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12-18-00 agendaCITY OF RICHFIELD, MINNESOTA HOUSING AND REDEVELOPMENT AUTHORITY MONDAY, DECEMBER 18, 2000 RICHFIELD CITY HALL 6700 PORTLAND AVENUE COUNCIL CHAMBERS 7 P.M. AGENDA Call to order Approval of minutes of (1) Regular HRA Meeting of November 20, 2000 and (2) Special HRA Meeting of November 27, 2000 1. Opportunity for citizens to address the HRA on items not on the agenda Notes: • 2. HRA approval of agenda 3. Consent Calendar contains several separate items which are acted upon by the HRA in one motion. Once the Consent Calendar has been approved, the individual items and recommended actions have also been approved. No further HRA action is necessary. However, any HRA Commissioner may request that an item be removed from the Consent Calendar and placed on the regular agenda for HRA discussion and action.- All items .listed. on the Consent Calendar are recommended for approval. A. Consideration of approval of resolution authorizing transfer of $210,000 from HRA Capital Project Fund (Bonds of 1996) to fund acquisition of 6639 Lake Shore Drive;. Gramercy TIF District S.R. No. 83 B. Consideration of approval of professional services agreement with Brian Ringham for property evaluation services S.R. No. 84 Notes: PUBLIC HEARINGS 4. Public hearin and consideration of resolution authorizin sale of 6537-14th Avenue 9 9 and 6224 Bloomington Avenue Staff Report No. 85 Notes: 5. Consideration of Contract for Private Redevelopment-and continue to January 16, 2001 the public hearing on Business Subsidy Agreement for City Bella project Staff Report No. 86 Notes: RESOLUTION 6. Consideration of resolution approving modification to tax increment financing plan for Interchange West and Lyndale Gateway Tax Increment Financing District Staff Report No. 87 Notes: ADMINISTRATIVE REPORTS AND OTHER BUSINESS 7. Executive Director report Notes: 8. Claims and payroll Adjournment Auxiliary aids for individuals with disabilities are available upon request. Requests must be made at least 96 hours in advance to the Administrative Services Director at 612-861-9702. • AGENDA SECTION: R e s o l u t i on AGENDA ITEM # 6 REPORT # Q ~ ~~ STAFF REPORT HOUSING AND REDEVELOPMENT AUTHORITY MEETING DECEMBER 18, 2000 • REPORT PREPARED BY: REPORT PRESENTER: DEPARTMENT DIRECTOR REVIEW: REVIEWED BY EXECUTIVE DIRECTOR: ITEM FOR HRA CONSIDERATION: Consideration of a resolution approving the Modification to the Tax Increment Financing Plan for the Interchange West and Lyndale Gateway Tax Increment Financing District. I. RECOMMENDED ACTION: KATIA MEDVETSKI, REDEVELOPMENT SPECIALIST , NAME, TITLE BRUCE PALMBORG, COMMUNITY DEVELOPMENT DIRECTOR NAME, TITLE By Motion: Approve a resolution for a Modification to the Tax Increment Financing Plan for the Interchange West and Lyndale Gateway Tax Increment Financing District. II. BACKGROUND On May 17, 1999, the Richfield Housing and Redevelopment Authority (HRA) approved the Modification to the Redevelopment Plan for the Richfield Redevelopment Project Area (Redevelopment Plan) and established the Interchange West and Lyndale Gateway Tax Increment Financing District (TIF District) and Tax Increment Financing Plan (TIF Plan). On June 14, 1999, the City Council held a public hearing and approved the same. A few months after this, the developer, CSM Corporation, of the Interchange West portion of the TIF District withdrew from the project. Shortly thereafter, a new developer (Best Buy/OPUS) and use were identified. 12181westTif2.doc The current proposed modification to the Interchange West and Lyndale Gateway Tax Increment Financing Plan (Modified TIF Plan) includes revisions to the description of the facilities to be developed and increases in budgeted expenditures for the Interchange West portion of the TIF District. Specifically, the proposed redevelopment of the subject site area consists of office buildings, related parking, utility, street and infrastructure upgrade to accommodate a corporate headquarters for the Best Buy Company. The proposed campus setting under the expected level of development would consist of approximately 1.5 million square feet of office space located within four buildings and parking facilities for 7,500. cars. Following is a summary of additional changes to the TIF Plan: Estimated Tax Increment Page 2-2 of the Modified TIF Plan indicates the amount of estimated annual tax increment. The Best Buy project will generate $7.1 million as opposed to $6.2 million under the previous proposal. Also, the figures for the Lyndale Gateway portion of the project have been revised to reflect changes in tax class rates. The proposed project itself-has not changed, however. Sources and Uses of Funds Pages 2-3 and 2-4 indicate the changes in uses and sources of funds, respectively. For Interchange West, the expense budget has increased by 12.24% ($13,320,000) from $108,780,000 to $122,100,000. New budget line items include the housing trust fund and public improvements. The Penn Avenue Bridge is included in the budget. The -cost of interest has increased slightly while administrative costs have been reduced by 54.95%. Administrative costs are now estimated to be only 4.01 of the new Interchange West budget. The composite expense budget for Interchange West and Lyndale Gateway is now $140,937,000. The uses of funds are balanced against the sources of funds. Estimated Impact on Other Taxing Jurisdictions Pages 2-4 through 2-6 include the revised impacts of the proposed projects to the other taxing jurisdictions such as the county, school district and the city. The TIF Plan, as originally approved on June 14, 1999, consisted of one composite analysis for both Interchange West and Lyndale Gateway. Since the Interchange West proposal changed, the impact analysis has been separated into two and re-run for only Interchange West. Lyndale Gateway's analysis remains unchanged. The basic premise remains that Interchange West would not have been constructed without tax increment financing and, therefore, there is $0 impact to the taxing jurisdictions. "But For Finding" The "But For" analysis has been upgraded to reflect the current proposal for Interchange West. The summary at page 2-7 provides greater detail. • III. BASIS OF RECOMMENDATION A. POLICY • All modifications to tax increment financing plans are undertaken in compliance with the Minnesota TIF Act. B. CRITICAL ISSUES • The Modification to the TIF Plan is being recommended as the project within the Interchange West portion has changed. • Proper notifications to the county commissioner, county board and school board have been made. • The Planning Commission will take action as to the conformity of the Modified TIF Plan and the City's Comprehensive Plan at a special meeting on January 9, 2001. • The public hearing will be held on January 22, 2001 at which time the City Council will take action on a proposed approval of the Modified TIF Plan. C. FINANCIAL • All financial information, including budget revisions and taxing jurisdiction impacts was undertaken based on updated project information. D. LEGAL • Legal counsel has reviewed the Modified TIF Plan in conjunction with Ehlers & Associates and in accordance with Minnesota Statutes, Section 469.174-469.179, inclusive, as amended. IV. ALTERNATIVE RECOMMENDATION(S~ • Do not approve the resolution to adopt the Modified TIF Plan. • Delay approval of the Modified Plan. V. ATTACHMENTS • Resolution approving a Modification to the Tax. Increment Financing Plan for the Interchange West and Lyndale Gateway Tax Increment Financing District • Modification to the .Tax Increment Financing Plan for the Interchange West and: Lyndale Gateway Tax Increment Financing District. VI. PRINCIPAL PARTIES EXPECTED AT MEETING Sid Inman, Ehlers & Associates, Inc. C7 RESOLUTION NO. RESOLUTION ADOPTING THE MODIFICATION TO THE TAX INCREMENT FINANCING PLAN FOR THE INTERCHANGE WEST AND LYNDALE GATEWAY TAX INCREMENT FINANCING DISTRICT. WHEREAS, it has been proposed that the Housing and Redevelopment Authority in and for the City of Richfield (the "HRA)" adopt the Modification to the Tax Increment Financing Plan for the Interchange West and Lyndale Gateway Tax Increment Financing District, (the "Modification"), all pursuant to and in conformity with existing law, including Minnesota Statutes, Sections 469.174 to 469.179, inclusive, as amended, all as reflected in the Modification and presented for the HRA's consideration; and WHEREAS, the HRA has investigated the facts relating to the Modification and has caused the Modification to be prepared; and WHEREAS, the HRA has performed all actions required by law to be performed prior to the adoption of the Modification, including but not limited to, notification of Hennepin County and Independent School District No. 280 having taxing jurisdiction over the property in the Interchange West .and Lyndale Gateway Tax Increment Financing : District (the "TIF District"), notice of the proposed Modification to the local county commissioner,. a request for review of and written comment on the Modification by the City Planning Commission,. and a request that the Council schedule a public hearing on the Modification upon published notice as required by law. NOW, THEREFORE, BE IT RESOLVED by the Housing. and Redevelopment Authority as follows: 1. The HRA hereby makes the findings set forth in the Modification, which are incorporated herein by reference. 2, Conditioned upon the approval thereof by the City Council following its public hearing thereon, the Modification, as presented to the HRA on this date, is hereby. approved and adopted and shall be placed on file in .the office of the Community Development Director. 3. Upon approval of the Modification by the City Council, the Community Development Director is authorized to forward a copy of-the Modification to the Minnesota Department of Revenue pursuant to Minnesota Statutes 469.175, subdivision 2. Adopted by the Richfield Housing and Redevelopment Authority of the City in and for the City of Richfield this 18th day of December, 2000. Thomas E. Harms, Chair ATTEST: Michael Sandahl, Secretary • • MODIFICATION TO THE TAX INCREMENT FINANCING PLAN for THE INTERCHANGE WEST AND LYNDALE GATEWAY TAX INCREMENT FINANCING DISTRICT (a scattered site redevelopment district) within THE RICHFIELD REDEVELOPMENT PROJECT AREA RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY CITY OF RICHFIELD HENNEPIN COUNTY STATE OF niIINNESOTA Draft as of December 13, 2000 Public Hearing: June 14, 1999 Adopted: June 14, 1999 Modified by HRA Action: Prepared by: EHLERS & ASSOCIATES, INC. 3060 Centre Pointe Drive Roseville, Minnesota 55113-1105 Phone: (651) 697-8500 Fax: (651) 697-8555 E-mail: info@ehlers-inc.com Web Site: www.ehlers-inc.com TABLE OF CONTENTS (for reference purposes only) SECTIDNII MODIFICATION TO THE TAX INCREMENT FINANCING PLAN FOR THE INTERCHANGE WEST AND LYNDALE GATEWAY TAX INCREMENT FINANCING 2 1 DISTRICT. ................. ............ ..................... ....2-1 Subsection 2-1.... Foreword ...................................... • ...... _ 2-1 Subsection 2-3. Statement of Objectives ............ . ................... . Subsection 2-8. Estimated Captured Net Tax Capacity Value/Increment ................ 2-1 ............2-2 Subsection 2-10. Uses of Funds ........................ • • • • • • • • • • • 2-3 Subsection 2-11. Sources of RevenueBonded Indebtedness ....................... . ........2-4 Subsection 2-14. Estimated Impact on Other Taxing Jurisdictions ............. . Subsection 2-25. Municipal Approval and Public Purpose of the Interchange West Portion of the TIF District ... .................................. 2-6 APPENDIX A -PROJECT DESCRIPTION ............................................. A-1 APPENDIX B -MAP OF PROJECT AREA AND TIF DISTIRCT ........................... B-1 APPENDIX C - CASHFLOW ............ ......................................... C-1 APPENDIX D - BUT/FOR FINDINGS ................................................ D-1 APPENDIX E -MEMO REGARDING BUT/FOR FINDINGS .............................. E-1 SECTIONII MODIFICATION TO THE TAX INCREMENT FINANCING PLAN FOR THE INTERCHANGE WEST AND LYNDALE GATEWAY TAX INCREMENT FINANCING DISTRICT Subsection 2-1. Foreword (Modified to add the following as of November 20, 2000) The Plan for the Interchange West and Lyndale Gateway Tax Increment. Financing District was approved by the City Council on June 14, 1999. The Plan is now being modified to revise the description of the facilities to be developed and budgeted expenditures. The modification does not reduce or enlarge the geographic area of the Richfield Redevelopment Project Area or the TIF District or designate additional property to be acquired. Subsection 2-3. Statement of Objectives (Modified to delete the first paragraph and add the following as of November 20, 2000) ' > The Interchange West portion of the Interchange West and Lyndale Gateway Tax Increment Financing District consists of 98 parcels of land and adjacent and internal rights-of--way. The .Interchange West project was created to facilitate the redevelopment of the area generally bounded by 76t" Street to the north, Interstate Highway 494 to the south, Knox Avenue to the east and Penn Avenue to the west. The proposed redevelopment of the site area consists of office buildings, related parking, utility, street, and infrastructure upgrade to accommodate a corporate headquarters for the Best Buy Company. Best Buy proposes to redevelop the site in a campus setting by constructing: (a) four or five office buildings with a minimum of 1.5 million square feet and parking facilities for 7,500 cars (the expected .level of redevelopment). Best Buy expects thaYinitial employment at the Best Buy Campus will be 5,500 to 6,500 persons, rising to 7,500 persons in subsequent years (the expected level of development). Subsection 2-8. Estimated Captured Net Tax Capacity Value/Increment {Modified to read as follows as of January 22, 2001) Pursuant to M.S., Section 469.174 Subd. 4 and M.S., Section 469.177, Subd. 1, 2, and 4, the estimated Captured Net Tax Capacity (CTC) of the Interchange West and Lyndale Gateway Tax Increment Financing District, within the Richfield Redevelopment Project Area, upon completion of the project, will annually approximate tax increment revenues as shown in the table below. The City and HRA request 100 percent of the available increase in tax capacity for repayment of its obligations and current expenditures, beginning in the tax year payable 2000. The project tax capacity listed is an estimate of values when the project is completed. For a complete description of the tax increment financing projections, see Appendix C. 2-I City of Richfield Tax Increment Financing Plan for the Interchange West and Lyndale Gateway TIF District • Interchange Interchange Lyndale Lyndale West West Gateway Gateway (As Approved (As Modif ed (As Approved (As Modified 6/14/99) 1/22/01) 6/14/99) 1/22/01) Project Estimated Tax Capacity $4,627,058 $5,225,286. $802,197 $534,156 upon Completion of Project (PTC) Original Estimated Net Tax 504 008 (*1504,578 94.594 *~ 188,006 Capacity (ONTC) Estimated Captured Tax Capacity 4,123,050 4,720,708 707,603 446,090 (CTC) Estimated Annual Tax Increment $6,221,847 $7,154,470 $1,067,801 $673,168 (CTC x Local Tax Rate) (*) Already Certified by County Subsection 2-10. Uses of Funds (Modified to read as follows as of November 20, .2000) Currently under consideration for the Interchange West and Lyndale Gateway Tax Increment Financing District is a proposal to facilitate redevelopment of existing buildings. The City and HRA have determined that it will be necessary to provide assistance to the project for certain costs. The City has studied the feasibility of the development or redevelopment of property in and around the Interchange West and Lyndale Gateway Tax Increment Financing District. To facilitate the establishment and development or redevelopment of the .Interchange West and Lyndale Gateway Tax Increment Financing District, this Plan authorizes the use of tax increment financing to pay for the cost of certain eligible expenses. The estimate of public costs and uses of funds associated with the Interchange West and Lyndale Gateway Tax Increment Financing District is outlined in the following table. City of Richfield Tax Increment Financing Plan for the Interchange West and Lyndale Gateway TIF District 2-2 Interchange Interchange Lyndale Uses of Funds West West Gateway (As Approved (As Modified (As Approved 6/14/19) 1/22/01) 6/14/99) Public $50,000,000 $9,000,000 Land Acquisition, Site Improvements, Improvements, Public Utilities, and Other Public Improvements $50,000,000 Land Acquisition -Office Project 7,200,000 Land Acquisition -Housing Trust Fund (15%) 12,000,000 Public Improvements Interest 47,902,000 48,902,000 7,953,300 Administrative Costs (up to 10%) 10,878,000 4,900,000 1,883,700 TOTAL $108,780,000 122,100,000 $18,837,000 Estimated budget costs associated with the Interchange West and Lyndale Gateway Tax Increment Financing District are subject to change among line item categories without a modification to this Plan. The cost of all activities to be considered for tax increment financing will not exceed, without formal modification, the. indicated budget pursuant to the applicable statutory requirements. Pursuant to M.S., Section 469.1763, Subd. 2, no more than 25 percent of the tax increment paid by property within the Interchange West and Lyndale Gateway Tax Increment Financing District will be spent on activities related to development or redevelopment outside ofthe Interchange West and Lyndale Gateway Tax Increment Financing District but within the boundaries of the Richfield Redevelopment Project Area, (including administrative costs, which may be spent outside of the Interchange West and Lyndale Gateway Tax Increment Financing District) subject to the limitations as described in,this Plan. It is the intent of the City to spend up to 15 percent of the Interchange West tax increment outside the District on housing projects. All expenses will comply with M.S. Section 469.1764.J, except to the extent otherwise permitted by the law. Subsection 2-1L Sources of RevenueBonded Indebtedness (Modified to read as follows as of January 22, 2001) Public improvement costs, acquisition, relocation, and site preparation costs and other costs outlined in the Uses of Funds will be financed primarily through the annual collection of tax increments. The City or HRA reserves the right to use other sources of revenue legally applicable to the Modification to the Redevelopment Plan and the Plan, including, but not limited to, special assessments, general property taxes, state aid for road maintenance and construction, proceeds from the sale of land, other contributions from the developer and investment income, to pay for the estimated public costs. The City or HRA reserves the right to incur bonded indebtedness or other indebtedness as a result of the Plan. As presently proposed, the project will be financed by spay-as-you-go note. Additional indebtedness may be required to finance other authorized activities. The total principal amount of bonded indebtedness 2-3 City of Richfield Tax Increment Financing Plan for the Interchange West and Lyndale Gateway TIF District related to the use of tax increment financing, including any pay-as-you-go notes, will not exceed $70,000,000 without a modification to the Plan pursuant to applicable statutory requirements. This provision does not obligate the City or HRA to incur debt. The City or HRA will issue bonds or incur other debt only upon the determination that such action is in the best interest of the City. The City or HRA may also finance the activities to be undertaken pursuant to the Plan through loans from funds of the City or HRA. The estimated sources of funds for the Interchange West and Lyndale Gateway Tax Increment Financing District are contained in the table below. Sources of Funds Interchange West Interchange. West Lyndale Gateway (As Approved 6/14/99) (As Modified 1/22/01) (As Approved 6/14/99) Tax Increment $103,600,000 $116,300,000 $17,940,000 Local Contribution 5,180,000 5,800,000 897,000 TOTAL $108,780,000 $122,100,000 $18,837,00 Subsection 2-14. Estimated Impact on Other Taxing Jurisdictions (Modified to read as follows as of January 22, 2001) The estimated impact on other taxing jurisdictions assumes construction which would have occurred without the creation of the Interchange West and Lyndale Gateway Tax Increment Financing District. If the construction is a result of tax increment financing, the impact is $0 to other entities. Notwithstanding, the fact that the fiscal impact on the other taxing jurisdictions is $0 due to the fact that the construction would not have occurred without the assistance of the City or HRA, the following estimated impact of the Interchange West and Lyndale Gateway Tax Increment Financing District would be as follows if the "but for" test was not met: City of Richfield Tax Increment Financing Plan for the Interchange West and Lyndale Gateway TIF District 2-4 IMPACT ON TAX. BASE FOR INTERCHANGE WEST d 1999/2000 Estimated Capture Total Net Tax Capacity (CTC) (*) Percent of CTC Tax Capacity. Upon Project Completion to Entity Total Hennepin County 925,993,876 7,126,810 0.7696% LS.D. No. 280 24,774,702 7,126,810 28.7665% City of Richfield 17,777,731 7,126,810 40.0884% IMPACT ON TAX RATES 1999/2000 Percent Potential Extension Rates of Total CTC Taxes Hennepin County 0.409940 27.17% 7,126,810 2,921,564 LS.D. No. 280 0.721270 47.80% 7,126,810 5,140,354 City of Richfield 0.285940 18.95% .7,126,810 2,037,840 Metro 0.060350 4.00% 7,126,810 430,103 Other 0.031540 2.09% 7.126.810 224.780 Total 1.509040 100.00% 10,754,641 (*) The estimates listed above display the captured tax capacity assuming a complete construction and appreciation in market value at a rate of 1.725% annually through 2006. The tax rate used for calculations is the 1999/Pay 2000 rate: The total net capacity for the entities listed above are based on Pay 2026 figures. The Interchange West and Lyndale Gateway Tax Increment Financing District is certified. • City of Richfield Tax Increment Financing Phan for the Interchange West and Lyndale Gateway T[F District 2-5 IMPACT ON TAX BASE FOR LYNDALE GATEWAY • 1997/1998 Estimated Captured Total Net Tax Capacity (CTC) Percent of CTC Tax Capacity Upon Project Completion to Entity Total Hennepin County 925,993,876 446,090 0.0482% LS.D. No. 280 24,774,702 446,090 1.8006% City of Richfield 17,777,731 446,090 2.5093% IMPACT ON TAX RATES 1998/1999 Percent Potential Extension Rates of Total CTC Taxes Hennepin County 0.409940 27.17% 446,090 182,870 LS.D. No. 280 0.721270 47.80% 446,090 321,751 City of Richfield 0.285940 18.95% 446,090 127,555 Metro 0.060350 4.00% 446,090 26,922 Other 0.031540 2.09% 446.090 14,070 Total 1.509040 100.00% 673,168 The estimates listed above display the captured tax capacity when all construction is completed. The tax rate used for calculations is the certified rate. The total net capacity for the entities listed above are based on Pay , 1999 figures. The Lyndale Gateway Tax Increment Financing District is certified. Subsection 2-25. Municipal A~nroval and Public Purpose of the Interchange West Portion of the TIF District (Modified to read as follows as of January 22, 2001) The reasons and facts supporting the findings for the adoption of the Tax Increment Financing Plan for the Interchange West Tax Increment Financing District as required pursuant to M.S., Section 469.175, Subd. 3 are as follows: 1. Finding that the Interchange West portion of the Interchange West and Lyndale Gateway Tax Increment Financing District is a redevelopment district as defined in M.S., Section 469.174, Subd. 10(a) (1). The tax increment financing district remains a redevelopment district based on the findings made upon adoption of the original tax increment financing plan on June 14, 1999.. 