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03-19-01 agendaREVISED • CITY OF RICHFIELD,.. MINNESOTA HOUSING AND REDEVELOPMENT AUTHORITY MONDAY,. MARCH 19, 2001 RICHFIELD CITY HALL 6700 PORTLAND AVENUE COUNCIL CHAMBERS 7 P.M. AGENDA ,. Call to order 1. Approval of minutes of (1) Regular HRA Meeting of February 20, 2001; and (2) Special HRA Meeting of March 5, 2001 2. Opportunity for citizens to address the HRA on items not on the agenda Notes: • 3. HRA approval of agenda 4. Consent Calendar contains several separate items which are acted upon by the HRA in one motion. Once the Consent Calendar has been approved, the individual items and recommended actions have also been approved. No further HRA action is necessary. However, any HRA Commissioner may request that an item be removed from the Consent Calendar and placed on the regular agenda for HRA discussion and action. All items listed on the Consent Calendar are recommended for approval. A. Consideration of approval of resolution for Gramercy Park Cooperative; second amendment to Contract for Private Redevelopment; sale of and providing form, terms, covenants and directions for, issuance of limited revenue tax increment note, Series 2001; and Estoppel Certificate S.R. No. 27 Notes: • 5. Public hearing and consideration of resolution authorizing sale of property at 6852 Park Avenue to Steven Marlin Grant Homes for new construction of single family home Staff Report No. 28 Notes: 6. Consideration of options for continuation of redevelopment; process for Lyndale Gateway area Staff Report No. 29 Notes: 7. Consideration of resolution authorizing execution of Tax Increment Pledge Agreement with City of Richfield relating to $8,350,000 General Obligation Tax Increment Bonds, Series 2001 A • Staff Report No. 30 Notes: 8. Consideration of draft license agreement with Walser Sales, Inc. for use by Buick/Isuzu dealership sites located at and adjacent to 2100 West 78th Street Staff Report No. 31 Notes: 9. Consideration of draft license agreement with Motorwerks, Inc. for use by BMW dealership site at and adjacent to 2100 West 78th Street Staff Report No. 32 • Notes: 10. Consideration of proceeding with eminent domain activities required to acquire real properties identified as Remnant Parcels No. 4 and 6 within Interchange West Redevelopment Area Staff Report No. 33 Notes: 11. Claims and payroll 12. Closed session to discuss pending litigation 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. .7 • CITY OF RICHFIELD, MINNESOTA HOUSING AND REDEVELOPMENT AUTHORITY MONDAY, MARCH 19, 20.01 RICHFIELD CITY HALL 6700 PORTLAND AVENUE COUNCIL CHAMBERS 7 P.M. AGENDA Call to order 1. Approval of minutes of (1) Regular HRA Meeting of February 20, 2001; and (2) Special HRA Meeting of March 5, 2001 2. Opportunity for citizens to address the HRA on items not on the agenda Notes: • 3: HRA approval of agenda 4. Consent Calendar contains several separate items which are acted upon by the HRA in one motion. Once the Consent Calendar has been approved, the individual items and recommended actions have also been approved. No further HRA action is necessary. However, any HRA Commissioner may request that an item be removed from the Consent Calendar and placed on the regular agenda for HRA discussion and action. All items listed on the Consent Calendar are recommended for approval. A. Consideration of approval of resolution for. Gramercy Park Cooperative; second amendment to Contract for Private Redevelopment; sale of and providing form, terms, covenants and directions for, issuance of limited revenue tax increment note, Series 2001; and Estoppel Certificate S.R. No. 27 Notes: • 5. Public hearing and consideration of resolution authorizing sale of property at 6852 Park Avenue to Steven Marlin Grant Homes for new construction of single family home Staff Report No. 28 Notes: 6. Consideration of options for. con.tin_u.ation.,.of.redevelopmen~.~rocess for.Lyndale Gateway area Staff Report No. 29 Notes: 7. Consideration of resolution authorizing execution of Tax Increment Pledge Agreement with City of Richfield relating to $8,350,000 General Obligation Tax Increment Bonds, Series 2001A •~ Staff Report No. 30 Notes: 8. Consideration of draft license agreement with Walser Sales, Inc. for use by Buick/Isuzu dealership sites located at and adjacent to 2100 West 78th Street Staff Report No. 31 Notes: 9. Consideration of draft license agreement with Motorwerks, Inc. for use by BMW dealership site at and adjacent to 2100 West 78th Street Staff Report No. 32 Notes: • • 10. Consideration of proceeding with eminent domain activities required to acquire real properties .identified as Remnant Parcels No. 4 and 6 within Interchange West Redevelopment Area Staff Report No. 33 Notes: 11. 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. • • • Richfield Housing and Redevelopment Authority Regular Meeting -March 19, 2000 Added Agenda Item Agreement Regarding the Conveyence of Land • • JBD-194860v1 RC 125-210 Execution Copy AGREEMENT REGARDING CONVEYANCE OF LAND THIS AGREEMENT, made and .entered into as of the 19th day of March, 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 "Authority"), and BEST BUY CO., INC., a Minnesota corporation (the "Redeveloper"). WITNESSETH: WHEREAS, the parties hereto did on or about March 28,2000 enter into an agreement entitled, Contract for Private Redevelopment, (the "Contract"), calling for the. redevelopment of an area of land (the "Property") lying within the City of Richfield; and WHEREAS, the parties hereto did on or about November 27, 2000 and again on February 20, 2001 amend the Contract by agreements agreement entitled, respectively: First Amendment to Contract for Private Redevelopment (the "First Amendment"); .and Second Amendment to Contract for Private Redevelopment (the "Second Amendment") which. amended the Contract; and • WHEREAS, in accordance with the provisions of the Second Amendment, the Authority is required to convey portions of the Redevelopment Property to Redeveloper upon the request of Redeveloper and "upon such security as the Authority shall deem appropriate"; and WHEREAS, the Redeveloper has made a request for the conveyance of a portion of the Redevelopment Property legally described in the attached Exhibit A (the "Property"); and WHEREAS, the Authority has delivered to the Redeveloper quit claim deeds to the Property with instructions that the deeds not be recorded until an agreement as to appropriate security is reached. NOW, THEREFORE, based upon the mutual covenants and undertakings hereinafter, and in the Contract provided, the parties hereto stipulate and agree as follows: 1. Best Buy indemnifies the Authority from any claim arising out of Best Buy's interference with Walser's use of the Property until June 15, 2001. 2. Best Buy agrees to pay for the replacement cost of any buildings on the Walser Property that are demolished between the time of conveyance of the Property to Best Buy and the date that the Authority is obligated to deliver the Note to Best Buy under the Contract, in • the event that any appeal results in the restitution of the Walser Property to Walser. 3. The Authority consents to the recording of the deeds. JBD-194860v1 r RC125-210 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed in their behalf by their authorized representatives on or as of the date first above written. • STATE OF MINNESOTA ss.: COUNTY OF HENNEPIN HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD By Its Chair By Its Executive Director BEST BUY CO., INC. By_ Its The foregoing instrument was acknowledged before me this day of 2001 by Thomas E. Harms and Samantha Orduno, the Chair and Executive Director, respectively, of the Housing and Redevelopment Authority in and for the City of Richfield, a public body corporate and politic under the laws of Minnesota, on behalf of the Authority. Notary Public JBD-194860v1 RC125-210 i STATE OF MINNESOTA ss.: COUNTY OF HENNEPIN The foregoing instrument was acknowledged before me this day of ; 2001 by the of Best Buy Co., Inc., a Minnesota corporation, on behalf of the corporation. Notary Public • • JBD-194860v1 RC125-210 • EXHIBIT A Parcel No. PID No. Address Parcel 1 33-028-24-33-0065, - 0066, -0067, -0068, -0069, 0070 2024, 2026, 2022, 2020 and 2016 -78"' Street West, Richfield Parcel 2 33-028-24-33-0011 2100 - 78`'' Street West, Richfield, Minnesota Parcel 3 33-028-24-33-0009 7701 Newton Avenue South, Richfield, Minnesota Parcel 4 33-028-24-33-0007 2000 - 78"' Street°West; `Richfield,'Minnesota Parcels 33-028-24-33-0013 7701 Penn Avenue South, Richfield; Minnesota Parcel 6 33-028-24-33-0014 7745 Penn Avenue South, Richfield, Minnesota Parcel ? Part of 78"' Street, between Penn and Morgan Avenues, Richfield Abstract and Torrens Properties. Certificate Nos. 694799 and 687923 I~~l Description of Property Parcel 1: Tracts A, B and D, except the West 30 feet of said tracts, as measured along the North • and South lines thereof; Tracts E, F and G, Registered Land Survey No. 800, Hennepin County, Minnesota. Parcel 2: Tract A: All of Tract C and the West 30 feet of Tracts A, B and D as measured along the North and South lines. thereof, Registered Land Survey No. 800, Hennepin County, Minnesota. Parcel 2: Tract B: The West 141.38 feet of the East 235.63 feet, as measured at right angles to the East line thereof, of: that part of the following described tract of land lying South of the North 200 feet thereof and North of the North right-of--way line of Interstate Highway No. 494. That part of the Southwest Quarter of the Southwest Quarter of Section 33, Township 28, Range 24, Hennepin County, Minnesota described as follows: Commencing on the South line of said Southwest Quarter of the Southwest Quarter at a point 328 feet East from the Southwest corner of said Section; thence Northerly to the Southwest corner of McHardy's Addition; thence Easterly to the Southeast corner of McHardy's Addition; thence Southerly to a point in the South line of said Section 33, distant 656 feet East from the Southwest corner of said Section 33; thence West 328 feet to the point of beginning. JBD-194860v1 RC125-210 • Parcel 2: Tract C The East 94.25 feet, as measured at right angles to the East line thereof, of: that part of the following described tract of land lying South of the North 200 feet thereof and North of the North right- of-way line of Interstate Highway No. 494. That part of the Southwest Quarter of the Southwest Quarter of Section 33, Township 28, Range 24, Hennepin County, Minnesota described as follows: Commencing on the South line of said Southwest Quarter of the Southwest Quarter at a point 328 feet East from the Southwest corner of said Section; thence Northerly to the Southwest corner of McHardy's Addition; thence Easterly to the- Southeast corner of McHardy's Addition; thence Southerly to a point in the South line of said Section 33, distant 656 feet East from the Southwest corner of said Section 33; thence West 328 feet to the point of beginning. Parcel 2: Tract D: That part of the following described property lying West of the East 235.63 feet thereof as measured at right angles to the East line thereof: that part of the following described tract of land lying South of the North 200 feet thereof and North of the North right-of- way line of Interstate Highway No. 494. That part of the Southwest Quarter of the Southwest Quarter of Section 33, Township 28, Range 24, Hennepin County, Minnesota, described as follows: Commencing on the South line of said Southwest • Quarter of the Southwest Quarter at a point 328 feet East from the Southwest corner of said Section; thence Northerly to the Southwest corner of McHardy's Addition; thence Easterly to the Southeast corner of McHardy's Addition; thence Southerly to a point in the South line of said Section 33, distant 656 feet East from Southwest corner of said Section 33; thence West 328 feet to the point of beginning. Parcel 3: The North 166 feet of the East 59 feet of the South half of the following described premises: Beginning at a point 656 feet East of the Southwest corner of Section 33, Township 28 North, Range 24 West of the 4"' Principal Meridian; thence running North a distance of 1312.96 feet; thence East a distance of 163.8 feet; thence South a distance of 1312.77 feet; thence West a distance of 164 feet to the point of beginning. Parcel 4: That part of the Southwest Quarter of the Southwest Quarter of Section 33, Township 28 North, Range. 24 West of the 4"' Principal Meridian described as follows: Commencing at a point 820 feet East of the Southwest corner of said Section 33; thence North a distance of 656.28 feet; thence East a distance of 163 feet; thence South a distance of 656.28 feet; thence West a distance of 164 feet to the point of beginning, • JBD-194860v I RC125-210 • according to the United States Government Survey thereof and situate in Hennepin County, Minnesota. Parcel 5: The South one half of the following described tract of land: That part of the Southwest Quarter of the Southwest Quarter (SW 1/4. of SW 1/4) of Section Thirty-three (33), Township Twenty eight (28), Range Twenty four (24), described as-follows: -Commencing at the ' Southwest corner of said Section 33; thence North 1313.33 feet; thence East 327.60 feet; thence South 1313.33 feet; thence West 328 .feet to the point of beginning, excepting however, that part thereof taken for State Highway No. 100, also known as Interstate Highway No. 494, and also excepting all other public streets and highways; except all that part of the following described tract; that part of the Southwest Quarter of the Southwest Quarter of Section 33, Township 28 North, Range 24 West, described as follows: Beginning at the point of intersection of a line 33 feet East of and parallel with the West line of said Section and the Northeasterly right of way line of Trunk Highway No. 494 as defined by Document No. 3419310; thence • North along the parallel line a distance of 175 feet; thence East at a right angle a distance of 164 feet; thence South at a right angle a distance of 232.80 feet, more or less, to a point on the Northeasterly right of way line of Trunk Highway No. 494; .thence Northwesterly along the North right of way line of Trunk highway No. 494 a distance of 173.89 feet, more or less, to the point of beginning, according to the United States Government Survey thereof and situate in Hennepin County, Minnesota which lies Northerly, Northeasterly and Easterly of the following described Line A: From a point on the west line of said Section 33, distant 535.26 feet north of the southwest corner thereof; thence run easterly at an angle of 88 degrees 30 minutes with said west section line (measured from north to east) for 33.01 feet to the point. of beginning of the line to be described; thence continue easterly on the last above described course for 117.43 feet; thence deflect to the right on a curve having a radius of 62 feet (delta angle 91 degrees 30 minutes) for 99.01 feet; thence on tangent to said curve for 210 feet and there terminating and which lies Northeasterly of the following described Line B: JBD-194860v1 RC125-210 . Beginning at a point on a line run parallel with and 33 feet easterly from the west line of said Section. 33, distant 31.37 feet northerly of its intersection with the above described Line A; thence run southeasterly to a point on the above described Line A distant 31.37 feet easterly of said intersection and there terminating. All according to the United States Government Survey thereof, and situate in Hennepin County, Minnesota. Parcel 6: Tract A: All that part of the following described tract; that part of the Southwest Quarter of the Southwest Quarter of Section 33, Township 28 North, Range 24 West, described as follows: Beginning at the point of intersection of a line 33 feet East of and parallel with the west line of said Section and the northeasterly right of way line of Trunk Highway No. 494 as defined by Document No. 3419310; thence North along the parallel line a distance of 175 feet; thence East at a right angle a distance of 164 feet; thence South at a • right angle a distance of 232.80 feet, more or less, to a point on the northeasterly right of way line of Trunk Highway No. 494; thence northwesterly along the North right of way line of Trunk Highway No. 494 a distance of 173.89 feet, more, or less, to the point of beginning according to the United States Government Survey thereof and situate in Hennepin County, Minnesota which lies southerly, southwesterly, and westerly of the following described Line A: Beginning at the southwest corner of said Section 33; thence northerly along the west line of said Section 33 a distance of 501.24 feet, to the point of beginning of the 1 ine to be described; thence easterly deflecting to the right at an angle of 88 degrees, 30 minutes, a distance of 125.65 feet; thence southeasterly along the tangential curve, concave to the southwest, radius 53 feet, delta angle 91 degrees, 30 minutes, a distance of 84.64 feet; thence southerly along the tangent of said curve a distance of 180 feet, more or less, to the northeasterly right of way line of said Trunk Highway No. 494 as defined by Document No. 3419310 and there terminating; • and which lies southeasterly of the following described line B: JBD-194860v 1 RC 125-210 • Beginning at a point on a line drawn parallel with and 33 feet easterly from the west line of said Section 33 distant 30 feet southerly from the point of intersection of said parallel line with Line A; thence northeasterly to a point on Line A distant 30 feet easterly from the point of intersection of said parallel line and Line A. All according to the United States Government Survey thereof, and situate in Hennepin County, Minnesota. Parcel 6: Tract B: That part of the Southwest Quarter of the Southwest Quarter of Section 33, Township 28 North, Range 24 West, Hennepin County, Minnesota, described as follows: Beginning at the point of intersection of Line 1 described below with a line run parallel with and distant 60 feet east of the west line of said Section 33; thence run south on said 60 foot parallel line for 80 feet; thence run southeasterly to the point of intersection of a line run parallel with and distant 180 feet northerly of Line 2 described below, with Line 3 described below; thence run northerly on said Line 3 to its intersection with said Line l; thence run northwesterly on said Line 1 to the point of beginning. • Line 1: Beginning at a point on a line run parallel with and distant 656 feet east of the west line of said Section 33, distant 120 feet north of the south line of said Section 33; thence run northwesterly to a point on the west line of said Section 33, distant 355 feet north of the southwest corner thereof and terminating. Line 2: From a point on the southwest corner of said Section 33, run easterly at an angle of 89 degrees 46 minutes 00 seconds from the west line of said Section 33 (measured from north to east) for 1359.14 feet to the point of beginning of Line 2 to be described; thence run westerly on the last described course for 89.23 feet; thence deflect to the right on a 00 degree 30 minute 00 second curve (delta- angle 04 degrees 39 minutes 00 seconds) for 930 feet; thence on tangent to said curve for 77.19 feet; thence deflect to the left on a Ol degree 00 minute 00 second curve (delta angle 07 degrees 31 minutes 48 seconds) for 753 feet and there terminating. Line 3: • dBD-194860v 1 RC125-210 • Beginning at a point on the west line of said Section 33, distant 501.24 feet -north of the southwest corner thereof; thence run easterly at an angle of 91 degrees 30 minutes 00 seconds from said west section line (measured from south to east) for 125.65 feet; thence deflect to the right on a curve having a radius of 53 feet (delta angle 91 degrees 30 minutes 00 seconds) for 84.64 feet; thence on tangent to said curve to an intersection with Line 1 described above; thence run southerly to a point distant 165 feet northerly (measured at right angles) to a point on Line 2 described above distant 656.32 feet easterly of its point of termination and there terminating. Parcel 7: TRACT A That part of the Southwest Quarter of the Southwest Quarter of Section 33, Township 28, Range 24, Hennepin County, Minnesota, described as follows: Commencing at the Southwest corner of said Southwest Quarter of the Southwest Quarter of Section 33; thence Easterly along the South line of said Southwest Quarter of the Southwest Quarter of . Section 33 a distance of 656.00 feet, more or less, to the West line of Registered Land Survey No. 800, files of the Registrar of Titles, County of Hennepin; thence Northerly along said West line of Registered Land Survey No. 800 a distance of 108.00 feet to the actual point of beginning of the easement to be described; thence continuing Northerly along said West line of Registered