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HomeMy WebLinkAbout[04f] TIF 2-1 (Millstream Shops & Lofts) Assignment Agreements Council Agenda Item 4f MEETING DATE: November 18, 2019 AGENDA ITEM: TIF 2-1 (Millstream Shops & Lofts) Assignment Agreements SUBMITTED BY: Finance BOARD/COMMISSION/COMMITTEE RECOMMENDATION: None PREVIOUS COUNCIL ACTION: City Council authorized TIF 2-1 assignment agreement to Kensington Bank 10-3-16. BACKGROUND INFORMATION: Millstream Shops and Lofts is a great addition to the downtown area and is part of a TIF District. The TIF note issued was in the amount of $467,000 for a 28 year period. As a reminder the City only issues pay as you go TIF notes with taxes reimbursed as they are paid. Issuance of TIF requires a development agreement which specifies the developer or institution to make the TIF payments to. If the developer choses to refinance and utilize a new bank, the TIF note must be reassigned to a new bank and the City must consider approval. In 2016, the TIF note was reassigned to Kensington Bank. In the case of TIF 2-1 there is a business subsidy agreement entered into in 2011 to use excess TIF proceeds from TIF 1-4 St. Joseph Development to purchase restaurant equipment. The business subsidy does not need to be reassigned. It will be forgiven after 2021. The Developer, Jon Petters, is requesting assignment from Kensington Bank to West Bank. Mary Ippel from Briggs and Morgan serves as the legal advisor for TIF agreements. She has reviewed the documents and approves the format prepared by Rinke Noonen. In order for the transaction to transfer the TIF, the TIF Revenue Note needs to be reassigned. BUDGET/FISCAL IMPACT: n/a ATTACHMENTS: Request for Council Action: TIF 2-1 Assignment Agreements Assignment Of TIF Revenue Note Consent & Estoppel Certificate REQUESTED COUNCIL ACTION: Consider approval to reassign the TIF 2-1 Millstream Shops & Lofts Revenue Note. ASSIGNMENT OF TAX INCREMENT REVENUENOTE THIS ASSIGNMENT OF TAX INCREMENT REVENUENOTE (the “Assignment”) is made and entered into as ofNovember___________, 2019(the “Effective Date”),MILL STREAM SHOPS, LLC, a Minnesota limited liability company (the “Assignor”) for the benefit of WEST BANK (the “Lender”). BACKGROUND A.The City of St. Joseph, Minnesota (“City”) and Collegeville Communities, LLC (“Developer”) entered into a Development Agreement, dated July 20, 2007 (the “Development Agreement”) which provided for the development by the Developer of a residential/retail/commercial project, including approximately 14 condominium housing units and approximately 10,820 square feet of commercial space to be located in the City on the real property described therein (the “Project”)and shown on Exhibit A. B. In furtherance of the purposes of the Development Agreement and in order to finance the construction of theimprovements to be constructed thereunder, the City assisted the Developer with the financing of certain costs of the project with tax increment financing in an amount up to $467,000 in accordance with the Development Agreement and a Tax Increment Financing Plan for Tax Increment Financing District No. 2-1 (the “Tax Increment Plan”). The City issued a Tax Increment Revenue Note in the amount of $467,000 (“TIF Note”)a copy of which is attached as Exhibit B. C. The Developer has assigned its obligations and undertakings under the Development Agreement and the TIF Note to Assignor. Assignor proposes to assign the TIF Note to the Lender as part of Lender making loan(s) to Borrower in the maximum principal amount of $1,992,000 and $440,000 (collectively the “Loans”), which Loans are to be secured by, among other things, Assignment of Tax Increment Financing Revenues Notebetween Borrower and Lender. AGREEMENT 1.Assignment. Assignor hereby unconditionally assigns, transfers, grants a security interest in,and sets over unto Lender, as assignee, all of its right, title and interest in any and all of the payments received and to be received by Assignorunder the TIF Note. Lender hereby accepts such assignment. Assignor shall cause all payments due and payable to Assignorunder the City Agreement \[21380-0004/3571325/1\] 1 and TIF Note to be paid directly to Lender. All such payments may be applied to Assignor’s periodic payment obligations under the Loans, provided thatan Event of Default (as defined therein) has not occurred. 2.Warranties and Representations. Assignor represents and warrants that its Members have approved and authorized this Assignment, as evidenced by the signatures set forth below. 