2. Finding that the proposed development, in the opinion of the City Council, would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future and that the increased market value of the site that could reasonably be expected to occur without the use of tax incrementfinancing would be less than the increase in the market value estimated to result from the proposed development after subtracting the present value of the projected tax increments i City of Richfield Tax Increment Financing Plan for the Interchange West and Lyndale Gateway TIF District 2-6 for the maximum duration of the Interchange West and Lyndale Gateway Tax Increment Financing • District permitted by the Plan. At the time the Best Buy Company redevelopment was proposed, the City/HRA already had a but/for analysis prepared.(Appendix E) This analysis was used to assist the City/HRA in its review ofthe need fortax increment. The analysis estimated the total cost of land acquisition and presented the result in as a "Cost Per Square Foot" and a"Cost Per Acre." The City/HRA reviewed these costs as compared to other possible .development sites to arrive a estimated difference in cost of $35,900,000. This difference is the extraordinary development cost of the site. At that time is was also determined that certain improvements would have to be made to the Penn Avenue-Hwy 494 Bridge. The total estimate for the cost was around $7,000,000. When all sources of revenue were reviewed it was determined that $7,000,000 for the bridge would have to be paid for from the tax increment district. Therefore due to the extraordinary development cost, the City/HRA determined .that without assisting the development by providing tax increment, the proposed development would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future. Since the first review of the project, it is now estimated that the cost of land acquisition will increase in excess of $10,000,000 of the original estimates. In addition, the Bridge is now estimated to be over $22,000,000 of which $14,000,000 must be paid for thru tax increment because no other funding source is available... Therefore the City reaffirms it finding that the development, in the opinion of the City, would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future. Further the City rearms its finding that the increased market value of the site that could reasonably be expected Yo occur without the use of tax increment financing would be less than7he increase in market value estimated to result from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of the TIFDistrictpermitted by the Plan. A new comparative analysis of estimated market values both with and without establishment of the Interchange West and Lyndale Gateway Tax Increment Financing District and the use of tax increments has been performed as described above. If all development which is proposed to be assisted with tax increment were to occur in the Interchange West project of the Interchange West and Lyndale Gateway Tax Increment Financing District, the total increase in market value would be up to $192,146,500. The present value of tax increments from the Interchange West and Lyndale Gateway Tax Increment Financing District is estimated to be $60,327,145. It is the Council's finding that no development with a market value of greater than $131,774,365 would occur without tax increment assistance in this district within 25 years. In fact, for the reasons described above, the HRA believes that no significant redevelopment of any kind is likely to occur without tax increment. financing assistance. This finding is based upon evidence from general past experience with the high cost of acquisition, site improvements, public improvements and redevelopment in the general area of the Interchange West and Lyndale Gateway Tax Increment Financing District. (see Cash • City of Richfield Tax Increment Financing Plan for the interchange West and Lyndale Gateway TIF District 2-~ flow in Appendix C). i 3. Finding that the Tax Increment Financing Plan for the Interchange West project of the Interchange West and Lyndale Gateway Tax Increment Financing District conforms to the general plan for the development or redevelopment of the municipality as a whole. The Plan was first reviewed by the Planning Commission on May 25, 1.999. The Planning Commission found that the Plan at that time conformed to the general development plan of the City. The Plan, as modified to reflect the revised development proposal, will be reviewed by the Planning Commission on January 9, 2000. 4. Finding that the Tax Increment Financing Plan for the Interchange West project of the Interchange West and Lyndale Gateway Tax Increment Financing District will afford maximum opportunity, consistent with the sound needs of the City as a whole, for the development or redevelopment of the Richfield Redevelopment Project Area by private enterprise. The City Council affirms its finding that theproject to be assisted by the Interchange West project in the Interchange West and Lyndale Gateway Tax Increment Financing District will result in increased employment and housing opportunities in the City and the State of Minnesota, the replacement of substandard properties, increased. tax base of the. State and add a high .quality development to the City. • City of Richfield Tax Increment Financing Plan for the Interchange West and Lyndale Gateway TIF District 2-8 APPENDIX A • PROJECT DESCRIPTION (Modified to delete the first paragraph and add the following as of November 20, 2000) The Interchange West portion of the Interchange West and Lyndale Gateway Tax Increment Financing District consists of 98 parcels of land and adjacent and internal rights-of--way. The Interchange West project was created to facilitate the redevelopment of the area generally bounded by 76`b Street to the north, Interstate Highway 494 to the south, Knox Avenue to the east and Penn Avenue to the west. The proposed redevelopment of the site area consists of office buildings, related parking, utility, street, and infrastructure upgrade to accommodate a corporate headquarters for the Best Buy Company. Best Buy proposes to redevelop the site in a campus setting by constructing: (a) four or five office buildings with a minimum of 1.5 million square feet and parking facilities for 7,500 cars (the expected level of redevelopment). Best Buy expects that initial employment at the Best Buy Campus will be 5,500 to 6,500 persons, rising to 7,500 persons in subsequent years (the expected level of development). s APPENDIX A-1 • • APPENDIX APPENDIX B MAP OF PROJECT AREA AND TAX INCREMENT FINANCING DISTRICT e-i aafx HsaNVls ~~ HIAL H18L ~ 8 ~ ~ ~ ~ ~ ~ QZ ~' W Z ~ .N 'S ~a ~ Q~ L ~ 3Atl aVU3~ t~OO •4 H181 ~ •~ • ~~~ ~-oLOO~O ~~ ~ ~ . ooooooD ao D 0000o0ooaoDo°0c~ No~~N ~~ ~ ~, oco~oo C~ ~ ~ ~ L~ooCld~oo~ 0 Hlf~ ooooQOOOC~ooc'~oo Hi£~ 000 000000oo0o0O Q 0ooc7 0o H1A~ ooc~^ooooo low 0 000 000000 ~ ~ C_.-7[000000 00 0000000000 ~ ~ C~OOOC7C7C=7C~C1 ~lavd 0000000000 ~a'''O '°^ o OOOOOC~oCOO ~v o`_ o`_ ~-~ 00o Loo Q C HJS C~ ~OOQQ~800 ~ NOlNIlO aci aci 0o0CIOOB00 aas E E Cho OOOC~oCOBBOO D aNS °. °' ~~ ~~~BBOOfo ~~ ° ° 0~ 08800070 ~~ 00 oC-~BBCOC~o 3nv~rw~IN ~ 00 BBBB D ~asKle ~ ~ CIOOOO Fuaoiw,~M ~ ~ o a oococ~ o Aat,BS'Tild -~ 00 oBOOOOO O _ ^o ,gOeB°o08 ~ ~ ~ dc~ oee~-o ~ ~I~~ ~_ o Ba®eeo0e ~ a~a0oo ~~ ~ o00 ~-~ . __ o00 ~NOreaa aoo~ ~~ ~IVaiJ LL ~OCOL C'~ - oOO + 000~(oOOo flNlAal g BBOBOO s3wrr BOO "°"°' DooOUQ~oCOC~ Nv~aow ooooad 0000 Pooo .~ DDB®E~B O ~a N ®BB ~ BBB O svwoHl o B.BB _ BBB^ ~ ~ q ireoNln o ~[~ BE-~80 D 0 N~18SVM r--1Q ~~ 3AVS3X?!~C g 0 0 ~ ~i ~i ~i ~ ~ ~~~Cc °~ ~ 8 ~ ~ ~ ~ ~ ~ ~R~:~~ ~ anv ava~ H18L H11L H19~ No1flNIWOOl9 HLS1 H11L Q Hi£~ H1Lt w ~ "'.°`~ a loflT~ OOV~IFk1 snewmoo W MJVd pNYUNO O anvaNrunod 3 "~ ~ 3 ~ Q No1Nlx~ ~ , ~ ~ ~ Z °"t ~ s sra W n . ~s~ 3AV 13T10~IN a , O HiaoMwaM J aanesnla w ~ ~~ w ~IaarH o ~~~ w ~,~, HDIaO'IV o oc ~,~ o ~~ wodno ..I . 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H1Yl ~ - H1E~ ~" H1,ZL O U Hlt~ •O ~~ ~ N lOn~-J ~p ~ ~ 0) snewmoo o c . ~ c aNVVwo ~ ~ _ anvaNVUaoa _ `' Q ~ ii = H1S V +-' H14 m N No~ro 'Q E a>~ a m aN~ sN3n3,s a ~ ~s4 3AV 13llIXNN O ~ ,~asiv,e ~ ~' I H1210M1N3M Aanesnb ~ ~ ~ ~, ~>, ~ m i3iaavH ~ a~l~av~ ~ ~ anv3-narui ~ .~ H~121Q7V ~ ~ Z ~raxae • ~ xv~ • • : NOSE : ~.. „aa~ead ~~~ LvloewnH oNlnai ~i s3rwr O Nv'JOl NvoaoW O NOlM3N M a3nno anv NN3d ° ~ o N33no -n3ssna N NvarBHS O SVWOI~l p Nolan •- 1raoNln NMnBSYM O 3AV S3Xa3X O O r APPENDIX C CASHFLOW APPENDIX Gl 112160 ~ GMY d RitltPeW - °aarckerge Web Page t • PROJECT VALUE INFORMATION rket Value Sq. FC Taxes Per Total Tax Capacity Total Tax Tax Market °- Ft Units Sa FWnO Taxes MinusFis DTs Capacity Role Value Pavaba 141.64 1,500,000 55.78 8,675,595 5,193.265 6,372,300 2.0%i3.076 212,480,000 2004 BASIC ASSUMPTIONS • SET t0A Diatrat INTERCHANGE WEST (COUNTY7282) Inllatlon Rats Evsry t yeah 1.7250°i6 ASSUMES NOTE ISSUED: 0210 7 /2 0 01 ASSUMES FIRST TAX INCREMENT FOR INTERCHANGE WEST IN : 2001 ASSt1MES UST TAX INCREMEN7IN: 2026 - ASSUMES CLASS RATES OF 2.OyJ3.Ox pSSt1ME5 MARKET VALUE PER SQUARE FOOT OF: 741.64 AMOUNT NEEDED CURRENT ESTIMATES: B 22,a00,000 C 8,110,134 30.910,734 AMOUNT OF PAY AS YOU GO NOTE: 46,073,727 DIFFERENCE: 17,162,993 AMOUNT NEEDED DEVE. AGREEMENT: B 22,800,000 C 13,070,116 35,870,116 AMOUNT OF PAY AS YOU GO NOTE: 48,073J27 DIFFERENCE: 12,203,071 BASE TAX CAPACITY: 438,903 Pay As You Go Rate 6•~% Fmeal Disp. Contribution Rata Pay 2000 76.503% Tax Capacity (Extenson) Rate • AREA W IDE RATE -Est 1.500000 Tax Capaeiry (Extension) Rate -CITY RATE • FROZEN 1.515550 Tax Capaciy lExtenaion) Rate -CITY RATE -Est Pav 2001 7.330000 Beginning Period Yrs. Mlh. Yr. Annual Baas Tax ac' Project Taz C Captured Tax C TAX INCREMENT CASH FLOW .Semi-Mnual Slate Aud. Semi•AnOUaI Gross Tax Payment Tax Increment 0.25% Increment Admin Fund S.OOX Housing Fund 15.00% TaxExempt G.O. Bored Pa ent - PAY.G. Note A Total Taxes. Paid Payment Date Ending Period Yrs. Mlh, r. 0.0 02-01 2001 0 0 0 0 0 0 ~ 0 0 0 0.5 08-01 2001 0.5 08-01 2007 0 0 0 0~ 0 0 ~ 0 0 0 1.0 02-01 2002 1.0 02-0i 2002 0 0 0 0 0 0 0. 0 0 1.5 08-01 2002 1.5 OB-0i 2002 0 0 0 0 ~ 0 0 0 0 0 2.0 02-01 2003 2.0 02-01 2003 0 0 0 - 0 0 0 0 0 0 2.5 OB-01 200.4 2.5 OB-07 2003 0 0 0 0 0 0 0 0 0 3.0 02-01 2004 3.0 02-01 2004 438,903 5,193,285 4,754,382 3,161,651 (11,886) 3,149,765 (105,263) (317,188) (310,500) 2,386,814 34,337,797 3.b 08-0t 2004 3.5 08-01 2004 438.903 5,193,265 4,754,362 3,161.651 (11,886) 3,149,765 (105,283) (317.169) (340,500) 2,388,814 54,337,797 ~ 4.0 02-01 2005 4.0 02-01 2005 438,903 5282,849 4,813,946 3,221.224 (12.110) 3,209,114 (105,283) (317.188) (340.500) 2,418.163 .54,412,624 4.5 08-01 - 2005 4.5 08-01 2005 438,903 5,282,849 4,813,946 3,221224 (72,110) 3,209,114 (105,283) (317,188) (340,500) 2,148,163 54.412,624 5.0 02-01 2006 5.0 02-01 2000 438.903 5,373,978 4,935,075 3,281.825 (12,336) 3,269,487 (105,283) (317,168) (340,500) 2,508,536 54.488.742 5.5 08-01 2008 5.5 06-01 2006 438,903 5,373,978 4,935,076. 3,281,925 (12,338) 3,289.487 (105283) (317,166) (340,b00) 2,506.536 54,488,742 6.0 02-01 2007 B.0 02-01 2007 438,903 5.466,879 5,027,776 3,343,471 (12,589) 3,330,902 (105,283) (917,166) (340,500) ~ 2,567,951 54,566,173 8.5 08-01 2007 6.5 09-01 2007 438,903 5,466,679 5,027,776 3.343,471 (12,589) 3,330,902 (105,283) (317,169) (940,500) 2,567,951 54,586,173 7.0 02-07 2008 7.0 02-0t 2008 138,903 5,660,880 5,122,077 3,408;181 (12,805) 3,393,376 (105283) (317,168) (340,500) 2,630,425 54,644,910 7.5 08-01 2008 7.5 OB•07 2008 438,903 5,560,980 5,122,077 3.406,181 (12,805) 3,393,376 (105283) (317,186) (340,500) 2,630,425 54,814.940 8.0 02-01 2009 8.0 02-01 2009 439,903 5,856,906 5,218,003 3,469,972 (13,045) 3.458,927 (105283) (317,166) (340,500) 2,699,976 54.725,065 8.5 OB-01 2009 B.5 08-01 2009 438,903 5,656,906 5,218,003 3,469,972 (13,045) 3,458,927 (105289) (317.186) (340,500) 2,699,978 54,725,085 9.0 02-01 2010 9.0 02-01 2010 438,903 b,754,488 5,315,585 3,534,884 (13,289) 3,521,575 (105283) (317,189) (340,500) 2,758,824 54,608,672 8.5 06-01 2010 9.5 08-01 2010 138,903 5,754,488 5,315,585 3,534,864 (13289) 3,521,575 (105283) (317,188) (340,500) 2,758,824 54,806,572 10.0 02-01 2011 10.0 02-01 2011 436,903 5,853,753 5,414,850 3,600,875 (13,537) 3,587,336 (105283) (317,188) (340,500) 2,824,987 .54,669,485 10.5 08-01 2011 10.5 08-01 2011 438,903 5,853,753 5,414,850 3,600,875 (13,537) 3.587,336 (105283) ~ (317,188) (340,500) 2,824,387 54,869,485 11.0 02-01 2012 71.0 02-01 2012 438,903 5,854,730 5,515,827 3.668,025 (13,790) 9,854,236 (105283) (317,168) (340,500) 2,891285 54,973,829 11.5 08-01 2012. 11.5 08-01 2012 438,903 5,954,730 5,515,827 3,688,025 (13,790) - 3,854,236 (105,263) (317,188) (340,500) 2,891285 54,973,829 12.0 02-0t 2013 12.0 02-01 2013 438,903 6.057,449 5,616,546 3,736,333 (14,046) 3.722,287 (105263) (317,188) (340,500) 2,959,336 55,059,828 12.5 08-01 2013 - 12.5 06-01 2013 -438,903 6,057,149 5,616,646 3,738,333 (14,046) 3.722,287 (105,283) (317,186) (340,500) - -2,959,338 55,059,828 13.9 02-01 .2014 13.0 02-01 2014 436.903 6.181,940 5,723,037 3,805,820 (14,306) 3,791,512 (105,283) (317,186) (940,500) 3,026,561 35,148,906 13.5 08-01 2014 13.5 0&01 2014 436,903 8,181,940 5,729,037 3,805,620 ~ (U1,306) 3,791,512 (105283) {317,188) (340,500) 3,028,581 55,148,906 14.0 02-01 2015 14.0 02-01 207b 136,903 8,288234 5,828,331 3,676,505 (14,573) 3,861,932 (105283) (317,788) (340,500) 3,088,981 35,235,890 14.5 OB-01 2015 14.5 08-01 2015 496,903 6,266234 5,628,331 3,676,505 - (14,573) 3,861,932 (105283) (317,168) (340,500) 3,088,967 55,235,890 15.0 02-0t 2018 15.0 02-01 2018 439,903 6,376,981 6,997,158 3,948,409 (74,844) 3,933,566 (105283). (317,188) (340,500) 3,170,815 55,328,006 15.5 OB-07 2016 15.5 08-01 2016 436,903 8,376.381 5,937,456 3,948,409 (14,844) 3,933,566 (105283) (317,188) -(340,500) 3,170,815 55,328,006 16.0 02-01 2017 16.0 02-0t 2017 .438,903 6,488,353 8,047,450 4,021,554 (15,119) 4,006,436 (105283) (317,188) (340,500) 3,219,485 55.417,880 16.5 00-01 201T 18.5 08-01 2017 438,903 6,486,353 6,047,150 4,021,554 (15,119) 4,008,436 (105283) (317,188) (340,500) 3213,485 55,417,880 17.0 02-01 2078 .17.0 02-01 2018 436,903 :8,596,243 8,159,310 4,095,961 (15,398) 4,080.582 (106,283) (317,186) (340,500) 3,317,811 55,511,938 17.5 06-01. 2018 17.5 08-01 2018 138,903 6,596243. - 8,159,340 4,095,961 (15,398) 4,080,582 (105283) (317,166) (340,500) 3,317,811 55,511,538 16.0 02-01 2019 18.0 02-01 2019 438,903 6,712,082 8273,159 4,171,851 (15,683) 4,155,968 (105,283) (317,168) (340,500) 3,393,017 55,808.409 18.5 OB-01 2019 18.5 08-01 2018 436,903 6,712,062 6,273,159 4,171,851 (15,683) 4,155,966 (105,283) (317,768) {340,500) 3,993,017 55,606,409 19.0 02-01 2020 19,0 02-01 2020 436,903 6,827,845 8,388,942 4,248,647 (15,972) 4,232,674 (105,283) (317,168) (340,500) 3,469,723 55,703.119 19.5 08-01 2020 19.5 06-01 2020 438,903. 8,827,845 6,388,942 4,248,847 (15,972) 4232,874 (105283) (317,168) (340;500) 3,169,723 55,703,119 20.0 02-01 2021 20.0 02-01 2021 438,903 6,945,626 6,506,723 4,326,971 (16,267) 4,310,704 (105,283) (317.168) (340,500) 3,547,753 55,801,498 20.5 OB-01 2021 20.5 08-01 2021 438,903 6,945,826 6,508;723 4,326,971 (18,267) 4,310,704 (105283) (317.168) (340,500) 3,547,753 55,801,498 21.0 02-01 2022 21.0 02-01 2022 436,903 7,065,438 6,626,535 4,406,846 (18,566) 4,390,079 (105,283) (317,188) (340,500) 3,827,128 55,901,574 21.5 08-07 2022 21.5 06-01 2022 438,903 7,066,438: 6,628,635 4,408,646 (18,566) 4,390,079 (105,283) (317,168) (340,500) 3,827,128 55,901,574 22.0 02-01 2023. 22.0 02-0i 2023 438,903 7,187,317 6,748,414 4,487,895 (16.871) 4,470,824 (105,283) (317,166) (340,500) 3,707,873 56,003,376 22.5 08-01 2023 22.5 08-07 2023 438,903 7,187;317 6;748,414 4,487,695 (16,671) 4,470,824 (105,283) (317,166) (340,500) 3,707,873 56,003.376 23.0 02-0t 2024 23.0 02-01 2024 438,903 7,311298 6,872,395 4,570,143 (17,181) .4,552.962 - (105,283) (317,166) 0 4,130,511 58,106.994 23.6 08-07 2024 23.5 08-01 2024 438,903. 