12-18-06 Regular
.
.
.
CITY OF RICHFIELD, MINNESOTA
MONDAY, DECEMBER 18, 2006
REGULAR HOUSING AND REDEVELOPMENT AUTHORITY MEETING
RICHFIELD CITY HALL
COUNCIL CHAMBERS
6700 PORTLAND AVENUE
, 7:00 P.M.
AGENDA
Call to order
1. Oath of Office to HRA Commissioner Joan Heimberger
Roll call
2. Approval of minutes of (1) Special Concurrent HRAlCity Council/Planning
Commission Meeting of October 16, 2006; (2) Regular HRA Meeting of October 16,
2006; (3) Special HRA Meeting of October 25,2006; and (4) Special HRA Meeting
of November 13, 2006
Notes:
3. HRA approval of agenda
4. 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 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 agreement with Minnesota Housing Finance Agency to
fund deferred rehabilitation energy conservation loan program S.R. No. 83 .
B. Consideration of approval of resolution authorizing purchase of real property at 7201
Nicollet Avenue with Community Development Block Grant and local funds under New
Home Program S.R. No. 84
Notes:
.
.
.
5. Consideration of contract for private development with Ryan Companies US, Inc. for
redevelopment of Phase II of Cedar Point Commons
Staff Report No. 85
Notes:
6. Consideration of plan for spring 2007 improvements at City Bella
Staff Report No. 86
Notes:
7. Executive Director report
Notes:
8. 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.
.
.
.
AGENDA ITEM # 4A
REpORT # 83
.-...
STAFF REpORT
RICHFIELD
HOUSING AND REDEVELOPMENT
AUTHORITY MEETING
NOVEMBER 18, 2006
REpORT PREPARED By:
BRUCE NORDQUIST, HOUSING AND
REDEVELOPMENT1iANAGER
NAME, TITLE
REpORT PRESENTER:
BRUCE NORDQUIST, HOUSING AND
REDEVELOPMENT~NAGER
DEPARTMENT DIRECTOR REVIEW:
NAME, TITLE
REVIEWED BY EXECUTIVE DIRECTOR:
ITEM FOR HRA CONSIDERATION:
Consideration of an agreement with the Minnesota Housing Finance Agency to fund a deferred
rehabilitation enenw conservation loan oroaram.
1. RECOMMENDED ACTION:
By Motion: Authorize the Chair and Executive Director to execute a
"Fund Availability, Disbursement, and Loan/Grant Agreement" with
the Minnesota Housing Finance Agency to fund energy conservation
loans.
I II.
BACKGROUND I
With energy conservation again a priority for many and the Richfield Housing and
Redevelopment Authority (HRA) a leader in energy conservation programming, a
new program was devised and submitted to Minnesota Housing Finance Agency
(MHFA) to consider. In response, the MHFA has authorized funding of a new loan
program called the "Richfield Energy Advantage Program". Fundswill be provided
in the form of a deferred loan to assist approximately 20 low-income homeowners
below 80 percent of area median income to make energy improvements to their
homes:
121806 MHFA
.
Qualifying Homeowner
Household Size
1
2
3
4
5
6
Maximum Income
$41,700
$47,700
$53,650
$59,600
$64,350
$69,150
Homeowner planned improvements such as replacement of windows, doors,
furnaces, air conditioning, insulation, and built in appliances will be eligible. The
deferred loan, zero interest and no monthly payments, would cover ten percent of
the total project cost up to $1,500 for as long as the applicant owned the home. If
the applicant makes more than $2,999 in improvements, the HRA, using local funds
would contribute $250 more to the project.
.
I III. BASIS OF RECOMMENDATION I
I A. POLICY I
. The Richfield HRA is a leader in energy conservation programming,
having administered an award winning energy audit program in the
past and facilitated the construction of super insulated and "energy-
star" rated homes.
. The cost of energy is placing a higher burden on household expenses,
particularly impacting those with lower incomes.
· The Richfield HRA has secured funding from MHFA to provide an
incentive for low income homeowners to make energy conservation
improvements, much like the Transformation Loan program funds
major remodeling.
I B. CRITICAL ISSUES I
. To secure MHFA's commitment of funds, the HRA must authorize a
"Fund Availability, Disbursement and Loan/Grant Agreement" by
January 15, 2007 or the funding commitment will expire.
. It is envisioned that the nonprofit Center for Energy and Environment
(CEE) will administer the loans as part of their portfolio of programs.
An Agreement for services needs to be finalized and brought to the
HRA for consideration.
I C. FINANCIAL I
. The activity was planned for in the 2007 HRA budget.
· The request from Richfield for MHFA funds was higher, but MHFA
chose to fund at the reported level.
.
ID.
LEGAL I
· The MHFA Agreement has been submitted to legal counsel to review.
· Additional agreements are anticipated and being developed with CEE
to administer the program in 2007 following HRA consideration.
.
.
.
I IV. ALTERNATIVE RECOMMENDATION(S) I
. Delay action on the Agreement. However, the funding offer from MHFA will
expire before the next regularly scheduled HRA meeting.
. Do not authorize the Agreement.
I V. ATTACHMENTS
. Program description
. Funding Agreement
I VI. PRINCIPAL PARTIES EXPECTED AT MEETING
. N/A
.
.
.
Organization
City/Community
Amount Re uested
Amount Recommended:
Fundin Partner(s):
Agency Strategic Goals:
lfA - (
Max: $60,000
osed: 20 New: Rehab: 20
Amount $
r Provide Housing Choices for Workers
r Increase Minority Homeownership
r Housing Partner of Choice
W Preserve Affordable Housing
r End Long-Term Homelessness
Project Description: Funds are being requested to assist low-income homeowners, with incomes below 80% of are,
that want to make energy improvements to their homes. A loan will be available for up to 10% of the total project c
a $1,500 maximum contribution using CRY funding. A contribution by the Richfield HRA will also be available in 1
amount of $250 for all eligible participants spending more than $2,999 on energy improvements. Eligible energy
improvements and replacements will include items that have a proven payback such as windows, doors, furnaces, c
conditioning, insulation, water heaters and built-in appliances. The Center for Energy and Environment (CEE) will
admiJ.:rister the ro am for the Richfield Housin Redevelo ment Authori HRA .
.
.
.
l{A-J.
Attachment A
Approved Project Description - Fall 2006 Single Family Request for Proposal
On October 26, 2006 the Minnesota Housing Finance Agency (Minnesota Housing) Board of
Directors approved funds for the Richfield Housing and Redevelopment Authority's Energy
Advantage Program. Funds will be provided in the form of a deferred loan to assist
approximately 20 low-income homeowners, whose incomes are at or below 80% of area median
income, make energy improvements to their homes. Loans are available, up to ten percent (10%)
of the total project cost with a $1,500 maximum CRY contribution per unit. The Center for
Energy and Enviroment has been approved to administer this program.
As Program Administrator, you are responsible and required to adhere to all
requirements/ guidelines in your Fall 2006 Single Family Request for Proposal application, the
CRY Fund Availability, Disbursement and Loan/Grant Agreement as well as to comply with
requirements/ guidelines in the CRY Procedural Ma.nual. The CRY manual is found on
Minnesota Housing's website.
Note: No CRY funds can be used for a project that has already received or has a funding
commitment to receive any other funds from the CRY Program unless specifically consented to,
in writing, by the Minnesota Housing. Please refer to Section 10.04 Prohibiting against Layering
in the Community Revitalization Fund Availability Disbursement and Loan/Grant Agreement.
Disclosure and Use of Social Security Numbers for those Awarded CRY Deferred Loan
Funds.
The disclosure of the borrower's Social Security number or Minnesota Tax Identification
number is mandatory for participation in the this program (when a CRY mortgage is executed
by the borrower) by virtue of the Minnesota Revenue Recapture Act of 1980 (section 270A.01 to
270A.12 of Milmesota Statues), as well as Section 270.66 of said Statues. Supplying the number
could result in the application of state tax refunds to the payment of any delinquent
indebtedness to MHFA resulting from this or other MHFA programs. These numbers may be
made available to state tax authorities and state personnel involved in the collection of state
obligations.
If you are not already doing so, a Tennessen Warning form must be signed by the borrowers at
the CRY deferred loan closing. The form must be retained in borrower's CRY file.
.
.
.
Lf.A... 3 10-2006-17-CRV- Energy Advantage
Termination of Availability Date July 15, 2008
Minnesota Housing Finance Agency
Community Revitalization Fund Program
FUND AVAILABILITY, DISBURSEMENT
AND LOAN/GRANT AGREEMENT
THIS AGREEMENT shall have an effective date of the 15th day of November 2006,
and is made and entered into by and between the Minnesota Housing Finance Agency
(hereinafter referred to as the "MHFA"), a public body corporate and politic of the State of
Minnesota, with its offices located at Suite 300, 400 Sibley Street, Saint Paul, Minnesota,
55101, and, Richfield Housing and Redevelopment Authority (hereinafter referred to as
the" Administrator"), with its principal place of business located at 6700 Portland A venue
South, , Richfield, MN 55423, and, if applicable, Center for Energy and Environment'
(hereinafter referred to as the "Processing Entity"), with its principal place of business
located at 212 3rd Avenue North, Suite 560 Minneapolis, MN 55401.
WHEREAS, the MHFA, under the statutory authority provided in Minn. Stat. S
462A.206 has created and is operating a Community Revitalization Fund Program
(hereinafter referred to as the "CRV Program"); and
WHEREAS, under the CRY Program, the MHF A is authorized to provide funds to
cities, for-profit organizations, and non-profit organizations to be used to assist in the
acquisition, construction, rehabilitation, and/or demolition of single family residential
properties that meet the requirements imposed under the CRY Program and which are to
be owned by a person or family of low and moderate Income and occupied by such
individuals as their principal residence (hereinafter referred to as an "Owner-Occupant");
and
WHEREAS, the MHF A has adopted the "Minnesota Housing Finance Agency
Homes Division Community Revitalization Fund Program Procedural Guide" which may
be amended, modified or supplemented from time to time in accordance with the
provisions contained therein (hereinafter cumulatively referred to as the "CRV Procedural
Guide") to implement the CRY Program; and .
WHEREAS, the MHF A has published a request for proposals soliciting entities
(hereinafter referred to as the "SF Request for Proposals") to apply to participate in the
CRY Program; and
WHEREAS, the Administrator is an eligible borrower under the CRY Program and
has applied to the MHFA for a set-aside of funds under such program to be lent and/or
granted to the Administrator and used thereby to provide financing to assist in the
If there is no Processing Entity then insert "Not applicable." in the lines for both the name and address of the
Processing Entity.
4,:}-'-/
granted to the Administrator and used thereby to provide financing to assist in the
acquisition, construction, rehabilitation, and/or demolition of single family residential .
properties to be owned by an Owner-Occupant; and
WHEREAS, the MHF A has considered and accepted Administrator for participation
in the CRY Program and agreed to set-aside funds to be lent and/or granted to the
Administrator under such program in the cumulative amount delineated in Section 2.01
herein (hereinafter referred to as the "CRV Funds"), which such funds are to be used by
Administrator to provide financing to assist in the acquisition, construction, rehabilitation,
and/ or demolition of single family residential properties that are intended for ownership
and occupancy by an Owner-Occupant; and
WHEREAS, the MHFA shall, upon request from the Administrator, disburse a
portion of the CRY Funds to the Administrator to be used by the Administrator to fund
projects that are owned by the Administrator and/ or to fund loans that the Administrator
will make to an Owner-Occupant; and
WHEREAS, either the Administrator or the Processing Entity will process the loans
that the Administrator will make to an Owner-Occupant and manage the disbursement of
the proceeds thereof; and
WHEREAS, the MHF A is prepared to provide the CRY Funds to the Administrator
on the condition that the Administrator or, if applicable, the Processing Entity handles the .
processing of the loans that the Administrator will make to an Owner-Occupant and the
handling of the disb't,1.rsement of the proceeds thereof..
NOW THEREFORE, in consideration of the mutual promises, covenants and
warranties contained herein, the parties hereto agree as follows:
Article I
DEFINITIONS.
Section 1.01 Defined Terms. As used in this Agreement, and unless otherwise
specified herein, the following terms shall have the meanings set forth respectively after
each term and such meanings shall be equally applicable to the singular and plural form of
such terms.
"Administrator" - means the entity designated as the Administrator in the first
paragraph of this Agreement.
"Administrator Event of Default" - means the occurrence of one or more of the
events delineated in Section 9.02 herein and the failure to cure such event within the
time period specified in such section.
II Administrator /Processing Entity" - means the Administrator if there is no .
CRY Program Fund Availability,
Disbursement and Loan/Grant Agreement
2
Vcr 4/28/04
(CRY Fncl Avlblty, Dsbrsmnt & Ln/Grnt Agrmnt 04.04.28)
L{ A- ~
Processing Entity and the Processing Entity if there is a Processing Entity.
.
/I Affordability Gap Financing" - means financing to assist Owner-Occupants in
the acquisition of Qualified Dwelling Units and is needed to cover the difference
between the cost of the improvement/ construction of such housing and the amount
of the mortgage loan for which the Owner-Occupant qualifies.
r
"Agreement" - means this Minnesota Housing Finance Agency Community
Revitalization Fund Program Fund Availability, Disbursement and Loan/Grant
Agreement.
"Community Land Trust" - means a private non-profit corporation created to
acquire and hold land for the benefit of a community and provide secure affordable
access to land and housing for community residents.
"Construction Loans" - means both 0% Construction 'Loans and 2%
Construction Loans.
"Construction Loan Funds" - means funds supplied to an Administrator for the
making and funding of Construction Loans in accordance with the provisions
contained in a CRY Application for Funds and the CRY Procedural Guide relating to
the use of such funds.
.
"Construction Loans Repayment Date" - means the date that is twenty (20)
months from the Effective Date.
"Construction Loan Funds Termination of Availability Date" - means the date
that is twenty (20) months from the Effective Date.
"CRY Application for Funds" - means an application for CRY Funds that is
prepared in response to a SF Request for Proposals by the Administrator for its own
Projects and by the Owners-Occupants with the assistance, if requested, of the
Administrator /Processing Entity for projects owned by the Owner-Occupants, and is
in full and complete accordance with the applicable requirements contained in the
CRY Procedural Guide and accepted and approved, in writing, by the MHF A.
"CRY Funds" - means the cumulative funds delineated in Section 2.01 herein
that the MHFA will under the CRY Program set-aside and make available to the
Administrator for Grants, Deferred Loans, 0% Construction Loans, and 2%
Construction Loans.
.
"CRY Procedural Guide" - means that certain Minnesota Housing Finance
Agency Homes Division Community Revitalization Fund Program Procedural
Guide, and any and all amendments, modifications or supplements thereto, that
describes and sets forth the requirements of the CRY Program.
CRY Program Fund Availability,
Disbursement and Loan/Grant Agreement
3
Ver 4/28/04
(CRV Fnd Avlblty. Dsbrsmnt & Ln/Grnl Agrmnt 04.04.28)
4- ft-(p
"CRV Program" - means the Community Revitalization Fund Program that the
MHFA has created and is operating under the statutory authority provided in Minn. .
Stat. S 462A.206, and under which the MHFA provides grants, deferred loans and
below market rate construction loans to certain entities for the production of single
family residential housing for persons and families oflow and moderate income.
"CRV Request for Funds" - means that certain Minnesota Housing Finance
Agency Community Revitalization Fund Program Request for Funds that is to be
used by the Administrator to request a disbursement of CRY Funds from the MHFA,
the form of which is contained in the CRY Procedural Guide.
"Deferred Loan" - means a deferred (Le., non-amortizing) zero interest rate loan
from the Administrator to an Owner-Occupant to provide Affordability Gap
Financing, and which must (i) be repaid in one lump sum upon the earliest to occur
of certain specified events or on a specified date, (ii) be processed and closed by the
Administrator /Processing Entity, (iii) be assigned and transferred to the MHF A; and
(iv) comply with all of the provisions relating thereto that are contained in the CRY
Procedural Guide.
"Deferred Loan Funds" - means funds supplied to an Administrator for the
making and funding of Deferred Loans in accordance with the provisions contained
in a CRY Application for Funds and the CRY Procedural Guide relating to the use of .
such funds.
"Deferred Loan Funds Termination of Availability Date" - means the date that
is twenty (20) months from the Effective Date.
"Deferred Loan Mortgage" - means a mortgage that secures the repayment of a
Deferred Loan, the form of which is contained in the CRY Procedural Guide.
"Deferred Loan Note" - means a promissory note that evidences a Deferred
Loan, the form of which is contained in the CRY Procedural Guide.
"Effective Date" - means the date so designated in the lead-in paragraph of this
Agreement.
"Grant" - .means a grant of funds from the MHFA to Administrator under the
CRY Program for use by Administrator as long-term financial assistance in
accordance with all of the applicable provisions relating thereto that are contained in
a CRY Application for Funds and in the CRY Procedural Guide, and which must be
repaid, if at alt only under certain circumstances.
"Grant Funds" - means funds supplied to an Administrator to fund Grants.
.
CRY Program Fund Availability,
Disbursement and Loan/Grant Agreement
4
Y cr 4/28/04
(CRY Fnd Avlblty, Dsbrsmnt & Ln/GrntAgrmnt 04.04.28)
tf A-1
"Grant Funds Termination of Availability Date" - means the date that is twenty
(20) months from the Effective Date.
.
"MHFA" - means the Minnesota Housing Finance Agency, a public body
corporate and politic of the State of Minnesota.
"MHF A Event of Default" - means the occurrence of one or more of the events
delineated in Section 9.04 herein and the failure to cure such event within the time
period specified in such section.
"Owner-Occupant" - means a person or family of low and moderate income, as
such term is used in the CRY Program, which owns Qualified Dwelling Units and
receives a Deferred Loan from the Administrator.
"Processing Entity" - means, if applicable, the entity designated as the
Processing Entity in the first paragraph of this Agreement.
"Processing Entity Event of Default" - means the occurrence of one or more of
the events delineated in Section 9.03 herein and the failure to cure such event within
the time period specified in such section.
.
"Project" - means the Real Estate. and the Qualified Dwelling Units situated
thereon.
"Project Event of Default" - means the occurrence of one or more of the events
delineated in Section 9.01 herein and the failure to cure such event within the time
period specified in such section.
"Project Owner" - means the entity, whether such entity is the Administrator or
the Owner-Occupant, that is or will be the owner of both the Qualified Dwelling
Units and has or will have a fee interest in or a long-term lease of the Real Estate that
are part of a Project.
"Qualified Dwelling Units" - means a condominium unit, townhouse, or
structure consisting of one to four single-family dwelling units one of which will be
occupied by the owner thereof as its principal residence, all of which are already
situated on or will be constructed on the Real Estate and are part of a Project
"Real Estate" - means the real property upon which Qualified Dwelling Units are
situated or are to be situated.
.
"SF Request for Proposals" - means that certain Minnesota Housing Finance
Agency Single Family Request for Proposals dated the 13th day of July, 2006 that the
Administrator responded to and under which Administrator requested a set-aside of
funds under the CRY Program.
CRY Program Fund Availability,
Disbursement and Loan/Grant Agreement
5
Yer 4/28/04
(CRY Fnd Avlblty, Dsbrsmnt & Ln/Grnt Agrmnt 04.04.28)
4A-~
"2% Construction Loan" - means a loan from the MHFA to Administrator
under the CRY Program for use by Administrator to provide construction financing .
in accordance with all of the applicable provisions relating thereto that are contained
in a CRY Application for Funds and in the CRY Procedural Guide, and which
Administrator is required to repay to the MHFA, with interest accruing thereon at a
rate of two percent (2%) per annum; upon the earliest to occur of certain specified
events or a specified date.
"2% Construction Loan Funds" - means funds supplied to an Administrator for
the making and funding of 2% Construction Loans.
"0% Construction Loan" - means a loan from the MHF A to Administrator
under the CRY Program for use by Administrator to provide construction financing
in accordance with all of the applicable provisions relating thereto that are contained
in a CRY Application for Funds and in the CRY Procedural Guide, and which
Administrator is required to repay to the MHF A, with no interest accruing thereon,
upon the earliest to occur of certain specified events or a specified date.
"0% Construction Loan Funds" - means funds supplied to an Administrator for
the making and funding of 0% Construction Loans.
Article II
RESERVATION AND USE OF FUNDS
.
Section 2.01 Reservation of Funds. The MHF A accepts the Administrator for
participation in the CRY Program in accordance with the provisions and conditions
contained in this Agreement, the CRY Procedural Guide, and the SF Request for
Proposals, and sets-aside and reserves for use by the Administrator the following funds
under the CRY Program:
TYPE OF FUNDS
Grant Funds
Deferred Loan Funds
o % Construction Loan Funds
2% Construction Loan Funds
TOTAL RESERVED AND
COMMITTED - CRY FUNDS
DOLLAR AMOUNT
$
$ 30,000
$
$
$ 30,000
The set-aside and reservation of funds listed in this Section 2.01 herein is dependent
and contingent on the MHF A receiving two (2) fully executed originals of this Agreement
no later than the 15th day of January 2007, and such set-aside and reservation shall not
take place if the MHFA does not receive such fully executed originals by such date.
.
CRY Program FunG Availability,
Disbursement and Loan/Grant Agreement
6
Ver 4/28/04
(CRV Fnd Avlblty. Dsbrsmnt & Ln/Gmt Agrmnt 04.04.28)
.