Land Survey No. 800 a distance of 12.00 feet, more or less, to the Northeasterly right of way line of Trunk .Highway No. 494, as defined by Doc. No. 3419310; thence on an assumed bearing of N70°30'28"W along said Northeasterly right of way line a distance of 118.94 feet; thence S17°41'59"West a distance of 10.54 feet; thence S27 ° 18' O 1 "E a distance of 28.28 -feet; thence S72 ° 18' O l "E a distance of 8.50 feet; thence S78°44'02"E a distance of 46.48 feet; thence S84 ° 18' 32"E a distance of 48.93 feet, more or less, to the actual point of beginning. Tract A contains 2,673 square feet or .061 acres. TRACT B That part of the Southwest Quarter of the Southwest Quarter of Section 33, Township 28, Range 24, Hennepin County, Minnesota, described as follows: JBD-194860v1 RC125-210 • Commencing at the Southwest corner of said Southwest Quarter of the Southwest Quarter of Section 33; thence Easterly along the South line of said Southwest Quarter of the- Southwest Quarter of Section 33 a distance of 656.00 feet, more or less, to the West line of Registered Land Survey No. 800, files of the Registrar of Titles, County of Hennepin; thence Northerly along said West line of Registered Land Survey No. 800 a distance of 120.00 feet, more or less, to the Northeasterly right of way line of Trunk Highway No. 494, as defined by Doc. No. 3419310; thence on an assumed bearing of-N70°30'28" Walong-said-Northeasterly right of-way line a distance of 148.96 feet to the actual point of beginning of the easement to be described; thence continuing N70°30'28"W along said Northeasterly right of way line a distance of 299.08 feet; thence S26°29'40"E a distance of 35.56 feet; thence S67°09'46"E a distance of 171.25 feet; thence S72 ° 18'.01 "E a distance of 83.58 feet; .thence N62°41'59"E a distance of 28.28 feet; thence N 17°41'59" E a distance of 11.48 feet, more or less to the actual point of beginning. Parcel B contains 8603 square feet or 0.197 acres. • Together with all rights in and to any and all streets and alleys adjacent thereto, vacated. or to be vacated, and together with any and all appurtenant easements. • JBD-194860v1 RC 125-210 C • C AGENDA ITEM # 10 REPORT # 33 STAFF REPORT ~ HOUSING AND REDEVELOPMENT AUTHORITY MEETING MARCH 19, 2001 REPORT PREPARED BY: REPORT PRESENTER: DEPARTMENT DIRECTOR REVIEW: REVIEWED BY EXECUTIVE DIRECTOR: JOHN STARK, COMMUNITY DEVELOPMENT MANAGER NAME, TITLE BRUCE PALMBORG, COMMUNITY DEVELOPMENT DIRECTOR ITEM FOR HRA CONSIDERATION: Consideration of a motion for staff to proceed with eminent domain activities required to acquire real properties identified as Remnant Parcels Number 4 and 6 within the Interchange West Redevelopment Area. I. RECOMMENDED ACTION: By Motion: Approve. a motion for staff to proceed with eminent domain activities required to acquire real properties identified as Remnant Parcels Number 4 and 6 within the Interchange West Redevelopment Area. II. BACKGROUND On November 20, 2000, the Richfield Housing and Redevelopment Authority (HRA) approved the acquisition of several remnant parcels. in the Interchange West area through condemnation. A remnant parcel is generally described as a property without an assigned parcel identification number and is undevelopable unless assembled into a larger site. Ownership of such properties is typically difficult to determine and condemnation is typically necessary to clear the title of such properties of all interests. 0319condemn2 NAME, TITLI: Since the November 20, 2000 approval of acquisition of remnant parcels was granted by the HRA, two additional remnant parcels have been identified. These • parcels are being termed as Remnant Parcels Number 4 and 6 and are further described in Attachment A and B. One of the properties (Parcel Number 4) is owned by the City of Richfield; other interests are potentially attached to the title which would be removed through condemnation. III. BASIS OF RECOMMENDATION A. POLICY • The Richfield HRA is party to a Contract for Private Development with Best Buy Co., Inc. • That Contract anticipates the use of condemnation for properties which Best Buy is unable to acquire privately. • Condemnation is the preferred method for acquiring remnant parcels, primarily because if removes all prior interests to the property even though such interests are often unidentifiable. B. CRITICAL ISSUES • The acquisition of these properties is necessary for Best Buy's site assembly of the Interchange West area. • One of the properties (Parcel Number 4) is owned by the City of Richfield; other interests are potentially attached to the title which would be removed through condemnation. C. FINANCIAL • Costs of acquiring these properties are to be reimbursed by Best Buy under the terms of the Contract. D. LEGAL • Legal counsel provided the legal description of the remnant parcels and have reviewed this staff report. IV. ALTERNATIVE RECOMMENDATION~S~ • Defer action on this item until a later date; however this would impede Best Buy's ability to assemble the Interchange West site on their current schedule. V. ATTACHMENTS • Legal Description of Remnant Parcel Number 4 (Attachment A) • Legal Description of Remnant Parcel 6 (Attachment B) • Map of Parcel 6 (Map of Parcel 4 to be provided by legal counsel at the HRA meeting) • VI. PRINCIPAL PARTIES EXPECTED AT MEETING • N/A Attachment A Remnant Parcel 4 Legal Description • That part of Tract A described below: Tract A: The south one-half of that part of the Southwest Quarter of the Southwest Quarter of Section 33, Township 28, Range 24 West, Hennepin County, Minnesota described as follows: Commencing on the southwest corner of said Section 33; thence running north 1313.7 feet; thence east 327.6 feet; thence south 1313.33 feet; thence west 328 feet to the point of beginning; Which lies easterly of the easterly line of Penn Avenue, northerly of Line 1 described below, easterly and northerly of Line 2 described below and southerly and westerly of Line 3 described below: Line 1: Beginning at a point on a line run parallel with and distant 656 feet east of the west line of said Section 33, distant 120 feet north of the south line of said Section 33; thence run northwesterly to a point on the west line of said Section 33, distant 355 feet north of the southwest corner thereof and there terminating; Line2: Beginning at a point on the west line of said Section 33; distant 501.24 feet north of the southwest corner thereof; thence run easterly at an angle of 91 degrees 30 minutes 00 seconds from said west section line .(measured from south to east) for 125.65 feet; thence deflect to the right on a curve having a radius of 53 feet (delta angle 91 degrees 30 minutes 00 seconds) for 84.64 feet; thence on tangent to said curve to an intersection with Line 1 described above and there terminating; Line 3: Beginning at a point on the west line of said Section 33, distant 535.26 feet north of the southwest corner thereof; thence run easterly at an angle of 88 degrees 30 minutes 00 seconds from said west section line (measured from. north to east) for 150.44 feet; thence deflect to the right on a curve having a radius of 62 feet (delta angle 91 degrees 30 minutes 00 seconds) for 99.01 feet; thence on tangent to said curve for 210 feet and there terminating; also together with a triangular piece, being that part of Tract A hereinbefore described, which lies southerly of Line 2 described above, easterly of the easterly line of Penn Avenue and northwesterly of the following described line: Beginning at a point on the easterly line of Penn Avenue, distant 30 feet southerly of its intersection with said Line 2; thence run northeasterly to a point on said Line 2, distant 30 feet easterly of said intersection and there terminating; also together with a triangular piece, being that part of Tract A hereinbefore described, which lies easterly of a line run parallel with and distant 33 feet easterly of the west line of said Section 33, northerly of line 3 described above and southwesterly of the following described line: Beginning at a point on said 33 foot parallel line, distant 31.37 feet northerly of its intersection with said Line 3; thence run southeasterly to a point on said Line 3, distant 31.37 feet easterly of said intersection and • there terminating. Attachment B • Remnant Parcel 6 Legal Description The North thirty (30) feet of the following described tract of land: The South %Z of the following described tract of land: That part of the Southwest '/4 of the Southwest '/4 of Section 33, Township 28, Range 24, described as follows: Commencing at the Southwest corner of said Section 33; thence running North 1313.33 feet; thence East 327.60 feet; thence South 1313.33 feet; thence West .328 feet to the point of beginning, according to the United States Government Survey thereof and situated in Hennepin County, Minnesota. That part of the above described tract of land described as follows: Commencing at the Southwest corner of Section 33, Township 28, Range 24; thence North along the West line of the Southwest'/4 of the Southwest'/4 of said Section 33, a distance of 355.0 feet; (said West line of Southwest '/a of the Southwest '/4, having an assumed bearing of North) thence South 70 degrees 35 minutes 06 seconds East, a distance of 34.99 feet, to the actual point of beginning of the land to be described; (said point being the point of intersection of the East right of way line of Penn Avenue and the North right of way line of Interstate Highway No. 494) thence North along the East right of way line of Penn Avenue, a distance of 313.48 feet, to the North line of the above described tract of land; thence North 59 degrees 40 minutes OS seconds East, . along the North line of the above described tract, a distance of 294.80 feet, to the Northeast corner of the above described tract; thence South 0 degrees O1 minutes East, along the East line of the above described tract, a distance of 419.14 feet, to the North right of way line of Interstate Highway No. 494; thence North 70 degrees 35 minutes 06 seconds West, along the North right of way line of Interstate Highway No. 494, a distance of 312.70 feet, to the point of beginning, and situate in Hennepin County, Minnesota. 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I Z ASlt02 I ~ Z (14) I ~ a. 1 I . 33 A I 1 .~~ e ~ `~ . t '- \ ~ I e ~ T i ~ 1 ~1 ~ w 1 •~~ ~ ;~ 1 1 1 ~` S ~ ~ `= $ t ri u ~ Ft I Q ~Z O 1- W Z i 30 ~ 70 w ^ g I . 1 j ~ 1 c RA PER OOC X -~ -~, ~ ~ I w •92n le ~ ~ ~ Se ct ~ `` ~ ~ ~~ • ~'~ {V t 1 l- NO ~SSS31 ~ ' M- ~ ~ ~ ` ~ l •~0 3~1 p3is . ~. 1 `~~ SCALE : ~~,~ lO©' ~ ~ ~'~,_ ---------------------------;-- --------- , ---- -=r-;;;; ----- `` ~ -~,- - ~ ,: so he zeo :~ 5 N ~.'_ ~.."~~ C ~ L. 6 ( io) (I I) • Additional Attachment to Staff Report No. 33 Consideration of proceeding with eminent domain activities required to acquire real properties identified as Remnant Parcels No. 4 and 6 within the Interchange West Redevelopment Area C, • • HRA RESOLUTION NO. RESOLUTION OF THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA AUTHORIZING EMINENT DOMAIN PROCEEDINGS TO ACQUIRE CERTAIN REAL PROPERTIES WHEREAS, the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota (the "HRA") is a housing and redevelopment authority duly constituted and organized under law, with all of the powers enumerated in Minnesota Statutes, Sections 469.001 to 469.047 (the "Act"); and WHEREAS, the HRA is authorized to develop and carry out redevelopment plans and redevelopment projects, as those terms are respectively defined in Minnesota Statutes, Section 469.002, subdivisions 16 and 14; and WHEREAS, the City of Richfield on June 14, 1993 adopted a redevelopment plan (the "Redevelopment Plan") for the Richfield Redevelopment Project Area (the "Project Area"), and on June 14, 1999 adopted a modification to the Redevelopment Plan and established the Interchange West and Lyndale Gateway Tax Increment Financing District (the "TIF District"). • WHEREAS, the Plans, as modified, contemplate the acquisition of certain real properties (the "Properties") which are located in the Project Area and which are more particularly described below in this resolution; and WHEREAS, the HRA has entered into a contract for private redevelopment (the "Contract") of land lying within the TIF District portion of the Project Area (including, but not limited to the Properties); and WHEREAS, the Developer under the Contract is not in default of any of its obligations thereunder; and WHEREAS, the Properties consist of remnant parcels of land underlying public streets, the owners of which the Developer has been unable to locate; and WHEREAS, the Developer has requested that, in accordance with the terms of the contract, the HRA commence eminent domain proceedings, and that such proceedings be undertaken as soon as possible so as to assure that the Properties will be available for development when needed; and WHEREAS, the HRA is satisfied that the Developer has complied with the requirements of the Contract concerning such request. • • NOW, THEREFORE, BE IT RESOLVED by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota as follows: 1. It is necessary to acquire the Properties as described below in this resolution in order for the HRA to carry out the purposes of the Plans, as modified, and the Act, to deal with properties that are structurally substandard and to eliminate and prevent the development or spread of conditions of blight found to exist by the City and the HRA. 2. Acquisition of the Properties by eminent domain, in the manner provided by Minnesota Statutes, Chapter 117, is deemed to be necessary and for a public purpose and is hereby authorized. 3. The HRA deems it necessary for the reasons set forth in the Plans, as modified, and in order to meet anticipated construction schedules, to proceed without undue delay to commence condemnation of the Properties. 4. The HRA's attorney .and staff are authorized to commence and prosecute to completion eminent domain proceedings to acquire fee simple title to the Properties, subject to existing easements in favor of the City of Richfield. 5. The Properties to be acquiredare described on the attached Exhibit A. • Ado ted b the Housin and Redevelopment Authority in and for the City of Richfield, P Y g Minnesota this 19th day of March, 2001. ATTEST: Thomas E. Harms, Chairperson Mike Sandahl, Secretary • EXHIBIT A Legal Descriptions of Properties to be Acquired Remnant Parcel 4 Legal Description That part of Tract A described below: Tract A: The south one-half of that part of the Southwest Quarter of the Southwest Quarter of Section 33, Township 28, Range 24 West, Hennepin County, Minnesota described as follows:. Commencing on the southwest corner of said Section 33; thence running north 1313.7 feet; thence east 327.6 feet; thence south 1313.33 feet; thence west 328 feet to the point of beginning; Which lies easterly of the easterly line of Penn Avenue, northerly of Line 1 described below, easterly and northerly of Line 2 described below and southerly and westerly of Line 3 described below: Line 1: Beginning at a point on a line run parallel with and distant 656 feet east of the west line of said Section 33, distant 120 feet north of the south line of • said Section 33; thence run northwesterly to a point on the west line of said Section 33, distant 3.55 feet north of the southwest corner thereof and there terminating; Line2: Beginning at a point on the west line of said Section 33; distant 501.24 feet north of the southwest corner thereof; thence run easterly at an angle of 91 degrees 30 minutes 00 seconds from said west section -line (measured from south to east) for 125.65- feet; thence deflect to the right on a curve having a radius of 53 feet (delta angle 91 degrees 30 minutes 00 seconds) for 84.64 feet; thence on tangent to said curve to an intersection with Line 1 described above and there terminating; Line 3: Beginning at a point on the west line of said Section 33, distant 535.26 feet north of the southwest corner thereof; thence run easterly at an angle of 88 degrees 30 minutes 00 seconds from said west section line (measured from north to east) for 150.44 feet; thence deflect to the right on a curve having a radius of 62 feet (delta angle 91 degrees 30 minutes 00 seconds) for 99.01 feet; thence on tangent to said curve for 210 feet and there terminating; also together with a triangular piece, being that part of Tract A hereinbefore described, which lies southerly of Line 2 described above, easterly of the easterly line of Penn Avenue and northwesterly of the following described line: Beginning at a point on the easterly line of Penn Avenue, distant 30 feet southerly of its intersection with said Line 2; i thence run northeasterly to a point on -said. Line 2, distant 30 feet easterly of said intersection and there terminating; also together with a triangular piece, being that part of Tract A hereinbefore described, which lies easterly of a line run parallel with and distant 33 feet easterly of the west line of said Section 33, northerly of line 3 described above and southwesterly of the following described line: Beginning at a point on said 33 foot parallel line, distant 31.37 feet northerly of its intersection with said Line 3; thence run southeasterly to a point on said Line 3, distant 31.37 feet easterly of said intersection and there terminating. Remnant Parcel 6 Legal Description T'he North thirty (30) feet of the following described tract of land: The South 1/2 of the following described tract of land: That part of the .Southwest 1/a of the Southwest '/4 of Section 33, Township 28, Range 24, described as follows: Commencing at the Southwest corner of said Section 33; thence running North 1313.33 feet; thence East 327.60 feet; thence South 1313.33 feet; thence West 328 feet to the point of beginning,- according to the United States Government Survey • thereof and situated in Hennepin County, Minnesota. That part of the above described tract of land described as follows: Commencing at the Southwest corner of Section 33, Township 28, Range 24; thence North along .the West line of the Southwest 1/4 of the Southwest '/a of said Section 33, a distance of 355.0 feet; (said West line of Southwest '/4 of the Southwest '/4, having an assumed bearing of North) thence South 70 degrees 35 minutes 06 seconds East, a distance of 34.99 feet, to the actual point of beginning of the land to be described; (said point being the point of intersection of the East right of way line of Penn Avenue and the North right of way. line of Interstate Highway No. 494) thence North along the East right of way line of Penn Avenue, a distance of 313.48 feet, to the North line of the above described tract of land; thence North 59 degrees 40 minutes OS seconds East, along the North line of the above described tract, a distance. of 294.80 feet, to the Northeast corner of the above described tract; thence South 0 degrees O1 minutes East, along the East line of the above described tract, a distance of 419.14 feet, to the North right of way line of Interstate Highway No. 494; thence North 70 degrees 35 minutes 06 seconds West, along the North right of way line of Interstate Highway No.494, a distance of 312.70 feet, to the point of beginning, and situate in Hennepin County, Minnesota. r~ STAFF REPORT AGENDA ITEM # 9 REPORT # 32 HOUSING AND REDEVELOPMENT AUTHORITY MEETING MARCH 19, 2001 • REPORT PREPARED BY: REPORT PRESENTER: DEPARTMENT DIRECTOR REVIEW: REVIEWED BY EXECUTIVE DIRECTOR: JOHN STARK, COMMUNITY DEVELOPMENT MANAGER BRUCE PALMBORG COMMUNITY DEVELOPMENT DIRECTOR ITEM FOR HRA CONSIDERATION: Consideration of a license agreement with Motorwerks, Inc., for use by the BMW dealership site located at, and adjacent to, 2100 W. 78th Street. I. RECOMMENDED ACTION: By Motion: Adopt the attached draft license agreement with Motorwerks, Inc. for use by the BMW dealership site located at, and adjacent to, 2100 W. 78th Street. II. BACKGROUND This agenda item is being continued from the March 5, 2001 Special HRA Meeting. • On July 17, 2000 the Richfield Housing and Redevelopment Authority (HRA) approved the commencement of condemnation proceedings to acquire properties located at, and adjacent to, 2100 W. 78th Street. After a trial on the public purpose of such actions, the Hennepin County District Court ruled (on January 19, 2001) in favor of the HRA. The HRA has since taken steps to take title to the aforementioned property. As part of the ruling, however, the Walser dealerships were allowed to remain on the properly until June 15, 2001. A license agreement, which is similar to a lease agreement, must therefore be executed to define the 0319bmw NfwrE, Tircr_• terms and conditions of the Walser dealership's possession of the property upon the • transfer of title to the HRA. Among the terms considered in the attached draft license agreement with the- BMW dealership are: • A monthly payment of $30,899 to the HRA (the amount of which was determined by the market rent calculations contained in an appraisal of the property); • Tax, utilities and maintenance costs responsibilities allocated to the dealership; and • A termination. date of June 15, 2001. The final terms of the license agreement are to be determined based on communications with representatives of Motorwerks, Inc. III. BASIS OF RECOMMENDATION A. POLICY • In accordance with a January 19, 2001 ruling of the Hennepin County District Court, the HRA has taken title to properties located at, or adjacent to, 2100 W. 78th Street. • According to the District Court ruling, the Walser dealerships shall be permitted to remain on site until June 15, 2001. • A license agreement is necessary to define the terms and conditions • of the Walser dealerships possession of the property upon the transfer of title to the HRA. B. CRITICAL ISSUES • Legal counsel has opined that the license agreement should be approved and executed as soon as possible. C. ~ FINANCIAL • There are no negative financial impacts on the HRA or City of Richfield. D. LEGAL • Legal counsel drafted the attached License Agreement. IV. ALTERNATIVE RECOMMENDATION(S) • Defer approval until the License Agreement has been executed by representatives of the Motorwerks, Inc. V. ATTACHMENTS • Draft License Agreement with the Motorwerks, Inc. • VI. PRINCIPAL PARTIES EXPECTED AT MEETING • Mr. Paul Walser and his attorney were advised of this agenda item and may be in attendance. Draft BMW License • 2/19/01 LICENSE AGREEMENT THIS AGREEMENT made and entered into as of this day of , 2001, by and between THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA, a Minnesota public body corporate .and politic, (hereinafter referred to as "Grantor"), and Motorwerks, Inc., a Minnesota corporation (hereinafter referred to as "Grantee"). WITNESSETH: BACKGROUND This Agreement has been entered into pursuant to the provisions of the Findings of Fact, Conclusions of Law and Order Appointing Commissioners dated January 19, 2001 issued in District Court File No. CD-2604. Paragraph 3 of the Conclusions of Law reads as follows: 3. That the HRA has complied with the legal requirements for obtaining title and possession pursuant to Minn. Stat. Section 117.042 (1998) subject to Walser's right to remain on the property pursuant to a License (approved by the Court if the parties cannot agree or other arrangement agreed to by the parties) until 12:00 midnight June 15, 2001. • ARTICLE I -GRANT, TERM. 1.1 LICENSED PREMISES. In consideration of the fees, covenants and agreements herein reserved and contained on the part of Grantee to be performed, Grantor does hereby license to Grantee that portion of the land and building located at ,Richfield, Minnesota and located on land legally described in the attached Exhibit A (hereinafter referred to as the "Demised Premises"). 