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05-16-05 agendaCITY OF RICHFIELD, MINNESOTA MONDAY, MAY 16, 2005 , REGULAR HOUSING AND REDEVELOPMENT AUTHORITY MEETING RICHFIELD CITY HALL COUNCIL CHAMBERS 6700 PORTLAND AVENUE 7 P.M. AGENDA Call to order 1. Consideration of resolution officially appointing Steven L. Devich as HRA Executive Director Staff Report No. 14 Notes: 2. Approval of minutes of (1) Special Concurrent HRA/City Council/Planning Commission Worksession of March 21, 2005 and (2) Regular HRA Meeting of March 21, 2005 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 designating Bruce Palmborg, Community Development Director, as Acting HRA Executive Director for 2005 S.R. No. 15 B. Consideration of approval of resolution accepting assignment of Professional Services Agreement with Conworth, Inc. from City of Richfield for land acquisition services in connection with Cedar Point Project S.R. No. 16 C. Consideration of approval of resolution requesting City Council to call for public hearing on modification to redevelopment plan for Richfield Redevelopment Project Area and referring modified plan to Planning Commission S.R. No. 17 D. Consideration of approval of Professional Services Agreement with Cornejo Consulting to conduct analyses of Richfield Redevelopment Project Area S.R. No. 18 Notes: 5. Consideration of Contract for Private Development with Ryan Companies, Inc. for redevelopment of Cedar Point area Notes: Staff Report No. 19 6. Consideration of staff conducting a tax increment financing analysis for west side of Lyndale Avenue and east side of Garfield Avenue north of 76th Street and draft Contract for Private Development with developers John Laurent and Bill Schatzlien for consideration at future HRA meeting Notes: Staff Report No. 20 7. Executive Director report 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 # REPORT # STAFF REPORT ~ HOUSING AND REDEVELOPMENT AUTHORITY MEETING MAY 16, 2005 6 20 REPORT PREPARED BY: REPORT PRESENTER: JOHN STARK, ASSISTANT DIRECTOR OF COMMUNITY DEVELOPMENT NAME, TITLE JOHN STARK, ASSISTANT DIRECTOR OF COMMUNITY DEVELOPMENT DEPARTMENT DIRECTOR REVIEW: REVIEWED BY EXECUTIVE DIRECTOR: NAME, TITLE SIGNA ITEM FOR HRA CONSIDERATION: Consideration of a redevelopment proposal for the west side of Lyndale Avenue and the east side of Garfield Avenue north of 76th Street b develo ers John Laurent and Bill Schatzlein. I. RECOMMENDED ACTION: By Motion: Direct staff to conduct a TIF analysis of the site and to draft a Contract for Private Development with developers John Laurent and Bill Schatzlien for consideration at a future meeting by the Housing and Redevelopment Authority. II. BACKGROUND In 1996 the Lyndale Gateway Redevelopment Plan and Strategy was adopted as a guide to the redevelopment of Lyndale Avenue between 74th and 77th Streets. Three phases of the redevelopment have occurred: • Mainstreet Village Senior Apartments and Offices; • Casteel Place Townhomes; and The condominiums/townhomes and retail at Kensington Park. The remaining area of the Lyndale Gateway area (from 74th to 76th Streets) will not involve the redevelopment of entire blocks as earlier development projects had. One of the block "segments" that is a potential redevelopment site is the southern 051605 7500Lyndale half of the east side of Lyndale Avenue. Currently, this area houses a pawn and gun shop, a Dairy Queen restaurant and a Thai restaurant. The area under consideration also includes the four single-family homes that have addresses on Garfield Avenue but are located directly behind the commercial uses. The houses are included in the potential development area because it is difficult to accomplish commercial redevelopment with only ahalf-block depth and because a shared property line between commercial properties and single-family homes often results in land-use conflicts. The development team of John Laurent and Bill Schatzlien are proposing amixed- use development on this site which would include condominiums and commercial uses. Mr. Laurent and Mr. Schatzlien have both been involved in the development field for over 25 years. (Mr. Laurent has been interested in the 76th Street and Lyndale Avenue area for redevelopment for many years.) Mr. Laurent and Mr. Schatzlein have sent letters to all of the property owners and have had discussions with six of the seven property owners. They have signed an option to purchase with one of the commercial property owners and have received letters from the other two describing a willingness to discuss the sale of their property. The developers have prepared a concept plan for the site including architectural renderings, which will be available for presentation as part of the Housing and Redevelopment Authority's (HRA) consideration of this issue. III. BASIS OF RECOMMENDATION A. POLICY • The Lyndale Gateway Redevelopment Plan and Strategy has been used as a guide for the redevelopment of the Lyndale Gateway area. • The area under consideration is included in the Lyndale Gateway Redevelopment Plan and Strategy. B. CRITICAL ISSUES • Due to the high cost of site assembly, there will likely be a need for public assistance in the form of Tax increment Financing (TIF). • It must be determined whether the area qualifies as a TIF district before the HRA commits to TIF as a funding source. C. FINANCIAL • A Contract for Private Redevelopment would identify the financial responsibility of each party. • Typically, a developer is required to reimburse the HRA for certain staff/consultant costs that are incurred in the project. D. LEGAL • N/A IV. ALTERNATIVE RECOMMENDATION(S~ • Make a determination that this area should not be considered for redevelopment and direct staff not to entertain any proposals for its redevelopment. • Direct staff to seek out other development proposals for this site. V. ATTACHMENTS • Site Plan and Rendering VI. PRINCIPAL PARTIES EXPECTED AT MEETING • Developers John Laurent and Bill Schatzlein. cv c~ a> U, a~ a' ~. ..c o cry c t ~- ~n o ~ ~ - ~ ~ ~ ~ ~ ~ v ~ C, ~ ~ U _ 1_L_! ~ ~ GII CB ~ Q> COJ 7~ `.y ...1 ti ~d u:. ~~ ..' ~ C~ SZ J ~ ~ a1 x5 P ~ ~ p F' ~ cn C ~ T~ -C ~ ~ O ~ ~ c~ ~ ~ FRs ~ C ~ ~ Y >" ~ ~ ~ O ~ (t5 O c ca -o ~ Q p t k'~ ~!, _. P ~ I~ ~~ 1f. I~: x ~_: a + ~ ~ ~ ;~ ~ 1C ' i t ~'~: ~ j e f ,M ~~ ' .yw i t ~ . ,~! r ;~~ ` i~ .'t ~ ;~ ~. •- '~.r'. ~ ,~:; ,~.~ ~~ ~~ ~~.~°` ~~ ~ 4 ih , k ~' ~~~ 'r ~~ ~4i AGENDA ITEM # REPORT # J STAFF REPORT 5 19 HOUSING AND REDEVELOPMENT AUTHORITY MEETING MAY 16, 2005 REPORT PREPARED BY: JOHN STARK, ASSISTANT DIRECTOR OF COMMUNITY DEVELOPMENT NAME, TITLE REPORT PRESENTER: DEPARTMENT DIRECTOR REVIEW: d, REVIEWED BY EXECUTIVE DIRECTOR: ITEM FOR HRA CONSIDERATION: ' Consideration of a Contract for Private Development with Ryan Companies, Inc., for redevelopment of the Cedar Point area. I. RECOMMENDED ACTION: By Motion: Approve and authorize execution of attached Contract for Private Development with Ryan Companies, Inc., for redevelopment of the Cedar Point area pending minor modifications by the Housing and Redevelopment Authority's legal counsel. II. BACKGROUND On October 18, 2004 the Richfield Housing and Redevelopment Authority (HRA) approved a Contract for Private Redevelopment with Ryan Companies, Inc. (Ryan) for the redevelopment of the Cedar point area. The HRA staff report that accompanied that contract is attached, as it provides much of the lengthy background of the project. The Contract that was previously approved by the HRA was never executed because there were several issues that it deferred for later agreement between Ryan and the HRA. It was subsequently decided to work out those issues in the context of the Contract. Among the issues that were not completely resolved in the earlier development agreement were: JOHN STARK, ASST. DIRECTOR OF COMMUNITY DEVELOPMENT NAME, TITLE 05162005CedarPoint • The allocation of costs for the construction of a new intersection on 66th Street just east of 17th Avenue; • The manner in which $2 million in grant funds from Hennepin County are to be expended; and • The cost that Ryan would have to pay the HRA for properties that had already been acquired. HRA staff, legal counsel and representatives of Ryan and their legal counsel have cooperatively drafted a revised contract for HRA consideration. Among the more notable provisions in this proposed contract (attached) are: • 29 Acre Site. • Minimum Improvements include a SuperTarget and Home Depot home improvement store. There is 61,200 additional sq. ft. of in-line and freestanding retail contemplated, but not required under the proposed terms of the contract. • Ryan will privately acquire 33 single-family homes (if the cost to acquire, environmentally mitigate and demolish these homes exceeds $8,735,300, Ryan is not contractually compelled to develop the project). • The HRA will utilize the $2 million Multijurisdictional Project Fund Grant from Hennepin County to acquire remaining commercial and apartment properties on Cedar Avenue. • The developer does not contemplate any public acquisition through condemnation by the HRA; there are no provisions in the proposed Contract, therefore, that address.HRA purchase of private property. • Ryan and/or future users of the site will contribute 20% of the costs to construct the new 66th Street intersection at approximately 17th Avenue. This contribution shall be no less than $400,000 nor greater than $800,000. • Ryan shall have the right of first refusal to purchase any remnant properties that were purchased for the intersection. • Caps totaling $6,869,750 have been set on the maximum amount that Ryan would be expected to pay for properties that have already been publicly acquired. • Due to the estimated cost ($15,605,050 for the privately and publicly owned properties) of the private purchases, Ryan has identified a need for public assistance. • The public assistance shall be in the form of a Tax Abatement Pay-As-You-Go Note totaling up to $2,068,700. • The HRA's financial analyst, Sid Inman of Ehlers and Associates, has thoroughly 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 the developer's actual need for the public assistance is not less than their estimated need. With all of the public assistance that is being made available to the developer being in the form of aPay-As-You-Go Note, the financial risk to the HRA has been substantially reduced. In exchange for this reduced risk, however, the amount of tax abatement funds due to Ryan have increased from $1 million in bond proceeds and a $500,000 note that had -been approved in the previous contract to a $2,068,700 Pay-As-You-Go Note. An outstanding risk to the HRA relates to the cap on the sales price of properties already, or soon to be, purchased by the HRA. The publicly owned lands are identified as four distinct categories in Exhibit A. The categories are based on the funding source with which the properties were purchased. Of the four, only the "A" properties require repayment to a third party for the appraised value of the property. This property was acquired by the City, for the Metropolitan Airports Commission (MAC), in order to provide right-of--way for the new ramps for the TH77 Interchange at 66th Street. The agreement with MAC allowed for the sale of the remnant land to a developer for its appraised value with the proceeds returning to the MAC. HRA staff negotiated a cap of $1,181,250 for Ryan's purchase of the property. Appraisal results that have been received after negotiating the cap, however, value the property at $1,360,000. This means that the HRA would be required to pay MAC the outstanding $178,750 in property valuation for the vacant land. This appraised value, however, may be substantially reduced because the appraisal may have overestimated the size of the remnant parcel. MnDOT will determine the precise size of the remnant parcel. If, as anticipated, the MnDOT Right-of-Way line is 40 feet off of the ramp (as had been forecast to Ryan) instead of 25 feet of the ramp (as had been assumed in the appraisal), then staff estimates the cost to the HRA to be less than $50,000. With approval of this Contract and an approval of the associated Tax Abatement by the City Council (scheduled for consideration at their May 24, 2005 meeting), the developer could begin negotiations with homeowners in the Cedar Point development area. III. BASIS OF RECOMMENDATION A. POLICY • 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. • While staff has been able to buy a great deal of property in the area with funds provided by outside agencies, it is unlikely that sufficient amounts of such funding will be available in the future for public acquisition of all of the affected properties. • Redevelopment planning efforts have continued to identify regional retail as the ideal use in the Cedar Point area. • The Ryan Companies has advanced a proposal for a regional retail shopping center in the Cedar Point area. • The HRA approved a Contract for Private Development with Ryan for this location at their October 18, 2004 meeting. • Many of the provisions of the Contract now under consideration are similar or identical to those which had been approved in the previous Contract, while new provisions primarily address issues that were unresolved in the previous Contract. • Due to the high cost of assembling the remaining private property, Ryan has indicated a need for $2,068,700 in public assistance in the form of a Tax Abatement Pay-As-You-Go Note. • In order for private redevelopment with public assistance to occur, a developer must have a Contract with the HRA. B. CRITICAL ISSUES • The Contract contemplates that Ryan will privately acquire 33 homes; if the cost to assemble those properties exceeds $8,735,300, Ryan could choose to abandon the project. • The Contract has no provision for the HRA to use its powers of eminent domain to acquire the 33 homes. • For the development to progress as proscribed in this Contract, the Richfield City Council must approve a tax abatement with a net present value of $2,068,700. C. .FINANCIAL • Due to the estimated cost to assemble the property ($15,605,050), Ryan has identified a need for public assistance. • The public assistance that is identified in this Contract is a $2,068,700 tax abatement Pay-As-You-Go Note from the HRA. • The availability of the public assistance would be subject to a "look- back provision" to ensure that the developer's actual need for the public assistance is not less than their estimated need. • The terms of the proposed Contract require the Developer to pay up to $62,500 in HRA staff costs, $50,000 to the HRA's legal counsel, $50,000 to the HRA's financial consultant and up to $15,000 to any other consultant deemed necessary by HRA staff. • The HRA may be required to pay the MAC an amount of up to $178,750 from the HRA Development Fund for property repayment (the Revised 2005,budget will reflect this possible payment) requirements that exceed the payment cap that had been negotiated by staff. • The HRA's financial analyst, Ehlers and Associates, has participated in the drafting of the proposed Contract. D. LEGAL • HRA legal counsel drafted the proposed Contract in cooperation with staff, the developer and the developer's legal counsel. • There are occasionally changes of an administrative or technical nature that are required of a contract as more information becomes available, HRA legal counsel may be given authority to make these changes without further HRA consideration. ~ IV. ALTERNATIVE RECOMMENDATION(Sl • 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. ~ V. ATTACHMENTS • H proposed Contract for Private Development with Ryan Companies, Inc, for redevelopment of the Cedar Point area. • A copy of Staff Report No.49 that accompanied an earlier version of the Contract that had been approved on October 18, 2004. VI. PRINCIPAL PARTIES EXPECTED AT MEETING • HRA Financial Analyst. • A representative of Ryan Companies, Inc. AGENDA ITEM # S REPORT # ~F9 STAFF REPORT HOUSING AND REDEVELOPMENT AUTHORITY MEETING OCTOBER 18, 2004 REPORT PREPARED BY: JOHN STARK, ASSISTANT DIRECTOR OF COMMUNITY DEVELOPMENT NAME, TITLE REPORT PRESENTER: JOHN STARK, ASSISTANT DIRECTOR OF COMMUNITY DEVELOPMENT N.9ME, TITLE DEPARTMENT DIRECTOR REVIEW: Ol SIGNATURE REVIEWED BY EXECUTIVE DIRECTOR: ' ITEM FOR HRA CONSIDERATION: Consideration of a Contract for Private Redevelopment with the Ryan Companies, Inc. for redevelo ment of the Cedar Point area. I. .RECOMMENDED ACTION: By Motion: Approval of a Contract for Private Redevelopment with the Ryan Companies, Inc. for redevelopment of the Cedar Point area pending minor modifications by Housing and Redevelopment Authority legal counsel. II. BACKGROUND In 1996 the Metropolitan Airports Commission (MAC) and the Minnesota State Legislature made a commitment to expand the existing Minneapolis/St. Paul International Airport instead of constructing a new major airport elsewhere in the metropolitan area. As part of this expansion, a new "north-south" runway has been constructed and will become operational in the fall of 2005. Concerned with the possible negative impacts of this new runway, approximately 1,200 feet from then- existing residential areas, the City of Richfield, and eventually the MAC, commissioned a study to identify those impacts. The study, entitled Findings of the Low Frequency Noise Expert Panel, identified an area in Richfield where the "low frequency noise" would exceed 87db of volume. At this volume of low frequency 10182004CedarPoint noise, the study concluded that negative impacts such as "rattle" would occur at unacceptable levels and that noise insulation would not be fully adequate nor would it be economically feasible. In light of the findings of the low frequency noise study, the City of Richfield has adopted the policy of acquiring homes in the low frequency noise impact area and redeveloping that area with uses that are compatible with airport noise. During the past four years, staff have acquired 52 houses, 26 commercial structures and four apartment buildings (60 units).