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101711completeagenda CITY OF RICHFIELD, MINNESOTA HOUSING AND REDEVELOPMENT AUTHORITY REGULAR MEETING MONDAY, OCTOBER 17, 2011 RICHFIELD MUNICIPAL CENTER 6700 PORTLAND AVENUE COUNCIL CHAMBERS 7:00 P.M. AGENDA Call to order Roll call 1. Approval of minutes of Regular HRA Meeting of September 19, 2011 2. HRA approval of agenda 3. Recognition of outgoing HRA Commissioner Joan Helmberger 4. Consideration of request for subordination of HRA Transformation Home Loan at 6813 Queen Avenue Staff Report No. 45 Notes: 5. Consideration of request for forgiveness of HRA Deferred Loan at 7333 Wentworth Avenue Staff Report No. 46 Notes: 6. Consideration of resolution authorizing purchase of real property located at 7544 Second Avenue through Richfield Rediscovered Program Staff Report No. 47 Notes: 7. Consideration of resolution affirming City Council's call for public hearing on proposed modification to Redevelopment Plan for Richfield Redevelopment Project Area and proposed establishment of Pillsbury Commons Tax Increment Finance District Staff Report No. 48 Notes: 8. Consideration of contract for private development with Lyndale Gardens, LLC for redevelopment of former Lyndale Garden Center property Staff Report No. 49 Notes: 9. Consideration of resolution amending Lyndale Gardens Tax Increment Financing Plan Staff Report No. 50 Notes: 10.HRA discussion items Notes: 11.Executive Director report Notes: 12.Claims and payroll Adjournment Auxiliary aids for individuals with disabilities are available upon request. Requests must be made at least 96 hours in advance to the City Clerk at 612-861-9738. richfield: October 2011 Page 1 of 1 City of Richfield Calendar Calendars Net Navigate: 2010 Jan Feb Mar Apr May Jun Jul Aug Sera Oct Nov Dec 2012 October 2011 Monday Tuesdays Wednesday Thursday Friday 26 Sep 27 23 29 30 5:30p Human Services 5:45p Special City Planning Council Council Meeting 7:OOp Planning (commission interviews) Commission in Heredia Conference Room 6:15p Special City Council Worksession 7:00p City Council Regular Meeting 's 4 5 6 7 7:OOp Special Planning 11:30a Richfield Tourism 7:OOp Transportation 7:OOp Arts Commission Commission Promotion Board @ Commission @ 7000 Nicollet Ave Worksession 6601 Lyndale Ave,Suite 106 6:30p Human Rights Commission 10 11 12 13 14 6:OOp Special Joint City 5:30 PM Special City of Richfield/City of Council Meeting Bloomington/City of (commission interview) Edina Planning Commissions 5:45 PM Special City Worksession in Council/HRA/Planning Municipal Center Commission Bartholomew Room Worksession 7:OOp Planning Commission Study Immediately following- Session Special City Council Worksession 7 PM Regular City Council Meeting Approximately 7:30 PM- Special Friendship City •Commission Meeting 17 18 19 20 21 6:OOp Advisory Board of 8:OOa Civil Service 7 PM Friendship City Health Commission in Commission 7:OOp Housing and Bartholomew Room (rescheduled to Oct.11) Redevelopment 8:30a Civil Service Authority(HRA) Commission in Bartholomew Room 7:OOp Community Services Commission @ 7000 Nicollet Ave 28 24 26 27 2`5 5:30p Human Services 6 PM Special City SATURDAY,OCT.28 Planning Council Council Worksession 9:30 a.m.-10:30 a.m. 7:OOp Planning Mayor's Hour @ Commission 7 PM Regular City Farmers'Market Council Meeting 31 1 I Nov 2 3 4 11:30a Richfield Tourism 7:OOp Transportation 7:OOp Arts Commission Promotion Board @ Commission @ 7000 Nicollet Ave 6601 Lyndale Ave,Suite 106 6:30p Human Rights Commission Display: Year Month Week Day Block List Condensed Abs Slide Calendars: Search Add Events: Daily Duration Periodic Administer: This Calendar All meetings held at City Hall(6700 Portland Avenue)unless indicated otherwise Calendars Net free online interactive web calendars http://www.my.calendars.net/richfield 10/13/2011 •■All HOUSING AND REDEVELOPMENT RICHFIELD AUTHORITY MEETING MINUTES Richfield, Minnesota Regular Meeting September 19, 2011 CALL TO ORDER The meeting was called to order by Chair Sandahl at 7:00 p.m. ROLL CALL HRA Members Sue Sandahl, Chair; Joan Helmberger, Debbie Goettel and Steven Quam Present: HRA Members Doris Rubenstein • Absent: Staff Present: Karen Barton, Acting Executive Director and Nancy Gibbs, City Clerk. Item #1 APPROVAL OF MINUTES OF (1) REGULAR HRA MEETING OF AUGUST 15, 2011 M/Goettel, S/Quam to approve the minutes of the Regular HRA Meeting of August 15, 2011. Motion carried 4-0. Item #2 HRA APPROVAL OF AGENDA M/Helmberger, S/Goettel to approve the agenda. Motion carried 4-0. HRA Meeting -2- September 19,2011 Item #3 CONSIDERATION OF RESOLUTION AUTHORIZING CONVEYANCE OF 515 64TH STREET WEST TO WOODLAKE APARTMENTS, LLC (STAFF REPORT NO. 44) M/Helmberger, S/Goettel that the following resolution be adopted and that it be made part of these minutes HRA RESOLUTION NO. 1107 RESOLUTION AUTHORIZING THE CONVEYANCE OF INTEREST IN CERTAIN LAND Motion carried 4-0. This resolution appears as HRA Resolution No. 1107. Item #4 HRA DISCUSSION ITEMS HRA Commissioner Goettel stated she would like to see more information added to the study that is being conducted on rental housing. She stated specifically the number of affordable housing. HRA Commissioner Quam stated he agreed with HRA Commissioner Goettel's recommendations and would also like to see the number of homes in the different categories, such as affordable through luxury. Chair Sandahl stated she would like to know what amenities the homes have such as washer and dryer in the units, work out rooms, pools, underground parking. Item #5 EXECUTIVE DIRECTOR REPORT None. Item #6 CLAIMS AND PAYROLL M/Goettel, S/Quam that the following claims and payrolls be approved: U.S BANK 09/19/2011 Section 8 Checks: 120959-121069 $ 147,689.59 HRA Checks: 31281-31304 $ 58,266.73 TOTAL $ 205,956.32 Motion carried 4-0. HRA Commissioner Goettel stated she would like to recognize HRA Commissioner Helmberger at next meeting for her long term on the HRA. HRA Meeting -3- September 19,2011 ADJOURNMENT The meeting was adjourned by unanimous consent at 7:10 p.m. Date Approved: October 17, 2011 Suzanne M. Sandahl Chair Cheryl Krumholz Karen Barton Recording Secretary Acting Executive Director AGENDA ITEM#: 4 REPORT#: 45 =Ad STAFF REPORT RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY MEETING OCTOBER 17, 2011 REPORT PREPARED BY: JULIE URBAN/MICHELLE LEWIS, HOUSING SPECIALIST NAME,TITLE REPORT PRESENTER: KAREN BARTON,ASSISTANT COMMUNITY DEVELOPMENT DIRECTOR NAME,TITLE DEPARTMENT DIRECTOR REVIEW: Air BY EXECUTIVE DIRECTO • A Oa /AL:7!4,,tPr I! ITEM FOR HRA CONSIDERATION: Consideration of a request for a subordination of a Housing and Redevelopment Authority Transformation Home Loan at 6813 Queen Avenue. I. RECOMMENDED ACTION: By Motion: Approve or deny the request for a subordination of a Housing and Redevelopment Authority Transformation Home Loan at 6813 Queen Avenue. II. BACKGROUND Dean Springer and Linda Boyd have requested a Subordination Agreement to subordinate their $15,000 Transformation Home loan received on June 29, 1997. The Housing and Redevelopment Authority (HRA) is currently in third position behind the Springer's primary mortgage and a $125,000 Home Equity Line of Credit (LOC). The lender has closed the existing $125,000 LOC because it was opened under a program that allowed the homeowners to borrow up to 100 percent combined loan- to-value (CLTV). While the CLTV now is 79 percent, the lender's program changes require the homeowner to establish a new LOC under the program that allows only 80 percent CLTV. The new LOC will be at $120,000 in order to meet the lender's requirements. 10172011 Springer subordination request appeal.doc The HRA subordinated to the original LOC in 2005; however, the HRA changed its policy olic in 2007 to prefer no subordinations to LOC mortgage products. In order for the Springer-Boyd household to establish a new LOC, the HRA needs to approve an appeal to its current policy. III. BASIS OF RECOMIlVIENDATION A. POLICY • According to the HRA's Subordination policy: "In most cases...revolving lines of credits...will not be allowed unless the HRA determines that an acceptable reason warrants this type of loan. • The following additional Subordination Policy requirements are met: o Closing costs are reasonable ($480; 0.4% of the mortgage amount). o Payment terms are within the financial means of the borrower. o The Loan to Value ratio is less than 80 percent (79 percent). o No equity is being removed. o Superior debt is being reduced. o The HRA has not agreed to more than one subordination in the past five years (the HRA originally agreed to subordinate to this loan in 2005). o Property taxes are current. B. CRITICAL ISSUES • The combined loan-to-value ratio is 79 percent. • The amount of debt in front of the HRA lien is decreasing from $206,675 to $201,675. • The HRA's position is improved from the current situation. C. FINANCIAL • The amount of debt in front of the HRA lien is decreased with the refinancing. • There are closing costs associated with the refinance equal to 0.4 percent of the mortgage amount. • Payment has been received for the subordination request and appeal. D. LEGAL • N/A IV. ALTERNATIVE RECOMMENDATIONS) • Deny the subordination request. V. ATTACHMENTS • Letter from homeowner • Current HRA subordination policy VI. PRINCIPAL PARTIES EXPECTED AT MEETING • Dean Springer LI — I Dean Springer/Linda Boyd 6813 Queen Ave S Richfield, MN 55423 11 October 2011 City of Richfield/HRA 6700 Portland Ave S Richfield, MN 55423 RE: Request for Letter of Subordination Appeal Dear Board Members: Thank you for time in reviewing our request. We wish to appeal the denial of our request for a letter of subordination with regards to the HRA loan on our house in Richfield and the Home Equity Line of Credit (HELOC) we are applying for with Wings Financial Credit Union (Wings). This is not really a new loan as much as it is changing from one HELOC to another, a change to everyone's benefit. Wings has made some policy changes in their HELOCs just like the HRA has, due to changes in the financial landscape. These changes,along with a better percentage rate, are the reason that we are seeking a new HELOC with Wings, transferring from a 100% Loan to Value (LTV) HELOC to an 80% LTV HELOC. This 80% LTV, is inclusive of all home related loans and a recent appraisal of our property. While the uses for the loan have been varied over the years, it is still important to us to have the equity in our home available from time to time for potential home and home-life improvements. Again, thanks for your time, and commitment to making Richfield a better place for all! Help us work with that aim in granting this request. Sincerely, Dean Springer Linda Boyd RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY SUBORDINATION &SATISFACTION POLICY EFFECTIVE JUNE 2011 SUBORDINATIONS Richfield Housing and Redevelopment Authority (HRA) loan recipients requesting subordination of the interest of the HRA in real property must submit a Subordination Request Form, the required supporting documentation, and a processing fee. Forms are available on the City of Richfield website (http://www. cityofrichfield.org/) or by calling the Community Development Department at 612-861-9760. Requests will not be considered until all documents and the processing fee have been received. Required Documents The following information must be submitted with the Subordination Request Form: 1. A typed letter dated and signed by the mortgagor, stating the reason for the requested subordination and the use of any equity being removed as part of the loan transaction. 2. A copy of the current appraisal (dated within six months of application) or other evidence of market value of the property that is acceptable to the HRA. 3. A copy of current title work(must indicate all debt against the property). 4. Explanation of remaining debts or liens with supporting documentation (i.e. most recent mortgage bill). 5. Estimated closing costs/settlement statement, where applicable. 6. A copy of the mortgagor's loan application. 7. Additional documentation may be required. Evaluation Criteria The Richfield HRA will subordinate its mortgage interest if all of the following conditions are met, to the extent that they are applicable: 1. Closing costs are reasonable. Generally this shall mean that the sum of all discount points, origination fees, and lender ancillary fees generally shall not exceed 3% of the new first mortgage amount. 2. If the HRA believes that the payment terms of the refinance are within the financial means of the borrower. 3. The total debt secured by the property, including the HRA lien and all superior mortgages, does not exceed 80% of the documented market value of the property. 4. Any equity being removed beyond the cost of the loan transaction will be used to improve the property. A typed letter, dated and signed by the applicant, must be submitted stating the use of any equity being removed. 5. The overall value of superior debt must not be increased by more than 50%. Exceptions may be granted by the HRA in cases where superior debts are found to be unusually low with sufficient equity protection. 6. If no more than one subordination request has been approved by the HRA in the past five years. l� -3 7. Property taxes, if not escrowed by the superior mortgage holder, must be current. The HRA will not subordinate to reverse mortgages. In most cases, interest-only loans or loans with interest- only options, revolving lines of credits or debt consolidation will not be allowed unless the HRA determines that an acceptable reason warrants this type of loan. The HRA may approve other subordination requests not meeting the conditions above on a case-by-case basis that are clearly in the best interests of the HRA, where the security of the HRA loan remains acceptable, and denial of the request will cause or contribute to a documented hardship on the part of the borrower. As a condition of approval, the HRA may require the Borrower to receive financial counseling. While many courses are available at no charge, the Borrower is responsible for any costs associated with the counseling. The course must be approved by the HRA. Fees The fee for a subordination request is established by the HRA. If the subordination request is denied, the fee will be returned with a letter explaining the reason(s) for denial. An additional fee is required for an appeal to the HRA and is non-refundable. Processing Subordination requests will be processed by HRA staff, who will submit the request with a recommendation for action, to the Executive Director. The Executive Director may request review and final decision by the HRA. Requests for subordination should be submitted 30 days prior to the date the agreement to subordinate is needed. Exceptions may be made on a case-by-case basis. Appeal Process In cases where a subordination request does not meet the Policy, the Executive Director may grant an administrative appeal under the following circumstances: • Loan-to-value (LTV) ratio is greater than 80%, but no greater than 85%; or • Equity being removed for anything other than property improvements does not exceed $5000; or • The amount of financing ahead of the HRA lien does not increase. If an application is denied, the applicant may request an appeal in writing. Appeals will be submitted by staff to the HRA at the next regularly scheduled meeting, provided the request is made at least 10 days prior to that meeting. The HRA meets on the third Monday of each month. SATISFACTIONS When a loan made by the HRA is paid in full, a document satisfying the lien will be prepared by the HRA and delivered to the borrower for recording. The borrower is responsible for the cost of recording the satisfaction. AGENDA ITEM#: 5 REPORT#: 46 STAFF REPORT rzlcl irir_LD HOUSING AND REDEVELOPMENT AUTHORITY MEETING OCTOBER 17, 2011 REPORT PREPARED BY: JULIE URBAN,HOUSING SPECIALIST NAME,TITLE REPORT PRESENTER: KAREN BARTON,ASSISTANT COMMUNITY DEVELOPMENT DIRECTOR NAME,TITLE DEPARTMENT DIRECTOR REVIEW: D REVIEWED BY EXECUTIVE DIRECTOR. ► �� / ���� / / ITEM FOR BRA CONSIDERATION: Consideration of a request for forgiveness of a Housing and Redevelopment Authority Deferred Loan at 7333 Wentworth Avenue. I. RECOMMENDED ACTION: By Motion: Approve or deny a request to forgive a Housing and Redevelopment Authority Deferred Loan at 7333 Wentworth Avenue and authorize staff to prepare a satisfaction of mortgage. II. BACKGROUND In 1984, Frieda Hoffman, owner of 7333 Wentworth Avenue, received a Deferred Loan for$8,250 to make repairs to her home. The loan carries a 30-year term with no interests and no payments. The loan is due to be forgiven on July 20, 2014. In 2006, Ms. Hoffman again received a Deferred Loan for $27,655 to make repairs and improvements to her home. Ms. Hoffman is currently in the financial position requiring her to take out a reverse mortgage on her home. The reverse mortgage will be in first position. The Housing and Redevelopment Authority's (HRA) subordination policy states that it will not subordinate to reverse mortgages; consequently, both loans will need to be repaid. 10172011 7333 Wentworth Loan Forgiveness Because there are less than three years remaining on the loan that was issued in 1984, Ms. Hoffman is asking that the loan for $8,250 be forgiven. Ms. Hoffman will repay the $27,655 loan when the reverse mortgage is established. III. BASIS OF RECOMMENDATION A. POLICY • The HRA's subordination policy states, "The HRA will not subordinate to reverse mortgages." • The subordination policy allows the HRA to deviate from this policy in cases where the, "denial of the request will cause or contribute to a documented hardship on the part of the borrower." • It is HRA policy to issue loans as 30-year, deferred loans as a way to recycle funds when a loan recipient sells his or her home. B. CRITICAL TIMING ISSUES • The loan is just short of being forgiven; however, Ms. Hoffman cannot wait the additional two years and 9 months before accessing funds from the reverse mortgage. C. FINANCIAL • Ms. Hoffman needs a reverse mortgage in order to have funds to meet her daily living expenses. The loss in market value combined with the two liens on the property reduces the funds available to Ms. Hoffman through the reverse mortgage. D. LEGAL • The Deferred Loan Program is funded with federal Community Development Block Grant (CDBG) funds. There is no federal requirement that the money be repaid. Program guidelines give the HRA the authority to make grants instead of loans. IV. ALTERNATIVE RECOMMENDATION(S) • Approve a subordination of the loan to the reverse mortgage accepting third position behind the reverse mortgage and a duplicate Federal Housing Administration (FHA) mortgage. • Deny the request to forgive the loan and to subordinate to the reverse mortgage. V. ATTACHMENTS • None VI. PRINCIPAL PARTIES EXPECTED AT MEETING • Ms. Hoffman does not drive so is unable to attend the meeting. AGENDA ITEM#: 6 REPORT#: 47 MAIN STAFF REPORT RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY MEETING OCTOBER 17, 2011 REPORT PREPARED BY: MICHELLE LEWIS/JULIE URBAN, HOUSING SPECIALISTS NAME,TITLE REPORT PRESENTER: KAREN BARTON, COMMUNITY DEVELOPMENT ASSISTANT DIRECTOR NAME,TITLE DEPARTMENT DIRECTOR REVIEW: ' T_ � REVIEWED BY EXECUTIVE DIRECTOR: r ITEM FOR HRA CONSIDERATION: Consideration of a resolution authorizing the purchase of real property located at 7544 2nd Avenue through the Richfield Rediscovered Program. I. RECOMMENDED ACTION: By Motion: Approve the attached resolution authorizing the purchase of real property located at 7544 2nd Avenue through the Richfield Rediscovered Program and authorize staff to undertake hazardous materials testing and abatement activities in an amount not to exceed $5,000. II. BACKGROUND In August 2010 a fire occurred at 7544 2nd Avenue causing extensive damage to the house. By August 2011 exterior repairs to the property had not been completed and the Richfield Inspections Division declared the house unsafe for human occupancy. The house was placarded by the City per Minnesota State Building Code. The property owners were informed by the Inspections Divisions staff that "Unsafe buildings are a public nuisance and must be abated by repair, rehabilitation, demolition, or removal according to Minnesota statutes." 10172011 7544 2nd Avenue Acquisition The owners indicated they were unable to complete the required repairs and was subsequently referred to the Housing and Redevelopment Authority (HRA) staff for possible sale to the HRA. HRA staff obtained one appraisal in the amount of$57,000 for the property. A Purchase Agreement was submitted to the owner and accepted. The offer is contingent upon HRA approval. The agreed upon purchase price of$57,000 plus closing costs will be paid through the HRA's Richfield Rediscovered Program. This expense is provided for in the 2011 HRA Budget. The 2011 estimated market value is $129,000, with a land value of$67,000. The one-and-a-half story rambler built in 1947 has two bedrooms, a total of 840 square feet, and no garage. An independent substandardness evaluation was conducted and concluded that the house meets criteria to certify it as substandard and that it is a candidate for removal. The lot is 72 feet wide, 134 feet deep and is a total of 9,648 square feet. III. BASIS OF RECOMMENDATION A. POLICY • The 2008-2018 Richfield Comprehensive Plan states as policy: • Encourage the creation of"move-up" housing through new construction and home remodeling. • The small house was severely damaged in a fire which has limited market appeal. • Through the City's Richfield Rediscovered Program, the HRA purchases and removes substandard and functionally obsolete housing and replaces it with newer, higher valued homes. B. CRITICAL TIMING ISSUES • The Purchase Agreement was submitted contingent upon HRA approval on October 17, 2011. • The HRA would close on the property by October 31, 2011. • Absent purchase by the HRA, the City's Building Official will begin condemnation proceedings against the property. • Following HRA approval, a hazardous materials inventory would be ordered and abatement undertaken in order to complete the demolition process as soon as possible. • Following HRA approval, a request for proposals for demolition would be issued and consideration of a contract for demolition would be brought to the HRA in November. Following approval of a contract, demolition could be completed by the end of the year. C. FINANCIAL • Due to the current housing market, the HRA is able to acquire the property at a very reasonable price of$57,000 plus closing costs. • Funds are available for the acquisition through the Richfield Rediscovered Program. • Funding for this activity is proposed in the HRA's 2011 Budget. D. LEGAL • Legal Counsel has prepared the Purchase Agreement. IV. ALTERNATIVE RECOMMENDATION(S) • Do not authorize the purchase of the property. V. ATTACHMENTS • Resolution • Photo of existing structure • Purchase Agreement VI. PRINCIPAL PARTIES EXPECTED AT MEETING • Dennis and Leslie Lien — 1 HRA RESOLUTION NO. RESOLUTION AUTHORIZING PURCHASE OF REAL PROPERTY LOCATED AT 7544 2nd AVENUE WHEREAS, the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota ("the HRA") desires to purchase certain real property pursuant to and in furtherance of the New Home Program, said property being described as: 7544 2nd Avenue Lot 8, Block 7, "Nicollet Garden Lots," according to the duly recorded plat thereof, Hennepin County, Minnesota WHEREAS, the HRA is authorized by Minnesota Statutes Section 469.012 to acquire real property within its area of operation; and WHEREAS, Richfield Rediscovered Program funds are available for acquisition purposes. NOW THEREFORE, BE IT RESOLVED, by the Housing and Redevelopment Authority in and for the City of Richfield: 1. The purchase price for the property identified is approved at $57,000, plus closing costs, not to exceed $62,000. 