7,311,298 .6,872,395 4,570,113 (17,181) 4,552,982 (105,283) (317,186) 0 4,130,511 .56,106,934 24.0 02-01 2025 24.0 02-01 2025 438,903 7,437,418 6,988,515 4,654,012 (17,496) 4,838,518 (105,263) (317,186) 0 4,214,065 56,212,279 24.5 08-01 2025 24.5 08-01 2025 438,903 7,437,418 6,998,515 4,654,012 (17,496) 4,636,518 (105,283) (317,188) 0 4,211,065 56,212279 25.0 02-01 2026 25.0 02-01 2026 438,903 7,565,713 7,126,810 4,739,329 (17,817) 4,721,512 (105,283) (317,168) 0 4,299,061 58,319,441 25S 08-07 2026 25.5 06-01 2026 438,903 7,565,713 7126 810 4,739 329 17,81 4,721 572 105,283 317 788 0 1,299,061 SB 319,441 26.0 02-07 2027 TOTALS 778555 527 675 021 178880 506 4643 018 14689 728 13 620 145 827 760 242 394 810 PRESENT VALUE 60,372,145 200,005 46,073,127 103,968,207 ~ ' _____. RIt00• Prparae by ElNxa -PMw rwMw aN aauaiplbro. _ BUTfORd-WEST.WK4 APPENDIX D • • APPENDIX BUT/FOR FINDINGS D-1 11f29A0 CYy of RkNNW - InlarManga Wap - Page 2 • BUT /FOR ANALYSIS -ASSUMES 2.0% and 3.4% Class Rates Current Market Value -Est. 20,313,500 New Market Value -Est. 212,460,000 Difference 192,146,500 Present Value of Tax Increment 60,372,145 Difference 131,774,355 Value Like to Occur Without TIF is Less Than: 131,774,355 RI100. ~ Prapantl Ey EMara - PMasa raviaw all asau„plWna. - BUT-FOR~•WEST.WK4 APPENDIX E • MEMO REGARDING BUT/FOR FINDINGS • APPENDIX E'~ FREERS & ASSOCIATES ~N~ M E M O R A N D U M TO: Bruce Palmborg -City of Richfield John Stark -City of Richfield FROM: .Sid Inman -Ehlers & Associates Mark Ruff -Ehlers & Associates DATE: March 15, 2000. RE: Interchange West Project -But For Analysis As requested, we have continued to review the "but/ for" analysis for the Interchange West project. The transaction as currently purposed is described at the top of the attached page. Of 'the approximately $59,000,000 in available tax increment, around 40% is being retained for fiscal disparities and city housing projects and tax increment district administration. The remainder is provided to the user with a combination of up front payment and a pay as you go note. In the past we have completed. our "but/for"analysis using developers' pro forma's and comparing various rates of returns that the developer would receive given various levels of tax increment assistance.. Since this will be an owner occupied building and since the entire assistance given will be used for land write down our method of analysis is different. In this case we compared the cost of the land in the Interchange West - project and. compared it to what would be standard for a similar project. Since the final cost for land and structured parking are not yet finalized, we have used a range of cost for our analysis. Also, we have attempted to compare the cost of the land on a site that does not require structured parking and one that does. You will note that on the. site with structured parking (after taking into account the tax increment assistance), the owner is .paying between $17 and $24 a foot for land. On the site with out structured parking (after taking into account the tax increment assistance), the owner is paying between $5..00 and $8.09 a foot for land. Both of these cost are in our opinion on the high side,of cost we see in the market place. Please let us know if you have any other questions or comments. from the desks of .Sid Inman ~ Mark Ruff Ehlers Fr Associates, Inc. 3060 Centre Point Drive Roseville, MN SS113 Phone: (651) 697-8507 Phone: (651) 697-8505 Faz: (651) 697-8555 C:\WINDOWS\TEMP\Bl1T-FOR-2.wpd AGENDA SECTION: AGENDA ITEM # REPORT # J STAFF REPORT Public Hearing 86 HOUSING AND REDEVELOPMENT AUTHORITY MEETING DECEMBER 18, 2000 • BRUCE NORDQUIST, REPORT PREPARED BY: HOUSING & REDEVELOPMENT MANAGER NAME, TITLE BRUCE NORDQUIST, REPORT PRESENTER: HOUSING & REDEVELOPMENT MANAGER NAME, TITLE DEPARTMENT DIRECTOR REVIEW: SIGNATURE REVIEWED BY EXECUTIVE DIRECTOR: ITEM FOR HRA CONSIDERATION: Consideration of a Contract for Private Redevelopment and continue to January 16, 2001 the public hearing on Business Subsidy Agreement for City Bella project. I. RECOMMENDED ACTION: By Motion:-Authorize a Contract for Private Redevelopment and continue a public hearing for the Business Subsidy Agreement for City Bella to 7 p.m., Tuesday, January 16, 2001. IIh BACKGROUND ~ The Richfield Housing and Redevelopment Authority (HRA) approved a Contract for Private Development (Contract) with Gramercy Corporation for City Bella in July 2000. The project has had at least four site plan modifications since then. The last modification was the basis for the City Council land use actions on December 11. Mike Conlan will review those plans with the HRA on December 18. 12citybella Coinciding with the plan changes, there have been matching updates to the Contract. In November, the HRA authorized "restated preconditions". Legal counsel has determined that further modification to the Contract best matches the plans and financial aspects of the project as they have changed and become more specific. While the HRA is not committing specific financial resources, consideration of the contract and HRA project support is important at the December 18 meeting. A December 29 deadline for Gramercy to exercise an agreement to purchase Lyndale Hardware will occur in advance of the HRA's consideration of tax increment financing and business subsidy which is scheduled for the January HRA meeting. Gramercy needs this contract and project support to exercise its options. Lyndale Hardware also needs the support because of the business and financial commitments it has made. In late November, Gramercy Corporation. made adjustments to the concept for City Bella to improve the financial feasibility. The five story office component at 67th Street and Lyndale Avenue was changed to become a seven story, 48-unit, non-age restricted cooperative housing building with first floor retailing. The 34-unit senior villa cooperative on Lake Shore Drive and the 250-unit non- age restricted apartment building with first and second floor retailing at 66th Street and Lyndale Avenue remains unchanged. The amount of parking provided below the 1.4-acre plaza was reduced slightly. to 663 spaces. With these adjustments completed, the building elevations could be drawn and the plans presented. to the City Council for consideration. On December 11, the City Council authorized a rezoning, planned unit development (PUD), final development plan (FDP) and conditional use permit (CUP) with stipulations, and a preliminary plat and necessary street vacations. They also accepted an Environmental Assessment Worksheet (EAW) with findings of no significant impact. However, work on the financial element of the project and the concept plan are still underway to satisfy the Contract for Private Development between the Housing and. Redevelopment Authority (HRA) and Gramercy. The amount of tax increment financing (TIF) and the business subsidy agreement that is needed are still being formulated, given the changes to the plan. Sid Inman of Ehlers and Associates, Inc. has been asked to discuss the financial aspects as presently known with the HRA a"t the December 18 meeting. The discussion will review the existing district, potential modifications to the district, the role of tax exempt financing to the success of the project and the financial options being considered. Mike Conlan of Gramercy will review the project as presented and approved by the City Council. His presentation will provide the latest plans, progress with lenders on considering the project, a discussion of the housing affordability element and the status of site assembly. III. BASIS OF RECOMMENDATION A. POLICY • The financial aspects of the project continue to be studied, hence the need for the. HRA to continue the scheduled public hearing regarding the business subsidy. However, analysis to date by Ehlers and Gramercy warrants a more detailed discussion with the HRA at this time. • State law regulates the need for a public hearing on business. subsidy. • The Contract for Private Development has been modified to include consideration of forming a new tax increment district just for City Bella in 2001 and providing a tax exempt note if needed by the developer. B. CRITICAL ISSUES • Option agreements for Lyndale Hardware and the Lynch house expire at the end of December. Gramercy needs specific feedback from the HRA that the project direction is supportable, and therefore, their actions on the option agreements are reasonable. • Lyndale Hardware, given financial and business decisions that have already been made for 2001, also needs feedback and support form the HRA that the project is moving ahead as planned. • Gramercy is near an agreement to acquire the parcels held by Lake Shore Drive Condominiums. C. FINANCIAL • Ehlers is working with the developer to determine the amount of business subsidy and TIF assistance required. The results of their analysis is scheduled to be presented in January. • Expenses by Ehlers are covered by the developer. D. LEGAL • The new Contract for Private Redevelopment has been prepared by legal counsel and will supercede any previous agreements. • The form of the Business Subsidy Agreement was .drafted by legal counsel • • The HRA is required to hold or continue the public hearing on the Business Subsidy Agreement which was published to occur on November 20, 2000. IV. ALTERNATIVE RECOMMENDATION(S~ • The HRA can choose to-hold and close. the hearing or cancel the hearing. However, a continuation provides for holding the hearing on January 16, 2001.. Financial information is insufficient to hold the hearing at this time. • If the HRA does not authorize a Contract, it will be required to extend the preconditions approved in November for. another 30 days. V. ATTACHMENTS • The Contract for Private Redevelopment is being drafted by legal counsel; the Contract will be delivered to the HRA on Friday, December 15 (Attachment A) • Form for City Bella Business Subsidy Agreement (Attachment B) • Business Subsidy Criteria (Attachment C) VI. PRINCIPAL PARTIES EXPECTED AT MEETING • Mike Conlan, Gramercy Corporation (the developer) • Sid Inman, Ehlers and Associates, Inc. • ATTACffi~ENT A HRA RESOLUTION NO. RESOLUTION APPROVING CONTRACT FOR PRIVATE REDEVELOPMENT WITH GRAMERCY CORPORATION WHEREAS, the City of Richfield and HRA have established the Richfield Redevelopment Project Area ("Project Area")under the authority of Minnesota Statutes, Chapter 469 (the "Act"), and intends to undertake the necessary actions to establish within the Project Area the City Bella Redevelopment Tax Increment District ("TIF District")and to adopt a Tax Increment Financing Plan ("hereinafter defined as the "Tax Increment Plan") for the TIF District to facilitate the financing of public development and redevelopment costs in the Project Area; and WHEREAS, the HRA deems it to be in the public interest to facilitate and encourage redevelopment of the Project Area by a combination of public and .private activity within the Project Area and in accordance with any Tax Increment Plan to be adopted by the City; and WHEREAS, the Gramercy Corporation has proposed a development (hereinafter defined as the "Development")within such Project Area which the HRA believes will promote and carry out the objectives for which redevelopment is undertaken, will be in the vital best interests of the City, will promote the health, safety, morals, and welfare of its residents and will be in accord with the public purposes and provisions of the applicable state and local laws and requirements under which activities within the Project Area have been undertaken and are being assisted; and WHEREAS, the HRA has been presented with a proposed agreement (the "Agreement")which outlines the terms and conditions by which the .Development would be undertaken; and WHEREAS, the Gramercy Corporation is willing to purchase property from the HRA • within the Project Area and to develop the Redevelopment Property for and in accordance with the Agreement; and WHEREAS,. subject to the adoption of, and consistent with the Tax Increment Plan, the HRA is willing to provide financial assistance in accordance with the provisions of the Agreement. NOW THEREFORE, BE IT RESOLVED by the Housing and Redevelopment Authority in and for the City of Richfield as follows: 1. The Agreement is hereby approved, and the Chair and Executive Director are hereby authorized and directed to execute and deliver a copy of the same to Gremercy Corporation. 2. Once executed by Gramercy, the Chair and Executive Director are directed to take all actions and do all things necessary to perform the HRA's obligations thereunder. 3. This approval supersedes and replaces any agreements previously authorized by the HRA in connection with this Development. Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this day of , 200 Thomas E: Harms, Chair ATTEST: Michael Sandahl, Secretary ATTACHMENT A DRAFT 12/1 S/00 CONTRACT FOR PRIVATE REDEVELOPMENT BY AND BETWEEN THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD AND GRAMERCY CORPORATION 2000 This document was drafted by: Kennedy & Graven, Chartered (JBD) 470 Pillsbury Center 200 South Sixth Street Minneapolis, MN 55402 • JBD-179224v4 RC125-209 TABLE.OF CONTENTS ARTICLE I Definitions Section 1.1. Definitions ...........................................................................................................2 Section 1.2. Exhibits ..............................................................................................................4 Section 1.3. Rules of Interpretation ....................................................................................... 4 ARTICLE II Representations Section 2.1. Representations by the Redeveloper .................................................................. 5 Section 2.2. Representations by HRA .................................................................................... 5 ARTICLE IL5 Preconditions Section 2.5.1 Initial Preconditions to Acquisition ................................................................... 7 ARTICLE III Site Assembly Section 3.1 Statement of Intent ................................................................................................. 9 Section 3.2. Acquisition ............................................................................................................. 9 Section 3.3. Conveyance of the Redevelopment Property .......................................................13 Section. 3.4. Time of Acquisition and Conveyance ..................................................................13 Section 3.5. Title ......................................................................................................................14 Section 3.6. Soil Conditions ....................................................................................................14 Section 3.7. Purchase Price ......................................................................................................14 Section 3.8. Taxes and Special Assessments ...........................................................................15 Section 3.9 Other Costs ..........................................................................................................15 Section 3.10 Property Conveyed As Is ....................................................................................15 Section 3.11. Termination .........................................................................................................15 ARTICLE IV Construction of Minimum Improvements Section 4.1. Agreement to Construct .......................................................................................16 Section 4.2. [Blank] .................................................................................................................16 Section 4.3. [Blank] .................................................................................................................16 Section 4.4. Concept Plans ......................................................................................................16 Section 4.SA. Commencement of Construction ........................................................................16 . Section 4.6. Construction Reports ..........................................................................................16 Section 4.7. Completion of Construction -Certificate of Completion ...................................16 JBD-U9224v4 i RC125-209 ARTICLE V Insurance Section 5.1. Insurance ..............................................................................................................18 ARTICLE VI Tax Increment Section 6.1. Statement of Purpose ..........................................................................................19 ............ .......................................... Section 6.2. Minimum Improvements ...:.............. .............19 ARTICLE VII Financing Section 7.1. Limitations Upon Encumbrance .......................................................................... 20 Section 7.2. Copy of Notice of Default to Lender ................................................................... 20 Section 7.3. Lender's Option to Cure Defaults ....................................................................... 20 Section 7.4. HRA's Option to Cure Default ............................................................................ 20 Section 7.5. Subordination ...................................................................................................... 21 ARTICLE VIII Prohibitions Against Assignment and Transfer Section 8.1. Representation as to Development ...................................................................... 22 Section 8.2. [Blank] ...... 22 Section 8.3. Prohibition Against Transfer of Property and Assignment of Agreement ................................................................................. 22 Section 8.4. .Following Completion ........................................................................................ 23 Section 8.5. Approvals ............................................................................................................23 ARTICLE IX Events of Default Section 9.1. Events of Default Defined .................................................................................. 24 Section 9.2. Remedies on Default ............................................................................................ 24 Section 9.3. No Remedy Exclusive .........................................................................................25 Section 9.4. No Additional Waiver Implied by One Waiver ................................................... 25 ARTICLE X Additional Provisions Section 10.1.. Conflict of Interests; HRA Representatives Not Individually Liable ........................................................................................... 26 Section 10.2. Nondiscrimination ............................................................................................... 26 Section 10.3. Provisions Not Merged With Deed ..................................................................... 26 Section 10.4. Notice of Status and Conformance ..................................................................... 26 Section 10.5. Compliance With Business Subsidy Note ........................................................... 26 Section 10.6. Redeveloper Deposit .............................................:.............................................. 26 Section 10.7. Notices and Demands ......................................................................................... 27 JBD-179224v4 11 RC125-209 r • Section 10.8. Identification Marker ........................................................................................... 27 Section 10.9. Counterparts ........................................................................................................27 Testimonium ...........................................................................................................................27 Signatures ............................................................................................................... ....27 EXHIBIT A Limited Revenue Tax Increment Note EXHIBIT B Certificate of Completion EXHIBIT C Assessment Agreement and Assessor's Certification. IBD-179224v4 111 RC125-209 CONTRACT FOR. PRIVATE DEVELOPMENT THIS AGREEMENT, made and entered into this _ day of , 2000, is by and between THE HOUSING AND REDEVELOPMENT AUTHORITY 'IN AND FOR THE CITY OF RICHFIELD, MINNESOTA, a Minnesota public body corporate and politic (the "HRA"), and GRAMERCY CORPORATION, a Minnesota corporation (the "Redeveloper"). WITNESSETH: WHEREAS, the City of Richfield and HRA have established the Richfield Redevelopment Project Area ("Project Area") under the authority of Minnesota Statutes, Chapter 469 (the "Act"), and intends to undertake the necessary actions to establish within the Project Area the City Bella Redevelopment Tax Increment District ("TIF District") and to adopt a Tax Increment Financing Plan ("hereinafter defined as the "Tax Increment Plan") for the TIF District to facilitate -the financing of public .development and redevelopment costs in the Project Area; and WHEREAS, the HRA deems it to be in the public interest to facilitate and encourage redevelopment of the Project Area by a combination of public and private activity within the Project Area and in accordance with any Tax Increment Plan to be adopted by the City, and WHEREAS, the Redeveloper has proposed a development (hereinafter defined as the "Development") within such Project Area .which the HRA believes will promote and carry out the objectives for which redevelopment is undertaken, will be in the vital best interests of the City, will promote the health, safety, morals, and welfare of its residents and will be in accord with the public purposes and provisions of the applicable state and local laws and requirements under which activities within the Project Area have been undertaken and are being assisted; and WHEREAS, the Redeveloper is willing to purchase property from the HRA within the Project Area such property. being legally described in the attached Exhibit C (hereinafter defined as the "Redevelopment Property") and to develop the Redevelopment Property for .and in accordance with this Agreement; and WHEREAS, subject to the adoption of, and consistent with the Tax Increment Plan, the HRA is willing to provide financial assistance in accordance with the provisions of this Agreement; NOW, THEREFORE, in consideration of the premises and mutual obligations of the parties contained herein, each of them does hereby represent, covenant and agree with the others as follows: • JBD-179224v4 RC125-209 ARTICLE I DEFINITIONS, EXHIBITS RULES OF INTERPRETATION Section 1.1. Definitions. In this Agreement, unless a different meaning clearly appears from the context: "Act" means the Economic Development Act, located at Minnesota Statutes, Chapter 469, as amended. "Agreement" means this Agreement, as the same may be from time-to-timemodified, amended, or