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HomeMy WebLinkAboutResolution No. 094-17 - DeveloptAssistanceAgree.COR and UrbanOnFirst,LLC RESOLUTION NO. 17-______ 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. 54 (the “Development District”), adopt the Economic Development Plan for the Development District (the “Development Plan”), establish Redevelopment Tax Increment Financing District No. 54-1 (Urban on First, LLC 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, and 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. 54 of the Rochester Economic Development Authority and Tax Increment Financing Plan for DMC Redevelopment Tax Increment Financing District No. 54-1 (Urban on First, LLC Project),” dated February 22, 2017, 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 a mixed use redevelopment project consisting of an approximately 6 story building to include approximately 156 market rate rental apartments, approximately 9,000 square feet of commercial area and approximately 156 structured parking stalls to be located south of 4th Street SW, between South Broadway and 1st Avenue SW, adjacent to the U.S. Bank property in the City of Rochester, Minnesota (the “City”) to be owned by the Developer (the “Development”). 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 Urban on First, LLC, a Minnesota limited liability company (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 494849v1 RC110-79 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”). The DMCC approved the Development on February 8, 2017. 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 public hearing thereon by the City 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: (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. 2 494849v1 RC110-79 (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 $19,874,448 which is the increase in the market value estimated to result from the proposed development (approximately $25,146,400, assuming no annual inflation) after subtracting the present value of the projected tax increments for the maximum duration of the TIF District (approximately $5,271,952). 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 Council 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. 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; 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 $529,591, interest in an amount 3 494849v1 RC110-79 up to $4,010,237 and other project costs in an amount up to $6,052,000) 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 $10,591,828 outstanding at any time. (d) All Loans shall mature not later than February 1, 2045 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. 4.01. 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, stating the Developer’s responsibilities regarding the Development and the terms and conditions the EDA’s assistance with the financing of certain costs of the Development. 4.02. The Board hereby approves the Agreement substantially in the form on file with the EDA, together with any related documents necessary in connection therewith, including but not limited to any agreements referred to therein, (collectively, the “Development Documents”), and hereby authorizes the President and Secretary, 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 and Owner have not (i) executed this Agreement, (ii) obtained a footing and foundation permit and commenced construction of the foundation of the Improvements, and (iii) delivered to the EDA evidence satisfactory to the EDA that the Developer has sufficient financing to complete the Improvements. Prior to the expiration of such 4 494849v1 RC110-79 180 period, the Developer or the Owner 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. 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. 4.04. 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 Bond thereunder. 4.05. The Board hereby determines that the execution and performance of the Development Documents will help realize the public purposes of the Act. PASSED AND ADOPTED BY THE BOARD OF COMMISSIONERS OF THE ROCHESTER ECONOMIC DEVELOPMENT AUTHORITY, THIS 22ND DAY OF FEBRUARY, 2017. 5 494849v1 RC110-79 SECRETARY’S CERTIFICATE I, the undersigned, being the duly qualified and acting Secretary of the Rochester Economic Development Authority, DO HEREBY CERTIFY that I have carefully compared the attached and foregoing extract of minutes of a duly called and regularly held meeting of the Board of Commissioners held on February 22, 2017, with the original minutes thereof on file in my office and I further certify that the same is a full, true, and correct transcript thereof insofar as said minutes relate to the actions referenced therein with respect to the EDA’s Economic Development District No. 54 and Redevelopment Tax Increment Financing District No. 54-1 therein. WITNESS My hand this ____ day of February, 2017. _______________________________________ Secretary Rochester Economic Development Authority 6 494849v1 RC110-79