.
tf-ti}-q
Section 2.02 Term of Reservation. The time period for the set-aside and reservation
of the funds listed in Section 2.01 herein shall be as follows:
A. The Grant Funds delineated in Section 2.01 herein shall be available for
disbursement to and use by Administrator from the Effective Date up to and
including the Grant Funds Termination of. Availability Date. The set-aside and
reservation of Grant Funds for use by the Administrator shall terminate at the end of
such time period and any of such funds that have not been disbursed during such
time period shall no -longer be available for disbursement to or use by the
Administrator.
B. The Deferred Loan Funds delineated in Section 2.01 herein shall be
available for disbursement to and use by Administrator from the Effective Date up to
and including the Deferred Loan Funds Termination of Availability Date. The set-
aside and reservation of Deferred Loan Funds for use by the Administrator shall
terminate at the end of such time period and any of such funds that ha~e not been
disbursed during such time period shall no longer be available for disbursement to or
use by the Administrator.
C. The 0% Construction Loan Funds and 2% Construction Loan Funds
delineated in Section 2.01 herein shall be available for disbursement to the
. Administrator from the Effective Date up to and including the Construction Loan
Funds Termination of Availability Date. The set-aside and reservation of 0%
Construction Loan Funds and 2% Construction Loan Funds for use by the
Administrator shall terminate at the end of such time period and any of such funds
that have not been disbursed during such time period shall no longer be available for
disbursement to or use by the Administrator. .
Section 2.03 Use of CRY Funds - General. All CRY Funds must be used by the
Administrator, or be provided by the Administrator to Owner-Occupants, to fund (in
whole or in part) the (i) acquisition of fee ownership of or a long-term lease of the Real
Estate and the Qualified. Dwelling Units, (ii) acquisition of fee ownership of or a long-term
lease of the Real Estate and construction of Qualified Dwelling Units; or (iii) acquisition of
fee ownership of or a long-term lease of the Real Estate and the Qualified Dwelling Units
and rehabilitation of the Qualified Dwelling Units. In addition, such CRY funds must be
used in accordance with all other provisions contained in this Agreement and all
provisions contained in the CRY Procedural Guide.
Section 2.04 Use of CRY Funds - Specific. In addition to any other requirements
contained in this Agreement, all CRY Funds provided by the MHF A to Administrator as a
result of the MHFA's acceptance and approval of a CRY Application for Funds must be
used for those purposes specified in such SF Request for Proposals and in the CRY
Application for Funds submitted in conjunction therewith.
. Section 2.05 Documentation. The Administrator shall be solely responsible for the
CRY Program Fund Availability,
Disbursement and Loan/Grant Agreement
7
Yer 4/28/04
(CRY Fnd Avlblty, Dsbrsmnt & LnlGmt Agrmnt 04.04.28)
~A-/O
drafting of all documentation, other than the Deferred Loan Note and Deferred Loan
Mortgage, that is related to and necessary to use CRY Funds to fund Grants, Deferred
Loans, and Construction Loans and shall do so in a manner that will prohibit any activity .
that would constitute any event that would become a Project Event of Default if not cured
within the time period delineated in Section 9.01 herein.
Article III
GRANTS
Section 3.01 Use of Grant Funds. Grant Funds must be used by Administrators to
provide Grants that will be used only for those purposes that are specified in a CRY
Application for Funds and authorized and allowed under the CRY Procedural Guide, and
the Administrator /Processing Entity must create procedures to insure that such funds are
so used.
Section 3.02 Repayment of Grant Funds. Grant Funds disbursed to an
Administrator shall be repaid to the MHF A in accordance with the provisions contained in
Section 7.02 herein.
Article IV
CONSTRUCTION LOANS
Section 4.01 Use of Construction Loan Funds. Construction Loan Funds must be
used by Administrators to provide Construction Loans that will be used only for those .
purposes that are specified in a CRY Application for Funds and authorized and allowed
under the CRY Procedural Guide, and the Administrator/Processing Entity must create
procedures to insure that such funds are so used.
Section 4.02 Collateralization of Construction Loans. Construction Loans shall be
unsecured loans from the MHFA to Administrator.
Section 4.03 Liquidation of Projects Receiving Construction Loans. Administrator
shall sell its entire interest in all Projects that were funded by Construction Loans on or
before the earlier to occur of the date specified for repayment of the Construction Loans in
a CRV Application for Funds or the Construction Loans Repayment Date. Such sale must
beat a price that will produce net proceeds in an amount equal to or greater than the
amount of the Construction Loans that went into the Project being sold and the proceeds
of such sale shall be held and dedicated to the repayment of the Construction Loans that
funded such Project.
Section 4.04 Repayment of Construction Loan Funds. Construction Loan Funds
disbursed to an Administrator shall be repaid to the MHF A in accordance with the
provisions contained in Section 7.03 herein.
.
CRY Program Fund Availability,
Disbursement and Loan/Grant Agreement
8
Yer 4/28/04
(CRY Fnd Avlblty, Dsbrsmnt & Ln/Grnt Agrmnt 04.04.28)
.
.
.
4fJ-rI
Article V
DEFERRED LOANS
Section 5.01 Use of Deferred Loan Funds. Deferred Loan Funds must be used by
Administrators to provide Deferred Loans that will be used only for those purposes that
are specified in a CRY Application for Funds and authorized and allowed under the CRY
Procedural Guide, and the Administrator/Processing Entity must create procedures to
insure that such funds are so used. Deferred Loan Funds must be provided only on an as
needed basis and the need basis for each Owner-Occupant that receives a Deferred Loan
must be documented and retained in the books and records of the
Administrator /Processing Entity.
Sect~on 5.02 Documentation and.ColIateralization of Deferred Loans. All Deferred
Loans shall be evidenced by a Deferred Loan Note made payable to Administrator and the
repayment of all Deferred Loans shall be collateralized by way of a Deferred Loan
Mortgage showing the Ad:ritinistrator as the mortgagee thereunder.
Section 5.03 Deferred Loan Closings. The Administrator /Processing Entity shall be
responsible for and shall either handle the closing of or retain a title company to handle
the closing of all Deferred Loans. The closing of each Deferred Loan shall be done in
accordance with normal procedures used by ordinary and prudent lenders for the closing
of similar loans and all applicable provisions contained in this Agreement and in the CRY
Procedural Guide.
Section 5.04 Transfer, Assignment and Enforcement of Deferred Loans. Within a
reasonable period of time after the closing of a Deferred Loan, Administrator shall assign
and transfer such loan to the MHFA by endorsing the Deferred Loan Note to the MHFA
and assigning the Deferred Loan Mortgage to the MHF A. Administrator shall record the
Deferred Loan Mortgage and assignment thereof and promptly deliver the endorsed
Deferred Loan Note and recorded Deferred Loan Mortgage and assignment thereof to the
MHF A, and the assignment and transfer of a Deferred Loan to the MHF A shall be deemed
to have not been completed until Administrator has fully complied with this requirement.
For all time periods prior to Administrator's completion of the assignment and transfer of
a Deferred Loan to the MHF A, Administrator shall fully and promptly service and enforce
the provisions of each such Deferred Loan. Administrator's responsibility for servicing
and enforcing the provisions of each such Deferred Loan shall cease upon its assignment
and transfer of such Deferred Loan to the MHF A in accordance with the provisions of this
Agreement.
Section 5.05 Repayment of Deferred Loan Funds. Deferred Loan Funds disbursed
to an Administrator shall be repaid to the MHFA in accordance with the provisions
contained in Section 7.04 herein.
CRY Program Fund Availability,
Disbursement and Loan/Grant Agreement
9
Yer 4/28/04
(CRY Fnd Avlblty. Dsbrsmnt & Ln/Gmt Agrmnt 04.04.28)
'-f A-It1
Arti de VI
DISBURSEMENT AND USE OF CRV FUNDS
Section 6.01 CRV Funds. Upon receipt of a CRY Request for Funds that has been
processed and approved by Administrator in ~ccordance with the provisions contained in
this Agreement and the CRY Procedural Guide, the MHFA shall disburse and transmit the
amount of monies requested therein to the Administrator/Processing Entity for use in
accordance with all applicable provisions contained in this Agreement and in the CRY
Procedural Guide. The disbursement of any of such funds by the MHF A to the Processing
Entity shall be deemed to be the disbursement of such proceeds to the Administrator for
the purpose' of this Agreement including but not limited to the calculation of interest, if
any, due and payable on such funds.
Upon receipt ,of such funds the Administrator/Processing Entity shall establish an
escrow account and promptly deposit such funds therein pending the use thereof in
accordance with all applicable provisions and requirements contained in this Agreement
and in the CRY Procedural Guide. The interest earned on such funds while held in such
escrow account may be retained by either the Processing Entity or the Administrator, or
both, as such entities may mutually agree. The Administrator/Processing Entity shall
maintain a detailed accounting of all of such escrow accounts and upon request by the
MHFA provide a copy of such accounting to the MHFA. The Administrator /Processing
Entity may commingle any and all funds it is holding in escrow under this Agreement!
provided that it maintains a separate ledger entry for the funds received under each
separate CRY Request for Funds. The records to be maintained hereunder by the
Administrator /Processing Entity must provide a complete account history of all of the
furids received under each and every CRY Request for Funds that ShOWSi (i) the date on
which the funds were received! (ii) the date on which each use and disbursement of such
funds was made by the Administrator /Processing Entity! (iii) the amount of each such use
and disbursement! (iv) the entity to whom each such disbursement was made! and (v) if
such disbursement was made to fund a Deferred Loan, the date such loan was closed.
Section 6.02 Monitoring of Work. Upon receipt of CRY Funds from the MHFA! the
Administrator /Processing Entity shall disburse the funds so received and monitor the
work for which such funds were disbursed all in accordance with the provisions and
requirements contained in this Agreement and in the CRY Procedural Guide.
Section 6.03 Fees and Expenses. If there is a Processing Entity! then the Processing
Entity and the Administrator may negotiate the fees! if any, that the Administrator will
pay to the Processing Entity for the Processing Entity's performance of the duties imposed
thereon by this Agreement or by the CRY Procedural Guide, and the Administrator shall
be solely responsible for any and all of such fees to be paid to the Processing Entity.
.
.
The Administrator agrees to pay all inspection fees! appraisal fees, survey fees!
recording fees! license and permit fees! and title insurance and other insurance premiums .
that it incurs in connection with the transactions contemplated by this Agreement.
CRY Program Fund Availability.
Disbursement and Loan/Grant Agreement
10
Ver 4/28/04
(CRV Fnd Avlblty. Dsbrsmnt & LnlGmt Agrmnt 04,04.28)
'-111-/3
.
Administrator further agrees to reimburse the MHFA and/ or the Processing Entity, upon
demand therefrom, for all reaso;nable out-of-pocket expenses actually incurred by either
the MHFA or the Processing Entity in connection with this Agreement or in connection
with the transactions contemplated by this Agreement, including, but not limited to, any
and all reasonable legal expenses and attorneys' fees sustained by either the MHFA
and/ or the Processing Entity in the exercise of any right or remedy available to' it under
this Agreement or otherwise by law or equity.
Under no circumstance shall the MHF A be responsible for the payment of any fee to
either the Processing Entity or the Administrator or for any expense incurred by either the
Processing Entity or the Administrator in their compliance with the provisions contained
in this Agreement or the CRY Procedural Guide; provided, however, this does not
preclude the Ad~nistrator from using CRY Funds to pay such fees and expenses if the
CRY Program, the CRY Procedural Guide and a CRY Application for Funds specifically
authorize such use.
Article VII
REPAYMENT OF CRV FUNDS
Section 7.01 General Requirement. The Administrator shall be required to repay the'
CRY Funds to the MHFA in accordance with the terms and provisions contained in this
Article VII. The provisions contained in this Article VII shall not preclude or prevent the
MHFA from asserting any of the remedies' delineated in Article IX herein or from
collecting any amounts that may result from the enforcement of any of such remedies.
.
Section 7.02 Repayment of Grant Funds. Administrator is required to repay in full,
without interest, those CRY Funds that were disbursed by the MHFA to the Administrator
as Grant Funds upon (i) Administrator's failure to use and disburse the Grant Funds for
those purposes relating to the use of Grant Funds that are stated in this Agreement, the SF
Request for Proposals, the corresponding CRY Application for Funds, or the CRY
Procedural Guide, or (ii) the occurrence of a Project Event of Default for those Projects that
received any of the Grant Funds. Grant Funds need not be repaid if none of such events
occurs.
Any amounts that are to be repaid under this Section 7.02 shall be immediately due
and payable in one lump sum payment without the need or requirement of presentment
or other demand, protest, notice of dishonor or any other notice of any kind, all of which
are hereby expressly waived.
Section 7.03 Repayment of Construction Loan Funds. Administrator shall be
required to repay in full, without any interest due thereon for 0% Construction Loans and
with interest thereon at an interest rate of tWo percent (2%) per annum for 2%
Construction Loans, those CRY Funds that were disbursed by the MHF A to the
Administrator as Construction Loan Funds on the earlier to occur of the date specified for
repayment in a CRY Application for Funds or the Construction Loan Repayment Date.
.
CRY Program Fund Availability,
Disbursement and Loan/Grant Agreement
11
Yer 4/28/04
(CRY Fnd Avlblty, Dsbrsmnt & Ln/Grnl Agrmnt 04.04.28)
4fi-/~
Provided, however, if Administrator has fully complied with the requirements contained
in Section 4.03 herein, then for this repayment requirement the amount of such repayment
is limited to those funds that Administrator collects from the sale of Projects in accordance .
with Section 4.03 herein.
In addition to the above repayment requirement Administrator shall be required to
repay in full, without any interest due thereon for 0% Construction Loans and with
interest thereon at an interest rate of two percent (2%) per annum for 2% Construction
Loans, that portion of the CRV Funds that were disbursed by the MHFA to the
Administrator as Construction Loan Funds and which Administrator failed to use for
those purposes relating to the use of Construction Loan Funds that are stated in this
Agreement, the SF Request for Proposals, the corresponding CRV Application for Funds,
or the CRV Procedural Guide, and that portion of the CRV Funds that were disbursed by
the MHF A to the Administrator as Construction Loan Funds for any Project for which a
Project Event of Default exists.
Any amounts that are to be repaid under this Section 7.03 shall be immediately due
and payable in one lump sum payment without the need or requirement of presentment
or other demand, protest, notice of dishonor or any other notice of any kind, all of which
are hereby expressly waived.
Section 7.04 Repayment of Deferred Loan Funds. Administrator shall be required
to repay in full those CRV Funds that were disbursed by the MHF A to the Administrator .
as Deferred Loan Funds and used to fund Deferred Lo~ms that Administrator is still the
owner of and has not assigned and transferred to the MHFA when such loans become due
and payable; provided, however, for this repayment requirement the amount of such
repayment is limited to those funds that Administrator collects from the Owner-Occupant
on such Deferred Loan.
In addition to the above repayment requirement Administrator shall be required to
repay in full, without interest, that portion of the CRV Funds that were disbursed by the
MHFA to the Administrator as Deferred Loan Funds and which Administrator failed to
use for those purposes relating to the use of Deferred Loan Funds that are stated in this
Agreement, the SF Request for Proposals, the corresponding CRV Application for Funds,
or the CRV Procedural Guide, and that portion of the CRV Funds that were disbursed by
the MHF A to the Administrator as Deferred Loan Funds for any Project for which a
Project Event of Default exists.
Any amounts that are to be repaid under this Section 7.04 shall be immediately due
and payable, without any interest due thereon, in one lump sum payment without the
need or requirement of presentment or other demand, protest, notice of dishonor or any
other notice of any kind, all of which are hereby expressly waived.
.
CRV Program Fund Availability,
Disbursement and Loan/Grant Agreement
12
Ver 4/28/04
(CRV Fnd Avlblty, Dsbrsmnt & Ln/Grnt Agrmnt 04.04.28)
'-IA-/~
Article VIII
REPRESENTATIONS AND WARRANTIES
.
Section 8.01 . Administrator's Representations and Warranties. The Administrator
makes the following representations and warranties:
A. It is an entity duly formed under the laws of the State of Minnesota.
B. It qualifies as a borrower under the CRY Program and the CRY Procedural
Guide.
C. The ex~cution of this Agreement is within the powers of its officers and
does not violate any provision of law or of the documents under which it is formed.
D. This Agreement creates and is a legal, valid and binding obligation of the
Administrator, enforceable against it in accordance with the provisions, terms,
conditions, representations, warranties and covenants contained herein.
.
E. It will promptly comply with all of the duties and requirements imposed
upon it by this Agreement, the SF Request for Proposals, the CRY Program, and the
CRY Procedural Guide, and with respect to such duties and requirements shall
perform them in full and complete accordance with all federal, state, and local laws,
statutes, ordinances, rules and regulations.
F. It will use and disburse the CRY Funds solely for those purposes stated in
the SF Request for Proposals and CRY Application for Funds and for the specific
Projects that are the subject of such application, and will not use or disburse such
CRY Funds for any purpose. or project or in any manner that is inconsistent with the
provisions contained in such request, application, this Agreement, or the CRY
Procedural Guide.
G. It will obtain or prepare and will maintain in its files a CRY Application for
Funds for each Project for which it uses CRY Funds.
H. It will not provide or disburse, or authorize the disbursement of, any CRY
Funds for a Project under the following circumstances:
(1). If the Project Owner does not have good and marketable fee simple
title to or a long-term "mortgageable" lease for the Real Estate portion thereof.
.
(2) If the Project is subject to a mortgage, lien or other encumbrance
unless such mortgage, lien or other encumbrance would be acceptable to
ordinary and prudent lenders and participants in the secondary mortgage
markets who make loans andlor grants for similar projects.
CRY Program Fund Availability,
Disbursement and Loan/Grant Agreement
13
Yer 4/28/04
(CRY Fnd Avlblty, Dsbrsmnl & Ln/Grnl Agrmnl 04.04.28)
LfA-/ {p
(3) If the Project is subject to a mortgage, lien or other encumbrance to
which the Project Owner consented by entering into an agreement relating
thereto without first obtaining the written consent of the holder of such .
mortgage, line or encumbrance and all insurers or guarantors thereof.
1. It will obtain a survey for all Projects and will not provide or disburse, or
authorize the disbursement of, any CRY Funds for any Project for which the survey
shows that any Qualified Dwelling Unit that is part of the Project; (i) is not situated
entirely on the Real Estate relating thereto, or (ii) encroaches upon or overhangs any
easement or right-of-way not constituting part of such Real Estate or upon any
unvacated street or upon any adjoining property to an extent that would not be
acceptable to ordinary and prudent lenders and participants in the secondary
mortgage markets that provide funding for projects that are similar to such Project.
J. It will require any additional funds, over and above the proceeds of the
CRY Funds, which may be required' to complete a Project to be supplied by the
Project Owner.
K. It will, if applicable, establish and administer the escrow account referred
to in Section 6.01 herein in accordance with the provisions and requirements
contained in such section.
L. It will not submit a CRY Request Jor Funds to the MHF A for any CRY
Application for Funds or Project that is the subject thereof that does not (i) meet all of .
the requirements contained in this Agreement, the SF Request for Proposals, and the
CRY Procedural Guide for the use of the type of funds requested, and (ii) meet
standard underwriting requirements, if any, imposed by ordinary and prudent
lenders and participants in the secondary mortgage markets for the specific type of
loan or grant being requested and project being funded.
M. It will, if there is no Processing Entity, be responsible for the closing of
individual Deferred Loans in accordance with the provisions and requirements
contained in this Agreement, in the CRY Procedural Guide, and in accordance with
the closing procedures used by ordinary and prudent lenders that normally make
loans for projects similar to the Project for' which the proceeds of the Deferred Loan
will be used.
N. It will, if there is no Processing Entity, control the disbursement of the
proceeds of Deferred Loans and monitor the construction or rehabilitation of the
Qualified Dwelling Units in accordance with the 'provisions and requirements
contained in this Agreement, in the CRY Procedural Guide, and in accordance with
the disbursement procedures used by ordinary and prudent lenders that normally
disburse funds for projects similar to the Project for which the proceeds of the
Deferred Loan will be used.
.
CRY Program Fund Availability,
Disbursement and Loan/Grant Agreement
14
Yer 4/28/04
(CRY Fnd Avlblty, Dsbrsrnnt & Ln/Grnt Agrmnt 04.04.28)
.
'-lA-I 1
o. It shall, upon the occurrence of each event that with the passage of time
could become either an Administrator Event of Default and/or a Project Event of
Default furnish to the MHFA and the Processing .Entity a statement setting forth
details of such event and the action, if any, that will be taken to cure such eV,ent or
events of default, and such statement shall be furnished as soon as possible and in
any event within seven (7) days after the Administrator has obtained knowledge of
such event.
P. It will furnish stich satisfactory evidence with respect to the
representations and warranties contained in this Section 8.01 as may be required and
requested, from time to time, by the MHFA or the Processing Entity, if there is a
Processing Entity.
Section 8.02 Processing Entity's Representations and Warranties. The Processing
Entity, if one exists, represents and warrants as follows:
A. It is an entity duly formed under the laws of the State of Minnesota.
B. It currently is a participating lender or administrator under one or more of
the MHF A programs other than the CRY Program.
.
C. The execution of this Agreement is within the powers of its officers and
does not violate any provision of law or of the documents under which it is created.
D. This Agreement creates and is a legal, valid and binding obligation of the
Processing Entity, enforceable against it in accordance with the provisions, terms,
conditions, representations, warranties and covenants contained herein.
