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05-21-01 agendaCITY OF RICHFIELD, MINNESOTA HOUSING AND REDEVELOPMENT AUTHORITY MONDAY, MAY 21, 2001 RICHFIELD CITY HALL 6700 PORTLAND AVENUE COUNCIL CHAMBERS 7 P.M. OR IMMEDIATELY FOLLOWING SPECIAL CITY COUNCIL MEETING AGENDA. Call to order Approval of minutes of (1) Special HRA Closed Executive Session of March 19, 2001;.(2) Special Concurrent Meeting of HRA and City Council of April 10, 2001; (3) Regular HRA Meeting of April 16, 2001; and (4) Special HRA Meeting of April 23, 2001 1. Opportunity for citizens to address the HRA on items not on the agenda Notes: 2. HRA approval of agenda 3. Consent Calendar contains several separate items which are acted upon by the HRA in one motion. Once the Consent Calendar has been approved, the individual items and recommended actions have also been approved. No further HRA action is necessary. However, any HRA Commissioner may request that an item be removed from the Consent Calendar and placed on the regular agenda for HRA discussion and action. All items listed on the Consent Calendar are recommended for approval. A. Consideration of approval of purchase of 7039 Fifth Avenue with Community Development Block Grant funds for 2001-2002 New Home Program S.R. No. 41 B. Consideration of approval of resolution authorizing release of $920,000 Irrevocable Standby Letter of Credit dated October 30, 2000 for account of CSM Investors, Inc. for Shops at Lyndale, Phase II S.R. No. 42 i • Notes: 4. Consideration of options for continuation. of redevelopment process for Lyndale Gateway area Staff Report No. 43 Notes: 5. Consideration of temporary lease for HRA owned unimproved property at 709 Graham Avenue for parking and execution of agreement with Gramercy Corporation and Gramercy Park Staff Report No. 44 Notes: 6. Consideration of three resolutions related to HRA's Contract for Private Development with Richfield State Agency for Urban Village (aka Woodlake Centre) and authorize issuance of tax increment notes related to project Staff Report No. 45 Notes: 7. Claims and payroll Adjournment Auxiliary aids for individuals with disabilities are available upon request. Requests must be made at least 96 hours in advance to the Administrative Services Director at 612-861-9702. • ~~ STAFF REPORT 6 45 AGENDA ITEM # REPORT # HOUSING AND REDEVELOPMENT AUTHORITY MEETING .MAY 21, 2001 REPORT PREPARED BY: REPORT PRESENTER: DEPARTMENT DIRECTOR REVIEW: REVIEWED BY EXECUTIVE DIRECTOR: BRUCE NORDQUIST, HOUSING & REDEVELOPMENT MANAGER NAME, TITLE BRUCE NORDQUIST, HOUSING 8L REDEVELOPMENT MANAGER NAME, TITLE d ISCP~~e ITEM FOR HRA CONSIDERATION: Consideration of the Housing and Redevelopment Authority's Contract for Private Development with Richfield State Agency for Urban Village (aka Woodlake Centre) and authorize issuance of Tax Increment Notes related to the project. I. RECOMMENDED ACTION: By Motion: Adopt (1.) the attached resolution approving an amended and restated Contract for Private Redevelopment between the Housing and Redevelopment Authority and Richfield State Agency, Inc.; (2.) the attached resolution awarding the sale of, and providing the form terms, covenants and directions for the issuance of its Tax Increment Revenue Note, Series 2001 A; and (3.) the attached resolution awarding the sale of, and providing the form, terms, covenants and directions for the issuance of its Taxable Tax Increment Revenue Note, Series 2001 B. III. BACKGROUND The Housing and Redevelopment Authority (HRA) entered into the original Contract for Private Redevelopment. with Richfield State Agency, Inc. dated November 16, 1998. That document required the Redeveloper to construct certain housing and commercial improvements in the Urban Village tax increment financing (TIF) 052101 UrbanVillage District, and obligated the HRA to provide certain tax increment financing assistance on a "pay as you go" basis. The project is completed. Richfield State Agency, Inc. (the Redeveloper) determined a need to sell a portion of the TIF pay as you go note to its lender, Marquette Bank. That transaction called for the HRA to issue a $5,000,000 tax-exempt tax increment revenue note to the bank, and a $4,500,000 taxable tax increment revenue note to the Redeveloper. In September, 1999, the HRA approved an amendment to the original Contract to provide for substantially that transaction, but that amendment was not executed by the parties because additional modifications were anticipated. Since that time, additional modifications have been made to the Contract for Private Redevelopment (Contract) and negotiated with Marquette Bank and the Redeveloper, in order to facilitate issuance of the tax-exempt note. To that end, the parties have reached agreement on an Amended and Restated Contract for Private Redevelopment, which incorporates all the changes to date and is included as an attachment. As provided in the Amended and Restated Contract, the HRA will issue its tax exempt Tax Increment Revenue Note, Series, 2001A to Marquette Bank. The Series 2001A Note will be issued in the maximum principal amount of $4,750,000 with interest at 5.6% (subject to reset every five years). The resolution directs the HRA Executive Director to finalize the principal amount (which may be less but will not be more than $4,750,000) and insert the final payment schedule. This provision is necessary to permit adjustments as the parties evaluate the final results of any property tax reform legislation that. could affect the projections of tax increment from the Urban Village TIF District. The Note is payable solely from 75% of the tax increment generated from the Redeveloper's project. The HRA and City will have no obligation to make any payments if projected tax increment is insufficient. Proceeds of the Note will be used to reimburse the Redeveloper for various qualified costs in connection with the project. Also as provided in the Amended and Restated Contract, the HRA will issue its Taxable Tax Increment Revenue Note, Series 2001 B to the Redeveloper. The Series 2001 B Note will be issued in the maximum principal amount of $4,750,000, subject to increase by any amount that the Series 2001A Note is issued less than. $4,750,000. The interest rate is 7.4% subject to reset every five years. This Note is a conventional "pay as you go" note, subordinate to the Series 2001A Note issued to the bank. It is payable only from 75% of tax increment available in any year after the amounts due on the Series 2001A Note are paid. As a condition of issuing the Note, the Redeveloper-will be required to submit evidence that it has incurred qualified costs in at least the amount of the Series 2001A Note and the Series 2001 B Note combined. III. BASIS OF RECOMMENDATION A. POLICY • A Contract for Private Redevelopment between the HRA and Richfield State Agency is the basis for policy decisions. • Modifications to the Contract for Private Redevelopment and related tax increment notes are required to facilitate permanent financing for the completed project. • This proposal is similar to one recently approved by the HRA for the Gramercy Co-op project. B. CRITICAL ISSUES • To ensure that modifying the terms and requirements for the project will not increase obligations for the HRA. The HRA's total obligation will not be increased. C. FINANCIAL • The recommended actions are based on a review by the HRA's financial consultant, Sid Inman of Ehlers. • The HRA's financial obligation to this project will not increase. D. LEGAL • The attached documents have been prepared by the HRA'sJegal counsel IV. ALTERNATIVE RECOMMENDATION • The HRA can choose not to modify the Contract for Private Redevelopment and tax increment notes. However, this would impair the developer's ability to finalize the permanent financing for this project. V. ATTACHMENTS • Attachment A; Amended and Restated Contract for Private Redevelopment • Attachment B; Resolution approving an amended and restated Contract for Private Redevelopment between the HRA and Richfield State Agency, Inc • Attachment C; Resolution Awarding the Sale of, and Providing the Form, Terms, Covenants and Directions for the Issuance of its Tax Increment Revenue Note, Series 2001A • Attachment D; Resolution Awarding the Sale of, and Providing the Form, Terms, Covenants and Directions for the- Issuance of its Taxable Tax Increment Revenue Note, Series 2001 B VI. PRINCIPAL PARTIES EXPECTED AT MEETING • Kennedy & Graven representative • Redeveloper representative • Attachment A SJB Revised Draft 5:00 ~m 5/12/01 AMENDED AND RESTATED CONTRACT FOR PRIVATE REDEVELOPMENT BY AND BETWEEN THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD AND RICHFIELD STATE AGENCY, INC. 2001 This document was drafted by: Kennedy & Graven, Chartered (SJB) 470 Pillsbury Center 200 South Sixth Street Minneapolis, MN 55402 • TABLE OF CONTENTS ARTICLE I Definitions Exhibits Rules of Interpretation Section 1.1. Definitions ............................................................................................... 3 Section 1.2. Exhibits .......................................................................................................5 Section 1.3. Rules of Interpretation ................................................................................5 ARTICLE II Representations Section 2.1. Representations by the Redeveloper ...........................................................6 Section 2.2. Representations by HRA .............................................................................6 ARTICLE III Site Assembly Section 3.1. Statement of Intent, Acquisition ..................................................................8 Section 3.2. Reimbursement of Redeveloper Costs .........................................................8 ARTICLE IV Construction of Minimum Improvements ...................9 Section 4.1. Agreement to Construct and Maintain ...................................... Section 4.2. Soil Correction -Contamination .................................................................9 Section 4.3. Certificate of Completion ...........................................................................9 ARTICLE V Public Improvements Section 5.1. Agreement to Construct .............................................................................10 ARTICLE VI Insurance Section. 6.1. Insurance ....................................................................................................11 Section 6.2. Condemnation ............................................................................................12 Section 6.3. Disbursement of Insurance and Condemnation Proceeds ..........................13 • i ARTICLE VII Tax Increment Section 7.1. Provision of Tax Increment Assistance .....................................................16 Section 7.2. HRA Covenants .........................................................................................17 Section 7.3. Redeveloper Covenants .............................................................................17 Section 7.4. Rights of Tax Exempt Noteholder .............................................................18 ARTICLE VIII Financing Section 8.1. Copy of Notice of Default to Lender ........................................................19 Section 8.2. Lender's Option to Cure Defaults ..............................................................19 Section 8.3. Subordination ............................................................................................19 ARTICLE IX Prohibitions Against Assignment and Transfer Section 9.1. Representation as to Development ............................................................20 Section 9.2. Prohibition Against Transfer of Property and Assignment of Agreement .....................................................................20 Section 9.3. Qualifications .............................................................................................22 Section 9.4. Information as to Stockholders or Partners ................................................22 Section 9.5. Approvals ...................................................................................................22 Section 9.6. Release and Indemnification Covenants ....................................................23 ...............23 Section 9.7. .Confirm Transfers Void .............................................................. ARTICLE X Events of Default Section 10.1. Events of Default Defined ........................................................................24 Section 10.2. Remedies on Default ..................................................................................24 ...........:.......25 Section 10.3. No Remedy Exclusive ............................................................ Section 10.4. No Additional Waiver Implied by One Waiver ........................................25 Section 10.5. Qualifications .............................................................................................25 ARTICLE XI Additional Provisions Section 11 .1. Conflict of Interests; HRA Representatives Not Individually Liable........ 26 Section 11 .2. ..........:........................ Nondiscrimination ................................................... 26 Section 11 .3. ............................. Successors and Assigns ................................................. 26 Section 11 Section 11 .4. .5. Notice of Status and Conformance ............................................................ Notices and Demands ................................................................................ 26 26 Section 11 .6. Counterparts ............................................................................................... 27 ii Section 11.7. Redeveloper Deposit.::.:.......: ...:.....:...........................................................27 Section 11.8. Business Subsidy Agreement .....................................................................27 Section 11.9. Existing Contract Superseded ....................................................................27 TESTIMONIUM ....................................................................................................................29 SIGNATURES ....................................................................................................................30 Exhibit A -Legal Description Exhibit B -Public Redevelopment Costs Exhibit C -Public Redevelopment Cost Certification and Approval Form iii AMENDED AND RESTATED CONTRACT FOR PRIVATE DEVELOPMENT THIS AGREEMENT, made and entered into this day of , 2001, 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 RICHFIELD STATE AGENCY, INC. a Minnesota corporation, (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 in accordance with the provisions of this Agreement will undertake to modify the Project Area, and to establish within the modified Project Area the Urban Village Tax Increment Financing District ("TIF District") and to adopt a Tax Increment Financing Plan (hereinafter defined as the "Tax Increment Plan") for the TIF District to facilitate the financing 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 the 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 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 have been undertaken and are being assisted; and WHEREAS, to facilitate the Development, the Redeveloper and the Authority entered into a Contract for Private Development dated as of November 16, 1998 (the "Original Contract"), describing the parties' respective responsibilities in redevelopment of the property described in Exhibit A (the "Redevelopment Property"); and WHEREAS, the parties also entered into a so-called Second Amendment to Contract for Private Development dated 2000 (the "Amendment"), providing for certain additional assistance to Developer, and considered, but did not approve and execute. a First Amendment to Contract (the Original Contract as heretofore amended is sometimes referred to herein as the "Existing Contract"); and WHEREAS, the HRA and Redeveloper have now determined to enter into this Amended and Restated Contract for Private Development in order to establish and confirm the rights and responsibilities of the parties with respect to the Development, and to amend and restate the Existing Contract in its entirety; and WHEREAS, consistent with the 'fax Increment Plan, the HRA is willing to provide financial assistance in accordance with the provisions of this Agreement; NOW, THEREFORE, in consideration of the premises and mutual obligations of the parties contained herein, each of them does hereby represent, covenant and agree with the others as follows: • 2 . ARTICLE I DEFINITIONS, EXHIBITS RULES OF INTERPRETATION Section 1.1. Definitions. In this Agreement, unless a different meaning clearly appears from the context: "Act" means the Economic Development Act, located at Minnesota Statutes, Chapter 469, as amended. "Agreement" means this Amended and Restated Contract for Private Development, as the same may be from time to time modified, amended, or supplemented. "Certificate of Completion" means the certification provided to the Redeveloper pursuant to Section 4.3 of this Agreement. "City" means the City of Richfield. "County" means the County of Hennepin. "Development" means the Minimum Improvements to be constructed on various portions of the Redevelopment Property. The Development will consist of several separate and distinct elements. "Element" means a components of the Development which will be developed separately on a separate portion of the Redevelopment Property. "Event of Default" means an action by the Redeveloper listed in Section 10.1 of this Agreement. "Existing Contract" has the meaning given in the Recitals hereof. "Holder" means the holder of any mortgage given by the Redeveloper in order to finance the Development or portions thereof, that is secured in whole or in part by the Redevelopment Property or portions thereof. The term "Holder" does not include the Tax Exempt Note Holder. "Maturity Date" means the date that the Notes have been paid, redeemed or defeased in accordance with their terms. "Minimum Improvements" means the improvements constructed by Redeveloper on the Redevelopment Property. The Minimum Improvements include a 600 vehicle parking ramp, 78 units of assisted living, 138 rental residential units including 30 townhouse units and up to 90,000 gross square feet of commercial space including two restaurants, and related public and private facilities and amenities all as more fully described in the Concept Plans. 3 "Minnesota Environmental Policy Act" means the statutes located at Minnesota Statutes Sections 116D.01 et seq., as amended. "Minnesota Environmental Rights Act" means the statutes located at Minnesota Statutes Sections 116B.01 et seq., as amended. "National Environmental Policy Act" means the federal law located at 42 U.S.C. Section 4311 et seq., as amended. "Notes" means, collectively, the Taxable Note and the Tax Exempt Note. "Redeveloper" means Richfield State Agency, Inc., a Minnesota corporation. "Redevelopment Property" or "Property" means the real property described as such in Exhibit A of this Agreement. "Residential Rental Element" means 138 units of rental housing constructed on Lot 1, Block 3, Richfield Urban Village, and 78 units of assisted living constructed on Lot 1, Block 2, Richfield Urban Village. "State" means the State of Minnesota. "Taxable Note" means the Taxable Tax Increment Revenue Note, Series 2001B to be issued by the HRA substantially the form described in the Taxable Exempt Note Resolution. "Taxable Note Resolution" means the resolution authorizing issuance of the .Taxable Note, to be approved by the HRA in substantially the form on file with the HRA as of the date of this Agreement. "Tax Exempt Note" means the Tax Increment Revenue Note, Series 2001A to be issued by the HRA substantially the form described in the Tax Exempt Note Resolution. "Tax Exempt Note Holder" means the owner of the Tax Exempt Note from time to time. The initial Tax Exempt Note Holder is Marquette Capital Bank, N.A. "Tax Exempt Note Resolution" means the resolution authorizing issuance of the Tax Exempt Note, to be approved by the HRA in substantially the form on file with the HRA as of the date of this Agreement. "Tax Increment" means that portion of the real property taxes which is paid with respect to the Redevelopment. Property 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" or "TIF Act" means the statutes located at Minnesota Statutes Section 469.174 through 469.179. 