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03-21-97 agendaCITY OF RICHFIELD, MINNESOTA MONDAY, MARCH 24, 1997 SPECIAL HOUSING AND REDEVELOPMENT AUTHORITY. MEETING COUNCIL CHAMBERS 6:30 P.M. AGENDA CALL TO ORDER 1. CONSIDERATION OF APPROVAL OF AGREEMENTS RELATING TO THE. MERIDIAN CROSSING PROJECT HRA LETTER NO. 16 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 861-9702. ,. HOUSING AND REDEVELOPMENT AUTHORITY HRA Letter No. i6 Agenda March 24, 1997 Issue Statement: Consideration of approval of the following agreements for the Meridian Crossings project: (a.) Consent to Assignment, Estoppel and Agreement; and (b.) Consent to Assignment and Assumption. Background: On February 18, 1997, the HRA approved a Right of Entry Agreement between the HRA and Meridian Crossings Properties Real Estate Development L.L.C., d/b/a TOLD Development Company (Developer). The purpose of the agreement was to permit the Developer to enter the Cloverleaf site prior to the land sale closing in order to initiate site grading and utility work. A Letter of Credit was provided by the Developer in conjunction with the agreement in order to protect the HRA from any default under the agreement. The closing on the land sale for the Phase I portion of the Cloverleaf site is scheduled for Tuesday, March 25, 1997. In order to expedite closing matters, two agreements necessary for the closing are required of the HRA. Each agreement is described below. • Consent to Assignment, Estoppel and Agreement This agreement is required by the Developer's lender, Richter-Schroeder Company, Inc., of Milwaukee, Wisconsin. Essentially, the Consent to Assignment, Estoppel and Agreement subordinates the HRA's interest to the lender in the event of a default by the Developer. Consent to Assignment and Assumption Meridian Crossings Properties Real Estate Development L.L.C., d/b/a TOLD Development Company (Developer) is currently under contract with the HRA for the project.. Upon the HRA's land sale to the Developer, the Developer will grant, transfer and assign its rights and interests to Meridian Crossings L.L.C. The Assignment and Assumption governs this transfer. The Consent to Assignment and Assumption acknowledges the HRA's approval of this transfer. Both of the agreements described above are standard and similar in nature to the agreements with the CSM Corporation for the Shops at Lyndale retail redevelopment project. A copy of each agreement is attached for review. Recommended Motion: Adopt a motion which authorizes execution of the (a.) Consent to Assignment, Estoppel and Agreement and (b.) Consent to Assignment and Assumption by the Chair and . Executive Director. Basis of Recommendation: 1. The Consent to Assignment, Estoppel and Agreement is similar in nature to a Subordination Agreement and is an agreement required by lenders to protect their assets in case of contract default by the Developer. 2. The Consent to Assignment and Assumption is required by the HRA to effectuate the transfer of rights and interests from Meridian Crossings Properties Real Estate Development L.L.C., d/b/a TOLD Development Company to Meridian Crossings L.L.C. 3. Legal counsel has reviewed the (a) Consent to Assignment, Estoppel and Agreement and the (b) Consent to Assignment and Assumption and is of the opinion that both are reasonable legal documents necessary for closing and adequately protect the HRA. 4. The closing on the Phase I portion of the land sale is scheduled for March 25, 1997. Alternative Recommendation: 1. Reject the Agreements required for closing. 