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05-19-08 Agenda . . CITY OF RICHFIELD, MINNESOTA MONDAY, MAY 19, 2008 REGULAR HOUSING AND REDEVELOPMENT AUTHORITY MEETING RICHFIELD CITY HALL COUNCIL CHAMBERS 6700 PORTLAND AVENUE 7:00 P.M. AGENDA (- Call to order Roll call 1. Approval of minutes of (1) Special HRA Worksession of April 21, 2008 and (2) Regular HRA Meeting of April 21, 2008 2. HRA approval of agenda 3. Consent Calendar contains several separate items which are acted upon by the HRA in one motion. Once the Consent Calendar has been approved, the individual items and recommended actions have also been approved. No further HRA action is necessary. However, any HRA Commissioner may request that an item be removed from the Consent Calendar and placed on the regular agenda for HRA discussion and action. All items listed on the Consent Calendar are recommended for approval. A. Consideration of approval of resolution authorizing HRA not to waive monetary limits on municipal tort liability established by Minnesota Statute 466.04 S.R. No. 19 B. Consideration of approval of resolution authorizing purchase of real property at 7316 Clinton Avenue for New Home Program S.R. No. 20 C. Consideration of approval of resolution authorizing purchase of real property at 6704 Pleasant Avenue through New Home Program S.R. No. 21 D. Consideration of approval to execute Quit Claim Deed for property owned by KFC at 220 West 66th Street S.R. No. 22 Notes: 4. Consideration of sixth amendment to contract for private development with Ryan Companies, US, Inc.; Cedar Point area Staff Report No. 23 . Notes: . 5. Consideration of resolution authorizing Ryan Companies, US, Inc. assignment and assumption of contract for private development to Richfield GL TCF, LLC for portion of Cedar Point development Staff Report No. 24 Notes: r 6. Consideration of Deal Points related to contract for private development for Cedar Point Phase II Senior Housing Project with Susee/Lang Nelson Staff Report No. 25 Notes: 7. Discussion of TOLD update related to development of concept/site plan for 30 acre area between 66th and 69th Streets and between 17th Avenue and TH 77 . Staff Report No. 26 Notes: 8. Consideration of directing staff to proceed with negotiating "short sale" for purchase of 6645 Thomas Avenue due to notice of foreclosure involving HRA lien Staff Report No. 27 Notes: 9. Executive Director report 10. Claims and payroll . Adjournment Auxiliary aids for individuals with disabilities are available upon request. Requests must be made at least 96 hours in advance to the City Clerk at 612-861-9738. . . . AGENDA ITEM # REpORT # 3A 19 ....... STAFF REpORT RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY MEETING MAY 19, 2008 REpORT PREPARED By: STEVEN L. DEVICH, EXECUTIVE DIRECTOR NAME, TITLE REpORT PRESENTER: : STEVEN L. DEVICH, EXECUTIVE ~~~ REVIEWED BY EXECUTIVE DIRECTOR: ITEM FOR BRA CONSIDERATION: Consideration of resolution authorizing the HRA not to waive the monetary limits on statutory municipality tort liability. 1. RECOMMENDED ACTION: By Motion: Adopt a resolution authorizing the HRA not to waive the monetary limits on municipal tort liability established by Minnesota Statutes 466.04. I II. BACKGROUND I The HRA purchases its insurance from the League of Minnesota Cities Insurance Trust (LMCIT). A requirement of thatinsurance coverage is that each participating municipality must annually either affirm or waive its statutory limits of liability. This action must be taken on or before July 1 of each year. The current statutory limits of liability for Minnesota cities are $300,000 for an individual claimant and $1,000,000 per occurrence. Cities can waive those limits by allowing an individual claimant to recover more than $300,000, up to the $1,000,000 occurrence limit or more if limits are waived and excess liability insurance is purchased. They may also waive the per occurrence limit and purchase excess liability insurance. 0519tort . Historically, the Richfield HRA has not waived its limits of liability. This is true of the City of Richfield also. The majority of cities in Minnesota have not waived their limits in the past. I III. . . BASIS OF RECOMMENDA DON I .1 A. POLICY I . The State Statute establishing liability limits for cities at the current $1,000,000 level was established fairly recently and appears to be a reasonable limit. .. Historically, just over one-half of the municipalities in Minnesota have not waived the monetary limits on municipality tort liability as was established by statutes 466.04. . The HRA could waive its statuary limits in future years if the Commissioners should decide to do so. . The City of Richfield has h,istorically not waived its limits of liability. lB. CRlTICAL ISSUES j . The HRA's insurance policy with the League of Minnesota Cities Insurance Trust renews on July 1,2008. This action must be completed before that time. . The HRA does not have to make a decision on purchasing excess liability coverage at this time. Coverage such as excess liability may be added at any time. I C. FINANCIAL I . There is a slight premium savings for political entities that affirm the statutory monetary limits. For the Richfield HRA the savings would be less than $1,000 for the coverage year. . The HRA has historically not purchased excess liability coverage because of the relatively high cost of such coverage. The cost for $1,000,000 of excess coverage would be between $6,000 and $7,000 per year. I D. LEGAL I . The tort liability limits established by Minnesota statutes have protected cities historically and no Minnesota court has ever established a monetary award in excess of the statutory limits against a municipality. . Each municipal entity must annually decide whether the City would voluntarily waive the statute for both the single claims each occurrence limits. . . . I IV. ALTERNATIVE RECOMMENDATION(S) I . If the HRA feels that any single claimant should receive more than the $300,000 limit, the HRA could elect to waive the statutory monetary limits. . If the HRA feels that the $1,000,000 per occurrence limit is not adequate, the HRA could purchase excess liability coverage and subsequently waive the limits of liability up to the amount of excess coverage purchased by the HRA. I V. ATTACHMENTS . Resolution I VI. PRINCIPAL PARTIES EXPECTED AT MEETING . None 2iA-{ HRA RESOLUTION NO. . RESOLUTION AFFIRMING MUNICIPAL TORT LIABILITY LIMITS ESTABLISHED BY MINNESOTA STATUTES 466.04 WHEREAS, Minnesota Statute 466.04 provides for Municipal tort liability limits for Minnesota cities; and WHEREAS, the League of Minnesota Cities Insurance Trust has asked that each city review the tort liability limits and determine if the respective city would choose to waive it's limits; and WHEREAS, such decision to affirm or waive the tort liability limits must be filed with the League of Minnesota Cities Insurance Trust at the insurance renewal date. NOW, THEREFORE, BE IT RESOLVED that the Executive Director is directed to report to the League of Minnesota Cities Insurance Trust that t~e Richfield HRA does not waive the monetary limits on the municipal tort liability established by Minnesota statutes 466.04. Approved by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 19th day of May 2008. . Suzanne M. Sandahl, Chair ATTEST: Joan Heimberger, Secretary . . . . AGENDA ITEM # REpORT # 3B 20 ....... STAFF REpORT RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY MEETING MAY 19, 2008 REpORT PREPARED By: JULIE URBAN, INTERIM HOUSING SPECIALIST NAME. TITLE REpORT PRESENTER: JOHN STARK, INTERIM COMMUNITY DEVELOPMENT DIRECTOR INTERIM DEP AR TMENT DIRECTOR REVIEW: REVIEWED BY EXECUTIVE DIRECTOR: ITEM FOR HRA CONSIDERATION: Consideration of a resolution authorizing the purchase of real property located at 7316 Clinton Avenue for a New Home ProQram proiect. 