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031912completeagenda
CITY OF RICHFIELD, MINNESOTA MONDAY, MARCH 19, 2012 RICHFIELD MUNICIPAL CENTER 6700 PORTLAND AVENUE REGULAR HOUSING AND REDEVELOPMENT AUTHORITY MEETING COUNCIL CHAMBERS 7:00 P.M. AGENDA Call to order Oath of Office to HRA Commissioner David Gepner Roll call 1. Approval of minutes of (1) Special HRA Worksession of January 17, 2012; (2) Regular HRA Meeting of January 17, 2012; (3) Special HRA/City Council/Planning Commission Worksession of January 24, 2012; (4) Special HRA/City Council/Planning Commission Worksession of February 14, 2012; and (5) Special HRA/City Council/Planning Commission Worksession of February 28, 2012 2. HRA approval of agenda 3. Consent Calendar contains several separate items which are acted upon by the HRA in one motion. Once the Consent Calendar has been approved, the individual items and recommended actions have also been approved. No further HRA action on these items is necessary. However, any HRA Commissioner may request that an item be removed from the Consent Calendar and placed on the regular agenda for HRA discussion and action. All items listed on the Consent Calendar are recommended for approval. A. Consideration of approval of resolution authorizing use of Affordable Housing Initiative Fund loan for acquisition of 7401-18th Avenue by West Hennepin Affordable Housing Land Trust S.R. No. 8 B. Consideration of approval of revised guidelines for HRA funded Foreclosure Purchase Incentive Program S.R. No. 9 C. Consideration of approval of right-of-entry agreement with Hennepin County related to HRA-owned property at 211 West 76th Street (former Gleason Mortuary) S.R No. 10 Notes: 4. Consideration of request for Transformation Loan to Sara and Mike Warner for remodeling of non-substandard home at 7320 Colfax Avenue Staff Report No. 11 Notes: 5. Consideration of Contract for Private Development between HRA and Scott and Crystal Vander Heiden for redevelopment of 6507 Bloomington Avenue under Richfield Rediscovered Program Staff Report No. 12 Notes: 6. Consideration of resolution granting assistance in amount of$50,000 and approving funding agreement with Bill Wolfson for redevelopment of 6528 Penn Avenue, ARC Value Village Staff Report No. 13 Notes: 7. Consideration of resolution requesting City Council call for public hearing on the proposed modification to Redevelopment Plan for Richfield Rediscovered Project Area and proposed establishment of Pillsbury Commons Tax Increment Financing District Staff Report No. 14 Notes: 8. HRA discussion items Notes: 9. Executive Director report Notes: 10.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: March 2012 Page 1 of 1 City of Richfield c r Calendars Net Navigate: 2011 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2013 March 2012 ondasy Tuesday Wednesday Thursday Friday 27 I Feb 28 29 1 I Mar 2 5:30p Human Services 5:45p Special City 7:OOp Arts Commission Planning Council CounciVHRA/Planning @ 7000 Nicollet Ave 6:OOp Advisory Board of Commission Health Worksession,followed 7:OOp Planning by Special City Council Commission Worksession 7:OOp City Council Regular Meeting 5 6 7 8 9 8:OOa Civil Service 7:OOp Transportation Commission Meeting- Commission Babcock Conf.Room 11:30a Tourism Promotion Board @ 6601 Lyndale Ave,Sure 106 6:30p Human Rights Commission 12 13 14 15 16 7:OOp Planning 6:OOp Special City 7:OOp Friendship City Commission Study Council Worksession Commission Session 7:OOp City Council CANCELED Regular Meeting 19 20 21 22 23 6:OOp Advisory Board of 8:OOa Civil Service Health Commission Meeting- 7:OOp Housing and Babcock Conf.Room Redevelopment Authority(HRA) 7:OOp Community Services Commission @ 7000 Nicollet Ave 26 27 28 29 30 5:30p Human Services 6:OOp Special City SATURDAY,MAR.31 Planning Council Council Worksession 9:30 a.m.-10:30 a.m. 6:OOp Richfield 7:OOp City Council Mayor's Hour-WLNC Bloomington Watershed Regular Meeting Management Organization @ Haeg Conference Room,City of Bloomington(meal at 5:30 p.m.) 6:15p Special Concurrent Richfield/Bloomington City Council Worksession @ Bloomington 7:OOp Planning 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 3/15/2012 HOUSING AND REDEVELOPMENT RICHFIELD AUTHORITY MEETING MINUTES Richfield, Minnesota Special Housing and Redevelopment Authority Worksession January 17, 2012 CALL TO ORDER The meeting was called to order by Chair Sandahl at 6:00 p.m. ROLL CALL HRA Members Sue Sandahl, Chair; Steve Quam; Debbie Goettel; and Doris Rubenstein Present: Staff Present: John Stark, Acting Executive Director; Karen Barton, Assistant Community Development Director; Michelle Lewis and Julie Urban, Housing Specialists; and Nancy Gibbs, City Clerk. Item # I DISCUSSION REGARDING RENTAL HOUSING STUDY Jay Demma, Project Manager of Stantec Consulting Service, Inc., presented an overview of the Rental Housing Study. HRA Commissioner Goettel suggested looking into Richfield's affordability rate compared to apartment rental rates. HRA Chair Sandahl asked about looking at Richfield's gap of high-end housing. She stated the City has an abundance of one bedroom units built in the 60's without much updating done. HRA Chair Sandahl stated she would like to know where Richfield is in terms of senior housing and if Richfield has enough senior housing compared to other communities. Mr. Demma stated he has received lots of good ideas and will return to the HRA when the study is complete. ADJOURNMENT The meeting was adjourned by unanimous consent at 6:40 p.m. Special Worksession Minutes -2- January 17, 2012 Date Approved: February 21, 2012 Suzanne M. Sandahl Chair Nancy Gibbs John Stark City Clerk Acting Executive Director HOUSING AND REDEVELOPMENT RICHFIELD AUTHORITY MEETING MINUTES Richfield, Minnesota Regular Meeting January 17, 2012 CALL TO ORDER The meeting was called to order by Chair Sandahl at 7:00 p.m. ROLL CALL HRA Members Sue Sandahl, Chair; Debbie Goettel, Doris Rubenstein Present: and Steven Quam. Staff Present: Steve Devich, Executive Director; John Stark, Community Development Director; Karen Barton, Community Development Manager; Chris Regis, Finance Manager; and Nancy Gibbs, City Clerk. Item #1 CONSIDERATION OF ELECTION OF HRA OFFICERS FOR 2012 M/Goettel, S/Rubenstein to approve Sue Sandahl as Chair of the HRA for 2012. Motion carried 4-0. M/Goettel, S/Sandahl to approve Steve Quam as Vice Chair of the HRA for 2012. Motion carried 4-0. M/Goettel, S/Quam to approve Doris Rubenstein as Secretary of the HRA for 2012. Motion carried 4-0. Item #2 APPROVAL OF MINUTES OF (1) SPECIAL HRA MEETING OF DECEMBER 13, 2011; (2) SPECIAL HRA WORKSESSION OF DECEMBER 19, 2011; AND (3) REGULAR HRA METING OF DECEMBER 19, 2011 M/Rubenstein, S/Quam to approve the minutes of the Special HRA Meeting of December 13, 2011; Special HRA Worksession of December 19, 2011 and Regular HRA Meeting of December 19, 2011 HRA Meeting -2- January 17,2012 Motion carried 4-0. Item #3 HRA APPROVAL OF AGENDA M/Rubenstein, S/Quam to approve the agenda. Motion carried 4-0. Item #4 HRA PROGRAMS/COMMUNITY DEVELOPMENT 2011 YEAR IN REVIEW Assistant Community Development Director Barton presented the 2011 Community Development Year in Review. Item #5 CONSENT CALENDAR A. Consideration of approval of designating Community Development Director as Acting Executive Director of HRA for 2012 in event Executive Director is absent from City S.R. No. 2 B. Consideration of approval of resolutions designating official depositories for HRA, including collateral, for 2012 S.R. No. 3 HRA RESOLUTION NO. 1111 RESOLUTION DESIGNATING U.S. BANK A DEPOSITORY OF FUNDS OF THE HRA OF RICHFIELD FOR THE YEAR 2012 HRA RESOLUTION NO. 1116 RESOLUTION DESIGNATING CERTAIN SAVING AND LOAN ASSOCIATIONS, BANKS AND CREDIT UNIONS AS DEPOSITORIES FOR THE INVESTMENT OF HOUSING AND REDEVELOPMENT AUTHORITY OF RICHFIELD FUNDS IN 2012 HRA RESOLUTION NO. 1117 RESOLUTION DESIGNATING CERTAIN FINANCIAL INSTITUTIONS AS DEPOSITORIES FOR THE INVESTMENT OF HOUSING AND REDEVELOPMENT AUTHORITY OF RICHFIELD FUNDS IN 2012 These resolutions appear as HRA Resolution Nos. 1111,1116 and 1117. C. Consideration of approval of resolution designating Richfield Sun-Current as official newspaper for 2012 S.R. No. 4 HRA RESOLUTION NO. 1112 RESOLUTION DESIGNATING AN OFFICIAL NEWSPAPER FOR 2012 This resolution appears as HRA Resolution No. 1112. HRA Meeting -3- January 17,2012 D. Consideration of approval of resolution authorizing purchase of real property at 6812-14th Avenue through Richfield Rediscovered Program contingent upon subdivision waiver by City Council S.R. No. 5 HRA RESOLUTION NO. 1113 RESOLUTION AUTHORIZING PURCHASE OF REAL PROPERTY LOCATED AT 6812 14TH AVENUE This resolution appears as HRA Resolution No. 1113. E. Consideration of approval of resolution authorizing transfer of up to $55,000 from Development Fund to City to assist in acquisition and removal of 6315-16th Avenue and removal of 6420-17th Avenue S.R. No. 6 HRA RESOLUTION NO. 1114 RESOLUTION AUTHORIZING TRANSFER OF UP TO $55,000 IN THE HOUSING AND REDEVELOPMENT AUTHORITY DEVELOPMENT FUND TO THE CITY OF RICHFIELD TO PURCHASE/REMOVAL OF REAL PROPERTY AT 6315 16TH AVENUE AND THE REMOVAL OF 6420 17TH AVENUE This resolution appears as HRA Resolution No. 1114. F. Consideration of approval of resolution authorizing Executive Director and HRA Chair to execute instruments necessary to purchase six to eight vacant and foreclosed houses using up to $513,200 from Housing and Redevelopment Fund through December 31, 2012 S.R. No. 7 RESOLUTION NO. 1115 RESOLUTION AUTHORIZING THE HOUSING AND REDEVELOPMENT AUTHORITY STAFF TO ACQUIRE CERTAIN FORECLOSED HOMES WITHIN THE CITY AND TO EXECUTE ALL INSTRUMENTS AND CONTRACTS RELATED THERETO This resolution appears as HRA Resolution No. 1115. M/Rubenstein, S/Quam to approve the Consent Calendar. Motion carried 4-0. Item #6 HRA DISCUSSION ITEMS Commissioner Goettel stated the earlier meeting regarding housing inventory was helpful. Item #9 EXECUTIVE DIRECTOR REPORT None. HRA Meeting -4- January 17,2012 Item #9 CLAIMS AND PAYROLL M/Goettel, S/Quam that the following claims and payrolls be approved: U.S BANK 01/16/2012 Section 8 Checks: 121407-121526 $ 157,231.65 HRA Checks: 31356-31373 $ 81,900.38 TOTAL $ 239,132.03 Motion carried 4-0. ADJOURNMENT The meeting was adjourned by unanimous consent at 7:35 p.m. Date Approved: February 21. 2012 Suzanne M. Sandahl Chair Nancy Gibbs Steven L. Devich City Clerk Executive Director =AM HOUSING AND REDEVELOPMENT RICHFIELD AUTHORITY MEETING MINUTES Richfield, Minnesota Special HRA/City Council/Planning Commission Worksession January 24, 2012 CALL TO ORDER The meeting was called to order by Mayor Goettel at 5:45 p.m. in the Council Chambers. ROLL CALL Council Members Debbie Goettel, Mayor; Pat Elliott; Sue Sandahl; Fred Wroge; and Tom Present: Fitzhenry HRA Members Sue Sandahl, Chair; Doris Rubenstein; and Debbie Goettel Present: HRA Member Steven J. Quam Absent: Planning Members Rick Jabs, Chair; Gordon Vizecky; Josh Root (arrived 6:19 p.m.); Robert Hall; Present: Maureen Scaglia; Daniel Kitzberger; and Tom Rublein Planning Member Dennis Schuller Absent: Staff Present: Steven L. Devich, City Manager/HRA Executive Director; John Stark, Community Development Director; Jim Topitzhofer, Recreation Services Director; Melissa Poehlman, City Planner; Christine Costello; Community Development Coordinator; Jeff Pearson, Transportation Engineer; Corrine Heine, City Attorney; and Nancy Gibbs, City Clerk. Item #1 DISCUSSION REGARDING PILLSBURY COMMONS PROPOSAL Ron Clark, CEO of Ron Clark Construction and Design, introduced his key team members. Kendra Lindahl of Landform presented the project history of Pillsbury Commons. She also addressed concerns the neighborhood had regarding this project and showed detailed maps of how they made changes to the project to accommodate the neighborhood concerns. Special Worksession Minutes -2- January 24, 2012 Council Member Wroge asked questions regarding an applicant's assets and how that may affect the qualifying for the apartments and who determines who gets chosen. Barb Halverson, President Steven Scott Management, explained that the property is income based and assets alone would not disqualify anyone, however if they received interest income from assets it could put an applicant over the income level. Ms. Halverson also explained how they are chosen. However, they must meet the criteria of income, credit check and criminal check. ADJOURNMENT The meeting was adjourned by unanimous consent at 7:00 p.m. Date Approved: March 19, 2012 Suzanne M. Sandahl Chair Nancy Gibbs Steven L. Devich City Clerk Executive Director HOUSING AND REDEVELOPMENT RICHFIELD AUTHORITY MINUTES Richfield, Minnesota Special HRA/City Council/Planning Commission Worksession February 14, 2012 CALL TO ORDER The meeting was called to order by Mayor Goettel at 5:45 p.m. in the Council Chambers. ROLL CALL Council Members Debbie Goettel, Mayor; Pat Elliott; Sue Sandahl; Fred Wroge; and Tom Present: Fitzhenry HRA Members Sue Sandahl, Chair; Steven J. Quam; and Debbie Goettel Present: HRA Member Doris Rubenstein Absent: Planning Members Rick Jabs, Chair; Gordon Vizecky; Josh Root; Daniel Kitzberger; and Tom Rublein Planning Member Robert Hall; Maureen Scaglia; and Dennis Schuller Absent: Staff Present: Steven L. Devich, City Manager/HRA Executive Director; John Stark, Community Development Director; Mike Eastling, Public Works Director; Melissa Poehlman, City Planner; Christine Costello; Community Development Coordinator; Corrine Heine, City Attorney; and Cheryl Krumholz, Executive Coordintor. Item #1 DISCUSSION REGARDING PILLSBURY COMMONS PROPOSAL Kendra Lindahl, Principal Landform, provided a project update addressing items raised at the January 24, 2012 City Council Worksession, including a revised site plan, reserve funds for property maintenance, market plan, and tenant selection plan, school impacts. Ron Clark, CEO of Ron Clark Construction and Design, stated there were no plans for Phase II. Special Worksession Minutes -2- February 14, 2012 Carey Vaughn, Regional Property Manager, explained the eligibility for students to live at Pillsbury Commons. Mayor Goettel expressed concern regarding the projects impact on the neighborhood, including crime. Ms. Lindahl explained the site is managed by an on-site project manager to address issues before they become problems. Brenda Hvambsal, Marketing Director, discussed the diverse portfolio. Community Development Director Stark explained the land use and Housing TIF District approval process for the project. No specific TIF assistance has been requested by Mr. Clark. City Manager Devich stated a formal application is needed from Mr. Clark to provide additional details on land use and financing. City Attorney Heine added that no application has been received and the City Council, Housing and Redevelopment Authority, and Planning Commission are not to be asked to make a decision before details are provided. The developer is in control of the project at this point. City Manager Devich concluded that Mr. Clark is continuing to pursue this project at his own financial risk and the City Council and Housing and Redevelopment Authority are not obligated to approve anything. ADJOURNMENT The meeting was adjourned by unanimous consent at 6:59 p.m. Date Approved: March 19, 2012 Suzanne M. Sandahl Chair Cheryl Krumholz Steven L. Devich Executive Coordinator Executive Director HOUSING AND REDEVELOPMENT AUTHORITY MEETING MINUTES Richfield, Minnesota Special City Council/HRA/Planning Commission Worksession February 28, 2012 CALL TO ORDER The meeting was called to order by Mayor Goettel at 5:45 p.m. in the Council Chambers. ROLL CALL Council Members Debbie Goettel, Mayor; Pat Elliott; Sue Sandahl; Fred Wroge; and Tom Present: Fitzhenry HRA Members Sue Sandahl, Chair; Doris Rubenstein; and Debbie Goettel Present: HRA Member Steven J. Quam Absent: Planning Members Rick Jabs, Chair; Josh Root; Robert Hall; Maureen Scaglia (arrived 5:50 p.m.); Daniel Kitzberger; Tom Rublein; and Dennis Schuller Planning Member Gordon Vizecky Absent: Staff Present: Steven L. Devich, City Manager/HRA Executive Director; John Stark, Community Development Director; Jim Topitzhofer (arrived 5:55 p.m.), Recreation Services Director; Jeff Pearson, Transportation Engineer; Kristin Asher-Osberg, City Engineer; Karen Barton, Community Development Manager; Nancy Gibbs, City Clerk; and Theresa Schyma, Deputy City Clerk. Item #1 DISCUSSION REGARDING LYNDALE GARDENS PROPOSED DEVELOPMENT (COUNCIL MEMO NO. 30) Colleen Carey, The Cornerstone Group, updated the group on progress with the concept plan for the redevelopment of the former Lyndale Garden Center site. Special Worksession Minutes -2- February 28, 2012 Ms. Carey stated they are anticipating a construction start on the commercial component of the project in the fall of 2012. Ms. Carey also mentioned her team worked hard to build more public amenities in the site plan. Bruce Jacobson, The Cornerstone Group, made a PowerPoint presentation of the preliminary site plan. David Stahl, Urban Works, continued the presentation speaking more specifically about the former Lyndale Garden Center building. Ms. Carey did announce that they decided on a final name of"Lyndale Gardens." Commissioner Rubenstein stated that she is concerned with water quality of the lake, noise level of night concerts and outdoor activity, and flight patterns that go directly over the Lyndale Gardens site. Council Member Wroge questioned what size restaurant they are looking to fill the space with. Ms. Carey responded that the restaurant will be approximately 2,500-3,000 square feet. Ms. Carey mentioned that they do still intend to build a mixed-use multi-story building on the Lyndale Avenue side of the site and to provide affordable units within the development but the Minnesota Life College is no longer going to be part of that building. Ms. Carey also mentioned the possibility of acquiring additional property for the Minnesota Life College. Council Member Wroge stated he was concerned about parking spaces. He also stated his concerns for having all affordable housing units. He would prefer to see 80/20 or 75/25 market rate to affordable housing. ADJOURNMENT The meeting was adjourned by unanimous consent at 6:38 p.m. Date Approved: March 19, 2012 Suzanne M. Sandahl Chair Theresa Schyma Steven L. Devich Deputy City Clerk Executive Director AGENDA ITEM#: 3A REPORT#: 8 =NAN STAFF REPORT RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY MEETING MARCH 19, 2012 REPORT PREPARED BY: JULIE URBAN/MICHELLE LEWIS, HOUSING SPECIALISTS NAME,TITLE REPORT PRESENTER: KAREN BARTON, ASSISTANT COMMUNITY DEVELOPMENT DIRECTOR NAME,TITLE DEPARTMENT DIRECTOR REVIEW: El I Pr. :► . / "7 i 40 REVIEWED BY EXECUTIVE DIRECTOR: ,,r = P--, - . .,. _ , ---- ITEM FOR HRA CONSIDERATION: Consideration of a Resolution authorizing use of an Affordable Housing Initiative Fund loan for the acquisition of 7401 18th Avenue by West Hennepin Affordable Housing Land Trust. I. RECOMMENDED ACTION: By Motion: Adopt the Resolution authorizing use of a Affordable Housing Initiative Fund loan for the acquisition of 7401 18th Avenue by the West Hennepin Affordable Housing Land Trust. II. BACKGROUND The West Hennepin Affordable Housing Land Trust (WHAHLT) received an award of funds from Hennepin County's Affordable Housing Initiative Fund (AHIF) to provide affordable housing in scattered sites across suburban Hennepin County. WHAHLT has identified the property at 7401 18th Avenue as a candidate for use of the funds. The property at 7401 18th Avenue was purchased and rehabilitated by the Greater Metropolitan Housing Corporation (GMHC) through the Housing and Redevelopment Authority's Neighborhood Stabilization Program (NSP). The house has been listed for sale since June 2011. The original list price was $167,000. After very little interest, the asking price was lowered to $162,000 in August 2011, and then down to $157,000 in October 2011. WHAHLT has made GMHC an offer 03192012 7401 18th AHIF.doc of$142,000 to purchase the property for a land trust participant. The sale proceeds will be returned to Richfield's NSP pool for additional purchase/rehabilitation/resale opportunities. The Housing and Redevelopment Authority (HRA) has partnered with WHAHLT in the past to provide long-term affordable housing opportunities on a scattered-site basis. Hennepin County requires that a City or HRA provide a Resolution in support of the use of AHIF within its community. Staff is recommending the HRA adopt the Resolution authorizing the use of an AHIF loan for the acquisition of the property by WHAHLT. III. BASIS OF RECOMMENDATION A. POLICY • A goal of the City's Comprehensive Plan is to ensure sufficient diversity in the housing stock to provide for a range of household sizes, income levels and needs through the following policies: o Promote the development of a balanced housing stock that is available to a range of income levels. o Promote the development, management and maintenance of affordable housing in the City through assistance programs; alternative funding sources; and the creation of partnerships whose mission is to promote low to moderate income housing. B. CRITICAL TIMING ISSUES • Closing on the property is scheduled for March 21, 2012. C. FINANCIAL • Hennepin County requires a Resolution of support from the community in which a project is located before they can provide AHIF assistance. • The Land Trust will retain ownership of the land and sell the structures to the buyer. • AHIF requires recipients to serve households earning less than 80 percent of the Twin Cities Area Median Income. D. LEGAL • N/A IV. ALTERNATIVE RECOMMENDATIONS) • Do not adopt the Resolution authorizing the use of AHIF funds for the acquisition of 7401 18th Avenue. V. ATTACHMENTS • Resolution VI. PRINCIPAL PARTIES EXPECTED AT MEETING • N/A 3A - 1 HRA RESOLUTION NO. RESOLUTION AUTHORIZING THE USE OF AN AFFORDABLE HOUSING INCENTIVE FUND LOAN FOR THE PURCHASE OF 7401 18TH AVENUE WHEREAS, Hennepin County Housing and Redevelopment Authority (HCHRA) in Resolution No. 10-HCHRA-0010 has approved the use of a $40,000 Affordable Housing Incentive Fund loan for the 7401 18th Avenue project, contingent upon the Richfield Housing and Redevelopment Authority's consent to the HCHRA's participation in the project; and WHEREAS, the 7401 18th Avenue project will increase/preserve the supply of affordable housing in the City of Richfield by providing one affordable single-family home; and WHEREAS, the loan from the HCHRA will complete the financing required for the project to proceed. BE IT RESOLVED, that the participation of the Hennepin County Housing and Redevelopment Authority in the project is hereby approved. Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 19th day of March, 2012. Doris Rubenstein, Acting Chair ATTEST: Doris Rubenstein, Secretary 03192012 7401 18th AH I F.doc AGENDA ITEM#: 3B REPORT#: 9 =add STAFF REPORT RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY MEETING MARCH 19, 2012 REPORT PREPARED BY: MICHELLE LEWIS/JULIE URBAN,HOUSING SPECIALISTS NAME,TITLE REPORT PRESENTER: KAREN BARTON, ASSISTANT COMMUNITY DEVELOPMENT DIRECTOR NAME,TITLE DEPARTMENT DIRECTOR REVIEW: !...� , rlri#,� ,�I .■ REVIEWED BY EXECUTIVE DIRECTOR 'Af 4ripp, iliftiS ti r_., ITEM FOR HRA CONSIDERATION: Approval of revised guidelines for the Foreclosure Purchase Incentive Program. I. RECOMMENDED ACTION: By Motion: Approve the revised guidelines for the Housing and Redevelopment Authority funded Foreclosure Purchase Incentive Program. II. BACKGROUND In February 2009 the Housing and Redevelopment Authority (HRA) instituted the Foreclosure Purchase Incentive Program (FPIP) to help stabilize neighborhoods impacted by foreclosures. Since program inception, the HRA has provided 18 loans totaling $240,000, representing 18 foreclosed and vacant houses returned to owner- occupancy. In an effort to simplify the loan documents, clarify program eligibility, terms and conditions, and to streamline the process overall, staff is recommending the following revisions to the Program Guidelines: 03192012 Foreclosure Purchase Incentive Program Guidelines • Clarify program definitions used in the loan program. Provide more specific information and definitions of terms used to administer the program. • Clarify Application Procedures and Eligibility Requirements. These changes specify the tasks and requirements that applicants must complete to qualify for and be approved for funding. • Clarify loan terms and conditions. Further explain terms and conditions of the loans offered. • Clarify requirements and administration of Rehabilitation Loans. Specify HRA expectations of timing and process for rehabilitation work. Added language to clarify eligible improvements and criteria for professionals hired to complete rehabilitation projects. Added language regarding exterior design to clarify design goals. III. BASIS OF RECOMMENDATION A. POLICY • It is to the benefit of loan recipients and administrators to clarify terms and conditions of the program to ensure program viability. • The City has seen continued elevated levels of foreclosures in 2011. Levels of late mortgage payments are still high and it is anticipated that foreclosure rates will remain at elevated levels due to continued economic difficulties. • Foreclosed properties contribute to blighted neighborhoods and negatively impact surrounding property values. • Many foreclosed properties are beset with deferred maintenance and/or damage associated with the foreclosure. • FPIP supports the Housing Plan Goals and Policies from the 2009 Richfield Comprehensive Plan. 1. Maintain and enhance Richfield's image as a community with strong, desirable and livable neighborhoods. • Supporting the rehabilitation and upgrading of the existing housing stock. • Supporting the ongoing maintenance and upkeep of residential properties. 2. Ensure sufficient diversity in the housing stock to provide for a range of household sizes, income levels and needs. • Encouraging improvements to the housing stock to better serve families with children and seniors. • Promoting housing diversity to serve families at all stages in their life-cycle through incentive programs (Housing Plan Goal #2). B. CRITICAL TIMING ISSUES • N/A C. FINANCIAL • $75,500 has been budgeted by the HRA in 2012 for the FPIP. • Funds are distributed in the form of a Deferred Loan, forgivable after five years. D. LEGAL • The HRA Attorney has reviewed the FPIP Agreements and loan documents. IV. ALTERNATIVE RECOMMENDATION(S) • Do not approve the revised FPIP Guidelines. V. ATTACHMENTS • Proposed revised program guidelines — Redline version • Proposed revised program guidelines — Clean copy and attachments VI. PRINCIPAL PARTIES EXPECTED AT MEETING • N/A Foreclosure Purchase Incentive Program Procedural Guidelines Statement of Purpose The purpose of the Richfield Foreclosure Purchase Incentive Program (FPIP) is to provide purchase or rehabilitation incentives to prospective Richfield homebuyers to buy in Richfield and to in order to-return foreclosed,vacant properties to owner-occupied properties as quickly as possible. The incentives are available in the form of deferred loans. FPIP was established by the HRA to provide and maintain a sufficient supply of adequate, safe, and sanitary dwellings in the City of Richfield. NOTE: Procedural Guidelines are a tool for guiding program administration. Procedural Guidelines do not constitute a contractual agreement or liability on the part of the City or the Housing and Redevelopment Authority (HRA). Program Objectives • To stabilize and improve residential neighborhoods and eliminate the blighting influence of foreclosed, vacant housing„thus stabilizing and improving residential neighborhoods. • To off-set costs associated with deferred maintenance and property damage associated with foreclosure and vacancy. • To maintain and improve Richfield housing stock. Program Goal Program Objectives will be achieved by providing pPurchase Assistance or fRehabilitation funds to encourage prospective homebuyers to purchase and occupy foreclosed, vacant homes in the eityRichfield. Homebuyers will alse-have free access to other remodeling advising services available in the City of Richfield. Data Privacy All information secured through the program is subject to the Minnesota Government Data Privacy Act. Questions regarding the release of information should be directed to the program administrator. 1 Hold Harmless The City and HRA expect Applicants to indemnify and hold harmless the HRA and the City, their officers. agents, and employees from and against all claims, loss, damage, cost, and expense alleged to have resulted from the Remodeler's work and operations. No HRA officer authorized to take part in administering the FPIP Loan Program, in his or her official capacity, shall have a personal financial interest or benefit financially from the Loan. No member, official. or employee of the HRA shall be personally liable to the Buyer, or any successor in interest, for any act or omission of the HRA or for any amount which may become due to the Buyer or successor or on any HRA obligations. Application Procedure The Applicant must: 1. Fill out Complete the Application Form (Exhibit AC) and attach copy(s)of all Remodeling Action Plan (Exhibit E).Submit all required documentation, including digital photos. 3. Submit application fee. Applications will be reviewed and awarded on a first-come, first-served basis, based on the date of receipt and completeness of the application, as solely determined by the HRA. Criteria for Eligibility In order for aa-applicant to be eligible for an FPIP Loan, certain conditions must be met. 1.Funding is • .. . - . -. - - - ' .. - • - - •- • . . -- - - - A • _ . . - . • . .• . - . . •--• . .. • . • . . -- . first served basis with priority given to complete applications. I. A complete Application is required for an Applicant to be considered for funding. A complete 2 3 _ 3 Application Form and all supporting documents are necessary for a complete application. 2. Eligible Properties The Property must meet minimum health and safety requirements. Loans will not be issued for uninhabitable properties. Determination of habitability will be at the discretion of the HRA based on City of Richfield Point of Sale Inspection report and physical inspection facilitated by the HRA. The HRA reserves the right to deny loan issuance to properties deemed uninhabitable. 3. The Buyer has entered into a binding purchase agreement to purchase the Property. A Loan Commitment letter will not be issued until a binding purchase agreement is submitted. 4. The Buyer must provide evidence of title control at or before the closing with the HRA. If the Buyer cannot provide such evidence, the Loan Commitment will be cancelled. To be considered for another FPIP Loan, the Buyer would need to reapply. 5. The Buyer is purchasing the Property for the purpose of occupancy. The FPIP Loan is offered for the purpose of Development, not speculation. a. The Buyer recognizes the importance of the Development to the general welfare of Richfield and the substantial financing and other public aids that have been made available by the HRA for the purpose of making the Development possible, the qualification and identity of the Buyer are of particular concern to the HRA. b. The Buyer recognizes that it is because of such qualifications and identity that the HRA is entering into the FPIP Loan, and, in so doing, is further willing to rely on the representations and undertakings of the Buyer for the faithful performance of all undertakings and covenants agreed by the Buyer to be performed. 6.Evidence of funds to purchase the Property is required. Any -- : •- - : financing for the purchase of the Property, the financing must be in the form of a fixed interest rate loan. A minimum of 20%equity in the Property will be required. Equity can be in the following forms: of-Buyer down-payment and/or the difference between appraised market 3 g—y value and combined amount of ALL liens against the property. Please note the CLTV calculation includes only , including 50% of the FPIP Loan. - - . . - - . 7. Evidence of sufficient financing for Improvements (identified in the Rehabilitation Plan) is required for Rehabilitation Loans. 48.Applicants• household incomes are not restricted. -5,9. Only one loan per eligible household. Fr l 0. The Property must be located within the City of Richfield municipal boundaries. FPIP funds. Terms and Conditions of the FPIP Loan 1. Funding is limited to the purchase of Foreclosed Properties, with priority given to foreclosed AND vacant properties. Funding is available on a limited basis. It is awarded on a first come, first served basis with priority given to complete applications. The HRA is not responsible for unavailability of loan funds to Applicants. 2. Upon receipt of complete application, the HRA will review applications for compliance with FPIP guidelines and the current HRA Subordination and Satisfaction Policy (Exhibit B). a. If eligible. the HRA will provide a Commitment Letter to the Buyer. b. If ineligible, the HRA will provide a Denial Letter to the Buyer. 3. Funds will be awarded in the form of a five-year, zero-interest. forgivable loan while the Property is owned and occupied by the Buyer. The lien created by the FPIP Loan will be forgiven five (5) years from the date of the Promissory Note and the Mortgage Deed (Exhibits B and C). 4 6 -�j 4. In cases of the Rehabilitation Loan, the HRA loan closing must take place within five business days of the transfer of Property to the Buyer. The Rehabilitation Incentive Loan will be disbursed in three payments. a. 25% at the HRA Loan closing. b. 25% not later than five business days following notification and verification of issuance of building permits i. If a building permit is not required, the second payment will be paid not later than five days after submission of receipts showing expenditures of$5,000 or more. Receipts submitted must be associated with Improvements identified in Rehabilitation Plan. c. 50% on issuance of Completion Certificate (Exhibit D), showing full completion of all Improvements. d. Typically payments to the Buyer are made through the HRA. On a case-by-case basis, funds may be escrowed and disbursed by a title company, upon satisfactory verification of work completed. 5. In cases of the Purchase Assistance Loan, the HRA loan closing will occur in conjunction with the transfer of property closing. The HRA will provide the full amount of the loan ($10,000), payable to the Buyer AND the Title Company conducting the closing. 6. The Loan Recipient must be the Buyer. The Buyer will provide the HRA with a mortgage in recordable form. The Buyer will pay the cost of recording the mortgage. The Loan Recipient must also provide to the HRA an executed Promissory Note, Errors and Omissions Acknowledgement Agreement, and Certificate and Request for Notice: Foreclosure. See examples in Exhibits C, D, and E. a. These documents must be executed prior to any loan disbursement. b. A lien will be placed against the Property by the HRA for the full loan amount 5 3B- L through the Mortgage Deed (Exhibits B and C). The Mortgage is subject to Mortgage Registration Tax; the Buyer is responsible for the payment. c. The Note may not be assigned or pledged. 