1.2 TERM. The term of this License and Grantee's obligation shall commence as of 2001 and the term of the License shall expire on June 15, 2001, or such earlier date as Grantee may determine by notice to Grantor. At the expiration of the term the Grantee agrees to vacate the Licensed Premises and deliver the same to the Grantor. ARTICLE II -USE OF PREMISES 2.1 GRANTEE'S USE. During the term of this License, the Licensed Premises shall be used solely for purposes permitted by law; and such uses shall be conducted in accordance with all applicable laws. • ARTICLE III -LICENSE FEE • 3.1 LICENSE FEE. The license fee for the term of the License shall be computed on the annual .rate of $370,788, and shall be payable in advance in monthly installments of $30,899; provided, however that the first license fee payment and the last license fee .payment will be prorated based on the number of days during such months that the Licensed Premises are Licensed. Except for the first license fee payment which shall be due upon the execution of this License, all license fee payments shall be due on or before the first day of each month. The amount of license fee payable pursuant to this License may not be used as evidence of market rent in any proceeding seeking to determine the market value of the Licensed- Premises, or relocation expenses or damages. All License Fee payments will be made to the Grantor, even :though, prior to the expiration or termination of this Agreement, the Licensed Premises may be conveyed to Best Buy Company, Inc., or its assigns. ARTICLE IV -TAXES 4.1. TAXES. The Grantee shall also be responsible for all real estate taxes and installments on special assessments which are payable in 2001. prorated for the term of the License. The amount will be paid in the manner described in Section 3.1 above. ARTICLE V -UTILITIES 5.1 CHARGES. Grantee shall pay for all utility services including gas, electricity, • domestic water, sewer, and all other utility services furnished the Grantee for use in the Licensed Premises. ARTICLE VI -MAINTENANCE AND REPAIRS 6.1 .ACCEPTANCE OF PREMISES. The Grantee accepts the Licensed Premises AS 1S, and WHERE IS with all faults and defects. Grantee acknowledges that the Grantor shall have no obligation of any nature to maintain, preserve or repair the Licensed Premises. ARTICLE VII -ALTERATIONS 7.1 NOTICE TO GRANTOR. Prior to the initiation of any alterations, Grantee shall give Grantor written notice thereof and specify the work to be performed in reasonable detail and include the names of the contractors and materialmen to be utilized. After receipt of -said notice, Grantor shall have a reasonable period of time during which it shall make a determination, in its sole discretion, as to whether or not the proposed work would increase the cost of demolition. Grantee shall provide Grantor upon request with any further information reasonably necessary for such determination by Grantor and Grantee shall not commence work or accept materials prior to receiving written notice of Grantor's determination. If Grantor determines that the proposed work would increase the cost of demolition, then, prior to the commencement of any work, the Grantee shall provide the Grantor with a deposit equal to 120% of the Grantor's estimate of increased demolition .costs. The portion, if any of such deposit not required shall be returned to Grantee within 60 days following the completion of demolition. • 7.2 ALTERATION NOT TO BE CONSIDERED. The value of any alteration made to the Licensed Premises following the established date of taking shall not be used as evidence of market value in any proceeding seeking to determine the market value of the Licensed Premises. • ARTICLE VIII - DESTRUCTIONAND RESTORATION 8.1 DAMAGED. If a significant portion of the Licensed Premises shall be damaged by any casualty whether insured or uninsured, the Grantor shall have no obligation to repair or rebuild the Licensed Premises. Grantee shall have the option to rebuild or repair or to terminate this License by exercise of notice to Grantor. 8.2 INSURANCE. Grantee shall apply the proceeds of any insurance policy covering damage or destruction of the improvements to reduce the amount of any award made in the Condemnation Action. ARTICLE IX -PUBLIC LIABILITY, INDEMNITY 9.1 GRANTEE'S LIABILITY INSURANCE. Grantee shall during the entire term hereof keep in full force and effect a policy of liability and property damage insurance with respect to the Licensed Premises, and the business operated by Grantee, in which the limits of liability shall be the same as the Policy limits which Grantee currently carries on the Licensed Premises. 9.2 INDEMNIFICATION. Except for claims arising out of the willful or negligent act of the other party or its representatives, each party shall indemnify and defend the other party against all claims, expenses and liabilities incurred, including reasonable attorneys' fees, in connection with loss of life, personal injury, or property damage arising out of any occurrence in, upon or at the Licensed Premises, or the occupancy or use thereof by said party, or occasioned • wholly or in part by any act or omission of said party, its agents, employees, contractors. This provision shall not be deemed as a waiver of any statutory liability limits available to Grantor. ARTICLE X -ASSIGNMENT AND SUBLETTING 10.1 NO ASSIGNMENT BY GRANTEE. Grantee may not assign this License and/or sublet the Licensed Premises, or any part thereof. 10.2 ASSIGNMENT BY GRANTOR. Grantee acknowledges that Grantor's rights under this Agreement may be assigned to Best Buy Company, Inc. pursuant to the terms of a Redevelopment Contract between Grantor and Best Buy. ARTICLE XI -GRANTEE'S DEFAULT 11.1 EVENTS OF DEFAULT. The following events shall be deemed to be events of default by Grantee under this License: (a) Grantee shall fail to pay when due any payments or other charges provided herein, or any portion thereof and the same shall. remain unpaid for a period of ten (10) days after the same has become due; or (b) Grantee shall do or permit to be done anything which creates a lien upon the • Licensed Premises; and does not cause said lien to be released within ten (10) days after written notice from Grantor; or (c) Grantee has failed to comply with any other provision of this License and has • not cured any failure within thirty (30) days, or such longer period of time as may be reasonably required to cure such default, after Grantor, by written notice, has informed Grantee of such noncompliance. 11.2 GRANTOR'S REMEDIES. Upon the occurrence of any of the above events of default, Grantor may without providing a notice of termination, or without affording Grantee an opportunity to cure (except as to matters for which the right to cure is specifically given in this agreement) apply to the Judge of Hennepin County District Court to whom Court File No. CD-2b04 (the "Condemnation Action") is assigned upon three days prior notice for whatever remedy and relief the Court shall deem appropriate. In addition to any other remedies available to Grantor, the Court may order. the deduction and off-set of any amounts or claims under this Agreement from any amounts payable Grantee pursuant to the Condemnation Action, or the award of commissioners or any relocation benefits Grantee may be entitled to receive. 11.3 COSTS, EXPENSES AND ATTORNEYS' FEES. If one party is required to seek legal counsel for collection or to commence litigation in order to enforce the covenants and agreements in this License, the party prevailing in such collection, litigation shall have the right to reimbursement from the other party of all reasonable costs, expenses and attorneys' fees. ARTICLEXII -- GRANTOR DEFAULT 12.1 DEFAULT NOTICE TO GRANTOR. Should Grantor default in the performance • of any of the covenants on the part of the Grantor to be kept or performed and such default shall continue for thirty (30) days after written notice to Grantor from Grantee specifying such default, Grantee shall have the same remedy as is available to the Grantor in section 11.2 above. ARTICLE XIII -MISCELLANEOUS PROVISIONS 13.1 COVENANT OF QUIET ENJOYMENT. Grantee, subject to the terms and provisions of this License, on payment of the license fee and observing, keeping and performing all of the terms and provisions of this License on its part to be observed, kept and performed, shall lawfully, peaceably and quietly have, hold occupy and enjoy the Licensed Premises during the term hereof without hindrance or objection by any persons lawfully claiming under Grantor. 13.2 ACCESS TO PREMISES. Grantee shall allow Grantor and its officers, agents, assigns, contractors and employees access to the Premises during the term ofthis Agreement for purposes of inspecting, surveying, testing and any other pre-demolition activities which are deemed necessary to the .Grantor .for purposes of redevelopment of the Premises. The Grantor will use reasonable efforts not to interrupt or disturb Grantee's business in the course of conducting said activities. 13.3 SURRENDER OF PREMISES. At the expiration or termination of this License, Grantee shall surrender the Licensed Premises in a safe and secure condition, but may remove .1 !• 19 1 .e . • 9 9 °.. 1 _91 _.1. _.. .9_°-___. ___ 1 _..... .9__.. . •.._ 19_. as it - - ~'a~=~ ~r ~risi `~ i ' a °-- - _~~~ Y -~ _~ - without limitation any liens for labor or materials provided for any repair, maintenance, • modification, alteration or construction of the Licensed Premises. 13.5 LICENSE SUBORDINATE. The provisions of this License are entirely subordinate to and are superceded and replaced by any contrary or inconsistent decision, order or directive in the Condemnation Action. Without limitation of the foregoing, no provision of this License, shall be deemed to extend the Grantees right to remain on the Licensed Premises beyond the 12:00 midnight on June 15, 2001. 13.6 NO PROPERTY INTEREST. This instrument is not a lease, creates no landlord- Tenant relationship, and nothing in this Agreement will be deemed to create any .property interest. other than as expressed in this Agreement. 13.7 GOVERNING LAW. The laws of the State of Minnesota will govern the validity and interpretation of this Agreement. 13.8 NOTICES. Any notice which is required under this License shall be deemed "given" upon hand delivery or three (3) days after prepaid posting in the U. S. Mail whichever shall first occur. IN WITNESS WHEREOF, the parties hereto have affixed their signatures the day and year first above written. • GRANTOR: HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR. THE CITY OF RICHFIELD By: Thomas E. Harms Its: Chair By: Samantha Orduno Its: Executive Director GRANTEE: MOTORWERKS, INC. By: Its: President • STATE OF MINNESOTA • ss.: COUNTY OF HENNEPIN The foregoing instrument was acknowledged before me this day of 2001, by Thomas E Harms, the Chair of the Housing and Redevelopment Authority in and for the City of Richfield, a Minnesota public body corporate and politic, on behalf of the Authority. Notary Public L~ U • STATE OF MINNESOTA ss.. COUNTY OF HENNEPIN The foregoing instrument was acknowledged before me this day of 2001, by Samantha Orduno, the Executive Director of the Housing and Redevelopment Authority in and for the City of Richfield, a Minnesota public body corporate and politic, on behalf of the Authority. Notary Public STATE OF MINNESOTA ss.: COUNTY OF HENNEPIN The foregoing instrument was acknowledged before me this day of 2001, by ,the President of Motorwerks, Inc., a corporation under the laws of the State of Minnesota, on behalf of the corporation. • Notary Public • Richfield Housing and Redevelopment Authority Regular .Meeting -March 19, 2000 Revised Attachment to Staff Report 32 Consideration of a Draft License Agreement with Motorwerks, Inc. for use by BMW Dealership Located at, and adjacent to, 2100 West 78"' Street. • • • Draft BMW License 3/6/01 LICENSE AGREEMENT THIS AGREEMENT made and .entered into as of this day of 2001, by and between THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA, a Minnesota public body corporate and politic, (hereinafter referred to as "Grantor"), and Motorwerks, Inc., a Minnesota corporation (hereinafter referred to as "Grantee"). WITNESSETH: BACKGROUND • This Agreement has been entered into pursuant to the provisions of the Findings of Fact, Conclusions of Law and Order Appointing Commissioners dated January 19, 2001 issued in District Court File No. CD-2604. Paragraph 3 of the Conclusions of Law reads as follows: 3. That the HRA has complied with the legal requirements for obtaining title and possession pursuant to Minn. Stat. Section 117.042 (1998) subject to Walsers' right to remain on the property pursuant to a License (approved by the Court if the parties cannot agree or other arrangement agreed to by the parties) until 12:00 midnight June 15, 2001. ARTICLE I -GRANT, TERM. 1.1 LICENSED PREMISES. In consideration of the fees, covenants and agreements herein reserved and contained on the part of Grantee to be performed, Grantor does hereby license to Grantee that portion of the land and building located at ,Richfield, Minnesota and located on land legally described in the attached Exhibit A (hereinafter referred to as the "Licensed Premises"). 1.2 TERM. The term of this License and Grantee's obligation shall commence as of , 2001 and the term of the License shall expire on June 15', 2001, or such earlier date as Grantee may determine by notice to Grantor. At the expiration of the term. the Grantee agrees to vacate the Licensed Premises and deliver the same to the Grantor. ARTICLE II -USE OF PREMISES 2.1 GRANTEE'S USE: During the term of this License, the Licensed Premises shall be used solely for purposes permitted by law; and such uses shall be conducted in accordance with all applicable laws. r~ ~~ ARTICLE III -LICENSE FEE 3.1 LICENSE FEE. The license fee for the term of the License shall be computed on the annual rate of $221,772, and shall be payable in advance in monthly installments of $18,481; provided, however that the first license fee payment and the last license fee payment will be prorated based on the number of days during such months that the Licensed Premises are Licensed. Except for the first license fee payment which shall be due upon the execution of this License, all license fee payments shall be due on or before the first day of each month. The amount of license fee payable pursuant to this License may not be used as .evidence of market rent in any proceeding seeking to .determine the market value of the Licensed Premises, or relocation expenses or damages. All License Fee payments will be made to the Grantor, even though, prior to the expiration or termination of this Agreement, the Licensed Premises may be conveyed to Best Buy Company, Inc., or its assigns. ARTICLE IV -TAXES 4.1. TAXES. The Grantee. shall also be responsible for all real estate taxes and installments on special assessments which are payable in 2001 prorated for the term of • the License. The amount will be paid in the manner described in Section 3.1 above. ARTICLE V -UTILITIES 5.1 CHARGES. Grantee shall pay for all utility services including gas, electricity, domestic water, sewer, and all other utility services furnished the Grantee for use in the Licensed Premises. ARTICLE VI - MAINTENANCEAND REPAIRS 6.1 ACCEPTANCE OF PREMISES. The Grantee accepts the Licensed Premises AS IS, and WHERE IS with all faults and defects. Grantee acknowledges that the Grantor shall have no obligation of any nature to maintain, preserve or repair the Licensed Premises. • ARTICLE VII -ALTERATIONS 7.1 NOTICE TO GRANTOR. Prior to the initiation of any alterations, Grantee shall give Grantor written notice thereof and specify the work to be performed in reasonable detail and include the names of the contractors and materialmen to be utilized. After receipt of said notice, Grantor shall have a reasonable period of time during which it shall make a determination, in its sole discretion, as to whether or not the proposed work would increase the cost of demolition. Grantee shall provide Grantor upon request with any further information reasonably necessary for such determination by Grantor and Grantee shall not commence work or accept materials prior to receiving written notice of Grantor's determination. If Grantor determines that the proposed work would increase the cost of demolition, then, prior to the commencement of any work, the Grantee shall provide the Grantor with a deposit equal to 120% of the Grantor's estimate of increased demolition costs. The portion, if any of such deposit not required shall be returned to Grantee within 60 days following the completion of demolition. 7.2 ALTERATION NOT TO BE CONSIDERED. The value of any alteration made to the Licensed Premises following the established date of taking shall not be used as evidence of market value in any proceeding seeking to determine the market value of the Licensed Premises. ARTICLE VIII - DESTRUCTIONAND RESTORATION 8.1 DAMAGED. If a significant portion of the Licensed Premises shall be damaged by any casualty whether insured or uninsured, the Grantor shall have no obligation to repair or rebuild the Licensed Premises. Grantee shall have the option to rebuild or repair or to terminate this License by exercise of notice to Grantor. 8.2 INSURANCE. Grantee shall apply the proceeds of any insurance policy covering damage or destruction of the improvements to reduce the amount of any award made in the Condemnation Action. ARTICLE IX - PUBLIC LLABILITY, INDEMNITY 9.1 GRANTEE'S LIABILITY INSURANCE. Grantee shall during the entire term hereof keep in full force and effect a policy of liability and property damage insurance with respect to the Licensed Premises, and the business operated by Grantee, in which the limits of liability shall be the same as the Policy limits which Grantee currently carries on the Licensed Premises. 