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HomeMy WebLinkAboutResolution No. 262-24 (EDA24-010) (4A) - Resolution (EDA) - TIF District No. 83-1 Interfund Loan and Development Assistance Agreement JOINT RESOLUTION EDA RESOLUTION NO. COUNCIL RESOLUTION NO. ______ Rochester Economic Development Authority Rochester City Council County of Olmsted, State of Minnesota Approving Economic Development District No. 83 and Plan; Housing Tax Increment Financing District No. 83-1; and A Tax Increment Financing Plan, and Authorizing an Interfund Loan; and Authorizing the Execution of a Development Assistance Agreement. WHEREAS, it has been proposed that the Rochester Economic Development Authority (the “EDA”) establish Economic Development District No. 83 (the “Development District”), adopt the Economic Development Plan for the Development District (the “Development Plan”) therefor, establish Housing Tax Increment Financing District No. 83- 1 (Prairie Ridge Project) 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, all as amended (collectively, the “Act”); all as reflected in that certain document entitled in part “Economic Development Plan for Economic Development District No. 83 of the Rochester Economic Development Authority and Tax Increment Financing Plan for Housing Tax Increment Financing District No. 83-1 (Prairie Ridge Project),” dated December 9, 2024, and presented for consideration by the Board of Commissioners (the “Board”) of the Rochester Economic Development Authority and the Common Council (the “Council”) of the City of Rochester, Minnesota (the “City”). WHEREAS, the Council and the Board have 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. WHEREAS, the City or the EDA 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. RC110-167-986556.v2 WHEREAS, certain written reports and other documentation (collectively, the “Reports”) relating to the Plans, including the tax increment application made and other information supplied by West 80 Partners, LLC, a Minnesota limited liability company (or an affiliate thereof or partnership formed thereby, the “Developer”) as to the activities contemplated therein, have heretofore been assembled or prepared by staff or others and submitted to the Council and 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 Council and the Board hereby confirm, ratify and adopt 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. WHEREAS, the TIF District is being established to facilitate the construction of approximately 40 affordable owner-occupied housing units (16 single family homes and 24 attached townhomes) as part of a larger development of 201 owner-occupied housing units and 100 rental housing units to be located southwest of the intersection of Valleyhigh Road NW and 50th Ave NW in the City (the “Development”). NOW, THEREFORE, BE IT RESOLVED by the Common Council of the City of Rochester, Olmsted County, Minnesota, and the Board of Commissioners of the Rochester Economic Development Authority as follows: Section 1. Findings for the Adoption and Approval of the Plans. 1.01. The Council and the Board hereby find 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 low and moderate income housing facilities and related structures in the City by private enterprise. 1.02. The Council and the Board hereby find that the TIF District is in the public interest and is a “housing district” within the meaning of Minnesota Statutes, Section 469.174, subdivision 11 because: The TIF District consists of a project or portions of a project intended for occupancy, in part, by persons or families of low and moderate income as defined in Chapter 462A, Title II of the National Housing Act of 1934, the National Housing Act of 1959, the United States Housing Act of 1937, as amended, Title V of the Housing Act of 1949, as amended, and any other similar present or future federal, state or municipal legislation, or the regulations promulgated under any of those acts. The Developer has represented that all of the units (which is more than 95%) will be initially purchased and occupied by individuals and families whose household income is less than or equal to 115% of the applicable median family income or, with respect to a family of fewer than 3 individuals, whose family income is less than or equal to 100% of the applicable median family income. 2 RC110-167-986556.v2 1.03. The Council and the Board hereby make the following additional findings in connection with the TIF District: (a) The Council and the Board further find that the proposed Development, in the opinion of the Council and 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. The specific basis for such finding being: The Development will result in the construction of low and moderate income housing units which would not otherwise be constructed in the reasonably foreseeable future. The purchase prices for affordable housing projects do not provide a sufficient return on investment to stimulate new development. The Developer has represented that it could not proceed with the Development without tax increment assistance. (b) The Council and the Board further find that the TIF Plan conforms to the general plan for the development or redevelopment of the City as a whole. The specific basis for such finding being: The TIF Plan will generally complement and serve to implement policies adopted in the City’s comprehensive plan. The housing Development contemplated on the property will comply with the existing zoning or a variance for the property, if approved. (c) The Council and the Board further find 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. The specific basis for such finding being: The Development proposed to occur within the TIF District is the construction by private enterprise of primarily low and moderate income multi-family housing. The Development will increase the taxable market valuation of the City and improve the quality and availability of affordable housing in the City. The available housing options in the City will expand by approximately 40 affordable owner-occupied housing units (16 single family homes and 24 attached townhomes) with the completion of the Development and help fulfill the need for such housing in the City. 1.04. The City and the EDA elect to retain all of the captured tax capacity to finance the costs of the TIF District and the Development District. 