06-19-95 agendaCITY OF RICHFIELD
MONDAY, JUNE 19, 1995
REGULAR HOUSING-AND REDEVELOPMENT AUTHORITY MEETING
COUNCIL CHAMBERS
7:00 P.M.
AGENDA
CALL TO ORDER
APPROVAL OF MINUTES OF SPECIAL HRA MEETING OF MAY 22, 1995
1. OPPORTUNITY FOR CITIZENS TO ADDRESS THE HRA ON ITEMS NOT ON THE
AGENDA
2. CONSIDERATION OF PROPOSED CONVEYANCE OF THREE RENTAL
APARTMENT COMMUNITIES TO HRA AND PURCHASE OF REPLACEMENT
RESERVE:
• HAMPTON PLACE 620-735 EAST 78TH STREET
• HERITAGE SQUARE 900-1000 EAST 78TH STREET
901-1001 EAST 77TH STREET
• CRESTWOOD 7720-40 FOURTH AVENUE
HRA LETTER NO. 37
3. CONSIDERATION OF INTERIM REPORT ON "TOGETHER WE CAN" PROGRAM
FROM JOHN SZARKE AS PART OF COMMUNITY APARTMENT PROGRAM
HRA LETTER NO. 38
4. CONSIDERATION OF RESOLUTION AUTHORIZING PURCHASE OF
PROPERTIES FOR RICHFIELD REDISCOVERED:
• 7037 OAKLAND AVENUE;
• 7241 SECOND AVENUE;
• 6812 13TH AVENUE;
• 6432 15TH AVENUE; AND
• 6933 QUEEN AVENUE
HRA LETTER NO. 39
5. CONSIDERATION OF STATUS REPORT BY HENNEPIN TECHNICAL CENTER ON
CITY PROJECTS
HRA LETTER NO. 40
6. EXECUTIVE DIRECTOR REPORT
7. CLAIMS AND PAYROLL
ADJOURNMENT
Auxiliary aids for individuals with disabilities are available upon request. Requests
must be made at least 96 hours in advance to the Administrative Services Director at
861-9702.
HOUSING AND REDEVELOPMENT AUTHORITY
HRA Letter No. 40
Agenda June 19, 1995
Issue Statement:
A status report by Hennepin Technical Center (Vo-Tech) on City projects.
Backaround:
The HRA has requested a status report from Vo-Tech on their. projects within the City. Vo-
Tech projects are presently being completed at 7537 Girard and 7021 Nicollet Avenues. Vo-
Tech work will be completed on schedule by the end of July. The cooperative effort has
spanned 18 years and 24 homes. During that time, Vo-Tech has provided well built three
and four bedroom homes affordable to families between 50 and 80 percent of the median
income. However, this partnership has not been without problems. Site appearance, length
of projects, and a lack of responsiveness are of greatest concern.
In recent weeks, staff has studied alternative ways of delivering three and four bedroom
affordable housing for the modest income market above Habitat for Humanity participants
and below Richfield Rediscovered participants. The most promising alternatives are: 1) The
Greater Minneapolis Metropolitan Housing Corporation (GMMHC) which builds homes
primarily for the Minneapolis Community Development Agency (MCDA); and 2) Affordable
Suburban Housing (ASH) anon-profit managed by Bill Schatzlein. MCDA provides subsidies
to reduce GMMHC's end housing cost to buyers. Single family housing is a new venture for
ASH. Project estimates are being solicited from GMMHC and ASH. Both organizations are
working with staff on housing proposals that the HRA could consider in August.
Representatives from the Vo-Tech will be present at the meeting and have expressed their
desire to continue project work with the HRA. Staff declined the most recent project proposal
which was to relocate a house built at the campus. Further, staff has addressed issues of
site appearance, length of time to project completion, and responsiveness during and after
project completion. If the relationship is to continue, revised performance standards will be
necessary and have been cooperatively worked on. A draft of those standards is attached
for the HRA to consider.
If the HRA concurs, Vo-Tech would be:
• limited to one project each year, starting in September and ending in June.
• no longer building at the campus for relocation to Richfield.
• required. to complete the exterior in three to four months (except for sidewalks,
drives, steps which would be completed following spring thaw).
• responsive and timely response to staff and Building Official requests.
Recommended Motion:
Consider the status report and Vo-Tech's request to be further considered for a fall project, to
be presented to the HRA in August provided all existing projects are completed in July and
\ performance standards agreed to.
Basis of Recommendation:
1. The number of projects have been reduced and troublesome project areas are
emphasized with specific expectations. Vo-Tech will only have one project and one focus
each year and the developed standards are very specific.
2. The 90 to 120 day exterior completion deadline for Vo-Tech is consistent with
expectations made of private contractors performing in Richfield.
3. The May/June completion of final grading and installation of steps, sidewalks, driveways,
and landscaping is consistent with .flexibility provided to private contractors that have fall
construction starts through Richfield Rediscovered. Weather, load restrictions, and the
availability of landscaping materials prevent faster completion.
4. Interior completion during the winter months fits the curriculum schedule of the school and
minimizes site appearance issues.
5. The Vo-Tech project at 7537 Girard Avenue essentially followed the proposed standard.
However, Vo-Tech erred by deciding to wait until spring to install the siding.
6. Vo-Tech has essentially completed 7537 Girard Avenue in ten months and shortened the
length of the project by six to nine months over previous efforts.
7. Vo-Tech needs some indication from the HRA in June that it would consider another
project given certain requirements. The fall curriculum has to be finalized before an
August project approval
8. Staff has evaluated alternatives and it appears Vo-Tech requires no direct subsidy and
provides a cost effective project. The August project proposal would include a side by
side comparison with a project by GMMHC and ASH.
Alternative Recommendation:
1. Discontinue the relationship.
2. Modify the performance standards for Vo-Tech projects.
Discussion/Decision Mode:
Dave Smith, Chair of Building Trades for Vo-tech., and Larry Parlin, instructor and
construction supervisor, will be in attendance at the June 19, 1995 HRA meeting to answer
questions of the HRA.
Respectfully,ga,bmitted,
James
irector
JDP:ds
PROJECT PERFORMANCE STANDARDS
1. One project will be stick built in Richfield on-site each school year. (September to
June.)
2. Preliminary project drawings, contracts and cost estimates must be assembled by
May 31 of each year for the upcoming project.
3. The HRA must provide a cleared site for construction by August 31 of each year.
4. Final contract and plan approval will occur in August of each year.
5. Construction will start by Vo-Tech each September.
6. Vo-Tech has approximately 110 to'120 days, until winter break of each year
(approx. December 20th) to excavate, place footings and foundations, frame,
sheath, side, install windows/doors, flash, roof.
7. Exterior appearance in regard to construction debris must be monitored daily and
continuously. In addition, by November 1 of each year, Vo-Tech will ensure that the
site has been completely picked up and rough graded so that winter weather does
not entrap debris and leave uneven surfaces on site that impair perimeter mowing
and maintenance by the HRA. Dirt piles should not be present during the course of
construction. If a particular site provides difficulty for relocating dirt, options should
be discussed with the HRA.
8. Concrete steps and sidewalks, brick work, decks, and bituminous driveways to allow
for settlement where soils have been disturbed, should not be installed in the fall
and winter of each project. However, they must be installed promptly after the lifting
of statutory load limits and no later than the final work day preceding the Memorial
Day holiday of each spring.
9. Where steps and brickwork may leave an unfinished appearance until the following
spring, the Vo-Tech construction supervisor shall provide interim finish options
which are temporary but provide a reasonable appearance of completion prior to
installation of the final materials. The HRA will review and approve each of those
options.
10.The Vo-Tech construction supervisor will respond to in-progress and post
completion construction requests of the HRA and the City Building Official in a timely
manner. For each request, a deadline must be agreed upon and the deadline must
be met. Unless the completing of the task warrants a longer period of time, seven
(7) days is the maximum time allowed to respond to requests.
11. Satellites should be removed from the site as soon as possible; i.e., as soon as
interior carpentry is completed and a temporary indoor commode and lavatory with
privacy is provided.
12. The number of vehicles at each site must be kept to a minimum. Parking should be
off-street and in the rear yard. Vehicle pooling is essential with off site parking
locations being reviewed and approved by the HRA if in Richfield.
13.The HRA will pick out floor covering and electrical fixtures by May of each year for
installation in June of each year.
14.The HRA will install landscaping by June 30 of each year. This requires all exterior
construction work, steps, sidewalks, driveways, to be completed by June 10 of each
year.
15.Vo-Tech will complete its project by June 30 of each year.
16. Upon installation of landscaping, floor covering, counter tops, finished
(stained/varnished) wood, and painted surfaces, Vo-Tech shall take all measures
necessary to ensure that those surfaces materials will not be damaged, marred, etc.
HOUSING AND REDEVELOPMENT AUTHORITY
HRA Letter No. 39
Agenda June 19, 1995
Issue Statement:
Adoption of a resolution authorizing the purchase of properties for Richfield
Rediscovered.
Background:
In April, Mr. Sid Inman of Publicorp presented a report to the HRA on the status of the
TIF projects. Mr. Inman has also determined that $625,000 could be made available
from the Development Fund to support Richfield Rediscovered. Staff has identified and
negotiated the purchase of five properties. Approximately five additional properties will
be presented to the HRA during the summer. BCL performed the requested appraisals.
The negotiated purchase price and appraised value are the same.
Ad re
7037 Oakland Avenue
7241 Second Avenue
6812 13th Avenue
6432 15th Avenue
6933 Queen Avenue
Appraised Value
$48,000
$53,000
$59,000
$55,000
$45,000
All the properties have been inspected to determine that they meet program
requirements for acquisitions. All the properties are part of the Richfield Rediscovered
Tax Increment Program approved by the HRA in May, 1995. These sites are initially
being offered to New Ford Town area relocatees. A description of existing conditions at
each property is attached.
