Based on the context provided for the City of Apple Valley, here is the transcribed townhall meeting with speaker names identified. [0:02] [Music] [0:26] [Music] [0:58] **Clint Hooppaw:** He, yeah. Call this meeting to order of the Economic Development Authority for the city of Apple Valley. This is a special meeting for October 26th, 2023. First order of business is the approval of tonight's agenda. A motion? [1:15] **Ruth Grendahl:** So moved. [1:17] **John Bergman:** Second. [1:19] **Clint Hooppaw:** Motion from Grendahl, second from Bergman. In favor? (Group: Aye). That carries. Next item is the consent agenda, which consists of the approval of the minutes from January 26, 2023. [1:45] **Ruth Grendahl:** I'll move the—I'll move the consent agenda. [1:50] **John Bergman:** Second. [1:52] **Clint Hooppaw:** Motion moved, second from Bergman. In favor? (Group: Aye). It also carries. That takes us to 4a, regular agenda item, which is adopting a resolution authorizing execution of subordination agreement. Ron Hedberg? [2:12] **Ron Hedberg:** Yes, sir. All right, thank you Mr. President and Commissioners. A couple quick items for this evening's special meeting. First one is for Beos Galante. And I thought just for a couple of people that may not have followed this back in 2014 when it all occurred, just kind of a brief introduction of what we're talking about. The Parkside development consists of two buildings: one is the Gabella building just north of Kelly Park and the other one is the Galante building which is on Galaxy and 153rd. Both of these buildings are owned by separate ownership groups—one is the Beos Gabella LLC and the other one's the Beos Galante LLC. General partner in both of those is Ted Beos. [3:05] **Ron Hedberg:** The development consisted of the Gabella building was 196 units. The current value of that is $45,235,000. And as part of the TIF district and the development agreements at the time, a TIF note in the amount of $2,618,400 for site improvements at the Gabella site was issued at that time. And the note is paid back as a pay-as-you-go tax increment financing note to the developer, and they received 70% of the TIF collections that the city receives; they get back in the form of pay-go assistance. As of August, the balance on that note for Gabella is $1,659,891. [3:48] **Ron Hedberg:** The second building, Parkside Galante, was built a couple years later, 126 units. The current value is $25,553,800 and there was a second TIF note issued for that part as well, and that was for $2,666,000, also for site improvements at the Gabella site. Again, 70% goes back to the developers as pay-to-go assistance and the balance as of August of 2023 is $2,553,873. [4:26] **Ron Hedberg:** The issue that Beos Galante is seeking action on of the EDA is they have a TIF note and they need to assign that. They're going to be taking out a mortgage; this will be the first mortgage on the Galante building. And if they take out any financing with a mortgage, the City or EDA must approve that agreement. And the action really subordinates our TIF note to their mortgage, which is frankly the involvement of the EDA and the city. So the action asked of the EDA is to adopt a resolution authorizing the execution of a subordination agreement for Beos Galante LLC. And really what it does is it assigns the right to the TIF note to the lender in the event of a default. Otherwise, if there's no default, we just keep paying the developer as we've been. And as I pointed out, the TIF note is subordinate to the mortgage and we would be issuing a new TIF note in the same dollar amount to the existing owner, Beos Galante. So with that, I'm available for questions. [5:40] **John Bergman:** Any questions for Ron? Is this a new requirement? I mean, this sounds like the subordination of the debt should be resolved a long time ago. [5:50] **Ron Hedberg:** Well, this will be the first mortgage on the Galante property. Back in 2017, we did a similar action for the Parkside Gabella building where he took out the financing—he bought the building, did not have a mortgage, and subsequent to purchasing it, he took out a mortgage on the Gabella property, which he used the cash to build Galante at the time. But the EDA and the City both had to take similar actions back in 2017. This is—I