2. The Chairperson and Executive Director are authorized to execute a Purchase Agreement and to take other actions necessary to purchase the property for the amount set forth in this resolution. Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota on this 17th day of October, 2011. Suzanne M. Sandahl, Chair ATTEST: Joan Helmberger, Secretary 6 -02. 7544 2nd Avenue 0 ' 'ii t }R t.z 1 ''. 4 .. :: •. . f ■ arc. , ' '''''',.... .2-1,-,At:.„.......1.7, ?. ,,,„ . 4 r . ti ! "'s`Yf'_ '!1't 7.....---• ,np`1nPncas s W.i.i w ':°t..,*l -'°..rte, PURCHASE AGREEMEN'I' • cc i £ - 2011. by and 1•I1l AGREEMENT is made as of this 7_1 day of ,_ �, between Leslie Lien and Dennis Lien. wife and husband, ("Seller") and the I lousing and Redevelopment Authority in and for the City of Richfield, a public body corporate and politic under the laws of the State of Minnesota ('I IRA" or"Buyer"). RECITALS A. Seller is the owner of property located at 7544 2116 Avenue South, Richfield, Minnesota. which is legally described on the attached Exhibit A ("Property"). B. The Property includes includes all plants. shrubs and trees. storm windows and/or inserts, storm doors, screens, awnings, window shades. blinds, curtain-traverse- drapery rods, attached lighting fixtures with bulbs. plumbing futures, water heater. heating system. humidifier, central air conditioning. electronic air filter. automatic garage door opener with controls. water softener. cable television outlets and cabling. and built-ins, including dishwasher, garbage disposal. trash compactor. oven(s), cook top stove, microwave oven, hood-Ian, intercom and installed carpeting located on the premises which are the property of Seller. The property also includes the following personal property: NONE. Seller is responsible for removal of all personal property. Seller may remove the following items. provided Seller does not cause any unnecessary damage to the Property: AGREEMENT• Offer/Acceptance for Sale of Property. The Seller agrees to sell to the 1-IRA the Property and the I-IRA agrees to purchase the same, according to the terms of this Agreement. 2. Purchase Price for Property and Terms. A. PURCHASE PRICE: 'I•he total Purchase Price for the Property is fifty-seven thousand and 00/100ths Dollars ($ 7.000.00). B. TERMS: (1 ): EARNEST MONEY. The sum of zero Dollars ($0.00) Earnest Money shall be paid by the Buyer to the Seller. (2): BALANCE DUE SELLER: Buyer agrees to pay by check or electronic transfer of funds on the Closing Date any remaining Balance Due according to the terms of this Purchase Agreement. ;i 5-n sv I c'm;i:R('125__fl 1 6 -u (3): DEED/MARKETABLE TITLE:F: Subject to performance by Buyer. Seller agrees to execute and deliver a Warranty Deed or Personal Representative's Deed conveying marketable title to the Property to Buyer. subject only to the following exceptions: a. Building and zoning laws, ordinances, state and federal regulations. b. Reservation of minerals or mineral rights to the State of Minnesota. if any. c. Public utility and drainage easements of record which will not interfere with Buyer's intended use of the Property. (4): DOCUMENTS TO BE DELIVERED AT CLOSING BY SELLER. In addition to the Warranty Deed required at paragraph 213(3) above, Seller shall deliver to the Buyer: a. Standard form Affidavit of Seller. b. A "bring-down" certificate. certifying that all of the warranties made by Sellers in this Purchase Agreement remain true as of the date of closing. c. Certificate that Seller is not a foreign national. d. If an environmental investigation by or on behalf of the Buyer discloses the existence of petroleum product or other pollutant, contaminant or other hazardous substance on the Property. either (i) a closure letter from the Minnesota Pollution Control Agency (MPCA) or other appropriate regulatory authority that remediation has been completed to the satisfaction of the MPCA or other authority: or (ii) Agreement for remediation/indemnification and security as the I-IRA may require. e. Well disclosure certification. if required. or. if there is no well on the Property. the Warranty Deed given pursuant to paragraph 213(4) above must include the following statement: "The Seller certifies that the Seller does not know of any wells on the described real property... I. Any other documents reasonably required by the I-IRA's title insurance company or attorney to evidence that title to the Property is marketable and that Seller has complied with the terms of this Purchase Agreement. 3I$4I5v I ('13R R('125-41 7 if s5 f ,,ji v \\...°'a \\ti.,3) I I 3. Contingencies. Buyer's obligation to buy is contingent upon t i fb'1'l'cACviii : L a. Buyer's determination of marketable title pursuant to paragraph 4 of this Agreement. b. Buyer's determination, in its sole discretion. that the results of the environmental investigation under this Agreement are satisfactory to Buyer: c. The parties acknowledge that the Richfield zoning ordinance requires that lots in the R district meet certain minimum lot width, and area requirements. If these standards are not met, one or more variances will he necessary prior to construction of a new dwelling on the property. If the City does not issue all variances necessary to make the property a buildable lot within the meaning of the zoning ordinance. the Buyer at its sole discretion may cancel this Purchase Agreement_ and d. Approval of this Agreement by the FIRA's Board. Buyer shall have until the Date of Closing to remove the foregoing contingencies. The contingencies at a. h. and c. are solely for the benefit of Buyer and may he waived by Buyer. The contingency at d. may not be waived by either party. If Buyer or its attorney gives written notice to Seller that the contingencies at a.. b. c. and d. are duly satisfied or waived, the Buyer and Seller shall proceed to close the transaction as contemplated herein. If one or more or Buyer's or Seller' s contingencies is not satisfied. or is not satisfied on time. and is not waived, this Purchase Agreement shall thereupon be void at the written option of Buyer. Seller shall return the Earnest Money to Buyer, and Buyer and Seller shall execute and deliver to each other the termination of this Purchase Agreement. As a contingent Purchase Agreement. the termination of this Agreement is not required pursuant to Minnesota Statutes, Section 559.2 1. et. seq. 4. Title Examination/Curing Title Defects. The Seller will provide the Buyer with the abstract of title for the Property for updating at Buyer's expense. If the abstract is not available. the 11RA shall, at its expense and within a reasonable time after Seller's acceptance of' this Agreement. obtain a commitment foi' title insurance ("Commitment") for the Property. The I-IRA shall have ten (10) business days after receipt of the commitment and executed Purchase Agreement to examine the sane and to deliver written objections to title. if any-. to Seller. or I IRA's right to do so shall he deemed waived. Seller shall have until the Closing Date (or such later date as the parties may agree upon) to make title marketable. at the ScIler's cost. In the event that title to the Property cannot be made marketable or is not made marketable by the Seller by the Closing Date. then, this Agreement may he terminated at the option of the Buyer. 5. Environmental Investigation. The Seller warrants that the Property has not been used for production, storage, deposit or disposal of any toxic or hazardous waste or substance. petroleum product or asbestos product during the period of time the Seller has owned the Property. The Seller further warrants that the Seller has no knowledge or information of any fact which would indicate the Property was used fbr production, storage, deposit or disposal of any 3154180 CBI:R( 25--111 " �P toxic or hazardous waste or substance. petroleum product or asbestos product prior to the date the Seller purchased the Property. Notwithstanding the above, the Seller's warranty regarding petroleum products does not preclude the presence of heating oil or other similar products used as a heating fuel for the dwelling but the Seller does warrant that if there was a fuel tank on the Property used for the storage of heating oil or other similar product, the Seller has no knowledge of any leak in the tank or contamination caused thereby. Seller hereby grants to Buyer and Buyer's agents a license to enter and evaluate the Property for the purpose of conducting an environmental assessment. Further. the Buyer or Buyer's agent shall have the right pursuant to the license to bring persons and equipment onto the Property. make inspections and perform tests and analyses as Buyer may deem reasonable to determine the presence of any toxic or hazardous waste. substance, or petroleum product or asbestos product. and ascertain soil conditions on the Property. Buyer shall hear the cost of the environmental assessment. If the results of the environmental assessment are not to the satisfaction of the Buyer. the Buyer at its sole discretion may cancel this Purchase Agreement. If the Buyer cancels this Purchase Agreement pursuant to this provision, the Buyer shall restore the Property to its original condition or nearly so as is reasonably practicable. 6. Real Estate Taxes and Special Assessments. Real estate taxes payable in the year of closing will be pro-rated between the Buyer and Seller to the date of closing. Seller shall pay all real estate taxes payable in previous years, the entire unpaid balance of special assessments. and all installments of special assessments levied and pending. including special assessments installments payable alter the year of closing. Seller also agrees to pay all assessments related to service charges furnished to the Property prior to the date of closing(e.g., delinquent water or sewer hills. removed or diseased trees), including those charges levied, pending, or certified to taxes payable in the year of closing. If closing occurs prior to the date the amount of real estate taxes due in the year of closing are available from I-lennepin County, the current year's taxes will he pro-rated based on the amount due in the prior year. 7. Closing Date. The date of closing will be on or before October 31, 2011. Delivery of all papers and the closing shall be made at the offices of I IRA, 6700 Portland Avenue South. Richfield. Minnesota 55423. or at such other location as is mutually agreed upon by the parties. All deliveries and notices to I-IRA shall be made to the above address and marked to the attention of I lousing Specialist. g. Possession/Utilities/Removal of Property/Escrow. (a) Possession. The Seller agrees to deliver possession not later than the date of' closing. (b) Utilities. City water and sewer charges. electricity and natural gas charges. fuel oil and liquid petroleum gas shall be pro-rated between the parties as of the date of closing. Seller shall arrange for final readings as of the date of closing. (c) Personal Property. The Seller agrees to remove all debris and all personal property not included herein from the Property before the possession date. Personal property not so removed shall he deemed forfeited to and shall become the property of the Buyer. The Buyer may inspect the Property immediately prior to closing and deduct from the purchase price 3i0-i l ivI (13R R('125-41 4 payable at closing an amount reasonably necessary to pay for the cost of removal of'airy dehs or personal property then remaining on the Property. The provisions of'this paragraph shall not merge with the deed and shall survive closing on the property: (d) Escrow. Seller agrees that, at closing. the I-IRA may retain Five undred Dollars ($500.00) from the purchase price for the Property as an Escrow for payment of personal property removal. disposal charges and utility charges. The retained amount. less deductions provided for this in paragraph 8, will he delivered to Seller no later than 60 days following the date of closing or delivery of possession, whichever is later. Said funds shall be held by Kennedy & Graven, Chartered, as Escrow Agent, pursuant to the terms of the Escrow Agreement attached here as Exhibit C. (e) The I-IRA's ability to deduct amounts due under this paragraph from the retained escrow is not exclusive but is in addition to the I-IRA's rights at law and equity to collect such amounts from Seller. The Seller is responsible for the amounts due under this paragraph even if: (i) the LIRA neglects to deduct the amount from escrow; or (ii) the escrowed amount is insufficient to pay all amounts due under this paragraph 8. 9. Seller Warranties. (a) Sewer and water. Seller warrants that the Property is connected to City sewer and City water. (b) Mechanics" Liens. Seller warrants that. prior to the closing. Seller shall pay in full all amounts due for labor, materials, machinery. fixtures or tools furnished within the 120 days immediately preceding the closing in connection with construction. alteration or repair of any structure upon or improvement to the Property. (c) Notices. Seller warrants that it has not received any notice from any governmental authority as to violation of any law, ordinaiicc or regulation in connection with the Property. e i'4.'off- `:`i t i k^ ka+ e-e- 'A t i`:a�,l S (d) Tenants. Seller warrants that the Property is not now occupied by tenants and was not occupied by tenants at the time the Seller first received the Buyer's written offer to purchase the Property. (e) Broker Commission. Each party represents to the other that it has not utilized the services of any Peal estate broker or agent in connection with this Purchase Agreement or the transaction contemplated by this Purchase Agreement. Each party agrees to indemnify, defend. and hold harmless the other party against and in respect of any such obligation and liability based in any way upon agreements. arrangements. or understandings made or claimed to have been made by the party with any third person. (f) Structures. The Seller warrants that the buildings. if'any. are entirely within the boundary lines of the Property. The parties acknowledge that the Property is being sold in "as is condition relating to the structural, operational. and mechanical systems. 10. Closing Costs/Recording Fees/Deed "Fax. The I IRA will pay: (a) the closing. ices 3154 ISviColl: R('I?5-41 5 charged by the title insurance or other closing agent. if any. utilized to close the transaction contemplated by this Agreement: (b) the premium for title insurance policy. if any. obtained by the I IRA: and (c)the recording fee for the deed transferring title to the I-IRA. Seller will pay all other lees normally paid by sellers. including (a) any transfer taxes and recording lees required to enable the 1-IRA to record its deed from Seller under this Agreement. and (b) fees and charges related to the filing of any instrument required to make title marketable. Each party shall pay its own attorney fees. 11. Inspections. From the date of this Agreement to the Date of Closing. IIRA, its employees and agents. shall he entitled to enter upon the Property to conduct such surveying. inspections. investigations. soil borings and testing. and drilling, monitoring, sampling and testing of groundwater monitoring wells. as the HRA shall elect; provided, that Seller is given at least 24 hours' notice. 12. Risk of Loss. It there is any loss or damage to the Property between the date hereof and the date of closing, for any reason including fire. vandalism, flood, earthquake or act of God, the risk of loss shall be on the Seller. If the Property is destroyed or substantially damaged before the closing date. this Purchase Agreement shall become null and void. at the I-IRAs option. At the request of the I-IRA. Seller agrees to sign a cancellation of Purchase Agreement. 13. Default/Remedies. If the Buyer defaults in any of the covenants herein, the Seller may terminate this Purchase Agreement. and on such termination all payments made hereunder shall be retained by the Seller as liquidated damages, time being of the essence. This provision shall not deprive either party of the right to enforce specific performance of this Purchase Agreement. provided this Purchase Agreement has not terminated and action to enforce specific performance is commenced within six months after such right of action arises. In the event the Buyer defaults in its performance of'the terms of this Purchase Agreement and Notice of Cancellation is served upon the Buyer pursuant to Minn. Stat. Section 559.21. the termination period shall be thirty (30) days as permitted by Minn. Stat., Section 55921, Subd. 4. 14. Notice. Any notice. demand, request or other communication which may or shall be given or served by the parties, shall be deemed to have been given or served on the date the same is personally served upon one of the following indicated recipients for notices or is deposited in the United States Mail, registered or certified, return receipt requested, postage prepaid and addressed as follows: • SELLER: Leslie Lien and Dennis Lien 3439 Tyler Street NE Minneapolis. MN 55418 .;15.41tivl e'131: R('lL -il 6 BUYER: I lousing and Redevelopment Authority °Idle C°'i=ts. oK:RRic.hI ld Attn: Mousing Specialist 6700 Portland Avenue South Richfield, MN 5542; AGENT: Kennedy & Graven, Chartered AT°TN: Corrine Heine and Catherine B. Rocklitz 470 U.S. Bank Plaza 200 South Sixth Street Minneapolis, MN 55402 15. Entire Agreement. "Phis Purchase Agreement. Fxhibits. and other amendments signed by the parties, shall constitute the entire Agreement between Seller and the I IRA and supersedes any other written or oral agreements between the parties relating to the Property. This Purchase Agreement can be modified only in a writing properly signed on behalf' of Seller and the I IRA. 16. Survival. Notwithstanding any other provisions of law or court decision to the contrary, the provisions of this Purchase Agreement shall survive closing. IN WI'I'N1 SS Wl 11 RFOF, the undersigned have executed this :agreement on the date and year above. Buyer: Housing and Redevelopment Authority Seller: in and for the City of Richfield By: `4=° Its Chair And by: !' - � r '✓ � � % Its Executive Director L�' I C'IU<1:(125-11 I 7 6 -'0 EXHIBIT A L,eual Description of Propsrty Lot S. Block 7. "Nicol let Garden Lots" according to the duly recorded plat thereof. Hennepin County. Minnesota 315.418\I ('lily R( I25-41 B-1 EXHIBIT B Escrow Aureement THIS I IS AGREEMENIT entered into this day of —__ 20 by and between _- ("Seller"). the IIOUSING AND RI:UEVI;I.OPMEN'[ At1TTIORIT'Y IN AND FOR TIIE CITY OF RICI-IFIEI.1), a Minnesota municipal corporation ("I-IRA or"Buyer'"). and KENNEDY & GRAVEN. CI IAR'f'I:RED (..Escrow Aggent" or.`Agent"). RI.:CITALS A. Seller and Buyer have entered into a Purchase Agreement dated 20 ("Agreement-) for the sale of property located,at Richfield, Minnesota and legally described on the attached Exhibit One (the ("Property"). B. The parties desire to close the sale of the Property on AGREEMENT The parties agree as follows: 1. Delivery of Possession_ Seller shall deliver possession ofthe Property to Buyer on or in accordance with the Purchase Agreement entered into by the parties. The Purchase Agreement requires the Seller to pay all utilities and to remove all personal property from the Property upon closing. 2. Escrow. (a) Upon closing and execution of this Agreement, Seller agrees to deposit into escrow the sum of 5500.00 (the "Escrowed Funds ) from the purchase price, to be held by Agent in a non-interest bearing account. (h) Within 7 days after requested by Agent. Buyer shall provide to Agent (with copy to Seller) evidence of expenses incurred for the removal and disposal of personal property and for payment of utility charges t r services provided to the Property prior to date of' possession. if any. Agent shall reimburse Buyer for the incurred expenses from the Escrowed hunds within', 7 days following receipt of such evidence from Buyer. (c) Agent shall deliver to Seller the balance of the'Escrowed Funds on deposit. less deductions provided for in paragraph 6(b) above. no later than 30 does following vacation of the Property by Seller. (d) The sole duties of Agent shall be those described herein, and Agent shall he under no obligation to determine whether the other parties hereto are complying with any requirements of law or the terms and conditions of any other 3154I8v1 C13R RC'I25-41 B-2 agreements among said parties. Agent shall have no duty or liability to verify any amounts deducted from the retained amount and Agent's sole responsibility shall be to act expresfly as set forth in this Escrow Agreement. 