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08-04-03 agendaCITY OF RICHFIELD MONDAY, AUGUST 4, 2003 SPECIAL HOUSING AND REDEVELOPMENT AUTHORITY MEETING RICHFIELD WATER TREATMENT PLANT CONFERENCE ROOM 6221 PORTLAND AVENUE 7:00 P.M. AGENDA Call to order HRA approval of agenda 2. Consent Calendar contains several separate items which are acted upon by the HRA in one motion. Once the Consent Calendar has been approved, the individual items and recommended actions have also been approved. No further HRA action is necessary. However, any HRA Commissioner may request that an item be removed from the Consent Calendar and placed on the regular agenda for HRA discussion and action. All items listed on the Consent Calendar are recommended for approval. A. Consideration of approval of agreement with LHB Engineers and Architects for preparation of construction documents and construction administration at 6819 Oliver Avenue S.R. No. 40 B. Consideration of approval of stipulation of settlement of condemnation for 7600 Lyndale Avenue in the Lyndale Gateway West condemnation action S.R. No. 41 C. Consideration of approval of settlement of relocation benefits for 7609 Aldrich Avenue in the Lyndale Gateway West Area S.R. No. 42 D. Consideration of approval of CSM request to enter proposed subordination agreement with CSM and its lender as part of refinancing of Shops at Lyndale S.R. No. 43 Notes: 3. Consideration of first amended and restated contract for private redevelopment with Lyndale Gateway LLC Staff Report No. 44 Notes: Adjournment Auxiliary aids for individuals with disabilities are available upon request. Requests must be made at least 96 hours in advance to the Administrative Services Director at 612-861- 9702. 6. Governing Law. This Agreement will be construed and enforced in accordance with the laws of the State of Minnesota. IN WITNESS WHEREOF, the Claimant and HRA have executed this Agreement the day and year first above written. HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD By: Its: Chair By: Its: Executive Director ANDREW FISH STATE OF MINNESOTA ss.. COUNTY OF HENNEPIN The foregoing instrument was acknowledged before me this _ day of , 2003, by Andrew Fish. Notary Public RJV-235367v1 RC125-245 AGENDA ITEM # a 8 REPORT # ~- STAFF REPORT HOUSING AND REDEVELOPMENT AUTHORITY MEETING AUGUST 4, 2003 REPORT PREPARED BY: JOHN STARK, COMMUNITY DEVELOPMENT MANAGER NAME, TITLE REPORT PRESENTER: JOHN STARK, COMMUNITY DEVELOPMENT MANAGER NAML, TITLE DEPARTMENT DIRECTOR REVIEW: SIGNATURE REVIEWED BY EXECUTIVE DIRECTOR: ITEM FOR HRA CONSIDERATION: Consideration of the attached proposed Stipulation of Settlement for Parcel 1, property located at 7600 Lyndale Avenue in the Lyndale Gateway West Condemnation Action. I. RECOMMENDED ACTION:. By Motion: Approve the attached proposed Stipulation of Settlement for Parcel 1, property located at 7600 Lyndale Avenue in the Lyndale Gateway West Condemnation Action. Hennepin County District Court File No. CD-2702. III. BACKGROUND ~ On December 16, 2002 the Housing and Redevelopment Authority (HRA) approved a resolution authorizing the condemnation of several parcels in the Lyndale Gateway West area. Identified as Parcel 1 in that resolution was the property located at 7600 Lyndale Avenue. This property is owned by Top Value Auto Supply, et al. On May 27, 2003, the HRA converted the condemnation to a "quick take" action. On June 18, 2003 the Hennepin County District Court filed. an order transferring title and possession of the property to the HRA. This action basically approved the condemnation and appointed condemnation commissioners to determine a value for 080403-7600 Lyndale the property. The owner of Parcel 1 ultimately appealed the District Courts ruling to the State Court of Appeals. This appeal represented a delay in the acquisition of a portion of the development property that would have caused scheduling problems in construction. Such construction scheduling problems, in turn, resulted in financing issues that would have been-difficult to overcome. In subsequent conversations with the property owner, however, it became evident that the amount of compensation they were seeking was not inconsistent with the privately negotiated purchase agreements that several other property owners signed with the developer of the project. Ultimately, through cooperative discussions involving HRA staff, legal counsel, HRA appointed appraisers, the developer, the property owner and their attorney a mutually acceptable settlement was achieved. This settlement, as defined in the attached Stipulation of Settlement includes the following provisions: • Purchase price of the property of $525,000 inclusive of all claims, including relocation. (The HRA's appraisals for the property were $350,000 and $380,000 and the relocation estimate was $60,000). • The title is to transfer on September 2, 2003. • The property is to be vacated by September 22, 2003. • The property owner is to dismiss its appeal of the condemnation action. III. BASIS OF RECOMMENDATION A. POLICY • The HRA authorized the acquisition of this property through condemnation on December 16, 2002. • This property is needed, in a timely manner, for the redevelopment of the Lyndale Gateway West area. • The property owner filed an appeal of the Hennepin County District Court's approval of the condemnation; this action would cause a delay in the transfer of title for this property. • HRA staff and legal counsel negotiated the attached settlement agreement in the best interests of the HRA. B. CRITICAL ISSUES • This settlement agreement defines terms that are vital to the ability of this project to go forward; most notably the establishment of a closing date of September 2, 2003. C. FINANCIAL • The settlement amount has been deemed appropriate by legal counsel when compared to the financial exposure and additional legal fees involved in the appeals process. D. LEGAL • Legal counsel drafted the attached Stipulation of Settlement. IV. ALTERNATIVE RECOMMENDATION(S~ • Defer action of the proposed Stipulation of Settlement. In order for this settlement to occur under the proposed terms, however, approval would be required no later than September 1, 2003. • Deny approval of the proposed Stipulation of Settlement. This action could result in an inability for the developer or HRA to take title to the remainder of parcels in the project area due to the uncertainty of assembling the entire site. V. ATTACHMENTS • Proposed Draft Stipulation of Settlement. VI. PRINCIPAL PARTIES EXPECTED AT MEETING • N/A DRAFT STATE OF MINNESOTA COUNTY OF HENNEPIN Case Type: Condemnation DISTRICT COURT FOURTH JUDICIAL DISTRICT File No. CD-2702 The Housing and Redevelopment Authority in and for the City of Richfield, a public body corporate and politic under Minnesota law, Petitioner, vs. Top Value Auto Supply, Inc., et al., Respondents. STIPULATION OF SETTLEMENT BETWEEN HIZA AND TOP VALUE AUTO SUPPLY, INC. Parcel l 7600 Lyndale Avenue South THIS AGREEMENT is entered into this day of July 2003, by and between THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, a public body corporate and politic under the laws of Minnesota, located at 6700 Portland Avenue South, Richfield, MN 55423, Petitioner herein, ("HRA") and TOP VALUE AUTO SUPPLY, INC., a Minnesota corporation; C S LIQUIDATION, INC., a Minnesota corporation; CHAMPION AUTO STORES, LLC; HASTINGS AUTO SUPPLY, INC.; and MIDWEST AUTO PARTS DISTRIBUTORS, INC., Respondents herein (collectively `TOP VALUE"), whose address is 2565 Kasota Avenue, St. Paul, MN 55108, and whose Federal Tax Identification No. is 41- 1920609 (Champion Auto Stores, LLC). RJL-233622v2 RC125-245 I. RECITALS 1.01. TOP VALUE represents that it is the owner in fee simple of the real estate located at 7600 Lyndale Avenue South, Richfield, MN, which is legally described on Exhibit A attached hereto and incorporated herein ("Subject Property or "Parcel 1"). "Subject Property" shall also include the fixtures and immovables located therein. 1.02. HRA has commenced the above-captioned proceeding to acquire the Subject Property and desires to do so pursuant to this Agreement. The Court has issued and filed the following orders with respect to the Subject Property at the request of HRA: a) First Amended Findings of Fact, Conclusions of Law and Order Approving Petition; and b) Findings of Fact, Conclusions of Law and Order Authorizing Transfer of Title and Possession ("Quick Take Order"). Pursuant to the Quick Take Order, HRA is authorized to deposit its approved appraisal of value for the Subject Property in the amount of $350,000 with the District Court Administrator for Hennepin County and thereby cause title and the right of possession of the Subject Property to pass to HRA effective on August 27, 2003, or the date of deposit, whichever occurs later. 1.03. TOP VALUE has claimed that the value of the Subject Property exceeds $520,000, including fixtures. 1.04. TOP VALUE objected to the approval of HRA's petition in this matter and appealed the issuance of said First Amended Findings of Fact, Conclusions of Law and Order Approving Petition to the Minnesota Court of Appeals. HRA has moved for expedited review of the appeal. 1.05. The HRA and TOP VALUE desire to settle and compromise TOP VALUE's claim for damages and relocation benefits payable to TOP VALUE which arise from the taking RJL-233622v2 RC125-245 of the Subject Property in the above-captioned proceeding ("Taking") in accordance with the provisions of this Agreement. II. AGREEMENT NOW, THEREFORE, in consideration of the premises, the parties' mutual promises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 2.01. Incorporation of Recitals. The foregoing recitals are made a part of this agreement. 2.02. Settlement Amount: Terms and Conditions. HRA and TOP VALUE agree to the following terms and conditions: a. HRA shall pay TOP VALUE a total of $525,000 for mazketable title of Pazcel 1 and release of all claims (including, but not limited to relocation benefits) by TOP VALUE arising from the taking of Pazcel 1 in this proceeding ("Purchase Price"); b. TOP VALUE shall convey title of Parcel 1 to HRA on or before September 2, 2003 at the time of HRA's payment of $475,000 of the Purchase Price; c. TOP VALUE shall deliver possession of Pazcel 1 to HRA on or before September 22, 2003, at which time HRA shall pay TOP VALUE the remainder of the Purchase Price ("Holdback"); d. TOP VALUE's appeal to the Minnesota Court of Appeals will be dismissed with prejudice upon execution of this Stipulation of Settlement by all signatory and approval of this Stipulation of Settlement by the HRA Board of Commissioners (or waiver in writing by HRA of the need for such approval); R)L-2336222 RC125-245 e. This eminent domain proceeding will remain pending until title and possession of Parcel 1 are delivered to HRA and until the Purchase Price is paid to TOP VALUE. 2.03. Defense Against Other Claims. a. TOP VALUE agrees that any amounts which may be paid by the District Court Administrator to Hennepin County and the City of Richfield from the portion of the Settlement Amount to be deposited with the District Court Administrator with respect to the Subject Property apply toward payment of the Settlement Amount, because amounts to be paid are owed by TOP VALUE. Notwithstanding any other provision of law to the contrary, the parties agree that the District Court Administrator shall, from said deposited funds, pay the full amount of real estate taxes payable in 2002 and previous years (including installments of special assessments payable therewith, if any), if not already paid, and the unpaid balance of special assessments levied or pending on .the date this matter was commenced with respect to the Subject Property. b. The Settlement Amount has been arrived at to compromise litigation. The Subject Property is being purchased to enable HRA to proceed with its Lyndale Gateway West Project. This Agreement shall not be introduced in eminent domain proceedings related to other properties for the purpose of determining the value of those other properties. 2.04. Waiver of Other Claims. Effective upon the payment by HRA of the entire Settlement Amount, TOP VALUE hereby waives any and all claims it may have against HRA or the City of Richfield in connection with HRA's acquisition of the Subject Property, including but not limited to damages, interest, attorneys fees, appraisal fees, relocation benefits, and costs and disbursements to which TOP VALUE may otherwise be entitled or claim to be entitled. RJL-233622v2 RC125-245 2.05. Waiver of Further Proceedings_Appeals. HRA and TOP VALUE both waive the right to all further hearings, proceedings and appeals in this matter except as either may elect in order to enforce or carry out the provisions of this Agreement. 2.06. Notices. All notices and demands required hereunder shall be in writing and shall be deemed given either when personally delivered or when deposited in the United States mail, as certified or registered mail, postage prepaid, return receipt requested, by facsimile transmission, by commercial courier service, or by first-class mail as evidenced by an Affidavit of Service, addressed as follows: If to TOP VALUE: Top Value Auto Supply Inc. 2565 Kasota Ave. St. Paul, MN 55108 Attn: Dave Shumaker With a copy to: Bradley J. Gunn, Esq. Leonard, Street & Deinard Suite 2300 150 South Fifth Street Minneapolis, MN 55402 Facsimile No.: (612) 335-1657 If to HRA: Housing and Redevelopment Authority in and for the City of Richfield ATTN: Bruce Nordquist Redevelopment Specialist 6700 Portland Avenue South Richfield, MN 55423 Facsimile No.: (612) 861-8974 With a copy to: Kennedy & Graven, Chartered 470 Pillsbury Center 200 South Sixth Street Minneapolis, MN 55402 Attention: Robert J. Lindall Facsimile No.: (612) 337-9310 2.07. Miscellaneous Provisions. RIL-233622v2 RC125-245 (a) Breach. In the event either party breaches or defaults in its performance hereunder, the other party shall have the right to pursue all its remedies under this Agreement, as well as the right to recover its reasonable attorneys' fees from the party in breach, in the eminent domain proceeding, or at law, or any or all of the foregoing, to seek enforcement of this Agreement, including, without limitation, the right to a decree for specific performance or an order to compel performance in the above captioned matter. (b) Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto with respect to the transaction and it supersedes all prior understandings or agreements between the parties. No representations, warranties, inducements or oral agreements have been made by any of the parties, except as expressly set forth herein, or in other contemporaneous written agreements. (c) Binding Effect. This Agreement. shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors and assigns. (d) Survival of Warranties. All the covenants, agreements, representations, and warranties made by the parties in this agreement or in any document or instrument delivered by the parties pursuant to this Agreement shall survive this agreement and the transfer of title of the Subject Properly to HRA. (e) Waiver, Modification. The failure by either party to enforce its rights hereunder shall not constitute a waiver of said party's right to demand future performance of the provisions hereof. No modification or extension of this Agreement shall be binding unless in writing and signed by the parties. RJL-233622v2 RC125-245 (f) Time of Essence. Timely performance is essential in this Agreement and each of its provisions. Where any date or time prescribed by this Agreement falls on a Saturday, Sunday or statutory holiday, such date or time shall automatically be extended to the next business day. (g) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota. (h) Further Assurances. Each party hereto shall promptly, on the request of the other party, have acknowledged and delivered to the other party any and all further instruments and assurances reasonably requested or appropriate to evidence or give effect to the provisions of this Agreement. (i) No Commissions. Under no circumstances, including, without limitation, any default(s) of TOP VALUE and/or HRA under this Agreement, will: (a) any real estate broker or agent be entitled to any commission under this Agreement; or (b) HRA or TOP VALUE have any liability and/or obligation for payment of any commission or other compensation to any real estate broker or agent regarding this Agreement. (j) Severability. If any provision of this Agreement is declared void or unenforceable, such provision shall be deemed severed from this Agreement, which shall otherwise remain in full force and effect. 2.08. HRA's Contingency. The obligations of HRA under this Agreement are expressly contingent upon the approval of this Agreement by the HRA Board of Commissioners. The contingency set forth in this section is for the sole and exclusive benefit of H1tA, and HRA shall have the right to waive the contingency by giving written notice to TOP VALUE. RJL-233622v2 RC125-245 2.09. Consent to Commissioners' Award. The parties hereby stipulate to the issuance of an award of damages by the Court appointed Commissioners in the above captioned matter in the amount of the Settlement Amount, upon the request of either TOP VALUE or HRA, at any time after approval of this Agreement by the HRA Board of Commissioners or waiver in writing by HRA of the contingency that such approval be obtained, in order for this Agreement to be enforceable. 2.10. Consent to Issuance of Order. TOP VALUE hereby consents to the issuance of an order of the District Court in the above captioned matter at any time after payment by HRA of the Settlement Amount (except for the Holdback), upon the ex parte application of counsel for the HRA in substantially the form of the order attached hereto and incorporated herein as Exhibit B. 2.11. Closing C, osts. HRA shall pay .all closing costs and recording fees in connection with the closing of this transaction. RJL-233622v2 RC125-245 TOP VALUE AUTO SUPPLY, INC. By: Its CS LIQUIDATION, INC. By: Its CHAMPION AUTO STORES, LLC Its By: HASTINGS AUTO SUPPLY, INC. By: Its MIDWEST AUTO PARTS DISTRIBUTORS, INC. By: Its THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD By: Samantha Orduno, Executive Director LEONARD, STREET & DEINARD By: Bradley J. Gunn (#132238) 150 South Fifth Street Suite 1600 Minneapolis, MN 55402 612-335-1500 ATTORNEY FOR TOP VALUE KENNEDY & GRAVEN, CHARTERED By: Robert J. Lindall, #63277 Bryan D. Shirley, #312964 470 Pillsbury Center 200 South Sixth Street Minneapolis, MN 55402 (612)337-9219 ATTORNEYS FOR THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD RJL-233622v2 RC125-245 STATE OF MINNESOTA ss. COUNTY OF HENNEPIN On this day of July 2003, before me, a Notary Public within for said County, personally appeared Samantha Orduno to me personally known, who being by me duly sworn, each did say that she is the Executive Director of THE HOUSING AND REDEVELOPMENT AUTHORITY in and for the City of Richfield, a public body corporate and politic under the laws of the State of Minnesota, on its behalf. Notary Public STATE OF MINNESOTA ss. COUNTY OF The foregoing instrument was acknowledged before me this day of July 2003, by ,the of TOP VALUE AUTO SUPPLY, INC., a Minnesota corporation, on behalf of the corporation. Notary Public STATE OF MINNESOTA ss. COUNTY OF The foregoing instrument was acknowledged before me this day of July 2003, by the of CS LIQUIDATION, INC., a Minnesota corporation, on behalf of the corporation. Notary Public RJL-233622v2 RC125-245 STATE OF NIINNESOTA ss. COUNTY OF The foregoing instrument was acknowledged before me this day of July 2003, by ,the _ of CHAMPION AUTO STORES, LLC, on behalf of the LLC. Notary Public STATE OF MINNESOTA ss. COUNTY OF The foregoing instrument was acknowledged before me this day of July 2003, by ,the of HASTINGS AUTO SUPPLY, INC., a corporation, on behalf of the corporation. Notary Public STATE OF MINNESOTA ss. COUNTY OF The foregoing instrument was acknowledged before me this day of July 2003, by the of MIDWEST AUTO PARTS DISTRIBUTORS, INC., a Minnesota corporation, on behalf of the corporation. Notary Public THIS INSTRUMENT WAS DRAFTED BY: KENNEDY & GRAVEN, CHARTERED (RJL) 470 Pillsbury Center 200 South Sixth Street Minneapolis, MN 55402 (612) 337-9219 RJL-233622v2 RC125-245 EXHIBIT A Parcel 1: PIN No. 33-028-24-44-0036 (Abstract) Property Address: 7600 Lyndale Avenue South, Richfield, MN Leal Description of Property and Description of Taking: Lot 1, "Glenn's Addition", according to the map or plat thereof on file in the Office of the County Recorder in and for Hennepin County, Minnesota. Together with adjacent streets or alleys vacated or to be vacated, accruing thereto. Names and Description of Interests to be Acquired Name Nature of Interest Top Value Auto Supply Inc., a Minnesota Fee Owner co ration Champion Auto Stores, Inc., by change of name Possible holder of an interest now known as CS Liquidation, Inc., a Minnesota corporation, dba Top Value Auto Su 1 Cham ion Auto Stores, LLC Possible holder of an interest All arties named as to Parcel 2 P Wall A Bement Hastings Auto Supply, Inc., dba Bumper to Lessee Bum er Auto Parts Ci of Richfield S ecial assessments Coun of Henne in Real estate taxes All other parties unknown, together with Any right, title or interest in the Subject unknown heirs or devisees ands oases, if an Pro Notwithstanding the foregoing attempt to identify all interests held by a party named herein, it is Petitioner's intention herein to acquire or encumber all interests owned by the named respondents in the above-described real estate. RJL-233622v2 A_ 1 RC125-245 EXHIBIT B Case Type: Condemnation STATE OF MINNESOTA COUNTY OF HENNEPIN The Housing and Redevelopment Authority in and for the City of Richfield, a public body corporate and politic under Minnesota law, Petitioner, vs. DISTRICT COURT FOURTH JUDICIAL DISTRICT File No. CD-2702 ORDER COMPELLING DELIVERY OF POSSESSION OF PARCEL 1 Top Value Auto Supply Inc., a Minnesota corporation, et al., Respondents. The above-entitled matter came on for hearing before the undersigned Judge of this Court in the Hennepin County Government Center, 300. South Sixth Street, Minneapolis, MN on _, 2003, on the Motion of Petitioner The Housing and Development Authority in and for the City of Richfield ("HRA") for an Order (a) compelling Respondents Top Value Auto Supply, Inc., CS Liquidation, Inc., Champion Auto Stores, LLC, Hastings Auto Supply, Inc., Midwest Auto Parts Distributors, Inc., and all other persons occupying the real estate which is described as Parcel 1 in the above-captioned matter and on Exhibit A attached hereto to forthwith deliver possession thereof to Petitioner HRA; (b) directing the sheriff of Hennepin County to take all lawful actions necessary to compel occupants of said real estate to deliver possession thereof to the HRA; and (c) awarding judgment in favor of the HRA and against Respondents Top Value Auto Supply, Inc., CS Liquidation, Inc., Champion Auto Stores, LLC, Hastings Auto Supply, Inc., and Midwest Auto Parts Distributors, Inc., for such attorneys fees, costs and disbursements as are incurred by the HRA in obtaining possession of said real estate. RJL-233622v2 RC125 245 B-1 Robert J. Lindall, Esq. appeazed on behalf of the HRA. The following parties and their counsel also appeared at said hearing: Bradley J. Gunn, Esq. appeazed on behalf of Respondents Top Value Auto Supply, Inc., CS Liquidation, Inc., Champion Auto Stores, LLC, Hastings Auto Supply, Inc. and Midwest Auto Parts Distributors, Inc. There were no other appearances. Having heazd the azguments of counsel, the evidence adduced at the hearing, and based upon the Affidavit of Robert J. Lindall submitted in support of City's motion, the agreement of the parties, and upon all the files, records and proceedings therein, the Court makes the following Order: 1. Respondents Top Value Auto Supply, Inc., CS Liquidation, Inc., Champion Auto Stores, LLC, Hastings Auto Supply, Inc., and Midwest Auto Parts Distributors, Inc., and all other persons occupying Pazcel 1 shall deliver possession of the said real estate to The Housing and Redevelopment Authority in and for the City of Richfield within five (5) calendar days following the date of this order, taking with them all personal property owned by them and vacating said premises totally and forever in accordance with the Orders of this Court in this matter. 