RES 17-50CITY OF OTSEGO
COUNTY OF WRIGHT
STATE OF MINNESOTA
RESOLUTION NO: 2017-50
AUTHORIZING INTERFUND LOAN FOR
ADVANCE OF CERTAIN COSTS IN CONNECTION
WITH TAX INCREMENT FINANCING DISTRICT NO.2
BE IT RESOLVED By the City Council of the City of Otsego, Minnesota (the "City") as
follows:
Section 1. Background.
1.01. The City of Otsego has established Tax Increment Financing District No. 2 (the
"TIF District") within Municipal Development District No. 1 (the "Development District")
pursuant to Minnesota Statutes, Sections 469.174 to 469.1794, as amended (the "TIF Act").
1.02. The City may incur certain costs related to the TIF District which may be
financed on a temporary basis from available City funds.
1.03. Under Section 469.178, Subdivision 7 of the TIF Act, the City is authorized to
advance or loan money from any fund from which such advances may be legally made in order
to finance expenditures that are eligible to be paid with tax increments under the TIF Act.
1.04. The City has determined that it may pay debt service on bonds issued to finance
project costs associated with the TIF District (the "Project Costs Advance") on a temporary basis
from the General Fund or any other fund from which such advances may be legally made (the
"Fund") as an Interfund Loan pursuant to Minnesota Statutes, Section 469.178, Subd. 7.
1.05. The City has also determined that it may be necessary to finance administrative
costs associated with the TIF District (the "Administrative Costs) using City funds legally
authorized for such purpose, and to reimburse such fund from tax increments from the district
when received.
1.06. The City hereby designates the Project Costs Advance as an interfund loan in
accordance with the terms of this resolution and the TIF Act.
Section 2. Repayment of Interfund Loan.
2.01. The City will reimburse itself for the Project Costs Advance and Administrative
Costs in an amount not to exceed $660,000, together with interest at the rate of 4.0% per annum
(the "Interfund Loan"). Interest accrues on the principal amount from the date of each advance.
The interest rate is no more than the greatest of the rate specified under Minnesota Statutes,
Section 270C.40 and Section 549.09, both in effect for calendar year 2017, and will not be
adjusted.
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2.02. Principal and interest ("Payments") on the Interfund Loan shall be paid semi-
annually on each February 1 and August 1 (each a "Payment Date"), commencing on the first
Payment Date on which the City 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 the Interfund Loan will be made solely from Available Tax
Increment, defined as the tax increment from the TIF District received by the City from Wright
County in the six-month period before any Payment Date. Payments shall be applied first to
accrued interest, and then to unpaid principal. Interest accruing from the Loan Date will be
compounded semiannually on February 1 and August 1 of each year and added to principal until
the first Payment Date, unless otherwise specified by the City Administrator. Available Tax
Increment shall be applied to payment on the Interfund Loan and for no other purpose until the
Interfund Loan is fully paid or forgiven as provided in Section 2.06 hereof. 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 a 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 resolution is pre-
payable in whole or in part at any time by the City without premium or penalty.
2.05. This resolution is evidence of an internal borrowing by the City in accordance
with Section 469.178, subdivision 7 of the TIF Act, and is a limited obligation payable solely
from Available Tax Increment pledged to the payment hereof under this resolution. The
Interfund Loan 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. 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 at any time make a determination to forgive the outstanding
principal amount and accrued interest on the Interfund Loan to the extent permissible under law.
2.07. The City may from time to time amend the terms of this Resolution to the extent
permitted by law, including without limitation amendment to the payment schedule and the
interest rate; provided that the interest rate may not be increased above the maximum specified in
Section 469.178. subd. 7 of the TIF Act.
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Section 3. Effective Date. This resolution is effective upon execution in full of the
Contract.
Adopted this _ day of June 12, 2017.
ATTEST:
City Clerk
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