9.2 INDEMNIFICATION. Except for claims arising out of the willful or negligent act of the other party or its representatives, each party shall indemnify and defend the other party against all claims, expenses and liabilities incurred,. including reasonable attorneys' fees, in connection with loss of life, personal injury, or property damage arising out of any occurrence in, upon or at the Licensed Premises, or the occupancy or use thereof by said party, or occasioned wholly or in part by any act or omission of said party, its agents, employees, contractors. This provision shall not be deemed as a waiver of any statutory liability limits available to Grantor. ARTICLE X - ASSIGNMENT AND SUBLETTING 10.1 NO ASSIGNMENT BY GRANTEE. Grantee may not assign this License and/or sublet the Licensed Premises, or any part thereof. 10.2 ASSIGNMENT BY GRANTOR. Grantee acknowledges that Grantor's rights under this Agreement may be assigned to Best Buy Company, Inc. pursuant to the terms of a Redevelopment Contract between Grantor and Best Buy. ARTICLE XI -GRANTEE'S DEFAULT 11.1 EVENTS OF DEFAULT. The following events shall be deemed to be events of default by Grantee under this License: (a) Grantee shall fail to pay when due any payments or other charges provided herein, or any portion thereof and the same shall remain unpaid for a period often (10) days after the same has become due; or (b) Grantee shall do or permit to be done anything which creates a lien upon the Licensed Premises; and does not cause said lien to be released within ten (10) days after written notice from Grantor; or (c) Grantee has failed to comply with any other provision of this License and. has not cured any failure within thirty (30) days, or such longer period of time as may be reasonably required to cure such default, after Grantor, by written notice, has informed Grantee of such noncompliance. 11.2 GRANTOR'S REMEDIES. Upon the occurrence of any of the above events of default, Grantor may without providing a notice of termination, or without affording Grantee an opportunity to cure (except as to matters for which the right to cure is specifically given in this agreement) apply to the Judge of Hennepin County District Court to whom Court File No. CD-2604 (the "Condemnation Action") is assigned upon three days prior notice for whatever remedy and relief the Court shall deem appropriate. In addition to any other remedies available to Grantor, the Court may order the deduction and off-set of any amounts or claims under this Agreement from any amounts payable Grantee pursuant to the Condemnation Action, or the award of commissioners or any relocation benefits Grantee may be entitled to receive. 11.3 :.COSTS, EXPENSES AND ATTORNEYS' FEES. If one party is required to seek legal counsel for collection or to commence litigation in order to enforce the covenants and agreements in this License, .the party prevailing in such collection, litigation shall have the right to reimbursement from the other party of all reasonable costs, expenses and attorneys' fees. ARTICLEXII -- GRANTOR DEFAULT 12.1 DEFAULT NOTICE TO GRANTOR. Should Grantor default in the performance of any of the covenants on the part of the Grantor. to be kept or .performed and such default shall continue for thirty (30) days after written notice to Grantor from Grantee specifying such default, Grantee shall have the same remedy as is available to the Grantor in section 11.2 above. ARTICLE XIII -MISCELLANEOUS PROVISIONS 13.1 COVENANT OF QUIET ENJOYMENT. Grantee, subject to the terms and provisions of this License, on payment of the license fee and observing, keeping and performing all of the terms and provisions of this License on its part to be observed, kept and performed, shall lawfully, peaceably and quietly and exclucively have, hold occupy and enjoy the Licensed Premises during the term hereof without hindrance or objection by any persons lawfully claiming under Grantor. '• 13.2 ACCESS TO PREMISES. Grantee shall allow Grantor and its officers, agents, assigns, contractors and employees access to the Premises during the term of theis Agreement for purposes of inspecting, surveying, testing and any other- pre-demolition activities which are deemed necessary to the Grantor for purposes of redevelopment of the Premises. The Grantor will use reasonable efforts not to interrupt or disturb Grantee's business in the course of conducting said activities. 13.3 SURRENDER OF PREMISES. At the expiration or termination of this License, Grantee shall surrender the Licensed Premises in a safe and secure condition, but may remove therefrom all advertising signs and devices and all other things and property that are not acquired by Grantor in the Condemnation Action. All such items not removed shall forfeit to and be deemed the exclusive property of Grantor. .13.4 LIENS. Grantee agrees not to suffer or allow any liens to be placed against the Licensed Premises as a result of Grantee's activities during the term of this agreement; including, without limitation any liens for labor or materials provided for any repair, maintenance, modification, alteration or construction of the Licensed Premises. 13.5 LICENSE SUBORDINATE. A. The provisions of this License are entirely subordinate to and are superceded and replaced by any contrary or inconsistent decision, order or directive in the Condemnation Action. Without limitation of the foregoing, no provision of this .License, shall be deemed to extend the Grantees right to remain on the Licensed Premises beyond the 12:00 midnight on June 15, 2001. B. This License does not limit in any way the rights of the parties to contest "value" in the Condemnation action in which the fair market value of the Licensed Premises will be determined or in any collateral claim for relocation expenses; nor shall the provisions of this License be deemed to preclude the right of any party to commence or maintain any appeal, to seek any stay or other injunctive relief or any other relief or remedy. 13.6 NO PROPERTY INTEREST. This instrument is not a lease, creates no landlord-Tenant relationship, and nothing in this Agreement will be deemed to create any property interest other than as expressed in this Agreement. 13.7 GOVERNING LAW. The laws of the State of Minnesota will govern the validity and interpretation of this Agreement. 13.8 NOTICES. Any notice which is required under this License shall be deemed "given" upon hand delivery or three (3) days after prepaid posting in the U. S. Mail whichever shall first occur. IN WITNESS WHEREOF, the parties hereto have affixed their signatures the day and year first above written. GRANTOR: HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD By: Thomas E. Harms Its: Chair By: Samantha Orduno Its: Executive Director GRANTEE: • MOTORWERKS, INC. By: Its: President STATE OF MINNESOTA ss.. COUNTY OF HENNEPIN The foregoing instrument was acknowledged before me this day of 2001, by Thomas E Harms, the Chair of the Housing and Redevelopment Authority in and for the City of Richfield, a Minnesota public body corporate and politic,. on behalf of the Authority. Notary Public • • STATE OF MINNESOTA ss.. COUNTY OF HENNEPIN The. foregoing instrument was acknowledged before me this day of 2001, by Samantha Orduno, the Executive Director of the Housing and Redevelopment Authority in and for the City of Richfield, a Minnesota public body corporate and politic, on behalf of the Authority. Notary Public STATE OF MINNESOTA ss.. COUNTY OF HENNEPIN The foregoing instrument was acknowledged before me this day of 2001, by the President of Motorwerks, Inc., a corporation under the laws of the State of Minnesota, on behalf of the corporation. Notary Public • • • AGENDA ITEM # ~ REPORT # ~ 1 STAFF REPORT ~ HOUSING AND REDEVELOPMENT AUTHORITY MEETING MARCH 19, 2001 REPORT PREPARED BY: REPORT PRESENTER: DEPARTMENT DIRECTOR REVIEW: REVIEWED BY EXECUTIVE DIRECTOR: JOHN STARK, COMMUNITY DEVELOPMENT MANAGER NAME, TiTLc BRUCE PALMBORG, COMMUNITY DEVELOPMENT DIRECTOR NAME', TITLE ITEM FOR HRA CONSIDERATION: Consideration of a license agreement with Walser Sales, Inc., for use by the Buick/Isuzu dealership sites located at, and adjacent to, 2100 W. 78th Street. I. RECOMMENDED ACTION: By Motion: Adopt the attached draft license agreement with Walser Sales, Inc. for use by the Buick/Isuzu dealership sites located at, and adjacent to, 2100 W. 78th Street. II. BACKGROUND. This agenda item is being continued from the March 5, 2001. Special HRA Meeting. • On July 17, 2000 the Richfield Housing and Redevelopment Authority (HRA) approved the commencement of condemnation proceedings to acquire properties located at, and adjacent to, 2100 W. 78th Street. After a -trial on the public purpose of such actions, the Hennepin County District Court ruled (on January 19, 2001), in favor of the HRA. The HRA .has since taken steps to take title to the aforementioned property. As part of the ruling, however, the Walser dealerships were allowed to remain on the property until June 15, 2001. A license agreement, which is similar to a lease agreement, must therefore be executed to define the 0319walser terms and conditions of the Walser dealership's possession of the property upon the transfer of title to the HRA. Among the terms considered in the attached draft license agreement with Walser Sales, Inc. are: A monthly payment of $40,912:66 to the HRA (the amount of which was determined by the market rent calculations contained in an appraisal of the property); Tax, utilities and maintenance costs responsibilities allocated to the dealership; and A termination date of June 15, 2001. The final terms of the license agreement are to be determined based on communications with representatives of Walser Sales; Inc. III. BASIS OF RECOMMENDATION A. POLICY • In accordance with a January 19, 2001 ruling of the Hennepin County District Court, the HRA has taken title to properties located at, or adjacent to, 2100 W. 78th Street. • According to the District Court ruling, the Walser dealerships shall be permitted to remain on site until June 15, 2001. • A license agreement is necessary to define the terms and conditions of the Walser dealerships possession of the property upon the transfer of title to the HRA. n U B. CRITICAL ISSUES • Legal counsel has opined that the license agreement should be approved and executed as soon as possible. C. FINANCIAL • There are no negative financial impacts on the HRA or City of Richfield. D. LEGAL • ,Legal counsel drafted the attached License Agreement. ~ IV. ALTERNATIVE RECOMMENDATION(S~ ~ • Defer approval until the License Agreement has been executed by representatives of the Walser Sales, Inc. ATTACHMENTS • Draft License Agree e Walser Sales, Inc. ~ VI. PRINCIPAL PARTIES EXPECTED AT MEETING ~ iwr. raui vvaiser ana nis be in attendance. rney were advised of this agenda item and may • Draft Walser License • LICENSE AGREEMENT 2/19/01 THIS AGREEMENT made and entered into as of this day of , 2001, by and between THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA, a Minnesota public body corporate and politic, (hereinafter referred to as "Grantor"), and WALSER AUTO SALES, INC., a Minnesota corporation (hereinafter referred to as "Grantee"). WITNESSETH: BACKGROUND This Agreement has been entered into pursuant to the provisions of the Findings of Fact, Conclusions of Law and Order Appointing Commissioners dated January 19, 2001 issued in District Court File No. CD-2604. Paragraph 3 of the Conclusions of Law.reads as follows: 3. That the HRA has complied with the legal requirements for obtaining title and possession pursuant to Minn. Stat. Section 117.042 .(1998) subject to Walsers' right to remain on the property pursuant to a License (approved by the Court if the parties cannot agree or other arrangement agreed to by the parties) until • 12:00 midnight June 15, 2001. ARTICLE I -GRANT, TERM. 1.1 LICENSED PREMISES. In consideration of the fees, covenants and agreements herein reserved and contained on the part of Grantee to be performed, Grantor does hereby license to Grantee that portion of the land and building located at ,Richfield, Minnesota and located on land legally described in the attached Exhibit A (hereinafter referred to as the "Demised Premises"). 1.2 TERM. The term of this License and Grantee's obligation shall commence as of 2001 and the term of the License shall expire on June 15, 2001, or such earlier date as Grantee may determine by notice to Grantor. At the expiration of the term the Grantee agrees to vacate the Licensed Premises and deliver the same to the Grantor. ARTICLE II -USE OF PREMISES 2.1 GRANTEES USE. During the term of this License, the Licensed Premises shall be used solely for purposes permitted by law; and such uses shall be conducted in accordance with all applicable laws. ARTICLE III -LICENSE FEE . 3.1 LICENSE FEE. The license fee for the term of the License shall be computed on the annual rate of $490,952, and shall be payable in advance in monthly installments of $40,912.66; provided, however that the first license fee payment and the last license fee payment will be prorated based on the number of days during such months that the Licensed . Premises are Licensed. Except for the first license fee payment which shall be due upon the execution of this License, all license fee payments shall. be due on or before the first day of each month. The amount of license fee payable pursuant to this License may not be used as evidence of market rent in any proceeding seeking to determine the market value of the Licensed Premises, or relocation expenses or damages. All License Fee payments will be made to the Grantor, even though, prior to the expiration or termination of this Agreement, the Licensed Premises may be conveyed to Best Buy Company, Inc., or its assigns. ARTICLE IV -TAXES 4.1. TAXES. The Grantee shall also be responsible for all real estate .taxes and installments on special assessments which are payable in 2001.. prorated for the term of the License. The amount will be paid in the manner described in Section 3.1 above. ARTICLE V -UTILITIES 5.1 CHARGES. Grantee shall pay for all utility services including gas, electricity, domestic water, sewer, and all other utility services furnished the Grantee for use in the Licensed Premises. ARTICLE VI -MAINTENANCE AND REPAIRS • 6.1 ACCEPTANCE OF PREMISES. The Grantee accepts the Licensed Premises AS IS, and WHERE IS with all faults and defects. Grantee acknowledges that the Grantor shall have no obligation of any nature to maintain, preserve or repair the Licensed Premises. ARTICLE VII -ALTERATIONS 7.1 NOTICE TO GRANTOR. Prior to the initiation of any alterations, Grantee shall give Grantor written notice thereof and specify the work to be performed in reasonable detail and include the names of the contractors and materialmen to be utilized. After receipt of said notice, Grantor shall have a reasonable period of time during which it shall make a determination, in its sole discretion, as to whether or not the proposed work would increase the cost of demolition. Grantee shall provide Grantor upon request with any further information reasonably necessary for such determination by Grantor and Grantee shall not commence work or accept materials prior to receiving written notice of Grantor's determination. If Grantor determines that the proposed work would increase the cost of demolition, then, prior to the commencement of any work, the Grantee shall provide the Grantor with a deposit equal to 120% of the Grantor's estimate of increased demolition costs. The portion, if any of such deposit not required shall be returned to Grantee within 60 days following the completion of demolition. 7.2 ALTERATION NOT TO BE CONSIDERED. The value of any alteration made to the Licensed Premises following the established date of taking shall not be used as • evidence of market value in any proceeding seeking to determine the market value of the Licensed Premises. ARTICLE VIII - DESTRUCTIONAND RESTORATION 8.1 DAMAGED. If a significant portion of the Licensed Premises shall be damaged by any casualty whether insured or uninsured, the Grantor shall have no obligation to repair or rebuild the Licensed Premises. Grantee shall have the option to rebuild or repair or to terminate this License by exercise of notice to Grantor. 8.2 INSURANCE. Grantee shall apply the proceeds of any insurance policy covering damage or destruction of the improvements to reduce the amount of any award made in the Condemnation Action. ARTICLE IX -PUBLIC LIABILITY, INDEMNITY 9.1 GRANTEE'S LIABILITY INSURANCE. Grantee -shall during the entire term hereof keep in full force and effect a policy of liability and property damage insurance with respect to the Licensed Premises, and the business operated by Grantee, in which the limits of liability shall be the same as the Policy limits which Grantee currently carries on the Licensed Premises. 9.2 INDEMNIFICATION. Except for claims arising out of the willful or negligent act of the other party or its representatives, each party shall indemnify and defend the other party against all claims, expenses and liabilities incurred, including reasonable attorneys' fees, in connection with loss of life, personal injury, or property damage arising out of any occurrence in, upon or at the Licensed Premises, or the occupancy or use thereof by said party, or occasioned wholly or in part by any act or omission of said party, its agents, employees, contractors. This • provision shall not be deemed as a waiver of any statutory liability limits available to Grantor. ARTICLE X -ASSIGNMENT AND SUBLETTING 10.1 NO ASSIGNMENT BY GRANTEE. Grantee may not assign this License and/or sublet the Licensed Premises, or any part thereof. 10.2 ASSIGNMENT BY GRANTOR. Grantee acknowledges that Grantor's rights under this Agreement may be assigned to Best Buy Company, Inc. pursuant to the terms of a Redevelopment Contract between Grantor and Best Buy. ARTICLE XI -GRANTEE'S DEFAULT 11.1 EVENTS OF DEFAULT. The following events shall be deemed to be events of default by Grantee under this License: (a) Grantee .shall fail to pay when due any payments or other charges provided herein, or any portion thereof and the same shall remain unpaid for a period of ten (10) days after the same has become due; or (b) .Grantee shall do or permit to be done anything which creates a lien upon the Licensed Premises; and does not cause said lien to be released within ten (10) days • after written notice-from Grantor; or (c) Grantee has failed to comply with any other provision of this License and has not cured any failure within thirty (30) days, or such longer period of time as may be reasonably required to cure such default, after Grantor, by written notice, has . informed Grantee of such noncompliance. 11.2 GRANTOR'S REMEDIES. Upon the occurrence of any of the above events of default, Grantor may; without providing a notice of termination, or without affording Grantee an opportunity to cure (except as to matters for which the right to cure is specifically given in this agreement) apply to the Judge of Hennepin County District Court to whom Court File No. CD-2604 (the "Condemnation Action") is assigned upon three days prior notice for whatever remedy and relief the Court shall deem appropriate. In addition to any other remedies available to Grantor, the Court may order the deduction and off-set of any amounts or claims under this Agreement from any amounts payable Grantee pursuant to the Condemnation Action, or the award of commissioners or any relocation benefits Grantee may be entitled to receive. 11.3 COSTS, EXPENSES AND ATTORNEYS' FEES. If one party is required to seek legal counsel for collection or to commence litigation in order to enforce the covenants and agreements in this License, the party prevailing in such collection, litigation shall have the right to reimbursement from the other party of all reasonable costs, expenses and attorneys° fees. ARTICLEXII -- GRANTOR DEFAULT 12.1 DEFAULT NOTICE TO GRANTOR. Should Grantor default in the performance of any of the covenants on the part of the Grantor to be kept or performed and such default shall continue for, thirty (30) days after written notice to Grantor from. Grantee specifying such default, Grantee shall have the same remedy as is available to the Grantor in section 11.2 above. • ARTICLEXIII -MISCELLANEOUS PROVISIONS 13.1 COVENANT OF QUIET ENJOYMENT. Grantee, subject to the terms and provisions of this License, on payment of the license fee and observing, keeping and performing all of the terms and provisions of this License on its part to be observed, kept and performed, shall lawfully, peaceably and quietly have, hold occupy and enjoy the Licensed Premises during the term hereof without hindrance or objection by any persons lawfully claiming under Grantor. 