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Home My WebLink About6.i. Approval of an Estoppel Agreement for Solar Subscription EXECUTIVE SUMMARY City Council Meeting: April 7, 2020 AGENDA ITEM: Approval of an Estoppel Agreement for Solar Subscription AGENDA SECTION: Consent PREPARED BY: Anthony Nemcek, Planner AGENDA NO. 6.i. ATTACHMENTS: Estoppel Agreement APPROVED BY: LJM RECOMMENDED ACTION: Motion to Approve the Estoppel Agreement with Amalgamated Bank, Virgo Mangata Holdco, LLC, and Warsaw Solar LLC and Authorize the Mayor and Clerk to Enter into Agreement. SUMMARY In an effort to support solar energy production and reduce long-term energy costs, the City has entered into subscriptions with multiple solar gardens. The cost savings to the City are derived from the bill credits Xcel Energy pays the City, which amount to more than the cost of the subscriptions. The City entered into the most recent subscription contract at its meeting on April 2, 2019. That contract is with ReneSola, operating as Warsaw Solar LLC. A financing partners of the solar developer, Amalgamated Bank, LLC, and Virgo Mangata Holdco, LLC, require the execution of an estoppel agreement that will bring them into the contract with Warsaw Solar LLC. and the City. This is necessary in the event that Amalgamated and Virgo Mangata need to take over the obligations and responsibilities of the garden from Warsaw Solar LLC. Technically, the City entered into the agreement with ReneSola (Warsaw Solar LLC), but not the funding partners. A similar estoppel was approved by Council on September 17, 2019. For this reason, staff recommends that the City Council authorize the execution of this estoppel agreement, so that the provisions in the ReneSola agreement will then be extended to Amalgamated and Virgo Mangata. The estoppel has been reviewed by the City Attorney who found no issues with the agreement. RECOMMENDATION Staff recommends approval of the estoppel agreement to extend the terms of the subscription to Amalgamated Bank and Virgo Mangata Holdco, LLC. 1 SUBSCRIPTION AGREEMENT ESTOPPEL CERTIFICATE Warsaw Solar LLC This Subscription Agreement Estoppel Certificate (this “Estoppel Certificate”) is delivered as of March ___, 2020 (the “Effective Date”) by the CITY OF ROSEMOUNT, a political subdivision of the State of Minnesota (“Subscriber”), in favor of AMALGAMATED BANK, a bank organized under the laws of the state of New York (together with its successors and assigns, “Lender”) AND VIRGO MANGATA HOLDCO, LLC, a Delaware limited liability company (“Owner,” and together with Lender, the “Parties”). WHEREAS, Subscriber entered that certain (i) Subscription Agreement – SRC #040823 dated April 4, 2019, and (ii) Subscription Agreement – SRC #040824 dated April 4, 2019 with Warsaw Solar LLC, a Minnesota limited liability company (“Company”) (together with all amendments and modifications thereto, collectively, the “Subscription Agreement”), a copy of which is attached hereto as Exhibit A; and WHEREAS, Subscriber executed that certain Subscriber Agency Agreement and Consent Form dated May 6, 2019 (together with all amendments and modifications thereto, collectively, the “Agency Agreement,” together with the Subscription Agreement, the “Agreement”), a copy of which is attached hereto as Exhibit B; and WHEREAS, Lender has agreed to make (i) a certain equity investment in Owner, the sole member and managing member of Company (the “Investment”), and (ii) certain loan(s) to Owner with respect to Company (the “Loan,” together with the Investment, the “Transaction”). WHEREAS, In connection with the Transaction, the Parties require that Subscriber confirm and acknowledge certain matters related to the Agreement. Capitalized terms used but not defined herein have their assigned meanings in the Agreement. Based on the foregoing, and recognizing that the Parties will rely hereon, Subscriber hereby confirms and agrees as follows: 1. Exhibits A and B set forth a true and complete copy of all documents constituting the Agreement, including the Agreement and any amendments or modifications of the same. The Agreement is in full force and effect, has not been modified, changed, altered, or amended in any respect except as indicated in Exhibit A and B. 2. As of the Effective Date: a. all payments and deposits required to be paid or posted to Subscriber under the Agreement (if any) by Company have been so paid or posted; b. all obligations and conditions of Company to be performed under the Agreement (if any) have been performed by Company; c. there are no Events of Default existing under the Agreement on the part of Company or Subscriber, and no events have occurred that, with the passage of time or the giving of notice, or both, would constitute an Event of Default by Company or Subscriber under the Agreement; 2 d. there is no existing basis for Subscriber or Company to cancel or terminate the Agreement; and e. there are no defenses, offsets, credits, rent increases, or claims of Subscriber pursuant to any of the terms or conditions of the Agreement. 3. Subscriber’s CSG Allocation 0.80 MWAC, which is approximately 39.88% of the Project’s projected output. 4. All representations made by Subscriber under the Agreement are true and correct. 5. Subscriber ratifies and confirms the Agreement in all respects. 6. To the Subscriber’s actual knowledge, there are no actions, whether voluntary or otherwise, pending against Subscriber under the Bankruptcy Laws of the United States or any state thereof. 7. Subscriber hereby acknowledges Lender is considered a “Financing Party” under the Agreement, and is entitled to the rights set forth therein, including Article 7, and the rights to copies of notices under Section 7.3 of the Agreement. Notice shall be given to Lender in writing at: Amalgamated Bank 255 California Street, Suite 600 San Francisco, CA 94111 Attention: Skyler Webster, First President E-mail: skylerwebster@amalgamatedbank.com With copy to: Norman L. Jones, III Winthrop & Weinstine, P.A. 225 South 6th Street, Suite 3500 Minneapolis, MN 55402 8. Subscriber shall not amend, modify, assign, or terminate the Agreement without prior written notice to the Parties. 9. Subscriber has read this Estoppel Certificate and acknowledges and understands the certifications and representations made herein. The undersigned signatory represents and warrants that he or she is duly authorized to execute this Estoppel Certificate on behalf of Subscriber. [Signature Page Follows Immediately] Warsaw Solar LLC (City of Rosemount) Subscriber Agreement Estoppel Certificate - Signature Page IN WITNESS WHEREOF, Subscriber has executed this Estoppel Certificate as of the Effective Date. SUBSCRIBER: CITY OF ROSEMOUNT, a political subdivision of the State of Minnesota By: Name: Its: EXHIBIT A COPY OF SUBSCRIPTION AGREEMENT [SEE ATTACHED] EXHIBIT B COPY OF AGENCY AGREEMENT [SEE ATTACHED]