7. Escrow_Age nt Liability. The sole duties of Escrow Agent shall be those described herein. and Escrow Agent shall be under no obligation to determine whether the other parties:hereto are complying with any requirements of law or the terms and conditions of any other agreements among said parties. Escrow Agent may conclusively rely upon and shall he protected in acting on any notice believed by it to be genuine and to have been signed or presented by the proper party or parties, consistent wilth reasonable due diligence on Escrow Agent's part. Escrow Agent shall have no duty or liability to verify any such notice, and its sole responsibility shall 1 be to at expressly as set forth in this Escrow Agreement. } ., Seller and Bi_iyer understand that Agent is legal counsel to the I3uycr and each consents to ,Ngent's serving as Escrow Agent notwithstanding such representation. In the event Agent determines, in its sole discretion,that it cannot continue to serve as Escrow Agent herein, Agent shall deposit the funds with Old Republic National Title Insurance Company or such other Escrow Agent acceptable to Seller and I3uver. Seller consents to Agent's continued representation of Buyer after a deposit is made. and Buyer agrees to pay all escrow fees charged by the substitute Escrow Arent. 8. Notices to be sent to the parties to this Agreement shall he sent by mail or personal delivery to: SELLER: l3tiYl R: Llousing and Redevelopment Authority in and for the City of Richfield Attn: I lousing Specialist 6700 Portland Avenue South Richfield. MN 55423 AGL:NT: Kennedy & Graven, Chartered AT TN: Corrine I leine and Catherine B. Rocklitz 470 U.S. Bank Plaza 200 South Sixth Street Minneapolis, MN 55402 IN WITNESS NESS WLIEI EOF, the parties have executed this agreement as of the date written above. 315418v I CM R( l2 -4I 13-3 6 - 1 SELLER: BUYER: ' - • 110t1SING AND REI)NVELOPVINNT AUTHORITY IN AND FOR THE CITY 01' By: Its Chair And by: Its Executive Director ESCROW AGENT: KENNEDY & GRAVEN, CHARTERED By: .H5-118v1 C131:k( !2 -4l 11-4 - lU Exhibit One I.cgal Description of Property 15418\I C'I R R(125-11 13-5 to - IS Community Deve .op- 6� �7 - L. S, August 11, 2011 Leslie & Dennis Lien 7544 2"` Ave So. Richfield, MN 55423 Subject: Fire damaged abandoned home at 7544 2nd Ave S. Dear Mr. & Ms. Lien, This letter is to inform you that your property located at 7544 2'd Ave. S in Richfield is in violation of the following Richfield City Code: 400.04, Subd. 4. Completion of Exterior Work. (b) If a building is damaged by fire or by other casualty or cause and the roof or exterior finishes are damaged or destroyed, the damaged materials shall be completely restored or replaced with exterior building materials permit6ted by the Minnesota state building code and this code as soon as reasonably possible, and in any event within 12 months after the damage or destruction. As it has been over 1 year since the fire damage occurred, this house has determined to be unsafe and has been placarded per Minnesota State Building Code section 1300.0180. Unsafe buildings are a public nuisance and must be abated by repair, rehabilitation, demolition, or removal according to Minnesota Statutes, sections 463.15 to 463.26. A building, plumbing, mechanical, and electrical permits and inspections are required to make the necessary repairs for the extensive fire damage to the home. You must have licensed contractors apply for the permits to make repairs within 10 days. Failure to comply will result in this matter being turned over to the city attorney's office to begin the abatement order. If you have any questions, please feel free to contact me at 612 861 9883. Sincerely, Jennifer Grinde 1 City of Richfield Inspections Division Copy: Rick Regnier, Building official John Stark, Community Development Director Martin Costello, Richfield Prosecuting Attorney 6'0@ PORTLAND AVENUE, R!CHF-__D. MiNN._SOTA 56423 612 861 2 ci) FAX 612 r.ii' . AGENDA ITEM#: 7 REPORT#: 48 STAFF REPORT RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY MEETING OCTOBER 17, 2011 REPORT PREPARED BY: CHRISTINE COSTELLO, COMMUNITY DEVELOPMENT SPECIALIST NAME,TITLE REPORT PRESENTER: JOHN STARK, COMMUNITY DEVELOPMENT DIRECTOR NAME, TITLE DEPARTMENT DIRECTOR REVIEW: I( /A� 7-"Iffirri/ . REVIEWED BY EXECUTIVE DIRECTOR: (1� ITEM FOR HRA CONSIDERATION: Consideration of a request that the City Council call for a public hearing on the proposed Modification to the Redevelopment Plan for the Richfield Redevelopment Project Area and the proposed establishment of the Pillsbury Commons Tax Increment Finance District. I. RECOMMENDED ACTION: By Motion: Affirm the City Council's call for a public hearing on the proposed Modification to the Redevelopment Plan for the Richfield Redevelopment Project Area and the proposed establishment of the Pillsbury Commons Tax Increment Finance District. II. BACKGROUND In March of this year Ron Clark Construction and Design (the Developer) entered into a preliminary development agreement for the redevelopment of the north portion of the former Richfield Public Works Maintenance Facility. The site is approximately 3.5 acres. The Developer is proposing 70-unit multi family apartment building with affordable units as well. The proposed development is two stories in height along Pillsbury Avenue and graduates to four stories along 77th Street. 10172011-HRA request CC call a PH_Pillsbury Commons The Developer has applied to the Minnesota Housing and Finance Agency's (MHFA) Housing Tax Credit program for funding of the project. The MHFA funding offers a ten year reduction in tax liability to owners and investors for eligible affordable rental housing units produced as a result of new construction, rehabilitation, or acquisition. MHFA is the primary agency that is designated by the Minnesota Legislature to allocate the Housing Tax Credit program. The MHFA will announce grant funding after their November 16, 2011 meeting. Calling the public hearing does not commit the City Council to approve the establishment of the Tax Increment Financing (TIF) District. The decision whether or not to approve the TIF District can be made only after the Council has had an opportunity to fully consider the matter with public input at the public hearing. If the call for a public hearing is approved, the next steps would be: a) To inform the County, School District and other taxing jurisdictions of the proposed TIF District and give them an opportunity to comment; and b) For the Planning Commission to determine whether the establishment of such a district would be consistent with Richfield's Comprehensive Plan; and c) For the Housing and Redevelopment Authority (HRA) to consider modifications to the Richfield Redevelopment Project Area; and Establishment of Pillsbury Commons TIF District; and finally d) The holding of a public hearing by the City Council on December 13, 2011. The HRA is being asked to consider, and staff is recommending affirmation of the City Council's call for a public hearing on the proposed Modification to the Redevelopment Plan for the Richfield Redevelopment Project Area and the proposed establishment of the Pillsbury Commons TIF District. III. BASIS OF RECOMMENDATION A. POLICY • A public hearing is required for the modification of the Richfield Redevelopment Project Area and for the creation of a TIF District. • The City Council is the body that must hold a public hearing to consider approval of the proposed modifications to a redevelopment plan and establishment of a TIF District. B. CRITICAL TIMING ISSUES • The HRA is scheduled to consider a resolution recommending that the City Council call for this public hearing at their November 21, 2011 meeting. • State Statute requires that the County, School Districts and other affected taxing jurisdictions receive notice of the proposed Tax Increment Plan and other information on fiscal impacts related to the modification/establishment of a Redevelopment Project Area and/or TIF District at least 30 days prior to that hearing. • The Planning Commission must determine whether the establishment of such a district would be consistent with Richfield's Comprehensive Plan; this is tentatively scheduled for the November 28, 2011 Planning Commission meeting. • The timing of this consideration would allow for the prospective Developers to maintain their tentative acquisition and construction schedule (if the project is ultimately approved). C. FINANCIAL • Without the tax increment financing, this project would unlikely come to fruition. D. LEGAL • The City's legal counsel has been involved in all staff discussions relating to tax increment financing for the proposed project. IV. ALTERNATIVE RECOMMENDATION(S) • Delay the call for a public hearing to a later City Council meeting in order to seek further information. • Do not adopt the attached Resolution. • Adopt the attached Resolution with modifications that meet the desires or concerns of City Council members. V. ATTACHMENTS • Resolution VI. PRINCIPAL PARTIES EXPECTED AT MEETING • Representatives from Ron Clark Construction and Design - I RESOLUTION NO. RESOLUTION CALLING FOR A PUBLIC HEARING BY THE CITY COUNCIL ON THE PROPOSED MODIFICATION OF THE REDEVELOPMENT PLAN FOR THE RICHFIELD REDEVELOPMENT PROJECT AREA AND THE PROPOSED ESTABLISHMENT OF THE PILLSBURY COMMONS TAX INCREMENT FINANCING DISTRICT THEREIN AND THE ADOPTION OF THE TAX INCREMENT FINANCING PLAN THEREFORE BE IT RESOLVED by the City Council (the "Council") for the City of Richfield, Minnesota (the "City"), as follows: Section 1. Public Hearing. This Council shall meet on December 13, 2011, at approximately 7:00 P.M., to hold a public hearing on the proposed modification of the Redevelopment Plan for the Richfield Redevelopment Project Area, the proposed establishment of the Pillsbury Commons Tax Increment Financing District, (a redevelopment district), and the proposed adoption of a Tax Increment Financing Plan therefore, all pursuant to and in accordance with Minnesota Statutes, Sections 469.001 to 469.047, and Sections 469.174 to 469.1799, inclusive, as amended, in an effort to encourage the development and redevelopment of certain designated areas within the City; and Section 2. Notice of Public Hearing, Filing of Plans. City staff is authorized and directed to work with Ehlers and Associates to prepare a modification to the Redevelopment Plan for the Richfield Redevelopment Project Area and a Tax Increment Financing Plan for the Pillsbury Commons Tax Increment Financing District and to forward documents to the appropriate taxing jurisdictions including Hennepin County and Independent School District No. 280. The Community Development Director is authorized and directed to cause notice of the hearing, together with an appropriate map as required by law, to be published at least once in the official newspaper of the City not later than 10, nor more than 30, days prior to December 13, 2011, and to place a copy of the Plans on file in the Community Development Director's office at City Hall and to make such copy available for inspection by the public. Adopted by the City Council of the City of Richfield, Minnesota this 25th day of October, 2011. Debbie Goettel, Mayor ATTEST: Nancy Gibbs, City Clerk AGENDA ITEM#: 8 REPORT#: 49 MIIIAI STAFF REPORT RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY MEETING OCTOBER 17, 2011 REPORT PREPARED BY: KAREN BARTON, ASST DIRECTOR OF COMMUNITY DEVELOPMENT NAME, TITLE REPORT PRESENTER: KAREN BARTON, ASST DIRECTOR OF COMMUNIT ADEVELOPMENT Alik NAME,TITLE DEPARTMENT DIRECTOR REVIEW: 15 4 //' Ainpreirl REVIEWED BY EXECUTIVE DIRECTOR: :—/ • iiii/ ITEM FOR HRA CONSIDERATION: Consideration of a Contract for Private Development with Lyndale Gardens, LLC for redevelopment of the former Lyndale Garden Center property. I. RECOMMENDED ACTION: By Motion: Approve and authorize execution of attached Contract for Private Development with Lyndale Gardens, LLC for redevelopment of the former Lyndale Garden Center property subject to minor modifications by the Housing and Redevelopment Authority's legal counsel. II. BACKGROUND The Cornerstone Group/Lyndale Gardens, LLC (Developer) has proposed to acquire and redevelop the former Lyndale Garden Center property located at 6400 Lyndale Avenue, along with the adjacent parcels at 6330 and 6430 Lyndale Avenue. The proposal includes plans to rehabilitate the former garden center and construction of a mixed-use building and multi-family housing. The Housing and Redevelopment Authority (HRA) staff, legal counsel and representatives of the Developer and their legal counsel have cooperatively drafted 10172011 Lyndale Gardens Contract for Private Development a proposed contract for HRA consideration. Among the more notable provisions in this proposed contract (attached) are: • Nine acre site; approximately 7.5 acres developable. • Minimum improvements include rehabilitation of the former garden center to provide 30,000-48,000 square feet of retail/restaurant/commercial tenant space; construction of a multi-story mixed-use building that may include a mix of education, office, retail and 35-60 units of housing; and the development of 50- 70 units of multi-family housing oriented to Richfield Lake. • Due to the estimated cost of the acquisition and redevelopment, the Developer has identified a need for public assistance. • The public assistance that is identified in this Contract includes a $3.3 million tax increment financing note from the HRA. • The tax increment will be distributed "pay as you go", meaning that payments will only be made subject to sufficient taxes being collected on the property to meet the payment obligation. • The availability of the tax increment financing would be subject to a "look-back provision" to ensure that the developer's actual need for the public assistance is not less than their estimated need. • Schedule D of the Contract details the concept plan, including phases and timelines for the redevelopment of the property. Approval of this Contract would allow staff to concentrate their efforts with the Developer and end-users on building design; with the goal of achieving a development of the highest design quality that is unique to Richfield. III. BASIS OF RECOMMENDATION A. POLICY • In order for private redevelopment with public assistance to occur, a developer must have a Contract with the HRA. • The 2008 Comprehensive Plan states the following goals and policies: o Maintain and enhance the "urban hometown" character of Richfield; and o Develop the Lakes at Lyndale area as the City Center; and o Provide an economic climate within Richfield that will encourage the availability of quality goods, services and employment opportunities for residents. B. CRITICAL TIMING ISSUES • Lyndale Gardens LLC is scheduled to close on the property on October 20, 2011 C. FINANCIAL • Due to the estimated cost of the acquisition and redevelopment, the Developer has identified a need for public assistance. • The public assistance that is identified in this Contract includes a $3.3 million tax increment financing note from the HRA. • The availability of the tax increment financing would be subject to a "look-back provision" to ensure that the Developer's actual need for the public assistance is not less than their estimated need. • The terms of the proposed Contract require the Developer to pay the HRA's legal counsel costs, the HRA's financial consultant costs and other costs deemed necessary by HRA staff. • The HRA's financial analyst, Ehlers and Associates, has participated in the drafting of the proposed Contract. D. LEGAL • HRA legal counsel drafted the proposed Contract in cooperation with staff, the Developer and the Developer's legal counsel. • There are occasionally changes of an administrative or technical nature that are required of a contract as more information becomes available, HRA legal counsel may be given authority to make these changes without further HRA consideration. IV. ALTERNATIVE RECOMMENDATION(S) • Approve the proposed Contract for Private Development with added provisions or modifications. • Do not approve the proposed Contract for Private Development. V. ATTACHMENTS • Proposed Contract for Private Development • Map • Concept Plan VI. PRINCIPAL PARTIES EXPECTED AT MEETING • HRA Legal Counsel. • HRA Financial Analyst. • Representatives of The Cornerstone Group/Lyndale Gardens, LLC. - 1 Authority Draft 10/11/11 CONTRACT FOR PRIVATE DEVELOPMENT BY AND BETWEEN THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD And LYNDALE GARDENS, LLC , 2011 This document was drafted by: Kennedy& Graven, Chartered (JBD) 200 South Sixth Street, Suite 470 Minneapolis, MN 55402 391382v6 JBD RC125-316 TABLE OF CONTENTS [Revise upon Completion of Agreement] ARTICLE I DEFINITIONS, SCHEDULES, RULES OF INTERPRETATION Section 1.1. Definitions 2 Section 1.2. Schedules 5 Section 1.3. Rules of Interpretation 6 ARTICLE II REPRESENTATIONS Section 2.1. Representations by the Developer 6 Section 2.2. Representations by Authority 7 ARTICLE III SITE ASSEMBLY Section 3.1. Statement of Intent 8 Section 3.2. Acquisition 8 Section 3.3. Governmental Approvals 8 Section 3.4. Other Preconditions to Closing 8 Section 3.5. Closing Documents 9 Section 3.6. Termination 9 ARTICLE IV TAX INCREMENT Section 4.1. Statement of Purpose 9 Section 4.2. General Description; Site Costs 9 Section 4.3. Glssuance of Note(s) and Additional Notes 9 Section 4.4. Withholding Tax Increment 11 Section 4.5. Treatment of Withheld Tax Increment and Disposition of Parcels GB and Apt B 11 Section 4.6. Removal of Parcels from District 11 Section 4.7. Business Subsidy Agreement 12 ARTICLE V CONSTRUCTION OF MINIMUM IMPROVEMENTS Section 5.1. Concept Plan 12 Section 5.2. Construction of Minimum Improvements 12 Section 5.3. Construction Plans 12 Section 5.4. Completion of Construction 13 Section 5.5. Certificate of Completion 14 ARTICLE VI INSURANCE AND SUBORDINATION Section 6.1. Insurance 14 Section 6.2. Subordination 16 ARTICLE VII TAXES; MINIMUM MARKET VALUE Section 7.1. Right to Collect Delinquent Taxes 16 Section 7.2. Reduction of Taxes 16 391382v6 JBD RC125-316 $ -3 ARTICLE VIII FINANCING Section 8.1. Financing 17 Section 8.2. Subordination 17 ARTICLE IX PROHIBITIONS AGAINST ASSIGNMENT AND TRANSFER; INDEMNIFICATION Section 9.1. Representation as to Development 17 Section 9.2. Prohibition Against Developer's Transfer of Property and Assignment of Agreement 18 Section 9.3. Transfer of Property and Assignment Agreement 18 Section 9.4. Release and Indemnification Covenants 19 ARTICLE X EVENTS OF DEFAULT Section 10.1. Events of Default Defined 20 Section 10.2. Remedies on Default 20 Section 10.3. No Remedy Exclusive 21 Section 10.4. No Additional Waiver Implied by One Waiver 21 Section 10.5. Attorney Fees 22 Section 10.6. Default by Authority 22 ARTICLE XI ADDITIONAL PROVISIONS Section 11.1. Conflict of Interests; Representatives Not Individually Liable 22 Section 11.2. Equal Employment Opportunity 22 Section 11.3. [Blank' 22 Section 11.4. Provisions Not Merged With Deed 23 Section 11.5. Titles of Articles and Sections 23 Section 11.6. Recapture of Public Funds 23 Section 11.7. Developer Deposit 23 Section 11.8. Notices and Demands 24 Section 11.9. Entire Agreement 24 Section 11.10. Termination of Agreement 24 Section 11.11. Counterparts 24 Section 11.12. Recording 24 Section 11.13. Entire Agreement 24 Signatures S-1 ii 391382v6 JBD RCI25-316 5 —y CONTRACT FOR PRIVATE DEVELOPMENT THIS AGREEMENT, made and entered into this day of , 2011, by and between THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA, a Minnesota public body corporate and politic (the "Authority"), and Lyndale Gardens, LLC, a Minnesota limited liability company (the "Developer"). WITNESSETH: WHEREAS, the Authority was created pursuant to Minnesota Statutes, Sections 469.001 to 469.047, as amended (the "Authority Act") and was authorized to transact business and exercise its powers by a resolution of the City Council of the City of Richfield ("City"); and WHEREAS, the Authority has established a program to promote and carry out the objectives for which development is undertaken within the City, and in this connection the Authority administers a redevelopment project known as the Richfield Redevelopment Project ("Redevelopment Project")pursuant to the Authority Act; and WHEREAS, pursuant to the Authority Act, the Authority is authorized to acquire real property, or interests therein, and to undertake certain activities to facilitate the redevelopment of real property by private enterprise and promote development within the City; and WHEREAS, within the Redevelopment Project, the Authority has created the Lyndale Gardens Tax Increment Financing District ("TIF District") in order to facilitate redevelopment of certain property in the Redevelopment Project; and WHEREAS, the Developer proposes to acquire certain property (the "Development Property") within the TIF District and to engage in a program of construction of new improvements and substantial rehabilitation of existing improvements (collectively, the "Minimum Improvements"); and WHEREAS, in order to achieve the objectives of the Redevelopment Plan for the Redevelopment Project and make the Minimum Improvements economically feasible for the Developer to carry out its program, the Authority is prepared to reimburse the Developer for a portion of the land acquisition costs, certain site improvement costs and certain site preparation costs related to the Minimum Improvements; and WHEREAS, the Authority believes that the development of the TIF District pursuant to this Agreement, and fulfillment generally of this Agreement, are in the vital and best interests of the City and the health, safety, morals, and welfare of its residents, and in accord with the public purposes and provisions of the applicable State and local laws and requirements under which the Redevelopment Project has been undertaken and is being assisted. 