E. It will, if applicable, establish and administer the escrow account referred
to in Section 6.01 herein in accordance with the provisions and requirements
contained in such section.
F. It will be responsible for the closing of individual Deferred J;..oans in
accordance with the provisions and requirements contained in this Agreement, in the
CRY Procedural Guide, and in accordance with the closing procedures used by
ordinary and prudent lenders that normally make loans for projects similar to the
Project for which the proceeds of the Deferred Loan will be used.
.
G. It will control the disbursement of the proceeds of Deferred Loans and
monitor the construction or rehabilitation of the Qualified Dwelling Units in
accordance with the provisions and requirements contained in this Agreement, in the
CRY Procedural Guide, and in accordance with the disbursement procedures used by
ordinary and prudent lenders that normally disburse funds for projects similar to the
Project for which the proceeds of the Deferred Loan will be used.
CRY Program Fund Availability,
Disbursement and Loan/Grant Agreement
15
Yer 4/28/04
(CRY Fnd Avlblty, Dsbrsmnt & Ln/Gmt Agrrnnt. 04.04.28)
l/-A-11
H. It will promptly comply with all of the duties and requirements imposed
upon it by this Agreement, the SF Request for Proposals, the CRY Program, and the
CRY Procedural Guide, and with respect to such duties and requirements shall .
perform them in full and complete accordance with all federal, state, and local laws,
statutes, ordinances, rules and regulations.
1. It will furnish such satisfactory evidence with respect to the
representations and warranties contained in this Section 8.02 as may be required,
from time to time and as requested, by the MHFA.
Article IX
EVENTS OF DEFAULT AND RIGHTS AND REMEDIES
Section 9.01 Project Events of Default. The occurrence of any of the following
events during the time period that CRY Funds have been supplied to a Project and have
not been repaid shall constitute a Project Event of Default for the Project or Projects that
are the subject of such event upon the MHF A or the Processing Entity giving the
Administrator thirty (30) days written notice thereof and the event that causes such
default not being cured within such time period.
A. Any of the Qualified Dwelling Units that are part of a Project are not
completed in strict accordance with (i) this Agreement, (ii) the SF Request for
Proposals, (iii) the CRY Procedural Guide, (iv) the corresponding c;RV Application .
for Funds therefore, and (v) all applicable federal, state and local laws, rules,
regulations,and ordinances, and covenants of record which bear on the construction
or rehabilitation of such Qualified Dwelling Units, which shall include but not be
limited to any and all zoning or use ordinance or building code.
B. Any of the Qualified Dwelling Units that are part of a Project are used and
operated in a manner that is contrary to (i) this Agreement, (ii) the SF Request for
Proposals, (iii) the CRY Procedural Guide, (iv) the corresponding CRY Application
for Funds therefore, or (v) any applicable federal, state and local laws, rules,
regulations and ordinances, and covenants of record that bear on the operation of
such Qualified Dwelling Units, which shall include but not be limited to any and all
zoning or use ordinance, or building code.
C. The Project Owner fails to provide, maintain and keep current, or fails to
cause the contractor or contractors who perform any work for such Projects to
provide, maintain and keep current during the process of construction or
rehabilitation thereof, the following insurance on the Qualified Dwelling Units that
are part of such Project:.
(1) Fire and extended coverage in an amount equal to the full insurable
value of such Qualified Dwelling Units along with an overlap endorsement or
rider covering the risk of any rehabilitation work in an amount equal to at least
.
CRY Program Fund Availability.
Disbursement and Loan/Grant Agreement
16
Yer 4/28/04
(CRY Fnd Avlblty, Dsbrsmnt & Ln/Grnt Agrmnt 04.04.28)
411-1 9
the amount of the CRY Funds to be used in the Project;
.
(2) Comprehensive general liability insurance for the Project that
includes the MHFA, the Administrator, and the Processing Entity as named
insureds, (including operations, contingent liability, operations of
subcontractors, completed operations and contractual liability insurance) with
limits against bodily injury of not less than $1,000,000 and against property
damage of not less than $250,000 (to accomplish the above-required limits, an
umbrella excess liability policy may be used); and
\ I .
(3) Worker's compensation insurance, with statutory coverage.
.
The policies of insurance required pursuant to clauses (i), (ii) and (iii) above
shall be in form and content satisfactory to ordinary and prudent lenders and
participants in the secondary mortgage markets who make real estate loans and shall
be placed with financially sound and reputable insurers licensed to transact business
in the State of Minnesota. The policies of insurance delivered pursuant to clauses (i)
and (ii) above shall contain an agreement of the insurer to give not less than ten (10)
days advance written notice to the MHFA and the Processing Entity in the event of
cancellation of such policy or change affecting the coverage thereunder. Acceptance
of insurance policies delivered pursuant to clauses (i) and (ii) above shall not bar the
MHF A or the Processing Entity from requiring additional insurance that either entity
may reasonably deem necessary.
D. The Project Owner fails to pay, or cause to be paid, any taxes or
assessments levied or assessed against a Project, or any part thereof, prior to the date,
on which penalties attach thereto; provided, however, that such owner may pay, or
cause to be paid, assessments in installments so long as no fine or penalty is added to
any installment for the nonpayment thereof. .
E. Execution shall have been levied against a Project, or any part thereof, or
any lien creditor's suit to enforce a judgment against a Project, or any part thereof,
shall have been brought, and (in either case) shall continue unstayed and in effect for
a period of more than ten (10) days.
F. The construction or rehabilitation of Qualified Dwelling Units is
abandoned. or shall be unreasonably delayed or be discontinued for a period of
twenty (20) days, in each instance for reasons other than acts of God, fire, storm,
strikes, blackouts, labor difficulties, riots, inability to obtain materials, equipment or
labor, governmental restrictions, or any similar cause over which the Project Owner
is unable to exercise control.
.
G. Upon completion of Qualified Dwelling Units, the Project Owner fails to
obtain a certificate of occupancy, or equivalent document, therefore from the
municipality in which the Qualified Dwelling Units are situated.
CRY Program Fund Availability,
Disbursement and Loan/Grant Agreement
17
Yer 4/28/04
(CRY Fnd Avlblty, Dsbrsmnt & LnlGmt Agrmnt 04.04.28)
'-IfI-JO
H. A Project Owner refuses to allow or permit the MHF A or the Processing
Entity, acting by and through their officers, employees and agents, to examine all .
books, recQrds, contracts, plans, drawings, permits, bills and statements of account
pertaining to such Project and to make extracts therefrom and copies thereof.
Section 9.02 Administrator Events of Default. The occurrence of any of the
following events shall constitute an event of .default by Administrator under this
Agreement upon the MHF A or the Processing Entity giving the Administrator thirty (30)
days written notice thereof and the Administrator's failure to cure such default within
such time period.
A. Administrator's failure to repay to the MHFA any CRY Funds that become
due and owing hereunder or any interest that may be due thereon, or failure to pay
any other amounts due and payable under any other document related to such CRY
Funds.
B. Administrator's failure to duly observe, perform and comply with any
term, condition, covenant, representation, or agreement contained in or imposed by
any document related to specific CRY Funds.
C. Administrator's failure to establish and administer, or cause the Processing
Entity to establish and administer, the escrow accOlmt refen~ed to in Section 6.01 .
herein in accordance with the provisions and requirements contained in such section.
D. Administrator's failure to close, or cause the Processing Entity or some
other entity under its direction and control to close, individual Deferred Loans in
accordance with the provisions and requirements contained in this Agreement and in
the CRY Procedural Guide.
E. Administrator's failure to use and disburse the CRY Funds for those
purposes stated in the SF Request for Proposals or a CRY Application for Funds, or
in a manner that is inconsistent with the provisions contained in such request or
package, this Agreement, or the CRY Procedural Guide.
F. Administrator's use or disbursement of CRY Funds for purposes or in a
manner that is inconsistent with the provisions contained in the SF Request for
Proposals, a CRY Application for Funds, this Agreement, or the CRY Procedural
Guide.
G. Administrator shall make an assignment for the benefit of its creditors, or
shall be dissolved, or shall commit an act of bankruptcy under the United States
Bankruptcy Act (as now or hereafter amended), or shall admit in writing its inability
to pay its debts as they become due, or shall file a petition iIl bankruptcy, or shall
become or be adjudicated a bankrupt or insolvent, however defined, or shall file a
.
CRY Program Fund Availability,
. Disbursement and Loan/Grant Agreement
18
Ver 4/28/04
. (CRV Fnd Avlblty, Dsbrsmnt & Ln/Grnt Agrmnt 04.04.28)
.
y. A-~J
petition seeking any reorganization, dissolution, liquidation, arrangement,
composition, readjustment or similar relief under any present or future bankruptcy
or insolvency statute, law or regulation or shall file an ansWer admitting to or not
contesting the material allegations of a petition filed against it in such proceedings, or
shall not, within thirty (30). days after the filing of such a petition against it, have the
same dismissed or vacated, or shall seek or consent to or acquiesce in the
appointment of any trustee, receiver or liquidator of a material part of its properties,
or shall not, within thirty (30) days after the appointment (without its consent or
acquiescence) of a trustee, receiver or liquidator of any material part of its properties,
have such appointment vacated.
H. Any representation or warranty made by the Administrator herein, in any
CRY Application for Funds, in any CRY Request for Funds, or in any financial
statement, certificate, report or draw requisition furnished pursuant to this
Agreement, or in order to induce the MHF A or the Processing Entity to disburse any
CRY Funds shall prove to have been untrue in any material respect or materially
misleading as of the time such representation or warranty was made.
1. Administrator's failure to fully and completely comply with any
representation, warranty, or covenant made by it herein, or any provision and/or
requirement imposed on it by this Agreement, the SF Request for Proposals, the CRY
Program, or the CRY Procedural Guide.
.
Section 9.03 Processing Entity Events of Default. If there is a Processing Entity,
then any of the following shall constitute an event of default by the Processing Entity
under this Agreement upon either the MHF A or the Administrator giving the Processing
Entity thirty (30) days written notice thereof and the Processing Entity's failure to cure
such item during such time period.
A. Processing Entity's failure to establish and administer the escrow account
referred to in Section 6.01 herein in accordance with the provisions and requirements
contained in such section.
B. Processing Entity's failure to close, or have some entity under its direction
and control close, individual Deferred Loans in accordance with the provisions and
requirements contained in this Agreement and in the CRY Procedural Guide.
C. Processing Entity's failure to use and disburse the proceeds of Deferred
Loans and monitor the construction or rehabilitation of Qualified Dwelling Units in
accordance with the provisions and requirements contained in this Agreement and in
the CRY Procedural Guide.
.
D. Processing Entity's use or disbursement of the proceeds of Deferred Loans
in violation of any provision or requirement contained in this Agreement, in the CRY
Procedural Guide, or in any document related to a Deferred Loan.
CRY Program Fund Availability,
Disbursement and Loan/Grant Agreement
19
Ver 4/28/04
(CRV Fnd Avlblty, Dsbrsmnt & I.J1lGmt Agrmnt 04.04.28)
Lff) -da
E. Processing Entity shall make an assignment for the benefit of its creditors,
or shall be dissolved, or shall commit an act of bankruptcy under the United States
Bankruptcy Act (as now or hereafter amended), or shall admit in writing its inability
to pay its debts as they become due, or shall file a petition in bankruptcy, or shall
become or be adjudicated a bankrupt or insolvent, however defined, or shall file a
petition seeking any reorganization, dissolution, liquidation, arrangement,
composition, readjustment or similar relief under any present or future bankruptcy
or insolvency statute, law or regulation, or shall file an answer admitting to or not
contesting the material allegations of a petition filed against it in such proceedings, or
shall not, within thirty (30) days after the filing of such a petition against it, have the
same dismissed or vacated, or shall seek or consent to or acquiesce in the
appointment of any trustee, receiver or liquidator of a material part of its properties,
or shall not, within thirty (30) days after the appointment (without its consent or
acquiescence) of a trustee, receiver or liquidator of any material part of its properties,
have such appointment vacated.
F. Any representation or warranty made by the Processing Entity herein, in
anyCRV Application for Funds, in any CRY Request for Funds, or in any financial
statement, certificate, report or draw requisition furnished pursuant to this
Agreement, or in order to induce theMHFA or the Administrator to transfer or
disburse any CRY Funds shall prove to have been untrue in any material respect or
materially misleading as of the time such representation or warranty was made.
G. Processing Entity's failure to fully and completely comply with any
representation, warranty, or covenant made by it herein, or any provision and/or
requirement imposed on it by this Agreement, the CRY Program or the CRY
Procedural Guide.
Section 9.04 MHFA Events of Default. Any of the following shall constitute an
event of default by the MHFA under this Agreement upon the either the Administrator or
the Processing Entity giving the MHF A thirty (30) days written notice thereof and the
MHFA's failure to cure such item during such time period.
A. MHFA's failure to timely transfer any of the CRY Funds to the
Administrator /Processing Entity for use and disbursement in accordance with this
Agreement, the CRY Program or the CRY Procedural Guide.
B. MHF A's failure to fully and completely comply with any and all
representations, warranties, or covenants made by it herein, or provisions and/ or
requirements imposed on it by this Agreement, the CRY Program or the CRY
Procedural Guide.
Section 9.05 MHFA's Rights and Remedies. The MHFA has the following rights
and remedies upon the occurrence of a Project Event of Default, Administrator Event of
CRY Program Fund Availability,
Disbursement and Loan/Grant Agreement
20
Yer 4/28/04
(CRY Fnt! AvJblty. Dsbrsmnt & Ln/Grnt Agrmnt 04.04.28)
.
.
.
LfA-;).3
Default or Processing Entity Event of Default.
.
A. Upon the occurrence of a Project Event of ,. Default, and at any time
thereafter until such event of default is cured to the satisfaction of the MHF A, the
MHFA may, at its sole option and discretion:
(1) Refrain from disbursing any additional CRY Funds for the Project
that is the cause of the Project Event of Default; provided, however, the MHFA
may continue to disburse the CRY Funds for such Project without thereby
waiving its rights and remedies hereunder. '
(2) Direct the Administrator /Processing Entity to refrain from disbursing
any additional CRY Funds for the Project that is the cause of the Project Event of
Default; provided, however, the MHFA may allow the
Administrator /Processing ,Entity to continue to disburse CRY Funds for such
Project without thereby waiving its rights and remedies hereunder.
(3) Require and direct the Administrator !Processing Entity to return to
the MHFA any remaining CRY Funds that it is holding for the Project that is the
cause of the Project Event of Default. '
.
(4) Require the Grant Funds, Construction Loan Funds and/or the
Deferred Loan Funds that were supplied to the Project that is the cause of thE!
Project Event of Default be repaid in accordance with the provisions contained
in Sections 3.02, 4.04 and 5.05 herein respectively.
B. Upon the occurrence of an Administrator Event of Default, and at any time
thereafter until such event of default is cured to the satisfaction of the MHF A, the
MHFA may, at its sole option and discretion:
(1) Refrain from disbursing any additional CRY Funds, provided,
however, the MHFA may continu~ to disburse the CRY Funds without thereby
waiving its rights and remedies hereunder.
(2) Direct the Administrator and the Processing Entity to refrain from
disbursing any additional CRY Funds, provided, however, the MHFA may
allow the Administrator and Processing Entity to continue to disburse CRY
Funds without thereby waiving its rights and remedies hereunder.
(3) Require and direct the Administrator and the Processing Entity to
return to the MHF A any remaining CRY Funds that they are holding and are
not subject to a written contract that requires such funds to be disbursed by the
Administrator or Processing Entity to some other entity.
.
(4) Terminate this Agreement.
CRY Program Fund Availability.
Disbursement and Loan/Grant Agreement
21
Yer 4/28/04
(CRY Fnd Avlblty, Dsbrsmnt & Ln/Grnt Agrmnt 04.04.28)
,
C. Upon the occurrence of a Processing Entity Event of Default, and at any
time thereafter until such event of default is cured to the satisfaction of the MHF A, .
the MHFA may, at its sole option and discretion:
lff}-~ ~
(1) Stop transmitting, or authorizing the transmittal of, CRY Funds to the
Processing Entity for disbursement.
(2) Direct the Processing Entity to refrain from disbursing any additional
CRY Funds, provided, however, the MHFA may allow the Processing Entity to
continue to disburse CRY Funds without thereby waiving its rights and
remedies hereunder.
(3) Require and direct the Processing Entity to return to the MHFA any
remaining CRY Funds that it is holding and are not subject to a written contract
that requires such funds to be disbursed by Processing Entity to some other
entity.
(4) Terminate this Agreement with respect to the Processing Entity.
Section 9.06 Administrator's Rights and Remedies. Upon the occurrence of a
Project Event of Default, Processing Entity Event of Default, or MHFA Event of Default,
and at any time thereafter until such event of default is cured to the satisfaction of the
Administrator, the Administrator may, at its sole option and discretion, exercise any and
all of the following rights and remedies.
.
A. Refrain, after providing written notice to the MHF A, from disbursing any
additional CRY Funds; provided, however, the Administrator may continue to
disburse the CRVFunds without thereby waiving its rights and remedies hereunder.
B. Terminate its involvement in this Agreement; provided, however, this
Agreement shall continue. to remain in full force and effect between the Processing
Entity and the MHF A.
Section 9.07 Processing Entity's Rights and Remedies. This Section shall only apply
if there is Processing Entity. Upon the occurrence of a Project Event of Default,
Administrator Event of Default, or MHFA Event of Default, and at any time thereafter
until such event of default is cured to the satisfaction of the Processing Entity, the
Processing Entity may, at its sole option and discretion, exercise any and all of the
following rights and.remedies.
A. Refrain, after providing written notice to the MHF A, from disbursing any
additional CRY Funds; provided, however, the Processing Entity may continue to
disburse the CRY Funds without thereby waiving its rights and remedies hereunder. .
CRY Program Fund Availability,
Disbursement and Loan/Grant Agreement
22
Yer 4/28/04
(CRY Fnd Avlblty, Dsbrsmnt & Ln/Gmt Agrmnt 04.04.28)
.
LJA-d-~
B. Terminate its involvement in this Agreement; provided, however, this
Agreement shall continue to remain in full force and effect between the
Administrator and the MHFA.
Section 9.08 General Rights and Remedies. In addition to the rights and remedies
specifically delineated herein, upon the occurrence of a Project Event of Default,
Administrator Event of Default, Processing Entity Event of Default, or MHF A Event of
Default, the parties hereto that are effected by such event of default may exert any
additional rights or remedies they may have under law or equity.
Section 9.09 Remedies Cumulative. The rights and remedies specified in this Article
IX are cumulative and not exclusive of any rights or remedies which any party hereof
would otherwise have.
Article X
MISCELLANEOUS
.
Section 10.01 Inspections. The Administrator/Processing Entity and its architect or
inspecting engineer, if any, shall be responsible for making inspections of the Qualified
Dwelling Units during the course of construction or rehabilitation in order to determine
and establish that the work done or materials supplied by any contractor has been
properly done or supplied in accordance with the applicable contracts therefore. If any
work done or materials supplied by a contractor are not satisfactory to the
Adininistrator /Processing Entity and! or its architect, if any, or if a contractor does not
comply with. the applicable contracts for the performance of such construction or
rehabilitation in any respect, then the Administrator /Processing Entity shall immediately
notify, in writing, the MHFA of such fact.
It is expressly understood and agreed that the inspections referred to in this Section
10.Glare in addition to any inspections required under the CRY Procedural Guide, and
that the MHF A, the Administrator/Processing Entity and its architect or inspecting
engineer, if any, may conduct such inspections of a Project as they may deem necessary
and that any inspections which may be made of a Project by the MHFA, the
Administrator /Processing Entity or its architect or inspecting engineer are made, and all
certificates issued thereby will be issued, solely for the benefit. and protection of the
MHFA and no other entity may rely thereon.
.
Section 10.02 Indemnification by Administrator and Processing Entity. The
Administrator and the Processing Entity shall, unless prohibited by law, bear all loss,
expense (including attorneys' fees) and damage in connection with and agree to indemnify
and hold harmless the MHF A, its agents and employees, from all claims; demands and
judgments made or recovered against the MHF A, its officers, agents and employees,
because of bodily injuries, including death at any time resulting therefrom, and/or
because of damages to property of the MHFA or others (including loss of use) from any
cause whatsoever, arising out of, incidental to, or in connection with the Administrator's
CRV Program Fund Availability.
Disbursement and Loan/Grant Agreement
23
Ver 4/28/04
(CRV Fnd Avlblty. Dsbrsmnl & Ln/Gmt Agrmnt 04.04.28)
Lf-A-~(p
or Processing Entity's disbursement of CRY Funds or processing of a Deferred Loan,
whether or not due to any act of omission or commission, including negligence of the
Administrator and/or the Processing Entity, or any of their contractors or employees, .
servants or agents, and whether or not due to any act of omission or commission of the
MHFA, its officers, agents and employees (excluding, however, negligence or breach of
statutory duty). The obligation of the Administrator or the Processing Entity under this
Section 10.02 shall survive the repayment of any amount of CRY Funds that are required
to be repaid to the MHF A hereunder.
Section 10.03 Use of Funds by Community Land Trusts. CRY Funds that are to be
used by or in conjunction with a Community Land Trust must comply with all of the
requirements contained in the CRY Procedural Guide dealing with and relating to
Community Land Trusts.