7. If at any time during the life of the loan an Event of Default occurs, the loan will be required to be repaid in full. Payment of the FPIP Loan will be made in full within 30 days upon the sale, conveyance, assignment. lease or transfer of the property. Events of Default include the following: a. The Buyer does not own and occupy the Property as the Buyer's primary residence. b. The Buyer does not obtain Homestead Tax Classification for the Property within 60 days of the purchase of the Property. c. The Property ceases to be classified as Homestead at any time during the five-year term of the Loan. d. The Property is rented, leased, unoccupied or assigned for a period longer than six consecutive months. e. If the house is soldThe Property is voluntarily or involuntarily sold, transferred or otherwise conveyed. f. There exists any other event, which would cause the Property to be occupied by another. other than the Buyer, for a period of more than six months. g. There exists any default under the terms of this or any other mortgage secured by the Property and the Buyer has not entered into a work-out agreement with the Mortgagee(s). 8. If an Event of Default occurs, the HRA may take one or more of the following remedies. The remedies shall be cumulative and concurrent and may be pursued singly, successively, or together. By any act of omission or commission, the HRA shall not be deemed to have waived any of its rights or remedies. One waiver of an Event of Default or other breach, by either party, 6 33 -- 9 is not to be considered waiver of any future Events of Default or other breach. a. Suspend HRA action i.e. making partial payment or authorizing Completion Certificate b. Cancel or rescind HRA Loan c. Accelerate payment under the Note d. Foreclose on the Mortgage e. Take other legal action to enforce the Buyer's performance and observance of the Loan requirements 9. If the HRA delivers any notice or demand with respect to an Event of Default by the Buyer, the HRA shall forward a copy of such notice or demand to each Holder of any Mortgage as identified in the evidence of financing for the purchase of the Property. 1.Funds will be awarded in the form of a five year, zero interest, forgivable loan while the Property is owned and occupied by the Applicant. The lien created by the FPIP Loan will be forgiven five (5) years from the date of the Promissory Note(Exhibit G) and the Mortgage Deed - - Mortgage Deed (Exhibit H). The Mortgage is subject to Mortgage Registration Tax. 4.- ' • . . ..• - .. .. • . . . . •., - - - ' . -- , - - - •_• 10. The FPIP Loan is disbursed at closing as a junior lien to the first mortgage. Any request for Subordination must meet the HRA Subordination and Satisfaction Policy(Exhibit F). 7 7,11. A Satisfaction of Mortgage (Exhibit G)in recordable form will be provided upon receipt of payment or at the end repayment period. The FPIP Loan may also be paid in full at any time. . _ � mortgage.- The Rehabilitation Incentive Loan can al-so be awafded within one year of Buyer's Loan Agreement (Exhibit B). Typically payments to the Buyer are made Through the HRA. verification of work completed. 12. Rehabilitation funded through the FPIP Loan must be identified in the Rehabilitation Plan. Improvements must be completed within 180 days of closing on the FPIP Loan. a. In such case that proposed work was never started and/or not completed within the 90-180 day period from the date of the FPIP Loan closing, the HRA will verify status of the rehabilitation completed. b. In such case that additional rehabilitation is required to achieve basic health and safety standards, the HRA may allow an extension and/or require a licensed contractor to complete the rehabilitation. When minimum health and safety standards are met the HRA may adjust the Mortgage amount to reflect funds disbursed to the Loan Recipient. c._In such case the rehabilitation was never initiated, the Mortgage will be due and all funds disbursed must be repaid. 13. When a licensed contractor is hired using FPIP Rehabilitation Loan funds the following conditions apply: a. A Remodeler Form (Exhibit H)must be submitted with the Rehabilitation Plan. 8 b. Lien Waivers for the full amount of the payment must be provided at the time of final disbursement. c. A "Certificate of Completion Certificate" (Exhibit D) form must be completed by the Applicant,the Remodeler, City of Richfield Building Inspections, and the HRA to verify that all parties acknowledge the work as complete. i. If the HRA refuses to provide acknowledgement, within five days the HRA will provide, in writing, the requirements for the Buyer to receive the HRA's certification of Rehabilitation completion. funds to Applicants. built in appliances are also eligible. 5.All rehabilitation must meet Housing Quality Standards. rehabilitation funds. . - - . . - ' - • .. - • - . - - - • Eligible Improvements 1. Value-added improvements, such as finishing off an additional bathroom or adding a garage; 9 3 - Its built-in appliances are also eligible. 2. Maintenance and repair, such as roof replacement, window/door replacement, or electrical update. 3. Furnaces, water heaters, and central air conditioning. 4. Cosmetic improvements, such as painting or floor replacement/repair. 5. Permanent landscaping, as determined by the HRA. 6. All rehabilitation must meet Housing Quality Standards. 7. Swimming pools. greenhouses, and appliances (except for built-in appliances) are NOT eligible for rehabilitation funds. Remodeler Criteria and Responsibility The Remodeler must meet a minimum set of standards and perform certain requirements in order to qualify for the program. 1.Meet all Lender requirements. 11.Provide adequate builder's risk, comprehensive general liability and worker's compensation insurance coverage. 3-:2.Provide a written warranty policy to the Applicant and LenderHRA. 43.Provide the following references to the Applicant: a. Five (5) satisfied customers; b. Three (3)major suppliers or subcontractors; c. Names of building officials from two cities where the Remodeler has worked in the last three(3) years. 5:4.Each Remodeler must complete a Remodeler Form (Exhibit H). The Remodeler must perform work in accordance with the specifications and contract provided to the Applicant. Any guarantees and/or warranties on the materials, supplies, or quality of work must be provided to the Applicant in writing. Lien Waivers must be provided at time of payment. All 10 proper permits must be obtained per city code. NOTE: The City has a Point of Sale Inspection Ordinance that requires all residential properties pass a housing code inspection before salei or repairs are to be completed after sale and secured by an escrow deposit made with the City Building Inspections Division. The HRA is not responsible for insuring compliance with this ordinance. During the rehabilitation process proper inspections should be arranged by the Buyer or Remodeler. Housing Design and Site Development Criteria House design is of critical concern for the HRA. The house building lines, window placement., and orientation to street, must present a balanced and pleasing view from all sides. Garage door dominance in design must be minimized. Blank walls without windows, doors, siding and roof line variations are strongly discouraged. The following requirements apply to all Rehabilitation Incentive Loan projects: 1. Newly constructed garages must be two-car, attached or detached. At a minimum, sufficient space must be available to allow for a future 20 x 20 feet garage without variances from city code. 2. If exterior work is envisioned, exterior materials should be low maintenance. Masonite siding materials are not acceptable. 3. Any building plans must be prepared in consultation with an architect or a designer with a minimum two-year technical degree. Plans will be reviewed by HRA staff as a condition of the Rehabilitation Incentive Loan approval. " . - - -- . . - . .' . •- , . . . . •-- - , 4. All landscaping and sod disturbed by the rehabilitation project must be repaired in a 11 professional manner. 5. Adjoining properties must not be disturbed by the rehabilitation process. 6. Storm water drainage patterns in the neighborhood and on adjoining properties must improve or not be negatively impacted by the improved property. Where roofs direct storm water toward minimum side yards, gutters or other water distribution methods may be required as a condition of the Rehabilitation Incentive Loan. Plan Review and Construction of Improvments If ne\\ construction is included in the(Rehabilitation Plan,the HRA must receive a set of the building plans, including building elevations, site drainage patterns, and a copy of the land survey including easements. HRA staff will review the plans to ensure conformance with the Housing Design and Site Development Criteria._HRA Loan Administrators are not authorized to review the building plans to conform to the Building Code. 1. If any element of the plan is in conflict with the above criteria, the Applicant will be notified. 2. Revised plans must be submitted for final approval. All plans need to be prepared by a qualified draftsperson or architect, or other person acceptable to the HRA. 3. All plan reviews will be completed by the HRA in a timely manner. Review will be complete within approximately one week. Each plan submitted will be processed individually. 4. After review and any modifications, plans may be submitted to the Building Official. The HRA may refer a set of plans to the county assessor to make a preliminary determination of value if there is concern about the extent of value-added as a result of rehabilitation. 5. The Buyer shall construct the Improvements on the Property in conformance to the Rehabilitation Plan. If the initial Rehabilitation Plan needs to be modified. the Buyer must contact the HRA staff to discuss such modifications. 6. All Improvements must be constructed in conformance with all local, state, and federal laws and regulations. 12 General Program Marketing Program marketing is entirely at the discretion of the HRA. It may include the following: • Promotional Articles • Direct Mail or Email contact • Website announcements End Buyers may be any financially eligible family. The HRA is a Fair Housing agency. Definitions Applicant—Person or persons who apply for FPIP funding . -: . - . : , . Foreclosed Property. Buyer{or Homebuyer)—Person or persons who purchase and occupy the Foreclosed Property. City—The City of Richfield. Closing—The date on which Buyer becomes the title owner of the Property through a purchase transaction of the Property. Combined Loan to Value Ratio (CLTV)—The proportion of loans secured by the Property in relation to its appraised value. To calculate For the purposes of FPIPCLTV, include only 50% of the FPIP Loan in the CLTV calculation. Development—The Property and the Improvements to be constructed according to the Rehabilitation Plans approved by the HRA. Foreclosed Property A housing unit that has been through a mortgage foreclosure process with the most recent owner of record, and the current owner of record is a lending agency/bank. FPIP Loan—Interest free loan offered by the HRA for purchasing and occupying a Foreclosed Property. Loan can be structured as a Purchase Incentive or a Rehabilitation Incentive Loan, see additional definitions. HRA –The Housing and Redevelopment Authority in and for the City of Richfield. Improvements—Each and all of the site improvements to be constructed on the Property by the 13 _ L. Buyer, as specified in the Rehabilitation Plans approved by the HRA. Lender—The primary lender working cooperatively with the HRA on home remodeling programsApplicant. Loan Recipient—Applicant who is approved to receive a FPIP Loan. Mortgage and Holder—The Mortgage shall include financing creating an encumbrance or lien upon the Property or any part thereof, as security for a loan. The Holder includes any insurer or guarantor (other than the Buyer) of any obligation or condition secured by such mortgage or deed of trust. Property–The Foreclosed Property identified in the FPIP application. Purchase Incentive Loan or FPIP Purchase Loan—Interest free loan offered by the HRA for purchasing and occupying a Foreclosed Property. The loan is $10,000. The loan is payable upon sale of the house or forgiven after 5 years. The loan is fully defined the FPIP Purchase Incentive Loan Agreemei4j-E h, A). Rehabilitation Incentive Loan or FPIP Rehab Loan—Interest free loan offered by the HRA for purchasing and occupying a Foreclosed Property. The loan is $15,000. The Loan is payable upon sale of the house or forgiven after 5 years. -- .. .- - -- - ► ► - • . Rehabilitation Plans—Collectively, the plans, drawings and related documents related to the Improvements. UnavoidableDelays—Delays which are the direct result of strikes, labor troubles, fire or other casualty to the Improvements, litigation commenced by third parties which results in delays or acts of any federal, state or local government, except those contemplated by this Agreement, which are beyond the control of the Buyer. Vacant Property—a property that has been vacant for at least 90 days. 14 List of Exhibits Application Form Exhibit A Rehabilitation Loan Promissory Note and Exhibit B Mortgage Purchase Assistance Promissory Note and Exhibit C Mortgage Completion Certificate Exhibit D Errors and Omissions Form; Certificate and Exhibit E request for notice-foreclosure Richfield Housing and Redevelopment Exhibit F Authority Subordination & Satisfaction Policy Satisfaction Form Exhibit G Remodeler Form Exhibit H 15 Foreclosure Purchase Incentive Program Procedural Guidelines Statement of Purpose The purpose of the Richfield Foreclosure Purchase Incentive Program (FPIP) is to provide incentives to prospective homebuyers to buy in Richfield and to return foreclosed, vacant properties to owner-occupied properties as quickly as possible. The incentives are available in the form of deferred loans. FPIP was established by the HRA to assist in maintaining and improving the housing stock in the City of Richfield. NOTE: Procedural Guidelines are a tool for guiding program administration. Procedural Guidelines do not constitute a contractual agreement or liability on the part of the City or the Housing and Redevelopment Authority (HRA). Program Objectives • To stabilize and improve residential neighborhoods and eliminate the blighting influence of foreclosed, vacant housing. • To off-set costs associated with deferred maintenance and property damage associated with foreclosure and vacancy. • To maintain and improve Richfield housing stock: Program Goal Program Objectives will be achieved by providing Purchase Assistance or Rehabilitation funds to encourage prospective homebuyers to purchase and occupy foreclosed, vacant homes in Richfield. Homebuyers will also have access to remodeling services available in the City of Richfield. Data Privacy All information secured through the program is subject to the Minnesota Government Data Privacy Act. Questions regarding the release of information should be directed to the program administrator. Hold Harmless The City and HRA expect Applicants to indemnify and hold harmless the HRA and the City,their officers, agents, and employees from and against all claims, loss, damage, cost, and expense alleged to have resulted from the Remodeler's work and operations. No HRA officer authorized to take part in administering the FPIP Loan Program, in his or her official capacity, shall have a personal financial interest or benefit financially from the Loan. No member, official, or employee of the HRA shall be personally liable to the Buyer, or any successor in interest, for any act or omission of the HRA or for any amount which may become due to the Buyer or successor or on any HRA obligations. Foreclosure Purchase Incentive Program Guidelines March 2012 Application Procedure The Applicant must: 1. Complete the Application Form(Exhibit A) 2. Submit all required documentation, including digital photos. 3. Submit application fee. Applications will be reviewed and awarded on a first-come, first-served basis, based on the date of receipt and completeness of the application, as determined by the HRA. Criteria for Eligibility 1. A complete Application is required for an Applicant to be considered for funding. A complete Application Fonn.and all supporting documents are necessary for a complete application. Incomplete applications will be returned to the Applicant if not completed within 30 days. 2. The Property must meet minimum health and safety requirements. Loans will not be issued for uninhabitable properties. Determination of habitability will be at the discretion of the HRA based on City of Richfield Point of Sale Inspection report and physical inspection facilitated by the HRA. The HRA reserves the right to deny loan issuance to properties deemed uninhabitable. 3. The Buyer has entered into a binding purchase agreement to purchase the Property. A Loan Commitment letter will not be issued until a binding purchase agreement is submitted. 4. The Buyer must provide evidence of title control at or before the closing with the HRA. If the Buyer cannot provide such evidence,the Loan Commitment will be cancelled. To be considered for another FPIP Loan,the Buyer would need to reapply. 5. The Buyer is purchasing the Property for the purpose of occupancy. The FPIP Loan is offered for the purpose of Development,not speculation. a. The Buyer recognizes the importance of the Development to the general welfare of Richfield and the substantial financing and other public aids that have been made available by the HRA for the purpose of making the Development possible,the qualification and identity of the Buyer are of particular concern to the HRA. b. The Buyer recognizes that it is because of such qualifications and identity that the HRA is entering into the FPIP Loan,and, in so doing, is further willing to rely on the representations and undertakings of the Buyer for the faithful performance of all undertakings and covenants agreed by the Buyer to be performed. 6. Evidence of funds to purchase the Property is required. Any financing for the purchase of the Property must be in the form of a fixed interest rate loan. A minimum of 20% equity in the Property will be required. Equity can be in the following forms: Buyer down-payment; the difference between appraised market value and combined amount of ALL liens against the property, including 50% of the FPIP Loan. 7. Evidence of sufficient financing for Improvements (identified in the Rehabilitation Plan) is required for Rehabilitation Loans. 8. Applicants' household incomes are not restricted. 9. Only one loan per eligible household. 10. The Property must be located within the City of Richfield municipal boundaries. 2 Foreclosure Purchase Incentive Program Guidelines March 2012 Terms and Conditions of the FPIP Loan 1. Funding is limited to the purchase of Foreclosed Properties, with priority given to foreclosed AND vacant properties. Funding is available on a limited basis. It is awarded on a first come, first served basis with priority given to complete applications. The HRA is not responsible for unavailability of loan funds to Applicants. 2. Upon receipt of complete application, the HRA will review applications for compliance with FPIP Guidelines. a. If eligible,the HRA will provide a Commitment Letter to the Buyer. b. If ineligible,the HRA will provide a Denial Letter to the Buyer. 3. Funds will be awarded in the form of a five-year, zero-interest, forgivable loan while the Property is owned and occupied by the Buyer. The lien created by the FPIP Loan will be forgiven five (5) years from the date of the Promissory Note and the Mortgage Deed (Exhibits B and C). 4. In cases of the Rehabilitation Loan,the HRA loan closing must take place within five business days of the transfer of Property to the Buyer, unless otherwise authorized by the HRA. The Rehabilitation Incentive Loan will be disbursed in three payments. a. 25%at the HRA Loan closing. b. 25%not later than five business days following notification and verification of issuance of building permits i. If a building permit is not required, the second payment will be paid not later than five days after submission of receipts showing expenditures of$5,000 or more Receipts submitted must be associated with Improvements identified in Rehabilitation Plan. c. 50%on issuance of Completion Certificate (Exhibit D), showing full completion of all Improvements. d. Typically payments to the Buyer are made through the HRA. On a case-by-case basis, funds may be escrowed and disbursed by a title company, upon satisfactory verification of work completed. 5. In cases of the Purchase Assistance Loan,the HRA loan closing will occur in conjunction with the transfer of property closing. The HRA will provide the full amount of the loan($10,000), payable to the Buyer AND the Title Company conducting the closing. 6. The Loan Recipient must be the Buyer. The Buyer will provide the HRA with a mortgage in recordable form. The Buyer will pay the cost of recording the mortgage. The Loan Recipient must also provide to the BRA an executed Promissory Note, Errors and Omissions Acknowledgement Agreement, and Certificate and Request for Notice: Foreclosure. See examples in Exhibits C, D, and E. a. These documents must be executed prior to any loan disbursement. b. A lien will be placed against the Property by the HRA for the full loan amount through the Mortgage Deed (Exhibits B and C). The Mortgage is subject to Mortgage Registration Tax; the Buyer is responsible for the payment. c. The Note may not be assigned or pledged. 7. If at any time during the life of the loan an Event of Default occurs, the loan will be required to be repaid in full. Payment of the FPIP Loan will be made in full within 30 days upon the sale, conveyance, assignment, lease or transfer of the property. Events of Default include the following: a. The Buyer does not own and occupy the Property as the Buyer's primary residence. 3 Foreclosure Purchase Incentive Program Guidelines March 2012 33�l� b. The Buyer does not obtain Homestead Tax Classification for the Property within 60 _ days of the purchase of the Property. c. The Property ceases to be classified as Homestead at any time during the five-year term of the Loan. d. The Property is rented, leased, unoccupied or assigned for a period longer than six consecutive months. e. The Property is voluntarily or involuntarily sold, transferred or otherwise conveyed. f. There exists any other event, which would cause the Property to be occupied by another, other than the Buyer, for a period of more than six months. g. There exists any default under the terms of this or any other mortgage secured by the Property and the Buyer has not entered into a work-out agreement with the Mortgagee(s). 8. If an Event of Default occurs, the HRA may take one or more of the following remedies. The remedies shall be cumulative and concurrent and may be pursued singly,successively, or together. By any act of omission or commission, the HRA shall not be deemed to have waived any of its rights or remedies. One waiver of an Event of Default or other breach,by either party, is not to be considered waiver of any future Events of Default or other breach. a. Suspend HRA action i.e. making partial payment or authorizing Certificate of Completion b. Cancel or rescind HRA Loan c. Accelerate payment under the Note d. Foreclose on the Mortgage e. Take other legal action to enforce the Buyer's performance and observance of the Loan requirements 9. If the HRA delivers any notice or demand with respect to an Event of Default by the Buyer,the HRA shall forward a copy of such notice or demand to each Holder of any Mortgage as identified in the evidence of financing for the purchase of the Property. 10. The FPIP Loan is disbursed at closing as a junior lien to the first mortgage. 11. A Satisfaction of Mortgage (Exhibit G)in recordable form will be provided upon receipt of payment or at the end repayment period. The"FPIP Loan may also be paid in full at any time 12. Rehabilitation funded through the FPIP Loan must be identified in the Rehabilitation Plan. Improvements must be completed within 180 days of closing on the FPIP Loan. a. In such case that proposed work was not completed within the 180 day period from the date of the FPIP Loan closing,the HRA will verify status of the rehabilitation completed. b. In such case that additional rehabilitation is required to achieve basic health and safety standards, the HRA may allow an extension and/or require a licensed contractor to complete the rehabilitation. When minimum health and safety standards are met the HRA may adjust the Mortgage amount to reflect funds disbursed to the Loan Recipient. c. In such case the rehabilitation was never initiated, the Mortgage will be due and all funds disbursed must be repaid. 13. When a licensed contractor is hired using FPIP Rehabilitation Loan funds the following conditions apply: a. A Remodeler Form (Exhibit H) must be submitted with the Rehabilitation Plan. b. Lien Waivers for the full amount of the payment must be provided at the time of final disbursement. 4 Foreclosure Purchase Incentive Program Guidelines March 2012 c. A Completion Certificate (Exhibit E) form must be completed by the Applicant,the Remodeler, City of Richfield Building Inspections, and the HRA to verify that all parties acknowledge the work as complete. i. If the HRA refuses to provide acknowledgement, within five days the HRA will provide, in writing, the requirements for the Buyer to receive the HRA's certification of Rehabilitation completion. Eligible Improvements 1. Value-added improvements, such as finishing of an additional bathroom or adding a garage; built-in appliances are also eligible. 2. Maintenance and repair, such as roof replacement, window/door replacement, or electrical update. 3. Furnaces, water heaters, and central air conditioning. 4. Cosmetic improvements, such as painting or floor replacement/repair. 5. Permanent landscaping, as determined by the HRA. 6. All rehabilitation must meet Housing Quality Standards. 7. Swimming pools, greenhouses, and appliances (except for built-in appliances) are not eligible for rehabilitation funds. Remodeler Criteria and Responsibility The Remodeler must meet a minimum set of standards and perform certain requirements in order to qualify for the program. 1. Provide adequate builder's risk,comprehensive general liability and worker's compensation insurance coverage 2. Provide a written warranty policy to the Applicant and HRA. 3. Provide the following references a. Five(5) satisfied customers, b. Three (3)major suppliers or subcontractors; c. Names of building officials from two cities where the Remodeler has worked in the last three (3) years. 4. Each Remodeler must complete a Remodeler Form(Exhibit H). The Remodeler must perform work in accordance with the specifications and contract provided to the Applicant. Any guarantees and/or warranties on the materials, supplies, or quality of work must be provided to the Applicant in writing. Lien Waivers must be provided at time of payment. All proper permits must be obtained per city code. NOTE: The City has a Point of Sale Inspection Ordinance that requires all residential properties pass a housing code inspection before sale, or repairs are to be completed after sale and secured by an escrow deposit made with the City Building Inspections Division. The HRA is not responsible for insuring compliance with this ordinance. During the rehabilitation process,required inspections must be arranged by the Buyer or Remodeler. 5 Foreclosure Purchase Incentive Program Guidelines March 2012 Housing Design and Site Development Criteria House design is of critical concern for the HRA. The house building lines, window placement, and orientation to street, must present a balanced and pleasing view from all sides. Garage door dominance in design must be minimized. Blank walls without windows, doors, siding and roof line variations are strongly discouraged. The following requirements apply to all Rehabilitation Incentive Loan projects: 1. Newly constructed garages must be two-car, attached or detached. At a minimum, sufficient space must be available to allow for a future 20 x 20 feet garage without variances from city code. 2. If exterior work is envisioned, exterior materials should be low maintenance. Masonite siding materials are not acceptable. 3. Any building plans must be prepared in consultation with an architect or a designer with a minimum two-year technical degree. Plans will be reviewed by HRA staff as a condition of the Rehabilitation Loan approval. 4. All landscaping and sod disturbed by the rehabilitation project must be repaired in a professional manner. 5. Adjoining properties must not be disturbed by the rehabilitation process. 6. Storm water drainage patterns in the neighborhood and on adjoining properties must improve or not be negatively impacted by the improved property. Where roofs direct storm water toward minimum side yards, gutters or other water distribution methods may be required as a condition of the Rehab Incentive Loan. Plan Review and Construction of Improvements If new construction is included in the Rehabilitation Plan, the HRA must receive a set of the building plans, including building elevations, site drainage patterns, and a copy of the land survey including easements. HRA staff will review the plans to ensure conformance with the Housing Design and Site Development Criteria. HRA Loan Administrators are not authorized to review the building plans to conform to the Building Code. 1. If any element of the plan is in conflict with the above criteria, the Applicant will be notified. 2. Revised plans must be submitted for final approval. All plans need to be prepared by a qualified draftsperson or architect, or other person acceptable to the HRA. 3. All plan reviews will be completed by the HRA in a timely manner, within approximately one week. Each plan submitted will be processed individually. 4. After review and any modifications,plans may be submitted to the Building Official. The HRA may refer a set of plans to the county assessor to make a preliminary determination of value if there is concern about the extent of value-added as a result of rehabilitation. 5. The Buyer shall construct the Improvements on the Property in conformance to the Rehabilitation Plan. If the initial Rehabilitation Plan needs to be modified, the Buyer must contact the HRA staff to discuss such modifications. 6. All Improvements must be constructed in conformance with all local, state, and federal laws and regulations. General Program Marketing 6 Foreclosure Purchase Incentive Program Guidelines March 2012 Program marketing is entirely at the discretion of the HRA. It may include the following: • Promotional Articles • Direct Mail or Email contact • Website announcements End Buyers may be any financially eligible family. The HRA is a Fair Housing agency. Definitions Applicant—Person or persons who apply for FPIP funding. Buyer or Homebuyer—Person or persons who purchase and occupy the Foreclosed Property. City—The City of Richfield. Closing—The date on which Buyer becomes the title owner of the Property through a purchase transaction of the Property. Combined Loan to Value Ratio (CLTV)—The proportion of all loans secured by the Property in relation to its appraised value. For the purposes of FPIP, include only 50% of the FPIP Loan in the CLTV calculation. Development—The Property and the Improvements to be constructed according to the Rehabilitation Plans approved by the HRA. Foreclosed Property—A housing unit that has been through a mortgage foreclosure process with the most recent owner of record, and the current owner of record is a lending agency/bank. FPIP Loan—Interest free loan offered by the HRA for purchasing and occupying a Foreclosed Property. Loan can be structured as a Purchase Incentive or a Rehabilitation Incentive Loan, see additional definitions. HRA -The Housing and Redevelopment Authority in and for the City of Richfield. Improvements-Each and all of the site improvements to be constructed on the Property by the Buyer, as specified in the Rehabilitation Plans approved by the HRA. Lender—The primary lender working with the Applicant. Loan Recipient—Applicant who is approved to receive an FPIP Loan. Mortgage and Holder—The Mortgage shall include financing creating an encumbrance or lien upon the Property or any part thereof, as security for a loan. The Holder includes any insurer or guarantor(other than the Buyer) of any obligation or condition secured by such mortgage or deed of trust. Property—The Foreclosed Property identified in the FPIP application. 7 Foreclosure Purchase Incentive Program Guidelines March 2012 Purchase Incentive Loan or FPIP Purchase Loan—Interest free loan offered by the HRA for purchasing and occupying a Foreclosed Property. The loan is $10,000. The loan is payable upon sale of the house or forgiven after 5 years. Rehabilitation Incentive Loan or FPIP Rehabilitation Loan—Interest free loan offered by the HRA for purchasing and occupying a Foreclosed Property. The loan is $15,000. The Loan is payable upon sale of the house or forgiven after 5 years. Rehabilitation Plans—Collectively, the plans, drawings, and documents related to the Improvements. Unavoidable Delays—Delays which are the direct result of strikes, labor troubles, fire or other casualty to the Improvements, litigation commenced by third parties which results in delays or acts of any federal, state or local government, except those contemplated by this Agreement, which are beyond the control of the Buyer. Vacant Property—a property that has been vacant for at least 90 days. 8 Foreclosure Purchase Incentive Program Guidelines March 2012 3 - List of Exhibits Application Form Exhibit A Rehabilitation Loan Promissory Note and Exhibit B Mortgage Purchase Assistance Promissory Note and Exhibit C Mortgage Completion Certificate Exhibit D Errors and Omissions Form; Certificate and Exhibit E request for notice-foreclosure Richfield Housing and Redevelopment Exhibit F Authority Subordination and Satisfaction Policy Satisfaction Form Exhibit G Remodeler Form Exhibit H 9 Foreclosure Purchase Incentive Program Guidelines March 2012 Exhibit A FORECLOSURE PURCHASE INCENTIVE PROGRAM RICHFIELD $10,000 PURCHASE-INCENTIVE LOAN - APPLICATION COVER SHEET APPLICANT CONTACT INFORMATION Applicant(s) Legal Name(s) and Marital Status Applicant(s) current address Applicant(s) phone number Applicant(s) email address PROPERTY AND LENDER INFORMATION Proposed Property Address Proposed Closing Date Lending Institution Lender Name Lender Phone number Lender Email address Lender Mailing address CITY REVIEW PROCEDURE 1. Submit completed application for formal review. 