2. Delay approval of the Agreements required for closing Discussion/Decision Mode: Approval of the Agreements would allow the closing on the land sale to occur as scheduled. Respectfully submitted, Ja a .Prosser Executive Director JDP:ds r1LC ~vo. ou'y v3/C1 yt L'tS:~C 1ll:lULll L1tVtLUI'1"ItNI E-il~ 4CO 7574 MAR 20 '97 16:42 FR O 8 H 26TH FL 414 277 5E,4d TD 13#2923?1116124207 P.10f1? • CD~QB~_Q A~~! ESTO]tl~~~L,~AND, ~~ Thin CON6SNT TO A58I~NT, ESTOPPEL AN'D AGREEMENT t"Agreement") is made es of the day of March, 199'7 by and among D~RIDZAN CA086INGS LLC, a Minnesota limited liability company ( "Redeveloper" } , AIC~IT$R-SCHAOEDSR co~spANX, IDtC. , a Wisconsin corporation {together with its successors a>~d assigns, "Lender" ) and TR8' ' HO't3'8TN4 ANA >RSDE'V'ELOPMI~NT AV?SORITY YN AND FOR TR8 CITY OF AICgP'TBLD, ltZNN1{SOTA, a Minnesota public body corporate and po7.itic (the "HRA"}. W '~ T N~ S S$ T Ms WHEREAS, RedAveloper's pred~xaessox in interest, Meridian Properties Real Estate DaveXopment L.L.C., and iiRA ent~lred into that certain contract for private redevelopment dated November ~, 1985, as amended by that certain First amendment co contract for pri~+rate xedevelopsnesit dated as of -March 18, lg9&, and as further amarlded by that certain second amendment to contract for private redevelopirlertt dated as of September 2S9b and that certain LeZtteY of Understanding dated Match 19, 1996 tas ainanded, the "Contract") which assignment of said Contract to Meridian Crossings LLC, was cvneanted to by the HRA vn March 2g, 1997, • pursuant to which Cho HRA has agreed, ~-mong,other things, to sell the Redeveloper the property snore particularly described on Exhibit A attached hereto (the "Phase I Property" or the "Grope=ty"); and WHEREAS, Lender has agreed to make a loan of up to $~1,oaa,000 to the Redevelopelr {the pConstzuction Doan") For the purpose of ca>,zstz'ucting an ®ight story, multi-tenant office building and parking structure on the Property (the "Project"), and is or will be the holder oP (i) a Mortgage and Security Afire®ment and Fixture Financing Statement tthe "Mortgage") which does ox wi7.1 encumber. the >Qroperty, azYt4 {ii} a eellatara2 Assignment of Tax .Incremental Financing {the "Assignment"} puzsuant to wlYich the Redeveloper will assign the Contract to the Lender far collateral purposod, WHEREAS, the Contract specifies, among other things, ti18t 3'iAA has the right to approve or disapprove of certain matters priox` to closing the sale of the Property and that saertain of HRA's rights under the Contrast ax® subject to being subordinated in favor of a construction lender; WHERE71.9, the Lender would be unwil~,ing to snake the Construct;on Loan without the a9aurancss provided in thi.e Agra~rtlent ; arsd PAGE 2 QBxls~isYet.a r 1 LC ~vo , aU~ L13~C1 ~ r Ut5 ~ ~G 1 U ~ 1 ULU lltVtLUF'iltN I EilC 4~(} 7574 MAR 20 '97 16:az FR a $ e z6YH F~ 414 277 5674 Ta ##z9z3?#161242b? P.1i/17 wEiLRLAa, capitalised terms used herein that are not otherwise defined herein shall have the meanirtge attributed to them in the Contract; NOw, THERE~'Oi~, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as toZlows: 1. Consent t_o~esianment. $RA aoknowledges that the Redeveloper's interest under the Contract is to be assigned to Leader and hereby gives its consent thereto. Such assignment shall not constitute a default under the Contract nor in any way alter or affect Redeveloper's rights and oblgationsc under the Contract. HRA further acknowledges that HRA hays consented to the execution of the purchase and s~-le agraemesnti dated as of March _, 1997 between. the Redeveloper and OTR, as nominee for The State Teachers ttetirement Board oP Ohio. ` 2_ Rep~^esenta 'one Rggardina the Contract. {a) Gen~trai.R ars~sntations. HRA hereby represents, warrants and certifies to Lender that as of the date hereof: (i) HRA is the owner and holder of the HRA's intexest under the Contrast; • {ii) a true and complete ropy of the Contract is attached hereto AS Exhibit 8, xhe CoAtraCt represents the entire agreement between the Redeveloper and FiRA with respect to the Property and the Contract has not been modified, supplemented or amended in any wayF (iii? the Contract is in full forts and effect and COn6t3.tt1tEi6 a legal. valid and binding obligation of the xx~; (iv) neither HRA nor Redeveloper is in daPault under any of .the terms, coveinants or pxovisione of the Contract end no notice of ddfault under the Contract has been served by or upon HRA, and HRA, to the bast of its knowledge, knows of no event which, but for the passage of tame or the giving of notice, or both, would aon+atitute 2tzi event of default by HRA or Redeveloper uxider the Contract; (~r) neither HRA nor Lender has commenced any action or given or received any notice !or the purpose of terminating khe ContraetJ (vi) all sums currently due and payable undex the Contre~ct have been paid in full, and {vii} there are no offsets or defenses to performance of the Contract. PAGE 3 ~3~37369i.7 ~. ril.c ~vv. au~ v3fe1 ~r Vts%~~ lU~ ItA.ll UtUtLUMI`ItNI Ejlc' 4`c'U 7574 MRR 20 ' 9? 