Res 2017- 61 Contract for Private Development, Issuance of TIF Revenue Note Michael DevelopmentCITY OF MENDOTA HEIGHTS
DAKOTA COUNTY
STATE OF MINIVESOTA
Council member Duggan introduced the following resolution and moved its adoption:
RESOLUTION 2017-61
RESOLUTION APPROVING A CONTRACT FOR PRIVATE DEVELOPMENT
AND AWARDING THE SALE OF, AND PROVIDING THE FORM, TERMS,
COVENANTS AND INSTRUCTIONS FOR, THE ISSUANCE OF THE CITY'S
TAX INCREMENT FINANCING REVENUE NOTE (MICHAEL
DEVELOPMENT NIINNESOTA, LLC)
BE IT RESOLVED by the City Council (the "Council") of the City of Mendota Heights,
Minnesota (the "City"), as follows:
Section l. Authorization; Award of Sale.
1.01. Authorization. The City has heretofore approved the establishment of Tax Increment
Financing District No. 2, a redevelopment district (the "TIF District") within Municipal Development
District No. 1(the "Project Area"), and adopted a tax increment financi�lg plan therefor for the purpose of
financing certain improvements within the Project Area, all pursuant to Minnesota Statutes, Sections
469.124 through 469.133, as amended, and Sections 469.174 through 469.1799, as amended (the "TIF
Act").
Pursuant to Section 469.178 of the TIF Act, the City is authorized to issue and sell a revenue note
for the purpose of iinancing a portion of the public development costs of the TIF District. The revenue
note is payable froln all or any portion of revenues derived from the TIF District and pledged to the
payment of the revenue note. This Council therefore finds and determines that it is in the best interests of
the City that it issue and sell its Tax Increment Financing Revenue Note, in the total aggregate principal
amount not-to-exceed $634,000 (the "Note"), far the purposes of financing certain public development
costs of the TIF District. More specifically, the proceeds of the Note will assist Michael Development
Minnesota, LLC, a Minnesota limited liability company (the "Developer"), with the acquisition of certain
real property located at 2180 Highway 13 in the City and the development of a market-rate apartment
building totaling approximately 69 units, with surface and underground parking (the "Project").
The Project is contemplated to be the first of two phases of development within the boundaries of
the TIF District. The second phase is intended to consist of the acquisition of certain real property
located at 2160 Highway 13 in the City, and the development of an additional market-rate apartment
building, totaling approximately 69 units on that property, with surface and underground parking ("Phase
II"). The Phase II project, if commenced and if tax increinent financing assistance is requested, will
require a separate approving resolution for a separate contract for private development, and a separate tax
increment financing revenue note.
1.02. A�reement A�roved• Issuance, Sale, and Terms of the Note. This Council has
additionally reviewed a proposed Contract for Private Development (the "Agreement"), to be entered into
between the City and the Developer. The form of the Agreement is hereby approved, and this Council
authorizes the Mayor and the City Adininistrator to execute such Agreement in substantially the foim on
file with the City, subject to modifications that do not substantially alter the substance of the transaction
and are approved by such officials, provided that execution of the Agreement by such officials is
conclusive evidence of their approval.
Pursuant to the Agreement, the Note shall be sold to the Developer and delivered at the time and
subject to the conditions of Section 3.1 of the Agreement. The Note shall be dated as of the date of
delivery and shall bear interest from the date of original issue to the earlier of maturity or prepayment, at
an interest rate of the lesser of (i) four and eight tenths percent (4.800%) per annum, or (ii) the interest
rate received by the Developer from a participating financial institution providing mortgage financing for
the Project. The consideration for the sale of the Note is the Developer incurring the Qualified Costs (as
such term is defined in the Agreement) related to the Project.
Section 2. Form of Note. The Note shall be in substantially the form attached hereto as
E�ibit A.
Section 3. Terms Execution and Delivery.
3.01. Denomination; Pa�. The Note shall be issued as a single typewritten note numbered
R-l. The Note shall be issuable only in fully registered form. Principal or and interest on the Note shall
be payable by check or draft issued by the Registrar described herein.