Recommended Motion:
Adopt the attached resolution which authorizes:
1. The purchase of the properties at the values indicated.
2. The Executive Director and HRA Chairperson to execute purchase agreements and
other documents to effectuate the purchase.
Basis of Recommendation:
1. The properties meet program requirements for acquisition and are identified in the
plans previously approved by the HRA.
2. Funding for acquisition is available.
3. The owners have voluntarily indicated an interest in selling their property to the HRA.
4. Purchase has been negotiated at the stated values.
Alternative Recommendation:
1. Do not authorize acquisition.
Discussion/Decision Mode:
Agreements to purchase will be prepared in final form and marketing is underway.
Respectfu submitted,
James rosser
Execu " Director
JDP:ds
RESOLUTION NO.
THE HOUSING AND REDEVELOPMENT AUTHORITY
IN AND FOR THE CITY OF RICHFIELD, MINNESOTA
RESOLUTION AUTHORIZING PURCHASE OF REAL PROPERTY LOCATED AT:
7037 OAKLAND AVENUE
7241 SECOND AVENUE
6812 13TH AVENUE
6432 15TH AVENUE
6933 QUEEN AVENUE
WHEREAS, the Housing and Redevelopment Authority in and for the City of
Richfield, Minnesota (HRA) desires to purchase certain real property pursuant to and in
furtherance of the Richfield Rediscovered Redevelopment Project (Project) heretofore
adopted by the City of Richfield (City) and the HRA, said real properties being
described as follows:
7037 Oakland Avenue: That part of the west 1/2 of the southeast 1/4 of
the northwest 1/4 of the northwest 1/4 of the northwest 1/4 lying north of
the south 192 ft. thereof and south of the north 55 ft. thereof.
7241 Second Avenue: Lot 14, Block 6, Wooddale Second Addition.
6812 13th Avenue: E 154' of S72' of N288' Block 5, Rich Fields Addition.
6432 15th Avenue: Lot 9, Block 3, Nokomis Gardens Rearrangement of
Block 1, 2, 3, 4, and 5, Girard Parkview Addition.
6933 Queen Avenue: Lot 16 and N 1/2 of Lot 15, Block 16, Tingdale
Bros.' Lincoln Hills Third Addition.
WHEREAS, the HRA is authorized by Minnesota Statues Section 469.012 to
acquire real property within its area of operation; and
WHEREAS, the properties meet all program requirements for acquisition; and
WHEREAS, the HRA has caused appraisals of the subject properties to be
made by a qualified independent professional real estate appraiser and has negotiated
purchase prices with; the owners based on stated values; and
WHEREAS, funds have been provided by the HRA and are available for
acquisition.
NOW, THEREFORE, BE IT RESOLVED by the Richfield Housing and
Redevelopment Authority:
1. That purchase prices are approved as follows:
Ad res
7037 Oakland Avenue
7241 Second Avenue
6812 13th Avenue
6432 15th Avenue
6933 Queen Avenue
Purchase Price
$48,000
$53,000
$59,000
$55,000
$45,000
2. That the Chairperson and Executive Director are authorized to execute a Purchase
Agreement and other documents to effectuate purchase for the amounts set forth in
this resolution.
Adopted by the Housing and Redevelopment Authority in and for the City of
Richfield, Minnesota this 19th day of June 1995.
Thomas E. Harms, Chairperson
ATTEST:
Vern Luettinger, Secretary
SUMMARY OF PROPOSED PROPERTY ACQUISITIONS
(As of June 19, 1995)
RICHFIELD REDISCOVERED PROGRAM
7037 Oakland Avenue. This property has been abandoned since
the owner died over a year ago. The property has been neglected for
some time. It suffers from water damage and damage from unsupervised
pets.
7241 Second Avenue. The house has 564 square feet with no
basement. The electrical system is in poor condition. The house
functions poorly due to its small size and cramped conditions.
6812 13th Avenue. This house sits back on the lot, It has no
basement. The house has a poor structural support system making it a
poor candidate for future remodeling. Several repairs are needed such as
updating the electrical, replacing the furnace and water heater, replacing
the windows, and updating all floor coverings and painting. Roof life is
limited.
6432 15th Avenue. This cottage home has been well maintained
by the owners for years, but has limited life left. It has 662 square feet of
livable space, including one bedroom, a small kitchen; no dining area.
The basement is full, but it is not square and has a low ceiling. Electrical
updating, new furnace and ductwork, new floor coverings, and general
updating are needed. Exterior siding is beginning to fail.
6933 Queen Avenue. Garage home on the back of the lot with
496 square feet. No basement. This has been a rental property for some
time, but is currently vacant. The ceilings are very low, (6.5 ft.) in the
living room and kitchen, 60 amp electrical, inadequate wall heaters, poor
ventilation. Rear lot location of home. The bathroom is entered through a
bedroom.
HOUSING AND REDEVELOPMENT AUTHORITY
HRA Letter No. 38
Agenda June 19, 1995
Issue Statement:
Midpoint report on "Together We Can" from Mr. John Szarke as a part of the
Community Apartment Program.
Background:
On February 28, 1995, the HRA retained the services of Mr. John Szarke to formulate
"Together We Can," an apartment resident self-sufficiency program. Although the
report was ready for presentation at the May meeting, limited time available for agenda
items in May made it inappropriate to present.
Recommended Motion:
Accept and discuss a presentation regarding the attached interim report.
Basis of Recommendation:
1. The report in Exhibit A indicates the contacts Mr. Szarke has made as a result of
data gathering. Resource utilization has been extensive.
2. Mr. Szarke has met often with a working group consisting of Camillo De Santis, Mike
Welsh (Bloomington-Richfield Family Services), Laura Klein (CAP), Bill Schatzlein
(CAP), Denny Johnson (staff) and Bruce Palmborg (staff).
3. This report will be utilized as a frame work to prepare aself-sufficiency strategy for
presentation to the HRA in August.
Alternative Recommendation:
1. Postpone report presentation.
2. Direct report to be modified.
Discussion/Decision Mode:
To present strategy in August, it is important that the direction for that strategy be
established as soon as practical.
Respectfully bmitted,
James D. rosser
Executive Director
JDP:ds
"Together We Can"
Midpoint Report
May 15, 1995
John Szarke
Research that I have completed so faz is included in Exhibit A. During the past two months, I have also
met on four occasions with an advisory group consisting of Bruce Palmborg, Dennis Johnson, Camillo
DeSantis, Mike Welsh, Laura Klein, and Bill Schatzlein. I am grateful for their valuable input.
This midpoint report confirms that there is a great need for developing an economic self-sufficiency
program in Richfield.
I have included some observations about poverty within block groups in three different tracts in
Richf eid; Block Group 2 of 248.02; Block Group 1 of tract 249.02 and Block Group 1 of tract 249.03
(Exhibit B). These block groups in the selected tracts have a high percentage of renters as is indicated in
the following 1990 census information:
RIC~IFIELD TRACT TRACT TRACT
CITY 248.02 249.02 249.03
CHARACTERISTIC, 1990 BG 2 BG 1 BG 1
Total population 35170 1415 1121 848
% of households that own 67% 18% 64% 45%
% of households that rent 33% 82% 36% 5~%
Children in Poverty in Richfield
1. In the City of Richfield, 9% of children were in poverty in 1989. Poverty among children was 2 to 3
times higher in the selected block groups of tract areas than in Richfield as a whole.
2. The targeted block groups had the following percentages:
a. In Block Group 2 of tract 248.02, 30% of the children lived in poverty (72 children in poverty).
b. In Block Group 1 of tract 249.02, 20% of the children lived in poverty (41 children in poverty).
c. In Block Group 1 of tract 249.03, 24% of the children lived in poverty (56 children in poverty).
3. It is also significant that poverty is higher in single parent households (mostly female headed) in
Richfield, 27% of all single pazent families with children under 18 were in poverty in 1989.60% of
single pazent families with children under age 5 were in poverty in 1989.
During the next few months, I will be focusing on the following possibilities that may be recommended
in the August report as ways of assisting individuals within a "pilot group" of apartment residents
become economically self-sufficient.
1. Recommendations to establish a "Service Team."
The purpose would be for agencies and/or institutions to more easily collaborate and cooperate
in their joint effort of effectively and efficiently serving apartment residents. (See Exhibit C)
2. Recommendations to develop a "Mentor Program"
The purpose of mentors would be to provide emotional support to apartment residents, help them
set goals and action plans and refer them to available resources. Mentors might also provide
assistance to apartment residents in developing leadership skills, employment interviewing skills,
etc. Mentors would probably be volunteers who would need screening, training and supervision.
3. Recommendations to improve communications and information to apartment residents.
Examine ways of improving communications and providing timely information to apamnent
residents. One step might be to deliver to a pilot group the same City of Richfield information
and communications updates that ~aze currently sent to private homes (Your City, Leisure Services
Brochure, etc.). Another recommendation may include the publication of a resource booklet of
available services often needed by individuals seeking economic self sufficiency.
The next steps will be:
• Identify a pilot "service team" and dialogue with them about their potential role in serving a pilot
group of apartment residents seeking to become economically self-sufficient.
• Identify potential mentors and dialogue with them about their role in serving a "pilot group" of
apartment residents seeking economic self-sufficiency.
• Investigate the steps necessary to provide better communication and information to apartment
residents.
• Present action plans and recommendations for implementation.
a. Develop mission statement.
b. Develop goals, strategies, action steps, and evaluation methods.
c. Recommend needed personnel to coordinate or administer this program.
"Together We Can"
Midpoint Report
John Szarke
May 15,1995
Resources'for my research include:
1. Demographic Economic and Social Trends Affecting People of Richfield
South Hennepin Regional Planning Agency (SHrPA) 1993.
2. Family Needs: A Survey of Low Income Tenants in Bloomington and Richfield
(SHrPA) 1993.