Section 10.04 Prohibition Against Layering. None of the CRY Funds maybe used
for a Project that has already received or has a commitment to receive any other funds
from the CRY Program unless specifically consented to, in writing, by the MHFA.
Section 10.05 Addresses for Notices. All notices to be given by either party to the
other hereunder shall be in writing and deemed to have been given when delivered
personally or when deposited in the United States Mail, registered or certified postage
prepaid, addressed to the addresses shown in the first paragraph of this Agreement or to
such other address as any party hereto designates in writing. Any notice delivered
personally to any party hereof shall be delivered to an officer or authorized agent of such .
party.
Section 10.06 Time of Essence. Time is of the essence in the compliance with the
provisions contained in this Agreement.
Section 10.07 Binding Effect and Assignment. This Agreement shall be binding
upon and inure to the benefit of the parties hereof and their respective successors and
assigns, except that the neither the Administrator nor the Processing Entity may transfer
or assign its rights hereunder without the prior written consent cjf the MHFA.
Section 10.08 Waivers. No waiver by the MHFA, the Administrator, or the
Processing Entity of any default hereunder shall operate as a waiver of any other default
or of the saine default on a future occasion. No delay on the part of either the MHFA, the
Administrator, or the Processing Entity in exercising any right or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any right or remedy
preclude other or further exercise thereof or the exercise of any other right or remedy.
Section 10.09 References to Processing Entity. All references to a Processing Entity
in this Agreement are effective only if there is a Processing Entity and if there is no
Processing Entity then such references shall be treated as if they did not exist and were not
contained in this Agreement.
.
CRY Program Fund Availability,
Disbursement and Loan/Grant Agreement
24
Ver 4/28/04
(CRV Fnd Avlblty, Dsbrsmnt & Ln/Gmt Agrmnt 04.04.28)
.
.
.
4A-J'7
Section 10.10 Governing Law and Venue. This Agreement shall be governed by the
laws of the State of Minnesota, and any action brought under this Agreement shall be
brought in the Minnesota District Court for the County of Ramsey, State of Minnesota.
Section 10.11 Entire Agreement. This Agreement contains the entire agreement of
the parties hereto on the matters covered herein. No other agreement, statement or
promise made by any party hereto or. by any employee, officer, or agent of any party
hereto that is not in writing and signed by allthe parties effected thereby shall be binding.
Section 10.12 Counterparts. This Agreement may be executed in any number of
counterparts, each of which, when so executed and delivered, shall be an original, but
such counterparts shall together constitute one and the same instrument.
Section 10.13 Additional Requirements. The parties hereto do agree to the
following additional requirements and such additional requirements shall control over
any contrary or conflicting provisions contained in this Agreement and in the CRY
Procedural Guide:
(If there are no additional requirements then insert the word "NONE".)
NONE.
Attachment A, of the Notification of Minnesota Housing Finance Agency Single Family
Fall 2006 Community Revitalization Fund (CRV) Award and Program Information letter,
provides a summary of your project and required results from your Fall 2006 CRY Award.
Attachment A is considered part of this Agreement.
(THE REMAINING PORTION OF THIS PAGE W AS INTENTIONALLY LEFT BLANK.)
. CRY Program Fund Availability,
Disbursement and Loan/Grant Agreement
25
Ver 4/28/04
(CRV Fnd Avlblty, Dsbrsmnt & Ln/Grnt Agrmnt 04.04.28)
4A~()SJ
IN WITNESS WHEREOF, the parties hereto have executed this Minnesota
Housing Finance Agency Community Revitalization Fund Program Fund Availability, .
Disbursement and Loan/Grant Agreement on the day and date set forth below their
respective signatures.
MHFA
Minnesota Housing Finance Agency,
a public body corporate and politic of the State of
Minnesota.
By:
Frances J. O'Neill
Operations Manager, Minnesota Homes
Division
Executed on the _ day of , 20_
ADMINISTRATOR
Richfield Housing and Redevelopment Authority
a
By:
Its:
And:
.
Its:
Executed on the _ day of
,20_
PROCESSING ENTITY
Center for Energy and Environment
a
[If there is not Processing Entity, then insert
"NOT APPLICABLE" in the lines for both the
names and titles.]
By:
Its:
And:
Its:
Executed on the _ day of
,20_
.
CRY Program Fund Availability,
Disbursement and Loan/Grant Agreement
26
Yer 4/28/04
(CRY Pnd Avlblty, Dsbrsmnt & Ln/Grnt Agrmnt 04.04.28)
.
AGENDA ITEM # 4B
REpORT # 84
.....
STAFF REpORT
RICHFIELD
HOUSING AND REDEVELOPMENT
AUTHORITY MEETING
DECEMBER 18, 2006
REpORT PREPARED By:
BRUCE NORDQUIST, HOUSING AND
REDEVELOPMENT 11ANAGER
NAME, TITLE
REpORT PRESENTER:
BRUCE NORDQUIST, HOUSING AND
REDEVELOPMENT 11ANAGER
DEPARTMENT DIRECTOR REVIEW:
NAME, TITLE
REVIEWED BY EXECUTIVE DIRECTOR:
.
ITEM FOR HRA CONSIDERATION:
Consideration of resolution authorizing the purchase of real property located at 7201 Nicollet
Avenue with Community Development Block Grant and local funds under the New Home
ProQram.
I. RECOMMENDED ACTION:
By Motion: Approve the attached resolution authorizing the purchase
of real property located at 7201 Nicollet Avenue under the New Home
Program.
.
I II. . BACKGROUND I
The owners of 7201 Nicollet Avenue have approached the Housing and
Redevelopment Authority (HRA) to purchase their property. The house at this
location was built in 1933, has one bedroom, and 688-sq.ft. of living space. An
appraisal and inspection have been performed. The property has an appraised
value of $182,000. The house has substandard conditions that qualify the use of
funding. The house is located on a double lot with approximately 11 ,645-sq. ft. It is
planned that, if the HRA authorizes purchase, there will be multiple additional steps
as part of a New Home Program affordable homes project
· CDBG funds would be used for a portion of the purchase. The City also
must authorize the purchase. The first and second reading of a
Transitory Ordinance, to ensure Richfield retains program income from
1218067201 Nicollet Ave
.
I III.
.
.
second mortgage financing assistance to qualified first time buyers, is
scheduled for January 2007.
. A house concept and Development Agreement would be prepared with
Greater Metropolitan Housing Corporation (GMHC) as the nonprofit
developer. The home at 6329-14th Avenue was recently completed,
demonstrating GMHC's abilities.
. The lot, upon clearance of the substandard structure is a double lot that
yields a minimum of two single-family homes following consideration by
the Planning Commission and City Council for a subdivision waiver. The
Comprehensive Plan allows for a higher density single family use, which
can also be considered.
. The negotiated purchase price based on appraisal for 7201 Nicollet
Avenue is $182,000.
BASIS OF RECOMMENDA nON I
I A. POLICY I
. The use of CDBG funds to buy small substandard houses and to
construct an affordable new home with a nonprofit developer has been
a successful program model for the HRA.
. In November 2006 the Planning Commission found the acquisition
and disposition of 7201 Nicollet Avenue for single family housing
purposes to be consistent with the Comprehensive Plan.
I B. CRITICAL ISSUES I
. The owner has moved to a new location and wants to sell the vacant
home to the HRA.
. Acquisition for demolition and redevelopment on sites scattered
throughout Richfield has been well received. The neighborhood would
become involved as the new housing concept is developed.
. The house concept and a Contract for Development need to be
finalized.
. A very small house with no remodeling potential is being replaced with
a newly constructed three to four bedroom house for a family to buy.
. The ongoing relationship with GMHC helps solve for financial gaps
that provide new homes for first time buyers.
I C.
FINANCIAL I
. CDBG funds would cover $82,000 of the purchase price. The City
and Hennepin County recently approved the programming of CDBG
for this acquisition activity.
. Housing fund resources administered by the HRA would cover
$100,000 of the purchase. The 2007 HRA budget provides for this
expense.
. The construction costs would be covered by proceeds of sale of the
new housing.
.
.
.
In.
LEG~ I
. The City/HRA standard form, Purchase Agreement will be used for the
property acquisition. The City is the initial purchaser with a
subsequent sale to the HRA arranged for $1.
. There are no known title or environmental conditions that would affect
the purchase.
. The purchase is contingent upon the City's consideration of purchase,
scheduled to occur in January 2007.
. The owner of the property is Ron Clabo, a former City employee and
cable television camera operator. The City Attorney reviewed the
matter and found it does not create a conflict of interest.
I IV. ALTERNATIVE RECOMMENDATION(S)
. Do not acquire the property.
I V. ATTACHMENTS
. Resolution
I VI. PRINCIP ~ PARTIES EXPECTED AT MEETING
. N/A
.
Lf8- /
HRA RESOLUTION NO.
RESOLUTION AUTHORIZING PURCHASE OF REAL PROPERTY
LOCATED AT 7201 NICOLLET AVENUE
UNDER THE NEW HOME PROGRAM
WHEREAS, the Housing and Redevelopment Authority in and for the City
of Richfield, Minnesota ("the HRA") desires to purchase certain real property
pursuant to and in furtherance of the New Home Program, said property being
described as:
7201 Nicollet Avenue
Lots 11 and 12, Block 3, Wooddale 2nd Addition, Hennepin County
WHEREAS, the HRA is authorized by Minnesota Statutes Section
469.012 to acquire real property within its area of operations; and
WHEREAS, a purchase price has been negotiated based on independent
appraisal; and
WHEREAS, Community Development Block Grant and local HRA funds
are available for acquisition purposes.
.
NOW THEREFORE, BE IT RESOLVED by the Housing and
Redevelopment Authority in and for the City of Richfield, Minnesota as follows
1. The purchase price for the property at 7201 Nicollet is approved at
$182,000 with $82,000 being funded by Community Development
Block Grant funds and $100,000 being funded by the Housing Fund.
2. The Chairperson and Executive Director are authorized to execute
purchase agreements and to take other actions necessary to purchase
the property for the amount set forth in this Resolution.
Adopted by the Housing and Redevelopment Authority in and for the City
of Richfield, Minnesota this 18th day of December, 2006.
Suzanne M. Sandahl, Chair
ATTEST:
Donna Drummond, Secretary
.
.
.
.
AGENDA ITEM #
REpORT #
5
85
........
STAFF REpORT
RICHFIELD
HOUSING AND REDEVELOPMENT
AUTHORITY MEETING
DECEMBER 18, 2006
REpORT PREPARED By:
PAT SMITH, COMMUNITY DEVELOPMENT
MANAGER
NAME, TITLE
REpORT PRESENTER:
PAT SMITH, COMMUNITY DEVELOPMENT
MANAGER
NAME, TITLE
DEPARTMENT DIRECTOR REVIEW:
REVIEWED BY EXECUTNE DIRECTOR:
ITEM FOR BRA CONSIDERATION:
Consideration of a Contract for Private Development with Ryan Companies US,Jnc., for Phase
II of Cedar Point Commons.
1.
RECOMMENDED ACTION:
By Motion: Approve and authorize execution of attached Contract for
Private Development with Ryan Companies US, Inc., for
redevelopment of Phase II of Cedar Point Commons.
I II.
BACKGROUND ,
On May 16, 2005 the Richfield Housing and Redevelopment Authority (HRA)
approved a Contract for Private Development with Ryan Companies US, Inc. (Ryan)
for the redevelopment of the Cedar Point area. That contract was for the 29-acre
site east of 17th Avenue. .
The proposed contract, which has been cooperatively drafted by HRA staff, HRA
legal counsel and representatives of Ryan, is for the 1.8-acre site west of 17th
Avenue. Ryan has already purchased and cleared the six single family residences
along 17th Avenue ("Third Party Properties"). The City has conveyed the two
properties along 66th Street to the HRA ("HRA Properties"), which will be conveyed
to Ryan according to the original Contract for Development for Cedar Point .
Commons.
121806 - Ryan contract ~hase II
.
Important aspects of the proposed Contract include:
.
. Minimum Improvements include at least 16,000 of the 21,600-square-feet of
retail space that was approved as part of the rezoning and Final Development
Plan.
. Due to the estimated project costs, Ryan has identified a need for public
assistance.
. The HRA's financial advisor, Sid Inman of Ehlers and Associates, has
reviewed the financial proforma for Ryan's proposed development and has
concluded that the development would not occur but-for the level of assistance
being requested.
. The. availability of the public assistance would be subject to a "look-back
provision" to ensure that Ryan's actual need for the public assistance is not
less than their estimated need.
. The public assistance shall be in the form of a Tax Increment Financing Note
totaling up to $500,000.
. One of the preconditions to close is that Ryan has negotiated sufficient pre-
leasing for at least one of the 4,000-square-foot buildings and is therefore
willing to proceed with the construction of the minimum improvements.
· The Note has a step-down provision: it is reduced $125,000 for each phase
that Ryan does not complete.
· In the event that the closing has not occurred within 12 months from the date
of execution of the Contract either party may give the other party written notice
of its intention to terminate this Contract.
· Similar to the original Development Contract, Ryan is required to reimburse
staff and consultant time in the preparation and modification to the Contract
and any modifications or amendment to the Tax Increment Plan that are
necessary in connection with the development. However, unlike the original
Development Contract, there is no cap on the amount of staff and consultant
costs that Ryan is required to reimburse the HRA.
I III. BASIS OF RECOMMENDA nON I
I A. POLICY I
· On June 13, 2006 the City Council approved the rezoning of Cedar
Point Commons to PC-2 and the Final Development Plan, which
consisted of three 4,800-square-foot retail buildings and one 7,200-
square-foot retail building.
· On September 18, 2006 the HRA approved the establishment of the
Cedar Avenue Tax Increment Financing District.
· On September 26,2006 the City CounCil approved the establishment
of the Cedar Avenue Tax Increment Financing District.
· Many of the provisions of the Contract now under consideration are
similar or identical to those which had been approved in the previous
Contract for the first phase.
.
.
lB.
CRITICAL ISSUES I
. In order for private redevelopment with public assistance to occur, a
Developer must have a Contract with the HRA.
Ic. FrnANC~L I
· Due to the estimated cost to assemble the property, Ryan has
identified a need for public assistance.
· The public assistance that is identified in this Contract is a $500,000
Tax Increment Financing Note from the HRA which would provide up
to $500,000.
· The availability of the public assistance would be subject to a "Iook-
back provision" to ensure that Ryan's actual need for the public
assistance is not less than their estimated need.
· The terms of the proposed Contract requires Ryan to pay all HRA staff
consultant costs in association with the preparation and modification
to the Contract and any modifications or amendment to the Tax
Increment Plan that are necessary in connection with the
development.
· The HRA's financial advisor, Ehlers and Associates, has participated
in the drafting of the proposed Contract.
.
/D.
LEGAL I
· HRA legal counsel drafted the proposed Contract in cooperation with
staff, Ryan and Ryan's legal counsel.
I IV. ALTERNATIVE RECOMMENDATION(S) ,
· Approve the proposed Contract for Private Development with added
provisions or modifications.
· Do not approve the proposed Contract for Private Development.
· Continue the consideration of the proposed Contract for Private Development
until a later meeting date.
I V. ATTACHMENTS I .
· A proposed Contract for Private Development with Ryan Companies, Inc, for
Phase /I of Cedar Point Commons.
I VI. PRINCIPAL P ARTlES EXPECTED AT MEETrnG
· HRA Legal Counsel.
· HRA Financial Advisor
· A representative of Ryan Companies, Inc.
.
5-{
.
12/12/06
CONTRACT
FOR
PRIVATE DEVELOPMENT
BY AND BETWEEN
THE HOUSING AND REDEVELOPMENT AUTHORITY
IN AND FOR THE CITY OF RICHFIELD
RYAN COMPANIES US, INC.
.
December 19, 2006
This document was drafted by:
Kennedy & Graven, Chartered (JBD)
200 South Sixth Street, Suite 470
Minneapolis, MN 55402
.
301889v6 JBD RC125-273
5- J..
.
TABLE OF CONTENTS
.
ARTICLE I DEFINITIONS, EXHIBITS, RULES OF INTERPRETATION 2
Section 1.1. Definitions........ ......................................................................................... 2
Section 1.2. Exhibits. ........................ ................ ..................... ................................ ....... 5
Section 1.3. Rules of Interpretation ............................................................................. 5
ARTICLE II REPRESENTATIONS 5
Section 2.1. Representations by the Developer ........................................................... 5
Section 2.2. Representations by HRA and City........................................................... 6
Section 2.2. Representations by HRA and City........................................................... 6
ARTICLE III SITE ASSEMBLY 9
Section 3.0. Statement of Intent...................................................................................9
Section 3.2. Acauisition.................................. ............................................................... 9
Section 3.4. Soil Conditions...................................................................... .................. 10
Section 3.10. Other Costs.... ........................................................................................ 10
Section 3.11. Property Conveyed As Is ......................................................................11
Section 3.12. Other Preconditions to Closing- ............................................................ 11
Section 3.14. Closing- Documents ...............................................................................11
Section 3.15. Termination........................................................................................... 12
ARTICLE IV PUBLIC FUNDS 12
Section 4.2. Public Funds.............. ............................................................................. 12
Section 4.3. Payment of Administrative Costs-Deposit............................................. 13
ARTICLE V CONSTRUCTION OF MINIMUM IMPROVEMENTS 14
Section 5.0. Concept Plan ...........................................................................................14
Section 5.1. Construction of Improvements ............................................................... 14
Section 5.2. Construction Plans ................................................................................. 14
Section 5.3. Completion of Construction .................................................................... 15
Section 5.4. Certificate of Completion ........................................................................ 16
ARTICLE VI INSURANCE AND CONDEMNATION 16
Section 6.1. Insurance.......................... .............................. ........ ................. ................ 16
Section 6.2. Subordination..... ..................................................................................... 18
ARTICLE VII TAXES; MINIMUM MARKET VALUE 18
Section 7.1. Rig-ht to Collect Delinquent Taxes .........................................................18
Section 7.2. Reduction of Taxes .................................................................................. 18
ARTICLE VIII FINANCING 19
Section 8.1. Financing-.... ........................................................ ..................................... 19
Section 8.2. Subordination.......................................................................................... 19
ARTICLE IX PROHIBITIONS AGAINST ASSIGNMENT AND
TRANSFER; INDEMNIFICATION 19
Section 9.1. Representation as to Development ........................................................19
Section 9.2. Prohibition Against Developer's Transfer of Property and
Assig-nment of Ag-reement..... ..................... ............... ...................................... ............. 19
Section 9.3. Transfer of Property and Assignment Agreement ................................ 20
.
301889v6 JBD RC125-273
1
5-3
.
Section 9.4. Release and Indemnification Covenants................................................ 21
ARTICLE X EVENTS OF DEFAULT 22
Section 10.1. Events of Default Defined ....................................................................22
Section 10.2. Remedies on Default ............................................................................. 22
Section 10.3. No Remedv Exclusive ............................ ......................................... ...... 23
Section 10.4. No Additional Waiver Implied by One Waiver .................................... 23
Section 10.5. Attornev Fees ........................................................................................23
Section 10.6. Default bv HRA................................................................... .................. 23
ARTICLE XI ADDITIONAL PROVISIONS 24
Section 11.1. Conflict of Interests: Representatives Not Individually Liable .......... 24
Section 11.2. Equal Employment Opportunity.......................................................... 24
Section 11.3. Construction Signs........................................ .......... ................. ............. 24
Section 11.4. Provisions Not Merged With Deed .......................................................24
Section 11.5. Titles of Articles and Sections .............................................................. 24
Section 11.6. Recapture of Public Funds on Sale of Development Property ............ 24
Section 11.7. Notices and Demands ........................................................................... 25
Section 11.8. Termination of Agreement ...................................................................26
Section 11.9. Counterparts............................ ............................................................. 26
Section 11.10. Recording............................................................................. ................ 26
.
.
30 1 889v6 JBD RC125-273
11
5-~
.
Testimonium ................................................................................................................................33
Signatures ....................... ..................................... ................... ............................................33
.
.
A. HRA Property Legal Description........................................................................ A-I
B. Certificate of Completion................................................................................... .B-l
C. Taxable Limited Revenue Note, Series 200_ ....................................................C-l
D. Staff Costs..................................................................................... ...................... D-l
301889v6 JBD RC125-273
iii
.
.
.
5-5
CONTRACT FOR
PRIVATE DEVELOPMENT
THIS AGREEMENT, made and entered into this 19th day of December, 2006 by and
between THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY
OF RICHFIELD, MINNESOTA, a Minnesota public body corporate and politic (the "HRA"),
and RYAN COMPANIES US, INC., a Minnesota corporation (the "Developer").
WITNESSETH:
WHEREAS, the City of Richfield and HRA have established, and intend to modify, the
Richfield Redevelopment Project Area ("Project Area") under the authority of Minnesota
Statutes, Chapter 469; and have established within the Project Area a Redevelopment Tax
Increment District (the "TIF District") and adopted a Tax Increment Financing Plan (hereinafter
the "TIF Plan") for the TIF District to facilitate the financing of public improvements and
redevelopment costs in the Project Area.
,
WHEREAS, the HRA deems it to be in the public interest to facilitate and encourage
redevelopment of the Project Area by a combination of public and private activity within the
Project Area and in accordance with the Redevelopment Plan for the Project Area, and
WHEREAS, the Developer has proposed a development (hereinafter defined as the
"Development") within such Project Area which the HRA believes will promote and carry out
the objectives for which redevelopment is undertaken, will be in the vital best interests of the
City, will promote the health, safety, morals, and welfare of its residents and will be in accord
with the public purposes and provisions of the applicable state and local laws and requirements
under which activities within the Project Area and the TIF District have been undertaken and are
being assisted; and .