16:43 Fa ~ 8 $ 16TH FL 4I4 27? 5674 TO s'its1~323?xt16124207 P.12i1? r~ J ib? ~pep~~,ti$p~esen,I,ations. PIRA hereby represents, warrants and cextifiee to Ladder that as of the date hereof (references to a '"section" below are to a Aection of the Contract}: ti) with respect to the Phase I Pzoperty, the Redeveloper and HRA have reached agreement an the initial graenndi.tions to closing set forth in section 3.2, and the letter agreement dated March 19, 1946 between HRA and the Rrrdevelop~sr {the "T,etter Agreetaerit"? evidencss the written agreement referextcad in section 3.2 regarding thaC neither party has any. termination rights pursuant:to the last paragraph of section 3.2. HRA has removed th® foreign soil that has previously been placod on the Property that is referenced in the Letter Agreement in connection with Section 3.2tfa of the Contract; ti.i} the Red,~velopcr hie reZpned Che Property t;o PC-2 and has obtained a conditional use permit far the phase x Minimum Smprovements ac required by sectioxt 3.3{c): {iii} the HRA has obtained all. necessary permits and approvals regarding the filling of the wetlandsa referenced in roection 3.4 td) to the extent that such wetlands are present an the Phase I Property; tiv) the HRA is not conditiozuAg the clc:eizlg of the sale of the Phase I Property on its ability to ~.I~eue artd ss11 tax increment gezteral obligation bonds as described in section 3.3 te} J (vf the idRA is .satisfied that the Redeveloper has met its obligations with respect to financing and conatructioa contracts as set forth in >aeatiori 3.4 tg) tvi} the HRA hoe removed the prior coa9truction project located on the Property pursuant to sectionn 3.3{~): tva.i) the HRA has approved the Concept Plans more particulaxly dtsacxibed on $ ibit c hereto; and (viii} the Redeveloper has obtained. the insurance required by section 6.1. 3. $~bordinati~n, pursuant tv section8 6.3 and 8.5 of the Contract, HRA hereby algraes that its rights under the Contract era tend Qhall be subject and subordinate to the Mortgage and the Asaigtiment and to all of-the proviwions.contained therein, all advances made or to be made thereunder, and to any renewals, modifications, supplements, replacements, consolidations, incre:aaes cad extetlsion4 of the Mortgage and the Assign>nent . g . R_ecQe„~n~tio{~ of Succe,~~ag,_~+Kv~loper. ~iRA. shall. receipe of written notice from Lender stating that it ia3 exercising its right under the Asaignmeat to assume thg Redeveloper's position under the Contract zecognize Lender upon as the PACE 4 QB1~39Yf?i.1 i 4c ~ ti~ . au~ u3• u y r uts ~ ~4 ~ 11 ~ ~ uLU lltvtLUl'I"ItfV I 612 42~ 7574 PAGE 5 MAR 28 '97 1643 FR Q 8 8 26TH FL 414 2?7 5674 TO t3is2923'tii1612421~7 P.13~17 C7 Redeveloper under the Contrast without further consent from Redeveloper or court order; provided that, in accordance with 9eetion 8.3 of the contract, Lendex shall not be permitted to undertake ar continua the construction or completion of the Phase I Minimum Improvement or receive any paymsnt9 under Note I {as such term is defined in the Contract? unless it assumes Redeveloper's obligations. under section 4.S(A). HRA agrees that, if-the interest of Redeveloper in the Contract shall be assumed by Lender, or in the event of a foreclasure sale of the Property to any other peraen er entity, then FiRA shall recognize Lender or such. purchaser, grantor, ox other successor to Redeveloper*s interest (~'Succeaaor