2. On or after five (5) calendaz days following the date of this order, upon the Affidavit of counsel for The Housing and Redevelopment Authority in and for the City of Richfield, which affidavit shall represent that said real estate has not been so vacated, the sheriff of Hennepin County shall take all lawful actions necessary to compel Respondents Top Value Auto Supply, Inc., CS Liquidation, Inc., Champion Auto Stores, LLC, Hastings Auto Supply, Inc., and Midwest Auto Parts Distributors, Inc, and all .other persons occupying said property to deliver possession thereof to The Housing and Redevelopment Authority in and for the City of Richfield in accordance with the Orders of this Court in this matter. RJL-233622v2 RC125-245 B-2 3. In the event Respondents Top Value Auto Supply, Inc., CS Liquidation, Inc., Champion Auto Stores, LLC, Hastings Auto Supply, Inc., and Midwest Auto Parts Distributors, Inc., or any thereof, or any person claiming under them shall fail to vacate the Subject Property on or before five (5) calendar days from the date hereof, or on or before September 22, 2003, whichever is later, or otherwise to comply with the Orders of this Court in this matter, judgment shall be entered in favor of The Housing and Redevelopment Authority in and for the City of Richfield and against Respondents Top Value Auto Supply, Inc., CS Liquidation, Inc., Champion Auto Stores, LLC, Hastings Auto Supply, Inc., and Midwest Auto Parts Distributors, ' Inc., for the amount of attorneys fees, costs and disbursements as is shown by .affidavit of the attorney for The Housing and Redevelopment Authority in and for the City of Richfield to have been incurred by the HRA in obtaining and enforcing this order to compel delivery of possession of the Subject Property. Dated: , 2003. BY THE COURT: Judge of District Court RJL-233622v2 xci2s-zas B-3 Ezhibit A to EXHIBIT B Parcel 1: PIN No. 33-028-24-44-0036 (Abstract) Property Address: 7600 Lyndale Avenue South, Richfield, MN Legal Description of Property and Description of Taking: Lot 1, "Glenn's Addition", according to the map or plat thereof on file in the Office of the County Recorder in and for Hennepin County, Minnesota. Together with adjacent streets or alleys vacated or to be vacated, accruing thereto. Names and Description of Interests to be Acquired Name Nature of Interest Top Value Auto Supply Inc., a Minnesota Fee Owner co oration Champion Auto Stores, Inc., by change of name Possible holder of an interest now known as CS Liquidation, Inc., a Minnesota corporation, dba Top Value Auto Su 1 Cham ion Auto Stores, LLC Possible holder of an interest All arties named as to Parcel 2 P Wall A Bement Hastings Auto Supply, Inc., dba Bumper to Lessee Bum er Auto Parts Ci of Richfield S ecial assessments Coun of Henne in Real estate taxes All other parties unknown, together with Any right,. title or interest in the Subject unknown heirs or devisees ands oases, if an Pro e Notwithstanding the foregoing attempt to identify all interests held by a party named herein, it is Petitioner's intention herein to acquire or encumber all interests owned by the named respondents in the above-described real estate. RJL-233622v2 RC125-245 B-4 1995. The only changes relate to the identity of the new lender, the new documents that are referenced in the Agreement, and the fact that the Phase I Minimum Improvement have been completed. III. BASIS OF RECOMMENDATION A. POLICY • The HRA recognized in the Development Contract with CSM that it might be necessary to subordinate to a lender in order to allow CSM to be able to proceed with the project. • This is a standard lender requirement and the current request is basically the same as the request that was approved in 1995. • The request does not place any additional obligation on the HRA, nor does it create any additional risk for the HRA. B. CRITICAL ISSUES • Unless the HRA agrees to the subordination, CSM will be unable to refinance its development. Refinancing frequently provides additional capital which can be used to maintain the high quality of the development. C. FINANCIAL • The proposed Subordination Agreement does not alter the existing agreements.. It merely adds a new party. D. LEGAL • HRA counsel has reviewed the attached Agreement. IV. ALTERNATIVE RECOMMENDATION(S~ • Continue the discussion on the item to a future meeting if additional information is needed. V. ATTACHMENTS • Subordination Agreement VI. PRINCIPAL PARTIES EXPECTED AT MEETING • Representatives of CSM • HRA legal counsel SUBORDINATION AGREEMENT This Agreement is made effective as of the day of , 2003, by and among THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA (the "Authority"), TRANSAMERICA LIFE INSURANCE COMPANY, an Iowa corporation (the "Lender") and CSM INVESTORS, INC., a Minnesota corporation (the "Developer"). RECITALS The Authority and CSM Corporation ("CSM Corporation") entered into a Contract for Private Development dated Apri129, 1994, as amended by Resolution No. 529 dated November 21, 1994, Resolution No. 530 dated November 21, 1994, and Resolution No. 543 dated February 28, 1995 (the "Development Contract"), whereby the Authority agreed to provide certain aid and assistance to the Developer under the Development Contract through use of public funds to finance certain costs of development of the Phase I Property and the Phase II Property (as defined in the Development Contract). Pursuant to an Assignment and Assumption dated as of August 1, 1994 (the "Assignment Agreement"), CSM Corporation assigned all of its rights and interests in the Development Contract to the Developer and the Developer assumed all of CSM Corporation's obligations under the Development Contract. Pursuant to the Development Contract, the Authority has executed and delivered to the Developer a Limited Revenue Tax Increment Note (Phase I) the "Revenue Note"), pursuant to which the Authority will make installment payments to the Developer as therein provided. The Lender has made a loan to Developer as of the date hereof in the amount of $13,250,000 (the "Lender Loan") to refinance the retail shopping center facility located on the land described in Exhibit A attached hereto and Emerson Avenue South and/or Colfax Avenue South to the extent the same are vacated and acquired by the Developer (collectively, the foregoing land is called the "Land"); collectively, the retail shopping center facility and any other improvements now existing or to be constructed on the Land are called the "Project"). The Lender Loan is evidenced by the Developer's Secured Promissory Note, dated as of July _, 2003, payable to the order of the Lender (the "Lender Note"). The Developer's obligations under the Lender Note are secured, among other things, pursuant to a Mortgage, Security Agreement and Fixture Filing dated as of July , 2003 (the "Lender Mortgage") and by an Absolute Assignment of Leases and Rents dated as of July _, 2003 (the "Lender Assignment of Rents"; collectively, the Lender Note, the Lender Mortgage and the Lender Assignment of Rents are called the "Lender Loan Documents"). :ODMA\GRPWISE\CSM_DOM 1.CSM_PO1.Finance/Acquisition:3005.1 As a condition of making the Lender Loan, the Lender has required that the Authority (i) fully subordinate all of the terms, covenants, conditions and restrictions contained in the Development Contract and all rights and interests of the Authority in or to the Project or the Land (collectively, the Project and the Land are called the "Premises") of any kind whatsoever under the Development Contract or otherwise to the lien of the Lender Mortgage and the Lender Assignment of Rents and to any other lien or security interest at any time hereafter acquired by the Lender in all or any portion of the Premises and (ii) upon receipt of written notice from the Lender certifying that Default as defined in the Lender Mortgage has occurred (an "Event of Default") and has not been cured by the Developer within any applicable cure period, make all future payments becoming due and payable under the Revenue Note to the Lender or to any transferee of the Lender. Accordingly, the Authority, the Developer and the Lender hereby agree as follows: 1. The Authority acknowledges and agrees that all rights and interests of the Authority under the Development Contract or otherwise in or to the Premises are and shall remain fully subordinate and subject to the liens of the Lender Mortgage and the Lender Assignment of Rents and all liens or security interests now held or at any time hereafter acquired by the Lender to secure other loans or extensions of credit made by the Lender. In further clarification of the subordination accomplished by the preceding sentence, and not in limitation thereof, the Authority acknowledges and agrees that (I) any right which the Authority has under Section 3.2 of the Development Contract or otherwise to utilize or sell the Premises after default by the Developer is fully subordinate to and subject to the lien of the Lender Mortgage and Lender Assignment of Rents, (ii) any right which the Authority has under Section 6.2 to receive insurance proceeds or to require the Premises to be rebuilt in the event of a casualty to the Premises is fully subordinate to and subject to the rights of the Lender under the Lender Mortgage and Lender Assignment of Rents, and (iii) notwithstanding the provisions of Section 8.3 and 10.2 of the Development Contract, either before or after foreclosure by the Lender or action in lieu thereof, the Lender. or the Lender's assignee may, without assuming any of the obligations of the Developer under the Development Contract and without any consent from the Authority, undertake to continue to complete construction of the Project with such changes to the Project as the Lender deems necessary or appropriate, and (iv) notwithstanding the provisions of Section 8.4 of the Development Contract, the Lender shall have no obligation to provide to the Authority any notice of any Event of Default on the part of the Developer under the Lender Mortgage (except as provided in paragraph 9 below) and the Authority shall have no right to cure any Event of Default on the part of the Developer under the Lender Mortgage. 2. The Developer hereby pledges, endorses and assigns to the Lender as additional collateral for payment of the Lender Loan made by the Lender to the Developer, all of its right, title and interest in and to the Revenue Note. The Authority ::ODMA\GRP WISE\CSM_DOM 1.CSM_PO1.Finance/Acquisition:3005.1 hereby acknowledges such assignment. The Developer agrees that if in the future there is an Event of Default by the Developer under the Lender Mortgage, the Lender, at its option may require that all subsequent payments due under the Revenue Note be paid solely and directly to the Lender or to the Lender's assignee. Upon the Authority's receipt of any such notification to that effect, the Developer hereby authorizes and directs the Authority, and the Authority hereby agrees, that all subsequent payments due to the Developer under the terms and conditions of the Revenue Note will be paid solely and exclusively to the Lender or to any such assignee, as the case may be. The Developer further agrees that this Agreement shall constitute an irrevocable direction and full grant of authority to the Authority to pay all such amounts to the Lender upon receipt of notice from the Lender directing the Authority to do so, without proof of the Event of Default relied upon in any such notice. The Authority is hereby irrevocably authorized to rely upon and comply with (and shall be fully protected in so doing) any notice or demand by the Lender for the payment to the Lender of any amounts due to the Developer under the Revenue Note and the Authority shall have no duty or obligation to inquire as to whether any Event of Default under the Lender Mortgage has actually occurred or is then existing. The Developer agrees to indemnify and hold the Authority harmless from all claims, demands, and judgments recovered against the Authority and any costs or expenses incurred by the Authority which arise. as a result of the Authority's making payments under the Revenue Note to the Lender as provided in this paragraph 2. Notwithstanding any other provision in this Agreement to the contrary, the Authority, the Developer and the Lender acknowledge and agree that the Authority shall have no obligation to make any payments under the Revenue Note to the Lender if an Event of Default (as defined in the Development Contract) relating solely to Developer's Phase I Property obligations has occurred under the Development contract on the part of the Developer and such Event of Default has not been waived by the Authority or cured by the Developer within the time period permitted under the Development Contract or cured by the Developer within the time period permitted under the Development Contract or cured by the Lender within a reasonable time; provided, however, that upon waiver by the Authority or by cure of the Event of Default by Developer within the time period permitted under the Development Contract, or by the Lender, the Authority shall be obligated to make any and all payments under the Revenue Note to the Lender. The authority agrees that notwithstanding any other provision in the Revenue Note to the contrary, the phrase "Event of Default under the Contract for Private Development" in the second full paragraph on page D-2 of the Revenue Note refers to an Event of Default relating solely to the Phase I Property (as defined in the Development Contract) and arising out of the actions or omissions of the Developer, subject to the notice and cure provisions of Section 10.2 thereof, and excluding Events of Defaults arising out of the actions or omissions of the Authority or the City of Richfield, Minnesota. Notwithstanding the provision contained in this paragraph 2 providing Lender with a reasonable period to cure an Event of Default under the Development Contract, the Lender and the Authority agree that if an Event of Default occurs under the Development Contract as a result of nonpayment of real property taxes for the Phase I Property (as defined in the :ODMAIGRPWISE\CSM_DOM 1.CSM_PO1.Finance/Acquisition:3005.1 Development Contract), Lender shall have thirty (30) days following receipt of written notice of the nonpayment from the Authority to cure the Event of Default. 3. The Authority and the Developer each acknowledge that the Development Contract is its valid, legal, binding and enforceable obligation, and, as of the date hereof, has not been assigned (except to the Developer as described in the Recitals), modified, supplemented or amended. 4. The Authority and the Developer each acknowledge that the Phase I Property has been developed in accordance with the Concept Plans (as defined in the Development Contract), and that the Phase I Minimum Improvements have been completed. 5. To the best of the Authority's knowledge and to the best of the Developer's knowledge, no Event of Default (as .defined in the Development Contract) or event, which with the passage of time or the giving of notice, or both, would be such an Event of Default, has occurred and is continuing under the Development Contract as of the date hereof. 6. If an Event of Default (as defined in the Development Contract) shall occur under the Development Contract, the Authority shall give written notice thereof to the Lender and the Lender shall have the right, but no obligation, to cure such Event of Default within a reasonable time thereafter. Any notice given to the Lender pursuant to this paragraph 6 shall be send by certified or registered mail to the Lender at the following address: TransAmerica Life Insurance Company c/o Aegon USA Realty Advisors, Inc., 433 Edgewood Road., N.E., Cedar Rapids, Iowa 52499-5443. 7. The Authority acknowledges receipt of copies of the Lender Mortgage and the Lender Assignment of Rents and acknowledges that the Lender Mortgage, the Lender Assignment of Rents, and the development of Phase I Property and Phase II Property are authorized by and approved under the Development Contract. 8. The Lender agrees to provide written notice to the Authority of the occurrence of an Event of Default on the part of the Developer under the Lender Mortgage prior to commencing any foreclosure proceeding with respect to the Premises or prior to accepting a deed in lieu of foreclosure with respect to the Premises. Any notice given to the Authority pursuant to this paragraph 8 shall be send by registered or certified mail to the Authority at the following address: ::ODMA\GRPWISE\CSM_DOM 1.CSM_PO1.Finance/Acquisition:3005.1 The Housing and Redevelopment Authority in and for the City of Richfield 6700 Portland Avenue South Richfield, MN 55423 Attn: Executive Director The failure of the Lender to provide the Authority with any such notice shall not impair the rights of the Lender against the Developer or limit Lender's right to foreclose against the Land or exercise any and all remedies available to Lender under the Lender Loan Documents. 9. During the forty-five (45) day period (the "Option Period') commencing on the date when the Lender sends to the Authority the written notice described in paragraph 8 above, the Authority shall have the option to purchase the Lender Loan and the related Lender Loan Documents from the Lender, without representation or recourse of any kind by the Lender and pursuant to assignment documentation acceptable to the Lender, for a purchase price equal to the outstanding principal balance of the Lender Loan plus all accrued and unpaid interest thereon and any other premiums, penalties, fees, costs and expenses owing to the Lender under the Lender Loan Documents as of the date of funding on such purchase. The Authority acknowledges and agrees that the Lender may commence foreclosure proceedings and may exercise other rights and remedies available to the Lender under the Lender Loan Documents during the Option Period; provided, however, that the Lender shall not accept a deed in lieu of foreclosure with respect to the Premises until after the expiration of the Option Period. The Authority further acknowledges that if the Authority elects to exercise its option to purchase the Lender Loan under this paragraph 9, the funding of such purchase must occur prior to 5:00 p.m. (Minneapolis time) on the last day of the Option Period. The Lender further agrees that during the Option Period, the Authority may propose for the Lender's consideration a substitute developer who, among other things, would assume all of the obligations of the Developer under the Development Contract and under the Lender Loan Documents; provided, however, the Lender shall have no obligation. to either consider or accept any such substitute developer, and, provided, further, in the event that the Lender, in its sole discretion, shall determine to consider or accept such substitute developer, such consideration and/or acceptance shall be on such terms as the Lender shall determine in its sole discretion. 10. If, following any Event of Default (as defined herein) under the Lender Mortgage, the Lender obtains title to the Premises through foreclosure or any accepting a deed to the Premises from the Developer, the Authority agrees that upon expiration of all redemption periods, in the case of a foreclosure, or upon the recording of such deed, in the case of a deed in lieu of foreclosure, as the case may be, all rights and interests of the Authority under the Development Contract and in and to the Premises under the Development Contract or otherwise, including, without limitation, all restrictive covenants contained therein, shall be automatically null and void without the need for the ::ODMA\GRP W ISE\CSM_DOM 1.CSM_PO1.Finance/Acquisition:3005.1 execution or recording of any other document. Notwithstanding the foregoing, the Authority shall retain such rights as it has under the terms and conditions of the Revenue Note, as modified pursuant to paragraph 2 herein. 11. The Authority represents to the Lender and the Developer that the making, delivery and performance of this Agreement have been duly authorized by all necessary action and this Agreement, when executed, shall be the valid and binding obligation of the Authority, enforceable in accordance with its terms. 12. The Lender represents to the Authority and the Developer that the making, delivery and performance of this Agreement have been duly authorized by all necessary action and this Agreement, when executed, will constitute the legal, valid and binding obligation of the Lender enforceable in accordance with its terms. 13. The Developer represents to the Authority and the Lender that the making, delivery and performance of this Agreement have been duly authorized by all necessary action and this Agreement, when executed, will constitute the legal, valid and binding obligation of the Lender enforceable in accordance with its terms. 14. The Authority, the Developer, and the Lender acknowledge that the Lender is not a party to the Development Contract and that this Agreement contains the entire Agreement between the Authority and the Lender with respect to any rights or obligations either might otherwise have with respect to the other under the Development Contract and under the Authority Mortgages, and that this Agreement may be amended only in writing signed by the parties hereto. By executing and delivering this Agreement, the Lender shall not incur any obligations to the Authority onto the Developer of any kind whatsoever, except those to the Authority which are expressly set forth herein, and the Lender may administer its extension of credit under the Lender Loan Documents in such manner as it shall deem appropriate without any notice to or consent from the Authority. 15. The Authority agrees that the Lender, at any time and from time to time, may extend the maturity, modify the interest rate or agree to alter any of the terms of payment of the Lender Loan as evidenced by the Lender Loan Documents, or release parties liable for payment thereof, or alter, amend, waive or supplement, in any way, any of the terms and provisions of the Lender Mortgage, the Lender Assignment of Rents and all related documents, all without any notice to or consent of the Authority. :ODMA\GRP W ISE\CS M_DOM 1.CSM_PO 1.Finance/Acquisition:3005.1 16. This Agreement shall be binding upon and insure to the benefit of the Authority, the Lender and the Developer and their respective successors and assigns. Executed as of the day and year first above written. THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD By: Its By: Its STATE OF MINNESOTA ) )ss. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this day of 2003, by the and the of the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota, on behalf of said Authority. Notary Public This Instrument was drafted by: C. William Franke, Attorney at Law c/o CSM Corporation 2575 University Ave. W., #150 St. Paul, MN 55114 7 :ODMA\GRP WISE\CSM_DOMI.CSM_PO1.Finance/Acquisition:3005.1 CSM INVESTORS, INC. By: U -LAC Its J.Q STATE OF NIINNESOTA ) )ss. COUNTY OF RAMSEY ) The foregoing instrument as ac owledged before me this o~day of 2003, by ~41N~ ~;cVul~ ,the - t`P,~ of CSM Investors, Inc., a Minnesota corporation,. on behalf of the corporation. ~ ~ ~ Not~~ublic .