WHEREAS, the Developer is willing to assemble properties within the Project Area,
prepare the same for development, and to develop the same for and in accordance with this
Agreement; and
WHEREAS, to assist the Development, the HRA IS willing to provide financial
assistance in accordance with the terms of this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual obligations of the
parties contained herein, each of them does hereby represent, covenant and agree with the others
as follows:
301889v6 JBD RC125-273
1
.
.
.
5-G:>
ARTICLE I
DEFINITIONS, EXHIBITS, RULES OF INTERPRETATION
Section 1.1. Definitions. In this Agreement, unless a different meaning clearly appears
from the context:
"Act" means the Economic Development Act, located at Minnesota Statutes, Chapter
469, as amended.
"Agreement" means this Agreement, as. the same may be from time-to-time modified,
amended, or supplemented.
"Available Tax Increment" means 75% of the Tax Increment generated from the
Development Property calculated on a semi-annual basis.
"Bona Fide End User" means a person or entity that is unrelated to and not an affiliate of
Developer.
"Business Day" means any day except a Saturday, Sunday, legal holiday, a day on which
the City or County is closed for business, or a day on which banking institutions in the City are
authorized by law or executive order to close.
"Certificate of Completion" means the certification, in the form of the certificate
contained in Exhibit B attached to and made a part of this Agreement, provided to the Developer,
pursuant to Section 4.7 of this Agreement.
"City" means the City of Richfield.
"Closing" means the date on which title to the Development Property is transferred
pursuant to Article III.
"Commencement of Construction" means excavation for the purpose of setting footings
or foundation.
"Completion of Construction" means the substantial completion of construction of the
Minimum Improvement, except for tenant finish work.
"Concept Plans" means the plans and related descriptive materials previously submitted
by Developer in connection with the City's Planned Unit Development process.
"Construction Contract" means a contract or contracts which provides for completion of
the Minimum Improvement.
"Construction Plans" means the plans, specifications, drawings and related documents on
the construction work to be performed by the Developer on the Development Property, including
301889v6 JBD RC125-273
2
S~I
.
the Minimum Improvement and the related site improvements, which (a) shall be as detailed as .
the plans, specifications, drawings and related documents which are submitted to the appropriate
building officials of the City, and (b) shall include at least the following: (1) Site Plan; (2)
foundation plan; (3) floor plan for each floor; (4) cross sections of each (length and width); (5)
elevations (all sides); (6) landscape plan; and (7) such other plans or supplements to the
foregoing plans as the City may reasonably request to allow it to ascertain the nature and quality
of the proposed construction work.
"County" means the County of Hennepin.
"Developer" means Ryan Companies US, Inc., a Minnesota corporation.
"Development" means the Minimum Improvement to be constructed on the Development
Property.
"Development Property" means Lots 1,2,3, and 4 Block 2, Cedar Point.
"HRA Property" means the portions of the Development previously conveyed to
Developer and legally described at the time of conveyance as shown in Exhibit A.
"Event of Default" means an action by the Developer or the HRA listed in Sections 10.1
or 10.6 of this Agreement.
. "Maturity Date" means the date that the Note has been paid in full or terminated,
whichever is earlier.
"Minimum Improvement" means at least 16,000 square feet of retail space in one or more
buildings to be constructed by Developer on the Development Property and related site work all
as shown on the Concept Plan as it may be amended from time to time.
"Minimum Improvement Phase" or "Phase" means 4,000 square feet of retail space.
"Minnesota Environmental Policy Act" means the statutes . located at Minnesota Statutes
Sections 116D.01 et seq., as amended.
"Minnesota Environmental Rights Act" means the statutes . located at Minnesota Statutes
Sections 116B.01 et seq., as amended.
"Mortgage" means any mortgage made by the Developer which is secured, in whole or in
part, with the Development Property and which is a permitted encumbrance pursuant to the
provisions of Article IX of this Agreement.
"National Environmental Policy Act" means the federal law located at 42 U.S.C.
Section 4311 et seq., as amended.
.
301889v6 JBD RC125-273
3
5-g
.
"Note" means the Taxable Limited Revenue Note, Series 200 in the amount of
$500,000 and substantially in the form attached as Exhibit C to this Agreement, to be issued by
the Authority to the Developer as provided for in this Agreement.
"Public Funds" means the funds provided to the Developer from Available Tax
Increment pursuant to the terms of this Agreement as land write down in an amount of $500,000
in the form of the Note.
"Scheduled Payment Dates" means each February 1 and August 1, commencing on the
August 1 first following the issuance of a Certificate of Completion for any Phase of the
Minimum Improvement on which date semi-annual installments will be paid on the Note.
"Site Plan" means the plans, elevations, drawings and narrative descriptions. for the
Minimum Improvement and related site work.
"State" means the State of Minnesota.
"Tax Increment" means that portion of the real property taxes which is paid with respect
to the Development Property which is remitted to the HRA as Tax Increment pursuant to the Tax
Increment Plan, after reduction, if any, of fiscal disparities' contributions which are mandated by
state law to be made with respect to any parcel, and also includes, to the extent permitted by law
uncollected Tax Increment which is later collected. .
. "Tax Increment Act" Minnesota Statutes Sections 469.174 through 469.179 of the
Economic Development Act.
"Tax Increment District" means the Cedar Avenue Tax Increment Financing District, a
redevelopment tax increment district.
"Tax Increment Plan" means the tax increment financing plan for the Tax Increment
District, and as such may be modified and amended from time to time.
"Tax Official" means any City or County assessor; County auditor; City, County or State
board of equalization, the commissioner of revenue of the State, or any State or federal district
court, the tax court of the State, or the State Supreme Court.
"Third Party Property" means the Development Property except the HRA Property.
"Transfer" has the meaning set forth in Section 9.2(a) hereof.
.
"Unavoidable Delays" means unexpected delays which are the direct result of adverse
weather conditions, shortages of materials, strikes, other labor troubles, fire or other casualty to
the Minimum Improvement, litigation commenced by third parties which, by injunction or other
judicial action, o~ acts of any federal, state or local governmental unit other than those provided
for under this Agreement or any other cause or force majeure beyond the control of Developer
which directly results in delays, provided, however, that adverse market conditions or tenant
301889v6 JBD RC125c273
4
.
.
.
5rq
actions affecting the marketability or profitability of the Minimum Improvement, or the inability
to secure financing of the Minimum Improvement shall not constitute Unavoidable Delays.
Section 1.2. Exhibits. The following exhibits are attached to and made a part of this
Agreement.
A. HRA Property Legal Description
B. Certificate of Completion
C. Taxable Limited Revenue Note, Series 200_
D. Staff Costs.
Section 1.3. Rules of Interpretation. (a) This Agreement shall be interpreted III
accordance with and governed by the laws of the State of Minnesota;
(b) The words "herein" and "hereof' and words of similar importance, without
reference to any particular section or subdivision refer to this Agreement as a whole rather than
any particular section or subdivision hereof;
(c) Any titles of the several parts, articles and sections of this Agreement are inserted
for convenience and reference only and shall be disregarded in construing or interpreting any of
its provisions.
ARTICLE II
REPRESENTATIONS
Section 2.1. Representations by the Developer. (a) The Developer has the power to enter
into this Agreement and has duly authorized the execution, delivery, and performance of this
Agreement by proper action.
(b) If the conditions precedent to construction occur, subject to the other terms of this
Agreement, the Developer has or will secure the financial capability to construct the Minimum
Improvement.
(c) If the conditions precedent to construction occur, subject to the other terms of this
Agreement, the Developer will construct the Minimum Improvement described in the Concept
Plans in accordance with the terms of this Agreement, the Redevelopment Plan and all local,
state and federal laws and regulations.
(d) The Developer will exercise all reasonably diligent efforts to obtain, in a timely
manner, all required permits, licenses, and approvals. If all such approvals are obtained, and all
preconditions set forth in this Agreement are satisfied, Developer will meet in a timely manner,
all lawful requirements of all local, state, and federal laws and regulations which must be
obtained or met before the Minimum Improvement may be constructed, all of which is subject to
Unavoidable Delay.
301889v6 JBD RC125-273
5
.
.
.
5-(0
(e) During the period of the Developer's ownership of the Development Property or
any portion thereof, then only as to such portion, and subject to the HRA's representations and
warranties set forth in Section 2.2(f) and (g) hereof, Developer will comply in all material
respects with all applicable environment laws and regulations. The term "Environmental
Law(s)" shall include, but is not limited to,: Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), 42 V.S.C. ~~ 9601 et seq. as now or hereafter
amended, the Resource Conservation and Recovery Act ("RCRA"), 42 V.S.C. ~~ 6901 et seq. as
now or hereafter amended, the Federal Water Pollution Control Act, 33 V.S.C. ~~ 1251 et seq. as
now or hereafter amended, the Clean Water Act (33 V.S.C. ~ 1317 et seq.), as now or hereafter
amended., the Clean Air Act, 42 V.S.C. ~ 7401 et seq., the Clean Water Act (33 V.S.C. ~ 1317 et
seq.), as now or hereafter amended; the Clean Air Act (342 V.S.C. ~ 7412 et seq.), as now or
hereafter amended; the Toxic Substances Control Act (15 V.S.C. ~ 2606 et seq.), as now or
hereafter amended; the Hazardous Materials Transportation Act (49 U.S.C. ~ 1801 et seq.), as
now or hereafter amended; the Minnesota Environmental Response and Liability Act (Minn.
Stat. Section 115B.02 et seq.) ("MERLA"), as now and hereafter amended and the regulations
thereunder, and any other local, state and/or federal laws or regulations, that govern
(i) The existence, cleanup and/or remedy of contamination of the
Development Property;
(ii) The protection of the environment from released, spilled,
deposited or otherwise emplaced contamination;
(iii) The control of hazardous wastes; or
(iv) The use, generation, transport, treatment, removal or recovery of
hazardous substances, including any and all building materials.
Notwithstanding the foregoing to the contrary, Developer shall not be responsible to
comply with all applicable Environmental Laws and regulations as hereinbefore provided, if the
condition requiring such compliance constitutes a breach by the HRA of its representations and
warranties pursuant to Section 2.2(f) and (g).
(f) The Developer acknowledges that, with respect to payment of the Note, it has
relied exclusively upon its own analysis of the Available Tax Increment to be generated by the
Development Property and has not relied on the accuracy of any material furnished by the HRA,
its officers, agents or employees, and that neither the HRA nor its officers, agents or employees
has made any representation or covenant, express or implied, as to the amount of Available Tax
Increment that will be generated by the Development Property.
Section 2.2. Representations by HRA. The HRA makes the following representations as
the basis for the undertakings herein contained.
(a) The HRA has the power to enter into this Agreement and has duly authorized the
execution, delivery and performance of this Agreement.
301889v6 JBD RCl25-273
6
5" I I
.
(b) The HRA will utilize its best efforts to secure the cooperation and participation of
the City in doing those things and taking those actions necessary to implement the Development.
(c) The HRA shall, without expense to it, cooperate in Developer's efforts to obtain
all federal, state, and regional agency land use, environmental or other regulatory approvals
which are required of Developer and necessary to implement the Development, and providing all
necessary land use approvals.
. (d) Vpon approval of this Agreement, the HRA will, subject to the reasonable
exercise of its legislative discretion, undertake the steps necessary leading to the proposed
Development, but this Agreement is not intended to contractually obligate the HRA to do more
than exercise its best efforts to accomplish such matters.
(e) [Intentionally Deleted]
.
(f) The HRA will make a reasonable effort to review its files and the City files and
provide Developer with all reports, investigations and studies disclosed by such review, which
have as their subject all or any portion of the Development Property or the property adjacent to
the Development Property. The reports, investigations and studies described herein shall be
referred to as the "HRA Documents." The HRA makes no representations or warranties
concerning the accuracy of the materials contained in any HRA Document, or whether or not
other relevant documents in the possession of the HRA or the City were not discovered by such
reVIew.
.
(g) To the best knowledge of HRA's Executive Director, Community Development
Director and Assistant Community Development Director, and except as may be set forth in any
environmental reports provided by HRA to Developer pursuant to this Agreement, no toxic or
hazardous substances or wastes, pollutants or contaminants (including, without limitation,
asbestos, urea formaldehyde, the group of organic compounds known as polychlorinated
biphenyls, petroleum products including gasoline, fuel oil, crude oil and various constituents of
such products, and any hazardous substance as defined in the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 ("CERCLA"), 42 V.S.C. ~ 9601-9657, as
amended) have been generated, treated, stored, released or disposed of, or otherwise placed,
deposited in or located on any portion of the HRA Property in violation of any environmental
laws, nor has any activity been undertaken on any portion of the HRA Property that would cause
or contribute to (i) any portion of the HRA Property to become a treatment, storage or disposal
facility within the meaning of, or otherwise bring any portion of the HRA Property within the
ambit of, the Resource Conservation and Recovery Act of 1976 ("RCRA"), 42 V.S.C. ~ 6901 et
seq., or any similar state law or local ordinance, (ii) a release or threatened release of toxic or
hazardous wastes or substances, pollutants or contaminants, from any portion of the HRA
Property within the meaning of, or otherwise bring any portion of the HRA Property within the
ambit of, CERCLA, or any similar state law or local ordinance, or (iii) the discharge of
pollutants or effluents into any water source or system, the dredging or filling of any waters or
the discharge into the air of any emissions, that would require a permit under the Federal Water
Pollution Control Act, 33 V.S.C. ~ 1251 etseq., or the Clean Air Act, 42 V.S.C. ~ 7401 et seq.,
or any similar state law or local ordinance. To the best ofHRA's knowledge, and except as may
301889v6 JBD RC125-273
7
.
.
.
5-/2
be set forth in any environmental reports provided by HRA to Developer pursuant to this
Agreement, there are no substances or conditions in or on any portion of the Excess Land that
support a claim or cause of action for environmental cleanup under RCRA, CERCLA or any
other federal, state or local environmental statutes, regulations, ordinances or other
environmental regulatory requirements.
(h) The HRA represents that, except as otherwise disclosed in any Well Disclosure
Statement provided as part of the HRA Documents, the HRA does not know of any "Wells" on
the Development Property within the meaning of Minn. Stats. Chapter 1031. This representation
is intended to satisfy the requirements of that statute.
(i) Notwithstanding paragraphs (f) and (g) above, the HRA makes the following
representations and warranties with respect to the HRA Property:
(i) HRA has not received any notice nor is it aware of any pending action to
take by eminent domain or by deed in lieu thereof all or any portion of the
HRA Property.
(ii) BRA has the full, right, power and authority to enter into this Agreement
and to carry out the terms and provisions hereof.
(iii) HRA is not a "foreign person," "foreign partnership," "foreign trust" or
"foreign estate" as those terms are defined in Section 1445 of the Internal
Revenue Code.
(iv) To the best of BRA's knowledge, no above ground or underground
storage tanks, wells or individual sewage treatment systems are located on
the BRA Property.
(v) To the best of BRA's knowledge, no portion of the BRA Property is
located within an area designated as a "flood plain" or "flood prone area"
under any statute, regulation, or ordinance.
(vi) The HRA Property is not subject to any lease or sublease, nor are there
any tenants in possession of the HRA Property.
(vii) To the best of HRA's knowledge, no unrecorded condition, restriction,
obligation or agreement exists which adversely affects the HRA Property,
the use thereof or the value of the BRA Property.
(viii) To the best of HRA's knowledge, the BRA Property is free from any use
or occupancy restrictions, except those imposed by zoning laws and
regulations and no part is dedicated or, to the best of BRA's knowledge,
has been used as a cemetery or burial ground.
301889v6 JBD RC125-273
8
5--/3
.
(ix) To the best ofHRA's knowledge, no fact or condition exists which would
result in the termination of access from the HRA Property to the streets
and roads adjoining or situate on the HRA Property or to any existing or
proposed sewer or other utility facilities servicing, adjoining or situated on
the HRA Property.
ARTICLE III
SITE ASSEMBLY
Section 3.0. Statement of Intent. All of the parcels that comprise the Development
Property are currently owned by Developer. The Developer has acquired all such properties in
anticipation of redevelopment of the same with assistance from the HRA in the manner described
in this Agreement. The parcels comprising the Development Property. include the HRA
Properties which the Developer has acquired from the HRA, and the Third Party Properties
which the Developer has acquired from others.
.
Subject to compliance with all applicable provisions of this Agreement, the Developer agrees to
sell the Development Property to the HRA and the HRA agrees to purchase the Development
Property from the Developer for the price of $500,000 (the "HRA Purchase Price"); and
immediately thereafter, the HRA agrees to sell the Development Property to the Developer, and
the Developer agrees to purchase the Redevelopment Property from the HRA for the price of
$1.00. (the "Developer Purchase Price"). The difference between the HRA Purchase Price and
the Developer Purchase Price is referred to as the "Land Writedown". The Land Writedown
provides assistance to the Developer to address the difference between the Developer's costs to
initially acquire the Development Property and the cleared land value of the Development
Property. The parties have determined that the actual difference is significantly greater that the
amount of the Land Writedown.
Section 3.1. [Intentionally Deleted]
.
Section 3.2. Acquisition of Third Party Propertv. It is understood that the HRA has
played no role in any of the acquisition activities for the Third Party Property. It is understood
that the HRA is not responsible for the payment of any land acquisition costs for the acquisition
of the Third Party Property, including, without limitation, the payment of any relocation benefits
to which any person displaced by the Development may be entitled, except to the extent such
relocation assistance and benefits are a result of the actions of the HRA and/or the City (the
"City/HRA Actions"); provided, however, such City/HRA Actions shall not include the adoption
of this Agreement, the modification of the Project Area, the creation of the TIF Plan or the TIF
District, the payment of assistance to the Developer pursuant to this Agreement and the Note, or
the performance of their other respective obligations pursuant to this Agreement It is understood
that, as between the HRA and the Developer, the HRA is not obligated to provide relocation
assistance or benefits to owners of the Third Party Property, except as otherwise provided in this
Section 3.2. The Developer hereby indemnifies and agrees to defend and hold harmless the
HRA and the City from any claims for any such costs, except for any relocation assistance or
301889v6 JBD RC125-273
9
.
.
.
5'/'f
benefits which any person displaced by the Development may be entitled to as a result of
City/HRA Actions.
The Developer's indemnity and agreement to defend and hold harmless the HRA from any
claims for any such costs, except for any relocation assistance or benefits any person displaced
by the Development may be entitled as a result of the City/HRA Actions is expressly applicable
to all relocation benefits payable to tenants, lessees and other non-owner occupants of the Third
Party Property to the extent required by applicable law.
The HRA represents and warrants to the Developer that, at its sole cost and expense, it, or its
predecessor in title has provided relocation assistance and benefits to owners and occupants of
the HRA Property to the extent required by applicable law. The HRA hereby indemnifies and
agrees to defend and hold harmless the Developer for any relocation assistance and benefits any
owner or occupant of the HRA Property may be entitled.
It is understood that the HRA and Developer are not authorized to act nor shall either act as the
other's agent or representative in relation to property acquisition.
Section 3.3. [Intentionally Deleted]
Section 3.4. Soil Conditions. The Developer acknowledges that the HRA makes no
representations or warranties as to the condition of the soils on the HRA Property or its fitness
for construction of the Minimum Improvement or any other purpose for which the Developer
may make use of such property, except as provided in Section 2.2(g) and (h) hereof. In addition
to the foregoing, the HRA agrees to diligently pursue efforts to secure third-party funding for the
mitigation of any contamination or pollution found to exist on the Development Property.
Otherwise, as between the HRA and the Developer, the cost and responsibility to mitigate rests
with the Developer, except to the extent the mitigation relates to a condition which is a breach by
the HRA of its representation pursuant to Section 2.2(g) thereof.
Section 3.5. [Intentionally Deleted]
Section 3.6. [Intentionally Deleted]
Section 3.7. [Intentionally Deleted]
Section 3.8. [Intentionally Deleted]
Section 3.9. [Intentionally Deleted]
Section 3.10. Other Costs. No cost, fee or other payment relating to any real estate
transaction of any nature shall be payable by. the HRA to any person or entity, except the HRA
shall pay for the preparation, copying and delivery of the HRA Documents to the Developer and
state deed tax, if either party elects to have the deeds recorded.
301889v6 JBD RC125-273
10
.
.
.
t5~/S
Section 3.11. Property Conveyed As Is. The Developer, at its sole cost and expense,
shall be responsible for the demolition and removal from the Development Property of all
structures and improvements, including but not limited to basements and utilities on the
Development Property.
Section 3.12. Other Preconditions to Closing. Notwithstanding any provision in this
agreement to the contrary, Closing shall not occur until (i) the Developer has entered into
agreements with the City and/or the ERA providing for an interim off-street parking plan
designed to accommodate parking requirements during construction of the Development; (ii) all
necessary land use approvals have been obtained; (iii) Developer has determined, in its sole
discretion, that based on the actual costs to acquire the Third Party Property and its current
projected costs for the Development, that the same is feasible based on the level of Public Funds
available; (iv) the Developer has determined that, as to at least one of the Phases, it has
negotiated sufficient pre-leasing and financing that it is willing to proceed with the construction
of the Minimum Improvement that comprises such Phase(s); and (v) the representations of the
HRA set forth in Section 2.2 are true as of when made and on the Closing Date as if made on the
Closing Date.