4 "Tax Increment District" or "T'IF District" means the Urban Village Tax Increment Financing District. "Tax Increment Plan" or "TIF Plan" means the tax increment financing plan 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 financing of the Minimum Improvements shall not constitute Unavoidable Delays. Section 1.2. Exhibits. The following exhibits are attached to and made a part of this Agreement. Exhibit A Redevelo ment Property Legal Description; p Exhibit B Public Redevelopment Costs Exhibit C Public Redevelopment Cost Certification And Approval Form 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 "hereofl' 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. • 5 ARTICLE II REPRESENTATIONS Section 2.1. Representations bathe 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) As of the date of this Agreement, Redeveloper has constructed the Minimum Improvements. (c) Redeveloper will comply in all material respects, with all applicable local, state and federal environment laws and regulations, will have obtained any and all necessary environmental reviews, licenses or clearances under, and will be in material compliance with the applicable requirements of the National Environmental Policy Act of 1969, the Minnesota Environmental Policy Act, and the Critical Area Act of 1973 and any other applicable environmental law or regulation. Redeveloper has not received notice or communication from any local, state or federal official indicating that the activities of Redeveloper may be or will be in violation of any environmental law or regulation. Redeveloper is not aware of any facts the existence of which would cause the Redeveloper to be in violation of any local, state or federal environmental law, regulation or review procedure or which would give any person a valid claim under the Minnesota Environmental Rights Act; Section 2.2. Representations b~. The HRA makes the following representations as the basis for the undertakings herein contained. (a) The HRA is a public body corporate and politic with all the powers of a housing. and redevelopment authority duly organized and existing under the laws of the State of Minnesota. The HRA is authorized by law to enter into this Agreement and to carry out its obligations hereunder.. (b) The HRA.has approved a Project Area modification and establishment of the TIF District in accordance with the procedures provided for by law. Redeveloper agrees to release the HRA, its officers, agents and employees from any claims which it may .have based any successful challenge to the Project Area modification or the TIF District following their adoption. The HRA received the first Tax Increment from the TIF District in 2000. (c) The activities of the HRA are undertaken pursuant to the Act and are undertaken in accordance with the Tax Increment Plan in furtherance of the objectives of the Development. (d) Each of the Project Area, the Tax Increment Plan, and the TIF District have been duly and properly adopted and created and the TIF District is a duly and properly adopted and created "redevelopment district" as defined in the TIF Act. (e) The Available Tax Increment may be lawfully applied to payment of the Tax Exempt Note and the Taxable Note. 6 i (f) There are no pending or threatened legal proceedings of which the HRA is aware that if successful would .threaten the economic viability of the HRA or the validity or enforceability of this Agreement or that would restrain or enjoin the transactions contemplated by this Agreement. (g) Neither the execution and delivery of this Agreement, the consummation of the transactions contemplated hereby, nor the fulfillment of or compliance with the terms and conditions of this Agreement is prevented, limited by or conflicts with or results in a breach of, the terms, conditions or provisions of any corporate restriction or any evidences of indebtedness, agreement or instrument of whatever nature to which the HRA is now a party or by which it is bound, or constitutes a default under any of the foregoing. • n ~J 7 ARTICLE III SITE ASSEMBLY Section 3.1. Statement of Intent, Acquisition. As of the date of this Agreement, the Redeveloper has acquired all of the Redevelopment Property. The parties acknowledge that the HRA did not acquire and has no further obligations to acquire any parcel of the Redevelopment Property. Section 3.2. Reimbursement of Redeveloper Costs. All rights and obligations relating to reimbursement of Redeveloper's expenses related to acquisition of the Redevelopment Property are described in Section 7.1 hereof. • • 8 . ARTICLE IV CONSTRUCTION OF MINIMUM IMPROVEMENTS Section 4.1. Agreement to Construct and Maintain. As of the date of this Agreement, the Redeveloper has completed all demolition of prior structures and construction of all the Minimum Improvements. The Redeveloper hereby agrees to maintain and keep the Minimum Improvements in first class condition and good repair, and to operate the same in a first class manner, until the Maturity Date. Section 4.2. Soil Correction -Contamination. As between the. parties .hereto and the City, the Redeveloper shall have the sole responsibility and bear the cost necessary to make any necessary soil correction or to remedy or otherwise respond to the existence of any contamination or pollution in, on or under the Redevelopment Property. Neither the HRA nor the City has made any representations concerning the nature of soils, the suitability of such soils for the Minimum Improvements, the existence of .contaminants or pollutants, or the cost of correcting any unsuitable soil conditions, contamination or pollution. Section 4.3. Certificate of Completion. As of the date of this Agreement, the HRA has issued a Certificate of Completion for all Elements of the Minimum Improvements, which Certificate of Completion constitutes a conclusive determination of satisfaction of .the agreements and covenants in this Agreement with respect to the obligations of the Redeveloper to construct the Minimum Improvements. 9 . ARTICLE V PUBLIC IMPROVEMENTS Section 5.1. Agreement to Construct. As of the date of this Agreement, all public improvements necessary to serve the Development have been completed to the mutual satisfaction of the parties. n • 10 • ARTICLE VI INSURANCE AND CONDEMNATION Section 6.1. Insurance. (a) From and after the date of this Agreement and through the Maturity Date, the Redeveloper shall maintain, or cause to be maintained, at its cost and expense, and from time to time at the request of the HRA or Tax Exempt Note Holder shall .furnish proof of the payment of premiums on, insurance as follows: (i) Insurance against loss and/or damage to- the Minimum Improvements under a policy or policies- covering such risks as are ordinarily insured against by similar businesses, but in any event such insurance must provide coverage in an amount not less than the replacement value of the Minimum Improvements. (ii) Comprehensive general public liability insurance, including personal injury liability (with employee exclusion deleted), against liability for injuries to persons and/or property, in the minimum amount for each occurrence and for each year of $ and shall be endorsed to show the City, the HRA and Tax Exempt Note • Holder as additional insureds. (iii) Such other insurance, including workers' compensation insurance respecting all employees of the Redeveloper, in such amount as is customarily carried by like organizations engaged in like activities of comparable size and liability exposure; provided that the Redeveloper may be self-insured with respect to all or any part of its liability for workers' compensation. (iv) Any other insurance, in such amounts and under such policy forms, as may be required by any Holder from time to time. (b) All insurance required in this Article VI shall be taken out and maintained in responsible insurance companies selected by the Redeveloper that are authorized under the laws of the State to assume the risks covered thereby. Upon request, the Redeveloper will deposit annually with the HRA and Tax Exempt Note Holder a certificate or certificates or binders of the respective insurers stating that such insurance is in force and effect. Each policy shall contain a provision that the insurer shall not cancel nor modify it in such a way as to reduce the coverage provided below the amounts required herein without giving written notice to the Redeveloper, the HRA and the Tax Exempt Note Holder at least 30 days before the cancellation or modification becomes effective. In lieu of separate policies, the Redeveloper may maintain a single policy, blanket or umbrella policies, or a combination thereof, having the coverage required herein, in which event the Redeveloper shall deposit with the HRA and Tax Exempt Note Holder a certificate or certificates of the respective insurers as to the amount of coverage in • force upon the Minimum Improvements. 11 • (c) Redeveloper acknowledges that, in addition to any other remedies available under Article X hereof, if Redeveloper fails to maintain or provide proof of the insurance required under this Section, the HRA and/or the Tax Exempt Note Holder may obtain such insurance. Redeveloper will remain liable to HRA or Tax Exempt Note Holder, as the case may be, for all costs incurred by HRA or Tax Exempt Note Holder in obtaining such insurance, including without limitation the cost of policy premiums, broker fees, and attorney fees. (d) The Redeveloper agrees to notify the HRA and Tax Exempt Note Holder immediately in the case of damage exceeding $25,000 in amount to, or destruction of, the Minimum Improvements or any portion thereof resulting from fire or other casualty. Redeveloper hereby assigns, transfers and sets over to Tax Exempt Note Holder the entire proceeds payable under any insurance policy on account of such fire or other casualty; provided that such insurance proceeds shall be applied solely in accordance with Section 6.3. In the event of any damage to the Minimum Improvements from fire or other casualty, the Redeveloper will forthwith repair, reconstruct, and restore. the Minimum Improvements to substantially the same or an improved condition or value as it existed prior to the event causing such damage and, to the extent necessary to accomplish such repair, reconstruction, and restoration, the Redeveloper will apply the net proceeds of any insurance relating to such damage received by the Redeveloper to the payment or reimbursement of the costs thereof, in accordance with the terms of Section 6.3. The Redeveloper shall commence, diligently prosecute and complete the repair, reconstruction and restoration of the Minimum Improvements as promptly as reasonably • possible, regardless of whether the net proceeds of insurance received by the Redeveloper for such purposes are available or sufficient to pay for the same. Any net proceeds remaining after completion of such repairs, construction, and .restoration shall be the property of the Redeveloper. In addition to any other remedies available under this Agreement, the HRA (and/or Tax Exempt Note Holder as an intended third party beneficiary of the Redeveloper's covenants and agreements under this Agreement) may require, seek and obtain specific enforcement of Redeveloper's obligations under this Section. Section 6.2. Condemnation. Redeveloper will give Tax Exempt Note Holder prompt notice of any action, actual or threatened, in Condemnation (as defined herein) and hereby assigns, transfers and sets over to Tax Exempt Note Holder the entire proceeds of any award or claim for damages for all or any part of the Minimum Improvements taken or damaged under the power of eminent domain or condemnation (referred to as "Condemnation"); provided that such Condemnation proceeds shall be applied solely in accordance with Section 6.3. Redeveloper authorizes Tax Exempt Note Holder to intervene in any Condemnation action and to collect and receive from the condemning authorities and give proper receipts and acquittances for such proceeds. Redeveloper will not enter into any agreements with the condemning authority permitting or consenting to the taking of the Minimum Improvements without prior written consent from Tax Exempt Note Holder. Redeveloper shall deliver Condemnation proceeds to Tax Exempt Note Holder within 5 days after receipt thereof and shall at Tax Exempt Note Holder's request direct the condemning authority to deliver the Condemnation proceeds to Tax Exempt Note Holder. Any expenses incurred by Tax Exempt Note Holder in intervening in such action or collecting Condemnation proceeds (including the cost of any independent appraisal) shall be reimbursed to Tax Exempt Note Holder first out of Condemnation proceeds prior to other disbursements under Section 6.3. Following any Condemnation, the Redeveloper will forthwith repair, reconstruct, and restore the Minimum Improvements to substantially the same 12 • or an improved condition or value as it existed prior to the Condemnation and, to the extent necessary to accomplish such repair, reconstruction, and restoration, the Redeveloper will apply the net proceeds of any Condemnation received by the Redeveloper to the payment or reimbursement of the costs thereof, in accordance with the terms of Section 6.3. The Redeveloper shall commence, diligently prosecute and complete the repair, reconstruction and restoration of the Minimum Improvements as promptly as reasonably possible, regardless of whether the net proceeds of Condemnation received by the Redeveloper for such purposes are available or sufficient to pay for the same. Any net proceeds remaining after completion of such repairs, construction, and restoration shall be the property of the Redeveloper. In addition to any other remedies available under, this Agreement, the HRA (and/or Tax Exempt Note Holder as an intended third party beneficiary of the Redeveloper's covenants and agreements under this Agreement) may require, seek and obtain specific enforcement of Redeveloper's obligations under this Section. Section 6.3. Disbursement of Insurance and Condemnation Proceeds. Redeveloper agrees and understands for the benefit of the Tax Exempt Note Holder that Net Proceeds (as hereinafter defined) must be disbursed in accordance with the terms and conditions of .this Section. All restoration or repair work must be performed under the supervision of an architect acceptable to Tax Exempt Note Holder (or, at Tax Exempt Note. Holder's discretion, an engineer acceptable to Tax Exempt Note Holder) and pursuant to site and building plans and specifications approved by the HRA and Tax Exempt Note Holder. The proceeds from insurance and Condemnation, after payment of costs and expenses of collection ("Net Proceeds"), shall be • held by Tax Exempt Note Holder (or an escrow agent designated by Tax Exempt Note Holder) to defray the costs of such restoration or repair under such safeguards and controls as Tax Exempt Note Holder may require and in accordance with standard construction loan procedures. Net Proceeds may at the option of Tax Exempt Note Holder be disbursed through a title insurance company selected by Tax Exempt Note Holder and at the sole cost of Redeveloper. Prior to making Net Proceeds available for the payment of costs of repair or restoration of the Minimum Improvements, Tax Exempt Note Holder shall be entitle to receive the following ("Required Deliveries"): (a) Evidence that no default exists under any of the terms, covenants and conditions of this Agreement, or under the terms, covenants and conditions of any mortgage encumbering all or any part of the Minimum Improvements; (b) Satisfactory proof that all improvements have been fully restored, or that the expenditure of Net Proceeds will be .sufficient to repair, restore or rebuild the Minimum Improvements, free and clear of all liens, except the lien of any mortgage that is subordinate to the terms of this Agreement. In the event Net Proceeds shall be insufficient to repair, restore or rebuild the improvements, Redeveloper shall deposit with Tax Exempt Note Holder funds equaling such deficiency, which, together with the Net Proceeds, shall be sufficient to pay for restoration, repair and rebuilding the Minimum Improvements. (c) A statement of Redeveloper's architect, certifying the extent of the repair and • restoration completed to the date thereof, and that such repairs, restoration and rebuilding have been performed to date in conformity with the plans and specifications that have been approved by Tax .Exempt Note Holder, together with appropriate evidence of payment for labor or 13 • .materials furnished to the Minimum Improvements, and total or partial lien waivers substantiating such payments. (d) A waiver of subrogation from any insurer to the effect that such insurer has no liability as to Redeveloper or the then owner or other insured under the policy of insurance in question. (e) Such performance and payment bonds,. and such insurance, in such amounts, issued by such company or companies and in such forms and substance, as are required by Tax Exempt Note Holder. (f) Evidence that zoning, building and other necessary permits and approvals for the construction and operation of the Minimum Improvements have been obtained. (g) Satisfactory evidence is delivered to Tax Exempt Note Holder that the improvement can be rebuilt substantially to the same as those originally financed and can with restoration and repair continue to be operated for the purposes utilized prior to such damage. (h) Tenants of the Minimum Improvements as designated by Tax Exempt Note Holder shall certify to Tax Exempt Note Holder their intention to continue to occupy the Minimum Improvements without any abatement or adjustment of rental payments (other than temporary abatements during the period of restoration and repair). • (i) Evidence that the appraised value of the Minimum Improvements after such restoration or repair shall not be less .than its appraised value as of the date hereof. (j) Evidence that each Holder of a mortgage encumbering all or any part of the Minimum Improvements has consented to the application of Net Proceeds to costs of repair or restoration of the Minimum Improvements, as aforesaid. In the event Redeveloper fails to meet. the above conditions for disbursement of Net Proceeds or otherwise fails to restore, repair or rebuild the improvements upon the Minimum Improvements within a reasonable time (and in no event later than twelve (12) months after the date of any damage, destruction, or Condemnation), then such failure shall constitute an Event of Default hereunder and Tax Exempt Note Holder, at its option and upon not less than thirty (30) days' written notice to Redeveloper, may in addition to its remedies contained in this Agreement, (i), subject to the conditions of the last paragraph of this Section 6.3, apply the Net Proceeds against the outstanding balance of the Tax Exempt Note (with such application being made against installments due in the inverse order of their maturity), or (ii) restore, repair or rebuild the said improvements for or on behalf of Redeveloper and for such purpose, may perform all necessary or appropriate acts to accomplish such restoration, repair or rebuilding, and use the Net Proceeds to