3. Richfield's Renters Study, September 1994, Decision Resources.
4. Family Self-Sufficiency: Linking Housing, Public Welfare and Human Services
National Association of Housing and Redevelopment Officials.
Exhibit A
5. Partnerships for Success: A Mentoring Program Manual.
6. The Community Collaboration Manaul, National Assembly.
7. South Hennepin Family Services Collaborative (Draft SHrPA), 1995.
8. Department of Housing and Urbari Development, Self Sufficiency Program Guidelines, 1991
9. Child Care: A Profile of Needs in South Hennepin County, (SHrPA), 1993.
10. The Job Gap Study, Jobs Now Coalition, January, 1995.
11. Northwest Hennepin Human Services Council 1994 Annual Report.
12. Apartment Program, Northwest Human Services Council.
13. Putting Children First, Report of the Child Care Task Force
Commission on the Economic Status of Women, February, 1991
14. A Woman's Place: A Guide to Women's Legal and Economic Rights in Minnesota
Commission on the Economic Status of Women, November, 1991
Individuals I have met with include:
• Jeanne Massey, Senior Planner/Director, South Hennepin Regional Planning Agency.
• Sue Gunder, Self-Sufficiency Coordinator, Catholic Charities.
• Dave Greeman, Project Coordinator at Northwest Human Service Planning Council.
• Kate Sweetzer, Jewish Vocational Services, St. Louis Park.
• Mike Brinda, Neighborhood Employment Network, Minneapolis Mayor's Office.
• John Vittera, Mobile Job Bank. (Funded by McKnight Foundation)
• Richfield Human Services Planning Council.
• Betsy Christianson, representing the Richfield Health Board.
• Mike Welsh, Bloomington/Richfield Family Center Program Coordinator.
Laura Klein, Coordinator Community Initiative Program, Project for Pride in Living.
• Roger Heil, Metropolitan Transit Commission.
• Betty Hayes, Refugee Resettlement Coordinator, Lutheran Social Services.
• Annette Hoyhtye and staff at Community Resource Center in Brooklyn Park.
Karen Kingsley and staff at Community Action Suburban Hennepin (CASH).
• Arlene Dixon and Mary Schwenke, (Highland Management Company).
• Ann Fendorf, West Seventh Community Center's Self-Sufficiency Director, St. Paul.
Census Block Group Names in Richfield
Exhibit B
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Block Groups
Tracts
Federal Poverty, Guideline
Famil~Size Poverty Line
1 person $6,310
2 people $8,076
3 people $9,885
4 people $12,674
5 people $14,990
The poverty line is argued to be too low because it is-based on estimates of families' basic needs in
1963. Income is adjusted for inflation, but not in changes in work norms, lifestyles and family structures,
all of which impact basic needs. Child care for example would be considered a basic need today. that was
not in 1963. It is estimated that the poverty line today would have to be about 50 percent higher to be
comparable, in terms of minimum consumption needs, to the standard- set in 1963 (Ruggles, 1990).
Exhibit C
"Together We-Can"
May. 15, 1995
A pilot "Service Team".would be comprised of a representative(s)-
- from agencies or institution(s) most commonly needed by
individuals seeking economic self-sufficiency such as: family
services, counseling, emergency assistance, public health,
education, and employment counseling.
The "Service Team" members could. also assist apartment
residents in connecting with other needed resources. Some of the
available resources include the following (resources funded or
partially funded by the City of Richfield are marked by an *):
Bloomington/Richfield Family Center
Community Education
Hennepin Technical
Bloomington Public Health
* Cornerstone Advocacy Services
* Storefront/ Youth Action
* VEAP (Volunteers Enlisted to Assist People)
* South Hennepin Regional Planning Agency
* Park and Recreation
* Public Safety
* Greater Minneapolis Day Care
* Senior Community Services
* Senior Linkage Line
* Senior Home Owners Repair Program
* Share A Home-Lutheran Social Services
HOUSING AND REDEVELOPMENT AUTHORITY
HRA Letter No. 37
Agenda June 19, 1995
Issue Statement:
Consideration of the proposed conveyance of three rental apartment communities to
the HRA and the purchase of a replacement reserve.
Background: ,
The Sage Company has proposed a transfer to the HRA of 422 units located in three
separate apartment communities:
Hampton Place 620-735 East 78th Street 221 units 13 buildings
Heritage Square 900-1000 East 78th Street 150 units 4 buildings
901-1001 East 77th Street
Crestwood 7720-40 Fourth Avenue 1 units 3 buildinas
TOTAL 422. units 20 buildings
Each community has a replacement reserve which in the aggregate totals
approximately $750,000. The replacement reserves are intended to help cover the cost
of significant capital improvements when needed such as roof or boiler replacement.
The FHA mortgages require the fund be transferred with the mortgages to a new
owner. To accept the apartment buildings as a gift, the HRA must purchase the
reserve fund from Sage Company. The tentative proposal at this time is for the HRA to
pay for the reserve fund from rent revenues at the rate of $160,000 per year for two
years with the balance due in the third year. The interest rate would be 5.5%.
Attached is a draft purchase agreement which would govern the transaction. The
purchase agreement will be reviewed by staff at the HRA meeting on June 19.
Basically, the HRA would accept the real estate, personal property and current tenants
as they exist with the exception that Sage would pay for the removal of one
underground fuel oil tank at Heritage Square. If the HRA proceeds with the proposal, it
is projected that a closing could take place about the end of the third quarter of 1995.
Recommended Motion:
1. Discuss the terms of the draft agreement for purchase and sale and related matters.
2. Consider adopting a motion which:
a) approves the concept of the apartment community gift and purchase of the
reserve fund; .
b) sets the July 17, 1995 HRA meeting to consider the formal approval of the
Agreement;
c) invite the City Council to schedule a special meeting for that same date and to
hold the public hearing on the housing plan and program;
d) request the City Council on July 17 to approve the special legislation recently
enacted by the State Legislature;
e) direct staff to prepare the necessary documents implementing the special
legislation for presentation to the HRA as soon as practicable following City Council
approval of the special legislation should the approval be forthcoming; and
f) direct staff to prepare a recommendation for presentation to the HRA July 17 for a
property management company.
Basis of Recommendation:
1. These apartment communities could be used to further the City's housing strategy
and policies:
• The HRA could utilize these three apartment communities or segments
thereof, to provide specialized housing opportunities not currently available
such as housing options for seniors.
• Remodeling efforts could be used as a demonstration project for other
apartment owners.
• .Long term stable residency and the continuation of market-rate housing
would be encouraged.
2. Sage Company, the current owner, is a reputable company which operates
businesses nationally with headquarters in Minnetonka. In the past, they gifted a
120. unit apartment community to the city of Omaha, Nebraska. Staff has spoken
with Omaha officials who were satisfied with the transaction.
3. The income tax benefits which accrued to the investing partners of Sage because of
their ownership of these properties are greatly diminished or no longer exist.
4. Several experts have examined various facets of these properties on behalf of the
HRA and determined them to be sound. The experts include a real estate
appraiser, property management company representatives, environmental
specialists, and the City's building official.
5. Publicorp Inc. representatives have examined the financial records of these
apartments. Mr. Mark Ruff will be prepared to discuss his findings at the HRA
meeting. (See the attached letter.)
6. Mr. Stuart Nolan of Stuart Companies has also assisted in evaluating this
transaction. He will be at the HRA meeting as well. (See the attached letter.)
7. Legal counsel has examined issues related to the transaction. Mr. John Dean will
be at the HRA meeting to discuss his findings.
8. The outstanding mortgages approximate $6.5 million. Mr. Brad Bjorklund of BCL
Appraisals has valued the communities at approximately $9.8 million.
9. It is anticipated that the apartment communities, through the rental income, would
be self-supporting.
10. State law (462C) requires that a public hearing be held before the HRA can assume
existing debt on multi-family housing. That hearing must be held by the City Council
and requires a notice of hearing to be published 30 days prior to the hearing. The
hearing could be held July 17 and would be on the attached housing plan and
program.
11. Special legislation must be approved by the City Council. Before the HRA could
establish the three single asset corporations and assume the existing mortgages,
the City Council must approve the legislation.
12. By-laws and other documents will be needed by the HRA to establish the single
asset corporations. To save time, the HRA could direct staff to prepare those
documents before the City Council approves the legislation. If the legislation is not
approved, the work on those documents could not be utilized.
13.To properly mange these properties, a private for fee management company must
be retained as early as possible.
14. Publicly owned property would be tax exempt but for an agreement between the
HRA and City calling for a payment in lieu of taxes.
Alternative Recommendation:
1. Postpone any action on this proposal.
2. Reject the proposal.
Discussion/Decision Mode:
Action by the HRA on June 19, 1995 would help make it possible to meet the proposed
closing time which is the end of the third quarter of 1995. Future actions necessary to
complete the transaction including the following, all of which could be scheduled for
July 17, 1995, except number 6.
1. Formal approval by the HRA of the Agreement for Purchase and Sale.
2. A City Council public hearing on a housing plan and program tentatively
scheduled for July 17, 1995.
3. City Council approval of the special legislation.
4. Establishment by the HRA of the three single asset corporations.
5. Selection of a property management company by the HRA.
6. Approval by FHA of the transfer of mortgages to the HRA.
Respectfully submitted,
Jame Prosser
Execu ' e Director
JDP:ds
Publicorp Inc.
-,2950 Norwest Center
`90 South Seventh Street
Minneapolis, MN 55402-4100
June 6, 1995
TO: Jim Prosser, City of Richfield
FR: Mark Ruff
Sid Inman
RE: Acquisition of Apartment Units
(612) 339-8291
FAX (612) 339-0854
Publicorp has served as a financial advisor to numerous housing and redevelopment
authorities across Minnesota in the acquisition, construction, or rehabilitation of "essential
function" apartment units. The term "essential-function" is used generally to describe
apartments owned by HRAs which do not fit into the category of low-income or subsidized
units. The term "essential function" is also a legal term in the HRA statute which enables
HRAs to own these types of apartments to meet an need within the community.
