1c. Assignment of TIF Note, North Bay0
CITY OF
CHAN9ASSEN
7700 Market Boulevard
PO Box 147
Chanhassen, MN 55317
Administration
Phone: 952.227.1100
Fax: 952.227.1110
Building Inspections
Phone: 952.227.1180
Fax: 952.227.1190
Engineering
Phone: 952.227.1160
Fax: 952.227.1170
Finance
Phone: 952.227.1140
Fax: 952.227.1110
Park & Recreation
Phone: 952.227.1120
Fax: 952.227.1110
IU ►/ @ ► ► 1 I
TO: Todd Gerhardt, City Manager
FROM: Laurie Hokkanen, Assistant City Manager
DATE: November 13, 2012
SUBJ: Approve Assignment of TIF Note (TIF #5, North Bay)
PROPOSED MOTION
The City Council approves the Consent to Assignment of Interest in Limited
Revenue Tax Increment Note.
A majority vote is required for adoption.
BACKGROUND
TIF #5:
This is a housing district, established in 1997, that encompasses the Rottlund housing
development known as North Bay. The city uses increment to repay itself and Rottlund
for public improvements and other certain development costs associated with the
project.
Recreation Center
TIF #5 obligations include payments to Rottlund Homes on a $400,000 + interest note.
2310 Coulter Boulevard
This is a pay -as- you -go note with the final payment due in 2014. This district may then
Phone: 952.227.1400
Fax: 952.227.1404
be eligible for decertification in 2015.
Planning &
Rottlund Homes is going through bankruptcy. As a part of this process, they have asked
Natural Resources
for the Note to be reassigned to the court appointed Receiver, Hearthstone Inc. Staff has
Phone: 952.227.1130
Essentially, the only change from the City's perspective realized through this Consent is
Fax: 952.227.1110
confirmed that the terms of the TIF Agreement allow for the transfer of the note.
Public Works
There are three projected payments remaining on the note, totaling approximately
7901 Park Place
$83,461. As detailed within the Agreement, payments are made only to the extent that
Phone: 952.227.1300
the City receives tax increment. Our obligation will end with the February 1, 2014
Fax: 952.227.1310
payment, regardless of the balance of the note.
Senior Center
Phone: 952.227.1125
Essentially, the only change from the City's perspective realized through this Consent is
Fax: 952.227.1110
the recipient of the tax increment check.
Web Site
RECOMMENDATION
www.ci.chanhassen.mn.us
Staff recommends approval of the Consent to Assignment of Interest in Limited
Revenue Tax Increment Note.
Chanhassen is a Community for Life - Providing for Today and Planning for Tomorrow
Mr. Todd Gerhardt
November 13, 2012
Page 2
ATTACHMENTS
1. Letter from Rolfe Worden requesting Consent to Assignment of TIF Note
2. Assignment of Interest in Limited Revenue Tax Increment Note
3. Consent to Assignment of Interest in Limited Revenue Tax Increment Note
HINSHAW
& C U L B E R T S O N L L P
RECE,NED
CITY OF CHAN ASSEN
Laurie Hokkanen
Assistant City Manager
City of Chanhassen
7700 Market Blvd.
P.O. Box 147
Chanhassen, MN 55317
October 18, 2012
Re: Request for Consent to Assignment of TIF Note
Dear Ms. Hokkanen:
ATTORNEYS AT LAW
333 South Seventh Street
Suite 2000
Minneapolis, MN 55402 -2431
612- 333 -3434
612- 334 -8888 (fax)
www.hinshawlaw.com
This relates to the $400,000 Limited Revenue Tax Increment Note between the City of
Chanhassen and The Rottlund Company, Inc. dated May 25, 2000. We represent Hearthstone,
Inc., the court appointed receiver for The Rottlund Company, Inc.
Thank you for your help to date in getting me the information on this TIF Note.
We are now in a position where we need a Consent to Assignment of the TIF Note by the
City of Chanhassen.
Enclosed is a form of Consent for consideration and execution by the City. Please call
with any questions or concerns, or if you need any other or further information.