3.02. Re�istration. This Council appoints the City Administrator to perfonn the functions of
registrar, transfer agent and paying agent relating to the Note (the "Registrar"). The effect of registration
and the rights and duties of the City and the Registrar with respect thereto shall be as follows:
(a) Register. The Registrar shall keep at its office a bond register in which the Registrar
shall provide for the registration of ownership of the Note and the registration of transfers and exchanges
of the Note.
(b) Transfer of Note. Upon surrender for transfer of the Note duly endorsed by the registered
owner thereof or accompanied by a written instrument of transfer, in form reasonably satisfactory to the
Registrar, duly executed by the registered owner thereof or by an attorney duly autharized by the
transferee or transferees, a new Note will be issued in a like aggregate principal amount and maturity, as
requested by the transferor. The Registrar may close the books for registration of any transfer after the
fifteenth day of the month preceding each Payment Date and until such Payment Date.
(c) Cancellation. The Note surrendered upon any transfer shall be promptly cancelled by the
Registrar and thereafter disposed of as directed by the City.
(d) ImpropeN or Unauthorized Transfer. When the Note is presented to the Registrar for
transfer, the Registrar may refuse to transfer the same until it is satisfied that the endorsement on such
Note or separate instrument of transfer is legally authorized. The Registrar shall incur no liability for its
refusal, in good faith, to make transfers which it, in its judgment, deems improper or unauthorized.
(e) Pe�°sons Dee»aed Owners. The City and the Registrar may treat the person in whose
name the Note is at any time registered in the bond register as the absolute owner of the Note, whether the
Note shall be overdue or not, for the purpose of receiving payment of, or on account of, the principal of
and interest on such Note and for all other purposes, and all such payments so made to any such registered
owner or upon the owner's order shall be valid and effectual to satisfy and discharge the liability of the
City upon such Note to the extent of the sum or sums so paid.
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(� Taxes, Fees and Charges. For every transfer or exchange of the Note, the Registrar may
impose a charge upon the owner thereof sufficient to reimburse the Registrar for any tax, fee, or other
governmental charge required by law to be paid with respect to such transfer or exchange.
(g) Mutilated, Lost, Stolen oi• Destroyed Note. In case the Note shall become mutilated or be
lost, stolen or destroyed, the Registrar shall deliver a new Note of like amount, maturity date and tenor in
exchange and substitution for and upon cancellation of such mutilated Note or in lieu of and in
substitution for such Note lost, stolen or destroyed, upon the payinent of the reasonable expenses and
charges of the Registrar in connection therewith; and, in the case the Note is lost, stolen, or destroyed,
upon filing with the Registrar of evidence satisfactory to it, in which both the City and the Registrar shall
be named as obligees. The Note so surrendered to the Registrar shall be cancelled by it and evidence of
such cancellation shall be given to the City. If the mutilated, lost, stolen or destroyed Note has already
matured or been called for redemption in accordance with its terms, it shall not be necessary to issue a
new Note prior to payment.
3.03. Preparation and Delivery. The Note shall be prepared under the direction of the City and
shall be executed on behalf of the City by the signatures of the Mayor and the City Clerk. In case any
officer whose signature shall appear on the Note shall cease to be such officer before the delivery of the
Note, such signature shall nevertheless be valid and sufiicient for all purposes, the same as if such officer
had remained in office until delivery. When the Note has been so executed, it shall be delivered by the
City Administrator to the Developer.
Section 4. Security Provisions.
4A1. Pled�e. The City pledges to the payment of the principal of and interest on the Note 90%
of Tax Increment derived from the Development Properiy, as defined in the Note, within the TIF District.
Tax Increment shall be applied to payment of the principal of and interest on the Note in accordance with
the terms of the Note.
4.02. No City Obli a�on. The Note is a special, limited revenue obligation and not a general
obligation of the City and is payable by the City only from Tax Increment, as derived from the TIF
District and as received from Dakota County. The Note is not a general obligation of the City, and
neither the full faith and credit nor the taxing powers of the City are pledged to the payment of the
principal or interest of the Note, and no property or other asset of the City is for shall be a source of
payment of the City's obligations under the Agreement and the Note. In the event Tax Increment is not
sufficient to pay the full amount of the principal of and interest on the Note, the City will not be
responsible to further fund or reimburse the Developer (or its assigns or creditors) for any such shortfall.