1 391382v6 JBD RC125-316 $ -S NOW, THEREFORE, in consideration of the premises and mutual obligations of the parties contained herein, each of them does hereby represent, covenant and agree with the others as follows: ARTICLE I DEFINITIONS, SCHEDULES, RULES OF INTERPRETATION Section 1.1. Definitions In this Agreement, unless a different meaning clearly appears from the context: "Additional Notes"means the notes described as such in Section 4.3. "Affiliate" means with respect to the Developer (a) any corporation, partnership, corporation or other business entity or person controlling, controlled by or under common control with the Developer, and (b) any successor to such party by merger, acquisition, reorganization or similar transaction involving all or substantially all of the assets of such party (or such Affiliate). For the purpose hereof the words "controlling", "controlled by" and "under common control with" shall mean, with respect to any corporation, partnership, corporation or other business entity, the ownership of fifty percent or more of the voting interests in such entity or possession, directly or indirectly, of the power to direct or cause the direction of management policies of such entity, whether ownership of voting securities or by contract or otherwise. An Affiliate shall include a limited partnership created for the purposes of obtaining low-income housing tax credits if the Developer is the general partner of such limited partnership. "Agreement" means this Contract for Private Development, as the same may be from time to time modified, amended, or supplemented. "Authority" means the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota. "Authority Act"means Minnesota Statutes, Sections 469.001 to 469.047, as amended. "Authority Representative"means the Executive Director of the Authority. "Authorizing Resolution" means the resolution of the Authority, substantially in the form of the attached Schedule B to be adopted by Board to authorize the issuance of the Note. "Available Tax Increment," means, on each Payment Date, Tax Increment attributable to a Phase of the Development Property determined as a percentage of the increase in the base value of the District to the increase of the base value of such Phase of the Development Property, and paid to the Authority by Hennepin County in the six months preceding the Payment Date after first deducting therefrom ten percent of the Tax Increment to be used to reimburse the Authority for administrative expenses incurred after completion of construction of the Minimum 2 391382v6 JBD RC125-316 I G Improvements; and with respect to Phase I, and any other phase that does not contain housing, an additional 15% of the Tax Increment. Available Tax Increment shall not include any Tax Increment if, as of any Payment Date, there is an uncured Event of Default for which the remedy of withholding payments of tax increment is provided under Section 10.2. "Board"means the Board of Commissioners of the Authority. "Certificate of Completion" means the certification provided to the Developer pursuant to Section 5.5 of this Agreement, in substantially the form set forth in Schedule C. "City"means the City of Richfield, Minnesota. "Closing" means the delivery of the any Note authorized under this Agreement to the Developer. "Closing Date" means the date on which any note authorized under this Agreement is delivered to the Developer. "Commencement of Construction" means, as to any phase, the date on which a building permit has been issued for construction for that phase. "Completion of Construction" means the substantial completion of construction of the relevant Minimum Improvement, except for tenant finish work. "Concept Plan" means the generalized description of the Minimum improvements which is attached hereto as Schedule D. "Construction Plans" means, with respect to any Phase, the plans, specifications, drawings and related documents on the construction work to be performed by the Developer on the Development Property, including the Minimum Improvements, which (a) shall be as detailed as the plans, specifications, drawings and related documents which are submitted to the appropriate building officials of the City, and (b) shall include at least the following: (1) site plan; (2) foundation plan; (3) floor plan for each floor; (4) cross sections of each (length and width); (5) elevations (all sides, including a building materials schedule); (6) landscape and grading plan; and (7) such other plans or supplements to the foregoing plans as the City may reasonably request to allow it to ascertain the nature and quality of the proposed construction work. "County" means Hennepin County, Minnesota. "Developer" means Lyndale Gardens, LLC, a Minnesota limited liability company, or its permitted successors and assigns. "Development Property" means the real property described in Schedule A of this Agreement. 3 391382v6 JBD RC125-316 "Funding Agreement" means the agreement between the parties dated , 2011 providing for the payment of up to $650,000 for certain eligible costs all as described in the Funding Agreement; and includes any amendments thereto. "Holder"means the owner of a Mortgage. "Housing" means the use of a building or portion thereof for residential occupancy which is used as living quarters and complies with all of the design and facility requirements of the City. "Material Change" means a change in construction plans that adversely affects generation of tax increment or changes the number of units of rental housing. "Maturity Date" means the date that all Notes have been paid in full or terminated, whichever is earlier. "Minimum Improvement" means the general reference to (i) the construction of the new improvements, or (ii) the substantial renovation of existing improvements, all as described in the Concept Plan. "Minimum Improvement, Phase P" means the construction on the Phase I Property which will include approximately Thirty Thousand square feet of retail and/or commercial space and, and related site work all as shown on the Concept Plan as it may be amended from time to time. "Minimum Improvement, Remainder" means the improvements generally described in the Concept Plan as Phases II and III. "Mortgage" means any mortgage made by the Developer which is secured, in whole or in part, with the Development Property and which is a permitted encumbrance pursuant to the provisions of Article VIII of this Agreement. "Note(s)" means either the Initial Note, or the Multiple Initial Notes as described in Section 4.3. "Phase" means either Phase I, Phase II, or Phase III as those terms are used in the Concept Plan "Phase I Property" means the tract of land described as such on Schedule A. To the extent reasonably possible, the parcels comprising the Phase I Property will be combined into a single tax parcel. "Project Area" means the real property located within the boundaries of the Redevelopment Project. "Public Funds" means the funds provided to the Developer from Available Tax Increment by payment of the Notes issued in accordance with the provisions of this Agreement. 4 391382v6 JBD RC125-316 "Redevelopment Plan" means the Redevelopment Plan for the Redevelopment Project approved and adopted by the Authority and the City Council of the City. "Redevelopment Project"means the Richfield Redevelopment Project. "Remainder Property" means the tracts of land described as Phases II and III on Schedule A which will be developed in such phase or phases as the developer may deem appropriate. "State" means the State of Minnesota. "Tax Increment" means that portion of the real property taxes which is paid with respect to the TIF District and which is remitted to the Authority as tax increment pursuant to the Tax Increment Act. "Tax Increment Act" or "TIF Act" means the Tax Increment Financing Act, Minnesota Statutes, Sections 469.174 to 469.1799, as amended. "Tax Increment District" or "TIF District" means the Lyndale Gardens Tax Increment Financing District, a redevelopment district. "Tax Increment Plan" or "TIF Plan" means the Tax Increment Financing Plan for the Tax Increment District, as approved by the City Council on July 25, 2011, and as it may be further amended. "Tax Official" means any County assessor; County auditor; County or State board of equalization, the commissioner of revenue of the State, or any State or federal district court, the tax court of the State, or the State Supreme Court. "Unavoidable Delays" means delays beyond the reasonable control of the party seeking to be excused as a result thereof which are the direct result of strikes, other labor troubles, prolonged adverse weather or acts of God, fire or other casualty to the Minimum Improvements, litigation commenced by third parties which, by injunction or other similar judicial action, directly results in delays, or acts of any federal, state or local governmental unit (other than the Authority in exercising its rights under this Agreement) which directly result in delays. Section 1.2. Schedules The following schedules are attached to and made a part of this Agreement. A. Legal Description of Development Property B. Authorizing Resolution C. Certificate of Completion D. Concept Plan E. Investment Letter 5 391382v6 JBD RCI25-316 Section 1.3. Rules of Interpretation (a) This Agreement shall be interpreted in accordance with and governed by the laws of the State of Minnesota; (b) The words "herein" and "hereof" and words of similar importance, without reference to any particular section or subdivision refer to this Agreement as a whole rather than any particular section or subdivision hereof'; (c) Any titles of the several parts, articles and sections of this Agreement are inserted for convenience and reference only and shall be disregarded in construing or interpreting any of its provisions. (d) Whenever the term "construction of Minimum Improvements" or "construction" is used in this Agreement, it shall include, when appropriate, the substantial rehabilitation of improvements currently located on the Development Property. ARTICLE II REPRESENTATIONS Section 2.1. Representations by the Developer (a) The Developer has the power to enter into this Agreement and has duly authorized the execution, delivery, and performance of this Agreement by proper action. (b) Subject to the other terms of this Agreement, the Developer will use commercially reasonable efforts to secure the financial capability to construct the Minimum Improvements, Phase I. (c) Subject to the other terms of this Agreement, the Developer will construct the Minimum Improvement, Phase I described in the Concept Plans in accordance with the terms of this Agreement, the Redevelopment Plan and all local, state and federal laws and regulations. (d) The Developer will exercise reasonably diligent efforts to obtain, in a timely manner, all required permits, licenses, and approvals. If all such approvals are obtained, and all preconditions set forth in this Agreement are satisfied, Developer will meet in a timely manner, all lawful requirements of all local, state, and federal laws and regulations which must be obtained or met before the Minimum Improvement, Phase I may be constructed, all of which is subject to Unavoidable Delay. (e) During the period of the Developer's ownership of the Development Property or any portion thereof, Developer will comply in all material respects with all applicable environment laws and regulations. The term "Environmental Law(s)" shall include, but is not limited to,: Comprehensive Environmental Response, Compensation and Liability Act 6 391382v6 JBD RC125-316 g , io ("CERCLA"), 42 U.S.C. §§ 9601 et seq. as now or hereafter amended, the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. §§ 6901 et seq. as now or hereafter amended, the Federal Water Pollution Control Act, 33 U.S.C. §§ 1251 et seq. as now or hereafter amended, the Clean Water Act (33 U.S.C. § 1317 et seq.), as now or hereafter amended., the Clean Air Act, 42 U.S.C. § 7401 et seq., the Clean Water Act (33 U.S.C. § 1317 et seq.), as now or hereafter amended; the Clean Air Act (342 U.S.C. § 7412 et seq.), as now or hereafter amended; the Toxic Substances Control Act (15 U.S.C. § 2606 et seq.), as now or hereafter amended; the Hazardous Materials Transportation Act (49 U.S.C. § 1801 et seq.), as now or hereafter amended; the Minnesota Environmental Response and Liability Act (Minn. Stat. Section 115B.02 et seq.) ("MERLA"), as now and hereafter amended and the regulations thereunder, and any other local, state and/or federal laws or regulations, that govern (i) The existence, cleanup and/or remedy of contamination of the Development Property; (ii) The protection of the environment from released, spilled, deposited or otherwise emplaced contamination; (iii) The control of hazardous wastes; or (iv) The use, generation, transport,treatment, removal or recovery of hazardous substances, including any and all building materials. (f) The Developer acknowledges that, with respect to payment of any Note, it has relied exclusively upon its own analysis of the Available Tax Increment and has not relied on the accuracy of any material furnished by the Authority, its officers, agents or employees, and that neither the Authority nor its officers, agents or employees has made any representation or covenant, express or implied, as to the amount of Available Tax Increment. (g) The Developer further acknowledges that it is aware of the possibility that a reduction in the tax capacity of any parcel in the TIF District below the tax capacity of such parcel at the time the TIF District was certified may result in a reduction of the captured net tax capacity for the entire TIF District and therefore would result in a reduction of Available Tax Increment payable on any Note even though that reduction may not be on parcels included in the applicable Phase. Section 2.2. Representations by Authority. The Authority makes the following representations as the basis for the undertakings herein contained. (a) The Authority has the power to enter into this Agreement and has duly authorized the execution, delivery and performance of this Agreement. (b) The Authority will utilize its best efforts to secure the cooperation and participation of the City in doing those things and taking those actions necessary to implement this Agreement. 7 391382v6 JBD RC125-316 • (c) The Authority shall, without expense to it, cooperate in Developer's efforts to obtain all federal, state, and regional agency land use, environmental or other regulatory approvals which are required of Developer and necessary to implement the Development, and providing all necessary land use approvals. (d) Upon approval of this Agreement, the Authority will, subject to the reasonable exercise of its legislative discretion, undertake the steps necessary leading to the proposed Development, but this Agreement is not intended to contractually obligate the Authority to do more than exercise its best efforts to accomplish such matters. (e) The Concept Plan is in conformity with the Development Plan. ARTICLE III SITE ASSEMBLY Section 3.1. Statement of Intent. It is the intention of the parties that the Development Property is to be acquired by the Developer. The Developer has not requested, and the Authority has not agreed to be responsible for or to undertake any acquisition of any part of the Development Property, whether by negotiation or condemnation. Section 3.2. Acquisition. (a) The Developer may, in its sole and absolute discretion, pursue the acquisition of the Development Property by negotiation and voluntary conveyance to Developer. (b) It is understood that the Authority will play no role in any of the acquisition activities for the Development Property. Acquisitions may be subject to such matters as title, survey, environmental and geotechnical review, wetlands remediation, or such other matters as the Developer shall in its sole and absolute discretion determine appropriate. It is understood that, subject only to the Authority's payment of the Public Funds, no Authority obligation is created by this Agreement for the payment of any land acquisition costs for the acquisition of the Development Property, including, without limitation, the payment of any relocation benefits to which any person displaced by the Development may be entitled. The Developer hereby indemnifies and agrees to defend and hold harmless the Authority and the City from any claims for any such benefits. Section 3.3. Governmental Approvals. On or before the Closing Date, Developer shall have obtained, at its sole cost and expense, all governmental approvals necessary in Developer's opinion to make use of the Development Property for the construction and operation of the Minimum Improvement for that Phase I contemplated pursuant to the Concept Plan. Section 3.4. Other Preconditions to Closing. Notwithstanding any provision in this Agreement to the contrary, Closing shall not occur until (i) the Authority is satisfied that steps have been taken or will be taken within a reasonable time to subdivide the Development 8 391382v6 JBD RC125-316 Property, as necessary, to comply with the subdivision regulations of the City; (ii) all necessary land use approvals have been obtained; (iii) the preconditions set forth in all of the sections of this Article III and Article IV have been satisfied or waived: and (iv) the Board of the Authority has approved the Authorizing Resolution in substantially the form attached as Schedule B. Section 3.5. Closing Documents. On the Closing Date, subject to the requirements of Section 4.3, Authority shall execute and deliver to Developer the Initial Note or the Multiple Initial Notes as the case may be. Section 3.6. Termination. In the event that Commencement of Construction of the Phase I Minimum Improvements has not begun by July 1, 2012, either party may give the other party written notice of its intention to terminate this Agreement. If the other party does not proceed to Closing within 30 days following the giving of such notice this Agreement may be declared null and void by any party giving written notice of such termination to the other parties and thereupon, no party shall have any obligation or liability to the others hereunder. ARTICLE IV TAX INCREMENT Section 4.1. Statement of Purpose. The parties acknowledge that the development which is proposed by the Developer would not be feasible absent the assistance which is provided the Developer in this Article IV. Section 4.2. General Description; Site Costs. The Authority will provide to the Developer an amount of public assistance to pay for or to reimburse the Developer for qualifying costs including, site acquisition (including all payments required to be made by Developer to the seller of any parcel comprising the Development Property pursuant to any purchase agreement, and as verified by a closing statement issued at the time of closing on such sales), clearance and site preparation, removal or remediation of hazardous substances, pollution or contaminates, installation of utilities, roads, sidewalks and parking facilities, demolition and rehabilitation costs for which reimbursement is authorized under the Tax Increment Plan("Land Costs") incurred by Developer subject to the limits described herein. In determining the level or reimbursement of Land Costs, the Authority has given due consideration to the use value of the Development Property. Available Tax Increment shall be used by the Authority to pay principal of and interest on the Notes. If more than one Note is issued, the principal of and interest on the Notes shall be paid from Available Tax Increment on a parity basis unless the parties agree to distribute the payment of Available Tax Increment in a different manner. Section 4.3. Issuance of Note(s) and Additional Notes. The Authority will provide Public Funds to the Developer to pay for the Land Costs, subject to the following limitations: (a) Initial Financing. At Closing the Authority shall issue to Developer the Note(s) which shall be Taxable Limited Revenue Tax Increment Notes in substantially the form of Exhibit A of the Authorizing Resolution attached as Schedule B. The Authority shall not deliver the Note(s) until the Developer has provided the Authority with an investment letter in 9 391382v6 JBD RC125-316 • - t3 substantially the form of Schedule E. The Note(s) will be issued in consideration of Developer's payment of Land Costs. Interest shall accrue on the principal amount of the Note(s) from the date of Closing. As a precondition to Closing the Authority must have reviewed and approved evidence showing that Developer has incurred Land Costs in an amount at least equal to the principal amount of the Initial Note which approval of such evidence shall not be unreasonably withheld, conditioned, or delayed. The principal amount of the Note(s), to be contained in the approved Authorizing Resolution, shall, subject to the qualifications below, be for eligible Land Costs, but will not include any eligible costs for which payment has previously been made by the Authority pursuant to the Funding Agreement. Such evidence submitted by Developer shall include paid invoices or other comparable evidence reasonably satisfactory to the Authority. Within 5 business days of approval of Developer's evidence of Land Costs, the Authority will deliver to the Developer a the calculated principal amount of the Note(s), which shall be the lesser of: (i) the approved Land Costs; and (ii) the maximum amount available under the TIF Plan for payment of the Initial Note at the agreed-upon interest rate ($ ). Upon the further request of the Developer, the Authorizing Resolution containing the calculated principal amount of the Initial Note will then be presented to the Authority for consideration. Upon approval, the Executive Director and Board Chair are authorized to execute and deliver the Initial Note upon satisfaction by the Developer of all the conditions for Closing contained in this Agreement. (b) Multiple Initial Notes. Either prior to issuance of the Initial Note, or thereafter, the Developer may request that Multiple Initial Notes be issued. The request will also contain the requested principal amount of each note. The aggregate principal amount of the Multiple Initial Notes may not exceed the maximum amount for the Initial Note as calculated in paragraph (a) above, less any principal payments made on the Initial Note if previously issued; and all of the terms and conditions contained in the form of Note(s) contained in Schedule B shall be contained in the multiple Initial Notes. The review and consideration of the request will be subject to the same process as described in paragraph (a) above If a single Initial Note has previously been issued, in addition to all the other preconditions to Closing contained in this Agreement, Closing shall not take place until the Developer delivers for cancelation the previously issued Initial Note. The Executive Director and Board Chair are authorized to execute and deliver the Note(s) to Developer at Closing without further action of the Board. (c) Additional Notes. At any time following the issuance of the Note(s) the Developer may, based upon Land Costs in excess of those used to determine the principal amount of the Initial Note(s) (excluding the Funding Agreement funds), request that either the Note(s) be amended to reflect the additional Land Costs, or that additional notes be issued based on such qualifying Land Costs. The review and consideration of the request will be subject to the same process as described in paragraph(b) above. 