Section 3.13 [Intentionally Deleted]
Section 3.14. Closing Documents.
(a) On the Closing Date, Developer shall execute and deliver to HRA the following
(collectively, "Developer's Closing Documents"), all in form and content reasonably satisfactory
to HRA:
(1) Deed. A Quit Claim Deed conveying the Development Property to the HRA, free
and clear of all encumbrances, except the Permitted Encumbrances, as such term is hereinafter
defined.
(2) FIRPTA Affidavit. A non-foreign affidavit, properly executed, containing such
information as is required by Internal Revenue Code Section 1445(b )(2) and its regulations.
(3) Developer's Affidavit. An Affidavit of Title by Developer indicating that on the
Closing Date, and subject to Permitted Encumbrances, there are no outstanding, unsatisfied
judgments, tax liens or bankruptcies against or involving Developer or the Development
Property; that there has been no skill, labor or material furnished to the Development Property
for which payment has not been made or for which mechanics' liens could be filed; and that
there are no other unrecorded interests in the Development Property, together with whatever
standard owner's affidavit and/or indemnity (ALTA Form) may be required by Title Company to
issue the Title Policy with the standard exceptions waived.
(4) Well Certificate. If there are any "Wells" on the Property within the meaning of
Minn. Stats. Chapter 1031, a Well Certificate in the form required by law.
301889v6 180 RC125-273
11
.
.
.
5-{ (p
(5) Individual Sewage Treatment System. Affidavit by the HRA stating whether or
not there is an individual sewage treatment system on the. HRA Property and, if so, the HRA
shall provide Developer with a Private System Disclosure Statement as required by Minnesota
Statutes, section 115.55 (6).
(b) On the Closing Date, HRA will execute and deliver to the Developer the following
(collectively, "HRA's Closing Documents"):
(1) The Note.
(2) The documents described in paragraph (a)(I) through (5) above, except
that the HRA will be the first party on all such documents.
(3) All other documents reasonably determined by the parties or Title
Company to be necessary to transfer the Development Property.
Section 3.15. Recording of Deeds. The parties do not intend that the quit claim deeds
referenced in section 3.14 above (the "Deeds") be recorded at Closing. After Closing, HRA will
provide the Developer's Closing Documents to Developer for retention. After receipt of the
documents, Developer shall not destroy the original Developer's Closing Documents or the
original HRA' s Closing Documents without the approval of the HRA and, unless either party
decides to record the original Deeds for tax or other purposes, shall hold the original Deeds for at
least the applicable record-retention period under law. If either party determines in its sole
discretion that the Deeds should be recorded for tax or other purposes, that party shall give notice
to the other of its intention to record the Deeds. Within ten (10) days after providing or receiving
such notice, Developer shall record the Deeds by first recording the deed referenced in section
3.14(a)(1) and then recording the deed referenced in section 3.14(b)(2). If such recording is
required, Developer will pay the state deed tax and other costs of recording the Deed referenced
in Section 3.14(a)(I), and the HRA will pay the state deed tax and other costs of recording the
Deed referenced in Section 3. 14(b)(2).
Section 3.16. Termination. In the event that the Closing has not occurred within twelve
months from the date hereof either party may give the other party written notice of its intention
to terminate this Agreement. If the other party does not proceed to Closing within 30 days
following the giving of such notice this Agreement may be declared null and void by any party
giving written notice of such termination to the other parties and thereupon, no party shall have
any obligation or liability to the others hereunder.
ARTICLE IV
PUBLIC FUNDS
Section 4.1. [Intentionally Deleted]
Section 4.2. Public Funds.
301889v6 JBD RC125-273
12
.
S~/l
(a) Source of Funds. The HRA's obligation under this Agreement is to make the
Public Funds available in support of the Development is accordance with the terms of this
Agreement.
(b) Generally. In order to make development of the Development economically
feasible, the HRA will, subject to the terms of this Agreement, provide the Public Funds to the
Developer in the principal amount of $500,000, or such lesser amount as provided in Section
11.6. The Public Funds will be utilized in providing the Developer with the Land Writedown;
and will be in the form of the Note in substantially the form of the attached Exhibit C to be
delivered to the Developer at Closing. The amount due on the Note shall be secured by a pledge
of Available Tax Increment.
(c) Limitations. Payments on the Note are payable solely from and to the extent of
the Available Tax Increment, and nothing herein shall be construed to obligate the City or the
HRA to make payments on the Note from any other funds. The HRA makes no warranties or
representations as to the amount of the Available Tax Increment, or that amounts payable on the
Note will be sufficient to pay all or any portion of the principal and/or interest on the Note. Any
estimates of Available Tax Increment amounts prepared by the HRA's financial consultants are
for the benefit of the HRA only, and the Developer is not entitled to rely oil such estimates.
.
(d) Delivery. The Note shall be delivered by the HRA to the Developer on the
Closing Date. In the event of any inconsistency between the terms of this Agreement and the
terms ofthe Note, the terms of the Note shall control.
(e) Change in Amount of Available Tax Increment. If the amount of Available Tax
Increment is reduced as a result of a change in state law, a change in the classification
of the Development Property, or any other reason that is not the result of actions or
inaction of the Developer, and if such reduction results in a deficiency in the amount
of Available Tax Increment necessary to fully pay the Note during its term, the
Authority agrees that it will, to the extent permitted by law, utilize its best efforts to
seek an extension of the term of the TIF District and the Note for a period sufficient
to generate sufficient additional Available Tax Increment to fully pay the Note.
Provided, that this paragraph (e) shall not be deemed to obligate the Authority to ever
make payments on the Note from any source other than Available Tax Increment.
.
Section 4.3. Payment of Administrative Costs-Deposit. The Developer will pay to the
HRA all staff time costs (which are currently estimated in the attached Exhibit E) ("Staff Costs")
and all out of pocket costs incurred by the HRA (including without limitation attorney and fiscal
consultant fees) (the "Qut-of-Pocket Costs") in the negotiation and preparation and amendment
or modification of this Agreement and other documents and agreements including any
modifications or amendments to the Tax Increment Plan which are necessary in connection with
the development contemplated hereunder (which are currently estimated to be
for legal and for fiscal consultant fees) (collectively, the
"Administrative Costs"). The Developer's obligation to pay Staff Cost is limited to the activities
contained in the attached Exhibit D. Out-of-Pocket Costs shall be evidenced by invoices,
. statements or other reasonable written evidence of the costs incurred by the HRA. The
301889v6 JBD RC125-273
13
.
.
.
5~(~
Developer shall pay Administrative Costs from time to time within 30 days after receipt of
written notice thereof from the HRA.
Section 4.4 [Intentionally Deleted]
Section 4.5. [Intentionally Deleted]
ARTICLE V
CONSTRUCTION OF MINIMUM IMPROVEMENT
Section 5.0. Concept Plan.
1. Approval. The Concept Plans for the Development have been reviewed and approved by
the HRA and the City.
Section 5.1. Construction of Improvements. The Developer makes the following
representation and agrees if Closing occurs, it will construct the Minimum Improvement for at
least one Phase of the Minimum Improvement in accordance with the approved Construction
Plans for such Phase or Phases and for at least five years following the issuance of a Certificate
of Completion for any Phase will operate and maintain, preserve and keep such Phase of the
Minimum Improvement or cause such improvements to be maintained, preserved and kept with
the appurtenances and every part and parcel thereof, in good repair and condition, subject to
reasonable wear and tear and casualty as provided in Section 6.1. The construction of any
subsequent Phase will be subject to all of the same requirements. The HRA's remedy for the
Developer's failure to operate, maintain and preserve the Minimum Improvement for any
constructed Phase will be limited to actions provided for in Section 1O.2(c). Developer agrees
upon the sale of any portion of the Development Property to Bona Fide End User, it will require
as a condition of such sale that the Bona Fide End User enter into an appropriate agreement with
the HRA agreeing to operate, maintain and preserve the applicable Phase for any remaining part
of such five year period. The HRA's remedy for the failure of a Bona Fide End User to operate,
maintain and preserve the applicable Phase for such time period will also be limited to the
actions provided for in Section 10.2(c).
Section 5.2. Construction Plans. (a) Before commencement of construction of any Phase
of the Minimum Improvement, the Developer shall submit to the HRA the Construction Plans.
The Construction Plans shall provide for the construction of the Minimum Improvement for the
Phase to be constructed and shall be in conformity with this Agreement, the approved Concept
Plans and all applicable State and local laws and regulations. The. HRA will approve the
Construction Plans in writing if: (i) the Construction Plans conform to the terms and conditions
of this Agreement and the Concept Plans; (ii) the Construction Plans conform to all applicable
federal, state and local laws, ordinances, rules and regulations; (iii) the Construction Plans are
adequate to provide for construction of the Minimum Improvement; (iv) the Construction Plans
do not provide for expenditures in excess of the funds available to the Developer from all sources
for construction of the Minimum Improvement; and ( v) no Event of Default has occurred.
301889v6 JBD RC125-273
14
.
.
.
6~/q
Approval may be based upon a review by the City's Building Official of the Construction Plans.
No approval by the HRA shall relieve the Developer of the obligation to comply with the terms
of this Agreement, applicable federal, state and local laws, ordinances, rules and regulations, or .
to construct the Minimum Improvement in accordance therewith. No approval by the HRA shall
constitute a waiver of an Event of Default. If approval of the Construction Plans is requested by
the Developer in writing at the time of submission, such Construction Plans shall be deemed
approved unless rejected in writing by the HRA, in whole or in part within 35 days after receipt
of such submission. Such rejections shall set forth in detail the reasons therefore, and shall be
made within 35 days after the date of their receipt by the HRA. If the HRA rejects any
Construction Plans in whole or in part, the Developer shall submit new or corrected Construction
Plans within 35 days after its receipt of written notification to the Developer of the rejection.
The provisions of this Section relating to approval, rejection and resubmission of corrected
Construction Plans shall continue to apply until the Construction Plans have been approved by
the HRA. The HRA's approval shall not be unreasonably withheld. Said approval shall
constitute a conclusive determination that the Construction Plans (and Phase of the Minimum
Improvement constructed in accordance with said plans) comply to the HRA's satisfaction with
the provisions of this Agreement relating thereto.
(b) If the Developer desires to make any material change in the Construction Plans
after their approval by the HRA, the Developer shall submit the proposed change to the HRA for
its approval. A change will be deemed material only if it: (i) significantly alters the exterior
design of any building, and (ii) will have a negative impact on the debt service needed to pay the
Note. If the Construction Plans, as modified by the proposed change, conform to the
requirements of this Section 5.2 with respect to such previously approved Construction Plans, the
HRA and the City shall approve the proposed change and notify the Developer in writing of its
approval. Such change in the Construction Plans shall, in any event, be deemed approved by the.
HRA and the City unless rejected, in whole or in part: (i) if no City Council or HRA Board
review is required, within 10 days after receipt of the proposed change; or, (ii) if City Council or
Board approval is required, within five days after the next regular meeting of the Councilor
HRA Board which takes place not sooner that ten days following submission of a completed
request for a proposed change. The rejection shall be by written notice by the HRA to the
Developer, setting forth in detail the reasons therefor. The HRA's and the City's approval of any
such change in the Construction Plans will not be unreasonably withheld.
Section 5.3. Completion of Construction.. Subject to Section 5.1 and Unavoidable
Delays, the Developer shall substantially complete the construction of at least one Phase of the
Minimum Improvement within 18 months after the Closing of the Developer's acquisition of the
Development Property. All work with respect to the Minimum Improvement for any Phase to be
constructed shall be in substantial conformity with the Construction Plans as submitted by the
Developer and approved by the HRA.
The Developer agrees for itself, its successors and assigns, and every successor in interest
to the Development Property, or any part thereof, that the Developer, and such successors and
assigns, act in good faith in determining if and when to undertake the development. of the
Development Property through the construction of the Minimum Improvement. After the date of
this Agreement and until construction of the Minimum Improvement has been completed, the
301889v6 ffiD RC125-273
15
.
.
.
5-dO
Developer shall make reports, in such detail and at such times as may reasonably be requested by
the HRA, as to the actual progress of the Developer with respect to such construction and to
review of the factors on which the decision to commence construction will be made..
Section 5.4. Certificate of Completion.
(a) Promptly after substantial completion of the Minimum Improvement for any
Phase in accordance with those provisions of the Agreement relating solely to the obligations of
the Developer to construct the Minimum Improvement for such Phase, the HRA will furnish the
Developer with a Certificate shown as Exhibit B. Such certification and such determination shall
not constitute evidence of compliance with 'or satisfaction of any. obligation of the Developer to
any Holder of a Mortgage, or any insurer of a Mortgage, securing money loaned to finance the
Minimum.Improvement, or any part thereof.
(b) If the HRA shall refuse or fail to provide any certification in accordance with the
provisions of this Section 5.4 of this Agreement, the HRA shall, within twenty (20) days after
written request by the Developer, provide the Developer with a written statement, indicating in
adequate detail in what respects the Developer has failed to complete the Minimum
Improvement in accordance with the provisions of the Agreement, or is otherwise in default, and
what measures or acts it will be necessary, in the reasonable opinion of the HRA, for the
Developer to take or perform in order to obtain such certification.
(c) The construction of the Minimum Improvement shall be deemed to be complete
upon issuance of a certificate of occupancy or a temporary certificate of occupancy by the City.
(d) [Intentionally Deleted]
ARTICLE VI
INSURANCE AND CONDEMNATION
Section 6.1. Insurance. (a) The Developer, during its ownership, will provide and
maintain at all times during the process of constructing the Minimum Improvement an All Risk
Broad Form Basis Insurance Policy and, from time to time during that period, at the request of
the HRA, furnish the HRA with proof of payment of premiums on policies covering the
following:
(i) Builder's risk insurance, written on the so-called "Builder's Risk --
Completed Value Basis," in an amount equal to one hundred percent (100%) of the
insurable value of the Minimum Improvement at the date of completion, and with
coverage available in nonreporting form on the so-called "all risk" form of policy.
(ii) Comprehensive. general liability insurance (including operations,
contingent liability, operations of subcontractors, completed operations and contractual
liability insurance) with limits against bodily injury and property damage of not less than
$1,000,000 for each occurrence (to accomplish the above-required limits, an umbrella
301889v6 JBD RC125-273
16
5'" J- /
.
excess liability policy may be used). The HRA shall be listed as an additional insured on
the policy; and
(iii) Workers' compensation insurance, with statutory coverage, provided that
the Developer may be self-insured with respect to all or any part of its liability for
workers' compensation.
(b) Upon completion of construction of the Minimum Improvement and prior to the
Maturity Date, the Developer, during its ownership, shall maintain, or cause to be maintained, at
its cost and expense, and from time to time at the request of the HRA shall furnish proof of the
payment of premiums on, insurance as follows:
(i) Insurance against loss and/or damage to the Minimum Improvement under
a policy or policies covering such risks as are ordinarily insured against by similar
businesses.
(ii) Comprehensive general public liability insurance, including personal
injury liability (with employee exclusion deleted), against liability for injuries to persons
and/or property, in the minimum amount for each occurrence and for each year of
$1,000,000, and shall be endorsed to show the HRA as additional insured.
.
(iii) Such other insurance, including workers' compensation insurance
respecting all employees of the Developer, in such amount as is customarily carried by
like organizations engaged in like activities of comparable size and liability exposure;
provided that the Developer may be self-insured with respect to all or any part of its
liability for workers' compensation.
(c) All insurance required in Article V of this Agreement shall be taken out and
maintained in responsible insurance companies selected by the Developer which are authorized
under the laws of the State to assume the risks covered thereby. Upon request, the Developer
will deposit annually with the HRA policies evidencing all such insurance, or a certificate or
certificates or binders of the respective insurers stating that such insurance is in force and effect.
Unless otherwise provided in this Article V of this Agreement each policy shall contain a
provision that the insurer shall not cancel nor modify it in such a way as to reduce the coverage
provided below the amounts required herein without giving written notice to the Developer and
the HRA at least thirty (30) days before the cancellation or modification becomes effective. In
lieu of separate policies, the Developer may maintain a single policy, blanket or umbrella
policies, or a combination thereof, having the coverage required herein, in which event the
Developer shall deposit with the HRAa certificate or certificates of the respective insurers as to
the amount of coverage in force upon the Minimum Improvement.
.
(d) The Developer will notify the HRA immediately in the case of damage exceeding
$500,000 in amount to, or destruction of, the Minimum Improvement or any portion thereof
resulting from fire or other casualty. In such event the Developer may elect in its sole discretion
to (i) repair, reconstruct and restore the Minimum Improvement to substantially the same or an
improved condition or value as it existed prior to the event causing such damage and, to the
301889v6 JBD RC125-273
17
.
.
.
S~d-~
extent necessary to accomplish such repair, reconstruction and restoration, the Developer will
apply the net proceeds of any insurance relating to such damage received by the Developer to the
payment or reimbursement of the costs thereof, (ii) construct other improvements serving the
same or similar uses as the Minimum Improvement, or (iii) not repair, reconstruct or restor~ the
Minimum Improvement.
Any net proceeds remaining after completion of such new construction or such repairs,
construction and restoration shall be the property of the Developer. If the Developer elects not to
repair the net proceeds will be the property of the Developer.
(e) All of the insurance provisions set forth in this Article V shall terminate upon the
termination of this Agreement.
Section 6.2. Subordination. Notwithstanding anything to the contrary contained in this
Article VI, the rights of the HRA with respect to the receipt and application of any proceeds of
insurance shall, in all respects, be subject and subordinate to the rights of any lender under a
Mortgage approved pursuant to Article VII of this Agreement.
ARTICLE VII
TAXES; MINIMUM MARKET VALUE
Section 7.1. Right to Collect Delinquent Taxes. The Developer acknowledges that the
HRA is providing substantial aid and assistance in furtherance of the Development through
issuance of the Note. The Developer understands that the Available Tax Increment pledged to
the Note is derived from real estate taxes on the Development Property, which taxes must be
promptly and timely paid. To that end, the Developer agrees for itself, its successors and
assigns, in addition to the obligation pursuant to statute to pay real estate taxes, that it is also
obligated by reason of this Agreement to pay before delinquency all real estate taxes assessed
against the Development Property and the Minimum Improvement; provided, however,
Developer shall not be responsible for the payment of real estate taxes assessed against the
portion of the Development Property transferred in accordance with Section 9.3. Except as
otherwise provided in this Section, the Developer acknowledges that this obligation creates a
contractual right on behalf of the HRA to sue the Developer or its successors and assigns to
collect delinquent real estate taxes and any penalty or interest thereon and to pay over the same
as a tax payment to the County auditor. In the event of a sale of all or a part of the Development
Property to a third party, the Developer will be released from its obligation under this Section as
provided in Section 9.3.
Section 7.2. Reduction of Taxes. Prior to the Maturity Date the Developer will not (a)
cause a reduction in the real property taxes paid in respect of the Development Property through
willful destruction of the Development Property or any part thereof; or; (b) apply for a deferral of
property tax on the Development Property pursuant to Minnesota Statutes, Section 469.181, or
any similar law; (c) conveyor transfer or allow conveyance or transfer of the Development
Property to any entity that is exempt from payment of real property taxes under State law, except
to the City in accordance with Section 11.6 of this Agreement; or (d) seek, through the exercise
301889v6 JBD RC125-273
18
.
.
.
5,-~3
of legal or administrative remedies, a reduction in the market value of the Development Property
below the value necessary to generate sufficient Available Tax Increment to make paYments on
the Note.
Section 7.3 [Intentionally Deleted]
Section 7.4 [Intentionally Deleted]
ARTICLE VIII
FINANCING
Section 8.1. Financing. The Developer warrants and represents to the HRA that it has or
will have available funds sufficient to construct the Minimum Improvement in accordance with
the Construction Plans.
Section 8.2. Subordination. The HRA agrees that it will subordinate the HRA's
interests, rights and remedies under this Agreement to the mortgage lien for an acquisition,
construction and permanent loan, including, but not limited to, the contractual obligation to
construct the Minimum Improvement pursuant to Section 5.1, and the contractual obligation to
pay real estate taxes pursuant to Section 7.1.
ARTICLE IX
PROHIBITIONS AGAINST ASSIGNMENT AND TRANSFER; INDEMNIFICATION
Section 9.1. Representation as to Development. The Developer's purchase of the
Development Property, and its other undertakings pursuant to the Agreement, are, and will be
used, for the purpose of development of the Development Property and not for speculation in
land holding.
Section 9.2. Prohibition Against Developer's Transfer of Property and Assignment of
Agreement. Prior to the issuance of a Certificate of Completion for the Minimum Improvement:
(a) Except only as provided in Section 9.3 or by way of security for, and only for, the
purpose of obtaining financing or refinancing necessary to enable the Developer or any successor
in interest to the Development Property, or any part thereof, to perform its obligations with
respect to acquiring the Development Property and making the Minimum Improvement and other
improvements for the Development under this Agreement, and any other purpose authorized by
this Agreement, the Developer has not made or created and will not make or create or suffer to
be made or created any total or partial sale, assignment, conveyance, or any trust or power, or
transfer in any other mode or form of or with respect to the Agreement or the Development
Property or any part thereof or any interest therein, or any contract or agreement to do any of the
same, to any person or entity whether or not related in any way to the Developer (collectively, a
"Transfer") without the prior written approval of the HRA, which approval will not be
unreasonably withheld or delayed unless the Developer remains liable and bound by this
301889v6 JBD RC125-273
19
5--d+
.