~ ~^ ~~ JOAN M. KU~Ci- ~~svFw~.tc ~ -_ - :~ ...:,N. >~~ :ODMA\GRP WISE\CSM_DOM 1.CSM_PO1.Finance/Acquisition:3005.1 TRANSAMERICA LIFE INSURANCE COMPANY By: Its STATE OF ) )ss. COUNTY OF ) The foregoing instrument was acknowledged before me this day of 2003, by ,the of Transamerica Life Insurance Company, an Iowa corporation, on behalf of said corporation. Notary Public ::ODMA\GRP WISE\CSM_DOM 1.CSM_PO1.Finance/Acquisition:3005.1 EXHIBIT A PARCEL 1 The North 240 feet of the East Half of the Southeast Quarter of the Southwest Quarter of the Southeast Quarter of Section 33, Township 28, Range 24 except the North Thirty (30) feet as described in Book 1957 of Deeds, Page 432, Hennepin County, Minnesota. Abstract Property PARCEL 2 The East 160 feet of the South 50 feet of the North 255 feet of the West 320 feet of the South Half of the Southeast Quarter of the Southeast Quarter of Section 33, Township 28, Range 24 except the East 30 feet, according to the United States Government Survey thereof and situate in Hennepin County, Minnesota. Abstract Property PARCEL 3 The North 255 feet of the West 320 feet of the South Half of the Southeast Quarter of the Southeast Quarter of Section 33, Township 28, North Range 24, West of the 4th Principal Meridian, except the East 30 feet thereof and except the West 130 feet of the East 160 feet of the South 50 feet thereof, Hennepin County, Minnesota. Abstract Property PARCEL 4 The South 90 feet of the North 345 feet of West 320 feet of the South One-half (S1/2) of the Southeast Quarter (SE1/4) of the Southeast Quarter (SE1/4) of Section Thirty-three (33), Township Twenty-eight (28} North, Range Twenty-four (24), West of the 4th Principal Meridian, except the East 30 feet thereof, according to the United States Government Survey thereof, Hennepin County, Minnesota. Abstract Property PARCEL 5 All that part of the West 320 feet of the South Half of the Southeast Quarter of the Southeast Quarter of Section 33, Township 28, Range 24 except the North 345 feet thereof and except the parts thereof taken for highway purposes and except for Colfax Avenue South and Market Drive according to the United States Government Survey thereof, Hennepin County, Minnesota. Abstract Property ::ODMA\GRPW ISEICSM_DOM I .CSM_PO1.Acquisition/Development_Lib:2828. I PARCEL 6 That part of the East Half of the Southeast Quarter of the Southwest Quarter of the Southeast Quarter of Section 33, Township 28, Range 24, which lies South of the North 240 feet thereof, except that part taken for highway, Hennepin County, Minnesota. Abstract Property PARCEL 6A Lot 8, except the Easterly 4.5 feet thereof, Block 1, Lots 9 through 11, inclusive, Block 1, The North 48.0 feet of Lots 8 through 11 inclusive, except the Easterly 4.5 feet of said Lot 8, Block 2, Strand-Bowen Second Addition. That part of vacated West 77 1/2 Street as dedicated in the plat of Strand-Bowen Second Addition which lies Westerly of the Southerly extension of the West line of the East 4.5 feet of Lot 8, Block 1, to the centerline thereof and the Northerly extension of the West line of the East 4.5 feet of Lot 8, Block 2, to said centerline all in said addition. That part of vacated Colfax Avenue South, as dedicated in the plat of Strand-Bowen Second Addition which lies between the Westerly extensions of the South line of Block 2 and the North line of Block 1, all in said plat. Torrens Property Torrens Certificate No. 861179 PARCEL? The North 30 feet of the East Half of the Southeast Quarter of the Southwest Quarter of the Southeast Quarter of Section 33, Township 28, Range 24, Hennepin County, Minnesota. Abstract Property PARCEL8 That part of the following described properties: The South 85 feet. of the West Half of the East Half of the Northeast Quarter of the Southwest Quarter of the Southeast Quarter of Section 33, Township 28, Range 24, Hennepin County, Minnesota. AND ::ODMA\GRPW ISE\CSM_DOM 1.CSM_PO1.Acquisition/Developmeirt_Lib:2828.1 Lot 8, NORTHFELT ADDITION, Hennepin County, Minnesota. AND Vacated or unvacated 77th Street West, as dedicated in the plat of NORTHFELT ADDITION, Hennepin County, Minnesota, being described as follows: Commencing at the Southeast corner of the Northeast Quarter of the Southwest Quarter of the Southeast Quarter of said Section 33; thence South 89 degrees 41 minutes 41 seconds West, assumed bearing, along the South line of said Northeast Quarter of Southwest Quarter of Southeast Quarter 86.58 feet to the point of beginning of the parcel to be described; thence Northwesterly 187.04 feet along anon-tangential curve concave to the Northeast having a radius of 610.33 feet and a central angle of 17 degrees 33 minutes 32 seconds, the chord of said curve bears North 63 degrees 29 minutes 13 seconds West; thence South 38 degrees 06 minutes 35 seconds West, not tangent to said curve, 32.47 feet; thence Southerly along a tangential curve concave to the East having a radius of 120.00 feet to the South line of said Northeast Quarter of Southwest Quarter of Southeast Quarter, thence North 89 degrees 41 minutes 41 seconds East along said South line to the point of beginning. PARCEL I The North 255 feet of the East 30 feet of the West 320 feet of the South Half of the Southeast Quarter of the Southeast Quarter of Section 33, Township 28, Range 24, Hennepin County, Minnesota. PARCEL J The South 90 feet of the North 345 feet of the East 30 feet of the West 320 feet of the South Half of the Southeast Quarter of the Southeast Quarter of Section 33, Township 28, Range 24, Hennepin County, Minnesota. PARCEL K The South 89.92 feet of the North 434.92 feet of the East 30 feet of the West 320 feet of the South Half of the Southeast Quarter of the Southeast Quarter of Section 33., Township 28, Range 24, Hennepin County, Minnesota. PARCEL L All that part of the East 30 feet of the West 320 feet of the South Half of the Southeast Quarter of the Southeast Quarter of Section 33, Township 28, Range 24, Hennepin County, Minnesota, EXCEPT the North 434.92 feet thereof and the parts thereof taken for highway purposes. Abstract Property ::ODMA\GRPW ISE\CSM_DOM I .CSM_PO 1.Acquisition/Development_Lib:2828.1 AGENDA ITEM # p~ ~, REPORT # L~a'Z, , J STAFF REPORT HOUSING AND REDEVELOPMENT AUTHORITY MEETING AUGUST 4, 2003 REPORT PREPARED BY: JOHN STARK, COMMUNITY DEVELOPMENT MANAGER NAME, TITLE REPORT PRESENTER: JOHN STARK, COMMUNITY DEVELOPMENT MANAGER NAME, TITLE DEPARTMENT DIRECTOR REVIEW: SIGNATURE REVIEWED BY EXECUTIVE DIRECTOR: ITEM FOR HRA CONSIDERATION: Consideration of the attached proposed Settlement of Relocation Benefits for the tenants at 7609 Aldrich Avenue in the Lyndale Gateway West Area. I. RECOMMENDED ACTION: By Motion: Approve attached proposed Settlement of Relocation Benefits for the tenants at 7609 Aldrich Avenue in the Lyndale Gateway West Area. III. BACKGROUND ~ As part of the implementation of the- redevelopment plan for the Lyndale Gateway West Area, all residential and commercial tenants in the area were made eligible for relocation benefits as of June 2, 2003. Based on the requirements of the Uniform Relocation Act, the tenants located at 7609 Aldrich Avenue were offered up to $10,500 as a Replacement Housing Payment. These tenants' ability to receive this maximum was conditioned upon their rental of a unit with monthly rent and utilities costs of $1,535 per month. If they chose to move into alesser-priced unit, the actual amount of their Replacement Housing Payment would be reduced. 080403 Aldrich Another component of the relocation benefits is the moving costs. In the case of 7609 Aldrich Avenue, the tenants had indicated that they preferred to move themselves (as opposed to a professional move company) and receive a Fixed Payment for Moving of $2,300. This amount is calculated by multiplying the number of furnished rooms by a per room move allowance. The amount of relocation benefits, therefore, that this household would be eligible to receive (as long as they documented actual rent and utilities exceeding $1,535/month), therefore, would be $12,800. Since being made aware of their relocation benefits, the tenants at 7609 Aldrich Avenue have obtained legal counsel. Their legal counsel has challenged the Comparable Dwelling that was chosen by the Housing and Redevelopment Authority's (HRA) consultant in order to determine the appropriate amount of Replacement Housing Payment. On July 18, 2003, the attorney for the tenants at 6709 Aldrich Avenue submitted a letter indicating his client's desires to appeal the amount of approved relocation benefits. This request, however, also provided a settlement option. The settlement option that has been proposed by the tenants of this property through their attorney is a fixed payment of $12,800 (to be paid individually to the two co-tenants in equal amounts of $6,400 each. You will note that this amount is exactly the same as the maximum Replacement Housing Payment and Fixed Payment for Moving that had been established by the HRA. The main difference is that the amount requested in the settlement amount is to be fixed regardless of the actual rent and utilities that are ultimately paid by these tenants when they relocate. In order to avert legal and consultant costs associated in a relocation appeal process, staff is recommending that the HRA approve this relocation settlement offer. III. BASIS OF RECOMMENDATION A. POLICY • On June 2, 2003, the Richfield HRA extended relocation benefits to the tenants at 7609 Aldrich Avenue. The HRA's relocation consultant, Conworth, Inc., calculated a maximum Replacement Housing Payment of $10,500 and a Fixed Moving Payment of $2,300. The tenants of this property, through their attorney, have requested an appeal unless the issue can be settled; a settlement offer of a Fixed Rental Assistance Payment of $10,500 and a Fixed Moving Payment of $2,300. B. CRITICAL ISSUES • The HRA has the ability to settle relocation appeals. C. FINANCIAL • The amount being sought in the settlement offer does not exceed the amount to which the relocatees would be eligible as long as they rented a unit with rent and utilities costs of at least $1,535 per month. D. LEGAL • HRA legal counsel drafted the attached Settlement Agreement. IV. ALTERNATIVE RECOMMENDATION~S~ • Do not approve the Settlement Agreement; this would result in the claimant's pursuit of a formal appeal of their relocation benefits. V. ATTACHMENTS • Two Proposed Settlement Agreements; one for each of the co-tenants. VI. PRINCIPAL PARTIES EXPECTED AT MEETING • N/A SETTLEMENT AGREEMENT AND RELEASE OF CLAIMS This Settlement Agreement ("Agreement"), dated August , 2003 is made between the RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY, a municipal corporation under the laws of Minnesota ("HRA") and RICK BREKKE ("Claimant"). RECITALS The Claimant previously resided at 7609 Aldrich Avenue South in the City of Richfield ("Property"). 2. The Property was purchased in furtherance of development in the City. As a result, the HRA provided relocation assistance and benefits to Claimant. 3. The Claimant disputes the HRA's determination concerning the amount of benefits due. The Claimant has requested an administrative appeal of the HRA's determination. The HRA and Claimant desire to resolve and settle this appeal. NOW, THEREFORE, in consideration of the promises and the mutual agreements, covenants and provisions contained in this Agreement, the parties hereto agree and declare as follows: AGREEMENT 1. Payment to Claimant. The HRA will pay the Claimant the sum of $ 6,400.00. 2. Release. Claimant for himself and his heirs, administrators, representatives, successors and assigns, releases the HRA and the City of Richfield, and all officers, agents, employees, predecessors, successors, assigns, insurers, subsidiaries and legal representativestherenf, from any relocation benefits claims, and any other suits or claims in law or equity or rights to relief of any kind, whether known or unknown, resulting from acquisition of the Property. 3. Settlement. This Agreement settles the parties' dispute concerning the amount of relocation benefits to which Claimant is entitled. This Agreement does not constitute a waiver of relocation benefits under the Minnesota Uniform Relocation Act ("MURA"), Minn. Stat. §§ 117.50 - 117.56. 4. Voluntary and Knowing Action. The undersigned parties acknowledge that they have been represented by their own legal counsel, that they have thoroughly read and understand the terms of this Agreement, and that they are voluntarily entering into this Agreement to resolve this matter. 5. Stipulation of Dismissal. The parties agree to stipulate to dismiss with prejudice the appeal requested by Claimant. RJV-235365v1 RC125-245 6. Governing Law. This Agreement will be construed and enforced in accordance with the laws of the State of Minnesota. IN WITNESS WHEREOF, the Claimant and HRA have executed this Agreement the day and year first above written. HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD By: Its: Chair By: Its: Executive Director RICK BREKKE STATE OF MINNESOTA ss.. COUNTY OF HENNEPIN The foregoing instrument was acknowledged before me this _ day of , 2003, by Rick Brekke. Notary Public RJV-235365v1 RC 125-245 SETTLEMENT AGREEMENT AND RELEASE OF CLAIMS This Settlement Agreement ("Agreement"), dated August , 2003 is made between the RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY, a municipal corporation under the laws of Minnesota ("HRA") and ANDREW FISH ("Claimant"). RECITALS 1. The Claimant previously resided at 7609 Aldrich Avenue South in the City of Richfield ("Property"). 2. The Property was purchased in furtherance of development in the City. As a result, the HRA provided relocation assistance and benefits to Claimant. 3. The Claimant disputes the HRA's determination concerning the amount of benefits due. The Claimant has requested an administrative appeal of the HRA's determination. The HRA and Claimant desire to resolve and settle this appeal. NOW, THEREFORE, in consideration of the promises and the mutual agreements, covenants and provisions contained in this Agreement, the parties hereto agree and declare as follows: AGREEMENT 1. Payment to Claimant. The HRA will pay the Claimant the sum of $ 6,400.00. 2. Release. Claimant for himself and his heirs, administrators, representatives, successors and assigns, releases the HRA and the City of Richfield, and all officers, agents, employees, predecessors, successors, assigns, insurers, subsidiaries and legal representatives thereof, from any relocation benefits claims, and any other suits or claims in law or equity or rights to relief of any kind, whether known or unknown, resulting from acquisition of the Property. 3. Settlement. This Agreement settles the parties' dispute concerning the amount of relocation benefits to which Claimant is entitled. This Agreement does not constitute a waiver of relocation benefits under the Minnesota Uniform Relocation Act ("MURA"), Minn. Stat. §§ 117.50 - 117.56. 4. Voluntary and Knowin Ag ction. The undersigned parties acknowledge that they have been represented by their own legal counsel, that they have thoroughly read and understand the terms of this Agreement, and that they are voluntarily entering into this Agreement to resolve this matter. 5. Stipulation of Dismissal. The parties agree to stipulate to dismiss with prejudice the appeal requested by Claimant. RJV-235367v1 RC125-245 between the east and west right-of--way lines of Lyndale Avenue and between the centerline of 76`x' Street and the Centerline of 77"' Street. It is the City's intentions to construct and pay for these improvements in accordance with the established specifications; but the City reserves the right to deviate from those specifications provided that such deviations which result in an alteration to the Redevelopment Property and/or its ingress and egress shall first be approved by the Redeveloper. The reconstruction of Lyndale Avenue shall begin no earlier than the date by which all of the parties occupying properties which have a Lyndale Avenue address have been relocated from the Development Area; and no later than August 1, 2004. (d) Public and Private Utilities. The costs associated with all public and private utilities (including, but not limited to sanitary sewer, storm sewer, gas lines, electric power lines and telephone lines) which are moved, terminated, disrupted or otherwise altered for any purpose are the responsibility of the Redeveloper, unless such activities would be necessary solely for the activities contained in the above Section 4.8(b) or 4.8(C). ARTICLE V INSURANCE Section 5.1. Insurance. Prior to Closing, the Redeveloper shall provide evidence of insurance, covering property, casualty, workers compensation, fire, indemnity, general liability, employer's liability and such other coverage and in such amounts as the HRA shall reasonably require. ARTICLE VI TAX INCREMENT Section 6.1. Statement of Purpose. The parties acknowledge that the development which is proposed by the Redeveloper would not be feasible absent the assistance which is provided the Redeveloper in this Article VI. JBD-234794v3 RC125-240 19 ARTICLE VII FINANCING Section 7.1. Limitations Upon Encumbrance. Prior to the issuance of a Certificate of Completion, neither the Redeveloper nor any successor in interest to the Redevelopment Property or any part thereof shall engage in any financing or any other transaction creating any mortgage or other encumbrance or lien upon the Redevelopment Property or any part thereof, whether by express agreement or operation of law, or suffer any encumbrance or lien to be made on or attached to the Redevelopment Property or any part thereof, except only for the purpose of obtaining funds to the extent necessary for purchasing or redeveloping the Redevelopment Property or funding construction of the Minimum Improvements. Section 7.2. Co~y of Notice of Default to Lender. Prior to the issuance of a Certificate of Completion, whenever the HRA shall deliver any notice or demand to the Redeveloper with respect to any breach or default by the Redeveloper in its obligations under this Agreement, the HRA shall at the same time forward a copy of such notice or demand to each holder ("Holder") known to the HRA of any mortgage or other financing agreement authorized by this Agreement by sending such notice to last known address of the Holder as shown in the records of the HRA. Section 7.3. Lender's Option to Cure Defaults. After any Event of Default by the Redeveloper referred to in Section 10.1 hereof, each Holder shall (insofar as the rights of the HRA are concerned) have the right for a period of ninety (90) days, at the Holder's option, to cure or remedy such Event of Default to the extent that it relates to the part of the Redevelopment Property covered by its financing and to add the cost thereof to the debt and the lien of its financing, provided, that if the breach or event of default is with respect to construction of the Minimum Improvements, nothing contained in this Section or any other section of this Agreement shall be deemed to permit or authorize such Holder, before foreclosure or action in lieu thereof, to undertake or continue the construction or completion of the Minimum Improvements (beyond the extent necessary to conserve or protect such Improvements or construction already made) without first having expressly assumed the Redeveloper's obligations described in Section 4.2 hereof by written agreement reasonably satisfactory to the HRA to complete the Minimum Improvements or the part thereof to which the lien or title of such holder relates, provided further, however, that the HRA will not unreasonably withhold its consent to any changes in the Minimum Improvements which are requested by the Holder if the requested changes do not alter the basic design of the Minimum Improvements. (It being understood that such consent shall in no way act to bind or influence the power of the City, in the exercise of its governmental authority not to approve any proposed changes or alterations to the Minimum Improvements. Any such Holder who shall perform the Redeveloper's obligations under Section 4.2 hereof, relating to the Redevelopment Property or applicable part thereof, shall be entitled, upon written request made to the HRA, to a certification by the HRA to such effect in the manner provided in Section 4.7 of this Agreement. Section 7.4. HRA's Option to Cure Default. Prior to the issuance of a Certificate of Completion, if the Redeveloper is in default under any financing authorized pursuant to Article VIII of this Agreement, the Holder, prior to exercising any of its remedies, shall notify the HRA in writing by sending it a copy of any notice of default sent to the Redeveloper. If, within thirty (30) JBD-234794v3 RCI25-240 20 days after receipt of said notice, the HRA cures the default, then the Holder shall pursue none of its remedies under the financing based upon the said default of the Redeveloper. Section 7.5 Subordination. In order to facilitate the obtaining of financing for the construction of the Minimum Improvements by the Redeveloper, the HRA agrees to modify and to subordinate its right under this Agreement to the mortgage or other financing agreement held by the financial institution providing such funds, to the extent that should the financial institution obtain title to the Redevelopment Property through foreclosure, that the HRA will subordinate its rights under this Agreement; provided, however, that nothing in this Section 7.5 shall be deemed to require the HRA to agree to any modification to or the subordination of its rights under the Assessment Agreement. Nor shall any such modification or subordination be deemed to release the Redeveloper from its obligations under the Letter of Credit, or the Redeveloper's chief manager from the Personal Guaranty. ARTICLE VIII PROHIBITIONS AGAINST ASSIGNMENT AND TRANSFER Section 8.1. Representation as to Development. The Redeveloper further recognizes that, in view of (a) the importance of the development of the Redevelopment Property to the general welfare of the community; and (b) the substantial fmancing and other public aids that have been made available by the City and the HRA, for the purpose of making such development possible; that the qualifications and identity of the Redeveloper are of particular concern to the community and the HRA. Any change as hereunder described with respect to the identity of the Redeveloper or the purchase of Redeveloper's interest by any other party or parties is for practical purposes. a transfer or disposition of the property then owned by the Redeveloper, the Redeveloper further recognizes that it is because, of such qualifications and identity that the HRA is entering into this Agreement with the Redeveloper and, in so doing, is further willing to accept and rely on the obligations of the Redeveloper for the faithful performance of all undertakings and covenants hereby then to be performed. Section 8.2. [Blank]. Section 8.3. Prohibition Against Transfer of Property and Assi~mnent of Agreement. For the foregoing reasons, the Redeveloper represents and agrees that prior to the issuance of a Certificate of Completion for that Phase: (a) Except only by way of security for, and only for, the purpose of obtaining fmancing of the nature described in Section 7.1, the Redeveloper (except as so authorized) has not made or created, and that it 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 this Agreement or the Redevelopment Property or any part thereof or any interest therein, or any contract or agreement to do any of the same, without the prior written approval of the HRA, which approval will not be unreasonably withheld. JBD-234794v3 RC125-240 21 (b) The HRA shall be entitled to require, except as otherwise provided in the Agreement, as conditions to any such action described in paragraph (a) above that: (i) any proposed transferee shall have the qualifications and financial responsibility, asreasonably determined by the HRA, necessary and adequate to fulfill the obligations undertaken in this Agreement by the Redeveloper (or, in the event the transfer is of or relates to part of the Redevelopment Property, such obligations to the extent that they relate to such part); (ii) any proposed transferee, by instrument in writing satisfactory to the HRA and in form recordable among the land records, shall for itself and its successors and assigns, and expressly for the benefit of the HRA, have expressly assumed all of the obligations of the Redeveloper under this Agreement and agreed to be subject to the terms of the Redevelopment Plan (or, in the event the transfer is of or relates to part of the Redevelopment Property, such obligations, conditions, and restrictions to the extent that they relate to such part); provided, that the fact that any transferee of, or any other successor in interest whatsoever the reason, shall have assumed such obligations or agreed, shall not (unless and only to the extent otherwise specifically provided in this Agreement or agreed to in writing by the HRA) relieve or except such transferee or successor of or from such obligations, conditions, or restrictions, or deprive or limit the HRA or with respect to any rights or remedies or controls with respect to the Redevelopment Property or the construction of the Minimum Improvements; it being the intent of this, together with other provisions of this Agreement, that (to the fullest extent permitted by law and 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 Redevelopment Property or any part thereof, of 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 or controls provided in or resulting from this Agreement with respect to the Redevelopment Property and the construction of the Minimum Improvements that the HRA would have had, had there been no such transfer or change; (iii) there shall be submitted to the HRA for review all instruments and other legal documents involved in effecting transfer, and if approved by the I-IItA its approval shall be indicated to the Redeveloper in writing. The HRA shall not unreasonably delay the taking of any action required of it under this paragraph. (c) Notwithstanding the prohibitions against transfer contained in this section, the Redeveloper shall have the right to transfer, (partial or full) ownership interests in the Redeveloper, this Agreement, or any Component of the Redevelopment Property to any entity or entities that are controlled by the Redeveloper. (d) 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 Redeveloper, or any other party bound in any way by this Agreement or otherwise with respect to the construction of the Minimum Improvements, or from any of its obligations with respect thereto. The HRA may, however, in its reasonable discretion exercised in accordance with the standards and requirements of Section 8.3(b) relieve Redeveloper if such transferee or assignee is acceptable to the HRA. Section 8.4. Following Completion. Upon the issuance of the Certificate of Completion, the provisions of Sections 8.1, 8.3 and 8.5 shall be deemed to have no further force and effect; and the Redeveloper may transfer the Redevelopment Property and assign its interest under this Agreement at any time upon written notice to the HRA. JBA234794v3 RC125-240 22 Section 8.5. Approvals. Any approval required to be given by the HRA under this Article VIII of this Agreement may be denied only in the event that the HRA reasonably determines that the performance of the obligations of Redeveloper under this Agreement will be materially impaired by the action for which approval is sought. At the HRA's request, the Redeveloper shall