1. RECOMMENDED ACTION: By Motion: Approve the attached resolution authorizing the purchase of real property located at 7316 Clinton Avenue through the New Home Program. I II. BACKGROUND I A representative of the owner of 7316 Clinton Avenue approached staff and expressed interest in selling the property to the City. The house was built in 1938, has two bedrooms and 838 square feet. The house is situated at the rear of the lot and is in poor condition. The house is located on a double lot with approximately 12,742 square feet. A lot split would be requested of the Council in the future, each lot providing a single-family housing opportunity. The property has been appraised at $150,000. The property would be developed for affordable housing under the New Home Program. Established in 1978, the New Home Program allows the City or Housing and Redevelopment Authority (HRA) to purchase substandard property, demolish 0519087316 Clinton . the existing home and sell the property to a nonprofit developer with plans to build a new affordable home. A number of steps would follow acquisition of the property: . A subdivision waiver would be requested to divide the lot into two 50-foot lots. . A nonprofit would be selected as a developer. . House concepts and a Development Agreement between the developer and the HRA would be prepared. I III. BASIS OF RECOMMENDATION I I A. POLICY I . A stated goal of the Richfield 2020 plan is to "sustain, expand, and continuously improve our housing assets." Acquiring this property would allow the replacement of a functionally obsolete and deteriorated property with two newly constructed affordable homes. . The HRA has demonstrated success through its New Home Program in removing housing in poor condition and providing affordable replacement housing for families. lB. CRITICAL ISSUES I . The owner has moved and wants to sell the vacant home to the City/HRA. . The City authorized purchase of the property on April 22, 2008. The City will hold a public hearing on the sale of the property to the HRA on May 27, 2008. . A small house with limited remodeling potential will be replaced with two newly constructed three to four bedroom houses. ( . Acquisition for demolition and redevelopment on sites scattered throughout Richfield has been well received. The neighborhood will be invited to participate as the new housing concept is developed. . Community Development Block Grant (CDBG) and Housing Fund resources would be used to purchase the property. The use of CDBG funds requires that households with an annual income less than 80 percent of median income be served. A family of four would need to have an income of less than $59,600 to qualify. . FINANCIAL I . CDBG funds would cover $32,150 of the purchase price. The funds are from 2007 and should be spent by June 2008. . Housing Fund resources would cover the remainder of the purchase. The 2008 HRA budget provides for this expense. . When CDBG funds are used, the City acquires the property and then sells the property to the HRA for $1. If the City acquires the property first, any program income (Le. repayment of a second mortgage) can be retained by the HRA for housing programs. If the HRA purchases the property directly, program income must be paid back to Hennepin County. . I C. . . . . . No relocation assistance would be paid to the owner because this is a voluntary acquisition and it is not part of a larger project. ID. LEGAL I . On March 24, 2008 the Planning Commission found the acquisition of 7316 Clinton Avenue for single family housing to be consistent with the Comprehensive Plan. I IV. ALTERNATIVE RECOMMENDATION(S) I . Do not authorize the purchase of the property. I v. ATTACHMENTS . Resolution I VI. PRINCIPAL PARTIES EXPECTED AT MEETING . N/A . . . 36-{ HRA RESOLUTION NO. RESOLUTION AUTHORIZING PURCHASE OF REAL PROPERTY LOCATED AT 7316 CLINTON 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: 7316 Clinton Avenue Lots 4 and 5, Block 4, Blairs Wooddale Third 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 an 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 7316 Clinton Avenue is approved at $150,000 with $32,150 being funded by Community Development Block Grant funds and $117,850 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 19th day of May, 2008. Suzanne M. Sandahl, Chair ATTEST: Joan Heimberger, Secretary 0519087316 Clinton . . . AGENDA ITEM # REpORT # 3C 21 ..... STAFF REpORT RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY MEETING MAY 19, 2008 REpORT PREPARED By: JULIE URBAN, INTERIM HOUSING SPECIALIST NAME, TInE REpORT PRESENTER: JOHN STARK, INTERIM COMMUNITY DEVELOPMENT ffiECTOR INTERIM DEPARTMENT DIRECTOR REVIEW: REVIEWED BY EXECUTIVE DIRECTOR: ITEM FOR HRA CONSIDERATION: Consideration of a resolution authorizing the purchase of real property located at 6704 Pleasant Avenue for a New Home Program project. 1. RECOMMENDED ACTION: By Motion: Approve the attached resolution authorizing the purchase of real property located at 6704 Pleasant Avenue through the New Home Program. I II. BACKGROUND I The owner of 6704 Pleasant Avenue approached staff and expressed interest in selling the property to the Housing and Redevelopment Authority (HRA). The property is a 45-foot wide vacant lot. The lot had been part of the adjacent lot to the north, which was subdivided with the approval of the City Council in April of 2006. The owner had intended to build a house on the property himself but has instead decided to sell the property. The purchase price is $46,464. The property would be developed for affordable housing under the New Home Program. Established in 1978, the New Home Program allows the HRA to purchase property and sell the property to a nonprofit developer with plans to build a new affordable home. 0519086704 Pleasant I III. BASIS OF RECOMMENDATION I . IA. POLICY I . A stated goal of the Richfield 2020 plan is to "sustain, expand, and continuously improve our housing assets." Acquiring this property would allow the construction of a new, affordable home. . A goal of the Redevelopment Plan is to provide affordable housing opportunities. . The HRA has demonstrated success through its New Home Program in providing affordable housing for families. . While the HRA typically purchases substandard homes for the New Home Program, there is no legal requirement to do so. lB. CRITICAL ISSUES I . The owner has expressed an interest in seeing the property developed for affordable housing. . A newly constructed three to four bedroom house will be added to the housing stock without removing an existing house. . The neighborhood will be invited to participate as the new housing concept is developed. . I C. FINANCIAL I . The owner is willing to sell the lot for $46,464. At $8 a square foot, the property purchase is considerably less than recent HRA purchases and involves no demolition costs. . The Housing Fund would be used to purchase the property. The 2008 HRA budget provides for this expense. . No relocation assistance would be paid to the owner because this is a voluntary acquisition and it is not part of a larger project. ID. LEGAL I . On April 28, 2008, the Planning Commission found the acquisition of 6704 Pleasant Avenue for single family housing to be consistent with the proposed Comprehensive Plan. I IV. ALTERNATIVE RECOMMENDATION(S) I . Do not authorize the purchase of the property. IV. A TT ACHMENTS . Resolution I VI. PRINCIPAL PARTIES EXPECTED AT MEETING . . N/A 3 C.-l HRA RESOLUTION NO. . RESOLUTION AUTHORIZING PURCHASE OF REAL PROPERTY LOCATED AT 6704 PLEASANT 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: 6704 Pleasant Avenue Lot 2, Block 7, Lyndale Shores on Wood Lake, 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; and WHEREAS, 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 6704 Pleasant is approved at $46,464 using 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 19th day of May, 2008. Suzanne M. Sandahl, Chair A TIEST: Joan Heimberger, Secretary . 0519086704 Pleasant . . . AGENDA ITEM # REpORT # 3D 22 ..... STAFF REpORT RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY MEETING MAy 19, 2008 REpORT PREPARED By: JOHN STARK, INTERIM COMMUNITY DEVELOPMENT DIRECTOR NAME. TITLE REpORT PRESENTER: JOHN STARK, INTERIM COMMUNITY DEVELOPMENT DIRECTOR INTERIM DEPARTMENT DIRECTOR REVIEW: REVIEWED BY EXECUTIVE DIRECTOR: ITEM FOR HRA CONSIDERATION: Consideration of approval to execute a Quit Claim Deed for the property owned by KFC at 220 West 66th Street. 1. RECOMMENDED ACTION: By Motion: Adopt a motion approving the execution of a Quit-Claim Deed for the property owned by KFC at 220 West 66th Street. I II. BACKGROUND I In 1991 the Housing and Redevelopment Authority (HRA) and Bradley Real Estate (in cooperation with KFC) entered into a Contract for Private Redevelopment for the "HUB West Parcel" on which the current KFC restaurant property is located. Bradley Real Estate complied with all of the requirements of the Contract and a Certificate of Completion was issued in accordance with the terms of the Contract. KFC ultimately took possession of the property. KFC has noted, however, that although there are no outstanding obligations to the HRA, the HRA still appears in title documents on the property. KFC has, therefore, requested that the HRA execute the attached Quit Claim Deed to the property. The HRA's legal cou~sel has concluded that there are no outstanding obligations to the HRA related to this property and that executing the Quit Claim Deed would be an appropriate action. 051908 KFC . 30- , . KelUledy Graven Offices in 470 U.S. Bank Plaza 200 South Sixth Stteet Minneapolis, MN 55402 (612) 337-9300 telephone (612) 337-9310 fax http://www.kennedy-gtaven.com Affirmative Action, Equal Opportunity Employer Minneapolis Saint Paul St. Cloud - . ROBERT J. LINDALL Attorney at Law Direct Dial (612) 337-9219 Real Property Law Specialist Certified By Minnesota State Bar Association April 25, 2008 By US Mail and Email Mr. John Stark Director of Community Development Richfield HRA 6700 Portland Avenue South Richfield, Minnesota 55423 j stark@ci.richfield.mn.us . RE: Sale ofKFC Property PIN #: 27-028-24-24-0063 220 - 66th Street West Richfield, Minnesota Dear John: We have been requested by counsel for KFC National Management Company to obtain a deed from the Richfield BRA to KFC with respect to the above property. The property was redeveloped in 1991 pursuant to a Contract for Private Development dated 7-31-1991, which was filed in the Office of the Hennepin COlmty Recorder on 8-7-1991, as Document No. 5811595. I am enclosing the requested deed, a recent title commitment relating to the property, and the Contract for Private Development. The deed is requested to confirm that the BRA no longer claims any interest in the property. I have reviewed the matter with John Dean, and we have concluded that no further obligations exist with respect to this property under the contract and consequently the request is reasonable and should be accommodated. . Please let me know if you require further information in order to respond to the request. 