-These acquisitions were funded through cooperative efforts with the State of Minnesota and MAC. Most of these acquisitions have occurred in the Cedar Point portion of the low frequency area. The Cedar Point area is bounded by 63rd Street on the north, 66th Street on the South, Trunk Highway (TH) 77 on the east and 17th Avenue on the west. Since 1999, staff has also been conducting redevelopment plans with the help of planning and architecture consulting firms. First, in 1999, the firm RLK-Kuusisto drafted a plan for the redevelopment of the entire east-end of Richfield, between Bloomington Avenue and TH77. In the Cedar Point area, the RLK plan showed regional retail development. Since 1999, the area being considered for redevelopment has been reduced because of further information on the extent of low frequency noise impacts and the available funding to mitigate those impacts. In February 2004, the HRA hired JLG Architects to complete a revised plan for this reduced redevelopment area. JLG has since drafted a plan for the low frequency noise area. In the Cedar Point area, the JLG plan continues to identify regional retail as the preferred use. Based on these recommendations, the Richfield Planning Commission and City Council have adopted resolutions to amend the Comprehensive Plan designation in the Cedar Point area to Regional Commercial/Office. The Ryan Companies, Inc. have submitted a proposal to redevelop the Cedar Point area as a regional retail center. Ryan has been contemplating this development for several years, but were waiting for the planning process to conclude before seeking formal HRA approval of a proposal for the area. At this point in time, the planning process for the area has consistently shown regional retail for the Cedar Point sub- area. Ryan, therefore, is advancing their proposal for a regional retail center at this location. On November 17, 2003, March 15, 2004 and again on September 28, 2004, the HRA held concurrent worksessions with the Richfield City Council to discuss the planning for the Cedar corridor in general terms and the specifics of a regional retail center in the Cedar Point area. At these worksessions there was discussion about the design and financing of the development and general consensus that the proposal bears merit for formal consideration with the provision that the design needs to be of the highest quality and is unique to Richfield. HRA staff, legal counsel and representatives of Ryan and their legal counsel have cooperatively drafted a proposed contract for HRA consideration. Among the more notable provisions in this proposed contract (attached) are: • 29 Acre Site • Minimum Improvements include a SuperTarget and Home Depot home improvement store. There is 61,200 additional sq. ft. of in-line and freestanding retail contemplated, but not required under the proposed terms of the contract. • Ryan will privately acquire 33 single family homes, two apartment buildings and two businesses. • The developer does not contemplate any public acquisition through condemnation by the HRA; there are no provisions in the proposed Contract, therefore, that address HRA purchase of private property. • HRA staff and-legal counsel are working with representatives of Ryan to agree on the responsibility for relocation benefits; the proposed contract contains a provision that will allow this agreement to be made at a later date, but precludes Ryan from beginning negotiations with property owners until such time that the agreement on this issue is made. • Due to the estimated cost ($11.2 million) of the private purchases, Ryan has identified a need for public assistance. • The public assistance that is identified in this Contract includes a $2 million "Multi-Jurisdictional Project" grant from Hennepin County (which is scheduled to be considered by the County Board in November), a $1 million tax-abatement bond and a $500,000 tax abatement note from the HRA and City. • The availability of the public assistance would be subject to a "look-back provision" to ensure that the developer's actual need for the public assistance is not less than their estimated need. ' Approval of this Contract would allow staff to concentrate their efforts with the developer and end-users on building design; with the goal of achieving a development of the highest design quality that is unique to Richfield. III. BASIS OF RECOMIVIENDATION A. POLICY • 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. • While staff has been able to buy a great deal of property in the area with funds provided by outside agencies, it is unlikely that sufficient amounts of such funding will be available in the future for public acquisition of all of the affected properties. • Redevelopment planning efforts have continued to identify regional retail as the ideal use in the Cedar Point area. • The Ryan Companies has advanced a proposal for a regional retail shopping center in the Cedar point area.. • On November 17, 2003, March 15, 2004 and again on September 28, 2004, the HRA held concurrent worksessions with the Richfield City Council to discuss the planning for the Cedar corridor in general terms and the specifics of a 'regional retail center in the Cedar Point area. • Due to the high cost of assembling the remaining private property, Ryan has indicated a need for $3.5 million in public assistance. • In order for private redevelopment with public assistance to occur, a developer must have a Contract with the HRA. B. CRITICAL ISSUES • HRA staff and legal counsel are working with representatives of Ryan to agree on the responsibility for relocation benefits; the proposed contract contains a provision that will allow this agreement to be made at a later date, but precludes Ryan from beginning negotiations with property owners until such time that the agreement on this issue is made. • Also, Ryan will not begin negotiations for the purchase of properties until the Hennepin County Board approves a $2 million "Multijurisdictional Project Grant" to the City or HRA for the Cedar Point area. • The proposed Contract has no provisions for HRA acquisition of private property. C. FINANCIAL • Due to the estimated cost ($11.2 million) of the private purchases, Ryan has identified a need for public assistance. • The public assistance that is identified in this Contract includes a $2 million "Multi-Jurisdictional Project" grant from Hennepin County (which is scheduled to be considered by the County Board in November), a $1 million tax-abatement bond and a $500,000 tax abatement note from the HRA and City. • The availability of the public assistance would be subject to a "look- back provision" to ensure that the developer's actual need for the public assistance is not less than their estimated need. • The terms of the proposed Contract require the Developer to pay up to $62,500 in HRA staff costs, $50,000 to the HRA's legal counsel, $50,000 to the HRA's financial consultant and up to $15,000 to any other consultant deemed necessary by HRA staff. • The HRA's financial analyst, Ehlers and Associates, has participated in the drafting of the proposed Contract. D. LEGAL • HRA legal counsel drafted the proposed Contract in cooperation with staff, the developer and the developer's legal counsel. • There are occasionally changes of an administrative or technical nature that are required of a contract as more information becomes available, HRA legal counsel may be given authority to make these changes without further HRA consideration. IV. ALTERNATIVE RECOMMENDATION(S~ • Approve the proposed Contract for Private Development with added provisions or modifications. • Do not approve the proposed Contract for Private Development. • Continue the consideration of the proposed Contract for Private Development until a later meeting date. V. ATTACHMENTS • Proposed Contract for Private Development. VI. PRINCIl'AL PARTIES EXPECTED AT MEETING • HRA Legal Counsel • HRA Financial Analyst. • Representatives of the Ryan Companies. 5/12/05 CONTRACT FOR PRIVATE DEVELOPMENT BY AND BETWEEN THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD RYAN COMPANIES US, INC. ,2005 This document was drafted by: Kennedy & Graven, Chartered (JBD) 200 South Sixth Street, Suite 470 Minneapolis, MN 55402 JBD-242155v12 RC125-239 TABLE OF CONTENTS ARTICLE I Definitions, Exhibits, Rules of Interpretation ARTICLE IDEFINITIONS, EXHIBITS, RULES OF INTERPRETATION .................................2 Section 1.1.Definitions .....................................................................................................................2 Section 1.2. Exhibits ........................................................................................................................5 Section 1.3. Rules of Interpretation ................................................................................................5 ARTICLE IIREPRESENTATIONS ................................................................................................5 Section 2.1.Representations by the Developer ................................................................................5 Section 2.2.Representations by HRA and City ................................................................................7 Section 2.2.Representations by HRA and City .............................................................................. ..7 ARTICLE IIISITE ASSEMBLY ................................................................................................... ..8 Section 3.O.Statement of Intent ...................................................................................................... ..8 Section 3.l.Initial Period ................................................................................................................ ..8 Section 3.2.Acquisition .................................................................................................................. ..9 Section 3.3.Title ............................................................................................................................. 10 Section 3.4.Soi1 Conditions ........................................................................................................... 10 Section 3.S.Title to HRA Property .......................................................................:......................... 1 l Section 3.S.Title to HRA Property ................................................................................................. 11 Section 3.6.Condition of HRA Property ........................................................................................ 12 Section 3.7.Governmental Approvals ............................................................................................ 12 Section 3.8.HRA Land Price .......................................................................................................... 12 Section 3.9.Taxes and Special Assessments ................................................:................................. 13 Section 3.10.Other Costs ................................................................................................................ 13 Section 3.11.Property Conveyed As Is .......................................................................................... 13 Section 3.12.Other Preconditions to Closing ................................................................................. 13 Section 3.13.Right to Terminate Based on Cost of Acquisition .................................................... 13 Section 3.14.Closing Documents ................................................................................................... 14 Section 3.15.Termination ............................................................................................................... 15 ARTICLE IV PUBLIC FUNDS .................................................................................................... 15 Section 4.1.Status of Development Property ................................................................................. 15 Section 4.2.Public Funds........: ....................................................................................................... 15 Section 4.3.Payment of Administrative Costs-Deposit .................................................................. 16 Section 4.4.Assistance to Cover Value Reduction of Third Party Property .................................. 16 Section 4.SBusiness Subsidy Agreement ....................................................................................... 17 ARTICLE V CONSTRUCTION OF MINIMUM IMPROVEMENTS ........................................ 17 Section S.OConcept Plan ................................................................................................................ 17 Section S.1.Construction of Improvements ................................................................................... 18 Section 5.2.Construction Plans ...................................................................................................... 18 Section 5.3.Completion of Construction ........................................................................................ 19 Section 5.4.Certificate of Completion ........................................................................................... 20 ARTICLE VI INSURANCE AND CONDEMNATION .............................................................. 20 Section 6.1.Insurance .....................................................................................................................20 Section 6.2.Subordination ..............................................................................................................22 JBD-242155v12 i RC125-239 ARTICLE VII TAXES; MINIMUM MARKET VALUE ............................................................ 22 Section 7.1.Right to Collect Delinquent Taxes .............................................................................. 22 Section 7.2.Reduction of Taxes ..................................................................................................... 22 Section 7.3.Minimum Tax ............................................................................................................. 23 Section 7.4.Deficiencies ................................................................................................................. 23 ARTICLE VIII FINANCING ....................................................................................................... 23 Section 8.1.Financing ......................................................................................:.............................. 23 Section 8.2.Subordination .............................................................................................................. 23 ARTICLE IX PROHIBITIONS AGAINST ASSIGNMENT AND TRANSFER; INDEMNIFICATION :..........................................................:............................................ 24 Section 9.1.Representation as to Development .................:............................................................ 24 Section 9.2.Prohibition Against Developer's Transfer of Property and Assignment of Agreement ......................................................................................................:............................... 24 Section 9.3.Transfer of Property and Assignment Agreement ...................................................... 24 Section 9.4.Release and Indemnification Covenants ..................................................................... 25 ARTICLE X EVENTS OF DEFAULT ........................................................................................ 26 Section 10.1.Events of Default Defined ........................................................................................ 26 Section 10.2.Remedies on Default ................................................................................................. 27 Section 10.3.No Remedy Exclusive ............................................................................................... 28 Section 10.4.No Additional Waiver Implied by One Waiver ........................................................ 28 Section 10.5.Attorney Fees ..................................................................................................:......... 28 Section 10.6.Default by HRA ........................................................................................................ 28 ARTICLE XI ADDITIONAL PROVISIONS .............................................................................. 28 Section 11.l.Conflict of Interests; Representatives Not Individually Liable ....................:........... 28 Section 11.2.Equal Employment Opportunity .......................................................:....................... 29 Section 11.3.Construction Signs .................................................................................................... 29 Section 11.4.Provisions Not Merged With Deed .........................................................:................. 29 Section 11.S.Titles of Articles and Sections .....:................:........................................................... 29 Section 11.6.Recapture of Public Funds on Sale of Development Property .................................. 29 Section 11.7.Notices and Demands .........:..................................................................................... 31 Section 11.8.Termination ofAgreement .......................................................:................................ 32 Section 11.9.Counterparts .............................................................................................................. 32 Section 11.10.Recording ................................................................................................................ 32 Testimonium ................................................................................................................................33 Signatures ...........................................................................................................................33 A. Development Property Legal Description .......................................................... A-1 B. City Abatement Resolution ..................................................................................B-1 C. Certificate of Completion ....................................................................................C-1 D. Taxable Limited Revenue Note, Series 200_ ................................................... D-1 E. Administrative Costs .............:...................... .....................................................E-1 F. Form of Business Subsidy Agreement ................................................................. F-1 JBD-242155v1~ 11 RC125-239 JBD-242155v12 111 RC125-239 CONTRACT FOR PRIVATE DEVELOPMENT THIS AGREEMENT, made and entered into this _day of , 2005 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 Development Area ("Development Area") under the authority of Minnesota Statutes, Chapter 469; and WHEREAS, the HRA deems it to be in the public interest to facilitate and encourage redevelopment of the Development Area by a combination of public and private activity within the Development Area and in accordance with the Redevelopment Plan for the Development Area, and WHEREAS, the Developer has proposed a development (hereinafter defined as the "Development") within such Development 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 Development Area have been undertaken and are being assisted; and WHEREAS, the Developer is willing to purchase from the HRA (the "HRA Property") and from other owners (the "Third Party Property") the property within the Development Area and legally described in the attached Exhibit A (hereinafter collectively defined as the "Development Property") and to develop the Development Property for and in accordance with this Agreement; and WHEREAS, the HRA and the City of Richfield have obtained a Multijurisdictional Program Grant in the amount of Two Million Dollars ($2,000,000) for the Development Property from Hennepin County, and are willing to provide financial assistance in the form of Tax Abatements, and by other means, 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: JBD-242155v12 1 RC 125-239 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 Minnesota Statutes, Sections 469.1812 to 469.1815, as amended. "Additional Improvements" means improvements constructed on the Development Property in addition to the Minimum Improvements, and which are for sale or lease. "Agreement" means this Agreement, as the same may be from time-to-time modified, amended, or supplemented. "Available Abatement" means on each Scheduled Payment Date, the sum of the City Tax Abatement generated in the preceding six (6) months with respect to the Development Property and remitted to the City. "Bona Fide End User" means Target Corporation and Home Depot. "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. "Business Subsidy Act" means Minnesota Statutes, sections 116J.993 through 116J.995. "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. "City Abatement Resolution" means a resolution in substantially the form attached as Exhibit B, anticipated to be approved by the City Council of the City regarding abatement of property taxes on the Development Property. "City Abatement Volume Cap" shall have the meaning given to it in the City Abatement Resolution. "City Tax Abatement" shall have the meaning given to it in the City Abatement Resolution. "Closing" means the date on which title to the HRA Property is transferred to the Developer. JBD-242155v12 2 RC125-239 "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 Improvements except for tenant finish work. "Construction Contract" means a contract or contracts which provides for completion of the