It is our understanding that the Richfield HRA is considering the acquisition of
approximately 420 essential function apartment units in three locations currently owned by
the Sage Companies. The acquisition price is simply the outstanding balance of the
mortgages plus some consideration for the value of the replacement reserve. The current
assumption is that the HRA will keep the existing FHA-insured financing structure in place,
at least in the short term.
Publicorp has reviewed the historical income and operating expenses history of the
apartment units, reviewed the Stuart Companies projections for the apartment units, and
conducted our own feasibility analysis of the acquisition of the units. Whenever a city or
HRA assumes ownership of apartment units or when. a city operates any type of enterprise
fund, some degree of financial risk always exists. Based upon our analysis of the
apartment units, the financial risk to the HRA is relatively small. The outstanding debt on
the buildings is significantly less than the appraised value of the apartment units.
Occupancy of the units has been historically high. The units are in good shape for their
age. The expected net operating income from the units is expected to be at least 130% of
debt service, which is 10% to 20% higher than the industry standard.
Assuming that we can reach a resolution on HUD's single asset entity requirement, we
know of no financial barriers to the transaction. We would recommend that the HRA
examine the potential for refunding the existing debt during the next year to take
advantage of tax-exempt interest rates and to provide a funding mechanism for any capital
improvements to the properties.
Please contact us with any questions. or comments.
In association with Ehlers and Associates, Inc.
q 4 )
~~~~~1 ~ a
STUART COMPANIES
MEMORANDUM
DATE: October 13, 1994
TO: City of Richfield Staff
FROM: Stuart Nolan
RE: Sage Properties
You have asked me to determine as best as possible the motivation for Sage to transfer ownership of their
Richfield apartment properties to the Richfield HRA. I am writing this memo to report my conclusions.
These properties are approximately 30 years old and the owning partnerships have undoubtedly fully
depreciated the buildings and equipment except for improvements made in recent years. Therefore, l
believe that the taxable income generated by these partnerships is a great deal larger than the cash flow
generated by the net rentals. In the early years of these partnerships, I expect that tax losses-were
generated for the individual partners but it is no longer an income tax advantage for them to hold these
properties. Rather it is an income tax disadvantage for them to continue holding these properties.
If the partnerships were to sell these properties, they would have to engage the services of a real estate
broker and be subject to whatever the market would pay. Since these properties were refinanced three
years ago and have relatively high mortgage balances, it is quite likely that they would have to come "out
of pocket" after selling these properties and paying the real estate commission and income taxes. Of
course, I am not privy to the individual tax returns of the individual partners but this is a very common
scenario for properties having been held and depreciated over a long period of time.
I have inquired with our CPA firm about the income tax consequences of a transaction structured like that
proposed by Sage. Without getting into great details on the tax law, I am informed that there are certain
benefits from an income tax perspective to this transaction compared to that of an outright sale. These tax
benefits, coupled with not having to expose the financial details of the buildings to the marketplace and not
having to pay a real estate commission, are most likely the motivations for the Sage proposal. I believe
that the income tax benefits to Sage are of no consequence to the Richfield HRA and that you should only
consider the benefits of the transaction to the HRA., which are considerable.
Kindly feel free to contact me if you desire any more detail on this subject.
SHN:as
30UShepardParkOEficeCenter ^ 2177YounKmarA~~enur ^ St.Paut,tilinnesutai7i16_;0-},4 ibl~)b9R-tl"S0~ FV`:'~,,,~.~;-+~37-
Mctropolita.n Council
Working for the Region, Planning for the Fluture
Apri17, 1995
Mark Ruff
Publicorp Inc.
2950 Norwest Center
90 South Seventh Street
Minneapolis, MN 55402-4100
RE: Housing Bond Plan and Program -City of Richfield
Metropolitan Council Referral File #16105-1
Dear Mark:
We have reviewed Richfield's Housing Plan and Program and find it consistent with Metropolitan
Council plans and policies.
The data summary prepared was very thorough in reviewing both the current housing available in
the city as well as anticipated needs of existing and future residents. The data provided supports
the housing needs identified. Council staff supports the programs proposed by the city and the
HRA to encourage diversification of the housing stock.
We appreciate the city's effort in preparing this Housing Plan and its willingness to use existing
housing programs to carry it out.
If you have any questions, please call me at 291-6380.
Sincerely, ~
L~.~~ ~~ ~1-~~
Audre~ughe~, Planner
Office of Local Assistance
cc: Katherine Hadley, Commissioner
Minnesota Housing Finance Agency
Bruce Palmborg, Richfield HRA (/
230 East Fifth Street St. Paui. Minnesota 55101-1634 (612) 291-6359 Fax 291-6550 TDD/T1Y 291-0904 Metro Info I1ne 229-3780
Art Equat Opportunity Employer
Publicorp Inc.
- _ 2950 Norwest Center
90 South Seventh Street
Minneapolis, MN 55402-4100
Apri14, 1995
Ms. Audrey Dougherty
Housing Planner
Metrpolitan Council
Mears Park Centre
230 East Fifth Street
St. Paul, MN 55101
Dear Audrey:
(612) 339-8291
FAX (61 Z) 339-0854
Enclosed is a modified copy of the City of Richfield's 462C Plan and Program for the potential acquisition
of the 400+ units known as Heritage Square, Crestwood, and Hampton Place.
Please call me with any questions or comments.
Sincerely,
Mark Ruff
cc: Bruce Palmborg, Richfield HRA (with enclosures)
In association with Ehlers and Associates, Inc.
462C HOUSING PLAN
AND MULTI-FAMILY HOUSING PROGRAMS
CITY OF RICHFIELD
RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY
Apri1,1995
TABLE OF CONTENTS
I. Introduction
II. Data Summary and Analysis
A. Population and Households
B. Employment Statistics
C. Age Distribution and Income of Residents
D. Number and Type of Dwelling Units
E. Tenure of Housing Stock
F. Single-Family Housing Costs and Market
G. Multi-Family Rental Ranges and Market
III. Housing Needs, Housing Policy Plan and Target Areas
IV. Multi-Family Housing Programs and Financial Tools
A. Apartment Acquisitions
B. General Provisions
1
2
2
2
4
5
5
7
8
9
10
10
10
I. INTRODUCTION
The City of Richfield is a first-ring suburb on the southern edge of the City of Minneapolis and the western
edge of the Minneapolis-St. Paul International Airport. The vast majority of the housing stock in the City
consists of single-family ramblers built in the 1940s and 1950s and one and two bedroom apartments
constructed in the 1960s and 1970s.
However, the market for housing, the population, and the physical characteristics of the City of Richfield
have changed significantly in the past 10 years. The amenities sought by homebuyers and renters,
particularly young families, include amenities which are not widely available in the majority of housing in
the City. Larger three and four bedroom homes, updates in design and function, and low maintenance
finishes are also in demand.
The choice of housing and the general trends in the age distribution of the .City have resulted in a decrease
in population of the City of over 20 percent during the past 20 years. The aging of the population in the City
has also resulted in an increased demand for a full range of senior housing opportunities. At the same time,
the population has become more diverse in economic and social chazacteristics resulting in an increased need
for diverse housing.
In addition, land use changes are decreasing the housing supply. The City's New Ford Town Area and Rich
Acres, which are adjacent to Minneapolis-St. Paul International Airport, have been designated for a federally
funded buyout program. The approximately 420 housing units are scheduled to be purchased and removed
within the next three years. The construction of the new 77th Street frontage corridor and the adjacent retail
development in the ILN Tax Increment District have or will result in the loss of 61 units of single family
homes and 74 apartment units.
In response, the City and the Housing and Redevelopment Authority (HRA) have initiated a number of
programs to encourage diversification of the housing stock. The details of these efforts are included in these
documents.
This Housing Plan and Multifamily Housing Program, undertaken pursuant to Minnesota Statutes, Chapter
462C, as amended (the "Act"), provides data and data analysis of the City's population and housing
conditions; sets forth the housing goals and policies which guide the decision making process; and identifies
programs and efforts the Richfield HRA will pursue to conserve, preserve, enhance and expand the City's
residential environment.
The City and HRA adopted a Housing Program on December 29, 1983, intended primarily for the allocation
ofsingle-family mortgage revenue bonds. This Housing Plan and Program will concentrate upon the multi-
family needs in the community.
II. DATA SUMMARY AND ANALYSIS
A. Population and Households
The City of Richfield is located entirely in Hennepin County in the Twin Cities metropolitan area. It is
located immediately adjacent to Minneapolis' southern border. Richfield became a village in 1908 and a city
in 1964. The City covers 7.1 square miles and had a 1993 estimated population of 35,538.
Table I
Richfield Population and Households
1970 1980 1990 2000 2010
Population 47,231 37,851 35,710 36,500 38,100
Households 15,252 15,607 .16,000 16,200
Source: Bureau of Census, U.S. Census of Population and Housing, 1970, 1980, & 1990 and the Metropolitan Council.
B. Employment Statistics
The City of Richfield is predominantly a residential community. The commercial/industrial
tax base primarily consists of retail development.
Table II
Estimate of Ten of the City's Largest Taxpayers for 1993/94
_ Tax Capacity as
Business Tax Percent of City's Property
Taxpayer NamelTvoe Ca aci Net Tax Caoacitv' Classification
Bradley Real Estate Trust Hub Shopping $568,350 2.7% Commercial
Northwest Unit Investment Co. Century Courts 431,897 2.0% Apartment
Market Plaza Market Plaza 416,150 2.0% Comm./Apts.
