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HRA Agenda Pkt 10-4-16 HOPKINS HRA REGULAR MEETING October 4, 2016 7 p.m. I. CALL TO ORDER II. CONSENT AGENDA 1. Approve minutes of the September 6, 2016, regular meeting 2. Approve disbursements through September 30, 2016 Recommendation: approve consent agenda Board Action: ___________________________________________ II. NEW BUSINESS 1. ITEM 2016-09 Authorize execution of Pledge Agreement with the City of Hopkins relating to the 2016D GO TIF Refunding Bonds and providing the for the redemption of Bonds refunded Recommendation: adopt Resolution 514 Board Action: ___________________________________________ III. ADJOURNMENT Board Action: ____________________________________________ CUMMINGS CAMPBELL GADD HALVERSON KUZNIA MORNSON ELVERUM OCTOBER S M T W T F S 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 NOVEMBER _S M T W T F S 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 MINUTES OF HOPKINS HRA REGULAR MEETING September 6, 2016 A regular meeting of the Hopkins Housing and Redevelopment Authority was held September 6, 2016, at Hopkins City Hall. Present were Chair Molly Cummings, Commissioners Katy Campbell, Jason Gadd, Kristi Halverson and Aaron Kuznia. Also present were Executive Director Mike Mornson and Assistant Executive Director Kersten Elverum. I. CALL TO ORDER The meeting was called to order at 7 p.m. II. CONSENT AGENDA 1. Approve minutes of the August 1, 2016, regular meeting 2. Approve disbursements through August 31, 2016 Commissioner Kuznia moved, Commissioner Gadd seconded, to approve the consent agenda. The motion was approved unanimously. III. ADJOURNMENT Commissioner Halverson moved, Commissioner Campbell seconded, to adjourn the meeting. The motion was approved unanimously. The meeting adjourned at 7:01 p.m. ____________________________________ Molly Cummings, Chair ____________________________________ Michael J. Mornson, Executive Director October 4, 2016 HRA Report 2016-09 AUTHORIZE EXECUTION OF PLEDGE AGREEMENT WITH THE CITY OF HOPKINS RELATING TO THE 2016D GO TIF REFUNDING BONDS AND PROVIDING FOR THE REDEMPTION OF BONDS REFUNDED Proposed Action Staff recommends approval of the following motion: Adopt Resolution 514, authorizing execution of a tax increment pledge agreement with the City of Hopkins relating to the City’s general obligation tax increment revenue refunding bonds, Series 20216D, and providing for the redemption of bonds refunded thereby. Adoption of this motion will result in the HRA Tax Increment Revenue Bonds (Excelsior Crossings Project), Series 2009, being called and refunded with the 2016D Tax Increment Refunding Bonds. Overview The HRA and the City of Hopkins have the opportunity to refund the 2009 HRA TIF Bonds and realize an estimated present value savings of $1,144,000. The 2009 HRA TIF Bonds were sold to finance one of the three buildings in the Cargill development. The savings from refunding the 2009 HRA bonds will reduce total debt service by an estimated $1,318 million over the next 12 years, and as a result, additional funds will be available to the City for development. Debt service will be paid from tax increment revenues generated from TIF 2-11. A tax increment pledge agreement was executed when the original bonds were sold. In order for the City to issue the Series 2016D Bonds, the HRA must call the Series 2009 Bonds for redemption and must pledge the tax increment revenues previously pledged to the Series 2009 Bonds to the Series 2016D Bonds. Primary Issues • Interest savings as a result of refunding the bonds. Staff Recommendation Staff recommends approval of the resolution. Supporting Information • Resolution No. 514 • Pledge Agreement ______________________________ Christine M. Harkess, CPA, CGFM Finance Director 486597v1 JAE HP110-87 HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF HOPKINS, MINNESOTA Hennepin County RESOLUTION NO. 514 RESOLUTION AUTHORIZING EXECUTION OF A TAX INCREMENT PLEDGE AGREEMENT WITH THE CITY OF HOPKINS RELATING TO THE CITY’S GENERAL OBLIGATION TAX INCREMENT REVENUE REFUNDING BONDS, SERIES 2016D, AND PROVIDING FOR THE REDEMPTION OF BONDS REFUNDED THEREBY WHEREAS, in accordance with Minnesota Statutes, Sections 469.001 through 469.047, as amended (the “HRA Act”), the Housing and Redevelopment Authority in and for the City of Hopkins, Minnesota (the “HRA”) established Redevelopment Project No. 2 (the “Project Area”) and approved a Redevelopment Plan (the “Project Plan”) for