Minimum Improvements. "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 the Minimum Improvements 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 Improvements to be constructed on the Development Property. "Development Property" means the HRA Property and the Third Party Property described as such on Exhibit A of this Agreement. "Event of Default" means an action by the Developer or the HRA listed in Sections 10.1 or 10.6 of this Agreement. "HRA Property" means the real property described as such on Exhibit A. "Maturity Date" means the date that the Note has been paid in full or terminated, whichever is earlier. "Minimum Improvements" means the Target Store and the Home Depot Store to be constructed by Developer on the Development Property and related site work all as shown on the Concept Plan approved in accordance with Section 5.0. "Minnesota Environmental Policy Act" means the statutes located at Minnesota Statutes Sections 116D.01 et sea•, as amended. "Minnesota Environmental Rights Act" means the statutes located at Minnesota Statutes Sections 116B.01 et sea., as amended. JBD-242155v12 3 RC125-239 "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. "Multijurisdictional Program Grant" or "MJG" means the grant to the City and/or HRA from the County in the amount of $2,000,000. "Multijurisdictional Program Grant Agreement" or "MJG Agreement" means the separate agreement or agreements between the City, HRA, the County and the County HRA containing the terms and conditions for the MJG and authorizing the HRA to disburse the MJG funds. "National Environmental Policy Act" means the federal law located at 42 U.S.C. Section 4311 etet seq•, as amended. "Note" means the Taxable Limited Revenue Note, Series 200_ in the amount of $2,068,700 and substantially in the form attached as Exhibit C to this Agreement, to be issued by the City to the Developer as provided for in the City Abatement Resolution. "Public Funds" means the funds provided to the Developer pursuant to this Agreement in an amount of not less than $2,068,700 in the form of the Note together with the additional assistance described in Section 4.4. "Scheduled Payment Date" means semi-annual installments payable on each February 1 and August 1, commencing on , 200_ [Complete]. "Site Plan" means the plans, elevations, drawings and narrative descriptions for the Minimum Improvements and related site work. "66th Street Bridge Reconstruction" means the reconstruction work as is described by the plan specifications for MnDOT Project No. SP2758-62, which .contract was let by MnDOT on March 25, 2005. "State" means the State of Minnesota. "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 real property described as such on Exhibit A. "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 JBD-242155v12 4. RC125-239 the Minimum Improvements, litigation commenced by third parties which, by injunction or other judicial action, or 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 actions affecting the marketability or profitability of the Minimum Improvements, or the inability to secure financing of the Minimum Improvements shall not constitute Unavoidable Delays. Section 1.2. Exhibits. The following exhibits are attached to and made a part of this Agreement. A. Development Property Legal Description . B. City Abatement Resolution C. Certificate of Completion D. Taxable Limited Revenue Note, Series 200_ [Complete] E. Administrative Costs. F. Form of Business Subsidy Agreement Section 1.3. Rules of Interpretation. (a) This Agreement shall be interpreted. in accordance with and governed by the laws of the State of Minnesota; (b) The words "herein" and "hereof' and words of similar importance, without reference to any particular section or subdivision refer to this Agreement as a whole rather than any particular section or subdivision hereof; (c) Any titles of the several parts, articles and sections of this Agreement are inserted for convenience and reference only and shall be disregarded in construing or interpreting any of its provisions. 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 fmancial capability to construct the Minimum Improvements. (c) If the conditions precedent to construction occur, subject to the other terms of this Agreement, the Developer will construct the Minimum Improvements 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. JBD-242155v12 5 RC125-239 (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 Improvements may be constructed, all of which is subject to Unavoidable Delay. (e) During the period of the Developer's ownership of the Development Property or any portion thereof, then only as to such portion, and subject to the HRA's representations and warranties set forth in Section 2.2(h) 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 U.S.C. §§ 9601 et seq. as now or hereafter amended, the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. §§ 6901 et seq. as now or hereafter amended, the Federal Water Pollution Control Act, 33 U.S.C. §§ 1251 et seq. as now or hereafter amended, the Clean Water Act (33 U.S.C. § 1317 et seq.), as now or hereafter amended., the Clean Air Act, 42 U.S.C. § 7401 et seq., the Clean Water Act (33 U.S.C. § 1317 et seq.), as now or hereafter amended; the Clean Air Act (342 U.S.C. § 7412 et seq.), as now or hereafter amended; the Toxic Substances Control Act (15 U.S.C. § 2606 et seq.), as now or hereafter amended; the Hazardous Materials Transportation Act (49 U.S.C. § 1801 et seq.), as now or hereafter amended; the Minnesota Environmental Response and Liability Act (Minn. Stat. Section 115B.02 et seq.) ("MERLA"), as now and hereafter amended and the regulations thereunder, and any other local, state and/or federal laws or regulations, that govern (i) The existence, cleanup and/or remedy of contamination of the Development Property; (ii) The protection of the environment from released, spilled, deposited or otherwise emplaced contamination; (iii) The control of hazardous wastes; or (iv) The use, generation, transport, treatment, removal or recovery of hazardous substances, including any and all building materials. 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 potential City Tax Abatement 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 Tax Abatement that will be generated by the Development Property. JBD-242155v12 6 RC 125-239 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. (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, including, without limitation, approval by the City of the City Abatement Resolution. (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, including, without limitation, adopting the Tax Abatement Resolution and providing all necessary land use approvals, including but not limited to the Concept Plan, Comprehensive Plan Amendment, rezoning/PUD plan, road/utility vacations, FDP/CUP and plat of the Development Property. (d) Upon approval of this Agreement, the HRA will, subject to the reasonable exercise of its legislative discretion, undertake the steps necessary leading to (i} the negotiation and execution of the MJG Agreement; (ii) the adoption of the City Abatement Resolution and; (iii) any necessary revisions or modifications to the Redevelopment Plan for the Development Area; (iv) consider approval the Concept Plan, but this Agreement is not intended to contractually obligate the HRA to do more that exercise its best efforts to accomplish such matters. (e) The HRA represents that as of the date of this Agreement, the City has not approved any abatement resolutions for any other abatement. (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) Except as disclosed in the environmental reports included as part of the HRA Documents (the "Environmental Reports"), the Executive Director, the Community Development Director and the Assistant Community Development Director of the HRA have no personal knowledge that any 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 any Environmental Law (collectively, "Hazardous Substances") have or have not been generated, treated, stored, transferred from, released or disposed of, or otherwise placed, deposited in or JBD-242155v12 7 RC125-239 located on the Development Property in violation of any Environmental Law, nor has any activity been undertaken on the Development Property that would cause or contribute to the Development Property becoming a treatment, storage or disposal facility within the meaning of any Environmental Law. Further, such persons, and except as otherwise disclosed in the Environmental Reports, have no personal knowledge whether or not there has been ~ any discharge, release or threatened release of Hazardous Substances from the Development Property, and whether or not any Hazardous. Substances or conditions in or on the Development Property that may support a claim or cause of action under any Environmental Law have been discharged or released on the Development Property. It is understood that neither the Executive Director nor the Development Director have made any independent investigation into any of these matters, but are relying solely on information that they have learned in the course of their duties. (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 103I. This representation is intended to satisfy the requirements of that statute. (i) The HRA represents and warrants that the Abatement Volume Cap for 2004 is $1,099,302, which amount is 10% of the current total city levy of $10,993,024. The HRA represents and warrants that the total property tax abatements payable by the City in 2004 will be $ [Sid needs to provide the missing amount.] ARTICLE III SITE ASSEMBLY Section 3.0. Statement of Intent. It is the intention of the parties that the Third Party Property is to be acquired through direct acquisitions by the Developer. The Developer has not requested, and the HRA has not agreed to be responsible for or to undertake any acquisition of the Third Party Property, whether be negotiation or condemnation. Section 3.1. Initial Period. The Developer shall not acquire, or enter into negotiations for the acquisition of the Third Party Property or engage in any other activities intended to result in the acquisition of any part of the Third Party Property until all of the following have taken place, or have been waived by Developer as to "a-c" below and by Developer, the HRA and the City as to "d" below: (a) The MJG Agreement has been executed. (b) The Developer has determined, in its sole discretion, that based on its projected costs the Development is feasible based on the level of Public Funds available. (c) Concept Plan, excluding elevations, has been approved by the HRA and the City. (d) The HRA in its reasonable judgment is satisfied that it has an enforceable agreement with the Developer regarding the Developer's obligation, pursuant to this Agreement, for the payment of relocation benefits to which displaced persons are entitled. JBD-242155v12 g RC 125-239 Section 3.2. Acquisition. Following satisfaction or waiver of the conditions contained in Section 3.1, the Developer agrees to diligently pursue the acquisition of the Third Parry Property by negotiation and voluntary conveyance to Developer. It is understood that the HRA will play no role in any of the acquisition activities for the Third Party Property, other than payment of the Public Funds. Acquisitions may be subject to such matters as title, survey, environmental and geotechnical review, wetlands remediation, acquisition of all Third Party Property, or such other matters as the Developer shall in its sole discretion determine appropriate. It is understood that, subject only to the HRA's payment of the Public Funds, 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/H1tA Actions"); provided, however, such City/HRA Actions shall not include the adoption of this Agreement, the tax abatement resolution, the payment of the Public Funds to the Developer, or the performance of their other respective obligations pursuant to this Agreement or the tax abatement resolution. The law governing eligibility for relocation benefits is uncertain and subject to pending litigation, but it is understood that 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 benefits which any person displaced by the Development may be entitled to as a result of City/HRA Actions. Prior to making a purchase offer, the Developer will inform the owners of the Third Party Property in writing that: 1. the Developer seeks to acquire such property by voluntarily conveyance, 2. the purchase of such property is contingent on a number of matters which will include the Developer acquiring all of the Third Party Property and the title, survey, environmental and geotechnical review, wetland remediation and other matters set forth in the purchase agreement, 3. what the Developer believes is the fair market value of the property, 4. the property will be inspected by a relocation consultant to determine the amount of relocation assistance or benefits each property owner may be entitled to and the amount of such relocation assistance or benefits will be included as part of the purchase price. The HRA shall promptly notify Developer if any of the Third Party Property are known by it to be occupied by tenants, lessees or other non-owner occupants. In the event the Developer, based on information provided by the HRA, or by its own investigation, determines that any of the Third Party Property is occupied by tenants, lessees, or other non-owner occupants, the Developer shall promptly notify the HRA. Upon receipt of any such notice, and at the request of the Developer, the HRA will provide relocation assistance and benefits to such non-owner occupants to the extent and at the times required by applicable law. The Developer shall promptly reimburse the HRA for the payment of any relocation assistance and benefits to such non-owner occupants to the extent required by applicable law. The Developer's indemnity and JBD-242155v12 9 RC125-239 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 CitylHRA 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 owns the HRA Property except for the properties described as "To be Acquired" on the attached Exhibit A, which properties the HRA intends to acquire by negotiation or eminent domain. Following satisfaction or waiver of the conditions contained in Section 3.1, the HRA agrees to diligently pursue the acquisition of the HRA Property by negotiation and voluntary conveyance or eminent domain. The HRA, at its sole cost and expense, will provide 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 maybe entitled. It is understood that the HRA and Developer are not authorized to act nor shall either act as the others' agent or representative in relation to property acquisition. Developer's acquisition of the Third Party Property may be subject to such matters as title, survey, environmental and geotechnical review, wetlands, remediation, acquisition of all Third Party Property and such other matters as Developer shall, in its sole discretion, determine appropriate. Section 3.3. Title. (a) Prior to and as a condition to the HRA's obligation to pay the Developer the Public Funds, the Developer shall obtain and furnish to the HRA a copy of its commitment for the issuance of a policy of title insurance to the Third Party Property. The HRA shall have twenty (20) days from the date of its receipt of such commitment to review the state of title and to provide the Developer with a list of written objections to such title. No objection may be made by the HRA to any defect or encumbrance on the title unless and to the extent that such defect or encumbrance would, if uncured, have the effect of precluding Developer's construction of the Minimum Improvements. Upon receipt of the HRA's list of written objections, the Developer may, in its sole discretion, elect to attempt to cure the objections made by the HRA. Within ten (10) days after the date that all such objections have been cured, to the reasonable satisfaction of the HRA, the HRA shall proceed with the conveyance of the HRA Property to the Developer and the payment of the Public .Funds. The HRA shall have no obligation to take any action to clear defects in the title to the HRA Property. If the Developer has not cured the objections made by the HRA, then either the HRA or Developer may terminate this Agreement by written notice to the other parry at any time prior to the Closing Date and, in such event, neither party shall have any further liability to the other party hereunder. 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 Improvements or any other purpose for which the Developer may make use of such property, except as provided in Section 2.2(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 JBD-242155v12 10 RC 125-239 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(h) thereof. Section 3.5. Title to HRA Property. HRA shall, within 15 days following the execution of this Agreement, as to properties currently owned by the HRA, and within 15 days following the date on each additional acquisition of HRA Property, furnish the Developer a commitment ("Title Commitment") for an ALTA Owner's Policy of Title Insurance insuring title to the HRA Property, in the amount of the Purchase Price, issued by Old Republic Title Insurance Company (the "Title Company"). The HRA will also reimburse the Developer for one/half the cost of any ALTA/ACSM Land Title Survey for the Development Property (the "Survey"). Within twenty (20) days after receiving the last of the Title Commitment and the Survey, Developer will make any objections to the marketability of the title of the HRA Property based on the Title Commitment by written notice to HRA ("Objections"). Developer's failure to make written Objections within such time period will constitute Developer's waiver of the Objections. Any matter shown on such Title Commitment which is not objected to by Developer shall be a "Permitted Encumbrance" hereunder. HRA may by written notice to Developer at any time elect not to cure the Objections or HRA will have sixty (60) days after receipt of the Objections to attempt to cure the Objections, during which period the Closing will be postponed, if necessary. HRA shall notify Developer within five (5) business days of receipt of the Objections whether it will elect to exercise commercially reasonable efforts to attempt to cure any of such Objections. To the extent an Objection can be satisfied by the payment of money such as a mortgage or mechanic's lien, Developer shall have the right to apply a portion of the cash payable to HRA at the Closing to satisfaction of such Objection, and the amount so applied shall reduce the amount of cash payable to HRA at the Closing. If HRA gives Developer written notice that it elects not to cure the Objections, or if the HRA attempts to cure the Objections and they are not cured within such 60-day period, Developer will have the option to do any of the following within five (5) days of the earlier of HRA's notice that it will not cure the Objections or the expiration of such 60-day period: (a) .Terminate this Agreement by written notice to HRA. (b) Escrow with the Title Company a sum (not to exceed $5,000 less the amount spent by HRA in attempting to cure the Objections) out of the Purchase Price, sufficient in Title Company's judgment to cure such Objections, which sum shall be utilized by Developer's legal counsel for costs (including attorneys' fees) to correct and/or cure such Objections post Closing. HRA shall not be responsible for any amounts to cure such Objections in excess of the amount deposited in escrow with the Title Company as provided herein and if the amount escrowed with the Title Company exceeds the amount necessary to cure the Objections, such excess shall be refunded by the Title Company to HRA. (c) Waive the Objections and proceed to Closing. If Developer fails to terminate this Agreement within