2. HRA notifies applicant of approval or denial within 10-15 business days. 3. If approved, the Agreement is executed by the HRA. 4. Funds are dispersed to the buyer and lender at the time of closing. A mortgage is filed on the property to secure the loan. APPLICATION REQUIREMENTS: A completed application packet must be received before formal review will begin. No applications will be approved after closing. Signed FPIP Purchase-Incentive Loan Agreement $150 Application Fee Picture of the Property (digital format) Purchase Agreement Financing commitment for property acquisition Appraisal Copy of Point-of-Sale Inspection Title Commitment Settlement Statement and Good Faith Estimate APPLICANT(S) SIGNATURE(S) Signature Date Signature Date Please submit application packet to: Richfield HRA, 6700 Portland Avenue S., Richfield, MN 55423 Attn: Housing Specialist,or housespecialist @cityofrichfield.orq. Limit one loan per household. Date Application Received: Exhibit A 5'b tv FORECLOSURE PURCHASE INCENTIVE PROGRAM $15,000 REHABILITATION LOAN RICHFIELD APPLICATION COVER SHEET APPLICANT CONTACT INFORMATION Applicant(s) Legal Name(s) and Marital Status Applicant(s) current address Applicant(s) phone number Applicant(s) email address PROPERTY AND LENDER INFORMATION Proposed Property Address Proposed Closing Date Lending Institution Contact person Phone number Email address Mailing address CITY REVIEW PROCEDURE 1. Submit completed application for formal review. 2. An inspection may be required to verify that the house can be rehabilitated. 3. HRA notifies applicant of approval or denial within 10-15 business days. 4. If approved, the Agreement is executed by the HRA. 5. Funds are dispersed according to the Rehabilitation Agreement; 25% at closing; 25% when permits are granted; 50% upon project completion (submit paid invoices and Completion Certificate). APPLICATION REQUIREMENTS: A completed application packet must be received before formal review will begin. No applications will be approved after closing. Signed FPIP Rehabilitation Loan Agreement $150 Application Fee Picture of the Property (digital format) Purchase Agreement Financing commitment for property purchase Appraisal Copy of Point-of-Sale Inspection Title Commitment Settlement Statement and Good Faith Estimate Rehabilitation Plan — plans prepared by a qualified draftsperson or architect; if proposed improvements do not require an architectural plan, a detailed list of the proposed improvements and required materials Financing commitment for property rehabilitation Subordination Agreement request and application fee, if necessary APPLICANT(S) SIGNATURE(S) Signature Date Signature Date Please submit application packet to: Richfield HRA,6700 Portland Avenue S., Richfield, MN 55423 Attn: Housing Specialist,or housespecialist acitvofrichfield.org. Limit one loan per household. Date Application Received: Exhibit B _ FORECLOSURE PURCHASE INCENTIVE PROGRAM REHABILITATION LOAN PROMISSORY NOTE 1. FOR VALUE RECEIVED, the undersigned ("Borrower") agrees to pay to the Housing and Redevelopment Authority in and for the City of Richfield, a body corporate and politic under the laws of the State of Minnesota, ("Noteholder"), the sum of (the "Original Note Amount"),without interest, on the Maturity Date as hereinafter defined. The Note shall be due and payable in three installments. The first installment of$3,750 will be due and payable at Closing, the second installment of$3,750 will be due and payable not later than five days following the date a building permit for construction of the Improvements is issued, and the final installment of$7,500 on the date of the issuance of a Certificate of Completion showing full completion of all of the Improvements. No amount shall be due or payable prior to those dates. 2. The Borrower acknowledges that the Original Note Amount is $15,000.00 loaned to the Borrower by the Noteholder and shall bear no interest, for the property located at Richfield, Minnesota, which property is legally described as follows: (the "Subject Property"). 3. The Maturity Date shall be the first date prior to the , five years from the date of this Note, upon which any of the following events shall occur: a. The Borrower does not own and occupy the property as Borrower's primary residence; b. The Borrower does not obtain homestead classification for the Property within 60 days after the purchase of the Property; c. The Property ceases to be classified as homestead, at any time during the five year period commencing with the date of this note; d. the Property is voluntarily or involuntarily sold, transferred or otherwise conveyed; e. the Property is rented, leased, unoccupied or assigned for a period exceeding six consecutive months; f. there exists any default under the terms of this or any other mortgage secured by the Property and the Borrower has not entered into a work-out agreement; g. there exists any other event which would cause the Subject Property to be occupied by other than the Borrower for a period of more than six months. If there has been no event prior to [five years after the date of this Note] which causes the occurrence of the Maturity Date, then the Borrower shall thereafter be relieved of the obligation to repay the Original Note Amount, and the lien hereby created shall be terminated. Upon payment of this Note as provided herein, the Noteholder will, within 30 days of written demand by the Borrower, execute a release and satisfaction or partial release and partial satisfaction of this Note. 4. To secure payment of this Note, the Borrower will execute a mortgage deed, a copy of which is attached hereto as Exhibit A(the"Mortgage"). All of the agreements, conditions, covenants, provisions, and stipulations and remedies contained in the Mortgage are hereby made a part of this Note to the same extent and with the same force and effect as if they were fully set forth herein. It is agreed that time is of the essence of this Note. If a default by the Exhibit B Borrower occurs under the Agreement, then the Noteholder may at its right and option, exercise any rights it may have under law or at equity under the Note and under the Mortgage. 5. In the event that the Borrower is notified directly or indirectly that an Event of Default has been commenced or will be commenced, the Borrower shall immediately notify the Noteholder in writing of such proceedings. 6. Presentment,protest and notice of dishonor are hereby waived by the Borrower. The Borrower shall - pay all costs incurred by the Noteholder hereof in the collection of this Note, including reasonable attorney's fee. If the Noteholder requires the Borrower to pay in full and the Borrower refuses to do so within the required period of time, the Borrower will be responsible for all costs incurred by the Noteholder in enforcing this Note, including reasonable attorney's fees. 7. It is intended that this Note is made with reference to and shall be construed as a Minnesota contract and shall be governed by the laws of the state of Minnesota without regard to conflict of laws provisions. Any disputes, controversies, or claims arising out of this Note shall be heard in the state or federal courts of Minnesota, and all parties to this Note waive any objection to the jurisdiction of these courts, whether based on convenience or otherwise. 8. If there is more than one Borrower under this Note, each person shall be considered a Borrower within the meaning of this Note and each shall be jointly and severally responsible for payment under the Note. 9. IT IS HEREBY CERTIFIED AND RECITED that all conditions, acts, and things required to exist, happen, and be performed precedent to or in the issuance of this Note do exist,have happened, and have been performed in regular and due form as required by law. Dated: BORROWER(S) STATE OF MINNESOTA ) ) SS COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this day of , 20_ by and Notary Public This document drafted by: The Housing and Redevelopment Authority in and for the City of Richfield 6700 Portland Avenue South Richfield, MN 55423 (612)861-9760 Exhibit B (Top 3 inches reserved for recording data) MORTGAGE Minnesota Uniform Conveyancing Blanks by Individual(s) Form 20.1.1 (2006) MORTGAGE REGISTRY TAX DUE: $ DATE: (month/day/year) U CHECK IF APPLICABLE: NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN,ENFORCEMENT OF THIS MORTGAGE IN MINNESOTA IS LIMITED TO A DEBT AMOUNT OF$ UNDER CHAPTER 287 OF MINNESOTA STATUTES. THIS MORTGAGE("Mortgage")is given by (insert name and marital status of each Borrower) as mortgagor("Borrower"),to (insert name of Lender) as mortgagee("Lender"). In consideration of the receipt of Dollars (insert amount of Indebtedness) ($ )(the"Indebtedness")from Lender,Borrower hereby mortgages,with power of sale,the real property in County,Minnesota,legally described as follows: Check here if all or part of the described real property is Registered(Torrens)Li together with all hereditaments and appurtenances belonging thereto(the"Property"),subject to the following exceptions: (a) Covenants,conditions,restrictions(without effective forfeiture provisions)and declarations of record,if any; (b) Reservations of minerals or mineral rights by the State of Minnesota,if any; (c) Utility and drainage easements which do not interfere with present improvements; (d) Applicable laws,ordinances,and regulations; (e) The lien of real estate taxes and installments of special assessments not yet due and payable;and (f) The following liens or encumbrances,if any:(insert encumbrances) Page 1 of 4 Exhibit B Page 2 of 4 Minnesota Uniform Conveyancing Blanks Form 20.1.1 - - Borrower covenants with Lender as follows: 1. Repayment of Indebtedness. If Borrower(a)pays the Indebtedness to Lender according to the terms of the promissory note or other instrument of even date herewith that evidences the indebtedness and all renewals,extensions,and modifications thereto(the"Note"), final payment of which is due on ;(b)pays interest on the Indebtedness as provided in the Note; (insert maturity date) (c)repays to Lender,at the times and with interest as specified,all sums advanced in protecting the lien of this Mortgage,if any;and (d)keeps and performs all the covenants and agreements contained herein,then Borrower's obligations under this Mortgage will be satisfied, and Lender will deliver an executed satisfaction of this Mortgage to Borrower. It is Borrower's responsibility to record any satisfaction of this Mortgage at Borrower's expense. 2. Statutory Covenants. Borrower makes and includes in this Mortgage the following covenants and provisions set forth in Minn.Stat.507.15,and the relevant statutory covenant equivalents contained therein are hereby incorporated by reference: (a) To warrant the title to the Property; (b) To pay the Indebtedness as herein provided; (c) To pay all taxes; (d) That the Property shall be kept in repair and no waste shall be committed; (e) To pay principal and interest on prior mortgages(if any). 3. Additional Covenants and Agreements of Borrower. Borrower makes the following additional covenants and agreements with Lender: (a) Borrower shall keep all buildings,improvements,and fixtures now or later located on all or any part of the Property (collectively,the"Improvements")insured against loss by fire,lightning,and such other perils as are included in a standard all-risk endorsement,and against loss or damage by all other risks and hazards covered by a standard extended coverage insurance policy,including, without limitation,vandalism,malicious mischief,burglary,theft,and if applicable,steam boiler explosion. Such insurance shall be in an amount no less than the full replacement cost of the Improvements,without deduction for physical depreciation. If any of the Improvements are located in a federally designated flood prone area,and if flood insurance is available for that area,Borrower shall procure and maintain flood insurance in amounts reasonably satisfactory to Lender. Borrower shall procure and maintain liability insurance against claims for bodily injury,death,and property damage occurring on or about the Property in amounts reasonably satisfactory to Lender and naming Lender as an additional insured,all for the protection of the Lender. (b) Each insurance policy required pursuant to Paragraph 3(a)must contain provisions in favor of Lender affording all right and privileges customarily provided under the so-called standard mortgagee clause. Each policy must be issued by an insurance company or companies licensed to do business in Minnesota and acceptable to Lender. Each policy must provide for not less than ten(10)days written notice to Lender before cancellation,non-renewal,termination,or change in coverage. Borrower will deliver to Lender a duplicate original or certificate of such insurance policies and of all renewals and modifications of such policies. (c) If the Property is damaged by fire or other casualty,Borrower must promptly give notice of such damage to Lender and the insurance company.In such event,the insurance proceeds paid on account of such damage will be applied to payment of the amounts owed by Borrower pursuant to the Note,even if such amounts are not otherwise then due,unless Borrower is permitted to make an election as described in the next paragraph.Such amounts first will be applied to unpaid accrued interest and next to the principal to be paid as provided in the Note in the inverse order of their maturity. Such payment(s)will not postpone the due date of the installments to be paid pursuant to the Note or change the amount of such installments. The balance of insurance proceeds,if any,will be the property of Borrower. (d) Notwithstanding the provisions of Paragraph 3(c),and unless otherwise agreed by Borrower and Lender in writing,if (i)Borrower is not in default under this Mortgage(or after Borrower has cured any such default);(ii)the mortgagees under any prior mortgages do not require otherwise;and(iii)such damage does not exceed ten percent(10%)of the then assessed market value of the Improvements, then Borrower may elect to have that portion of such insurance proceeds necessary to repair,replace,or restore the damaged Property (the"Repairs")deposited in escrow with a bank or title insurance company qualified to do business in Minnesota,or such other party as may be mutually agreeable to Lender and Borrower. The election may only be made by written notice to Lender within sixty(60)days after the damage occurs;and the election will only be permitted if the plans,specifications,and contracts for the Repairs are approved by Lender,which approval shall not be unreasonably withheld,conditioned,or delayed. If such a permitted election is made by Borrower,Lender and Borrower Exhibit B 3 3- 1 Page 3 of 4 Minnesota Uniform Conveyancing Blanks Form 20.1.1 - . shall jointly deposit the insurance proceeds into escrow when paid. If such insurance proceeds are insufficient for the Repairs,Borrower shall, before the commencement of the Repairs,deposit into such escrow sufficient additional money to insure the full payment for the Repairs. Even if the insurance proceeds are unavailable or are insufficient to pay the cost of the Repairs,Borrower shall at all times be responsible to pay the full cost of the Repairs. All escrowed funds shall be disbursed in accordance with sound,generally accepted,construction disbursement procedures. The costs incurred or to be incurred on account of such escrow shall be deposited by Borrower into such escrow before the commencement of the Repairs. Borrower shall complete the Repairs as soon as reasonably possible and in a good and workmanlike manner,and in any event the Repairs shall be completed by Borrower within one(1)year after the damage occurs. If,following the completion of and payment for the Repairs,there remains any undisbursed escrow funds,such funds shall be applied to payment of the amounts owed by Borrower under the Note in accordance with Paragraph 3(c). (e) If all or any part of the Property is taken in condemnation proceedings instituted under power of eminent domain or is conveyed in lieu thereof under threat of condemnation,the money paid pursuant to such condemnation or conveyance in lieu thereof must be applied to payment of the amounts due by Borrower to Lender under the Note as set forth in Paragraph 3(c),even if such amounts are not then due to be paid. (f) Borrower will diligently complete all Improvements,if any,that may now or hereafter be under construction on the Property. (g) Borrower will pay all dues,fees,or assessments,if any,which are due and payable by Borrower to any homeowners or similar association as a result of the Property's inclusion therein. (h) Borrower will pay any other expenses and attorneys'fees incurred by Lender pursuant to the Note or as reasonably required for the protection of the lien of this Mortgage. 4. Payment by Lender. If Borrower fails to pay any amounts to be paid hereunder to Lender or any third parties,or to insure the Improvements,and deliver the policies as required herein,Lender may make such payments or secure such insurance.The sums so paid shall be additional Indebtedness,bear interest from the date of such payment at the same rate set forth in the Note,be an additional lien upon the - Property,and be immediately due and payable upon written demand. This Mortgage secures the repayment of such advances. 5. Default. In case of default(i)in the payment of sums to be paid under the Note or this Mortgage,when the same becomes due, (ii)in any of the covenants set forth in this Mortgage,(iii)under the terms of the Note,or(iv)under any addendum attached to this Mortgage, Lender may declare the unpaid balance of the Note and the interest accrued thereon,together with all sums advanced hereunder,immediately due and payable without notice,and Borrower hereby authorizes and empowers Lender to foreclose this Mortgage by judicial proceedings or to sell the Property at public auction and convey the same in fee simple in accordance with Minn.Stat.Ch.580,and out of the monies arising from such sale,to retain all sums secured hereby,with interest and all legal costs and charges of such foreclosure and the maximum attorneys'fees permitted by law,which costs,charges,and fees Borrower agrees to pay. 6. Residential Mortgages. Notwithstanding the provisions of Paragraph 5,if the Indebtedness is a"conventional loan"as defined in Minn.Stat.47.20,subd.2(3),Borrower and Lender further covenant and agree as follows: (a) Lender shall furnish to Borrower a conformed copy of the Note and this Mortgage at the time of execution or within a reasonable time after recordation hereof. (b) Upon default by Borrower of any covenant or agreement under the terms of this Mortgage,Lender shall give notice to Borrower prior to foreclosure as provided in Paragraph 6(c)and such notice shall specify:(i)the nature of the default;(ii)the action required to cure the default;(iii)a date,not less than thirty(30)days from the date the notice is mailed to Borrower,by which the default must be cured;(iv)that failure to cure the default on or before the date specified in the notice may result in acceleration of the sums secured by this Mortgage and sale of the Property;(v)that Borrower has the right to reinstate this Mortgage after acceleration;and(vi)that Borrower has the right to bring a court action to assert the non-existence of the default or any other defense of Borrower to acceleration and sale. Page 4 of 4 Exhibit B Minnesota Uniform Conveyancing Blanks Form 20.1.1 (c) In addition to any notice required under applicable law to be given in another manner,(i)any notice to Borrower provided for in this Mortgage shall be addressed to Borrower and given by mailing the notice via certified mail to the Property address(or to such other address as Borrower may designate by written notice to Lender as provided herein),and(ii)any notice to Lender shall be given by mailing the notice via certified mail to the following address(or to such other address as Lender may designate by written notice to Borrower as provided herein): (insert Lender's address) 7. Governing Law;Severability. This Mortgage shall be governed by the laws of Minnesota. In the event that any provision or clause of this Mortgage or the Note conflicts with applicable law,such conflict shall not affect other provisions of this Mortgage or the Note which can be given effect without the conflicting provision. 8. Additional Terms. Check this box ❑ if Form 20.2.1 or any other addendum(either one or more)containing additional terms and conditions is attached to this Mortgage. If the foregoing box is not checked,then this Mortgage shall not contain any such additional terms and conditions. The number of additional attached pages is . Terms of this Mortgage will run with the Property and (insert number of pages in addendum) bind the parties hereto and their successors in interest. Borrower (signature) (signature) State of Minnesota,County of This instrument was acknowledged before me on ,by (month/day/year) (insert name and marital status of each Borrower) • (Seal,if any) (signature of notarial officer) Title(and Rank): My commission expires: - (month/day/year) THIS INSTRUMENT WAS DRAFTED BY: (insert name and address) Note: Failure to record or file this mortgage may give other parties priority over this mortgage. 33 - 33 Exhibit C FORECLOSURE PURCHASE INCENTIVE PROGRAM PURCHASE ASSISTANCE LOAN PROMISSORY NOTE 1) FOR VALUE RECEIVED, the undersigned ("Borrower") agrees to pay to the Housing and Redevelopment Authority in and for the City of Richfield, a body corporate and politic under the laws of the State of Minnesota, ("Noteholder"), the sum of (the "Original Note Amount"), without interest, on the Maturity Date as hereinafter defined. The Borrower acknowledges that the Original Note Amount is $15,000.00 loaned to the Borrower by the Noteholder , shall bear no interest for the property located at Richfield, Minnesota, which property is legally described as follows: (the "Subject Property"). 2) The Maturity Date shall be the first date prior to the , five years from the date of this Note, upon which any of the following events shall occur: a) The Borrower does not own and occupy the Property as Borrower's primary residence; b) The Borrower does not obtain homestead classification for the Property within 60 days after the purchase of the Property; c) The Property ceases to be classified as homestead, at any time during the five year period commencing the date of this note; d) the Property is voluntarily or involuntarily sold,transferred or otherwise conveyed; e) the Property is rented, leased, unoccupied or assigned for a period exceeding six consecutive months; f) there exists any default under the terms of this or any other mortgage secured by the Property and the Borrower has not entered into a work-out agreement; g) there exists any other event which would cause the Property to be occupied by other than the Borrower for a period of more than six months. If there has been no event prior to (five years after the date of this Note] which causes the occurrence of the Maturity Date, then the Borrower shall thereafter be relieved of the obligation to repay the Original Note Amount, and the lien hereby created shall be terminated. Upon payment of this Note as provided herein, the Noteholder will, within 30 days of written demand by the Borrower, execute a release and satisfaction or partial release and partial satisfaction of this Note. 3) To secure payment of this Note,the Borrower will execute a mortgage deed. All of the agreements, conditions, covenants,provisions, and stipulations and remedies contained in the Mortgage are hereby made a part of this Note to the same extent and with the same force and effect as if they were fully set forth herein. It is agreed that time is of the essence of this Note. If a default by the Borrower, then the Noteholder may at its right and option, exercise any rights it may have under law or at equity under the Note and under the Mortgage. 4) In the event that the Borrower is notified directly or indirectly that an Event of Default has been commenced or will be commenced,the Borrower shall immediately notify the Noteholder in writing of such proceedings and Remedies of Default as defined in the Agreement may be pursued. 5) Presentment,protest and notice of dishonor are hereby waived by the Borrower. The Borrower shall pay all costs incurred by the Noteholder hereof in the collection of this Note, including reasonable attorney's fee. If the Noteholder requires the Borrower to pay in full and the Borrower refuses to do so within the required period of time, the Borrower will be responsible for all costs incurred by the Noteholder in enforcing this Note, including reasonable attorney's fees. 6) It is intended that this Note is made with reference to and shall be construed as a Minnesota contract and shall be governed by the laws of the state of Minnesota without regard to conflict Of laws provisions. Any disputes, controversies, or claims arising out of this Note shall be heard in the state or federal courts of Minnesota, and all parties to this Note waive any objection to the jurisdiction of - these courts, whether based on convenience or otherwise. 7) If there is more than one Borrower under this Note, each person shall be considered a Borrower within the meaning of this Note and each shall be jointly and severally responsible for payment under the Note. 8) IT IS HEREBY CERTIFIED AND RECITED that all conditions, acts, and things required to exist, happen, and be performed precedent to or in the issuance of this Note do exist, have happened, and have been performed in regular and due form as required by law. Dated: BORROWER(S) STATE OF MINNESOTA ) ) SS COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this day of , 20_ by and Notary Public This document drafted by: The Housing and Redevelopment Authority in and for the City of Richfield 6700 Portland Avenue South Richfield,MN 55423 (612)861-9760 33- 35 Exhibit C (Top 3 inches reserved for recording data) MORTGAGE Minnesota Uniform Conveyancing Blanks by Individual(s) Form 20.1.1 (2006) MORTGAGE REGISTRY TAX DUE: $ DATE: (month/day/year) iJ CHECK IF APPLICABLE: NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN,ENFORCEMENT OF THIS MORTGAGE IN MINNESOTA IS LIMITED TO A DEBT AMOUNT OF$ UNDER CHAPTER 287 OF MINNESOTA STATUTES. THIS MORTGAGE("Mortgage")is given by (insert name and marital status of each Borrower) as mortgagor("Borrower"),to (insert name of Lender) as mortgagee("Lender"). In consideration of the receipt of Dollars (insert amount of Indebtedness) ($ )(the"Indebtedness")from Lender,Borrower hereby mortgages,with power of sale,the real property in County,Minnesota,legally described as follows: Check here if all or part of the described real property is Registered(Torrens)C together with all hereditaments and appurtenances belonging thereto(the"Property"),subject to the following exceptions: (a) Covenants,conditions,restrictions(without effective forfeiture provisions)and declarations of record,if any; (b) Reservations of minerals or mineral rights by the State of Minnesota,if any; (c) Utility and drainage easements which do not interfere with present improvements; (d) Applicable laws,ordinances,and regulations; (e) The lien of real estate taxes and installments of special assessments not yet due and payable;and (f) The following liens or encumbrances,if any:(insert encumbrances) Page 1 of 4 Exhibit C 31 Page 2 of 4 Minnesota Uniform Conveyancing Blanks Form 20.1.1 _ Borrower covenants with Lender as follows: 1. Repayment of Indebtedness. If Borrower(a)pays the Indebtedness to Lender according to the terms of the promissory note or other instrument of even date herewith that evidences the Indebtedness and all renewals,extensions,and modifications thereto(the"Note"), final payment of which is due on ;(b)pays interest on the Indebtedness as provided in the Note; (insert maturity date) (c)repays to Lender,at the times and with interest as specified,all sums advanced in protecting the lien of this Mortgage,if any;and (d)keeps and performs all the covenants and agreements contained herein,then Borrower's obligations under this Mortgage will be satisfied, and Lender will deliver an executed satisfaction of this Mortgage to Borrower. It is Borrower's responsibility to record any satisfaction of this Mortgage at Borrower's expense. 2. Statutory Covenants. Borrower makes and includes in this Mortgage the following covenants and provisions set forth in Minn.Stat.507.15,and the relevant statutory covenant equivalents contained therein are hereby incorporated by reference: (a) To warrant the title to the Property; (b) To pay the Indebtedness as herein provided; (c) To pay all taxes; (d) That the Property shall be kept in repair and no waste shall be committed; (e) To pay principal and interest on prior mortgages(if any). 3. Additional Covenants and Agreements of Borrower. Borrower makes the following additional covenants and agreements with Lender: (a) Borrower shall keep all buildings,improvements,and fixtures now or later located on all or any part of the Property (collectively,the"Improvements")insured against loss by fire,lightning,and such other perils as are included in a standard all-risk endorsement,and against loss or damage by all other risks and hazards covered by a standard extended coverage insurance policy,including, without limitation,vandalism,malicious mischief,burglary,theft,and if applicable,steam boiler explosion. Such insurance shall be in an amount no less than the full replacement cost of the Improvements,without deduction for physical depreciation. If any of the Improvements are located in a federally designated flood prone area,and if flood insurance is available for that area,Borrower shall procure and maintain flood insurance in amounts reasonably satisfactory to Lender. Borrower shall procure and maintain liability insurance against claims for bodily injury,death,and property damage occurring on or about the Property in amounts reasonably satisfactory to Lender and naming Lender as an additional insured,all for the protection of the Lender. (b) Each insurance policy required pursuant to Paragraph 3(a)must contain provisions in favor of Lender affording all right and privileges customarily provided under the so-called standard mortgagee clause. Each policy must be issued by an insurance company or companies licensed to do business in Minnesota and acceptable to Lender. Each policy must provide for not less than ten(10)days written notice to Lender before cancellation,non-renewal,termination,or change in coverage. Borrower will deliver to Lender a duplicate original or certificate of such insurance policies and of all renewals and modifications of such policies. (c) If the Property is damaged by fire or other casualty,Borrower must promptly give notice of such damage to Lender and the insurance company.In such event,the insurance proceeds paid on account of such damage will be applied to payment of the amounts owed by Borrower pursuant to the Note,even if such amounts are not otherwise then due,unless Borrower is permitted to make an election as described in the next paragraph.Such amounts first will be applied to unpaid accrued interest and next to the principal to be paid as provided in the Note in the inverse order of their maturity. Such payment(s)will not postpone the due date of the installments to be paid pursuant to the Note or change the amount of such installments. The balance of insurance proceeds,if any,will be the property of Borrower. (d) Notwithstanding the provisions of Paragraph 3(c),and unless otherwise agreed by Borrower and Lender in writing,if (i)Borrower is not in default under this Mortgage(or after Borrower has cured any such default);(ii)the mortgagees under any prior mortgages do not require otherwise;and(iii)such damage does not exceed ten percent(10%)of the then assessed market value of the Improvements, then Borrower may elect to have that portion of such insurance proceeds necessary to repair,replace,or restore the damaged Property (the"Repairs")deposited in escrow with a bank or title insurance company qualified to do business in Minnesota,or such other party as may be mutually agreeable to Lender and Borrower. The election may only be made by written notice to Lender within sixty(60)days after the damage occurs;and the election will only be permitted if the plans,specifications,and contracts for the Repairs are approved by Lender,which approval shall not be unreasonably withheld,conditioned,or delayed. If such a permitted election is made by Borrower,Lender and Borrower Exhibit C 3 - 37 _ Page 3 of 4 Minnesota Uniform Conveyancing Blanks Form 20.1.1 - - shall jointly deposit the insurance proceeds into escrow when paid. If such insurance proceeds are insufficient for the Repairs,Borrower shall, before the commencement of the Repairs,deposit into such escrow sufficient additional money to insure the full payment for the Repairs. Even if the insurance proceeds are unavailable or are insufficient to pay the cost of the Repairs,Borrower shall at all times be responsible to pay the full cost of the Repairs. All escrowed funds shall be disbursed in accordance with sound,generally accepted,construction disbursement procedures. The costs incurred or to be incurred on account of such escrow shall be deposited by Borrower into such escrow before the commencement of the Repairs. Borrower shall complete the Repairs as soon as reasonably possible and in a good and workmanlike manner,and in any event the Repairs shall be completed by Borrower within one(1)year after the damage occurs. lf,following the completion of and payment for the Repairs,there remains any undisbursed escrow funds,such funds shall be applied to payment of the amounts owed by Borrower under the Note in accordance with Paragraph 3(c). (e) If all or any part of the Property is taken in condemnation proceedings instituted under power of eminent domain or is conveyed in lieu thereof under threat of condemnation,the money paid pursuant to such condemnation or conveyance in lieu thereof must be applied to payment of the amounts due by Borrower to Lender under the Note as set forth in Paragraph 3(c),even if such amounts are not then due to be paid. (f) Borrower will diligently complete all Improvements,if any,that may now or hereafter be under construction on the Property. (g) Borrower will pay all dues,fees,or assessments,if any,which are due and payable by Borrower to any homeowners or similar association as a result of the Property's inclusion therein. (h) Borrower will pay any other expenses and attorneys'fees incurred by Lender pursuant to the Note or as reasonably required for the protection of the lien of this Mortgage. 4. Payment by Lender. If Borrower fails to pay any amounts to be paid hereunder to Lender or any third parties,or to insure the Improvements,and deliver the policies as required herein,Lender may make such payments or secure such insurance.The sums so paid shall be additional Indebtedness,bear interest from the date of such payment at the same rate set forth in the Note,be an additional lien upon the - Property,and be immediately due and payable upon written demand. This Mortgage secures the repayment of such advances. 