328976vl RJL RC125-1 . . . Stark April 25, 2008 Page 2 of2 3D-~ When an executed and notarized deed is available, please send it to me and I will forward it to Kristin Stowell, who contacted me. Thank you for your assistance. RJL:jks Enclosures cc: Kristin Stowell, Esq. John Dean, Esq. Corrine Heine, Esq. 328976vl RJL RC125-1 1:1-1 RObertJ.L~ . . . 3 ()~ 3 QUIT CLAIM DEED STATE DEED TAX DUE HEREON $1.65 Date: ,2008 FOR VALUABLE CONSIDERATION, Housing and Redevelopment Authority of Richfield, Minnesota, a public body corporate and politic under Minnesota law, Grantor, hereby conveys and quitclaims to KFC National Management Company, a Delaware corporation, Grantee, real property in Hennepin County, Minnesota, described as follows: See Exhibit A attached hereto. Together with all hereditaments and appurtenances belonging thereto. The total consideration for this transaction is $500.00 or less. The Grantor certifies that the Grantor does not know of any wells on the described real property. Housing and Redevelopment Authority of Richfield, Minnesota, a public body corporate and politic under Minnesota law By: Its: STATE OF MINNESOTA ) ) ss. COUNTY OF ) The foregoing was acknowledged before me this _ day of , 2008, by , the of the Housing and Redevelopment Authority of Richfield, Minnesota, a , on behalf of the Notary Public This Instrument was drafted by: BARNA, GUZY & STEFFEN, LTD. 400 Northtown Financial Plaza 200 Coon Rapids Boulevard Minneapolis, MN 55433 Phone: (763) 780-8500 (KNS) Tax Statements for the Real Property Described in this Instrument should be sent to: KFC National Management Company P.O. Box 32070 Louisville, Kentucky 40232 403602 1 . . . j D- L( EXHIBIT A LEGAL DESCRIPTION That part of the Southeast Quarter of the Northwest Quarter of Section 27, Township 28, Range 24, described as follows: Commencing at the intersection ofthe centerline of the Minneapolis, Northfield and Southern Railway and the Southerly line of said Southeast Quarter of the Northwest Quarter; thence North 89 degrees 59 minutes 52 seconds East, along said Southerly line, a distance of25.00 feet to the Easterly right of way line of said railroad; thence North 0 degrees 20 minutes 18 seconds East, parallel with said centerline a distance of 43.00 feet to the point of beginning of the land to be described; thence continue North 0 degrees 20 minutes 18 seconds East along said parallel line a distance of 98.56 feet; thence North 89 degrees 59 minutes 52 seconds East, parallel with said Southerly line, a distance of 282.00 feet; thence South 0 degrees 20 minutes 18 seconds West, parallel with said centerline, a distance of71.56 feet; thence South 89 degrees 59 minutes 52 seconds West, parallel with said Southerly line, a distance of 15.000 feet; thence South 0 degrees 20 minutes 18 seconds West parallel with said centerline, a distance of 27.00 feet; thence South 89 degrees 59 minutes 52 seconds West, parallel with said Southerly line, a distance of267.00 feet to the point of beginning. Together with the benefits contained in that certain Reciprocal Easement Agreement dated July 23; 1991, recorded August 7, 1991, as Document No. 5811594, between Bradley Real Estate Trust, a Massachusetts business trust, and KFC National Management Company, a Delaware corporation. . I . . AGENDA ITEM # REpORT # 4 23 ....... STAFF REpORT RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY MEETING MAY 19, 2008 REpORT PREPARED By: JOHN STARK, INTERIM COMMUNITY DEVELOPMENT DIRECTOR NAME, TITLE REpORT PRESENTER: JOHN STARK, INTERIM COMMUNITY DEVELOP ME T DIRECTOR INTERIM DEPARTMENT DIRECTOR REVIEW: NAME, TITLE 1St REVIEWED BY EXECUTIVE DIRECTOR: ITEM FOR HRA CONSIDERATION: Consideration of the proposed Sixth Amendment to the Contract for Private Development with Ryan Companies, US, Inc. 1. RECOMMENDED ACTION: By Motion: Adopt the proposed Sixth Amendment to the Contract for Private Development with Ryan Companies, US, Inc. I II. BACKGROUND I Ryan Companies, US, Inc. (Ryan) is proposing three minor amendments to the Contract for Private Development for the Cedar Point Area. These proposed amendments are contained in the Sixth Amendment to the Contract for the Housing and Redevelopment Authority (HRA) consideration. The proposed amendments are as follows: · Add the following language to Section 9.2 of the Agreement: "The restrictions under this Section 9.2 terminate upon the issuance of the Certificate of Completion." This section was originally intended to restrict the transfer of property and assignment of the Agreement only prior to a Certificate of Completion and the revised language will better reflect that intention. 051908 Ryan Dev Agmt . . Adding a reference to Section 7.1 in the requirements governing the transfer and assignment of the Agreement (Section 9.3). This would preserve the ability of the HRA to commence litigation to collect unpaid taxes upon the transfer or assignment of the contract. . Deleting the last sentence of subsection (b) of Section 9.3. This will preserve the obligations of the developer even after the issuance of a Certificate of Completion. The HRA's legal counsel has reviewed the proposed amendments and has concluded that the amendments are reasonable and do not pose any risk to the HRA. I III. BASIS OF RECOMMENDATION I I A. POLICY I . The amendments contained in the proposed Sixth Amendment to the Contract for Private Development with Ryan Companies, US, Inc. allow the developer to more effectively transfer the property and/or assign the Contract without imposing any additional risk on the HRA. I B. CRITICAL ISSUES I . Ryan is requesting that the HRA consider the proposed amendment prior to consideration of an assignment of the Contract; they are currently seeking such an assignment which would be considered immediately after this item. . I C. FINANCIAL I . The HRA's legal counsel has reviewed the proposed amendments and has concluded that the amendments are reasonable and do not pose any risk to the HRA. I D. LEGAL I. . The HRA's legal counsel has reviewed the proposed amendments and has conCluded that the amendments are reasonable and do not pose any risk to the HRA. I IV. ALTERNATIVE RECOMMENDATION(S) I . Continue consideration of the Sixth Amendment to the Contract in order to gather additional information. Iv. . ATTACHMENTS I . The proposed Sixth Amendment to the Contract for Private Development with Ryan Companies, US, Inc. . An excerpt of the original Contract with Ryan containing the affected sections (7.1, 9.2 and 9.3). I VI. PRINCIPAL PARTIES EXPECTED AT MEETING I . A representative of Ryan Companies, US, Inc. . . . 4-1 04/07/08 SIXTH AMENDMENT TO CONTRACT FOR PRIVATE DEVELOPMENT This Sixth Amendment to Contract for Private Development (this "Sixth Amendment") is entered into as of this day of April, 2008, by and between HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA, a Minnesota public body corporate and politic (the "HRA"), and RYAN COMP ANIES US, INC., a Minnesota corporation ("Developer"). RECITALS A. The HRA and Developer entered into that certain Contract for Private Development dated July 27, 2005 (the "Original Agreement"), as amended by that certain First Amendment to Contract for Private Development dated June 30, 2006 (the "First Amendment"), that certain Second Amendment to Contract for Private Development dated July 21, 2006 (the "Second Amendment"), that certain Third Amendment to Contract for Private Development dated August 16, 2006 (the "Third Amendment"), that certain Fourth Amendment to Contract for Private Development dated October 25, 2006 (the "Fourth Amendment"), and that certain Fifth Amendment to Contract for Private Development dated November 13, 2006 (the "Fifth Amendment"), together with the Original Agreement, the First Amendment, the Second Amendment, the Third Amendment, the Fourth Amendment, and the Fifth Amendment (the "Development Agreement"). B. The HRA and Developer desire to amend the Development Agreement as set forth in this Sixth Amendment. C. Capitalized terms not otherwise defined herein shall have the meanings assigned to them in the Development Agreement. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree that the Development Agreement is amended as follows: 1. Prohibition Against Developer's Transfer of Property and Assignment Agreement. Section 9.2(a) is amended by including the following as the last sentence of that subparagraph: "The restrictions under this Section 9.2 terminate upon the issuance of the Certificate of Completion." 2. follows: Transfer of Property and Assignment Agreement. Section 9.3 is amended as (a) Subparagraph "(a)(ii)" is amended in the fifth line to delete the phrase "Sections 4.5, 7.2 and 7.3" and substitute the phrase "Sections 4.5,7.1,7.2 and 7.3". 