supplemented. "Business Subsidy Act" means Minnesota Statutes, sections 116J.993 through 116J.995. "Certificate of .Completion" means the certification, in the form of the certificate contained in Exhibit B attached to and made a part of this Agreement, provided to the Redeveloper, pursuant to Section 4.7 of this Agreement. "City" means the City of Richfield. "Closing" means the date on which title to the Redevelopment Property is transferred to the Redeveloper. "Commencement of Construction" means excavation for the purpose of setting footings or foundation. "Completion of Construction" means the completion of construction of the Minimum Improvements except for tenant finish work. "Construction Contract" means a contract or contracts which. provides for completion of the Minimum Improvements. "County" means the County of Hennepin. "Development" means the Minimum Improvements to be constructed on the Redevelopment Property. "Event of Default" means an action by the Redeveloper listed in Section 10.1 of this Agreement. "Minimum Improvements" means the improvements to be constructed by Redeveloper on the Redevelopment Property and related site work all as shown on the Concept Plan. The Minimum Improvements shall consist of two components: "Component One Minimum Improvements" means the 34-unit cooperative housing development and related site imporvements. JBD-179224v4 2 RC125-209 "Component Two Minimum Improvements" means: the 48-unit cooperative housing development, the approximately 11,836 square feet of commercial space and related site improvements. "Component Three Minimum Improvements" means the 250 units of apartment, and approximately 32,100 square feet of commercial and related site improvements. Collectively, referred to as "Components". "Minnesota Environmental Policy Act" means the statutes located at Minnesota Statutes Sections 116D.01 et sea•, as amended. "Minnesota Environmental Rights Act" means-the statutes located at Minnesota Statutes Sections 116B.01 et sea•, as amended. "National Environmental Policy Act" means the federal law located at 42 U.S.C. Section 4311 et sea•, as amended. "Note" means the Limited Revenue Tax Increment Note to be executed and delivered in the form set forth on Exhibit b, pursuant to Section 3.7. "Redeveloper" means Gramercy Corporation, a Minnesota corporation, and also includes any other entity in which Gramercy Corporation is a general partner and/or has a controlling interest.. "Redevelopment Property" means the real property described as such on Exhibit C of this Agreement. "Site Plan" mean the plans, elevations, drawings and narrative descriptions for the Minimum Improvements and related site work and a study showing impacts on site lines to Woodlake Nature Center from other residential property in the area. "State" means the State of Minnesota. "Tax Increment" means that portion of the real property taxes which is paid with respect to the Redevelopment Property which is remitted to the Authority as Tax Increment pursuant to the Tax .Increment Plan, after. reduction (if any) of fiscal disparities' contributions which are mandated by state law to be made with respect to any parcel. "Tax Increment Act" means the statutes located at Minnesota Statutes Section 469.174 through 469.179, of the Economic Development Act. "Tax Increment Plan" means the tax increment financing plan to be adopted by the City in connection with the creation of the Tax Increment District and as such may be modified and amended from time to time. "Tax Official" means any City or county assessor; County auditor; City, County or State board of equalization, the commissioner. of revenue of the. State, or any State or federal district court, the tax court of the State, or the State Supreme Court. JBD-U9224v4 3 RC125-209 "Unavoidable Delays" means unexpected delays which are the direct result of adverse weather conditions, shortages of materials, strikes, other labor troubles, fire or other casualty to the Minimum Improvements, litigation commenced by third parties which, by injunction or other judicial action, directly results in delays, or acts of any federal, state or local governmental unit other than those provided for under this Agreement or any other cause or force majeure beyond the control of Redeveloper which directly results in delays, provided, however, that adverse market conditions or tenant actions affecting .the marketability or profitability of the Minimum Improvements, or the inability to secure financing of the Minimum Improvements shall not constitute Unavoidable Delays. Section 1.2. Exhibits. The following exhibits are attached to and made a part of this Agreement. A. Form of Limited Revenue Tax Increment Note ("Note"); B. Certificate of Completion; C. Redevelopment Property Legal Description; Section 1.3. Rules of Interpretation. (a) This Agreement shall be interpreted in accordance with and governed by the laws of the State of Minnesota; (b) The words "herein" and "hereof' and words of similar importance, without • reference to any particular section or subdivision refer to this Agreement as a whole rather than any particular section or subdivision hereof; (c) Any titles of the several parts, articles and sections of this Agreement are inserted for convenience and reference only and shall be disregarded in construing or interpreting any of its provisions. ~sD-i~922a~a 4 RC125-209 ARTICLE II REPRESENTATIONS Section 2.1. Representations by the Redeveloper. (a) The Redeveloper has the power to enter into this Agreement and has duly authorized the execution, delivery, and. performance of this Agreement by proper action. (b) If the conditions precedent to construction occur, subject to the other terms of this Agreement, the Redeveloper has the financial capability to construct the Minimum Improvements. (c) If the conditions precedent to construction occur,. subject to the other terms of this Agreement, the Redeveloper will construct the Minimum Improvements described in the Concept Plans in accordance with the terms of this Agreement, the Redevelopment Plan and all local, state and federal laws and regulations. (d) The Redeveloper will exercise all reasonably diligent efforts to obtain, in a timely manner, all required permits, licenses, and approvals and if all such approvals are obtained, and subject to Unavoidable .Delays and the satisfaction of all preconditions set forth in this Agreement will meet in a timely manner, all lawful requirements of all local, state, and federal . laws and regulations which must be obtained or met before the Minimum Improvements may be constructed. (e) Redeveloper will comply in all material respects, with all applicable local, state and federal environment laws and regulations, will have obtained any.. and all necessary environmental reviews, licenses or clearances under, and will be in material compliance with the applicable requirements of the National Environmental Policy Act of 1969, the Minnesota Environmental Policy Act, and .the Critical Area Act of 1973 and any other applicable environmental law or regulation. Redeveloper has not received notice or communication from any local, state or federal official indicating that the activities of Redeveloper may be or will be in violation of any environmental law or regulation. Redeveloper is not aware of any facts the existence of which would cause the Redeveloper to be in violation of any local, state or federal environmental law, regulation or review procedure or which would give any person a valid claim under the Minnesota Environmental Rights Act; (fj The Redeveloper acknowledges that it has relied exclusively upon its own analysis of the potential Tax Increment and/or Available Tax Increment to be generated by the Redevelopment Property and that neither the HRA nor its officers, agents or employees has made any representation or covenant, express or implied, as to the amount of Tax Increment, and/or Available Tax Increment that will be generated by the Redevelopment Property;. or that such will be sufficient to make payments under the Notes. The Redeveloper further acknowledges that payments under the Note are the sole source of payments from the HRA to the Redeveloper described in the Contract. The Redeveloper further acknowledges that the . amount of Tax Increment and/or Available Tax .Increment may. be affected by a variety of factors, including without limitation legislative reductions in property class rates that could reduce the Captured Tax Capacity of the Redevelopment Property, thus reducing .the Tax JBD-179224v4 5 RC125-209 • Increment collected by the Authority and the Available Tax Increment pledged to payments on the Notes. Section 2.2. Representations b~. The HRA makes the following representations as the basis for the undertakings herein contained. (a) The HRA has the power to enter into this Agreement and has duly authorized the execution, delivery and performance of this Agreement. (b) The HRA shall, without expense to it, cooperate in Redeveloper's efforts to obtain all federal, state, and regional agency land use, environmental or other regulatory approvals which are required of Redeveloper and necessary to implement the Development. (c) The Project Area, has been properly and legally established and is currently fully operative. Upon approval of this Agreement, the HRA will, subject to the reasonable exercise of its legislative discretion, undertake the steps necessary leading to the creation of the City Bella Redevelopment Tax Increment District and the adoption of a Tax Increment plan for the District. It is anticipated that the actions necessary for creation of the TIF District can be taken by March 1, 2001. (d) The HRA has no knowledge that any tax increment projections or similar material • furnished to the Redeveloper is untrue, but further makes no representation concerning its accuracy. (e) The HRA will provide Redeveloper with all reports, investigations and studies in the HRA's possession which have as their subject the Redevelopment Property. • JBD-179224v4 6 RC125-209 ARTICLE II.S CONCEPT PLANS Section 2.5.1. Concept Plan-Approval. The Concept Plans for the Development are to be prepared by the Redeveloper, at its expense, and submitted to the HRA for its approval not later than March _, 2001. If not approved by such date, this, agreement shall terminate unless the period for submission or approval of the Concept Plans is extended by both parties in writing. - Section 2.5.1. Concept Plan-Content. The Concept Plan must address and contain the following: (a) Design layout of the Minimum Improvements which are substantially the same as those shown on the Site Plan, and which design accommodates the future construction of a second floor skyway access across Lyndale Avenue, and across 66t" Street. (b) The location, nature and construction timing of all public improvements to be constructed to serve and benefit the Development, and all other public improvements that are required as a consequence of the Development. Required improvements include improved signaling for traffic movement at Lake Shore Drive and West 66th Street and traffic quieting measures and pedestrian crosswalk with improved .lighting at the mid-block of Lake Shore Drive. (c) Landscape plan, including timing of installation (d) Plan for tree protection during construction. (e) Plans for the discontinuance and removal or relocation of all utilities (fj The form of a personal protection and safety plan for the Development. (g) The location and general design of a transit service facility. Section 2.5.2. Other Actions. Until the Concept Plan approved by the HRA, the HRA will not authorize the commencement of condemnation, and will- not pay any economic assistance to the Redeveloper; and the Redeveloper agrees that it will not obtain a building permit for construction of the Minimum Improvements. Section 2.5.3. Precondition. The HRA will not approve the Concept Plans until the. parties have agreed upon the level and form of economic assistance to be provided to the Redeveloper, and the scope and the nature of the local match. • IBD-179224v4 7 RC125-209 ARTICLE III SITE ASSEMBLY Section 3.1. Statement of Intent. It is the intention of the parties that the tracts of land which comprise the Redevelopment Property are to be acquired through a combination of direct acquisitions by the Redeveloper and acquisitions by the HRA followed by conveyances to the Redeveloper. It is further the intention of the parties that, whenever possible, direct acquisition by the Redeveloper is preferred. It is further the understanding of the parties that in the acquisition of the Redevelopment Property and related activities the HRA's obligation shall only be to proceed in good faith and to utilize its best efforts. Section 3.2. Acquisition. The Redeveloper agrees to diligently pursue such acquisition activities. Not later than 100 days following execution, the Redeveloper will provide the HRA with the following information together with supporting material all of which. shall be in writing and reasonably satisfactory to the HRA: (a) That it has taken reasonable steps to acquire all the Redevelopment Property (b) That any owner of residential property who has requested mediation has been afforded the opportunity for mediation with respect to the -purchase price to be paid for such owner's property. (c) That financing; whether in the form of Equity, Financial Commitments or otherwise, necessary for the acquisition of the Redevelopment Property and for the construction of the Development is in the reasonable judgment of the Redeveloper likely to be available. (d) That Redeveloper, based upon preliminary environmental reviews and other inspections of the Property, is not aware of any conditions, environmental or otherwise, that would prevent Redeveloper from proceeding with the acquisition and development of the Property. (e) A list of the properties with respect to which purchase agreements or options to purchase have been executed. (f) A list of lands with respect to which such agreements or options have not been executed. (g) A request that ,the HRA undertake- condemnation activities, and the parcels to which such activities relate, together with a deposit deemed adequate by the HRA to cover the fees and expenses of those retained by the HRA to provide legal, survey, appraisal, relocation and title services in connection with such acquisition. The request shall also include (i) an acknowledgment by the Redeveloper that if the HRA does approve the request, the Redeveloper's obligations pursuant to Section 3.4 shall be applicable; and (ii) the form of written agreement and security, reasonably acceptable to the HRA in the nature of the agreement described in Section 3.4. The request shall also include a statement of whether it is necessary for the HRA to proceed in accordance with Minnesota Statutes, § 117.042. Failure to make this JBD-179224v4 g RC125-209 statement as a part of the initial request does not preclude the Redeveloper from subsequently making it. (h) If the Redeveloper supplies .the items contained in paragraphs (a)-(g) above, the HRA agrees that it will, in good faith, and following a review and verification of the same, and following delivery to it of an agreement applicable to the Property in the nature of the agreement described in paragraph (i)(3) below, undertake the steps necessary to acquire fee simple title to the portions of the Property to which the request relates, and in accordance with Minnesota Statutes, § 117.042 to the extent requested. If the Redeveloper fails to supply the items contained in paragraphs (a) - (g) above within the time described above, either party may terminate this Agreement by written notice to the other whereupon this Agreement shall be null and void, and the parties will be relieved of further obligations hereunder. (i) The obligation of the HRA to commence and continue condemnation, to make any deposit, including a deposit: made pursuant it Minnesota Statutes, section 117.042, and to obtain title to and possession of any of the parcels shall, unless waived in writing by the HRA, be specifically subject to the following: 1. Redeveloper is not in default of any provisions of this Agreement and all amounts due and payable under this Agreement have been paid. 2. Redeveloper has reviewed the condition of title as such is to be acquired by the HRA and notified the HRA in writing that such condition of title is satisfactory. 3. The Redeveloper has provided the HRA with an undertaking in the form of a written agreement, and with security (which, if other forms of security are not reasonably acceptable to the HRA, may include the right of the HRA to take an assignment of leases) all reasonably acceptable to the HRA which will assure payment by the Redeveloper of:. (i) any condemnation award in excess of the previously deposited sums; (ii) any relocation benefits which are not yet paid; Such undertaking and security is to remain in effect according to its terms, and in any event, until suitable and adequate substitute security is agreed to by the parties. 4. The Redeveloper has furnished the HRA with written notice, reasonably acceptable to the HRA, indicating that, based upon Redeveloper's own investigation it is satisfied in all respects with the nature and condition of the parcels and .interests to be acquired by the HRA, and accepts the same AS IS and WHERE IS. 5. The HRA is satisfied that the Redeveloper has obtained, or will be obtaining, fee simple title to any portions of the Redevelopment Property which are not the subject of the condemnation.. JBD-179224v4 9 RC125-209 6. .Redeveloper has furnished the HRA with written evidence reasonably acceptable to the HRA that it has funds, whether in the nature of Equity or Financial Commitment or otherwise which are sufficient for construction of the Minimum Improvements. 7. Redeveloper has supplied the HRA with written evidence reasonably acceptable to the HRA that it has presale agreements for at least 80% of the units in the Component One Minimum Improvements. 8. Redeveloper has supplied the HRA with a signed written statement, reasonably satisfactory to the HRA, to the effect that, to the best of Redeveloper's knowledge, upon Closing, there will be no remaining matters which would affect the prompt commencement of construction of the Minimum Improvements -and the continuation of construction to completion. The statement must also acknowledge that the Redeveloper understands that the HRA is relying on the statement as a inducement to its activities hereunder. 9. Redeveloper has obtained all permissions and approvals required by the city and other governmental authorities relating to such matters as, without limitation, disruption or .closure of rights of way, encroachment above streets and alleys for construction activities, and use of public lands for storage of construction equipment and materials. It is understood that such permissions may be conditioned upon such terms as the approving authorities may in their discretion deem advisable. 10. Redeveloper has entered into indemnity and held .harmless agreements with the .City .and HRA protecting those parties from damage or third party claims relating to construction activities. 11. The HRA has reviewed and approved the Concept Plan. 12. The City and Redeveloper have reached written agreement regarding the location and nature and cost of any public improvements to be located on the Redevelopment Property. 13. The Redevelopment Property has been rezoned to a .classification which allows the proposed activities. 