The City is not responsible to fund or reimburse any obligation of the Developer (or its assigns or
creditors) under the Agreement or the Note.
4.03. TIF Note Fund. Until the date the Note is no longer outstanding, the City shall maintain
a separate and special "TIF Note Fund" to be used for no purpose other than the payment of the principal
of and interest on the Note. The City irrevocably agrees to appropriate to the TIF Note Fund on or before
each TIF Note Payment Date an amount equal to 90% of Tax Increment available at each TIF Note
Payinent Date. If any T� Increment remains in the TIF Note Fund after the Note has been fully paid, the
remaining amount shall be transferred to the City's account for the TIF District, pursuant to the TIF Act.
4.04. Additional Obli atg ions. While the Note is outstanding, the City shall not pledge or
permit the pledge of all or any portion of the Tax Increment to the payment of principal of or interest on
any other obligations of the City unless and to the extent such pledge is subordinate to the pledge under
the Note, unless otherwise determined by the City Administrator.
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Section 5. Certification of Proceedin�s. The officers of the City are authorized and directed to
prepare and furnish to the Developer certified copies of all proceedings and records of the City, and such
other affidavits, certificates and information as may be required to show the facts relating to the legality
of the Note as the same appear from the books and records under their custody and control or as otherwise
known to them, and all such certified copies, certificates and aff'idavits, including any heretofore
furnished, shall be deemed representations of the City as to the facts recited therein.
Section 6. Effective Date. This Resolution is effective upon full execution of the Agreement
between the City and the Developer. All capitalized but undefined tenns herein shall have the definitions
as provided in the Agreement.
This Resolution is adopted by the City Council of the City of Mendota Heights, Minnesota, this
1 st day of August, 2017.
ATTEST:
Lorri Smith, City Clerk
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r I� (�.�, `�..e�
Neil Garlock, Mayor
No. R-1
1�.�:11:3111I\
FORM OF TAX INCREMENT FINANCING NOTE
UNITED STATES OF AMERICA
STATE OF MII�tNESOTA
COUNTY OF DAKOTA
CITY OF MENDOTA HEIGHTS
TAX INCREMENT FINANCING REVEN[JE NOTE
TAX INCREMENT FINANCING DISTRICT NO. 2
The City of Mendota Heights, Minnesota (the "City"), hereby acknowledges itself to be indebted
and, for value received, hereby promises to pay the amounts hereinafter described (the "Payment
Amounts") to Michael Development Minnesota, LLC, a Minnesota limited liability coinpany (the
"Developer"), or its registered assigns (the "Registered Owner"), but only in the manner, at the times,
from the sources of revenue, and to the extent hereinafter provided.
The principal amount of this Note shall equal from time to time the principal amount stated
above, as reduced to the extent that such principal instaliments shall have been paid in whole or in part
pursuant to the terms hereof; provided that the sum of the principal amount listed above shall in no event
exceed Six Hundred Thirty Four Thousand and No/100 Dollars ($634,000.00), as provided in that certain
Contract for Private Development, dated as of , 2017, as the same may be amended
from time to time (the "Development Agreement"), by and between the City and the Developer. The
unpaid principal amount hereof shall bear interest from the date of this Note at the rate of %
per annum. Interest accruing from the date of issue through August l, 2019 will be coinpounded
semiannually on each August 1 and February 1 and added to principal. Interest shall be computed on the
basis of a 360 day year consisting of twelve (12) 30-day months. All capitalized but undefined terms
herein shall be defined as in the Development Agreement.
The amounts due under this Note shall be payable on each February 1 and August 1, commencing
on August l, 2019 and thereafter to and including February l, 2028, or, if the first payment date should
not be on a Business Day, the payment shall be made on the next succeeding Business Day (the "Payment
Dates"). On each Payment Date the City shall pay by check or draft mailed to the person that was the
Registered Owner of this Note at the close of the last business day of the City preceding such Payment
Date an amount equal to the Tax Increment received by the City during the six-month period preceding
such Payment Date (or, with respect to the first Payment Date, in the period commencing on the date of
issuance of this Note through the day that is prior to the first Payment Date). All payments inade by the
City under this Note shall first be applied to accrued interest and then to principaL This Note is pre-
payable by the City, without penalty, in whole or in part, on any date.