mean, this is timing. So these rights for mortgages are all about when they're filed against the property. And so since our TIF note existed before the mortgage he's taking out currently, that first mortgage lender wants to be in first lien position and we're holding that up with our note. It's just about timing since there was no debt on the property at the time. [7:08] **Clint Hooppaw:** Exactly. Any other questions or clarifications? Or this is really more of a formality? This is normal order. [7:14] **Ron Hedberg:** Yes, and that frankly is what's brought it forward this night—is the formality of getting this action taken, but of course, we have to know about it so he can get his mortgage. And unfortunately, they missed the regular timing of the last EDA meeting. They didn't want to wait till December, or they couldn't wait till December is how they worded it. [7:34] **Clint Hooppaw:** Okay, so Ron, you're looking for a motion to approve or adopt the resolution authorizing the execution of the subordination agreement which provides for all the other agreements. [7:47] **Ruth Grendahl:** So moved. [7:48] **John Bergman:** Second. [7:50] **Clint Hooppaw:** Motion from Grendahl and a second from Bergman. Any discussion? In favor? (Group: Aye). Opposed? It carries. [8:04] **Ron Hedberg:** All right, there is a number of signatures that need to be gathered. [8:08] **Clint Hooppaw:** Okay, I'll do that. Your turn to sign things. [Pause] Okay, that moves on to item 5—wait, I think we have 4b. I'm sorry, 4b is adopting a resolution approving an amendment to the loan agreement. [8:40] **Ron Hedberg:** Okay, another simple action. The Apple Valley Economic Development Authority back in 2016 issued Health Care Facilities revenue refunding bonds for the benefit of Augustana Healthcare. They're issued through the City EDA as a nonprofit can do that as what we call a conduit debt, where the City/EDA are not responsible for repaying the bonds, but they are issued under the EDA's authority. [9:17] **Ron Hedberg:** So as part of that bond issue, there's a number of covenants in the bond documents and any changes to that have to be approved by the EDA because technically the EDA was the issuer. The 2016 issue was to refund bonds that Augustana had issued also under the EDA's conduit debt back in 2006, 2011, and 2012. Those bonds were originally issued to construct and renovate the healthcare facility over there, the Skilled Nursing Facility. [10:04] **Ron Hedberg:** The action this evening really is to authorize an increase in their insurance deductible, which was one of the provisions in the bond documents. It stated what the maximum insurance deductible could be. What Augustana has explained to me is they're having difficulty finding insurance at that deductible level at an affordable rate. So they have the bond trustee looking out for the bondholders' approval to increase their insurance deductible so they can move ahead and get more affordable, more competitive insurance quotes for Augustana. So the action before the EDA is approving the amendment of a loan agreement related to the Apple Valley Economic Development Authority's Health Care Facilities revenue refunding bonds series 2016 and 2016B. [11:09] **Clint Hooppaw:** Questions? [11:10] **Ruth Grendahl:** I'll move approval. [11:12] **John Bergman:** Second. [11:14] **Clint Hooppaw:** Motion from Grendahl, second from Bergman. In favor? (Group: Aye). Opposed? Also carries. [11:22] **Ron Hedberg:** Like I mentioned, a couple quick items. Thank you. [11:27] **Clint Hooppaw:** Okay, now we've got EDA items and Communications. Is that you, Tom? [11:32] **Tom Lawell:** Mr. President, certainly if there's anything else that the commission would like to discuss, we're certainly open for that conversation. We do not have any staff items. We thought that our Finance Director would have his usual 33 slides, so we thought he would take more time, but he was really quick tonight. So, no additional staff reports unless you have questions for us. [11:55] **Clint Hooppaw:** Okay. Motion to adjourn? [11:57] **Ruth Grendahl:** So moved. [11:58] **John Bergman:** Second. [12:00] **Clint Hooppaw:** Motion by Grendahl, second by Bergman. In favor? (Group: Aye). Opposed? [12:05] [Music] [12:06] **Clint Hooppaw:** Carries. [12:08] [Music]