1 . . . 4,~ (b) Subparagraph "(b)" is amended by deleting the last sentence thereof. 3. Counterparts. This Sixth Amendment may be executed in any number of counterparts, each of which shall be deemed to be an original and together which shall constitute one and the same Sixth Amendment. This Sixth Amendment may be delivered by facsimile transmittal or other electronic communication of signed original counterparts. 4. Amendment. Except as set forth herein, the Development Agreement shall remain unmodified and in full force and effect. IN WITNESS WHEREOF, the parties have executed this Sixth Amendment effective as of the day and year first above written. HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA By Its Chairperson By Its Executive Director RYAN COMPANIES US, INC. By Its 4349524JDOC 04/07/08 2 . . ~ . 4~3 Attachment 2: Excerpt from Original Contract 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 Improvements, or (iii) not repair, reconstruct or restore the Minimum Improvements. 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 first applied to the repayment of any amount due under a Business Subsidy Agreement, then the balance of 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 City Tax Abatements pledged to the Note are 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 Improvements; 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 Minimum Improvements 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 JBD-242155v22 RC125-239 22 . ' . ~ . ~ . L(-~ include the obligation to make any repayments under any Business Subsidy Agreement pursuant to Section 4.5. 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 Improvements: (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 Improvements 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") except to a Bona Fide End User, 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 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 Improvements: (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. The HRA agrees that a Transfer to a Bona Fide End User JBD-242155v22 RC125-239 24 I 'J. Li--5 . shall be deemed to have financial responsibility acceptable to the HRA. Additionally, any other proposed transferee shall be deemed to have the financial responsibility if they have a net worth of not less than the Developer as of the date of the end of the Developer's fiscal year preceding the date of this Agreement. "''l. (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, 7.2, and 7.3 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 Improvements. 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 Improvements 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 Improvements, from any of its obligations with respect thereto. . (iii) Any and all instruments and other legal doc,uments 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. '7 (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 upon issuance of the Certificate of Completion. . 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 JBD-242155v22 RC125-239 ' 25 . . . AGENDA ITEM # REpORT # 5 24 ......- STAFF REpORT RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY MEETING MAY 19, 2008 REpORT PREPARED By: JOHN STARK, INTERIM COMMUNITY DEVELOPMENT DIRECTOR NAME, TITLE REpORT PRESENTER: JOHN STARK, INTERIM COMMUNITY DEVELOPMENT DIRECTOR INTERIM DEPARTMENT DIRECTOR REVIEW: NAME, TITLE REVIEWED BY EXECUTIVE DIRECTOR: ITEM FOR HRA CONSIDERATION: Consideration of an Assignment and Transfer of a portion of the Cedar Point development to Richfield GL TCF, LLC. 1. RECOMMENDED ACTION: By Motion: Approve the attached Assignment and Assumption of Contract for Private Development to Richfield GL rCF, LLC. I II. BACKGROUND I Ryan Companies, US, Inc. (Ryan) is proposing the assignment and assumption of their Contract for Private Development for the Cedar Point development to Richfield GL TCF, LLC as it relates to two portions of the property; one currently occupied by TCF Bank and the other occupied by Home Depot (as well as portions of the surrounding parking and other surface improvements). The Contract contemplates the possibility of such assignments and requires HRA approval of such an assignment. There are currently no unresolved obligations of Ryan for the Cedar Point area. The recipient of such an assignment and assumption, therefore is not subject to any unresolved obligations other than the obligations preserved through the Contract. 051908 Ryan Assignment . Ryan has proposed some minor amendments to the Contract (considered as a separate item at the May 19, 2008 meeting) that allow them to more effectively make suchan assignment without posing additional risk to the Housing and Redevelopment Authority (HRA). The HRA's legal counsel has reviewed the proposed assignment and assumption of the Contract is reasonable and does not pose any risk to the HRA. I III. BASIS OF RECOMMENDATION I I A. POLICY I . The Contract for Private Development contemplates such assignments. I B. CRITICAL ISSUES I . Ryan is requesting that the HRA consider proposed amendments to the Contract prior to consideration of this consideration of assignment. I C. FINANCIAL I . The HRA's legal counsel has reviewed the proposed amendments and has concluded that the amendments are reasonable and do not pose any risk to the HRA. . ID. LEGAL I · The HRA's legal counsel has reviewed the proposed amendments and has concluded that the amendments are reasonable and do not pose any risk to the HRA. [ E. ENVIRONMENTAL CONSIDERATIONS . N/A I IV. ALTERNATIVE RECOMMENDATION(S) I · Continue consideration of the Sixth Amendment to the Contract in order to gather additional information. Iv. . ATTACHMENTS · Resolution · Assignment and Assumption of Contract for Private Development for the TCF Bank property · Assignment and Assumption of Contract for Private Development for the Home Depot property · Agreement Concerning Reduction of Taxes and Minimum Tax for the TCF Bank property · Agreement Concerning Reduction of Taxes and Minimum Tax for the Home Depot property I VI. PRINCIPALPARTIESExpECTEDATMEETING I · A representative of Ryan Companies, US, Inc. . . . 5-{ HRA RESOLUTION NO. RESOLUTION APPROVING PARTIAL ASSIGNMENT OF CONTRACT FOR PRIVATE DEVELOPMENT AND RELEASING RYAN THEREFROM WHEREAS, the Housing and Redevelopment Authority ("the HRA") and Ryan Companies, US, Inc. ("Ryan") did on or about July 27, 2005, enter into an agreement entitled, Contract for Private Development, calling for the redevelopment of an area of land (the "Property") lying within the City of Richfield; and WHEREAS, the HRA has thereafter approved various amendments to the contract, including, without limitation, the Sixth Amendment to the Contract earlier approved on this date; (the initial contract and all subsequent amendments are herein referred to as the "Contract"); and WHEREAS, in accordance with the provisions of the Contract, Ryan has previously transferred ownership of a portion of the Redevelopment Property to GL TCF, LLC;and WHEREAS, the portion so assigned is described in the attached Exhibit A; and WHEREAS, in accordance with the provisions Section 9.3, Ryan has requested that it be released from its obligations under the Contract relating to the transferred parcels, and that such obligations become the responsibility of GL TCF, LLC; and WHEREAS, based on the report and recommendation of staff, the Board finds and determines that Ryan has met the requirements contained in Section 9.3 of Contract. NOW, THEREFORE, BE IT RESOLVED, by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota as follows: 1. The HRA accepts the undertakings of GL TCF, LLC to expressly assume the obligations of Ryan required to be assumed under the Contract 2. Ryan is hereby released from its obligations under the Contract with respect to the parcels described in Exhibit A. Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this day of May, 2008. Suzanne M. Sandahl, Chair ATTEST: Joan Heimberger, Secretary . . . 5-d.- AMENDED AND RESTATED ASSIGNMENT AND ASSUMPTION OF CONTRACT FOR PRIVATE DEVELOPMENT THIS AGREEMENT is made and entered into as of May _,2008, by and between RYAN COMPANIES US, INC., a Minnesota corporation ("Assignor"), and RICHFIELD GLTCF, LLC, a Minnesota limited liability company ("Assignee"). RECITALS: A. Assignor has, by deed dated March 31, 2008, conveyed to Assignee the real property described on Exhibit A attached hereto (the "Property") and assigned its lessor's interest to Assignee in the Ground Lease dated June 6, 2007 with TCF National Bank. B. Assignor and The Housing and Redevelopment Authority in and for the City of Richfield (the "HRA") have entered into the Contract for Private Development dated July 27, 2005, as amended by the First Amendment to Contract for Private Development dated June 30, 2006, the Second Amendment to Contract for Private Development dated July' 21, 2006, the Third Amendment to Contract for Private Development dated August 16, 2006, the Fourth Amendment to Contract for Private Development dated October 25, 2006, the Fifth Amendment to Contract for Private Development dated November 13,2006 and the Sixth Amendment to Contract for Private Development dated May _, 2008 (collectively, the "Contract for Private Development"), of which a Memorandum of Contract for Private Development dated December 12, 2006, between Assignor and the HRA was filed on December 19, 2006, as Document No. 8910691 in the Office of the Hennepin County Recorder. C. Assignor has satisfied its obligations to construct. the Minimum Improvements (as defined in the Contract for Private Development), and the HRA has issued the Certificates of Completion each dated March 27, 2008 pursuant to Section 5.4 of the Contract for Private Development. . . . 