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III. 2. Amendment to TIF Note C - TIF District 1-5 (HRA2021-10)December 21, 2021 HRA Report 2021-10 AMENDMENT TO TIF NOTE C – TIF DISTRICT 1-5 Proposed Action Staff recommends adoption of the following motion: Move to approve Resolution 542 Authorizing the Execution of a Tax Increment Note As Provided Therein. With this motion, the Note will be amended to allow for an accelerated repayment schedule. Overview TIF District No. 1-5 is a redevelopment district established for the development of the Moline. Currently there are three (3) TIF Notes in TIF District 1-5 that total $13 million (TIF Notes A, B and C). There is a priority order of payment with current TIF generated in the District being prorated to Notes A and B first. After those Notes are paid, payment on TIF Note C would occur. At the December 21, 2021 City Council meeting, amending the TIF Note C to allow payment on it prior to TIF Notes A and B being paid off as is currently stated was discussed. The HRA intends to utilize pooling dollars from TIF District 2-11 to accomplish this, thus allowing it to be paid off at the same time as the A and B Notes. This will result in approximately $5 million in interest savings, all the district obligations being paid in approximately nine years and early decertification of the TIF District Primary Issues to Consider This action does not commit any additional funds but rather saves interest costs by paying off debt from another source, TIF District 2-11. Supporting Information • Resolution 542 ___________________________ Kersten Elverum Director of Planning & Development Financial Impact: $__0__________Budgeted: Y/N ____ Source: ________________ Related Documents (CIP, ERP, etc.): _________________________________ DOCSOPEN\HP145\7\769384.v3-12/16/21 HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF HOPKINS Hennepin County, Minnesota RESOLUTION NO. 542 RESOLUTION AUTHORIZING THE EXECUTION OF A TAX INCREMENT NOTE AS PROVIDED THEREIN BE IT RESOLVED BY THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF HOPKINS (the "Authority") AS FOLLOWS: Section 1. Execution of Contract. 1.1. Authorization. The Housing and Redevelopment Authority In and For the City of Hopkins (the ''Authority") and the City of Hopkins (the “City”) have heretofore approved the establishment of Tax Increment Financing District No. 1-5 (The Moline) (the "District") within the Authority's Redevelopment Project No .. 1 (the "Project"), and has adopted a tax increment financing plan for the purpose of financing certain public costs of the Project. 1.2. A Development Agreement (the ''Contract") between the Authority, the City, Doran 810 Apartments, LLC (the "Redeveloper") and Doran 810, LLC, was previously entered into pursuant to which the Redeveloper would construct a residential rental development on certain real property located within the Project. The proposed Contract also provides that the City and the Authority would provide certain financial and other assistance in connection with the Redeveloper's development. 1.3. Issuance of Notes; Modification. Pursuant to the Contract, three TIF Notes (Note A, Note B and Note C) were issued to the Redeveloper. The parties now desire to modify the repayment terms of Note C. 1.4. Note C Modification. The Authority has reviewed the proposed revised Note C as set forth in Exhibit A and incorporated herein by reference and intends by this Resolution to authorize its execution and the performance of the HRA's obligations contained therein. 1.5. Execution of Note C. The appropriate officers of the Authority are hereby authorized to execute the Note C in substantially the form presented to the Authority Board, subject to such non- material changes as may be approved by the City Manager and legal counsel. Adopted this 21st day of December, 2021. _____________________________________ Jason Gadd, Chair ATTEST: ______________________________________ Mike Mornson, Executive Director A-1 DOCSOPEN\HP145\7\769384.v3-12/16/21 EXHIBIT A FORM OF REVISED NOTE C R-1 $8,000,000 UNITED STATES OF AMERICA STATE OF MINNESOTA COUNTY OF HENNEPIN HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF HOPKINS LIMITED REVENUE TAX INCREMENT NOTE OF 2019 (Doran 810, LLC Note C (this "Note")) The Housing and Redevelopment Authority In and For the City of Hopkins, Minnesota (the "Authority"), hereby acknowledges itself to be indebted and, for value received, promises to pay to the order of Doran 810, LLC, a Minnesota limited liability company, or its pem1itted assigns (the ''Owner"), solely from the source, to the extent and in the manner hereinafter provided, the principal amount of this Note, being Eight Million Dollars ($8,000,000.00) (the "Principal Amount"), said amount, together with interest as hereinafter described, to be paid, without demand, commencing on or before December 31, 2021, and continuing on each February 1 and August 1, thereafter to and including February 1, 2043 (the "Scheduled Payment Dates"). This Note is one of three Notes as defined in that certain Development Agreement dated as of March 4, 2016, between the Authority, the City of Hopkins, Doran 810 Apartments, LLC and the Owner, as amended by that First Amendment to Development Agreement, dated February 2, 2017, and as amended and restated by that Amended and Restated Development Agreement, dated December 20, 2019 (the "Contract"). The unpaid principal amount of the Note shall bear interest from August 2, 20l9 at the simple non-compounding rate of five percent (5.00%) (the "Rate"). Payments will be applied first to unpaid interest and then to outstanding principal until the earlier of the date that this Note is paid in full or terminated or the date of termination of the Authority's Tax Increment Financing District No. 1-5 (The Moline) (the "District"). Interest shall be computed on the basis of a 360-day year of twelve (12) 30-day months. The term of this Note shall continue until the entire Principal Amount of and interest on this Note has been paid, until this Note is terminated in accordance with the terms of the Contract, or until February 1, 2043, whichever is earliest. Each