a five (5) day period after HRA's notice that it will not cure the Objections or the expiration of such sixty (60) day period, as the case JBD-242155v12 11 RC 125-239 may be, it shall be deemed to have waived the Objections and the right to terminate and it shall proceed to Closing pursuant to the other terms and conditions of this Agreement. Section 3.6. Condition of HRA Property. Developer, in its sole discretion, shall have determined on or before the Closing Date, as hereinafter defined, that it is satisfied with the condition of the HRA Property as disclosed by its environmental, soils and wetland reviews, or any condition disclosed in the Survey for which an objection has not been previously waived and any other condition that adversely affects the Development. Section 3.7. Governmental Approvals. On or before the Closing Date, Developer shall have obtained, at its sole cost and expense, all governmental approvals necessary in Developer's opinion to make use of the Development Property for the construction and operation of the Minimum Improvements and the other improvements contemplated pursuant to the Concept Plan. Section 3.8. HRA Land Price. The parties agree that the HRA Property will have a value based upon an appraisal valuing these properties as raw land and assuming all the improvements on the properties, including but not limited to buildings, basements and utilities have been demolished and removed prior to the Closing Date. The "not to exceed" values assigned to the HRA Property assume that Closing will take place on or before December 31, 2005. In the event that Closing does not take place by that date solely as a result of the fact that the Developer is not ready, willing and able to close the acquisition of the Third Party Property and the HRA Property, the HRA reserves the right to reappraise all or part of the HRA Property; and to alter the "not to exceed" values based on such appraisals. In the event that the Developer pays less than the appraised value for any property, the difference between the amount paid and the appraised value will be considered a business subsidy. The HRA Land Price for HRA "A" Properties (as described on attached Exhibit A) to be paid by Developer at Closing shall be the full amount of the appraised value for those properties, but in no event to exceed $1,181-,250.00. The HRA Land Price for HRA "B" Properties (as described on attached Exhibit A) to be paid by Developer at Closing shall be the full amount of the appraised value for those properties, but in no event to exceed $1,920,000. The HRA Land Price for HRA "C" Properties (as described on attached Exhibit A) to be paid by Developer at Closing shall be no more than the appraised value for those properties, but in no event to exceed $2,605,500 and no less than $1 to be determined at the sole and absolute discretion of the Developer. The HRA Land Price for any of the HRA "D" Properties (as described on attached Exhibit A) which have been acquired by the HRA shall be no more than the appraised value for those properties, but in no event to exceed $1,183,000 and no less than $1 to be determined at the sole and absolute discretion of the Developer. JBD-242155v12 12 RC125-239 In the event all of the HRA Property is not listed in the categories of HRA Properties "A" through "D", then such additional property will be included and deemed to be a part of the HRA "D" Properties for purposes of determining the HRA Land Price for the HRA Property. Section 3.9. Taxes and Special Assessments The HRA shall have no responsibility for the payment of taxes and installments of special assessments for any portion of the Development Property regardless of when levied or when payable. 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 HR.A to any person or entity, except the HRA shall pay for the cost of the Developer's title commitment for the HRA Property, preparation, copying and delivery of the HRA Documents to the Developer, cost of the survey, state deed tax, its prorated share of costs and expenses that are prorated pursuant to this Article III, the costs and expenses incurred in correcting title defects and one-half of the closing fee. Section 3.11. Property Conveyed As Is. The HRA, at its sole cost and expense, shall be responsible for the demolition and removal from the HRA Property of all structures and improvements, including but not limited to basements and utilities on the HRA Property. The HRA shall complete such demolition and removal work on the HRA Property at least 30 days prior to the Closing Date. Developer acknowledges that the HRA shall have no obligation to perform any additional site work in connection with the proposed transaction or otherwise. 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 HRA providing for an interim off-street parking plan designed to accommodate parking requirements during construction of the Development; (ii) the HRA is satisfied that steps have been taken or will be taken within a reasonable time to subdivide the Development Property, as necessary, to comply with the subdivision regulations of the City; (iii) all necessary land use approvals have been obtained; (iv) Developer has accepted the condition of title to the HRA Property; (v) Developer has accepted the condition of the HRA Property pursuant to Section 3.6, subject to the representations and warranties of the HRA as set forth in Section 2.2(h) hereof; (vi) Developer has determined, in its sole discretion, that based on the actual costs to acquire the Third Parry Property and its current projected costs for the Development, that the same is feasible based on the level of Public Funds available; (vii) Developer has, contemporaneously with the closing for the acquisition of the HRA Property, successfully closed on the acquisition of title to all of the Third Party Property pursuant to the respective purchase agreements; (viii) the preconditions set forth in all of the sections of this Article 3 have been satisfied or waived by the Developer; (ix) the representations of the H1tA set forth in Section 2.2 are true as of when made and on the Closing Date as if made on the Closing Date; (x) the City has adopted an abatement resolution in substantially the form of the attached Exhibit B; (xi) the Developer has approved the Payment Schedule on the Note; (xiii) the Developer has been provided with reasonable evidence of a binding and enforceable contracts for the 66~' Street Bridge reconstruction and related work. Section 3.13. Right to Terminate Based on Cost of Acquisition. The HRA may terminate this Agreement. upon 30-day written notice to the Developer if the costs to acquire the JBD-242155v12 13 RC 125-239 HRA Property exceed the amount previously expended by more than $2,500,000. The Developer may terminate this Agreement upon 30-day written notice to the HRA if the Developer's known and reasonably certain costs to acquire the Third Party Property exceed $7,847,852 after deducting the Public Funds due the Developer under this Agreement. Upon the expiration of said 30-day period, the Agreement- shall be of no further force and effect, except that the indemnities contained in Section 3.2 shall survive. The term "cost to acquire" means out of pocket costs, including, without limitation, purchase price, closing costs, required environmental and geotechnical investigation and remediation, survey, demolition, relocation benefits and assistance, broker fees, attorney fees and consultant charges. Section 3.14. Closing Documents. On the Closing Date, HRA shall execute and deliver to Developer the following (collectively, "HRA's Closing Documents"), all in form and content reasonably satisfactory to Developer: (a) Deed. A Quit Claim Deed conveying the HRA Property to Developer, free and clear of all encumbrances, except the Permitted Encumbrances, as such term is hereinafter defined. (b) FIRPTA Affidavit. Anon-foreign affidavit, properly executed, containing such information as is required by Internal Revenue Code Section 1445(b)(2) and its regulations. (c) HRA's Affidavit. An Affidavit of Title by HRA indicating that on the Closing Date there are no outstanding, unsatisfied judgments, tax liens or bankruptcies against or involving HRA 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. (d) Well Certificate. If there are any "Wells" on the Property within the meaning of Minn. Stats. Chapter 103I, a Well Certificate in the form required by law. (e) Note. The Note .shall be duly executed by the HRA and delivered to Developer pursuant to Section 4.2 hereof. (f) Developer's Closing Documents. On the Closing Date, Developer will execute and deliver to the HRA the following (collectively, "Developer's Closing Documents"): (i) Purchase Price. Funds representing the Purchase Price by wire transfer. (g) Other Documents. All other documents reasonably determined by Developer or Title Company to be necessary to transfer the Development Property to Developer free and clear of all encumbrances, except for the Permitted Encumbrances. JBD-242155v12 14 RC125-239 Section 3.15. Termination. In the event that the Closing with the HRA for the HRA Property and the third parties with regard to the Third Party Property has not occurred within eighteen (18) months from the date hereof either party may give the other party written notice of its intention to terminate this Agreement. If the other parry 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. Status of Development Property. Acquisition of the Development Property will be made in accordance with Article III of this Agreement. Neither the City the HRA, the County or the County HRA shall have any obligation to acquire the Third Party Property or any portion thereof. Section 4.2. Public Funds. (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 $2,068,700, or such lesser amount as provided in Section 11.6, and the amounts described in Section 4.4. The amount due on the Note shall be secured by a pledge of the City Tax Abatements. (c) Limitations. The City's pledge of Available Abatements is subject to all the terms and conditions of the City Abatement Resolution. Payments on the Note are payable solely from and to the extent of the Available Abatement, and nothing herein shall be construed to obligate the City or the HRA to make payments on the Note from any other funds. The amount to be paid on the Scheduled Payment dates shall be equal to the Available Abatement. The HRA makes no warranties or representations as to the amount of the Available Abatement, or that amounts payable on the Note will be sufficient to pay all or any portion of the principal amount. Any estimates of Available Abatement amounts prepared by the HRA's financial consultants are for the benefit of the HRA only, and the Developer is not entitled to rely on such estimates. The Developer further acknowledges that the total property tax abatements payable by the City in any year may not exceed the greater of $200,000 or ten percent of the City's levy for that year (such limit referred to as the "Abatement Volume Cap"), all pursuant to Section 469.1813, Subd. 8 of the Act. Any abatements granted by the City under the Act will be allocated to the Abatement Volume Caps in order of the date of approval of each abatement resolution. JBD-242155v12 15 RC 125-239 (d) Delivery. The Note shall be delivered by the HRA to the Developer upon the issuance of a Certificate of Completion for the Minimum Improvements. In the event of any inconsistency between the terms of this Agreement and the terms of the Note, the terms of the Note shall control (e) Deficiencies in Amounts Needed to Pay Note. In no event will the total City Tax Abatement paid in any 12-month period exceed the Abatement Volume Cap for the City. Available Abatement shall include (i) uncollected City Tax Abatements which are later collected and not needed to make payments on the ~d shall, to the extent permitted by law, shall be used to make payments on the Note, and (ii) Available Abatements received in later years shall be applied to payments on the Note. Section 4.3. Payment of Administrative Costs-DepOSlt. The Developer will pay to the HRA all staff time costs ("Staff Costs") and all out of pocket costs incurred by the HRA (including without limitation attorney and fiscal consultant fees) (the "Out-of-Pocket Costs") in the negotiation and preparation of this Agreement and other documents and agreements in connection with the development contemplated hereunder, and all costs incurred by the HRA in connection with Article III, excluding any costs incurred by the HRA or City for the condemnation of any portion of the HRA Property (collectively, the "Administrative Costs"). The Developer's obligation to pay Staff Costs is limited to a maximum amount of $62,500, and is limited to the activities contained in the attached Exhibit D. The Developer's obligation to pay Out-of-Pocket Costs is limited to a maximum amount of $50,000 for attorney, and $50,000 for fiscal consultant, and $15,000 for all other Out-of-Pocket Costs. Administrative Costs shall be evidenced by invoices, statements or other reasonable written evidence of the costs incurred by the HRA. Reimbursement for Staff Costs incurred prior to the date all of the following conditions are satisfied or waived will be deferred until the date the conditions have been satisfied or waived (at which point the accrued amounts will be immediately due and payable): as set forth in Section 3.1; an abatement resolution has been adopted; binding and enforceable contracts for the 66~' Street bridge reconstruction and road related work have been entered into by the authorities having jurisdiction over such work; the City has given the land use approvals necessary to permit construction and use of the Minimum Improvements for their intended uses; the Cedar Corridor Plan has been approved by the City; and the Concept Plan has been approved by the City. The Developer shall pay Staff Costs incurred thereafter, and Out-of-Pocket Costs, from time to time within 30 days after receipt of written notice thereof from the HRA. As security for that obligation,. the Developer has deposited with the HRA the amount of $40,000. Such deposit may be drawn on to pay for such Administrative Costs. If the amount of such deposit is, due to withdrawals, reduced to $10,000, the Developer shall have five days following written notification to return the balance of the deposit to the initial amount. Any unutilized portion of the deposit will be returned to the Developer upon completion of the tasks for which the deposit intended. In the event that this Agreement is terminated for failure of any of the conditions contained in Section 3.1, the Developer's obligation to pay deferred Staff Costs shall terminate; and the Developer shall have no obligation to pay any Out-of-Pocket Costs incurred after the date of such termination. Section 4.4. Assistance to Cover Value Reduction of Third Party Property. The Developer will be acquiring the Third Party Property with all improvements in place. It is JBD-242155v12 16 RC 125-239 expected that the market value of the Third Party Property, following demolition of the improvements will be significantly less than the "cost to acquire" (as defined in Section 3.13) the Third Party Property. If the HRA were acquiring the Third Party Property, it would expect to sell the land to the Developer at the cleared land value, which assumes all improvements on the HRA Property, including but not limited to buildings, basements and utilities have been demolished and removed. Consequently, the HRA agrees to provide additional assistance to the Developer to cover the excess of the Developer's "costs to acquire" the Third Party Property over the fair market value of the cleared land, but in no event will such assistance exceed $1,920,000. If the parties cannot mutually agree on the fair market value within 30 days after Developer submits its "cost to acquire" the Third Party Property to the HRA, the amount will be established by an appraiser selected by the parties within 60 days of selection of the appraiser. If the parties cannot agree on the selection of an appraiser, then each party will appoint an appraiser and the two appraisers so appointed will select a third appraiser. The opinion of two appraisers within 60 days of the selection of the appraisers shall be binding. Based on information currently known to the parties, it appears that the difference between the "cost to acquire and the fair market value of the cleared land will exceed $1,920,000. Any payment due under this section will be made at Closing. Section 4.5. Business Subsidy Agreement. In the event that the assistance provided to the Developer under this Agreement constitutes a business subsidy within the meaning of that term as used in Minnesota Statutes. Section 116J.993 to 116J.995 (the "Business Subsidy Act"), the Developer will be required, prior to the receipt of any assistance, to enter into a business subsidy agreement complying with the terms of the Business Subsidy Act and in the form attached as Exhibit F. The Developer understands and agrees that either the HRA or the City may require the Developer or any of its successors in ownership to portions of the Development Property to: (i) consent to the assignment of all or part of the initial agreement, or (ii) enter into separate business subsidy agreements. ARTICLE V CONSTRUCTION OF MINIMUM IMPROVEMENTS Section 5.0. Concept Plan. 1. Approval. The Concept Plans for the Development are to be prepared by the Developer, at its expense, and submitted to the HRA and the City for their approval not later than 180 days after the date of this Agreement. If not approved by the HRA and the City within 90 days after the date of submittal, this Agreement shall terminate unless the period for submission or approval of the Concept Plans is extended by both parties in writing. 2. Content. The Concept Plan must address and contain the following: (a) Building elevations, locations and special exterior design features which are intended to provide a special identity to the location. JBD-242155v12 17 RC 125-239 (b) The location, nature and construction timing of all public improvements to be constructed to serve and benefit the Development, and all other public improvements that are required as a consequence of the Development. The Plan will also address the estimated cost of such public improvements, and the means by which the Developer proposes to pay for such work. (c) General landscape plan Section 5.1. Construction of Improvements. Subject to the Developer entering into the necessary agreements with Target and Home Depot for the lease or sale of a portion of the Development Property to them and the construction of the Target store and Home Depot store, upon terms and conditions acceptable to the Developer in its sole discretion, but consistent with the Concept Plan, the Developer agrees that it will construct the Minimum Improvements on the Development Property in accordance with the approved Construction Plans and at all times prior to the Maturity Date will operate and maintain, preserve and keep the Minimum Improvements 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 HR.A's remedy for the Developer's failure to operate, maintain and preserve the Minimum Improvements will be limited to its remedies under any Business Subsidy Agreement, and Section 7.5. Additionally, if the Developer fails to operate, maintain and preserve either the Target store or the Home Depot store during the period of its ownership, the HRA's sole remedy for the Developer's failure shall be as provided under the Business Subsidy Agreement and Section 7.5. Developer agrees upon the sale of any portion of the Development Property to Target and/or Home Depot, it will require as a condition of such sale that Target and Home Depot, as the case may be, enter into an appropriate agreement with the HRA agreeing that if it fails to operate, maintain and preserve its store, that the HRA's sole remedy for such default by either Target or Home Depot, as the case may be, shall be as set forth in the Business Subsidy Agreement and Section 7.5. Section 5.2. Construction Plans. (a) Before commencement of construction of the Minimum Improvements, the Developer shall submit to the HRA the Construction Plans. The Construction Plans shall provide for the construction of the Minimum Improvements 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 Improvements; (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 Improvements; and (v) no .Event of Default has occurred. 