pay all costs and expenses incurred by the Tax Exempt Note Holder in accomplishing such restoration, repair or rebuilding. In the event Net Proceeds are insufficient to pay all such costs and expenses, Redeveloper shall, within ten (10) days of written request from the Tax Exempt Note Holder, deposit the shortfall with Tax Exempt Note Holder, which • Tax Exempt Note Holder must use to pay costs and expenses of restoration, repair or rebuilding. In the event Net Proceeds exceed the amount necessary to complete the repair, restoration, or the 14 • rebuilding of the improvements upon the Minimum Improvements, such excess must be returned to Redeveloper, its mortgagees and assigns. Redeveloper grants to the Tax Exempt Note Holder a right of entry on the Redevelopment Property in order to permit Tax Exempt Note Holder to exercise its rights under this Sections. Net Proceeds, and any amounts deposited by Redeveloper in the event Net Proceeds are insufficient as described in the previous paragraph, may not be disbursed to or for the benefit of Tax Exempt Note Holder for any purpose other than restoration of the Minimum Improvements unless and to the extent either (x) the HRA and Tax Exempt Note Holder have received an opinion of anationally-recognized bond counsel selected by the HRA to the effect that such disbursement will not cause the interest on the Tax Exempt Note to become includable in gross income of the holder thereof for purposes of federal and state income taxation, or (y) the Tax Exempt Note Holder delivers to the HRA a written release in a .form reasonably satisfactory to the HRA, stating that the Tax Exempt Note Holder expressly releases, waives any claim against, and agrees to indemnify, defend and hold harmless. the HRA and Kennedy & Graven, Chartered as bond counsel in connection with any claim arising from a determination that interest on the Tax Exempt Note is includable in gross income of the holder thereof for purposes of federal and state income taxation. • • 15 • ARTICLE VII TAX INCREMENT Section 7.1. Provision of Tax Increment Assistance. In order to make development of the Minimum Improvements financially feasible, and to reimburse the Redeveloper for Public Redevelopment Costs specified in Exhibit B, the. HRA shall issue the Tax Exempt Note in the maximum principal amount of $5,000,000, and the Taxable Note in the maximum principal amount of $4,500,000, all in accordance with the terms of this Section. (a) Tax Exempt Note. The HRA will-issue and sell the Tax Exempt Note to the Tax Exempt Note Holder in accordance with the Tax Exempt Note Resolution. The Tax Exempt Note shall be payable solely from the revenues, mature on the dates, and bear interest at the rate or rates specified in the Tax Exempt Note Resolution. The HRA shall approve the Tax Exempt Note Resolution upon approval of this Agreement. Delivery of the Tax. Exempt Note shall be conditioned upon (i) receipt by the HRA of an investment letter from the Tax Exempt Note Holder in a form reasonably acceptable to the HRA, (ii) there being no Event of Default under this Agreement, and (iii) receipt from Redeveloper of costs of issuance and amounts required to be deposited in the reserve fund in accordance with the Tax Exempt Note Resolution. HRA hereby acknowledges receipt and approval of a Public Redevelopment Cost Certification And Approval Form, in substantially the form attached hereto as Exhibit C, together with supporting invoices,. and m the case of request for reimbursement of land acquisition costs, copies of each relevant purchase agreement, certificate of real estate value and closing statement. Accordingly, the HRA will promptly upon receipt disburse proceeds of the Tax Exempt Note to the Redeveloper. (b) Taxable Note. The HRA will issue and sell the Taxable Note to the Redeveloper, in accordance with the Taxable Note Resolution. The Taxable Note shall be payable solely from the revenues, mature on the dates, and bear interest at the rate or rates specified in the Taxable Note Resolution substantially in the form on file with the HRA as of the date of this Agreement. The HRA shall approve the Taxable Note Resolution upon approval of this Agreement. The HRA and the Redeveloper agree that the consideration from the Redeveloper for the purchase of the Taxable Note shall consist of the Redeveloper's incurring Public Redevelopment Costs in excess of the amount financed with proceeds of the Tax Exempt Note. Upon or before delivery of the Taxable Note, the Redeveloper shall have delivered and the HRA approved a Public Redevelopment Cost Certification And Approval Form, in substantially the form attached hereto as Exhibit C evidencing costs in an amount at least equal to the principal amount of the Taxable Note and not financed from proceeds of the Tax Exempt Note. The certification form must be accompanied by supporting invoices, and in the case of request for reimbursement of land acquisition costs, copies of each relevant purchase agreement, certificate of real estate value and closing statement. • (c) No Warranties. The Redeveloper understands and acknowledges that the HRA makes no representations or warranties regarding the amount of Available Tax Increment (as defined in the Notes), or that revenues pledged to the Note will be sufficient to pay the principal 16 of and interest on the Notes. .Any estimates of Tax Increment prepared by the HRA or its financial advisors in connection with the TIF District, the Agreement and the Notes are for the benefit of the HRA, and are not intended as representations on which the Redeveloper or the Tax Exempt Note Holder may rely. Section 7.2. HRA Covenants. (a) The HRA will take no action, nor omit to take any action, regarding the TIF District that impairs the collection or payment of Tax Increment or the amount thereof, unless and to the extent the impairment in collection, payment or amount is de minimis. (b) In the event the HRA at any time reasonably estimates that, by reason of changes in the method of taxation for the support of cities, counties or school districts, Available Tax Increment (as defined in the Notes) is insufficient to pay the principal of and interest on the Notes when due, then if legislatively-created options to ameliorate the adverse effect upon tax increment financing are available to the HRA, the HRA will exercise such options in such a way as to retain to the extent possible sufficient Available Tax Increment to pay the principal of and interest on the Notes when due; provided that the HRA will have no obligation to exercise any option that it determines, in its reasonable discretion, will result in materially adverse financial consequences for the HRA. (c) Upon request of the Tax Exempt Note Holder, the HRA will assign its rights under this Agreement to the Tax Exempt Note Holder, subject to terms and conditions mutually • agreed by such parties. (d) If this Agreement shall in any action or proceeding be terminated, rescinded or rejected the HRA shall promptly enter into such new instruments and agreements as may be necessary to provide to the Tax Exempt Note Holder all of the essential benefits of this Agreement and rights with respect to the Tax Exempt Note. (e) Upon request of the Tax Exempt Note Holder from time to time, the HRA will provide to the Tax Exempt Note Holder written reports describing fund balances related to the Tax Exempt Note, amounts of Available Tax Increment received or to be received in the current year, and similar information related to the Tax Exempt Note. Section 7.3. Redeveloper Covenants. In connection with issuance of the Tax Exempt Note, the Redeveloper agrees that it will take no action, and will not fail to take an action, the effect of which will be to: (a) cause the Tax Exempt Note to be determined to be a "private activity bond" (as such term is defined in Section 141 of the Internal Revenue Code of 1986, as amended (the "Code") and in applicable Treasury Regulations promulgated pursuant to the applicable Code provisions (the "Regulations"); (b) cause the "private security or payment test" or the "private loan financing test" (as • such terms are defined in Section 141 of the Code and in applicable Regulations) to be satisfied with respect to the Tax Exempt Note; 17 • (c) cause the Tax Exempt Note to be determined to be an "arbitrage bond" (as such term is defined in Section 148 of the Code and in applicable Regulations); or (d) cause interest on the Tax Exempt Note to be includable in gross income for federal income tax purposes. Section 7.4. Rights of Tax Exempt Note Holder. (a) The HRA and Redeveloper each acknowledge and agree that the Tax Exempt Note Holder is a direct, intended beneficiary of all of the covenants, warranties and agreements of Redeveloper hereunder including, without limitation, the agreement of the Redeveloper to maintain and operate the minimum improvements in a first class manner under Article IV, the agreement of the Redeveloper to insure the Minimum Improvements (and to restore the Minimum Improvements in the event of casualty or Condemnation without regard to the sufficiency or availability of Net Proceeds) under Article VI. Accordingly, the Tax Exempt Note Holder shall have the right to require, seek and obtain specific enforcement of the Redeveloper's obligations under this Agreement, and may bring proceedings to enjoin, rescind and reverse any action taken by or with respect to the Redeveloper which under the terms of this Agreement requires the consent of the Tax Exempt Note Holder if such action was taken without such consent. Redeveloper acknowledges that if Redeveloper shall default in any covenant, warranty or agreement hereunder, Tax Exempt Note Holder will have no adequate remedy at law, and Redeveloper hereby waives each and every objection and defense to such specific enforcement (or proceedings to enjoin, rescind or reverse) by Tax Exempt Note Holder. If Tax Exempt Note • Holder shall bring a proceeding to enforce this Agreement, Redeveloper agrees to pay all costs and expenses (including attorneys fees) that may become due and owing to any third party. engaged by Tax. Exempt Note Holder, it being agreed that Redeveloper's agreement to pay such costs to such third parties is itself specifically enforceable. (b) Each of the HRA and Redeveloper agrees that without the prior written consent of the Tax Exempt Note Holder, which consent may be granted or withheld in the absolute discretion of the Tax Exempt Note Holder, none of the following agreements, resolutions or items may be amended or modified (and no right or obligation arising under. any of them which relates to the Tax Exempt Note shall be waived or abridged): this Agreement, the Tax Exempt Note Resolution, the Tax Exempt Note, .and to the extent any amendment or modification materially affects the collection or payment of Tax Increment pledged to the Tax Exempt Note, the Tax Increment Plan, the Project Area, and the TIF District. Any attempt to amend or modify (or waive or abridge any rights under or with respect to) said agreements, resolutions or items (except as otherwise provided with respect to the Tax Increment Plan, the Project Area and the TIF District) without the prior written. consent of Tax Exempt Note Holder shall be null and void and of no force or effect. As of the date hereof, there exists no other agreement or understanding which amends, modifies, waives or abridges any of said agreements, resolutions or items. (c) The HRA covenants and agrees for the benefit of the Tax Exempt Note Holder that the Available Tax Increment (as defined in the Tax Exempt Note Resolution) has not been and will not be pledged or assigned to any party other than the Tax Exempt Note Holder. • 18 • ARTICLE VIII FINANCING Section 8.1. Copy of Notice of Default to Lender. Prior to the Maturity Date, 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 and the Tax Exempt Note Holder by sending such notice to address of the Tax Exempt Note Holder as shown in the records of the registrar for the Tax Exempt Note, and to the last known address of each Holder as shown in the HRA's records. Section 8.2. Lender's Option to Cure Defaults. After any breach or event of default referred to in Section 10.1 hereof, any Holder and the Tax Exempt Note 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 breach or event default Section 8.3. Subordination. In order to facilitate the obtaining of construction or permanent financing for an Element by the Redeveloper, the HRA agrees to subordinate its rights under this Agreement to the. mortgage evidencing any such construction or permanent financing; but only if (a) the HRA determines in the exercise of its reasonable judgment it is in its best interest to do so, and (b) such subordination is approved in writing by the Tax Exempt • Note Holder. U 19 • ARTICLE IX PROHIBITIONS AGAINST ASSIGNMENT AND TRANSFER Section 9.1. Representation as to Development. The Redeveloper represents and agrees that its undertaking pursuant to the Agreement are, and will be used, for the purpose of development of the Redevelopment Property and not for speculation in land holding. 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 financing 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 identify of the Redeveloper are of particular concern to the community and the HRA. Finally, the Redeveloper recognizes that, in view of the importance to the Tax Exempt Note Holder of the responsible care and maintenance of the Minimum Improvements under Article IV, the covenant (and ability to honor the covenant) to repair, reconstruct and restore the Minimum Improvements under Article VI, the performance of covenants relating to the use and operation of the Minimum Improvements, and the status of the Tax Exempt Note, the qualifications and identity of the Redeveloper are of particular concern to the Tax Exempt Note Holder. Any significant change with respect to the identify 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 identify that the HRA is entering into this Agreement with .the Redeveloper and the Tax Exempt Note Holder is agreeing to purchase the Tax Exempt Note, and each, 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 9.2. Prohibition Against Transfer of Property and Assignment of Agreement. For the foregoing reasons, the Redeveloper represents and agrees that, until the Maturity Date: (a) Except only by way of security for, and only for, the purpose of obtaining financing necessary to enable the Redeveloper or any successor in interest to the Redevelopment Property, or any part thereof, to perform its obligations with respect to making the Minimum Improvements under this Agreement, and any other purpose authorized by this Agreement, Redeveloper 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, the Redevelopment Property ,the Minimum Improvements, or any part or Element thereof or any interest therein, or any contract or agreement to do any of the same, without the prior written approval of the HRA and the Tax Exempt Note Holder. (b) The HRA and the Tax Exempt Note Holder shall be entitled to require, except as otherwise provided in the Agreement, as conditions to any such transfer that: (i) any proposed transferee shall have the qualifications and financial responsibility, as determined by each of the • HRA and Tax Exempt Note Holder, necessary and adequate to fulfill the obligations undertaken in the 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 20 proposed transferee, by instrument in writing satisfactory to the HRA and Tax Exempt Note Holder and in form recordable among the land records, shall for itself and its successors and assigns, and expressly for the benefit of the HRA and Tax Exempt Note Holder, have expressly assumed all of the obligations of the Redeveloper under the 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 the Agreement or agreed to in writing by the HRA and Tax Exempt Note Holder) relieve or except such transferee or successor of or from such obligations, conditions, or restrictions, or deprive or limit the HRA or Tax Exempt Note Holder 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 the 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 the 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 or Tax Exempt Note Holder of or with respect to any rights or remedies or controls provided in or resulting from the Agreement with respect to the Property and the construction of the Minimum Improvements that the HRA or Tax Exempt Note Holder would have had, had there been no such transfer or change; (iii) there shall be submitted to the HRA and Tax Exempt Note Holder for review all instruments and other legal documents involved in effecting transfer, and if . approved by the HRA and Tax Exempt Note Holder such approval shall be indicated to the Redeveloper in writing. (c) Certain Transfers Exempted. Notwithstanding the prohibitions against transfer contained in this section, and. the rights granted the HRA-under Section 9.5, the Redeveloper shall have the right to transfer ownership interests in the Redeveloper among the current shareholders, and to transfer ownership interest in the Redeveloper, this Agreement, or the Redevelopment Property to family members of William George ("W.G.") Kirchner or to entities controlled by his family members, for tax and/or estate planning purposes, or due to the death or incapacity of his spouse. Such transfer shall be subject to the provisions of Section 9.2(b)(ii) and (iii). (d) In the absence of specific written agreement by the HRA to the contrary, no such transfer or approval by the HRA and Tax Exempt Note Holder thereof shall be deemed to relieve the Redeveloper, or any other party bound in any way by the 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 9.2(b), and, if approved in writing by the Tax Exempt Note Holder, relieve Redeveloper if the transferee or assignee is acceptable to the HRA and Tax Exempt Note Holder. (e) Notwithstanding anything to the contrary herein, the Redeveloper may not transfer the Redevelopment Property or any portion thereof to any person or entity whose ownership or use thereof would render such property exempt from property tax under State law. 21 Section 9.3. Qualifications. The Development is comprised of several Elements. As of the date of this Agreement, the Residential Rental Element (including the relevant portion of the Redevelopment Property) has been transferred to Oaks LLC. The HRA consents to such transfer, provided that Redeveloper is not released and remains obligated in all respects under this Agreement with respect to the Residential Rental Element. „i.;o,.++„ +~.o+o,.,,..~ ,.ice,.