Redeveloper") as the Redeveloper under the Contract upon such Successor Redevelopers request and Lender shall not be {a) liable for any accrued obligation pf Redevelopex or for any act or omission vg Redev~aloper, whether prior to ar after much foreclasure or sale, (b} xeguired to make any repairs to the Property required as a result of fire or other casualty ar by reason o€ condemnation unless Lender shall be obligated under the Contz~ct to make such repairs and shall have received sugficient casualty insurance proceeds or condemnation awards to finance the completion of such repairs, ox {c) eub~eGC to any offsets or counterclaims or similar claims which shall have accrued to HRA against Redeveloper prior to the date upon which Lender or othex successor Redeveloper shall become the own~sr of the Property. Successor Redeveloper's liability under the Contract shall be ].~.mited to the extent of the interest of the 3uctess-or-Redeveloger in the Property and in no event shall Successor Redeveloper be personally liable under the .Contract. NokwithStanding~ any other provision in this Agreement to the .contrary, the HRA, -the Redeveloper and the Lender acknowledge and agree that the. HRA shall have nv obligation to make any payments under Note i to the Lender if an Event of Default (as dsfi~ied in the Contract} has occurred under the contract o» the part of the Redeveloper and such Event of Default hats not been waived by the HRA or cured by the Redeveloper or Leader or Successor Redeveloper within the time period permitted under the contract ar coxed by the Lender within a ~r'aawonable time. 5. Further Amenc}ments 4~ the Contract. KRA shall not, without obtaining the prior written consent of Lender, {a) enter into any agreement which terminates the Contract or amends or modifies the Contract, (b) terminate the Contract without cause, or {c? assign the Contractor say part thereof; and any such amendment, modification, termination, prepayment, voluntary eurrendex, aeeignmene ar subletting, without Lender's priaz~ consent, sha11 not be binding open Leader. 6 . ~Q iea o `~Jotit"~a/L.enr3s+r~ s pnflortuni y to Cure . In accordance with section B,Z, HRA will promptly furnish Lender at the address set forth beneath its signature below with a copy of all not~,css given by HRA to Redeveloper under the pxavisions of the Contract. Yn addition, HRA agrees that no notice or demand with respect to a default or breach of the contract by the Redevelopex shall be effective unless Lender has received notice of such default and has failed to cure such default or breach Ctrl\371679.2 4 a ~..L ~ rv . .~vct vv~ cl .7 t VO • J4 1 U • I ULll Ut~tLUF'I ItIV l kj1G~ Q~{) 7,Fj~lj MRR 20 '97 16=43 Pk Q & 8 26TH F~ ale 277 S67a To ats292373t16324ae7 P.iail? • (however, .Lender shall not be obligated to curs any such default or breach) within whichever period of time is long®r {i) forty- fivs {45) days after receipt of such notice or (ii? such period of time fallowing such notice as Redeveloper has to cure the default which gives rise to such alleged xight of cancellation, reduction or abmtement. 7. ~~1oes Gener,~al~. Any notice or election to be given hereunder shall be in writing, addressed to the party at the address atatc~d below Chat party's $ignnture on this Agreement and shall be t1) delivered in person to the receiving party by the other .party, his agent or a prafes~sional courier service, {11f sent United States certified or regi>9tered mail, postage prepaid, return receipt requested, or (iii) sent by`telscopy to the receiving party at the tel®copy phone numb~sr stated below the receiving party'$ signatuxe on this Rgroemsnt. Rssy such notice or tlection sha11 be deemed of€ective upon they earlier of the actual receipt of the notice cr election or 4i) if delivered in person, then when such notice or el~sction ins delivered to 8n individual at the receiving party's address who is apparently auehoYized to accept dcliver~,els, tii) if sent by United States certified or registered mail, then one day after such notice cr election is depposited with the United States Po~atal 5ez'vi.ce, or {iii) if s~er~t by telecopy, then at the time sent and confzrmsd by the sender's trrlnsmitrted copy of such notice or election. 