ITEM 3.5 Authorizing Tax Increments Financing DistrictsOF
Otsego
MINNESOTA
DEPARTMENT INFORMATION
Request for
City Council Action
ORIGINATING DEPARTMENT REQUESTOR:
MEETING DATE:
Administration City Administrator/Finance Director Flaherty
August 12, 2019
PRESENTER(s) REVIEWED BY:
ITEM #:
Consent
3.5
STRATEGIC VISION
MEETS:
I THE CITY OF OTSEGO:
X
Is a strong organization that is committed to leading the community through innovative
communication.
IS A PUBLIC HEARING REQUIRED?
Has proactively expanded infrastructure to responsibly provide core services.
No
Is committed to delivery of quality emergency service responsive to community needs and
expectations in a cost-effective manner.
The City has previously approved the establishment of Tax Increment Financing (TIF) Districts for Guardian
Is a social community with diverse housing, service options, and employment opportunities.
City incurs certain administrative expenditures, often including, but not limited to: staff time, newspaper
Is a distinctive, connected community known for its beauty and natural surroundings.
AGENDA ITEM DETAILS
RECOMMENDATION:
City staff is recommending that the City Council authorize interfund loans in connection with certain Tax
Increment Financing districts.
ARE YOU SEEKING APPROVAL OF A CONTRACT?
IS A PUBLIC HEARING REQUIRED?
No
No
BACKG ROU N D/J USTI FI CATI ON:
The City has previously approved the establishment of Tax Increment Financing (TIF) Districts for Guardian
Angels Riverview Landing (No. 3) and Riverbend North (No. 4). In connection with these TIF Districts, the
City incurs certain administrative expenditures, often including, but not limited to: staff time, newspaper
publications, preparation of annual reporting forms and county fees.
After establishment of a TIF District, it often is multiple years before tax increment is generated within the
respective projects; however, the City will incur certain expenditures prior to that tax increment
generation. During this time period, the TIF District funds will carry a deficit fund balance.
The corresponding Resolutions will authorize the City to advance or loan $25,000 (per District) from the
City's General fund to provide for the payment of the respective administrative expenditures. This advance
will be reimbursed from tax increments derived from the respective TIF Districts.
The adoption of the Resolutions was recommended by the City's TIF consultants, Ehlers. Also, having a
formal Resolution authorizing the advance satisfies Statutory requirements and provides additional
support to the Minnesota Office of the State Auditor, whom reviews the annual TIF reporting forms.
SUPPORTING DOCUMENTS ATTACHED:
• Resolution 2019-43
• Resolution 2019-44
POSSIBLE MOTION
PLEASE WORD MOTION AS YOU WOULD LIKE ITTO APPEAR IN THE MINUTES:
Motion to approve Resolution 2019-43 authorizing an interfund loan in connection with Tax Increment
Financing District No. 3 — Guardian Angels Riverview Landing.
Motion to approve Resolution 2019-44 authorizing an interfund loan in connection with Tax Increment
Financing District No. 4—Riverbend North.
BUDGET INFORMATION
FUNDING: BUDGETED:
N/A
Council member
CITY OF OTSEGO
WRIGHT COUNTY
STATE OF MINNESOTA
introduced the following resolution and moved its adoption:
RESOLUTION NO. 2019-43
RESOLUTION AUTHORIZING AN INTERFUND LOAN FOR ADVANCE OF
CERTAIN COSTS IN CONNECTION WITH TAX INCREMENT FINANCING
DISTRICT NO.3 - GUARDIAN ANGELS RIVERVIEW LANDING.
BE IT RESOLVED by the City Council (the "Council") of the City of Otsego, Minnesota (the
"City"), as follows:
Section 1. Background.
1.01. The City has heretofore approved the establishment of Tax Increment Financing District
No. 3 - Guardian Angels Riverview Landing (the "TIF District") within Development District No. 1 (the
"Project"), and has adopted a Tax Increment Financing Plan (the "TIF Plan") for the purpose of financing
certain improvements within the Project.
1.02. The City has determined to pay for certain costs identified in the TIF Plan consisting of
land/building acquisition, site improvements/preparation, public utilities, streets and sidewalks, other
qualifying improvements, interest and administrative costs (collectively, the "Qualified Costs"), which
costs may be financed on a temporary basis from City funds available for such purposes.
1.03. Under Minnesota Statutes, Section 469.178, Subd. 7, the City is authorized to advance or
loan money from the City's general fund or any other fiend from which such advances may be legally
authorized, in order to finance the Qualified Costs.
1.04. 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 "Interfund Loan").
Section 2. Terms of Interfund Loan.
2.01. The City hereby authorizes the advance of up to $25,000 from the General fund or so much
thereof as may be paid as Qualified Costs. The City shall reimburse itself for such advances together with
interest at the rate stated below. Interest accrues on the principal amount from the date of each advance.
The maximum rate of interest permitted to be charged is limited to the greater of the rates specified under
Minnesota Statutes, Section 270C.40 or Section 549.09 as of the date the loan or advance is authorized,
unless the written agreement states that the maximum interest rate will fluctuate as the interest rates
specified under Minnesota Statutes, Section 270C.40 or Section 549.09 are from time to time adjusted.