13.2 ACCESS TO PREMISES. Grantee shall allow Grantor and its officers, agents, assigns, contractors and employees access to the Premises during the term of this Agreement for purposes of inspecting, surveying, testing ,and any other pre-demolition activities which are deemed necessary to the Grantor for purposes of redevelopment of the Premises. The Grantor. will use reasonable efforts not to interrupt or disturb Grantee's business in the course of conducting said activities. 13.3 SURRENDER OF PREMISES. At the expiration or termination of .this License, Grantee shall surrender the Licensed Premises in a safe and secure condition, but may remove therefrom all advertising signs and devices and all other things and property that are not acquired by Grantor in the Condemnation Action. All such items not removed shall forfeit to and be deemed the exclusive property of Grantor. 13.4 LIENS. Grantee agrees not to suffer or allow any liens to be placed against the • Licensed Premises as a result of Grantee's activities during the term of this agreement; including, without limitation any liens for labor or materials provided for any repair, maintenance, modification, alteration or construction of the Licensed Premises. 13.5 LICENSE SUBORDINATE. The provisions of this License are entirely subordinate • to and. are superseded and replaced by any contrary or inconsistent decision, order or directive in the Condemnation Action. Without limitation of the foregoing, no provision of this License, shall be deemed to extend the Grantees right to remain on the Licensed Premises beyond the 12:00 midnight on June 15, 2001. 13.6 NO PROPERTY INTEREST. This instrument is not a lease, creates no landlord- Tenant relationship, .and nothing in this Agreement will be deemed to create any property interest other than as expressed in this Agreement. 13.7 GOVERNING LAW. The laws of the State of Minnesota will govern the validity and interpretation of this Agreement. 13.8 NOTICES. Any notice which is required under this License shall be deemed "given" upon hand delivery or three (3) days after prepaid posting in the U. S. Mail whichever shall first occur. IN WITNESS WHEREOF, the parties hereto have affixed their signatures the day and year first above written. • GRANTOR: HOUSING AND. REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD By: Thomas E. Harms Its: Chair By: Samantha Orduno Its: Executive Director GRANTEE: WALSER AUTO SALES, INC. By: Its: President • STATE OF MINNESOTA ss.: COUNTY OF HENNEPIN The foregoing instrument was acknowledged before me this day of 2001, by Thomas E Harms, the Chair of the Housing and Redevelopment Authority in and for the City of Richfield, a Minnesota public body corporate and politic, on behalf of the Authority. Notary Public r1 LJ STATE OF MINNESOTA ss.. COUNTY OF HENNEPIN The foregoing instrument was acknowledged before me this day of 2001, by Samantha Orduno, the Executive Director of the Housing and Redevelopment Authority in and for the City of Richfield, a Minnesota public body corporate and politic, on behalf of the Authority. Notary Public STATE OF MINNESOTA ss.: COUNTY OF HENNEPIN The foregoing instrument was acknowledged before me this day of 2001, by ,the President of Walser Auto Sales, Inc., a corporation under the laws of the State of Minnesota, on behalf of the corporation. Notary Public • Richfield Housing and Redevelopment Authority Regular Meeting -March 19, 2000 Revised Attachment to Staff Report 31 Consideration of a Draft License Agreement with Walser Sales, Inc. for use by Buick/Isuzu Dealership Located at, and adjacent to, 2100 West 78"' Street. • • 1~ U Draft Walser License 3/6/01 LICENSE AGREEMENT THIS AGREEMENT made and entered into as of this day of 2001, by and between THE HOUSING AND REDEVELOPMENT AUTHORITY 1N AND FOR THE CITY OF RICHFIELD, MINNESOTA, a Minnesota public body corporate and politic, (hereinafter referred to as "Grantor"), and WALSER AUTO SALES, INC., a Minnesota corporation (hereinafter referred to as "Grantee"). WITNESSETH: BACKGROUND This Agreement has been entered .into pursuant to the provisions of -the Findings of Fact, Conclusions of Law and Order Appointing Commissioners dated January 19, 2001 issued in District Court File No. CD-2604. Paragraph 3 of the Conclusions of Law reads as follows: 3. That the HRA has complied with the legal requirements for obtaining title and possession pursuant to Minn. Stat. Section 117.042 (1998) subject to Walsers' right to remain on the property pursuant to a • License (approved by the Court if the parties cannot agree or other arrangement agreed to by the parties) until 12:00 midnight June 15, 2001. ARTICLE I -GRANT, TERM. 1.1 LICENSED PREMISES. In consideration of the fees, covenants and agreements herein reserved and contained on the part of Grantee to be performed, Grantor does hereby license to Grantee that portion of the land and building located at ,Richfield, Minnesota and located on land legally described in the attached Exhibit A (hereinafter referred to as the "Licensed Premises"). 1.2 TERM. The term of this License and Grantee's obligation shall commence as of , 2001 and the term of the License shall expire on June 15, 2001, or such earlier date as Grantee may determine by notice to Grantor. At the expiration of the term the Grantee agrees to vacate the Licensed Premises and deliver the same to the Grantor.. ARTICLE II -USE OFPREMISES 2.1 GRANTEES USE. During the term of this License, the Licensed Premises shall be used solely for purposes permitted by law; and such uses shall be conducted in accordance with all applicable laws. • ARTICLE III -LICENSE FEE 3.1 LICENSE FEE. The license fee for the term of the License shall be computed on the annual rate of $345,228, and shall be payable in advance in monthly installments of $28,769; provided; however that the first license fee payment and the last license fee payment will be prorated based on the number of days during such months that the Licensed Premises are Licensed. Except for the first license fee payment which shall be due upon the execution of this License, all license fee payments shall be due on or before the first day of each month. The amount of license fee payable pursuant to this License. may not be used as evidence of market rent in any proceeding seeking to determine the market value of the Licensed Premises, or relocation expenses or damages. All License Fee payments will be made to the Grantor, even though, prior to the expiration or termination of this Agreement, the Licensed Premises may be conveyed to Best Buy Company, Inc., or its assigns. ARTICLE IV -TAXES • 4.1. .TAXES. The Grantee shall also be responsible for all real estate taxes and installments on special assessments which are payable in 2001 prorated for the term of the License. The amount will be paid in the manner described in Section 3.1 above. ARTICLE V -UTILITIES 5.1 CHARGES. .Grantee shall pay for all utility services including gas, electricity, domestic water, sewer, and all other utility services furnished the Grantee for use in the Licensed Premises. ARTICLE VI -MAINTENANCE AND REPAIRS 6.1 ACCEPTANCE OF PREMISES. The Grantee accepts the Licensed Premises AS IS, and WHERE IS with all faults and defects. Grantee acknowledges that the Grantor shall have no obligation of any nature to maintain, preserve or repair the Licensed Premises. • • ARTICLE VII -ALTERATIONS 7.1 NOTICE TO GRANTOR. Prior to the initiation of any alterations, Grantee shall give Grantor written notice thereof and specify the work to be performed in reasonable detail and include the names of the contractors and materialmen to be utilized. After receipt of said notice, Grantor shall have a reasonable period of time during which it shall make a determination, in its, sole discretion, as to whether or not the proposed work would increase the cost of demolition. Grantee shall provide Grantor upon request with any further information reasonably necessary for such determination by Grantor and Grantee shall not commence work or accept materials prior to receiving written notice of Grantor's determination. If Grantor determines that the proposed work would increase the cost of demolition, then, prior to the commencement of any work, the Grantee shall provide the Grantor with a deposit equal to 120% of the Grantor's estimate of increased demolition costs. The portion, if any of such deposit not required shall be returned to Grantee within 60 days following the completion of demolition. 7.2 ALTERATION NOT TO BE CONSIDERED. The value of any alteration made to the Licensed Premises following the established date of taking shall not be used as evidence of market value in any proceeding seeking to determine the market value of the Licensed Premises. • ARTICLE VIII - DESTRUCTIONAND RESTORATION 8.1 DAMAGED. If a significant portion of the Licensed Premises shall be damaged by any casualty whether insured or uninsured, the Grantor shall have no obligation to repair or rebuild the Licensed Premises. Grantee shall have the option to rebuild or repair or to terminate this License by exercise of notice to Grantor. 8.2 INSURANCE.. Grantee shall apply the proceeds of any insurance policy covering damage or destruction of the improvements to reduce the amount of any award made in the Condemnation Action. ARTICLE IX -PUBLIC LIABILITY, INDEMNITY 9.1 GRANTEE'S LIABILITY INSURANCE. Grantee shall during the entire term hereof keep in full force and effect a policy of liability and property damage insurance with respect to the Licensed Premises, and the business operated by Grantee, in which the limits of liability shall be the same as the Policy limits which Grantee currently carries on the Licensed Premises. 9.2 INDEMNIFICATION. Except for claims. arising out of the willful or negligent act of the other party or its representatives, each party shall indemnify and defend the other party against all claims, expenses and liabilities incurred, including • reasonable attorneys' fees, in connection with loss of life, personal injury, or property • damage arising out of any occurrence in, upon or at the Licensed Premises, or the occupancy or use thereof by said party, or occasioned wholly or in part by any act or omission of said party, its agents, employees, contractors. This provision shall not be deemed as a waiver of any statutory liability limits available to Grantor. ARTICLE X -ASSIGNMENT AND SUBLETTING 10.1 NO ASSIGNMENT BY GRANTEE. Grantee may not assign this License and/or sublet the Licensed Premises, or any part thereof. 10.2 ASSIGNMENT BY GRANTOR. Grantee acknowledges that Grantor's rights under this Agreement may be assigned to Best Buy Company, Inc. pursuant to the terms of a Redevelopment Contract between Grantor and Best Buy. ARTICLE XI -GRANTEE'S DEFAULT .11.1_ EVENTS OF DEFAULT. The following events shall be deemed to be events of default by Grantee under this License: (a) Grantee shall fail to pay when due any payments or other charges provided herein, or any portion thereof and the same shall remain unpaid for a period often (10) days after the same has become due; or • (b) Grantee shall do or permit to be done anything which creates a lien upon the Licensed Premises; and does not cause said lien to be released within ten (10) days after written notice from Grantor; or (c) Grantee has failed to comply with any other provision of this License and has not cured any failure within thirty (30) days, or such longer period of time as may be reasonably required to cure such default, after Grantor, by written notice, has informed Grantee of such noncompliance. 11.2 GRANTOR'S REMEDIES. Upon the occurrence of any of the above events of default, Grantor may without providing a notice of termination, or without affording. Grantee an opportunity to cure (except as to matters for which the-right to cure is specifically given in this agreement) apply to the Judge of Hennepin County District Court to whom Court File No. CD-2604 (the "Condemnation Action") is assigned upon three days prior notice for whatever remedy and relief the Court shall deem appropriate. In addition to any other remedies available to Grantor, the Court may order the deduction and off-set of any amounts or claims under this Agreement from any amounts payable Grantee pursuant to the Condemnation Action, or the award of commissioners or any relocation benefits Grantee may be entitled to receive. 11.3 COSTS, EXPENSES AND ATTORNEYS' FEES. If one party is required • to seek legal counsel for collection or to commence litigation in order to enforce the • covenants and agreements in this License, the party prevailing in such collection, litigation shall have the right to reimbursement from the other party of all reasonable costs, expenses and attorneys' fees. ARTICLEXII -- GRANTOR DEFAULT 12.1 DEFAULT NOTICE TO GRANTOR. Should Grantor default in the performance of any of the covenants on the part of the Grantor to be kept or performed and such default .shall continue for thirty (30) days after written notice to Grantor from Grantee specifying such default, Grantee shall have the same remedy as is available to the Grantor in section 11.2 above. ARTICLE XIII -MISCELLANEOUS PROVISIONS 13.1 COVENANT OF QUIET ENJOYMENT. Grantee, subject to the terms and provisions of this License, on payment of the license fee and observing, keeping and performing all of the terms and provisions of this License on its part to be observed, kept and performed, shall lawfully, peaceably and quietly, and exclusively have, hold occupy and enjoy the Licensed Premises during the term hereof without hindrance or objection by any persons lawfully claiming under Grantor. 13.2 ACCESS TO PREMISES. Grantee shall allow Grantor and its officers, agents, assigns, contractors and employees access to the Premises during the term of theis • Agreement for purposes of inspecting, surveying, testing and any other pre-demolition activities which are deemed necessary to the Grantor for purposes of redevelopment of the Premises. The Grantor will use reasonable efforts not to interrupt or disturb Grantee's business in the course of conducting said activities. 13.3 SURRENDER OF PREMISES. At the expiration or termination of this License, Grantee shall surrender the Licensed ,Premises in a safe and secure condition, but may remove therefrom all advertising signs and devices and all other things and property that are not acquired by Grantor in the Condemnation Action. All such items not removed shall forfeit to and be deemed the exclusive property of Grantor. 13.4 LIENS. Grantee agrees not to suffer or allow any liens to be placed against the Licensed Premises as a result of Grantee's activities during the term of this agreement; including, without limitation any liens for labor or materials provided for any repair, maintenance, modification, alteration or construction of the Licensed Premises. 13.5 LICENSE SUBORDINATE. A. The provisions of this License are entirely subordinate to and are superceded and replaced by any contrary or inconsistent decision, order or directive in the Condemnation Action. Without limitation of the foregoing, no provision of this License, shall be deemed to extend the Grantees right to remain on the Licensed Premises beyond the 12:00 midnight on June 15, 2001. B. This License does not limit in any way the rights of the parties to contest • "value" in the Condemnation action in which the fair market value of the .Licensed • Premises will be determined or in any collateral claim for relocation expenses; nor shall the provisions of this License be deemed to preclude the right of any party to commence or maintain any appeal, to seek any stay or other injunctive relief or.any other relief or remedy. 13.6 NO PROPERTY INTEREST. This instrument is not a lease, creates no landlord-Tenant relationship, and nothing in this Agreement will be deemed to create any property interest other than as expressed in this Agreement. 13.7 GOVERNING LAW. The laws of the State of Minnesota will govern the validity and interpretation of this Agreement. -13.8 NOTICES. Any notice which is required under this License shall be deemed "given" upon hand delivery or three (3) days after prepaid posting in the U. S. Mail whichever shall first occur. IN WITNESS WHEREOF, the parties hereto have affixed their signatures the day and year first above written. • GRANTOR: HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR -THE CITY OF RICHFIELD By: Thomas E. Harms Its: Chair By: Samantha Orduno Its: Executive Director GRANTEE: WALSER AUTO SALES, INC. By: Its: President • STATE OF MINNESOTA ss.. COUNTY OF HENNEPIN The foregoing instrument was acknowledged before me this day of 2001, by Thomas E Harms, the Chair of the Housing and Redevelopment Authority in and for the City of Richfield, a Minnesota public body corporate and politic, on behalf of the Authority. Notary Public STATE OF MINNESOTA ss.. COUNTY OF HENNEPIN The foregoing instrument was acknowledged before me this day of 2001, by Samantha Orduno, the Executive Director of the Housing and Redevelopment Authority in and for the City of Richfield, a Minnesota public body corporate and politic, on behalf of the Authority. • Notary Public STATE OF MINNESOTA ss.. COUNTY OF HENNEPIN The foregoing instrument was acknowledged before me this day of 2000, by ,the President of Walser Auto Sales, Inc., a corporation under the laws of the State of Minnesota, on behalf of the corporation. Notary Public • AGENDA ITEM # REPORT # y 30 L-. J STAFF REPORT HOUSING AND REDEVELOPMENT AUTHORITY MEETING MARCH 19, 2001 • REPORT PREPARED BY: REPORT PRESENTER: DEPARTMENT DIRECTOR REVIEW: REVIEWED BY EXECUTIVE DIRECTOR: KATIA MEDVETSKI, REDEVELOPMENT SPECIALIST NAME, TITLE BRUCE PALMBORG, COMMUNITY DEVELOPMENT DIRECTOR NAME, TITLL' ITEM FOR I~R.A CONSIDERATION: Consideration of a resolution authorizing execution of a Tax Increment Pledge Agreement with the City of Richfield relating to the $8,350,000 General Obligation Tax Increment Bonds, Series 2001A. I. RECOMMENDED ACTION: By Motion: Approve a resolution authorizing execution of a Tax Increment Pledge Agreement with the City of Richfield relating to the $8,350,000 General Obligation Tax Increment Bonds, Series 2001 A. • III. BACKGROUND On March 20, 2000, the Richfield Housing and Redevelopment Authority (HRA) adopted, and entered into a Contract for Private Development (Contract) with Best Buy for the redevelopment of the Interchange West area. Section 3.6 and Exhibit J of the Contract specify certain public improvements to be undertaken by the HRA. Among the required public improvements is the construction of a new Penn Avenue Bridge over I-494. The cost of this bridge is estimated to be at least $22.5 million: The funding of the bridge is anticipated to be accomplished in the following manner: $7 million in 0319pledge General Obligation (G.O.) Tax Exempt Tax Increment Financing (TIF) Bond proceeds; $7 million from the Metropolitan Council's Right of Way Loan Fund (KALE) to be repaid by the Minnesota Department of Transportation (MnDOT) upon • Best Buy's conveyance of property to MnDOT at no charge; and at least $8.5 million from MnDOT. The G.O. TIF Bond issue includes approximately $7 million in bond proceeds plus approximately $1.35 million in interest and issuance fees. The source of funding for the debt service on these bonds is to be the tax increment generated in the Interchange West area; this tax increment is being provided solely through Best Buy's property taxes. Bridge bond payments will be deducted from the tax increment in the Interchange West area before Best Buy is to receive any of their tax increment financing. As a part of the HRA's agreement with Best Buy, prior to any issuance of tax increment financing to Best Buy, they will sign a minimum market value agreement (assessment agreement) stating that for the life of the TIF district, Best Buy or their successor will pay property taxes on a minimum of $148. million in property value.