+;,,,, o zc~r;;~ .,~a ~;;;~ Section 9.4. Information as to Stockholders or Partners. In order to assist in the effectuation of the purposes of this Article IX of this Agreement, the Redeveloper agrees that during the period .between the execution of this Agreement and the Maturity Date, (a) the Redeveloper will promptly notify the HRA and Tax Exempt Note Holder of any and all changes whatsoever in the ownership of stock or partnership interests, legal or beneficial which in the aggregate exceed ten percent (10%) of the issued stock or partnership interests in Redeveloper at any level, or of any other act or transaction involving or resulting in any change in the ownership or stock or partnership interests of such Redeveloper or in the relative distribution thereof, which in the aggregate exceeds ten. percent (10%) of the issued stock or partnership interests of Redeveloper, and (b) Redeveloper shall, at such time or times as the HRA or Tax Exempt Note Holder may request, furnish the HRA and Tax Exempt Note Holder with a complete statement, subscribed and sworn to by the president, general partner, member or other executive officer of Redeveloper, setting forth all of the stockholders, members, or partners of Redeveloper and the extent of their respective holdings, and in the event any other parties have a beneficial interest in such stock or partnership interest, their names and the extent of such interest, all as determined or indicated by the records of Redeveloper, by specific inquiry made by any such officer, of all parties who on the basis of such records own ten percent (10%) or more of the stock or partnership interest of Redeveloper, and by such other knowledge or information as such officer shall have. Upon request from the Tax Exempt Note Holder, the Redeveloper will cause the Oaks LLC to provide to Tax Exempt Note Holder the reports described in this Section 9.4 with respect to Oaks LLC. Section 9.5. Approvals. Any approval required to be given by the HRA under this Article IX 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. Any approval required to be given by the Tax Exempt Note Holder may be given or withheld in the absolute discretion of the Tax Exempt Note Holder. At the HRA's or Tax Exempt Note Holder's request, the Redeveloper shall provide to the HRA's attorney for privileged review on behalf of the HRA and to the Tax Exempt Note Holder financial information as to any proposed general partners, members,. or controlling stockholders of proposed assignees or transferees, and financial information as to any such partnership, limited liability company or corporation. Section 9.6. Release and Indemnification Covenants. (a) The Redeveloper releases from and covenants and agrees that the HRA and the City and Tax Exempt Note Holder and the governing body members, officers, agents, servants and employees thereof shall not be liable for and agrees to indemnify and hold harmless the HRA and the City and Tax Exempt Note Holder and the governing body members, officers, agents, servants and employees thereof against any loss or damage to property or any injury to or 22 death of any person occurring at or about or resulting from any defect in the Minimum Improvements. (b) Except. for any willful misrepresentation or any willful or wanton misconduct of the following named parties, the Redeveloper agrees to protect and defend the HRA and the City and Tax Exempt Note Holder and the governing body members, officers, agents, servants and employees thereof, now or forever, and further agrees to hold the aforesaid harmless from any claim, demand, suit, action or other proceeding whatsoever by any person or entity whatsoever arising or purportedly arising from this Agreement, or the transactions. contemplated hereby or the acquisition, construction, installation, ownership, and operation of the Minimum Improvements. (c) Except where arising from the negligent act or omission of the following named parties, the HRA and the City and Tax Exempt Note Holder and the governing body members, officers, agents, servants and employees thereof shall not be liable for any damage or injury to the persons or property of the Redeveloper or its officers, agents, servants or employees or any other person who may be about the Redevelopment Property, Minimum Improvements due to any act of negligence of any person: (d) All covenants, stipulations, promises, agreements and obligations of the HRA contained herein shall be deemed to be the covenants, stipulations, promises, agreements and obligations of the HRA .and not of any governing .body member, officer, agent,. servant or employee of the HRA in the individual capacity thereof. (e) Notwithstanding anything to .the contrary in this Agreement, the HRA shall have no right to enforce, and the Redeveloper shall have no obligation to take any actions or make any payments, under paragraphs (a), (b) and (c) of this Section 9.6 unless and to the extent that the HRA shall have received an opinion of anationally-recognized bond counsel selected by the HRA to the effect that the receipt by the HRA of such payment will not cause the interest on the Tax Exempt Note to become includable in gross income of the holder thereof for purposes of federal income taxation. The .requirement for such an opinion may be waived by the Tax Exempt Note Holder by delivery to the HRA of a written waiver in a form acceptable to the HRA, including at a minimum representations that the Tax Exempt Note Holder has consulted with its legal counsel regarding such waiver and that Tax Exempt Note Holder waives any claims against HRA related to or arising from enforcement actions described in this paragraph. Section 9.7. Certain. Transfers Void. If Redeveloper (or any permitted successor or assign of Redeveloper) shall attempt to make any assignment or transfer with respect to which the consent of Tax Exempt Note Holder is required hereunder without first obtaining the written consent of Tax Exempt Note Holder, such attempted assignment or transfer shall be null and void and of no effect whatsoever. • 23 ARTICLE X EVENTS OF DEFAULT Section 10.1. Events of Default Defined. The following shall be "Events of Default" under this Agreement and the term "Event of Default" shall mean, whenever it is used in this Agreement (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 or performing any actions required to be performed under this Agreement. (b) Subject to Unavoidable Delay, failure by the Redeveloper to observe and substantially perform any covenant, conditions, obligation, or agreement on its part to be observed or performed hereunder. (c) If the Redeveloper shall admit in writing its inability to pay its debts generally as they become due, or shall file a petition in bankruptcy, or shall make an assignment for the benefit of creditors, or shall consent to the appointment of a receiver of themselves or of the whole or any substantial part of the Redeveloper Property. (d) If the Redeveloper shall file a petition or answer seeking reorganization or arrangement under the federal bankruptcy laws. (e) If the Redeveloper, on a petition in bankruptcy filed against them, be adjudicated a bankrupt, or a court of competent jurisdiction shall enter an order of decree appointing, without the consent of Redeveloper, a receiver of Redeveloper or of the whole or substantially all of its property, or approve a petition filed against Redeveloper seeking reorganization or arrangement of Redeveloper under bankruptcy laws, and such adjudication, order, or decree shall not be vacated or set aside or stayed within sixty (60) days from the date of entry thereof. (f) If the Redeveloper is in default under any mortgage in favor of the HRA and fails to cure any such default within thirty (30) days after written demand from the HRA to do so. Section 10.2. Remedies on Default. Whenever any Event of Default referred to in Section 10.1 of this Agreement occurs, the HRA may, in addition to any other remedies or rights given the HRA under this Agreement, but only after at least thirty (30) 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 taken within such 30-day period, find the Redeveloper in default (Default) and take any one or more of the following actions: (a) Suspend its performance under the Agreement until it receives assurances from the Redeveloper or mortgagee reasonably deemed adequate by the HRA, that the Redeveloper. will cure the default and continue performance under the Agreement. 24 (b) 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. Notwithstanding the foregoing provisions of Section 10.1 and this Section 10.2 (or any other provision of this Agreement) the HRA shall have no right or power to exercise any remedy hereunder or at law or in equity that could or might (i) 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, or (ii) affect, impair, diminish or limit in any way the Tax Exempt Note or the rights of the Tax Exempt Note Holder to receive payments under (or the obligation of the HRA to make payments on account of) the Tax Exempt Note. Section 10.3. No Remedy Exclusive. No remedy herein conferred upon or reserved to the HRA or Tax Exempt Note Holder 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. Except as provided in Section 10.4 of this Agreement, 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 Tax Exempt Note Holder 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. • Section 10.4. 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. Section 10.5. 4ualifications. Notwithstanding anything herein to the contrary, the HRA and Redeveloper acknowledge and agree as follows: (a) The Redeveloper .will remain obligated with regard to all Elements unless released in accordance with Sections 9.3 and 9.4. (b) Nevertheless, a default with respect to one Element will not give rise to any remedies hereunder with respect to any other Element. (c) Unless otherwise released from its obligations under this Agreement, this Section is a limitation of the remedies available to the HRA, and not as a limitation on the right to pursue the Redeveloper for a default. (d) Under no circumstances will the exercise of any right or remedy under or with respect to this Agreement affect, impair, diminish or limit in any way the Tax Exempt Note or the rights of the Tax Exempt Note Holder to receive payments under (or the obligation of the • HRA to make payments on account of) the Tax Exempt Note. 25 • ARTICLE XI ADDITIONAL PROVISIONS Section 11.1. Conflict of Interests• HRA Representatives 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. Section 11.2. 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 11.3. Successors and Assigns. The provisions of this Agreement shall be binding upon the successors and assigns of the parties hereto. Nothing in this Section 11.3 is intended to alter or diminish the right of the HRA and Tax Exempt Note Holder to consent to certain transfers, as provided in Article IX hereof. Section 11.4. 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 or Tax Exempt Note Holder, to execute, acknowledge and deliver, without charge, to Redeveloper or Tax Exempt Note Holder or to any person designated by Redeveloper or Tax Exempt Note Holder, 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 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 or Tax Exempt Note Holder hereunder, and any other information reasonably requested by the Redeveloper or Tax Exempt Note Holder. It is the intention of this Section 11.4 to provide a mechanism for obtaining estoppel certificates which may be requested by Redeveloper's mortgagee or any transferee (or prospective transferee) of the Tax Exempt Note. Section 11.5. Notices and Demands. Except as otherwise expressly provided in this Agreement, a notice, demand, or other communication under the Agreement by either party to the other shall be sufficiently given or delivered 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 26 r~ U As to the Redeveloper: Richfield State Agency, Inc. 6625 Lyndale Avenue South Richfield, MN. 55423 Attention: Steven Kirchner As to Tax Exempt Note Holder: • Marquette Capital Bank, N.A. Suite 4000 Dain Tower Sixty South Sixth Street Minneapolis, MN 55402 Attention: 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 11.6. Counterparts. This Agreement may be simultaneously executed in any number of counterparts, all of which shall constitute one and the same instrument. Section 11.7. Redevel~er Deposit. The parties acknowledge that the Redeveloper previously deposited. certain funds with the HRA to reimburse the HRA for costs incurred by it in connection with the preparation of the Original Contract and the establishment of the TIF District. Such deposit has been fully expended as of the date of this Agreement, but Redeveloper remains obligated to reimburse HRA for any costs in connection with this Agreement and issuance of the Taxable Note. The parties acknowledge that the HRA's costs in connection with the Tax Exempt Note (including without limitation bond counsel and other attorney fees and financial advisor fees) will be paid from proceeds of the Tax Exempt Note. Redeveloper must pay any amount required under this Section within 30 days after receiving a written request from the HRA. Section 11.8. Business Subsid~greement. In addition to the assistance otherwise provided for in this Agreement, the Redeveloper has also. received a business subsidy to cover the cost of certain utility relocation and resizing, in the amount of $97,900 provided by the HRA and $35,000 provided by the City (collectively, the "Business Subsidy"). The Business Subsidy shall be paid in accordance with the provisions of separate Business Subsidy Agreements entered into by the Redeveloper with the HRA and the City, respectively, in accordance with the provisions of the Business Subsidy Act (Chapter 243, Article 12, Laws, 1999) ("Act"). The Redeveloper's obligation to repay all or part of the Business Subsidy will be subject entirely to the terms of the Business Subsidy Agreements, except that the Redeveloper agrees that any Tax Increment remaining after the Notes have been paid shall be applied to repay any part of the Business Subsidy not previously repaid. No failure to pay or perform any obligation under or with respect to the Business Subsidy Agreement shall affect the Tax Exempt Note or the right of the Tax Exempt Note Holder to receive payments thereunder. Section 11.9. Existing Contract Superseded. This Amended and Restated Contract for Private Redevelopment is intended to amend and restate the Existing Contract in its entirety, and no person or party shall have any rights or obligations under or with respect to the Existing Contract, all rights and obligations with respect to the Redevelopment Property being as stated herein and in documents entered into pursuant hereto. 27 • 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: By: STATE OF MINNESOTA SS COUNTY OF ) Its: Its: Executive Director The foregoing instrument was acknowledged before me this day of , 2001, by and ,the Chairperson and Executive Director. of The Housing and Redevelopment Authority in and for the City of Richfield, Minnesota. Notary Public • 28 RICHFIELD STATE AGENCY, INC. • By: Its: STATE OF MINNESOTA ) SS COUNTY OF ) The foregoing instrument was acknowledged before me this day of , 2001, by ,the of Richfield State Agency, a Minnesota on behalf of the Notary Public • • 29 The undersigned, as owner of the Residential Rental Element described in the above Amended • and Restated Contract for Private Redevelopment between the Housing and Redevelopment Authority in and for the City of Richfield and Richfield State Agency, Inc., ("Agreement") expressly consents to all the terms of the Agreement and agrees, for the benefit of the Authority and the Tax Exempt Note Holdeer, to be bound by all covenants and obligations of Redeveloper as they relate to the Residential Rental Element. OAKS LLC By: Its: STATE OF MINNESOTA ) SS COUNTY OF ) The foregoing instrument was acknowledged before me this day of , 2001, by ,the of Oaks LLC, a Minnesota limited liability company, on behalf of the limited liability compnay. i • 30 • EXHIBIT A LEGAL DESCRIPTION • A-1 • EXHIBIT B PUBLIC REDEVELOPMENT COSTS The following costs incurred by the Redeveloper constitute Public Redevelopment Costs: Land acquisition Parking Ramp Grading and Excavation Landscaping • • B-1 • EXHIBIT C PUBLIC REDEVELOPMENT COST CERTIFICATION AND APPROVAL FORM Request for Reimbursement from: Tax Exempt Note Taxable Note Date Of Request: (To be Completed by Redeveloper) Date Of Receipt: (To be Completed by HRA) 1. Public Redevelopment Costs Represented by this Certification $ (Itemization attached, including dates of payment) 2. Total Public Redevelopment Costs Previously Approved $ 3. Amount of this Request Approved $ 4. Total Approved Public Redevelopment Costs $ Richfield State Agency, Inc. ("Redeveloper") is delivering this instrument to the Housing • and Redevelopment Authority in and for the City of Richfield (the "HRA"), pursuant to Section 7.1 of the Amended and Restated Contract for Private Redevelopment dated as of , 2001, between the Redeveloper and the HRA (the "Redevelopment Contract"). The Redeveloper hereby certifies that (i) the Public Redevelopment Costs represented by this certification (e.g. amounts on line 1 hereof) have been paid to third parties unrelated to Redeveloper; (ii) such Public Redevelopment Costs have not previously been contained in a cost certification furnished to the HRA pursuant to Section 7.1 of the Redevelopment Contract, and (iii) if Redeveloper requests payment of costs described in this certificate from proceeds of the Tax Exempt Note, then date of this certificate is no later than 18 months after the later of (A) the date of each expenditure described in this certificate, or (B) the date the Development (or relevant Element thereof) is placed in service, but in no event more than 3 years after the original expenditure was paid. Capitalized terms used herein and not otherwise defined herein shall have the meaning given to them in the Redevelopment Contract. • C-1 .] • • Submitted by: Richfield State Agency, Inc. By: M1:733373.03 C -2 Approved by: Housing and Redevelopment Authority in and for the City of Richfield By: Its Date approved: • HRA RESOLUTION NO. RESOLUTION APPROVING AN AMENDED AND RESTATED CONTRACT FOR PRIVATE REDEVELOPMENT BETWEEN THE HRA AND RICHFIELD STATE AGENCY, INC. WHEREAS, the Housing and Redevelopment Authority in and for the City of Richfield ("HRA") has previously entered into a Contract for Private Redevelopment with Richfield State Agency, Inc. ("Redeveloper")dated as of November 16, 1998, as amended (the "Original Contract"); and WHEREAS, under the Original Contract the Redeveloper agreed to construct certain improvements within the Urban Village Tax Increment Financing District ("TIF District")and the HRA agreed to provide certain financial assistance to facilitate that redevelopment effort; and WHEREAS, in order to implement financing of certain public redevelopment costs undertaken by Redeveloper under the Original Contract, the parties have determined a need to amend the Original Contract in several respects; and WHEREAS, there has been presented before the board of commissioners an Amended and Restated Contract for Private Redevelopment (the "Amended Contract") between the Authority and the Redeveloper; and WHEREAS, the board has reviewed the Amended Contract and finds that the execution thereof and performance of the Authority's obligations thereunder are in the best • interest of the City and its residents. NOW, THEREFORE, BE IT RESOLVED: 1. The Amended Contract is approved, subject to modifications that do not alter the substance of the transaction and that are approved by the Chair and Executive Director, provided that execution of the documents by such officials shall be conclusive evidence of approval 2. The Chair and Executive Director are hereby authorized to execute on behalf of the Authority the Amended Contract and any documents referenced therein requiring execution by the Authority, and to carry out, on behalf of the Authority its obligations thereunder. Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 21 st day of May, 2001. Thomas E. Harms, Chair ATTEST: Michael Sandahl, Secretary RESOLUTION NO. • RESOLUTION AWARDING THE SALE OF, AND PROVIDING THE FORM, TERMS, COVENANTS AND DIRECTIONS FOR THE ISSUANCE OF ITS TAX INCREMENT REVENUE NOTE, SERIES 2001 A. NOW, THEREFORE, BE IT RESOLVED, by the Housing and Redevelopment Authority in and for the City of Richfield as follows: Section 1. Authorization: Award of Sale. 1.01.- Authorization The Authority and City of Richfield ("City") have heretofore approved the establishment of the Urban Village Tax Increment Financing District (the "TIF District°) within the Richfield Redevelopment Project ("Project"), and have adopted a-tax increment financing plan for the purpose of financing certain improvements within the Project. Pursuant to Minnesota Statutes, Section 469.178, the Authority is authorized to issue. and sell its bonds for the purpose of financing a portion of the public development costs of the Project.. Such bonds are payable from-all or any portion of revenues derived from the TIF District and pledged to the payment of the bonds. The Authority hereby finds and determines that it is in the best interests of the Authority that it issue and sell its Increment Revenue Note, Series 2001A (the "Note") in a maximum principal amount of $4,750,000 for the purpose of financing certain public costs of the Project. 