The interest rate shall be 4% and will not fluctuate.
2.02. Principal and interest ("Payments") on the Interfund Loan shall be paid semi-annually on
each August 1 and February 1 (each a "Payment Date"), commencing on the first Payment Date on which
the Authority has Available Tax Increment (defined below), or on any other dates determined by the City
Administrator, through the date of last receipt of tax increment from the TIF District.
2.03. Payments on this Interfund Loan are payable solely from "Available Tax Increment,"
which shall mean, on each Payment Date, tax increment available after other obligations have been paid,
or as determined by the City Administrator, generated in the preceding six (6) months with respect to the
property within the TIF District and remitted to the City by Wright County, all in accordance with
Minnesota Statutes, Sections 469.174 to 469.1794, all inclusive, as amended. Payments on this Interfund
Loan may be subordinated 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.
2.04. The principal sum and all accrued interest payable under this Interfund 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
Interfund Loan.
2.05. This Interfund 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 hereof under this resolution. This Interfund 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 Interfund 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 Interfund Loan or other costs incident hereto. The City shall have no
obligation to pay any principal amount of the Interfund Loan or accrued interest thereon, which may
remain unpaid after the final Payment Date.
2.06. The City may amend the terms of this Interfund 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.
Section 3. Effective Date. This resolution is effective upon the date of its approval.
The motion for the adoption of the foregoing resolution was duly seconded by Council member
, and upon a vote being taken thereon, the following voted in favor thereof:
and the following voted against the same:
Dated:
ATTEST:
Jessica Stockamp, Mayor Adam Flaherty, City Administrator
(Seal)
CITY OF OTSEGO
WRIGHT COUNTY
STATE OF MINNESOTA
Council member introduced the following resolution and moved its adoption:
RESOLUTION NO. 2019-44
RESOLUTION AUTHORIZING AN INTERFUND LOAN FOR ADVANCE OF
CERTAIN COSTS IN CONNECTION WITH TAX INCREMENT FINANCING
DISTRICT NO.4 — RIVERBEND NORTH.
BE IT RESOLVED by the City Council (the "Council") of the City of Otsego, Minnesota (the
"City"), as follows:
Section 1. Background.
1.01. The City has heretofore approved the establishment of Tax Increment Financing District
No. 4 — Riverbend North (the "TIF District") within Development District No. 1 (the "Project"), and has
adopted a Tax Increment Financing Plan (the "TIF Plan") for the purpose of financing certain
improvements within the Project.
1.02. The City has determined to pay for certain costs identified in the TIF Plan consisting of
land/building acquisition, site improvements/preparation, public utilities, streets and sidewalks, other
qualifying improvements, interest and administrative costs (collectively, the "Qualified Costs"), which
costs may be financed on a temporary basis from City funds available for such purposes.
1.03. Under Minnesota Statutes, Section 469.178, Subd. 7, the City is authorized to advance or
loan money from the City's general fund or any other fund from which such advances may be legally
authorized, in order to finance the Qualified Costs.
1.04. 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 "Interfund Loan").
Section 2. Terms of Interfund Loan.
2.01. The City hereby authorizes the advance of up to $25,000 from the General fund or so much
thereof as may be paid as Qualified Costs. The City shall reimburse itself for such advances together with
interest at the rate stated below. Interest accrues on the principal amount from the date of each advance.
The maximum rate of interest permitted to be charged is limited to the greater of the rates specified under
Minnesota Statutes, Section 270C.40 or Section 549.09 as of the date the loan or advance is authorized,
unless the written agreement states that the maximum interest rate will fluctuate as the interest rates
specified under Minnesota Statutes, Section 270C.40 or Section 549.09 are from time to time adjusted.
The interest rate shall be 4% and will not fluctuate.
2.02. Principal and interest ("Payments") on the Interfiind Loan shall be paid semi-annually on
each August 1 and February 1 (each a "Payment Date"), commencing on the first Payment Date on which
the Authority has Available Tax Increment (defined below), or on any other dates determined by the City
Administrator, through the date of last receipt of tax increment from the TIF District.
2.03. Payments on this Interfund Loan are payable solely from "Available Tax Increment,"
which shall mean, on each Payment Date, tax increment available after other obligations have been paid,
or as determined by the City Administrator, generated in the preceding six (6) months with respect to the
property within the TIF District and remitted to the City by Wright County, all in accordance with
Minnesota Statutes, Sections 469.174 to 469.1794, all inclusive, as amended. Payments on this Interfund
Loan may be subordinated 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.
2.04. The principal sum and all accrued interest payable under this Interfund 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
Interfund Loan.
2.05. This Interfund 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 hereof under this resolution. This Interfund 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 Interfund 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 Interfund Loan or other costs incident hereto. The City shall have no
obligation to pay any principal amount of the Interfund Loan or accrued interest thereon, which may
remain unpaid after the final Payment Date.
2.06. The City may amend the terms of this Interfund 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.
Section 3. Effective Date. This resolution is effective upon the date of its approval.
The motion for the adoption of the foregoing resolution was duly seconded by Council member
and upon a vote being taken thereon, the following voted in favor thereof:
and the following voted against the same:
Dated:
ATTEST:
Jessica Stockamp, Mayor Adam Flaherty, City Administrator
(Seal)