Development Agreement in which event the HRA's approval is not required. Any such Transfer
shall be subject to the provisions of this Agreement. Notwithstanding anything to the contrary in
this Section, the Developer may assign its rights under this Agreement and/or the Note to the
holder of a mortgage.
Section 9.3. Transfer of Property and Assignment Agreement. Prior to or after the
issuance of a Certificate of Completion for the Minimum Improvement:
(a) In the event the Developer, upon Transfer of the Development Property or any
portion thereof, seeks to be released from its obligations under this Development Agreement as
to the portions of the Development Property that is transferred or assigned, the HRA shall be
entitled to require, except as otherwise provided in the Agreement, as conditions to any such
release that:
(i) Any proposed transferee shall have the financial responsibility, in the
reasonable judgment of the HRA,. necessary and adequate to fulfill the obligations
undertaken in this Agreement by the Developer as to the portion of the Development
Property to be transferred.
.
(ii) Any proposed transferee, including any Bona Fide End User, by
instrument in writing satisfactory to the HRA and in form recordable in the public land
records of Hennepin County, Minnesota, shall, for itself and its successors and assigns,
and expressly for the benefit of the HRA, have expressly assumed the obligations of the
Developer under Sections 4.5, 7.1 and 7.2 of this Agreement as to the portion of the
Development Property to be transferred and agreed to be subject to such obligations to
which the Developer is subject as to such portion. The fact that any transferee of, or any
other successor in interest whatsoever to, the Development Property, or any part thereof,
shall not, for whatever reason, have assumed such obligations or so agreed, shall not
(unless and only to the extent otherwise specifically provided in this Agreement or agreed
to in writing by the HRA) deprive the HRA of any rights or remedies or controls with
respect to the Development Property or any part thereof or the construction of the
Minimum Improvement. It is the intent of the parties as expressed in this Agreement that
(to the fullest extent permitted at law and in equity and excepting only in the manner and
to the extent specifically provided otherwise in this Agreement) no transfer of, or change
with respect to, ownership in the Development Property or any part thereof, or any
interest therein, however consummated or occurring, and whether voluntary or
involuntary, shall operate, legally or practically, to deprive or limit the HRA of or with
respect to any rights or remedies on controls provided in or resulting from this Agreement
with respect to the Minimum Improvement that the HRA would have had, had there been
no such transfer or change, except as provided in this Section 9.3. In the absence of
specific written agreement by the HRA to the contrary, no such transfer or approval by
the HRA thereof shall be deemed to relieve the Developer, or any other party bound in
any way by this Agreement or otherwise with respect to the construction of the Minimum
Improvement, from any of its obligations with respect thereto.
.
301889v6 JBD RC125-273
20
5~~~
.
(iii) Any and all instruments and other legal documents involved in effecting
the transfer of any interest in this Agreement or the Development Property governed by
this Article IX, shall be in a form reasonably satisfactory to the HRA.
(b) In the event the foregoing conditions are satisfied then the Developer shall be
released from its obligation under this Agreement, as to the portion of the Development Property
that is transferred, assigned or otherwise conveyed. The restrictions under this Section terminate
as to any Phase upon issuance of the Certificate of Completion covering that Phase.
Section 9.4. Release and Indemnification Covenants. (a) Except for any
misrepresentation or any willful or wanton misconduct or negligence of the City or the HRA or
the governing body members, officers, agents, servants and employees thereof (the "Indemnified
Parties"), and except for any breach by the Indemnified Parties of their obligations under this
Agreement, the Indemnified Parties shall not be liable for and the Developer shall indemnify and
hold harmless the Indemnified Parties against any loss or damage to property or any injury to or
death of any person (collectively, the "Claim") occurring at or about or resulting from any defect
in the portion of the Development Property or the Minimum Improvement owned by Developer
at the time the Claim occurred.
.
(b) Except for any misrepresentation or any willful or wanton misconduct or
negligence of the Indemnified Parties, and except for any breach by any of the Indemnified
Parties of their obligations under this Agreement, the Developer agrees to protect and defend the
Indemnified Parties, now and forever, and further agrees to hold the aforesaid harmless from any
claim, demand, suit, action or other proceeding whatsoever by any person or entity whatsoever
arising from the acquisition, construction, installation, ownership, maintenance and operation of
the Development Property or the Minimum Improvement (collectively, the "Claim"); provided,
however, notwithstanding the foregoing, the Developer's indemnification and hold harmless
shall (i) apply only with regard to the portion of the Development Property or Minimum
Improvement owned by the Developer at the time the Claim occurred and (ii) not apply with
regard to any Claim that relates to a breach by the HRA or City of its representation set forth in
Section 2.2.
(c) Except for any misrepresentation or any willful or wanton misconduct or
negligence of the Indemnified Parties, and except for any breach by any of the Indemnified
Parties of their representations and obligations under this Agreement, the Indemnified Parties
shall not be liable for any damage or injury to the persons or property of the Developer or its
officers, agents, servants or employees or any other person who may be about the Development
Property or Minimum Improvement.
(d) All covenants, stipulations, promises, agreements and obligations of the HRA
contained herein shall be deemed to be the covenants, stipulations, promises, agreements and
obligations of such entities and not of any governing body member, officer, agent, servant or
employee of such entities in the individual capacity thereof.
.
301889v6 JBD RC125-273
21
.
.
.
5-6tCp
ARTICLE X
EVENTS OF DEFAULT
Section 10.1. Events of Default Defined. The following shall be "Events of Default"
under this Agreement and the term "Event of Default" shall mean, whenever it is used in this
Agreement, anyone or more of the following events:
(a) failure by the Developer to observe or perform any material covenant, condition,
obligation or agreement on its part to be observed or performed under this Agreement or any
other agreement required to be entered into under this Agreement.
(b) prior to the substantial completion of the Minimum Improvement, the
commencement by the Holder of any Mortgage on the Development Property or any
improvements thereon, or any portion thereof, of foreclosure proceedings as a result of default
under the applicable Mortgage documents;
( c) if the Developer shall
(i) file any petition in bankruptcy or for any reorganization, arrangement,
composition, readjustment, liquidation, dissolution, or similar relief under the United
States Bankruptcy Act or under any similar federal or State law; or
(ii) . make an assignment for benefit of its creditors; or
(iii) admit in writing its inability to pay its debts generally as they become due;
or
(iv) be adjudicated a bankrupt or insolvent.
(d) the HRA or City default as provided in Section 10.06.
Section 10.2. Remedies on Default. Whenever any Event of Default referred to in
Section 10.1 of this Agreement occurs by the Developer, the HRA may exercise any of the
following rights under this Section 10.2 after providing (30) thirty days written notice to the
Developer of the Event of Default, but only if the Event of Default has not been cured within
said thirty days or, if the Event of Default is by its nature incurable within thirty days, the
Developer does not, within such 30-day period, provide assurances reasonably satisfactory to the
party providing notice of default that the Event of Default will be cured and will be cured as soon
as reasonably possible:
(a) Suspend its performance under the Agreement until it receives reasonably
satisfactory assurances that the Developer will cure its default and continue its performance
under the Agreement.
301889v6 JBD RC125-273
22
5'-~1
.
(b) Cure any Event of Default after at least ten (10) days prior written notice to
Developer that the HRA intends to cure such default, and deduct the reasonable costs incurred to
cure such Event of Default from the payments of the Public Funds to the Developer, and the
amount due under the Note.
(c) Take whatever action, including legal, equitable or administrative action, which
may appear necessary or desirable to collect any payments due by Developer under this
Agreement, or to enforce performance and observance of any obligation, agreement, or covenant
of the Developer under this Agreement; provided, however, neither the City nor the HRA shall
have the right to terminate this Agreement.
(d) Notwithstanding the foregoing to the contrary, if the Event of Default is by the
Developer or by a transferee following the transfer of a portion of the Development Property to a
transferee in accordance with the requirements of this Agreement so that Developer is released of
liability as to the portion of the Development Property transferred, then the remedy shall be
exercised only against the defaulting transferee or the Developer, as the case may be, and only as
to the portion of the Development Property owned by such defaulting party.
.
Section 10.3. No Remedy Exclusive. Except as otherwise specifically provided herein,
no remedy herein conferred upon or reserved to any party is intended to be exclusive of any
other available remedy or remedies, but each and every such remedy shall be cumulative and
shall be in addition to every other remedy given under this Agreement or now or hereafter
existing at law or in equity or by statute. No delay or omission to exercise any right or power
accruing upon any default shall impair any such right or power or shall be construed to be a
waiver thereof, but any such right and power may be exercised from time to time and as often as
may be deemed expedient. In order to entitle the HRA to exercise any remedy reserved to it, it
shall not be necessary to give notice, other than such notice as may be required in this Article X.
Section 10.4. No Additional Waiver Implied by One Waiver. In the event any agreement
contained in this Agreement should be breached by either party and thereafter waived by the
other party, such waiver shall be limited to the particular breach so waived and shall not be
deemed to waive any other concurrent, previous or subsequent breach hereunder.
Section 10.5. Attorney Fees. Whenever any Event of Default occurs as provided in 10.1
or 10.6 hereof and if either party shall employ attorneys or incur other out-of-pocket expenses for
the collection of payments due or to become due or for the enforcement of performance or
observance of any obligation or agreement on the part of the other party under this Agreement,
the unsuccessful party shall, within ten days of written demand by the successful party, pay to
the successful party the reasonable fees of such attorneys and such other expenses so incurred by
the successful party.
.
Section 10.6. Default by HRA. Notwithstanding anything to the contrary herein, in the
event the HRA fails to perform or observe any covenant, condition, obligation or agreement on
its part to be performed or observed under this Agreement or the Note, and such failure has not
been cured within 30 days after receipt of written notice to the defaulting party from the
Developer, or if a non-monetary failure is by its nature incurable within 30 days, the defaulting
party does not, within such 30-day limit, provide assurances reasonably satisfactory to the
301889v6 JBD RC125-273
23
.
.
.
5,-~ g
Developer that the failure will be cured as soon as reasonably possible, then the Developer may
exercise such remedies as may be available at law, in equity or by statute with respect to the
defaulting party. The terms of Sections 10.3, 10.4, and 10.5 apply in favor of the Developer as
well as the HRA.
ARTICLE XI
ADDITIONAL PROVISIONS
Section 11.1. Conflict of Interests; Representatives Not Individually Liable. The HRA
and the Developer, to the best of their respective knowledge, represent and agree that no
member, official, or employee of the HRA shall have any personal interest, direct or indirect, in
the Agreement, nor shall any such member, official, or employee participate in any decision
relating to the Agreement which affects his personal interests or the interests of any corporation,
partnership, or association in which he is, directly or indirectly, interested. No member, official,
or employee of the HRA shall be personally liable to the Developer, or any successor in interest,
in the event of any default or breach by the HRA or for any amount which may become due to
the Developer or successor or on any obligations under the terms of the Agreement.
Section 11.2. Equal Employment Opportunity. The Developer, for itself and its
successors and assigns, agrees that during the construction of the Minimum Improvement
provided for in the Agreement it will. comply with all applicable federal, state and local equal
employment and non-discrimination laws and regulations.
Section 11.3. Construction Signs. In addition to any requirements of the City, no sign
shall be posted on Development Property during construction of the Minimum Improvement
until such sign has been reviewed and approved by the HRA. The HRA will not unreasonably
withhold or delay such approval. The Developer will provide the HRA with a drawing
indicating the overall sign dimensions, wording, colors, materials to be used and the method of
attachment for each sign for which approval is sought.
Section 11.4. Provisions Not Merged With Deed. None of the provisions of this
Agreement are intended to or shall be merged by reason of any deed transferring any interest in
the Development Property and any such deed shall not be deemed to affect or impair the
provisions and covenants of this Agreement.
Section 11.5. Titles of Articles and Sections. Any titles ofthe several parts, Articles, and
Sections of the Agreement are inserted for convenience of reference only and shall be
disregarded in construing or interpreting any of its provisions.
Section 11.6. Recapture of Public Funds on Sale of Development Property.
(a) Background. The Developer understands that the HRA is providing the Public
Funds because, based on information currently known to the HRA, the Development would not
reasonable be expected to occur absent such assistance. However, in the event that the actual
economics of the Development are materially more favorable to the Developer than expected, it
is important for the HRA to have a mechanism to recapture part of the Public Funds.
301889v6 JBD RC125-273
24
.
.
.
S~~9
(b) Mechanism. The Developer has previously provided the HRA's fiscal consultant
with an estimate of the Developer's costs to acquire. and prepare the Redevelopment Property for
development (such preparation costs include, but are not limited to demolition, street and utility
removal, environmental remediation, soil correction, rough grading, stormwater management,
wetland mitigation, indemnification, costs of intersection, other costs incurred by the Developer
in preparing the Development Property for development, and the Developer's profit); and with
information regarding what would be the target amount of such costs on a square foot basis to
make the project feasible. The fiscal consultant has reviewed the information provided, and.has
provided the HRA with a letter concurring with the Developer's suggested target amount. Not
later than one year from the date of this Agreement the Developer will meet with the HRA's
fiscal consultant to review the actual costs that the Developer incurred in the acquisition of the
Development Property and site preparation activities. From that information, the fiscal
consultant will determine if the actual costs of acquisition and site preparation, are less than,
equal to, or more than the per-square foot target amount The Developer agrees to provide the
consultant with sufficient information to permit the review The consultant will provide the HRA
and Developer with a certification that will address the question of whether or not the costs for
the acquisition of the Development Property and the costs for site preparation. on a per square
foot basis are less, equal to or more that than the target amount. If the consultant determines that
the actual per square foot amount is less than the target amount, the HRA shall have the authority
to reduce the principal amount of the Note by an amount equal to the per square foot difference
between the target amount and the actual amount multiplied by the number of square feet,
provided, however, in no event shall the unpaid principal balance of the Note be reduced to less
than 50% of the original principal amount of the Note. If the HRA elects to reduce the principal
amount of the Note, it must first give at least 30 days prior written notice thereof to Developer.
The HRA shall have no right to collect the any overpayment on the.Note from any source other
than by a reduction in the principal amount the Note.
Section 11.7. [Intentionally Deleted]
Section 11.8. Notices and Demands. Except as otherwise expressly provided in this
Agreement, a notice, demand, or other communication under the Agreement by either party to
the other shall be sufficiently given or delivered two days after if it is dispatched by registered or
certified mail, postage prepaid, return receipt requested, or on the date of delivery if delivered
personally; and
(a) in the case of the Developer, is addressed to or delivered personally to the
Developer at Ryan Companies US, Inc., 50 South Tenth Street, Suite 300, Minneapolis, MN
55403-2012 ATTN: Bill McHale, with a copy to Charles F. Diessner, Esq., Fredrikson & Byron,
P.A., 200 South Sixth Street, Suite 4000, Minneapolis, MN 55402-1425; and
(b) in the case of the HRA is addressed to or delivered personally to Richfield
Housing and Redevelopment Authority, 6700 Portland Avenue South, Richfield, MN 55423,
Attention: Executive Director, and with a copy to John B. Dean, Esq., Kennedy & Graven
Chartered, 200 South Sixth Street, Suite 470, Minneapolis, MN 55402,
30 I 889v6 JBD RC125-273
25
.
.
.
5--30
or at such other address with respect to either such party as that party may, from time to time,
designate in writing and forward to the other as provided in this Section.
Section 11.8. Entire Agreement. This Agreement represents the entire agreement
between the parties as to matters contained herein; and supercedes and replaces any other
agreements between the parties as to such matters.
Section 11.9. Termination of Agreement. This Agreement shall terminate on the earlier
of the Final Maturity Date under the Note or the date the Note is paid in full. This Agreement
and all obligations under this Agreement shall be null and void and of no further force and effect
from and after the termination of this Agreement.
Section 11.10. Counterparts. This Agreement may be executed in any number of
counterparts, each of which. shall constitute one and the same instrument.
Section 11.11. Recording. The HRA may record this Agreement and any amendments
thereto with the Hennepin County recorder. The HRA shall pay all costs for recording. If the
Developer requests, a memorandum of the agreement in a form acceptable to the parties will be
filed in lieu of this Agreement.
301889v6 JBD RC125-273
26
.
.
.
S~3(
IN WITNESS WHEREOF, the HRA and Developer have caused this Agreement to be
duly executed by their duly authorized representatives as ofthe date first above written.
STATE OF MINNESOTA )
) SS.
COUNTY OF HENNEPIN )
HOUSING AND REDEVELOPMENT AUTHORITY IN
AND FOR THE CITY OF RICHFIELD, MINNESOTA
By
Its Chairperson
By
Its Executive Director
The foregoing instrument was acknowledged before me this _ day of , 2006 by
Suzanne M. Sandahl, the Chair of the Housing and Redevelopment Authority in and for the City
of Richfield, Minnesota, on behalf of the Authority.
STATE OF MINNESOTA )
) SS.
COUNTY OF HENNEPIN )
Notary Public
The foregoing instrument was acknowledged before me this _ day of , 2006 by
Steve Devich, the Executive Director of the Housing and Redevelopment Authority in and for
the City of Richfield, Minnesota, on behalf of the Authority.
301889v6 JBD RC125-273
Notary Public
27
.
.
.
5-32.
RYAN COMPANIES US, INC.
By
Its
STATE OF MINNESOTA )
) SS.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this _ day of , 2006
by , the of Ryan Companies US, Inc., a
Minnesota corporation, on behalf of the corporation.
Notary Public
#3117738\2
050905
301889v6 JBD RC125-273
28
.
.
.
301889v6 JBD RC125-273
5-33
EXHIBIT A
HRA PROPERTY
Lots 1 and 2, Block 5, Iverson's 3rd Addition
A-I
.
.
.
5~3tf
EXHIBIT B
CERTIFICATE OF COMPLETION
The undersigned hereby certifies that Ryan Companies US, Inc. (the "Developer") has
fully complied with its obligations as to Phase _ under Articles IV and V of that document
titled "Contract for Private Development," dated December 19, 2006 between the Housing and
Redevelopment Authority in and for the City of Richfield and the Developer, with respect to
construction of the Minimum Improvement in accordance with the Construction Plans, and that
the Developer is released and forever discharged from its obligations to construct the Minimum
Improvement under Articles IV and V as to such Phase.
Dated:
,200_.
HOUSING AND REDEVELOPMENT
AUTHORITY IN AND FOR THE CITY
OF RICHFIELD
By:
301889v6 JBD RC125-273
B-1
5-3~
.
EXHIBIT C
$500,000
LIMITED REVENUE TAX INCREMENT NOTE
SERIES
Interest Rate
Date of
Original Issue
7.5%
2/200
.
This Note is being made and issued pursuant to that certain agreement entitled: Contract
for Private Development between The Housing and Redevelopment Authority in and for the City
of Richfield (the "Authority") and Ryan Companies US, Inc (the "Owner") (hereinafter, the
"Contract"). The Authority hereby acknowledges itself to be indebted and, for value received,
promises to pay to the order of the "Owner, to the extent and in the manner hereinafter provided,
the original principal amount of this Note, being $500,000 (the "Principal Amount"), together
with interest thereon accrued from the date of this Note, at the rate of interest of 7.5% per annum
(the "Stated Rate"), on the dates (the "Scheduled Payment Dates") set forth on the attached
Schedule A. The unpaid interest accruing from the date of this Note, shall be added to principal
on a semi annual basis on each August 1 and February 1 until February 1, 2009 [Sid-Confirm].
Capitalized terms used in this Note shall have the meanings assigned them in the Contract unless
a different meaning is clearly intended.
Any payments on this Note shall be applied fIrst to accrued interest and then to the
Principal Amount in respect of which such payment is made.
Each payment on this Note is payable in any coin or currency of the United States of
America which on the date of such payment is legal tender for public and private debts and shall
be made by check or draft made payable to the Owner and mailed to the Owner at it postal
address within the United States which shall be designated from time to time by the Owner.
The Note is a special and limited obligation and not a general obligation of the Authority,
which has been issued by the Authority to aid in financing a "project," as defmed in Minnesota
Statutes, S 469.174, of the Authority within and for the benefIt of the Cedar Avenue Tax
Increment Financing District ("District").
THE NOTE IS NOT A DEBT OF THE AUTHORITY, THE CITY OF RICHFIELD, OR
THE STATE OF MINNESOTA (THE "STATE"), AND NEITHER THE AUTHORITY, THE
CITY OF RICHFIELD, THE STATE NOR ANY POLITICAL SUBDIVISION THEREOF
SHALL BE LIABLE ON THE NOTE, NORSHALL THE NOTE BE PAYABLE OUT OF ANY
FUNDS OR PROPERTIES OTHER THAN AVAILABLE TAX INCREMENT, AS DEFINED
BELOW.
.
C-1
.
.
.
5- 3 (p
Each payment on this Note due on any Scheduled. Payment Date is payable solely from
and only to the extent that the Authority shall have received as of such Scheduled Payment Date
"Available Tax Increment" For the purpose of this Note, "Available Tax Increment" means the
tax increment received by the Authority within the six-month period immediately preceding the
payment date after first deducting therefrom an amount equal to 25% of the entire tax increment
received during such period with respect to the Property.
In the event that the Note is extended pursuant to Section 4 .2( e) of the Contract,. interest
accured, but unpaid as of the date of the extension will be added to the principal amount of the
extension.