8. parties g, ou„nd. Thia A~grsement ~Ihall bind and inure to the benefit of the successors and asslgrrs of the parties hereCO; .provided that the Redeveloper shall not assign its rights and obl~tgations hereunder without the consent of both the H17A and the Lender. 9 , only„ T~ r ' t~ tea Rimend~te , Thia Agraernent may not be modified in any tttanner or terminated except by an instrument in writing executed by the parties hereto, Z0. go~s-~inq_Law. This Agreement eahall be governed by and construed under the laws of the State df Minnesota. 11, DTot,~ces of Defa~c to HRR. The Lender agrees to provide written notice Co the HRA of the occurrence of an Bvent of Default on the part of the 17eveloper under the Construction Loan Ayxeemeint or the Mortgage prior to comet®>ncing any foreclosure proceeding with respect to the Property or prior to accepting a deed in lieu of foreclosure with respect to the Property; provided that the failure to give any such notice shall not impair or delay the Lender's rights and remedies in arty manner, but such failure shall Gxtend the commencement of the Option Period referenced below. Any notice given to the F3RA pursuant to this paragraph 11 shall be cent by registered or certified mail to the HRA at the following address: PAGE 6 vnx~s7is~s.z 5 ....~.. ~ ~~ . ,,v~, 1lJ~ Cl ~ r ua • ~a t u ~ i Ut,.U UtVtLUf'~"ItN I 612 424 757A MRR 20 '97 16 44 FR Q & B 26TH FL 414 27'1 5674 Tl7 ##2923'7#1612420? P,15/1? The Fiausing and Redavelopm~snt Authority in and for the City of Richfield 6700 Portland Avenue South- ' Richfield, Minnesota 5523 Attention: Executive Dl.rector 12. B, ec e,,~~ion Riaht,,~s~o~ NI~n. During the forty-five (~5~ day period (the ~~optien Period"} commencing on the date when the Lend+~r sands tca the N12A the written notice described in paxagraph 11 $bove, the FIRA shall have the option to purchase the Construction Loan and the related L~snder loan doeumerits (the "Lender Loan Documents")..from the Lender,. without ,representation or xecourse of any kind by the Lender and pursuant to assignment documentation acceptable to the Lender, for a purchase price equal to th+s outstanding principal balance vE the construction Loan plus all accrued and unpaid interest thereon and arsy ether premiums, panaZties, fees. costs and. expenses owing to the Lender under the Lender Loan Documents as of the date of funding of such purchase. The H1IA acknowledges and agrees thmt the Lender may commence foreclosure proceedings and may exercise other rights and remedies available to the Lender undez the Lender Loan Documents during the Option Period; provided, however, that she Lender shall not accept a deed in lieu of foreclosure with respect to the Property until after the expiration of the Option Period. The HRA further ackiww~,edges that if the FIRA elects to exercise its option to purchase the Construction-Loan under this paragraph 12, the funding of Such purchase mutt occur prior to 5:00 p.m. (Minneapolis tine} on the last day of the Option Period. The Lender further agreed that during the Option Period, the HRA may propose for the LendeF's consideration a substitute developer who, among other things, would assume all of the obligations of the Redeveloper under the. Contract and under the Lender Loan pocum®ntsf provided, howevex, the Lendrsr shall have no obligation to either consider or accept any such substitute developer; and provided, further, in the event that the Lendex', in its sole diaaretion, shall determine to cor~9ider or accept Such substitute developer, such consideration andJor acceptance shall be on such terms as the Lender shall. determine in its sole diaaretion. IN WITNESS WHEREOF, the parties hereto have executed this Agxeement as of the month,. day and year fir6t written above. I~RIDIAN CR03SINGS LLC By: xtg: Address• Tel.ecopy No.: RHS~~xs~e.a 6 PAGE 7 • --.