provide to the HRA's attorney for privileged review on behalf of the HRA financial information as to any proposed general partners, or controlling stockholders of proposed assignees or transferees, and financial information as to any such partnership or corporation. Failure to provide such information shall be an adequate basis for the denial of any requested approval; however, it shall not otherwise be construed as a default under this Agreement. ARTICLE IX EVENTS OF DEFAULT Section 9.1. Events of Default Defined. The following shall, after the Redeveloper has received notice of the same and has failed to cure in accordance with Section 9.2, be "Events of Default" under this Agreement and the term "Event of Default" shall mean, whenever it is used in this Agreement (unless the context otherwise provides), any one or more of the following events: (a) Failure by the Redeveloper to pay when due any payments required to be paid under Article III of this Agreement. (b) Subject to Unavoidable Delay, failure by the Redeveloper to observe and substantially perform any material covenant, condition, obligation, or agreement on its part to be observed or performed hereunder. (c) If the Redeveloper is in default under any mortgage and fails to cure any such default within thirty (30) days after written demand from the HRA to do so. (d) If the real estate taxes are not paid when due, subject to Redeveloper's right to contest same in accordance with applicable law. Section 9.2. Remedies on Default. Whenever any Event of Default referred to in Section 9.1 of this Agreement occurs, the I-iRA may, in addition to any other remedies or rights given the HRA under this Agreement, but only after at least sixty (60) days notice to the Redeveloper and its failure to cure (unless a different cure period is provided with respect to specific defaults under this Agreement) or such longer cure period if reasonably required and the actions to cure have been commenced within such 60-day period, fmd the Redeveloper in default (Default) and take any one or more of the following actions: (a) Terminate this Agreement. (b) Suspend its performance under the Agreement until it receives assurances from the Redeveloper or mortgagee reasonably deemed adequate by the HI2A, that the Redeveloper will cure the default and continue performance under this Agreement. JBD-234794v3 RC125-240 23 (c) If Closing has not yet occurred, cancel pursuant to Minnesota Statutes Section 559.21, and rescind this Agreement, in which case the 60-day cure period shall commence with notice of cancellation. (d) Withhold the Certificate of Completion if the Event of Default relates to the failure of the Redeveloper to complete the Minimum Improvements as provided in this Agreement. (e) Subject to the limitations stated in Article III take whatever action at law or in equity may appear necessary or desirable to the HRA to collect any payments due under this Agreement, or to enforce performance and observance of any obligation, agreement or covenant of the Redeveloper under this Agreement. Provided, however, that any exercise by the HRA, its successors or assigns, of its right or remedies hereunder shall always be subject to and limited by, and shall not defeat, render invalid or limit in any way (a) the lien of any mortgage authorized by this Agreement and (b) any rights or interests provided in this Agreement for the protection of the Holder of such mortgages Section 9.3. No Remedy Exclusive. Except as provided in Article III, no remedy herein conferred upon or reserved to the HRA is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to 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 or the Redeveloper 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 or by applicable law. Section 9.4. No Additional Waiver Implied by One Waiver. In the event any obligation 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. ARTICLE X ADDITIONAL PROVISIONS Section 10.1. Conflict of Interests; HRA Re,~resentatives Not Individually Liable. No member, official, or employee of the HRA shall have any personal interest, direct or indirect, in the Agreement, nor shall any such member, official or employee participate in any decision relating to the Agreement which affects his personal interests or the interests of any corporation, partnership, or association in which he is, directly or indirectly, interested. No member, official, or employee of the HRA shall be personally liable to the Redeveloper, 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 Redeveloper or successor or on any obligations under the terms of the Agreement. JBD-234794v3 RC125-240 24 Section 10.2. Nondiscrimination. The provisions of Minnesota Statutes Section 181.59, which relate to civil rights and nondiscrimination, shall be considered a part of this Agreement as though fully set forth herein. Section 10.3. Provisions Not Merged With Deed. None of the provisions of this Agreement are intended to be or shall be merged by reason of any deed transferring any interest in any part of the Property and any such deed shall not be deemed to affect or impair the provisions of this Agreement. Unless otherwise indicated in this Agreement, the provisions of this Agreement shall be binding upon and inure to be benefit of the successors and assigns of the parties hereto. Section 10.4. Notice of Status and Conformance. The HRA agrees that from time to time, upon not less than ten (10) days' prior written notice by Redeveloper, to execute, acknowledge and deliver, without charge, to Redeveloper or to any person designated by Redeveloper, a statement in writing certifying, to the extent true, that this Agreement is unmodified, the principal amount of any obligation herein created then unpaid, that the HRA has not received any notice of default, that to the knowledge of the HRA no event of default exists hereunder (or if any such event of default does exist, specifying the same and stating that the same has been cured, if such be the case), that the HRA to its knowledge, has no claims against the Redeveloper hereunder, and any other information reasonably requested by the Redeveloper. It is the intention of this Section 10.4 to provide a mechanism for obtaining estoppel certificates which may be requested by from time to time by Redeveloper or Redeveloper's mortgagee. Section 10.5. Compliance With Business Subsidy Act. The HRA's obligation to make payments under this Agreement that constitute Business Subsidies under the Business Subsidy Act are expressly contingent upon the conclusion of the procedures required by such law. Section 10.6. Redeveloper Deposit. The Redeveloper shall deposit $20,000 with the HRA. The purpose of the deposit is to reimburse the HRA for the money value of staff time and consultant costs incurred by it in connection with the preliminary activities leading up to, resulting in and including the preparation of this Agreement and any modifications of the Interchange West and Lyndale Gateway Tax Increment District, and in the implementation of this Agreement and the Development. Any portions of the deposit which are not needed for those purpose shall be returned to the Redeveloper within 15 days following the issuance of the Certificate of Completion; or the termination of this Agreement for failure to close. At any time that the unexpended amount of such deposit is $10,000 or less, the Redeveloper shall, upon 15 days written request to do so, provide such further deposit as is required to return the unexpended amount to $20,000. It is understood that the deposited amount is not a limitation on the Redeveloper's obligation to reimburse for such costs, or to make other payments required under this Agreement. At the time the Redeveloper takes title to the property, the outstanding balance of this account will be reimbursed to the Redeveloper with the understanding that future costs incurred by the HRA would be sought for reimbursement from the Redeveloper if the terms of this contract so warrant. Section 10.7. 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 JBD-234794v3 RC125-240 25 other shall be sufficiently given or delivered it if is dispatched by registered or certified mail, postage prepaid, return receipt requested, or delivered personally: As to the HRA: Housing and Redevelopment Authority 6700 Portland Avenue South Richfield, MN 55423 Attention: Executive Director With Copy to: John Dean Kennedy & Graven 470 Pillsbury Center Minneapolis, MN 55402 As to the Redeveloper: Lyndale Gateway, LLC c/o The Cornerstone Group, Inc 7661 Bush Lake Drive Bloomington, MN 55438 Attention: Colleen M. Carey, Chief Manager With Copy to: Winthrop & Weinstine, P.A. 3000 Dain Rauscher Plaza 60 South Sixth Street Minneapolis, MN Attention: Joanne L. Matzen 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. Section 10.8. Actions Taken Pursuant to Earlier Agreements. The following is a listing of the various actions that were required of the parties pursuant to the earlier agreements, and which remain in effect as if required by this Agreement: (a) ~) c) (d) Section 10.9. Counterparts. This Agreement may be simultaneously executed in any number of counterparts, all of which shall constitute one and the same instrument. Section 10.10. Entire Agreement, Merger. This Agreement shall be deemed the entire agreement between the parties as to matters herein contained; and, except as to other agreements required hereunder, supersedes and replaces all other agreements and understandings of the parties, oral or written. JBD-234794v3 RC125-240 26 IN WITNESS WHEREOF, the parties hereto have set their hands and seals as of the day and year first above written. THE HOUSING AND REDEVELOPMENT AUTHORITY OF THE CITY OF RICHFIELD, MINNESOTA By: Its: Chairperson Bv: Its: Executive Director LYNDALE GATEWAY, LLC By: Its: STATE OF NIINNESOTA ss.. COUNTY OF HENNEPIN The foregoing instrument was acknowledged before me this day of 2003, by and ,the Chairperson and Executive Director of The Housing and Redevelopment Authority in and for the City of Richfield, Minnesota. Notary Public JBD-234794v3 RC125-240 27 STATE OF MINNESOTA ss.. COUNTY OF HENNEPIN The foregoing instrument was acknowledged before me this day of 2003, by the of , a limited liability company under the laws of Minnesota, by and on behalf of said company. Notary Public JBD-234794v3 RC125-240 28 EXHIBIT A CERTIFICATE OF COMPLETION The undersigned hereby certifies that , a Minnesota corporation has fully and completely complied with its obligations under Article IV of that document entitled "Contract for Private Development," dated , 2000 between THE HOUSING AND REDEVELOPMENT IN AND FOR THE CITY OF RICHFIELD and with respect to construction of the Minimum Improvements located on the tract of land described in the attached Schedule A In accordance with the requirements of such document and is released and forever discharged from its obligations to construction the Minimum Improvements under such above-referenced Article on the above-referenced tract. DATED: HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD By . Its Chairperson By Its Executive Director JBD-234794v3 RC125-240 A-1 Schedule A Redevelopment Property Legal Description. JBD-234794v3 RC125-240 A-2 EXHIBIT B Redevelopment Property Legal Description. JBD-234794v3 RC125-240 B-1 EXHIBIT C OPTION AGREEMENT JBD-234794v3 RC125-240 C-1 AGENDA ITEM # ~ D REPORT # t.~ 3 J STAFF REPORT HOUSING AND REDEVELOPMENT AUTHORITY MEETING AUGUST 4, 2003 REPORT PREPARED BY: JOHN STARK, COMMUNITY DEVELOPMENT MANAGER NAneE, TITLE REPORT PRESENTER: JOHN STARK, COMMUNITY DEVELOPMENT MANAGER NAME, T/Tll DEPARTMENT DIRECTOR REVIEW: SIGNATURC' REVIEWED BY EXECUTIVE DIRECTOR: ITEM FOR HRA CONSIDERATION: Consideration of request by CSM to enter into the attached proposed Subordination Agreement with CSM and its lender as part of the refinancing of Shops at Lyndale. I. RECOMMENDED ACTION: By Motion: Approve the attached proposed Subordination Agreement and direct the Chair and Executive Director to execute and deliver the same, contingent upon developer reimbursement of staff and legal costs associated with such action. II. BACKGROUND CSM, the developer of the Shops at Lyndale, is seeking to refinance its loan on the shopping center. As part of the refinancing, the lender is requiring that the Housing and Redevelopment Authority (HRA), CSM, and the lender enter into a Subordination Agreement (Agreement). The Agreement acknowledges that the rights of the HRA under its Development Contract with CSM are in certain respects subordinate to the rights of the lender. A copy of the proposed agreement is attached. The proposed Subordination Agreement is virtually identical to the subordination agreement that the HRA approved in connection with CSM's initial financing in 080403 CSM AGENDA ITEM # 3 REPORT # J STAFF REPORT HOUSING AND REDEVELOPMENT AUTHORITY MEETING AUGUST 4, 2003 REPORT PREPARED BY: JOHN STARK, COMMUNITY DEVELOPMENT MANAGER NAME, TITLE REPORT PRESENTER: JOHN STARK, COMMUNITY DEVELOPMENT MANAGER NAME, TITLE DEPARTMENT DIRECTOR REVIEW: SIGNATURE REVIEWED BY EXECUTIVE DIRECTOR: ITEM FOR HRA CONSIDERATION: Consideration of the attached First Amended and Restated Contract for Private Redevelopment with Lyndale Gateway LLC. I. RECOMMENDED ACTION: By Motion: Approve the attached First Amended and Restated Contract for Private Redevelopment with Lyndale Gateway LLC, subject to administrative amendments authorized by the Executive Director. III. BACKGROUND ~ On August 5, 2002 the Richfield Housing and Redevelopment Authority (HRA) authorized a Contract for Private Redevelopment with Lyndale Gateway, LLC for the redevelopment of the Lyndale Gateway West area. That Contract was augmented with additional financial information and requirements in the First Supplement that was authorized by the HRA on February 26, 2003. This Contract, and its Supplement, was drafted and approved with the intent that the public expenditure for funding of site assembly activities would be expended concurrently with the developer's closing on their private financing for the construction of the project. 0804_LGWContract As described in an earlier HRA memo (HRA Memo No. 2003-11) and at the special concurrent City Council and HRA meeting held on July 8, 2003, staff identified a significant timing issue with the redevelopment of this area. The timing issue arises from the situation in which the need for site assembly funds is preceding the developer's full access to private construction financing. All of the properties in the area are now subject to private purchase agreements or in the case of two properties, condemnation awards. Those agreements require that the developer close on the purchase of the properties on, or about September 2, 2003. All of the site assembly funds that would be used to close on the purchase of these properties is being advanced through the public financing. The HRA's contract with the developer, however, states that the public financing intended for site assembly cannot be advanced until the developer's private construction financing has been closed and funded. At the special concurrent City Council and HRA meeting held on July 8, 2003, the HRA directed staff and legal counsel to devise a method by which the public financing could be advanced to allow site assembly. activities to occur in early September even though the private construction financing will not be available at that time. This directive was given with the provision that the HRA must have the ability to take title to the properties in the event that the developer is unable to obtain their private financing in a proscribed period of time. Based on the direction from the HRA, legal counsel, with input from HRA staff and the developer, has drafted the attached First Amended and Restated Contract for Private Redevelopment. This Amended and Restated Contract was drafted from adual-track perspective which will allow the current developer to move forward with the project prior to March 1, 2004 or allow the HRA to take title to properties after that date in order to seek a new developer. Among the most important details of this document are that it: • Restates all of the remaining issues of relevance from the original Contract and Supplemental Agreement. • No longer includes previous requirements that have already been met (i.e. approval of zoning -which has already occurred). • Allows for the advancement of public financing prior to the full availability of the private construction funds. • Describes the public financing as up to $6 million in short-term and/or long term general obligation bonds, a $610,000 grant from the HRA, a $1.1 million dollar loan from the HRA. Not stated in the Contract, is that an additional $755,000 in HRA funds would be needed on an interim basis .until The Cornerstone Group (or any subsequent developer) is able to proceed with the project. • Requires that the developer's lending institution close on the construction loan prior to issuance of public financing, but allows that institution to withhold funds until the developer has met its pre-sales and pre-leasing requirements. • Requires that the developer manage the environmental abatement and demolition processes. • Requires the Developer to provide the HRA with an Option to Purchase all of the properties that can be exercised no later than March 15, 2004. This would allow the HRA to take title to the property. in an expedited manner. The City Council must also take further action in order for the financing method contained in the attached Amended and Restated Contract to occur. This action, which the City Council is scheduled to consider on August 12, 2003, is the award of the sale of bonds that are necessary to fund the site assembly activities. III. BASIS OF RECOMMENDATION A. POLICY • The HRA and Lyndale Gateway, LLC entered into a Contract for Private Development on August 5, 2002. • The HRA and Developer entered into the First Supplemental Agreement to the Contract on February 26, 2003. • The Contract, and its Supplement, contemplated that the required public financing would not be made available until the private construction funding was available to the developer. • The developer has entered into non-contingent purchase agreements and/or the HRA is a party to condemnation awards both requiring the acquisition of properties in early September 2003. • It is now evident that the developer's private construction financing will not be available prior to the need for site assembly funds in early September 2003. • The HRA and Richfield City Council indicated a preference at their special concurrent meeting on July 8, 2003, that the public financing be advanced prior to the private construction financing as long as the HRA retained an ownership interest in the properties. • This HRA and City Council directive requires a new or amended Contract with the developer. B. CRITICAL ISSUES • In order for the public funds to be available by September 2, 2003, the City Council must award a bond sale on August 12, 2003. In order for the City Council to award a bond sale on August 12, 2003., the HRA should first amend its Contract with the developer. C. FINANCIAL • HRA financial analysts, Ehlers and Associates, Inc., have been intimately involved in the drafting of the Amended and Restated Contract and the discussions that have led to its creation. Based on a number of assumptions (listed in HRA Memo No. 2003- 11)the HRA should be able to recuperate any "new" expenses associated with the revised site assembly method as well as all of the expenses it had anticipated recuperating in the earlier contract. D. LEGAL • Legal staff drafted the attached First Amended and Restated Contract for Private Redevelopment with input from City/HRA staff, the developer and its attorney. IV. ALTERNATIVE RECOMMENDATION~S~ • Approve the attached First Amended and Restated Contract for Private Redevelopment with minor changes. • Do not approve the attached First Amended and Restated Contract for Private Redevelopment, in which case the development will not be able to occur. V. ATTACHMENTS • Draft of First Amended and Restated Contract for Private Development VI. PRINCIPAL PARTIES EXPECTED AT MEETING • HRA legal counsel • HRA financial analysts • A representative of Lyndale Gateway, LLC DRAFT 7/30/03 FIRST AMENDED AND RESTATED CONTRACT FOR PRIVATE REDEVELOPMENT BY AND BETWEEN THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD LYNDALE GATEWAY, LLC August _, 2003 This document was drafted by: Kennedy & Graven, Chartered (JBD) 470 Pillsbury Center 200 South Sixth Street Minneapolis, MN 55402 JBD-234794v3 RC125-240 TABLE OF CONTENTS To be revised prior to execution ARTICLE I Defmitions, Exhibits, Rules of Interpretation Section 1.1. Defmitions ............................................................................................................... 2 Section 1.2. Exhibits ...................................................................................................................4 Section 1.3. Rules of Interpretation ............................................................................................ 4 ARTICLE II Representations Section 2.1. Representations by the Redeveloper ...................................................................... 5 Section 2.2. Representations by HRA ........................................................................................ 6 ARTICLE III Site Assembly Section 3.0. Background ................................................................................................................. 6 Section 3.1 HRA Obligations ........................................................................................................ 6 Section 3.2. Preconditions .............................................................................................................. 7 Section 3.3. Failure of Preconditions ............................................................................................10 Section 3.4. Proceeds from Unit Sales ..........................................................................................10 Section 3.5. Allocation of Letter of Credit ...................................................................................12 Section 3.6. Additional Provisions - Interfund Loan Proceeds ...................................................13 Section 3.7. Conveyance of the Redevelopment Property ...........................................................14 Section 3.8. Time of Acquisition and Conveyance ......................................................................14 Section 3.9. [Blank] ......................................................................................................................14 Section 3.10. Soil Conditions .........................................................................................................14 Section 3.11. Purchase Price ...........................................................................................................15 Section 3.12. Taxes and Special Assessments ................................................................................15 Section 3.13. Other Costs ...............................................................................................................15 Section 3.14. Property Conveyed As Is .........................................................................................15 Section 3.15. Other Preconditions to Closing .................................................................................15 Section 3.16. Termination ..............................................................................................................15 ARTICLE IV Construction of Minimum Improvements Section 4.1. Agreement to Demolish ............................................................................................16 Section 4.2. Agreement to Construct ............................................................................................16 Section 4.3. [Blank] ......................................................................................................................16 JBD-234794v3 RC125-240 Section 4.4. Concept Plans ..........................................................................................................16 Section 4.SA. Commencement of Construction .............................................................................16 Section 4.6. Construction Reports ...............................................................................................17 Section 4.7. Completion of Construction -Certificate of Completion ........................................17 Section 4.8. Public Improvements ................................................................................................17 ARTICLE V Insurance Section 5.1. Insurance ...................................................................................................................18 ARTICLE VI Tax Increment Section 6.1. Statement of Purpose ...............................................................................................18 ARTICLE VII Financing Section 7.1. Limitations Upon Encumbrance ............................................................................... 