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HomeMy WebLinkAbout6.m. Interfund Loan Transfer ApprovalCITY OF ROSEMOUNT EXECUTIVE SUMMARY FOR ACTION City Council Meeting Date: October 19, 2004 AGENDA ITEM: Approval of Interfund Loan Transfer AGENDA SECTION: Consent PREPARED BY: Kim Lindquist, Community Development Director q 1 ATTACHMENTS: Draft Resolution APPROVED BY: RECOMMENDED ACTION: Motion to approve Draft Resolution ACTION: ISSUE As part of the redevelopment process the City will begin incurring costs associated with acquisition of property in the Downtown Area. Because the TIF District will not begin generating income for at least two years, staff is requesting approval of a resolution allowing an interfund loan for up to 2 million dollars to pay for land acquisition and related development costs. Future TIF District income would then pay off the interfund loan. This is similar to the resolution approved by the Council in August permitting an interfund loan for administrative costs. SUMMARY The two ways cities can pay for TIF costs prior to receipt of the increment is to either have an interfund loan or bond. The Office of the State Auditor requires that cities pass a resolution permitting interfund loans. At this time staff is requesting approval to pay costs incurred for property acquisition for the District through an interfund loan. When the increment is generated, the loan will be repaid. Staff is recommending that the resolution permit up to $2,000,000 for the internal loan. This amount should permit payment of land acquisition and related costs until such time as the tax increment is generated. The Finance Director is comfortable that the City can make the proposed interfund loan without negatively impacting city operations. Should costs be above the amount Listed in the resolution, a new resolution would have to be approved by the City Council. CITY OF ROSEMOUNT DAKOTA COUNTY, MINNESOTA RESOLUTION NO. RESOLUTION APPROVING THE TERMS OF $2,000,000 INTERNAL LOAN IN CONNECTION WITH THE DOWNTOWN- BROCKWAY TAX INCREMENT FINANCING DISTRICT. WHEREAS, the City has heretofore approved the establishment of the Downtown - Brockway Tax Increment Financing District(the "TIF District ") within the RosemountRedevelopmentProject (the "Project "), and has adopted a Tax Increment Financing Plan (the "TIF Plan") for the purpose of financing certain improvements within the project. WHEREAS, the City has determined to pay for certain costs identified in the TIF Plan consisting of land/building acquisition, site improvements /preparation,environmental remediation, public utilities, parking facilities, streets and sidewalks, interest, administrative costs (collectively,the Qualified Costs "), which costs will be financed on a temporary basis from City funds available for such purposes, and WHEREAS, under Minnesota Statutes, Section 469.178, Subd. 7, the City isauthorized to advance or loan money from the City's general fund or any other fund from which such advances may be legally made, in order to finance the Qualified Costs; and WHEREAS, the City intends to reimburse itself for the Qualified Costs from tax increments derived from the TIF District in accordance with the terms of this resolution (which terms are referred to collectively as the "TIF Loan"); and NOW, THEREFORE, BE IT RESOLVED, the Council of the City of Rosemount hereby approves the TIF Loan with the following terms. The city shall repay to the City fund from which the Qualified Costs are initially paid, the principal amount of $2,000,000 togetherwith the interest on the principal amount expended accruing from the date of each initial expenditure, at the greatest of (a) the rate specified under Minnesota Statutes, Section 207.75, or (c) the rate specified under Minnesota Statutes, Section 549.09. The interestrate for each calendar year during the term of the TIF Loan will be determined as of each January 1, using the maximum rate under clauses (a) or (b)in effect as of that date; and BE IT FURTHER RESOLVED, that the term of the loan shall be two years and the interest shall accrue to principal on a semi-annual basis on each June I and December I'; and BE IT FURTHER RESOLVED, that the payments on this TIF Loan are payable solely from "Available Tax Increment," which shallmean, on each Payment Date, all of the tax increment generated in the preceding six (6) months with respect to the property within the TIF District [or name other districts] and remitted to the City by Dakota County, all in accordance with Minnesota Statutes, Sections 469.174 to 469.1799, all inclusive, as amended. Payments on this TIF Loan are subordinate to any outstanding or future bonds, notes or contracts secured in whole or in part with Available Tax Increment, and are on parity with any other outstanding or future interfund loans secured in whole or in part with Available Tax Increment; and RESOLUTION 2004 - BE IT FURTHER RESOLVED, that the principal sum and all accrued interest payable under this TIF Loan are pre- payable in whole or in part at any time by the City without premium or penalty. No partial prepayment shall affect the amount or timing of any other regular payment otherwise required to be made under this TIF Loan; and BE IT FURTHER RESOLVED, that this TIF Loan is evidence of an internal borrowing by the City in accordance with Minnesota Statutes, Section 469.178, Subd. 7, and is a limited obligation payable solely from Available Tax Increment pledged to the payment hereofunder this resolution. This TIF Loan and the interest hereon shall not be deemed to constitute a general obligation of the State of Minnesota or any political subdivision thereof, including, without limitation, the City. Neither the State of Minnesota, nor any political subdivision thereof shall be obligated to pay the principal of or interest on this TIF Loan or other costs incident hereto except out of Available Tax Increment, and neither the full faith and credit nor the taxing power of the State of Minnesota or any political subdivision thereof is pledged to the payment of the principal of or interest on this TIF Loan or other costs incident hereto. The City shall have no obligation to pay any principal amount of the TIF Loan or accrued interest thereon, which may remain unpaid afterthe final Payment Date; and BE IT FURTHER RESOLVED, that the City may amend the terms of this TIF Loan at any time by resolution of the City Council, including a determination to forgive the outstanding principal amount and accrued interest to the extent permissible under law. ADOPTED this 19"' day of October, 2004 by the City Council of the City of Rosemount. William H. Droste, Mayor ATTEST: Linda Jentink, City Clerk Motion by: Second by: Voted in favor: Voted against: Member absent: 2