Very truly yours,
HINSHAW RTSON LLP
Rolfe A. Worden
612- 334 -2516
rworden@hinshawlaw.com
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Arizona California Florida Illinois Indiana Massachusetts Minnesota Missouri New York Oregon Rhode Island Wisconsin
RECITALS:
A. Hearthstone, Inc. is the court appointed receiver (the "Receiver ") for The
Rottlund Company, Inc., having been so designated by an Order of the Ramsey
County District Court in the matter of Barak of America, N.A. v. The Rottlund
Company, hic., Ramsey County Court File 62- CV -11- 9191 ( "Order ").
B. The Order provided that the Receiver should have all of the power and authority
usually granted to receivers, including but not limited to, selling or otherwise
disposing of the property and assets of The Rottlund Company, Inc. (hereafter
"Rottlund ") at a public or private sale to provide funds to pay Rottlund's
obligations.
C. On June 24, 1996, the City of Chanhassen (the "City "), Minnesota issued a Tax
Increment Note (the "TIF Note ") in the amount of $400,000.00 to Rottlund to
encourage and facilitate the building of owner occupied affordable housing on
property then owned by Rottlund legally described in the TIF Note, and
commonly known as Mmften -HiHr( "Property ").
Nor ihj q N
D. The Available Tax Increment, considered for the purposes of the TIF Note,
consists of any Tax Increments generated by the Minimum Improvements in the
years 1999 through 2013, inclusive.
E. Payments are made solely from and only to the extent that the City receives tax
revenues generated from the property and received during a six month period
immediately preceding the payment date. The remaining anticipated payments
are as follows ("Anticipated Payments "):
ASSIGNMENT OF INTEREST IN LIMITED REVENUE'TAX INCREMENT NOTE
THIS ASSIGNMENT OF INTEREST IN LIMITED REVENUE TAX .INCREMENT
NOTE ( "Assignment ") is made this -,L6 day of : y I' 2012 by Hearthstone, Inc., a
California corporation, acting in its capacity as receiver for The .Rottlund Company, Inc., a
Minnesota corporation ( "Assignor ") to and for the benefit of Bank of America, N.A., a national
banking association, in its capacity as Administrative Agent for itself and each of the other
lenders party to that certain Credit Agreement dated April 24, 2008, namely M &I Marshall and
Ilsley Bank, a Wisconsin banking corporation, and KeyBank National Association, a national
banking association ( "Assignee ").
Settlement Date
December 2012
July 2013
December 2013
Available Increment
$13,461.51
$35,000.00
$35,000.00
Payment Date
February 1, 2013
August 1, 2013
February 1, 2014
B of A Draft Asst of TIF Now ( arffistone Comments)
p 1
F. The project in connection with which the TIF Note was issued was completed,
and Certificates of Occupancy were issued for the improvements on the Property.
G. Both parties understand that these Anticipated Payments are contingent on the
City receiving sufficient tax revenues from the Property to make them.
H. Assignee filed a claim with the Receiver in the amount of $19,199,172.29
( "Claim "). This Claim was calculated as of October 4, 2012. Interest is accruing
at a per diem of $1,507.56.
I. In consideration for the assignment of the TIF Note, Assignee has agreed to
reduce its Claim by $83,461.51 ( "Amended Claim "), the full value of the
Anticipated Payments.
J. The parties understand that the TIF Note may not be assigned without prior
written consent of the City. The Receiver is required to obtain written consent
prior to the assignment.
K. The Receiver will promptly endeavor to secure court approval of this Assignment
from the Ramsey County District Court in the matter of Bank of America, N.A. v.
The Rottluiid Company, Inc., Ramsey County Court File 62 -CV -11 -9191.
THEREFORE:
1. Assignment Subject to 2 and 3, infra, Assignor hereby grants, assigns, transfers, and
conveys to Assignee all of its right, title, and interest in the TIF Note in consideration of
the Claim reduction by Assignee set out in Recital I above.
2. Consent Assignor will obtain the necessary written consent of the City prior to the
Assignment.
3. Court Approval. Assignor will obtain prior court approval of this Assignment as set out
in Recital K above.