19 Section 7.2. Copy of Notice of Default to Lender ........................................................................ 19 Section 7.3. Lender's Option to Cure Defaults ............................................................................ 19 Section 7.4. HRA's Option to Cure Default ................................................................................ 19 Section 7.5. Subordination ............................................................................................................ 20 ARTICLE VIII Prohibitions Against Assignment and Transfer Section 8.1. Representation as to Development ........................................................................... 20 Section 8.2. [Blank] ..................................................................................................................... 20 Section 8.3. Prohibition Against Transfer of Property and Assignment of Agreement ...................................................................................... 20 Section 8.4. Following Completion .............................................:............................................... 21 Section 8.5. Approvals ................................................................................................................. 22 ARTICLE IX Events of Default Section 9.1. Events of Default Defined ....................................................................................... 22 Section 9.2. Remedies on Default ................................................................................................. 22 Section 9.3. No Remedy Exclusive ............................................................................................. 23 Section 9.4. No Additional Waiver Implied by One Waiver ....................................................... 23 JBD-234794v3 RC125-240 11 ARTICLE X Additional Provisions Section 10.1. Conflict of Interests; HRA Representatives Not 23 Individually Liable ............................................... ................................................. Section 10.2. Nondiscrimination .................................................. ................................................. 24 Section 10.3. Provisions Not Merged With Deed ......................................................................... 24 Section 10.4. Notice of Status and Conformance .......................................................................... 24 Section 10.5. Compliance With Business Subsidy Act .................................................................. 24 Section 10.6. Redeveloper Deposit ................................................................................................. 24 Section 10.7. Notices and Demands ............................................................................................... 24 Section 10.8. Actions Taken Pursuant to Earlier Agreement ......................................................... 25 Section 10.9. Counterparts ............................................................................................................. 25 Section 10.10. Entire Agreement, Merger ........................................................................................ 25 Testimonium ............................................................................ Signatures ............................................................................ EXI IIBIT A Certificate of Completion EXHIBIT B Redevelopment Property Legal Description EXHIBIT C Option Agreement JBD-234794v3 RC125-240 .....................26 ..................... 26 111 FIRST AMENDED AND RESTATE CONTRACT FOR PRIVATE DEVELOPMENT THIS AGREEMENT, made and entered into this 5~' day of August, 2002, is 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 Lyndale Gateway, LLC, a Minnesota limited liability company (the "Redeveloper"). WITNESSETH: WHEREAS, the City of Richfield and HRA have established the Richfield Redevelopment Project Area ("Project Area") under the authority of Minnesota Statutes, Chapter 469 (the "Act"), and has established within the Project Area a Redevelopment Tax Increment District (the "TIF District") and adopted a Tax Increment Financing Plan (hereinafter defined as the Tax Increment Plan) for the TIF District to facilitate the fmancing of public development and redevelopment costs in the Project Area; and WHEREAS, the HRA deems it to be in the public interest to facilitate and encourage redevelopment of the Project Area by a combination of public and private activity within the Project Area and in accordance with any Tax Increment Plan to be adopted by the City, and WHEREAS, the Redeveloper has proposed a development (hereinafter defined as the "Development") within such Project Area and the TIF District which the HRA believes will promote and carry out the objectives for which redevelopment is undertaken, will be in the vital best interests of the City, will promote the health, safety, morals, and welfare of its residents and will be in accord with the public purposes and provisions of the applicable state and local laws and requirements under which activities within the Project Area and the TIF District have been undertaken and are being assisted; and WHEREAS, the Redeveloper is willing to purchase property from the HRA within the Project Area such property being legally described in the attached Exhibit B (hereinafter defined as the "Redevelopment Property") and to develop the Redevelopment Property for and in accordance with this Agreement; and WHEREAS, the HRA and Redeveloper entered into a Contract for Private Redevelopment as of August 5, 2002, as supplemented by a Supplemental Agreement to Contract for Private Redevelopment dated as of February 26, 2003 (collectively referred to as the "Original Contract") relating to the TIF District; and WHEREAS, it is the intention of the parties that this Agreement will amend and restate the Original Agreement, and replace the Original Agreement as the instrument setting out the rights, obligations and responsibilities of the parties; and WHEREAS, the HRA is willing to provide fmancial assistance in accordance with the provisions of this Agreement; JBD-234794v3 RC125-240 NOW, THEREFORE, in consideration of the premises and mutual obligations of the parties contained herein, each of them does hereby represent, covenant and agree with the others as follows: ARTICLE I DEFII~TITIONS, EXHIBITS RULES OF INTERPRETATION Section 1.1. Definitions. In this Agreement, unless a different meaning clearly appears from the context: "Act" means the Economic Development Act, located at Minnesota Statutes, Chapter 469, as amended. "Agreement" means this Agreement, as the same may be from tima~to-time modified, amended, or supplemented. "Available-Tax Increment" means 90% of the Tax Increment. "Bonds" means the general obligation tax increment bonds (whether short or long-term) issued by the City to finance the acquisition and relocation costs of the development, in a net amount not exceeding $6,000,000. It is currently anticipated that two bonds will be sold. One. in the net amount of $3,000,000, having a three year maturity and a one year call (Short-Term Bond); and one in the net amount of $3,000,000 having a 20 year maturity with an eight to ten year call (Long Term Bond) The term also includes any bonds issued to refinance the Bonds. "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 Redeveloper, pursuant to Section 4.7 of this Agreement. "City" means the City of Richfield. "Closing" means the date on which: i) the HRA has provided the Redeveloper with the funds to acquire the portions of the Redevelopment Property that are to be acquired from third parties by the Redeveloper ii) the HRA conveys title to the Redevelopment Property to the Redeveloper; and iii) the. parties enter into the. Option Agreement. "Commencement of Construction" means excavation for the purpose of setting footings or foundation. JBD-234794v3 RC 125-240 2 "Completion of Construction" means the completion of construction of the Minimum Improvements except for tenant finish work. "Concept Plans" mean the Site Plan and the other plans and descriptions of the Minimum Improvements as approved by the City through its CUP and zoning process. "Construction Contract" means a contract or contracts which provides for completion of the Minimum Improvements. "County" means the County of Hennepin. "Development" means the Minimum Improvements to be constructed on the Redevelopment Property. "Event of Default" means an action by the Redeveloper listed in Section 10.1 of this Agreement. "HRA Commercial Mortgage" means the mortgage in the principal amount of $500,000 given to the HRA by Redeveloper in accordance with Section 3.6. "HRA Housing Mortgage" means the mortgage in the principal amount of $3,000,000 given to the HRA by Redeveloper, and serve as security for payment of principal and interest on the Short Term Bonds. "HRA Funds" means up to $1,710,000 which will be provided to the. Redeveloper by the HRA in accordance with the terms of this Agreement, and used first to pay relocation and acquisition costs in excess of the proceeds from the Bonds, and then to pay other qualifying site preparation costs. The HRA Funds will come from two sources: i). $1,100,000 from an interfixnd loan ("IFL"), and $610,000 of tax increment from another development ("RCTI"). "Minimum Improvements" means the improvements to be constructed by Redeveloper on the Redevelopment Property and related site work all as shown on the Concept Plans. The Minimum Improvements shall consist of: all the improvements contained in the Concept Plans. "Minnesota Environmental Policy Act" means the statutes located at Minnesota Statutes Sections 116D.01 et seq., as amended. "Minnesota Environmental Rights Act" means the statutes located at Minnesota Statutes Sections 116B.01 et se ., as amended. "National Environmental Policy Act" means the federal law located at 42 U.S.C. Section 4311 et sea., as amended. "Option Agreement" means the agreement in substantially the form of Exhibit C. "Redeveloper" means Lyndale Gateway, LLC, a Minnesota limited liability company. JBD-234794v3 RC125-240 3 "Redevelopment Property" means the real property described as such on Exhibit C of this Agreement. "Site Plan" means the plans, elevations, drawings and narrative descriptions for the Minimum Improvements and related site work. "State" means the State of Minnesota. "Tax Increment" means that portion of the real property taxes which is paid with respect to the Redevelopment Properly which is remitted to the Authority as Tax Increment pursuant to the Tax Increment Plan, after reduction (if any) of fiscal disparities' contributions which are mandated by state law to be made with respect to any parcel. "Tax Increment Act" means the statutes located at Minnesota Statutes Section 469.174 through 469.179, of the Economic Development Act. "Tax Increment District" means the Lyndale Gateway West Tax Increment District, a redevelopment tax increment district. "Tax Increment Plan" means the tax increment financing plan to be adopted by the City in connection with the creation of the Tax Increment District and as such may be modified and amended from time to time. "Tax Official" means any City or county assessor; County auditor; City, County or State board of equalization, the commissioner of revenue of the State, or any State or federal district court, the tax court of the State, or the State Supreme Court. "Unavoidable Delays" means unexpected delays which are .the direct result of adverse weather conditions, shortages of materials, strikes, other labor troubles, fire or other casualty to the Minimum Improvements, litigation commenced by third parties which, by injunction or other judicial action, directly results in delays, 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 Redeveloper 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 or fund fmancing 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. Certificate of Completion; B. Redevelopment Property Legal Description; C. Option Agreement. JBD-234794v3 RC125-240 4 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 Redeveloper. (a) The Redeveloper 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 HRA acquires title to the Redevelopment Property, subject to the other terms of this Agreement, the Redeveloper has or will likely secure the fmancial capability to construct. the Minimum Improvements. (c) If the HRA acquires title to the Redevelopment Property, .subject to the other terms of this Agreement, the Redeveloper 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. (d) The Redeveloper will exercise all reasonably diligent efforts to obtain, in a timely manner, all required permits, licenses, and approvals and if all .such approvals are obtained, and subject to Unavoidable Delays and the satisfaction of all preconditions set forth in this Agreement 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. (e) Redeveloper 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 JBD-234794v3 RC125-240 5 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 on Property; (ii) The protection of the environment from released, spilled, deposited or otherwise emplaced contamination; (iii) The control of hazardous wastes; or (iv) the use, generation, transport, treatment, removal or recovery of hazardous substances, including any and all building materials. (f) The Redeveloper acknowledges that it has relied exclusively upon its own analysis of the potential Tax Increment and/or Available Tax Increment to be generated by .the Redevelopment Property 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 Increment, and/or Available Tax Increment that will be generated by the Redevelopment Property. Section 2.2. Representations by HRA. The HRA makes the following representations as the basis for the undertakings herein contained. (a) The HRA has the power to enter into this Agreement and has duly authorized the execution, delivery and performance of this Agreement. (b) The HRA shall, without expense to it, cooperate in Redeveloper's efforts to obtain all federal, state, and regional agency land use, environmental or other regulatory approvals which are required of Redeveloper and necessary to implement the Development. (c) The HRA has no knowledge that any tax increment projections or similar material furnished to the Redeveloper is untrue, but further makes no representation concerning its accuracy. (d) The HRA will provide Redeveloper with all reports, investigations and studies in the I-IRA's possession which have as their subject the Redevelopment Property. JBD-234794v3 RC125-240 6 ARTICLE III SITE ASSEMBLY Section 3.0. Background. In accordance with the provisions of the Original Contract, the Redeveloper has acquired title to certain parcels of the Redevelopment Property, and has entered into assignable purchase agreements for other parcels; and the HRA has commenced and is pursuing condemnation of the balance of the parcels comprising the Redevelopment Property. The parties intend to set forth in this Article III the process for acquiring the parcels within the Redevelopment Property, and for accomplishing and funding relocation, site preparation of the Redevelopment Property. Section 3.1. HRA Obligations. The HRA agrees as follows: (O1). Financing. The HRA will utilize its best efforts to induce the City to issue the Bonds; and, subject to all the terms and conditions of this Agreement, make the proceeds and the HRA Funds available by not later than September 2, 2003. To that end, the HRA will enter into a tax increment agreement with the City, pledging tax increment from the TIF District to the repayment of the Bonds. The HRA will also pledge or otherwise assign to the City, for payment of the Short-Term Bonds, any proceeds it is to receive from the Redeveloper for the sale of housing units. (02). Acquisition and Relocation.. On or before, September 2, 2003, and assuming all of the preconditions in Section 3.2 have occurred, the HRA will: i) acquire from the Redeveloper all of the tracts and parcels of land previously acquired by the .Redeveloper, ii) complete all acquisitions requiring the exercise of condemnation, iii) convey to the Redeveloper all of the parcels described in I and ii above, together with parcels previously acquired by the HRA, and, iv) pay or agree to pay all relocation benefits due and owing to parties who are entitled to the same by virtue of the project. (03) Demolition . Following completion of the items set forth in Section 3.2 (02), the HRA will fund, to the extent of available HRA Funds and Bond proceeds, site demolition activities. (04). Conveyance of Redevelopment Property. Conveyance of the Redevelopment Property will be in accordance with the provisions of sections 3.2 through 3.12. Section 3.2. Preconditions. The HRA shall have no obligation to do any of the things described above until all of the following have either occurred or been waived in writing: (Ol ). Redeveloper Deposit. The Redeveloper has previously deposited with the HRA a Letter of Credit in the amount of $250,000 ("LC#1"). LC #1 will serve as security for Redeveloper's obligation to pay any claim against the HRA relating to the Redevelopment Property, including claims for relocation benefits, based on: i). discontinuance of the condemnation action; or, Redeveloper's inability to obtain funding of its construction loan by March 1, 2004. At Closing, the Redeveloper will provide the HRA with a replacement JBD-234794v3 RC125-240 7 Letter of Credit ("LC#2") in the amount of $500,000. LC#2 must be in a form acceptable to the HRA. If either LC# 1 or LC#2 contains an expiration date, it must contain a provision that prohibits the issuer or surety from terminating the security without first giving 30 days advance written notice to the HRA of the proposed termination or expiration of the security. Redeveloper must also provide a substitute Letter of Credit within 10 days prior to expiration or termination of the Letter of Credit. Upon failure of Redeveloper to perform its obligations described above, or upon Redeveloper's failure to provide a substitute Letter of Credit, the HRA may immediately draw upon the financial guaranty provided in the Letter of Credit. The Letter of Credit will be applied, expended and released in accordance with Section 3.5. The HRA in its sole discretion may permit the Redeveloper to satisfy its obligations under this section through the use of a substitute form of security in an amount and in a form acceptable to the HRA. (02). Redeveloper has supplied the HRA with a signed written statement, reasonably satisfactory to the HRA, to the effect that, to the best of Redeveloper's knowledge, upon closing of its construction loans, except for lender's pre-sale and pre-lease requirements to funding, there will be no remaining matters which would affect the prompt commencement of construction of the Minimum Improvements -and the continuation of construction to completion. The statement must also acknowledge that the Redeveloper understands that the HRA is relying on the statement as a inducement to its activities hereunder. (03). Redeveloper has obtained all permissions and approvals required by the city and other governmental authorities relating to such matters as, without .limitation, discontinuance and removal or relocation of utilities, disruption or closure of rights of way, encroachment above streets and alleys for construction activities, and use of public lands for storage of construction equipment and materials. It is understood that such permissions may be conditioned upon such terms as the approving authorities may in their discretion deem advisable. (04). Redeveloper has entered into indemnity and hold harmless agreements with the City and HRA protecting those parties from damage or third party claims relating to construction activities that will take place on, over, under or across public lands. or rights-of--way. (OS). The Redeveloper has provided the HRA with written assurances, deemed adequate to the HRA that at least 32 of the housing units will be affordable. (06). The Redeveloper has received approval for a plan for tree protection during construction. (07). Project Feasibility. 1. The HRA, Redeveloper and the Redeveloper's construction lender have entered into a written agreement on a minimum sale price for each of the residential units. The written agreement will also provide that, unless the - construction lender has foreclosed on the construction loan, no unit may be JBD-234794v3 RC125-240 g sold at a price below the agreed-upon minimum without the consent of the HRA. 2. A market analysis indicates that the units are marketable within a specified time period at not less than the projected minimum prices; and such specified time period and prices are determined to support the deternunation to be made pursuant to paragraph 4. i) below. 3. The HRA is satisfied that there will be sufficient net proceeds from housing unit sales to fully pay the housing portion of the construction loan by the sale of not more than 80% of the housing units. 4. The HRA is satisfied: i) that upon payment of the housing portion of the construction loan to the construction lender, the net proceeds from the remaining unsold units will be sufficient to fully pay principal and interest on the Short-Term Bonds; ii) Developer `s security in the form of the Letter of Credit and the Mortgage, together with the Available Tax Increment from the Development will be sufficient to fully pay the Bonds, the IFI,, and interest on the HRA Commercial Mortgage; and Available Tax Increment is sufficient to pay principal and interest on the Long Term Bonds and at least 20% of principal and interest on the Short Term Bonds. 5. The HRA is satisfied that the net proceeds from the Bonds and the HRA Funds will be sufficient to pay all of the acquisition and relocation and site preparation costs; or, that there are other funds available to the Redeveloper to cover any anticipated insufficiency. 6. The Redeveloper's construction lender has agreed in writing to permit the recording of the HRA Commercial Mortgage as an encumbrance on the Property in accordance with Section 3.6 hereof. (08). Construction Contracts. Redeveloper has entered into binding and enforceable contracts for the construction of all of the Minimum Improvements, and has obtained, or can demonstrate to the reasonable satisfaction of the HRA that it will timely obtain, all necessary permits and approvals for construction of the Minimum Improvements. (09). Redeveloper Financing. The HRA is unwilling to expend either the Bond proceeds or the HRA Funds until and unless i) the Redeveloper's construction loans containing the agreements required by .the HRA herein, and in an amount sufficient to construct the Minimum Improvements has been closed; and, ii) the HRA is fully satisfied that upon the satisfaction of the pre-sale and pre-lease requirements of the construction loans, such loans will be funded, and thereupon construction of all the Minimum Improvements comprising the Development will be promptly commenced and prosecuted, without delay, to completion. Consequently, the parties agree that the HRA may, without limitation, require, as a precondition to providing any proceeds or funds and fulfilling its other obligations under section ,that i) the Redeveloper has entered into contracts for the JBD-234794v3 RC125-240 9 construction of the Minimum Improvements, ii) the Redeveloper has closed on financing sufficient for the construction of the Minimum Improvements (provided that such Closing need not involve the funding of the construction loan or the recording of the mortgage securing the same), iii) that the terms and conditions of such financing relating to funding and disbursement of the construction loan account, (including, without limitation, a representation by the lender that it will not agree to a partial funding or advance prior to the Redeveloper meeting all of the requirements for full funding) and the lender's rights with respect to proceeds from sales of housing units do not impair the interests of the HRA hereunder, except as specifically provided in this Agreement. (10). Assessment Agreements. The parties have entered into an assessment agreement for the residential portion of the Development, and an assessment agreement for the commercial portion of the Development. The combined minimum market values contained in the assessment agreements will be used to make the determination described in section 3.2 (07) 4 above. The commercial assessment agreement will remain in effect for the term of the TIF District, or until both the Bonds and the IFL are paid, whichever occurs first. Individual housing units will be removed from the residential assessment agreement upon the sale of such unit by the Redeveloper to a bona fide good faith purchaser. (11). Title Issues. The Redeveloper has provided the HRA with evidence in the form of a commitment for title insurance, or other evidence acceptable to the HRA, to the effect that upon the acquisition of the parcels through condemnation, or transfer from Redeveloper, the HRA will have marketable fee simple title to all of the Redevelopment Property. (12). Personal Guarantee. The HRA has received a personal guarantee from the chief manager of the Redeveloper equal to dollar amount equal to the total debt service on the Short-Term Bond. The Personal Guarantee will be released once the HRA has received all payments due it from the sale of the residential units in accordance with the agreed-upon schedule, or in the event the HRA has acquired the Redevelopment Property from the Redeveloper through operation of the Option Agreement, the Personal Guarantee will be released on the date on which the HRA conveys the Redevelopment Property to a third party. (13) HRA Mortgages. The Redeveloper has delivered to the HRA the executed HRA Commercial Mortgage and the executed HRA Housing Mortgage for recording. Section 3.3. Failure of Preconditions. If all of the preconditions have not been met, or waived or extended by the HRA in writing by not later than the date set by the City for the sale of the Bonds (which date is anticipated to be August 12, 2003), either party may declare this Agreement null and void. Upon such declaration, the Redeveloper's obligation to the HRA shall be limited to the obligation contained in Section 3.16 of this Agreement. The HRA, by written notice from its Executive Director may extend the date for performance of any precondition; provided, however that no such extension will be deemed to alter the sequence of activities contemplated herein unless specifically so stated in the notice of extension. No extension will be effective unless - it has been consented to in writing by the Redeveloper. JBD-234794v3 RC125-240 10 Should the HRA terminate this Agreement for a failure any of the conditions contained above after the HRA has acquired title to and possession of any pazcel, but before Closing, the HRA shall have the unrestricted right to utilize all or part of the same in any manner which it, in its sole discretion deems appropriate, including, without limitation, the sale of all or part of the same to others, all on terms and for amounts which the HRA in its exclusive judgment deems appropriate. In the event that the HRA elects to sell all or part of such property, the HRA agrees to reimburse the Redeveloper from, and only from the sale proceeds (if any), amounts expended by the Redeveloper in connection with acquisition of such pazcels in the form of earnest money, real estate fees and commissions, fees or costs for title, survey and environmental work, and legal fees related to the purchase and closing, after first deducting from the sale price: 1. Amounts then due and payable to the HRA under this Agreement. 