5-3 D. Assignor desires to assign to Assignee all of its' obligations under Sections 2.l(e), 6.1, 7.1, 7.4, 9.4, Article X and Sections 11.1,11.2,11.4,11.5,11.8,11.8 [sic], 11.9, 11.10 and 11.11 of the Contract for Private Development as they pertain to the Property (collectively, the "Obligations"); and Assignee desires to accept the assigninent of the Obligations and to assume and agree to perform and be bound by the Obligations of Assignor arising from and after the date hereof. E. Assignor and Assignee desire to amend and restate the Assignment and Assumption of Contract dated March 31, 2008 ("Original Assignment and Assumption Agreement") entered into by Assignor and Assignee. AGREEMENT: NOW THEREFORE, in consideration of the sum of One Dollar ($1.00) and other good and valuable consideration, the receipt and . sufficiency of which is hereby acknowledged, Assignor and Assignee hereby agree as follows: 1. Assignor hereby transfers, assigns and conveys to Assignee, and its successors and assigns, all of Assignor's Obligations. Assignor warrants and represents that it has full right, power and authority to assign the same as herein provided. Assignor further warrants and represents that the Contract for Private Development is in full force and effect and has not been modified or amended, except as set forth herein and in the separate Agreement Concerning Reduction of Taxes and Minimum Tax dated of even . date herewith between Assignor and Assignee. 2. Assignee hereby accepts the assignment of Assignor's Obligations, and hereby assumes the Obligations of Assignor arising from and after the date hereof, and agrees to perform, observe, keep and comply with all the terms, covenants, conditions, provisions and agreements contained in the Contract for Private Development pertaining to the Obligations as they relate to the Property from and after the date hereof. Assignee's assumption of the Obligations as provided herein shall inure to the benefit of the HRA. 3. This Agreement amends and restates the Original Assignment and Assumption Agreement in its entirety. [signature page follows] 2 . . . 5-.~. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the date stated above. ASSIGNOR: RYAN COMPANIES US, INC. By Timothy M. Gray ASSIGNEE: RICHFIELD GLTCF, LLC By William J. McHale, its Chief Manager RELEASE In consideration of Assignee's assumption ofthe Obligations as set forth herein, The Housing and Redevelopment Authority in and for the City of Richfield hereby releases Assignor effective March 31, 2008 from any further responsibility or liability for the Obligations as they relate to the Property. THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD By Its By Its 3 . . . 5" 5' State of Minnesota, County of Hennepin This instrument was acknowledged before me on March _, 2008 by Timothy M. Gray, as Vice President of Ryan Companies US, Inc., a Minnesota corporation, on behalf of the corporation. Notary Public . Seal State of Minnesota, County of Hennepin This instrument was acknowledged before me on ,2008 by William J. McHale, as Chief Manager of Richfield GLTCF, LLC, a Minnesota limited liability company, on behalf of the company. Notary Public Seal State of Minnesota, County of Hennepin This instrument was acknowledged before me on and , 2098 by , as and respectively of The Housing and Redevelopment Authority in and for the City of Richfield, a Minnesota public body corporate and politic, on behalf of the Authority. Notary Public Seal Drafted by: Mary E. Wawro, Esq. Ryan Companies US, Inc. 50 South Tenth Street, Suite 300 Minneapolis, MN 55403 4 . . . 5~(P Exhibit A The Property Lot 4, Block 1, Cedar Point Commons, Hennepin County, Minnesota, together with the appurtenant easements contained in that certain Operation and Easement Agreement dated December 12,2006, filed December 19,2006, as Doc. No. 8910702 in the Office of the Hennepin County Recorder. . . . S--1 AMENDED AND RESTATED ASSIGNMENT AND ASSUMPTION OF CONTRACT FOR PRIVATE DEVELOPMENT THIS AGREEMENT is made and entered into as of May _, 2008, by and between RYAN COMPANIES US, INC., a Minnesota corporation ("Assignor"), and RICHFIELD GLHD, LLC, a Minnesota limited liability company ("Assignee"). RECITALS: A. Assignor has, by deed dated March 31, 2008, conveyed to Assignee the real property described on Exhibit A attached hereto (the "Property") and assigned its lessor's interests to Assigne'e in the Ground Lease dated August 1, 2006, as amended, . with Home Depot U.S.A., Inc. ("Tenant"), of which a Memorandum of Lease dated August 1, 2006, between Assignor and Tenant was filed on December 19, 2006, as Document No. 8910701 in the Office ofthe Hennepin County Recorder and on December 19,2006, as Document No. 4339054 in the Office of the Hennepin County Registrar of Titles. B. Assignor and The Housing and Redevelopment Authority in and for the City of Richfield (the "HRA") have entered into the Contract for Private Development dated July 27, 2005, as amended by the First Amendment to Contract for Private Development dated June 30, 2006, the Second Amendment to Contract for Private Development dated July 21, 2006, the Third Amendment to Contract for Private Development dated August 16, 2006, the Fourth Amendment to Contract for Private Development dated October 25, 2006, the Fifth Amendment to Contract for Private Development dated November 13,2006 and the Sixth Amendment to Contract for Private Development dated May _,2008 (collectively, the "Contract for Private Development"), of which a Memorandum of Contract for Private Development dated December 12, 2006, between Assignor and the HRA was filed on December 19, 2006, as Document No. 8910691 in the Office of the Hennepin County Recorder and on December 19, 2006, as Document No. 4339044 in the Office of the Hennepin County Registrar of Titles. 5~ r{ . C. Assignor has satisfied its obligations to construct the Minimum Improvements (as defined in the Contract for Privat~ Development), and the HRA has issued the Certificates of Completion each dated March 27, 2008 pursuant to Section 5.4 of the Contract for Private Development. D. Assignor desires to assign to Assignee all of its obligations under Sections 2.1(e), 6.1, 7.1, 7.4, 9.4, Article X and Sections 11.1, 11.2, 11.4, 11.5, 11.8,'11.8 [sic], 11.9, 11.10 and 11.11 of the Contract for Private Development as they pertain to the Property (collectively, the "Obligations"); and Assignee desires to accept the assignment of the Obligations and to assume and agree to perform and be bound by the Obligations of Assignor arising from and after the date hereof. E. Assignor and Assignee desire to amend and restate the Assignment and Assumption of Contract dated March 31, 2008 ("Original Assignment and Assumption Agreement") entered into by Assignor and Assignee. AGREEMENT: . NOW THEREFORE, in consideration of the sum of One Dollar ($1.00) and other good and, valuable consideration, the receipt and sufficiency of which is hereby . acknowledged, Assignor and Assignee hereby agree as follows: 1. Assignor hereby transfers, assigns and conveys to Assignee, and its successors and assigns, all of Assignor's Obligations. Assignor warrants and represents that it has full right, power and authority to assign the same as herein provided. Assignor further warrants and represents that the Contract for Private Development is in full force and effect and has not been modified or amended, except as set forth herein and in the separate Agreement Concerning Reduction of Taxes and Minimum Tax dated of even date herewith between Assignor and Assignee. 2. Assignee hereby accepts the assignment of Assignor's Obligations, and hereby assumes the Obligations of Assignor arising from and after the date hereof, and agrees to perform, observe, keep arid comply with all the terms, covenants, conditions, provisions and agreements contained in the Contract for Private Development pertaining to the Obligations as they relate to the Property from and after the date hereof. Assignee's assumption of the Obligations as provided herein shall inure to the benefit of the HRA. 3. This Agreement amends and restates the Original Assignment and Assumption Agreement in its entirety. . [signature page follows] 2 . . . 