-This agreement represents security to the City and HRA that there will be sufficient tax increment to service the bridge bond. On March 12, 2001, the City Council adopted a resolution authorizing a negotiated sale of the G.O. TIF Bonds. On March 26, 2001, the City Council is scheduled to award the bonds to a qualified buyer. Itis necessary for the HRA to enter into a Pledge Agreement with the City so that the tax increment from the Best Buy project in the Interchange West /Lyndale Gateway Tax Increment Financing District will be transferred to the City for debt service on the bridge bonds (TIF pledge agreements have been utilized in other redevelopment projects over the years). III. BASIS OF RECOMMENDATION A. POLICY • The HRA has made financial commitments to Best Buy, a component of which includes the issuance of general obligation tax exempt tax increment bonds. • The City Council approved a negotiated sale of the G.O. TIF bonds for this project on March 12, 2001. • A modification to the Tax Increment Financing Plan for the Interchange West and Lyndale Gateway Tax Increment Financing District that specifically allowed for bonding capacity using tax increment from the Best Buy project was approved by the (a) HRA on December 18, 2000 and (b) City Council, after the public hearing, on January 22, 2001. B. CRITICAL ISSUES • The closing on the bond sale is scheduled for April 12, 2001. C. FINANCIAL • The bond sale will make it possible to meet the. financial commitments made to Best Buy. • Ehlers & Associates is handling the sales.. D. LEGAL Kennedy & Graven law firm has been involved in the bond sale transaction as bond counsel to the City. • IV. ALTERNATIVE RECOMMENDATION(S~ • The HRA may decide to either delay or decline approval of the Tax Increment Pledge Agreement. Delaying approval would negatively impact the schedule bond sale. Not approving the Agreement would hamper the ability. to use the Best Buy increment for debt service payments on G.O. TIF Bonds. V. ATTACHMENTS • HRA Resolution • Pledge Agreement • Certificate VI. PRINCIPAL PARTIES EXPECTED AT MEETING • Sid Inman, Ehlers & Associates, Inc. • • HRA RESOLUTION NO. RESOLUTION AUTHORIZING EXECUTION OF A TAX INCREMENT PLEDGE AGREEMENT WITH THE • CITY OF RICHFIELD RELATING TO $8,350,000 GENERAL OBLIGATION TAX INCREMENT BONDS, SERIES 2001A WHEREAS, the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota (the "HRA") has established the Richfield Redevelopment Project Area (the "Project Area"), and approved a Redevelopment Plan (the "Project Plan") for the Project Area; and WHEREAS, the HRA and City have established the Interchange West and Lyndale Gateway Tax Increment Financing District (the "TIF District") within the Project Area in accordance with Minnesota Statutes, Sections 469.174: to 469.:179; and WHEREAS, on December 18, 2000, the HRA approved a modification to the tax increment financing plan for the TIF District related to the Interchange West portion of the TIF District; and WHEREAS, on January 22, 2001, the City Council approved the modification of the tax increment financing plan for the TIF District.; and WHEREAS, pursuant to authority conferred by Minnesota Statutes, Section 469.178, and Minnesota Statutes, Chapter 475,. the City. has agreed to finance certain public redevelopment costs to be incurred by the HRA or the City in the Project Area through the issuance of general obligation bonds of the City in the principal amount of $8,350,000, designated the General Obligation Tax Increment Bonds, Series 2001A, and hereinafter referred to as the "Bonds"; and • WHEREAS, the HRA has agreed to pledge certain tax increment. revenues to the City for the principal and interest on the Bonds; and WHEREAS, there has been presented to the HRA a Tax Increment Pledge Agreement between the HRA and the City providing for the pledge of tax increments from the Interchange West TIF District to payment of principal and interest on the Bonds; NOW, THEREFORE, BE IT RESOLVED by the Board of Commissioners (the "Board") of the HRA, as follows: The Chair and Secretary of the HRA are hereby authorized to execute and deliver a Tax Increment Pledge Agreement with the City of Richfield, Minnesota substantially in the form on file with the City, providing for the pledge of tax increment derived from property in the Interchange West portion of the TIF District for the payment of the principal of, premium, if any, and interest on, the Bonds. 2. This resolution shall be effective as of the date hereof. Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 19th day of March, 2001. Thomas E. Harms, Chair • ATTEST: Michael Sandahl, Secretary TAX INCREMENT PLEDGE AGREEMENT by and between CITY OF RICHFIELD, MINNESOTA and • THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA THIS AGREEMENT is made and entered into on or as of the day of 2001, by and between the City of Richfield, Minnesota (the "City"), and The Housing and .Redevelopment Authority in and for the City of Richfield, Minnesota (the ~~H~~~ )• WHEREAS, the HRA has established the Richfield Redevelopment Project Area (the "Project Area"), and approved a Redevelopment Plan (the "Project Plan") for the Project Area; and WHEREAS, the HRA and City have established the Interchange West and Lyndale Gateway Tax Increment Financing District (the "TIF District") within the Project Area in accordance with Minnesota Statutes, Sections 469.174 to 469.179; and WHEREAS, on December 18, 2000, the HRA approved a modification to the tax increment financing plan for the TIF District related to the Interchange West portion of the TIF District; and WHEREAS, on January 22, 2001, the City Council approved the modification of the tax increment financing. plan for the TIF District; and WHEREAS, pursuant to authority conferred by Minnesota Statutes, Section 469.178, and Minnesota Statutes, Chapter 475, the City has agreed to finance certain public redevelopment costs to be incurred by the HRA or the City in the Project Area through the issuance of general obligation bonds of the City in the principal amount of $8,350,000, designated the General Obligation Tax Increment Bonds, Series 2001A, and hereinafter referred to as the "Bonds"; and WHEREAS, the HRA has agreed to pledge certain tax increment revenues to the City for the principal and interest on the Bonds. WHEREAS, pursuant to Minnesota Statutes, Section 469.178, Subdivision 2, any agreement to pledge tax increment revenues must be made by written agreement by and between the HRA and the City and must be filed with the Taxpayer Services Division Manager of Hennepin County; NOW THEREFORE, the City and the HRA mutually agree to the following: (1) The City will sell the Bonds. (2) The proceeds from the sale of the bonds and interest earning thereon will. be made available to the City or HRA to pay or reimburse certain public redevelopment costs paid, incurred, or to be paid or incurred by the City or HRA in connection with the Interchange West portion of the TIF District and the Project Area. (3) The HRA hereby pledges to the payment of the principal of and interest on the Bonds the tax increments derived from property in the Interchange West portion of the TIF District and received by the HRA, which pledge is in an • amount sufficient to pay 105% of such principal and interest due on the Bonds from time to time (the "Pledged Tax Increment"). (4) Nof less than three (3) business days prior to each debt service payment date for the Bonds, there shall be transferred from the account for the TIF District to the Debt Service Fund maintained by the City for the payment of the Bonds, an amount of Pledged Tax Increment which when taken together with amounts already on deposit in such Debt Service Fund, is equal to the principal of and interest on the Bonds to become due on the subject payment • date. Any Pledged Tax Increment in excess of 105% of the principal and interest due with respect to the Bonds on any payment date may be retained by the HRA in the tax increment account for the TIF District and applied to any public redevelopment costs of the Project Area in accordance with law. (5) Without regard to anything in this Agreement to the contrary, Pledged Tax Increment shall be available (at the HRA's option on a parity, superior or subordinate basis) to pay principal of and interest on both the Bonds and any other obligations issued by the City, HRA or any other public body to finance public redevelopment costs paid or incurred by the HRA in the Project Area. (6) An executed copy of this Agreement shall be filed with the Taxpayer Service Division Manager of County pursuant to the requirement contained m Minnesota Statutes, Section 469.178, Subdivision 2. IN WITNESS WHEREOF, the City and the HRA have caused this Agreement to be duly executed on their behalf and their seals to be hereunto affixed and such signatures and seals to be attested, as of the day and year first above written. CITY OF RICHFIELD, MINNESOTA Martin J., Kirsch, Mayor S ATTEST: Samantha Orduno, City Manager THE HOUSING AND REDEVELOPMENT AUTHORITY IN-AND FOR THE CITY OF RICHFIELD, MINNESOTA By Thomas E. Harms, Chair ATTEST: Michael Sandahl, Secretary • STATE OF MINNESOTA COUNTY OF HENNEPIN Minnesota, hereby certify that a Tax Increment Pledge Agreement by and between the City of Richfield, Minnesota and the Richfield Housing and Redevelopment Authority dated as of 2001, relating to the City's $8,350,000 General Obligation Tax Increment Bonds, Series 2001 A, has been filed in my office. I, the undersigned Taxpayer Services Division Manager of Hennepin County, WITNESS my hand and official seal this .day of • CERTIFICATE 2001. (SEAL) Taxpayer Services Division Managers Hennepin County, Minnesota By Deputy TAXPAYER SERVICES DIVISION MANAGER'S • • AGENDA ITEM # 6 REPORT # 29 STAFF REPORT ~ HOUSING AND REDEVELOPMENT AUTHORITY MEETING MARCH 19, 2001 REPORT PREPARED BY: REPORT PRESENTER: JoxN STARx, COMMUNITY DEVELOPMENT MANAGER NAME, TITLE BRUCE PALMBORG, COMMUNITY DEVELOPMENT DIRECTOR NAME, TITLE • DEPARTMENT DIRECTOR REVIEW: REVIEWED BY EXECUTIVE DIRECTOR: ITEM FOR HRA CONSIDERATION: Consideration of options for the continuation of the redevelopment process for the Lyndale Gateway area. Ia 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 February 20, 2001, the HRA denied CSM's request for extension. This denial of an extension left CSM in a state of non-compliance with the Contract. Upon review of the Contract, it has been determined that there is no notice period required for the termination of the Contract. 03191yndale CSM's non-compliance with the Contract, and the resulting termination, now require the HRA to determine the best manner for continuing with the redevelopment of the west side of the 7600 block of Lyndale Avenue South. Staff has identified a number of potential options for moving forward with the redevelopment; these are listed in the Alternative Recommendations portion of this staff report. It should be noted that CSM continues to be optimistic that a lease agreement with Walgreens can be executed within the near future. 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, thusrendering.OSM 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. B. CRITICAL ISSUES • The property owners and. tenants in the area are very frustrated with the redevelopment process and are seeking more certainty regarding the continuation of the redevelopment plans for the area. • Unless the properties on the west side of Lyndale Avenue can be acquired and the occupants relocated prior to August 2001 (which would be very difficult at this point), the reconstruction of this portion of Lyndale Avenue cannot occur this year. C. FINANCIAL • CSM and Minnstar Builders have an agreement pertaining to the allocation of some funding through tax increment financing. Legal counsel of the HRA, CSM and Minnstar Builders should review and resolve any issues pertaining to this agreement prior to executing an agreement on contract termination. D. LEGAL • 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. IV. ALTERNATIVE RECOMMENDATION~S~ • A. Defer a motion on termination of the Contract for a given. period of time. in order to allow CSM additional time to execute their lease agreement with Walgreens. B. Approve a motion to terminate the Contract for Private Redevelopment with CSM upon the execution of an agreement by both parties whereby each party acknowledges the termination of the Contract and releases one another of all claims pursuant to the Contract with the stipulation that issues related to any tax increment financing agreement,between CSM and Minnstar Builder first be resolved. C. In addition to alternative recommendation B, direct staff to continue working with CSM for a given period of time prior to discussions with other developers regarding the area. D. In addition to alternative recommendation B, direct staff to pursue discussions with other developers regarding the area. E. In addition to alternative recommendation B, direct staff to halt any, and all, discussions. with developers (including CSM) for a given period of time. V. ATTACHMENTS • N/A VI. PRINCIPAL PARTIES EXPECTED AT MEETING • A representative of CSM Investors II, Inc.. • Attachment B SECOND AMENDMENT TO CONTRACT • FOR PRIVATE REDEVELOPMENT THIS AMENDMENT, made and entered into as of the day of 2001 by and between GRAMERCY PARK COOPERATIVE AT LAKE SHORE DRIVE, a Minnesota Cooperative .Corporation ("Redeveloper") and THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, a Minnesota public body corporate and politic ("HRA"). WITNESSETH: WHEREAS, the HRA and the Redeveloper did on July 20, 1998 execute and deliver that certain document entitled Contract for Private Redevelopment, which has subsequently been amended by that First Amendment to Contract for Private Redevelopment dated December 21, 1998 (such Contract and Amendment collectively referred to herein as the "Contract"); and WHEREAS, the Redeveloper wishes to assign certain payments of tax increment pursuant to the Contract and in order to do so desires to enter into an agreement concerning the payment and security therefor; and WHEREAS, the Redeveloper has proposed that the tax increment note originally • proposed to be issued pursuant to the Contract be replaced by a tax increment note to be assigned to third-party purchasers; and WHEREAS, the HRA has reviewed the proposed amendments, has received the reports and recommendations of its staff and consultants, and has concluded that the proposed amendments are necessary and appropriate and in furtherance of the proposed Redevelopment. NOW THEREFORE, based upon the mutual covenants and undertakings of the parties, the Contract is hereby amended as follows: NOW, THEREFORE, in consideration of the mutual covenants and obligations herein contained, the Contract is hereby amended in the following respects. 1. A definition of "Maturity Date" in Section 1.1 is added to read as follows: "Maturity Date" means the earlier of: (i) the date when the Redeveloper has been. fully reimbursed according to the terms of the Note; or (ii) February 1, 2026. • DJG-187194v6 1 RC125-223 • 2. The definition of "Note" in Section 1.1 is amended to read as follows: "Note" means the HRA's Limited Revenue Tax Increment, Series 2001 to be executed and delivered in the form set forth on Exhibit A, pursuant to Section 3.6. 3. Section 3.6(c) is amended read as follows: Section 3.6. Purchase Price. (a) The HRA shall pay the Redeveloper as purchase price for Parcel A the aggregate principal amount contained in the Note. Payment of the Purchase Price will be made entirely and exclusively in accordance with the terms of said Note. The Note is to be executed by the HRA and delivered to Redeveloper upon .the Redeveloper's request. Prior to or simultaneously with the HRA's delivery of the Note, the HRA shall deliver to Redeveloper the Certificate of Completion. (b) The purchase price to be paid by the Redeveloper for the reconveyance of the Parcel A and conveyance of Parcels B and C from the HRA shall be $1.00. 4. Section 5.1 is amended to read as follows: Section 5.1. Insurance. (a) The Redeveloper will provide and maintain at all times during the process of constructing the Minimum Improvements an All Risk Broad Form Basis Insurance Policy and, from time to time during that • period, at the request of the City, furnish the. City with proof of .payment of premiums on policies covering the following: (i) Builder's risk insurance, written on the so-called "Builder's Risk -- Completed Value Basis," in an amount equal to one hundred percent (100%) of the insurable value of the Minimum Improvements at the date of completion, and with coverage available in nonreporting form on the so-called "all risk" form of policy. (ii) Comprehensive general liability insurance (including operations, contingent liability, operations of subcontractors, completed operations and contractual liability insurance) together with an .Owner's Protective Liability Policy with limits against bodily .injury and property damage of not less than $1,000,000 for each occurrence (to accomplish the above-required limits, an umbrella excess liability policy may be used); and (iii) Workers' compensation insurance, with statutory coverage. (b) Upon completion of construction of the Minimum Improvements and prior to 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 shall furnish proof of the payment of premiums on, insurance as follows: DJG-187194v6 2 RC125-223 • (i) Insurance against loss and/or damage to the Minimum Improvements under a policy or policies covering such risks as are ordinarily insured against by similar businesses. (ii) Comprehensive general public liability insurance, including personal injury liability (with employee exclusion deleted), against liability for injuries to persons and/or property, in the minimum amount for each occurrence and for each year of $1,000,000. (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. (c) All insurance required in Article V of .this Agreement shall. be taken out and maintained in responsible insurance companies selected by the Redeveloper which are authorized under the laws of the State to assume the risks covered thereby. Upon request, the Redeveloper will deposit annually with the HRA policies evidencing .all such insurance, or a certificate or certificates or binders of the respective insurers stating that such insurance is in force and effect. • Unless otherwise provided in this Article V of this Agreement, each policy shall contain. a provision that the insurer shall not cancel nor modify it in such a way as to reduce the coverage provided below the amounts required herein without giving written .notice to the Redeveloper and the' HRA at least thirty (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 a certificate or certificates of the respective.. insurers as to the amount of coverage in force upon the Minimum Improvements. (d) The Redeveloper agrees to notify the HRA immediately in the case of damage exceeding $100,000 in amount to, or destruction of, the Minimum Improvements or any portion thereof resulting from fire or other casualty. In such event 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. The Redeveloper shall complete the repair, reconstruction and restoration of the . Minimum Improvements, whether or not the Net Proceeds of insurance received DJG-187194v6 3 RC125-223 by the Redeveloper for such purposes .are 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. (e) In lieu of its obligations under paragraph (d), Redeveloper may pay to the HRA the amount necessary to pay the outstanding principal amount of and accrued interest the Note, as determined by the HRA's financial advisor. Upon the HRA's receipt of such payment, (i) the HRA. shall forthwith pay such n„t.ctanrlinu nrincinal of and accrued interest on the Note and (ii) this Agreement • Section 6.4. Assessment.,A~reement. (a) Prior to or concurrently with. issuance of the Note, the Redeveloper shall, with the HRA execute an Assessment Agreement pursuant to Minnesota Statutes, Section 469.177, subd: 8, specifying an assessor's. minimum market value (the "Minimum Market Value") for the Redevelopment Property, and all improvements thereon. The. amount of the Minimum Market Value for the Redevelopment Property and Minimum Improvements shall be $24,000,000 as of January 2, 2001 notwithstanding the progress of construction of the Minimum Improvements by such date. (b) The Assessment Agreement shall be substantially in the form attached hereto as Exhibit D. Nothing in the Assessment Agreement shall limit the discretion of the assessor to assign a market value to the property in excess of the Minimum Market Value. The Assessment Agreement shall remain in force until the Maturity Date. 6. Anew Section 8.3(e) is added to read as follows: (e) Notwithstanding anything to the contrary herein, and in accordance with the Consent to Assignment of Note and Release and Indemnity between the HRA and the Redeveloper dated , 2000 (the "Consent"), the HRA and the Redeveloper agree that the Redeveloper may, at its discretion, assign the Note to one or more third-party purchasers (the "Assignees"). The HRA shall have no obligation to obtain such third-party purchasers. The Authority further agrees that upon written notice to the Authority from the Redeveloper and any and all Assignees designated pursuant to the Consent, the Authority shall, from the date of receipt of such notice until the Maturity Date, pay to the Redeveloper any remaining payments due under the Note. 7. Anew Section 8.3(f) is added to read as follows: (f) As a condition precedent to the assignment of the Note by the _ Redeveloper pursuant to Section 8.3(e), the Redeveloper shall execute and deliver or cause to be executed and delivered to the HRA all documents deemed necessary or desirable by the HRA to effectuate such assignment, including but not limited to an investment letter in substantially the form set forth at Exhibit E hereto. 