2. Pledge Agmt. Entertainmentd_
MEMORANDUM
CITYOF
CHANHASSEN
Administration
Building Inspections
Engineering
Finance
Park & Recreation
Planning &
Nalural Resources
Public Works
Senior Center
Web Site
TO:
Todd Gerhardt, Executive Director
FROM:
DATE:
RE:
Justin Miller, Assistant to the Executive Directors~v, /
July 7, 2004 ~
Pledge Agreement Between the EDA and City of Chanhassen for
Tax Increment in the Entertainment TIF District
BACKGROUND
The Chanhassen Housing and Redevelopment Authority (predecessor to the
Economic Development Authority) issued tax increment notes to Bloomberg
Companies in 1998 and Chanhassen Properties, LLC (the Chanhassen Cinema) in
1997 for improvements to their buildings. These notes were issued with a 9%
interest rate - far above current interest rates. The City Council is contemplating
pre-paying these notes and reissuing bonds to take advantage of current low rates.
The EDA is the controlling authority for the Entertainment Tax Increment
District, but the City Council is the authority issuing the new bonds. The bonds
being issued are to be repaid with increment produced in the district, therefore,
the EDA must pledge future increment received to the City of Chanhassen in an
amount suitable to repay the bonds.
RECOMMENDATION
Staff recommends that the Chanhassen Economic Development Authority
approve the attached pledge agreement between the EDA and the City of
Chanhassen for the purpose of repaying bonds being issued to pm-pay current tax
increment financing notes payable to Bloomberg Companies and Chanhassen
Properties, LLC.
The CityofChanhassen. ; , , :
TAX INCREMENT PLEDGE AGREEMENT
THIS AGREEMENT, entered into as August __, 2004, by and between the City of
Chanhassen, Minnesota, a municipal corporation, ( the "City"), and the Economic Development
Authority of the City of Chanhassen, a public body corporate and politic created and existing
under the laws of Minnesota, (the "Authority"), created and existing under the provisions of
Minnesota Statutes, Sections 469.090 through 469.1081 (the "Act"), WITNESSETH that:
A. WHEREAS, the Authority has heretofore accepted jurisdiction over the
Redevelopment Plan (the "Redevelopment Plan") for the Downtown Chanhassen Redevelopment
Project Area heretofore established by the Housing and Redevelopment Authority in and for the
City of Chanhassen and transfer of all tax increments derived from Tax Increment Financing
District No. 4 (the "Tax Increment District"), and has approved a tax increment financing plan
therefore, as amended, all pursuant to the provisions of the Act; and
B. WHEREAS, attached hereto as Exhibit A is a resolution entitled "Resolution
Providing for the Issuance and Sale of $1,170,000 Taxable General Obligation Tax Increment
Refunding Bonds, Series 2004C; Pledging Tax Increments for the Security Thereof and
Authorizing the Execution of a Pledge Agreement (the "Authorizing Resolution") adopted by the
City Council on July 12, 2004, which authorizes the issuance of $1,170,000 Taxable General
Obligation Tax Increment Refunding Bonds, Series 2004C, dated August 10, 2004 (the "Bonds")
of the City, to provide funds to refund on August 10, 2004, the outstanding $360,000 Limited
Revenue Tax Increment Note, dated December 31, 1998, and the $540,000 Limited Revenue Tax
Increment Note, dated August 8, 1997 (defined as the "Prior Notes" in the Authorizing
Resolution). Tax Increments derived from the Tax Increment District No. 4 (the "Tax
Increments"), are pledged to the payment of the Bonds pursuant to Minnesota Statutes, Sections
469.174 and 469.028, and this Tax Increment Pledge Agreement.
NOW, THEREFORE, BE IT RESOLVED by the City and the Authority, each in
consideration of the mutual covenants and agreements herein contained, covenant and agree as
follows:
1. Coverage Test. The Authority hereby pledges to the payment of the Bonds Tax
Increments in an amount which, together with other revenues and remitted by the Authority to
the City for the payment of the Bonds, or interest thereon, is sufficient to pay 105% of the
principal and interest (except capitalized interest) to become due each year on the Bonds, to the
extent that available Tax Increments are insufficient to pay when due the principal of and interest
(except capitalized interest) on the Bonds.
2. Remittance; Segregation, Reservation of Rights. All Tax Increments herein
pledged shall be remitted directly to the City and the City, acting as agent of the Authority, shall
segregate all Tax Increments so received in a special account on its official books and records.
The Authority reserves the right to alter the pledge of Tax Increments as set forth in paragraph
18 of the Authorizing Resolution.
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3. Filing; Computation, Collection and Segregation. An executed copy of this
Agreement shall be filed with the affected County Auditor and Directory of Property Tax and
Public Records and shall constitute the request and authorization of the Authority and the City to
the County Auditor, Director of Property Tax and Public Records and Treasurer to compute,
collect and segregate said tax increments in accordance with the provisions of this Agreement
and Minnesota Statutes, Section 469.177 and to remit the same to the City acting as agent of the
Authority.
IN WITNESS WHEREOF, the City and the Authority have caused this Agreement to be
duly executed on their behalf and the seal to be hereunto affixed, and such signatures and seal to
be attested, as of the day and year first above written.
CITY OF CHANHASSEN, MINNESOTA
By
Mayor
Attest:
City Manager
(SEAL)
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ECONOMIC DEVELOPMENT AUTHORITY
OF THE CITY OF CHANHASSEN
By
President
Attest:
Secretary
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