CDP Inc. CDP 244,178 1.1% CommMlarehot~
Carlson Real Estate Co. Richfield Shoppes 235,990 1.1 % Commercial
Richfield State Agency Inc. Richfield Bank 205,092 1.0% Commercial
Sage Corporation Apartments 192,960 0.9% Apartments
Naegele Outdoor
Advertising Co. Naegele Signs 175,040 0.8% Commercial
Rop Investment Co. Apartments 170,000 0.8% Apartment
Steven Operating Inc. Fountain Head Apts. 140,658 0.7% Apartment
2
Table III shows major employers in Richfield with the total number of employees as of
March 1993. Total employees include full- and part-time workers and average number of
seasonal employees.
Table III
Richfield Major Employers
March 1993
Employers Indust Total Employees
Copy Duplicating Products Office Supplies 350
Richfield Bank & Trust Banking 206
Lunds Grocery 150
KMart Retail 150
Wally McCarthy Oldsmobile Auto Dealer 90
Walzer Buick Auto Dealer 90
Metro Sales Copies Supplies 75
Lyndale Hardware Hardware 75
Naegele Advertising Advertising Agency 70
Lyndale Garden Lawncare Products 70
Walgreens Retail 60
Drug Emporium Retail ~
Richfield Mitsubishi Auto Dealer 38
Source: MN Department of Trade and Economic Development, Community Profile, March 1993
Table IV
Hennepin County Employment by Industry
December 1980
Agriculture, Forestry & Fishing
Mining
Construction
Manufacturing
Transportation & Public Utilities'
Trade
December 1990
1,458
289
22,536
122,430
35,104
163,550
2,479
63
23,016
121,508
47,192
188,173
F.I. R. E.Z 47,651 64,396
Services 144,309 212,684
Government 71.747 81.228
TOTAL 609,363 740,739
Source: MN Department of Jobs & Training, Minnesota Employment & Wages by County, Fourth Quarter, 1980 and MN
Department of Jobs & Training, Minnesota Employment ~ Wages by Region and County, Fourth Quarter, 1990
In 1980, category was called Transportation, Communication ~ Public Utilities.
Finance, Insurance and Real Estate
3
C. Ag_e Distribution and Income of_Residents
Richfield, like other communities across the country, is finding that senior citizens are the
fastest growing segment of its population. In fact, persons over 65 years old increased in
numbers by 2,053 from 1980 to 1990, an increase of over 52 percent. The sheer numerical
increases in this housing market points to a significant need to offer new types of housing
for citizens with a wide array of incomes and needs for services. Secondarily, the "baby-
boomers" or persons from 25 to 44 years old were the other sector of population to
increase its share from 1980 to 1990.
Table V
Richfield Area Age Distribution
1980 & 1990
Age Age Age Age Age
Total Population 18 & Under 19-24 25-44 45-64 65 8 Over
1980 .1990 1980 1990 1980 1990 1980 1990 1980 1990 1980 1990
Number 37,851 35,710 9,027 7,261 4,963 3,219 10,614 14,421 9,281 6,790 3,966 6,019
Percent 100% 100% 23.85% 20.33% 13.11 % 9.01 % 28.04% 34.78% 24.52% 19.01 % 10.48% 16.865
Source: Bureau of the Census, U.S. Census of Population and Housing, 1980 $ 1990.
- Household and family incomes in the Richfield area have shown steady increases and
diversification over the past decade. Again, these data point to a need to diversify the
housing options for the community.
Table VI
Richfield Area Household Income
1979 and 1989
1979
Less Greater
Than $10,000- $20,000- $25,000- $35,000- Than
Median
1$ 0.000 1$ 9.999 24 999 3$ 4.999 49 999 50 000
Income
Number 2,988 4,457 2,113 3,234 1,858 602 $20,424
Percent 19.59% 29.22% 13.85% 21.20% 12.18% 3.95°k
1989
Less Greater
Than $10,000- $20,000- $25,000- $35,000- Than
Median
10 000 19 999 2$ 4.999 X34.999 $49.999 50 000
Income
Number 1,218 2,754 1,678 2,816 3,674 3,467 $32,405
Percent 7.80% 17.65% 10.75% 18.04% 23.54% 22.21%
Source: Bureau of the Census, U.S. Census of Population and Housing, 1980 & 1990.
4
D. Number and Type of Dwelling Units
Richfield is a city with primarily owner occupied housing units. The traditional style of the
housing stock is evidenced by the relatively small number of townhouse and duplex units.
Table VII
Dwelling Units
1990
Percent
Dwelling Tvoe of Total Numbers
Single Family Detached 10,329 64.18%
Townhouse 324 2.01%
Duplex 195 1.21
Other Multifamily 5,082 31.58%
Mobile Home 69 0.43%
Other 95 0.59%
TOTAL 16,094 100.00%
Source: 1990 U.S. Census
E. Tenure of Housing Stock
- The age of the housing units varies widely in Richfield. However, over 82 percent of the
owner-occupied housing was built between 1940 and 1959 and almost 75 percent of all
rental housing units were built before 1970.
Table VIII
Richfield Area Age of Occupied Housing Units
(Percent of Total Occupied Structures Owned and Rented)
1990
Year Built
Units Prior to 1940 1940-1949 1950-1959 1960-1969 1970-1990
Owned Rented Owned Rented Owned Rented Owned Rented Owned Rented Owned Rented
Number
10,406 5,145
602 75
2,961 361 5,671 1,180
565 2,154
E07 1,375
Percent
100.00% 100.00%
5.79% 1.46%
28.45% 7.02% 54.50% 22.93%
5.43% 41.87%
5.83% 26.72%
Source: Bureau of the Census, U.S. Census of Population and Housing, 1980 8~ 1990.
In addition, people who own older homes have lived in them for most of their lives. An
amazing two-thirds of people over 75 years of age in Richfield live in their own home as
shown in Table IX. It is also an indication that seniors may want to remain in the
community but have few options from which to choose.
5
Table IX
Richfield Area Tenure
By Age of Householder
1990
qgg No. Pct.
15-24 Own 103 0.99%
Rent 808 15.70%
Total 911 5.86%
25-34 Own 1,850 17.78%
Rent 1,832 35.61%
Total 3,682 23.68%
35-44 Own 2,009 19.31
Rent 948 18.43%
Total 2,957 19.01
45-54 Own 1,570 15.09%
Rent 396 7.70%
Total 1,966 12.64%
55-64 Own 1,650 15.86%
Rent 348 6.76%
Total 2,455 12.85%
65-74 Own 2,146 20.62%
Rent 309 6.01
Total 2,455 15.79%
75+ Own 1,078 10.36%
Rent 504 9.80%
Total 1,582 10.17%
Total Own 10,406 100.00%
Rent 5,145 100.00%
Total 15,551 100.00%
Source: Bureau of the Census, U.S. Census of Population and Housing, 1990.
s
F Single-Family Housing Costs and Market
Richfield has a rather narrow variety of housing, from 1950s ramblers to split-level designs
of the 1960s and 1970s. The vast majority of the housing stock has been well-maintained
and pride of ownership is evident. The Richfield School District has an excellent reputation
and Richfield is perceived as a very desirable community in which to live. Housing is
affordable, with average home values between $80,000 and $90,000. However, homes
in this price range are in extremely short supply, as are homes in the $100,000 to $120,000
price range. Although housing is affordable, buyers cannot find a home to buy. In
addition, the lack of available alternatives for other market segments (particularly empty-
nesters and seniors) has resulted in persons remaining in their homes longer than
necessary. If these people had been able to move, their homes could have been
purchased by other households.
The Richfield Rediscovered Program, in which substandard residential properties are razed
and replaced with new homes with generally two to three times the market value, continues
to be very successful. In the past two and a half years over 30 homes were constructed
under this and ancillary programs and ten to twelve are anticipated during 1994.
The following are the key factors at work in the for-sale market:
- Substantial shortage of resale homes in all price ranges due to recent strong sales
activity, and older homeowners not selling. Local real estate agents have buyers who
are looking to buy.
- Much of the reason for the lack of available homes for sale is tied directly to the number
of senior citizens who continue to reside in their own homes.
- Homes in Richfield are generally well-maintained and in good condition.
- Greatest demand is for homes priced between $70,000 and $80,000 and homes priced
between $100,000 and $120,000.
Table X
Richfield Home Sales
1988 through 1993
Period Number Total Price Average Price
of Sales of Sales of Sales of Home
January 1987 -September 1988 790 $62,994,171 S79,739
January 1988 -September 1989 668 54,166,086 81,087
January 1989 -September 1990 710 58,467,654 82,349
January 1990 -September 1991 679 56,346,840 82,985
January 1991 -September 1992 732 61,533,834 84,063
January 1992 -September 1993 864 73,316,233. 84,857
Source: MN Department of Revenue. Sale price does not include personal property. These figures may not include all new
construction.
7
G Multi-Family Rental Ranges and .Market
Most of the rental housing in Richfield was built in the 1960s and 1970s. There were two
rental projects built in Richfield during the 1980s and none during the 1990s totalling
approximately 180 units. Other than these projects, there has been no other new rental
housing built in Richfield since 1980.
Most of the rental product is older (1960s and 1970s vintage) and lacks features and
amenities desired by today's renters. Market rate rents in Richfeld are affordable with one-
bedroom unit rents ranging from $400 per month to $475 per month in a larger rental
complex built during the 1970s. Two-bedroom unit rents range from $500 per month to
$625 per month. According to our survey of rental apartments in the community, the
average vacancy rate overall is two to three percent, less than the 5 percent level
considered acceptable to meet consumer choice and pride for adequate turnover.
Seniors now live in general occupancy market rate rental or subsidized rental housing or
in their own homes. According to the 1990 Census, 80 percent of all Richfield senior
households (65+) own their housing. Although most seniors choose to remain in their
single-family homes, a growing number of active, independent seniors are choosing to sell
their homes and downsize either to a smaller, owned home or to rental housing. The high
percentage of seniors who still own in the study area reflects the limited number of housing
alternatives available to this group.
