RES 15-43RESOLUTION NO.2015-43
RESOLUTION APPROVING THE TERMS OF UP TO A
$450,000 INTERFUND LOAN IN CONNECTION WITH
A POTENTIAL TAX INCREMENT FINANCING DISTRICT
BE IT RESOLVED by the City Council (the "Council") of the City of Otsego, Minnesota
(the "City"), as follows:
Section 1. Background.
(a) The City may establish a Tax Increment Financing District (the "TIF District")
within a Development District to be formed, and may adopt a tax increment financing plan for
the TIF District (the "TIF Plan").
(b) The City may pay for certain costs to be identified in the TIF Plan consisting of
land acquisition, public utilities, site improvements/preparation, other eligible improvements,
and administrative costs (the "Qualified Costs") incurred in connection with the establishment of
the TIF District and development of land within the TIF District, which costs may be financed on
a temporary basis from City funds available for such purposes.
(c) 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 made, in order to finance the Qualified Costs.
(d) The City intends to reimburse itself for the payment of the Qualified Costs, plus
interest thereon, 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.
(a) The City hereby authorizes the advance of up to $450,000 from the City's 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.
(b) Principal and interest on the Interfund Loan shall be paid semi-annually on each
February 1 and August 1 (each a "Payment Date") commencing with the Payment Date on which
the City has Available Tax Increment (defined below), or on any other dates determined by the
City Administrator, through the last receipt of tax increment from the TIF District.
(c) Payments on the Interfund Loan are payable solely from "Available Tax
Increments" which shall mean, on each Payment Date, all of the tax increment available after
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other obligations have been paid, 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, as amended. Payments on the Interfund
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.
(d) The principal sum and all accrued interest payable under the 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.
(e) The 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. The 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 the 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 the 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.
(f) The City may amend the terms of the 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.
Adopted this 24th day of August, 2015.
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ATTEST:
City Clerk
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