1.02. Issuance Sale, and Terms of the Note. The Authority hereby delegates to the Executive Director the. determination of the date on which the Note is to be delivered, in accordance with that certain Amended and Restated Contract for Private Redevelopment between the Authority and Richfield State Agency, Inc. ("Redeveloper") dated 2001 (the "Agreement"). The Note shall be sold to Marquette Capital Bank, N.A. (the "Owner") at a price of par. The Note shall be dated as of the date of delivery thereof, shall bear interest at the rate of 5.6% per annum to the earlier of maturity or prepayment, subject to adjustment as provided in the Note, and shall be payable in installments of principal on the dates ("Payment Dates") set forth in Schedule A attached to the Note. The Note is not subject to prepayment or redemption before maturity except as otherwise provided in Section. 4 of this Resolution or as permitted. under the terms of the Agreement. The Executive Director is authorized to approve the original principal amount of the Note up to the maximum stated in Section 1.01, the principal amounts payable (the "Scheduled Payments") on each Payment Date, and other changes to the terms of the Note (excluding the rate of interest and terms of adjustment thereof); all to the extent agreed by the Redeveloper and the Owner. Delivery of the executed Note will be conclusive evidence that the Executive Director has approved any changes in the form of the Note. - -- Section`2. Form of Note. The Note shall be in substantially the following form, with the blanks to be properlyfilled in and the principal amount and payment schedule inserted as of the date of issue: - UNITED STATES OF AMERICA STATE OF MINNESOTA COUNTY OF HENNEPIN HOUSING AND REDEVELOPMENTAUTHORITY IN AND FOR THE CITY OF RICHFIELD. - , - l No. R-1 $ TAX INCREMENT REVENUE NOTE SERIES 2001A Date of Orictinal Issue The Housing and .Redevelopment Authority in and for ,the City of Richfield (the "Authority"), hereby acknowledges itself to be indebted and, for value received, promises to pay to the order of Marquette Capital Bank, N.A., its endorsees, successors and assigns (the "Holder"), solely from the sources and to the extent and in the manner hereinafter provided, the original principal amount of this Note, being $5,000,000 or such lesser amount advanced herein under the Agreement hereinafter described, together with interest on the principal balance of this Note outstanding from time to time (the "Principal Balance") at the rate of interest hereinafter set forth. Thee principal of this Note is payable. in installments on the dates (the "Payment Dates") set forth on the Payment Schedule attached as Schedule A hereto and in the. amounts stated thereon (the "Scheduled Payments"). Interest accruing on the Principal Balance from the date of this Note, shall be paid on each August 1 and February 1, commencing August 1, 2001, to and including February 1, 2026 (the "Maturity Date"), when the entire Principal Balance and all accrued and unpaid interest shall be due and payable. The interest rate on this Note shall be 5.60% per annum from the date of original issue to and including February 1, 2006. The interest rate shall be .reset as of February 1, 2011, February 1, 2006, and February 1, 2021 (each a "Reset Date") to equal the Moody's Municipal AAA Bond Curve for five-year obligations as most recently published prior to each such Reset Date plus 150 basis points or, if such index is no longer published, then a comparable index mutually agreed by the Authority and the Holder. Any payments on this Note shall be applied first to accrued interest and then to the Principal Balance. Each payment on this Note is payable in any coin or currency of the United States of America which on the date of such payment is legal tender for public and private debts and shall be made by check or draft made payable to the Holder and mailed to the Holder at its postal address within the United States which shall be designated from time to time by the Holder. The Note is a special and limited obligation and not a general obligation of the Authority, which has been issued by the Authority to provide funds to defray certain public redevelopment costs of a project pursuant to Minnesota Statutes, Sections 469.001 to 469.047 and is issued pursuant to resolution of the Authority approved May 21, 2001 ("Resolution"} and Minnesota Statutes, Section 469.178. THE NOTE IS NOT A DEBT OF THE AUTHORITY, THE CITY OF RICHFIELD, OR THE STATE OF MINNESOTA (THE "STATE"), AND NEITHER THE AUTHORITY,- THE CITY OF RICHFIELD, THE STATE NOR ANY POLITICAL SUBDIVISION THEREOF SHALL BE LIABLE ON THE NOTE, NOR SHALL THE NOTE BE PAYABLE OUT OF ANY FUNDS OR PROPERTIES OTHER THAN THE REVENUES PLEDGED PURSUANT TO THE RESOLUTION. The principal and interest due on any Payment Date are payable solely from-and only to the extent that the Authority shall have received as of such Payment Date "Available Tax 2 Increment° together with any other amounts pledged to the Debt Service Fund under the Resolution, the terms of which are incorporated as if fully set forth herein. For the purpose of this Note, "Available Tax. Increment" means seventy-five percent (75%) of the tax increment attributable to the portion of the Urban Village Tax Increment Financing District ("TIF District") described in Schedule B that is received by the Authority from .Hennepin County as of any Payment Date and not previously applied to any previous payment under this Note. The Principal Balance of this Note shall be prepaid on each Reset Date, without premium or penalty, from and to the extent of any amounts deposited in the Prepayment Fund, as described in the Resolution. Any prepayments of principal shall be applied to the last maturing installments of principal on Schedule A without affecting the amount or timing of any remaining Scheduled Payment. This Note shall not otherwise be subject to .prepayment or redemption except to the extent provided otherwise in the Amended and Restated Contract for Private Redevelopment between the Authority and Richfield State Agency dated , 2001 (the "Agreement"). This Note shall not be payable from or constitute a charge upon any funds of the Authority or the City of Richfield and the Authority shall not be subject to any liability hereon or be deemed to have obligated itself to pay hereon from any funds except the Available Tax. Increments and other funds pledged to the payment of the Note under the Resolution, and then only to the extent and in the manner specified in the Resolution. The Holdershall never have or be deemed to have the right to compel any exercise of any taxing power of the Authority or the City of Richfield or of any other public body, and neither the Authority or the City of Richfield nor any director, commissioner, council member, board member, officer, employee or agent of the Authority or the City of Richfield; nor any person executing or registering this Note shall be liable personally hereon by reason of the issuance or registration hereof or otherwise. _ This Note is issuable only as a fully registered note without coupons. As provided in the Resolution, this Note shall. be transferable upon the books of the Authority kept for- that purposes at the principal .office of the Registrar, by the Owner hereof in person or by such owner's attorney duly authorized in writing,. upon. surrender of this Note together with a written instrument of transfer satisfactory to the Authority, duly executed by the owner. Upon such transfer or exchange and the payment by .the Owner. of any tax, fee, or governmental charge required to be paid by the Authority with respect to such transfer or exchange, there will be issued in-the name of the transferee a new Note of the same aggregate. principal amount, bearing interest at the same rate and maturing on the same dates. .The Note shall be transferred or assigned only to an "accredited investor" within the meaning of Regulation D of the Securities and Exchange Commission and only upon execution and delivery by the purchaser of an investment letter substantially in the form described in the Resolution. The Board of Commissioners has designated the Note as a -"qualified tax exempt.. obligation" within the meaning of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended (the Code) relating to disallowance of interest expense for financial institutions and within the $10 million limit allowed by the Code for the calendar year of issue. IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions, and things required by the Constitution and laws of the State of Minnesota to be done, to exist, to happen,. and to be performed in order to make this Note a valid and binding limited obligation of the Authority according to its terms, have been done, do exist, have happened, and have been performed. in due form, time and manner as so required. D 3 IN WITNESS WHEREOF, the Board of Commissioners of the Housing and Redevelopment Authority in and for the City of Richfield has caused this Note to be executed with the manual signatures of its Chair and Executive Director, all as of the Date of Original Issue specified above. Housing and RedevelopmentAuthority in and for the City of Richfield Executive Director Chair REGISTRATION PROVISIONS The ownership of the unpaid balance of the within Note is registered in the bond register of the City Finance Director, in the name of the person last listed below. Date of Registration Registered Owner Marquette Capital Bank, N.A. Date of Authentication: Note Registrar's Authentication Certificate Signature of City Finance Manager This is one of the Notes described in the within mentioned Resolution. Note Registrar By - Authorized Signature Section 3. Terms, Execution and .Delivery. 3.01: Denomination Payment. The Note shall be issued as a single typewritten note -numbered R-1 in the denomination of the original principal amount of the Note. The Note shall be issuable only in fully registered form. Principal of and interest on the Note shall be payable by check or draft issued by the Registrar described herein. 4 3.02. Dates; Interest Payment Dates. Principal of and interest on the Note shall be payable by mail to the owner of record thereof as of the close of business on the fifteenth day of the month preceding the Payment Date, whether or not such. day is a business day. 3.03. Registration The Authority hereby appoints the City Finance Manager to perform the functions of registrar, transfer agent and paying agent (the "Registrar"). The effect of registration and the rights and duties of the Authority and the Registrar with respect thereto shall be as follows: (a) Register. The Registrar shall keep at its office a bond register in which the Registrar shall provide for the registration of ownership of the Note and the registration of transfers and exchanges of the Note. (b) Transfer of Note. Upon surrender for transfer of the Note duly endorsed by the registered owner thereof or accompanied by a written instrument of transfer, in form reasonably satisfactory to the Registrar,. duly executed by the registered owner thereof or by an attorney duly authorized by the .registered owner in writing, the Registrar shall authenticate and deliver, in the name of the designated transferee or transferees, a new Note of a like aggregate principal amount and maturity, as requested by the transferor. Notwithstanding the foregoing, the Note shall be transferred only to an "accredited investor". within the meaning of .Regulation D of the Securities .and Exchange Commission and only upon execution and delivery by the purchaser to the Registrar of an investment letter substantially in the form of Schedule C hereto. The Registrar may close the books for registration of any transfer after the fifteenth day of the month preceding each Payment Date and until such Payment Date. (c) Cancellation The Note surrendered upon any transfer shall be promptly cancelled by the Registrar and thereafter disposed of as directed by the Authority. (d) Improper or Unauthorized Transfer. When the Note is presented to the Registrar for transfer, the Registrar may refuse to transfer the same until it is satisfied that the endorsement on such Note or separate instrument of transfer is legally authorized. The Registrar shall incur no liability for its refusal, in good faith, to make transfers which it, in its judgment, deems improper or unauthorized. (e) Persons Deemed Owners. The Authority and the Registrar may treat the person in whose name the Note is at any time registered in the bond register as the absolute owner of the Note, whether the Note shall be overdue or not, for the purpose of receiving payment of, or on account of, the principal of and interest on such Note and for all other purposes, and all such payments so made to any such registered owner or upon the owner's order shall be valid and effectual to satisfy and discharge the liability of the Authority upon such Note to the extent of the sum or sums so paid. (f) Taxes, Fees and Charges. For every transferor exchange of the Note, the Registrar may impose a charge upon the owner thereof sufficient to reimburse the Registrar for any tax, fee, or other governmental charge required to be paid with respect to such transfer or exchange. (g) Mutilated, Lost, Stolen or Destroyed Note. In case any Note shall become mutilated or be lost, stolen, or destroyed, the Registrar shall deliver a new Note of like amount, maturity-dates and tenor in exchange and substitution for and upon cancellation of such mutilated Note or in lieu of and in substitution for such Note lost, stolen, or destroyed, upon the payment of the reasonable expenses and charges of the Registrar in connection therewith; and, in the case the Note lost, stolen, or destroyed, upon filing with the Registrar 5 _ ,_. of evidence satisfactory to it that such. Note was lost, stolen, or destroyed, and of the ownership thereof, and upon furnishing to the Registrar of an appropriate bond or indemnity in form, substance, and amount satisfactory to it, in which both the Authority and the Registrar shall be named as obligees. The Note so surrendered to the Registrar shall be cancelled by it and evidence of such cancellation shall be given to the Authority. If the mutilated, lost, stolen, or destroyed Note has already matured or been called .for redemption in accordance with its terms, it shall not be necessary to issue a new Note prior to payment. . 3.04. Preparation and Delivery. The Note shall be prepared under the direction of the Executive Director of the Authority and shall be executed on behalf of the Authority by the signatures of the Chair and the Executive Director, provided that. said signatures may be printed, engraved, or lithographed facsimiles thereof. In case any officer whose signature, or a facsimile of whose signature, shall appear on the Note shall cease to be such officer before the delivery of the Note, such signature or facsimile shall nevertheless be valid and sufficient for all purposes, the same as if such offer had remained in office until delivery. Notwithstanding such execution, the Note shall not be valid or obligatory for any purpose or entitled to any security or benefit under this resolution unless and until a certificate of authentication on such Note has been duly executed by the manual signature of an authorized representative of the Registrar. The executed certificate of authentication on each Note shall be conclusive evidence that it has been authenticated and delivered under this resolution. When the Note has been so executed and authenticated, it shall be delivered by the Executive Director to the purchaser thereof upon payment of the purchase price, and the purchaser shall not be obligated to see to the application of the purchase price. Section 4. Security Provisions. 4.01. Creation of Funds;. Priority of Payments. There are hereby created special funds designated as the "Project Fund," the "Debt Service Fund," the "Reserve Fund," and the "Prepayment Fund," to be held and administered by the Authority separate from other funds or accounts of the Authority. The Authority hereby pledges Available Tax Increment (as defined in the Note) to the following funds or uses in the following order of priority: First to the Debt Service Fund, with respect to Available Tax Increment received as of any August 1 Payment Date, the amount, together with amounts then on deposit in the Debt Service Fund, necessary to pay the principal and interest due on that August 1 and the next following February 1; and with respect to the Available Tax Increment received as of any February 1 Payment Date, the amount together with amounts then on deposit in the Debt Service Fund, necessaryto pay the principal and interest due on that February 1; Second to the Reserve Fund in the amount necessary to bring the balance therein to the Reserve Requirement (hereinafterdefined); Third to the registrar for the Taxable Tax Increment Revenue Note, Series 2001 B (the "Series 2001 B Note"), for deposit in the debt service fund established in the resolution approving issuance of the Series 2001 B Note; and Fourth to the Prepayment Fund. 4.02. Proiect Fund. The Authority appropriates to the Project Fund proceeds of the Note, less the amount deposited in the Reserve Fund under Section 4.04. Moneys in the Project Fund shall be used to pay costs of issuance of the Note and certain Public Redevelopment Costs in accordance with the terms of the Agreement. Upon completion and payment of all public costs financed with the. proceeds of the Note deposited in the Project Fund, any balance remaining in the 6 Project Fund shall be credited and paid to the Debt Service Fund hereinafter created. Interest eamings on amounts in the Project Fund will be credited to the Project Fund. 4.03. Debt Service Fund. The Debt Service Fund together with all funds deposited therein pursuant to this Resolution are .hereby pledged to the payment of principal of and interest on the Note and shall be used for no other purpose. To the extent that on any Payment Date the Authority is unable to pay the full Scheduled Payment and accrued interest due because of insufficient revenues on hand in the Debt Service Fund after making the deposits required under Sections 4.01 and 4.04 hereof, such deficiency shall be deferred and paid on the next Payment Date on which the Authority has received Available Tax Increment (after making the deposit required under Section 4.01 second) in excess of the amount needed to pay the principal. and interest due on that Payment Date. Any Available Tax Increment remaining in the Debt Service Fund shall be transferred to the Authority's account for the TIF District upon the payment of all principal and interest to be paid with respect to the Note. Interest eamings on amounts in the Debt Service Fund will be credited in the same manner as Available Tax Increment. 