10 391382v6 JBD RC125-316 If the request is for the amendment of the Note(s), the amended Note will not be issued until the Note(s)has been surrendered for cancellation. If the request is denied due to the fact that the additional Land Costs exceed the Tax Increment Plan budget amount for such expenditure ($ ), the Developer may seek to have the Tax Increment Plan modified to allow for payment of the additional Land Costs; and if successful, the request may again be considered. The Note(s), and any Additional Note will be a special, limited obligation of the Authority and will be payable solely from the Available Tax Increment. Such notes will neither constitute nor give rise to a general obligation or liability or a charge against the general credit or taxing power of the Authority or the City. Section 4.4. Withholding Tax Increment. The Authority may withhold the payment of Net Available Tax Increment from the parcels described in Schedule A as Parcel GB and Parcel Apt B until such parcels are acquired by Developer. For the purposes of this section, Net Available Tax Increment means, for any year, the total Available Tax Increment generated by the two parcels minus the reduction in taxes resulting from any reduction of net tax capacity of either parcel below the captured net tax of such parcel; but only if the reduction is the result of demolition of improvements. Any withheld payments of Net Available Tax Increment will be subject to disposition in accordance with Section 4.5. Section 4.5. Treatment of Withheld Tax Increment and Disposition of Parcels GB and Apt B. (a) If Developer purchases only one of the parcels within 7 years following the certification of the Tax Increment District, unless otherwise required by the TIF Act, the Authority will release one half of the Net Available Tax Increment to the Developer. The remaining Net Available Tax Increment will become the property of the Authority. (b) If the Developer purchases both of the parcels within 7 years following the certification of the Tax Increment District, the Net Available Tax Increment will be paid over to the Developer. Section 4.6. Removal of Parcels from District. The Parties may request that Parcels GB and/or Apt B be removed from the Tax Increment District in the following circumstances: (a) By the Authority if the parcel(s) sought to be removed has not been purchased by the Developer within the time period contained in 4.5 (a). In lieu of removing any unpurchased parcel from the District, the Authority may retain the parcel in the District and seek its redevelopment by others. (b) By the Developer, whether or not it has purchased the parcel. Such request will be subject to all of the requirements contained in the TIF Act. 11 391382v6 JBD RC125-316 g — IS Section 4.7. Business Subsidy Agreement. As a precondition to the issuance of any note, the parties will, to the extent required by law, enter into a Business Subsidy Agreement pursuant to Minnesota Statutes, Section 116J.993, et seq. ARTICLE V CONSTRUCTION OF MINIMUM IMPROVEMENTS Section 5.1. Concept. Plan. The Concept Plan is contained in Schedule D of this Agreement. Although the Concept Plan describes construction of the Minimum Improvements in terms of phases, the Concept Plan is not intended to obligate the Developer to follow the phase structure in implementing development of the Development Property. As to Phase I, and to the extent that other portions of the Development Property are developed, the Developer will, to the extent reasonably possible, seek to combine each such Phase of portion into single tax parcels. Any other amendment or modification of the Concept Plan require the approval of the Authority, which approval will not be unreasonably withheld. Section 5.2. Construction of Minimum Improvements. The Developer makes the following representation and agrees, if Closing occurs, it will utilize its best efforts to construct the Minimum Improvement in accordance with the approved Concept Plan and for at least five years following the issuance of a Certificate of Completion for each constructed Phase, it will, or will obligate its grantee(s), assignee(s) or successor(s) in interest to, operate and maintain, preserve and keep such Phase of the Minimum Improvement or cause such improvements to be maintained, preserved and kept with the appurtenances and every part and parcel thereof, in good repair and condition, subject to reasonable wear and tear. Upon the expiration of said five year period and if Developer (or its grantee(s), successor(s) and/or assignee(s)) are not in default under this Agreement, then the Authority shall provide Developer (or the appropriate grantee(s), successor(s) and/or assignee(s) to Developer) with a recordable termination or release of this Agreement sufficient to remove it from the real estate records of the property on which the particular Minimum Improvement is located. Failure to observe the provisions of this Section is an Event of Default subject to the remedy provisions contained in Section 10.2. Section 5.3. Construction Plans. (a) Before commencement of construction, the Developer shall submit to the Authority the Construction Plans for that work. The Construction Plans shall provide for the construction of the relevant Minimum Improvement. The Authority will approve the Construction Plans in writing if: (i) the Construction Plans conform to the terms and conditions of this Agreement and the Concept Plans; (ii) the Construction Plans conform to all applicable federal, state and local laws, ordinances, rules and regulations; (iii) the Construction Plans are reasonably adequate to provide for construction of the relevant Minimum Improvement; (iv) the Construction Plans do not provide for expenditures in excess of the funds available to the Developer from all sources for construction of the relevant Minimum Improvement; and (v) no Event of Default has occurred. 12 391382v6 JBD RC125-316 S - 1(0 Approval may be based upon a review by the City's Building Official of the Construction Plans for the applicable Phase. No approval by the Authority shall relieve the Developer of the obligation to comply with the terms of this Agreement, applicable federal, state and local laws, ordinances, rules and regulations, or to construct the Minimum Improvement for the applicable Phase in accordance therewith. No approval by the Authority shall constitute a waiver of an Event of Default. If approval of the Construction Plans is requested by the Developer in writing at the time of submission, such Construction Plans shall be deemed approved unless rejected in writing by the Authority, in whole or in part within 45 days after receipt of such submission. Such rejections shall set forth in detail the reasons therefore, and shall be made within 45 days after the date of their receipt by the Authority. If the Authority rejects any Construction Plans in whole or in part, the Developer shall submit new or corrected Construction Plans within 45 days after its receipt of written notification to the Developer of the rejection. The provisions of this Section relating to approval, rejection and resubmission of corrected Construction Plans shall continue to apply until the Construction Plans have been approved by the Authority. The Authority's approval shall not be unreasonably withheld. Said approval shall constitute a conclusive determination that the Construction Plans (and Phase of the Minimum Improvement constructed in accordance with said plans) comply to the Authority's satisfaction with the provisions of this Agreement relating thereto. (b) If the Developer desires to make any material change in the Construction Plans after their approval by the Authority, the Developer shall submit the proposed change to the Authority for its approval. A change will be deemed material only if it: (i) significantly alters the exterior design of any building, (ii) will change the uses of the Property, or (iii) will have a negative impact on the debt service needed to pay the Note. If the Construction Plans, as modified by the proposed change, conform to the requirements of this section with respect to such previously approved Construction Plans, and the proposed change is otherwise consistent with all applicable local regulations, the Authority shall approve the proposed change and notify the Developer in writing of its approval. Such change in the Construction Plans shall, in any event, be deemed approved by the Authority unless rejected, in whole or in part: (i) if no Authority Board review is required, within 15 days after receipt of the proposed change; or, (ii) if Board approval is required, within five days after the next regular meeting of the Authority Board which takes place not sooner that fifteen days following submission of a completed request for a proposed change. The rejection shall be by written notice by the Authority to the Developer, setting forth in detail the reasons therefor. The Authority's approval of any such change in the Construction Plans will not be unreasonably withheld. Section 5.4. Completion of Construction. Subject to Unavoidable Delays, the Developer shall substantially complete the construction of the work contained in the approved Construction Plans within 24 months after the Commencement of Construction. All work with respect to the relevant Minimum Improvement shall be in substantial conformity with the Construction Plans as submitted by the Developer and approved by the Authority. The Developer agrees for itself, its successors and assigns, and every successor in interest to the Development Property, or any part thereof, that the Developer, and such successors and assigns, act in good faith in determining if and when to undertake the development of the Development Property through the construction of the relevant Minimum Improvement. After 13 391382v6 JBD RC125-316 g - l the date of this Agreement and until construction of the all Phases of the relevant Minimum Improvement has been completed, the Developer shall make reports, in such detail and at such times as may reasonably be requested by the Authority as to the actual progress of the Developer with respect to such construction and to review the factors on which the decision to commence construction will be made. Section 5.5. Certificate of Completion. (a) Promptly after substantial Completion of Construction in accordance with those provisions of the Agreement relating solely to the obligations of the Developer to construct the Minimum Improvement, the Authority will, upon request, furnish the Developer with a Certificate in substantially the form shown as Schedule C. Such Certificate of Completion shall be in recordable form and Developer may, in its sole and absolute discretion, record said Certificate of Completion in the appropriate Hennepin County real estate records office. (b) If the Authority shall refuse or fail to provide any certification in accordance with the provisions of this Section 5.5, the Authority shall, within twenty (20) days after written request by the Developer, provide the Developer with a written statement, indicating in adequate detail in what respects the Developer has failed to complete the Minimum Improvement for the applicable Phase in accordance with the provisions of the Agreement, or is otherwise in default, and what measures or acts it will be necessary, in the reasonable opinion of the Authority, for the Developer to take or perform in order to obtain such certification. (c) The construction of the Minimum Improvement for any Phase shall be deemed to be complete for such phase upon issuance of a certificate of occupancy by the City. ARTICLE VI INSURANCE AND SUBORDINATION Section 6.1. Insurance. (a) The Developer will provide and maintain at all times during the process of constructing the Minimum Improvement for any Phase an All Risk Broad Form Basis Insurance Policy and, from time to time during that period, at the request of the Authority, furnish the Authority with proof of payment of premiums on policies covering, with respect to that Phase, the following: (i) Builder's risk insurance, written on the so-called "Builder's Risk -- Completed Value Basis," in an amount equal to one hundred percent (100%) of the insurable value of the relevant Minimum Improvement at the date of completion, and with coverage available in non-reporting form on the so-called "all risk" form of policy. (ii) Comprehensive general liability insurance (including operations, contingent liability, operations of subcontractors, completed operations and contractual liability insurance) with limits against bodily injury and property damage of not less than $1,000,000 for each occurrence (to accomplish the above-required limits, an umbrella 14 391382v6 JBD RC125-316 - 18 excess liability policy may be used). The Authority shall be listed as an additional insured on the policy; and (iii) Workers' compensation insurance, with statutory coverage, provided that the Developer may be self-insured with respect to all or any part of its liability for workers' compensation. (b) Upon completion of construction of the relevant Minimum Improvement or any Phase and prior to the Maturity Date, the Developer, during its ownership, shall maintain, or cause to be maintained, at its cost and expense, and from time to time at the request of the Authority shall furnish proof of the payment of premiums on, insurance for such Phase as follows: (i) Insurance against loss and/or damage to the relevant Minimum Improvement under a policy or policies covering such risks as are ordinarily insured against by similar businesses. The casualty loss insurance coverage shall be for the full replacement value of the Development. (ii) Comprehensive general public liability insurance, including personal injury liability (with employee exclusion deleted), against liability for injuries to persons and/or property, in the minimum amount for each occurrence and for each year of $1,000,000, and shall be endorsed to show the Authority as additional insured. (iii) Such other insurance, including workers' compensation insurance respecting all employees of the Developer, in such amount as is customarily carried by like organizations engaged in like activities of comparable size and liability exposure; provided that the Developer may be self-insured with respect to all or any part of its liability for workers' compensation. (c) All insurance required in Article VI of this Agreement shall be taken out and maintained in responsible insurance companies selected by the Developer which are authorized under the laws of the State to assume the risks covered thereby. Upon request, the Developer will deposit annually with the Authority policies evidencing all such insurance, or a certificate or certificates or binders of the respective insurers stating that such insurance is in force and effect. Unless otherwise provided in this Article VI of this Agreement each policy shall contain a provision that the insurer shall not cancel nor modify it in such a way as to reduce the coverage provided below the amounts required herein without giving written notice to the Developer and the Authority at least thirty (30) days before the cancellation or modification becomes effective. In lieu of separate policies, the Developer may maintain a single policy, blanket or umbrella policies, or a combination thereof, having the coverage required herein, in which event the Developer shall deposit with the Authority a certificate or certificates of the respective insurers as to the amount of coverage in force upon the relevant Minimum Improvement. (d) In the event of damage to the Minimum Improvements, Phase I, unless the parties agree otherwise, the Developer shall have the obligation to promptly repair, reconstruct and 15 391382v6 JBD RC125-316 restore the such Minimum Improvements in a manner consistent with the Concept Plan; and to use insurance proceeds for that purpose. Any net proceeds remaining after completion of such new construction or such repairs, construction and restoration shall be the property of the Developer. (e) All of the insurance provisions set forth in this Article VI shall terminate upon the termination of this Agreement. Section 6.2. Subordination. Notwithstanding anything to the contrary contained in this Article VI, the rights of the Authority with respect to the receipt and application of any proceeds of insurance shall, except for the reduction of the principal amount of the Note, be subject and subordinate to the rights of any lender under a Mortgage approved pursuant to Article VIII of this Agreement. ARTICLE VII TAXES; MINIMUM MARKET VALUE Section 7.1. Right to Collect Delinquent Taxes. The Developer acknowledges that the Authority is providing substantial aid and assistance in furtherance of the Development through providing the Public Funds. The Developer understands that the Available Tax Increment pledged to the Note is derived from real estate taxes on the Development Property, which taxes must be promptly and timely paid. To that end, the Developer agrees for itself, its successors and assigns, in addition to the obligation pursuant to statute to pay real estate taxes, that it is also obligated by reason of this Agreement to pay before delinquency all real estate taxes assessed against the Development Property and the relevant Minimum Improvement. Except as otherwise provided in this Section, the Developer acknowledges that this obligation creates a contractual right on behalf of the Authority to sue the Developer or its successors and assigns to collect delinquent real estate taxes and any penalty or interest thereon and to pay over the same as a tax payment to the County auditor. In the event of a sale of all or a part of the Development Property to a third party, the Developer will be released from its obligation under this Section as provided in Section 9.3 to the extent such obligation is undertaken by a transferee acceptable to the Authority. Section 7.2. Reduction of Taxes. The Developer agrees that after the date of certification of the Tax Increment District and prior to completion of the Minimum Improvements, it will not cause a reduction in the real property taxes paid in respect of the Development Property through: (A) willful destruction of the Development Property or any part thereof (except for the demolition of structures required for construction of the Minimum Improvements); or (B) willful refusal to reconstruct damaged or destroyed property pursuant to Section 5.1 of this Agreement. The Developer also agrees that it will not, prior to the Maturity Date: (i) seek exemption from property tax for the Development Property; (ii) convey or transfer or allow conveyance or 16 391382v6 JBD RC125-316 S —AO transfer of the Development Property to any entity that is exempt from payment of real property taxes under State law. The Developer may, at any time following the issuance of the Certificate of Completion and until the Notes are fully paid, seek through petition or other means to have the Assessors Estimated Market Value for the Development Property reduced. Such activity must be preceded by written notice from the Developer to the Authority indicating its intention to do so. Upon receiving such notice, or otherwise learning of the Developer's intentions, the Authority may suspend or reduce payments due under the Note(s) and the Additional Note until the actual amount of the reduction in market value is determined, whereupon the Authority will make the suspended payments less any amount that the Authority is required to repay the County as a result any retroactive reduction in market value of the Development Property. During the period that the payments are subject to suspension, the Authority may make partial payments on the Notes, from the amounts subject to suspension, if it determines, in its reasonable discretion, that the amount retained will be sufficient to cover any repayment which the County may require. The Authority's suspension of payments on the Notes pursuant to this Section shall not be considered a default under Section 9.1 hereof. ARTICLE VIII FINANCING Section 8.1. Financing. The Developer warrants and represents to the Authority that it has or will have available funds sufficient to construct the Minimum Improvement for any Phase in accordance with the Construction Plans for such Phase. Section 8.2. Subordination. The Authority agrees that it will subordinate the Authority's interests, rights and remedies under this Agreement to the mortgage lien for an acquisition, construction and permanent loan, to the extent the Authority determines, in its reasonable judgment, that it will not be contrary to its interests to do so. ARTICLE IX PROHIBITIONS AGAINST ASSIGNMENT AND TRANSFER; INDEMNIFICATION Section 9.1. Representation as to Development. The Developer's purchase of the Development Property, and its other undertakings pursuant to the Agreement, are, and will be used, for the purpose of development of the Development Property and not for speculation in land holding. Subject to Section 9.3, Developer may "Transfer" (defined in Section 9.2 below) 17 391382v6 JBD RC125-316 -ak the Development Property after a Certificate of Completion for the relevant Minimum Improvements is issued by the Authority. Section 9.2. Prohibition Against Developer's Transfer of Property and Assignment of Agreement. Prior to the issuance of a Certificate of Completion for the relevant Minimum Improvement: Except only as provided in Section 9.3 or by way of security for, and only for, the purpose of obtaining financing or refinancing necessary to enable the Developer or any successor in interest to the Development Property, or any part thereof, to perform its obligations with respect to acquiring the Development Property and making the relevant Minimum Improvement and other improvements for the Development under this Agreement, and any other purpose authorized by this Agreement, the Developer has not made or created and will not make or create or suffer to be made or created any total or partial sale, assignment, conveyance, or any trust or power, or transfer in any other mode or form of or with respect to the Agreement or the Development Property or any part thereof or any interest therein, or any contract or agreement to do any of the same, to any person or entity whether or not related in any way to the Developer (collectively, a "Transfer") without the prior written approval of the Authority, which approval will not be unreasonably withheld or delayed unless the Developer remains liable and bound by this Development Agreement in which event the Authority's approval is not required. Any such Transfer shall be subject to the provisions of this Agreement. Notwithstanding anything to the contrary in this Section, the Developer