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
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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:
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