4.04.. Reserve Fund. The Authority appropriates to the Reserve Fund proceeds of the Note in an amount equal to the lesser of: (i) the maximum principal and interest due on the Note in any succeeding one. year period commencing on August 2 or (ii) 125% of the average annual debt service payable on the Note in the succeeding one year periods commencing on August 2 or (iii) ten percent of the proceeds of the Note (such lesser amount being referred to as the "Reserve Requirement"). If on any Payment Date the amount on deposit in the Debt Service Fund is insufficient to pay the principal and interest due on such date, the Finance Manager shall transfer from the Reserve Fund to the Debt Service Fund an amount equal to such deficiency. In the determining the balance on hand in the Reserve Fund for purposes of this Section, investments shall be valued at their fair market value as of the date of such valuation, which shall be at least annually. Interest earnings on amounts in the Reserve Fund will be credited in the same manner as Available Tax Increment. Amounts in the Reserve Fund shall be applied, together with amounts in the Prepayment Fund and the Debt Service Fund, to the final Scheduled Payment on the Note. 4.05. Prepayment Fund. There is hereby created a special fund designated as the "Prepayment Fund" to be held and administered by the Authority. Amounts in the prepayment fund will be applied on each Reset Date (as defined in the Note) to prepay in part, without premium or penalty, the outstanding principal balance of the Note. Any such prepayment will be applied to the last maturing installments of principal on Schedule A attached to the .Note without affecting the amount or timing of any remaining Scheduled Payment. Interest eamings on amounts. in .the Prepayment Fund will be credited in the same manner as Available Tax Increment. 4.06. Additional Obligations. While the. Note is outstanding, the Authority shall not pledge or permit the pledge of all or any portion of the Available Tax Increment to the payment of principal of or interest on any obligations of the Authority or City other than the Note except (i) the subordinate pledge of Available Tax Increment to the Series 20018 Note, and (ii) any pledge approved in writing by the Holder (as defined in the Note). -- ` 4:07. Covenants Regarding TIF District and Agreement The Authority covenants for the benefit of the Holder that while the Note is.outstanding ~" (a) it will not take any action to remove all or any portion of the property described in Schedule A attached to the Note from the TIF District or alter or impair the collection of Available . Tax Increment including without limitation any mod cation of the TIF District in such a manner that would materially affect the amount or timing of receipt by the Authority of Available Tax Increment, and (b) it will enforce the Agreement to the extent consistent with -the covenants in Section 6 hereof, except to the extent of any Redeveloper obligations that have no material bearing on the collection of Available Tax Increment. Section 5. Certification of Proceedings. 5.01. Certification of Proceedings. The officers of the Authority are hereby authorized and directed to prepare and furnish to the Owner of the Note certified copies of all proceedings and records of the Authority, and such other affidavits, certificates, and information as may be required to show the facts relating to the legality and marketability of the Note as the same appear from the books and records under their custody and control or as .otherwise known to them, and all such certified copies, cert~cates, and affidavits, including any heretofore furnished, shall be deemed representations ofthe Authority as to the facts recited therein. Section 6. Tax Covenant 6.01. The Authority covenants and agrees with the holders from time to time of the Note that it will not take or permit to be taken by any of its officers, employees or agents any action which would cause the interest on the Note to become subject to taxation under the Internal, Revenue Code of 1986, as amended (the Code), and the Treasury Regulations promulgated thereunder, in effect at the time of such actions, and that it will take or cause its officers, employees or agents to take, all affirmative action within its power that may be necessary to ensure that such interest will not become subject to taxation under the Code and applicable Treasury Regulations, as presently existing or as hereafter amended and made applicable to the Note. 6.02. The Authority will comply with requirements necessary under the Code to establish and maintain the exclusion .from gross income of the interest on the Note under Section 103 of the Code; including without limitation requirements relating to temporary periods for investments, limitations on amounts invested at a yield greater than the yield on the :Note, and the rebate of excess investment earnings to the United States. 6.03. The Authority further covenants not to use the proceeds of the Note or to cause or permit them or any of them to be used, or cause the_Note to be paid or secured, in such a manner as to cause the Note to be "private activity bonds" within the meaning of Sections 103 and 141 through 150 of the Code.. 6.04. In order to qualify the Note as a "qualified tax-exempt obligation" within the meaning of Section 265(b)(3) of the Code, the Authority makes the following factual statements and representations: (a) the Note is not a "private activity bond" as defined in Section 141 of the Code; (b) the Authority hereby designates the Note as a "qualified tax-exempt obligation° for purposes of Section 265(b)(3) of the Code; (c) the reasonably anticipated amount of tax-exempt obligations (other than any private activity bonds that are not qualified 501(c)(3) bonds) which wilt be issued- by the Authority (and all subordinate entities of the Authority) during calendar year 2001 will not exceed $10,000,000; and (d) not more than $10,000,000 of obligations issued by the Authority during calendar year 2001 have been designated for purposes of Section 265(b)(3) of the Code. 8 • 6.05. The Authority will use its best efforts to comply with any federal .procedural requirements which may apply in order to effectuate the designations made by this section. Section 7. Continuing Disclosure. The continuing disclosure requirements of Rule 15c2-12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934 (the "Rule") do not apply to the Notes, because the offering is exempt from such requirements under Section 15c2-12(d)(1)(). Consequently, the Issuer will not enter into any undertaking to provide continuing disclosure of any kind with respect to the Note. Section 8. Effective Date. This resolution shall take effect and be in force from and after its approval Adopted by the Housing and Redevelopment Authority in. and for the City of Richfield this 21 st day of May, 2001. Thomas E. Harms, Chair LJ • ATTEST: Michael Sandahl, Secretary 9 SCHEDULE A Pavment Date August 1, 2001 February 1, 2002 August 1, 2002 February 1, 2003 August 1, 2003 February 1, 2004 August 1, 2004 February 1, 2005 August 1, 2005 February 1, 2006 August 1, 2006 February 1, 2007 August 1, 2007 February 1, 2008 August 1, 2008 February 1, 2009 August 1, 2009 February 1, 2010 August 1, 2010 February 1, 2011 August 1, 2011 February 1, 2012 August 1, 2012 February 1, 2013 Principal Payment Schedule Amount Pavment Date August 1, 2013 February 1, 2014 August 1, 2014 February 1, 2015 August 1; 2016 February 1, 2017 August 1, 2017 February 1, 2018 August 1, 2018 February 1, 2019 August 1, 2019 February 1, 2020 August 1, 2020 February 1, 2021 August 1, 2021 February 1, 2022 August 1, 2022 February 1, 2023 August 1, 2023 February 1, 2024 August 1, 2024 February 1, 2025 August 1, 2025 February 1, 2026 10 Amount SCHEDULE B Description of Property • 11 SCHEDULE C Form of Investment Letter 12 City of Richfield Housing and Redevelopment Authority 6700 Portland Avenue So. Richfield, MN 55423 Dear Ladies and Gentlemen: In connection with our purchase of the Housing and Redevelopment Authority in and for the City of Richfield Tax Increment Revenue Note, Series 2001A in an original principal amount of $5,000,000 (the "Note"), we confirm that: We are an "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act of 1933, as amended (the "Securities Act")) purchasing for our own account and not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, 2. We have no present intention of selling, granting any participation in, or otherwise distributing the Note. 3. We have such knowledge and ..experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Note, and we are able to bear the economic risk of our investment. 4. In making our decision to acquire the Note, we have relied upon independent investigations made by us and, to the extent we believed to be appropriate, by our representatives, including our own professional, tax and other advisors, and we have not relied upon any representation or warranty from the Issuer or any of its officers, employees, agents, affiliates or representatives, with respect to the value of the Note. 5. The undersigned or its representatives have been given a full opportunity to examine all documents and to ask questions of, and to receive answers from, the Issuer, the Redeveloper and their representatives concerning the terms of the Note and such other information as the undersigned desires in order to evaluate the acquisition of and investment in the Note, and all .such questions have been- answered to the full satisfaction of the undersigned. 6. The undersigned has evaluated the merits and risks of investment in the Note and has determined that the .Note is a suitable investment for us in light of our overall financial condition and prospects. 7. We understand that the offer and sale of the Note has not been registered under the Securities Act, and that the Note may not be offered or sold except as described below. We agree and each subsequent holder of the Note by its acceptance thereof will agree, not to offer; sell or .otherwise transfer the Note, except (A) in accordance with Rule 144A under the Securities Act to a "qualified institutional buyer" (as defined therein), (B) to an "accredited investor" (as defined above) that is purchasing for his own account or for the account of such an "accredited-investor," (C) pursuant to the exemptions from registration provided by - -Rule 444 under the Securities Act, if available, (D) pursuant to an effective registration statement underthe Securities Act, or (E) pursuant to any other available exemption from the' registration requirements of the Securities Act, subject in each of the foregoing cases to any requirement of law that the disposition of our property or the property of such investor account or accounts be at all times within our or their. control .and to compliance with applicable state securities laws. We further agree to provide to any person purchasing the Note from us a notice advising such purchaser that resale of the Note is restricted as stated 13 herein. 8. No market for this Note exists and no market for the Note is intended to be developed. 9. We understand that payments on the Note are subject to certain restrictions and conditions set forth in the Amended and Restated Contract for Private Redevelopment between the Issuer and Richfield State Agency, Inc. ("Redeveloper") dated 2001 (the "Contract") and a resolution approved by the Issuer on April 16, 2001 (the "Resolution"). 10. We agree to purchase the Note when and as issued, on , 2001 or such other date as agreed. among the parties. You are entitled to rely upon. this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. NAME OF PURCHASER By: Name: Title: Address: Dated as of : , 2001 14 RESOLUTION NO. RESOLUTION AWARDING THE SALE OF, AND PROVIDING THE FORM, TERMS, COVENANTS AND DIRECTIONS FOR THE ISSUANCE OF ITS TAXABLE TAX INCREMENT REVENUE NOTE, SERIES 20016 NOW, THEREFORE, BE IT RESOLVED, by the Housing and Redevelopment Authority in and for the City of Richfield as follows: Section 1. Authorization; Award of Sale. 1.01. Authorization The Authority and City of Richfield ("City") have heretofore approved the establishment of the Urban Village Tax Increment Financing District (the "TIF District") within the Richfield Redevelopment Project ("Project"), and have adopted a tax increment financing plan for the purpose of financing certain improvements within the Project. Pursuant to Minnesota Statutes, Section 469.178, the Authority is authorized to issue and sell its bonds for the purpose of financing a portion of the public development costs of the Project. Such bonds are payable from all or any portion of revenues derived from the TIF District and pledged to the payment of the bonds. The Authority hereby finds and determines that it is in the best interests of the Authority that it issue and sell its Taxable Tax Increment Revenue Note, Series 2001 B (the. "Note") in the original principal amount of $4,750,000 (except as otherwise provided in Section 1.02) for the .purpose of financing certain public costs of the Project. : 1.02.. Issuance. Sale, and Terms of the Note. The Authority hereby delegates to the Executive Director the .determination of the date on which the Note is to be delivered, in accordance with that certain Amended and Restated Contract for Private Redevelopment between the Authority and Richfield State Agency, Inc. ("Redeveloper") dated 2001 (the "Agreement"). The Note shall be sold to the. Redeveloper (the "Owner"), in consideration for the Redeveloper's payment of certain Public Redevelopment Costs (as defined in the Agreement) at a cost at least equal to the principal amount of the Note. The Note shall be dated as of the date of delivery thereof, shall bear interest at the rate of 7.40% per annum to the earlier of maturity or prepayment, subject to adjustment as provided in the Note. Notwithstanding the maximum original principal amount stated in Section 1.01, if the Authority issues its Tax Increment Revenue Note, Series 2001A ("Series 2001A Note" in an original principal amount of less than $4,750,000, the Executive Director is authorized and directed to add such difference to the principal amount of this Note. The Executive Director is further authorized to adjust other terms of the Note (excluding the rate of interest and the terms of adjustment thereof) to the extent agreed by the Redeveloper and the Owner. Delivery of the executed Note will be conclusive evidence that the Executive Director has approved the principal amount and any changes in the form of the Note. 1.03. Prepayment The Note is subject to prepayment at the option of the Authority in whole or in part on any date without premium or penalty. Section 2. Form of Note. The Note shall be in substantially the following form, with the blanks to be properly filled in and the principal amount, interest rate and payment schedule adjusted as of the date of issue: UNITED STATES OF AMERICA STATE OF MINNESOTA COUNTY OF HENNEPIN HOUSING AND REDEVELOPMENTAUTHORITY IN AND FOR THE CITY OF RICHFIELD No. R-1 TAXABLE TAX INCREMENT REVENUE NOTE SERIES 2001 B $, Date of Original Issue The Housing and Redevelopment Authority in and for the City of Richfield (the "Authority"), hereby acknowledges itself to be indebted and, for value received; promises to pay to the order of Richfield State .Agency, Inc., its endorsees, successors and assigns (the "Holder"), solely from the sources and to the extent and in the manner hereinafter provided, the original principal amount of this Note, being $ or such lesser amount advanced herein under the Agreement hereinafter described, together with interest on the principal balance of this Note outstanding from time to time (the "Principal Balance") at the rate of interest hereinafter set forth. The principal of and interest on this Note are payable in semi-annual installments on each February 1 and August 1, commencing August 1, 2001 and continuing through February 1, 2026 {the "Payment Dates"), which payments will be in the amount of Available Tax Increment and Local Match Funds as defined hereafter.: The interest rate on this Note shall be 7.40 % per annum from the date of original issue to and including February 1, 2006. The interest rate shall be reset as of February 1, 2011, February 1, 2016, and February 1, 2021 (each a "Reset Date") to equal the effective bond yield on single "A" rated financial institutions with five to ten year maturities, as determined by the Authority as of each such Reset Date, plus 150 basis points. Any payments on this Note shall be applied first to accrued interest and then to the Principal Balance. Each payment on this Note is payable in any coin or currency of the United States of America which on the date of such payment is legal tender for public and private debts and shall be made by check or draft made payable to the Holder and mailed to the Holder at its postal address within the United States which shall be designated from time to time by the Holder. The Note is a special and limited obligation and not a general obligation of the Authority, which has been issued by the Authority to provide funds to defray certain public redevelopment costs of a project pursuant to Minnesota Statutes, Sections 469.001 to 469.047 and is issued pursuant to resolution of the Authority approved May 21, 2001 ("Resolution") and Minnesota Statutes, Section 469.178. THE NOTE IS NOT A DEBT OF THE AUTHORITY, THE CITY OF RICHFIELD, OR THE STATE OF MINNESOTA (THE "STATE"), AND NEITHER THE AUTHORITY, THE CITY OF RICHFIELD, THE STATE NOR ANY POLITICAL SUBDIVISION THEREOF SHALL BE LIABLE 2 ON THE NOTE, NOR SHALL THE NOTE BE PAYABLE OUT OF ANY FUNDS OR PROPERTIES OTHER THAN THE REVENUES PLEDGED PURSUANT TO THE RESOLUTION. The principal and interest due on any Payment Date are payable solely from and only to the extent that the Authority shall have received as of such Payment Date "Available Tax Increment" together with "Local Match Funds" and any other amounts pledged to the Debt Service Fund under the Resolution, the terms of which are incorporated as if -fully set forth herein. For the purpose of this Note, "Available Tax Increment" means seventy-five percent (75%) of the tax increment attributable. to the portion of the Urban Village Tax Increment Financing District ("TIF District") described in Schedule A that is received by the Authority from Hennepin County as of any Payment Date and not previously applied to any previous payment under this Note or the Authority's Tax Increment Revenue Note, Series 2001A ("Series 2001A Note"), after application of such revenues to payment of amounts due on such Payment Date under the Resolution No. with-respect to the Series 2001A Note. For the purpose of this Note, "Local Match Funds" mean funds available to the Authority in an amount equal to 5.0 percent of the Tax Increments attributable to the property described in Schedule A that is received by the Authority from. Hennepin County as of any Payment Date and not applied to any. previous payment under this Note or the Series 2001A Note, but which amount shall be payable solely from unrestricted funds of the Authority and not from tax increments derived from the TIF District or any other tax increment financing district. The obligations of the Issuer to pay any amount on this Note shall not be deemed to be in default in the event Available Tax Increment and Local Match Funds are not sufficient to pay the principal and interest due on this Note on any Payment Date. The obligation of the Authority to pay principal of an interest on this Note shall terminate on the Maturity Date, without regard to any amounts that remain unpaid. The Note is subject to prepayment at the option of the Authority in whole or in part on any date without premium. or penalty. Upon payment in full of the Series 2001A Note, the Principal Balance of this Note shall be prepaid on each Reset Date, without premium or penalty, from and to the extent of any amounts deposited in the Prepayment Fund, as described in the Resolution. This Note shall not be payable from or constitute a charge upon -any funds of the Authority or the City of Richfield and the Authority shall. not be subject to any liability hereon or be deemed to have obligated itself to pay hereon from any funds except the Available Tax Increments, Local Match Funds and other funds pledged to the payment of the Note under the Resolution, and then only to the extent and in the manner specified in the Resolution. The Holder shall never have or be deemed to have the right to compel any exercise. of any taxing power of the Authority or the City of Richfield or of any other public body, and neither the Authority or the City of Richfield nor any director, commissioner, council member, board member, officer, employee or agent of the Authority or the. City of Richfield; nor any person executing or registering this Note shall be liable personally hereon by reason of the issuance or registration hereof or otherwise. This Note is issuable only as a fully registered-note without coupons. As provided in the Resolution, this Note shall be transferable upon the books of the Authority kept for that purposes at the principal office of the Registrar, by the Owner hereof in person or by such owner's attorney duly authorized in writing, upon surrender of this Note together with a written instrument of transfer satisfactory to the Authority, duty executed by the owner. Upon such transfer or exchange and the payment by the Owner of any tax, fee, or governmental charge required to be paid by the Authority with respect to such transfer or exchange, there will be issued in the name of the transferee a new Note of the same aggregate principal amount, bearing interest at the same rate and maturing on the same dates. The Note shall be transferred or assigned only to an "accredited investor" within the meaning of Regulation D of the Securities and Exchange Commission and only upon execution and delivery by the purchaser of an investment letter substantially in the form of Exhibit B to the Resolution. IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions, and things required by the Constitution and-laws of the State of Minnesota to be done, to exist, to happen, and. to be performed in order to make this Note a valid and binding limited obligation of the Authority according to its terms, have been done, do exist, have happened, and have been performed in due form., time and manner as so required. IN WITNESS WHEREOF, the Board of Commissioners of the Housing and Redevelopment Authority in and for the City of Richfield has caused this Note to be executed with the manual signatures of its Chair and Executive Director, all as of the Date of Original Issue specified above. Housing and RedevelopmentAuthority in and for the City of Richfield Executive Director Chair REGISTRATION PROVISIONS The ownership of the unpaid balance of the within Note is registered in the bond register of the City Finance Director, in the name of the person last listed below. Date of Registration Registered Owner Marquette Capital Bank, N.A. Signature of City Finance Manager Date of Authentication: Note Registrar's Authentication Certificate This is one of the Notes described in the within mentioned Resolution. 