14. The parties have reached agreement as to the nature and extent of the Redeveloper's participation in the Affordable Housing Program. The HRA may, in its sole judgment, but only with consent of the Redeveloper, commence and continue its activities under this section even though some or all of the conditions stated above have not been satisfied, or waived. In such event, the HRA will notify the Redeveloper of its election to proceed and shall also notify the Redeveloper of the dates by which some conditions must be satisfied. JBD-179224v4 1 ~ RC125-209 The HRA shall, upon becoming aware of failure of any of the conditions stated above to occur within the time provided, and verifying the same with the Redeveloper, immediately discontinue its acquisition activities, and thereafter, the Redeveloper's sole obligation shall be to reimburse the HRA for the costs and expenses incurred by the HRA in connection with its acquisition activities, and. to indemnify and save harmless the HRA and the City, their officers, agents and employees and to defend the same from any claim or cause arising out of or occasioned by the discontinuance of such acquisition activities, and the HRA's sole remedy shall be to obtain such reimbursement and indemnify from the Redeveloper. The HRA may utilize any security available to it in this Agreement as security for Redeveloper's obligations under this Paragraph, including, without limitation, security provided by Redeveloper under this Agreement. (j) During the pendency of such actions, the Redeveloper .shall be required to promptly pay all expenses incurred by the HRA in connection with the prosecution thereof, such expenses include legal, survey, title, appraisal, relocation, process service, court costs and similar expenses. The HRA shall, not more often than the monthly during the pendency of the action, furnish the Redeveloper with a written itemized statement of all such expenditures. Such expenditures shall be duducted from the deposit provided for in Section 10.6. (k) Not later than five days prior to any date on which the HRA is required to deposit any amount into court in order to obtain title and possession to portions of the Property or to make relocation benefit payments to persons entitled to such payments, Redeveloper shall. deliver to the HRA funds payable to the HRA in the amount of any such deposit or payment. The HRA shall then have the right, and subject to the terms and conditions hereof, the obligation to use such funds to make such deposit or such payments. The HRA shall have no obligation to repay such funds .received deposited or paid pursuant to this Agreement should the redevelopment covered by this Agreement not be .completed for any reason. (1) Should the HRA terminate this Agreement for a failure of Redeveloper to satisfy any of the conditions in paragraph (i) after the HRA has acquired title to and possession of any parcel, the HRA shall have the unrestricted right to utilize all or part of the same in any manner which it, in its sole discretion deems appropriate, including, without limitation, the sale of all or part of the same to others, all on terms and for amounts which the HRA in its exclusive judgment deems appropriate. In the event that the HRA elects to sell all or part of such property, the HRA agrees to reimburse the Redeveloper from, and only from the sale proceeds (if any), amounts .expended by the Redeveloper in connection with acquisition of such parcels and paid to the HRA pursuant to this Agreement after first deducting from the sale price: 1. Amounts still owing the HRA under paragraphs (b) and (c) and the amount of any remaining obligations under this Agreement. 2. .All expenditures incurred by the HRA in connection with such subsequent transaction which were intended to be paid through the sale price. The Redeveloper acknowledges that the HRA's obligation hereunder shall be enforceable against no other source then the sale proceeds, if any, and does not constitute a lien or JBD-179224v4 l l RC125-209 encumbrance on the property or any other HRA asset. This .provision places no fiduciary obligation on the HRA to act in any manner which would preserve, protect, secure or enhance the property or the amount of reimbursement which the Redeveloper might receive. Nothing in this subparagraph (e) shall be deemed to preclude a sale by the HRA to the Redeveloper; and the application of the sale price to reduce the amount due the HRA under this subparagraph. (m) On the date of Closing, and as a further precondition to the HRA's obligations to deliver title, Redeveloper shall provide the HRA with either a lien, in recordable form and recordable against the Redevelopment Property or a letter of credit (LC). The choice between lien or LC shall be at the sole discretion of the Redeveloper_ The instrument shall be in a form acceptable to the HRA and in an amount deemed by the HRA in its reasonable judgment to be sufficient to cover each of the matters described in Section 3.2(1)(3) above. The HRA agrees that it will, from time to time,. hear and consider requests from the Redeveloper to release or modify the instrument, or, in the case of a lien, to subordinate the same, and will do so if in its reasonable judgment such action will not, impair the adequacy of the HRA's security. The HRA may condition the approval of any such requests upon the Redeveloper providing substitute security acceptable to the HRA. Unless the HRA specifically determines otherwise, provided for in this paragraph is an additional. form of security to the other forms of security interest provided for in 3.2(i)(3) above..- (n) Redeveloper Liability. Notwithstanding anything herein to the contrary, in the event the Redeveloper shall fail or refuse to perform its obligations under paragraphs (b) and (c) .above, or fail to satisfy the conditions set forth in Section 3.2(i) above, then the HRA, upon written notice thereof .from Redeveloper, may immediately discontinue its acquisition activities, and thereafter, the Redeveloper's sole obligation shall be: i) to reimburse the HRA for the costs and expenses incurred by the HRA in connection with its acquisition activities; ii) to indemnify and save harmless the HRA and the City and their officers, agents and employees and to defend the same from any claim or cause arising out of or occasioned by the discontinuance of such acquisition activities and the HRA's sole remedy shall be to obtain such reimbursement and indemnity from the Redeveloper. (o) Voluntary Termination. In the event that i) the costs and expenses payable by the Redeveloper to the HRA for. the acquisition of the .Redevelopment Property shall exceed $ or; ii) the Redeveloper shall fail to obtain approval of financing for the development by ,then in either such event, either parry may terminate this Agreement by furnishing the other party with written notice of such termination. Upon such termination, each party shall be relieved from any further obligation hereunder except that the Redeveloper shall be obligated to reimburse the HRA for any amounts which it was committed or obligated as a result of activities prior to such termination. (p) Copies of Pleadings, etc. Copies of all correspondence, notices and pleadings relative to any condemnation proceeding shall be sent to the Redeveloper and Redeveloper's counsel as provided in Section 10.7. .Section 3.3. Conveyance of the Redevelopment Pronerty. The HRA shall reconvey title ' to and possession of the Redevelopment Property to the Redeveloper under a quit claim deed. The conveyance of and the Redeveloper's use of the Redevelopment Property shall be subject to all of the conditions, covenants, restrictions and limitations imposed by this- Agreement. The JBD-179224v4 12 RC125-209 conveyance of title to and the Redeveloper's use of the Redevelopment Property shall also be subject to building and zoning laws and ordinances and all other applicable local, state and federal laws and regulations. Section 3.4. Time of Acquisition and Conveyance. (a) Closing on the simultaneous sale and repurchase and purchase transactions contemplated herein shall occur not later than 10 days following the date on which the HRA has acquired title to all of the parcels acquired through condemnation provided that the Redeveloper is not in default of any obligation under this agreement and that all monies due the HRA hereunder have been paid, and provided. Further that all other conditions, events or actions which under this .Agreement must occur prior to Closing have either occurred or been waived in writing by the party in whose favor the requirement runs; The Redeveloper shall take possession of the Redevelopment Property the day of execution and delivery of the deed by the HRA. -The HRA and the Redeveloper acknowledge, that unless so required by others, the deeds which are contemplated in this transaction need not be recorded. (b) Unless otherwise mutually agreed by the HRA and the Redeveloper, the execution and delivery of all deeds shall be made at the principal office of the HRA. Section 3.5. Title.. (a) Prior to and as a condition to the HRA's obligation to acquire the portions of the Redevelopment Property not being condemned„ the Redeveloper shall obtain and furnish to the HRA a commitment for the issuance of a policy of title insurance.. The HRA shall have twenty (20) days from the date of its receipt of such commitment to review the state of title and to provide the Redeveloper with a list of written objections to such title. No objection may be made by the HRA to any defect or encumbrance on the title unless and to the extent that such defect or encumbrance would, if uncured, have the effect of precluding Redeveloper's construction of the Minimum Improvements. Upon receipt of the HRA's list of written objections, the Redeveloper shall proceed in good faith and with all due diligence to attempt to cure the objections made by the HRA. Within ten (10) days after the date that all such objections have been cured, to the reasonably satisfaction of the HRA, the HRA shall proceed with its acquisition and reconveyance of the Redevelopment Property. The HRA shall have no obligation to take any action to clear defects in the title to the Redevelopment Property. (b) The HRA shall take no actions to encumber title to the Redevelopment Property between the moment the HRA acquires to the moment on which the Authority's Deed is delivered to the Redeveloper, it being understood that such conveyances will occur simultaneously. Section 3.6. Soil Conditions. The Redeveloper acknowledges that the HRA makes no representations or warranties as to the condition of the soils on the Redevelopment Property or its fitness for construction of the Minimum Improvements or any other purpose for which the Redeveloper may make use of such property. The Redeveloper further agrees that it will indemnify, defend, and hold harmless the HRA, its governing body members, officers, and employees, from any third party claims or .actions arising out of the presence, if any, of hazardous wastes or pollutants on the Redevelopment Property; but only to the extent that such claims or actions are based upon the HRA's ownership of the Redevelopment Property required herein and for no other reason. In addition to the foregoing, the HRA agrees to diligently pursue JBD-179224v4 13 RC125-209 • efforts to secure third-party funding for the mitigation of any contamination or pollution found to exist on the Redevelopment Property. Otherwise, as between the HRA and the Redeveloper, the. cost and responsibility to mitigate rests with the Redeveloper. Section 3.7. Purchase Price. The HRA shall pay the Redeveloper as purchase price for the Redevelopment Property 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 at Closing. At the request of the Redeveloper, the Note may be divided into two or more notes each covering portions of the Redevelopment Property, and the aggregate principal amount of all such Notes not to exceed the stated amount of the initial Note. .Section 3.8. Taxes and Special Assessments. Redeveloper shall pay all taxes and installments of special assessments due and payable in years prior to the year of Closing. Redeveloper shall pay all installments of taxes and. special assessments due and payable in the year of Closing. Installments of special assessments due and payable in future years shall be responsibility of Redeveloper. Section 3.9. Other Costs. No cost, fee or other payment relating to any real estate transaction of any nature shall be payable by the HRA to any person. or entity; and except as otherwise set forth in this Agreement, the HRA's entire .obligation in connection with the purchase and sale of the Redevelopment Property shall be payment of the purchase price and • reconveyance of the Redevelopment Property as provided in this Agreement. Section 3.10. Property Conveyed As Is: Redeveloper acknowledges that the HRA shall have no obligation to perform any site work in connection with the proposed transaction or otherwise. The HRA's only obligation hereunder. is to convey the Redevelopment Property to the Redeveloper in the condition in which it was obtained by the HRA. All site work, including, without limitation, grading, soil preparation and demolition of all structures and improvements shall be done by the Redeveloper at Redeveloper's cost. Section 3.11 Other Preconditions to Closing. Notwithstanding any provision- in this agreement. to the contrary, Closing shall not occur, and the HRA shall have no obligation to deliver the Note until the Redeveloper has entered into agreements with the City and/or the HRA, (i) providing any licenses, permits, easements or other rights necessary for location the skyway on the portion of the Redevelopment Property shown in the Concept Plans; (ii) provide the necessary consents and waivers from the Redeveloper for the establishment of a maintenance district for the purpose of assessing the costs of maintaining the skyway, and to a district wide assessment to cover the cost ofconstructing the skyway; and (iii) providing for an interim off- street parking plan designed to accommodate parking requirements during construction of the Development as well as to provide for the parking requirements of Gramercy Park Cooperative during such period. Section 3.11. Termination. In the event that Closing has not- occurred by July 1, 2001, either party may give the other party written notice of its intention to terminate this Agreement. S If the other party does not proceed to Closing within 30 days following the giving of such notice this Agreement may be declared null and void by either party giving written notice of such JBD-179224v4 14 RC125-209 declaration to the other party and thereupon, neither party shall have any obligation or liability to the other hereunder. • JBD-179224v4 1 5 RC125-209 ARTICLE IV CONSTRUCTION OF MINIMUM IMPROVEMENTS Section 4.1. Agreement to Construct. Subject to the acquisition of the Redevelopment Property, the Redeveloper agrees that it will construct the Minimum Improvements substantially in accordance with the approved Concept Plans; the construction and all .construction activities shall be conducted in strict conformity with the ordinances, codes and regulations of the City and other governmental units having jurisdiction over such activities. Section 4.2. [blank]. Section 4.3. [blank]. Section 4.4. Conce-pt Plans. The Concept Plans shall be submitted and approved as provided in Section 2.5.1. If the Redeveloper desires to make any material change in the Concept Plans, the Redeveloper shall submit the proposed change to the HRA for its approval. If the Concept Plans, as modified by the proposed change, conform to the requirements of this section with respect to such previously approved Concept Plans, the HRA shall approve the proposed change and notify the Redeveloper in writing of its approval. Such change in the Concept Plans shall, in any event, be deemed approved by the HRA unless rejected, in whole or in part, by written notice by the HRA to the Redeveloper, setting forth in detail the reasons therefor within twenty (20) days after receipt of the notice of such change. Final construction plans and specifications .shall be reviewed by the City Building Official in connection with- issuance of building permits. No building permit may be issued if the final construction plans and specifications materially depart from the approved Concept Plans. Section 4.SA. Commencement of Construction. Subject to Unavoidable Delays, the Commencement of Construction for the Component One Minimum Improvements must occur no later than April 2001, Commencement of Construction of the Component Two Minimum Improvements. must .occur no later than April 2002, Commencement of Construction of the Component Three Minimum Improvements must occur not later than April 2001 Section 4.6. Construction Reports. At the request of the HRA, the Redeveloper will provide the HRA with copies of the portions of any construction reports prepared by Redeveloper's architect and which show the status of construction. Section 4.7. Completion of Construction -Certificate of Completion. Construction of the Component One Minimum Improvements shall be completed not later than June 2002, Completion of the Component Two and Three Minimum Improvements shall be completed by June 2003. Once commenced, construction of the Minimum. Improvements for any. phase shall JBD-179224v4 16 RC125-209 be diligently prosecuted to completion. Promptly after notification by the Redeveloper of completion of the Minimum Improvements, the HRA shall inspect the construction to determine whether such Minimum Improvements are completed substantially in accordance with the terms of this Agreement. If the HRA is satisfied, it will promptly furnish the Redeveloper with a Certificate of Completion. .Such certification by the HRA shall, .except as further provided in this Section 4.7, be a conclusive determination of satisfaction and termination of the agreements and covenants in this Agreement, with respect to the obligations of the Redeveloper to construct the Minimum Improvements. The certification provided for in this section shall be in recordable form. If the HRA shall refuse or fail to provide the Redeveloper a certification in accordance with the provisions of this Section 4.7, the HRA shall, provide the Redeveloper with a written statement, indicating in adequate detail in what respects the Redeveloper has failed to complete. the Minimum Improvements in accordance with the provisions of this. Agreement, or is otherwise in default, and what measures or acts it will be necessary, in the reasonable opinion of the HRA, for the Redeveloper to take or perform in order to obtain such certification. The HRA may not impose as a condition for issuance of the certificate, any requirement which has previously been deemed satisfied either by actual approval or the passage of time. If the HRA fails to act on the Certificate of Completion within 60 days following the date it is notified of completion of construction of a phase, all objections shall be deemed waived and the certificate shall issue for such phase. • • JBD-179224v4 1 7 RC125-209 ARTICLE V INSURANCE Section 5.1. Insurance. Prior to Closing, the Redeveloper shall provide evidence of insurance, covering property, casualty, workers compensation, fire, indemnity, general liability, employer's liability and such other coverage and in such amounts as the HRA shall reasonably require. • JBD-179224v4 1 g RC125-209 ARTICLE VI TAX INCREMENT Section 6.1. Statement of Purpose. The parties acknowledge that the development which is proposed by the Redeveloper would not be feasible absent the assistance which is provided the Redeveloper in this Article VI. Section 6.2. Minimum Improvements. Upon the issuance of a Certificate of Completion for the Minimum Improvements, but only if Redeveloper has not committed an Event of Default under this Agreement for which cure has not occurred, the HRA shall become obligated to make payments to the Redeveloper under and in accordance with -the terms of the Note. The HRA's obligation under this Agreement to make payments to the Redeveloper is entirely limited to the terms of the Note. ARTICLE VII FINANCING Section 7.1. Limitations Upon Encumbrance. Prior to the issuance of a Certificate of Completion, neither the Redeveloper nor any successor in interest to the Redevelopment Property or any part thereof shall engage. in any financing or any other transaction creating any mortgage or other encumbrance or lien upon the Redevelopment Property or any part thereof, whether by express agreement or operation of law, or suffer any encumbrance or lien to be made on or attached to the Redevelopment Property or any part thereof, except only for the purpose of obtaining funds to .the extent necessary for purchasing or redeveloping the Redevelopment Property or funding construction of the Minimum Improvements. Section 7.2. Copy of Notice of Default to Lender. Prior to the issuance of a Certificate of Completion, whenever the HRA shall deliver any notice or demand to the Redeveloper with respect to any breach. or default by the Redeveloper in its obligations under this Agreement, the HRA shall at the same time forward a copy of such notice or demand to each holder ("Holder") known to the HRA of any mortgage or other financing agreement authorized by this Agreement by sending such notice to last known address of the Holder as shown in the records of the HRA. Section 7.3. Lender's Option to Cure Defaults. After any Event of Default by the Redeveloper referred to in Section 10.1 hereof, each Holder shall (insofar as the rights of the S HRA are concerned) have. the right for a period of ninety (90) days, at the Holder's option, to cure or remedy such Event of Default to the extent that it relates to the part of the Redevelopment Property covered by its financing and to add the cost thereof to the debt and the lien of its financing, provided, that if the breach or event of default is with respect to construction of the Minimum Improvements, nothing contained in this Section or any other section of this Agreement shall be deemed to permit or authorize such Holder, either before or after foreclosure or action in lieu thereof, to undertake or continue the construction or completion of the Minimum Improvements (beyond