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 Improvements in accordance therewith. No approval by the HRA shall constitute a waiver of an Event of Default. If approval of the Construction Plans is JBD-242155v12 1 g RC 125-239 requested by the Developer in writing at the time of submission, such Construction Plans shall be deemed approved unless rejected in writing by the HR.A, 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 and City's approval shall not be unreasonably withheld. Said approval shall constitute a conclusive determination that the Construction Plans (and the Minimum Improvements 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, within 35 days after receipt of the proposed change, 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 the Minimum Improvements within 18 months after the Closing of the Developer's acquisition of the Development Property; provided, however, that the Developer shall not be required to substantially complete construction of the Minimum Improvements prior to the date for the opening of business of the Target store, which will be during March, July or October of a year, and Home Depot, which will occur during the spring or fall of any year. All work with respect to the Minimum Improvements to be constructed or provided by the Developer on the Development Property 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, shall diligently prosecute to completion the development of the Development Property through the construction of the Minimum Improvements thereon, and that such construction shall in any event be completed within the period specified in this Section. After the date of this Agreement and until construction of the Minimum Improvements has been completed, the 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. JsD-242155v12 19 RC 125-239 Section 5.4. Certificate of Completion. (a) Promptly after substantial completion of .the Minimum Improvements in accordance with those provisions of the Agreement relating solely to the obligations of the Developer to construct the Minimum Improvements (including the dates for beginning and completion thereof), the H12A will furnish the Developer with a Certificate shown as Exhibit C. 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 Improvements, 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 Improvements 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 Improvements shall be deemed to be complete upon issuance of a certificate of occupancy or a temporary certificate of occupancy by the City. (d) Notwithstanding any of the provisions in this Section 5.4 to the contrary, the HRA shall refuse the issuance of a Certificate of Completion until the final plat for the Development Property has been recorded. 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 Improvements 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 Improvements 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 excess liability policy may be used). The HRA shall be listed as an additional insured on the policy; and JBD-242155v12 20 RC125-239 (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 Improvements 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 fixrnish proof of the payment of premiums on, insurance as follows: (i) Insurance against loss and/or damage to the Minimum Improvements 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 HRA a certificate or certificates of the respective insurers as to the amount of coverage in force upon the Minimum Improvements. (d) The Developer will notify the HRA immediately in the case of damage exceeding $500,000 in amount to, or destruction of, the Minimum Improvements 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 Improvements to substantially the same or an improved condition or value as it existed prior to the event causing such damage and, to the 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 JBD-242155v12 21 RC125-239 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) convey or 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 JBD-242155v12 22 RC 125-239 of legal or administrative remedies, a reduction in the market value of the Minimum Improvements below the value necessary to generate the Minimum Per Square Foot Tax as defined in Section 7.3 hereof. Provided, however, that the prohibitions contained in this Section apply only to the extent that such actions reduce. the Minimum Per Square Foot Tax below that which is required under Section 7.3. Section 7.3. Minimum Tax. Developer agrees that with regard to the Minimum Improvements and the Additional Improvements that the Developer and its successors and assigns shall pay real estate taxes 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 and the Additional Improvements as are necessary to pay the Scheduled Payments on the Note (the "Minimum Per Square Foot Tax"). Prior to Closing, and as a precondition thereto, the parties will determine a Minimum Square Foot Tax for each separate owner, tenant or lessee of the Development Property and payable with respect to all the improvements in the Development Property and set forth such amounts in an amendment to this Agreement. Developer for itself and all parties subsequently obligated to pay real estate taxes agrees to pay the agreed-upon Minimum Per Square Foot Tax, beginning in the calendar year 2008 and increased each year thereafter by _%. Section 7.4. Deficiencies. In any year that the amount of City Tax Abatement is less that the amount needed to make a Scheduled Payment due and payable in that year on the Note as a result of the Abatement Volume Cap, a change in state law, a change in the classification of the Development Property, or for any other reason which is not the result of actions or inaction by the Developer (the "Deficiency"), neither the Developer nor its successors and assigns, as the case may be, shall be obligated to pay any portion of such Deficiency. To the extent there is a Deficiency, the Scheduled Payments due on the Note shall be adjusted accordingly and the amount of the Deficiency shall be added to the next semiannual Scheduled Payment. 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 Improvements 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 Improvements pursuant to Section 5.1, and the contractual obligation to pay real estate taxes pursuant to Section 7.1; provided, however, such subordination shall not include the obligations to pay the Deficiency pursuant to Section 7.5, or to make any repayments under any Business Subsidy Agreement pursuant to Section 4.5. JBD-242155v12 23 RC125-239 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 Propertv 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 Propertv 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 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 JBD-242155v12 24. RC125-239 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. (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, 7.3, 7.4 and 7.5 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; provided, however, that 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, and 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 being 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 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 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 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 death of any person (collectively, the "Claim") occurring at or about or resulting from any defect JBD-242155v12 25 RC 125-239 in the portion of the Development Property or the Minimum Improvements 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 Improvements (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 Improvements 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 Improvements. (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. ARTICLE X EVENTS OF DEFAULT Section 10.1. Events of Default Defined. The following shall be "Events of Default" under this Agreement and the term "Event of Default" shall mean, whenever it is used in this Agreement, any one or more of the following events: (a) failure by the Developer to observe or perform any material covenant, condition, obligation or agreement on its part to be observed or performed under this Agreement or any other agreement required to be entered into under this agreement. (b) prior to the substantial completion of the Minimum Improvements, 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 JBD-242155v12 26 RC125-239 (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 parry 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. (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. JBD-242155v12 27 RC125-239 (e) Notwithstanding the foregoing to the contrary, if Developer or a transferee fails to operate, maintain and preserve the Minimum Improvements, the HRA's sole remedy will be limited as provided in the Business Subsidy Agreement and Section 7.5. 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 parry 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 anon-monetary failure is by its nature incurable within 30 days, the defaulting parry does not, within such 30-day limit, provide assurances reasonably satisfactory to the Developer that the failure will be cured as soon as reasonably possible, then the Developer may exercise such remedies as may be available at law, in equity or by statute with respect to the defaulting party. The terms of Sections 10.3, 10.4, and 10.5 apply in favor of the Developer as well as the 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 JBD-242155v12 2g RC 125-239 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 OpportunitX. The Developer, for itself and its successors and assigns, agrees that during the construction of the Minimum Improvements 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 Signns. In addition to any requirements of the City, no sign shall be posted on Development Property during construction of the Minimum Improvements 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 of the several parts, Articles, and Sections of the Agreement are inserted for convenience of reference only and shall be disregarded in construing or interpreting any of its provisions. Section 11.6. Recapture of Public Funds on Sale of Development Property. (a) Back rg ound. 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 Development than expected, it is important for the HRA to have a mechanism to recapture part of the Public Funds. (b) Mechanism. On the first to occur of (i) the date on which the Developer sells a portion of the Development Property to a Bonafide End User, or (ii) three years from the date of this Agreement the Developer will meet with the HRA's fiscal consultant to review the sources and uses statement for the Development on a per square foot basis for the Development Property. The Developer agrees to provide the consultant with sufficient information to permit the review. It is understood that leases will not be evaluated in such a review. The consultant will provide the HRA and Developer with a certification that will address the question of whether or not Developer has sold such portion of the Development Property at an amount in excess of the Developer's out-of-pocket costs for the acquisition of the Development Property and the costs for site preparation, including, but not limited to environmental remediation, soil correction, rough grading, stormwater management, wetland mitigation, indemnification, costs of intersection, profit and other costs incurred by the Developer in preparing the Development JBD-242155v12 29 RC125-239 Property for the Development (collectively referred to as the "Developer Costs"). When the Developer has sold a portion of the Development Property to such Bona Fide End User as hereinbefore provided, the net sales proceeds (after deducting from the purchase price all costs incurred by Developer relating to such sale) shall be determined on a per square foot basis for the property sold by the Developer and if such amount is in excess of the Developer's Costs on a per square foot basis over the total square feet of the Development Property, excluding areas for easements and right-of--way, then such excess shall be multiplied by the number of square feet for the portion of the Development Property sold to such Bona Fide End User and the amount so determined shall be referred to herein as the "Excess." In the event the Developer leases any portion of the Development Property to a Bonafide End User, then such lease for purposes of this Section 11.6 shall be deemed to be on the same terms and conditions as a sale of a portion of the Development Property to a Bonafide End User. If an Excess is found to exist by the consultant, the HRA shall have the authority to reduce the principal amount of the Note by an amount equal to the Excess, provided, however, in no event shall the unpaid principal balance of the Note be reduced to less than $1,000,000. 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 Excess from any source other than by a reduction in the principal amount the Note.. Section 11.7 Intersection Improvements. The City will be constructing certain roadway improvements in the vicinity of the Development Property. The improvements generally involve the construction of two new intersections and related roadway widening (the "Intersection Project"). One of the intersections will be on 66th Street between the current location of 17th and 18th Avenues, and the other intersection will be approximately 300-500 feet to the north of the first intersection. The Intersection Project will benefit the Redevelopment Property and other property in the vicinity. As a precondition to Closing, the Developer and the City will enter into an agreement which will. contain the following elements: 1. The Developer will pay 20% of the cost of the Intersection Project; except that in no event will the Developer will pay less than $400,000; nor more than $800,000; 2. Payment will be made through equal semiannual payments of a special assessment levied by the City fora 20-year period; 3. The Developer will waive any right to challenge the special assessment either on the basis of amount, process or validity; 4. The Developer will have an opportunity to review and comment on the plans for the Intersection Project, and the intersection design must meet minimum standards established by the Developer so long as those standards do not result in a total project cost of over $4,000,000, and so long as the Developer has informed the City of such minimum standards by not later than August 1, 2005. Except as hereinbefore set forth and as described in 5 below, the design will be in the sole and absolute discretion of the City. 5. The City desires to explore the use of a "roundabout" intersection design at the 66th Street intersection. Developer supports the use of a roundabout for JBD-242155v12 3 ~ RC 125-239 the 66~' Street intersection, and if the City, County and MnDOT approve the use of a roundabout agrees to utilize reasonable efforts to seek the consent of Target Corporation to use of a roundabout. If the Target Corporation does not consent, the intersection at 66~' Street will be of a traditional/non-roundabout design. The intersection to the east will be of a typicaUnon-roundabout design when constructed as part of the Intersection Project. If the City determines in the future to reconstruct the east intersection as a roundabout, the Developer and its successor may object to such an intersection design and neither the Developer or its successors to the Development Property will be further assessed for the first of such future reconstructions. 6. The parties anticipate that it maybe necessary to acquire lands in excess of the area that will actually be needed for the Intersection Project right-of--way (the "Excess Lands"). The City will provide the Developer with an option and a right of first refusal as to all or part of the Excess Lands. The option may be exercised at any time within 10 years of the date of the agreement with the City. The option will be exercised by Developer electing to pay a price equal to the then fair market value of the Excess Land, or portion as raw land, which assumes all improvements on the Property, including .but not limited to buildings, basements and utilities have been demolished and removed. If the parties cannot mutually agree on the fair market value within 45 days after exercise of the option, the amount will be established by an appraiser selected by the parties. If the parties cannot agree on the selection of an appraiser, then each party will appoint an appraiser and the two appraisers so appointed will select a third appraiser. The opinion of two appraisers shall be binding. If the City accepts a bona fide offer from a third party to purchase all or part of the Excess Land, it shall be subject to the Developer having the right of first refusal to elect, within 30 days of written notice which includes a copy of the third-party offer signed on behalf of the City, to purchase the property at the same price and terms. If the property is part of a larger tract being sold by the City, the Developer will have the right to purchase the portion of the Excess Land which is a part of such tract based on the lesser of the fair market value of such Excess Land to be determined as in the case of the exercise of an option or the per square foot land cost pursuant to the terms of the bona fide offer. Developer's right to purchase by option is not applicable to (i) parcels with respect to which a third party offer has been received and is being considered for a time period of not more than 30 days after receipt of such offer; or (ii) Excess Land which is being actively considered for development by the City for municipal purposes; provided that such development plans proceed to commencement of construction of the municipal project within 18 months of commencement of consideration of the municipal use of such Excess Land. 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 if it is dispatched by registered or certified mail, postage prepaid, return receipt requested, or delivered personally; and JBD-242155v12 31 RC125-239 (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, 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, 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. Termination of Agreement. This Agreement shall terminate on the earlier of the Final Maturity Date under the Note or the date the and Note are 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 11.9. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall constitute one and the same instrument. Section 11.10. Recording. The HRA may record this Agreement and any amendments thereto with the Hennepin County recorder. The HRA shall pay all costs for recording. JBD-242155v12 32 RC 125-239 IN WITNESS WHEREOF, the HRA and Developer have caused this Agreement to be duly executed by their duly authorized representatives as of the date first above written. STATE OF MINNESOTA ) SS. COUNTY OF HENNEPIN ) HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA By By Its Chairperson Its Executive Director The foregoing instrument was acknowledged before me this day of , 2005 by Thomas E. Harms, the Chair of the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota, on behalf of the Authority. Notary Public STATE OF MINNESOTA ) SS. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this day of , 2005 by Steve Devich, the Executive Director of the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota., on behalf of the Authority. Notary Public 7BD-242155v12 33 RC125-239 RYAN COMPANIES US, INC. STATE OF MINNESOTA ) SS. COUNTY OF HENNEPIN ) By Its The foregoing instrument was acknowledged before me this day of 2005 by ,the of Ryan Companies US, Inc., a Minnesota corporation, on behalf of the corporation. Notary Public #31177382 050905 .rBD-2421ssv12 34 RC125-239 EXHIBIT A DEVELOPMENT PROPERTY The HRA Property is all the property outlined on the site plan included as part of this Exhibit A and designated as the HRA Property and which includes, but is not limited to all of the following described properties: HRA "A" Properties 6301 Cedar Avenue S 6311 Cedar Avenue S 6315 Cedar Avenue S 6325 Cedar Avenue S 6333 Cedar Avenue S 6341 Cedar Avenue S 6345 Cedar Avenue S 6405 Cedar Avenue S 6409 Cedar Avenue S 6417 Cedar Avenue S 6421 Cedar Avenue S 6425 Cedar Avenue S 6429 Cedar Avenue S 6437 Cedar Avenue S 6441 Cedar Avenue S 6445 Cedar Avenue S 6501 Cedar Avenue S 6509 Cedar Avenue S 6511 Cedar Avenue S 6521 Cedar Avenue S 6525 Cedar Avenue S 6529 Cedar Avenue S 6533 Cedar Avenue S 6537 Cedar Avenue S 1820 66th Street E 1800 66th Street E 1720 66th Street E 1714 66th Street E 1708 66th Street E 1700 66th Street E HRA "B" Pro eb rties 6315 18th Avenue S. 6321 18th Avenue S. 6327 18th Avenue S. 6333 18th Avenue S. 6339 18th Avenue S. 6345 18th Avenue S. 6401 18th Avenue S. 6409 18th Avenue S. 6415 18th Avenue S. HRA "C" Properties 6328 Cedar Avenue S 6344 Cedar Avenue S 6400 Cedar Avenue S (To be Acquired) 6412 Cedar Avenue S HRA "D" Pro ep rties (To be Acquired) 6300 Cedar Avenue S 6320 Cedar Avenue S 6421 18th Avenue S. 6427 18th Avenue S. 6433 18th Avenue S. 6439 18th Avenue S. 6445 18th Avenue S. 6509 18th Avenue S. 6515 18th Avenue S. 6521 18th Avenue S. 6527 18th Avenue S. 6533 18th Avenue S. 6314 18th Avenue S. 6320 18th Avenue S. 6326 18th Avenue S. 6332 18th Avenue S. 6344 18th Avenue S. 6400 18th Avenue S. 6408 18th Avenue S. 6414 18th Avenue S. 6444 Cedar Avenue S 6520 Cedar Avenue S (not yet demolished) 6500 Cedar Avenue S 6528 Cedar Avenue S JBD-242155v12 A-1 RC125-239 The Third Party Property is all the property outlined on the site plan included as part of this Exhibit A and designated as the Third Party Property and which includes, but is not limited to all of the following described properties: 6315 17th Avenue S 6321 17th Avenue S 6327 17th Avenue S 6333 17th Avenue S 6338 18th Avenue S 6339 17th Avenue S 6345 17th Avenue S 6401 17th Avenue S 6409 17th Avenue S 6415 17th Avenue S 6420 18th Avenue S 6421 17th Avenue S 6426 18th Avenue S 6427 17th Avenue S 6432 18th Avenue S 6433 17th Avenue S 6438 18th Avenue S 6439 17th Avenue S 6444 18th Avenue S 6445 17th Avenue S 6500 18th Avenue S 6501 18th Avenue S 6501 17th Avenue S 6508 18th Avenue S 6509 17th Avenue S 6514 18th Avenue S 6515 17th Avenue S 6520 18th Avenue S 6521 17th Avenue S 6526 18th Avenue S 6527 17th Avenue S 6532 18th Avenue S 6533 17th Avenue S JBD-242155v12 A-2 RC 125-239 DEVELOPMENT PROPERTY SITE PLAN JBD-242155v12 A-3 RC 125-239 EXHIBIT B CITY OF RICHFIELD RESOLUTION NO. RESOLUTION APPROVING PROPERTY TAX ABATEMENT FOR CERTAIN PROPERTY IN THE CITY OF RICHFIELD BE IT RESOLVED By the City Council ("Council") of the City of Richfield, Minnesota ("City") as follows: Section 1. Recitals. 1.01. The City has determined a need to grant a property tax abatement to certain property in the City, legally described in Exhibit A (the "Property"), all pursuant to Minnesota Statutes, Sections 469.1812 to 469.1815 (the "Act"). 1.02. The purpose of the abatement is to provide funds to make payments to a redeveloper on a note to be issued by the HRA to be used in the acquisition, site preparation and related redevelopment activities within the area described in Exhibit A (the "Project."). 1.03. Hennepin County (the "County") has agreed to contribute to the financing of the Project, but has declined to grant a tax abatement after receipt of a request from the City. The City's request to the County was made in accordance with Section 469.1813, subdivision 6 of the Act. 1.04. This Council has fully reviewed the proposed Abatement (as hereinafter defined) and on May 24, 2005 conducted a public hearing thereon, at which the views of all interested persons were heard. Section 2. Findings. 2.01. It is hereby found and determined as follows: (a) the benefits to the City from the Abatement will be at least equal to the costs to the City of the Abatement; (b) the Abatement will help to increase or preserve the tax base by the resulting location of new retail businesses on land purchased with assistance of the Abatement; (c) the Abatement will provide access to services for residents of the City by the resulting establishment of new retail businesses on land purchased with assistance of the Abatement; (d) the Abatement will provide employment opportunities in the City by the resulting establishment of new retail businesses on land purchased with assistance of the Abatements; (e) the Abatement will assist in the redevelopment of areas that are subject to blighting influences; and JBD-257698v5 RC125-239 (f) the new retail businesses established on land purchased with assistance of the Abatements will be paying for part of the cost of new public infrastructure. Section 3. Actions Ratified; Abatement Ap rn owed. 3.01. The Council hereby ratifies all actions of the City's staff and consultants in arranging for approval of this resolution in accordance with the Act. 3.02. Subject to the provisions of the Act, the Abatement is hereby approved and adopted subject to the following terms and conditions: (a) The term "Abatement" means the real property taxes payable in the years 2007 through 2022: (i) generated in any tax-payable year by extending the City's local tax rate against the tax capacity of the land and improvements, excluding any portion of the tax capacity attributable to the areawide tax under Minnesota Statutes, Chapter 473F) as of January 2 in the prior year; and (ii) paid to the City by the county. The term also includes, to the extent permitted by law, any delinquent real property taxes which are due and payable during the period of the Abatement, and which are subsequently paid, either during the period of the abatement or afterwards. In no event will the Abatement in any year exceed .the greater of (1) ten percent of the City's current levy, or (2) $200,000 (the "Abatement Cap."). (b) The Abatement will be paid for a .period of 15 years, commencing with taxes payable in 2007. In order to grant abatements longer than 10 years, the City acknowledges receipt of written notice from Hennepin County formally declining to participate in abatement for the Project. (c) The Abatement is hereby pledged to make annual payments on a Tax Abatement Limited Revenue Note in the maximum amount (principal and issuance costs) of $2,068,700 (the "Note") which will be issued to redeveloper of the Project and used to reimburse site acquisition and related expenditures. incurred by the redeveloper. The Note will bear interest at the rate of 7.0% per annum, payable only from the Abatement. It is anticipated that if the Note were issued in the maximum amount, interest would total approximately $ In accordance with Section 469.1814, subdivision 4 of the Act, the total amount of the Abatement authorized under this resolution may not be modified during its term. Approved by the City Council of the City of Richfield, Minnesota this day of 2005. JBD-257698v5 RC125-239 Mayor Attest: City Clerk JBD-257698v5 RC125-239 Exhibit A Descriution of Prouerty JBD-242155v11 RC125-239 B-1 EXHIBIT C CERTIFICATE OF COMPLETION The undersigned hereby certifies that Ryan Companies US, Inc. (the "Developer") has fully complied with its obligations under Articles IV and V of that document titled "Contract for Private Development," dated 2005 between the Housing and Redevelopment Authority in and for the City of Richfield and the Developer, with respect to construction of the Minimum Improvements in accordance with the Construction Plans, and that the Developer is released and forever discharged from its obligations to construct the Minimum Improvements under Articles IV and V. Dated: , 200_. HOUSING AN AUTHORITY IN OF RICHFIELD By JBD-242155v11 RC 125-239 D REDEVELOPMENT AND FOR THE CITY C-1 EXHIBIT D UNITED STATES OF AMERICA STATE OF MINNESOTA COUNTY OF HENNEPIN CITY OF RICHFIELD No. $2,068,700 TAXABLE LIMITED REVENUE NOTE SERIES 200 Date of Original Issue 200_ This Note is given in accordance with that certain Contract for Private Development between the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota (the "HRA") and the Owner dated as of , 2005 (the "Contract"). Capitalized terms used and not otherwise defined herein shall have the meaning provided for such terms in the Contract unless the context clearly requires otherwise. The Housing and Redevelopment Authority in and for the City of Richfield, Minnesota (the "Issuer"), hereby acknowledges itself to be indebted and, for value received, promises to pay to the order of Ryan Companies US, Inc. or registered assigns (the "Owner"), solely from the source, to the extent and in the manner hereinafter provided, the principal sum of Two Million Sixty Eight Thousand Seven Hundred and No/100 Dollars ($2,068,700.00) (the "Principal Amount"), with interest on the Principal Amount at the rate of 7% per annum. The amount of this Note shall be payable in semi-annual installments as set forth on the attached Schedule A (the "Scheduled Payments"), payable on each February 1 and August 1, (the "Scheduled Payment Dates") commencing 1, 200_, and ceasing no later than 1, 20_, as automatically extended in order to collect Available Abatements which are due and payable during the term of the Note and which are subsequently paid, either during the period of the abatement or afterwards (the "Final Maturity Date"). [Clarify that the Note will be for a term of 15 years and describe how the commencement date is determined.] Payments on this Note should first be applied to interest due hereunder and then to the unpaid Principal Amount. The Principal Amount is subject to prepayment at the option of the Issuer in whole or in part on any date after the date of original issue. JBD-242155v11 RC125-239 D-1 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 its postal address within the United States which shall be designated from time to time by the Owner. Payments on this Note are payable solely from Available Abatements as defined in the Contract. The pledge of Available Abatements is subject to all the terms and conditions of the City Abatement Resolution and the Contract. The Issuer shall have no obligation to make any payment on any Scheduled Payment Date if, as of such date there has occurred and is continuing any Event of Default on the part of the Owner as defined in the Contract and such payment will be suspended as provided in Section 10.2 of the Contract. If the Event of Default is thereafter cured in accordance with the Contract, the suspended payment shall be paid within 20 days after the Event of Default is cured. This Note shall terminate and be of no further force and effect as of the earlier of: (1) the Final Maturity Date; or (2) the date the Principal Amount and interest due thereon shall have been paid in full. The Issuer makes no representation or covenant, express or implied, that the Available Abatement will be sufficient to pay, in whole or in part, the amounts which are or may become due and payable hereunder. The Issuer shall have no obligation to pay any portion of the Principal Amount that remains unpaid after the Final Maturity Date. This Note is issued pursuant to Minnesota Statutes, Sections 469.1812 to 469.1815, and pursuant to the resolution of the Issuer adopted on , 200_ (the "Resolution") duly adopted by the Issuer pursuant to and in full conformity with the Constitution and laws of the State of Minnesota. This Note is a limited obligation of the Issuer, payable solely from moneys pledged to the payment of the Note under the Resolution. The Note shall not be deemed to constitute a general obligation of the State of Minnesota, or any political subdivision thereof, including, without limitation, the Issuer. Neither the State of Minnesota, nor any political subdivision thereof, including, without limitation, the Issuer, shall be obligated to pay the principal of this Note or other costs incident hereto except from the revenues and receipts pledged therefor, and neither the full faith and credit nor the taxing power of the State of Minnesota or any political subdivision thereof, including, without limitation, the Issuer, is pledged to the payment of the principal of this Note or other costs incident hereto. This Note is issuable only as a fully registered note without coupons. This Note is transferable upon the books of the Issuer kept for that purpose at the principal office of the Registrar, by the Owner hereof in person or by such owner's attorney duly authorized in writing, upon surrender of this Note together with a written instrument of transfer satisfactory to the Issuer, duly executed by the Owner. Upon such transfer or exchange and the payment by the Owner of any tax, fee, or governmental charge required to be paid by the Issuer with respect to such transfer or exchange, there will be issued in the name of the transferee a new Note of the same aggregate principal amount, bearing no interest, and maturing on the same dates. This Note shall not be transferred to any person or entity unless the Issuer has been provided with an opinion of counsel or a certificate of the transferor, in a form satisfactory to the JBD-242155v11 RC125-239 D-2 Issuer, that such transfer is exempt from registration and prospectus delivery requirements of federal and applicable state securities laws. Transfer of the ownership of this Note to a person other than one permitted by this paragraph without the written consent of the Issuer shall relieve the Issuer of all of its obligations under this Note. If the Issuer defaults in its obligations to the Owner hereunder, then the Issuer shall pay the Owner for all of the out of pocket expenses, including, -but not limited to, attorneys 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 Issuer under this Note. IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions, and things required by the Constitution and laws of the State of Minnesota to be done, to 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 Issuer outstanding on the date hereof and on the date of its actual issuance and delivery, does not cause the indebtedness of the Issuer to exceed any constitutional or statutory limitation thereon. IN WITNESS WHEREOF, the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota has caused this Note to be executed by the manual signatures of the Chair, and Executive Director of the Issuer and has caused this Note to be dated as of the Date of Original Issue specified above. HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA Its Chair Its Executive Director REGISTRATION PROVISIONS The ownership of the unpaid balance of the within Note is registered in the bond register of the City Finance Director in the name of the person last listed below. Date of Signature of Res;istration Registered Owner City Finance Director 200_ Ryan Companies US, Inc. JBD-242155v11 RC125-239 D-3 SCHEDULE A SCHEDULED PAYMENTS JBD-242155v11 RC125-239 D-4 W W 0 °O ~ N ,~ oo o O a o O 0 ~ M . 0 ~--~ 0 0 ~ N ~O o 0 ~ y4 +-~ ~ ~ ~ ~ v'i M ~/'~ ~ ~ V'~ ~ N M 00 II O ~~ ~i U ~ b9 ~ EF3 M F/-? _, ,. 69 Fs9 6~9 6N4 b~14 ...~ ~' ~ .. v ~ ~ ~ ~ ~ ~ ~ r.., O ~ r-+ O U ~ O U .~+ O U r , bn , ~ , ~ bn ~, ~ ~ o ~ o °~' o °~' ~ ~ 3 ~ ~ +a ~ o ~ ~ ~ c ~ ° ~ ~ .~ ~ ~ ~ o ~ ~ ~ 0 0 0 ~' o ~ ~ ~ ~~, ox~ o,~~ o,~~ o,~~ ~ ,.~ ~, U W `~ ~ 3 ~ 0'3 ~ ~ 3~ ~ 3 ~ 3 ~ , . ~ , . 0 x , ~ N y ~ i bu ~ bn ~ 3 y vii O ~ ~ ~ '' ~ • ~ W . . ~ . V ~ ~ +, vi O • ~ ~ ~ ¢+ O N U ~ O O ~ ,,,' ,.O ~ O ~ ~ s-~ ~ .~ O ~ ,~ ~ Q O O ^-~ ~ ~ ~ ~ O O ~ O . bA O .,~ ~ ~ ~ ~ v ~ ~ b4 ~¢ ~ O ~ v ~ ~ ~, ~ ~ ~ ~ '~ N ~ ~ ~ ~ ~ ~ c~ ~ '~ O ~ o a ° ,~ a w `~ ~ o ~ ~ ~ o.~ ~ ~ ' °~'~ ° ~ ° ar~ ~ ~ ~ ~ ~ d ~ c ~ a ~ ~ w O M ~ ~ M b4 ~ O ~O N M ~ ~ ,-~ O ~ x ~, ~ ..., o .o ~> '~ Q Q ~, ~ ~~ ~~ ~~ ~,~ ~~ ~ o ~ o ~ o °' ~ o~ U o ~~ ~ ~~ ~ a~ ~ 0 ~ ~ ~ ~~ ~ a U Q U A L U Q ~ O A ~~ .r M N N N v' ~ N_ Q U ~~ W EXHIBIT F BUSINESS SUBSIDY AGREEMENT THIS AGREEMENT, made and entered into this _day of , 2005 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"). Section 1 Business Subsid~~eement. The provisions of this Agreement constitute the "business subsidy agreement" for the purposes of the Business Subsidy Act. (a) General Terms. The parties agree and represent to each other as follows: (1) For the purpose of this Agreement, the terms used in this Agreement which are defined in the Contract for Private Development between the parties and dated as of 2005 (the "Contract") shall have the meanings given them in the Contract. (1) The subsidy provided to the Developer consists of (i) the sum of financing provided by the Authority and City in the form of the Note and the proceeds from the and (ii) conveyance of a portion of the HRA Property by the Authority to Developer for less than fair market value. Each disbursement, payment or waiver described in such Article represents a forgivable loan that is repayable by the Developer in accordance with this Section. As of the date of this Agreement, the aggregate business subsidy (in present value terms) is estimated to be approximately million. (2) The public purposes of the subsidy are to redevelop an area that has been significantly impacted, and will continue to be impacted by airport operations on land adjacent to the Development .Property, establish a mixed commercial development that is designed to be compatible with the impacts, and which will serve as a buffer to land uses to the West of the Development Property and to implement the City's land use goals identified in the comprehensive plan. (3) The goals for the subsidy are: to secure completion of the Minimum Improvements of the Development and the related Public Improvements by the Completion Date for that Phase, and to operate the Minimum Improvements for at least five years as described in clause (6) below. (4) If the goals described in clause (3) are not met, the Developer must make the payments to the Authority described in Section 6.4(c). JBD-242155v15 RC 125-239 (5) The subsidy is needed because the cost of land acquisition, demolition and site clearance, make development of the Minimum Improvements financially infeasible without public assistance, all as determined by the Authority and City. (6) The Developer must continue operation of the Minimum Improvements for at least five years after the date of issuance of the Certificate of Completion. For the purpose of this Section, space will be considered to be maintained in operation if it is leased, or available for lease, to any person or entity, or occupied by Developer for use in its trade or business. (7) The Developer does not have a parent corporation. (8) The Developer has not received, and does not expect to receive, financial assistance from any other "grantor" as defined in the Business Subsidy Act, in connection with the Development Property or the Minimum Improvements. (b) Job and Wage Goals. In accordance -with Section 116J.994, subdivision 4, the Authority has determined after a public hearing that-the creation or retention of jobs is not the goal of this redevelopment effort. Accordingly, the wage and job goals are set at zero. (c) Remedies. 