5. Default. In case of default(i)in the payment of sums to be paid under the Note or this Mortgage,when the same becomes due, (ii)in any of the covenants set forth in this Mortgage,(iii)under the terms of the Note,or(iv)under any addendum attached to this Mortgage, Lender may declare the unpaid balance of the Note and the interest accrued thereon,together with all sums advanced hereunder,immediately due and payable without notice,and Borrower hereby authorizes and empowers Lender to foreclose this Mortgage by judicial proceedings or to sell the Property at public auction and convey the same in fee simple in accordance with Minn.Stat.Ch.580,and out of the monies arising from such sale,to retain all sums secured hereby,with interest and all legal costs and charges of such foreclosure and the maximum attorneys'fees permitted by law,which costs,charges,and fees Borrower agrees to pay. 6. Residential Mortgages. Notwithstanding the provisions of Paragraph 5,if the Indebtedness is a"conventional loan"as defined in Minn.Stat.47.20,subd.2(3),Borrower and Lender further covenant and agree as follows: (a) Lender shall furnish to Borrower a conformed copy of the Note and this Mortgage at the time of execution or within a reasonable time after recordation hereof. (b) Upon default by Borrower of any covenant or agreement under the terms of this Mortgage,Lender shall give notice to Borrower prior to foreclosure as provided in Paragraph 6(c)and such notice shall specify:(i)the nature of the default;(ii)the action required to cure the default;(iii)a date,not less than thirty(30)days from the date the notice is mailed to Borrower,by which the default must be cured;(iv)that failure to cure the default on or before the date specified in the notice may result in acceleration of the sums secured by this Mortgage and sale of the Property;(v)that Borrower has the right to reinstate this Mortgage after acceleration;and(vi)that Borrower has the right to bring a court action to assert the non-existence of the default or any other defense of Borrower to acceleration and sale. Page 4 of 4 Exhibit C Pa 9 Minnesota Uniform Conveyancing Blanks Form 20.1.1 (c) In addition to any notice required under applicable law to be given in another manner,(i)any notice to Borrower provided for in this Mortgage shall be addressed to Borrower and given by mailing the notice via certified mail to the Property address(or to such other address as Borrower may designate by written notice to Lender as provided herein),and(ii)any notice to Lender shall be given by mailing the notice via certified mail to the following address(or to such other address as Lender may designate by written notice to Borrower as provided herein): (insert Lender's address) 7, Governing Law;Severability. This Mortgage shall be governed by the laws of Minnesota. In the event that any provision or clause of this Mortgage or the Note conflicts with applicable law,such conflict shall not affect other provisions of this Mortgage or the Note which can be given effect without the conflicting provision. 8. Additional Terms. Check this box ❑ if Form 20.2.1 or any other addendum(either one or more)containing additional terms and conditions is attached to this Mortgage. If the foregoing box is not checked,then this Mortgage shall not contain any such additional terms and conditions. The number of additional attached pages is . Terms of this Mortgage will run with the Property and (insert number of pages in addendum) bind the parties hereto and their successors in interest. Borrower (signature) (signature) State of Minnesota,County of This instrument was acknowledged before me on ,by (month/day/year) (insert name and marital status of each Borrower) • (Seal,if any) (signature of notarial officer) Title(and Rank): My commission expires: (month/day/year) THIS INSTRUMENT WAS DRAFTED BY: (insert name and address) Note: Failure to record or file this mortgage may give other parties priority over this mortgage. 35- '39 Exhibit D Richfield Housing And Redevelopment Authority _ COMPLETION CERTIFICATE Note: This form must be signed by all parties before release of full or partial payment under the Richfield Transformation Loan Program. Homeowner Property Address CONTRACTOR: The undersigned Contractor hereby certifies that the improvements specified by the Work Contract pertaining to the above Homeowner have been completed in their entirety and in accordance with the agreement between the undersigned and the Homeowner, and that all work performed by the undersigned is subject to and in conformity with the Contractor's Warranty set forth in said Work Contract. The Contractor affirms that all required permits were obtained from the Richfield Inspections Division. Name of Firm Amount of Contract Completed Signature of Authorized Representative INSPECTOR: The undersigned Inspector hereby certifies that the Contractor listed above has completed the work and/or delivered all materials per applicable codes for the housing rehabilitation improvements noted on the back side of this form, or attached to this form. No other improvements are part of this sign-off request. Signature of Inspector Date Inspected HOMEOWNER: The undersigned Homeowner hereby certifies that the Contractor listed above has completed the work and/or delivered all materials for the housing rehabilitation improvements, in full compliance with the terms of the Work Contract between the undersigned and said Contractor. The undersigned hereby authorizes the HRA to disburse the funds directly to the Contractor. Signature of Homeowner Date RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY: The undersigned Administering Entity hereby certifies that the above-referenced Homeowner is in conformity with eligibility requirements as set forth in the Transformation Loan Program Procedural Guidelines. Authorized Signature/Title Date --PLEASE COMPLETE REVERSE SIDE-- IMPROVEMENTS COMPLETED AS PART OF THIS CERTIFICATE Property Address: H:\Cdadmin\HOUSING\DEFERRED\Standard Forms\Completion Certificate.DOC Exhibit E - ERRORS,OMISSIONS AND ACKNOWLEDGMENT AGREEMENT (the "Mortgagor") acknowledges that the Housing and Redevelopment Authority in and for the City of Richfield ("HRA" or "Mortgagee") is handling all or part of the closing of the mortgage from the HRA to Mortgagor encumbering property at ,Richfield,MN 55423. The Mortgagor acknowledges that the HRA CLOSING AGENT HAS NOT EXPRESSED OPINION REGARDING THE LEGAL EFFECT OF THE CLOSING DOCUMENTS OR OF THE CLOSING ITSELF. Mortgagor agrees to re-execute any of the closing documents, execute any further documents which are necessary to complete closing of the mortgage contemplated by the agreement between the parties, and cooperate in correcting any clerical errors or miscalculations of any figures in said closing. Dated: MORTGAGOR: MORTGAGEE: Housing and Redevelopment Authority in and By: for the City of Richfield By: Its: By: c51 -1-ka Exhibit E - (Top 3 inches reserved for recording data) CERTIFICATE AND REQUEST FOR NOTICE by Business Entity 1. The name and mailing address of the person holding a lien or having a redeemable interest in real property requesting notice is: Housing and Redevelopment Authority in and for the City of Richfield, a public body corporate and politic under the laws of Minnesota ("Requesting Party"). 2. The redeemable interest or lien of the Requesting Party was created by the following instrument: [insert name of document/instrument] dated [month/day/year] and recorded on [month/day/year], as Document Number [...] (or in Book [...] of[...] Page [...]), in the Office of the n County Recorder I Registrar of Titles of Hennepin County, Minnesota. 3. The Requesting Party has a redeemable interest in or lien upon real property in Hennepin County, Minnesota, described as follows: [insert legal description...] Check here if all or part of the described real property is Registered(Torrens) ❑ 4. The Requesting Party requests notice of any mortgage foreclosure by advertisement as provided in Minn. Stat. 580.032, subd. 1. Exhibit E - 5. The Requesting Party requests notice of any post-foreclosure sale reduction of the mortgagor's redemption period for any superior lien as provided in Minn. Stat. 582.032, subd. 3. HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD By: Steven L. Devich Its: Executive Director State of Minnesota, County of Hennepin This instrument was acknowledged before me on [month/day/year], by Steven L. Devich, the executive director of Housing and Redevelopment Authority in and for the City of Richfield, a public body corporate and politic under the laws of Minnesota, on behalf of the authority. (Stamp) (signature of notarial officer) Notary Public My commission expires: (month/day/year) THIS INSTRUMENT WAS DRAFTED BY: Housing and Redevelopment Authority in and for the City of Richfield 6700 Portland Avenue South Richfield,MN 55423 612-861-9760 Exhibit E - ERRORS,OMISSIONS AND ACKNOWLEDGMENT AGREEMENT (the "Mortgagor") acknowledges that the Housing and Redevelopment Authority in and for the City of Richfield ("HRA" or "Mortgagee") is handling all or part of the closing of the mortgage from the HRA to Mortgagor encumbering property at ,Richfield,MN 55423. The Mortgagor acknowledges that the HRA CLOSING AGENT HAS NOT EXPRESSED OPINION REGARDING THE LEGAL EFFECT OF THE CLOSING DOCUMENTS OR OF THE CLOSING ITSELF. Mortgagor agrees to re-execute any of the closing documents, execute any further documents which are necessary to complete closing of the mortgage contemplated by the agreement between the parties, and cooperate in correcting any clerical errors or miscalculations of any figures in said closing. Dated: MORTGAGOR: MORTGAGEE: Housing and Redevelopment Authority in and By: for the City of Richfield By: Its: By: Exhibit E (Top 3 inches reserved for recording data) CERTIFICATE AND REQUEST FOR NOTICE by Business Entity 1. The name and mailing address of the person holding a lien or having a redeemable interest in real property requesting notice is: Housing and Redevelopment Authority in and for the City of Richfield, a public body corporate and politic under the laws of Minnesota ("Requesting Party"). 2. The redeemable interest or lien of the Requesting Party was created by the following instrument: [insert name of document/instrument] dated [month/day/year] and recorded on [month/day/year], as Document Number [...] (or in Book [...] of[...] Page [...]), in the Office of the n County Recorder ❑ Registrar of Titles of Hennepin County, Minnesota. 3. The Requesting Party has a redeemable interest in or lien upon real property in Hennepin County, Minnesota, described as follows: [insert legal description...] Check here if all or part of the described real property is Registered(Torrens) ❑ 4. The Requesting Party requests notice of any mortgage foreclosure by advertisement as provided in Minn. Stat. 580.032, subd. 1. Exhibit E 5. The Requesting Party requests notice of any post-foreclosure sale reduction of the mortgagor's redemption period for any superior lien as provided in Minn. Stat. 582.032, subd. 3. HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD By: Steven L. Devich Its: Executive Director State of Minnesota, County of Hennepin This instrument was acknowledged before me on [month/day/year], by Steven L. Devich,the executive director of Housing and Redevelopment Authority in and for the City of Richfield, a public body corporate and politic under the laws of Minnesota, on behalf of the authority. (Stamp) (signature of notarial officer) Notary Public My commission expires: (month/day/year) THIS INSTRUMENT WAS DRAFTED BY: Housing and Redevelopment Authority in and for the City of Richfield 6700 Portland Avenue South Richfield,MN 55423 612-861-9760 -149 EXHIBIT EXHIBIT F 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. EXHIBIT F -1.14 _ 6. If no more than one subordination request has been approved by the HRA in the past five years. 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. Exhibit G Date: Satisfaction Of Mortgage THAT CERTAIN MORTGAGE owned by the undersigned, dated , executed by , Mortgagor to Housing and Redevelopment Authority in and for the City of Richfield, as Mortgagee, and filed for record as Document Number in the Office of the County Recorder (or Registrar of Titles) of Hennepin County, Minnesota, is with the indebtedness thereby secured, fully paid and satisfied. Housing and Redevelopment Authority in and for the City of Richfield By Its Chairperson By Its Executive Director Exhibit G - STATE OF MINNESOTA } ss.: COUNTY OF HENNEPIN ) The following instrument was acknowledged before me this day of , 20_, by Steven L. Devich, the Executive Director, of the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota, a public body corporate and politic under the laws of Minnesota, on behalf of the HRA. NOTARIAL STAMP OR SEAL SIGNATURE OF PERSON TAKING ACKNOWLEDGMENT STATE OF MINNESOTA } ss.: COUNTY OF HENNEPIN ) The following instrument was acknowledged before me this day of , 20 , by Suzanne M. Sandahl,the Chairperson, of the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota, a public body corporate and politic under the laws of Minnesota, on behalf of the HRA. NOTARIAL STAMP OR SEAL SIGNATURE OF PERSON TAKING ACKNOWLEDGMENT This Instrument Drafted By: The Housing and Redevelopment Authority in and for the City of Richfield 6700 Portland Avenue South Richfield, MN 55423 (612) 861-9760 Exhibit H FORECLOSURE PURCHASE INCENTIVE PROGRAM REHABILITATION LOAN REMODELER FORM Business Name: Phone No.: Business Address (street/city/zip): Contact Person: 1. How many years has your company been in business? 2. In the past three years, what has been the average number of homes your company has remodeled per year? 3. In the past three years, what has been the average remodeling contract price by your company? 4. Please indicate if you comply with statutory warranties. Yes No Attach a copy of your company warranty policy. 5. You agree that you have the ability, at all times during the term of the remodeling contract, to have and keep in force the following minimum insurance coverages: COVERAGE LIMITS Workers Compensation Statutory Employer's Liability $300,000 BI & PD Comprehensive General Liability ncluded Independent Contractors ncluded Products/Completed Operations ncluded Contractual Liability ncluded Personal Iniury Liability ncluded "XCU" Liability (if applicable) ncluded Broad Form Property Damage ncluded Comprehensive Automobile Liability $300,000 BI & PD for owned, hired and non- 6. You meet Minnesota state licensing requirements. Yes No Exhibit H -OVER- 7. Please list municipalities in which you have secured remodeling permits within the past 3-5 years and indicate the name of the City staff person (building official or other) with whom you had the most contact. 8. Provide names, addresses and telephone numbers from five customers that may be contacted as references. 1. 2. 3. 4. 5. 9. Provide names, addresses and telephone numbers of three major suppliers or subcontractors that may be contacted as references. 1. 2. 3. 10. Please identify: 1. Construction Lender 2. Design Professional I have reviewed the general program summary and to the best of my knowledge can meet the specified requirements. The information contained on this form may be provided to lenders, homeowners, and others interested in participating in the Richfield Rediscovered remodeling programs. By: Its: Date: AGENDA ITEM#: 3C REPORT#: 10 STAFF REPORT RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY MEETING MARCH 19, 2012 REPORT PREPARED BY: CHRISTINE COSTELLO, COMMUNITY DEVELOPMENT SPECIALIST. NAME,TITLE REPORT PRESENTER: JOHN STARK, COMMUNITY DEVELOPMENT DIRECTOR t NAME,TITLE DEPARTMENT DIRECTOR REVIEW: I iiii.k REVIEWED BY EXECUTIVE DIRECTO' C 1.17-1"AlriGNA 7 '''illir, AV / __■•■•...,-.- _fi-1.4,11 - vr ITEM FOR HRA CONSIDERATION: Consideration of a Right of Entry Agreement with Hennepin County related to the Housing and Redevelopment Authority owned property at 211 West 76th Street (former Gleason Mortuary). I. RECOMMENDED ACTION: By Motion: Adopt a motion to approve the attached Right of Entry Agreement with Hennepin County related to the Housing and Redevelopment Authority owned property at 211 West 76th Street (former Gleason Mortuary). II. BACKGROUND The Richfield Housing and Redevelopment Authority (HRA) purchased 211 West 76th Street (former Gleason Mortuary) in the late 1990s. Before that time the building served as mortuary on the main floor with several apartments located on the second floor. Since the HRA purchased the site it has remained vacant and the building has been used for storage by City departments. Over the years the City of Richfield and the HRA have submitted grant applications for properties that both entities own, to assess a properties' potential need for environmental remediation. In 2007 the HRA received funding to complete a Phase I Environmental Site Assessment (ESA), the purpose of which is to understand the site's history. The 03192012-211 w76thSt_RightofEntry.doc next steps would include a Phase II ESA and a Response Action Plan (RAP). Grant funds are available from Hennepin County that could be used to complete a Phase II ESA and RAP of the site. The Phase II ESA is an investigation in which soil borings are done to collect soil samples, groundwater or building materials to analyze for quantitative values of various contaminants. The RAP is a detailed report that would include the steps to remediate any environmental hazards if found through the Phase II ESA process. A RAP is needed in order to determine the level of cleanup for the future use (i.e. residential, commercial, recreational, etc.). A RAP would also be necessary if the Minnesota Pollution Agency needed to be involved in the remediation of the site. The action under consideration is to allow Hennepin County and its consultants access to the site to conduct the necessary steps (i.e. soil borings) in order to conduct the Phase II ESA and RAP. If it is found to be contaminated through the Phase II ESA and RAP process, the HRA would need to seek additional funding for the actual cleanup of the site. III. BASIS OF RECOMMENDATION A. POLICY • It is appropriate to seek outside funding whenever possible. • The HRA currently owns the site at 211 West 76th Street. B. CRITICAL TIMING ISSUES • Environmental assessment work is a critical step in determining the potential contamination of a site. • Not completing the environmental assessment work could make redevelopment more expensive and also contribute to blight in the community. • The Right of Entry Agreement is valid for a seven (7) month timeframe. C. FINANCIAL • No local match is required. • The Right of Entry Agreement protects the HRA from financial liability arising from Hennepin County and its consultants accessing the site. • If a grant is not received other avenues will be pursued. D. LEGAL • Legal counsel has reviewed the attached Right of Entry Agreement. E. ENVIRONMENTAL CONSIDERATIONS • Completing an environmental assessment ensures that steps are taken to analyze the impacts former site uses (i.e. mortuary) have had on a community's natural resources (i.e. groundwater and soil), and whether the site needs to be remediated. IV. ALTERNATIVE RECOMMENDATION(S) • Adopt the attached Right of Entry Agreement with modifications to meet the HRA concerns. • Do not adopt the attached Right of Entry Agreement. V. ATTACHMENTS • Right of Entry Agreement for 211 West 76th Street. VI. PRINCIPAL PARTIES EXPECTED AT MEETING • None RBA 97-4-238 .de-- I RIGHT OF ENTRY AGREEMENT THIS AGREEMENT is made this day of 2012, by and between the HRA City of Richfield, 6700 Portland Avenue South,Richfield,Minnesota(the"Grantor"),and Hennepin County, a public body corporate and politic under the laws of Minnesota(the"Grantee"). 1. PARTIES.The Grantor,which is the fee simple owner of certain real property identified with Property Identification No. 34-028-24-34-0070 located at 211 76th Street West,Richfield, Minnesota(the"Property")and Hennepin County, are the parties to this Right of Entry Agreement(the"Agreement"). 2. PURPOSE. Hennepin County wants to receive from the Grantor and the Grantor is willing to grant to Hennepin County a right of entry so that Hennepin County may conduct environmental inspections, including environmental soil borings, and soil and ground water sampling at, in or upon the Grantor's Property. Hennepin County will provide Grantor with a copy of any report it receives based on such investigations. 3. GRANT OF RIGHTS. The Grantor agrees to permit Hennepin County and its agents, contractors, subcontractors,vendors, employees, or assigns to enter the Property at all reasonable times during the term of this Agreement in a manner that does not substantially interfere with the activities of the Grantor. 4. TERM OF THIS AGREEMENT. The rights granted herein will be possessed and enjoyed by Hennepin County from March 20,2012 until September 20,2012(the"Termination Date"). 5. ASSIGNMENT. Hennepin County may assign its right to conduct the activities described in Section 2 hereof to its contractors, subcontractors,vendors,employees or assigns. 6. LIABILITY. Hennepin County shall be responsible to the Grantor for the actions of Hennepin County and Hennepin County's agents, contractors, subcontractors,vendors, employees, or assigns, in carrying out the activities described in Section 2 hereof, subject to all of the limitations on liability set forth in Minnesota Statutes Chapter 466. Nothing in this section prohibits Hennepin County from entering into binding agreements with its agents, contractors, subcontractors,vendors or assigns regarding defense, indemnification, insurance or other aspects of liability for claims arising out of the activities described in Section 2. 7. GOVERNING LAW. This Agreement is to be construed and enforced according to and governed by the law of the State of Minnesota. 8. NOTICES.Any notice under this Agreement will be in writing and will be sent by regular mail addressed to Hennepin County do John Evans at 701 Fourth Avenue South, Suite 700, Minneapolis, Minnesota, 55415 and to the Grantor at c/o Christine Costello, City of Richfield, 6700 Portland Avenue South,Richfield,Minnesota 55423. 9. WAIVER OF TRESPASS. The Grantor expressly waives any claims of trespass the Grantor may otherwise have over and across the Property above described by Hennepin County or any of its agents, contractors, subcontractors,vendors,employees, invitees or assigns. RBA 97-4-238 COUNTY ADMINISTRATOR AUTHORIZATION Reviewed by the County Attorney's COUNTY OF HENNEPIN Office STATE OF MINNESOTA By: Assistant County Attorney Richard P. Johnson, County Administrator By: Assistant County Administrator- Public Works Date: Recommended for Approval By: Director, Department of Environmental Services Date: GRANTOR The Grantor certifies that the person who executed this Agreement is authorized to do so on behalf of the Grantor as required by applicable articles, bylaws,resolutions or ordinances. Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 19th day of March, 2012. Doris Rubenstein, Acting Chair ATTEST: Doris Rubenstein, Secretary AGENDA ITEM#: 4 REPORT#: 11 STAFF REPORT RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY MEETING MARCH 19, 2012 REPORT PREPARED BY: JULIE URBAN/MICHELLE LEWIS, HOUSING SPECIALISTS NAME,TITLE REPORT PRESENTER: KAREN BARTON, ASSISTANT COMMUNITY DEVELOPMENT DIRECTOR NAME,TITLE DEPARTMENT DIRECTOR REVIEW: • .ELI:'7'� REVIEWED BY EXECUTIVE DIRECTOR' n F ITEM FOR PIRA CONSIDERATION: Consideration of a request to provide a Transformation Loan to Sara and Mike Warner for the , remodeling of the non-substandard home at 7320 Colfax Avenue. I. RECOMMENDED ACTION: By Motion: Approve a Transformation Loan to Sara and Mike Warner for the remodeling of the non-substandard home at 7320 Colfax Avenue. II. BACKGROUND In February, Mike and Sara Warner applied for a Transformation Home Loan to remodel the house they were planning to purchase at 7320 Colfax Avenue. They have since purchased the house and have begun remodeling outside of the scope associated with the Transformation Loan request. The Warners propose to add a two-story addition onto the back of the house providing an expanded kitchen and great room, a second garage stall, and two additional bedrooms including a master bedroom and bath. The estimated cost of the remodeling project is $184,000, which would qualify the Warners for the maximum allowable Transformation Loan of$25,000. 03192012 7320 Colfax Transformation Loan.doc The Transformation Loan Program is funded through the Housing & Redevelopment Fund. State law requires that the funds be used to eliminate substandard housing conditions. As a result, all properties must undergo a pre-remodeling condition report and meet minimum substandard conditions to be eligible for funding. The program guidelines provide as follows: 6. A Pre-Remodeling Condition Report will be required of each property and will be conducted by a person or agency contracted by the HRA. 7. Based on the degree of substandardness revealed by the Pre-Remodeling Condition Report, the HRA may choose to reject an application and not fund a project. The Housing and Redevelopment Authority (HRA) contracts with an independent inspector to conduct the Pre-Remodeling Condition evaluation. Based on the inspector's findings for the house at 7320 Colfax Avenue, it does not qualify under the Tax Increment Financing statute as substandard. Because the house was built in 1992 on top of an existing foundation, it did not meet the substandard test. Per the program guidelines the HRA may choose to deny the loan or to approve the loan utilizing an alternate source of funds. To fund a loan with alternate funds, the HRA must authorize the use of other funds. The HRA Development Fund offers a non-restrictive source of funds that can be used to fund this loan. Sufficient funds are available in the Development Fund for this loan. Staff is recommending the HRA approve the Warners' Transformation Loan utilizing the Development Fund to fund the loan because the primary purpose of the Transformation Loan Program is to encourage major additions/remodeling of the existing housing stock. III. BASIS OF RECOMMENDATION A. POLICY • The Transformation Loan program provides a 30-year deferred loan for transformative remodeling projects that exceed $50,000 in value. • The Statement of Purpose for the Transformation Home Program is as follows: o To help improve and maintain an aging housing stock by providing financial and technical assistance to homeowners so they may make home improvements and undertake expansions to accommodate the needs of growing families. • The Program Objectives are as follows: o To provide an incentive to homeowners or home buyers for initiating major remodeling on their homes to meet their housing needs. o To increase the function and livability of small or outdated Richfield homes. o To increase the range of housing options available to individuals and families who want to live or remain in Richfield. B. CRITICAL TIMING ISSUES • The Warners have since closed on the property and have begun some remodeling work outside the scope of the work proposed for the Transformation Loan. The Warners are aware that this work will not be considered as part of the Transformation Loan, and that the HRA may elect to not fund the Transformation Loan. C. FINANCIAL • Sufficient funds are available in the Development Fund to provide funding for this loan. • The HRA budget provides $125,000 for Transformation Loans in 2012 using the Housing & Redevelopment Fund. • The Transformation Loan Program is funded primarily through the Housing & Redevelopment Fund. Expenditures for the Program outside of this Fund must be authorized by the HRA. D. LEGAL • The Housing & Redevelopment Fund can only be used on qualified costs. A structure must be substandard in order for funds to be used. IV. ALTERNATIVE RECOMMENDATION(S) • Deny a Transformation Loan to Sara and Mike Warner for the remodeling of the non-substandard house at 7320 Colfax Avenue. V. ATTACHMENTS • Photo of the existing house at 7320 Colfax Avenue • Remodeling Plans for 7320 Colfax Avenue VI. 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IL-6j' 1 li I= lo —11 111.11 III II I,1 [i 1 1 1 i li1. — 1 , I I ill 1 . 1 J' 1 IN 1 It,l, II i 1 , 1- 1 , 1 is • I 1 i ,11 , 111 Iiim III li i 1 .11 g $:: i-15!1, ''• eArantipregs\tray N.ukselveltunoos46.1/46.H AGENDA ITEM#: 5 REPORT#: 12 STAFF REPORT RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY MEETING MARCH 19, 2012 REPORT PREPARED BY: MICHELLE LEWIS/JULIE URBAN, HOUSING SPECIALIST NAME,TITLE REPORT PRESENTER: KAREN BARTON, ASST COMMUNITY DEVELOPME DIRECTOR AL NAME,TITLE DEPARTMENT DIRECTOR REVIEW: 0 l .Zr e (6. REVIEWED BY EXECUTIVE DIRECTOR: [�I 41471111W"' / ....., ITEM FOR BRA CONSIDERATION: Consideration of a Contract for Private Development between the Housing and Redevelopment Authority and Scott and Crystal Vander Heiden for the redevelopment of 6507 Bloomington Avenue under the Richfield Rediscovered Program. I. RECOMMENDED ACTION: By Motion: Approve and authorize execution of a Contract for Private Development between the Housing and Redevelopment Authority and Scott and Crystal Vander Heiden for the redevelopment of 6507 Bloomington Avenue. II. BACKGROUND Scott and Crystal Vander Heiden have submitted an application for a $50,000 subsidy to redevelop 6507 Bloomington Avenue under the Richfield Rediscovered Program. Prospective Richfield Rediscovered participants bear a significant cost in redeveloping developed lots. The $50,000 redevelopment subsidy addresses the financing gap and provides an attractive incentive to replace a substandard housing structure with a new home that meets the needs and desires of today's families. The Vander Heidens will work with Iverson Homes, Inc., to demolish the existing 572 square foot house, and construct a new house. The new two-story home will 03192012 RR Contract 6507 Bloomington (Vander Heiden).doc have 2,549 square feet, four bedrooms and a study, three baths and an attached, three-stall garage. The home will have an estimated end-value of$290,000. The Vander Heidens submitted a Purchase Agreement to negotiate a short sale with the current owner's lender. That offer was accepted by the lender, and closing on the property is scheduled for the end of March. The existing structure has been inspected by the Housing and Redevelopment Authority's (HRA) inspector and found to be substandard, per the program guidelines. The Contract for Private Development requires the new house construction to be completed by the end of the year. The Vander Heidens anticipate beginning construction shortly after closing on the property. Under the terms of the Contract for Private Redevelopment, the HRA will issue a Note in the amount of$50,000, payable once construction is complete, a completion certificate is issued, and the Vander Heidens assume ownership of the property from the builder. Staff is recommending approval of the Contract for Private Development between the HRA and the Vander Heidens under the Richfield Rediscovered Program. III. BASIS OF RECOMMENDATION A. POLICY • The proposed project meets the objectives of the Richfield Rediscovered Program: o Removes substandard, functionally obsolete housing and eliminates its blighting influence. o Provides new, higher valued housing. o Alleviates shortage of housing choice for families. o Facilitates the HRA's "Market Rate Initiatives" by providing a four-bedroom, owner-occupied house designed for a family. • The project meets the Housing Design and Site Development Criteria, as defined in Exhibit B of the Contract for Private Redevelopment. B. CRITICAL ISSUES • The small house has limited market appeal and has been listed on the MLS since April 2011. The house can be demolished to accommodate a home that provides move-up housing. • The property qualifies as substandard, as required by the program guidelines. • Per the Contract for Private Development, the house construction must be completed by the end of the year. The Vander Heidens anticipate beginning construction shortly after closing on the property. C. FINANCIAL • This project is eligible for a $50,000 Redevelopment Credit subject to the terms of the Contract for Private Development. • Under the terms of the Contract the $50,000 will be due on issuance of a Certificate of Completion. • The Richfield Rediscovered budget allows for property acquisitions and credit developments. D. LEGAL • The HRA Attorney has reviewed the terms of the Contract for Private Redevelopment. IV. ALTERNATIVE RECOMMENDATION(S) • Do not execute the Contract for Private Development. • Amend the Contract for Private Development and direct staff to work with property owners to revise their proposal. V. ATTACHMENTS • Contract for Private Development • Picture of 6507 Bloomington Avenue • Building Plans/Elevations • Site Plan/Landscaping Plan • Purchase Agreement, applicant to purchase property • Purchase Agreement, Builder to purchase property and construct new home VI. PRINCIPAL PARTIES EXPECTED AT MEETING • Scott Vander Heiden, applicant • Tim Iverson, builder Copy CONTRACT FOR PRIVATE DEVELOPMENT Between THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA and Scott Vander Heiden at 6507 Bloomington Avenue South This Instrument Drafted by: I-lousing and Redevelopment Authority in and for the City of Richfield 670() Portland Avenue South Richfield, MN 55423 612-861-9760 CONTRACT FOR PRIVATE DEVELOPMENT THIS AGREEMENT, made and entered into as of this day of by and between the Housing and Redevelopment Authority in and for the City of Richfield, a public body corporate and politic under the laws of the State of Minnesota, having its principal office at 6700 Portland Avenue, Richfield, Minnesota (HRA), and Scott Vander Heiden (Buyer). WITNESSETH: WHEREAS, the City of Richfield (City) and the HRA have previously created and established a Redevelopment Project (Project) pursuant to the authority granted in Minnesota Statutes, Sections 469.001 through 469.047 and Sections 469.174 through 469.179 (collectively, the Acts); and WHEREAS, pursuant to the Acts, the City and the HRA have previously adopted a redevelopment plan (Redevelopment Plan) to finance all or a portion of the public development costs of the Project; and WHEREAS, in order to achieve the objectives of the Redevelopment Plan as hereinafter defined and particularly to make specified land in the Project available for development by private enterprise for and in accordance with the Redevelopment Plan, the HRA has determined to provide substantial aid and assistance to finance development costs in the Project; and WHEREAS, the Buyer has proposed a development as hereinafter defined within the Project which the HRA has determined will promote and carry out the objectives for which the Project has been undertaken, will assist in carrying out the obligations of the Redevelopment Plan, will be in the vital best interests of the City and the health, safety and welfare of its residents and is in accord with the public purposes and provisions of the applicable state and local laws and requirements under which development in the Project has been undertaken and is being assisted. NOW, THEREFORE, in consideration of the mutual covenants and obligation of the I-IRA and the Buyer, each party does hereby represent, covenant and agree with the other as follows: ARTICLE I. DEFINITIONS, EXHIBITS, RULES OF INTERPRETATION Section 1.1. Definitions. In this Agreement, the following terms have the meaning given below unless the context clearly requires otherwise: (a) City. The City of Richfield, Minnesota. (b) Construction Plans. Collectively, the plans, drawings and related documents related to the Improvements, which are listed on Exhibit D. (c) Buyer. Scott Vander Heiden. 