer has not completed the following actions within 180 days after the date of this resolution: (i) executed the Agreement, (ii) obtained a footing and foundation permit and commenced construction of the foundation of the Development, and (iii) delivered to the EDA evidence satisfactory to the EDA that the Developer has adequate financial resources available for and committed to the completion of the Development. Prior to the expiration of such 180 period, the Developer may request an extension from the Board of Commissioners of the EDA. 4.03. The approval hereby given to the Development Documents includes approval of such additional details therein as may be necessary and appropriate and such modifications thereof, deletions therefrom and additions thereto as may be necessary and appropriate and approved by legal counsel to the EDA and by the officers authorized herein to execute said documents prior to their execution; and said officers are hereby authorized to approve said changes on behalf of the EDA. The execution of any instrument by the appropriate officers of the EDA herein authorized shall be conclusive evidence of the approval of such document in accordance with the terms hereof. This Resolution shall not constitute an offer and the Development Documents shall not be effective until the date of execution thereof as provided herein. 4.04. In the event of absence or disability of the officers, any of the documents authorized by this Resolution to be executed may be executed without further act or authorization of the Board by any duly designated acting official, or by such other officer or officers of the Board as, in the opinion of the City Attorney, may act in their behalf.Upon execution and delivery of the Development Documents, the officers and employees of the EDA are hereby authorized and directed to take or cause to be taken such actions as may be necessary on behalf of the EDA to implement the Development Documents, including without limitation the issuance of the Tax Increment Revenue Note thereunder, when all conditions precedent thereto have been satisfied. 4.05. The Board hereby determines that the execution and performance of the Development Documents will help realize the public purposes of the Act. 5 RC110-114-612084.v3 PASSED AND ADOPTED BY THE BOARD OF COMMISSIONERS OF THE ROCHESTER ECONOMIC DEVELOPMENT AUTHORITY, THIS 20TH DAY OF APRIL, 2020. PRESIDENT OF SAID AUTHORITY SECRETARY OF SAID AUTHORITY 6 RC110-114-612084.v3 PASSED AND ADOPTED BY THE COMMON COUNCIL OF THE CITY OF ROCHESTER, MINNESOTA, THIS__________DAY OF______________, 2020. ___________________________________ PRESIDENT OF SAID COMMON COUNCIL ATTEST: __________________________ CITY CLERK APPROVED THIS_____DAY OF_____________________, 2020. __________________________________ MAYOR OF SAID CITY (Seal of the City of Rochester, Minnesota) 7 RC110-114-612084.v3