2. All expenditures incurred by the HRA in connection with such subsequent transaction which would customarily be paid through the sale price. The Redeveloper acknowledges that a reduction in the sale price in the form of a land writedown, to the extent not subsequently returned to the HRA through tax increment, would be deemed to be such an expenditure. The Redeveloper acknowledges that the HRA's obligation under this subparagraph shall be enforceable against no other source than the sale proceeds, if any, and does not constitute a lien or encumbrance on the property or any other HRA asset. This provision places no fiduciary obligation on the HRA to act in any manner which would preserve, protect, secure or enhance the property or the amount of reimbursement which the Redeveloper might receive. Nothing in this subpazagraph (1) shall be deemed to preclude a sale by the HRA to the Redeveloper; and the application of the sale price to reduce the amount due the HRA under this subparagraph. Section 3.4. Proceeds from Unit Sales. (O1). HRA's Right to Proceeds. The HRA is willing to expend the proceeds from the Bonds and the HRA Funds only if i) it is satisfied that the precondition of paragraph 3.2 (0) has been met; and, ii) it has written assurances from the Redeveloper and Redeveloper's construction lenders that, subject only to the deductions contained in paragraphs 3.4 (02) and (03). All sales proceeds from the sale of residential units after the housing portion of the construction loan has been paid in full, will be paid over to the HRA and used only to pay principal and interest on the Short Term Bonds until such bonds aze fully paid. The parties agree, and the Redeveloper's construction lender will be required to agree in writing that housing unit sales proceeds will never be utilized or pledged to make any payment of principal or interest on the construction loan other than on the housing portion of the construction loan. Unless the- parties, and the construction lender agree otherwise, the construction loan documents will contain an allocation of the amount to the construction loan between the housing portion and the commercial portion. Sales proceeds from the housing unit sales will be expended to pay principal and interest on the housing portion of the construction loan JBD-234794v3 RC125-240 11 until the housing portion of the construction loan has been paid. Once that point has been reached, and subject to the deductions allowed by paragraph 3.4 (03), all housing unit sales proceeds will be paid over to the HRA to be placed in an account and applied to make scheduled payments of the Short Term Bonds. Once the Short-Tenn Bonds have been paid or defeased, any remaining or further proceeds from housing sales will be applied to payment of the HRA Commercial Mortgage. (02). Before Payoff of Housing`Portion of Construction Loan. In making the determination provided in Section 3.02 (07) 3 the parries will agree to the allowable deductions that can be taken by Redeveloper from the sales proceeds. Prior to the full payment of the housing portion of the construction loan, the Redeveloper may not retain any further deductions. (03). After Pavoff of the Housing Portion of Construction Loan. Following payment of the full housing portion of the construction loan, the Redeveloper shall be entitled to take additional deductions from the sale proceeds if the remaining amount available to the HRA from a unit sale is equal to 80% of the minimum sale price for the unit agreed. to pursuant to Section 3.02 (07) 1, and the following conditions are present: 1. The additional deduction is not needed to cover a shortfall in the funds available to make debt service payments on the Short Term Bonds which shortfall results from a reduction in the anticipated Available Tax Increment below the amount determined under Section 3.02 (07) 4. (04) HRA Housing Mortgage. At Closing the Redeveloper shall give the HRA a mortgage in the principal amount of $3,000,000 (The "HRA Housing Mortgage"). The HRA Housing Mortgage will initially cover the Redevelopment Property, and will be reformed, or partially released to cover only the housing portion of the Redevelopment Property once the description is available. The HRA Housing Mortgage will be partially released for each housing unit sold; provided that the principal amount of the mortgage will not be reduced until sales proceeds are made available to the HRA pursuant to Section 3.4. Section 3.5. Allocation of Letter of Credit. 'The Letter of Credit will be expended as provided below: (O1). If the project is discontinued prior to the sale of the Bonds, the Letter of Credit will be applied to cover the payment of any relocation or condemnation claims arising out of such discontinuance. The remaining balance of the Letter of Credit will be released once such claims have been resolved. (02). Following the sale of the Bonds, the Letter of Credit will be applied first to cover relocation benefits and condemnation awards above the aggregate amount of Bond proceeds and HRA funds available for such purposes ($7,710,000 minus any amounts expended for site preparation). Pending the final determination of all such benefits and awards, the HRA may reserve within the Letter of Credit amounts equal to the amount of the claims. JBD-234794v3 RC125-240 12 (03). Within 10 days following the date that $2,250,000 sales proceeds from housing unit sales have been paid to the HRA, the HRA will provide the Redeveloper with an accounting: 1. Showing the total sales proceeds received by the HRA, and the amount, if any of payments made therefrom on the Short Term Bonds. 2. Showing any deviation between the sales proceeds actually received by the HRA and the projections based on the values agreed upon pursuant to Section 3.2 (07)1. 3. Showing the additional amount of sales proceeds needed, which together with the Letter of Credit will be necessary to fully pay the Short-Term Bonds. 4. Showing the impact on the Long Term Bonds, if any, of any reduction in market values below the sales prices determined in accordance with Section 3.2(07) 1. 5. Showing the amount of reserves remaining under paragraph 3.5 (02). 6. Showing the amount by which the Redeveloper's "Profit Margin" exceeds fifteen percent. Profit Margin means the percentage by which the total funding of the development exceeds the total development costs. 7. Showing the amount of the Letter of Credit that will be applied to: i) reduce the Profit Margin to fifteen percent, ii) eliminate the impact of a reduction, based entirely on a reduction in the purchase prices of housing units below the anticipated minimum market values, in the anticipated taxes needed to pay the Long Term Bonds and iii) the amount of any deductions to cover reserves remaining in paragraph 3.5 (02). 8. Showing the remaining amount of the Letter of Credit available to make payments on the Short Term Bonds. 9. Showing the difference between the actual sales proceeds received by the HRA from housing unit sales, and the amount necessary to pay the outstanding Short Term Bonds in full after application of that portion of the Letter of Credit available to pay the Short Term Bonds. Redeveloper will have 10 days to review and .comment on the accounting. And the HRA will present the Redeveloper with a final accounting within five days thereafter. Following acceptance of the fmal accounting, appropriate adjustments will be made between the Redeveloper and the HRA. JBD-234794v3 RC125-240 13 (04). Substitution of Funds. During the 10 day comment period described above, the Redeveloper shall also notify the HRA that the Redeveloper will furnish cash to cover all or part of the draw. The Letter of Credit will be released in an amount equal to the substitute cash provided. (OS). Miscellaneous. 1. Amounts of the Letter of Credit that remain reserved in accordance with Paragraph 3.5 (03) 7iii, beyond the date of the final accounting made in accordance with paragraph 3.5 (03), and are not used for those purposes will be released. 2. Redeveloper will be issued a limited revenue tax increment note equal to the amount of any payments from the Letter of Credit in accordance with Paragraph 3.5 (03) Iii. Payments will begin and interest will accrue on the note only after the payments described in paragraph 3.6 (03) have all been made. The note will not run longer than 22 years from the date of first receipt of tax increment. Section 3.6. Additional Provisions-Interfund Loan Proceeds. (Ol ). Preconditions. The IFL will be made available to pay acquisition, relocation and site preparation costs only when the preconditions to providing the Bond proceeds and the RCTI have been met. (02). HRA Commercial Mortaa~e. At Closing, the Redeveloper will provide the HRA a mortgage in favor of the HRA, and covering the Redevelopment Property. Once the Redevelopment Property has been divided into separate parcels, the HRA Commercial Mortgage will be reformed, or partially released to cover only the commercial portion of the Redevelopment Property. The HRA Commercial Mortgage will be in the principal amount of $500,000, will bear interest at the rate of 5% per year from the date of execution. Interest will accrue on the HRA Commercial Mortgage until the earlier of: i) December 31, 2016, ii) the date the Redeveloper sells or refmances the Commercial portion of the Redevelopment Property, at which time the principal balance and all accrued interest will be due and payable; unless the HRA in its sole discretion elects to defer all or a portion of the principal and/or interest. Notwithstanding the foregoing, no payment will be required under this section until 2009. The HRA Commercial Mortgage will be subordinate to the lien of any construction financing for construction of the Minimum Improvements, and the permanent mortgage placed on the commercial portion by Redeveloper to pay off the construction financing. (03). Mortgage as Security. The HRA Commercial Mortgage, and any proceeds from the payment of the HRA Commercial Mortgage, is intended as security for repayment of the IFL. To that end, if the Available Tax Increment generated by the Redevelopment and paid to the HRA is not sufficient, by not later than August 1, 2025, to: i) pay the Long-Term Bonds, ii) pay principal and interest (5.00 %) on the IFL, and, iii) to pay interest on the HRA JBD-234794v3 RC125-240 14 Commercial Mortgage (5.00 %), then the HRA will be entitled to use so much funds payable under the HRA Commercial Mortgage as aze required to cover all such deficiencies. Any mortgage balance not needed for those purposes, will be released to the Redeveloper. Section 3.7. Conveyance of the Redevelopment Property. At the Closing, the HRA shall convey title to and possession of the Redevelopment Property to the Redeveloper by quit claim deed. The Redeveloper and the HRA will also execute an Option Agreement in substantially the form of the attached Exhibit C, which will be recorded against the Redevelopment Property along with the deed. The conveyance of and the Redeveloper's use of the Redevelopment Property shall be subject to all of the conditions, covenants, restrictions and limitations imposed by this Agreement. The conveyance of title to and the Redeveloper's use of the Redevelopment Property shall also be subject to building and zoning laws and ordinances and all other applicable local, state and federal laws and regulations. Section 3.8. Time of Acquisition and Conveyance. (a) Subject to Section 3.3, the Closing will take place on the later of i) the date on which the Redeveloper closes on its construction loan, or the date on which the HRA has acquired title to all of the Redevelopment Property, provided that the Redeveloper is not in default of any obligation under this agreement and that all monies due the HRA hereunder have been paid. The Redeveloper shall take possession of the Redevelopment Property the day of the Closing. (b) Unless otherwise mutually agreed by the HRA and the Redeveloper, the execution and delivery of all instruments shall be made at the principal office of the HRA. Section 3.9. jBlankl Section 3.10. Soil Conditions. The Redeveloper acknowledges that the HRA makes no representations or warranties as to the condition of the soils on the Redevelopment Property or its fitness for construction of the Minimum Improvements or any other purpose for which the Redeveloper may make use of such property. The Redeveloper further agrees that it will indemnify, defend, and hold harmless the HRA, its governing body members, officers, and employees, from any third party claims or actions arising out of the presence, if any, of hazardous wastes or pollutants on the Redevelopment Property; but only to the extent that such claims or actions relate to activities occurring prior to the HRA's acquisition of the Redevelopment Property and aze based upon the HRA's ownership of the Redevelopment Property required herein and for no other reason. 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 Redevelopment Property. Otherwise, as between the HRA and the Redeveloper, the cost and responsibility to mitigate rests with the Redeveloper. Section 3.11. Purchase Price. The Redeveloper will pay the HRA, as and for the purchase price of the Redevelopment Property an amount of $3,500,000 all in accordance with the provisions of Sections of this Agreement. $3,000,000 of such purchase price will be secured by - the HRA Housing Mortgage, the Letter of Credit and the Personal Guazantee; and $500,000 of such purchase price will be secured by the HRA Commercial Mortgage, the Letter of Credit and the JBD-234794v3 RC125-240 15 Personal Guarantee. The HRA shall have no other or further recourse to enforce payment of such amounts. Section 3.12. 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 Redevelopment Property regardless of when levied or when payable. Section 3.13. Other Costs. No cost, fee or other payment relating to any real estate transaction of any nature shall be payable by the HRA to any person or entity; and except as otherwise set forth in this Agreement. Section 3.14. Property Conveyed As Is Redeveloper acknowledges that the I-IItA shall have no obligation to perform any site work in connection with the proposed transaction or otherwise. The Redeveloper agrees to accept the Property AS IS. Section 3.15 Other Preconditions to Closing. Notwithstanding any provision in this agreement to the contrary, the Closing shall not occur until the Redeveloper has entered into agreements with the City and/or the HRA, (i) provide the necessary consents and waivers from the Redeveloper for the establishment of a maintenance district for the purpose of assessing the costs of maintaining ;and (ii) providing for an interim off-street parking plan designed to accommodate parking requirements during construction of the Development. Section 3.16. Termination. In the event that the Closing has not occurred by September 2, 2003, or been extended pursuant to Section 3.3, either party may give the other party written notice of its intention to terminate this Agreement. If the other party does not proceed to Closing within 30 days following the giving of such notice this Agreement may be declared null and void by either party giving written notice of such declaration to the other parry and thereupon, unless this Agreement specifically provides otherwise, neither party shall have any obligation or liability to the other hereunder. Provided, however, that the Redeveloper shall be liable to the HRA for any claims for relocation benefits or assistance occasioned by or arising out of the assignment of purchase agreements from the Redeveloper to the HRA. ARTICLE IV CONSTRUCTION OF MINIMUM IMPROVEMENTS Section 4.1. Agreement to Demolish. Subject to the acquisition of the Redevelopment Property, the Redeveloper agrees that it will demolish the existing structures and improvements located on the Redevelopment Property. All demolition activities will be conducted in strict conformity with the ordinances, codes and regulations of the City and other governmental units having jurisdiction over such activities. Section 4.2. Agreement to Construct. Subject to the funding of its construction loan, the Redeveloper agrees to construct the Minimum Improvements substantially in accordance with the approved Concept Plans; the construction and all construction activities shall be conducted in strict JBD-234794v3 RC125-240 16 conformity with the ordinances, codes and regulations of the City and other governmental units having jurisdiction over such activities. Section 4.3. [blank]. Section 4.4. Concept Plans. If the Redeveloper desires to make any change in the approved Concept Plans that will change the project density, site elevation, market value or will require a modification to any previously granted land use approval, the Redeveloper shall submit the proposed change to the HRA for its consent. If the Concept Plans, as modified by the proposed change, conform to the requirements of this section with respect to such previously approved Concept Plans, the HRA shall consent to the proposed change and notify the Redeveloper in writing of its approval. Such change in the Concept Plans shall, in any event, be deemed consented to by the HRA unless rejected, in whole or in part, by written notice by the HRA to the Redeveloper, setting forth in detail the reasons therefor within twenty (20) days after receipt of the notice of such change. The Redeveloper may not seek any land use approvals that are required as a result of the changes to the Concept Plans until it has received the consent of the HRA. Final construction plans and specifications shall be reviewed by the City Building Official in connection with issuance of building permits. No building permit may be issued if the final construction plans and specifications materially depart from the approved Concept Plans. Section 4.5. Commencement of Demolition and Construction. Subject to Unavoidable Delays, the Commencement of demolition activities must occur not later than September 10, 2003, and commencement of Construction for the Minimum Improvements must occur no later than 30 days following the funding of the construction loan. Section 4.SA. Completion of Demolition. In addition to its obligation to demolish the improvements currently located on the Redevelopment Property, the Redeveloper acknowledges that if is separately obligated to do so by December 31, 2003. Subject to Unavoidable Delays, unless the construction loan has been funded, all demolition work on the Redevelopment Property will be completed by December 31, 2003. In such event, the HRA may draw from the Letter of Credit the amount of $60,000 as liquidated damages for Redeveloper's failure to complete demolition by December 31, 2003. The payment of such liquidated damages does not in any way release the Redeveloper from its continuing obligation to undertake demolition work on the Redevelopment Property. Section 4.6. Construction Reports. At the request of the HRA, the Redeveloper will provide the HRA with copies of the portions of any construction reports prepared by Redeveloper's architect and which show the status of construction. Section 4.7. Completion of Construction -Certificate of Completion. Subject to Unavoidable Delays, construction of the Minimum Improvements shall be completed not later than December 31.2005. Once commenced, construction of the Minimum Improvements for any phase shall be diligently prosecuted to completion. Promptly after notification by the Redeveloper of JBD-234794v3 RC125-240 17 completion of the Minimum Improvements, but only if the Redeveloper has also replatted the Redevelopment Property, the HRA shall inspect the construction to determine whether such Minimum Improvements are completed substantially in accordance with the terms of this Agreement. If the HRA is satisfied, it will promptly furnish the Redeveloper with a Certificate of Completion. Such certification by the HRA shall, except as further provided in this Section 4.7, be a conclusive determination of satisfaction and termination of the agreements and covenants in this Agreement, with respect to the obligations of the Redeveloper to construct the Minimum Improvements. The certification provided for in this section shall be in recordable form. If the HRA shall refuse or fall to provide the Redeveloper a certification in accordance with the provisions of this Section 4.7, the HRA shall, provide the Redeveloper with a written statement, indicating in adequate detail in what respects the Redeveloper has failed to complete the Minimum Improvements in accordance with the provisions of this Agreement, has failed to replat the Redevelopment Property, or is otherwise in default, and what measures or acts it will be necessary, in the reasonable opinion of the I3RA, for the Redeveloper to take or perform in order to obtain such certification. The HItA may not impose as a condition for issuance of the certificate, any requirement which has previously been deemed satisfied either by actual approval or the passage of time. If the HRA falls to act on the Certificate of Completion within 60 days following the date it is notified of completion of construction of a phase, all objections shall be deemed waived and the certificate shall issue for such phase. Section 4.8. Public Improvements. With respect to the construction of public improvements, the HRA and the Redeveloper agree as follows: (a) 77th Street Sound Walls. Removal of the existing sound wall at 77~' Street shall be the responsibility of the Redeveloper. The Redeveloper shall use its best efforts not to cause damage to the removed portions of the sound wall during removal. The Redeveloper shall give City or HRA staff written notice prior to removal of any part of the sound wall and will allow City/HRA personnel the opportunity to observe and/or assist in the walls removal. The City or I3RA shall retain the right to salvage the removed portion of the wall. If the remaining portion of the wall is damaged during any point in the construction of improvements by the Redeveloper and their contractors/subcontractors, then the cost to repair such damage is to be borne by the developer. (b) "Streetscape" on Lyndale Avenue, 76~' Street and 77~" Street. The HRA shall be responsible to pay for and complete all of the improvements shown on the attached Exhibit _ lying between the future properly line and the west curb line of Lyndale Avenue, the south. curb line of 76~' Street, the north curbline of 77~' Street. It is understood, however, that the HRA shall have no obligation to expend in excess of $525,000 for all the "streetscape" improvements lying in this area. The Redeveloper shall construct sidewalk areas of similar design and materials to the HRA constructed streetscape in the area between the buildings and the right-of--way line. - (c) Roadway Improvements to Lyndale Avenue. The City has drafted bid specifications for the realignment and reconstruction of Lyndale Avenue. The portion to be reconstructed lies JBD-234794v3 RC125-240 18 AGENDA ITEM # p2 p REPORT # Q STAFF REPORT HOUSING AND REDEVELOPMENT AUTHORITY MEETING AUGUST 4, 2003 PAM BOOKHOUT, REPORT PREPARED BY: REHABILITATION SPECIALIST NAME, T/TLE REPORT PRESENTER: BRUCE PALMBORG, COMMUNITY DEVELOPMENT DIRECTOR NAME, TITLE DEPARTMENT DIRECTOR REVIEW: SIGNATURE REVIEWED BY EXECUTIVE DIRECTOR: ITEM FOR HRA CONSIDERATION: Consideration of the attached agreement with LHB Engineers and Architects for the next phase of development at 6819 Oliver Avenue. I. RECOMMENDED ACTION: By Motion: Authorize the Executive Director and Chairperson to execute the attached agreement with LHB Engineers and Architects for the preparation of construction documents and construction administration at 6819 Oliver Avenue. III. BACKGROUND ~ The Housing and Redevelopment Authority (HRA) purchased and demolished the abandoned substandard house at 6819 Oliver Avenue. In October 2002, the HRA authorized services by LHB Engineering and Architects (LHB) to prepare a concept plan. The contract amount was $7,500. LHB has completed the contract. The concept plans which they developed are attached. The features of the plan include: • A 1-'h story front elevation, similar to other homes on the block. • A split level floor plan design that includes a master bedroom/bathroom suite, plus three other bedrooms. 