1 C, 0 p y (d) Development. The Property and the Improvements to be constructed thereon according to the Construction Plans approved by the 1-IRA. (e) HRA. The Housing and Redevelopment Authority in and for the City of Richfield, Minnesota. (f) Closing The date on which Buyer closes on the Purchase of the Property. (g) Housing and Redevelopment Authorities Act (HRA Act). Minnesota Statutes Sections 469.001 through 469.047. (h) improvements. Each and all of the structures and site improvements,constructed on the Property by the Buyer, as specified in the Construction Plans approved by the HRA. (i) Minimum Market Value. 42,51)� 00 , which is the minimum market value for the land and Improvements as confirmed by the Hennepin County Assessor. (j) Mortgage and Holder. The term "mortgage" shall include the mortgages referenced in Article VI of this Agreement and any deed of trust or other instrument creating an encumbrance or lien upon the Property or any part thereof, as security for a loan. The term "holder" in reference to a mortgage includes any insurer or guarantor (other than the Buyer) of any obligation or condition secured by such mortgage or deed of trust. (k) Property. The real property legally described as: Lot 23 and the North 19 feet of Lot 22, Block 12, Nokomis Gardens Rgt Blk 7-12 Girard Parkview Located on land having a street address of: 6507 Bloomington Avenue South (I) Redevelopment Project (Project). The Redevelopment Project established by the HRA pursuant to Minnesota Statutes Sections 469.001 through 469.047 and described in the Redevelopment Plan. (m) Redevelopment Project Plan (Redevelopment Plan). The plans for implementation of the Project adopted by the HRA pursuant to Minnesota Statutes Sections 469.001 through 469.047. (q) Unavoidable Delays. Delays which are the direct result of strikes, labor troubles, fire or other casualty to the Improvements, litigation commenced by third parties which results in delays or acts of any federal, state or local government, except those contemplated by this Agreement, which are beyond the control of the Buyer. 2 copy Section 1.2 Exhibits. The following Exhibits are attached to and by reference made a part of this Agreement: A. Form of Certificate of Completion B. Housing Design and Site Development Criteria C. The Note D. List of Construction Plan Documents 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 import, without reference to any particular section or subdivision refer to this Agreement as a whole rather than any particular section or subdivision hereof: (c) References herein to any particular section or subdivision hereof are to the section or subdivision of this Agreement as originally executed. (d) 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. ARTICLE II. REPRESENTATIONS AND UNDERTAKINGS Section 2.1 By the Buyer. The Buyer makes the following representations and undertakings: (a) The Buyer has the legal authority and power to enter into this Agreement and has duly authorized the execution, delivery and performance of this Agreement; (b) The Buyer has the necessary equity capital or will obtain commitments for financing necessary fbr construction of the Improvements; (c) The Buyer will construct the Improvements in accordance with the terms of this Agreement and all local, state and federal laws and regulations; (d) The Buyer will obtain, in a timely manner, all required permits, licenses and approvals, and will meet, in a timely manner, the requirements of all local, state and federal laws and regulations which must be obtained or met before the Improvements may be constructed; and (e) The plans fbr the Improvements have been prepared by a qualified draftsperson or architect. 3 ‘ voiaiir ric (f) Buyer intends to reside at the Property following completion of construction; and - is not acquiring the Property for the purpose of resale.or speculation. • Section 2.2 By the HRA. The HRA makes the following representations as the basis for the undertaking on its part herein contained: (a) The HRA is authorized by law to enter into this Agreement and to carry out its obligations hereunder; and • (b) The HRA will, in a timely manner, subject to all notification requirements, review and act upon all submittals and applications of the Buyer and will cooperate with the efforts of Buyer to secure the granting of any permit, license, or other approval required to allow the construction of the Improvements. ARTICLE III. ACQUISITION OF PROPERTY; CONVEYANCE TO BUYER Section 3.1 Purchase of Property by Buyer. The Buyer has, or will utilize its best efforts to enter into a binding agreement to purchase the Property. Upon determination by the HRA that Buyer has entered into a binding purchase agreement for the purchase of the Property, the HRA will deliver to Buyer the Note described in Section 5.1. If no binding purchase agreement is entered into within 30 days from the date of this Agreement, either the HRA or the Buyer may declare this Agreement null and void, and the parties will thereby be released from any further obligation hereunder. Section 3.2 Closing. Closing must take place on or before Aimy"3\s , or such other date as may he agreed to by the Buyer and HRA in writing. ARTICLE IV. CONSTRUCTION OF IMPROVEMENTS Section 4.1. Construction of Improvements. The Buyer shall construct the Improvements on the Property in accordance with the Construction Plans, shall meet or exceed the Minimum Market Value specified in Section 1.1, and shall maintain, preserve and keep the Improvements in good repair and condition. Section 4.2. Building Plans. No building permit will be issued by the City unless the building plans are in conformity with the Construction Plans, with the Buyer's Minimum Market Value, this Agreement, including the Housing Design and Site Development Criteria contained in Exhibit B, and all local, state and federal regulations. The HRA shall, within 25 days of receipt of Construction Plans submitted in application for a building permit, review such Construction Plans to determine whether the foregoing requirements have been met. If the HRA determines such Construction Plans to be deficient, it shall notify the Buyer in writing stating the deficiencies and the steps necessary for correction. Issuance of the building permit by the City shall be a 4 r y • conclusive determination that the Construction Plans have been approved and shall satisfy the provisions of this Section 4.2. Section 4.3 Schedule of Construction. Subject to Unavoidable Delays, construction of the Improvements shall be completed prior to fit'1 P o . All construction shall be in conformity with the approved Construction Plans. Periodically during construction the Buyer shall make reports in such detail as may reasonably he requested by the HRA concerning the actual progress of construction. if at any time prior to completion of construction the HRA has cause to believe that the Buyer will be unable to complete construction of the Improvements in the time permitted by this.Section 4.3, it may notify the Buyer and demand assurances from the Buyer regarding the Buyer's construction schedule. If such assurances are not forthcoming or are deemed by the HRA at its sole discretion to he inadequate, the HRA may declare an Event of Default and may avail itself of any.of the remedies specified in Section 8.2 of this Agreement. Section 4.4 Certificate of Completion. Promptly after notification by the Buyer of completion of construction of the Improvements, the I-IRA shall inspect the construction to determine whether the improvements have been completed in accordance with the Construction Plans and the terms of this Agreement, including the date of the completion thereof In the event that the HRA is satisfied with the construction, the I-IRA shall furnish the Buyer with a Certificate of Completion in the form attached hereto as Exhibit A. Such certification by the I-IRA shall be a conclusive determination of satisfaction and termination of the agreements and covenants in this Agreement with respect to the obligation of the Buyer to construct the Improvements. issuance of the Certificate of Completion shall also serve as a satisfaction of any obligation of Buyer under the Note . If the HRA shall refuse or fail to provide certification in accordance with the provisions of this Section 4.4, the HRA shall •within 15 days of such notification provide the Buyer with a written statement, indicating in adequate detail in what respects the Buyer has failed to complete the Improven,snts in accordance with the provisions of this Agreement necessary, in the opinion of the HRA, for the Buyer to take or perform in order to obtain such certification. Section 4.5 Failure to Construct. In the event that construction of the Improvements is not completed as provided in Section 4.3 of this Agreement, an Event of Default shall he deemed to have occurred, and the HRA may proceed with its Remedies on Default under this Agreement. ARTICLE V. DEVELOPMENT CREDIT Section 5.1 Issuance of the Note. As consideration for Buyer's covenant to construct the Improvements, and subject to all of the conditions of this Agreement, the HRA agrees to provide the Buyer with a Development Credit in the amount of $50,000. Upon the Buyer providing the HRA with evidence that Buyer has entered into a purchase agreement for the purchase of the Property, the HRA will deliver to Buyer a promissory note in substantially the form of the attached Exhibit C. Payment of the Development Credit will he exclusively subject to and in accordance with the terms of the Note as such are contained in the Note or described in this Agreement. 5 . . 5 -1 C FY- • Section 5.2 Note Terms. The terms of the Note will include the following: • (a) Assuming the Buyer is in compliance with Buyers obligations, the Note will be payable in one installmenton the date of the issuance of a Certificate of Completion showing full completion of all of the Improvements including landscaping. (b) The Note will be cancelled if the Closing does not occur by the last date provided in Section 3.2; or if construction of the Improvements are not fully completed by the last date provided in Section 4.3. (c) The Note will not bear interest. • (d) The Note may be canceled by the HRA in the event that the Buyer is in default of any of its obligations under this Agreement. (e) The Note may not he assigned or pledged unless the proposed recipient certifies to the HRA that it is aware of and accepts to the conditions of the Note governing payment. ARTICLE VI. PROHIBITIONS AGAINST ASSIGNMENT AND TRANSFER Section 7.1 Representation as to Redevelopment. The Buyer represents and agrees that its undertakings pursuant to the Agreement, are for the purpose of development of the Property and not for speculation in land holding. The Buyer further recognizes that, in view of the importance of the Development to the general welfare of Richfield and the substantial financing and other public aids that have been made available by the HRA for the purpose of making the Development possible, the qualification and identity of the Buyer are of particular concern to the HRA. The Buyer further recognizes that it is because of such qualifications and identity that the HRA is entering into this Agreement, and, in so doing, is further willing to rely on the representations and undertakings of the Buyer for the faithful performance of all undertakings and covenants agreed by the Buyer to be performed. Section 7.2 Prohibition Against Transfer of Property and Assignment of Agreement. a) HRA and Buyer acknowledge that in furtherance of construction of the improvements the Buyer may make an assignment of the property to the Construction Contractor, with a reassignment of the property to the Buyer following completion of construction of the improvements. The Buyer understands that no such assignment to the Construction Contractor will create any rights in the Construction Contractor to receive payments under the Note; and the Buyer further understands that Buyer will no be entitled to receive payments under the Note until all of the provisions of the Note have been satisfied and the Property has been reassigned to Buyer. 6 C (.()) kJ) = b) Other than as provided above, no Transfer of the Property or Assignment of the Agreement - prior to the issuance of a Certificate of Completion will be permitted absent the written approval of the HRA. ARTICLE VII. . EVENTS OF DEFAULT Section 8.1 Events of Default Defined. The following shall be deemed Events of Default under. this Agreement and the term shall mean, whenever it is used in this Agreement, unless the context otherwise provides, any one.or more of the following events: (a) Failure by the Buyer to pay when due the payments required to be paid or secured under any provision of this Agreement; (b) Failure by the Buyq to observe and substantially perform any covenant, condition, obligation or agreement on its part to be observed or performed hereunder, including the time for such performance; (c) If the Buyer shall admit in writing its inability to pay its debts generally as they become due, or shall file a petition in bankruptcy, or shall make an assignment for the benefit of its creditors, or shall consent to the appointment of a receiver of itself or of the whole or any substantial part of the Property; (d) if the Buyer, on a petition in bankruptcy filed against it, be adjudicated as bankrupt, or a court of competent jurisdiction shall enter an order of decree appointing, without the consent of the Buyer, a receiver of the Buyer or of the whole or substantially all of its property, or approve a petition filed against the Buyer seeking reorganization or arrangement of the Buyer under the federal bankruptcy laws, and such adjudication, order or decree shall not he vacated or set aside or stayed within 60 days from the date of entry thereof or (e) if the Development is in default under any Mortgage and has not entered into a work-out agreement with the Mortgagee. Section 8.2 Remedies on Default. Whenever any Event of Default occurs, the HRA may, in addition to any other remedies or rights given the HRA under this Agreement, take any one or more of the following actions following written notice by the HRA to the Buyer as provided in Section 9.5 of this Agreement: (a) suspend its performance under this Agreement until it receives assurances from the Buyer, deemed reasonably adequate by the HRA, that the Buyer will cure its default and continue its performance under this Agreement; (b) cancel or rescind this Agreement; (c) cancel or rescind the Note; 7 • - C FT - (e) withhold the Certificate of Completion; or (f) take whatever action at law or in equity may appear necessary or desirable to the HRA to enforce performance and observance of any obligation, agreement, or covenant of the Buyer under this Agreement; provided, however, that any exercise by the HRA of its rights or remedies hereunder shall always be subject to and limited by, and shall not defeat, render invalid or limit in any way (a) the lien of any Mortgage authorized by this Agreement and (b) any rights or interest provided in this Agreement for the protection of the Holders of a Mortgage; and provided further that should any Mortgagee succeed by foreclosure of the Mortgage or deed in lieu thereof to the Buyer's interest in the Property, it shall, notwithstanding the foregoing, be obligated to perform the obligations of the Buyer under this Agreement to the extent that the same have not therefore been performed by the Buyer. Section 8.3 No Remedy Exclusive. No remedy herein conferred upon or reserved to the HRA 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 he 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 HRA or the Buyer 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 VIII. Section 8.4 No Additional Waiver Implied by One Waiver. In the event of the occurrence of any Event of Default by either party, which Event of Default is thereafter waived by the other party, such waiver shall be limited to the particular Event of Default so waived and shall not be deemed to waive any other concurrent, previous or subsequent Event of Default. ARTICLE VIII. ADDITIONAL PROVISIONS Section 9.1 Conflict of Interests; Representatives Not Individually Liable. No HRA officer who is authorized to take part in any manner in making this Agreement in his or her official capacity shall voluntarily have a personal financial interest in this Agreement or benefit financially there from. No member, official, or employee of the HRA shall be personally liable to the Buyer, or any successor in interest, for any Event of Default by the HRA or for any amount which may become due to the Buyer or successor or on any obligations under the terms of this Agreement. Section 9.2 Non-Discrimination. The provisions of Minnesota Statutes Section 181.59, which relate to civil rights and non-discrimination, and any affirmative action program of the City shall be considered a part of this Agreement and binding on the Buyer as though fully set forth herein. 8 • 6—\0 c 0 py • Section -9.3 Notices and Demands. Except as otherwise expressly provided in this Agreement, a notice, demand or other communication under this Agreement by either party to the other shall b ••sufficiently given.0 r.delivered if it is sent by mail, postage prepared, return receipt requested or delivered personally: (a) . As to the HRA: • Richfield HRA Attn: Housing Specialist 6700 Portland Avenue South Richfield, MN 55423 (b) As to the Buyer: Scott Vander Heiden 7/6 zecteici.N. s or at such otlrr address with respect to either such party as that party may, fi-om time to time, designate in writing and forward to the other as provided in this Section 9.3. Section 9.4 Counterparts. This Agreement may be simultaneously executed in any number of counterparts, all of which shall constitute one and the same instrument. • 9 • Co . Pyt IN WITNESS WHEREOF, the HRA has caused this Agreement to be duly executed in its name and behalf and its seal to be hereunto duly affixed and the Buyer has caused this Agreement to be duly executed as of the day and year first above written. THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA • By --- — - . -Its Chairperson By- Its Executive Director BUYER MA 414 Afik 10 • . • . • STATE OF MINNESOTA. ) • c 0 py ,_ ) SS COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this — day of ______ , 2012,. by Suzanne M. Sandahl, the Chairperson of the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota (HRA), a public body corporate and politic under the laws of Minnesota, on behalf of the HRA. -- Notary Public — -_-- -- STATE OF MINNESOTA ) ) SS COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this . _day of—__.____ 2012, by Steven L. Devich, the Executive Director of the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota (HRA), a public body corporate and politic under the laws of Minnesota, on behalf of the HRA. Notary Public STATE OF MINNESOTA ) ) SS COUNTY OF ) The foregoing instrument was acknowledged before me this day of , 2012, by Notary Public • 11 ) 3 C 0 py EXHIBIT A FORM OF CERTIFICATE OF COMPLETION The undersigned hereby certifies that , has fully and completely complied with its obligations under Article IV of that document entitled "Contract for Private Development", between the Housing and Redevelopment Authority in and for the City of - Richfield, Minnesota and _ dated • . filed as Document No. with respect to the construction of the approved construction plans at , legally described as • and is released and forever discharged from its obligations to construct under such above-referenced Article. DATED: THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY RICHFIELD By: Its: Executive Director STATE OF MINNESOTA ) SS COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this day of , 20__, by — - — — and . the Executive Director of the Housing and Redevelopment Authority in and for the City of Richfield, a public body corporate and politic under the laws of the State of Minnesota on behalf of the public body corporate and politic. Notary Public This instrument was drafted by: Housing and Redevelopment Authority in and for the City of Richfield 6700 Portland Avenue South Richfield, MN 55423 612-861-9760 A-1 • I C 0 PY EXHIBIT B HOUSING DESIGN AND SITE DEVELOPMENT CRITERIA Housing design is a critical element of the program. Siding materials, exterior façade presentation, roof, window, siding and building line variability, finished landscape, interior space function and use are all important issues of design to the HRA. The criteria were created to ensure that the homes built on the identified lots blend in with the surrounding neighborhood and respond to the specific concerns of the HRA. All new houses built under the Richfield Rediscovered Program must meet the requirements of the City's Zoning Code and additional criteria, as listed in this document. The development of all sites shall meet the development criteria listed below, as reviewed and approved by the HRA. To maximize the development of a given lot, the HRA reserves the right to explore all development options without obligating the HRA to support any specific proposal, idea or solicitation. A. New Home Standards 1. Existing buildings must be demolished. If an existing garage is in good condition, it may be retained upon review by HRA staff and the Building Official. 2. New dwelling must be owner-occupied and single-family. 3. Three finished bedrooms are required. 4. Two finished bathrooms are required. 5. Two-car garage is required. 6. A full basement is required, unless the selected design results in a split-level or a garden-level type of basement. In the case of an "accessible" house, a basement may be omitted if it would otherwise prohibit accessible design elements. B. Site Standards 1. After construction, the site must be fully landscaped, including plantings around the foundation. The entire grounds shall be landscaped and be aesthetically pleasing in all seasons. Land forms and plant materials shall be used to define the site and blend neatly with adjoining properties. Specific lot line blending requirements may be required, as appropriate, for specific sites. At a minimum, the applicant must meet the "Landscaping and Screening Requirements" in the City's Zoning Code under Section 544.03, Subd. 4, General landscaping requirements and Subd. 5, Residential sites. The code is available on the City's website: http://www.cityofrichfield.org. To the greatest extent possible, existing trees should be preserved. Any trees removed must be replaced (they do not have to be the same species or in the same location) and should be labeled on the required landscape plan. 2. Utility meters shall be screened from street view and locations must be specified on plans. 3. Site drainage should be accommodated on the site so that water is directed away from the new home and the neighboring properties. Neighboring properties must not be disturbed by the creation of drainage swales. Specific storm water management requirements may be required, as appropriate, including the addition of gutters for specific sites. Construction and the finished structure must not have detrimental impact on storm water drainage patterns in the neighborhood. B-I • • • 4. All air conditioning units must be located in the rear yard of sthe house or as approved by the HRA. C. Construction Requirements 1. Existing trees must be protected during construction. A tree wrap with board reinforcements shall be sued on trees directly adjacent to active grading and construction area. Damaged or destroyed trees must be replaced. 2. The construction site, neighboring properties and adjacent public streets shall be kept free of construction debris at all times. 3. No construction workers, construction equipment or construction material shall encroach upon neighboring properties. 4. The property shall have a new sanitary service line installed to the city sanitary sewer main consisting of schedule 40 PVC or equivalent. If there is an existing 6" sewer stub at the property line, it must be lined with 4" schedule 40 PVC or equivalent to the city's sanitary main, and it must include a "donut" at the end with cement. The line must be televised after installation to ensure the following: 1. There are no obstructions in the line. 2. The PVC liner is not protruding into the city's sanitary sewer main line. B-2 EXHIBIT C PROMISSORY NOTE DEVELOPMENT CREDIT NOTE $50,000 DATE: _The Housing and Redevelopment Authority in and for the City of Richfield, Minnesota, a public body corporate and politic (the "Maker"), for value received, hereby promises to pay to _ _ (the "Holder.") the principal. sum of fifty thousand and No/100 Dollars ($50,000), with no interest as hereinafter provided, in any coin or currency which at the time or times of payment is legal tender fbr the payment of private debts in the United States of America. The principal of this Note is payable as follows: 1. The principal amount of the Note is as provided for in that certain agreement by and between • Maker and Holder entitled: Contract for Private Development dated (the "Contract") and shall bear no interest. Terms contained in this Note shall have the meanings given them in the Contract unless a different meaning is clearly indicated. 2. - The Note shall be due and payable the Note will he payable due and payable on the date of the issuance of a Certificate of Completion showing full completion of all of the Improvements including landscaping. No amount shall be due or payable prior to those dates. 3. This Note will be cancelled if the Closing does not occur by the last date provided in Section 3.2 of the Contract; or if construction of the Improvements are not fully completed by the last date provided in Section 4.3 of the Contract. 4. This Note is given pursuant to the Contract. All of the agreements, conditions, covenants, provisions, and stipulations and remedies contained in the Contract are hereby made a part of this Note to the same extent and with the same force and effect as if they were fully set forth herein. It is agreed that time is of the essence of this Note. If a default by the Maker or the Holder occurs under the Contract, then the Holder or Maker may at its right and option, exercise any rights it may have under law or at equity, under the Agreement, and under the Note. 5. . The remedies of the Maker or Holder as provided herein, and in the Contract, or any other instrument, shall be cumulative and concurrent and may be pursued singly, successively, or together, and,- at the sole discretion of the Maker or Holder, may be exercised as often as occasion therefore shall occur; and the failure to exercise any such right or remedy shall in no event be construed as a waiver or release thereof The Maker or Holder shall not be deemed, by any act of omission or commission, to have waived any of its rights or remedies hereunder unless such waiver is in writing and signed by the Maker or Holder and then only to the extent specifically set forth in the writing. A waiver with reference to one event shall not be construed as continuing or as a bar to or waiver of any right or remedy as to a subsequent event. This Note may not be amended, modified, or changed except 1 �:m - TN/7 1 a only by an instrument in writing signed by.the party against whom enforcement of any such amendment, modifications, or change is sought. 6. This Note shall be governed by and construed in accordance with the laws of the state of Minnesota without regard to its conflict of laws provisions. Any disputes, controversies, or claims arising out of this Note shall be heard in the state or federal courts of Minnesota, and all parties to this Note waive any objection to the jurisdiction of these courts, whether based on - convenience or otherwise 7. Holder may not assign, transfer or pledge this Note without the prior written consent of the Maker. Maker may condition consent on obtaining a certification from the proposed assignee, transferee or pledgee acknowledging and agreeing to Maker's rights to cancel the Note in accordance with the terms of the Note and the Contract. 8. IT IS HEREBY CERTIFIED AND RECITED that all conditions, acts, and things required to exist, happen, and be performed precedent to or in the issuance of this Note do exist, have happened, and have been performed in regular and due form as required by law. IN WITNESS WHEREOF, the Maker has caused this Note to be duly executed as of the day of--- - 2012. THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA BUYS ' g `r►/ 4 Y ./M' Its Chairperson By Its Executive Director STATE OF MINNESOTA ) ) SS COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this day of .12012, by Suzanne M. Sandahl, the Chairperson of the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota-(HRA), a public body corporate and politic under the laws of Minnesota, on behalf of the HRA. Notary Public 2 4c, 0 py STATE OF MINNESOTA ) ) SS COUNTY OF,HENNEPIN ) • The fb'-egoing instrument was acknowledged before me this day of . 2012, by Steven L. Devich, the Executive Director of the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota (HRA), a public body corporate and politic under the laws of Minnesota, on behalf of the HRA. Notary Public STATE OF MINNESOTA ) ) SS COUNTY OF ) The ibrcgoing instrument was acknowledged before me this -day of - — _ , 20 by- - - - - Notary Public This Instnmlent v'as Drafted by: 1-lousing and Redevelopment.Authority in and for the City of Richfield 6700 Portland Avenue South Richfield, MN 5.`;423 612-861-9760 3 C • _ _ EXHIBIT A LEGAL DESCRIPTION Lot 23 and the North 19 feet of Lot 22, Block 12, Nokomis Gardens Rgt Blk 7-12 Girard Parkview Hennepin County, Minnesota c-I EXHIBIT D C py LIST OF CONSTRUCTION PLAN DOCUMENTS • Contract fin- Private Development, fully executed • Building Plans, approved by the HRA for design considerations and approved by the Building Official for construction considerations • Approved Site Plan • Landscape Plan • Purchase Agreement for sale of Property from Buyer to Homeowner I)-I 5-91 6507 Bloomington Ave S — Existing House i -' ".1,. `� _ x q ■ � •.dis� t� .gyp '4" Ne . -" "1y Ili li Y c r3 dam" � ., ,# �'..S �"0. ` 'e�+iar.+MF^. •a.ti?iYi!�! 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A • A A .E' F , ' ( , : 4 ii, ,i r■ ',3 Fi- ‘,7-ii---- t- 2, Mt 4 111 if — , ...:-I ---"''''.* • ' '"..--1 Tf1:---1 '''*',WiEj111.1 .... I. t\I '‘,. : 1,■?1 1 jf IN,. i 141 -1 li :ILI ifti--]-- P1 , ' 1 44 -0 LI' , -II i'llria 4 I 1. 1 Q t _I .1 'i • 1 i. ^L 3M-31111, : 141 I ilk ;,_ t.:1,410 II ' ; -44' cr 't 4.. A P. , • - -, .._, 1 da :. . ,_ 11—. II —I— I. —I !J )E. i- r_.v. 4 .1.. I 1 s 4 „ i ) „ i [ 0 0 1 _ \ ;. \ \ 1 s N \ \ \ it —ii \ ,--i 1 a) CD r o VI U in U) . §g Y ^ O M 0 G n N 10 ZO iV*dO LLJ r ^ Q N ;i- n T z O I— CD �I ® z z 1I 0 0 0 ------t J ,„ m w Q ® _ \ N W O CD ER1 • — N .04 0.__Q Q Q. g kk/� kkkkkkk 6*-1 y ^ N O X N g= v m U . i--.@) 0 W m fx Z 0_ CL 'i is°0 cfl b < J U S 3AV NOIONIW0018 r . (n Z W J Q U N W F- 00 entanuelson-podas consulting engineers December 22, 2011 Mr. Kevin Bumgardner Counselor Realty Dear Kevin, Scott Vander Heiden is a managing partner in our firm. Scott and his wife Crystal intend to purchase the property at 6507 Bloomington Avenue in Richfield, MN. This letter serves to confirm that Emanuelson Podas, Inc.will be providing Scott&Crystal a loan for the purchase of this property out of our corporate cash account. With this loan, they will have sufficient cash to close on the purchase of the property for$61,000 without a mortgage. Cordially, Michael Webert Managing Partner 2, - Matthew Putts Managing Partner 10401 Bren Road East Minnetonka,MN 55343 Phone;(952)930-0050 www.epinc.net lengineous'l � • ~ � � . S~ '�!/\ x . ' . • . 1-1 Scott Vander Heiden .., 1. Crystal Vander Heiden 1-7-iisio .. ,-1 'Minneapolis,MN 5509 ,. el2-667-9378 /A i j/igi,„ . , , ., ... f .o.______________________- 4 , 0 .,..„...,. ..._ m. .. ., , , 1:0910000 191: 39 7 3 900 2 S 20 Et lifill . --_ -_._-_''- -_-__-.... ____ _ . ' . � � " . ..� • . ■ • PURCHASE AGREEMENT This form approved by the Minnesota Association of REALTORSe, COU n e 0i a which disclaims any liability arising out of use or misuse of this form. ©2011 Minnesota Association of REALTORS',Edina,MN realty 1. Date December 22,2011 2. Page 1 of t3 3. RECEIVED OF Scott A.Vander Heiden Crystal Vander Heiden 4. 5. the sum of Two Thousand Dollars($ 2,000.00 ) 6. by 0 CHECK❑ CASH ❑ NOTE as earnest money to be deposited upon Final Acceptance of Purchase (Check one.}.-._----•---•-- 7. Agreement by all parties,on or before the third Business Day after Final Acceptance,in the trust account of listing 8. broker,unless otherwise agreed to in writing,but to be returned to Buyer If Purchase Agreement is not accepted 9. by Seller. 10. Said earnest money is part payment for the purchase of the property located at 11. Street Address: 6507 Bloomington Ave 12. City of Richfield , County of Hennepin 13. State of Minnesota,legally described as 14. Lot 000 Block 012 NOKOMIS GARDENS RGT BLK 7-12 GIR PKVW LOT 23 AND N 19 FT OF LOT 22 15. 16. 17. including all fixtures on the following property, if any, owned by Seller and used and located on said property, 18. including but not limited to garden bulbs, plants, shrubs and trees;storm sash, storm doors, screens and awnings; - 19. window shades, blinds, traverse and curtain and drapery rods; attached lighting fixtures and bulbs; plumbing 20. fixtures,water heater,heating plants(with any burners,non-fuel tanks,stokers and other equipment used in connection 21. therewith), built-in air-conditioning equipment,electronic air filter,water softener OWNED❑RENTED®NONE, - -(Check one.).-........22. built-in humidifier and dehumidifier, liquid fuel tank(s) ❑ OWNED ❑ RENTED 0 NONE and controls (if the (Check one)---- 23. property of Seller), sump pump; attached television antenna, cable TV jacks and wiring; BUILT-INS; dishwashers, 24. garbage disposals, trash compactors, ovens, cook-top stoves, microwave ovens, hood fans, intercoms; 25. ATTACHED:carpeting;mirrors;garage door openers and all controls;smoke detectors;fireplace screens,doors and 26. heatilators;AND the following personal property: 27. 28. 29. 30. all of which property Seller has this day agreed to sell to Buyer for sum of($ 61,000.00 31 Sixty-One Thousand Dollars, 32. which Buyer agrees to pay in the following manner: 33. 1. Cash of 100 percent(%)of the sale price, or more in Buyer's sole discretion,which includes the earnest 34. money;PLUS 35. 