1. If the Developer fails to commence construction of the Minimum Improvements within the time provided in the Contract, the Developer shall repay the Authority the full amount of the business subsidy. 2. If the Developer commences construction of the Minimum Improvements within the time provided in the Contract, the amount of the business subsidy will be reduced to $2,500,000. 3. If the Developer commences construction of the Minimum Improvements as provided in the Contract, but fails to complete construction within the time period provided in the Contract, the Developer shall repay the Authority $2,500,000. 4. If the Developer commences and completes construction of the Minimum Improvements within the times provided in the Contract [Is the time in § 5.3 adequate?], the amount of the business subsidy will be reduced to $1,000,000. 5. If the Developer commences and completes construction of the Minimum Improvements within the times provided in the Contract, but fails to continue operation of all or a divisible portion of the Minimum improvements, the Developer shall repay the Authority a portion of the business subsidy (adjusted in accordance with paragraph 4 above) equal to the percentage of square footage of the non-performing portion to the square footage of the Minimum Improvements and prorated by the portion of the five-year operation period elapsed as of the date of default. [All of the foregoing subparagraphs of paragraph "(c)" should be amended to allocate a specific dollar amount of the business subsidy (for not starting construction, starting construction and completing construction) between Target and Home Depot based on the ratio of square footage of each project as part of the Minimum Improvements. The failure to build .one store should not create across-default and accelerate the entire business subsidy when the other store was started and may have been completed as required in the Contract. JBD-242155v15 RC125-239 Additionally, the Target project and the Home Depot project should each have their own five- year operation period.] Any demand for repayment must be in writing and is subject to the cure provisions of the Contract. Payment shall also include interest at the implicit price deflator as defined in Minnesota Statutes, Section 275.50, subd. 2, accrued from the Closing Date to the date of payment Nothing in this Section shall be construed to limit the Authority's remedies under Article X of the Contract in the event of a violation of any other provision of the Contract, but the remedies set forth in this paragraph (c) are the exclusive remedies for failure to comply with the terms of this Agreement. In addition to the exclusive remedy described in this Section, the Developer agrees and understands that it may not a receive a business subsidy from the Authority or any grantor (as defined in the Business Subsidy Act) for a period of five years from the date of the failure or until the Developer satisfies its repayment obligation under this Section, whichever occurs first. (d) Reports. The Developer must submit to the Authority a written report regarding business subsidy goals and results by no later than March 1 of each year, commencing March 1, 200_ and continuing until the later of (i) the date the goals stated Section 1(a)(3) are met; (ii) 30 days after expiration of the five-year period described in Section 1(a)(6); or (iii) if the goals are not met, the date the subsidy is repaid in accordance with Section 1(c). The report must comply with Section 116J.994, subdivision 7 of the Business Subsidy Act. The Authority will provide information to the Developer regarding the required forms. If the Developer fails to timely file any report required under this Section, the Authority will mail by certified mail return receipt requested to the Developer at the address set forth in Section 11.7 of the Contract a warning within one week after the required filing date. If, after 30 days after receipt of the warning, the Developer fails to provide a report, the Developer must pay to the Authority a penalty of $100 for each subsequent day until the report is filed. Failure by the Authority to deliver a timely warning notice will not relieve the Developer's obligation to pay a penalty within 30 days after receipt of a notice to pay. The maximum aggregate penalty payable under this Section is $1,000. IN WITNESS WHEREOF, the HRA and Developer have caused this Agreement to be duly executed by their duly authorized representatives as of the date first above written. HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA By Its Chairperson By Its Executive Director JBD-242155v15 RC125-239 STATE OF MINNESOTA ) SS COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this day of , 2005 by Thomas E. Harms, the Chair of the Housing and development Authority in and for the City of Richfield, Minnesota, on behalf of the Authority. Notary Public STATE OF MINNESOTA ) SS. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this day of , 2005 by Steve Devich, the Executive Director of the Housing and Development Authority in and for the City of Richfield, Minnesota, on behalf of the Authority. Notary Public JBD-242155v15 RC125-239 RYAN COMPANIES US,1NC. By Its STATE OF MINNESOTA ) SS. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this day of 2005 by ,the of Ryan Companies US, Inc., a Minnesota corporation, on behalf of the corporation. ' Notary Public #31177382 JBD-242155v15 RC125-239 AGENDA ITEM # 4D REPORT # 1H STAFF REPORT HOUSING AND REDEVELOPMENT AUTHORITY MEETING MAY 16, 2005 REPORT PREPARED BY: REPORT PRESENTER: DEPARTMENT DIRECTOR REVIEW: REVIEWED BY EXECUTIVE DIRECTOR: JOHN STARK, ASSISTANT DIRECTOR OF COMMUNITY DEVELOPMENT NAME, TITLE JOHN STARK, ASSISTANT DIRECTOR OF COMMUNITY DEVELOPMENT NAME, TITLE ~/~ /'1 _ ITEM FOR HRA CONSIDERATION: Consideration of a Professional Services Agreement with Cornejo Consulting to conduct anal ses of the Richfield Redevelo ment Pro'ect Area. I. RECOMMENDED ACTION: By Motion: Approve the execution of a Professional Services Agreement with Cornejo Consulting to conduct analyses of the Richfield Redevelopment Project Area. II. BACKGROUND The Richfield Redevelopment Project Area was originally established by the Richfield Housing and Redevelopment Authority (HRA) and City Council in 1993. This area delineates where redevelopment projects can occur in the community. In order to properly plan for, and accommodate, new or revised redevelopment plans, the Richfield Redevelopment Project Area must be modified. Such plan modifications rely on findings related to blighting conditions, the nature of improvements to be made or the costs and benefits of such improvements. Cornejo Consulting (Cornejo) has proposed the rendering of professional services in order to provide the technical analysis to make these required findings as necessary for upcoming Redevelopment Project Area modifications, specifically the Cedar Point area. The attached proposal will be incorporated into the HRA's 051605 Cornejo standard form, Professional Services Agreement. The costs to perform these services shall not exceed $9,400. Dan Cornejo, the owner of Cornejo Consulting, was formerly the chief author of reports that led to redevelopment area modifications related to the Lyndale Gateway West and City Bella projects. III. BASIS OF RECOMMENDATION A. POLICY • In order to properly plan for, and accommodate, new or revised redevelopment plans, the Richfield Redevelopment Project Area must be modified. • Such modifications should be based on findings that require a technical analysis of the redevelopment area. • Cornejo Consulting has provided a proposal to perform these technical analyses. B. CRITICAL ISSUES • N/A C. FINANCIAL • The costs incurred can be paid by funds in the HRA's Development Account. D. LEGAL • Legal staff have reviewed the scope of services and agree that the services performed will result in findings that meet legislative requirements. IV. ALTERNATIVE RECOMMENDATION~S~ • N/A V. ATTACHMENTS • Proposal from Cornejo Consulting. VI. PRINCIPAL PARTIES EXPECTED AT MEETING • N/A C~MMl1NITY P4ANNIN& + DES16N May 10, 2005 Mr. Bruce Palmborg Director of Community Development City of Richfield 6700 Portland Avenue Richfield, MN 55423 Re: Redevelopment Project Area Modifications and Blight Analysis (Cedar Point) Dear Mr. Pahnborg: CORNEJO CONSULTING is pleased to submit this proposal for professional services to conduct analyses, including assessment of blighting conditions, to enable Richfield to modify the Richfield Redevelopment Project Area to facilitate redevelopment of the Cedar Point area. Scope of Work This proposed scope of work is based on my current understanding of the project and my discussions with you and your staff earlier today. Primary tasks include the following: Task 1: Blight Analysis 1. Gather and Review Background Data, including the report of the Governor's Airport Community Stabilization Funding Task Force (January, 2000) and the MSP International Airport Low Frequency Noise Policy Committee Report (August, 2000), The City of Richfield -Legislative Proposal (for) Proposed Low-Frequency Noise TIF Area (March, 2005), and the Cedar Avenue Corridor Redevelopment Concept Master Plan (September, 2004). Review property tax data and building permit data within the project study area. 2. Conduct and Document Field Survey, including site visits to observe and document existing conditions. of properties within project study area and surrounding context. Photograph properties within project study area to provide a visual record of the blighting conditions. 3. Conduct Blight Analysis, including analysis of the background data and documentation from the field survey and photos to determine the presence of blighting conditions according to the statutory definition; review compliance with the Zoning Code; review consistency with Comprehensive Plan direction and other City policy documents. Identify the presence or lack thereof of blighting conditions on individual properties within the project study area and within the project study area as Cornejo Consulting - 1657 Saunders Avenue -Saint Paul, MN 55116-2430 P 651.699.1927 F 651.698.0212 E dancornejo@comcast.net COMMEINETY FLAHNIN& * QES16N a whole. Develop a qualitative analysis to establish the relative degree to which the various blighting conditions are evident. 4. Prepare Preliminary Report, including text, figures, tables, photographs, etc. Meet with staff to review draft preliminary report. Revise preliminary report as necessary to address staff comments. 5. Meeting Participation. Assist staff, as required, in presenting Preliminary Report to Planning Commission, City Council, and HRA. 6. Prepare Final Report, addressing any issues, concerns, or conditions that may be identified or established during review by Planning Commission, City Council, and HRA. Task 2: Narrative Description of Redevelopment Plan 1. Prepare narrative description of Redevelopment Plan for insertion into the Modification to the Redevelopment Plan for the Richfield Redevelopment Project Area. City of Richfield Tasks /Responsibilities In accordance with our discussions, Richfield Community Development staff will work with me to obtain available background information and to develop maps for this project. Schedule Upon your authorization, I will commence the work and complete the draft Preliminary Report for the Blight Analysis and the Redevelopment Plan narrative description by May 24, 2005. I will attend (and participate as required) the Planning Commission meeting scheduled for June 13 and the City Council/HRA meetings scheduled for June 20. Compensation Compensation will be made on an hourly basis ($100/hr), with a total cost not to exceed $8,600 for Task 1, with an additional $800 for Task 2, for a total of $9,400, plus reimbursement of out- of-pocket expenses including printing of reports. These latter expenses will be billed on a cost- recovery basis. The maximum fee billed will not exceed this amount without your prior authorization. Invoices will be sent monthly, with payment within thirty days. Cornejo Consulting -1657 Saunders Avenue -Saint Paul, MN 55116-2430 P 651.699.1927 F 651.698.0212 E dancornejo@comcast.net COMMUNITY PLANNING + t#ESiGN Agreement This letter represents the entire understanding between CORNEJO CONSULTING and the City of Richfield with respect to this project, and may only be modified in writing and signed by both parties. If it satisfactorily sets forth your understandin:~ of our agreement please sign both of the enclosed copies of this letter in the space provided below and return an on final si named copy to me. I look forward to working with you on this project. If you have any. questions or comments about this agreement, please contact me at 651-699-1927, or email at dancornejoncomcast.net. Sincerely, ~ .. Dan Cornejo Principal Accepted this day of , 2005 Please initial Task options, and sign below. Task 1 only: Tasks 1 and 2: CITY OF RICHFIELD, MINNESOTA By: Title: Cornejo Consulting -1657 Saunders Avenue -Saint Paul, MN 55116-2430 P 651.699.1927 F 651.698.0212 E dancornejo@comcast.net AGENDA ITEM # 4C REPORT # j ] STAFF REPORT HOUSING AND REDEVELOPMENT AUTHORITY MEETING MAY 16, 2005 REPORT PREPARED BY: REPORT PRESENTER: KATIA MEDVETSKI, REDEVELOPMENT SPECIALIST NAME, TITLE BRUCE PALMBORG, COMMUNITY DEVELOPMENT DIRECTOR NAME, TITLE DEPARTMENT DIRECTOR REVIEW: REVIEWED BY EXECUTIVE DIRECTOR: R ITEM FOR HRA CONSIDERATION: Consideration of a request for the City Council to call a public hearing on the Modification to the Redevelopment Plan for the Richfield Redevelopment Project Area and refer the Modified Plan to the Plannin Commission. I. RECOMMENDED ACTION: By Motion: Approve the attached resolution Applying to the City Council of the City of Richfield to take Certain Actions with Respect to the Modification of a Redevelopment Plan for the Richfield Redevelopment Project Area. II. BACKGROUND The Cedar Point redevelopment project (Project) is located within the Richfield Redevelopment Project Area boundary. The current redevelopment plan is in need of revision to incorporation the Project into the plan. As the Housing and Redevelopment Authority (HRA) is the body undertaking the Project, it is appropriate for the HRA to request the City Council to call for a public hearing on the Modification to the Redevelopment Plan for the Richfield Redevelopment Project Area and refer the modified plan to the Planning Commission for consideration. III. BASIS OF RECOMMENDATION A. POLICY • Minnesota Statutes require that modifications to redevelopment plans undergo a public hearing. B. CRITICAL ISSUES • The modified plan needs to be in place before the developer of the Cedar. Point project can proceed with any acquisitions in the area. • A public hearing by the City Council is proposed for a special meeting on June 14, 2005. C. FINANCIAL • The cost of preparing the modified plans will be those of the HRA. • The HRA will be presented with a proposal for work related to planning activities and redevelopment area analysis under a separate staff report. D. LEGAL • Legal counsel has provided the HRA with advice regarding the need to undertake the modified plan. IV. ALTERNATIVE RECOMMENDATION~S~ • Do not request the City Council to call a public hearing at this time. However, the schedule for acquisitions by the developer of the Project will be impacted until the plan is modified. V. ATTACHMENTS • Resolution VI. PRINCIPAL PARTIES EXPECTED AT MEETING • N/A HRA RESOLUTION NO. RESOLUTION APPLYING TO THE CITY COUNCIL OF THE CITY OF RICHFIELD TO TAKE, CERTAIN ACTIONS WITH RESPECT TO THE MODIFICATION OF A REDEVELOPMENT PLAN FOR THE RICHFIELD REDEVELOPMENT PROJECT AREA WHEREAS, the Housing and Redevelopment Authority in and for the City of Richfield (the "Authority") anticipates the undertaking of redevelopment activities to the Cedar Point redevelopment project (the "Redevelopment Project") within the Richfield Redevelopment Project Area (the "Project Area") shown on the attached Exhibit A; and WHEREAS, in connection with such an undertaking, the Authority is desirous that the Redevelopment Plan for the Richfield Redevelopment Project Area be modified (the "Modified Plan"); and WHEREAS, as a precondition to the Authority's proceeding with the redevelopment activities, certain actions are required to be taken by the City. NOW, THEREFORE, BE IT RESOLVED by the Housing and Redevelopment Authority in and for the City of Richfield as follows: 1. The Executive Director is directed to make application to the City of Richfield for approval of the Modified Plan for Project Area as it relates to the Redevelopment Project. 2. The Executive Director is directed to request the Richfield Planning Commission consider the proposed Modified Plan at a special meeting of June 13, 2005 and render its opinion to the City.- 3. The Executive Director is further directed to request that the City Council hold a public hearing on the approval of the Modified Plan at a special meeting of June 14, 2005; and that notice of such hearing be made in the manner provided by law. Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 16th day of May, 2005. Thomas E. Harms, Chair ATTEST: Kristal Stokes, Secretary AGENDA ITEM # 4B REPORT # 16 STAFF REPORT r HOUSING AND REDEVELOPMENT AUTHORITY MEETING MAY 16, 2005 REPORT PREPARED BY: KATIA MEDVETSKI, REDEVELOPMENT SPECIALIST NAME, TITLE REPORT PRESENTER: ~/~ NAME, TITLE DEPARTMENT DIRECTOR REVIEW: ~/' /~(- REVIEWED BY EXECUTIVE DIRECTOR:. ITEM FOR HRA CONSIDERATION: Accept assignment of the Professional Services Agreement with Conworth, Inc. from the City of Richfield for land ac uisition services in connection with the Cedar Point Project. I. RECOMMENDED ACTION: By Motion: Approve the attached resolution accepting assignment of a certain contract from the Cit of Richfield. II. BACKGROUND • On January 18, 2005, the Richfield Housing and Redevelopment Authority (HRA) approved and entered into a Cooperative Agreement with the Hennepin County Board, Hennepin County Housing and Redevelopment Authority, and the City of Richfield (City) for the use of $2 million in grant Multi jurisdictional Project Funds (MJP) for the Cedar Point Project (Project). • On April 26, 2005, the City approved a Professional Services Agreement with Conworth, Inc. (Contract) in the amount of $144,350 for certain land acquisition services for 6300, 6320, 6400, 6500, 6520, and 6528 Cedar Avenue in connection with the Project as described in Attachment A. • The land in the Project impacted by these activities includes six properties: 6300 and 6320 Cedar Avenue (freight handler, warehousing, transfer, delivery), 6400 Cedar Avenue (occupied, 4 unit apartment building), 6500 Cedar Avenue (landscaping company), 6528 Cedar Avenue (occupied, 12 unit apartment 051605_ConworthPSA building) and 6520 Cedar Avenue (vacant, 12 unit apartment building purchased by City in November, 2005 which stilt requires site clearance). • The Cooperative Agreement contemplates that the HRA undertake the acquisition activities for the Project. • .The Contract with Conworth was recently assigned to the HRA by the City on May 10, 2005. • The assignment of the Contract requires acceptance by the HRA. III. BASIS OF RECOMMENDATION • A. POLICY • The Cooperative Agreement governs the use of the MJP funds and contemplates that the HRA undertake land acquisition activities for the Project. • The City has assigned the Contract with Conworth to the HRA. B. CRITICAL ISSUES • The assignment of the Contract is subject to the acceptance by the HRA and Conworth. C. FINANCIAL • The HRA assumes the costs for Conworth's services as part of the assignment of the Contract. • Project costs will be reimbursed with the MJP funds. D. LEGAL • Legal counsel reviewed the Cooperative Agreement and prepared the resolution. • Conworth has provided the City with its consent. IV. ALTERNATIVE RECOMMENDATION(S~ • Do not accept the assignment of the Contract. However, this would prevent the City from spending the MJP funds as the HRA is the authorized body to undertake land acquisition activities. V. ATTACHMENTS • Resolution with Exhibit A -Professional Services Agreement • Attachment A -Summary of Proposed Costs by Conworth Inc. • Attachment B -Map VI. PRINCIPAL PARTIES EXPECTED AT MEETING • N/A HRA RESOLUTION NO. A RESOLUTION ACCEPTING ASSIGNMENT OF A CERTAIN CONTRACT FROM THE CITY OF RICHFIELD WHEREAS, the City of Richfield has entered into a certain Professional Services Agreement with Conworth, Inc. dated Aprif 26, 2005 (the "Contract"), attached as Exhibit A, for the provision of services related to the possible acquisition of six properties near Cedar Avenue; and WHEREAS, the City entered into the Contract and proposed to fund the Contract utilizing funds provided in accordance with a Cooperative Agreement approved by the City on January 25, 2005 and by the Housing and Redevelopment Authority in and for the City of Richfield (the "Authority") on January 18, 2005 and entered into among the City, the Authority, Hennepin County, and the Hennepin County Housing and Redevelopment Authority (the "Cooperative Agreement"); and WHEREAS, the Cooperative Agreement contemplates that the Authority would undertake the acquisition activities referenced in the Cooperative Agreement; and WHEREAS, the City Council did on May 10, 2005 adopt a resolution assigning the City's interest and obligations in the Contract to the Authority; and WHEREAS, the Authority believes it desirable and appropriate that it accept the assignment of the Contract. NOW, THEREFORE, BE IT RESOLVED by Housing and Redevelopment Authority in and for the City of Richfield: 1. The assignment of the City's interest under the Contract to the Authority is hereby accepted, subject to the consent of Conworth, Inc. 2. The Authority shall be responsible for the payment of all fees and charges incurred under the Contract for work and services pertormed, but not paid, prior to the date of assignment. 