payment on this Note is payable in any coin or currency of the United States of America which on the date of such payment is legal tender for public and private debts and shall be made by check or draft made payable to the Owner and mailed to the Owner at its postal address within the United States which shall be designated from time to time by the Owner. A-2 DOCSOPEN\HP145\7\769384.v3-12/16/21 The Note is a special and limited obligation and not a general obligation of the Authority, which has been issued by the Authority pursuant to and in full conformity with the Constitution and laws of the State of Minnesota, including Minnesota Statutes, Section 469.178, subdivision 4, to aid in financing a "project", as therein defined, of the Authority consisting generally of defraying certain public redevelopment costs incurred and to be incurred by the Authority within and for the benefit of its Redevelopment Project No. 1 (the "Project"). Absent issuance of this Note, the Owner would not have undertaken the Project and this Note is necessary to reimburse the Owner for the Qualified Costs as identified in the Contract. This Note is issued only after and to the extent the Authority has received reasonable evidence that the applicable Qualified Costs have been incurred by the Owner. THIS NOTE IS A LIMITED OBLIGATION OF THE AUTHORITY AND NOT A DEBT OF THE CITY OF HOPKINS OR THE STATE OF MINNESOTA (THE "STATE"), AND NEITHER THE CITY, THE STATE NOR ANY POLITICAL SUBDIVISION THEREOF SHALL BE LIABLE ON THE NOTE, NOR SHALL THIS NOTE BE PAYABLE OUT OF ANY FUNDS OR PROPERTIES OTHER THAN THE AVAILABLE TAX INCREMENT, AS DEFINED BELOW. The Scheduled Payment of this Note due on any Scheduled Payment Date is payable from and only to the extent of Available Tax Increment less amounts of Available Tax Increment owing with respect to the Authority's Limited Revenue Tax Increment Note (Doran 810 LLC Note) Series 2018A and Limited Revenue Tax Increment Note (Doran 810 Apartments LLC Note) Series 2018B as set forth in Section 6.2(b) of the Contract or any other source of funding available to the Authority in its sole discretion. Available Tax Increment consists of a portion of the real property taxes received as tax increment by the Authority with respect to the Authority's Tax Increment Financing District No. 1-5 (The Moline). Available Tax Increment, with respect to each Scheduled Payment Date, shall have the meaning given to such term in the Contract. This Note is issued in one denomination. The Authority shall not be in default under this Note for failure to make a payment under this Note and no interest shall accrue with respect to such payment not made until a date ten (10) days after the Authority receives written demand for such payment from the Owner; provided, that the Authority shall endeavor to make all payments when due or as soon as possible after receipt of the Owner's written demand. · The Authority shall pay on each Scheduled Payment Date to the Owner the Available Tax Increment. On any Scheduled Payment Date, the Authority may choose to make an additional payment from other funding sources in the sole discretion of the Authority. Payment shall be first applied to unpaid interest and then to the Principal Amount. No interest shall accrue with respect to unpaid interest on a Scheduled Payment Date. If not terminated sooner pursuant to the terms of this Note or the Contract, on February 1, 2043, the Authority's payment obligations under this Note shall terminate and this Note shall no longer be an obligation of the Authority. A-3 DOCSOPEN\HP145\7\769384.v3-12/16/21 The Authority's obligations herein are subject to the terms and conditions of the Contract. Subject to Section 9.2 of the Contract, the Authority's payment obligations hereunder shall be suspended and this Note may be terminated by the Authority upon the occurrence of an Event of Default as provided in Section 9.1 of the Contract, which Contract is incorporated herein and made a part hereof by reference. Upon such termination, the Authority's obligations to make further payments hereunder shall be discharged. Such termination may be accomplished by the Authority's giving of written notice to the then registered owner of this Note, as shown on the books of the Authority. This Note shall not be payable from or constitute a charge upon any funds of the Authority, and the Authority shall not be subject to any liability hereon or be deemed to have obligated itself to pay hereon from any funds except the Available Tax Increment, and then only to the extent and in the manner herein specified. The Owner shall never have or be deemed to have the right to compel any exercise of any taxing power of the Authority or of any other public body, and neither the Authority nor any director, commissioner, council member, board member, officer, employee or agent of the Authority, nor any person executing or registering this Note shall be liable personally hereon by reason of the issuance or registration hereof or otherwise. This Note shall be transferable or assignable, in whole or in part, by the Owner without the prior written consent of the Authority. IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions, and things required by the Constitution and laws of the State of Minnesota to be done, to have happened, and to be performed precedent to and in the issuance of this Note have been done, have, happened, and have been performed in regular and due form, time, and manner as required by law; and that this Note, together with all other indebtedness of the Authority outstanding on the date hereof and on the date of its actual issuance and delivery, does not cause the indebtedness of the Authority to exceed any constitutional or statutory limitation thereon. IN WITNESS WHEREOF, the Housing and Redevelopment Authority In and For the City of Hopkins, by its Commissioners, has caused this Note to be executed by the manual signatures of the Chair and the Executive Director of the Authority and has caused this Note to be dated December 21, 2021. ___________________________________ ____________________________ Jason Gadd, Chair Mike Mornson, Executive Director