the Project Area; and WHEREAS, the HRA and the City of Hopkins, Minnesota (the “City”) have established Tax Increment Financing District No. 2-11 (the “TIF District”) within the Project Area in accordance with Minnesota Statutes, Sections 469.174 through 469.1794, as amended (the “TIF Act”); and WHEREAS, pursuant to the HRA Act, the TIF Act, Laws of Minnesota 2003, Chapter 127, Article 10, Section 31 (the “Special Law”), and an Indenture of Trust, dated as of October 1, 2009 (the “Indenture”), between the HRA and U.S. Bank National Association, as trustee (the “Trustee”), the HRA issued its Tax Increment Revenue Bonds (Excelsior Crossings Project Phase Three), Series 2009 (the “Series 2009 Bonds”), in the original aggregate principal amount of $4,825,000, to finance a portion of the costs of the acquisition of real property, demolition of certain structures, site remediation, and certain site improvements related to the Phase Three Improvements (as such terms are defined in the Indenture) within the TIF District; and WHEREAS, the Series 2009 Bonds are currently outstanding in the principal amount of $4,220,000 and are callable at the option of the HRA on February 1, 2017, or any date thereafter, at a price of par plus accrued interest; and WHEREAS, in order to achieve debt service savings for the HRA and the City, the City has proposed to redeem and prepay the outstanding principal amount of the Series 2009 Bonds through the issuance of its General Obligation Tax Increment Revenue Refunding Bonds, Series 2016D (the “Refunding Bonds”), in the approximate aggregate principal amount of $3,760,000; and WHEREAS, the HRA finds it in the best interest of the City to call the outstanding Series 2009 Bonds for redemption on or about February 1, 2017 (the “Redemption Date”), in the principal amount of $4,050,000, subject to the terms set forth herein and in the notice of call for redemption attached hereto as EXHIBIT A; and WHEREAS, the HRA has determined to pledge certain tax increment revenues from the TIF District to the City for the payment of the principal of and interest on the Refunding Bonds; and WHEREAS, there has been presented to the Board of Commissioners of the HRA (the “Board”) a Tax Increment Pledge Agreement (Series 2016D Bonds) between the HRA and the City (the “Pledge Agreement”) providing for the pledge of certain tax increments from the TIF District to the payment of the principal of and interest on the Refunding Bonds. 486597v1 JAE HP110-87 2 NOW, THEREFORE, BE IT RESOLVED by the Board of Commissioners of the Housing and Redevelopment Authority in and for the City of Hopkins, Minnesota, as follows: 1. The Series 2009 Bonds are hereby called for redemption on the Redemption Date; provided, however, that (i) the City Council of the City approves the issuance of the Refunding Bonds and the Refunding Bonds are issued and (ii) sufficient funds are deposited in the Bond Fund established for the Series 2009 Bonds pursuant to the Indenture. 2. The Trustee is hereby authorized and directed to mail a conditional notice of call for redemption of the Series 2009 Bonds in the form attached hereto as EXHIBIT A to the registered owners of the Series 2009 Bonds to be redeemed at the address shown on the registration books kept by the Trustee. 3. The Chair and Executive Director of the HRA, or their designees, are hereby authorized and directed to execute and deliver the Pledge Agreement substantially in the form on file with the Board, providing for the pledge of certain tax increment derived from certain real property in the TIF District for the payment of the principal of, premium, if any, and interest on, the Refunding Bonds. 4. The Chair and Executive Director of the HRA, or their designees, are hereby authorized and directed to execute any and all documents deemed necessary to refund the Series 2009 Bonds and carry out the intentions of this resolution. 