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III. 1. ITEM 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, adopt Resolution 514 October 4, 2016HRAReport 2016-09 AUTHORIZEEXECUTION OF PLEDGE AGREEMENT WITH THE CITY OF HOPKINS RELATING TO THE 2016DGO 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 theHRA Tax Increment Revenue Bonds (Excelsior Crossings Project), Series 2009,being called and refunded with the 2016DTax Increment Refunding Bonds. Overview The HRA and the City of Hopkins havethe opportunity to refund the 2009HRA TIF Bonds and realize an estimated present value savings of $1,144,000. The 2009HRA TIF Bonds were sold to finance one of the three buildings in the Cargill development. The savings from refunding the 2009HRA bonds will reduce total debt service by an estimated $1,318million over the next 12years,and as a result,additional funds will be available to theCity for development. Debt service will be paid from tax increment revenues generated from TIF 2-11.A tax increment pledge agreement was executed whenthe original bonds were sold. In order for the City to issue the Series 2016D Bonds, the HRA must call the Series 2009Bonds for redemption and must pledge the tax increment revenues previously pledged to the Series 2009Bonds to the Series 2016D Bonds. Primary Issues Interest savings as a result of refunding the bonds. Staff Recommendation Staff recommends approval of theresolution. Supporting Information Resolution No. 514 Pledge Agreement ______________________________ Christine M. Harkess, CPA, CGFM Finance Director HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF HOPKINS, MINNESOTA Hennepin County RESOLUTION NO. 514 RESOLUTION AUTHORIZING EXECUTION OF ATAX INCREMENT PLEDGE AGREEMENT WITH THECITY OF HOPKINSRELATING TO THE CITY’SGENERALOBLIGATION TAX INCREMENT REVENUE REFUNDINGBONDS, SERIES2016D, 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 andtheCityof 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 through469.1794, as amended (the “TIF Act”); and WHEREAS, pursuant to the HRA Act, the TIF Act, Laws of Minnesota 2003, Chapter 127, Article10, 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 CrossingsProjectPhase Three), Series 2009(the “Series2009Bonds”), 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 ThreeImprovements (as such terms are defined in the Indenture)within the TIF District; and WHEREAS, the Series 2009Bonds are currently outstanding in the principal amount of $4,220,000 and are callable at the option of the HRA onFebruary 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 proposedtoredeem and prepay the outstanding principal amount of the Series 2009Bonds through the issuance of its General Obligation Tax Increment Revenue Refunding Bonds, Series 2016D(the “Refunding Bonds”), in the approximateaggregate 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 setforth herein and in the notice of call for redemption attached hereto as EXHIBIT A; and WHEREAS, the HRA has determinedto pledge certain tax increment revenuesfrom the TIF District to the City for the payment of the principalofand 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 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 2009Bonds 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 Bondsand the Refunding Bonds are issued and (ii) sufficient funds are deposited in the Bond Fund established for the Series2009Bonds pursuant to the Indenture. 2.The Trustee is hereby authorized and directed to mail a conditional notice of call for redemption of the Series 2009Bonds in the form attached hereto as EXHIBIT A to the registered owners of the Series 2009Bonds to be redeemed at the address shown on the registration books kept by the Trustee. 3.The Chair and Executive Directorof the HRA, or their designees,are hereby authorized and directed to execute and deliver thePledge Agreement substantially in the form on file with the Board, providing for the pledge ofcertaintax 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 2009Bonds 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, th this 4day of October2016. Molly Cummings, Chair Attest: Kristi Halverson, Secretary 486597v1 JAE HP110-87 2 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 PROJECTPHASE 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 ProjectPhase Three), Series 2009(the “Bonds”),dated October 15,2009,having stated maturity dates of February1 in the years 2018through 2030, both inclusive, totaling $4,050,000in principal amount, and with the following CUSIP numbers: Year of MaturityAmountCUSIP 2018$180,00043987P AY7 2020405,00043987P BA8 2022465,00043987P BC4 2023260,00043987P BD2 2024280,00043987P BE0 20302,460,00043987P 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 Trusteeis required to withhold a specified percentage of the principal amountof the redemption price payable to the holder of any Bonds subject to redemption and prepayment on the redemption date, unless the Trusteeis provided with the Social Security Number or Federal Employer Identification Number 486597v1 JAE HP110-87 A-1 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 486597v1 JAE HP110-87 A-2 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 th “Agreement”)is made and entered as of the 4 day of October2016by 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 through469.1794, as amended(the “TIF Act”); and WHEREAS, pursuant to the HRA Act, the TIF Act, Laws ofMinnesota 2003, Chapter 127, Article 10, Section 31 (the “Special Law”), and an Indenture of Trust, dated as of October1, 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 CrossingsProjectPhase Three), Series 2009(the “Series 2009Bonds”), 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 ThreeImprovements (as such terms are defined in the Indenture) within the TIF District; and WHEREAS, the Series 2009Bonds are currently outstanding in the principal amount of $4,220,000 and arecallable at the option of the HRA onFebruary 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 toredeem and prepay the outstanding principal amount of the Series 2009Bonds through the issuance of its General Obligation Tax Increment Revenue Refunding Bonds, Series 2016D(the “RefundingBonds”), in the originalaggregate 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 revenuederived 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 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 theRefunding Bondsand will use a portion of the proceeds of the Refunding Bonds toredeem and prepay the outstanding Series 2009Bonds 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 revenuesderived 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 lessthan 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 appliedto 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 theRefundingBonds 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 theCountypursuant to the requirement contained in Section469.178, subdivision 2of the TIF Act. (The remainder of this page is intentionally left blank.) 486602v1 JAE HP110-87 2 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 dateand year first written above. CITY OF HOPKINS, MINNESOTA By Molly Cummings, Mayor By Michael Mornson, City Manager 486602v1 JAE HP110-87 S-1 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 S-2 STATE OF MINNESOTACERTIFICATE OF TAXPAYER COUNTY OF HENNEPINSERVICES DIVISION MANAGER I, the undersigned Taxpayer Services Division Manager of Hennepin County, Minnesota, hereby certify that aTax 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 HennepinCounty, Minnesota (SEAL) DeputyCounty Auditor 486602v1 JAE HP110-87