may assign its rights under this Agreement and/or the Note to the holder of a mortgage. Further, the Developer may effect a Transfer to an Affiliate without approval by the Authority provided that the Developer submit to the Authority an assignment and assumption executed by the Affiliate in accordance with Section 9.2(b)(2). Section 9.3. Transfer of Property and Assignment Agreement. Prior to or after the issuance of a Certificate of Completion for the relevant Minimum Improvement: (a) In the event the Developer, upon Transfer of the Development Property or any portion thereof, seeks to be released from its obligations under this Development Agreement as to the portions of the Development Property that is transferred or assigned, the Authority shall be entitled to require, except as otherwise provided in the Agreement, as conditions to any such release that: (i) Any proposed transferee shall have the financial responsibility, in the reasonable judgment of the Authority, necessary and adequate to fulfill the obligations undertaken in this Agreement by the Developer as to the portion of the Development Property to be transferred. (ii) Any proposed transferee, by instrument in writing reasonably satisfactory to the Authority and in form recordable in the public land records of Hennepin County, Minnesota, shall, for itself and its successors and assigns, and expressly for the benefit of the Authority, have expressly assumed the obligations of the Developer under this Agreement as to the portion of the Development Property to be transferred and agreed to be subject to such obligations to which the Developer is subject as to such portion. The 18 391382v6 JBD RC125-316 -ga fact that any transferee of, or any other successor in interest whatsoever to, the Development Property, or any part thereof, shall not, for whatever reason, have assumed such obligations or so agreed, shall not (unless and only to the extent otherwise specifically provided in this Agreement or agreed to in writing by the Authority) deprive the Authority of any rights or remedies or controls with respect to the Development Property or any part thereof or the construction of any Minimum Improvement. It is the intent of the parties as expressed in this Agreement that (to the fullest extent permitted at law and in equity and excepting only in the manner and to the extent specifically provided otherwise in this Agreement) no transfer of, or change with respect to, ownership in the Development Property or any part thereof, or any interest therein, however consummated or occurring, and whether voluntary or involuntary, shall operate, legally or practically, to deprive or limit the Authority of or with respect to any rights or remedies on controls provided in or resulting from this Agreement with respect to any Minimum Improvement that the Authority would have had, had there been no such transfer or change, except as provided in this Section 9.3. In the absence of specific written agreement by the Authority to the contrary, no such transfer or approval by the Authority thereof shall be deemed to relieve the Developer, or any other party bound in any way by this Agreement or otherwise with respect to the construction of any Minimum Improvement, from any of its obligations with respect thereto. (iii) Any and all instruments and other legal documents involved in effecting the transfer of any interest in this Agreement or the Development Property governed by this Article IX, shall be in a form reasonably satisfactory to the Authority. (b) In the event the foregoing conditions are satisfied then the Developer shall be released from its obligation under this Agreement, as to the portion of the Development Property that is transferred, assigned or otherwise conveyed. Section 9.4. Release and Indemnification Covenants. (a) Except for any misrepresentation or any willful or wanton misconduct or negligence of the Authority, and except for any breach by the Authority of its obligations under this Agreement, the Developer agrees to protect and defend the Authority, now and forever, and further agrees to hold the aforesaid harmless from any claim, demand, suit, action or other proceeding whatsoever by any person or entity whatsoever arising from the acquisition, construction, installation, ownership, maintenance and operation of the Development Property or any Minimum Improvement (collectively, the "Claim"); provided, however, notwithstanding the foregoing, the Developer's indemnification and hold harmless shall (i) apply only with regard to the portion of the Development Property or any Minimum Improvement owned by the Developer at the time the Claim occurred and (ii) not apply with regard to any Claim that relates to a breach by the Authority of its representation set forth in Section 2.2. (b) Except for any misrepresentation or any willful or wanton misconduct or negligence of the Authority, and except for any breach by any of the Authority of its representations and obligations under this Agreement, the Authority shall not be liable for any damage or injury to the persons or property of the Developer or its officers, agents, servants or 19 391382v6 JBD RC125-316 employees or any other person who may be about the Development Property or any Minimum Improvement. (c) All covenants, stipulations, promises, agreements and obligations of the Authority contained herein shall be deemed to be the covenants, stipulations, promises, agreements and obligations of such entities and not of any governing body member, officer, agent, servant or employee of such entities in the individual capacity thereof. ARTICLE X EVENTS OF DEFAULT Section 10.1. Events of Default Defined. The following shall be "Events of Default" under this Agreement and the term "Event of Default" shall mean, whenever it is used in this Agreement, any one or more of the following events: (a) failure by the Developer to observe or perform any material covenant, condition, obligation or agreement on its part to be observed or performed under this Agreement or any other agreement required to be entered into under this Agreement. (b) prior to the substantial completion of the Minimum Improvement for any Phase, the commencement by the Holder of any Mortgage on that Phase of the Development Property or any improvements thereon, or any portion thereof, of foreclosure proceedings as a result of default under the applicable Mortgage documents; (c) if the Developer shall (i) file any petition in bankruptcy or for any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under the United States Bankruptcy Act or under any similar federal or State law; or (ii) make an assignment for benefit of its creditors; or (iii) admit in writing its inability to pay its debts generally as they become due; or (iv) be adjudicated a bankrupt or insolvent. (d) the Authority defaults as provided in Section 10.6. (e) the parties are unable to reach agreement as to matters for which mutual agreement is required as a condition for further action under this Agreement. Section 10.2. Remedies on Default. Whenever any Event of Default referred to in Section 10.1 of this Agreement occurs by the Developer, the Authority may exercise any of the 20 391382v6 JBD RC125-316 following rights under this Section 10.2 after providing (30) thirty days written notice to the Developer of the Event of Default, but only if the Event of Default has not been cured within said thirty days or, if the Event of Default is by its nature incurable within thirty days, the Developer does not, within such 30-day period, provide assurances reasonably satisfactory to the Authority that the Event of Default will be cured and will be cured as soon as reasonably possible: I. If the Event of Default involves Phase I (a) Terminate this Agreement, unless the Agreement limits the extent of such termination. (b) Suspend its performance under this Agreement, or payments due under any Note for such Phase, until it receives reasonably satisfactory assurances that the Developer will cure its default and continue its performance under the Agreement. (c) Cure any Event of Default after at least ten (10) days prior written notice to Developer that the Authority intends to cure such default, and deduct the reasonable costs incurred to cure such Event of Default from the payments of the amount due under the Note. (d) Take whatever action, including legal, equitable or administrative action, which may appear necessary or desirable to collect any payments due by Developer under this Agreement, or to enforce performance and observance of any obligation, agreement, or covenant of the Developer under this Agreement. (e) Notwithstanding the foregoing to the contrary, if the Event of Default is by the Developer or by a transferee following the transfer of a portion of the Development Property to a transferee in accordance with the requirements of this Agreement so that Developer is released of liability as to the portion of the Development Property transferred, then the remedy shall be exercised only against the defaulting transferee or the Developer, as the case may be, and only as to the portion of the Development Property owned by such defaulting party. II. If the Event of Default does not involve Phase I Take any of the actions described in Paragraph I above, except that such action shall only apply to the defaulting phase, and not to any non-defaulting phase, including Phase I. Section 10.3. No Remedy Exclusive. Except as otherwise specifically provided herein, no remedy herein conferred upon or reserved to any party is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Authority to exercise any remedy reserved to it, it shall not be necessary to give notice, other than such notice as may be required in this Article X. 21 391382v6 JBD RC125-316 3 —015 Section 10.4. No Additional Waiver Implied by One Waiver. In the event any agreement contained in this Agreement should be breached by either party and thereafter waived by the other party, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other concurrent, previous or subsequent breach hereunder. Section 10.5. Attorney Fees. Whenever any Event of Default occurs as provided in 10.1 or 10.6 hereof and if either party shall employ attorneys or incur other out-of-pocket expenses for the collection of payments due or to become due or for the enforcement of performance or observance of any obligation or agreement on the part of the other party under this Agreement, the unsuccessful party shall, within ten days of written demand by the successful party, pay to the successful party the reasonable fees of such attorneys and such other expenses so incurred by the successful party. Section 10.6. Default by Authority. Notwithstanding anything to the contrary herein, in the event the Authority fails to perform or observe any covenant, condition, obligation or agreement on its part to be performed or observed under this Agreement or the Note, and such failure has not been cured within 30 days after receipt of written notice to the defaulting party from the Developer, or if a non-monetary failure is by its nature incurable within 30 days, the defaulting party does not, within such 30-day limit, provide assurances reasonably satisfactory to the Developer that the failure will be cured as soon as reasonably possible, then the Developer may exercise such remedies as may be available at law, in equity or by statute with respect to the defaulting party. The terms of Sections 10.3, 10.4, and 10.5 apply in favor of the Developer as well as the Authority. ARTICLE XI ADDITIONAL PROVISIONS Section 11.1. Conflict of Interests; Representatives Not Individually Liable. The Authority and the Developer, to the best of their respective knowledge, represent and agree that no member, official, or employee of the Authority shall have any personal interest, direct or indirect, in the Agreement, nor shall any such member, official, or employee participate in any decision relating to the Agreement which affects his personal interests or the interests of any corporation, partnership, or association in which he is, directly or indirectly, interested. No member, official, or employee of the Authority shall be personally liable to the Developer, or any successor in interest, in the event of any default or breach by the Authority or for any amount which may become due to the Developer or successor or on any obligations under the terms of the Agreement. Section 11.2. Equal Employment Opportunity. The Developer, for itself and its successors and assigns, agrees that during the construction of any Minimum Improvement provided for in the Agreement it will comply with all applicable federal, state and local equal employment and non-discrimination laws and regulations. 22 391382v6 JBD RCI25-316 —a(+9 Section 11.3. [Blank] Section 11.4. Provisions Not Merged With Deed. None of the provisions of this Agreement are intended to or shall be merged by reason of any deed transferring any interest in the Development Property and any such deed shall not be deemed to affect or impair the provisions and covenants of this Agreement. Section 11.5. Titles of Articles and Sections. Any titles of the several parts, Articles, and Sections of the Agreement are inserted for convenience of reference only and shall be disregarded in construing or interpreting any of its provisions. Section 11.6. Recapture of Public Funds. (a) The financial assistance provided to the Developer pursuant to this Agreement is based on certain assumptions regarding the likely total development costs and expenses and sources of funding associated with constructing the Minimum Improvements for Phase I. (the "Initial Developer Sources and Uses"). Those assumptions have been reviewed by the Authority's financial advisor. The Authority and Developer agree that those assumptions will be reviewed at the time described in paragraph(b). (b) Within sixty days after the delivery of the Certificate of Completion for Phase I, the Developer shall provide the Authority's financial advisor, its final total development costs for Phase I, and final total sources of funding for Phase I, reflecting adjustments to date the "Final Developer Sources and Uses". The Developer shall also furnish additional background documentation related to such costs as the Authority and its financial consultant may reasonably request. Upon determination by the Authority that the Final Developer Sources and Uses is in acceptable form, the Authority will notify the Developer in writing. (c) If, based on a review of the Final Developer Sources and Uses, the actual total development costs are less than the amount of actual sources, then fifty percent (50%) of the amount by which total sources exceed total uses will be applied to reduce the outstanding principal amount of the Note(s), provided that the maximum reduction to the principal amount of the Note(s) shall be no more than $50,000. In making that determination, the developer fee contained in the Final Developer Sources and Uses may not be greater than 12% of the uses as disclosed in the Final Developer Sources and Uses. If more than one Note has been issued, the Developer may determine how to allocate the adjustment. Section 11.7. Developer Deposit. At the time this Contract is executed and delivered to the Developer, the Developer shall deposit $10,000 with the Authority. The purpose of the deposit is to reimburse the Authority for the money value of staff time and consultant costs incurred by it in connection with the preliminary activities leading up to, resulting in and including the preparation of this Agreement and amendments thereto, and any modifications of the TIF District or Project Area, and in the implementation of this Agreement. Any portions of the deposit which are not needed for those purpose shall be returned to the Developer within 15 days following the issuance of the Certificate of Completion for Phase I; or the termination of this Agreement. At any time that the unexpended amount of such deposit is $1,500 or less, the Developer shall, upon 15 days written request to do so, provide such further deposit as is 23 391382v6 JBD RC125-316 -a� required to return the unexpended amount to $5,000. Failure to do so shall constitute an Event of Default. It is understood that the deposited amount is not a limitation on the Developer's obligation to reimburse for such costs, or to make other payments required under this Agreement. Section 11.8. Notices and Demands. Except as otherwise expressly provided in this Agreement, a notice, demand, or other communication under the Agreement by either party to the other shall be sufficiently given or delivered two days after if it is dispatched by registered or certified mail, postage prepaid, return receipt requested, or on the date of delivery if delivered personally; and (a) in the case of the Developer, is addressed to or delivered personally to the Developer: c/o The Cornerstone Group, 7610 Lyndale Ave South, Suite 200, Richfield, MN 55423; and (b) in the case of the Authority is addressed to or delivered personally to Richfield Housing and Redevelopment Authority, 6700 Portland Avenue South, Richfield, MN 55423, Attention: Executive Director, or at such other address with respect to either such party as that party may, from time to time, designate in writing and forward to the other as provided in this Section. Section 11.9. Entire Agreement. This Agreement represents the entire agreement between the parties as to matters contained herein; and supersedes and replaces any other agreements between the parties as to such matters. Section 11.10. Termination of Agreement. Unless earlier terminated as herein provided, this Agreement shall terminate on the earlier of the Final Maturity Date under the Note or the date the Note is paid in full. This Agreement and all obligations under this Agreement shall be null and void and of no further force and effect from and after the termination of this Agreement. Section 11.11. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall constitute one and the same instrument. Section 11.12. Recording. The Authority may record a memorandum of this Agreement and any amendments thereto in a form acceptable to the parties, with the Hennepin County records. The Developer shall pay all costs for recording. Section 11.13. Termination of Development Agreement. Upon completion or fulfillment of the Developer's obligations herein, the Authority shall deliver to Developer a recordable Termination of Development Agreement that terminates this Agreement and releases this Agreement from the title records of the Development Property. 24 391382v6 JBD RC125-316 IN WITNESS WHEREOF, the Authority and Developer have caused this Agreement to be duly executed by their duly authorized representatives as of the date first above written. HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA By Its Chairperson By Its Executive Director STATE OF MINNESOTA ) ) SS. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this day of , 2011 by Suzanne M. Sandahl, the Chair of the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota, on behalf of the Authority. Notary Public STATE OF MINNESOTA ) ) SS. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this day of 2011, by Steve Devich, the Executive Director of the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota, on behalf of the Authority. Notary Public S-1 391382v6 JBD RC125-316 LYNDALE GARDENS, LLC. By Its STATE OF MINNESOTA ) ) SS. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this day of 2011, by , the of Lyndale Gardens, LLC, a Minnesota limited liability company, on behalf of the company. Notary Public S-2 391382v6 JBD RC125-316 SCHEDULE A LEGAL DESCRIPTION OF DEVELOPMENT PROPERTY (Numbers coincide with the numbers on Page 3 of Appendix F of the Tax Increment Financing Plan. Legal descriptions are subject to modification based on survey or title information) 1. Roy E. Peterson, C/T 743681, Commonwealth #743681 Parcel ID #28.028.24.11.0002 Par 1: That part of Government Lot 3, Section 28, Township 28, Range 24 described as follows: Beginning at a point on the East line of said Government Lot 3 distant 1131.3 feet South from the Northeast corner of said Government Lot 3; thence on an assumed bearing of North along said East line a distance of 70.36 feet; thence West at a right angle a distance of 176.5 feet; thence South at a right angle a distance of 95.17 feet, more or less, to an intersection with a line bearing South 82 degrees West from the point of beginning; thence North 82 degrees east 178.23 feet; more or less, to the point of beginning. Par 2: That part of Government Lot 3, Section 28, Township 28, Range 24, beginning at a point on the East line of said Lot distant South 1176.3 feet from the Northeast corner thereof; thence North on said East line 45 feet; thence South 82 degrees West to a line drawn parallel with and distant 176.5 feet West of the East line of said Government Lot 3 thence South along said parallel line to a line drawn South 82 degrees West from the point of beginning thence North 82 degrees East to said point of beginning. 