2. Financing of 0 percent(%)of the sale price,which will be the total amount secured against this property 36. to fund this purchase. - 37. Such financing shall be (check one) ❑a first mortgage; ❑ a contract for deed; or❑ a first mortgage with 38. subordinate financing,as described in the attached Addendum: 39. ❑Conventional ❑FHA ❑DVA LI Assumption LI Contract for Deed ❑Other: - -.... (Check one.). -•--- 40. The date of closing shall be w/in 30 days of bank apprvl ,20 MN:PA-1 (8/11) WEBFonns''Oct/2011 Counselor Realty, Inc PURCHASE AGREEMENT 41. Page 2 Date December 22,2011 42. Property located at 6507 Bloomington Ave Richfield MN 55423 43. This Purchase Agreement❑IS 2 IS NOT subject to a Contingency Addendum for sale of Buyer's property. (Check one.)------ 44. (If answer is iS,see attached Addendum.) 45. (If answer is iS NOT,the closing of Buyer's property,if any,may still affect Buyer's ability to obtain financing,if financing 46. is applicable.) 47. This Purchase Agreement❑ IS ® IS NOT subject to cancellation of a previously written purchase agreement (Check one.)----•• 48. dated ,20 49. (If answer is IS, said cancellation shall be obtained no later than. ,20 . If 50. said cancellation is not obtained by said date,this Purchase Agreement is canceled.Buyer and Seller shall immediately 51. sign a Cancellation of Purchase Agreement confirming said cancellation and directing all earnest money paid 52. hereunder to be refunded to Buyer.) 53. Buyer has been made aware of the availability of property inspections. Buyer 0 Elects ❑ Declines to have a (Check one.). 54, property inspection performed at Buyer's expense. 55. This Purchase Agreement®IS❑IS NOT subject to an Inspection Contingency Addendum. (Check one.)- 56. (If answer is IS,see attached Addendum.) 57. DEED/MARKETABLE TITLE:Upon performance by Buyer,Seller shall deliver a 58. 2 Warranty Deed or❑ Other: Deed joined In by spouse, if any, conveying - - (Check one.).----- ---- 59. marketable title,subject to 60. (a) building and zoning laws,ordinances,and state and federal regulations; 61. (b) restrictions relating to use or Improvement of the property without effective forfeiture provisions; 62. (c) reservation of any mineral rights by the State of Minnesota; 63. (d) utility and drainage easements which do not interfere with existing improvements; 64. (e) rights of tenants as follows (unless specified, not subject to tenancies): 65. ;and 66. (f) others (must be specified in writing): 67. 68. Seller shall pay on the date of closing all real estate taxes due and payable in all prior years including ail penalties and 69. interest. 70. ❑ BUYER SHALL PAY [j SELLER SHALL PAY on date of closing any deferred real estate taxes (e.g., Green (Check one.)- 71. Acres)or special assessments,payment of which is required as a result of the closing of this sale. 72. ❑ BUYER AND SELLER SHALL PRORATE AS OF THE DATE OF CLOSING 121 SELLER SHALL PAY ON (Check one.),- -.------ - - 73. DATE OF CLOSING all installments of special assessments certified for payment,with the real estate taxes due and 74. payable in the year of closing. 75. ❑BUYER SHALL ASSUME ❑f SELLER SHALL PAY on date of closing all other special assessments levied as (Check one.)-- - 76. of the date of this Purchase Agreement. 77. ❑BUYER SHALL ASSUME 2 SELLER-SHALL PROVIDE FOR PAYMENT OF special assessments pending as (Check one.)-._.__._ ---------_°--••- 78. of the date of this Purchase Agreement for improvements that have been ordered by any assessing authorities.(Seller's 79. provision for payment shall be by payment into escrow of two(2)times the estimated amount of the assessments or 80. less,as required by Buyer's lender.) MN:PA-2(8111) WEBForms"'Oct/2011 1 - 43 9 Counselor Realty, Inc PURCHASE AGREEMENT - 81. Page 3 Date December 22,2011 82. Property located at 6507 Bloomington Ave Richfield MN 55423 83. Buyer shall pay any unpaid special assessments payable in the year following closing and thereafter,the payment of 84. which is not otherwise herein provided. 85. As of the date of this Purchase Agreement, Seller represents that Seller❑ HAS® HAS NOT received a notice (Check one.)- 86. regarding any new improvement project from any assessing authorities, the costs of which project may be assessed 87. against the property.Any such notice received by Seller after the date of this Purchase Agreement and before closing 88. shall be provided to Buyer immediately. if such notice is issued after the date of this Purchase Agreement and on 89. or before the date of closing,then the parties may agree in writing, on or before the date of closing,to pay, provide 90. for the payment of or assume the special assessments.In the absence of such agreement,either party may declare 91. this Purchase Agreement canceled by written notice to the other party,or licensee representing or assisting the other 92. party,in which case this Purchase Agreement is canceled.If either party declares this Purchase Agreement canceled, 93. Buyer and Seller shall immediately sign a Cancellation of Purchase Agreement confirming said cancellation and 94. directing all earnest money paid hereunder to be refunded to Buyer. 95. Buyer shall pay®PRORATED FROM DAY OF CLOSING❑ 12ths OF❑ALL❑NO real estate taxes due -(Check one.)- 96. and payable in the year 20 12 97. Seller shall pay®PRORATED TO DAY OF CLOSING El 12ths OF❑ALL❑NO real estate taxes due and (Check one.). 98. payable in the year 20 12 .If the closing date is changed,the real estate taxes paid shall,if prorated,be adjusted 99. to the new closing date.Seller warrants taxes due and payable in the year 20 12 shall be FULL-0 PART❑NON- (Check one.). 100. homestead classification. 101. If part-or non-homestead classification is checked,Seller agrees to pay Buyer at closing$ 0.00 102. toward the non-homestead real estate taxes. Buyer agrees to pay any remaining balance of non-homestead taxes 103. when they become due and payable.Buyer shall pay real estate taxes due and payable in the year following closing 104. and thereafter, the payment of which is not otherwise herein provided.No representations are made concerning the 105. amount of subsequent real estate taxes. 106. POSSESSION: Seller shall deliver possession of the property no later than unmediately after closing. 107. Seller agrees to remove ALL DEBRIS AND ALL PERSONAL PROPERTY NOT INCLUDED HEREIN from the property 108. by possession date. 109. PRORATIONS:All interest;unit owners'association dues;rents;and charges for city water,city sewer,electricity and 110. natural gas shall be prorated between the parties as of date of closing.Buyer shall pay Seller for remaining gallons of 111. fuel oil or liquid petroleum gas on the day of closing,at the rate of the last fill by Seller. 112. TITLE AND EXAMINATION:As quickly as reasonably possible after Final Acceptance of this Purchase Agreement: 113. (a) Seiler shall surrender any abstract of title and a copy of any owner's title insurance policy for the property, if 114. in Seller's possession or control,to Buyer or Buyer's designated title service provider;and 115. (b) Buyer shall obtain the title services determined necessary or desirable by Buyer or Buyer's lender, including 116. but not limited to title searches,title examinations, abstracting,a title insurance commitment or an attorney's 117. title opinion at Buyer's selection and cost and provide a copy to Seller. 118. Seller shall use Seller's best efforts to provide marketable title by the date of closing. Seiler agrees to pay all costs 119. and fees necessary to convey marketable title including obtaining and recording all required documents,subject to the 120. following: 121. In the event Seller has not provided marketable title by the date of closing,Seller shall have an additional 30 days to 122. make title marketable,or in the alternative, Buyer may waive title defects by written notice to Seller.In addition to 123. the 30-day extension; Buyer and Seller may, by mutual agreement,further extend the closing date.Lacking such 124. extension, either party may declare this Purchase Agreement canceled by written notice to the other party, or 125. licensee representing or assisting the other party, in which case this Purchase Agreement is canceled.If either 126. party declares this Purchase Agreement canceled, Buyer and Seller shall immediately sign a Cancellation of 127. Purchase Agreement confirming said cancellation and directing all earnest money paid hereunder to be refunded 128. to Buyer. MN:PA-3(8/11) WEBFormsT"Oct/2011 Counselor Realty, Inc PURCHASE AGREEMENT - 129. Page 4 Date December 22,2011 130. Property located at 6507 Bloomington Ave Richfield MN 55423 131. SUBDIVISION OF LAND: If this sale constitutes or requires a subdivision of land owned by Seller,Seller shall pay 132. all subdivision expenses and obtain all necessary governmental approvals.Seller warrants that the legal description 133. of the real property to be conveyed has been or shall be approved for recording as of the date of closing.Seller warrants 134. that the buildings are or shall be constructed entirely within the boundary lines of the property.Seller warrants that 135. there is a right of access to the property from a public right-of-way.These warranties shall survive the delivery of the 136. deed or contract for deed. 137. MECHANIC'S LIENS:Seller warrants that prior to the closing,payment in full will have been made for all labor,materials, 138. machinery, fixtures or tools furnished within the 120 days immediately preceding the closing in connection with 139. construction,alteration or repair of any structure on,or improvement to,the property. 140. NOTICES:Seller warrants that Seller has not received any notice from any governmental authority as to condemnation 141. proceedings,or violation of any law, ordinance or regulation.If the property is subject to restrictive covenants, Seller 142. warrants that Seller has not received any notice from any person or authority as to a breach of the covenants.Any 143. such notices received by Seller shall be provided to Buyer immediately. 144. DIMENSIONS: Buyer acknowledges any dimensions,square footage or acreage of land or improvements provided 145. by Seller or broker may be approximate.Some information may have been provided by third parties and information 146. may be reliable but not guaranteed.Buyer shall verify the accuracy of information to Buyer's satisfaction, if material, 147. at Buyer's sole cost and expense. 148. ACCESS: Seller agrees to allow reasonable access to the property for performance of any surveys or inspections 149. agreed to herein. 150. RISK OF LOSS: If there is any loss or damage to the property between the date hereof and the date of closing for any i 51. reason, including fire, vandalism,flood, earthquake or act of God, the risk of loss shall be on Seller. If the property 152. is destroyed or substantially damaged before the closing date,this Purchase Agreement is canceled,at Buyer's option, 153. by written notice to Seller or licensee representing or assisting Seller. If Buyer cancels this Purchase Agreement, 154. Buyer and Seller shall immediately sign a Cancellation of Purchase Agreement confirming said cancellation and 155. directing all earnest money paid hereunder to be refunded to Buyer. 156. TIME OF ESSENCE:Time is of the essence in this Purchase Agreement. 157. ENTIRE AGREEMENT:This Purchase Agreement, any attached exhibits and any addenda or amendments signed 158, by the parties shall constitute the entire agreement between Seller and Buyer and supersedes any other written or 159. oral agreements between Seller and Buyer.This Purchase Agreement can be modified or canceled only in writing 160. signed by Seller and Buyer or by operation of law.The parties agree the electronic signature of any party on any document 161. related to this transaction constitute valid, binding signatures. All monetary sums are deemed to be United States 162. currency for purposes of this Purchase Agreement.Buyer or Seiler may be required to pay certain closing costs,which 163. may effectively increase the cash outlay at closing or reduce the proceeds from the sale. 164. FINAL ACCEPTANCE:To be binding, this Purchase Agreement must be fully executed by both parties and a copy 165. must be delivered. 166. CALCULATION OF DAYS:Any calculation of days begins on the first day(calendar or Business Days as specified) 167. following the occurrence of the event specified and includes subsequent days(calendar or Business Days as specified) 168. ending at 11:59 P.M.on the last day. 169. BUSINESS DAYS: "Business Days"are days which are not Saturdays, Sundays or state or federal holidays unless 170. stated elsewhere by the parties in writing. 171. DEFAULT: If Buyer defaults in any of the agreements hereunder, Seller may terminate this Purchase Agreement 172. under the provisions of MN Statute 559.21. If either Buyer or Seller defaults in any of the agreements hereunder or 173. there exists an unfulfilled condition after the date specified for fulfillment; either party may cancel this Purchase 174. Agreement under MN Statute 559.217, Subd. 3.Whenever it is provided herein that this Purchase Agreement is 175. canceled,said language shall be deemed a provision authorizing a Declaratory Cancellation under MN Statute 559.217, 176. Subd.4. 177. If this Purchase Agreement is not canceled or terminated as provided hereunder, Buyer or Seller may seek actual 178. damages for breach of this Purchase Agreement or specific performance of this Purchase Agreement; and, as to 179. specific performance,such action must be commenced within six(6)months after such right of action arises. MN:PA-4(8/11) WEBFwmsTMOct/2011 Counselor Realty, Inc PURCHASE AGREEMENT - 180. Page 5 Date.December 22,2011 181. Property located at 6507 Bloomington Ave Richfield MN 55423 182. NOTICE REGARDING PREDATORY OFFENDER INFORMATION:Information regarding the predatory offender 183. registry and persons registered with the predatory offender registry under MN Statute 243.166 may be obtained 184. by contacting the local law enforcement offices in the community where the property is located or the Minnesota 185. Department of Corrections at (651) 361-7200, or from the Department of Corrections web site at 186. www.corrstate.mn.us. 187. HOME PROTECTION/WARRANTY PLAN:Buyer and Seller are advised to investigate the various home protection/ 188. warranty plans available for purchase. Different home protection/warranty plans have different coverage options, 189. exclusions,limitations and service fees.Most plans exclude pre-existing conditions. (Check one.) 190. ❑ A Home Protection/Warranty Plan will be obtained and paid by BUYER❑SELLER to be issued by (Check one.)- 191. at a cost not to exceed$ 192. ® There will be no Home Protection/Warranty Plan as part of this Agreement. 193. ENVIRONMENTAL CONCERNS:To the best of Seller's knowledge,there are no hazardous substances or underground 194. storage tanks except herein noted: 195. none 196. 197. 198. 199. 200. (Check appropriate boxes.) 201. SELLER WARRANTS THAT THE PROPERTY IS EITHER DIRECTLY OR INDIRECTLY CONNECTED TO: 202. CITY SEWER YES NO 1 CITY WATER OYES❑NO 203. SUBSURFACE SEWAGE TREATMENT SYSTEM 204. SELLER CERTIFIES THAT SELLER❑DOES IZ DOES NOT KNOW OF A SUBSURFACE SEWAGE TREATMENT --- (Check one.)- 205. SYSTEM ON OR SERVING THE PROPERTY. (If answer is DOES, and the system does not require a state permit, 206. see Subsurface Sewage Treatment System Disclosure Statement.) 207. PRIVATE WELL 208. SELLER CERTIFIES THAT SELLER ❑ DOES ® DOES NOT KNOW OF A WELL ON OR SERVING THE --------------(Checkone.)-• -•......_ 209. PROPERTY.(If answer is DOES and well is located on the property,see Well Disclosure Statement.) 210. THIS PURCHASE AGREEMENT 0 IS IS NOT SUBJECT TO A SUBSURFACE SEWAGE TREATMENT SYSTEM (Check one.)- 211. AND WELL INSPECTION CONTINGENCY ADDENDUM.(If answer is IS,see attached Addendum.) 212. IF A WELL OR SUBSURFACE SEWAGE TREATMENT SYSTEM EXISTS ON THE PROPERTY, BUYER HAS 213. RECEIVED A WELL DISCLOSURE STATEMENT AND/OR A SUBSURFACE SEWAGE TREATMENT SYSTEM 214. DISCLOSURE STATEMENT. MN:PA-5(8/11) WE8Forr&''Oct/2011 Counselor Realty, Inc PURCHASE AGREEMENT 215. Page 6 Date December 22,2011 216. Property located at 6507 Bloomington Ave Richfield MN 55423 217. SELLER WARRANTS THAT CENTRAL AIR-CONDITIONING,HEATING,PLUMBING AND WIRING SYSTEMS USED 216. AND LOCATED ON SAID PROPERTY SHALL BE IN WORKING ORDER ON DATE OF CLOSING, EXCEPT AS 219. NOTED IN THIS PURCHASE AGREEMENT. 220. BUYER HAS THE RIGHT TO A WALK-THROUGH REVIEW OF THE PROPERTY PRIOR TO CLOSING TO 221. ESTABLISH THAT THE PROPERTY IS IN SUBSTANTIALLY THE SAME CONDITION AS OF THE DATE OF 222. THIS PURCHASE AGREEMENT. 223. BUYER ❑ HAS ❑ HAS NOT RECEIVED A SELLER'S PROPERTY DISCLOSURE STATEMENT OR A ------- (Check one.)- 224. SELLER'S DISCLOSURE ALTERNATIVES FORM. 225. BUYER HAS RECEIVED THE INSPECTION REPORTS,IF REQUIRED BY MUNICIPALITY. 226. SELLER AGREES TO NOTIFY BUYER IMMEDIATELY IN WRITING OF ANY SUBSTANTIVE CHANGES FROM 227. ANY PRIOR REPRESENTATIONS REGARDING THE PROPERTY. 228. BUYER ACKNOWLEDGES THAT NO ORAL REPRESENTATIONS HAVE BEEN MADE REGARDING POSSIBLE 229. PROBLEMS OF WATER IN BASEMENT OR DAMAGE CAUSED BY WATER ICE OR ICE BUILDUP ON ROOF OF 230. THE PROPERTY. 231. NOTICE 232. Kevin Bumgardner is❑Seller's Agent Qj Buyer's Agent❑Dual Agent❑Facilitator. (Licensee) (Check one.} 233. Counselor Realty,Inc (Real Estate Company Name) 234. Judd Sampson is®Seller's Agent❑Buyer's Agent❑Dual Agent❑Facilitator. (Licensee) (Check one.). 235. Edina Realty,Inc. (Real Estate Company Name) 236. THIS NOTICE DOES NOT SATISFY MINNESOTA STATUTORY AGENCY DISCLOSURE REQUIREMENTS. 237. DUAL AGENCY REPRESENTATION 238. PLEASE CHECK ONE OFTHE FOLLOWING SELECTIONS: 239. ®Dual Agency representation DOES NOT apply in this transaction.Do not complete lines 240-256. 240. ❑Dual Agency representation DOES apply in this transaction. Complete the disclosure in lines 241-256. 241. Broker represents both the Seller(s) and the Buyer(s) of the property involved in this transaction, which creates a 242. dual agency.This means that Broker and its salespersons owe fiduciary duties to both Seller(s)and Buyer(s).Because 243. the parties may have conflicting interests, Broker and its salespersons are prohibited from advocating exclusively for 244. either party.Broker cannot act as a dual agent in this transaction without the consent of both Seller(s) and Buyer(s). 245. Seller(s)and Buyer(s)acknowledge that 246. (1) confidential information communicated to Broker which regards price, terms,or motivation to buy or sell will 247. remain confidential unless Seller(s)or Buyer(s) instructs Broker in writing to disclose this information.Other 248. information will be shared; 249. (2) Broker and its salespersons will not represent the interest of either party to the detriment of the other;and 250. (3) within the limits of dual agency, Broker and its salespersons will work diligently to facilitate the mechanics of 251. the sale. 252. With the knowledge and understanding of the explanation above,Seller(s)and Buyer(s)authorize and instruct Broker 253. and its salesperson to act as dual agents in this transaction. 254. Seller Buyer 255. Seller Buyer 256. Date. Date MNPA-6(8111) WEBFormsTMOct/2011 Counselor Realty, Inc PURCHASE AGREEMENT _ 257. Page 7 Date December 22,2011 258. Property located at 6507 Bloomington Ave Richfield MN 55423 259. OTHER: 260. PA is subject to final approval of seller's bank. 261. 262. ADDENDA AND PAGE NUMBERING:Attached addenda are a part of this Purchase Agreement. 263. Enter total number of pages of this Purchase Agreement,including addenda,on line two(2)of page one(1). 264. I,the owner of the property, accept this Purchase I agree to purchase the property for the price and on 265. Agreement and authorize the listing broker to withdraw the terms and conditions set forth above 266. said property from the market,unless instructed I have reviewed all pages of this Purchase 267. otherwise in writing. Agreement. 268. I have reviewed all pages of this Purchase Agreement. 269. ❑ If checked,this Purchase Agreement is subject to 270. attached Counteroffer Addendum. 271. X X - .•.� �O��al/ fit (Seller's Signature) (Date) (B - .ignature (Date) 272. X x Scott A.Vander Heiden (Seller's Printed Name) (Buyer's Printed Name) 273. x X (Marital Status) (Marital i-Ws) 274. X i/IY _ 4/1(Sellers Si )' (Dale) (= Signature) (Date Signature) 275 X x Crystal Vander Heiden (Seller's Printed Name) (Buyer's Printed Name) 276. X X (Marital Status) (Marital Status) 277. FINAL ACCEPTANCE DATE:The date on which the fully executed Purchase Agreement is delivered. 278. 279. THIS IS A LEGALLY BINDING CONTRACT BETWEEN BUYER(S)AND SELLER(S). 280. IF YOU DESIRE LEGAL OR TAX ADVICE,CONSULT AN APPROPRIATE PROFESSIONAL. 281. I ACKNOWLEDGETHAT I HAVE RECEIVED AND HAVE HADTHE OPPORTUNITYTO REVIEWTHE ARBITRATION 282. DISCLOSURE AND RESIDENTIAL REAL PROPERTY ARBITRATION AGREEMENT,WHIC S A TIONAL, 283. VOLUNTARY AGREEMENT AND IS NOT PART OF THIS PURCHASE AGRE ENT • 284. SELLER(S) BUYER(S) Sc A.Vander Heiden 4/4416i4 285. SELLERS). BUYER(S) s 1 an er F�eiden MN:PA•7(8/11) WEBForms MOct/2011 SHORT SALE - counsel-WF ADDENDUM This form approved by the Minnesota Association of REALTORS°, which disclaims any liability arising out of use or misuse of this form. ©2011 Minnesota Association of REALTORS°,Edina,MN 1. Date December 21,2011 2. Page 8 3. Addendum to Purchase Agreement between parties,dated December 21 ,20 11 ,pertaining 4. to the purchase and sale of the property located at 6507 Bloomington Ave 5. Richfield MN Hennepin 55423 6. The proceeds of the sale will not be sufficient to fully pay off all mortgages and other liens against the property.As a 7. result, Seller must obtain"short sale"approval from one or more creditors.There may be various lienholders from 8. whom Seller may need approval:this includes but is not limited to senior and junior liens,if any,homeowner's associations 9. or tax liens. 10. Short Sale Approval in this Addendum is defined as a mutually acceptable agreement between the creditor(s) and 11. Seller to accept Buyer's offer to purchase the property on the proposed terms or any subsequently agreed terms 12. between Buyer and Seller. 13. This Purchase Agreement is contingent on the Short Sale Approval by Seller's creditors. 14. Seller shall obtain the Short Sale Approval(s)and notify Buyer,or licensee representing or assisting Buyer,in writing 15. of the approval(s)no later than February 15,2012 . If Seller fails to obtain the necessary approval(s)and 16. provide Buyer,or licensee representing or assisting Buyer,with written notice by this deadline,this Purchase Agreement - 17. is canceled, in which case Buyer and Seller shall immediately sign a Cancellation of Purchase Agreement directing 18. the release of the earnest money to Buyer. 19. The following provision(s)modify and supersede any conflicting term(s)in the Purchase Agreement and any Addenda 20. thereto ONLY IF the corresponding box is marked(Select appropriate option(s)a-c.): 21. 0 (a) Notwithstanding any provision of this Purchase Agreement to the contrary,Buyer shall not be required to provide 22. earnest money until Short Safe Approval has been obtained.Buyer shall pay the earnest money within three 23. (3) business days after Seller provides written notice to Buyer, or licensee representing or assisting Buyer, 24. that said approval has been obtained from all mortgagees and lienholders. 25. 0 (b) Notwithstanding any provision of this Purchase Agreement tothe contrary,thetimeframe to perform inspection(s)shall 26. commence on the date that Seller provides written notice of Short Sale Approval from all mortgagees and 27. lienholders to Buyer,or licensee representing or assisting Buyer,rather than on final acceptance of this Purchase 28. Agreement. 29. 0 (c) Notwithstanding any provision of this Purchase Agreement to the contrary,Seller,or licensee representing or 30. assisting Seller,®SHALL ❑SHALL NOT have the right to continue to offer the property for sale until this (Check one.) 31. contingency is removed. 32. OTHER: 33. 34. 35. 36. THIS PAGE IS PART OF A LEGALLY BINDING CONTRACT BETWEEN BUYER(S)AND SELLER(S). 37. IF YOU DESIRE LEGAL OR TAX ADVICE,CONSULT AN APPROPRIATE PROFESSIONAL. MN:SSCA-1 (8/11) WEBFommsl"Aug12011 Counselor Realty, Inc SHORT SALE - CONTINGENCY ADDENDUM 38. Page 61 39. Property located at 6507 Bloomington Ave Richfield 55423 40. NOTICE: Buyer and Seller acknowledge the following: 41. • There are alternatives to short sale; 42. • A short sale will have legal,financial or tax consequences; 43. • Non-recoverable expenses may be incurred;and 44. • Buyer and Seller are advised to seek legal, financial and tax advice prior to executing this 45. agreement. dff4 k4z 46. (Seller) (Date) (Bu (Date) / 1 / `` 47. ...rl� , _ ..1 .r/ (Seller) (Date) (= yar) (D.e) 48. THIS PAGE iS PART OF A LEGALLY BINDING CONTRACT BETWEEN BUYER(S)AND SELLER(S). 49. IF YOU DESIRE LEGAL OR TAX ADVICE,CONSULT AN APPROPRIATE PROFESSIONAL. MN:SSCA-2(8/11) VVE8FOrmst"Aug12011 ✓. J '- BUYER PURCHASING"AS IS"ADDENDUM - This form approved by the Minnesota Association of REALTORS°, CO U I1 O r e which disclaims any liability arising out of use or misuse of this form. ©2011 Minnesota Association of REALTORS®,Edina,MN regli 1. Date December 21,2011 2. Page tLp 3. Addendum to Purchase Agreement between parties,dated December 21 ,20 11 ,pertaining 4. to the purchase and sale of the property at 6507 Bloomington Ave 5. Richfield MN 55423 6. DISCLOSURE REQUIRED: Under Minnesota law, Sellers of residential property, except by waiver or with limited 7. exceptions,are obligated to disclose to prospective Buyers all material facts of which Seller is aware that could adversely 8. and significantly affect an ordinary Buyer's use or enjoyment of the property or any intended use of the property of 9. which Seller is aware.Such a disclosure is not a warranty or a guarantee of any kind by Seller or licensee representing 10. or assisting any party in the transaction.Seller agrees to notify Buyer immediately in writing of any substantive changes 11. from any prior representations regarding the property. 12. (Check appropriate box.) 13. ❑ Buyer has received and had an opportunity to review the Seller's Property Disclosure Statement; 14. or 15. ❑ Buyer has received and had an opportunity to review the Seller's Disclosure Alternatives form. 16. CONDITION OF PROPERTY;The property being purchased by Buyer, including the dwelling, other improvements 17. and fixtures,is not new and is being purchased"AS IS". 18. Buyer understands that the property,as defined above,will be purchased in the condition It is in at the time of Purchase 19. Agreement. Buyer shall have the right to a walk-through review of the property prior to closing.To the extent there 20. is a material change in the condition of the property arising between the date of the Purchase Agreement and the 21. closing date,Seller shall be responsible for restoring the property to substantially the same condition it was in on the 22. date of the Purchase Agreement, except that Seller shall have NO OBLIGATION OR RESPONSIBILITY to repair or 23. replace central air-conditioning,healing,plumbing(including subsurface sewage treatment systems,unless otherwise 24. required by law),wiring systems or wells on the property if they fail between the date of Purchase Agreement and the 25. date of closing.This provision voids lines 217-219 of the Purchase Agreement. 26. RISK OF LOSS: The Risk of Loss provision in the Purchase Agreement is modified as follows. If there is any loss 27. or damage to the property between the date of Purchase Agreement and the date of closing for any reason,including fire, 28. vandalism, flood, earthquake or act of God, the risk of loss shall be on Seller except that Seller shall have NO 29. OBLIGATION OR RESPONSIBILITY to repair or replace central air-conditioning,heating,plumbing(including subsurface 30. sewage treatment systems,unless otherwise required by law),wiring systems or wells on the property if they fail between 31. the date of Purchase Agreement and the date of closing.If the property is destroyed or substantially damaged before 32. the closing date, this Purchase Agreement is canceled, at Buyer's option, by written notice to Seller or licensee 33. representing or assisting Seller. If Buyer cancels this Purchase Agreement, Buyer and Seller shall immediately sign 34. a Cancellation of Purchase Agreement confirming said cancellation and directing all earnest money paid hereunder 35. to be refunded to Buyer. 36. RIGHT OF INSPECTION: Buyer shall have the right to inspect the property or to have it inspected by a person of 37, Buyer's choice,at Buyer's expense. 38. THIS IS A LEGALLY BINDING CONTRACT BETWEEN BUYER(S)AND SELLER(S). 39. IF YOU DESIRE LEGAL OR TAX ADVICE,CONSULT AN APPROPRIATE PROFESSIONAL. MN:SPAIA•1 (8/11) WEBFormsT°Aug/2011 5_ LSD = - Counselor Realty, Inc BUYER PURCHASING"AS IS"ADDENDUM - . 40. Page - 6507 Bloomington Ave Richfield MN 55423 41. Property located at 42. SETTLEMENT IS FINAL:It is understood that Buyer accepts the property"AS IS."ANY WARRANTIES OF PHYSICAL 43. CONDITION OFTHE PROPERTY CONTAINED IN THIS PURCHASE AGREEMENT INCLUDING,BUT NOT LIMITED 44. TO,CENTRAL AIR-CONDITIONING,HEATING,PLUMBING,WIRING,AND CONNECTION TO CITY SEWER AND 45. CITY WATER ARE VOID.This provision shall survive delivery of the deed or contract for deed. All other warranties 46. specified in the Purchase Agreement remain the same. 47. OTHER: 48. 49. 50. 51. 52. 53. 54. 55. 56. 57. 58. 59. 60. I 61. (Date) (Buys P /,t9. ( (Seller) 62. .t) h Date) 11 (Seller) (Date) ( er 63. THIS 1S A LEGALLY BINDING CONTRACT BETWEEN BUYER(S)AND SELLER(S). 64. IF YOU DESIRE LEGAL OR TAX ADVICE,CONSULT AN APPROPRIATE PROFESSIONAL. MN:BPAIA-2(8/11) WE8Formst""Aug/2011 INSPECTION CONTINGENCY ADDENDUM - This form approved by the Minnesota Association of REALTORS®, C•U nS• O i® which disclaims any liability arising oul of use or misuse of this form. 02011 Minnesota Association of REALTORS®,Edina,MN realty 1. Date December 21,2011 2. Page t ■ 3. THE PROPERTY,IF NOT NEW,CANNOT BE EXPECTED TO BE IN NEW CONDITION. 4. ROUTINE MAINTENANCE ITEMS ARE NOT PART OF THIS ADDENDUM. 5. Addendum to Purchase Agreement between parties,dated December 21 ,20 11 ,pertaining 6. to the purchase and sale of the property at 6507 Bloomington Ave 7, Richfield 55423 8. This Purchase Agreement is contingent upon a complete home inspection(s)of the property to determine its condition. 9. Any and all inspections performed by Buyer shall constitute a complete home inspection(s). 10. Any inspection(s) shall be done by an Inspector(s)of Buyer's choice.The Inspector(s) should be qualified to do the 11. inspection(s),as evidenced by a license or professional designation.Buyer shall satisfy Buyer as to the qualifications 12. of the Inspector(s). 13. Said inspection(s)shall be at Buyer's sole expense. 14. Seller agrees to make the property reasonably available for said Inspection(s). 15. Any inspections)or test(s)done by FHA,DVA or any other governmental unit shall be done and paid for in accordance 16. with the applicable regulations and are not part of this Inspection Contingency Addendum. 17. Buyer shall not have the right to do intrusive testing without the prior written authorization of Seller. 18. For purposes of this form,"intrusive testing"shall mean any testing,inspection(s)or investigation(s)that changes the - 19. property from its original condition or otherwise damages the property. 20. Seller❑DOES Q DOES NOT agree to allow Buyer to perform intrusive testing or inspection(s). (Check enc.} 21. If answer is DOES,Buyer agrees that the property shall be returned to the same condition it was in prior to Buyer's 22. intrusive testing at Buyer's sole expense. 23. For the purposes of this Addendum,`Business Days"shall end at 11:59 p.m.and do not include Saturdays, 24. Sundays and state and federal holidays. 25. All inspection(s)shall be done within 5 Business Days of Final Acceptance of this Purchase Agreement. 26. Buyer shall have these options following inspection(s): 27. (1) If Buyer,or licensee representing or assisting Buyer,identifies any issues pertaining to the property resulting 28. from the inspection(s) and intends to negotiate the identified issues with Seller, then Buyer, or licensee 29. representing or assisting Buyer, shall notify Seller, or licensee representing or assisting Seller, in writing, 30. describing the issues and proposed remedy,within 1 Business Days after expiration of the time 31. period specified on line 25. 32. If Buyer, or licensee representing or assisting Buyer, notifies Seller, or licensee representing or assisting 33. Seller, of the identified issues and proposed remedy, and if within 2 Business Days alter such 34. notice Buyer and Seller have not agreed in writing to a remedy of the identified issues,this Purchase Agreement 35. is canceled without further notice required. Buyer and Seller shall immediately sign a Cancellation of 36. Purchase Agreement confirming said cancellation and directing all earnest money paid hereunder to be 37. refunded to Buyer, and thereafter neither party shall have any further liability to the other. 38. And/or; 39. THIS IS A LEGALLY BINDING CONTRACT BETWEEN BUYER(S)AND SELLER(S). 40. IF YOU DESIRE LEGAL OR TAX ADVICE,CONSULT AN APPROPRIATE PROFESSIONAL. MN:ICA-1(8/11) WEBFormsTM'Aug/2011 5- 4 � Counselor Realty, Inc INSPECTION CONTINGENCY ADDENDUM - 41. Date December 21,2011 42. Page 112 43. Property located at 6507 Bloomington Ave Richfield 55423 44. (2) Notwithstanding any provision to the contrary or any notice given, Buyer may unilaterally waive any issues, 45. providing that Buyer,or licensee representing or assisting Buyer,notifies Seller,or licensee representing or 46. assisting Seller,of waiver in writing,within the time specified on line 33. 47. And/or; 48. (3) Notwithstanding any other provision of this Purchase Agreement, Buyer may, based on the inspection(s), 49. declare this Purchase Agreement canceled by written notice to Seller,or licensee representing or assisting 50. Seller,within 2 Business Days after expiration of the time period specified on line 25,in which case 51. this Purchase Agreement is•canceled. 52. In the event Buyer declares this Purchase Agreement canceled, Buyer and Seller shall immediately sign 53. a Cancellation of Purchase Agreement confirming said cancellation and directing all earnest money paid 54. hereunder to be refunded to Buyer. 55. If Buyer fails to have the inspection(s)performed within the lime specified in line 25,or does not notify Seller,or licensee 56. representing or assisting Seller,of Buyer's decision within the time specified in lines 30 and 50,then this Contingency 57. shall be deemed removed and this Purchase Agreement shall be in full force and effect. 58. Nothing herein invalidates the warranties agreed to in lines 217-219 of this Purchase Agreement. 59. Seller, or licensee representing or assisting Seller, 2 SHALL❑ SHALL NOT have the right to continue to offer --- (Cheek one.)- 60. the property for sale until this Contingency is removed. e 061. 4 t (S eller) (Date) (Buyer (Date) 62. 7/..,,,,egg 4;4 iz////:. (Seller) (Dale) (Buyer (Date) 63. THIS IS A LEGALLY BINDING CONTRACT BETWEEN BUYER(S)AND SELLER(S). 