8. Anew Section 8.3(g) is added to read as follows: (g) In addition to any other indemnification to which the HRA is entitled under this Agreement, the Redeveloper releases from and agrees that it will defend, indemnify, protect, and hold harmless the _HRA, the City, and the ..governing body members, servants, officers, agents, employees, and representatives thereof from any claim, demand, suit, action or other proceeding whatsoever by any person or entity whatsoever arising or purportedly arising from any assignment of the Note pursuant to Section 8.3(e), whether such claim, demand, suit, action, or other proceeding arising from an actual alleged violation of any D7G-187194v6 5 RC125-223 federal or state securities or investment law, rule, or regulation or otherwise. Nothing in this Agreement is intended to waive any limitation on or immunity from liability to which the HRA or the City is entitled, under Minnesota Statutes, Chapter 466 or otherwise. 9. The Exhibits are amended to read as set forth at Schedule A to this Second Amendment. 10. Except as specifically amended herein, the Contract remains unaltered and in full force and effect. 11. The HRA may record this Second Amendment in the public land records. in and for Hennepin County, Minnesota. The Redeveloper shall pay all costs for recording. 12. The Redeveloper consents to the rescission of the HRA's Resolution No. "Resolution Awarding The Sale Of, And Providing -The Form, Terms, Covenants And Directions For The Issuance Of Its Limited Revenue Tax Increment Note, Series 2001A; Approving Amendment To Contract -For Private Redevelopment" and the HRA's Resolution No, "Resolution Awarding The Sale Of, And Providing The Form, Terms, Covenants And Directions For The Issuance Of Its Limited Revenue Tax Increment Note,. Series 2001B" and release the HRA from any liability or obligation .under .these resolutions and the notes to be issued thereunder. • • DJG-187194v6 6 RC125-223 IN WITNESS WHEREOF, the parties hereto have set their hands and seals as of the • day and year first above written. By: Its: GRAMERCY PARK COOPERATIVE AT LAKE SHORE DRIVE By: .Its: i STATE OF MINNESOTA ) SS COUNTY OF ) 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 STATE OF MINNESOTA • THE HOUSING AND REDEVELOPMENT AUTHORITY OF THE CITY OF RICHFIELD, MINNESOTA By: Its: )SS. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this day of , 2001, by the of , a cooperative corporation under the laws of Minnesota, by and on behalf of said corporation. Notary Public DJG-187194v6 RC125-223 7 • Adopted this -day of , 2001. Chairperson ATTEST: Secretary • DJG-187176v3 g RC125-223 • • • DJG-187194v6 RC125-223 SCHEDULE:A A-1 • EXHIBIT A INSERT NOTE HERE • • DJG-187194v6 A-A-1 RC125-223 • EXHIBIT B Certificate of Completion here DJG-187194v6 A-B-1 RC125-223 • EXHIBIT C Lot 1, Block 1, GRAMERCY PARK RICHFIELD, according to the recorded plat thereof, Hennepin County, Minnesota • • DJG-187194v6 A-C-1 RC125-223 • EKHIBIT D ASSESSMENT AGREEMENT THIS AGREEMENT, made on or as of the day of , 2001, between GRAMERCY PARK COOPERATIVE AT LAKE SHORE DRIVE, a Minnesota Cooperative Corporation ("Redeveloper") and THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, a Minnesota public body corporate and politic ("HRA"). WITNESSETH, that WHEREAS, the HRA and Redeveloper did on July 20, 1998 execute and deliver that certain document entitled Contract. for Private Redevelopment, which has subsequently been amended by that First Amendment to Contract for. Private Redevelopment dated December 21, 1998 and that Second Amendment to Contract for Private Redevelopment dated 2001 (such Contract and Amendments collectively referred to herein as the "Contract"); and WHEREAS, pursuant to the Contract the Redeveloper is obligated to construct, or has constructed, certain improvements upon the Redevelopment Property (the "Minimum .Improvements"); and WHEREAS, the HRA and the Developer desire to establish a minimum market value for the Redevelopment Property and the Improvements constructed thereon, pursuant to Minnesota Statutes, Section 469.177, Subdivision 8; and WHEREAS, the .HRA and the Assessor for Hennepin County (the "Assessor") have reviewed the plans and specifications for the Improvements; NOW, THEREFORE, the parties to this Agreement, in consideration of the promises, covenants and agreements made by each to the other, do hereby agree as follows: 1. The minimum market value which shall be assessed for the Redevelopment Property described in Exhibit A, together with the Improvements thereon, for ad valorem tax purposes, shall be $24,000,000 as of January 2, 2001, notwithstanding the progress of construction of the Improvements by such date. - 2. The minimum market value .herein established shall be of no further force and effect and this Agreement shall terminate on the Maturity Date (as defined in the Contract) . 3. This Agreement shall be promptly recorded by the HRA. The Redeveloper shall pay all costs of recording. C7 DJG-187194v6 A-D-1 RC125-223 4. Neither the preambles nor provisions of this Agreement are intended to, nor shall • they be construed as, modifying the terms of the Contract. 5. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of the parties. 6. Each of the parties has authority to enter into. this Agreement and to take all actions required of it, and has taken all actions necessary to authorize the execution and delivery of this Agreement. 7. In the event any provision of this Agreement shall be held invalid and unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. 8. The parties hereto agree that they will, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements, amendments and modifications .hereto, and such further instruments as may reasonably be required for correcting any inadequate, or incorrect, or amended description of the Redevelopment Property, or for carrying out the expressed intention of this Agreement, including, without limitation, any further instruments required to delete from. the description of the Redevelopment Property such part or parts as may be included within a separate assessment agreement. 9. Except as provided in Section 8 of this Agreement, this Agreement may not be amended nor any of its terms modified except by a writing authorized and executed by all parties hereto. 10. This Agreement may be simultaneously executed in several counterparts, each of which shall be an original .and all of which shall constitute but one and the same instrument. 11. This Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota. • DJG-l 87194v6 A-D-2 RC125-223 THE HOUSING AND REDEVELOPMENT • AUTHORITY OF THE CITY OF RICHFIELD, MINNESOTA By: _ Its: By: Its: GRAMERCY PARK COOPERATIVE AT LAKE SHORE DRIVE Bv: - - - Its: STATE OF MINNESOTA ) SS COUNTY OF ) • 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 STATE OF MINNESOTA )SS. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this day of , 2001, by the of , a cooperative corporation under the laws of Minnesota, by and on behalf of said corporation. Notary Public • DJG-187194v6 A-D-3 RC125-223 • EXHIBIT A TO ASSESSMENT AGREEMENT Lot 1, Block 1, GRAMERCY PARK RICHFIELD, according to the recorded plat thereof, Hennepin County, Minnesota • • DJG-187194v6 RC125-223 A-D-A-1 • CERTIFICATION BY COUNTY ASSESSOR The undersigned, having reviewed the plans and specifications for the improvements to be constructed and the market value assigned to the land upon which the improvements are to be constructed, hereby certifies as follows:. The undersigned Assessor, being legally responsible for the assessment of the above described property, hereby certifies that the values assigned to the land and improvements are reasonable. County Assessor for the County of Hennepin STATE OF MINNESOTA ss.. COUNTY OF HENNEPIN The foregoing instrument was acknowledged before me this _ day of by ,the County Assessor of the County of Hennepin. • , Notary Public • DJG-187194v6 RC125-223 • EXHIBIT E .Letter of Investment Intent [Date] Gramercy Park Cooperative at Lake Shore Drive 7900 International Drive, -Suite 1035 Bloomington, MN 55425 Miller Johnson Steichen Kinnard, Inc. Fourth Floor 920 Second Avenue South Minneapolis, MN 55402 Housing and Redevelopment Authority in and for the City of Richfield 6700 Portland Avenue Richfield, MN 55423-2560 Dear Ladies and Gentlemen: In connection with our purchase of a participating interest in the amount of $ , in the $ Richfield Housing and Redevelopment Authority Limited • Revenue Tax increment Note 2001 (the "Note") issued to Gramercy Park Cooperative at Lake Shore Drive ("Gramercy") and assigned by Gramercy to the undersigned, we confirm that: 1. We have received a copy of the Private Placement Memorandum dated March'., 2001, relating to the Note and such .other information as we deem necessary in order to make our investment decision. 2. 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. 3. We have no present intention of selling, granting any participation in, or otherwise distributing the Note. 4. 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. 5. 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 HRA or Gramercy, or any of their • DJG-187194v6 A_~ 1 RC125-223 • respective officers, employees, agents, affiliates or representatives, with respect to the value of the Note. 6. Neither the HRA nor Gramercy has made any warranty, acknowledgment or covenants, in writing or otherwise, to the undersigned regarding the tax consequences, if any, of the acquisition and investment in the Note. 7. 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 HRA and Gramercy 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. 8. The undersigned .has evaluated the merits and risks of investment in the Note and has determined that the Note is a suitable investment for the use in light of our overall condition and prospects. 9. 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) to Gramercy, (B) in accordance with Rule 144A under the Securities Act to a "qualified institutional buyer" (as defined therein), (C) to an "accredited investor" (as defined above) that is purchasing for his own • account or for the account of such an "accredited investor," (D) pursuant to the exemptions from,registration provided. by Rule 144 under the Securities Act, if available, (E) pursuant to an effective registration statement under the Securities Act, or (F) 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 application state securities laws. We further agree to provide to any person purchasing the Note from us a notice advising such Purchaser(s) that resale of the Note is restricted as stated herein. 10. No market for the Note exists and no market for the Note is intended to be developed. 11. We understand that payments on the .Note are subject to certain restrictions. and conditions set forth in the Contract for Private Redevelopment between the Issuer and Gramercy ("Redeveloper") dated July 20, 1998, as amended on December 21, 1998 and February _, -2001 (the "Contract"), a resolution approved by the HRA on March _, .200.1 (the "Resolution") and an Escrow Agreement between Gramercy, the undersigned and the Escrow Agent, dated ("Escrow Agreement"). 12. We understand that the Gramercy Available Tax Increment as defined in the Contract and the Note, together with a portion of the proceeds of the Note and any amounts deposited with the Escrow Agent, are the sole source of money that is pledged and will be available for the payments due under the Note; that neither the HRA, nor the Redeveloper has any obligation to repurchase the Note from us under any circumstances; that the Note is not a general obligation of the HRA; and that, if the Available Tax Increment is not sufficient DJG-187194v6 A-E-2 RC125-223 to make the payments due under the. Note in full, no right will exist to have taxes levied • by the HRA or the City of Richfield for the payment of the unpaid amounts due under the Note. 13. We agree to purchase the Note when and as issued on March _, 2001 or such other date as agreed among the parties. Each of 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(s)) By: Name: Title: Address: • Dated as of , 2000 • DJG-187194v6 A-E-3 RC125-223 ATTACHMENT G r 1 U ESTOPPEL CERTIFICATE RE GRAMERCYPARK COOPERATIVE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD. MINNESOTA 2001 • Miller Johnson Steichen Kinnard, Inc. John G. Kinnard & Co. 920 Second Avenue South Minneapolis, MN 55402 Re: Contract for Private Redevelopment:. between the Housing and Redevelopment Authority in and for the City of Richfield ("Authority") and Gramercy Park Cooperative at Lake Shore Drive, a Minnesota Cooperative Corporation ("Redeveloper") dated July 20, 1998, as amended by the First Amendment thereto dated December 21, 1998 ("First Amendment") and the Second Amendment thereto dated 2001 ("Second Amendment") (the Contract and the Amendments thereto are collectively referred to herein as the "Agreement"); Limited Revenue Tax Increment Note, Series 2001, in the face principal amount of $ made and. executed by the Authority pursuant to the Agreement (the ..Note"). Ladies and Gentlemen: The Authority understands that Miller Johnson Steichen Kinnard, Inc. ("Placement Agent") intends to arrange the placement of the Note with one or more qualified investors (collectively, the "Investors"). In connection with the foregoing, the Authority does hereby certify to the Placement Agent, the Investors, and their respective permitted successors and assigns as follows: a. The Agreement is unmodified except as set forth above and is in full force and effect. b. The Note is unmodified except as set forth above, is in full forth and effect, and the principal amount. of the Note is as set forth above. . DJG-194161v1 l RC125-223 c. The Authority has not received any notice of default under the Agreement, and, to • the knowledge of the Authority, no event of default exists thereunder and the Authority has no claims against the Redeveloper under the Agreement. d. The Redeveloper has paid or reimbursed the Authority for all amounts due and payable by the Redeveloper under the Agreement through the date hereof, except certain amounts due and payable with regard to the preparation of the Second Amendment and related documents, such amounts to be paid by the Redeveloper upon issuance of the Note. e. .The Redeveloper. has complied with its obligations under Section 10.8 of the Agreement with regard to the Identification Marker. f. The Redeveloper has complied with its obligations under .Section 10.5 of the Agreement with regard to creation of 3 new jobs at average hourly wage rates of no less than $12.50 per hour. IN WITNESS WHEREOF, the Authority has executed this instrument this day: of 2001. THE HOUSING AND REDEVELOPMENT AUTHORITY OF THE CITY OF RICHFIELD, MINNESOTA By: Its: By: _ Its: • DJG-194161vL 2 RC125-223 ATTACHMENT D March 9, 2001 CITY OF RICHFIELD, MINNESOTA HOUSING AND REDEVELOPMENT AUTHORITY • LIMNED REVENUE TAX INCREMENT NOTE PRIVATE PLACEMENT OFFERING (GRAM1vRCY PARK COOPERATIVE PROJECT) SERIE$ 2001 NIARCA S M T ~ '~ tt J I ! ! s ~ ~ e f /o !t !I !d 1! 1S 1F /7 ie /f 10 Il Il 27 II , IS 16 I7 Ie 2f 70 Il REVISED TIMETABLE • DATE ' ,ACTION IYEA7 • Xt)BSPONSISClIT1F;, Friday, March 9 Deliver necessary legal docutnenu including tlu PPM to .PAC, K&G, City of Richfield HRA for upcoming meeting on March 19 MJSK week of March I2 Completion and availability of execation of the following: GRAM, BORC, Assessment Agreement, Gramercy co-op certificate, K&G, PAC, Gramercy co-op resolution, collect necessary signatures of MJSK Gramercy co-op board member for closing documents. Monday, March 19 Ciry of Richfield approval of amended documents for the AUTH project W d e nesday, Marc}t 21 Pre-Closing BORC, K&G PAC Thursday, March 22 Closing and Funding ALL PARTICIPANTS Borrower (GRAM)- Gramercy Co-Op Borrower's Counsel (BORC) - Hunshaw & Culbertson Escrow Agent (EA) - US Bank Financial Advisor (PA) -Ehlers & Associates Issuer (AUTH)- Ciry of Richfield HRA Issuer Counsel (K&G) -Kennedy & Graven Placemenr Agent (MJSK) -Miller Johnson Steichen Kinnard, Inc. Placement Agent's Counsel (PAC) -Holmes. & Associates Purchaser's Counsel (PC) -Winthrop & Weinstine • Miller Johnson Steichen Kinnard, Inc, C TOTAL P.02 FROM HINSHAW & CULBERT50N t (MUN) 3. 19 V1 1 Z : 33/Sl. ] I : Z'(/NU. 3'/6VU4469'/ ~' Z G R A M~ R C X CORrORAT10N Re: Consent Agenda item. Letter from developer saying they have met the conditions contained on page 2 of the Estoppel Certificate for items "e" and "f". Mauch 13, zoos IVlr. Bruce Nordquist City of Richfield b740 Tyndale Ave. So. Richfield, MN. 55423 Dear Bruce, In response Lo our phone conversation of this rooming regarding items a 8t f of the Ertoppet Certificate; e. Gramercy Corporation (The Redeveloper) has committed and area onthe corner of Lake Shore Drive aad Lyndale Avenue south for tha future vse of the City of Richfield for an identification Marl~er_ L 1Le Gramercy Co-op has created as required 3 new jobs that are at or over the i z. SO per hour recluireanent • Administrator. annual salary 540,040 • Building Superintendent: annual salary 540,000 • Administrative assistant: 513.50 an hour Brace, if tlbcre is anything else please do not hesitate to call. Sincerely, r`t-'~ ~3~D~''s'° Lou Stocco Vice President • 7900 ]ettrnadand Drive su~78 1035 • Bloomington, MN 55425 • .rww.gnmercYoosp.°vm rtL: 952.854.0467 •800.852.0098 FAY: 950^.876.4788 \ AGENDA ITEM # rj • REPORT # 28 ~- STAFF REPORT HOUSING AND REDEVELOPMENT AUTHORITY MEETING MARCH 19, 2001 REPORT PREPARED BY: REPORT PRESENTER: DEPARTMENT DIRECTOR REVIEW: REVIEWED BY EXECUTIVE DIRECTOR: PAM BOOKHOUT, REHABILITATION SPECIALIST NAME, TITLE BRUCE PALMBORG, COMMUNITY DEVELOPMENT DIRECTOR NAME, TITLE ITEM FOR HRA CONSIDERATION; Public hearing and approval of the attached resolution authorizing the sale of 6852 Park Avenue South to Steven Marlin Grant Homes for new construction of a single family home. I. RECOMMENDED ACTION: Conduct and close a public hearing and by motion: Approve the attached resolution authorizing the sale of real property located at 6852 Park Avenue to Steven Marlin Grant Homes. III. BACKGROUND In July 2000, the HRA purchased the property at 6856 Park Avenue from the Department of Housing and Urban Development (HUD). It was vacant and had been a troublesome property off and on since 1981. The land was large enough to subdivide, which was an important aspect of covering the cost of acquisition. The subdivision was approved by the City Council in December 2000. The new south lot is available for sale. under the Richfield Rediscovered Program and retains the property address of 6856 Park Avenue. The north, interior lot is planned to be developed by Steven Marlin Grant Homes as an entry in the Parade of Homes Fall Showcase. This will be Richfield's tenth entry in the Parade of Homes. Generally the homes have sold prior to the start of the Parade. 0319-6852Park The new home will be a two-story home with over 2,000 finished square feet. Its • end value is anticipated to be approximately $260,000. Demolition of the existing house and garage is underway. Construction is anticipated to start in March or April, depending on the weather. The Contract for Private Development is similar in form and content to past contracts. III. BASIS OF RECOMMENDATION A. POLICY • The HRA acquired the site for development under the Richfield Rediscovered program. • The builder is experienced, qualified, and has built under the program previously. • The terms of the Contract for Private Development have been negotiated and are in conformance with program guidelines. B. CRITICAL ISSUES • N/A C. FINANCIAL • According to the program guidelines, the builder must provide a Letter of Credit or other acceptable security upon closing to cover the • purchase price of the land, $50,000, and performance security in the same amount. D. LEGAL • Notice of public hearing. on sale of the property was published on March 7, 2001 in the Sun-Current. IV. ALTERNATIVE RECOMMENDATION(S~ • Do not proceed with the Contract for Private Development with the recommended builder and direct staff to find another buyer. V. ATTACHMENTS • Form of the resolution • House plans/elevations VI. PRINCIPAL PARTIES EXPECTED AT MEETING • N/A • HRA RESOLUTION NO. • RESOLUTION AUTHORIZING THE SALE OF REAL PROPERTY LOCATED AT 6852 PARK AVENUE SOUTH TO STEVEN MARLIN GRANT HOMES WHEREAS, the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota (HRA) desires to develop certain real property pursuant to and in furtherance of the Richfield Rediscovered program adopted by the HRA, said real property being described as 6852 Park Avenue South, and whose legal description is that part of Lot 4, Block 3, Portland Avenue Acres Addition, Hennepin County, Minnesota, according to the recorded plat thereof lying south of the North 121.3 feet and lying north of the south 55.0 feet thereof; and WHEREAS, the HRA is authorized to sell real property within its area of operation after a public hearing; and WHEREAS, the purchaser of the described. property has been identified as Steven Marlin Grant Homes; and WHEREAS, a Contract for Private Development has been prepared, and the sale price of the land is $50,000 with performance security in the same amount; and WHEREAS, a public hearing has been held after proper public notice. • NOW, THEREFORE, BE IT RESOLVED by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota: 1. A public hearing has been held and 6852 Park Avenue is authorized to be sold for $50,000 to Steven Marlin Grant Homes; and 2. The Chairperson and Executive Director are authorized to execute a Contract for Private Development and other agreements as required to effectuate the sale to Steven Marlin Grant Hornes. Adopted by the Housing and Redevelopment Authority in and- for the City of Richfield, Minnesota this 19th day of March, 2001. Thomas E. Harms, Chair • ATTEST: Michael Sandahl, Secretary .