2. Rancho Richfield LLC, Commonwealth #230931 C/T 1075759; Parcel ID #28.028.24.11.0080 Parcel A on survey Pan : That part of the following described land and accretions thereto lying northerly of the northerly line of Registered Land Survey No. 1560 and its extensions: That part of Government Lot 3 in Section 28, Township 28, Range 24 described as follows: Beginning at a point on the East line of said Government Lot 3 distant 1060.94 feet South from the Northeast corner thereof; thence West at a right angle to said East line a distance of 176.5 feet; thence North at a right angle a distance of 16.00 feet; thence West at a right angle a distance of 123.5 feet to the Southerly extension of the West line of Block 1, "Ray's Lynnhurst 2nd Addition" thence South along said extension to its intersection with a line drawn parallel with and distant 192.67 feet South of the Westerly extension of the South line of the East- West alley platted in said Block 1, "Ray's Lynnhurst 2nd Addition"; thence West along said parallel line to its intersection with the Southerly extension of the East line of Block 2, "Ray's Lynnhurst 2nd Addition"; thence South along said A-1 391382v6 JBD RC125-316 Southerly extension to its intersection with a line drawn parallel with and distant 225.00 feet South from the South line of Lot 4, in said Block 2; thence West along said parallel line to its intersection with the Southerly extension of the East line of the North-South alley platted in said Block 2; thence North along said Southerly extension to the South line of the East-West alley platted in said Block 2; thence West along said South line and its extension a distance of 202.00 feet; thence Southwesterly to Judicial Landmark No. 7 set pursuant to Torrens Case No. A- 2547 on the mean center line of the bed of Grass Lake; thence Southeasterly along said mean center line, determined in Torrens Case No. A-2547 to the Northerly line Registered Land Survey No. 1560, Hennepin County, Minnesota; thence Easterly, Southerly, Easterly and Southerly along the Northerly, Easterly, Northerly and Easterly lines of said Survey to the Southwesterly extension of the Northwesterly line of Tract A, Registered Land Survey No. 675, Hennepin County, Minnesota; thence Northeasterly along said Southwesterly extension and along the Northwesterly line of said Registered Land Survey No. 675 to the East line of said Government Lot 3; thence North along said East line to the point of beginning; except that part of the East 176.5 feet thereof lying Northerly of a line bearing South 82 degrees West (assuming the East line of said Government Lot 3 to bear North and South) from a point on said East line distant 1176.3 feet South of the Northeast corner of said Lot 3. Par 2: That part of Government Lot 3, Section 28, Township 28, Range 24, Hennepin County Minnesota, described as follows: Commencing at the intersection of the East line of said Government Lot 3 with the Northwesterly line of Tract A, Registered Land Survey No. 675, Hennepin County, Minnesota; thence on an assumed bearing of South 55 degrees 14 minutes West along the Northwesterly line of said Tract A and its extension a distance of 178.99 feet to the actual point of beginning; thence South 72 degrees 50 minutes 34 seconds East to the West line of Tract C, in said Registered Land Survey No. 675; thence Northerly along said West line to the Northwesterly corner of said Tract C; thence South 55 degrees 14 minutes West to the actual point of beginning. Par 3: Tracts A and B, Registered Land Survey No. 1560, Hennepin County, Minnesota. 3. 800 Company LLC C/T 1060621 Parcel ID #27.028.24.23.0065 Parcel 1: Tract B, Registered Land Survey No. 1131, County of Hennepin. Parcel 2: The Northwesterly 15 feet of Tract B, and the Southwesterly 55 feet of Tract B, except the Northwesterly 15 feet thereof, and all of Tract C, all in Registered Land Survey No. 675, County of Hennepin. A-2 391382v6 JBD RC125-316 8 - 4. Rancho Richfield LLC, Commonwealth #230931 C/T 1169344 Parcel ID #28.028.24.23.0064 Parcel B on Survey Par 1: That part of Government Lot 1 in Section 27, Township 28, Range 24 lying Southwesterly of the Southwesterly line of Lyndale Avenue South and Northwesterly of Registered Land Survey No. 675, Hennepin County, Minnesota. Par 2: That part of the following described land and accretions thereto lying southerly of the northerly line of Registered Land Survey No. 1560 and its easterly extension: That part of Government Lot 3 in Section 28, Township 28, Range 24 described as follows: Beginning at a point on the East line of said Government Lot 3 distant 1060.94 feet South from the Northeast corner thereof; thence West at a right angle to said East line a distance of 176.5 feet; thence North at a right angle a distance of 16.00 feet; thence West at a right angle a distance of 123.5 feet to the Southerly extension of the West line of Block 1, "Ray's Lynnhurst 2nd Addition" thence South along said extension to its intersection with a line drawn parallel with and distant 192.67 feet South of the Westerly extension of the South line of the East- West alley platted in said Block 1, "Ray's Lynnhurst 2nd Addition"; thence West along said parallel line to its intersection with the Southerly extension of the East line of Block 2, "Ray's Lynnhurst 2nd Addition"; thence South along said Southerly extension to its intersection with a line drawn parallel with and distant 225.00 feet South from the South line of Lot 4, in said Block 2; thence West along said parallel line to its intersection with the Southerly extension of the East line of the North-South alley platted in said Block 2; thence North along said Southerly extension to the South line of the East-West alley platted in said Block 2; thence West along said South line and its extension a distance of 202.00 feet; thence Southwesterly to Judicial Landmark No. 7 set pursuant to Torrens Case No. A- 2547 on the mean center line of the bed of Grass Lake; thence Southeasterly along said mean center line, determined in Torrens Case No. A-2547 to the Northerly line Registered Land Survey No. 1560, Hennepin County, Minnesota; thence Easterly, Southerly, Easterly and Southerly along the Northerly, Easterly, Northerly and Easterly lines of said Survey to the Southwesterly extension of the Northwesterly line of Tract A, Registered Land Survey No. 675, Hennepin County, Minnesota; thence Northeasterly along said Southwesterly extension and along the Northwesterly line of said Registered Land Survey No. 675 to the East line of said Government Lot 3; thence North along said East line to the point of beginning. Par 3: All of Tract A; A-3 391382v6 JBD RC125-316 Tract B, except the northwesterly 15 feet of said Tract B, and except that part of the southwesterly 55 feet of said Tract B lying southeasterly of said northwesterly 15 feet thereof, all In Registered Land Su ry ey No. 675, Hennepin County, Minnesota. Together with a non-exclusive easement for driveway purposes over the Northwesterly 15 feet of Tract B, Registered Land Survey No. 675, Hennepin County, Minnesota as shown in deed Doc. No. 536923; (as to land in Par 3). A-4 391382v6 JBD RC125-316 SCHEDULE B AUTHORIZING RESOLUTION HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA RESOLUTION NO. RESOLUTION APPROVING THE ISSUANCE OF, AND PROVIDING THE FORM, TERMS, COVENANTS AND DIRECTIONS FOR THE ISSUANCE, IN ONE OR MORE SERIES, OF ITS TAX INCREMENT LIMITED REVENUE NOTE, IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $ BE IT RESOLVED BY the Board of Commissioners ("Board") of the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota (the "Authority"), as follows: Section 1. Authorization; Award of Sale. 1.01. Authorization. The Authority has heretofore approved the establishment of Lyndale Gardens Tax Increment Financing District (the "TIF District") within the Richfield Redevelopment Project ("Redevelopment Project"), and has adopted a tax increment financing plan for the purpose of financing certain improvements within the Redevelopment Project. Pursuant to Minnesota Statutes, Section 469.178, the Authority is authorized to issue and sell its bonds for the purpose of financing a portion of the public development costs of the Redevelopment District. Such bonds are payable from all or any portion of revenues derived from the TIF District and pledged to the payment of the bonds. The Authority hereby finds and determines that it is in the best interests of the Authority that it issue and sell its Tax Increment Revenue Notes, in one or more series (the "Notes"), in the aggregate principal amount of up to $ , for the purpose of financing certain public costs of the Tax Increment Plan for the TIF District. 1.02. Issuance, Sale and Terms of the Notes. Pursuant to the Contract for Private Development (the "Agreement") between the Authority and Lyndale Gardens, LLC (the "Owner"), the Notes shall be sold to the Owner. The Notes shall be dated as of the date of delivery and shall bear interest at the rate of % per annum to the earlier of maturity or prepayment. In exchange for the Authority's issuance of one or more Notes to the Owner, the Owner shall pay certain land acquisition costs and site improvement costs related to the Minimum Improvements (as defined in the Agreement) pursuant to Sections 3.4 and 4.3 of the Agreement. B-1 391382v6 JBD RCI25-316 3C Section 2. Form of Notes. The Notes shall be in substantially the form set forth in Exhibit A attached hereto, with the blanks to be properly filled in and the principal amount and payment schedule adjusted as of the date of issue. Section 3. Terms, Execution and Delivery. 3.01. Denomination, Payment. The Notes shall be issued typewritten notes numbered R-1, R-2, and continuing. The Notes shall be issuable only in fully registered form. Principal of and interest on the Notes shall be payable by check or draft issued by the Registrar described herein. 3.02. Dates; Interest Payment Dates. Principal of and interest on the Notes shall be payable by mail to the owner of record thereof as of the close of business on the fifteenth day of the month preceding the Payment Date, whether or not such day is a business day. 3.03. Registration. The Authority hereby appoints the Authority's Executive Director to perform the functions of registrar, transfer agent and paying agent (the "Registrar"). The effect of registration and the rights and duties of the Authority 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 Notes and the registration of transfers and exchanges of the Notes. (b) Transfer of Notes. Upon surrender for transfer of the Notes, including any assignment or exchange thereof', 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 authorized by the registered owner in writing, and the payment by the Owner of any tax, fee, or governmental charge required to be paid by or to the Authority with respect to such transfer or exchange, the Registrar shall authenticate and deliver, in the name of the designated transferee or transferees, a new Note of the same aggregate principal amount, bearing interest at the same rate and maturing on the same dates. Notwithstanding the foregoing, the Notes shall not be transferred to any person other than an affiliate, or other related entity, of the Owner unless the Authority has been provided with an investment letter in a form substantially similar to the investment letter submitted by the Owner or a certificate of the transferor, in a form satisfactory to the Authority, that such transfer is exempt from registration and prospectus delivery requirements of federal and applicable state securities laws. 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. The Notes shall not be transferred to any person other than an affiliate, or other related entity, of the Owner unless the Authority has been provided with an investment letter in a form substantially similar to the investment letter in Schedule D of the Agreement or a certificate of the transferor, in a form satisfactory to the Executive Director of the Authority, that such transfer is exempt from registration and prospectus delivery requirements of federal and applicable state B-2 391382v6 JBD RC125-316 g - 3(O securities laws. 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. The Owner may assign the Notes to a lender that provides all or part of the financing for the acquisition of the Development Property or the construction of the Minimum Improvements. The Authority hereby consents to such assignment, conditioned upon receipt of an investment letter from such lender in substantially the form attached in the Agreement as Schedule E, or other form reasonably acceptable to the Executive Director of the Authority. The Authority also agrees that future assignments of the Notes may be approved by the Executive Director of the Authority without action of the Authority's Board, upon the receipt of an investment letter in substantially the form of Schedule E of the Agreement or other investment letter reasonably acceptable to the Authority from such assignees. (c) Cancellation. The Notes surrendered upon any transfer shall be promptly cancelled by the Registrar and thereafter disposed of as directed by the Authority. (d) Improper or Unauthorized Transfer. When a 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) Persons Deemed Owners. The Authority and the Registrar may treat the person in whose name a 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 Authority upon such Note to the extent of the sum or sums so paid. (f) Taxes, Fees and Charges. For every transfer or exchange of a 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 to be paid with respect to such transfer or exchange. (g) Mutilated, Lost, Stolen or Destroyed Note. In case any Note shall become mutilated or be lost, stolen, or destroyed, the Registrar shall deliver a new Note of like amount, maturity dates 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 payment of the reasonable expenses and charges of the Registrar in connection therewith; and, in the case the Note lost, stolen, or destroyed, upon filing with the Registrar of evidence satisfactory to it that such Note was lost, stolen, or destroyed, and of the ownership thereof, and upon furnishing to the Registrar of an appropriate bond or indemnity in form, substance, and amount satisfactory to it, in which both the Authority 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 Authority. 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. B-3 391382v6 JBD RC125-316 3.04. Preparation and Delivery. The Notes shall be prepared under the direction of the Executive Director of the Authority and shall be executed on behalf of the Authority by the signatures of its Chair and its Executive Director. In case any officer whose signature shall appear on the Notes shall cease to be such officer before the delivery of the Notes, such signature shall nevertheless be valid and sufficient for all purposes, the same as if such officer had remained in office until delivery. When the Notes have been so executed, the Notes shall be delivered by the Authority to the Owner following the delivery of the necessary items delineated in Sections 3.4 and 4.3 of the Agreement. Section 4. Security Provisions. 4.01. Pledge. The Authority hereby pledges to the payment of the principal of and interest on the Notes all Available Tax Increment as defined in the Notes. Available Tax Increment shall be applied to payment of the principal of and interest on the Notes in accordance with Section 4.3 of the Agreement and the terms of the forms of Note set forth in Exhibit A attached to this resolution. 4.02. Bond Fund. Until the date the Notes are no longer outstanding and no principal thereof or interest thereon (to the extent required to be paid pursuant to this resolution) remains unpaid, the Authority shall maintain a separate and special "Bond Fund" to be used for no purpose other than the payment of the principal of and interest on the Notes. The Authority irrevocably agrees to appropriate to the Bond Fund in each year Available Tax Increment. Any Available Tax Increment remaining in the Bond Fund shall be transferred to the Authority's account for the TIF District upon the payment of all principal and interest to be paid with respect to the Notes. Section 5. Certification of Proceedings. 5.01. Certification of Proceedings. The officers of the Authority are hereby authorized and directed to prepare and furnish to the Owner of the Notes certified copies of all proceedings and records of the Authority, and such other affidavits, certificates, and information as may be required to show the facts relating to the legality and marketability of the Notes 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 affidavits, including any heretofore furnished, shall be deemed representations of the Authority as to the facts recited therein. Section 6. Issuance of Notes. The Authority shall not issue the Notes until the Agreement is executed by all parties and the requirements to issue each of the Notes set forth in Sections 3.4 and 4.3 of the Agreement are satisfied. Section 7. Effective Date. This resolution shall be effective upon full execution of the Agreement. B-4 391382v6 JBD RC125-316 - 3% Adopted by the Board of Commissioner the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota, this day of , 20_. Chair Executive Director B-5 391382v6 JBD RC125-316 - 3q EXHIBIT A OF SCHEDULE B FORM OF NOTE UNITED STATE OF AMERICA STATE OF MINNESOTA COUNTIES OF HENNEPIN HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD No. R- $ TAX INCREMENT LIMITED REVENUE NOTE SERIES Date Rate of Original Issue The Housing and Redevelopment Authority in and for the City of Richfield, Minnesota (the "Authority"), for value received, certifies that it is indebted and hereby promises to pay to LYNDALE GARDENS, LLC, or registered assigns (the "Owner"), the principal sum of $ and to pay interest thereon at the rate of percent per annum, as and to the extent set forth herein. All capitalized terms herein have the meaning given such term in the Contract for Private Development, dated (the "Agreement"), between the Authority and the Owner. 1. Payments. Principal and interest ("Payments") shall be paid on August 1, 2014, and each February 1 and August 1 thereafter to and including February 1, 20_ ("Payment Dates"), in the amounts and from the sources set forth in Section 3 herein. Payments shall be applied first to accrued interest, and then to unpaid principal. Interest accruing from the date of issue through February 1, 20_ shall be compounded on each February 1 and August 1 and added to principal. Payments are payable by mail to the address of the Owner or such other address as the Owner may designate upon 30 days written notice to the Authority. Payments on this Note are payable in any coin or currency of the United States of America which, on the Payment Date, is legal tender for the payment of public and private debts. 2. Interest. Interest at the rate stated herein shall accrue on the unpaid principal, commencing on the date of original issue. Interest shall be computed on the basis of a year of 360 days and charged for actual days principal is unpaid. B-6 391382v6 JBD RC125-316 g —uo 3. Available Tax Increment. Payments on this Note are payable on each Payment Date solely from "Available Tax Increment," which means, on each Payment Date, Tax Increment attributable to a Phase of the Development Property determined as a percentage of the increase in the base value of the TIF District to the increase of the base value of such Phase of the Development Property, and paid to the Authority by Hennepin County in the six months preceding the Payment Date after first deducting therefrom ten percent of the Tax Increment to be used to reimburse the Authority for administrative expenses incurred after completion of construction of the Minimum Improvements; and with respect to Phase I, and any other phase that does not contain housing, an additional 15% of the Tax Increment. Available Tax Increment shall not include any Tax Increment if, as of any Payment Date, there is an uncured Event of Default under the Agreement. In addition, the payment of principal of and interest on this Note with Available Tax Increment is subject to the Authority's ability to withhold Available Tax Increment pursuant to Sections 4.4, 4.5, and 7.2 of the Agreement. The Authority shall have no obligation to pay principal of and interest on this Note on each Payment Date from any source other than Available Tax Increment, and the failure of the Authority to pay the entire amount of principal or interest on this Note on any Payment Date shall not constitute a default hereunder as long as the Authority pays principal and interest hereon to the extent of Available Tax Increment. The Authority shall have no obligation to pay the unpaid balance of principal or accrued interest that may remain after the payment of Available Tax Increment from the last payment of Tax Increment the Authority is entitled to receive from Hennepin County with respect to the Development Property. 4. Optional Prepayment. The principal sum and all accrued interest payable under this Note is prepayable in whole or in part at any time by the Authority without premium or penalty. No partial prepayment shall affect the amount or timing of any other regular payment otherwise required to be made under this Note. 5. Termination. At the Authority's option, this Note shall terminate and the Authority's obligation to make any payments under this Note shall be discharged upon the occurrence of an Event of Default on the part of the Developer as defined in Section 10.1 of the Agreement, but only if the Event of Default has not been cured in accordance with Section 10.2 of the Agreement. 6. Nature of Obligation. This Note is issued to aid in financing certain public development costs and administrative costs of a Redevelopment Project undertaken by the Authority pursuant to Minnesota Statutes, Sections 469.001 through 469.047, as amended, and is issued pursuant to an authorizing resolution (the "Resolution") duly adopted by the Authority on , and pursuant to and in full conformity with the Constitution and laws of the State of Minnesota, including Minnesota Statutes, Sections 469.174 to 469.1799, as amended. This Note is a limited obligation of the Authority which is payable solely from Available Tax Increment pledged to the payment hereof under the Resolution. This Note and the interest hereon shall not be deemed to constitute a general obligation of the State of Minnesota or any political subdivision thereof, including, without limitation, the Authority. Neither the State of Minnesota nor any political subdivision thereof shall be obligated to pay the principal of or B-7 391382v6 JBD RC125-316 interest on this Note or other costs incident hereto except out of Available Tax Increment, and neither the full faith and credit nor the taxing power of the State of Minnesota or any political subdivision thereof is pledged to the payment of the principal of or interest on this Note or other costs incident hereto. 7. Estimated Tax Increment Payments. Any estimates of Tax Increment prepared by the Authority or its financial advisors in connection with the TIF District or the Agreement are for the benefit of the Authority, and are not intended as representations on which the Developer may rely. THE AUTHORITY MAKES NO REPRESENTATION OR WARRANTY THAT THE AVAILABLE TAX INCREMENT WILL BE SUFFICIENT TO PAY THE PRINCIPAL OF AND INTEREST ON THIS NOTE. 8. Registration. This Note is issuable only as a fully registered note without coupons. 