The following key factors summarize the rental housing market situation in Richfield:
Less than 200 new general occupancy rental housing has been built in Richfield over
the past 20 years: -
Existing market rate rental housing is dated, and most properties do not offer newer
features and amenities desired by today's renters;
- Shortage of market rate housing for several senior market segments;
8
III. HOUSING NEEDS. HOUSING POLICY PLAN AND TARGET AREAS
Table XI
Project Housing Needs
Housing Needs Number of Units
Single Family 165
Market Rate Rental
General Occupancy 420
Senior 200
Total New Units 785
An analysis of the data clearly indicates that there is a need for additional single-family and
multi-family housing development in the City of Richfield. Single-family needs appear to
lie in a wide range from moderate to higher costs. HRA has also found that moderately
priced homes could be made available by increasing the opportunities for senior citizens
and general occupancy to move out of single-family homes and occupy a wider range of
rental housing options. Because the private market has not independently provided rental
housing in sufficient numbers to meet the needs of the citizens, HRA has found that public
intervention is necessary to provide safe and decent housing and to offer housing
opportunities for all citizens, particularly low and moderate income citizens.
Therefore, the HRA and the City of Richfield have embarked upon a process which will
target particular segments of the population. These housing opportunities already include
a comprehensive focus upon upgrading the existing stock of single-family homes through
the Richfield Rediscovered Program and various home improvement informational
sessions.
The next step for the HRA and City will be a focus upon multi-family developments, both
existing and new construction. The development of multi-family housing in the community
is expected to the one of the most efficient means to increasing available housing units,
increasing employment, and improving the health and welfare of its residents while
maintaining the lowest cost and least risk to the taxpayers of the City.
Administration of all HRA programs will be handled by the Executive Director in concert
with City staff and community organizations. All housing assisted by HRA will be
professionally and independently managed and will be subject to HRA review on a annual
or bi-annual basis.
9
IV. MULTI-FAMILY HOUSING PROGRAMS AND FINANCIAL TOOLS
A. Crestwood, Heritage Square East and Hampton Place Apartments
The HRA has been approached by the owners of the Crestwood Apartments (51 units),
Heritage Square East Apartments (150 units) and the Hampton Place Apartments (221
units) regarding the possibility of the HRA assuming the ownership and existing debt of the
422 apartment units (the "Apartments"). The existing debt, non-recourse financing insured
by the Federal Housing Administration, on the Apartments totals approximately $6,466,000
or approximately $15,300 per unit. Because the debt is non-recourse, neither the general
obligation nor other revenues of the City are required to provide security for the debt at this
time. The transaction is expected to occur by March 31, 1995. Any closing costs will be
paid for with city equity. The assumption of the existing debt by the HRA will constitute a
housing development project and taxable essential function debt pursuant to Minnesota
Statutes, Section 469.017 and 469.0171.
The HRA and the City reasonably anticipate that the HRA will refund the taxable existing
debt and issue tax-exempt essential function debt undertaken as a housing development
project under Minnesota Statutes, Sections 469.017 and 469.0171. The maximum sources
and uses for the project are as follows:.
Sources Uses .
Revenue $9,450,000 Existing Debt $6,400,000
HRA Equity 50,000 Construction 2,200,000
Reserve 500,000
Arch. & Eng. 50,000
Other Fees 350.000
TOTAL $9,500,000 $9,500,000
The HRA does not anticipate the need for application of the state ceiling for private activity
bonds with respect to the housing bonds.
The HRA plans to contract with private management companies for the marketing and daily
administration of the units. The HRA's intent is to market the units to a broad spectrum of
rental residents including single-parent .households and handicapped persons. The
management firm hired by the HRA will be expected to have a staff person familiar with the
metropolitan region's social service programs and will be expected to refer apartment
residents with special short and long term needs to the appropriate agencies.
Prior to the refinance of the taxable debt, the HRA is planning to evaluate the feasibility of
converting Crestwood or Heritage Square into a senior housing facility. The conversion
of the units would include substantial capital improvements including amenities needed and
desired by senior residents including common areas for health care providers, meals, and
recreation, housekeeping services, .transportation to retail facilities, and handicapped
apartment units.
10
B. General Provisions
The following standards and requirements shall apply with respect to the operation of each
Program described in this Section IV:
1. The HRA will not arbitrarily reject an application from a
proposed tenant because of race, color, creed, religion,
national origin, sex, marital status, sexual orientation, or status
with regard to public assistance or disability.
2. All of the housing units in each Program will be occupied or
held for occupancy by low and moderate income persons or
families, as determined by the Authority pursuant to Minnesota
Statutes, Section 469.012, subd. 1(8).
3. The HRA shall not amend any Program under this Section IV
while Bonds authorized hereby are outstanding, to the
detriment of the holders of such Bonds.
11
June 9, 1995
AGREEIN~NT FOR PURCHASE AND SALE
THIS AGREEMENT FOR PURCHASE AND SALE ("Agreement" herein) , is made
and entered into as of this day of 1995, by and ,between
and , a A~ne~~tta carporetior
eying its principal address at 6700 Portland Avenue South, Minnesota 55423
("Buyer" herein), with reference to the following:
A. Seller is the owner of that certain real property and the improvements
thereon consisting of a unit apartment complex situated in the City of Richfield,
County of Hennepin, .State of Minnesota, commonly known as ,
as more particularly described on Exhibit A attached hereto, and o all urniture,
fixtures and other personal property. owned by Seller, and used, in the operation of
said real property all such property is described. in the attaclec~ ~x~t3bit B•7, all
easements, rights and other appurtenant rights and benefits, the reserve unds
described on Exhibit B'•~ owned by Seller with respect to said real property, all
manufacturers' and contractors' guarantees and warranties, if any, with respect to
such property, all rights, if any, of the Seller against materialmen, contractors
and/or subcontractors and all tenant leases affecting the real property (collectively
the "Property").
B . Seller is also the owner of certain replacement reserves ("Fund") .
C . Seller desires to /~doriate the
clescrxbed ire fhe attached>.Exhibit B•2 and sell the Fund to uyer, and $uyer desires
to accept the gift of the Property and to purchase and acquire the Fund, upon the
terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing recitals and their mutual
promises and agreements hereinafter contained and other good and valuable
consideration, the receipt of which is hereby acknowledged, Seller and Buyer
hereby agree as follows
ARTICLE 1
Purchase of the Property
1.1 Seller shall sell and gift to Buyer, and Buyer shall purchase and accept
as a gift, the Fund and the Property, respectively, upon the terms and conditions
hereinafter set forth.
1.2 If Seller has not previously delivered the follosnnng records and
documents to Buyer, Seller shall deliver ;but only i.f available in'the firm d~,scribed
one copy of the following to Buyer or its agents within /~fftee~, (15}' days following
the execution of this Agreement by both Buyer and Seller:
1.2.1 Property operating information for the two prior calendar years
and year-to-date as may be requested by Buyer, including, without
limitation, income and expense statements, utility bills, employee expenses,
maintenance records, real and personal property taxes, insurance policies and
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ARTICLE 2
Purchase Price, Payment and Closing
2.3 /~ClaSln ASubject to the written approval or written waiver by the
respective party of the conditions precedent set forth in subparagraph 2.3.5, the
closing of this Agreement shall occur on the date which is ninety (90) days after the
execution of this Agreement., ..time being:: of the essence, at the offices of Buyer's
counsel/; provided that, /upon rnutual> agreement, Closing shall occur at such
earlier date which is ten (10) days after written notice thereof from Buyer to Seller.
The term "Closing Date." , as ,used. herein., shall be deemed to be the date,
upon which Buyer accepts ednve~razxce of title to .the Prape~~~' ~xp:rau~rlt to
tl~~ Agreement, and on the same date as, the transfer to the respective
parties of all other documents and funds . All prorations and adjustments shall
be effected as of midnight of the day preceding the Closing Date, unless
otherwise mutually agreed to by the parties ("Adjustment Date") .
2.3.2 Seller shall deliver at Closing in form reasonably acceptable to
Buyer's Counsel (unless otherwise provided)
(a) A Warranty Deed ("Deed") , duly executed and
acknowledged, which conveys the Property to Buyer, accompanied by
a standard Seller's Affidavit and a well certificate or statement that no
wells are located on the Property;
(b) A Bill of Sale duly executed and an Inventory (attached
thereto) conveying to Buyer on an "as-is" basis the personal property
and fixtures owned by Seller t~resently used in the operation of the
,,.,,a ~~~.,..,....,..~ ~..< <..~..:,..,,...~~
~.er to~''conveyathe same; - -
JBD90188
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notices, and inventory of ..personal property, and warranties, permits and
licenses, tenant leases and a complete rent roll.
2.1 Purchase Price. The Purchase Price for the Fund shall be
Dollars ($ ) or such lesser or
greater amount as is equal to the outstanding balance o the Fund on the Closing
Date, which the parties estimate to be in the amount of $
(c) The most recent tax bill for the Property from the local tax
assessor;
(d) A current "as-built" survey of the Property by a licensed
surveyor or engineer, if available;
{e) At least one (1) copy of all plans and specifications
covering the Property, but only if available to Seller;
(f) An Assignment of Tenant Leases affecting the Property,
duly executed and acknowledged;
(g) An Assignment of all assignable existing warranties of the
Property, the contracts and agreements described in Exhibit B attached
hereto (reserving to Seller the right to defend itself against claims
related to the contract rights sold to Buyer) , governmental licenses and
permits pertaining to the Property, tax and insurance impound
accounts, if any, and trade name of the Property, duly executed;
(h) Rent Roll of the Property (including security deposits),
corrected and accurate, as of the Closing Date;
(i) Concurrently with the execution of this Agreement, an
affidavit from Seller stating: (i) its United States taxpayer
identification number for federal income tax purposes; and (ii) it is not
a "foreign person" within the meaning of section 1445, et seq. , of the
Internal Revenue Code of 1986, as amended.