4. Endorsement and Delivery of the TIF Note Assignor agrees to endorse and deliver the
original TIF Note to the Assignee, at the time it receives the Amended Claim from
Assignee.
5. Governing Law This Assignment shall be governed by the laws of the State of
Minnesota.
6. Successors and Assigns This Assignment shall be binding upon and shall inure to the
benefit of the parties and their respective successors and assigns.
2
THE ROTTLUND COMPANY, INC.
By Hearthstone, Inc., acting in its capacity
as Receiver for The Rottlund Company,
Inc., a Minnesota corporation
l � .r
BANK OF AMERICA, N.A., A
NATIONAL BANKING ASSOCIATION,
IN ITS CAPACITY AS
ADMINISTRATIVE AGENT FOR ITSELF
AND EACH OF THE OTHER LENDERS
PARTY TO THAT CERTAIN CREDIT
AGREEMENT DATED APRIL 24, 2008,
NAMELY M &I MARSHALL AND
ILSLEY BANK, A WISCONSIN
BANKING CORPORATION, AND
KEYBANK NATIONAL ASSOCIATION,
A NATIONAL BANKING ASSOCIATION
Its:
3
CONSENT TO ASSIGNMENT OF INTEREST IN LIMITED REVENUE TAX
INCREMENT NOTE
THIS CONSENT TO ASSIGNMENT OF INTEREST IN LIMITED REVENUE TAX
INCREMENT NOTE ( "Consent ") is made this _ day of , 2012 by the City of
Chanhassen, a municipal corporation under the laws of Minnesota, to the Assignment by
Hearthstone, Inc., a California corporation, acting in its capacity as receiver for The Rottlund
Company, Inc., a Minnesota corporation ( "Assignor ") of that certain Tax Increment Note dated
June 24, 1996 issued by the City of Chanhassen in the principal amount of $400,000.00 ( "the
TIF Note ") to and for the benefit of Bank of America, N.A., a national banking association, in its
capacity as Administrative Agent for itself and each of the other lenders party to that certain
Credit Agreement dated April 24, 2008, namely M &I Marshall and Ilsley Bank, a Wisconsin
banking corporation, and KeyBank National Association, a national banking association
( "Assignee ").
RECITALS:
A. Hearthstone, Inc. is the court appointed receiver (the "Receiver ") for The Rottlund
Company, Inc., having been so designated by an Order of the Ramsey County
District Court in the matter of Bank of America, N.A. a The Rottlund Company,
Inc., Ramsey County Court File 62 -CV -11 -9191 (the "Order ").
B. The Order provided that the Receiver should have all of the power and authority
usually granted to receivers, including but not limited to, selling or otherwise
disposing of the property and assets of The Rottlund Company, Inc. (hereafter
"Rottlund ") at a public or private sale to provide funds to pay Rottlund's
obligations.
C. On June 24, 1996, the City of Chanhassen (the "City "), Minnesota issued the TIF
Note in the amount of $400,000.00 to Rottlund to encourage and facilitate the
building of owner occupied affordable housing on property then owned by
Rottlund legally described in the TIF Note, and commonly known as North Bay
(the "Property ").
D. The Project in connection with which the TIF Note was issued was completed.
E. The Assignor anticipates the execution of an Assignment of Interest in Limited
Revenue Tax Increment Note substantially in the form attached as Exhibit A
hereto.
F. The TIF Note provides that "This Note shall not be transferable or assignable, in
whole or in part, by The Rottlund Company, Inc. without the prior written consent
of the City."
THEREFORE:
1. Consent The City hereby approves the Assignment of Interest in Limited
Revenue Tax Increment Note as set out in Exhibit A hereto.
121501750_3.DOC
1215017500 0929232
IN WITNESS WHEREOF, the City Council of the City has caused this Consent to be
executed by the manual signatures of the Mayor and City Manager.
City of Chanhassen
By
Tom Furlong
Its Mayor
and
Todd Gerhardt
Its City Manager
2
1215017500 0929232
EXHIBIT A
Assignment of Interest in Limited Revenue Tax Increment Note
121501750_3.DOC
1215017500 0929232