HomeMy WebLinkAboutResolution No. 356-17 - DevelopmentAssistAgree.COR&MortensonProperties,Inc.
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.
62 (the “Development District”), adopt the Economic Development Plan for the Development
District (the “Development Plan”), establish DMC Redevelopment Tax Increment Financing
District No. 62-1 (Mortenson Discovery Square Phase I) 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. 62 of the Rochester Economic Development Authority and Tax Increment Financing
Plan for DMC Redevelopment Tax Increment Financing District No. 62-1 (Mortenson Discovery
Square Phase I),” dated August 7, 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 an
approximately 89,000 square foot, 4-story bioscience, office, educational, and commercial
building (the “Development”) to be located on 4th Street SW between 2nd Avenue SW and 3rd
Avenue SW in the City of Rochester, Minnesota (the “City”). The Developer will lease the
Development land from the fee owners, the Mayo Clinic and the Mayo Foundation.
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 Properties 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
500022v3 RC110-89
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 district 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 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
500022v3 RC110-89
(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 $11,917,500 which is the increase in the market
value estimated to result from the proposed development (approximately $16,817,500,
assuming no annual inflation) after subtracting the present value of the projected tax
increments for the maximum duration of the TIF District (approximately $4,900,000).
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 $1,097,455, interest in an
3
500022v3 RC110-89
amount up to $2,000,000 and other project costs in an amount up to $7,877,096 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 $10,974,551 outstanding at any time.
(d) All Loans shall mature not later than February 1, 2047 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 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, 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 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 has not completed the following actions within 180
days after the date of this resolution: (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 adequate financial
4
500022v3 RC110-89
resources available for and committed to the completion of the Improvements. Prior to the
expiration of such 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 7TH DAY OF
AUGUST, 2017.
5
500022v3 RC110-89
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 August 7, 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. 62 and DMC Redevelopment Tax Increment Financing District No.
62-1 (Mortenson Discovery Square Phase I) therein.
WITNESS My hand this ____ day of August, 2017.
_______________________________________
Secretary
Rochester Economic Development Authority
6
500022v3 RC110-89