2.3.3 During the pendency of this Agreement and as a condition of
Closing, .Seller shall (i) maintain the Property in good repair and shall, in
Seller's customary manner, clean and prepare for occupancy all vacancies as
they occur prior to the Closing Date, and (u) a~se~.t: written ~nae~~.; of
Boyer`, not rent any apartment from the date hereof throu~l Closing for a
term in excess of twelve (12) months, and (ui) ~~sent!. €t ~uns~t v€
Buyer, not rent any apartment from the date hereof through Closing at rents.
less than the highest rent for a similar apartment.. Bti~~r ag~eeB t~give~iL
2.3.4 Buyer shall deliver at Closing:
(a) The Promissory Note set forth in Paragraph 2.2.2 above;
and
(b) A mortgage on the Property, subordinate to Atha
rtg,ge, securing Buyers obligations under the Promissory Note
2.3.5 The following shall be conditions precedent to Buyer's obligations
hereunder and shall be for the sole benefit of Buyer:
(a) Seller's representations and warranties contained herein
/~emari ~naterza~, true and correct as of the Closing Date, and Seller
shall have materially performed its covenants contained herein;
(b) Buyer must be able to procure a commitment for an ALTA
Owner's Policy of Title Insurance from Escrowholder, in the amount of
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the fair market value _of the APrtiperty subject to those encurt~bra~eea
~schedtxied in' the attached Exhibit ' E { ".Permitted Encumbrances" ); . If
Buyer is not able to obtain such commitment iri writing on or before said
date, Buyer may terminate this Agreement thereafter by providing a
written notice of termination to Seller;
(c) Buyer shall have obtained final authorization from the U . S .
Department of Housing and Urban Development (the "HUD") and from
any mortgagee which approves and determines the acceptability of the
transfer of the Property and the assignment and assumption of the
existing; HUD mortgage or the Property subject only to modification
reeso~zably acceptable to the Buyer;
If any of the preceding conditions (a) through (e) are not satisfied by the time
specified, Buyer may terminate this agreement by notice to Seller and Buyer shall
be entitled to a refund of its entire earnest. money deposit from Escrowholder,
together with all interest earned thereon and this Agreement shall be null and void
and neither party shall have any liability to the other .
The following shall be conditions precedent to Seller's obligations hereunder
and shall be for the sole benefit of Buyer:
(aa) Buyer's representations and warranties contained herein
are true and correct as of the Closing Date, and Buyer shall have
performed its covenants contained herein;
(bb) Seller shall have procured at its expense an appraisal of
the Property setting a value of the Property acceptable to Seller.
If any of the preceding conditions (aa) through (bb) are not satisfied by the time
specified, Seller may terminate this agreement by notice to Buyer and Seller shall
JBD90188
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(d) Buyer shall have obtained approval of the City of Richfield
for Buyer's acquisition of the Property, including an agreement for
payment in lieu of taxes;
refund to Buyer Buyer's entire earnest money deposit from Escrowholder, together
with all interest earned thereon and this Agreement shall be null and void and
neither party shall have any liability to the other.
2.3.6 On or before Closing, Seller shall provide Buyer with the latest
current rent roll of the Property, and Seller represents and warrants same to
be true and accurate .
2.3 . ? Seller and Buyer shall, prior to the Closing Date, execute any
and all documents, and perform any and all acts reasonably necessary and
appropriate to consummate the purchase and sale pursuant to the terms of this
Agreement, including, but not necessarily limited to, additional instructions
required by the Title Company.
2.3.8 Seller shall furnish to Buyer (to be paid by Buyer) a commitment
for an Owner's ALTA Form B Policy of Title Insurance, including, a mechanics'
lien endorsement (or equivalent policy) issued by the A:~'tle . +Company,
insuring title in Buyer, free and clear of all matters, encumbrances and
survey exceptions except for /~ertn.tted En~um'bran~~s . Buyer specifically
agrees that, subject to the provisions 2.3 5(ej the HUD insured mortgage on
the property is a permitted exception to title.
(a) Such Policy of Title Insurance shall have a liability limit
equal to the /fair.market w~lu~ of the real estate. In the event any
additional exceptions, except as permitted in this Paragraph, shall
show (or purport to be shown) in the Policy of Title Insurance to be
provided to the Buyer hereunder, if the same results from any
voluntary action by Seller, or if the same may be removed solely by
payment of money, Seller shall cause such exceptions to be removed.
With regard to any other additional exceptions, if Seller fails to remove
the same within the time allowed for Closing, the Buyer shall have the
right to terminate this Agreement as the Buyer's sole and exclusive
remedy, and any deposit made herein shall be returned to the Buyer by
Title Company. in full plus interest accrued thereon, and Seller agrees
to pay any escrow and title cancellation fees in connection therewith.
(b) Seller shall provide Buyer (at Seller's expense) with a
complete abstract of title to the Property, including, without limitation,
all appropriate name searches, continued at least to 30 days before
Closing.
2.3.9 If, before legal title or the possession of the Property has been
transferred to Buyer, any portion of the Property is damaged without fault
of the Buver. or is taken by eminent domain by anv governmental entity,
proceed to Closing and all insurance proceeds shall be assigned to Buyer; or
ii) such damage or taking is in excess of $100, 000 or significantly interferes
with the full operation of the Property, then Buyer shall have the option to
either (i) terminate this Agreement, and all documents and monies /shall be
returned to the party which had delivered any such documents or monies, or
(ii) proceed with the purchase of the Property, in which case, Seller shall
assign to Buyer. any amounts due from any governmental entity as a result of
the taking, or the amaux~ts die under and ~aolie~' of insu~can<~ and the amount
of any deductible under Seller's insurance policy shall be a credit to the
Purchase Price and reduce the amount due under the Promissory Note
JBD90188
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pursuant to subparagraph 2.2.2. Seller shall not be required to credit the
Purchase Price in such event by any amount in excess of the deductible. The
risk of loss during the pendency of this Agreement rests with Seller, and
Seller covenants to keep and maintain during the pendency of this Agreement
casualty insurance in an amount not less than the full replacement value of the
Property .
2.3.10 Upon Closing, the /~'1'tle Company shall cause the Deed and
any other instruments required to be recorded or filed, to be recorded and
filed in the Office of the County Recorder for Hennepin County, Minnesota,
or where otherwise required to .be so recorded or filed all .costs and fees
incurred in recording documents necessary to vast title in the Seller shall be
paid by Seller, all costs and fees necessary to transfer title to .Buyer shall be
paid by Buyer. /The Deed shall have noted thereon that, after recordation
thereof, the same is to be returned to Buyer's counsel.
2.3.11 Seller shall be entitled to all rents for the period of time
prior to Closing. Delinquent rents due Seller as of Closing, if and when
collected by Buyer, shall be paid to Seller. Provided, however, that this
paragraph shall place no obligation to collect any, delinquent rents, or to
credit any rent payments to delinquent rent. Buugr' ddes ae® 'fo tirc~vldo
2.3.12 Buyer shall secure its own casualty insurance, and Seller
shall be entitled to any unearned premium if any existing policy.
2.3.13 Seller will pay Buyer in cash at closing an amount equal to
the security and other tenant and pet deposits, Awhether or not refundable,
accrued interest on any such deposits if required by local law, prepaid rents
and advance deposits, all as will be shown on the updated Rent Roll delivered
at Closing. Buyer will pay Seller in cash at closing an amount equal to i)
property tax escrow, ii) the unearned premium on any hazard insurance and
mortgage insurance on the property, and iii) the operating account. The
proper amount of such payments shall be agreed upon by the parties not later
than 10 days prior to the Closing Date . Upon payment at Closing of such cash
amounts, Seller shall transfer to Buyer all right, title and interest to and in
all such accounts .
2.3.14 Final readings and final billings for utilities will be made
if possible as of the Adjustment Date . Seller shall pay all outstanding amounts
due as of such time. Seller shall also be entitled to any applicable refunds of
security deposits with any utility companies . If final readings and billings
cannot be obtained as of Closing, the final bills when received shall be
prorated based upon the number of days Seller owned the Property in such
final billing period .
2.3.15 Seller shall pay all charges for deliveries made and services
rendered and all other operating costs of the Property up to the Adjustment
Date . Any items on order but undelivered as of the Adjustment Date will be
reviewed and accepted or cancelled as desired by Buyer. Employee salaries,
benefits, sick leave, vacation pay, and employer contributions to
governmental agencies of each employee of the Property shall be paid current
by Seller as of the Adjustment Date. It'is uhderstupd that tlxi.s;.trdnsactio~
JBD90188
RC125-73 6
a employ ,any oP Se~ler~'s e~
2.3.16 Real and personal property taxes and assessments due and
payable in the year of Closing (not delinquent) and all other current expenses
of operation of the Property shall be prorated as of the Adjustment Date.
Seller shall pay all taxes and special assessments due and payable in the years
prior to the year of Closing. Buyer shall be responsible for all pending
special assessments.
2.3.1? If any adjustment or proration hereunder shall be found to
be incorrect within sixty (60) days after the .Closing Date, Buyer and Seller
agree to timely effect the correction or readjustment thereof..
~:::.: .
2.4 /~~otan. At Closing, Seller shall gift to Buyer, and Buyer shall
accept, the Property at the appraised value for the Property as set forth in the
appraisal to be obtained by Seller (plus the value of any personal property and
minus the lien of any existing encumbrance to be assumed by Buyer) . In accepting
this gift, Buyer acknowledges that Buyer is a governmental subdivision and is
accepting any gift hereunder for purely public purposes. Except for the specific
representations contained herein, Seller agrees and acknowledges that the Buyer is
making no representations or warranties regarding Seller's entitlement to a
charitable contribution under the Internal Revenue Code or the amount of any such
entitlement and the Buyer shall not be required to make any representations to the
Internal Revenue Service except with respect to the terms of this Agreement or as
otherwise required by law.