64. IF YOU DESIRE LEGAL OR TAX ADVICE,CONSULT AN APPROPRIATE PROFESSIONAL. MN:ICA-2(8/11) WEBFormsT"Aug/2011 ARBITRATION DISCLOSURE AND - RESIDENTIAL REAL PROPERTY � � � ARBITRATION AGREEMENT rugby This form approved by the Minnesota Association of REALTORS. which disclaims any liability arising out of use or misuse of this form. CO 2009 Minnesota Association of REALTORS°,Edina,MN 1. Page 1 2. ARBITRATION DISCLOSURE 3. You have the right to choose whether to have any disputes about disclosure of material facts affecting the use 4. or enjoyment of the property that you are buying or selling decided by binding arbitration or by a court of law.By agreeing 5. to binding arbitration, you give up your right to go to court. By signing the RESIDENTIAL REAL PROPERTY 6. ARBITRATION AGREEMENT(ARBITRATION AGREEMENT)on page two,you agree to binding arbitration under the 7. Residential Real Property Arbitration System(Arbitration System)administered by National Center for Dispute Settlement 8. (NCDS) and endorsed by the Minnesota Association of REALTORS®(MNAR).The ARBITRATION AGREEMENT is 9. enforceable only if it is signed by all buyers,sellers and licensees representing or assisting the buyers and the sellers. 10. The ARBITRATION AGREEMENT is not part of the Purchase Agreement.Your Purchase Agreement will still be 11. valid whether or not you sign the ARBITRATION AGREEMENT. 12. The Arbitration System is a private dispute resolution system offered as an alternative to the court system. it 13. is not government sponsored.NODS and the MNAR jointly adopt the rules that govern the Arbitration System.NCDS 14. and the MNAR are not affiliated. Under the ARBITRATION AGREEMENT you must use the arbitration services of 15. NODS. 16. All disputes about or relating to disclosure of material facts affecting the use or enjoyment of the property,excluding 17. disputes related to title issues,are subject to arbitration under the ARBITRATION AGREEMENT.This includes claims 18. of fraud,misrepresentation,warranty and negligence.Nothing in this Agreement limits other rights you may have under 19. MN Statute 327A(statutory new home warranties)or under private contracts for warranty coverage.An agreement to 20. arbitrate does not prevent a party from contacting the Minnesota Department of Commerce, the state agency that - 21. regulates the real estate profession,about licensee compliance with state law. 22. The administrative fee for the Arbitration System varies depending on the amount of the claim, but It is more 23. than initial court filing fees.In some cases,conciliation court is cheaper than arbitration.The maximum claim allowed 24. in conciliation court is$7,500.This amount is subject to future change.In some cases,it is quicker and less expensive 25. to arbitrate disputes than to go to court,but the time to file your claim and pre-hearing discovery rights are limited.The 26. right to appeal an arbitrator's award is very limited compared to the right to appeal a court decision. 27. A request for arbitration must be flied within 24 months of the date of the closing on the property or 28. else the claim cannot be pursued. In some cases of fraud, a court or arbitrator may extend the 24-month 29. limitation period provided herein. 30. A party who wants to arbitrate a dispute files a Demand, along with the appropriate administrative fee, with 31. NODS.NCDS notifies the other party,who may file a response.NCDS works with the parties to select and appoint an arbitrator 32. to hear and decide the dispute.A three-arbitrator panel will be appointed instead of a single arbitrator at the request 33. of any party.The party requesting a panel must pay an additional fee.Arbitrators have backgrounds in law,real estate, 34. architecture,engineering,construction or other related fields. 35. Arbitration hearings are usually held at the home site.Parties are notified about the hearing at least 14 days in 36. advance.A party may be represented by a lawyer at the hearing if he or she gives five(5)days advance notice to the 37. other party and to NCDS.Each party may present evidence,including documents or testimony by witnesses.The arbitrator 38. must make any award within 30 days from the final hearing date.The award must be in writing and may provide any 39. remedy the arbitrator considers just and equitable that is within the scope of the parties'agreement.The arbitrator 40. does not have to make findings of fact that explain the reason for granting or denying an award.The arbitrator may 41. require the party who does not prevail to pay the administrative fee. 42. This Arbitration Disclosure provides only a general description of the Arbitration System and a general 43. overview of the Arbitration System rules.For specific information regarding the administrative fee,please see the 44. Fee Schedule located in the NCDS Rules.Copies of the Arbitration System rules are available from NODS by calling 45. (888)832-4792 or on the Web at www.ncdsusa.org or from your REALTOR®.if you have any questions about arbitration, 46. call NCDS at(888)832-4792 or consult a lawyer. 47. THE RESIDENTIAL REAL PROPERTY ARBITRATION AGREEMENT IS A LEGALLY BINDING CONTRACT 48. BETWEEN BUYERS,SELLERS AND LICENSEES.IFYOU DESIRE LEGAL ADVICE,CONSULT A LAWYER. MN:ADRAA-1 (8/09) WEBFormsT'Augf2009 Counselor Realty, Inc ARBITRATION DISCLOSURE AND RESIDENTIAL REAL PROPERTY ARBITRATION AGREEMENT 49, Page 2 50. THIS IS AN OPTIONAL,VOLUNTARY AGREEMENT. 51. READ THE ARBITRATION DISCLOSURE ON PAGE ONE IN FULL BEFORE SIGNING. 52. RESIDENTIAL REAL PROPERTY ARBITRATION AGREEMENT 53. For the property located at 6507 Bloomington Ave Richfield Hennepin 54. City of ,County of ,State of Minnesota. 55. Any dispute between the undersigned parties, or any of them, about or relating to material facts affecting the use or 56. enjoyment of the property,excluding disputes related to title issues of the property covered by the Purchase Agreement 57. dated December 21 , 20 11 , including claims of fraud, misrepresentation, warranty and 58. negligence,shall be settled by binding arbitration.National Center for Dispute Settlement shall be the arbitration service 59. provider.The rules adopted by National Center for Dispute Settlement and the Minnesota Association of REALTORS@ 60. shall govern the proceeding(s).The rules that shall govern the proceeding(s) are those rules in effect at the time the 61. Demand for Arbitration is filed and include the rules specified in the Arbitration Disclosure on page one.This Agreement shall 62. survive the delivery of the deed or contract for deed in the Purchase Agreement.This Agreement is only enforceable if 63. all buyers,sellers and licensees representing or assisting the buyers and sellers have agreed to arbitrate as acknowledged 64. by signatures below. 65. (Seller's Signature) (Date) (Buyer's Signature) (Date) 66. (Salters Printed Name) (Buyer's Printed Name) 67. (Seller's Signature) (Date) (Buyer's Signature) (Date) 68. (Seller's Printed Name) (Buyer's Printed ame) 69. 1-2(Zy f (Licensee Representing or Assisting Seller) (Date) ,-e Representing or Assisting (Oat ) 70, Edina Realty,Inc. Counselor Realty,Inc (Company Name) (Company Name) 71. THE RESIDENTIAL REAL PROPERTY ARBITRATION AGREEMENT IS A LEGALLY BINDING CONTRACT 72. BETWEEN BUYERS,SELLERS AND LICENSEES.IF YOU DESIRE LEGAL ADVICE,CONSULT A LAWYER. MN:ADRAA-2(8109) WE8ForrrisT"Aug/2009 5- 45 - � kl IV SO; 1 :. Ls HOMES ;NC Purchase Agreement and Construction Contract occupancy of the home by Buyer shall be extended for This Purchase Agreement and Construction Contract such reasonable time as may be necessary to complete ("Contract") is made this 2nd day of February 2€12, by and construction. between Iverson Homes Inc., a Minnesota Corporation, ("Builder") and Scott & Crystal Vander Heiden ("Buyer," If construction occurs during the winter months, items whether one or more). including, but not limited to, final grade, garage floor, driveway, sidewalks, porch and steps may not be completed 1. The Property. Builder hereby agrees to sell and Buyer until after the Closing. agrees to purchase from Builder the land (the "Land") commonly known as 6507 Bloomington Avenue, Buyer acknowledges that, once construction begins, the located in the Richfield, County of Hennepin, State of initial down payment all subsequent payments are non- Minnesota,and legally described as: refundable. Legal lengthy to conform to street address, according to the 4. Base Contract Price. The Base Contract Price ("Base recorded plat thereof. Contract Price")for the Land and new homes shall be, Two Hundred Eight-Two i: Thousand Four Hundred Builder agrees to construct upon the Land a new home to be Forty-nine Dollars. ($282,449.00) built in accordance with the Contract Documents. The Land and the new home are hereafter collectively referred to as 5. Payment Schedule. The Final Price shall be paid by the the"Property." Buyer in the following manner. 2. Contract Documents. This Contract, and the below Plan deposit of$2,500.00,January 13,2012. listed documents which are made a part hereof, constitute the entire Contract between the parties: Down payment of $25,745.00 receipt of which is acknowledged by Builder. a. Construction Plans dated January 31, 2012, which are hereby approved by the parties("Plans"); Final Payment of$254,204.00 due on the Closing Date. b. Specification dated February 2, 2012, which are hereby approved by the parties("Specification"). The parties agree that all payments made by Buyer to Builder shall be made directly to Builder and shall not be held in any If anything in this Contract conflicts with the Plans or escrow or trust account. Specifications,the Plans and Specifications shall control. 6. Deed/Marketable Title. Upon full performance by 3. Commencement and Completion. Builder shall Buyer, Builder shall convey the Property to Buyer by commence construction within a reasonable time after warranty deed,subject to the following: a building permit has been secured and shall continue with reasonable diligence, such work to be a. Building and zoning laws, ordinances, state and substantially completed in approximately five (5) federal regulations; months after commencement of construction, or June b. Covenants, conditions, reservations and restrictions 30, 2012, whichever is later (the "Closing Date"). The of record without effective forfeiture provisions; term "Substantially Completed" shall mean that the c. Reservations of any minerals or mineral rights; home has received a Certificate of Occupancy from the d. Easements for utility and drainage, streets, roads, Building Inspector. This date is subject to change due highways and alleys; to delays caused by labor disputes, labor shortages, e. The Declaration and other governing documents of unavailability of materials, inclement weather, acts of Cedar Estates Buyer or of persons employed or hired by Buyer, f. Other: (None unless specified) delays caused by governmental regulations, delays caused by changes in the Contract Documents 7. Title and Examination. Builder shall, within a requested by Buyer, or other causes beyond the reasonable time prior to Closing Date, provide Buyer control of Builder, in which event the Closing Date and with a commitment for an American Land title Page 1 of 8 ;,VERSON . :,,. ,;HOMES S INC Purchase Agreement and Construction Contract Association (ALTA) owner's policy of title insurance levied against the Property on or before the Closing (the Commitment"), subject to the title exceptions Date shall be paid by Builder. Special assessments referenced above and the standard exceptions and which are pending as of the date of this Contract, or requirements contained in the ALTA Commitment. become pending on or before the Closing Date, shall Buyer shall be allowed five (5) days after receipt of the be paid by Builder. A special assessment shall be Commitment for examination and making any deemed to be "pending" if the assessing authority has objections thereto,which objections shall be made in entered into a contract for construction of the writing or deemed waived. If any objections are so improvement which will result in the assessment made, Builder shall be allowed one hundred twenty against the Property. If Builder is responsible for (120) days to make title marketable. Pending payment of the pending assessment, Builder agrees to correction of title, the final payment hereunder escrow an amount not to exceed one and one half required shall be postponed, but upon correction of (11/2) times the estimated amount of the assessment title and within ten (10) days after written notice to at Closing. Buyer, the parties shall perform this Contract according to its terms. If title is not marketable, and is 11. Homestead Classification. Real estate taxes due and not made so within one hundred twenty (120) days payable in the year of Closing and in the year following from the date of written objection, this Contract shall Closing will be non-homestead classification. Buyer be null and void,at option of Buyer, neither party shall be liable for damages hereunder to the other, and may be able to obtain homestead classification for the down payment shall be refunded to Buyer upon Property if Buyer takes timely action in applying for receipt from Buyer of a recordable quitclaim deed to homestead classification. Builder and Builder's agents the Property. Builder shall pay the cost, if any,for the make no representations concerning the amount of Commitment; Buyer shall pay the premium for the title real estate taxes or special assessments. policy. 8. Real Estate Taxes. Real estate taxes shall be paid as 12. Change Orders. Any changes in the Contract follows: Real estate taxes due and payable in the year Documents shall be made by written change order, of Closing shall be prorated to the Closing Date. signed by Buyer and Builder,and setting forth the costs Builder shall pay the prorated portion for the period thereof. A change order may include the addition of from January 1 of the year of Closing to the Closing Builder's fee for pricing and design services. In the Date. Buyer shall pay the prorated portion from the event Buyer gives Builder verbal approval to make Closing Date to December 31 of the year of Closing. changes prior to signing the change order, Buyer shall be deemed to have consented to the change and may Any deferred real estate taxes or special assessments which are required to be paid by the taxing or assessing increase in the cost, including any Builder's fee. If authority upon sale shall be paid by the Builder at Buyer requests Builder to submit a proposal for a Closing. Any delinquent real estate taxes shall be paid by change in the Contract Documents,and then elects not Builder. Buyer shall pay all real estate taxes in the year to proceed,a change order may be issued to reimburse following the year of Closing,and thereafter. Builder for any costs incurred for design or pricing services. Builder may require payment by Buyer of 9. Builder's Right to Stop Construction. The Builder shall some or all of the additional cost prior to furnishing have the right to stop construction in the even of default by Buyer under the terms and conditions of extra labor or supplies. In the event changes reduce this Contract. Builder may keep the job idle until such costs, Buyer will receive credit at Closing. Builder shall time as the default under this Contract is cured. The have the right to stop construction in the event any Closing Date shall be extended by the length of time payment is not made to Builder under the terms of the equal to the delay caused by Buyer's default. Contract. Builder may keep job idle until such time as payments which are due to the Builder are made. The 10. Special Assessments. Special Assessments shall be paid as follows: Special assessments which have been Page 2 of 8 Li 1�f,;1Ey\R. 0i'. .F < t k1 p11 f tF"Wl Purchase Agreement and Construction Contract ventilation system. Buyer acknowledges that,to not,and cannot be,designed to exclude mold spores. ensure proper operation of the mechanical If the growing conditions are right,mold can grow in ventilation system in the home, Buyer must follow your home. Most Buyers are familiar with mold the manufacturer's guidelines for operation and growth in the form of bread mold,and mold that ma maintenance. It is important to keep the mechanical grow on bathroom tile. ventilation system operating properly throughout the year. Failure to keep the mechanical ventilation In order to grow,mold requires food source. This might system properly operating can lead to inadequate be supplied by items found in the home,such as fabric, ventilation and a build-up of humidity in the home carpet or even wallpaper,or by building materials,such which can damage the hoe. as drywall,wood and insulation,to name a few. In B. Exterior/Interior Maintenance: Buyer addition,mold growth requires a temperature climate. acknowledges that maintaining the interior and The best growth occurs at temperatures between 40 exterior of the home is the homeowner's degrees F and 100 degrees F. Finally,mold growth responsibility. To prevent water seepage into the requires moisture. Moisture is the only mold growth home,it is important that the exterior of the home factor that can be controlled in a residential setting. By be maintained. Soil around the home will settle in minimizing moisture, a Buyer can reduce or eliminate time. Buyer agrees that Buyer will keep soil mold growth. elevations at a level sufficient to allow water to drain away from the home. In addition, Buyer agrees that Moisture in the home can have many causes. Spills,leaks, any landscaping around the home will be done in a overflows,condensation,and high humidity are common manner which will not interfere with water drainage sources of home moisture. Good housekeeping and home away from the home. Buyer agrees to inspect at maintenance practices are essential in the effort to prevent least annually the interior and exterior surfaces of or eliminate mold growth. If moisture is allowed to remain the home and caulk and maintain these surfaces to on the growth medium,mold can develop within 24 to 48 prevent openings which allow moisture into the hours. walls of the home. Any damage to the interior or exterior surfaces or roof of the homes must be 21. Disclaimer and Waiver. In order to prevent mold growth in a promptly repaired to prevent moisture from home it is up to the Buyer to properly manage and maintain entering into the walls of the home. Moisture can the home. The responsibility of a Builder is limited to things pk' damage sheathing,insulation,windows and framing that can be controlled during construction. The Builder "` lumber,and lead to the growth of mold. cannot eliminate the possibility that mold and other fungi \ � 1 �,ia C. Alterations and Room Additions: Alterations and may grow in your home after construction is completed. The additions to our home can affect the performance of Builder shall not be liable for any damages caused by mold,or �� the insulation and mechanical ventilation system. by some other fungus or agent,that may be associated with \ud`l{ Buyer acknowledges that it is Buyer's responsibility alleged defects in construction,including but not limited to to comply with all applicable codes when making any property damage, personal injury,loss of income,emotional (OM alterations or additions to the new home. distress,death,loss of use,loss of value,adverse health effects,or any other effects. Implied warranties,including 20. Moisture and Mold. Mold is a type of fungus. It the implied warranty of workmanlike construction,the occurs naturally in the environment,and it is necessary implied warranty of habitability,and the implied warranty of for the natural decomposition of plant and other fitness for a particular use,do not apply to the prevention of organic material. It spreads by means of microscopic mold or other fungal growth. The Buyer hereby waives all spores borne on the wind,and is found everywhere life claims and causes of action against the Builder in connection can be supported. Residential home construction is Page 4 of 8 1t 4` tm Purchase Agreement and Construction Contract with mold or other fungal growth,and any damages related a home is to be located in areas subject to extreme summer thereto. temperatures,an air-conditioning system can be used to control indoor temperature levels. Other means of 22. Default. In the event Buyer defaults in Buyer's obligations controlled mechanical ventilation can be used to reduce under this Contract, Builder may terminate this Contract. If levels of formaldehyde and other indoor air contaminants. Buyer fails to cure the default within thirty(30)days after being served with written notice pursuant to Minn Stat If you have any questions regarding the health effects of 559.21,then this Contract shall be cancelled,in which event formaldehyde,consult your doctor or local health all payments made buy Buyer to Builder shall be retained by department. Builder as liquidated damages. The parties agree that a determination of actual damages incurred as a result of 25. Promotional Displays. Construction of the home shall be Buyer's default would be difficult to ascertain and that the governed by the Contract Documents. Buyer acknowledges liquidated damage amount included herein is reasonable. If that any promotional displays,plans,model homes,or the Builder elects not to cancel this Contract, Builder shall have like,are not part of this Contract and Buyer is not relying the right to specific performance of this Contract, provided upon any such promotional displays,plans or model homes in such action is commenced with six(6) months of the Closing entering in this Contract. Date. 26. Allowances. Buyer shall be given credit against the 23. Mechanic Lien Notice. You are entitled under Minnesota Law Final Price at Closing if Buyer uses less than the full to the following notice: "(a)any person or company amount of the allowances,which are included in the supplying labor or materials for this improvement to your Base Contract Price in this Contract. If Buyer exceeds property may file a lien against your property if that person the allowances,the Final Price shall increase and Buyer or company is not paid for their contributions. (b)Under shall pay the increase at Closing. No representations Minnesota law,you have the right to pay persons who made by Builder that the amount of the allowance is supplied labor or materials for this improvement directly and sufficient to meet the requirements of any specific deduct this amount from our final price,or withhold the standard,design or style. amounts due them from us until 120 days after completion of the improvement unless we give a you a lien waiver signed 27. Trees,Shrubs and Vegetation. Buyer acknowledges by persons who supplied any labor or material for the that trees,shrubs and other vegetation on the improvement and who gave you timely notice." construction site will be removed during the course of construction. Buyer also acknowledges that trees, 24. Important Health Notice: Some of the building materials shrubs,and vegetation in the area around the used in this home(or these building materials)emit construction site may be affected by soil compaction formaldehyde. Eye, nose and throat irritation,headache, and other activity which could adversely affect trees, nausea and a variety of asthma-like symptoms,including shrubs and other vegetation. Buyer agrees to hold shortness of breath,have been reported as a result of Builder harmless from any and all loss or damages formaldehyde exposure. Elderly persons and young children, relating to trees,shrubs and vegetation. as well as anyone with a history of asthma,allergies,or lung problems,may be at great risk. Research is continuing on the 28. Landscaping. Unless otherwise specified in the possible long-term effects of exposure to formaldehyde. Contract,no landscaping,including,but no limited to, the planting of trees,is included n the Contract. Reduced ventilation may allow formaldehyde and other contaminants to accumulate in the indoor air. High indoor 29. Final Rough Grade. Builder shall provide a final rough temperatures and humidity raise formaldehyde levels. When / grade to the Land. Buyer acknowledges that final Page 5 of 8 /rid( V Dv'1 Drp A Purchase Agreement and Construction Contract rough grading to be completed by the Builder does not selected by the Builder on the Land. If the location of include the addition of any black dirt or other soil the new home is changed from the location selected improvements unless specified in this Contract and by the Builder, and the change results in any increased that raking and other work will be required before the costs,the Base Contract Price shall increase soil will be suitable for seeding,sod or other accordingly and Builder shall have the option of landscaping. The final rough grade to be completed by requiring payment of the increased costs before Builder shall be only in those areas disturbed by the agreeing to nay change in location. Buyer construction. acknowledges that changes in the placement of the new home on the Land can result in increased cost for 30. Covenants,Conditions and Restrictions. Buyer such things as foundation,driveway,utility installation acknowledges receipt of a copy of the N/A covenants, and hook-ups,grading and excavation. conditions and restriction on the Property. 36. Right to Photograph. Buyer herby grants Builder the 31. Basement Moisture. Builder does not warrant that right to photograph the new home and to use such the basement will be free from moisture or dampness, photographs in Builder's promotions. In the event Buyer has opted to install of a 37. Entire Contract. This Contract,the attachments to this waterproofing system,Buyer agrees to rely exclusively Contract,and the Contract documents,constitute the upon the warranty provided with the waterproofing entire contract by and between the parties and system and to look exclusively to the manufacturer supersede any and all representations,promised, and/or installer of the waterproofing system for all agreements or understandings between the parties. matters relating thereto,including any loss or damage. This Contract may be amended or modified only by written agreement signed by the parties hereto. 32. Soil Conditions. In the event soil conditions on the Property are unsuitable for construction of the 38. Binding Effect. This Contract is binding upon the improvements under this Contract, Builder may cancel parties,their respective heirs,successors and assigns. this Contract,in which event,all monies paid herewith The parties represent to each other they have the shall be refunded to Buyer. capacity and the authority to enter into this Contract. 33. Zoning/Land Use. Builder makes not representations 39. Applicable Law. This Contract shall be construed and or warranties concerning the current or future zoning enforced in accordance with the laws of the State of or land use of the areas located in the vicinity of the Minnesota,irrespective of the domiciles of the parties, Land. Buyer acknowledges that Buyer has had an the State in which the Contract was executed,or any opportunity to investigate the surrounding zoning and other factors affecting choice of law. If any portion of land use. Buyers waive any claim against Builder with this Contract is unenforceable under Minnesota law, respect to the zoning and land use in the surrounding the balance of the Contract shall remain in full force vicinity. and effect. In the event Builder commences litigation or arbitration to enforce this Contract, Builder shall be 34. Well Disclosure. Builder certified that as of the date entitled to attorney fees and costs incurred. hereof the Builder does not know of any wells on the property. �� > 40. Copy of Contract. By signing below, Buyer `' acknowledges receipt of a co g p copy of this Contract. 35. Placement of Residence. Buyer acknowledges that the Base Contract Price contained in this Contract is based 41. Builder's Copyright of Plan. Buyer acknowledges that upon construction of the new home in a location Builder's Plans are copyrighted and remain in the Page 6 of 8 ;("', L5 Purchase Agreement and Construction Contract property of Builder. Buyer is allowed a one-time use of jurisdiction in accordance with the provisions of the the Plans for the construction of the new home under Minnesota Arbitration Act. this contract,and understands that Buyer may not copy,use or sell such Plans without the prior written 44. New Construction Statutory Warranties. Under consent of Builder. Any unauthorized use of the Plans Minnesota law,the new home is warranted as follows: is in violation of copyright law and may subject Buyer (1)during the one year period from the warranty date, to injunctive relief and damages. the new home shall be free from defects caused by faulty workmanship and defective materials due to 42. Savings Clause. Should any term or provision of this non-compliance with building standards; (2)during the Contract be rules invalid or unenforceable by a court of two year period from the warranty date,the new competent jurisdiction,the remainder of the Contract home shall be free from defects caused by faulty shall nonetheless remain in full force and effect. Buyer installation of plumbing,electrical, heating and cooling and Builder acknowledge that they have reviewed all systems;and(30 during the ten year period from the the provisions for the Contract and have had the warranty date,the new home shall be free from major opportunity to obtain legal review prior to signing this construction defects. The warranty date is the date Contract. the Owner fist occupies the new home or the date on which Owner takes legal title to the new home, 43. Binding Arbitration Agreement. Buyer and Builder whichever is first to occur. Written claims under the agree that all claims,disputes and controversies,of warranty must be reported to the Builder within six whatever nature,by and between Buyer and Builder months after the owner discovers or should have arising out of or relating to this Contract,the discovered the loss or damage. To determine the performance of the parties under this Contract,the exact coverage under the warranty and the exclusions new home or the real property on which the home was to the warranty,see Minnesota Statutes Chapter 327A located,any of the terms and conditions of this "Chapter 37A". The Owner and Builder agree that the Contract and including,without limitation,claims coverage's,exclusions and remedies in Chapter 327A relating to the formation of this Contract,breach of shall be the exclusive remedies for claims of breach of contract,negligence and misrepresentation,shall be the Chapter 327A warranties. The Chapter 327A submitted to binding arbitration before the warranties are hereby incorporated into this Contract Construction Arbitration Services, Inc. ("CAS"),in and this written warranty instrument conveys these accordance with the rules of CAS then in effect. The warranties to Buyer at the Closing,in compliance with arbitration hearing shall be held in the new home if the Minn.Stat. Section 327A.08. Nothing herein shall be claims relate to warranty or to the physical condition construed to create any warranties,express or implied, of the new home or other improvements. The party other than those contained in Chapter 327A.. requesting arbitration shall initiate arbitration by filing a demand for arbitration with the American Arbitration 45. Right to Cure. Buyer and Builder agree that any Association and paying all fees relating to filing of the warranty work,escrow work or other work required to arbitration claim. The arbitrator shall have the correct any deficiencies in the construction of the new authority to allocate costs and disbursement as the home will be performed by Builder or Builder's arbitrator deems fair and equitable. If the parties are subcontractors. Buyer agrees to provide written notice represented by legal counsel,the parties shall each of any claim concerning any warranty work,escrow bear their own legal costs. The decision of the work or other work required to correct any arbitrator shall be final and binding and may be deficiencies in the construction of the new home to enforced by any party in a court of competent Builder and shall make the home available to Builder and Builder's subcontractor during the business hours Page 7 of 8 E.;01 14e, F. N i�. Purchase Agreement and Construction Contract of 8:00 a.m. to 5:00 p.m.central standard time, Monday through Friday. Builder shall not be liable for any warranty work,escrow work or other corrective work performed by Buyer or any contractor or subcontractor hired by Buyer. 46. Agency Disclosure. Beth Iverson, RE/MAX Results,is the wife of builder, Tim Iverson. Tim Iverson,President&Joe Iverson,Vice President, son of builder,are licensed real estate agents in the State of MN. All will be acting as Seller Brokers in this transaction. 