- ~ •~ . wv vv, « u r vo • ~~ 1 li • ~ ULll llt u tLUNI ItN I b j ~ q2Q X574 MRR 20 '97 1644 FR i~ 8 B 26TH FL 414 2'7'T S6?4 Tl3 i3ii29237ii1612420? P.16~17 • • AIC~TSR-SCHItORA~R CObIpAWY. IN'C. ~y~ I,~sa Lin aay. v~.ce President Address: RlChter-Schroeder Company, YnC_ Suite 320 3110 North Odd World Third StreeC Milwaukee, W'I 53203 T~lecopy N'o.: (qTg) 371-67x3 T8E I3OIIS~NCi ANA RS~DEV~LGpDt~1~1T AUT$ORITY IN ANa $'OR T~iB CITY OA' R~CR~t'~EI.T?, MTNNESdTA By: Its: By: It>~ Address: Telecopy No.: PACE $ ~tail3TSaya.x -•-~ •-~-• ~~~+ vv c..l yr vV•JV 1L• IIJLU LCVCLUh'I ICIVI bI~ 4~U '("v74 MAR 20 '9? 16:44 fR Q $ H 26TH FL a14 2?? 5674 TO ttti2923?1i1612421~'7 P.17/17 • STATE OF ) SS COUNTY OF -.^_ ) Personally came be€ore me this day of Marsh, 1999, the above-named as the ~. of Meridian Crossings LLC a~zrd to may known to be t e~i `son w o executed the foregoing instrun~ant and acknowledged the same in such capacity. STATE OF j ) SS covNTx of _„~,l Notary Public, State o My coau+n#.ssion: Personally carne bs€oxe me this day o€ March, 1897, the above-named as the o T e Housli2g -and Re eve~.optttent Authority in and for the City of Richfield, Mizuaesvta and to m® known to be the person who executed the foregoing instrument and acknowledged ebe ®atne ~n such capacity. 3TAT~E OF' ) ss COUNTY OF ) Notary Publ c, State of My eommission• Personally came before me this day of March, 1997, the above-,named Lisa A. Lindsay, as the Viea President of Richter- Schroeder Company, Inc. and to me known to be- the person who executed the foregoing instrument and acknowlr~dgad the same in such capacity. O81t~7ii~r.z NOCary Publ c, State of My commission: B PAGE 9 ~ TOTAL PAGE.i7 >~ CONSENT TO ASSIGNMENT AND ASSUMPTION Pursuant to the provisions contained in the Contract, the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota ("HRA") hereby finds and determines that the proposed assignment and assumption is in compliance with the provisions contained in Section 9.3(b) of the Contract. The HRA therefore approves and consents to the assignment and assumption as described in the attached agreement. Dated: March , 1997 • HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA By: sy: Its Commission Chairperson Its Executive Director JBD119595 RC125-66 ASSIGNMENT AND ASSUMPTION THIS ASSIGNMENT, made this day of 1997, by and between MERIDIAN PROPERTIES REAL ESTATE DEVELOPMENT, LLC, a Minnesota limited liability company (Assignor") and MERIDIAN CROSSINGS LLC, a Minnesota limited liability Company ("Assignee"). WITNESSETH: WHEREAS, Assignor has entered into a Contract for Private Redevelopment dated November 6, 1995, with the Housing and Redevelopment Authority of the City of Richfield (the "Contract"); WHEREAS, Assignor, as permitted by the Contract, now wishes to assign its rights and interests therein to Assignee; NOW, THEREFORE, IN CONSIDERATION OF One Dollar ($1.00) and other good, and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the. parties hereto hereby agree as follows: 1. Assignor does hereby grant, transfer and assign to Assignee, all of its rights and interests in the Contract. 2. Assignee hereby accepts this Assignment and assumes and agrees to faithfully abide by, perform, and discharge each and every term, covenant, and condition of the Contract which are to be performed by the Assignor thereunder from the date hereof and to defend and hold Assignor harmless from any lawsuits, claims, damages, costs and expenses, including actual attorneys' fees arising in connection with the Contract, except those arising from events occurring or arising prior to the date hereof. 3. This Assignment and Assumption shall be binding upon and inure to the benefit of the successors and assigns of the parties hereto. IN WITNESS WHEREOF, the parties have executed this Assignment and Assumption Agreement as of the date indicated below. MERIDIAN CROSSINGS LLC MERIDIAN PROPERTIES REAL ESTATE DEVELOPMENT, LLC By: Its: sy: Its: JBD119589 RC125-66