ARTICLE 3
Warranties
3.1 Seller's Warranties , Etc . Exi~ept ss`'to meters avithiri the :j3u~x~r~s s~nt~z8
kn€~~led~e,'Seller hereby represents, warrants and covenants (which warranties,
representations and covenants shall survive the Closing Date) that, as of the date
of this Agreement and as of the Closing Date, the following are true and correct:
3.1.1 Seller has full power and authority to enter into and perform this
Agreement in accordance with its terms;
3.1.2 Seller has good Rand marketable title in fee simple to all of the
Property, subject to /~Perr~tted Eneumli~anees above;
A3.1.3 Seller has not received any notice or communication from
any governmental entity indicating that a condition exists with respect to the
Property or with respect to the improvements thereon which violates any city,
county, state or federal law, ordinance, regulation, or code; nor has any
notice or communication been received from an insurance carrier of the
Property regarding dangerous, illegal or other conditions requiring corrective
action;
3.1.4 Seller has not entered into any labor union contracts for the
operation of the Property;
3.1.5 Seller has not entered into any operating or service contracts or
other agreements relating to the Property (other than tenant leases) , except
JBD90188
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- for those contracts and agreements a list of which is set forth in Exhibit B
attached hereto and copies of which have been provided to Buyer;
3.1.6 The Property is not subject to any outstanding agreement (s) of
sale, option(s) or other right(s) of third parties to acquire any interest
therein, except from the occupancy rights of tenants in possession;
3.1.7 Any existing management agreement or contract between Seller
and a property management company for the Property will terminate as of the
Closing Date;
3.1.8 Seller shall deliver the Property at Closing in a fully operational
condition (which shall .mean that Seller will perform all maintenance, repair
and replacement tasks /~'i the nor~tal cour~~ before the date of Closing, but
Seller shall not be responsible for latent defects not known to Seller); all
vacant apartments shall be in rentable conditions (which shall mean that they
have not only been properly cleaned but that they contain the normal
complement of furniture, fixtures and equipment normally included by Seller
when renting its apartments) ; and all of the appliances in the apartments
which are normally rented with the apartments (including, without limitation,
stoves, ranges, refrigerators, .dishwashers, and garbage disposals) are
owned by Seller and are not the property of the tenant or any other party;
3.1.9 None of the tenants on the Property have been given any
concession or consideration for the rental of any space which shall apply after
the Adjustment Date; no tenants are entitled hereafter to any concessions,
rebates, allowances or free rent for any period after the Adjustment Date; and
none of the apartments have been rented for professional or business use;
3.1.10 There have been no claims asserted by tenants for offsets
against rent or any other monetary claim made against Seller as landlord which
shall apply after the Adjustment Date . If any claim is made against Buyer
following the Adjustment Date by any tenant asserting an offset against rent
or otherwise with respect to any matter which arose prior to the Adjustment
Date, Seller shall indemnify and hold Buyer harmless for all losses, damages
and expenses in connection therewith and Seller shall have the right to defend
itself in connection therewith;
3.1.11 There is no litigation or proceeding pending or, to Seller's
knowledge, threatened against or relating to any of the Property, nor does
Seller know or have reasonable grounds to know of any basis for any such
action, and Seller hereby agrees to indemnify Buyer, hold it harmless, and
protect and defend it from and against any and all claims, demands, damages,
losses, liens, liabilities, actions, causes of action and other proceedings of
any nature, together with all costs and expenses thereof (including, without
limitation, reasonable attorneys' fees and court costs) resulting directly or
indirectly in any manner from such litigation;
3.1.12 Except as noted in paragraph 2.3.5(e) with respect to an
underground storage tank located on the Property, there are no substances
located, stored, used or disposed of on the Property which are listed as
"hazardous" or "toxic" in the Comprehensive Environmental Response
Compensation Act, 42 USC ~ 9601 et seq. , the Resource Conservation and
Recovery Act, 42 USC ~ 6901 et seq. , or any other federal, state or local law
regulating toxic or hazardous substances; and to the best of Seller's
knowledge, there have been no such substances on the Property except to the
JSD90188
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extent that the chlorine and muriatic acid used -for pool cleaning purposes
could be considered to be in such categories;
3.1.13 To the best of Seller's knowledge and belief, all public
utilities, including, without being limited to, sewers, water, electric, gas,
telephone, etc. , required for the operation of the Property, either enter the
Property through public roads or adjoining private land and do so in
accordance with value public easements or private .easements . All of said
public utilities are installed and operating, and all installation and connection
charges have been paid for in full;
3.1.14 No assessments for public improvements have been made
against the Property that remain unpaid, including, without limitation, those
for construction of sewer and water lines and mains, street lights, streets,
sidewalks and curbs;
3.1.15 Seller has not failed to disclose to the Buyer any material
adverse fact or condition regarding this Agreement or the transactions
contemplated hereunder;
3.1.16 To the best of Seller's knowledge and belief, there are no
off-record agreements relating to entrances, exists, access and service roads
affecting the Property;
3.1.1? Seller knows of no material defects in the fitness or
physical condition of the Property, without making a special inspection for
purposes of this warranty, which is attached hereto and incorporated herein;
3.1.18 All personal property to be purchased hereunder is free
of liens and encumbrances/; and
3.1.19 Seller is not a "foreign person" within the meaning of
section 1445, et seq., of the Internal Revenue Code of 1986, as amended.
3.1.20 There are no wells and, except as provided in paragraph
2.3.5 (e) underground storage tanks located on the Property .
3.1.21 Seller has fully and accurately accounted to Buyer with
respect to all accounts, funds, or deposits being held by Seller or which are
held by others either at Seller's request or for Seller's benefit without limiting
the foregoing. Seller agrees to indemnify and hold harmless the Buyer.
Seller agrees that it will either pursue the procedures described in Minnesota
Statutes, ~ 504.A~f, Aor will indemnify and hold harmless the Buyer~or any
claims or security 'deposits in excess of the noticed for amount.
3.2 Buyer's Warranties . Buyer hereby represents, warrants and covenants
(which warranties, representations and covenants shall survive the Closing Date)
that, as of the date of this Agreement and as of the Closing Date, Buyer has full
power and authority to enter into and perform this Agreement in accordance with its
terms .
3.3 Additional Buyer Covenant. Buyer further covenants. to Seller, that
absent the consent of Seller, Buyer will not voluntarily convey title to the Property
for a period of two years following the Closing Date.
JHD90188
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ARTICLE 4
Notices
4.1 All written notices and demands of any kind, which either party may be
required or may desire to serve upon the other. party in connection with this
Agreement, may be served (as an alternative to personal service) by registered or
certified mail or by national overnight courier. Any such notice or demand so served
by registered or certified mail shall be deposited in the United States Mail with
postage thereon fully prepaid and addressed to the party to be served at the address
set forth at the beginning of this agreement, or such other address as the other
party may provide in writing. Service of any such notice or demand so made by mail
shall be deemed complete two (2) business days after the day of mailing, and service
made by national overnight courier shall be deemed complete when delivered by such
courier. A copy of any such notice shall also be sent to Escrowholder.
ARTICLE 5
Liquidated Damages
5.1 The parties have discussed and negotiated in good faith upon the
question of damages to be suffered by /~ei~l~er pert in the event /~i~€ breach/ of this
A cement b tt~e other
~' y . p~arty~, and they hereby agree that liquidated damages in the
amount of $I00: 00 are and will be reasonable; and in the event of such breach, /N
nonbreae#x~ig party`'';shall be entitled to and shall receive such liquidated damages'
and Buyer shall have no additional liability whatsoever. Buyer shall, /fit>
election, have;! the aptioxr of specific performance under this Agreement; Seller,.
however, shall not have such recourse. Except as provided in this Article, n
partte~:shall have no personal liability hereunder.
ARTICLE 6
General Provisions
6.1 The titles and headings of the various Articles and Paragraphs hereof
are intended solely for means of reference and are not intended for any purpose
whatsoever to modify, explain or place any construction on any of the provisions of
this Agreement .
6.2 This Agreement constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof and may not be modified, amended
or otherwise changed in any manner except by a writing executed by the parties
hereto . This Agreement and all documents executed in connection herewith or
pursuant to the terms hereof •shall be governed by and construed in accordance with
the laws of the State of Minnesota.
6.3 This Agreement and all the covenants, terms and provisions contained
herein shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns Bu~er may assign this Agreement only with
e ler's consent. ~vhi~l r*nncarYt >ch~ai.. :,,~-+. `:~~ ,zY,.n~cnro~t~>::.>::.r+.~.~; ~.;~: ..a,~:.~;...
JBD90188
RC125-73 1 0
-- 6.4 The provisions and conditions of this Agreement shall -not merge with
any deed or instrument of conveyance, and said provisions and conditions shall
survive the Closing.
6.5 /ch .:~~~ hereby indemnifies tithe atl~er ::party, holds it harmless
from, and agrees to defend and protect it against, any and all claims, demands,
damages, losses, liabilities, liens, legal actions and other proceedings of any nature,
together with all costs and expenses thereof (including, without limitation,
reasonable attorneys' fees and court costs) arising from a claim by any person or
entity (including, without limitation, by affiliates or Seller) for a real estate
commission or a finder's fee in this transaction based upon any contacts or dealings
such party may have had with Seller.
6.6 Each party shall pay the fees charged by any attorney retained by it is
connection with this transaction.
n~>H
By
Its
By
Its
[SELLER]
By
Its
By
Its
JHD90188
RC125-73 1 1
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth above .
EXHIBIT A
LEGAL DESCRIPTION
[to be completed prior to execution]
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RC125-73 1 2
EXHIBIT B
List of Operating Contracts/Agreements
[to be completed prior to execution]
JBD90188
RC125-73 1 3
EXHIBIT C
Promissory Note
[to be completed prior to execution]
JBD90188
RC125-73 1 4