5--9 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the date stated above. ASSIGNOR: RYAN COMPANIES US, INC. By Timothy M. Gray ASSIGNEE: RICHFIELD GLHD, LLC By William J. McHale, its Chief Manager RELEASE In consideration of Assignee's assumption ofthe Obligations as set forth herein, The Housing and Redevelopment Authority in and for the City of Richfield hereby releases Assignor effective March 31, 2008 from any further responsibility or liability for ' the Obligations as they relate to the Property. THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD By Its By Its 3 . . . State of Minnesota, County of Hennepin 5--/0 This instrument was acknowledged before me on May _, 2008 by Timothy M. Gray, as Vice President of Ryan Companies US, Inc., a Minnesota corporation, on behalf of the corporation. Seal , State of Minnesota, County of Hennepin Notary Public This instrument was acknowledged before me on ,2008 by William J. McHale, as Chief Manager of Richfield GLHD, LLC, a Minnesota limited liability company, on behalf ofthe company. Seal State of Minnesota, County of Hennepin Notary Public , 2008 by This instrument was . acknowledged before me on and as and respectively of The Housing and Redevelopment Authority in arid for the City of Richfield, a Minnesota public body corporate and politic, on behalf of the Authority. Seal Drafted by: Mary E. Wawro, Esq. . Ryan Companies US, Inc. 50 South Tenth Street, Suite 300 Minneapolis, MN 55403 Notary Public 4 . . . 5 - I J Exhibit A The Property Lot 8, Block 1, Cedar Point Commons, Hennepin County, Minnesota, together with the appurtenant easements contained in that certain Operation and Easement Agreement dated December 12,2006, filed December 19,2006, as Doc. No. 8910702 in the Office of the Hennepin County Recorder and filed December 19,2006, as Doc. No. 4339055 in the Office of the Hennepin County Registrar of Titles. . . . 5 - /2- AGREEMENT CONCERNING REDUCTION OF TAXES AND MINIMUM TAX THIS AGREEMENT is made and entered into as of March _, 2008, by and between RYAN COMPANIES US, INC., a Minnesota corporation ("Seller"), and RICHFIELD GLTCF, LLC, a Minnesota limited liability company ("Buyer"). RECITALS: A. Seller has, by deed of even date herewith, conveyed to Buyer the real property described on Exhibit A attached hereto (the "Property") and assigned to Buyer all its lessor's interest in the Ground Lease dated June 6, 2007 with TCF National Bank. B. Seller and The Housing and Redevelopment Authority in and for the City of Richfield (the "HRA") have entered into the Contract for Private Development dated July 27,2005, as amended by the First Amendment to Contract for Private Development dated June 30, 2006, the Second Amendment to Contract for Private Development dated July 21, 2006, the Third Amendment to Contract for Private Development dated August 16,2006, the Fourth Amendment to Contract for Private Development dated October 25, 2006, and the Fifth Amendment to Contract for Private Development dated November 13, 2006 (collectively, the "Contract for Private Development"). C. In accordance with the terms of Section 7.2 and 7.3 of the Contract for Private Development and as a condition to the sale of the Property, Seller and Buyer desire to enter into this Agreement. AGREEMENT: NOW THEREFORE, in consideration of the sum of One Dollar ($1.00) and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Seller and Buyer hereby agree as follows: 1. All capitalized terms not otherwise defined herein have the same meaning as ascribed to them in the Contract for Private Development. 2. Prior to the Maturity Date, Buyer shall not (a) cause a reduction in the real property taxes paid in respect of the Property through willful destruction of the Additional Improvements or any part thereof; (b) apply for a deferral of property tax on the Property pursuant to Minnesota Statutes, Section 469.181, or any similar law; ( c) conveyor transfer or allow conveyance or transfer of the Property to any entity that is exempt from the payment of real property taxes under State law, except to the City in accordance with Section 11.6 of the Contract for Private Development; or (d) seek, through the exercise of legal or administrative remedies, a reduction in the market value of the Additional Improvements below the value agreed upon by Developer. 5--/3 . 3. With regard to the Additional Improvements located on the Property, Buyer shall pay the real estate taxes as agreed upon by Developer which shall result in the City portion of such real estate taxes being not less than such amount per square foot for the Additional Improvements as is necessary to pay the Scheduled Payments on the Note. 4. This Agreement shall be binding upon Buyer, its successors and assigns. This Agreement may not be terminated, amended or modified by Buyer, its successors or assigns, without the written consent of Seller. 5. This Agreement, a copy of which has been provided to the HRA, is deemed to be an amendment to and incorporated into Sections 7.2 and 7.3 of the Contract for Private Development. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the date stated above. SELLER: . RYAN COMPANIES US, INC., a Minnesota corporation By Timothy M. Gray BUYER: RICHFIELD GLTCF, LLC, a Minnesota limited liability company By William J. McHale, its Chief Manager . 2 5,-{tf . Exhibit A The Property Lot 4, Block 1, Cedar Point Commons, Hennepin County, Minnesota, together with the appurtenant easements contained in that certain Operation and Easement Agreement dated December 12,2006, filed December 19,2006, as Doc. No. 8910702 in the Office of the Hennepin County Recorder. . . /' 5~/~ . AGREEMENT CONCERNING REDUCTION OF TAXES AND MINIMUM TAX THIS AGREEMENT is made and entered into as of March _,2008, by and between RYAN COMPANIES US, INC., a Minnesota corporation ("Seller"), and RICHFIELD GLHD, LLC, a Minnesota limited liability company ("Buyer"). RECITALS: A. Seller has, by deed of even date herewith, conveyed to Buyer the real property described on Exhibit A attached hereto (the "Property") and assigned to Buyer all its lessor's interest in the Ground Lease dated August 1, 2006, as amended, with Home Depot U.S.A., Inc. . B. Seller and The Housing and Redevelopment Authority in and for the City of Richfield (the "HRA") have entered into the Contract for Private Development dated July 27,2005, as amended by the First Amendment to Contract for Private Development dated June 30, 2006, the Second Amendment to Contract for Private Development dated July 21, 2006, the Third Amendment to Contract for Private Development dated August 16,2006, the Fourth Amendment to Contract for Private Development dated October 25, 2006, and the Fifth Amendment to Contract for Private Development dated November 13, 2006 (collectively, the "Contract for Private Development"). C. In accordance with the terms of Section 7.2 and 7.3 of the Contract for Private Development and as a condition to the sale of the Property, Seller and Buyer desire to enter into this Agreement. AGREEMENT: NOW THEREFORE, in consideration of the sum of One Dollar ($1.00) and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Seller and Buyer hereby agree as follows: 1. All capitalized terms not otherwise defined herein have the same meaning as ascribed to them in the Contract for Private Development. 2. Prior to the Maturity Date, Buyer shall not (a) cause a reduction in the real property taxes paid in respect of the Property through willful destruction of the Minimum Improvements or any part thereof; (b) apply for a deferral of property tax on the Property pursuant to Minnesota Statutes, Section 469.181, or any similar law; (c) conveyor transfer or allow conveyance or transfer of the Property to any entity that is exempt from the payment of real property taxes under State law, except to the City in accordance with . Section 11.6 of the Contract for Private Development; or (d) seek, through the exercise of 5r )~ . legal or administrative remedies, a reduction in the market value of the Minimum Improvements below the value agreed upon by Developer. 3. With regard to the Minimum Improvements located on the Property, Buyer shall pay the real estate taxes as agreed upon by Developer which shall result in the City portion of such real estate taxes being not less than such amount per square foot for the Minimum Improvements as is necessary to pay the Scheduled Payments on the Note. 4. This Agreement shall be binding upon Buyer, its successors and assigns. This Agreement may not be terminated, amended or modified by Buyer, its successors or assigns, without the written consent of Seller. 5. This Agreement, a copy of which has been provided to the HRA, is deemed to be an amendment to and incorporated into Sections 7.2 and 7.3 of the Contract for Private Development. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the date stated above. . SELLER: RYAN COMPANIES US, INC., a Minnesota corporation By Timothy M. Gray BUYER: RICHFIELD GLHD, LLC, a Minnesota limited liability company By William J. McHale, its Chief Manager . 