The Payment Amounts due hereon shall be payable solely from 90% of Tax Increment derived
from the Development Property within the City's Tax Increment Financing District No. 2(the "TIF
District") within its Municipal Development District No. 1, which is paid to the City and which the City
is entitled to retain pursuant to the provisions of Minnesota Statutes, Sections 469.174 through 469.1799,
as the same may be amended or supplemented from time to time (the "TIF Act"). This Note shall
terminate and be of no further force and effect following the Termination Date, on any date upon which
the City shall have terminated the Development Agreement under Section 4.2(b) thereof, the date the TIF
District is terminated, or on the date that all principal and interest payable hereunder shall have been paid
in full, whichever occurs earliest.
The City makes no representation or covenant, express or implied, that the Tax Increment will be
sufficient to pay, in whole or in part, the amounts which are or may become due and payable hereunder.
In the event Tax Increment is not sufficient, the City is not responsible to further fund or reimburse the
Developer (or its assigns or creditors) for any such shortfall. The City is not responsible to fund or
reimburse any obligation of the Developer (or its assigns or creditors) unless expressly stated in this
Agreement.
Subject to the terms of the Development Agreement, including Section 6.4(b) thereof, the City's
payment obligations hereunder shall be further conditioned on the fact that no Event of Default under the
Development Agreement shall have occurred and be continuing at the time payment is otherwise due
hereunder, but such unpaid amounts shall become payable if said Event of Default shall thereafter have
been cured; and further, if pursuant to the occurrence of an Event of Default under the Development
Agreement the City elects, subject to the provisions of Section 4.2 of the Development Agreement, to
cancel and rescind the Development Agreement, the City shall have no further debt or obligation under
this Note whatsoever. Reference is hereby made to all of the provisions of the Development Agreement,
including without limitation Section 3.1 thereof, for a fuller statement of the rights and obligations of the
City to pay the principal of this Note, and said provisions are hereby incorporated into this Note as though
set out in full herein.
This Note is a special, limited revenue obligation and not a general obligation of the City and is
payable by the City only from the sources and subject to the qualifications stated or referenced herein.
This Note is not a general obligation of the City, and neither the full faith and credit nor the taxing powers
of the City are pledged to the payment of the principal of this Note and no property or other asset of the
City, save and except the above-referenced Tax Increment, is or shall be a source of payment of the City's
obligations hereunder.
This Note is issued by the City in aid of financing a project pursuant to and in full conformity
with the Constitution and laws of the State of Minnesota, including the TIF Act.
This Note may be assigned only with the consent of the City. In order to assign the Note, the
assignee shall surrender the same to the City either in exchange for a new fully registered note or for
transfer of this Note on the registration records for the Note maintained by the City. Each permitted
assignee shall take this Note subject to the foregoing conditions and subject to all provisions stated or
referenced herein.
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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, ha�e happened, and ha�e 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 City outstanding on the date hereof and on the date of its actual issuance and delivery,
does not cause the indebtedness of the City to exceed any constitutional or statutory limitation thereon.
IN WI'I'NESS WHEREOF, the City of Mendota Heights, Minnesota, by its City Council, has
caused this Note to be executed by the manual signatures of its Mayor and City Clerk and has caused this
Note to be dated as of , 20 .
City Clerk Mayor
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CERTIFICATION OF REGISTRATION
It is hereby certified that the foregoing Tax Increment Financing Revenue Note was registered in the
name of Michael Development Minnesota, LLC, and that, at the request of the Registered Owner of this
Note, the undersigned has this day registered the Note in the name of such Registered Owner, as indicated
in the registration blank below, on the books kept by the undersigned for such purposes.
NAME AND ADDRESS OF DATE OF SIGNATURE OF CITY
REGISTERED OWNER REGISTRATION ADMINISTRATOR
Michael Development Minnesota,
LLC
971 Sibley Memorial Hwy, Suite 300
Lilydale, Minnesota 55118