9. Transfer. As provided in the Resolution, and subject to certain limitations set forth therein, this Note is transferable upon the books of the Authority kept for that purpose at the principal office of the City Clerk of the City of Richfield. Upon surrender for transfer of the Note, including any assignment or exchange thereof, 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 authorized by the registered owner in writing, and the payment by the Owner of any tax, fee, or governmental charge required to be paid by or to the Authority with respect to such transfer or exchange, the Registrar shall authenticate and deliver, in the name of the designated transferee or transferees, a new Note of the same aggregate principal amount, bearing interest at the same rate and maturing on the same dates. Notwithstanding the foregoing, the Note shall not be transferred to any person other than an affiliate, or other related entity, of the Owner unless the Authority has been provided with an investment letter in a form substantially similar to the investment letter in Schedule D of the Agreement or a certificate of the transferor, in a form satisfactory to the Executive Director of the Authority, that such transfer is exempt from registration and prospectus delivery requirements of federal and applicable state securities laws. 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. The Owner may assign the Note to a lender that provides all or part of the financing for the acquisition of the Development Property or the construction of the Minimum Improvements. The Authority hereby consents to such assignment, conditioned upon receipt of an investment letter from such lender in substantially the form attached in the Agreement as Schedule E, or other form reasonably acceptable to the Executive Director of the Authority. The Authority also agrees that future assignments of the Note may be approved by the Executive Director of the Authority without action of the Authority's Board, upon the receipt of an investment letter in substantially the form of Schedule E of the Agreement or other investment letter reasonably acceptable to the Authority from such assignees. B-8 391382v6 JBD RC125-316 g r 9- This Note is issued pursuant to a resolution of the Board of the Authority and is entitled to the benefits thereof, which Resolution is incorporated herein by reference. 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 exist, to happen, and to be performed in order to make this Note a valid and binding limited obligation of the Authority according to its terms, have been done, do exist, have happened, and have been performed in due form, time and manner as so required. IN WITNESS WHEREOF, the Board of Commissioners of the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota, has caused this Note to be executed with the manual signatures of its Chair and Executive Director, all as of the Date of Original Issue specified above. HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA Executive Director Chair B-9 391382v6 JBD RC125-316 q3 REGISTRATION REGISTRATION PROVISIONS The ownership of the unpaid balance of the within Note is registered in the bond register of the Authority's Executive Director, in the name of the person last listed below. Date of Registration Registered Owner Signature of Executive Director LYNDALE GARDENS, LLC. Federal ID # B-10 391382v6 JBD RC125-316 -uu SCHEDULE C CERTIFICATE OF COMPLETION The undersigned hereby certifies that LYNDALE GARDENS, LLC. (the "Developer") has fully complied with its obligations under Articles IV and V of that document titled "Contract for Private Development," dated between the Housing and Redevelopment Authority in and for the City of Richfield and the Developer, with respect to construction of the Minimum Improvement for Phase in accordance with the Construction Plans, and that the Developer is released and forever discharged from its obligations to construct the Minimum Improvement under Articles IV and V as to such Phase. Dated: , 20 . HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD By: STATE OF MINNESOTA ) ) SS. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this day of 20_, by , the Executive Director of the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota, on behalf of the Authority. Notary Public This instrument was drafted by: II C- 3 91382v6 JBD RC125-316 g Lf S SCHEDULE D CONCEPT PLAN Lyndale Gardens Concept Plan Phase I: Existing Garden Center Building Estimated Construction: 2012-2014 • Remodel the existing vacant Lyndale Garden Center building into approximately 30,000 - 48,000 SF of potential retail and/or commercial space. • Renovation may include either re-use or demolition of the existing greenhouse structure and additions to the building, as necessary, to achieve tenant or owner space needs. • Renovation will include the related site work necessary to provide access to the building, landscaping, and parking. Phase II: Mixed-Use Estimated Construction: 2013-2016 • Create a new multi-story mixed-use building oriented toward Lyndale Avenue. • First floor uses may include, but are not limited to, a mix of: education, office, retail and housing. • Upper levels will include 35-60 housing units and associated amenities, and may be a mix of affordable and/or market rate prices. • The building will provide a mix of below-grade and surface parking. • Construction will include the related site work necessary to provide access to the building, landscaping, amenities and parking. Phase III: Housing Estimated Construction: 2013-2016 • Create a new multi-story housing building oriented toward Richfield Lake. • The building will include 50-70 housing units and associated amenities, and may be a mix of affordable and/or market rate prices. • The building will provide a mix of below-grade and surface parking. • Construction will include the related site work necessary to provide access to the building, landscaping, amenities and parking. 800-840 West 65th Street Lyndale Gardens LLC currently has a three (3) year Right of First Refusal for the properties located southwest of the garden center site at 800-840 West 65th Street. Should Lyndale Gardens purchase this property it will consider options for 1) remodeling the existing buildings, site, and grounds to update the existing product and connect it to Richfield Lake, or 2) demolition of all or a portion of the existing apartments in order to facilitate new construction of housing or mixed- use buildings. D-1 391382v6 JBD RC125-316 SCHEDULE E INVESTMENT LETTER To the Housing and Redevelopment Authority in and for the City of Richfield(the "Authority") Attention: Executive Director Re: $ Tax Increment Limited Revenue Note, Series 20 The undersigned, as Owner of$ in principal amount of the above captioned Note (the "Note") pursuant to a resolution of the Authority adopted on , 2011 (the "Resolution"), hereby represents to you and to Kennedy & Graven, Chartered, Minneapolis, Minnesota, development counsel, as follows: 1. We understand and acknowledge that the Note is delivered to the Owner as of this date pursuant to the Resolution and the Contract for Private Development between the Authority and the Owner, dated as of , 2011 (the "Contract"). 2. We understand that the Notes are payable as to principal and interest solely from Available Tax Increment as defined in the Note and the provisions of the Contract. 3. We further understand that any estimates of Tax Increment (as defined in the Contract) prepared by the Authority or its financial advisors in connection with the TIF District (as defined in the Contract), the Contract or the Note are for the benefit of the Authority, and are not intended as representations on which the Owner may rely. 4. We have sufficient knowledge and experience in financial and business matters, including purchase and ownership of municipal obligations, to be able to evaluate the risks and merits of the investment represented by the purchase of the above stated principal amount of the Note. 5. We acknowledge that no offering statement, prospectus, offering circular or other comprehensive offering statement containing material information with respect to the Authority and the Note has been issued or prepared by the Authority, and that, in due diligence, we have made our own inquiry and analysis with respect to the Authority, the Note and the security therefor, and other material factors affecting the security and payment of the Note. 6. We acknowledge that we have either been supplied with or have access to information, including financial statements and other financial information, to which a reasonable investor would attach significance in making investment decisions, and we have had the opportunity to ask questions and receive answers from knowledgeable individuals concerning the Authority, the Note and the security therefor, and that as a reasonable investor we have been able to make our decision to purchase the above stated principal amount of the Note. E-1 391382v6 JBD RC125-316 -(-11 7. We have been informed that the Note (i) is not being registered or otherwise qualified for sale under the "Blue Sky" laws and regulations of any state, or under federal securities laws or regulations, (ii) will not be listed on any stock or other securities exchange, and (iii) will carry no rating from any rating service. 8. We acknowledge that neither the Authority nor Kennedy & Graven, Chartered have made any representations as to the status of interest on the Note for state or federal income tax purposes. 9. We represent to you that we are purchasing the Note for our own accounts and not for resale or other distribution thereof, except to the extent otherwise provided in the Note, the Resolution, or any other resolution adopted by the Authority. 10. All capitalized terms used herein have the meaning provided in the Contract unless the context clearly requires otherwise. 11. The Owner's federal tax identification number is: 12. We acknowledge receipt of the Note as of the date hereof [OWNER] By Its Dated: , 20_ E-2 391382v6 JBD RC125-316 8 — u$ Hennepin County Property Map - Tax Year: 2011 The data contained on this page is derived from a compilation of records and maps and may contain discrepancies that can only be disclosed by an accurate survey performed by a licensed land surveyor.The perimeter and area(square footage and acres)are approximates and may contain discrepancies.The information on this page should be used for reference purposes only. Hennepin County does not guarantee the accuracy of material herein contained and is not responsible for any misuse or misrepresentation of this information or its derivatives. IL 6245 6244---.1 I—906--1—6244—I L 6245.6244 L 6245 I 6234 J L5245—1-6244__I 63RD ST W 12 6301 6300 6301 6301 6300 6301 6305 al 6300 — — — 6304 6305 Z _6305 6304 `6395_ 6300 5307 4 6308 -1 6309 So ' ( �•,,5 l 4 1050 C 6311 5308 5313 n (8 1016 109$! � 5320 m w 1020 1999 p I 910 A 6315 6314 = f } i �+ 920 914 906 Y. 6317 4 j `---+-- nn — W i r� I900 6321 6329 ^ 4 6301 ��-�—�—L— — 6321 6 3 2 0 0 MILOREO OR 6325 6324 > ! 6327 ; 6325 I 6328 ' ill I II 6345 1.608 602 64TH ST W 6400 6ao1 r,tLiu 6430 j 840 •436' : l :-6438 6a-- 6444' 6444 800 cj y 6 ,a.; liSelected Parcel Data Date Printed: 10/7/2011 3:27:55 PM Parcel ID: 28-028-24-11-0080 Current Parcel Date: 10/5/2011 Owner Name: RANCHO RICHFIELD LLC Parcel Address: 6400 LYNDALE AVE S, RICHFIELD, MN 55423 Property Type: COMMERCIAL-PREF Sale Price: $2,600,000.00 Homestead: NON-HOMESTEAD Sale Date: 10/1986 Area (sqft): 401732 Sale Code: WARRANTY DEED Area (acres): 9.22 A-T-B: TORRENS Market Total: $3,998,000.00 Tax Total: $158,230.82 l i r GtE} S t....... S c LTh1h1 UV LOS E S - 14R CONCEPT PLAN = ‘.'.'" 'IT:. ;i47.',`,,,714: ., ,,,„4:_e,..1,y,-,., •e. T. . v-.-,---.., ' .....;. 41J t f A fil-6 --..r • .. ') - ,':?'-,*--t:• > , ---; „---• ,, ,• ,,,-_-- „- -..,_74., *..74,:;-;----,C;i:'-`,c,At5, ''' „.--'s't3v,.':1;:2!;:•,5; -' V,43 , . .:' ,,-,;- --,--. r ,--i' ..,! Iiit ..:,-,, - - I , , -y-,:et,,,,, •; -J.i,-__.:L7I,„-i, - - -,,,, . - , -,,,,,... ,-.,.t.- - -.-.',....-- i MULTIFAMILY ; . MULTI-FAMILY '' '>;-•.,A,,„....7,,--T , -1 Elfit, i'-. -: -4, -77_,, '''' ---1'4-1'; v, •,• -4 . . 0-• , • i.! i - ,,,..,4_ °c.-A k *r .. „I:, _, , . „......, .01.7„ ,,. 1 _ --7 / ---k.' r41L"--ra. ' \ _- „. :1-1 • \ gk -,.. , : = . --,;:,,:-...., .. .r, --. `" - . 4, RA . , , I '' 1 e . ... ,,,.. ' i . i ..s . . . - ...- — elt-iit ,\ –.1: --■., ' dr :,.,,-,- • 4.4 -'0' :-.. al - r. ..,, , , 64TH ST \Irs,..y4\\\ .,. --. 1.--. . -- . .. N 411 -.1 ' ' '---- REMODELED \fi ., it .. ...—/2" . . , ii \ 1 -. REMOD-- \r.- .40 „PO Ir''' BUILDING ",, \i'' . . \ # ,4i.t.:,-...., ., , '- ' ,\ \ '. °\ OP LAKE \ ` , \ RICHFIELD \ ' ''-' \ i. \\ \ PAVILION \ \\ .,, - ' \V",;t1.,,,,„ 1. 14-•'' - \*7''''Iv.- - .:.,. RICHFIELD LAI.E 4\ ' . . \ , -. ,.---.---' , t.: R -',Irg- A „i; _ __ :-.. . -,-,..--,v_ - --., -. ; _ ''-•_-__:,,8..' , . • 1 ' _ ... .. , ..... _ •-'1, A-,--li :,... ----;,...,,I-A, I, ' '.-,, , 2,,,g,,S,-.7-4::-.±_,,- ,,,,,_ , ,, ,,C--, •- , - ,.. . . , ... TIPP. ,re . ,...-. , Lyndale Garden Center Redevelo pment Masterplan Richfield, MN 2, .''',,■ 1 AGENDA ITEM#: 9 REPORT#: 50 mild! STAFF REPORT RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY MEETING OCTOBER 17, 2011 REPORT PREPARED BY: KAREN BARTON, ASSISTANT DIRECTOR OF COMMUNITY DEVELOPMENT NANrr_. TITLE REPORT PRESENTER: KAREN BARTON, ASSISTANT DIRECTOR OF COMMUNITY DEVELOPMENT AA,vl/3. T1111 DEPARTMENT DIRECTOR REVIEW: - + Ty REVIEWED BY EXECUTIVE DIRECT• : ITEM FOR HRA CONSIDERATION: Consideration of an amendment to the Lyndale Gardens Tax Increment Financing Plan. I. RECOMMENDED ACTION: By Motion: Approve a resolution amending the Lyndale Gardens Tax Increment Financing Plan. II. BACKGROUND At the July 25, 2011 regular meeting of the Richfield Housing and Redevelopment Authority (HRA) the HRA adopted a resolution establishing the Lyndale Gardens Tax Increment Financing District and establishing a tax increment financing plan therefore. On August 9, 2011 the City Council held a public hearing and also adopted a resolution establishing the Lyndale Gardens TIF district and adopting the TIF Plan. The Lyndale Gardens TIF District (District) consists of four parcels of land and right-of-way. The District was created to facilitate the construction of a mixed- use commercial/retail, multi-family rental housing and public/community space on 10172011 Lyndale Gardens TIF Plan Amendment the site of the former Lyndale Garden Center and the surrounding parcels of land. Since 2000 it has been the HRA's policy to require tax increment financing districts that do not have a housing component (including at least 20% affordable units) to dedicate 15% of the TIF generated into the HRA's Housing and Redevelopment Fund. The original TIF Plan Budget included this 15% TIF dedication. While the first phase of the project is retail and will contribute to the Housing and Redevelopment Fund (in the amount of $75,000), future phases of the project being proposed are intended to include housing units that would allow the development to keep this 15% of the TIF as a project cost. In order to accurately reflect this policy in the Lyndale Garden's TIF Plan, a modification to the budget is being proposed to reduce the contribution to the Housing and Redevelopment Fund (Costs Outside of District) and increase the costs of the Site Improvements and Preparation and Land/Building Acquisition proportionately. The TIF Plan budget is proposed to be amended as follows (with revisions in bold): Adopted Revised Revised? Budget Budget Land/Building Acquisition $3,000,000 $3,200,000 yes Site Prep & Improvements $ 351,000 $2,416,000 yes Utilities $ 0 $ 0 no Other Qualifying Improvements $ 15,000 $ 15,000 no Costs Outside of District $2,340,000 $ 75,000 yes (TIF Contribution to Housing and Redevelopment Fund) Administrative Costs $1,560,000 $1,560,000 no (to HRA) Total (pre-interest) TIF $7,266,000 $7,266,000 no The Developer would be eligible to access the additional funds in the Site Improvements/Preparation and Land/Building Acquisition budget; however the total amount of funding the Developer could receive is governed by a Contract for Private Development between the Developer and the HRA and a "look-back" provision to ensure the need for the funding. Should the Developer not construct the affordable housing component in the subsequent phases, the TIF Plan would need to be amended again at that time to require a percentage of the tax increment be paid into the HRA's Housing and Redevelopment Fund. The TIF Plan can be viewed on the City's website under the Documents tab, and is titled "Lyndale Gardens TIF Plan". III. BASIS OF RECOMMENDATION A. POLICY • Pursuant to Section 469.175, subd. 4(b) of the TIF Act, a tax increment financing plan may be modified without public hearing or the findings required to be made for the original tax increment financing plan if the modification does not include (i) any reduction or enlargement of the geographic area of the project or tax increment financing district; (ii) an increase in the amount of bonded indebtedness; (iii) a determination to capitalize interest on debt if that determination was not a part of the original plan; (iv) an increase in the portion of the captured net tax capacity to be retained by the City; (v) an increase in the estimated cost of the project, including administrative expenses, to be paid or financed with tax increment from the district; or (vi) the designation of additional property to be acquired by the authority; • Since 2000 the HRA has traditionally required a percentage of tax increment generated from districts that do not include affordable housing components be deposited into a fund to facilitate additional housing and redevelopment projects within the City's redevelopment area. B. CRITICAL TIMING ISSUES • The Cornerstone Group/Lyndale Gardens LLC is scheduled to close on the former Lyndale Garden Center property on November 21, 2011. • Construction is scheduled to begin in earnest spring of 2012. C. FINANCIAL • Tax Increment will be captured and used to fund the project, pay the HRA's administrative costs, and potentially add funding to the HRA's Housing and Redevelopment Fund. • Cornerstone is seeking up to 85% of the available TIF. • Without TIF, the project would not come to fruition. • The actual amount of TIF is subject to a "look-back" provision and is governed by a Contract for Private Development between the Developer and the HRA. D. LEGAL • Legal Counsel has been involved in the process, drafted the attached resolution and has provided direction to staff. IV. ALTERNATIVE RECOMMENDATION(S) • Do not adopt the Resolution. V. ATTACHMENTS • Resolution VI. PRINCIPAL PARTIES EXPECTED AT MEETING • HRA Legal Counsel RESOLUTION NO. RESOLUTION APPROVING MODIFICATION TO THE TAX INCREMENT FINANCING PLAN FOR LYNDALE GARDENS TAX INCREMENT FINANCING DISTRICT WHEREAS, the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota (the "Authority") and the City of Richfield, Minnesota (the "City") have previously established the Richfield Redevelopment Project Area (the "Redevelopment Project") pursuant to Minnesota Statutes, Sections 469.001 through 469.047, as amended(the"HRA Act"); and WHEREAS, on July 25, 2011, the Board of the Authority approved a Tax Increment Financing Plan (the "TIF Plan") for the Lyndale Gardens Tax Increment Financing District (the "TIF District") located within the Redevelopment Project pursuant to the HRA Act and Minnesota Statutes, Sections 469.174 to 469.1799,as amended(collectively,the"TIF Act"); and WHEREAS,the Authority has determined a need to modify the TIF Plan in order to amend the budget contained therein and such amendment is consistent with the redevelopment program for the Redevelopment Project; and WHEREAS, pursuant to Section 469.175, subd. 4(b) of the TIF Act, a tax increment financing plan may be modified without public hearing or the findings required to be made for the original tax increment financing plan if the modification does not include (i) any reduction or enlargement of the geographic area of the project or tax increment financing district; (ii) an increase in the amount of bonded indebtedness; (iii) a determination to capitalize interest on debt if that determination was not a part of the original plan; (iv) an increase in the portion of the captured net tax capacity to be retained by the City; (v) an increase in the estimated cost of the project, including administrative expenses, to be paid or financed with tax increment from the district; or (vi) the designation of additional property to be acquired by the authority; and WHEREAS, by this resolution, the Authority proposes to modify the public costs and uses of funds table located at Section 2, Subsection 2-10 (Uses of Funds) of the TIF Plan in order to amend the costs of Site Improvements/Preparation and Costs Outside of District, as set forth in Exhibit A, attached hereto and made a part hereof. NOW, THEREFORE, BE IT RESOLVED, by the Housing and Redevelopment Authority in and for the City of Richfield,Minnesota as follows: 1. The TIF Plan for the TIF District, as amended by this resolution, conforms to the general plan of redevelopment of the City as a whole. 2. The approval of the TIF Plan, as amended by this resolution, is intended, and in the Authority's judgment its effect will be, to promote the public purposes and accomplish the objectives specified in the TIF Plan. 3. The proposed modification to the TIF Plan may be made without public hearing or the findings required for the original TIF Plan since the modification does not include (i) any reduction or enlargement of geographic area of the Redevelopment Project or the TIF District; (ii) an increase in the amount of bonded indebtedness; (iii) a determination to capitalize interest on debt; (iv) an increase in the portion of the captured net tax capacity to be retained by the City; (v) an increase in the estimated cost of the project to be paid or financed with tax increment from the TIF District; or(vi)the designation of additional property to be acquired by the Authority. 4. The amended TIF Plan is hereby approved and adopted. 5. The Community Development Director is authorized and directed to file a copy of this resolution with the Minnesota Commissioner of Revenue and the Taxpayer Services Division Manager of Hennepin County as required by the TIF Act. Approved by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 17th day of October,2011. Suzanne M. Sandahl, Chair ATTEST: Joan Helmberger, Secretary a -3 EXHIBIT A MODIFIED TABLE OF PUBLIC COSTS AND USES OF FUNDS USES OF TAX INCREMENT FUNDS TOTAL Land/Building Acquisition $3,200,000 Site Improvements/Preparation $2,416,000 Utilities $0 Other Qualifying Improvements $15,000 Costs Outside of District $75,000 Administrative Costs (up to 10%) $1,560,000 PROJECT COST TOTAL $7,266,000 Interest $8,334,000 PROJECT AND INTEREST COSTS TOTAL $15,600,000