3. The Authority designates the Executive Director, or that person's designee in writing as the Authority contact person for matters pertaining to the Contract. 4. This resolution is effective upon adoption. Adopted this day of May, 2005. Thomas E. Harms, Chair ATTEST: Kristal Stokes, Secretary EXHIBIT A to Resolution PROFESSIONAL SERVICES AGREEMENT Conworth, Inc. THIS AGREEMENT made and entered into by and between the City of Richfield, State of Minnesota, hereinafter referred to as the "CITY", and Conworth, Inc., hereinafter referred to as "CONWORTH". WITNESSETH: WHEREAS, the CITY wishes to purchase the services of CONWORTH; and WHEREAS, there are funds available for the purchase of these services. NOW, THEREFORE, in consideration of the mutual undertakings and agreements hereinafter set forth, the CITY and CONWORTH agree as follows: 1. TERMS AND COST OF THE AGREEMENT CONWORTH agrees to furnish services to the CITY for the implementation of various phases of a land acquisition process that include appraisal and review appraisal (if required), acquisition, relocation, property management, professional environmental services, demolition specifications and related activity services, well capping (if required) and legal services in the Cedar Point Project area, specifically related to 6300, 6320, 6400, 6500, 6520, and 6528 Cedar Avenue, as described in the CONWORTH proposal dated April 18, 2005. The total cost of this Agreement shall not exceed $144,350.00 unless amended by the CITY. This figure does not include the cost for title insurance, well capping (if required), fixture appraisals (if required) and review appraisals (if required). Should these additional services be required, an amendment to the AGREEMENT will be necessary. All reports, memos, and other data produced by CONWORTH become the property of the CITY. 2. PAYMENT FOR SERVICES Invoices may be submitted monthly. Payment for services shall be made directly to CONWORTH by check. Invoices shall be of sufficient detail for the CITY to determine the line item task being completed. Payment shall be made within 30 days of receipt of an invoice by the CITY. The cost of the work conducted under this Agreement shall not exceed $144,350.00 unless amended by the CITY. 3 3. INDEPENDENT CONTRACTOR CONWORTH shall select the means, method, and manner of performing the services herein in consultation with the CITY. Nothing is intended or should be construed in any manner as creating or establishing the relationship of copartners between CONWORTH and the CITY or as constituting CONWORTH as the agent, representative, or employee of the CITY for any purpose or in any manner whatsoever. CONWORTH is to be and shall remain an independent contractor with respect to all services performed under this Agreement. CONWORTH represents that it has or will secure at its own expense atl personnel required in performing services under this Agreement. Any and all personnel of CONWORTH or other persons while engaged in the performance of any work or services required by this Agreement shall have no contractual relationship with the CITY, and shall not be considered employees of the CITY. Any and all claims that may or might arise under the Unemployment Compensation Act or the Workers' Compensation Act of the State of Minnesota on behalf of said personnel, arising out of employment or alleged employment, including, without limitation, claims of discrimination against CONWORTH, its officers, agents, contractors, or employees shall in no way be the responsibility of the CITY. CONWORTH shall defend, indemnify, and hold the CITY, its officers, agents, and employees harmless from any and all such claims irrespective of any determination of any pertinent tribunal, agency, board, commission, or court. Such personnel or other persons shall neither require nor be entitled to any compensation, rights, or benefits of any kind whatsoever from the CITY, including, without limitation, tenure rights, medical and hospital care, sick and vacation leave, Workers' Compensation, Unemployment Insurance, disability, severance pay, and PERA. 4. NONDISCRIMINATION The CITY operates in accordance with the City of Richfield's policies against discrimination. No person shall be excluded from or denied the benefits of any service performance or contemplated under the terms of this Agreement on the grounds of race, color, creed, religion, age, sex, disability, marital status, public assistance status, ex-offender status, or national origin; and no person who is protected by applicable Federal or State laws against discrimination shall be otherwise subjected to discrimination. CONWORTH shall (1) furnish all information and reports which may be required by the City's Affirmative Action Policy, and (2) it shall comply with the City's Equal Employment Opportunity/Affirmative Action Policies with regard to employment and contracting (See Exhibit A). 4 5. INDEMNITY AND INSURANCE CONWORTH agrees to defend, indemnify, and hold the CITY, its officers, and employees harmless from any liability claims, damages, costs, judgments, or expenses, including reasonable attorney, fees, resulting directly or indirectly from a negligent act or omission (including without limitation professional errors or omissions) of CONWORTH, its agents, employees, or assignees in performance of the services provided by this contract, and against all loss by reason of the failure of CONWORTH to fully performance in any respect, all obligations under this contract. 6. RECORDS -AVAILABILITY CONWORTH agrees that the CITY, the State Auditor, or any of their duly authorized representatives at any time during normal business hours and as often as they may reasonably deem necessary, shall have access to and the right to examine, audit, excerpt, and transcribe any books, documents, papers, records, etc., which are pertinent to the accounting practices and procedures of CONWORTH and involve transactions relating to this Agreement. Records shall be retained for three years from date of final payment with respect to the project. 7. DATA PRACTICES COMPLIANCE This contract is governed by Minnesota Statutes, § 13.05, subds. 6 and 11, the provisions of which are incorporated by reference into this contract. The CITY agrees to give CONWORTH access to data collected or maintained by the CITY as necessary to perform CONWORTH 's obligations under this contract. CONWORTH agrees to maintain all data obtained from the CITY consistent with the requirements of the Minnesota Government Data Practices Act, Minn. Stat. §§ 13.02 et seq. (the "Act"). CONWORTH will not release or disclose the contents of data classified as not public to any person except at the written direction of the CITY. CONWORTH agrees to defend and indemnify the CITY from any claim, liability, damage or loss asserted against CITY as a result of CONWORTH 's failure to comply with the requirements of this paragraph; provided that CONWORTH shall have no duty to defend or indemnify where the CONWORTH has acted in conformance with the CITY's written directions. Upon termination of this contract, CONWORTH agrees to return data to the CITY, as requested by the CITY. 8. NON-ASSIGNMENT CONWORTH shall not assign, subcontract, transfer, or pledge this contract and/or the services to be performed hereunder, whether in whole or in part, without the prior written consent of the CITY. 5 9. MERGER AND MODIFICATION a. It is understood and agreed that the entire Agreement between the parties is contained herein and that Agreement supersedes all oral agreements and negotiations between the parties relating to the subject matter hereof. All items referred to in this Agreement are incorporated or attached and are deemed to be part of this Agreement. b. Any material alterations, variations, modifications, or waivers of provisions of this Agreement shall only be valid when they have been reduced to writing as an amendment to this Agreement signed by the parties hereto. 10. DEFAULT AND CANCELLATION a. If CONWORTH fails to perform any of the provisions of this Agreement or so fails to administer the work as to endanger the performance of the Agreement, this shall constitute a default. Unless the default is excused, the CITY, may upon written notice, immediately cancel the Agreement in its entirety. b. The CITY's failure to insist upon strict performance of any provision or to exercise any right under this Agreement shall not be deemed a relinquishment or waiver of the same, unless consented to in writing. Such consent shall not constitute a general waiver or relinquishment throughout the entire term of the Agreement. c. This Agreement may be canceled without cause by either party upon thirty (30) days written notice. 11. CONTRACT ADMINISTRATION In order to coordinate the services of CONWORTH with the activities of the CITY so as to accomplish the purposes of this contract, John Stark, Assistant Director of Community Development, shall manage this contract on behalf of the CITY. In addition, from time to time, meetings shall be held between CONWORTH and CITY staff. CONWORTH may also report directly to the City Council of the CITY. 12. NOTICES Any notice or demand which must be given or made by a party hereto under the terms of this Agreement shall be in writing. 6 Notices shall be sent as follows: Community Development Department John Stark, Assistant Director of Community Development City Hall 6700 Portland Avenue South Richfield, MN 55423 Conworth, Inc. Ken Helvey 4725 Excelsior Boulevard Suite #200 Minneapolis, MN 55416 CONWORTH having signed this contract, and the CITY having duly approved this contract on , 2005, and pursuant to such approval and the proper CITY officials having signed this contract, the parties hereto agree to be bound by the provisions herein set forth. CITY OF RICHFIELD, MINNESOTA By: Martin L. Kirsch Its: .Mayor By: Steven L. Devich Its: City Manager CONWORTH, INC. By: Ken Helvey Its: Vice President 7 EXHIBIT A AFFIRMATIVE ACTION REQUIREMENTS On January 1, 1988, the Richfield City Council approved an affirmative action program which requires the City "to provide equality of opportunity in employment to alf person and to prohibit discrimination because of race, color, religion, national origin, place of residents, political affiliation, disability, marital status, status with regard to public assistance, sex, or age in all aspects of the City's personnel policies, programs, and practices". The program further requires that the City support the various relationships with contractors, subcontracts and vendors. Therefore, requirements have been adopted for contracts as follows: a. The contractor shall submit a signed statement (Exhibit B) signifying that they are in compliance with the standards of equal employment and anti-discrimination as cited in the Civil Rights Act of 1964 as amended in 1972 by the Equal Employment Opportunity Act. b. In accordance with the City of Richfield's Affirmative Action policy, no person shall, on the ground of race, creed, color, sex, age, disability, or national origin be excluded from full employment rights in, participation in, be denied the benefits of; or be otherwise subjected to discrimination under any program, service, or activity for which the parties received, or will receive financial assistance under the provisions of any and all applicable federal and state laws against discrimination. The contractor will furnish all information and reports if required by the City of Richfield or by Executive Order No. 11246 and Revised Order No. 4, .and by the rules and regulations and orders of the Secretary of Labor or the State of Minnesota for purposes of investigation to ascertain compliance with such rules, regulations, and orders. c. 1971 Minnesota Statutes 181.59 is made a part of this contract. See Exhibit C. 8 EXHIBIT B STATEMENT OF COMPLIANCE The undersigned, in his/her capacity as agent for CONWORTH, hereby states that CONWORTH is in compliance with the standards of equal employment and anti- discrimination as cited in the Civil Rights Act of 1964 as amended in 1972 by the Equal Employment Opportunity Act. Dated: By: Its: 9 EXHIBIT C 181.59 DISCRIMINATION ON ACCOUNT OF RACE, CREED, OR COLOR PROHIBITED IN CONTRACT. Every contract for or on behalf of the State of Minnesota, or any county, city, town, township, school, school district, or any other district in the state, for materials, supplies, or construction shall contain provisions by which the contractor agrees: (1) That, in the hiring of common or skilled labor for the performance of any work under any contract, or any subcontract, no contractor, material supplier, or vendor, shall, by reason of race, creed, or color, discriminate against the person or persons who are citizens of the United States or resident aliens who are qualified and available to perform the work to which the employment relates; (2) That no contractor, material supplier, or vendor, shall, in any manner, discriminate against, or intimidate, or prevent the employment of any person or persons identified in clause (1) of this section, or on being hired, prevent, or conspire to prevent, the person or persons from the performance of work under any contract on account of race, creed, or color; (3) That a violation of this section is a misdemeanor; and (4) That this contract may be canceled or terminated by the state, county, city, town, school board, or any other person authorized to grant the contracts for employment, and all money due, or to become due under the contract, may be forfeited for a second or any subsequent violation of the terms or conditions of this contract. History: 1941 c 238; 1973 c 123 art 5 s 7; 1984 c 609 s 11 10 Attachment A Summary of Proposed Costs by Conworth, Inc. Land Acquisition Services 6300, 6320, 6400, 6500, 6520, 6528 Cedar Avenue Appraisals $15,500 Review Appraisals Fixture Appraisals Environmental Audits $21,500 Legal Services $7,350 Title Insurance * Acquisition/Relocation Services $70,000 Property Management $20,000 Site Clearance $10,000 Wetl capping * Total not to exceed $144,350 *To be determined on a case-by-case basis. 11 CAH-262287v1 RC125-239 ATTACHMENT B CEDAR POINT PROJECT, HENNEPIN COUNTY MULTIJURISDICTIONAL FUNDS ;~ W ;~ ___~- ; 63RD ST. -- - ~ _. FF~ETGTTIT -IANDLER 'AR~~VIENT BLDG. - 4 UNIT w > ~ Q Q Q ~ o~ _ w ~ U _ -- Y - z 65TH ST. i _ ~ ssoo L ISCAPE CO. ` J 6520 Vi CANT APARTMENT BLDG. - 12 UNIT s52s A MENT BLDG. - 12 Uf~lT ~_ 66TH ST. _J ~ -- 200 0 200 400 600 Feet N DATE: 5-10-05 12 64TH ST. AGENDA ITEM # 4A REPORT # t ~ STAFF REPORT HOUSING AND REDEVELOPMENT AUTHORITY. MEETING MAY 16, 2005 REPORT PREPARED BY: CHERYL KRUMHOLZ, EXEC. COORDINATOR TITLE REPORT PRESENTER: STEVEl~,. DEVICH, EXECUTIVE DIRECTOR REVIEWED BY EXECUTIVE DIRECTOR: ITEM FOR HRA CONSIDERATION: Consideration of designating Bruce Palmborg, Community Development Director, as the Actin Executive Director of the HRA for 2005. L RECOMMENDED ACTION: By Motion: Designate Bruce Palmborg, Community Development Director, as the Actin Executive Director of the HRA for 2005. ~ II. BACKGROUND --I Since the City Manager also serves as the Executive Director of the HRA, it is recommended that the Community Development Director, Bruce Palmborg, be designated by the HRA as the Acting Executive Director of the HRA to serve in that capacity during the absence of the Executive Director. ~ III. BASIS OF RECOMMENDATION A. POLICY • Designation of an Acting Executive Director is a normal business action of the HRA similar to the designation of depositories and the official newspaper. 0516acting B. CRITICAL ISSUES • It is necessary to designate a person to serve as the Acting Executive Director to ensure continuation of HRA operations during an absence of the Executive Director. IV. ALTERNATIVE RECOMMENDATION(S~ • Defer this designation to another HRA meeting. V. ATTACHMENTS • None. VI. PRINCIPAL PARTIES EXPECTED AT MEETING • None. AGENDA ITEM # j REPORT # j4 STAFF REPORT HOUSING AND REDEVELOPMENT AUTHORITY MEETING MAY 16, 2005 REPORT PREPARED BY: CHERYL KRUMHOLZ, EXECUTIVE COOR. N.u~rE 77TZs REPORT PRESENTER: STEVEN L. DEVICH, EXECUTIVE DIRECTOR N~ TITZE REVIEWED BY EXECUTIVE DIRECTOR: ITEM FOR HRA CONSIDERATION: Consideration of a resolution appointing the Executive Director for the Housing and Redevelopment Authority I. RECOMMENDED ACTION: By Motion: Approve the resolution officially appointing Steven L. Devich the Executive Director for the Richfield Housing and Redevelopment Authority. ~ II. BACKGROUND Steven L. Devich assumed the position of City Manager on February. 22, 2005. The City Manager also serves as Executive Director of the Housing and Redevelopment Authority (HRA). The HRA by-laws provide that the Executive Director shall be appointed by the HRA. Therefore, the HRA is being asked to officially appoint City Manager Steven L. Devich as Executive Director of the HRA and ratify all activities as Executive Director to date. III. BASIS OF RECOMMENDATION A. POLICY • The HRA by-laws provide that the Executive Director shall be appointed by the HRA. 0516director B. LEGAL • The HRA is required to appoint an Executive Director. IV. ALTERNATIVE RECOMMENDATION~S~ • Defer this appointment to a future HRA meeting. V. ATTACHMENTS -I Resolution HRA RESOLUTION NO. RESOLUTION APPOINTING CITY MANAGER STEVEN L. DEVICH AS EXECUTIVE DIRECTOR OF THE HOUSING AND REDEVELOPMENT AUTHORITY WHEREAS, the HRA by-laws provide that the Executive Director shall be appointed by the HRA. NOW, THEREFORE, BE IT RESOLVED by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota as follows: 1. City Manager Steven L. Devich is appointed Executive Director of the Housing and Redevelopment in and for the City of Richfield, Minnesota, and 2. All Executive Director activities to date are ratified. Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 16th day of May 2005. Thomas E. Harms, Chair ATTEST: Kristal Stokes, Secretary