2 5~/l . Exhibit A The Property Lot 8, Block 1, Cedar Point Commons, Hennepin County, Minnesota, together with the appurtenant easements contained in that certain Operation and Easement Agreement dated December 12,2006, filed December 19,2006, as Doc. No. 8910702 in the Office of the Hennepin County Recorder and filed December 19, 200~, as Doc. No. 4339055 in the Office of the Hennepin County Registrar of Titles. . . . AGENDA ITEM # REpORT # 6 25 .... STAFF REpORT RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY MEETING MAY 19, 2008 REpORT PREPARED By: KAREN BARTON, COMMUNITY DEVELOPMENT 11ANAGER NAME, TITLE REPORT PRESENTER: JOHN STARK, INTERIM COMMUNITY DEVELOPMENT DIRECTOR INTERIM DEPARTMENT DIRECTOR REVIEW: EJ NAME, TITLE REVIEWED BY EXECUTIVE DIRECTOR: ;l\ . ITEM FOR HRA CONSIDERATION: Consideration regarding the proposed Deal Points relating to the Contract for Private Development for the Cedar Point Phase II Senior HousinQ Proiect. I. RECOMMENDED ACTION: By Motion: Approve proposed Deal Points and direct staff to prepare a Contract for Private Development with Susee/Lang Nelson for the redevelopment of the Cedar Point Phase II area. I II. BACKGROUND I City staff, along with City Attorney John Dean and Ehler's Financial Advisors, have been working with Susee/Lang Nelson ("Developer") to define the Deal Points for the proposed redevelopment of the Cedar Point Phase II area. Late last week City staff and the Developers reached consensus on the following Deal Points: . · The Developer is responsible for the property acquisition and assembly. · The Developer will receive 90 percent of that portion of the tax increment generated in the District that is attributable to the project; the City will retain 10% of the tax increment for administration. Cedar Point Phase /I Deal Points . . The Developer is responsible to vacate 64th Street and any underground utilities through the project, if necessary. . The Developer agrees to supply a minimum of $100,000 in public art to the project. . 429 Special Assessment Bond . City will issue up to $4,320,000 in 429 Special Assessment Bonds. . $1,100,000 of the bond proceeds will be used for construction costs of Richfield Parkway between 63rd and 66th Streets, and storm water processing. . Up to $3,220,000 of the bond proceeds will be used to purchase 25 feet of right-of-way from the developer for the portion of Richfield Parkway between 63rd and 66th Streets (assuming land values justify the purchase price). . The development will be assessed 20% of the bond costs (up to $864,000) over the life of the bond (i.e., 20 years). ($220,000 as 20% of the road/storm water costs and $644,000 as 20% of the ROW costs.) . The remainder of the debt service on the bond will be paid through the general obligation of the City. . Developer's Obligation to Repay the City . . The Developer will be obligated to repay the City an amount of up to $3,220,000 (based on actual bond issuance): . Up to $864,000 in Special Assessment payments over the life of a special assessment bond (up to $644,000 for the portion of assessment for ROW costs and $220,000 for the portion of assessment for road construction/storm water). and; . Up to $2,356,000 through a note secured by a mortgage on the property to be repaid in full with an annual interest charge at the earlier of either 20 years after the date of recording or upon the sale or substantial refinancing of the project. The project area is within the boundaries of an existing TIF District that has been grandfathered to allow for the use of eminent domain. However, the City has made no indication of intent to use eminent domain to acquire any of the properties. . Staff is recommending the Housing and Redevelopment Authority (HRA) approve the Deal Points and authorize staff to proceed with the preparation of a Contract for Private Development with the Developer, to be brought back to the HRA for final approval. . I III. BASIS OF RECOMMENDATION I IA. POLICY I . The City has identified a Low Frequency Noise Impact area in the northeast corner of Richfield where the negative impacts of low frequency noise will exceed the tolerances of existing housing. . Federal funding for property acquisition in this area has been expended. . Redevelopment planning efforts have identified the Cedar Point Phase II area as ideal for multi-family housing. . The Developer has indicated a desire to redevelop this area into multi- family senior housing. . Due to the high cost of assembling the private property and development financing, the Developer has indicated a need for up to $3,220,000 in public assistance. lB. CRITICAL ISSUES I . The Deal Points assume the Developer will be able to successfully negotiate the purchase of all 29 properties in the development area. Should they be unable to accomplish this task, the Developer can choose to abandon the project. . Since the TIF District in which the proposed project is located was established in 2005, each year that passes further diminishes the available tax increment generated by the district. . . For the development to proceed as proscribed, the Richfield City Council must approve the public financing component. I C. FINANCIAL I . Due to the high cost to assemble the property, the Developer has identified a need for public assistance. . The Developer will be required to repay the City through Special Assessment payments and through a note secured by a mortgage on the" property to be repaid in full at a future date, with interest. . The HRA's financial analyst, Ehlers and Associates has participated in the drafting of the Deal Points. ID. LEGAL I . HRA legal counsel has participated in the negotiating and drafting of the Deal Points in cooperation with City staff and the Developer. I IV. ALTERNATIVE RECOMMENDATION(S) . Approve Deal Points as presented. . Modify and approve the Deal Points. . Do not approve the Deal Points. Iv. ATTACHMENTS . N/A . I VI. PRINCIPAL PARTIES EXPECTED AT MEETING. . Representatives of the Developer . John Dean, HRA Legal Counsel . Sid Inman, Ehlers and Associates Financial Advisors . . . AGENDA ITEM # REpORT # 7 26 " ....... . STAFF REpORT RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY MEETING MAY 19, 2008 REPORT PREPARED By: CHRISTINE COSTELLO, COMMUNITY DEVELOPMENT SPECIALIST NAME, TITLE REpORT PRESENTER: JOHN STARK, INTERIM COMMUNITY DEVELOPMENT DIRECTOR INTERIM DEPARTMENT DIRECTOR REVIEW: NAME, TITLE Ei1 .--- REVIEWED BY EXECUTIVE DIRECTOR: ITEM FOR HRA CONSIDERATION: Discussion of TOLD update on the development of a concept/site plan. I. RECOMMENDED ACTION: By Motion: No formal action required. I II. BACKGROUND I On April 16, 2007 the Housing and Redevelopment Authority (HRA) authorized an Agreement with TOLD Development Company (TOLD) to study the development feasibility for the 30-acre. area between 66th and 69th Streets and between 17th Avenue and TH 77. A number of extensions to the original agreement were granted and the last extension granted by the HRA is set to expire on November 17, 2008. For the last extension it was agreed that TOLD would provide within the nine month period updates to the HRA to ensure that the process was moving forward. The first update to the HRA is at the May meeting in which TOLD will discuss a development concept/site plan to show more precisely what they are proposing for redevelopment. Then again at six months (in August) TOLD would discuss the overall feasibility of the redevelopment with the HRA. Then finally, by the 051908-TOLD Update . . . November expiration date TOLD would authorize in a letter to the City to begin working on a development agreement. It was determined that this multi-step process would allow the HRA and staff to see the progress being made before the nine month extension expired on November 17, 2008. I III. BASIS OF RECOMMENDATION I I A. POLICY I . The area under consideration is included in the Cedar Avenue Corridor Redevelopment Concept Master Plan. lB. CRITICAL ISSUES I . TOLD representatives are agreeable to the multi-step process for moving forward. . It is important that when the economy is not as strong as it was in past years to take a phased approach in redevelopment to ensure the best outcomes and benefits for the community. I C. FINANCIAL I . The Preliminary Development Agreement requires TOLD to reimburse the HRA for expenses including staff and consultants. I D. LEGAL . N/A I IV. ALTERNATIVE RECOMMENDATION(S) . N/A I v. ATTACHMENTS . Narrative . Concept site plan I VI. PRINCIPAL PARTIES EXPECTED AT MEETING I . Roger Behrens, Assistantt General Counsel for TOLD . Dennis Sutliff, Principal Architect at ESG . . . I-I O!Q~!! May 12, 2008 . Ms. Christine Costello Community Development Specialist City of Richfield 6700 Portland Avenue Richfield, MN. 55423 Dear Christine, I am pleased to provide our concept plan for the redevelopment Cedar Avenue Corridor between 66th and 69th Street. We envision the development a of high-quality business park on the site. This concept plan reflects the product types that we believe are feasible over the long-term for this area of the City of Richfield. The concept plan is not intended to accurately depict infrastructure, public improvements or architectural characteristics; these details will be developed through an interactive process with the city as the feasibility analysis moves forward. The concept plan provides us with an idea on how the various uses will interact on the site and the overall density and massing of the project. The concept plans contemplates 542,000 square feet of office space, 73,000 square feet of office/flex space and, a 140-room hotel, and 45,000 square feet of retail, neighborhood office, and medical uses. Elness Swenson Graham Architects (ESG) developed the plan on our behalf. ESG has worked with the City of Richfield in the past and was our architect on the redevelopment of Excelsior & Grand in St. Louis Park. Roger Behrens will be representing TOLD at the May 19th HRA meeting. Unfortunately I will be out of town on business. We look forward to receiving any feedback that the HRA has on the plan and moving forward on completing the financial feasibility analysis in the near future. Sincerely, . ~~~--:7 Gary Dreher Managing Principal MINNEAPOLIS I MILWAUKEE Two Carlson Parkway. Suite 355 I Plymouth, Minnesota 55447 TEl 952.278.9000 FAX 952.278.7574 . . n I'T1 o )> :;:c n o ;<J~ ;:;.