4 • Note Registrar By Authorized Signature Section 3. Terms, Execution and Delivery. 3.01. Denomination, Payment. The Note shall be issued as a single typewritten note numbered R=1 in the denomination of the original principal amount of the Note. The Note shall be issuable only in fully registered form. Principal of and interest on the Note shall be payable by check or draft issued by the Registrar described herein. 3.02. Dates; Interest Payment Dates. Principal of and interest on the Note shall be payable by mail to the owner of record thereof as of the close of business on the fifteenth day of the month preceding the Payment Date, whether or not such day is a business day. 3.03. Registration. The Authority hereby appoints-the City Finance Manager to perform the functions of registrar, transfer agent and paying agent (the "Registrar"). The effect of registration and the rights and duties of the Authority and the Registrar with respect thereto shall be as follows: (a) Re ister. The Registrar shall keep at its office a bond register in which the Registrar shall provide for the registration of ownership of the Note and the registration of transfers and exchanges of the Note. (b) Transfer of Note. Upon surrender for transfer of the Note duly endorsed by the registered owner thereof or accompanied by a written instrument of transfer, in form reasonably satisfactory to the Registrar, duly executed by the registered owner thereof or by an attorney duly authorized by the registered owner in writing, the Registrar shall authenticate and deliver, in the name of the designated transferee or transferees, a new Note of a like aggregate principal amount and maturity, as requested by the transferor. Notwithstanding the foregoing, the Note shall be transfer-ed only to an "accredited investor" within the meaning of Regulation D of the Securities and Exchange Commission and only upon execution and delivery by the purchaser to the Registrar of an investment letter substantially in the form of Exhibit B hereto. The Registrar may close the books for registration of any transfer after the fifteenth day of the month preceding each Payment Date and until such Payment Date. (c) Cancellation The Note surrendered upon any transfer shall. be promptly cancelled by the Registrar and thereafter disposed of as directed by the Authority. (d) Improper or Unauthorized Transfer. When the Note is presented to the Registrar for transfer, the Registrar may refuse to transfer the same until it is satisfied that the endorsement on such Note or separate instrument of transfer is legally authorized. The 5 Registrar shall incur no liability for its refusal, in good faith,. to make transfers which it, in .its judgment, deems improper or unauthorized. (e) Persons Deemed Owners. The Authority and the Registrar may treat the person in whose name the Note is at any time registered in the bond register as the absolute owner of the Note, whether the Note shall be overdue or not, for the purpose of receiving payment of, or on account of, the principal of and interest on such Note and for all other purposes, and all such payments so made to any such registered owner or upon the owner's order shall be valid and effectual to satisfy and discharge the liability of the Authority upon such Note to the extent of the sum or sums so paid. (f) Taxes, Fees and Charges. For every transferor exchange of the Note, the Registrar may impose a charge upon the owner thereof sufficient to reimburse the Registrar for any tax, fee, or other governmental charge required to be paid with respect to such transfer or exchange. (g) Mutilated, Lost, Stolen or Destroyed Note. In case any Note shall become mutilated or be lost, stolen, or destroyed, the Registrar shall deliver a new Note of like amount, maturity dates and tenor in exchange and substitution for and upon cancellation of such mutilated Note or in lieu of and in substitution for such Note lost, stolen, or destroyed, upon the payment of the reasonable expenses and charges of the Registrar in connection therewith; and, in the case the Note lost, stolen, or destroyed, upon filing with the Registrar of evidence satisfactory to it that such Note was lost, stolen, or destroyed, and of the ownership thereof, and upon furnishing to the Registrar of an appropriate bond or indemnity in form, substance, and amount satisfactory to it, in which both the Authority. and the Registrar shall be named as obligees. The Note so surrendered to the Registrar shall be cancelled by it and evidence of such cancellation shall be given to the Authority. If the mutilated, lost, stolen, or destroyed .Note has already matured or been called for redemption in accordance with its terms, it shall not be necessary to issue a new Note prior to payment. 3.04. Preparation and Delivery. The Note shall be prepared under the direction of the Executive Director of the Authority and shall be executed on behalf of the Authority by the signatures of the Chair and the Executive Director, provided that said signatures may be printed, engraved, or lithographed facsimiles thereof.. In case any officer whose signature, or a facsimile of whose signature, shall appear on the Note shall cease to be such officer before the delivery of the Note, such signature or facsimile shall nevertheless be valid and sufficient for all purposes, the same as if such offer had remained in office until delivery. Notwithstanding such execution, the Note shall not be valid. or obligatory for any purpose or entitled to any security or benefit under this resolution unless and until a certificate of authentication on such Note has been duly executed by the manual signature of an authorized representative of the Registrar. The executed certificate of authentication on each Note shall be conclusive evidence that it has been authenticated and delivered under this resolution. When the Note has been so executed and authenticated, it shall be delivered. by the Executive Director to the purchaser thereof upon payment of the purchase price, and the purchaser shall not be obligated to see to the application of the purchase price. Section 4. Security Provisions. 4.01. Creation of Funds; Priority of Payments. There are hereby created special funds • designated as the "Debt Service Fund" and the "Prepayment Fund," to be held. and administered by the Authority separate from other funds or accounts of the Authority. The Authority hereby 6 pledges Available Tax Increment and Local Match Funds (as defined in the Note) to the following funds or uses in the following order of priority: First to the Debt Service Fund in the amount of Available Tax Increment remaining on each Payment Date after payment or provision for payment of the amounts due under Resolution No. with respect to the Series 2001 A Note; and Second to the Debt Service Fund in the amount of Local Match Funds available on that Payment Date; and Second, after payment in full of the principal of and interest on the Series 2001A Note, Available Tax Increment and Local Match Funds to the Prepayment Fund. 4.02. Debt Service Fund. The Debt Service Fund together with all funds deposited therein pursuant to this Resolution are hereby pledged to the payment of principal of and interest on the Note and shall- be -used for no other purpose. Any Available Tax Increment remaining in the Debt Service Fund shall be transferred to the Authority's; account for the TIF District upon the payment of all principal and interest to be paid- with respect to the Note. Interest earnings on amounts in the Debt Service Fund will be credited in the same manner as Available Tax Increment. Any Local Match Funds remaining in the Debt Service Fund shall be transferred to the Authority account from which such funds were drawn. 4.03. Prepayment Fund. There is hereby created a special fund designated as the "Prepayment Fund" to be held: and administered by the Authority. Amounts in the prepayment fund will be applied on each Reset. Date (as defined in the Note) to prepay in part, without premium or penalty, the outstanding principal balance of the Note. Any such prepayment will be applied to the last maturing installments of .principal on Schedule A attached to the Note without affecting the amount or timing of any remaining Scheduled Payment. Interest earnings on amounts in the Prepayment Fund will be credited in.the same manner as Available Tax Increment. 4.06. Additional Obli. atq_ions. While the Note is outstanding, the Authority shall not pledge or permit the pledge of all or any portion of the Available Tax Increment to the payment of principal of or interest on any obligations of the Authority or City other than the Note and the Series 2001A Note, except any pledge approved in writing by the Holder (as defined in the Note). Nothing in this resolution will restrict the ability of the Authority to pledge Local Match Funds to any other obligation on a parity, subordinate or superior basis with the Note. 4.07.. Covenants Regarding TIF District and Agreement. The Authority covenants for the benefit of the Holder that while the Note is outstanding (a) it will not take any action to remove all or any portion of the property described in Schedule A attached to the Note from the TIF District or alter or impair the collection of Available Tax Increment including without limitation any modification of the TIF District in such a manner that would materially affect the amount or timing of receipt by the Authority of Available Tax Increment, and (b) it will enforce the Agreement except to the extent of any Redeveloper obligationsthat have no material bearing on the collection of Available Tax Increment. • 7 Section 5. Certification of Proceedings. 5.01. Certification of Proceedings. The officers of the Authority are hereby authorized and directed to prepare and furnish to the Owner of the Note certified copies of all proceedings and records of the Authority, and such other affidavits, certificates, and information as may be required to show the facts relating to the legality and marketability of the Note as the same appear from the books and. records under their custody and control or as otherwise known to them, and all such certified copies, certificates, and affidavits, including any heretofore furnished, shall be deemed representations ofthe Authority as to the facts recited therein. Section 6. Continuing Disclosure. The continuing disclosure requirements of Rule 15c2-12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934 (the "Rule") do not apply to the Notes, because the offering is exempt from such requirements under Section 15c2-12(d)(1)(i). Consequently, the Issuer will not enter into any undertaking to provide continuing disclosure of any kind with respect to the Note. Section 7. Effective Date. This resolution shall take effect and be in force from and after its approval Adopted by the Housing and Redevelopment Authority in and for the City of Richfield this 21 st day of May, 2001. Thomas E. Harms, Chair • ATTEST: Michael Sandahl, Secretary • • • SCHEDULE A Description of Property • SCHEDULE B • Form of Investment Letter • • 10 City of Richfield • Housing-and Redevelopment Authority 6700 Portland Avenue So. Richfield, M N 55423 Dear Ladies and Gentlemen: In connection with our purchase of the Housing and Redevelopment Authority in and for the City of Richfield Tax Increment Revenue Note, Series 20016 in an original principal amount of $ (the "Note"), we confirm that: 1. We are an "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act of 1933, as amended (the "Securities Act")) purchasing for our own account and not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, 2. We have no present intention of selling, granting any participation in, or otherwise distributing the Note. 3. We have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Note, and we are able to bear the economic risk of our investment. 4. In making our decision to acquire the Note, we have relied upon independent investigations made by us and, to the extent we believed to be appropriate, by our representatives, • including our own professional, tax and other advisors, and we have not relied upon any representation or warranty from the Issuer or any of its officers, employees, agents,. affiliates or representatives, with respect to the value of the Note. 5. The undersigned or its representatives have been given a full opportunity to examine all documents and to ask questions of, and to receive answers from, the Issuer, the Redeveloper and their representatives concerning the terms of the Note and such other information as the undersigned desires in order to evaluate the acquisition of and investment in the Note, and all such questions have been answered to the full satisfaction of the undersigned. 6. The undersigned has evaluated the merits and risks of investment in the Note and has determined that the Note is a suitable investment for us in light of our .overall financial condition and prospects. 7. We understand that the offer and sale of the Note has not been registered under the Securities Act, and that the Note may not be offered or sold except as described below. We agree and each subsequent holder of the Note by its acceptance thereof will agree, not to offer, sell or otherwise transfer the Note, except (A) in accordance with Rule 144A under the Securities Act to a "qualified institutional buyer" (as defined therein), (B) to an "accredited investor" (as defined above) that is purchasing for his own account or for the account of such an "accredited investor," (C) pursuant to the exemptions from registration provided by Rule 144 under the Securities Act, if available, (D) pursuant to an effective registration statement under the Securities Act, or (E) pursuant to any other available exemption from • the registration requirements of the Securities Act, subject in each of the foregoing cases to any requirement of law that the disposition of our property or the property of such investor 11 account or accounts be at all times within our or their control and to compliance with . applicable state securities laws. We further agree to provide to any person purchasing the Note from us a notice advising such purchaser that resale of the Note is restricted as stated herein. 8. No market for this Note exists and no market for the Note is intended to be developed. 9. We understand that payments on the Note are subject to certain restrictions and conditions set forth in the Amended. and Restated Contract for Private Redevelopment between the Issuer and Richfield State Agency, Inc. ("Redeveloper") dated 2001 (the "Contract").and a resolution approved by the Issuer on April 16, 2001 (the "Resolution"). 10. We agree to purchase the Note when and as issued, on , 2001 or such other date as agreed among the parties. You are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. NAME OF PURHCASER • r1 LJ By: Name: Title: Address: Dated as of : . 