the extent necessary to conserve or protect such Improvements or construction already made) without first having expressly assumed the Redeveloper's obligations described in Section 4.5 hereof by written agreement reasonably satisfactory to the HRA to complete the Minimum Improvements or the. part thereof to which the lien or title of such holder relates, provided further, however, that the HRA will not unreasonably withhold its consent to any changes in the Minimum Improvements which are requested by the Holder if the requested changes do not alter the basic design of the Minimum Improvements. (It being understood that such consent-shall in no way act to bind or influence the power of the City, in the exercise of its governmental authority not to approve any proposed changes or alterations to the Minimum Improvements. Any such Holder who shall perform the Redeveloper's obligations under Section 4.5 hereof, relating to the Redevelopment Property or applicable part thereof, shall be entitled, upon written request made to the HRA, to a certification by the HRA to such effect in the manner provided in Section 4.7 of this Agreement. Section 7.4. HRA's Option to Cure Default. Prior to the issuance of a Certificate of Completion, if the Redeveloper is in default under any financing authorized pursuant to Article VIII of this Agreement, the Holder, pnor to exercising any of its remedies, shall notify the HRA in writing by sending it a copy of any notice of default sent to the Redeveloper. If, within thirty JBD-179224v4 20 RC125-209 (30) days after receipt of said notice, the HRA cures the default, then the Holder shall pursue none of its remedies under the financing based upon the said default of the Redeveloper.. Section 7.5 Subordination. In order to facilitate the obtaining of financing for the construction of the Minimum Improvements by the Redeveloper, the HRA agrees to modify and to subordinate its right under this Agreement to the mortgage or other financing agreement held by the financial institution providing such funds, provided, however, that nothing in this Section 7.5 shall be deemed to require the HRA to agree to any modification or subordination of its rights which in its judgment would be contrary to its best interests, or to the prompt and timely construction of the Minimum Improvements; or which would fail to obligate any Holder to the provisions of Section 7.3. • JBD-179224v4 21 RC125-209 ARTICLE VIII PROHIBITIONS AGAINST ASSIGNMENT AND TRANSFER Section 8.1. Representation as to Development. .The Redeveloper further recognizes that, in view of (a) the importance of the development of the Redevelopment Property to the general welfare of the community; and (b) the substantial financing and other public -aids that have been made available by the City and the HRA, for the purpose of making .such development possible; that the qualifications .and identity: of the Redeveloper are of particular concern to the community and the HRA. Any change as hereunder describedwith. respect to the identity of the Redeveloper or the purchase of Redeveloper's .interest by any other party or parties is for practical purposes a transfer or disposition of the property then owned by the Redeveloper, the Redeveloper further recognizes that it is because, of such qualifications and identity that the HRA is entering into this Agreement with the Redeveloper and, in so doing, is further willing to accept and rely on the obligations of the Redeveloper for the faithful performance of all undertakings and covenants hereby then to be performed. Section 8.2. [Blank].. Section 8.3. Prohibition Against Transfer of Property and Assignment of Agreement. For the foregoing reasons, the Redeveloper represents and agrees that prior to the issuance of a Certificate of Completion for that Phase: (a) Except only by way of security for, and only for, the purpose of obtaining financing of-the nature described in Section 7.1, the Redeveloper (except as so authorized).has not made or created, and that it will not make or create, or suffer to be made or created, any total or partial sale, assignment, conveyance, or any trust or power, or transfer in any other mode or form of or with respect to this Agreement or the Redevelopment Property or any part thereof or any interest therein, or any contract or agreement to do any of the same, without the prior written approval of the HRA, which approval will not be unreasonably withheld. (b) The HRA shall be entitled to require, except as otherwise provided in the Agreement, as conditions to .any such action described in paragraph (a) above that: (i) any proposed transferee shall have the qualifications and financial responsibility, asreasonably determined by the HRA, necessary- and adequate to fulfill the obligations undertaken in this Agreement by the Redeveloper (or, in the event the transfer is of or relates to part of the Redevelopment Property, such obligations to the extent that they relate to such part); (ii) any proposed transferee, by instrument in writing satisfactory to the HRA and in form recordable. among the land records, shall for itself and its successors and assigns, and expressly for the benefit of the HRA, have expressly assumed all of the obligations of the Redeveloper under this Agreement and agreed to be subject to the terms of the Redevelopment -Plan (or, in the event the transfer is of or relates to part of the Redevelopment Property, such obligations, conditions, and restrictions to the extent that they relate to such part); provided, that the fact that any transferee of, or any other successor in interest whatsoever the reason, shall have assumed such obligations or agreed, shall not (unless and only to the extent otherwise specifically provided in this Agreement or agreed to in ,writing by the HRA) relieve or except such transferee or successor of or from such obligations, conditions, or restrictions, or deprive or limit the HRA or with respect JBD-179224v4 22 RC125-209 to any rights or remedies or controls with respect to the Redevelopment Property or the construction of the Minimum Improvements; it being the intent of this, together with other provisions of this Agreement, that (to .the fullest extent permitted by law and equity and excepting only in the manner and to the extent specifically .provided otherwise in this Agreement) no transfer of, or change. with respect to, ownership in the Redevelopment Property or any part thereof, of any interest therein, however consummated or occurring, and whether voluntary or involuntary, shall operate, legally or practically, to deprive or limit the HRA of or with respect to any rights or remedies or controls provided in or resulting from this Agreement with respect to the Redevelopment Property and the construction of the Minimum Improvements that the HRA would have had, had there been no such transfer or change; (iii) there shall be submitted to the HRA for review all instruments and other legal documents involved in effecting transfer, and if approved by the HRA its approval shall be indicated to the Redeveloper in writing. The HRA shall not unreasonably delay the taking of any action required of it under this paragraph. 1. (c) Notwithstanding the. prohibitions against transfer contained in this section, the Redeveloper shall have the right to transfer, (partial or full) ownership interests in the Redeveloper, this. Agreement, or any Component of the Redevelopment Property to any entity or entities that are controlled by the Redeveloper. (d) In the absence of specific written agreement by the HRA to the contrary, no such transfer or approval by the HRA thereof shall be deemed to relieve the Redeveloper, or any other party bound in any way by this Agreement or otherwise with respect to the. construction of the Minimum Improvements, or from any of its obligations with respect thereto. The HRA may, however, in its reasonable discretion exercised in accordance with the standards and requirements of Section 8.3(b) relieve Redeveloper if such transferee or assignee is acceptable to the HRA. Section 8.4. Following Completion. Upon the issuance of the Certificate of Completion, the provisions of Sections 8.1, 8.3 and 8.5 shall be deemed to have no further force and effect; and the Redeveloper may transfer the Redevelopment Property and assign its interest under this Agreement at any time upon written notice to the HRA. Section 8.5. Annrovals. Any approval required to be given by the HRA under this Article VIII of this Agreement may be denied only in the event that the HRA reasonably determines that the performance of the obligations of Redeveloper under this Agreement will be materially impaired by the action for which approval is sought. At the HRA's request, the Redeveloper shall provide to the HRA's attorney for privileged review on behalf of the HRA financial information as to any proposed general partners, or controlling stockholders of proposed assignees or transferees, and financial information as to any such partnership or corporation. Failure to provide such information shall. be an adequate basis for the denial of any requested approval; however, it shall not .otherwise be construed as a default under this Agreement. JBD-179224v4 23 RC 125-209 ARTICLE IX EVENTS OF DEFAULT Section 9.1. Events of Default Defined. The following shall, after the Redeveloper has received notice of the same and has failed to cure in accordance with Section 9.2, be "Events of Default" under this Agreement and the term "Event of Default" shall mean, whenever it is used in this Agreement (unless the context otherwise provides), any one or more of the following events: (a) Failure by the. Redeveloper to pay when due any payments required to be paid under Article III of this Agreement. (b) Subject to Unavoidable Delay, failure by the Redeveloper to observe and substantially perform any material covenant, condition, obligation, or agreement on its part to be observed or performed hereunder. (c) If the Redeveloper is in default under any mortgage and fails to cure any such default within thirty (30) days after written demand from the HRA to do so. (d) If the real estate taxes are not paid when due, subject to Redeveloper's right to contest same in accordance with applicable law. Section 9.2. Remedies on Default. Whenever any Event of Default referred to in Section 9.1 of this Agreement occurs, the HRA may, in addition to any other remedies or rights given the HRA under this Agreement, but only after at least sixty (60) days notice to the Redeveloper and its failure to cure (unless a different cure. period is provided with respect to specific defaults under this Agreement) or such longer cure period if reasonably required and the actions to cure have been commenced within such 60-day period, find the Redeveloper in default (Default) and take any one or more of the following actions: (a) Suspend its performance under the Agreement until it receives assurances from the Redeveloper or mortgagee reasonably deemed adequate by the HRA, that the Redeveloper will cure the default and continue performance under this Agreement. (b) If Closing has not yet occurred, cancel pursuant to Minnesota Statutes Section 559.21, and rescind this Agreement, in which case the 60-day cure period shall commence with notice of cancellation. (c) Withhold the Certificate of Completion if the Event of Default relates to the failure of the Redeveloper to complete the Minimum Improvements as provided in this Agreement. (d) Subject to the limitations stated in Article III take whatever action at law or in equity may appear necessary or desirable to the HRA to collect any payments due under this Agreement, or to enforce performance and observance of any obligation, agreement or covenant of the Redeveloper under this Agreement. JBD-179224v4 24 RC125-209 Provided, however, that any exercise by the HRA, its successors or assigns, of its right or remedies hereunder shall always be subject to and limited by, and shall not defeat, render invalid or limit in any way (a) the lien of any mortgage authorized by this Agreement and (b) any rights or interests provided in this Agreement for the protection of the Holder of such mortgages. Provided further, however, that should any Holder succeed by foreclosure of the mortgage or deed in lieu thereof, to Redeveloper's interest in the Redevelopment Property, it shall, notwithstanding the foregoing provision, be obligated and, shall agree in writing to perform all of the obligations of the Redeveloper, set forth in this Agreement. Said Holder shall have no obligations pursuant to this Agreement other than as specifically set forth in the foregoing sentence. Section 9.3. No Remedy Exclusive. Except as provided in Article III, no remedy herein conferred upon or reserved to the HRA is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the HRA or the Redeveloper to exercise any remedy reserved to it, it shall not be necessary to give notice, other than such notice as may be required in this Article X or by applicable law. Section 9.4. No Additional Waiver Implied by One Waiver. In the event any obligation contained in this Agreement should be breached by either parry and thereafter waived by the other party, such waiver .shall be limited to the particular breach so waived and shall not be deemed to waive any other concurrent, previous or subsequent breach hereunder. • JBD-179224v4 25 RC125-209 ARTICLE X ADDITIONAL PROVISIONS Section 10.1. Conflict of Interests; HRA Representatives Not Individually Liable. No member, official, or employee of the HRA shall have any personal interest, direct or indirect, in the Agreement, nor shall any such member, official or employee participate in any decision relating to the Agreement which affects his personal interests or the interests of any corporation, partnership, or association in which he is, directly or indirectly, interested. No member, official, or employee of the HRA shall be personally liable to the Redeveloper, or any successor in interest, in the event of any default or breach by the HRA or for any amount which may become due to the Redeveloper or successor or on any obligations under the terms of the Agreement. Section 10.2. Nondiscrimination. The provisions of Minnesota Statutes Section 181.59, which relate to civil rights and nondiscrimination, shall be considered a part of this Agreement as though fully set forth herein. Section 10.3. Provisions Not Merced With Deed. None of the provisions of this Agreement are intended to be or shall be merged by reason of any deed transferring any interest in any part of the Property and any such deed shall not be deemed to affect or impair the provisions of this Agreement. Unless otherwise indicated in this Agreement, the provisions of this Agreement shall be binding upon and inure to be benefit of the successors and assigns of the parties hereto. Section 10.4. Notice of Status and Conformance. The HRA agrees that from time to time, upon not less than ten (10) days' prior written notice by Redeveloper, to execute, acknowledge and deliver, without charge, to Redeveloper or to any person designated by Redeveloper, a statement in writing certifying, to the extent true, that this Agreement is unmodified, the principal amount of any obligation herein created then. unpaid, that the HRA has not received any notice of default, that to the knowledge of the HRA no event of default exists hereunder (or if any such event of default does exist, specifying the same and stating that the same has been ~ cured, if such be the case), that the HRA to its knowledge, has no .claims against the Redeveloper hereunder, and any other information reasonably requested by the Redeveloper. It is the intention of this Section 10.4 to provide a mechanism for obtaining estoppel certificates which may be requested by from time to time by Redeveloper or Redeveloper's mortgagee. Section 10.5. Compliance -With Business Subsides. The HRA's obligation to .make payments under this Agreement that constitute Business Subsidies under the Business Subsidy Act are expressly contingent upon the conclusion of the procedures required by such law. Section 10.6. Redeveloper Deposit. The parties acknowledge that the Redeveloper has previously deposited $25,000 with the HRA. The purpose of the deposit is to reimburse the HRA for the money value of staff time and consultant costs incurred by it in connection with the preliminary activities leading up to, resulting in and including the preparation of this Agreement and any modifications of the Gramercy Tax Increment District, and in the implementation of this Agreement and .the Development. Any portions of the deposit which are not needed for those purpose shall be returned to the Redeveloper within 15 days following the issuance of the JBD-179224v4 26 RC125-209 Certificate of Completion; or the termination of this Agreement for failure to close. At any time that the unexpended amount of such deposit is $10,000 or less, the Redeveloper shall, upon 15 days written request to do so, provide such further .deposit as is required to return the unexpended amount to $25,000. It is understood that the deposited amount is not a limitation on the Redeveloper's obligation to reimburse for such costs, or to make other payments required under this Agreement. Section 10.7. Notices and Demands. Except as otherwise expressly provided in this Agreement, a notice, demand, or other communication under the Agreement by either party to the other shall be sufficiently given or delivered it if is dispatched by registered or certified mail, postage prepaid, return receipt requested, or delivered personally: As to the HRA: Housing and Redevelopment Authority 6700 Portland Avenue South Richfield, Minnesota 55423 Attention: Executive Director With Copy to: John Dean Kennedy & Graven 470 Pillsbury Center Minneapolis, MN 554302 As to the Redeveloper: Gramercy Corporation 7900 International Drive Suite 1035 Bloomington, MN 55425 Attention: Michael W. Conlan, President With .Copy to: Rolfe A. Worden Hinshaw &Culbertson Suite 3100 222 So. 9~' Street Minneapolis, MN 55402 or at such other address with respect to either such party as that party may, from time to .time, designate in writing and forward to the other. Section 10.8. Identification Marker. The Redeveloper, .the HRA will work with the city, as part of the PUD Plan approval process, in the formulation of plans for an Identification Marker to be located on or near the Redevelopment Property and near the intersection of Lyndale Avenue and Lake Shore Drive. The plans will address such matters as design, message, location, cost, and maintenance. Section 10.9. Counterparts. This Agreement may be simultaneously executed in any number of counterparts, all of which shall constitute one and the same instrument. JBD-179224v4 2'~ RC 125-209 IN WITNESS WHEREOF, the parties hereto have set their hands and seals as of the day and year first above written. THE HOUSING AND REDEVELOPMENT AUTHORITY OF THE CITY OF RICHFIELD, MINNESOTA By: Its: Chairperson Bv: Its: Executive Director GRAMERCY CORPORATION By: Notary Public • Its: STATE OF MINNESOTA ss.. COUNTY OF HENNEPIN The foregoing instrument was acknowledged before me this day of 2000, by and ,the Chairperson and Executive Director of The Housing and Redevelopment Authority in and for the City of Richfield, Minnesota. JBD-179224v4 RC125-209 28 STATE OF MINNESOTA ss.. COUNTY OF HENNEPIN The foregoing instrument. was acknowledged before me .this day of 2000, by the of Gramercy Corporation, a corporation under the laws of Minnesota, by and on behalf of said corporation. Notary Public • JBD-179224v4 29 RC 125-209 • EXHIBIT A EXAMPLE LIMITED REVENUE TAX INCREMENT NOTE SERIES Interest Rate 8.5% Date of Original Issue 2/200_ 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 Corporation. (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 of this Note, at the rate of interest of 8.5% per annum (the "Stated Rate"), on the dates (the "Scheduled Payment Dates") set forth on the attached Schedule A. The unpaid interest accruing from the date of this Note, shall be added to principal on a semi annual basis on each August 1 and February 1 until February 1, U 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. 