5. This resolution shall be effective as of the date hereof. Adopted by the Housing and Redevelopment Authority in and for the City of Hopkins, Minnesota, this 4th day of October 2016. Molly Cummings, Chair Attest: Kristi Halverson, Secretary 486597v1 JAE HP110-87 A-1 EXHIBIT A NOTICE OF CALL FOR REDEMPTION $4,825,000 HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF HOPKINS, MINNESOTA TAX INCREMENT REVENUE BONDS (EXCELSIOR CROSSINGS PROJECT PHASE THREE) SERIES 2009 NOTICE IS HEREBY GIVEN that, by order of the Board of Commissioners of the Housing and Redevelopment Authority in and for the City of Hopkins, Minnesota (the “HRA”), there have been called for redemption and prepayment on February 1, 2017 all outstanding bonds of the HRA designated as the Tax Increment Revenue Bonds (Excelsior Crossings Project Phase Three), Series 2009 (the “Bonds”), dated October 15, 2009, having stated maturity dates of February 1 in the years 2018 through 2030, both inclusive, totaling $4,050,000 in principal amount, and with the following CUSIP numbers: Year of Maturity Amount CUSIP 2018 $ 180,000 43987P AY7 2020 405,000 43987P BA8 2022 465,000 43987P BC4 2023 260,000 43987P BD2 2024 280,000 43987P BE0 2030 2,460,000 43987P BF7 The Bonds are being called at a price of par plus accrued interest to February 1, 2017, on which date all interest on said Bonds will cease to accrue. The redemption of the Bonds is contingent upon the receipt by U.S. Bank National Association, as trustee (the “Trustee”), of sufficient funds, on or before Noon (Minneapolis time) on the redemption date, for the redemption of all Bonds. If such funds are not received in accordance with the preceding sentence then the redemption will be cancelled. Holders of the Bonds hereby called for redemption are requested to present their Bonds for payment at the main office of the Trustee in the City of Saint Paul, Minnesota, at the following address, on or before February 1, 2017: U.S. Bank National Association Corporate Trust Services 111 Fillmore Avenue East St. Paul, MN 55107 Important Notice: In compliance with the Economic Growth and Tax Relief Reconciliation Act of 2009, the Trustee is required to withhold a specified percentage of the principal amount of the redemption price payable to the holder of any Bonds subject to redemption and prepayment on the redemption date, unless the Trustee is provided with the Social Security Number or Federal Employer Identification Number 486597v1 JAE HP110-87 A-2 of the holder, properly certified. Submission of a fully executed Request for Taxpayer Identification Number and Certification, Form W-9 (Rev. December 2011), will satisfy the requirements of this paragraph. Dated: ________________. BY ORDER OF THE BOARD OF COMMISSIONERS OF THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF HOPKINS, MINNESOTA By /s/ Mike Mornson Executive Director Housing and Redevelopment Authority in and for the City of Hopkins, Minnesota 486602v1 JAE HP110-87 TAX INCREMENT PLEDGE AGREEMENT (SERIES 2016D BONDS) between CITY OF HOPKINS, MINNESOTA and HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF HOPKINS, MINNESOTA THIS TAX INCREMENT PLEDGE AGREEMENT (SERIES 2016D BONDS) (the “Agreement”) is made and entered as of the 4th day of October 2016 by and between the City of Hopkins, Minnesota (the “City”) and the Housing and Redevelopment Authority in and for the City of Hopkins, Minnesota (the “HRA”). WHEREAS, in accordance with Minnesota Statutes, Sections 469.001 through 469.047, as amended (the “HRA Act”), the HRA established Redevelopment Project No. 2 (the “Project Area”) and approved a Redevelopment Plan (the “Project Plan”) for the Project Area; and WHEREAS, the HRA and the City have established Tax Increment Financing District No. 2-11 (the “TIF District”) within the Project Area in accordance with Minnesota Statutes, Sections 469.174 through 469.1794, as amended (the “TIF Act”); and WHEREAS, pursuant to the HRA Act, the TIF Act, Laws of Minnesota 2003, Chapter 127, Article 10, Section 31 (the “Special Law”), and an Indenture of Trust, dated as of October 1, 2009 (the “Indenture”), between the HRA and U.S. Bank National Association, as trustee (the “Trustee”), the HRA issued its Tax Increment Revenue Bonds (Excelsior Crossings Project Phase Three), Series 2009 (the “Series 2009 Bonds”), in the original aggregate principal amount of $4,825,000, to finance a portion of the costs of the acquisition of real property, demolition of certain structures, site remediation, and certain site improvements related to the Phase Three Improvements (as such terms are defined in the Indenture) within the TIF District; and WHEREAS, the Series 2009 Bonds are currently outstanding in the principal amount of $4,220,000 and are callable at the option of the HRA on February 1, 2017, or any date thereafter, at a price of par plus accrued interest; and WHEREAS, in order to achieve debt service savings for the HRA and the City, the City has agreed to redeem and prepay the outstanding principal amount of the Series 2009 