20 12 AGENDA ITEM # 5 REPORT # 44 • STAFF REPORT HOUSING AND REDEVELOPMENT AUTHORITY MEETING MAY 21, 2001 • REPORT PREPARED BY: BRUCE NORDQUIST, HOUSING & REDEVELOPMENT MANAGER NAME, TITLE BRUCE NORDQUIST, REPORT PRESENTER: HOUSING & REDEVELOPMENT MANAGER NAME, TITLE DEPARTMENT DIRECTOR REVIEW: SIGNATURE REVIEWED BY EXECUTIVE DIRECTOR: ~~ _ ~-~~~_. ITEM FOR HRA CONSIDERATION: Consideration of a temporary lease for the Housing and Redevelopment Authority owned unimproved property at 709 Graham Avenue for parking. I. RECOMMENDED ACTION: By Motion: Approve the temporary leasing of property at 709 Graham Avenue and the execution of an agreement with Gramercy Corporation and Gramercv Park by the Chair and Executive Director. ~ II. BACKGROUND ~ Gramercy Park was completed in October 2000. During the preceding 18-month construction period and since opening, parking patterns have been disruptive. Woodlake Nature Center is the parking lot of choice after the parking lot at the front of the VFW building is full. Ample parking is located directly behind the Gramercy Park building. However, that parking has been perceived by users as inconvenient. In anticipation of another construction period and then an opening of City Bella 24 to 30 months into the future, there is a concern about meeting interim parking needs. The concern was heightened recently by Gramercy Park's interest in allowing outside customers to use the hair stylist that has been serving residents. (Two beauticians who have been located elsewhere in Richfield for several years have moved their business to Gramercy Park.) Vern Luettinger, Board President for Gramercy Park, indicated in a recent letter to the City that "though the majority of 052101-709Graham salon business is derived from Gramercy Park, the business will be unable to support itself if clientele is limited to residents and the Cooperative will lose an • amenity". He has requested the Housing and Redevelopment Authority (HRA) to consider permitting Gramercy Park to use a portion of the HRA-owned vacant lot (709 Graham Avenue) behind Gramercy. Park as overflow parking for hairstyling customers, VFW and Gramercy. Park guests. If the HRA concurs, a lease would be drafted to which Gramercy Corporation and Gramercy Park and the HRA would be parties. The following issues would be addressed: • A strip of the HRA property (approximately 150 ft. x20 ft.) running southeast to northwest along the. edge of the alley would be improved with a 2" asphalt overlay over the existing base, and striped. Gramercy Corporation would pay for the installation. (See the attached concept drawing.) • Gramercy Park would be responsible for sweeping, plowing, and generally maintaining the parking area and providing general liability insurance which holds the HRA harmless. • An additional pedestrian entrance into Gramercy Park would be installed at the northwest corner of the building. This would include a sidewalk, security entrance, additional lighting and a canopy cover. A similar canopy cover would be added to more clearly identify the rear entrance to the VFW. • Gramercy Park and VFW parking and directional signs would be added at the alley entrance on Lyndale Avenue to improve usage. • • No building signage promoting hair styling would be added. Visitors would be there only by appointment. • The cost of the improvement is the developers, Gramercy Corporation, as agreed by the parties. Gramercy would also be required to remove the improvement at the request of the HRA should the lease need to end for some reason. • The suggested lease term is 12 months, with extensions possible until the property is conveyed for redevelopment or redevelopment is completed. • A performance time frame for these improvements would be included. III. BASIS OF RECOMMENDATION A. POLICY • The HRA previously authorized the temporary use of this property by Gramercy Corporation for construction staging when the co-op was being built. • The lot can be leased on an interim basis without harming its redevelopment potential. B. CRITICAL ISSUES • • Sufficient interim "quality" parking spaces that reduce the attractiveness of the Nature Center's parking will help reduce parking frustrations. • An interim lease gives the HRA the greatest flexibility until City Bella plans are finalized. City Bella will provide the ultimate parking • solution. • The Gramercy Park Board is requesting the additional parking and is proposing desirable improvements as part of the request. • The interim parking facilities would not be in compliance with ordinances regulating parking facilities. The paved, well drained spaces would not include perimeter curb and gutter improvements. Permanent curbing would not be compatible with redevelopment plans. This will be addressed in the off street parking contract proposal submitted to the City Council. C. FINANCIAL • There will be compensation to the HRA for the land lease. The HRA presently receives no income from the property. D. LEGAL • Legal Counsel is reviewing the impact of the expanded hair styling services on the planned unit development and conditional use permit approvals. • Legal Counsel would draft the lease if the HRA supports the concept. • IV. ALTERNATIVE RECOMMENDATION(S~ • Do not lease the property and do not allow parking on the property. However, some parking is already occurring, and the site would have to be fenced or barricaded to prevent parking. • Individual lease provisions proposed above could be modified. V. ATTACHMENTS • Concept drawing VI. PRINCIPAL PARTIES EXPECTED AT MEETING • Mike Conlan, Gramercy Corporation • Vern Luettinger, Gramercy Park Board President JEN~~ L~N~ PLE ~ i / \ =' i ~ ;;; > „' ~ -, , ; ,, ,, p ,_ ------------------------------------- 1111 -- ------ ~v ' ''~' ~__ r_r ' \ 0 ^ f ~ i / ~ ~ 1 I ' ;, fir r-- ~ lil Yry. • 4 1 1 r LL ~ x ~ y; i 7S Y Icy/ 1 I ~"j ~ 1 f X ~ti t Y~ 'i ~~ ~ i J V// \VV/ 1 ~ < z T` ~, r ~ z .,~ jr ; ..., 7~ I o S 4 1 I' w .cr r ,< ~ r V 1 .~• i >y X 1 C ~ I dam,. h< s ti n .. } ~ ' I qt ~Y. ~~ '4 . 1 V i a .r'k Yr ~ I i 1 I J .a•. 1 ~« i 5 s ( I > Y Y / A ~( I t t tlr~ 1 i. j{[tj 1 I IT h-'I t`rY! l Y tr s I I z r . i i +y (,J" ~ I •n.^27 i.t ~-*,~ak ( 6-'f ~.+.~c~-+~E ~. ••r .r > ; -t I ~'tif "K 3?t*.Ai rFy -+'{r7 -. t r ~ s{{ W F '! -~ ~ r-E 1 9 f Yy 9 ~ i ( ~~ nits ~.ryi\ f ~` .+ ~ r - y; c 1 ~ ~] W ~'t~Sle' t I ` ~ ~ 6 = ~ ~ I 1`;itz'1'j`.. 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N II l.y~ f.s~ ct~,,. s~ tr?~'. r ~ F' ~-.'~l5 >~ ~ 1 ~`.>TH ~.,•."(j~ ^ ~ t ~ i- °•3.ZY ~t a,oSs>. _~ :s h' `7 1~y~:. i 1 ~ , 'r . ~ i ( e • r t-h 4~'~~>st ° f ~ ~ zs ~~ ~.X {"~w-•~if , } ~ ~+ `ai'i r-a+.v `yr I _ '; ~„q; ~ts,<,>,.S>~'^'a ~;Y S^Ss7 ~, "~Nr N.~R's'} 1~'+'Lt.~q s. :>I~~. 8 ., any, ~, . r•ir 1 ~„y ~ ~~ ~+~ ~ i~ •z t r~ r3 J .~ -,,,.,,.,a„ - - - - _ . _ _ - .. - .. - ~ _ ~ - - ~~ ~ ~~ 1, -_ ~a+s''--~: tam nt"*'..:~ -ii • ~- STAFF REPORT 4 43 AGENDA ITEM # REPORT # HOUSING AND REDEVELOPMENT AUTHORITY MEETING MAY 21, 200.1 • JOHN STARK, REPORT PREPARED BY: COMMUNITY DEVELOPMENT MANAGER NAME, TITLE JOHN STARK, REPORT PRESENTER: COMMUNITY DEVELOPMENT MANAGER NAME, TITLE DEPARTMENT DIRECTOR REVIEW: SIGNATURE REVIEWED BY EXECUTIVE DIRECTOR: ~' _ ITEM FOR HRA CONSIDERATION: Consideration of options for the continuation of the redevelopment process for the Lyndale Gateway area. I. RECOMMENDED ACTION: By Motion: Approve one of the Alternative Recommendations for the continuation of the redevelopment process for the Lyndale Gateway area. III. BACKGROUND ~ On January 18, 2000, the Richfield Housing and Redevelopment Authority (HRA) entered into a Contract for Private Redevelopment (Contract) with CSM Investors II, Inc. (CSM) for the redevelopment of Phase III of the Lyndale Gateway development. That Contract included a number of provisions which have not been met by CSM. On April 16, 2001, at the HRA's request, staff and legal counsel presented a Termination Agreement for consideration at the meeting. The purpose of this Termination Agreement would be the formal termination of the Contract with CSM in • the event that CSM could not provide confirmation from Walgreens of their intent to locate in the Lyndale Gateway area. At the April 16 meeting, HRA action on the termination agreement was deferred to the May 21 meeting with the hopes that 0521 CSM CSM could soon provide an executed contract with Walgreens, thus allowing the • project to proceed. CSM, reports that as of this report writing they are reviewing Walgreens latest revisions to the draft lease agreement with the goal of executing the agreement prior to the May.21 HRA meeting. III. BASIS OF RECOMMENDATION A. POLICY • The HRA entered into a Contract for Private Redevelopment with CSM for Phase III of the Lyndale Gateway redevelopment on January 18, 2000. • That contract contains certain Closing Contingencies, including site assembly and standards for the required degree of pre-leasing. • CSM has not completed the Closing Contingencies in accordance with the Contract, thus. rendering CSM in a state of non-compliance. • The Contract contains language to "self-terminate" in the event that CSM is in non-compliance with certain provisions of the Contract; legal counsel has opined, however, that a formal agreement on the termination should be executed in order to fully protect both parties. • The HRA requested the drafting of a Termination Agreement for • consideration in the event that CSM could not provide evidence of Walgreens' intentions to locate in the Lyndale Gateway area. B. CRITICAL ISSUES • If the project with CSM does proceed, the Contract must be amended in order to address issues related to the cost and schedule for the roadway improvements as well as other issues. C. FINANCIAL • There may be additional costs associated with the City's planned roadway improvements due to delays in the development schedule. D. LEGAL • Legal counsel drafted the attached Termination Agreement. IV. ALTERNATIVE RECOMMENDATION(S~ • If CSM provides an executed lease with Walgreens, direct staff to draft a contract amendment with CSM for consideration at the June 18 HRA meeting. • Continue the consideration of the Termination Agreement until the June 18 HRA meeting to allow CSM additional time to execute their lease agreement with Walgreens. • Adopt a motion. approving the attached Termination Agreement. V. ATTACHMENTS • • Agreement Terminating-the Contract for Private Redevelopment VI. PRINCIPAL PARTIES EXPECTED AT MEETING • A CSM .representative • • AGREEMENT TERMINATING • CONTRACT FOR PRIVATE REDEVELOPMENT THIS AGREEMENT, made and entered into as of the day of April, 2001 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 CSM INVESTORS II, INC., a Minnesota corporation (the "Redeveloper"). WITNESSETH: WHEREAS, the parties hereto did on or about , 2000 enter into that certain agreement entitled: Contract for Private Redevelopment (the "Contract") providing for the acquisition and redevelopment of certain lands within the area of operation of the HRA; and WHEREAS, said Contract contained numerous provisions imposing time limits, commencement dates, completion dates and other deadlines on the parties; and WHEREAS, the parties have jointly determined that due to circumstances and events beyond their reasonable control, it will not be possible to proceed in the manner required by the Contract, and therefore desire to recognize its termination; and • WHEREAS, it is the mutual desire of the parties by this Agreement to memorialize the termination of the Agreement. NOW THEREFORE, the parties hereto hereby stipulate and agree as follows: 1. The parties recognize that the Contract has terminated according to its terms, and the parties are thereby released from any further obligation of performance thereunder. 2. Each party acknowledges that there are no monetary obligations created by the Contract due and owing such party from the other party 3. Each party hereby releases the other party, and waives any claim or cause of action against the other party occasioned by or arising out of the performance or the termination of the Contract. IN WITNESS WHEREOF, the parties hereto have set their hands and seals as of the day and year first above written. • • STATE OF MINNESOTA ) ss COUNTY OF ) HOUSING AND REDEVELOPMENT AUTHORITY OF THE CITY OF RICHFIELD, MINNESOTA By: Its Chairperson By: Its Executive Director The foregoing instrument was acknowledged before me this day of by and ,the Chairperson and Executive Director, respectively, of the. Housing and Redevelopment Authority in and for the City of Richfield, Minnesota, a public body corporate and politic, on behalf of such public body. Notary Public CSM INVESTORS II, INC. By: STATE OF MINNESOTA ) ss COUNTY OF ) Its The foregoing instrument was acknowledged before me this day of 2001, by ,the of CSM Investors II, Inc., a Minnesota corporation, on behalf of the corporation. • Notary Public AGENDA ITEM # 3B REPORT # !+2 STAFF REPORT HOUSING AND REDEVELOPMENT AUTHORITY MEETING MAY 21, 2001 REPORT PREPARED BY: REPORT PRESENTER: KATIA MEDVETSKI, REDEVELOPMENT SPECIALIST NAME, TITLE BRUCE PALMBORG, COMMUNITY DEVELOPMENT DIRECTOR NAME, TITLE • DEPARTMENT DIRECTOR REVIEW: ^L' REVIEWED BY EXECUTIVE DIRECTOR: ~' ITEM FOR HRA CONSIDERATION: Consideration of a request by CSM Corporation to release a $920,000 Irrevocable Standby Letter of Credit for the Shops at. Lyndale, Phase II, and adopt a resolution relating thereto. I. RECOMMENDED ACTION: By Motion: Adopt the attached resolution authorizing the release of the Irrevocable Standby Letter of Credit dated October 30, 2000 for the account of CSM Investors, Inc. for Shops at Lyndale, Phase II. • II. BACKGROUND On April 20, 2001, CSM Corporation (CSM), developer of Shops at Lyndale, requested the release of a $920;000 Irrevocable Standby Letter of Credit (Letter of Credit) that is being held by the Housing and Redevelopment Authority (HRA) to secure payment of outstanding condemnation claims for the Shops at Lyndale, Phase II (Shops). Recently, CSM made the final condemnation claim payment for the Shops. Release of the Letter of Credit is warranted. However, legal counsel has advised staff that there is remaining clean-up legal work on the condemnation files and has further advised staff to retain $10,000 from CSM for this matter. CSM has offered to make a cash deposit with the HRA in the amount of $10,000 for this work. 0521-Shops at Lyndale.doc III. BASIS OF RECOMMENDATION A. POLICY • • In 1996, the HRA required CSM to post an Irrevocable Standby Letter of Credit from CSM to ensure completion of project improvements and payments on condemnation actions for the Shops at Lyndale project. • Since 1997, the HRA has approved numerous reductions in the Letter of Credit based on performance. B. CRITICAL ISSUES • CSM has offered to deposit $10,000 cash with the HRA for clean- up legal work related to condemnation matters in return for the Letter of Credit. C. FINANCIAL • .Legal counsel has recommended the dollar amount for the deposit to be made by CSM. • CSM will provide a letter to the HRA with its cash deposit that will encumber the use of the funds. D. LEGAL • Legal counsel informed staff that the clean-up legal work remaining • for 30 parcels of land for the Shops at Lyndale includes preparation and filing of a Discharge of Lis Pendens and preparation of the Final Certificate, which may or may not be filed. • Legal counsel is amenable to a cash deposit with the HRA instead of a reduction in the Letter of Credit. IV. ALTERNATIVE RECOMMENDATION(S~ • The HRA may choose to reduce the Letter of Credit rather than releasing it. However, .this will bring additional, unnecessary financial charges to CSM. V. ATTACHMENTS • HRA resolution authorizing the release of the Irrevocable Standby Letter of Credit dated October 30, 2000 for the account of CSM Investors, Inc. for Shops at Lyndale, Phase II. VI. PRINCIPAL. PARTIES EXPECTED AT MEETING • Murray Kornberg, CSM Corporation • HRA RESOLUTION NO. • RESOLUTION AUTHORIZING THE RELEASE OF THE IRREVOCABLE STANDBY LETTER OF CREDIT DATED OOCTOBER 30, 2000 FOR THE ACCOUNT OF CSM INVESTORS, INC. FOR SHOPS AT LYNDALE, PHASE II WHEREAS, the Housing and Redevelopment Authority (the "HRA") entered into an Agreement with CSM Corporation (the "Developer"), a Minnesota business corporation, dated April 11, 1994, pursuant to and in furtherance of the. ILN Redevelopment Project heretofore adopted by the City and the Richfield Housing and Redevelopment Authority; and WHEREAS, the Agreement obligated the Developer to construct certain improvements to property identified in that Agreement; and WHEREAS, Section 3.3(g) of the Agreement required the Developer to furnish the HRA with pertormance security for certain of Developer's obligations under the Agreement; and WHEREAS, the Developer originally provided the HRA with an Irrevocable Standby Letter of Credit in the amount of $2.0 million dated November 15, 1996 as performance security for payment of site assembly costs for the Shops at Lyndale, Phase II; and WHEREAS, the HRA last approved a $150,000 reduction to the Irrevocable Standby Letter of Credit on May 15, 2000, which amounts to a new total of $920,000; and • WHERES, the Irrevocable Standby Letter of Credit, dated May 22, 2000, was replaced with an Irrevocable Standby Letter of Credit, dated October 30, 2000, with an expiration date extended to November 15, 2001; and WHEREAS, since then the Developer has made final site assembly payments and has most recently requested that the Irrevocable Standby Letter of Credit, dated October 30, 2000, be released; and WHEREAS, staff has found that final payments made toward site assembly costs warrant the release of the Irrevocable Standby Letter of Credit, dated October 30, 2000; and WHEREAS, staff has found that a cash deposit of $10,000 (the "Deposit") to be made by the Developer with the HRA will ensure the necessary clean-up legal work required to close out the condemnation files. NOW THEREFORE, BE IT RESOLVED by the Housing and Redevelopment Authority that upon receipt of the Deposit, the Executive Director and HRA Chair are directed to take all steps necessary to facilitate the release of the Irrevocable Standby Letter of Credit, dated October 30, 2000. Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 21st day of May, 2001. • ATTEST: Thomas E. Harms, Chair Michael Sandahl, Secretary ~ J AGENDA ITEM # 3A , REPORT # 41 STAFF REPORT HOUSING AND REDEVELOPMENT AUTHORITY MEETING MAY 21, 2001 • REPORT PREPARED BY: REPORT PRESENTER: DEPARTMENT DIRECTOR REVIEW: REVIEWED BY EXECUTIVE DIRECTOR: 70HN OLINGER, COMMUNITY DEVELOPMENT SPECIALIST NAME, TITLE BRUCE PALMBORG, ITEM FOR HRA CONSIDERATION: Consideration of a resolution authorizing the purchase of real property located at 7039 Fifth Avenue with Community Development Block Grant funds for the 2001-2002 New. Home Pro ram. I. RECOMMENDED ACTION: By Motion: Approve the attached resolution authorizing the purchase of real: property located at 7039 Fifth Avenue South for rehabilitation through the 2001-2002 New Home Program. II. BACKGROUND The structure at 7039 Fifth Avenue is a 73-year-old, 600-sq. ft., one-story structure with detached garage. The owner was ordered to sell the property as part of a private party settlement agreement not involving the City. The structure has various code violations and is in need of considerable repairs (for example, the garage partially collapsed from heavy snow). The lot is 50 ft. by 144 ft. The Housing and Redevelopment Authority (HRA) and the Hennepin Technical College (HTC) will enter into an agreement to construct a new home on this property as part of HTC's construction. program as they have done for many years. The agreement will be presented to the HRA at a subsequent meeting. 0521-7039fifthave COMMUNITY DEVELOPMENT DIRECTOR NAME, TITLE To fully utilize federal funding for acquisition, the City must purchase the property • and subsequently transfer it to the HRA. The City has available Community Development Block Grant (CDBG) funds, which have been identified for this acquisition. The purchase price of the property has been determined to be $87,000 based on an independent appraisal report. III. BASIS OF RECOMMENDATION A. POLICY • This use of CDBG funds to buy poor quality property and constructing a home under contract with HTC has been a productive program combination for several years. B. CRITICAL ISSUES • A poor quality house will be replaced by a new home. C. FINANCIAL • Federal CDBG funds and proceeds of sale will provide the financial means to implement the project. No City General Fund revenues are utilized. D. LEGAL • The sale from the City to the HRA will require a City Council public hearing and second reading of a transitory ordinance scheduled for June 11, 2001., IV. ALTERNATIVE RECOMMENDATION(S) • Do not acquire the property. V. ATTACFIMENTS • Resolution VI. PRINCIPAL PARTIES EXPECTED AT MEETING • N/A • HRA RESOLUTION NO. • RESOLUTION AUTHORIZING PURCHASE OF REAL PROPERTY LOCATED AT 7039 FIFTH AVENUE SOUTH FOR THE 2001-2002 NEW HOME PROGRAM WHEREAS, the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota ("the HRA") desires. to purchase certain real property pursuant to and in furtherance of the Hennepin Technical College construction program, said property being described as Lots 30 & 31 Savage's Addition WHEREAS, the HRA is authorized by Minnesota Statutes Section 469.012 to acquire real property within its area of operation; and WHEREAS, the HRA has negotiated a purchase price of $87,000 based on an independent appraisal; and WHEREAS, funds are available for acquisition NOW, THEREFORE, BE IT RESOLVED by the City. of Richfield Housing and Redevelopment Authority: • 1. The purchase price for 7039 Fifth Avenue South is approved at $87,000. 2. The Chairperson and Executive Director-are authorized to execute a purchase agreement and other documents to allow purchase for the amount set forth in this resolution. Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota on this 21 st day of May, 2001. Thomas E. Harms, Chair ATTEST: Michael Sandahl, Secretary •