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, § 469.174, of the Authority within and for the benefit of the City Bella Tax Increment Financing 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 AVAILABLE TAX INCREMENT, AS DEFINED BELOW. Each payment on this Note due on any Scheduled Payment Date is payable solely from and only to the extent that the Authority shall have received as of such Scheduled Payment Date "Available Tax Increment" For the purpose of this Note, "Available Tax Increment" means (i) The first $ of tax increment received from the real estate described in JBD-189046v2 RC125-210 Schedule B (the"Property") within the six-month period immediately preceding the payment date. (ii) The balance of the tax increment received during such period after first deducting therefrom an amount equal to 10% of the entire tax increment received during such period with respect to the Property. For purposes of this Note, a "Payment Date" shall mean each of the dates set forth on Schedule A attached hereto. This Note shall terminate upon the earlier of (i) the date when the Owner has been fully reimbursed according to the terms hereof; or (ii) February 1, The Authority's obligation to make any payments under this Note may be suspended 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 Development Contract subject to the notice and cure provisions therein, and limited only to defaults which relate to the Development Property. This Note shall not be payable from or constitute a charge upon any funds of the Authority or the City of Richfield and the Authority shall not be subject to any liability hereon or be deemed to have obligated itself to pay hereon from any funds except the Available Tax Increments, and 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 S 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 transferable or assignable, in whole or in part, by the Owner without the prior written consent of the Authority; provided that the Owner may pledge the payments hereunder to a lender or assign the payments hereunder to a subsequent purchaser of the Redevelopment, but only with prior written notice thereof to the Authority. The Authority also agrees to consent to transfer or assignment upon being furnished securities investment letters and/or indemnities satisfactory to the Authority. The Owner may .also, without prior notice to or consent of the Authority transfer or assign the Note or the right to receive payments under the Note to a wholly-owned subsidiary of the Owner. This Note may be prepaid in full at any time at the option of the Authority; but only with the consent of the Owner, and may also be prepaid at the request of the Owner, but in either instance only if the Authority first determines that sufficient tax increment is or will be generated to permit such prepayment, and the parties agree upon the actual prepayment amount. This Note is issued pursuant to proper action of the Authority by Resolution and the Owner is entitled to the benefits thereof, which Resolution is incorporated herein by reference. IT IS HEREBY CERTIFIED AND RECITED that any acts, conditions, and things required by the Constitution and laws of the State of Minnesota to be done, to have happened, JBD-189046v2 RC125-210 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 , 2 Chairperson Executive Director • • JBD-189046v2 RC125-210 • SCHEDULE A [To be completed prior to execution] • SCHEDULED PAYMENT DATES SCHEDULED PAYMENT DATES 2/1/01 8/1/13 8/1/01 2/1/14 2/1/02- 8/1/14 8/1/02 2/1/15 2/1/03 8/1/15 8/1/03 2/1/16 2/1/04 8/1/16 8/1/04 2/1/17 2/1/05 8/1/17 .8/1/05 2/1/18 2/1/06 8/1/18 8/1/06 2/1/19 2/1/07 8/1/19 8/1/07 2/1/20 2/1/08 8/1/20 8/1/08 2/1/21 2/1/09. 8/1/21 8/1/09 2/1/22 2/1/10 8/1/22 8/1/10 2/1/23 2/1/11 8/1/23 8/1/11 2/1/24 2/1/12 8/1/24 8/1/12 2/1/25 2/1/13 8/1/25 JBD-179224v4 RC125-209 A-2 EXHIBIT. B CERTIFICATE OF COMPLETION The undersigned hereby certifies that GRAMERCY CORPORATION, a Minnesota corporation has fully and completely complied with its obligations under Article IV of that document entitled "Contract for Private Development," dated , 2000 between THE HOUSING AND REDEVELOPMENT IN AND FOR THE CITY OF RICHFIELD and GRAMERCY CORPORATION, with respect to construction of the Minimum Improvements located on the tract of land described in the attached Exhibit A In accordance with the requirements of such document and is released and forever discharged from its obligations to construction the Minimum Improvements under such above-referenced Article. on the above-referenced tract. DATED: HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD By Its Chairperson By Its Executive Director JBD-179224v4 RC125-209 $-l Cedar Avenue Environmental. Assessments City Property Address Phase One Phase Two Parcel PID Number 1 6301 Cedar Ave. 25-028-24-22-0001 Pre-demolition Submitted Submitted Ke s Available? 24-Jul Not Needed 2 6311 Cedar Ave. 25-Jul 06-Nov 25-028-24-22-0002 3 6315- Cedar Ave. 21-Jun Not Needed 25-028-24-22-0003 4 6325 Cedar Ave. 24-Jul 27-Oct 25-028-24-22-0004 5 6333 Cedar Ave. 25-028-24-22-0060 6 6341 Cedar Ave. 25-028-24-22-0007 7 6345 Cedar Ave. 25-028-24-22-0008 8 6405 Cedar Ave. 25-028-24-23-0064 9 6409 -17 Cedar Ave 25-028-24-23-0065 11 6421 Cedar Ave. 25-028-24-23-0067 12 6425 Cedar Ave. 25-028-24-23-0142 18-Oct Needed 07-Nov Not Neded 21-Jun 27-Oct 24-Jun 27-Oct 24-Jul Not Needed 24-Jul Not Needed 13-16 6429 Cedar Ave. 25-028-24-23-0143 17 6501 Cedar Ave. 25-028-24-23-0001 18 6509 Cedar Ave. 25-028-24-23-0002 19 6511 Cedar Ave. 25-028-24-23-0003 20 6521 Cedar Ave. 25-028-24-23-0004 21 6525 Cedar Ave. 25-028-24-23-0005 22 6529 Cedar Ave. 25-028-24-23-0006 23 6533 Cedar Ave. 25-028-24-23-0007 24 6537-39 Cedar Ave. 25-028-24-23-0008 25 1820 E. 66th St. 26-028-24-14-0054 26 1800 E. 66th St. 26-028-24-14-0064 27 1720 E. 66th St. 26-028-24-14-0118 24-Jul Not Needed 01-Dec Needed 24-Jul Not Needed 24-Jul Needed 21-Jun Not Needed 21-Jun Not Needed 21-Jun Not Needed 28 1714 E. 66th St. 26-028-24-14-0119 29 1708 E. 66th St. 26-028-24-14-0120 30 1700 E. 66th St. 26-028-24-14-0121 31 6315 Cedar Ave. Billboard 32 6405 Cedar Ave. Billboard 33 6537 Cedar Ave. Billboard Administration Total 21-Jun Not Needed 21-Jun Not Needed 21-Jun Not Needed N/A N/A N/A N/A N/A N/A • Attachment B BUSINESS SUBSIDY AGREEMENT THIS AGREEMENT, made and entered into. as of this day of January 2001, by and between the HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, a Minnesota public body corporate and politic, ("Grantor"), and GRAMERCY CORPORATION, a Minnesota corporation, ("Grantee") WITNESSETH: r 1. Grantor and Grantee are the parties to that certain instrument entitled. Contract for Private Development dated July 17, 2000 ("Contract"). 2. The Contract provides for financial assistance to the Grantee-that constitutes a "business subsidy" for the purposes of the Business Subsidy Act (Chapter 243, Article 12, Laws 1999) ("Act"). 3. The Act requires that a business subsidy may not be provided until the parties have entered into a business subsidy agreement that complies with the requirements of the Act. 4. This Agreement is intended to constitute a business subsidy agreement for the purposes of the Act. NOW THEREFORE, in consideration of the mutual covenants contained herein .and in the Contract, it is hereby stipulated and agreed by and between the parties hereto as follows. (a) Definitions. The terms used in this agreement shall have the meanings given them in the Contract and the Act unless a different meaning is clearly indicated. (b) General Terms. The parties agree and represent to each other as follows: (1) The subsidy provided to the Grantee involves use of funds currently available to the Grantor for the payment of costs incurred by the Grantee in performing the Redevelopment Property as more fully described in the Contract. The subsidy has an estimated value (2) The public purposes for the subsidy are as described in the Business Subsidy Criteria adopted by the Grantor. (3) The goals for the subsidy are: to secure development of .the Minimum Improvements on the Redevelopment Property; to maintain such improvements for at least 5 years as described in clause (6) below; and to create the jobs and wage levels in accordance with Section (c) hereof. (4) If the goals described in clause (3) are met, the Grantee shall have no obligation to repay the payments to the Grantee described in the Agreement (5) The subsidy is needed because site development costs make development of the Minimum Improvements financially- infeasible without public assistance, all as determined upon approval of the TIF Plan. (6) The Grantee must continue operation of the Minimum Improvements for at least five years after the date of issuance of the certificate of completion. (7) The Grantee does not have a parent corporation. (c) Job and Waae Goals. Within two years after the date of this issuance of the certificate of completion of the Minimum Improvements (the "Compliance Date"), the Grantee shall cause to be created at least new full-time equivalent jobs on the Redevelopment Property (excluding any jobs previously existing in the State as of the date of this Agreement and relocated to this site), and shall cause the wages of the jobs created on the Redevelopment Property to be no less than $ exclusive of benefits. Notwithstanding anything to the contrary herein, if the wage and job goals described in this paragraph are met by the compliance Date those goals are deemed satisfied despite the Redeveloper's continuing obligations under sections (b)(6) and (e). The Grantor may, after a public hearing, extend the Compliance Date by up to a year, provided that nothing in this Section will be construed to limit the Grantor's legislative discretion regarding this matter. (d) Remedies. If the Grantee fails to meet. the goals described in Section (b)(3), the Grantee shall repay to the Grantor upon written demand from the Grantor (a) a "pro rata. share" of the amount of .subsidy expended by the Grantor. The term "pro rata share" means percentages calculated as follows: (i) if the failure relates to the number of jobs, the jobs required less the jobs created, divided by the jobs required; (ii) if the. failure relates to wages, the number of jobs required less the number of jobs that meet the required wages, divided by the number of jobs required; (iii) if the failure relates to maintenance of the facility in accordance with Section (b)(6), 60 less the number of months of operation as the required facility (where any month in which the facility is in operation for at least 15 days constitutes a month of operation), commencing on the date of the certificate of completion and ending with the date the facility ceases to be so operated as determined by the Grantor, divided by 60; and (iv) if any more than one of clauses (i) through (iii) apply, the sum of the applicable percentages, not to exceed 100%. Nothing is this Agreement shall be construed to limit the Grantor's remedies otherwise available to it under this Contract. In addition to the remedy described in this Section and any other remedies available to the Grantor for failure to meet the goals stated in Section (b)(3), the Grantee agrees and understands that it may not receive a business subsidy from the Grantor or any grantor (as defined in the Act) for a period of five years from the date of the failure or until the Grantee satisfies its repayment obligations under this Section, whichever occurs first. (e) Reports. The Grantee must submit to the Grantor a written report regarding business subsidy goals and results by no later than March 1 of each year, commencing March 1, 2002 and continuing until the later of (i) the date the goals stated in Section (b)(3) are met; (ii) 30 days after expiration of the five-year period described in Section (b)(6); or (iii) if the goals are not met, the date the subsidy. is repaid in accordance with Section (d). Thee report must comply with Section 116J.994, subdivision 7 of the Act. The Grantor will provide information to the Grantee regarding the required forms. If the Grantee fails to timely file any report required under this section, the Grantor will mail the Grantee a warning within one week after the required filing date. If, after 14 days of the postmarked date of the warning, the Grantee fails to provide a report, the Grantee must pay the Grantor a penalty of $100 for each subsequent day until the report is filed. The maximum aggregate penalty payable under this section is $1,000. (f) Approval. This Agreement shall not be effective until approved by the City Council, which approval shall be conclusively evidenced by the City Council resolution of approval being affixed to this Agreement. ~J IN WITNESS WHEREOF, the Grantor has caused this Agreement to be executed in its corporate name by its duly authorized officers; and the Grantee has caused this Agreement to be executed all as of the date first above written. THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD By Its Chair And by Its Executive Director STATE OF MINNESOTA ) )ss. COUNTY OF HENNEPIN ) On this day of , 2000, before me, a Notary Public within and for said county appeared and , to me personally known, who being by me duly sworn, did say that they are respectively the Chair and 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 corporation. Notary Public r GRAMERCY CORPORATION By: Its: STATE OF MINNESOTA ) )ss. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this day of 2000, by the of Gramercy Corporation, a corporation under the laws of Minnesota by and on behalf of said corporation. No#ary Public • • Approved November 15, 1999 ATTACHMENT C RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY BUSINESS SUBSIDY CRITERIA 1. Puroose This document includes the criteria to be considered by the Richfield Housing and Redevelopment Authority (°Authority") to evaluate requests for business subsidies. It is the intent of the Authority in adopting these. criteria. is to comply with Minnesota Statutes, Sections 116J.993-116J.995 (the "Act"). The Authority hereby adopts the definitions contained in the Act for application in the criteria Goals and Objectives It is the Authority's .intent to advance the following goals and objectives in granting business subsidies: a) All. projects, by not later than the benefit date, must be consistent with Richfield's comprehensive plan and any other plan or guide for development of the community or a sub-area of the community. b) Business `subsidies must be justified by evidence that the project cannot proceed without the benefit of the subsidy. ff tax increment financing is used to grant a subsidy; the grantee must demonstrate compliance with all statutory requirements of the TIF Act, including the "but for" test. The grantee wilt be required to provide all documentation necessary for the Authority to make the requisite findings under the TIF Act and the Act. c) Grantees will be required to enter into an agreement with the Authority that is consistent with statutory requirements, including a commitment to continue the. business at the site for a minimum of five years after the benefit date and compliance with the specific jobs and wages goals established for the project. • JBD-169407 RC125.1 Business Subsidy Criteria The Authority recognizes that every proposal is unique. Nothing in these criteria shall be deemed to be an entitlement or shall establish a contractual right to a subsidy... The Authority reserves the right to modify these criteria from time to time end to evaluate each project as a whole. The following criteria shall be ..utilized in evaluating a request for a business subsidy: a) Increase in tax base. While an increase in the tax base cannot be the sole grounds for granting a subsidy, the---Authority believes it is a preferred condition for any subsidy. b) Jobs and Wages. !t is Authority's intent that the .grantee create livable wage jobs at the site. This may include jobs to be retained -but only iF job loss is imminent and demonstrable. c) Economic Development. Projects should promote one or more of the following: a 1) Encourage economic and commercial diversity within the community; 2) Contribute to the establishment of a critical mass of commercial development within an area; 3) Provide basic goods and services, increase the range of goods and services available or encourage fast rowing businesses; 4) .Promote redevelopment objectives and removal of blight, including pollution cleanup; 5) Promote the retention or adaptive reuse .of buildings of historical or architectural sign~cance; 6) Promote additional or spin-off development within the community; 7) Encourage full. utilization of existing or planned infrastructure improvements. IV. Compliance and Reoortina Requirements. a) Any subsidy granted by the Authority will be subject to the requirement of a public hearing, if necessary, and must be approved by the Richfield city council. b) It will be necessary for both the grantee and the Authority to comply with the reporting and monitoring requirements of the Act: AGENDA SECTION: public HearinP~ AGENDA ITEM # 4 REPORT # Q S STAFF REPORT r HOUSING AND REDEVELOPMENT AUTHORITY MEETING DECEMBER 18, 2000 PAMELA BOOKHOUT, REPORT PREPARED BY: REHABILITATION SPECIALIST NAn~, TITLE BRUCE PALMBORG, REPORT PRESENTER: COMMUNITY DEVELOPMENT DIRECTOR NAME, TITLE DEPARTMENT DIRECTOR REVIEW: SIGNATURE REVIEWED BY EXECUTIVE DIRECTOR: ~ ~ ~ ~ ITEM FOR HIZA CONSIDERATION: ~I~ Public hearing and consideration of a resolution authorizing the sale of 6537-14th and 6224 Bloomington Avenues. I. RECOMMENDED ACTION: Conduct and close a public hearing and by motion: Adopt a resolution authorizing the sale of 6537-14th Avenue and 6224 Bloomington AvenueR III. BACKGROUND The new construction projects at 6537-14th and 6224 Bloomington Avenues were authorized by the Housing and Redevelopment Authority (HRA) as cooperative projects. with Hennepin Technical College (HTC). The homes are completed and sales are anticipated early in 2001. The property on 14th Avenue was developed under the New Home Program. The property on Bloomington Avenue was developed as an affordable initiative under the Richfield Rediscovered Program. The selected purchaser of 6537-14th Avenue is a two member, income qualified family seeking to live in Richfield. Presently, the family is renting a townhome in Minneapolis. The selected purchaser for 6224 Bloomington Avenue is a five member family renting a townhouse in Minnetonka. Both families meet the eligibility 1218houses requirements stated in Attachment A. A public hearing and HRA authorization for the sale of the properties are required prior to closing. The properties are each valued at $185,000. A second mortgage of $45,000 is provided by the HRA. After a minimum down payment of $5,000, the buyers will each need to secure a first mortgage in the amount of $135,000. If they are able, buyers are always encouraged to contribute more down payment to reduce their first mortgage. All buyers are required to take homebuyer education courses. The second mortgage accomplishes two things: (1) makes the initial purchase price affordable; and (2) prevents a speculative purchase in which the buyer might benefit from selling the home quickly. The HRA will pay points for mortgage discounting if the buyers cannot secure an interest rate below eight percent. Property taxes will be prorated as of the date of closing. After closing, the HTC contracts of $118,000 for each property will be paid from the proceeds of the sale. If, during final qualifying, a family is found ineligible by the lender, the purchase agreement will be void, the earnest money will be released, and the next qualified applicant in the pool would be contacted. At this time, however, the purchasers are strong candidates. III. BASIS OF RECOMMENDATION A. POLICY • Two qualified families have been identified as purchasers and meet program requirements. • Authorization of the sale is required at the December 18, 2000 meeting so that the buyers can finalize mortgage financing for a prompt closing.. B. CRITICAL ISSUES • Purchase agreements cannot be processed further without HRA authorization of sale. • The Planning Commission has determined that the sale for residential purposes is consistent with the Comprehensive Plan. • The homes are completely finished. C. FINANCIAL • The potential buyers of 6537-14th and 6224 Bloomington Avenues meet the program requirements (see Attachment A). • The HRA budget provides for the expenditure of the points. D. LEGAL. • A public hearing notice has been published in the Sun Current which allows the HRA to consider the sale at the December meeting. IV. ALTERNATIVE RECOMMENDATION(S~ • Do not adopt the resolution. However, this would cause a delay in the sale of the properties and would increase HRA holding costs. V. ATTACHMENTS • Resolution regarding the sale of 6537-14th and 6224 Bloomington Avenues. • Eligibility Requirements (Attachment A) VI. PRINCIPAL PARTIES EXPECTED AT MEETING • N/A • HRA RESOLUTION N0. THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA RESOLUTION AUTHORIZING THE SALE OF REAL PROPERTY LOCATED AT 6537-14TH AVENUE AND 6224 BLOOMINGTON AVENUE WHEREAS, the Housing and Redevelopment Authority (HRA) owns certain real property located at 6537-14th Avenue, legally described at Lot 17, Block 4, Nokomis Gardens Rearrangement of Blocks 1, 2, 3, 4, and 5 Girard Parkview, and the property at 6224 Bloomington Avenue, legally described as Lot 9, Block 8, Nokomis Gardens Rearrangement of Blocks 1, 2, 3, 4, and 5 Girard Parkview; and WHEREAS, the HRA acquired the properties so that Hennepin Technical College (HTC) could construct a new single family home at each site to be sold by the HRA and a minimum of $5,000 down payment to a moderate income family; and WHEREAS, two families have been identified as eligible purchasers for the properties; and WHEREAS, the conditions of the sale include a total sale price of $185,000; first mortgage of $135,000 payable to the lender; a lien of $45,000 payable to the HRA and a minimum of $5,000 down payment; and WHEREAS, the sale of 6537-14th and 6224 Bloomington Avenues may be authorized by the HRA following a public hearing which considers the disposition of the property; and WHEREAS, that hearing has been held following proper publication of notice. NOW, THEREFORE, BE IT RESOLVED by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota that the HRA Chairperson and the Executive Director are authorized to execute the purchase agreements and other required documents so that the disposition of HRA owned property at 6537-14th Avenue and 6224 Bloomington Avenue occurs as presented herein. Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 18th day of December, 2000. Thomas E. Harms, Chair ATTEST: Michael Sandahl, Secretary • ATTACHMENT A • New Home Program Eligibility Requirements For Home Buyers in 2000 • Have a two to six member family (a family is defined as persons related by blood, marriage or operation of law having a minimum of a head of household and one or more minor children.) • Be a first time buyer (or not having owned in three years). • Not exceed the following maximum annual income depending upon family size: Family Size Maximum Income 2 - 4 persons $50,200 5 persons $54,200 6 persons $58,250 Income limits are 80 percent of the metropolitan area median income - an accepted CDBG program income level. • • Have the ability to make monthly payments on a mortgage, make the required down payment and pay required closing costs. • Agree to be subject to a second mortgage lien by the HRA to make the buyers' first mortgage more affordable. r AGENDA SECTION: CnnePnt AGENDA ITEM # 3B REPORT # g 4 STAFF REPORT HOUSING AND REDEVELOPMENT AUTHORITY MEETING DECEMBER 18, 2000 • REPORT PREPARED BY: REPORT PRESENTER: DEPARTMENT DIRECTOR REVIEW: REVIEWED BY EXECUTIVE DIRECTOR: PAM BOOKHOUT, REHABILITATION SPECIALIST NAME, TITLE BRUCE PALMBORG, COMMUNITY DEVELOPMENT DIRECTOR 0 • ITEM FOR HRA CONSIDERATION: Consideration of entering into a Professional Services Agreement with Mr. Brian Ringham for property evaluation services. I. RECOMMENDED ACTION: By Motion: Approve a Professional Services Agreement with Mr. Brian Ringham for property evaluation services. III. BACKGROUND The purpose of the Richfield Rediscovered New Construction Program is to remove small, substandard and functionally obsolete housing to make opportunities available for larger homes built according to current codes, and that appeal to families needing more space. Because of the higher costs of redevelopment, private investment of this kind rarely occurs. Therefore, in order for the Housing and Redevelopment Authority (HRA) to redevelop, tax increment financing (TIF) is needed. Tax increment rules require that a finding of substandardness be reported and included in the TIF plan. Staff has identified Mr. Brian Ringham as being capable to prepare these reports.. In addition to reports on property to be demolished, reports are required on Transformation projects prior to remodeling, since Transformation Homes Loan 1218ringham agmt funding also comes from TIF monies. Mr: Ringham would also prepare those reports. The hourly rate would be $50 per-hour, which is comparable to other • independent contractors utilized by the HRA (such as the Remodeling Advisor). III. BASIS OF RECOMMENDATION A. POLICY • Property evaluation reports are required by TIF rules. • Mr. Ringham is capable of providing these services. B. CRITICAL ISSUES • N/A C. FINANCIAL • These services are part of the Richfield Rediscovered and Transformation budgets. I~. LEGAL • N/A IV. ALTERNATIVE RECOMMENDATION(S~ • Direct staff to modify the proposal • Do not enter into the agreement. V. ATTACHMENTS • Professional Services Agreement VI. PRINCIPAL PARTIES EXPECTED AT MEETING • N/A • PROFESSIONAL SERVICE AGREEMENT FOR PROPERTY EVALUATION CONSULTANT THIS AGREEMENT made and entered into by and between the Housing and Redevelopment Authority in and for the City of Richfield, State of Minnesota, hereinafter referred to as "the HRA", and Brian W. Bingham, 7232 Pleasant Avenue South, Richfield, hereinafter referred to as "the Consultant". WITNESSETH: WHEREAS, the HRA wishes to purchase the services of the Consultant; and WHEREAS, .there are funds available for the purchase of these services. NOW, THEREFORE, in consideration of the mutual undertakings and agreements hereinafter set forth, the HRA and the Consultant agree as follows: 1. TERMS AND COST OF THE AGREEMENT The Consultant agrees to furnish services to the HRA as indicated on the attached Exhibit A dated December 18.2000. The cost of this Agreement shall not exceed fifty dollars per hour ($50.00/hour). All reports, memos, and other data produced by the Consultant become the property of the HRA. 2. PAYMENT FOR SERVICES Invoices may be submitted monthly. Payment for services shall be made directly to Brian W. Bingham by check. Invoices shall be of sufficient detail for the HRA to determine the activity and personnel for which payment is being made. Payment shall be made within 30 days of receipt of an invoice by the HRA: 3. INDEPENDENT CONTRACTOR The Consultant shall select the means, method, and. manner of performing the identified services in consultation with the HRA. Nothing is intended or should be construed in any manner as creating or establishing the relationship of copartners between the Consultant and the HRA or as constituting the Consultant as the agent, representative, or employee of the HRA for any purpose or in any manner whatsoever. The Consultant is to be and shall remain an independent contractor with respect to all services performed under this Agreement. The Consultant represents that it has or will secure at its. own expense all personnel required in performing services under this Agreement. Any and all personnel of the Consultant or other persons while engaged in the performance of any work or services required by this Agreement shall have no contractual relationship with the HRA, and shall not be considered employees of the HRA. Any and all claims that may or might arise under the Unemployment Compensation Act or the Workers' Compensation Act of the State of Minnesota on behalf of said personnel, arising out of employment or alleged employment, including, without limitation, claims of discrimination against the Consultant, its officers, agents, contractors, or employees shall in no way be the responsibility of the HRA. The Consultant shall defend, indemnify, and hold the HRA, its officers, agents, and employees harmless from any and all such claims irrespective of any determination of any pertinent tribunal, agency, board,: commission, or court. Such personnel or other persons shall neither require nor be entitled to any compensation, rights, or benefits of any kind whatsoever from the HRA, including, without limitation, tenure rights, medical and hospital care, sick and vacation leave, Workers' Compensation, Unemployment Insurance, disability, severance pay, and PERA. 4. NONDISCRIMINATION The HRA operates in accordance with the City of Richfield's policies against discrimination. No person shall be excluded from or denied the benefits of any service performed or contemplated under the terms of this Agreement on the grounds of race, color, creed, religion, age, sex, disability, marital status, public assistance status, ex-offender status, or national origin; and no person who is protected by applicable Federal or State laws against discrimination shall be otherwise subjected to discrimination. The Consultant shall (1) furnish all information and reports which may be required by the City's Affirmative Action Policy; and (2) it shall comply with the City's Equal Employment Opportunity/Affirmative Action Policies with regard to employment and contracting (See Exhibit B). , 5. INDEMNITY AND INSURANCE. The Consultant agrees to defend, indemnify, and hold the HRA, its officers, and employees harmless from any liability claims, damages, costs, judgments, or expenses, including reasonable attorney, fees, resulting directly or indirectly from an act or omission (including without limitation professional errors or omissions) of the Consultant, its agents, employees, or assignees in performance of the services provided by this contract, and against all loss by reason of the failure of the Consultant to fully performance in any respect, all obligations under this contract. 6. DATA PRIVACY The Consultant agrees to abide by all applicable State and Federal laws and regulations concerning the handling and disclosure of private and confidential information concerning individuals and/or data including but not limited to information made non-public by such laws or regulations. 7. RECORDS -AVAILABILITY The Consultant agrees that the HRA, the State Auditor, or any of their duly authorized representatives at any time during normal business hours and as often as they may reasonably deem necessary, shall have access to and the right to examine, audit, excerpt, and transcribe any books, documents, papers, records, etc., which are pertinent to the accounting practices and procedures of the Consultant and involve transactions relating to this Agreement. Records shall be retained for three years from date of final payment with respect to services performed. 8. NON-ASSIGNMENT The Consultant shall not assign, subcontract, transfer, or pledge this contract and/or the services to be performed hereunder, whether in whole or in part, without the prior written consent of the HRA. 9. MERGER AND MODIFICATION a. It is understood and agreed that the entire Agreement between the parties is contained herein and that the Agreement supersedes all oral agreements and negotiations between the parties relating to the subject matter hereof. All items referred to in this Agreement are incorporated or attached and are deemed to be part of this Agreement. b. Any material alterations, variations, modifications, or waivers of provisions of this Agreement shall only be valid when they have been reduced to writing as an amendment to this Agreement signed by the parties hereto. 10. DEFAULT AND CANCELLATION a. If the Consultant fails toperform any of the provisions of this Agreement or fails to administer services so as to endanger the performance of the Agreement, this shall constitute a default. Unless the default is excused, the HRA may, upon written notice, immediately cancel the Agreement in its entirety. b. The HRA's failure to insist upon strict performance of any provision or to exercise any right under this Agreement shall not be deemed a relinquishment or waiver of the same, unless consented to in writing. Such consent shall not constitute a general waiver or relinquishment throughout the entire term of the Agreement. c. This Agreement may be canceled without cause by either party upon twenty (20) days written notice. 11. CONTRACT ADMINISTRATION In order to coordinate the services of the Consultant with the activities of the HRA so as to accomplish the purposes of this Agreement, Bruce Palmborg shall manage this Agreement. on behalf of the HRA, and Pam Bookhout shall serve as liaison between the HRA and the Consultant. In addition, from time to time, meetings shall be held between the Consultant and HRA staff. The Consultant may also report directly to the HRA Board of Commissioners from time to time. 12. NOTICES Any notice or demand which must be given or made by a party hereto under the terms of this Agreement shall be in writing. Notices shall be sent as follows: • To the HRA: Richfield HRA Pam Bookhout 6700 Portland Avenue South Richfield, MN 55423 To the Consultant: Brian W. Bingham 7232 Pleasant Avenue South Richfield, MN 55423 The Consultant having signed this Agreement, and the HRA having duly approved this Agreement on December 18, 2000, and pursuant to such approval and the proper HRA officials having signed this Agreement, the parties hereto agree to be bound by the provisions herein set forth. HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA By: Executive Director Date By: Chairperson THE CONSULTANT By: Date Brian W. Bingham Date [H:Cdadmin:Agreements:Professional Svc Agmt - BR] • EXHIBIT A The Consultant shall perform the following services as they apply to the Richfield Rediscovered New Construction Program, the Transformation Homes Loan program, .and related projects: , 1. Conduct on-site property evaluations on an as-needed, on-call basis, on properties identified by the HRA, including use of best efforts to gain access to property for interior inspections. 2. Summarize characteristics of each property, including building age, occupancy type, construction grade, configuration (1 story, 1.5 stories, etc.), occupiable square footage, site area and site coverage. 3. Analyze and summarize defects in structural elements, deficiencies in essential utilities and facilities, light and ventilation, fire protection including egress, layout and condition of interior partitions and other similar factors, and recommend whether such defects and deficiencies in consultant's professional opinion are of sufficient total significance to justify substantial renovation or clearance. 4. Document code deficiencies as comprehensively as possible based upon the most recent edition of the Minnesota Building Code, Energy Code, housing maintenance code, and any other applicable building code. 5. Estimate the cost of correcting any code deficiencies and the cost of construction a new structure of the same square footage and type on that site, based on reasonably available evidence and building industry standards. 6. Perform other related services as required. • EXHIBIT B • AFFIRMATIVE ACTION REQUIREMENTS On January 1, 1988, the Richfield City Council approved an affirmative action program which requires the City "to provide equality of opportunity in employment to all person and to prohibit discrimination because of race, color, religion, national origin, place of residence, political affiliation, disability, marital status, status with regard to public assistance, sex, or age in all aspects of the City's personnel policies, programs, and practices". The program further requires that the City support the various relationships with contractors, subcontracts and vendors. Therefore, requirements have been adopted for contracts as follows: a. The contractor shall submit a signed statement (Exhibit C) signifying that they are in compliance with the standards of equal employment and anti-discrimination as cited in the Civil Rights Act of 1964 as amended in 1972 by the .Equal Employment Opportunity Act. b. In accordance with the City of Richfield's Affirmative Action policy, no person shall,. on the grounds of race, creed, color, sex, age, disability, or national origin be excluded from full employmentrights in, participation in, be denied the benefits of, or be otherwise subjected to discrimination under any program, service, or activity for which the parties received, or will receive financial assistance under the provisions of any and all applicable federal and state laws against discrimination. The contractor will furnish all information and • reports if required by the City of Richfield or by Executive Order No. 11246 and Revised Order No. 4, and by the rules and regulations and orders of the Secretary of Labor or the State of Minnesota for purposes of investigation to ascertain compliance with such rules, regulations, and orders. c. 1971 Minnesota Statutes l 81.59 is made a part of this contract. See Exhibit D. • EXHIBIT C . STATEMENT OF COMPLIANCE The undersigned, Brian W. Bingham, hereby states that he is in compliance with the standards of equal employment and anti-discrimination as cited in the Civil Rights Act of 1964 as amended in 1972 by the Equal Employment Opportunity Act. Dated: By: • EXHIBIT D MINNESOTA STATUTES 181.59 DISCRIMINATION ON ACCOUNT OF RACE CREED OR COLOR PROHIBITED IN CONTRACT. Every contract for or on behalf of the State of Minnesota, or any county, city, town, township, school, school district, or any other district in the state, for materials, supplies, or construction shall contain provisions by which the contractor agrees: (1) That, in the hiring of common or skilled labor for the performance of any work under any contract, or any subcontract, no contractor, material supplier, or vendor, shall, by reason of race, creed, or color, discriminate against the person or persons who .are citizens of the United States or resident aliens who are qualified and available to perform the work to which the employment relates; (2) That no contractor, material supplier, or vendor, shall, in any manner, discriminate against, or intimidate, or prevent the employment of any person or persons identified in clause (1) of this section, or on being hired, prevent, or conspire to prevent, the person or persons from the performance of work under any contract on account of race, creed, or color; (3) That a violation of this section is a misdemeanor; and (4) That this contract may be canceled or terminated by the state, county, city,. town, school board, or any other person authorized to grant the contracts for employment, and all money due, or to become due under the contract, may be forfeited for a second or any subsequent violation of the terms or conditions of this contract. History: 1941 c 238; 1973 c 123 art 5 s 7; 1984 c 609 s 11 • • HOUSING AND REDEVELOPMENT AGENDA SECTION: Consent AGENDA ITEM # 3A REPORT # 83 STAFF REPORT AUTHORITY MEETING DECEMBER 18, 2000 • REPORT PREPARED BY: REPORT PRESENTER: DEPARTMENT DIRECTOR REVIEW: REVIEWED BY EXECUTIVE DIRECTOR: ITEM FOR HRA CONSIDERATION: Consideration of a resolution to transfer $210,000 from the Housing and Redevelopment Authority Capital Project Fund (Bonds of 1996) to fund the acquisition of 6639 Lake Shore Drive (Gramercy. TIF District). I. RECOMMENDED ACTION: KATIA MEDVETSKI, REDEVELOPMENT SPECIALIST BRUCE PALMBORG, COMMUNITY DEVELOPMENT DIRECTOR 1=1 o- By Motion: Adopt a resolution providing authorization to transfer $210,000 from the Housing and Redevelopment Authority Capital Project Fund (Bonds of 1996) to fund the acquisition of 6639 Lake Shore Drive (Gramercy TIF District). II. BACKGROUND On June 21, 1999, the Housing and Redevelopment Authority (HRA) authorized the funding and purchase of asingle-family home at 6639 Lake Shore Drive. The owner was interested in selling the property and the HRA required the subject property for site assembly for the Gramercy TIF District. The HRA purchased the property on July 26, 1999 and undertook site clearance shortly thereafter. 1218Gramtrans.doc The transfer of funds for this project was not a regular, HRA budgeted transaction. The HRA's auditors, HLB Tautges Redpath, Ltd., have recommended that all non- budgeted transfers be approved by the HRA. III. BASIS OF RECOMMENDATION A. POLICY • The HRA's auditors recommend that all non-budgeted transfers be approved by the HRA. B. CRITICAL ISSUES • The HRA'a auditor's recommendation on this issue is being implemented prior to their annual audit. C. FINANCIAL • Project expenses in the amount of $210,000 have been incurred and paid. D. LEGAL • N/A IV. ALTERNATIVE RECOMMENDATION~S~ • The HRA could authorize staff to undertake transfers for project funding without formal approval as proposed. However, this would be in direct opposition to the auditor's recommendation for general accounting practices. • Reject the transfer. V. ATTACHMENTS • Resolution authorizing transfer of funds from the HRA Capital Project Fund VI. PRINCIPAL PARTIES EXPECTED AT MEETING • N/A HRA RESOLUTION NO. RESOLUTION AUTHORIZING TRANSFER OF FUNDS FROM THE HRA CAPITAL PROJECT FUND (BONDS OF 1996) WHEREAS, on June 21, 1999, the Housing and Redevelopment Authority in and for the City of Richfield (the "HRA"), did by HRA Resolution No. 717 authorize purchase of real property located at 6639 Lake. Shore Drive for the Gramercy Tax Increment Financing District Project (the "Purchase Resolution"); and WHEREAS, the Purchase Resolution also indicated that HRA funds were available for acquisition; and WHEREAS, the HRA's purchase of 6639 Lake Shore Drive was not a budgeted HRA transaction; and WHEREAS, the HRA's auditors, HLB Tautges Redpath, Ltd. have recommended that all transfers to fund project activity that are not part of the HRA budget be approved by the HRA. NOW, THEREFORE, BE IT RESOLVED that the HRA authorize the CD Accountant to transfer from the HRA Capital Project Fund (Bonds of 1996) $210,000 to the Gramercy Tax Increment District Fund effective as of December 31, 2000. Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 18th day of .December, 2000. Thomas E. Harms, Chair ATTEST: Michael Sandahl, Secretary •