For purposes of this Note, a "Payment Date" shall mean each of the dates set forth on Schedule
A attached hereto. This Note shall terminate upon the earlier of (i) the date when the Owner has
been fully reimbursed according to the terms hereof; or (ii) February 1, 2033, subject to
extension of such date in accordance with Section 4.2 (e) of the Contract.
The Authority's obligation to make any payments under this Note may be suspended and
the Authority shall have no obligation and incur no liability to make any payments hereunder
immediately upon the occurrence of an "Event of Default" under the Contract (subject to the
notice and cure provisions therein;) until such Event of Default has been cured and limited only
to defaults which relate to the Development Property as defined in the Contract.
This Note may also be terminated or the principal amount of the Note may be reduced in
accordance with the following:
1. If the Developer fails to complete the construction the Minimum
Improvement for a Phase within the time provided in Section 5.3 of the Contract, and, fails
to remedy such Event of Default as provided in Section 10.2 of the Contract, the BRA may
cancel the Note and notify the Developer of such in writing, and upon notice of such
cancellation, the Developer will immediately return the Note and any payments previously
made to it on the Note.
2. If after completing construction of the first Phase within the times required in .
the Contract, the Developer does not, within three years after issuance of a Certificate of
Completion for the first Phase, commence construction of a second Phase, and fails to
remedy such Event of Default as provided in Section 10.2 ofthe Contract, then the principal
amount of the Note will be reduced by $125,000. In such instance, the Note will also be
revised to reflect that all previously made payments will be applied to principal and interest
on the reduced balance.
3. If construction of the third and fourth Phases have not been commenced
within the earlier of: (i) six years from the date upon which construction of the first Phase
was commenced, or (ii) three years following the issuance of a Certificate of Completion for
the second Phase, and fails to remedy such Event of Default as provided in Section 10.2 of
301889v6 JBD RC125-273
C-2
.
.
.
;)---31
the Contract, then, the principal amount of the Note will be reduced by $125,000 for each
such Phase that has not been commenced within such time period. In such instance, the
Note will also be revised to reflect that all previously made payments will be applied to
principal and interest on the reduced balance, and if the revisions show the Note (as revised)
is fully paid, the Developer will repay any amounts received by it in excess of the amount
needed to make full payment.
The principal amount of the Note is subject to reduction in accordance with the provisions
of Section 11.6 of the Contract.
301889v6 JBD RC125-273
C-3
.
.
.
5-3)7
This Note shall not be payable from or constitute a charge upon any funds of the
Authority or the City and the Authority shall not be subject to any liability hereon or be deemed
to have obligated itself to pay hereon from any funds except the Available Tax Increments, and
then only to the extent and in the manner herein specified.
The Owner shall never have or be deemed to have the right to compel any exercise of any
taxing power of the Authority or the City or of any other public body, and neither the Authority
or the City nor any director, commissioner, council member, board member, officer, employee or
agent of the Authority or the City, nor any person executing or registering this Note shall be
liable personally hereon by reason of the issuance or registration hereof or otherwise.
This Note shall not be transferred, in whole or in part, to any person or entity unless the
Authority has been provided with an opinion of council or a certificate of the transferor, in a
form satisfactory to the Authority that such transfer is exempt from the registration and
prospectus delivery requirements of federal and applicable state securities laws. The Authority
also agrees to consent to transfer or. assignment upon being furnished securities investment
letters and/or indemnities satisfactory to the Authority.
Notwithstanding the foregoing to the contrary, the Owner may, without prior notice to or
consent of the Authority, transfer or assign the Note or the right to receive payments under the
Note to Owner's lender that provides financing for the acquisition and/or development of the
Development Property.
This Note may be prepaid in full at any time at the option of the Authority; but only with
the consent of the Owner, but only if the Authority first determines that sufficient tax increment
is or will be generated to permit such prepayment, and the parties agree upon the actual
prepayment amount.
If the Authority defaults in its obligations to the Owner hereunder, then the Authority
shall pay the Owner for all out of pocket expenses, including, but not limited to, attorney fees,
incurred by the Owner for the collection of payments due or to become due or for the
enforcement of the performance or observance of any obligation or agreement on the part of the
Authority under this Note.
This Note is issued pursuant to proper action of the Authority, and the Owner is entitled
to the benefits thereof.
IT IS HEREBY CERTIFIED AND RECITED that any acts, conditions, and things
required by the Constitution and laws of the State of Minnesota to be done, to have happened,
and to be performed precedent to and in the issuance of this Note have been done, have
happened, and have been performed in regular and due form, time, and manner as required by
law; and that this Note, together with all other indebtedness of the Authority outstanding on the
301889v6 JBD RC125-273
C-4
.
.
.
5--39
date hereof and on the date of its actual issuance and delivery, does not cause the indebtedness of
the Authority to exceed any constitutional or statutory limitation thereon.
IN WITNESS WHEREOF, the Board of Commissioners of the Authority has caused this
Note to be executed by the manual signatures of the Chairperson and the Executive Director of
the Authority and has caused this Note to be dated ,200_"
Chairperson
Executive Director
SCHEDULE A
[To be completed prior to execution of Note]
SCHEDULED PAYMENT
DATES
SCHEDULED PAYMENT DATES
301889v6 JBD RC125-273
C-5
.
.
.
5:-40
301889v6 JBD RC125-273
C-6
.
00.
~ ~
00.
~ 0 <Il
. ~ =
== u ~
...
~ iJ;.( -
~
~ =
=
riIi:l ~ iJ;.(
00.
<Il
-
l.l::
~
=
~
~
=
-
=
00.
~
""'
=
~
=
.
~
~
u
~
.s
":.l
~
~
~
~
o
~ 00
~-N
= <Ill:"-
iI!!"I~-
~Uf.l"1
~ 0
~ ;a
~ ~ S
~.~ ~ ~
"'C-O~
~ .;.-C:
-; ... ("f') S
5~o~u:i
.- ... ~ (1.).....-1
~~8"~]
5 -41
00
00
~
("f')
~
f.I"1
~
~'"3
rJ:l OIl
~ ~
.8 ~
0'\ S
o ~ u:i
.... cu....
o.,curJ:l
~~.2
l:"-
l:"-
~
0'\
f.I"1
~
00
r'
\0
f.I"1
~ ~.
~ '"3 ~ '"3
rJ:l OIl rJ:l OIl
~ ~ ~ ~
o ~ $a ~
.-C:I=I ......1=1
("f') 0 N 0
O~u:iO~u:i
.... CU........ cu....
0., cu rJ:l 0., cu rJ:l
~~.2~~.2
~ t OIl
~ g.....:.S 0
rJ:l -. d .... ~ .... .... u:i
.... cu rJ:l cu 0.... ,..., 0 CU
>> rJ:l > t 8 cu.::: =3 cu ....
.~ d cu ~ cu'O' 'E 0.,.'0' "E
'0 .9 ~ S ~ IS. g ~ gp.s IS. ~
0., ~ -:S a OIl 0 ..o'C cu~.s ~
OIl Ci'~ OIl S e.S r.J; e ~ cu OIl 8
.S .= 1=1 d,'""' ..... OIl cu rJ:l g d cu
OIl ~ ;::s.... '0 .... .s d rJ:l.... ~ .... OIl
~ 8 8.!: 0., g ;":::',;:3 ~.S 1;) ti ~
a '0 8 0 '0 'O"u cu cu 8.... .~ a
~ a 8.5 a ~ ~ s.~ ~ ~ <: 8
o
\0
r'
V)
f.I"1
"'"
o
....
o
~
o
=
~
...
-
...
<Il
~
=--
....
>>d
.... cu
.... 8
5 0.,
8.9
8 ~
o cu
uo
N
C""J
00
~
f.I"1
d
o
....
rJ:l
'S:
o
1=:
CCU
'8 8 "'"
;::s 0., cu
800Il
8 ~ ~
o cu ~
uo~
0'\
V)
-
("f')
f.I"1
....
rJ:l
....
-
~
....
o
cu
0.,
00.
1=:
>>cu
'g [
8.9
8 ~
o cu
UO
~oB
.s .S
rJ:l >>
-0.,
so,,-...
cu 0 c.i
d.s~
cu 0
OIl .-C: ~
0Ilc...0Il
d ~.S
;at1=:
.... 0 ;::s
> 0., 0
8 g. g
~ rJ:l ~
N
0;
("f')
("f')
f.I"1
-
o
-6
N
f.I"1
>>~
.t::: .s
500.
81=:
8 cu
o e
ug.
""'-
cu cu
..c: >
.... cu
00
\0 0 ~
- ("f') ~
gj--6r--:
ooo\O~
l:"- O~~~"l
l:"-("f')("f')~
f.I"1 f.I"1 f.I"1 f.I"1
............ -
rJ:l rJ:l rJ:l <Il
o 0 0 ~
ouuu
~ ~ ~ =
~~~.5
00.
-~~~
~ ,,-... 0 ...
wrJ:lV)u
e ~ d
_cu "'C
.s~~~
o ~ =
~I~ ~ 5
..c: ::>...
.... .... ~
serili:l
8 ~ i
- 1=: ~
o~
8
N
rJ:l
;::s
E:::
-
I
o
....,
r--
N
.;.
S:J
~
Cl
co
-.
'-0
;>
0\
00
~
o
....,
.
AGENDA ITEM #
REpORT #
6
86
........
STAFF REpORT
RICHFIELD
HOUSING AND REDEVELOPMENT
AUTHORITY MEETING
DECEMBER 18, 2006
REpORT PREPARED By:
BRUCE NORDQUIST, HOUSING AND
REDEVELOPMENT MANAGER
NAME, TITLE
REpORT PRESENTER:
BRUCE NORDQUIST, HOUSING AND
REDEVELOPMENT 11ANAGER
DEPARTMENT DIRECTOR REVIEW:
NAME, TITLE
REVIEWED BY EXECUTIVE DIRECTOR:
.
ITEM FOR HRA CONSIDERATION:
Consideration of a plan for Spring 2007 improvements at City Bella.
1. RECOMMENDED ACTION:
By Motion: Authorize the Chair and Executive Director to execute an
A reement providin for im rovements ad"acent to Ci Bella"
.
I II. BACKGROUND I
A conceptual work plan and cost estimates for additional pedestrian and streetscape
improvements adjacent to City Bella has been prepared. An agreement with Gramercy
Corporation representative Jan Susee is being prepared to initiate a spring construction
start including finalizing detailed plans and specifications and managing the contracted
improvements to completion. The additional background follows:
· The Housing and Redevelopment Authority (HRA) secured $500,000 in Livable
Communities monies from the Metropolitan Council for funding plaza
improvements including pedestrian scale improvements within and adjacent to
City Bella.
· The $500,000 is due to the Redeveloper, Gramercy Corporation (also known as
City Bella, LLC) for funding the construction of the public plaza at City Bella and
upon agreement for additional improvements.
121806 City Bella
.
.
I III.
.
. The $500,000 continues to be held by the HRA until an agreement to build a
skyway between City Bella and Wood lake Centre is finalized, or an alternative
use of funds is agreed to by the parties that is consistent with the eligible use of
funds.
. A Scope of Work and estimate of cost has been prepared as an alternative.
. Instead of a skyway, multiple pedestrian and streetscape improvements would
be made adjacent to City Bella.
. To summarize:
. Planters, trees, benches, and wastebaskets will be added.
. Additional pedestrian scale lighting along Lake Shore Drive and 66th Street
will circle the southwest quadrant with 23 hook lights similar in style to the
lights at City Bella and Wood lake Centre.
. Traffic light switching equipment at 66th Street and Lyndale Avenue will be
placed in a below ground vault.
. Universal parking signs will be added to improve finding the off-street parking
next to the plaza.
. Countdown pedestrian crossing signals at 66th Street and Lyndale Avenue
will be installed.
· Public art, additional sculpture to compliment sculpture already located near
K-Mart and the Kirchbak Garden at Wood lake Centre, will be developed and
installed.
· The cost for the Scope of Work, prepared by landscape architect, Michael
Schroeder is $530,963.
· Jan Susee, representing the Redeveloper, has agreed to proceed with the
Scope of Work in spring 2007 and wants to take advantage of winter bidding
to arrive at a breakeven ($500,000 or less).
BASIS OF RECOMMENDATION I
I A. POLICY I
· An agreement regarding grant funds with the Metropolitan Council and
Gramercy Corporation was approved, June 21,2004 by the HRA.
· A discussion of the Scope of Work and fund management with the
Redeveloper has been ongoing.
· In December of 2005 preliminary concepts were presented to the
HRA. The HRA indicated interest in proceeding following additions to
the Scope of Work so that costs matched resources.
CRITICAL ISSUES I
· Staff met with the Building and Grounds Committee for the City Bella
Association and the scope of work was supported.
· Contacts with the owners of Wood lake Centre, M&I, and City Bella
have indicated that a skyway is not a high priority and the proposed
improvements are a valuable substitution.
· The improvements are consistent with the original purpose of the
Metropolitan Council funding: "Plaza improvement and connections:
interior roads and parking areas with pavers, curb, gutter, lighting,
lB.
.
.
landscaping, plaza features, walls, pedestrian walkways within the
development and to other developments".
The proposed costs exceed funds available and the Developer has
indicated that an emphasis on cost controls and contract management
will ensure a breakeven.
ID.
I C. FINANCIAL I
. The HRA is holding $500,000 to fund the additional improvements.
. The HRA and resident association would not incur additional expense
to install the improvements.
. The Developer seeks a breakeven in costs and revenues and
suggests that if a balance remains, it be contributed to the public
sculpture line item.
. The agreement will require payment for any outstanding amounts still
due the HRA based on the Contract for Redevelopment for City Bella.
LEGAL ~ I
. If authorized, legal counsel will prepare an agreement to match the
Scope of Work and includes the following key provisions:
a. The HRA and Developer have agreed to a revised Scope of Work
that replaces the skyway improvement with a list of other
improvements.
b. The Developer will be allowed five draws invoiced on not less than
a 30 day period that coincides with completion of the invoiced
element and the HRA's regular claim/payment schedule.
c. Completion of all work in 2007 and full utilization of the $500,000
for the scope of improvements.
d. City will provide the developer with a Boulevard Permit for
construction of improvements. The Agreement will contain
language as typically found in such documents.
.
I IV. ALTERNATIVE RECOMMENDATION(S)
. Consider other improvements.
· Continue to reserve the $500,000 for a skyway.
· Return the $500,000 to the Metropolitan Council.
I V.. ATTACHMENTS I
· A summary of the improvements and cost.
I VI. PRINCIPAL PARTIES EXPECTED AT MEETING
. Michael Schroeder, LHB Inc.
. Jan Susee
. HRA Legal Counsel
.
.
.
~
0:
"
~
8
0-
..s
!:
'C '"
.~ ~~~
~ V) ~ b
J!~::;;~
<2.:@N~
::S "0" ii' ~
Q) v ;:: Co
~:g]l
u J! ~'E
~
"
~
!'t
~ "
o:s -tl
.~ S
~ .~
.... 'l:!
8 ~
l~
..l:l ~
.... !'J
&.~
~ Cl..
~ ,~
IJ. ~
o
o
..;.
~
_ ","
0:'"
"
o
a
...::-
~
d
"
a
"
"
"
0-
~ e
t) *
~ ~
" ...
" "
5 15
I>~
...:: 0..
"* ~
"0 .9
0: 00
s..J-
~..... ~
.~ ~ ~
'c.o ~
~ ~ u
o~~
~
0:
~
8
.~
"
0..
"
u
~
"
~
5~
O:::Q
o ~
au
o
u
u
8<
0..
"
"
0:
~
"*
1l
S
0/)
0:
o
Ol
~
'i3
""
"
,D
0:
"
~
<!)
,D
g?
.~
u
.;g
0:
~
g?
'i3
"
u
.S
'8
00
1:
Jf'
'B
'-
o
d
"
a
<!)
u
"
0..
1::
g?
.'"
""
Jf'
<!)
0:
o
...
<2
1j
o
o
o
o
o
o
~~
-
g? 0:
..9 .g
" .~
~~
~..8
~ ~ ...;
v t) ;
~~~
"0 Ul "
~..s g..
Ol"'"O
~ \0 C
;] 5
'13 " ~
~.~ ~
15.. Cl Jf'
~~~
g~i!
:E ~ ~
~j~
g?
.",
""
0/)
""
~
Ul
""
-:0
'"
"0
0:
"
!:
..:
Cl
1::
o
""
Ul
J!
j
::Q
o
o
o
o
o
","
-
o
0/)-
0: <!)
:-a .~
'3 ~ .
::1:~
~.~=
0: ,D ~
t ~~
~.,g c
] jo~
" ~
..c:: B I
Ol'<;l a
~]~
..... ~ s;
~ib~
5 ~ ~
5] 1::
u 0: 0..
~ ::SA
@"~1'
0:
o
.'"
"
'i3
<!)
a
1::
gp
.'"
""
0/)
""
"
~
::Q
~
U
u
o
o
o
o
'"
","
o
o
o
o
o
<^
'"
-
-
"0
~
""
Ol
~
~
"
..e
"
u
"0 .
<!),D
"0 ...
0: "
<!) u
- '-
>< 0
<!) -
'- 0:
o <!)
Ol a
~~
... 1::
..;;
'"
'"
~1
d <!)
8 e
,9- ~ ~
g.~ I>
Ol:g~
.~s ~
~~.~
] ~']
b 8 ~
0: 00 0:
.g <l.l .8
e ~ ~
o ::3 ::::
] ~ en
0:
o
.",
~
o
u
[<'
,D
gp
~
...
"
0..
<!)
e
~
"*
"0
0:
S
0:
o
.",
"
u
o
1!
d
8
0..
':;
C"
<!)
Ol
0:
.~
u
i:5
~
1-<
CI
~
o
o
o
o
o
0"
00
-
""
,,-:0
~'"
::Q..;;
.q'~
U l:l
~ 8
~ 0
1:: u
~~
tl:l ;
~ g
:B ~
5.~
"O:g
0: 0:
o ""'
~ ~-ri-
" 0: <!)
.~ ~~
...
"
u
""
.g
0..
~
(0- (
o
o
o
'"
'"
..,::
-
<!)
a e
~ ~ Q)
B <l.l ~
v'"; c
~]S
~S]
,D"O "
~ ; ~
0: _ jj
g ~ UJ
;:gJl..;;
~-fi~
S;::gb
.rb E
~
.~ ~ ~
<!) ... "
~ ~ 0'"
g & ~
1! ~ 8
...
B
"
{;
!:
o
a
"0"
"
0..
~
0:
0:
o
.",
"
u
o
1!
0..
*
gj
::Q
"
o
o
o
o
00
~"
-
0/)
.S
"*l eo ]
.~ ~ s ~
en I: 0 ~
..;; " <!)
.~ -5 5
_ u
,.$g~
~ c @"
.~ 0
~ u 00
=:B~
~ ~ g
8 9 .~
..::: 0: ~
o ~ ~
E"'O....
8 g &
]~~
g.1l .~
... - ~
<!)
Ol
"0
0:
S
1l
"
""
-:0
'"
-
"
~
.~
.r
8
u
-0:
~
"0
i:
"
o
~
:t
~
en
o
o
o
o
'"
d
o
o
o
o
o
~"
-
-
.~
w~
Ol <!)
0: ::Q
o ~
.~ u
:.5 ~
Ol gp
~:.g
!: "
'S 0..
" <!)
b ~
.g ~
'i3 ~
""gij
-i"fj
~.~ ~
'- "" "
o ~ ...
00 S':O
~ -0 ~
.: ~ 'g
0: <!) <!)
]"&i
<!) ... ""
0.. <!) -
~ e ~
.S <2 ~
"0 0: ""
~g~
~ ~.s
2 c ...
;'~ 5
"ii !: a
~ ~.~
's 1:: g'
.i
'"
"
2
~
""
<!)
~
:@
-.
o
o
c:!i
t-
oo"
'"
'"
-
'"
~
u
0:
o
.",
g
l'J
o
U
o
00
::t
t-
""
t-
-
"0....
0: 0
" -
O/)U
.g g
u 0:
" 0
jj U
0:"
o l:l
U 0..
- 0
,,-
... <!)
<!) I>
0: <!)
~"O
~E
~ E
~ ~
" '"
6'.2..
0:"0
<!) "
0/)-
0: 00
.", .0
0: U
o
U
o
00
cO
'"
....
~"
-
]
.9
0:
o
.",
g
l'J
o
U
'"
t-
<'i
~
00"
00
'"
'"
N
'"
'"
d
'"
'"
-
-
;R.,'Ci)'
o 0:
~ .g
~ e
0/)"':
'E '2
<!) 0..
0: 00
'~1l
<!) "
~j
'tn 0..
~rg
0:" '@
o -
.", <!)
,,"0
jj'-
00 0
:5 g.
a ...
"Os.
...::
'"
8
~
'8
0..
]
o
1-<
lo ~ d-.
.
'"'-
,-'-"'"
1-,--:--
!
"-1
J.
i.
i
.
i
..~_..-+~ ~ ---~ j .
i
j ,.
..... .'
~
~-_.
---
i
i (
i
r--~'----' --
_.-
,Oi,
P. ;0 1
~l
Y ~
I
I
,
Ll
i
i
I
I
.
L-
a> .
-
c:
co
c..
-
co
c:
co
a..
(P-3
.
.
--.j..,
!
os.
.
. -1---.
J ,~
....
m
-
l::
~
j"C..
j......
~
l::
o
:;:::;
~
>
m
W