0803special-6819 Oliver • Good use of the sloping site, allowing for full windows and natural light on both upper and lower levels of the house. • An attached tuckunder double garage that eliminates garage door dominance in the front elevation. A proposed new agreement with LHB would authorize them to bring the project to the next step by: • Creating preliminary and final building plans. • Incorporating the requirements of the American Lung Association for "Health House" status and participation in the building specifications. • Developing other required construction documents for the builder. • Administering construction for the implementation of the innovative Metal Fit framing system. The fees for these services are $15,000 for design and plan development, final building plans and other contract documents, and $5,000 for construction administration. The costs have been anticipated and will be covered by the proceeds of sale. Construction management during framing is an added responsibility of LHB. One of the goals of the new Metal Fit framing system in this house is to demonstrate the ease of installation. However, the panelized walls that are part of it make for a very tight and energy efficient house. On-going monitoring to reduce the issues of future moisture problems and to ensure the success of the combination of all the building systems is essential BCB Construction, the builder identified through a "request for proposal" process, has met with LHB to learn the implementation of the Metal Fit framing system, has attended required "Health House" training, and is ready to proceed with the project. A contract for private development between the builder and the HRA is being prepared to be considered by the HRA in August or September, to include a public hearing for sale of land to the builder. III. BASIS OF RECOMMENDATION A. POLICY • The substandard property removed by the HRA will be replaced by a new single family home. • The property at 6819 Oliver Avenue provides a unique opportunity for demonstrating new building technologies, a Parade of Homes opportunity and the development of a high value new home. B. CRITICAL ISSUES The concept design is complete and final building plans are now required. • The architectural firm LHB provides experience and resources that allow special technology, energy efficiency, and education to be included in the project. C. FINANCIAL • Monthly payments will be made as invoiced, relative to services provided by LHB. • Fees will be fully covered by proceeds of sale. D. LEGAL • The agreement proposed by LHB is a standard American Institute of Architects agreement. It is similar in form to the previous agreement with LHB, which had been reviewed by legal counsel. IV. ALTERNATIVE RECOMMENDATION~S~ The HRA can choose not to approve the agreement with LHB. V. ATTACHMENTS • House concept plans. • Agreement with LHB. VI. PRINCIPAL PARTIES EXPECTED AT MEETING • N/A ocument 181- ectromc ormat Standard Form of Agreement Between Owner and Architect for Housing Services COMPLE IONEOR MODIFICOATION. AUTHENTIOCAT ON OF THISOELECTRONICALLY DRAFTED AIA DOCLiMENOTt MAY BE MADE BY USINGO AIA DOCllMENT D4oi. Copyright 1978, ©i994 by The American Institute of Architects, 1735 New York Avenue, N.W., Washington D.C, zooo6-5292. Reproduction of the material herein or substantial quotation of its provisions without permission of the AIA violates the copyright laws of the United States and will subject the violator to legal prosecution. 1994 Edition AGREEMENT made as of the 4th day of August in the year of 2003 (In words, indicate day, month and year) BETWEEN the Owner: (Name and address) Richfield Housing & Redevelopment Authority (HRA) 6700 Portland Avenue Minneapolis MN 55423-2599 and the Architect: (Name and address) LHB 250 Third Avenue North. Suite 450 Minneapolis Minnesota 55401 For the following Project: (Include detailed description ofproject location, address and scope.) LHB Project #02659 10 -Provide architectural services pertaining to the following phases of work: Desjan Development. - Construction Documents and Construction Admlrnstratlon Thls work Is In conlunctlon with our previous slaned agreement with Richfield Housing & Redevelopment Authority dated October 21, 2002. The Owner and the Architect agree as set forth below. Design Development: Revise first floor and second floor plans from Pre-Desian Study. Revise exterior elevations from Pre-Design Study based on Cltv staffs comments. Revise Site Plans from Pre-Desian Study. Submit plans to City for approval and contractor for pricing. Construction Documents: Al Site Plan including Site Laxout/Grading/Utilities/Landscaping and Detail A2 Floor Plans and Schedules A3 Exterior Elevations A4 Interior Elevations and Stair Sections A5 Details A6 Details A7 Details E1 Electrical Location Plans M1 Mechanical Location Plans Project Manual wlTechnical Specifications Construction Administration: Monitor and report construction progress to HRA Answer Contractor administrative auestions Prepare drawings for clarification if needed 4) Attend site meetings ~ - 5 - - OWNER-ARCHITECT AGREEMENT FOR HOUSING SERVICES - AIAO -WARNING: Unlicensed photocopying violates U.S. copyright laws and will subject the violator to legal prosecution. This document was electronically produced with permission of the AIA and can be reproduced in accordance with your license without violation until the date of expiration as noted below. expiration as noted below. User Document: 02659AG052203 RICHFIELD HRA.AIA -- 7/30/2003. AIA License Number 1000839, which expires on 7/18/2004. Electronic Format 8181-1994 TERMS AND CONDITIONS OF THE AGREEMENT BETWEEN OWNER AND ARCHITECT ARTICLE 1 ARCHITECT'S RESPONSIBILITIES 1.1 ARCHITECT'S SERVICES l.l.l The Architect's services consist of those services performed by the Architect, Architect's employees and Architect's consultants as enumerated in Articles 2 and 3 of this Agreement and any other services included in Article 12. 1.1.2 The Architect's services shall be performed as expeditiously as is consistent with professional skill and care and the orderly progress of the Work. Upon request of the Owner, the Architect shall submit for the Owner's approval a schedule for the performance of the Architect's services that may be adjusted as the Project proceeds, and that shall include allowances for periods of time required for the Owner's review and for approval of submissions by authorities having jurisdiction over the Project. Time limits established by this schedule approved by the Owner shall not, except for reasonable cause, be exceeded by the Architect or Owner. 1.1.3 The services covered by this Agreement are subject to the time limitations contained in Subparagraph u.5.i. ARTICLE 2 SCOPE OF ARCHITECT'S BASIC SERVICES 2.1 DEFINITION 2.1.1 The Architect's Basic Services consist of those described in Paragraphs 2.2 through i.6 and any other services identified in Article i2 as part of Basic Services, and include normal civil, structural, mechanical and electrical engineering services. 2.2 DESIGN PHASE 2.2.1 The Architect shall review the program furnished by the Owner to ascertain the requirements of the Project and shall arrive at a mutual understanding of such requirements with the Owner. 2.2.2 The Architect shall provide a preliminary evaluation of the Owner's program, schedule and construction budget requirements, each in terms of the other, subject to the limitations set forth in Subparagraph 5.zs. 2.2.3 The Architect shall review with the Owner alternative approaches to design and construction of the Project. 2.2.4 Based on the mutually agreed-upon program, schedule and construction budget requirements, the Architect shall prepare, for approval by the Owner, Design Documents consisting of drawings and other documents appropriate for the Project. 2.3 CONSTRUCTION DOCUMENTS PHASE 2.3.1 Based on the approved Design Documents and any further adjustments in the scope or quality of the Project or in the construction budget authorized by the Owner, the Architect shall prepare, for approval by the Owner, Construction Documents consisting of Drawings and Specifications setting forth in detail the requirements for construction of the Project. 2.3.2 The Architect shall assist the Owner in the preparation of the necessary bidding information, bidding forms, the Conditions of the Contract, and the form of Agreement between the Owner and Contractor. 2.3.3 The Architect shall assist the Owner in connection with the Owner's responsibility for filing documents required for the approval of governmental authorities having jurisdiction over the Project. 2.4 BIDDING OR NEGOTIATION PHASE 2.4.1 Following the Owner's approval of the Construction Documents, the Architect shall assist the Owner in obtaining bids or negotiated proposals and assist in awarding contracts for construction. 2.5 CONSTRUCTION PHASE ADMINISTRATION OF THE CONSTRUCTION CONTRACT 2.5.1 The Architect's responsibility to provide Basic Services for the Construction Phase under this Agreement commences with the award of the Contract for Construction and terminates at the earlier of the issuance to \the Owner of the final Certificate for Payment or 6o days after the date of Substantial Completion of the Work. 2.5.2 The Architect shall provide administration of the Contract for Construction as set forth below and in the edition of AIA Document A2o1, General Conditions of the Contract for Construction, current as of the date of this Agreement, unless otherwise provided in this Agreement. 2.5.3 Duties, responsibilities and limitations of authority of the Architect shall not be restricted, modified or extended without written agreement of the Owner and the Architect,. with the consent of the Contractor; which consent shall not be OWNER-ARCHITECT AGREEMENT FOR HOUSING SERVICES - AIAO -WARNING: Unlicensed photocopying violates U.S. copyright laws and will subject the violator to legal prosecution. This document was electronically produced with permission of the AIA and can be reproduced in accordance with your license without violation until the date of expiration as noted below. expiration as noted below. User Document: 02659AG052203 RICHFIELD HRA.AIA -- 7/30/2003. AIA License Number 1000839, which expires on 7/18/2004. Electronic Format 6181-1994 2 unreasonably withheld. 2.5.4 The Architect shall be a representative of and shall advise and consult with the Owner (i) during construction until final payment to the Contractor is due; and (2) as an Additional Service ai the Owner's direction from time to time during the correction period described in the Contract for Construction. The Architect shall have authority to act on behalf of the Owner only to the extent provided in this Agreement unless otherwise modified by written instrument. Instructions to the Contractor shall be forwarded through the Architect. 2.5.5 The Architect shall visit the site at intervals appropriate to the stage of construction (or as otherwise agreed by the Architect in writing) to become generally familiar with the progress and quality of the Work and to determine in general if the Work when completed will be in accordance with the Contract Documents. However, the Architect shall not be required to make exhaustive or continuous on-site inspections to check the quality or quantity of the Work. On the basis of on-site observations as an architect, the Architect shall keep the Owner informed of the progress and quality of the Work, and shall endeavor to guard the Owner against defects and deficiencies in the Work. (More extensive site representation may be agreed to as an Additional Service, as described m Paragraph 3.z) 2.5.6 The Architect shall not have control over, charge of, or responsibility for construction means, methods, techniques, sequences or procedures, or for safety precautions and programs in connection with the Work, since these are solely the Contractor's responsibility under the Contract for Construction. The Architect shall not be responsible for the Contractor's schedules or failure to carry out the Work. in accordance with the Contract Documents. The Architect shall not have control over or charge of acts or omissions of the Contractor, Subcontractors, or their agents or employees, or any other persons performing any of the Work. 2.5.7 The Architect shall at all times have access to the Work, wherever it is in preparation or progress. 2.5.8 Based on the Architect's observations and evaluations of the Contractor's Applications for Payment, the Architect shall review and certify the amounts due the Contractor. 2.5.9 The Architect's certification for payment shall constitute a representation to the Owner that the Work has progressed to the point indicated, and that to the best of the Architect's knowledge, information and belief, the quality of the Work is in accordance with the Contract Documents. Such certification shall be based on the Architect's observations ai the site as provided in Subparagraph 2.5.5 and on the data comprising the Contractor's Application for Payment. The foregoing representations are subject to an evaluation of the Work for conformance to the Contract Documents upon Substantial Completion, to results of subsequent tests and inspections, to minor deviations from the Contract Documents correctable prior io completion and to any specific qualifications expressed by the Architect. The issuance of a Certificate for Payment shall further constitute a representation that the Contractor is entitled to payment in the amount certified. However, the issuance of a Certificate for Payment shall not be a representation that the Architect has (i) made exhaustive or continuous on-site inspections to check the quality or quantity of the Work; (2) reviewed construction means, methods, techniques, sequences or procedures; (3) reviewed copies of requisitions received from Subcontractors and material suppliers and other data requested by the Owner to substantiate the Contractor's right to payment; or (4) ascertained how or for what purpose the Contractor has used money paid on account of the Contract Sum. 2.5.10 The Architect shall have authority to reject Work that does not conform to the Contract Documents. Whenever the Architect considers it necessary or advisable for implementation of the intent of the Contract Documents, the Architect will have authority to require additional inspection or testing of the Work in accordance with the provisions of the Contract Documents, whether or not such Work is fabricated, installed or completed. However, neither this authority of the Architect nor a decision made in good faith either io exercise or not to exercise such authority shall give rise to a duty or responsibility of the Architect to the Contractor, Subcontractors, material and equipment suppliers, their agents or employees, or other persons performing portions of the Work. 2.5.11 The Architect shall review and approve or take other appropriate action upon the Contractor's submittals such as Shop Drawings, Product Data and Samples, but only for the limited purpose of checking for conformance with information given and the design concept expressed in the Contract Documents. The Architect's actions shall be taken with reasonable promptness so as to cause no delay in the Work or in the construction of the Owner or of separate contractors, while allowing sufficient time (in the Architect's professional judgment) to permit adequate review. The Architect's approval of a specific item shall not indicate approval of an assembly of which that item is a component. 2.5.12 The Architect shall prepare Change Orders for the Owner's approval and execution, and shall have authority to order minor changes in the Work not involving an adjustment in the Contract Sum or an extension of the Contract Time. 2.5.13 The Architect shall conduct inspections io determine the date of Substantial Completion and the data of fmal completion, and shall issue a final Certificate for Payment. 2.5.14 The Architect shall interpret and decide matters concerning performance of the Owner and Contractor under the requirements of the Contract Documents on written request of either the Owner or Contractor. The Architect's response to such requests shall be made with reasonable promptness and within any time limits agreed-upon. 2.5.15 Interpretations and decisions of the Architect shall be consistent with the intent of and reasonably inferable from the Contract Documents and shall be in writing or in the form of drawings. When making such interpretations and initial OWNER-ARCHITECT AGREEMENT FOR HOUSING SERVICES - AIAO -WARNING Unlicensed photocopying violates U.S. copyright laws and will subject the violator to legal prosecution. This document was electronically produced with permission of the AIA and can be reproduced in accordance with your license without violation until the date of expiration as noted below. expiration as noted below. User Document: 02659AG052203 RICHFIELD HRA.AIA -- 7/30/2003. AIA License Number 1000839, which expires on 7/18/2004. Electronic Format 6181-1994 3 decisions, the Architect shall endeavor to secure faithful performance by both Owner and Contractor, shall not show partiality to either, and shall not be liable for results of interpretations or decisions rendered in good faith in such capacity. ARTICLE 3 ADDITIONAL SERVICES 3.1 Additional Services shall be provided if authorized or confirmed in writing by the Owner or if included in Article io, and shall be paid for by the Owner as provided in this Agreement. 3.2 If the Owner and the Architect agree that more extensive representation at the site than is described in Subparagraph 2.5.5 shall be provided, such additional project representation shall be provided and paid for as set forth in Article 12. ARTICLE 4 THE OWNER'S RESPONSIBILITIES 4.1 The Owner shall provide full information, including a program setting forth the Owner's design objectives, constraints and criteria. The Owner shall establish and update an overall budget for the Project, including the Construction Cost, the Owner's other costs and reasonable contingencies related to all of these costs. If requested by the Architect, the Owner shall furnish evidence that fmancial arrangements have been made to fulfill the Owner's obligations under this Agreement. - 4.2 The Owner shall designate a representative authorized to act on the Owner's behalf with respect to the Project. The Owner or such authorized representative shall render decisions pertaining to documents submitted by the Architect in a timely manner, so as to avoid unreasonable delay in the orderly and sequential progress of the Architect's services. 4.3 The Owner shall furnish a legal description and a certified land survey of the site, and the services of geotechnical engineers or ocher consultants when such services are deemed necessary by the Architect. Such services may include but are not limited to topographic surveys, test borings, test pits, determinations of soil bearing values, percolation tests, evaluations of hazardous materials, ground corrosion and resistivity tests, including necessary operations for anticipating subsoil conditions. The services of geotechnical engineer(s) or other consultants shall include preparation and submission of all appropriate reports and professional recommendations. 4.4 The Owner shall furnish structural, mechanical, chemical, air and water pollution tests, tests for hazardous materials, and other laboratory and environmental tests, inspections and .reports as required by law or the Contract Documents. 4.5 The Owner shall furnish all legal, accounting and insurance counseling services as may be necessary at any time for the Project, including auditing services the Owner may require to verify the Contractor's Applications for Payment or to ascertain how or for what purposes the Contractor has used the money paid by or on behalf of the Owner. The Owner shall furnish the services of other consultants when such services are reasonably required by the scope of the Project .and are requested by the Architect. 4.6 The Owner, unless otherwise provided in Article i2> shall furnish all legal, accounting, planning, estimating and other services and expenses required to prepare, present and process any application for governmental or private financing, mortgage insurance or subsidy. 4.7 The Owner, unless otherwise provided in Article 12, shall furnish the services of a cost consultant or cost estimator to provide all construction cost data, preliminary estimates of Construction Cost or other cost estimates as the Architect's work progresses. 4.8 The services, information, surveys and reports required by Paragraphs 4.3 through 4.7, inclusive, shall be furnished ai the Owner's expense, and the Architect shall be entitled to rely upon the accuracy and completeness thereof. 4.9 Prompt written notice shall be given by the Owner to the Architect if the Owner becomes aware of any fault or defect in the Project or nonconformance with the Contract Documents. 4.10 The proposed language of certificates or certifications requested of the Architect or Architect's consultants shall be submitted to the Architect for review and approval ai least i4 days prior to execution. The Owner shall not request certifications that would require knowledge or services beyond the scope of this Agreement. ARTICLE 5 CONSTRUCTION COST 5.1 DEFINITION 5.1.1 The Construction Cost shall be the total cost or estimated cost to the Owner of all elements of the Project designed or specified by the Architect. 5.1.2 The Construction Cosi shall .include the cost at current market rates of labor and materials furnished by the Owner and any equipment which has been designed, specified, selected or specially provided for by the Architect, plus a reasonable allowance for the Contractor's overhead and profit. In addition, a reasonable allowance for contingencies shall be included for market conditions at the time of bidding and for changes in the Work during construction. 5.1.3 Construction Cost does not include the compensation of the Architect and the Architect's consultants, the cost of the land, rights-of--way, financing or other costs that are the responsibility of the Owner as provided in Article 4. c _ 5 •, - - OWNER-ARCHITECT AGREEMENT FOR HOUSING SERVICES - AIAO -WARNING: Unlicensed photocopying violates U.S. copyright laws and will subject the violator to legal prosecution. This document was electronically produced with permission of the AIA and can be reproduced in accordance with your license without violation until the date of expiration as noted below. expiration as noted below. User Document: 02659AG052203 RICHFIELD HRA.AIA -- 7/30/2003. AIA License Number 1000839, which expires on 7/18/2004. Electronic Format 6181-1994 4 5.2 RESPONSIBILITY FOR CONSTRUCTION COST 5.2.1 It is recognized that neither the Architect nor the Owner has control over the cost of labor, materials or equipment, over the Contractor's methods of determining bid prices, or over competitive bidding, market or negotiating conditions. Accordingly, the Architect can not and does not warrant or represent that bids or negotiated prices will not vary from the Owner's Project budget or from any preliminary estimate of Construction Cost or other cost estimate or evaluation. Any Project budget shall be adjusted to reflect changes in the general level of prices in the construction industry between the date of submission of the Construction Documents to the Owner and the date on which bids or negotiated proposals are sought. 