47. Title&Closing. The parties agree that the closing,escrow and title agent shall be Land Title Inc,or its assignee. IN WITNESS WHEREOF,the parties have executed this Contract,effective as of the date and year first appearing hereinabove. BUILDER: IVERSON HOMES INC A Minnesota Corporation Builder's License No.1557 By: Its: BUYER(S): Page 8 of 8 AGENDA ITEM#: 6 REPORT#: 13 STAFF REPORT RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY MEETING MARCH 19, 2012 REPORT PREPARED BY: KAREN BARTON, COMMUNITY DEVELOPMENT ASSISTANT DIRECTOR NAME,TITLE REPORT PRESENTER: KAREN BARTON, COMMUNITY DEVELOPMENT ASSISTANT DIRECTOR NAME,TITLE DEPARTMENT DIRECTOR REVIEW: n. /i A a • o TrA__ REVIEWED BY EXECUTIVE DIRECTOR: g, / ;jam'_ eA. ITEM FOR HRA CONSIDERATION: Consideration of assistance in the amount of$50,000 and a Funding Agreement with Bill Wolfson for substantial rehabilitation to the property located at 6528 Penn Avenue, ARC Value Village. I. RECOMMENDED ACTION: By Motion: Consider the adoption of a Resolution granting assistance in the amount of $50,000, and approving a Funding Agreement with Bill Wolfson for the redevelopment of 6528 Penn Avenue, ARC Value Village. II. BACKGROUND Bill Wolfson is requesting assistance from the Housing and Redevelopment Authority (HRA) in the amount of$50,000 to facilitate the substantial rehabilitation of the property located at 6528 Penn Avenue and currently occupied by ARC Value Village. At its meeting on July 25, 2011 the HRA approved a spending plan for the Lyndale Gateway and Interchange TIF Districts in accordance with the Temporary TIF Authority Act (the "Spending Plan") to utilize existing tax increment revenues from the TIF Districts in order to stimulate construction or rehabilitation of private 03192012 Wolfson/ARC Business Subsidy development in a way that will also create or retain jobs. On August 9, 2011 the City Council held a public hearing regarding the Spending Plan and approved the Spending Plan. Pursuant to the Spending Plan, the HRA is authorized to spend Available Spending Plan Increment (as defined in the Spending Plan) for any other private development in the City for which the HRA finds that the private development will create or retain jobs in the State (including construction jobs). Through the substantial rehabilitation of the property located at 6528 Penn Avenue, it is anticipated that 5 to 15 full-time- equivalent construction jobs will be created for this project. Mr. Wolfson is projecting to expend $128,924 associated with the funding request for the rehabilitation. The rehabilitation activities will include repair of the exterior sidewalks and ADA ramps, resurfacing of the parking lot, and remodeling of the sales floor. A complete list of improvements is attached to the Funding Agreement as Exhibit B. Without the HRA's assistance, the renovation would be to a much lesser scale. The assistance through the HRA is proposed to be in the form of a grant. Providing the requested assistance to the Developer for the project pursuant to the Funding Agreement is an eligible use of the excess tax increment available for use under the approved Spending Plan. Staff is recommending the HRA award the $50,000 funding request to Bill Wolfson for the substantial rehabilitation of the property at 6528 Penn Avenue, ARC Value Village. III. BASIS OF RECOMMENDATION A. POLICY • Minnesota Statutes, Section 469.176, Subd. 4m, (the "temporary TIF Authority Act") authorizes the HRA to spend available tax increment from any existing tax increment financing district to provide assistance in any form to private development consisting of construction or substantial rehabilitation of buildings and ancillary facilities provided: o Such assistance will create or retain jobs in the State of Minnesota, including construction jobs; o Construction commences before July 1, 2012 for private commercial development; o The construction would not have commenced before that date without the assistance; o Tax increments under the Spending Plan are spent by December 31, 2012; and o The City Council approves a written spending plan after conducting a duly noticed public hearing that specifically authorizes the HRA to take such actions B. CRITICAL TIMING ISSUES • The project will begin no later than June 30, 2012 and is anticipated to be complete this summer. • The Funding Agreement requires the project be started no later than June 30, 2012 and be completed by December 31, 2012. C. FINANCIAL • A total of$951,445 in excess tax increment has been identified under the Spending Plan. • A current balance of approximately $51,445 remains available for this funding assistance. • A balance of$1,445 would remain if Mr. Wolfson is awarded the full $50,000 in assistance. • Mr. Wolfson is seeking $50,000 to aid in the rehabilitation of the property at 6528 Penn Avenue S. D. LEGAL • The HRA attorney has reviewed the Funding Agreement. IV. ALTERNATIVE RECOMMENDATION(S) • Do not approve the Funding Agreement V. ATTACHMENTS • Resolution • Funding Agreement VI. PRINCIPAL PARTIES EXPECTED AT MEETING • Bill Wolfson RESOLUTION NO. HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA RESOLUTION APPROVING THE EXECUTION AND DELIVERY OF A FUNDING AGREEMENT BETWEEN THE RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY AND BILL WOLFSON WHEREAS, the Housing and Redevelopment Authority in and for the City of Richfield (the "Authority") and the City of Richfield (the "City") have previously established the Interchange Tax Increment Financing District and the Lyndale Gardens Tax Increment Financing District (collectively, the "TIF Districts") within the Richfield Redevelopment Project Area and adopted tax increment financing plans therefore, pursuant to Minnesota Statutes, Sections 469.001 to 469.047, as amended, and Sections 469.174 to 469.1799, as amended; and WHEREAS, Minnesota Statutes, Section 469.176, Subd. 4m(the "Temporary TIF Authority Act") authorizes the Authority to spend available tax increment from any existing tax increment financing district, notwithstanding any other law to the contrary, to provide improvements, loans, interest rate subsidies, or assistance in any form to private development consisting of construction or substantial rehabilitation of buildings and ancillary facilities, if certain conditions are met; and WHEREAS, at its meeting on July 25, 2011,the Authority approved a spending plan for the TIF Districts in accordance with the Temporary TIF Authority Act(the "Spending Plan")to utilize existing tax increment revenues from the TIF Districts in order to stimulate construction or rehabilitation of private development in a way that will also create or retain jobs; and WHEREAS, on August 9, 2011,the City Council of the City held a public hearing regarding the Spending Plan and approved the Spending Plan; and WHEREAS, Bill Wolfson, a Minnesota corporation(the "Developer") has requested assistance from the Authority under the Spending Plan in the amount of$50,000 to assist in the financing of the substantial rehabilitation of the ARC Value Village building located at 6528 Penn Avenue in Richfield, Minnesota and legally described in the attached Exhibit A (the "Property"). WHEREAS, the Board of the Authority has been presented with a Funding Agreement, between the Authority and the Developer(the "Funding Agreement"),pursuant to which the Authority will provide $50,000 of the funds available under the Spending Plan to the Developer to rehabilitate the Property under certain terms and conditions; and 395331v1 JAE RC125-320 WHEREAS, pursuant to the Funding Agreement, $50,000 in assistance will be provided to the Developer as a grant; and WHEREAS,the Authority has reviewed the Funding Agreement and finds that the execution of the same and the Authority's performance of its obligations thereunder are in the best interest of the City and its residents; and NOW,THEREFORE,BE IT RESOLVED, by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota as follows: 1. The Funding Agreement presented to the Authority and on file with the Community Development Director is hereby in all respects approved, subject to modifications that do not alter the substance of the transaction and that are approved by the Chairperson and Executive Director; provided that execution of such document by such officials shall be conclusive evidence of approval. 2. The Chairperson and Executive Director are hereby authorized to execute the Funding Agreement on behalf of the Authority and to carry out on behalf of the Authority the Authority's obligations thereunder. Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 19th day of March, 2012. Doris Rubenstein, Acting Chair ATTEST: Doris Rubenstein, Secretary 2 395331v1 JAE RC125-320 FUNDING AGREEMENT THIS FUNDING AGREEMENT (the "Funding Agreement"), made and entered into as of the day of , 20_ 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 Bill Wolfson(the "Developer"). BACKGROUND On August 9, 2011, the Richfield City Council appro;~ . . ding plan (the "Spending Plan") which authorizes the Authority to expend current . bala ° on hand from two tax increment district for activities which will generate job AO which are W enced not later than July 1, 2012. Pursuant to the Spending Plan,the H' = uthorized to spe P Available Spending Plan Increment (as defined in the Spending Plan ° .ny other private deve-4:401ent in the City for which the HRA finds that the private de , ent will to or retain 'n the State (including construction jobs); that the private de 11!® ent A ommence befor&the required date (depending on the type of development); anittILL,,w4 h construction would not have commenced before the required date wut the assist. I, der the Spending Plan. The Developer has requested as° , c° ��the Aut in the amount of$50,000 to assist in the financing of substantial rehatilti ation. 'C = Village building located at 6528 Penn Avenue South eld, Miniota_e e.: _e_- cribed in the attached Exhibit A (the "Property"). The - ;- °. ill co t- - substan _ rehabilitation activities on the Property, as describes = e attach-7! xhibit :_ or to July 1, 2012. The Authority.r L agree e - . T0, the D < per's request and provide such funding in accordance with the ter TH ` RE, onsideration of the mutual covenants and undertaking and undo_ .a dings of the pa.. , th 3 ciency of which is hereby acknowledged, the parties agree as fo I. ASSISTANCE PROVIDED 1.01 A 't t lain• of Certain Activities. The Authority agrees to provide funds to the Developer in ce-° ount of up to $50,000 to assist the Developer in the substantial rehabilitation of the Pr?,erty. The funds will be provided to the Developer upon completion of the rehabilitation activities described on the attached Exhibit B, upon the Authority being reasonably satisfied, based on assurances from the Developer that: (i) the rehabilitation activities created or retained jobs in the state, including construction jobs; (ii) construction commenced before July 1, 2012, and would not have commenced before that date without the assistance; (iii)the funds have been expended for rehabilitation activities prior to December 31, 2012 (a receipt showing that at least $50,000 was paid to rehabilitate the Property will satisfy that 1 Wolfson Funding Agreement requirement); and (iv)the jobs described in Section 1.05 were created during the completion of the rehabilitation activities described in Exhibit B. 1.02 Source of Assistance. The funds provided hereunder are from the sources identified in the Spending Plan approved by the City Council on August 9, 2011 and approved by the Board of the Authority on July 25, 2011, and from no other source. Neither the City nor the Authority shall have any obligation to provide funds beyond the amounts available under the Spending Plan. 1.03 Form of Assistance. The Assistance will be provid- - e form of a grant in the amount of$50,000. 1.04 Assistance not a Business Subsidy. The pa ccckno,e, ;e that the assistance provided by the Authority to the Developer under this F ng Agreem-li_ not a business subsidy pursuant to Minnesota Statutes, Sections 116 : to 116J.995 (th Ili•.siness Subsidy Act"). Pursuant to Pursuant to Section 116J.993,: 4 . 3(1), the financial ass e provided to the Developer hereunder is not a business subsist ! cause the adakt is in an amo ao f less than $75,000. ff=r_ 1.05 Job Creation Require The Develop-7%461.s agreed to cause the creation of at least 5 new full-time equivalent constr '-fi:qMp.h s at the Pro 1.06 Developer Covenant Rega g Ass " 41. . The,. =--loper acknowledges that it would not have commenc-� °whabilitat e of this time without the assistance provided pursuant to th.a Ali°• = s reemen II. •tVi ITIONA ROVISIONS 2.01 Conflict ail zi esentatives Not Individually Liable. The Authorit s - t elop-M r the best oft spective knowledge, represent and agree that no me r officia + -mp -. of the Authority shall have any personal interest, direct or indi - w, n the Funding i.-eeme - or shall any such member, official, or employee participate in an' x ision relating . e Feipir Agreement which affects his personal interests or the interests %,Fr. y corporatio ,artners ip, or association in which he is, directly or indirectly, interested. ember, of qr31, or employee of the Authority shall be personally liable to the Developer, or'''':-iuccesseediorinterest, in the event of any default or breach by the Authority or County or for .T m_® o g hich may become due to the Developer or successor or on any obligations under th'Zi'76-ie of the Funding Agreement. 2.02 Equal Employment Opportunity. The Developer, for itself and its successors and assigns, agrees that during the construction of the substantial rehabilitation provided for in this Funding Agreement it will comply with all applicable federal, state and local equal employment and non-discrimination laws and regulations. 2 Wolfson Funding Agreement 2.03 Titles of Articles and Sections. Any titles of the several parts, Articles, and Sections of the Funding Agreement are inserted for convenience of reference only and shall be disregarded in construing or interpreting any of its provisions. 2.04 Notices and Demands. Except as otherwise expressly provided in this Funding Agreement, a notice, demand, or other communication under the Funding Agreement by either party to the other shall be sufficiently given or delivered if it is dispatched by registered or certified mail,postage prepaid, return receipt requested, or delivered personally; and (a) in the case of the Developer, is addressed to o °_ ered personally to the Developer at 201 E. Lake Street, Wayzata, Minn-° x5391, Attn: Bill Wolfson; (b) in the case of the Authority, is addressee,71 or I-V '°-red personally to the Authority at 6700 Portland Avenj South, -ld, MN 55423, Attn: Community Development Dire I or at such other address with re .7-5.47-1- to either su--,0 party as that : may, from time to time, designate in writinglitik,forw. flgr the other as prided in this Section. -= 2.05 Counterparts. This F < ,.reement be executed in any number of counterparts, each of which shall consti on .,a same ( .ment. 2.06 Recording. � thority ec Apte me 1 reRi dum of this Funding Agreement and any amendments t ..e Henn°;�runty reco a er. The Developer shall pay all costs for recording. -- 2.07 Costs a •uthor' ' 'm._ to t •uthority providing the assistance to the Developer described int ° '6 . i i° .=r shall pay the Authority for all costs and expenses.'g 'W to the ° _ _A�irity to provei== ch assistance, including administrative costs, attorn- ti es and = ffi y® es. (The r inderr his page is intentionally left blank.) 3 Wolfson Funding Agreement IN WITNESS WHEREOF, the Authority has caused this Funding Agreement to be duly executed in its name and behalf and its seal to be hereunto duly affixed and the Developer has caused this Funding Agreement to be duly executed in its name and behalf as of the date first above written. HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD,MIN � ' A By: �-= Its: .w, (SEAL) „ : W. By: Its: .irector STATE OF MINNESOTA ) - SS. -., COUNTY OF HENNEPI = - The foregoin! ' ent .cknow; Wed before me this day of , 20 , by Suzanne .ndahl, the S it of the RLsing and Redevelopment Authority in and for the City of Richfield,-,--4 esota-,- .: of the- hority. °"v Notary Public - = STATE .: INNESOTA SS. COUNTY OP-4 ",_,' EPI -= The foregoi 0: F ument was acknowledged before me this day of , 20 , by Steve Devic-i the Executive Director of the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota, on behalf of the Authority. Notary Public Wolfson Funding Agreement S-1 IP ` q Bill Wolfson By: Its: STATE OF MINNESOTA S S. COUNTY OF HENNEPIN ) = The foregoing instrument was acknowl° °• before m pis day e ' , ) 20 , by ,the Bill Wolfson. — otaxy .► - ,4 r----7,— Nat,. Wolfson Funding Agreement S-2 Lf)- 8 EXHIBIT A LEGAL DESCRIPTION OF PROPERTY TO BE ACQUIRED THAT PART OF LOT 16 LYING S OF N 130 FT THOF ALSO LOT 3 BLK 3 H TICKNERS SUB OF LOT 15 RICHFIELD GARDENS EX HW Aar N e. Wolfson Funding Agreement A-1 EXHIBIT B SUBSTANTIAL REHABILITATION ACTIVITIES Resurface parking lot, re-stripe and paint arrows leading to donation area; Repair exterior front walks(immediately adjacent to building) and install/repair ADA accessible ramps; Rehab northwest corner of sales floor. t 710-344, —21S- sFar Jar NIEL i3Y?ii Wolfson Funding Agreement A-1 AGENDA ITEM#: 7 REPORT#: 14 STAFF REPORT RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY MEETING MARCH 19, 2012 REPORT PREPARED BY: CHRISTINE COSTELLO, COMMUNITY DEVELOPMENT SPECIALIST NAME,TITLE REPORT PRESENTER: JOHN STARK, COMMUNITY DEVELOPMENT DIRECTOR, NAME,TITLE DEPARTMENT DIRECTOR REVIEW: a /�` �A!u wri S/GNATU' REVIEWED BY EXECUTIVE DIRECTOR: Adjilli° ITEM FOR HRA CONSIDERATION: Consideration of making a request to the City Council to 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: Request that the City Council call for a public hearing at their April 24th meeting 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 On March 13th Ron Clark Construction and Design (dba Connelly Development LLC) made a formal request for Tax Increment Financing (TIF) to the City of Richfield/Richfield Housing and Redevelopment Authority (HRA) for their proposed 70 unit 100% affordable multi-family housing project, Pillsbury Commons. The developer had applied to the Minnesota Housing and Finance Agency's (MHFA) Housing Tax Credit program for funding of their proposed project. In 03192012-HRA request CC cal a PH_Pillsbury Commons.doc November 2011 MHFA awarded Ron Clark Construction and Design, $10 million in housing tax credit. The Low Income Housing Tax Credit Program (LIHTC) was created by the Tax Credit Reform Act of 1986. The LIHTC program regulations are under Section 42 of the Internal Revenue Code. In Minnesota the MHFA is the primary agency that is designated by the Minnesota Legislature to allocate the housing tax credit program. Tax credit encourages developers to build affordable housing to meet the needs of a community. As a condition for receiving housing tax credits, owners must keep the units affordable for a 30 year period. Affordable rents are defined and calculated based on Median Household Income figures and published by the U.S. Department of Housing and Urban Development (HUD). According to the Developer, awarding of the housing tax credit alone will not finance the proposed project. The Developer has stated that the cost of the project exceeds the sources of financing for the project and that they are looking to secure TIF in order to make the project feasible. In order for discussions to proceed with the City Council and the HRA, the HRA must request that the City Council call for a public hearing to take place at a future date. At the HRA's October 2011 meeting, a request had been made for the City Council to 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. The HRA voted 4 to 0 to affirm the Council's call for a public hearing. The next step was for the City Council to set the date for the public hearing, which the Council did at their October 25, 2011 meeting. The Council voted 5 to 0 that a public hearing date be set for the Council's December 13, 2011 meeting. The legal publication for that Public Hearing however, was not submitted because the Developer stated they wanted to slow down their process. Since the process to call for a public hearing was not completed in 2011, it must be restarted at this time. Calling for the public hearing does not commit the HRA or the City Council to approve the establishment of the TIF district. The decision whether or not to approve the TIF District can only be made after the City Council has had an opportunity to fully consider the matter with public input at a 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 HRA to consider modifications to the Richfield Redevelopment Project Area; and establishment of Pillsbury Commons TIF District at its April meeting; and finally d) The holding of a public hearing by the City Council on April 24, 2012. 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 or denial of the proposed modifications to a redevelopment plan and establishment of a TIF District. B. CRITICAL TIMING ISSUES • 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 (April 24, 2012). • 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 April 23, 2012 Planning Commission meeting. • The Developer has indicated that their November 17, 2011 tax credit award requires final approval of all financing (including TIF) within six months (by May 17, 2012). C. FINANCIAL • There are no financial implications or commitments resulting from the request to call for a Public Hearing on TIF. D. LEGAL • The City's/HRA's legal counsel and financial consultant, has been involved in all staff discussions relating to tax increment financing for the proposed project. • The Resolution calling for a public hearing was prepared by Ehlers and Associates. • The HRA will be considering this matter at its April 16, 2012 meeting. IV. ALTERNATIVE RECOMMENDATIONS) • Delay the request for a call for a public hearing to a later meeting in order to seek further information. • Adopt the attached Resolution with modifications that meet the desires or concerns of HRA members. V. ATTACHMENTS • Resolution • Developer's letter requesting Tax Increment Financing (TIF) • Excerpt of October 17, 2011 HRA meeting minutes • Excerpt of October 25, 2011 Council meeting minutes VI. PRINCIPAL PARTIES EXPECTED AT MEETING • Representatives from Ron Clark Construction and Design HRA RESOLUTION NO. RESOLUTION REQUESTING THE CITY COUNCIL OF THE CITY OF RICHFIELD CALL FOR A PUBLIC HEARING ON THE MODIFICATION OF THE RICHFIELD REDEVELOPMENT PROJECT AREA AND THE ESTABLISHMENT OF THE PILLSBURY COMMONS TAX INCREMENT FINANCING DISTRICT(A HOUSING DISTRICT). BE IT RESOLVED,by the Board of Commissioners(the "Board")of the Richfield Housing and Redevelopment Authority,Minnesota(the "HRA")as follows: WHEREAS,the City Council (the"Council")of the City of Richfield,Minnesota(the"City") established the Richfield Redevelopment Project Area pursuant to Minnesota Statutes,Minnesota Statutes, 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 WHEREAS,the HRA is proposing the modification of the Richfield Redevelopment Project Area and the establishment of the Pillsbury Commons Tax Increment Financing District,pursuant to,and in accordance with,Minnesota Statutes, Sections 469.174 to 469.1799 and Sections 469.001 to 469.047, inclusive, as amended; NOW,THEREFORE BE IT RESOLVED by the Board as follows: 1. The HRA hereby requests that the Council call for a public hearing on April 24,2012 to consider the proposed adoption of the Modification to the Redevelopment Plan for the Richfield Redevelopment Project Area and the proposed adoption of the Tax Increment Financing Plan for the Pillsbury Commons Tax Increment Financing District(collectively,the"Plans")and cause notice of said public hearing to be given as required by law. 2. The HRA directs the Executive Director to transmit copies of the Plans to the Planning Commission of the City and requests the Planning Commission's written opinion indicating whether the proposed Plans are in accordance with the Comprehensive Plan of the City,prior to the date of the public hearing. 3. The Executive Director of the HRA is hereby directed to submit a copy of the Plans to the Council for its approval. 4. The HRA directs the Executive Director to transmit the Plans to the county and the school district(s)in which the Pillsbury Commons Tax Increment Financing Districts is located not later than April 6,2012. 5. Staff and consultants are authorized and directed to take all steps necessary to prepare the Plan and related documents and to undertake other actions necessary to bring the Plan before the Council. Approved by the Board on March 19,2012. Doris Rubenstein,Acting Chair ATTEST: Doris Rubenstein, Secretary -- a-- RonClark Construction &Design 7500 West 78,h Street Edina,MN 55439 (952)947-3000 fax(952)947-3030 Tuesday, March 13,2012 Mr. Steven L. Devich Executive Director City of Richfield Housing & Redevelopment Authority 6700 Portland Ave South Richfield, MN 55423 Re: Pillsbury Commons Subject: Request for Tax Increment Financing Dear Mr. Devich: From our initial financial modeling that was done prior to submitting our application to Minnesota Housing Finance Agency (MHFA) it was determined that the cost of the project would exceed available funding, e.g. there would be a financial gap. Because of this gap, prior to making our application to MHFA we came to the city and requested Tax Increment Financing (TIE)to make the project feasible. The TIF will be used to pay for the costs involved in the demolition, environmental clean-up of the site,site improvements, and other TIF eligible costs and will be needed to make the project financially feasible. To justify the need for TIF we will support this request in the future with documentation that these are all TIF eligible costs. It is important to know that we will incur and pay for these costs up front and then request reimbursement from "pay as you go TIF"over an extended period of time In this manner the reimbursement will be paid from the new, higher real estate taxes paid by our project, and not from other city sources, This letter is intended to define the amount of TIF needed to make the project financially feasible and to request the city complete the process of approving the TIF district simultaneously with the Land Use approval of our Project. Due to the lengthy time frame to get to this point in the development process, we think it would be helpful to give a brief "bullet point" history of the tax increment financing element involved in our development to date: • City Council meeting on 4/12/11: the City Council was made aware of our intent to submit an application to Minnesota Housing Finance Agency(MHFA) for a 70-unit 100% affordable housing project on the former City Maintenance Facility property to be called "Pillsbury Commons". (This was also restated in an HRA memorandum dated 10/27/2011 to the City Council.) • City Council meeting on 6/14/11: the City Council approved Resolution 10520. The Resolution states that"the City wishes to support the Project and directs staff to work with the Developer to take steps necessary to create a tax increment financing district for the Project". The"Project"is described in the Resolution to be"70 units of multifamily housing"and"is to be known as Pillsbury Commons and 100%of the units will be affordable to persons with incomes at 60%of the area median income". We submitted our application to MHFA immediately after receiving the City Council's Resolution to support TIF for our project. MN Builder License#1220 MORA www.Ron(Jark.com 2008 Recipient R11-1" X7-3 RonClark Construction&Design 7500 West 78th Street Edina,MN 55439 (952)947-3000 fax(952)947-3030 • In our application to MHFA for financing for this project we used the approved city TIF Resolution as a key component of our application in order to demonstrate TIF support by the city which awarded us additional points for a higher score against our competition. • On 11/17/2011 MHFA allocated federal tax credits to the Pillsbury Commons project through its competitive process. On February 21, 2012 Ron Clark Construction (Connelly Development, LLC) made formal application to the City of Richfield for our Pillsbury Commons project. Our project has remained unchanged in its overall concept for 70 units of 100% affordable rental housing since our meeting on this concept back on 04/12/2011 noted above. Based on the above noted City approved Resolution, our MHFA application included Tax Increment Financing(TIF)as an integral financial component for project feasibility. ORIGINAL CONCEPT SITE PLAN—Exiting onto Pillsbury Ave. (PRIOR TO CITY APPLICATION The original TIF amount used in our MHFA application for sources of funds for proof of development financial feasibility was$530,082.00,which was based on the original site plan exiting onto Pillsbury Ave. Attached please find our"Project Sources&Uses"showing the financial gap in our sources of funds necessary to pay for project costs.This continues to be the amount of our base TIF request, which amount may be modified as shown below depending upon the city's preferred site plan 1.Tax Increment Financing Requested $530,082.00. PROPOSED SITE PLAN L1.0—Exiting onto 76th Street(THIS IS OUR APPLICATIONS BASE PLAN) Early in the process of review with the City and the neighbors, it was requested that our original site plan which exited onto.Pillsbury Avenue be revised to exit onto 76th street. We have agreed to make this change in exiting to 76th Street, but this change will require an Easement from the City and the HRA for the driveway that crosses both City and HRA property.We have no additional sources of funds to pay for the increased cost of changing the site plan. Therefore; we request that the value of this Easement be added to the TIF amount summarized below. 1. L1.0: Proposed Site Plan a. Original Concept plan -Tax Increment Financing Requested =$530,082.00 b. Suggested Value of Easement required for driveway(to access 76thSt)= $10,000.00* c. Total TIF requested= $540,082.00*** ALTERNATE SITE PLANS L1.1 and L1.2–Exiting onto 76th Street plus include additional city land After several additional meetings and discussions with the City of Richfield, neighbors and residents we also have come up with two additional"Alternate"site plans for consideration. If either of these alternate site plans(L1.1: Alternate#1 or L1.2:Alternate#2) is preferred by the City, we would agree to purchase the additional City owned land identified as parcel C-3 on the attached document.We would agree to purchase the additional land area required. However,we have no additional sources of funds to pay for the additional land, and therefore we also request that the sale price amount of this additional land be added to the TIF amount for this project.The previous method that was used to calculate the land value for the Option Agreement was determined by dividing the total appraised land value by the total land area. votNE, r .a MN Builder License#1220 „nE, www.RonClark.com 2008 Recipient I"T' 1--14 RonClark Construction&Design 7500 West 78th Street Edina,?'IN 55439 (952)947-3000 fax(952)947-3030 Then this land value cost per square foot was allocated to each parcel based on area of the given parcel. See the attached land value worksheet. It should be noted that the parcel sizes have adjusted a small amount based on the updated survey that we recently conducted,so some of the values have adjusted slightly. (The Option agreement used a value of$415,936 based on the previous square footage amount.)Listed below is the summary of Tax Increment Financing amounts requested depending on the City's preferred site plan selection: 1. L1.1 or L1.2: Alternate Site Plans#1 or#2 for consideration a. Original Concept plan-Tax Increment Financing Requested =$530,082.00 • i. Additional cost of land to accommodate alternate plans=$103,341.00** • (Total value of City parcels C-2&C-3 =$519,377.00-$415,936.00 (value in Option Agreement)= $103,441.00.) b. Suggested Value of Easement required for driveway(to access 76th St.) =$10,000.00* c. Total TIF requested =$643,523.00*** We look forward to the upcoming City meetings to be able to present and discuss the variations in our project and come up with the best solution for all involved. • S° erely Ronald E. Clark CEO Ron Clark Construction&Design Connelly Development,LLC R.E.C.,Inc. *Cost of Driveway Easement with the City of Richfield and the IIRri has yet to be determined.Once that actual amount has been determined it will be inserted here. **Cost ofAdditional land purchase with the City of Richfield has yet to be determined.Once that actual amount has been determined it will be inserted here. ***Total 77F requested may vary based on the cost of the Driveway Easement and Additional Land. vstNEss 4:,_ ? q MN Builder License# 1220 °MO RA www.ltonClark.com 2008 Recipient 1'."13 i i 7- 5 I E a) . m N a o ) ,U U O > vi Q H R ++ 413 a) o a) a - Er.: .`3 E ca .Q U . = (o ,n Q R7 4-, .- Co o o d a a o o "a °` � x v U. + CO � > as is o E a ° a! .� o 4 o@ ° c a) f L 41 th CLL O C Q � a fl 4, CO u x +i a) CO H 40 y— IV ro sd O = .0 0 O t Fa - F u O U vi O O y aC ' wo 0 ' o ca cti -. L9 t a.) o C-J t - o O + -Fa ¢ o 4, n o L (6 O (C yd a) U V V) 0 C a) ' 'IA C 461 a) 3 2 as 5 O O 0 s U o V a. U. F- 1- o v tr. a) 0 0 0 0 0 0 mo e -t 0 �t- 1 CO 0 E 0 v o .4 uZ o R .6. o m m N 3 1.n t-1 o r-1 it) 4• N M {31 N N rt "- "" ri r-1 aY ... O d th t/} tI'} t1? -VI. ih N r-1 m 0 oo °o, °o, °o, 0 m 0 0 m o .4 0 cn N O mo m 0 E in c0 v. 0 E (.J m of h U. F- vi• v> VI- C m To all .. 4, oA I-O FO- f_T' U v 0 Q .D 5 C }-- V1 3 t� t� C CO L a) '4 tai a) 0 0 C a L.L. N C c ro > a) c (V a� 0 C a to c o in c o 1 co a) U. u° o v p E C9 i -s = u 0 a) v N u N V) 7, .,. tai. - U C U O +- 3 = X x G ate+ a: aL. � 0 _vhf �_F-_ F-- iI: I-- : vi I " • 9,181.0 sq.ft. O 9,181,0 sq.ft. 31.965.2 sq.f6 9,128.2 sq.ft. 16,040.7 sq.ft. I) 72,251.4 sq.f1. rdin 10,670.4 sq.ft. Total oreo 162,668.1 sq.ft. 3.73 acres naa (y r-( O- d N h v) M .co co 6 r Tit L-- a. a. a t-1 M ' a a a at ,c c .0 o Ui TS 0) 4 c 0- a a a E 0, c C C E O o O o U a. z Z 0) ti 7 CO CO ') ■ V U f0 O F N' O h d r1 CD O) N (0 00 CO 0 0 <N-I co"'r OMO V) c�0 Cl, r-1 d! :-4 N > 0 m U 0 t/) N V) N r( LL • \ O M O O O a) O O v t O O - ( }O v n n a > a as C (O 76,„ O e-f r-t V) r1 CO T. a+ N O N Cr) Or1O CO Q 1 CD U. N CO ■ rl O1 co' L Cr ri N CO CO ((0 a_ m a-1 J Q us to L dJ N Q N ) a o 10 +-, N Cr <-a o a N CO N c ‘-is 0 i OS O? N' -I (n r1 N ri CO .l00 CO i v .@ L a a. I Q C C O c-4 N CO d' r—I N J co V U C V = S c-( N s N O• (NI u Q i-•` (0 O: as C Ts >• M N t -a (0 ((0 chi cal 1- ..t Q 0 x 0.. N HRA Meeting -3- October 17,2011 ......> Item #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) Community Development Director Stark presented Staff Report No. 48. Commission Member Goettel asked staff to prepare a memo on what amenities these apartments will include. M/Sandahl, S/Goettel to affirm the 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. Motion carried 4-0. Item #8 CONSIDERATION OF CONTRACT FOR PRIVATE DEVELOPMENT WITH LYNDALE GARDENS, LLC FOR REDEVELOPMENT OF FORMER LYNDALE GARDEN CENTER PROPERTY(STAFF REPORT NO. 49) Assistant Community Development Director Barton presented Staff Report No. 49. Colleen Carey and Beth Pfeifer of The Cornerstone Group/Lyndale Gardens, LLC were available for questions. M/Sandahl, S/Helmberger to approve contract for private development with Lyndale Gardens, LLC for redevelopment of former Lyndale Garden Center property. Motion carried 4-0. Item #9 CONSIDERATION OF RESOLUTION AMENDING LYNDALE GARDENS TAX INCREMENT FINANCING PLAN (STAFF REPORT NO. 50) Assistant Community Development Director Barton presented Staff Report No. 50. Dennis Schuller, 7144 Garfield Avenue, stated he supports the projects, however, he has concerns regarding the developer and the Kensington project. Colleen Carey, representing The Cornerstone Group/Lyndale Gardens, LLC explained what was happening with Kensington project. Chair Sandahl stated the Kensington project has not cost the city any money. Council Meeting Minutes -3- October 25,2011 RESOLUTION NO. 10569 RESOLUTION APPROVING THE GRANT WITH THE U.S. DEPARTMENT OF JUSTICE, OFFICE OF JUSTICE PROGRAMS AND RICHFIELD POLICE FOR BULLETPROOF VESTS This resolution appears as Resolution No. 10569. B. Consideration of approval of Letter of Understanding regarding portable restroom facilities at Community Garden S.R. 210 C. Item 4C moved to Item 5. M/Sandahl, S/Wroge to approve the Consent Calendar as amended. Motion carried 5-0. Item #5 CONSIDERATION OF ITEMS, IF ANY, REMOVED FROM CONSENT mum* CALENDAR Council Member Wroge presented Staff Report No. 211. Council Member Wroge asked if the public hearing could be on November 14, 2011 to move the process forward faster. Council Member Stark explained there are legal requirements that apply so it could not be sooner and the Minnesota Housing and Finance Agency funding decision is not determined until November 16, 2011. Ron Clark, developer, stated an open house with the neighborhood will be held as soon as funding is determined but if no funding is received there will be no application for a project. M/Wroge, S/Sandahl that the following resolution be adopted and that it be made part of these minutes: RESOLUTION NO. 10570 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 Motion carried 5-0. This resolution appears as Resolution No. 10570. Item#6 CONSIDERATION OF RESOLUTION DESIGNATING CITY'S CONTRIBUTION TOWARD HEALTH, TERM LIFE AND DENTAL INSURANCE PREMIUMS FOR GENERAL SERVICES AND MANAGEMENT EMPLOYEES (STAFF REPORT NO. 212) Council Member Sandahl presented Staff Report No. 212.