( 'i • • 1 ~s5~ i ~,~. ~'~ li - ------------.-- --- --- -- -- ---- ~ D ~ - _ - - o ao o - - o~~~~~~o [~L~[~~t~L~~C~D. ~z ~~ ~ 1 vl6w _ J _,. 1~EA'R ELEVATION ,Z ~ \. ~.~~ ~:~~ ~i~'i; I _ STCbp ~ ` I :. ' _ . SOlJ7H ELEVATION K AV EN1JE T ;; ;~ NORTH, ELEVATION • • ~ ~- ~ `_ 4 _ _ --- - - --- I J O O 3-S~oee FIBER,-a^ck eonc,E~ n I . YF.7~1F`I' NILE w\~"bn, M ~,p ._ .- 6 DINEtTE ~ITGHEI'1 E ~a~ I ~A4r VQ Ga L .Z"(x A~a. wa..+ 6s.a+ N ^^^~~~ . J I. `~ w 'fH ~I ° LT ~~ I I ~--R.U~'I'I HNC. _..I.{.~ si~.'ts _ _ _ 2a IN \ ~ ~ I I "+~P7a F12fLOrJE I ~ c,Elunq 4 Wvutr~~ ~ / = tl~, °' '` I a I ~'~ Ilp~~ -~ ~ _.,I~o~ - To aea~~~9 I E ' ' I ~~~ ~ y~~.ars ~ ~I a i- ~ - - \ - tonc. - - ~uT~GP ._... IL'xY 4-~nc~n pH o~ _~ --- ~~ I yfeP 14--.__ Npe~ ~ MA[N LEVEL (~ -- • -~ECE~ND LEVEL • STAFF REPORT AGENDA ITEM # 4A REPORT # 27 HOUSING AND REDEVELOPMENT AUTHORITY MEETING MARCH 19, 2001 • REPORT PREPARED BY: REPORT PRESENTER: DEPARTMENT DIRECTOR REVIEW: REVIEWED BY EXECUTIVE DIRECTOR: BRUCE NORDQUIST, HOUSING & REDEVELOPMENT MANAGER NAME, TITLE BRUCE PALMBORG, COMMUNITY DEVELOPMENT DIRECTOR ITEM FOR HRA CONSIDERATION: Consideration of a redrafted Second Amendment to Contract for Private Redevelopment, the Issuance of a Limited Revenue Tax Increment Note and an Estoppel Certificate related to Gramercy Park Cooperative at Lake Shore Drive. I. RECOMMENDED ACTION: By Motion: Approve the attached resolution for Gramercy Park Cooperative; approve a Second Amendment to Contract for Private Redevelopment; approve the sale of, and .providing the form, terms,. covenants and directions for, the issuance of a limited revenue tax increment note, series 2001; and approve an Estoppel Certificate. • III. BACKGROUND At the January 16 Housing and Redevelopment Authority (HRA) meeting, the resolutions were approved for a Second Amendment to a Contract for Private Redevelopment and the issuance of two limited revenue tax increment notes for Gramercy Park. Shortly after those actions, Gramercy requested further revisions on behalf of the placement agent, Kinard. As a result, the attached contract amendment and note would,replace those approved in January. The previous actions of the HRA would be rescinded by the-RBA's favorable consideration of the 0319Gramercy NAME; TITLE attached documents. The revised timetable indicates that closing on the private placement of the note will occur March 22. The Certificate of Completion for Gramercy Park was approved at the January 16 HRA meeting. In preparation for the private placement of the note, the HRA is being asked to approve of the project completion in the form of an Estoppel Certificate (a copy is attached). The certificate mentions certain requirements on page 2, which must be met. Gramercy has represented that it has met these requirements and a letter so stating will be presented to the HRA at the March 19, 2001 meeting. These requirements are contained in the Contract for Private Redevelopment. The HRA entered into a Contract for Private Redevelopment with Gramercy in July 1998, which was amended in December of that year. Under that agreement, Gramercy was entitled to a Tax Increment Financing (TIF) revenue note in the amount of $2,230,174 to be paid to Gramercy at 7.5 percent interest over 25 years. While the .NBA's total obligation will not be increased, there. are changes to the existing contract that are being proposed (these are the same changes identified in January): 1) An assessment agreement will be entered into establishing a minimum market value for the property of $24,000,000 (Hennepin County has confirmed this value for property tax purposes). This wilt help provide additional security for the note. Like most agreements of this type which are of a standard form, the • obligations it creates are on the developer, not on the HRA. 2) The proposed City Bella project will be removed from the Gramercy TIF District and put in a new TIF district. The HRA is committing 75 percent of the TIF generated by the Gramercy Park project to payment on the Gramercy note (the remaining 25 percent is for the HRA's Housing Account and Administration). Under the current note, there are specific maximum dollar amounts that will be ..paid to Gramercy on each February 1 and August 1. The source of those payments remains the same percentage of tax increment that was originally envisioned, and the HRA's obligation is still solely to make payments out of tax increment. III. BASIS OF RECOMMENDATION A. POLICY • A Contract for Private Redevelopment between the HRA and Gramercy is the basis for policy decisions. • Modifications to the contract, related tax increment note, and an Estoppel Certificate are required to facilitate permanent financing for the completed project. • B. CRITICAL ISSUES • 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. • January HRA actions to allow two notes would be rescinded. Only one note will be placed. • Action by the HRA is needed now to achieve the proposed private placement closing date of March 22. C. FINANCIAL • The recommended actions are based on a review by the HRA's financial consultant, Sid Inman of Ehlers. D. LEGAL • The attached documents have been prepared by the HRA's legal counsel. IV. ALTERNATIVE RECOMMENDATION(S~ • The HRA can choose not to modify the contract and limited revenue tax increment note. However, this would impair the developer's ability to finalize the permanent financing for this project. • V. ATTACHMENTS • Attachment A: Resolution for the Issuance of a Limited Revenue Tax Increment Note • Attachment B: Second Amendment to Contract for Private Redevelopment. • Attachment C: Estoppel Certificate • Attachment D: Private Placement Offering -Revised Timetable VI. PRINCIPAL PARTIES EXPECTED AT MEETING • N/A • Attachment A • :THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD RESOLUTION NO. RESOLUTION AWARDING THE .SALE OF, AND PROVIDING THE FORM, TERMS, COVENANTS AND DIRECTIONS FOR THE ISSUANCE OF ITS LIMITED REVENUE TAX INCREMENT NOTE, SERIES 2001; APPROVING AMENDMENT TO CONTRACT FOR PRIVATE REDEVELOPMENT AND ESTOPPEL. CERTIFICATE; RESCINDING .RESOLUTION NO. Rnt~ AND RESOLUTION NO. xo5 BE IT RESOLVED BY the Board of Commissioners ("Board") of the Housing and Redevelopment Authority in and for the City of Richfield (the. "Authority") as follows: Section 1. Authorization: Award of Sale. 1.01. Authorization. The Authority and City of Richfield ("City") have heretofore approved the establishment of Gramercy Redevelopment Tax Increment District (the "TIF District") within Richfield Redevelopment Project Area ("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 Limited Revenue Tax Increment Note, Series 2001 (the "Note"), in the maximum principal amount of $2,230,174 for the purpose of financing certain public costs of the Project. 1.02. Approval of Documents; Issuance, Sale, and Terms of the Note. The Note is issued in accordance with that certain Contract for Private Redevelopment between the Authority and Gramercy Park Cooperative at Lake Shore Drive, a Minnesota Cooperative Corporation ("Redeveloper") dated- July 20, 1998, as amended by the First Amendment thereto dated December 21, 1998. ("First Amendment") and the Second Amendment thereto dated 2001 ("Second Amendment") (the Contract and the Amendments thereto are collectively referred to herein as the "Agreement"). The Authority hereby authorizes issuance of the Note in accordance with terms set forth in this resolution to the Redeveloper, at a price of par. The Note shall be dated as of the date of delivery thereof and shall bear interest at a rate not to exceed 9.75% per annum to the earlier of maturity or prepayment. The Note shall be payable in semi-annual installments of principal and interest on each February 1 and August 1 commencing. August 1, 2001 and continuing through February 1, 2026 (the "Payment Dates"). U DJG-187176x3 1 RC125-223 The Note is issued as replacement for the Authority's $2,230,174 Limited Revenue Tax Increment Note issued pursuant to the First Amendment (the "Prior Note"), and the Redeveloper shall return the Prior Note to the Authority as a condition precedent to delivery of the Note. The principal amount and interest rate of the Note shall be as requested by the Owner in writing prior to the issuance of the Note, provided that: (a) in no case shall the principal amount of the Note exceed $2,230,174; (b) in no case shall the sum of the present value of the maximum amounts of principal and interest payable on the Note exceed the present value of the maximum amount of principal and interest that would have been payable on the Prior Note; and (c) in no case shall the interest rate on the Note exceed 9.75%. The Authority's Executive Director is directed to complete the Note in accordance with the provisions of this paragraph and is further directed to deliver a certificate attesting to the calculation of the principal amount and interest rate of the Note in accordance with the terms of this Resolution. The HRA hereby rescinds its approval of its Resolution No. 804 and Resolution No. X05 ,contingent upon-the Redeveloper's execution of the Second Amendment. The Authority hereby further approves and authorizes and directs the Authority's Chair and Executive Director to execute and deliver as appropriate: (i) the Second Amendment; (ii) the Certificate of Completion attached as Exhibit B to the Contract; (iii) the Assessment Agreement attached as Exhibit D to the Contract; and (iv) the estoppel certificate presented to the Authority as of the date of this Resolution in accordance with the provisions of Section 10.4 of the Contract and containing the representations set forth therein. 1.03. Optional Prepayment. The Authority may prepay the Note in whole or in part without premium or penalty at any time at the option of the Authority. Section 2. Form of Note. The Note shall be in substantially the following form, with the blanks to be properly filled in as of the date of issue: UNITED STATES OF AMERICA STATE OF MINNESOTA COUNTY OF HENNEPIN THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD LIMITED REVENUE TAX INCREMENT NOTE, SERIES 2001 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 Gramercy Park Cooperative at Lake Shore Drive or its permitted assigns (the "Owner"), to the extent and in the manner hereinafter provided, the original principal amount of this Note, • being $ (the "Principal Amount"), together with interest thereon accrued from the date DJG-187176v3 2 RC125-223 • of this Note, at the rate of interest of % .per annum (the "Stated Rate"), payable on each February 1 and August 1 commencing August 1, 2001 and .continuing through February 1, 2026 (the "Payment Dates"). Any payments on this Note shall be applied first to accrued interest and then to the Principal Amount in respect of which such payment is made. • .7 Each .payment on this Note is payable in any coin or currency of the United States of America which on the date of such payment is legal tender for public and private debts and shall be made by check or draft made payable. to the Owner and mailed to the Owner at it postal. address within the United States which shall be designated from time to time by the Owner. The Note is a special and limited obligation and not a general obligation of the Authority, which has been issued by the Authority to aid in .financing a "project," as defined in Minnesota Statutes, Section 469.174, of the Authority within and for the benefit of the Gramercy Redevelopment Tax Increment District ("District"). THE NOTE IS NOT A DEBT OF THE AUTHORITY, THE CITY OF RICHFIELD, OR THE STATE OF MINNESOTA (THE "STATE"), AND NEITHER THE AUTHORITY, THE CITY OF RICHFIELD, THE STATE NOR ANY POLITICAL SUBDIVISION THEREOF SHALL BE LIABLE ON THE NOTE, NOR SHALL THE NOTE BE PAYABLE OUT OF ANY FUNDS OR PROPERTIES OTHER THAN AVAII.ABLE TAX INCREMENT, AS DEFINED BELOW. Payments on this Note are payable solely from proceeds of this Note and from and only to the extent that the Authority shall .have received as of such Payment Date "Available Tax Increment." For the purpose of this Note, "Available Tax Increment" means: Seventy-five Percent (75%) of the tax increment received from the real estate described in Exhibit C to the Agreement (the "Redevelopment Property") for years beginning with 2001 and ending in 2026. To the extent that on any Payment Date the Authority does not have on hand sufficient Available Tax Increment to make the scheduled payment (which insufficiency is not due to a failure of the Owner to pay full real estate taxes payable on the Redevelopment Property), such deficiency shall be deferred and paid to the extent possible on the next Payment Date on which the Authority has received Available Tax Increment sufficient to do so, This Note shall terminate upon the "Maturity Date", hereby defined as the earlier of: (i) the date when the Redeveloper has been fully reimbursed according to the terms hereof; or (ii) February 1, 2026. This Note may be prepaid in full at any time at the option of the Authority. This Note shall also terminate and the Authority's obligation to make any payments under this Note shall be discharged and the Authority shall have no obligation and incur no liability to make any payments hereunder immediately upon the occurrence of an -Event of Default under the Contract for Private Development, dated July 20, 1998,. as amended by the First Amendment thereto dated December 21, 1998 and the Second Amendment thereto dated , 2001 (the Contract and the Amendments thereto are collectively referred to herein as the DJG-187176v3 RCI25-223 3 • "Development Contract") between the Authority and the Owner, subject to the notice and cure provisions of Section 9.2 thereof. 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 Increment, and then only to the extent and in the manner herein specified. The Owner shall never have. or be deemed to have the right to compel any exercise of any taxing power of the Authority or the City 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 shall not be transferred to any person without the prior written consent of the Authority. TT IS HEREBY CERTIFIED AND RECITED that, except as provided in the Development Contract, any acts, conditions, and things required by the Constitution and laws of the State of Minnesota to be done, to have happened, and to be performed precedent to and in the issuance of this Note have been done, have happened, and have been performed in regular and due form, time, • and manner as required by law; and that this Note, together with all other. indebtedness of .the Authority or the City of Richfield outstanding on the date hereof and on the date of its actual issuance and delivery, does not .cause the indebtedness of the Authority or the City of Richfield to exceed any constitutional or statutory limitation thereon. IN WITNESS WHEREOF, the Board of Commissioners of the Authority has caused- this Note to be executed by the manual signatures of the Chairperson and the Executive Director of the Authority and has caused this Note to be dated , 2001. Chairperson • Executive Director DJG-187176v3 4 RC125-223. • AUTHENTICATION AND REGISTRATION PROVISIONS This is one of the Notes described in the within mentioned Resolution. The ownership of the unpaid balance of the within Note is registered in the bond register of the City Clerk- Treasurer, in the name of the person last listed below. Date of Registration Section 3. Terms, Execution and Deliverv. Signature of Registrar 3.01. Denomination, Pavment. The Note shall be issued as one or more typewritten notes numbered from R-1 upwards. 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 Pavment 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's Finance Director 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 i~ ster. 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. Except as provided in the Development Contract, the Note- shall not be transferred to any person without the prior written consent of the Authority. (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 DJG-187176v3 5 RC125-223 Registered Owner Name Tax I.D. No: • 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 transfer or 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 Destroved 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. (h) .Prepayment. In the event the Note is prepaid in whole or in part, notice thereof will be given by the Registrar by mailing a copy of the redemption notice by first class mail (postage prepaid) not more than 60 and not less than 30 days prior to the date fixed for redemption to the registered owner of the Note at the address shown on the registration books kept by the Registrar. Failure to give notice by mail to any registered owner, any defect therein, will not affect the validity of any proceeding for the redemption of the Note. The Note so called for redemption will cease to bear interest after the specked redemption date, provided that the funds for the redemption are on deposit with the place of payment at that time. 3.04. Preparation and Delivery. The Note shall be prepared under the direction of the Secretary and shall be executed on behalf of the Authority by the signatures of its Chair and Secretary. In case any officer whose signature shall appear on the Note shall cease to be such officer before the delivery of the Note, such signature shall nevertheless be valid and sufficient for all purposes, the same as if such officer 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. Certificates of authentication on different Notes certificates need not be signed by the same representative. 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 DJG-187176v3 RC125-223 • been so executed and authenticated; it shall be delivered by .the Secretary to the Owner upon payment of the purchase price therefor, and the Owner shall not be obligated to see to the application of the purchase price. Section 4. Security Provisions. 4.01. Pledge. The Authority hereby pledges to the payment of the principal of and interest on the Note all Available Tax Increment as defined in the Note. Available Tax Increment shall be deposited in the Debt Service Fund in accordance with Section 4.02 hereof and applied to payment of the principal of and interest on the Note in accordance with the terms of the form of Note set forth in Section 2 of this resolution. 4.02. Debt Service Fund. So long as the-Note is outstanding and any principal thereof or interest thereon remains unpaid, the Authority shall maintain a separate Limited Revenue Tax Increment Note, Series 2001 Debt Service Fund (the "Debt Service Fund") to be used for no purpose other than the payment of the principal of and interest. on the Note. The Authority appropriates and irrevocably pledges to the Debt Service Fund: (a) Available Tax Increment pledged pursuant to Section 4.01 of this Resolution; (b) all investment earnings on funds held in the Debt Service Fund; and. (c) any other funds appropriated to the Debt Service Fund. The Debt Service Fund and all moneys deposited therein pursuant to this Resolution are hereby pledged to the payment of principal of and interest on the Note. • 4.02. Investment of Funds. All amounts held in the Debt Service Fund will be invested in accordance with the provisions of Minnesota Statutes, Chapter 118A, governing the investment of funds of governmental entities. 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 maybe 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 of the 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 Note, because the offering is exempt from such requirements under Section 15c2-12(d)(1)(i). Consequently, the Authority 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 be effective upon full execution of the Second Amendment. DJG-187176v3 7 RC125-223