Bonds through the issuance of its General Obligation Tax Increment Revenue Refunding Bonds, Series 2016D (the “Refunding Bonds”), in the original aggregate principal amount of $3,760,000; and WHEREAS, pursuant to a resolution adopted by the Board of Commissioners of the HRA on October 4, 2016, the HRA has agreed to pledge certain tax increment revenue derived from the TIF District to the City for the payment of the principal of and interest on the Refunding Bonds; and WHEREAS, pursuant to Section 469.178, subdivision 2 of the TIF Act, any agreement to pledge tax increment revenues must be made by written agreement by and between the HRA and the City and 486602v1 JAE HP110-87 2 must be filed with the Taxpayer Services Division Manager of Hennepin County, Minnesota (the “County”). NOW, THEREFORE, the City and the HRA mutually agree to the following: (1) The City has issued the Refunding Bonds and will use a portion of the proceeds of the Refunding Bonds to redeem and prepay the outstanding Series 2009 Bonds on or about February 1, 2017. (2) The HRA hereby pledges to the payment of the principal of and interest on the Refunding Bonds ninety percent (90%) of the tax increment revenues derived from the Phase Three Property (hereinafter defined) in the TIF District and received by the HRA, which pledge is in an amount sufficient to pay one hundred five percent (105%) of such principal and interest due on the Refunding Bonds from time to time (the “Pledged Tax Increment”). (3) The “Phase Three Property” is defined as Lot 2, Excelsior Crossings, Second Addition, according to the plat thereof, Hennepin County, Minnesota. (4) Not less than three (3) business days prior to each debt service payment date for the Refunding Bonds, there shall be transferred from the account for the TIF District to the Debt Service Fund maintained by the City for the payment of the Refunding Bonds, an amount of Pledged Tax Increment which when taken together with amounts already on deposit in such Debt Service Fund, is equal to the principal of and interest on the Refunding Bonds to become due on the subject payment date. Any Pledged Tax Increment in excess of one hundred five percent (105%) of the principal and interest due with respect to the Refunding Bonds on any payment date may be retained by the HRA in the tax increment account for the TIF District and applied to any public redevelopment costs of the Project Area in accordance with law. (5) Without regard to anything in this Agreement to the contrary, Pledged Tax Increment shall be available (at the HRA’s option on a parity, superior or subordinate basis) to pay principal of and interest on both the Refunding Bonds and any other obligations issued by the City, HRA or any other public body to finance public redevelopment costs paid or incurred by the HRA in the Project Area. (6) An executed copy of this Agreement shall be filed with the Taxpayer Service Division Manager of the County pursuant to the requirement contained in Section 469.178, subdivision 2 of the TIF Act. (The remainder of this page is intentionally left blank.) 486602v1 JAE HP110-87 S-1 IN WITNESS WHEREOF, the City and the HRA have caused this Tax Increment Pledge Agreement (Series 2016D Bonds) to be duly executed on their behalf as of the date and year first written above. CITY OF HOPKINS, MINNESOTA By Molly Cummings, Mayor By Michael Mornson, City Manager 486602v1 JAE HP110-87 S-2 Execution page of the HRA to the Tax Increment Pledge Agreement (Series 2016D Bonds), dated as of the date and year first written above. HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF HOPKINS, MINNESOTA By Molly Cummings, Its Chair By Michael Mornson, Its Executive Director 486602v1 JAE HP110-87 STATE OF MINNESOTA COUNTY OF HENNEPIN CERTIFICATE OF TAXPAYER SERVICES DIVISION MANAGER I, the undersigned Taxpayer Services Division Manager of Hennepin County, Minnesota, hereby certify that a Tax Increment Pledge Agreement (Series 2016D Bonds) by and between the City of Hopkins, Minnesota (the “City”), and the Housing and Redevelopment Authority in and for the City of Hopkins, Minnesota, dated November ___, 2016, relating to the City’s General Obligation Tax Increment Revenue Refunding Bonds, Series 2016D, in the original aggregate principal amount of $3,760,000, has been filed in my office. WITNESS My hand and official seal this _____ day of ___________, 2016. Taxpayer Services Division Manager Hennepin County, Minnesota (SEAL) Deputy County Auditor