~ ;;0 ~z .0. Vl 3:Vl :;'0 iilc :5'" Iii:!: . II~ ;. '< . IV ~ 0 _ 0 I 00 '" . ,. ~ ,. . ~ a> ~---I 50 ~ ~r- ~O VI f'l .. i> II IV 0 0 S!l j '" '" ,... :l $ 1-2- \\ ~ . . . AGENDA ITEM # REpORT # 8 27 ..... STAFF REpORT RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY MEETING MAY 19, 2008 REpORT PREPARED By: KAREN BARTON, COMMUNITY DEVELOPMENT 11ANAGER NAME, TITLE REpORT PRESENTER: KAREN BARTON, COMMUNITY DEVELOPMENT 11ANAGER INTERIM DEPARTMENT DIRECTOR REVIEW: ~ REVIEWED BY EXECUTIVE DIRECTOR: ITEM FOR BRA CONSIDERATION: Notice of pending foreclosure at 6645 Thomas Avenue involving a Housing and Redevelopment Authoritv lien. I. RECOMMENDED ACTION: By Motion: Direct staff to proceed with negotiating a "short sale" for the purchase of 6645 Thomas Avenue. I II. BACKGROUND I Staff has recently been notified of a pending foreclosure at 6645 Thomas Avenue. This property currently has a Housing and Redevelopment Authority (HRA) lien in the amount of $15,000. The primary mortgage on the property has an outstanding balance of $182,650.37, in addition to the HRA lien for a total of $197,650.37 in liens against the property. The 2008 Hennepin County Estimated Market Value is $217,000.00 The Sheriff's sale is currently scheduled for June 4, 2008. Staff has visually inspected the exterior of the property and has concluded that extensive repairs would likely be required to make the home marketable. 6645 Thomas Avenue - HRA Lien . There are several alternatives available to the HRA at this time: 1. Direct staff to attempt to purchase the property at the Sheriff's Sale. This would likely require the HRA to spend $197,650.37 plus foreclosure costs to acquire the property. Due to the extensive repairs that would be needed to subsequently sell the house and recoup the HRA's original $15,000 investment, the HRA would need to invest additional funds into the property. Given the market at this time, it would be unlikely that we would be able to sell the house at a sufficient price to fully recoup the $15,000 plus the additional funds needed to repair the house. . 2. Direct staff to attempt to purchase the property prior to the Sheriff's Sale as a "short-sale", offering an amount that would allow for repairs/improvements to be made to the house that would not exceed a reasonable and/or affordable sale price for the property (e.g., offer $170,000 for a market-rate re-sale; $160,000 for an "affordable" re-sale to a family making 80% of Area Median Income). This of course would be subject to the current owner's approval AND the mortgage holder's approval. However, this option would allow the current owner to "redeem" the mortgage and not have a foreclosure on their credit report. Given the very short timeframe until the scheduled Sheriff's Sale (June 4, 2008), this option may not be realistic. Therefore, if this option is chosen by the HRA, staff requests a secondary option be selected should this option not come to fruition. 3. Direct staff to attempt to negotiate repayment of the HRA lien with the homeowner. This option, although laudable, is highly unlikely given the fact that the property is currently in foreclosure. 4. Direct staff to allow the Sheriff's Sale to proceed without pursuing the purchase of the property, foregoing the HRA's $15,000 lien. Staff recommends that the HRA direct staff to pursue option 2 listed above and to further select a secondary option should the "short-sale" option not be viable. . I III. BASIS OF RECOMMENDA nON I I A. POLICY I . The Mortgage Foreclosure Response Program Procedural Guidelines (approved by the HRA on September 17, 2007) direct staff to consider various options when a property with an HRA mortgage interest enters foreclosure. . Decision to purchase/rehab/sell, purchase/demolish/sell, or negotiate repayment of the HRA lien is made by the HRA. . Redemption/purchase should only be pursued when a comfortable margin exists between the potential resale price and the estimated costs of redemption/purchase, rehabilitation, and subsequent re-sale. . . . I B. CRITICAL ISSUES I . The outstanding liens on the property currently total $197,640.37. . The 2008 Estimated Market Value for the property is $217,000. . Given the state of disrepair the property is in, it is unlikely the property could be sold at a high enough price to fully recoup the City's investment if full price is paid at the Sheriffs Sale. . If no action is taken, the HRA will lose its $15,000 investment. . Time restrictions to pending Sheriffs Sale on June 4, 2008 I C. FINANCIAL I . The HRA currently has a lien on the property in the amount of $15,000. . Additional HRA investment to acquire the property, if desired. . Additional HRA investment to repair the property for re-sale, if purchased. I D. LEGAL . N/A I IV. ALTERNATIVE RECOMMENDATION(S) I . Direct staff to pursue the purchase of 6645 Thomas Avenue at the Sheriffs Sale and subsequently re-sell the property. .. Direct staff to attempt to purchase the property prior to the Sheriffs sale as a "short-sale" (offering less than the outstanding liens). . Allow the Sheriffs Sale to proceed without pursuing purchase . Direct staff to attempt to negotiate repayment of the HRA lien with the homeowner. I V. ATTACHMENTS I . Mortgage Foreclosure Response Program Procedural Guidelines. . Photo of 6645 Thomas Avenue. I VI. PRINCIPAL PARTIES EXPECTED AT MEETING . N/A ~-I . Mortgage Foreclosure Response Program Procedural Guidelines This document has been developed as a guidance tool for program administration. This document should not be interpreted as constituting any contractual agreement or liability by tHe City or HRA. Statement of Purpose 'I ' The goal of the Richfield Mortgage Foreclosure Response Program is to consider t~e various options when a property with a HRA mortgage interest enters foreclosure. Proaram Obiectives . To protect the HRA's mortgage, interest. . To improve the housing stock for future homeowners. . To prevent foreclosure and ke~p homeowners in their home whenever feasible. . I 1. After receiving a notice of foreclosure, staff contacts City Manager and HRA Ch1air. 2. Staff visits homeowner with information regarding foreclosure prevention. I 3. Analysis on property, mortgage amount, foreclosure status, etc. is completed. 4. Decision is made to: purchase/rehab/sell, purchase/demolish/sell, or negotiate repayment of HRA lien. I . I Redemption/Purchase I 1. Redemption should only be pursued when a comfortable margin exist~ betwee~ the potential resale price and the estimated costs of redemption, rehabilitation, and sale. I I Rehabilitation I 1. The purchased homes will be rehabilitated to meet the Point of Sale reqUireme~ts. This level of rehabilitation will ensure a safe living environment for the future homeowner and <;:onserve HRA resources. I 2. Staff will coordinate the rehabilitation, with assistance from non-profit organizations as needed. I I Demolition I i 1. In some instances, the property in foreclosure may be a qualifying substandard Idwelling that is in a condition that it should be demolished as substandard and by removal becomes a vacant lot for an affordable' New Home or a Richfield Rediscovered home. I i I Sale I 1. Once the HRA purchases the property, the HRA will consider an offer from former owner to purchase the home back at market value. I 2. The rehabilitated homes, at a minimum, will be sold at a price to cover HRA co~ts. The HRA will decided the level of sale on;a case by case basis (i.e. market-rate, 80% AM', 60% AMI, etc.). . I 3. Staff will market the home for sale and facilitate the sale. 'The use of non-profit organizations or realtors may be used when needed. Legal counsel will be utilized during the re~ale process. I I Proaram Basics . 091707 Foreclosure Guidelines . . . 8-~ "Short Sales" i ! 1. It is not unusual for a mortgage company to approach the HRA with an offer to buy the HRA's mortgage interest due to a "short sale". A short sale typically occurs under dir~ circumstances. In such sales, the lender lets the borrower sell the house for less than the outstanding loan amount, takes the proceeds and forgives any remaining overage. Banks are willing to do so , I because they often lose less on these deals than they do in foreclosures. Shor;t sales are pre- foreclosure strategies that allow a homeowner to get out before foreclosure prdceedings occur. I 2. Staff will consider short sale offers and negotiate as high of repayment as possible. Action will be taken quickly as to not to disrupt the short sale opportunity and cause the homeowner to enter into foreclosure. I I ! I