5.2.2 No fixed limit of Construction Cost shall be established as a condition of this Agreement by the furnishing, proposal or establishment of a Project budget, unless such fixed limit has been agreed upon in writing and signed by the parties hereto. If such a fixed limit has been established, the Architect shall be permitted to include contingencies for design, bidding and price escalation; to determine what materials, equipment, component systems and types of construction are to be included in the Contract Documents; to make reasonable adjustments in the scope of the Project; and to include in the Contract Documents alternate bids io adjust the Construction Cost to the fixed limit. Fixed limits, if any, shall be increased in the amount of an increase in the Contract Sum occurring after execution of the Contract for Construction. 5.2.3 If the Project budget or fixed limit of Construction Cost is exceeded by the lowest bona fide bid or negotiated proposal, the Owner shall: .1 give written approval of an increase in the Project budget or the fixed limit; .2 authorize rebidding or renegotiating the Project within a reasonable time; .3 if the Project is abandoned, terminate in accordance with Paragraph 8.2; or .4 cooperate in revising the Project scope and quality as required to reduce the Construction Cost. 5.2.4 If the Owner chooses to proceed under Clause 5.2.3.4 the Architect shall endeavor to comply wish the Project budget or the fixed limit of Construction Cost by making modifications to the Contract Documents. The making of such modifications shall be the limit of the Architect's responsibility arising out of the establishment of a Project budget or a fixed limit of Construction Cost. If a fixed limit has been established as a Condition of this Agreement, the Architect shall not obtain an increase in compensation for making such modifications unless the Fixed limit has been exceeded due to inaccurate cost estimating by the Owner's consultant. If no fixed limit has been established, the Architect shall receive an increase in compensation for making such modifications. The Architect shall be entitled to compensation in accordance with this Agreement for all services performed, whether or not the Construction Phase is commenced. 5 2 5 If a change in the Work is the result of a reauired item or component of the project omitted from the Construction Documents the Owner shall be responsible for the cost exclusive of design services, required to add such item or component if such item or component would have been required and included in the original Construction Documents. The Architect is not responsible for a cost to the Project that provides an upgrade to or enhances the value of the Protect. ARTICLE 6 USE OF ARCHITECT'S DRAWINGS, SPECIFICATIONS AND OTHER DOCUMENTS 6.1 The Drawings, Specifications and other documents prepared by the Architect for this Project are instruments of the Architect's service for use solely with respect to this Project, and unless otherwise provided, the Architect shall be deemed the author of these documents and shall retain all common law, statutory and other reserved rights, including the copyright. The Owner shall be permitted to retain copies, including reproducible copies, of the Architect's Drawings, Specifications and other documents for information and reference in connection with the Owner's use and occupancy of the Project. The Architect's Drawings, Specifications or other documents shall not be used by the Owner or others on ocher projects, for additions to this Project, or for completion of this Project by others unless the Architect is adjudged to be in default under this Agreement, except by agreement in writing and with appropriate compensation to the Architect. 6.2 Submission or distribution of documents to meet official regulatory requirements or for similar purposes in connection with the Project is not to be construed as publication in derogation of the Architect's reserved rights. 6.3 To the extent the Instruments of the Architect's Service are modified supplemented or otherwise altered the Owner Subsequent Design Professional or anv other party the Owner frees to indemnify, defend and hold the Architect harmless for any claims. demands, damages or causes of action arising out of such modification supplementation or alteration. ARTICLE 7 RESOLUTION OF CLAIMS, DISPUTES OR OTHER MATTERS 7.1 r .,,,~„ tries-te~Iris-~.~._re~_ ~+...~~~-e~ .fie-fkis- ~e~ -er -i13e ~eaek ~ke~eel -sl~ll ~e °~- -te -,ate - desided -1~ z~kiiratie~r -ice -a~r~ } -tom ~s#~biet~ - ~ - 5 ~ ., - - OWNER-ARCHITECT AGREEMENT FOR HOUSING SERVICES -AIA®-WARNING: Unlicensed photocopying violates U.S. copyright laws and will subject the violator to legal prosecution. This document was electronically produced with permission of the AIA and can be reproduced in accordance with your license without violation until the date of expiration as noted below. expiration as noted below. User Document: 02659AG052203 RICHFIELD HRA.AIA -- 7/30/2003. AIA License Number 1000839, which expires on 7/18/2004. Electronic Format 6181-1994 5 ~-y ~i~ra~ie~ -I~tlles -ef the .,.,.,_-------~----- 'F i.•+ +• 1, 111,,, F:lo.l . ,.;++.rt~r ,L_ _.L _., ~ ~ ~ Aaroomor.i ~, 1~iiit •ttfC ~E•- MiC~~k~iC~' ~s;~~ - -14 xd ~ lei} ~kall ~e - ,1 •+1,' ~ l,l +• xc a icx-+cnccl~+^"~+l'°r L ' 7-~ ~A ~u~itra~ien -ai~si~g ~ ~ ~ "- '~*'~""s -#e his - Agleeme# mall ~s ~ ~{-~aiiex-s ~e~e~ -eF ~r -any - +Qh~}cxTaxx aQau r C A ,..~,,,.,~ ,.+ -n~ccnn~. ~z'^:xiicii ~vn~ci" ~"H~ $ -S~32EiY3E - n ,,.oo.,. ,.+ -mod ~ the -•r; TIICLTIR.CC'~ - r ~e phis - -o- - ----°- ar~it~a4iel} ~g ~ ~-persel~ -e~ y~liafl -tied - - i,.a, ,1~~,...;1,,,,1 - skis - a -per~ei} ~ -e~ ~ ~ ~Q ~erei~: ~~~A~ate-a~-A~2t..a,.~---~•=•--'_."..,o,.+~ -i9-arkit~te~tl}- a~r~d~iet~l~e~set~~-et~y~lly-~xx~xiea~e 1,.,-~-na~x'`° to -t~s -~Lg~eex3e~ ~I~afl -13e -spec-a~j= °~F ,.o~^l.l° -~ . .., thereat=- X1,-3 Imo-nevi-sfiall~ke-~a~-fel:~i#-ra#~ei}ke-~xade- ~ +1. + k +'+ +' F 1 1 '+..1.1~ ~ z L / L L ~4 q=ke -a~varEl ~xdet=ed~ -1~ -eke -arki#~ate~ -e~ -~~ers - sl}all ~e ~1a1•,• -ate ~ ~` ~e ~ -~ ~ - LL 7.2 MEDIATION 7.2.1 I~ add~iet~ ~e ~ bier -te z~ The parties shall endeavor to settle claims, disputes or other matters in question by mediation in accordance with the Construction Industry Mediation Rules of the American Arbitration Association currently in effect, unless the parties mutually agree otherwise. Demand for mediation shall be filed in writing with the other party to this Agreement and with the American Arbitration Association. A demand for mediation shall be made within a reasonable time after the claim, dispute or other matter in question has arisen. In no event shall the demand for mediation be made after the date when institution of legal or equitable proceedings based on such claim, dispute or other matter in question would be barred by the applicable statute of limitations. ARTICLE 8 SUSPENSION, TERMINATION OR ABANDONMENT 8.1 This Agreement may be terminated by either party upon not less than seven days' written notice, should the other party substantially fail io perform in accordance with the terms of this Agreement through no fault of the party initiating the termination. 8.2 This Agreement may be terminated by the Owner upon not less than seven days' written notice to the Architect in the event that the Project is permanently abandoned. If the Project is abandoned by the Owner for more than 90 consecutive days, the Architect may terminate this Agreement by giving written notice. 8.3 If the Project is suspended by the Owner for more than 3o consecutive days, the Architect shall be compensated for services performed prior to notice of such suspension. When the Project is resumed, the Architect's compensation shall be equitably adjusted to provide for expenses incurred in the interruption and resumption of the Architect's services. 8.4 Failure of the Owner to make payments to the Architect in accordance with this Agreement shall be considered substantial nonperformance and cause for termination. 8.5 If the Owner fails to make payment when due the Architect for services and expenses, the Architect may, upon seven days' written notice to the Owner, suspend performance of services under this Agreement. llnless payment in full is received by the Architect within seven days of the date of the notice, the suspension shall take effect without further notice. In the event of a suspension of services, the Architect shall have no liability to the Owner for delay or damage caused the Owner because of such suspension of services. 8.6 In the event of termination not the fault of the Architect, the Architect shall be compensated for services performed prior to termination, together with Reimbursable Expenses then due and all Termination Expenses as defined in Paragraph 8.7. 8.7 Termination Expenses are in addition to compensation for Basic and Additional Services, and include expenses directly attributable to termination for which the Architect is not otherwise compensated, plus an amount computed as a percentage of the total compensation for Basic and Additional Services earned to the time of termination, as follows: .1 Zo percent if termination occurs during the Design Phase; or to percent if termination occurs during the Construction Documents Phase; or .3 5 percent if termination occurs during any subsequent phase. ARTICLE 9 MISCELLANEOUS PROVISIONS 9.1 Unless otherwise provided, this Agreement shall be governed by the law of the place of the Project. OWNER-ARCHITECT AGREEMENT FOR HOUSING SERVICES - AIAO -WARNING Unlicensed photocopying violates U.S. copyright laws and wilt subject the violator to legal prosecution. This document was electronically produced with permission of the AIA and can be reproduced in accordance with your license without violation until the date of expiration as noted below. expiration as noted below. User Document: 02659AG052203 RICHFIELD HRA.AIA -- 7/30/2003. AIA License Number 1000839, which expires on 7/18/2004. Electronic Format 6181-1994 6 9.2 Terms in this Agreement shall have the same meaning as those in AIA Document A2ot, General Conditions of the Contract for Construction, current as of the date of this Agreement. 9.3 Causes of action between the parties to this Agreement pertaining to acts or failures to act shall be deemed to have accrued and the applicable statutes of limitations shall commence to run not later than either the date of Substantial Completion for acts or failures to act occurring prior to Substantial Completion, or the date of issuance of the fmal Certificate for Payment for acts or failures to act occurring after Substantial Completion. 9.4 The Owner and Architect waive all rights against each other and against the contractors, consultants, agents and employees of the other for damages, but only to the extent covered by property insurance during construction, except such rights as they may have to the proceeds of such insurance as set forth in the edition of AIA Document t12oi, General Conditions of the Contract for Construction, current as of the date of this Agreement. The Owner and Architect each shall require similar waivers from their contractors, consultants and agents. 9.5 The Owner and Architect, respectively, bind themselves, their partners, successors, assigns and legal representatives to the other party to this Agreement and to the partners, successors, assigns and legal representatives of such other party with respect to all covenants of this Agreement. Neither Owner nor Architect shall assign this Agreement without the written consent of the other. _ 9.6 This Agreement represents the entire and integrated agreement between the Owner and Architect and supersedes all prior negotiations, representations or agreements, either written or oral. This Agreement may be amended only by written instrument signed by both Owner and Architect. 9.7 Nothing contained in this Agreement shall create a contractual relationship with or a cause of action in favor of a third party against either the Owner or Architect. 9.8 Unless otherwise provided in this Agreement, the Architect and Architect's consultants shall have no responsibility for the discovery, presence, handling, removal or disposal of or exposure of persons to hazardous materials in any form at the Project site, including but not limited to asbestos, asbestos products, polychlorinated biphenyl (PCB) or other toxic substances. 9.9 The Architect shall have -the right to include representations of the design of the Project, .including photographs of the exterior and interior, among the Architect's promotional and professional materials. The Architect's materials shall not include the Owner's confidential or proprietary information if the Owner has previously advised the Architect in writing of the specific information considered by the Owner to be confidential or proprietary. The Owner shall provide professional credit for the Architect on the construction sign and in the promotional materials for the Project. 9 10 The Architect and the Owner waive consequential damages for claims disputes or other matters in question arising out of or relating to this Agreement. This mutual waiver is applicable without limitation to all consequential damages due to either party's termination in accordance with Article 8. 911 To the maximum extent permitted by law, the Owner agrees to limit the Architect's liability for the Owner's damages to the amount of Five Hundred Thousand Dollars ($500 000), or the Consultant's fee. whichever is greater. This limitation shall apply regardless of the cause of action or legal theory pled or asserted. ARTICLE 10 PAYMENTS TO THE ARCHITECT 10.1 PAYMENTS ON ACCOUNT OF BASIC SERVICES 10.1.1 An initial payment set forth in Paragraph tt.i is the minimum payment under this Agreement. 10.1.2 Subsequent payments for Basic Services shall be made monthly and, where applicable, shall be in proportion to services performed within each phase of service on the basis set forth in Subparagraph u.2.2. 10.1.3 If and to the extent that the lime initially established in Subparagraph u.5.t of this Agreement is exceeded or extended through no fault of the Architect, compensation for any services rendered during the additional period of time shall be computed in the manner set forth in Paragraph u.3. 10.1.4 When compensation is based on a percentage of Construction Cosi, and any portions of the Project are deleted or otherwise not constructed, to the extent services are performed on those portions, compensation for those portions of the Project shall be payable in accordance with the schedule set forth in Subparagraph u.2.2, based on (t) the lowest bona fide bid or negotiated proposal; or (2) if no such bid or proposal is received, the most recent preliminary estimate of Construction Cost or other cost estimate as described in Subparagraph 4.7 for such portions of the Project. 10.2 REIMBURSABLE EXPENSES 10.2.1 Reimbursable Expenses are in addition to compensation for Basic and Additional Services and include actual expenditures made by the Architect in the interest of the Project for: .1 transportation and living expenses in connection wish out-of--town travel as authorized by the Owner; OWNER-ARCHITECT AGREEMENT FOR HOUSING SERVICES - AIAO -WARNING: Unlicensed photocopying violates U.S. copyright laws and will subject the violator to legal prosecution. This document was electronically produced with permission of the AIA and can be reproduced in accordance with your license without violation until the date of expiration as noted below. expiration as noted below. User Document: 02659AG052203 RICHFIELD HRA.AIA -- 7/30/2003. AIA License Number 1000839, which expires on 7/18/2004. Electronic Format B18t-1994 7 .2 long-distance communications; .3 fees paid for securing approvals of authorities having jurisdiction over the Project; .4 expense of reproductions, postage and handling of Drawings and Specifications and other documents; .5 expense of renderings, models and mock-ups requested by the Owner; carried by the Architect and the Architect's consultants. 10.3 PAYMENTS ON ACCOUNT OF ADDITIONAL SERVICES 10.3.1 Payments on account of the Architect's Additional Services and for Reimbursable Expenses shall be made monthly upon presentation of the Architect's statement of services rendered or expenses incurred. .6 if authorized in advance by the Owner, expense of 10.4 PAYMENTS WITHHELD overtime work requiring higher than regular rates; and 10.4.1 No deductions shall be made from the Architect's .7 expense of any additional insurance coverage or compensation on account of penalty, liquidated damages or limits, including professional liability insurance, other sums withheld from payments to contractors, or on requested by the Owner in excess of that normally account of the cost of changes in the work other than those for which the Architect has been found to be liable. ARTICLE 11 BASIS OF COMPENSATION The Owner shall compensate the Architect as follows: 11.1 AN INITIAL PAYMENT of zero Dollars ($ 0) shall be made upon execution of this Agreement and credited to the Owner's account at final payment. 11.2 BASIC COMPENSATION 11.2.1 FOR BASIC SERVICES, as described in Article 2 and any other services included in Article r2 as part of Basic Services, Basic Compensation shall be computed as follows: (Here Insert basis of compensation, including stipulated sums, multiples or percentages, and identify phases to which particular methods ofcompensation apply, if necessary.) Fees for Design Development and Construction Documents will be billed in a lump sum of Fifteen Thousand Dollars 15 000) Construction Administration will be billed on an hourly basis with a project fee estimate of Five Thousand Dollars ($5 000) Reimbursable expenses will be additional refer to Exhibit 8 Hourly Rates Schedule. attached. 11.2.2 Where compensation is based on a stipulated sum or percentage of Construction Cosi, progress payments for Basic Services in each phase shall total the following percentages of the total Basic Compensation payable: (Insert additional phases as appropriate.) Design Phase: percent ( Q/o) Construction Documents Phase: percent ( /o) Bidding or Negotiation Phase: Percent ( %) Construction Phase: percent ( %) ota asic ompensation: one un re percent too 0 11.3 COMPENSATION FOR ADDITIONAL SERVICES 11.3.1 FOR PROJECT REPRESENTATION BEYOND BASIC SERVICES;"as described in Paragraph 3.i, compensation .shall be computed as follows: (Insert basis ofcompensation, including stipulated sums, multiples orpercentages.) Project fees will be billed on an hourlybasis according to the Exhibit 8 Hourly Rates Schedule, attached. 11.3.2 FOR ADDITIONAL SERVICES OF THE ARCHITECT, as described in Articles 3 and 12 ,other than (1) Additional Project Representation as described in Paragraph 3.2; and (2) services included irl Article 12 as part of Basic Services, but. excluding services of consultants, compensation shall be computed as follows: (Insert basis ofcompensation, including rates and/or multiples ofDirect Personnel Expense for principals and employees, and identifyprincipals and classify employees, ifre9uired. Identifyspeci6cservtces to which par[icularmethods ofcompensation apply, ifnecessary.) OWNER-ARCHITECT AGREEMENT FOR HOUSING SERVICES -AIA®-WARNING Unlicensed photocopying violates U.S. copyright laws and will subject the violator to legal prosecution. This document was electronically produced with permission of the AIA and can be reproduced in accordance with your license without violation until the date of expiration as noted below. expiration as noted below. User Document: 02659AG052203 RICHFIELD HRA.AIA -- 7/30/2003. AIA License Number 1000839, which expires on 7/18/2004. Electronic Format 6181-1994 8 Project fees will be billed on an hour) t~basis accordina to the Exhibit 8 Hourly Rates Schedule. attached. 11.3.3 FOR ADDITIONAL SERVICES OF CONSULTANTS, including additional structural, mechanical and electrical engineering services and those provided under Paragraph 3.t or identified in Article 12 as pari of Additional Services, a multiple of (1_1) times the amounts billed to the Architect for such services. (Ideniifyspecifictgpes ofconsultantsm Articlel2, ifrequired.) 11.4 REIMBURSABLE EXPENSES 11.4.1 FOR REIMBURSABLE EXPENSES, as described in Paragraph io.s, and any other items included in Article 12 as Reimbursable Expenses, a multiple of one point one (1_1) times the expenses incurred by the Architect, the Architect's employees and consultants in the interest of the Project Reimbursable expenses will be billed monthly alona with Desian Services. 11.5 ADDITIONAL PROVISIONS 11.5.1 IF THE BASIC SERVICES covered by this Agreement have not been completed within ()months of the date hereof, through no fault of the Architect, extension of the Architect's services beyond that time shall be compensated as provided in Paragraph u.3. 11.5.2 Payments are due and payable 30 (thi )days from the date of the Architect's invoice. Amounts unpaid 60 (six )days after the invoice date shall bear interest at the rate entered below, or in the absence thereof, at the legal rate prevailing from time to time at the principal place of business of the Architect. (Insert rate ofinterest agreed upon.) Annual interest rate of eight percent (8 0°/~ or 0 67% per month on the unpaid balance. (LZsury laws and requirements under the Federal Truth in Lending Act, similar state and local consumer credit /aws and otherregulations at the Owner's and Architect's places ofbusiness the location of the project and elsewhere may affect the validity ofthis provision. Specific legal advice should be obtained with respect to deletion, or modification, and also regarding requirements such as written disclosures or waivers.) 11.5.3 The rates and multiples set forth for Additional Services shall be annually adjusted in accordance with normal salary review practices of the Architect. ARTICLE 12 OTHER CONDITIONS OR SERVICES (Insert descriptions of other services, identify Additional Services included within Basic Compensation and modifications to the payment and compensation terms included in this Agreement.) 12.1 LIMIT OF LIABILITY Reference Article 9 Miscellaneous Provisions. 9.11. This Agreement entered into as of the day and year first written above. OWNER ARCHITECT (Signature(!SJ (Signature) SAMANTHA ORDUN©. EXECUTIVE DIRECTOR RICHARD A. CARTER. SENIOR VICE PRESIDENT (Name an a ress RICHFIELD HOUSING & REDEVELOPMENT AUTHORITY (HRA) Name an a ress) LHB. MINNEAPOLIS OWNER-ARCHITECT AGREEMENT FOR HOUSING SERVICES - AIAO -WARNING Unlicensed photocopying violates U.S. copyright laws and will subject the violator to legal prosecution. This document was electronically produced with permission of the AIA and can be reproduced in accordance with your license without violation until the date of expiration as noted below. expiration as noted below. User Document: 02659AG052203 RICHFIELD HRA.AIA -- 7/30/2003. AIA License Number 1000839, which expires on 7/18/2004. Electronic Format 8181-1994 LHB 250 Third Avenue North, Suite 450 Minneapolis, MN 55401 PH: (612) 338-2029 FAX: (612) 338-2088 www.lhbcorp.com EXHIBIT B STANDARD HOURLY RATE SCHEDULE POSITION DESCRIPTION AVG $ MAX $ RATE/HR RATE/HR Project Principal .......................................................... 142 171 Project/Discipline Manager ............................................. 116 153 Sr. Architect: Landscape Architect/Engineer/Land Surveyor...... 97 123 Senior Certified Interior Designer ...................................... 85 104 Architect: Landscape Architect/Engineer/Land Surveyor/Certified 73 86 Interior Designer ........................................................... Designer: Architectural/Interior Design/Landscape/Structural..... 72 83 Technicians: Architectural/Civil/Structural ........................... 76 81 Interns: Architectural/Interior Design .................................. 49 60 Administrative ............................................................. 60 75 Reimbursable items will include, but are not limited to: Mileage :.......................... Billed at prevailing IRS rate Lodging & Meals:........... Billed at 110% of cost B&W Xerox Copies:...... Billed at $0.15 per copy Color Copies 11 x 17...... Billed at $2.00 per copy Color Copies 8-1/2 x 11 . Billed at $1.00 per copy Postage :.......................... Billed at 110% of cost Photography :.................. Billed at 110% of cost Reproduction :................. Billed at 110% of cost Subconsultant Fees:........ Billed at 110% of cost CADD ............................ Billed at $15.00/hr. Plotting B&W :................ Billed at $2.00 per bond copy, $3.00 per vellum copy Rates are subject to adjustment for normal salary review practices. The rates are current as of the date shown below. Actual amounts will be based upon the individual assigned. Revised 7/9/2003