3.Indemnification. Assignorhereby agrees that itshall indemnify,defend, and hold harmless Lender and its members, directors, officers, employees, agents and their respective successors, heirs and assigns (the “Protected Parties”), against any liability, damage, loss, or expense (including reasonable attorney’s fees and expenses of litigation) incurred by or imposed upon any of the Protected Parties in connection with any claims, suits, actions, demands or judgments (“Claims”) arising out of anytheory of liability (regardless of whether such action has any factual basis) concerning or in any way related to this Assignment. 4.Miscellaneous. a.Entire Agreement. This Agreement is the sole agreement with respect to the subject matter hereby and except as expressly set forth herein, supersedes all other agreements and understandings between the parties with respect to same. b.Notices. Unless otherwise specifically provided, all notices required or permitted by this Agreement shall be in writing and may be delivered personally, or may be sent by facsimile or certified mail, return receipt requested, to the following addresses, unless the parties are subsequently notified of any change of address in accordance with this Section 4b. If to Assignor: 15 East Minnesota Street, Suite 104A Saint Joseph, MN 56374 If to Lender:West Bank c/o Aaron Meester 622 Roosevelt Road, Suite 150 St. Cloud, MN 56301 Any notice shall be deemed to have been received as follows: (i) by personal delivery, upon receipt; (ii) by facsimile, one business day after transmission or dispatch; (iii) by mail, three (3) business days after delivery to the postal authorities by the party serving notice. If notice is sent by facsimile, a confirming copy of the same shall be sent by mail to the same address. c.Governing Law and Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of Minnesota, without regard to the application of principles of conflicts of law. The parties hereby consent to personal jurisdiction in Minnesota and agree that the competent court in Stearns County, Minnesota shall have sole jurisdiction over any and all matters arising from this Agreement. \[21380-0004/3571325/1\] 2 d.Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties and their respective legal representatives, successors and permitted assigns. e.Amendment; Waiver. This Agreement may be amended, modified, superseded or canceled, and any of the terms may be waived, only by a written instrument executed by each party or, in the case of waiver, by the party waiving compliance. The delay or failure of any party at any time or times to require strict performance of any provisions hereof shall in no manner affect the rights at a later time to enforce the same. No waiver by either party of any condition or of the breach of any term contained in this Agreement, whether by conduct, or otherwise, in any one or more instances, shall be deemed to be, or considered as, a further or continuing waiver of any such condition or of the breach of such term or any other term of this Agreement. f. Counterparts.This Agreement may be signed in multiple counterparts, which together shall comprise one and the same instrument. (Signature Page to Follow) \[21380-0004/3571325/1\] 3 IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives as of the date first written above. MILL STREAM SHOPS, LLC By ___________________________ Jon C. Petters, Its _______________ STATE OF MINNESOTA) ) ss. COUNTY OF STEARNS) The foregoing instrument was acknowledged before me this ____day of________________, 2019, by Jon C. Petters, the __________________of Mill Stream Shops, LLC, a Minnesota limited liability company, on behalf of said company. __________________________________ Notary Public \[21380-0004/3571325/1\] 4 EXHIBIT A Legal Description The land situated in the City of St. Joseph, County of Stearns, and described as follows: Lot 1 Block 1 and Lot 1 Block 2, Mill Stream, according to the plat thereof on record in the office of the County Recorder in and for Stearns County, Minnesota. \[21380-0004/3571325/1\] 5 EXHIBIT B \[21380-0004/3571325/1\] 6 \[21380-0004/3571325/1\] 7 \[21380-0004/3571325/1\] 8 \[21380-0004/3571325/1\] 9 CONSENT AND ESTOPPEL CERTIFICATE THIS CONSENT AND ESTOPPEL CERTIFICATE (this “Estoppel Certificate”), is dated as of November ____, 2019, and is from the CITY OF ST. JOSEPH, MINNESOTA, a municipal corporation existing under the laws of the State of Minnesota (the “City”), to WEST BANK, 622 Roosevelt Road, Suite 150, St. Cloud, MN 56301 (the “Lender”), and its successors and assigns. The City hereby agrees with Lender as follows: 1.The City and Collegeville Communities, LLC (“Developer”) entered into a Development Agreement, dated July 20, 2007 (the “Development Agreement”) which provided for the development by the Developer of a residential/retail/commercial project, including approximately 14 condominium housing units and approximately 10,820 square feet of commercial space to be located in the City on the real property described therein (the “Project”). The Developer has assigned its obligations and undertakings under the Development Agreement to Mill Stream Shops, LLC (“Borrower”). 