1.05. The provisions of this Section 1 are hereby incorporated by reference into and made a part of the TIF Plan. 3 RC110-167-986556.v2 1.06. The Council and the Board further find that the Plans are intended and in the judgment of the Council and the Board their effect will be to promote the public purposes and accomplish the objectives specified therein. The Council and the Board also intend that the EDA shall have and enjoy, with respect to the Development District, the full range of powers and duties conferred upon the EDA pursuant to the Development Plan, the Act, and such other legal authority as the EDA may have or enjoy from time to time. 1.07. The Development District and the TIF District are hereby established and the Plans, as presented to the Council and 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. Section 2. Approval of Development Assistance Agreement. 2.01. The Developer has presented the Council and the Board 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. 2.02. Subject to obtaining necessary variances, site plan approvals and zoning approvals, the Council and the Board hereby approve the Agreement in substantially the form presented to the Council and 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 authorize 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 Council and the Board 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 at least one unit of affordable owner occupied housing in the Development in accordance with the Agreement, 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-day period, the Developer may request an extension from the Board. 2.03. 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 4 RC110-167-986556.v2 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. 2.04. 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 Council or 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. 2.05. The Council and the Board hereby determine that the execution and performance of the Development Documents will help realize the public purposes of the Act. Section 3. Interfund Loans. 3.01. The Council and the Board hereby approve 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 $359,588, interest in an amount up to $1,500,000 and other project costs in an amount up to $1,736,295) 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 general fund or other City 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 $3,595,883 outstanding at any time. (d) All Loans shall mature not later than February 1, 2052 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. 5 RC110-167-986556.v2 (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. (g) In particular, the City and the EDA hereby approve an interfund Loan from the Economic Vitality Fund in the amount of up to $800,000 to be advanced in accordance with the Agreement in amounts of up to $20,000 per affordable housing unit of the Development sold to initial purchasers thereof meeting the income qualifications of Section 1.02 hereof (the “Development Loan”, together with interest at the rate of 5.00%. Principal and interest (“Payments”) on the Development Loan will be paid semiannually on February 1 and August 1 (each a “Payment Date”), commencing on the first Payment Date on which the EDA has Available Tax Increment (defined below), or on any other dates determined by the City Finance Director, through the earlier of (i) the date the Development Loan and all accrued interest thereon are paid in full or (ii) the date of last receipt of tax increment from the applicable TIF District. “Available Tax Increment” means 95% of the tax increment from the TIF District received by the EDA from the County in the 6-month period before any Payment Date. 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 date of each advance 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 Development Loan may be subordinated to any outstanding or future bonds, notes, or contracts secured in whole or in part with tax increments of the applicable TIF District, and are on a parity with any other outstanding or future interfund loans secured in whole or in part with tax increments of such TIF District. The principal sum and all accrued interest payable under this resolution are pre-payable in whole or in part at any time by the EDA without premium or penalty. The City and EDA may at any time make a determination to forgive the outstanding principal amount on the Development Loan, in whole or in part, on any date, to the extent permissible under law. 6 RC110-167-986556.v2 PASSED AND ADOPTED BY THE BOARD OF COMMISSIONERS OF THE ROCHESTER ECONOMIC DEVELOPMENT AUTHORITY, THIS _9th__ DAY OF ___December__, 2024. PRESIDENT OF SAID AUTHORITY SECRETARY OF SAID AUTHORITY PASSED AND ADOPTED BY THE COMMON COUNCIL OF THE CITY OF ROCHESTER, MINNESOTA, THIS __________ DAY OF _______________, 2024. ___________________________________ PRESIDENT OF SAID COMMON COUNCIL ATTEST: __________________________ CITY CLERK APPROVED THIS _____ DAY OF ______________________, 2024. ___________________________________ MAYOR OF SAID CITY (Seal of the City of Rochester, Minnesota) 7 RC110-167-986556.v2