2.In furtherance of the purposes of the Development Agreement and in order to finance the construction of the improvements to be constructed thereunder, the City assisted the Developer with the financing of certain costs of the project with tax increment financing in an amount up to $467,000 in accordance with the Development Agreement and a Tax Increment Financing Plan for Tax Increment Financing District No. 2-1 (the “Tax Increment Plan”). The City issued a Tax Increment Revenue Note in the amount of $467,000 (“TIF Note”) which has been assigned to Borrower. 3.Borrower proposes to collaterally assign the TIF Note to Lender. 4.The City understands that Lender is making loan(s) to Borrower in the maximum principal amounts of $1,992,000 and $440,000(collectively the “Loans”), which Loansare to be secured by, among other things, as Assignment of TIF Note(the “TIF Assignment”) between Borrower and Lender. Pursuant to the TIF Assignment, Borrower granted to Lender a security interest in, among other things: (i) all right, title, and interest of Borrower in and to, including the right to receive payments under, the TIF Note, and (ii) all right, title and interest of Borrower in the Development Agreement. Borrower has also, under the TIF Assignment, assigned to Lender its right to receive payments under the TIF Note. 5.Borrower previously made a collateral assignment to Kensington Bank of the TIF Note and Development Agreement; which assignment will be released upon the above financing being provided by Lender. 6.The City understands that Lender has required this certificate as a condition of making the Loan and that Lender will rely on this certificate in connection therewith. 7.The City covenants, represents, and warrants to and agreeswith Lender as follows: a. That the TIF Note and rights to receive payments under the Development Agreement have been assigned by Borrower to Lender; \[21380-0004/3572728/1\] b. That, until further notice from Lender, the City will tender all payments due under the TIF Note, and any optional prepayments, either in whole or in part, to Lender at the address set forth above; c. That it hereby consents to the execution by Borrower and delivery to Lender of the TIF Assignment, and to the liens and security interests created therein, as security for the Loan; and d. In the event that Lender exercises its remedies under the TIF Assignment, upon request by Lender, the City will either (i) issue a new fully registered note to Lender or its nominee or (ii) evidence the transfer of the TIF Note to Lender or its nominee on the registration records for the TIF Note maintained by the City. 8.Until the termination of the TIF Assignment, the City agrees to give Lender a copy of (i) each notice or demand given to Borrower with respect to any breach or default by Borrower in its obligations under the Development Agreement at the same time such notice, demand or other communication is given to Borrower under the Development Agreement, addressed to Lender and (ii) upon request by Lender, a copy of the current TIF Note payment computations, in each case, at the address listed above. 9.The City agrees to accept the cure by Lender of any default by Borrower under the Development Agreement within the cure periods provided in the Development Agreement, but acknowledges that Lender shall be under no obligation to cure any such default. No commencement of any performance by Lender or any obligation of Borrower required under the Development Agreement shall obligate Lender to continue or complete such performance or otherwise perform any of Borrower’s obligations under the Development Agreement. 10.The City agrees to provide Lender with notice of any modifications or amendments to be made to the Development Agreement and the right to consent to such modifications or amendments. \[Remainder of this page intentionally blank.\] \[21380-0004/3572728/1\] Signature page to Consent and Estoppel Certificate (City of St. Joseph / West Bank) IN WITNESS WHEREOF, the undersigned officer of the City has executed this Consent and Estoppel Certificate as of the date and year first written above. THE CITY OF ST. JOSEPH, MINNESOTA By: __________________________________ Its: __________________________________ STATE OF MINNESOTA) ) ss. COUNTY OF STEARNS ) The foregoing instrument was acknowledged before me this ___ day of _____________, 2019, by _______________________________ in his/her official capacity as _________________ of the City of St. Joseph, Minnesota. ____________________________________ Notary Public THIS INSTRUMENT DRAFTED BY: Rinke Noonan(ISL/mjr) 1015 W. St. Germain St., Suite 300 P.O. Box 1497 St. Cloud, MN 56302-1497 (320) 251-6700 File No.21380-0004 \[21380-0004/3572728/1\]