07-20-2020 HRA Complete AgendaREGULAR HOUSING AND REDEVELOPMENT AUTHORITY MEETING
VIRTUAL MEETING HELD VIAWEBEX
J U LY 20, 2020
Call to Order 7:00 PM
Open Forum
Each speaker is to keep their comment period to three minutes to allow sufficient time for others. Comments
are to be an opportunity to address the Housing and Redevelopment Authority on items not on the agenda.
Individuals who wish to address the Housing and Redevelopment Authority must have submitted comments
to Idubois@richfieldmn.gov prior to the meeting.
Approval of the minutes of the Regular Housing and Redevelopment Authority meeting of June 15, 2020.
AGENDAAPPROVAL
Consent Calendar contains several separate items which are acted upon by the HRA in one motion.
Once the Consent Calendar has been approved, the individual items and recommended actions have
also been approved. No further HRAaction on these items is necessary. However, any HRA
Commissioner may request that an item be removed from the Consent Calendar and placed on the
regular agenda for H RA discussion and action. All items listed on the Consent Calendar are
recommended for approval.
A. Consideration of the adoption of a resolution approving the issuance of, and providing the form, term,
covenants and directions for the issuance of its Tax Increment Financing Limited Revenue Note, Series
2020 in an aggregate principal amount not to exceed $8,492,000, related to Tax Increment Financing
District2017-1 (The Chamberlain).
Staff Report No. 22
2. Consideration of items, if any, removed from Consent Calendar
RESOLUTIONS
Consideration of a resolution approving a Contract for Private Development with 6345 Partners, LLC and
authorizing the issuance of a Tax Increment Limited Revenue Note.
Staff Report No. 23
4. Consider the attached resolution approving a Preliminary Development Agreement between the Housing and
Redevelopment Authority and PLH & Associates - Construction Services, LLC for redevelopment of property at
101 - 66th Street East.
Staff Report No. 24
OTHER BUSINESS
Consider the adoption of a resolution approving revisions to the InclusionaryAffordable Housing Policy.
Staff Report No. 25
6. Consider a request to purchase the property at 6701 17th Avenue South for $412,000.
Staff Report No. 26
HRA DISCUSSION ITEMS
EXECUTIVE DIRECTOR REPORT
CLAIMS
Adjournment
Auxiliary aids for individuals with disabilities are available upon request. Requests must be made at least 96
hours in advance to the City Clerk at 612-861-9738.
HOUSING AND REDEVELOPMENT
AUTHORITY MEETING MINUTES
Richfield, Minnesota
Regular Meeting
June 15, 2020
CALL TO ORDER
The meeting was called to order by Chair Supple at 7:03 p.m. via Webex.
HRA Members Mary Supple, Chair; Sue Sandahl; Maria Regan Gonzalez; Pat Elliott
Present. and Erin Vrieze Daniels.
HRA Members
Absent: None.
Staff Present: John Stark, Executive Director; Julie Urban, Housing Manager; and LaTonia
DuBois, Administrative Assistant.
Others Present: Sarah Harris, Aeon Season's Park; Dustin Endres, Endres Custom Homes.
OPEN FORUM
No speakers
APPROVAL OF THE MINUTES
M/Regan Gonzalez, S/Vrieze Daniels to approve the minutes of the regular Housing and
Redevelopment Authority meeting of May 18, 2020.
Motion carried 5-0
Item #1 APPROVAL OF THE AGENDA
M/Vrieze Daniels, S/Regan Gonzalez to approve the agenda.
Motion carried 5-0
Item #2 APPROVAL OF THE CONSENT CALENDAR
Executive Director Stark presented the consent calendar.
HRA Meeting Minutes -2- June 15, 2020
A. Consider adoption of a change to the Richfield Housing and Redevelopment Authority
Administrative plan to conduct biennial inspections for units under the Section 8 Housing
Choice Voucher Program. (S.R. No. 18)
M/Sandahl, S/Regan Gonzalez to approve the consent calendar.
Motion Carried 5-0
Item #3 CONSIDERATION OF ITEMS, IF ANY, REMOVED FROM THE CONSENT
CALENDAR
None.
Item #4 CONSIDERATION OF AN AMENDMENT TO THE GUIDELINES FOR THE
APARTMENT IMPROVEMENT GRANT PROGRAM TO ALLOW DUPLEXES AS
ELIGIBLE PROPERTIES. (S.R. NO. 19)
Housing Manager Urban presented Staff Report No.19 and explained grant funds are
intended to be used for rental property participating in the Housing Choice Voucher Program.
Commissioner Vrieze Daniels inquired about triplexes participating in the City of Richfield.
Housing Manager Urban explained that there are only two or three triplexes in the City, but
none of them participate in the Housing Choice Voucher Program.
M/Vrieze Daniels, S/Sandahl to approve an amendment to the guidelines for the Apartment
Improvement Grant Program to allow duplexes as eligible properties.
Motion Carried 5-0
Item #5 CONSIDERATION OF A MASTER AMENDMENT TO THE MORTGAGE,
PROMISORY NOTE, AND LOAN AGREEMENT WITH AEON SEASONS PARK
AND SUBORDINATION OF THE MORTGAGE. (S.R. NO. 20)
Housing Manager Urban presented Staff Report No. 20
Chair Supple commented that it is good financing has been found to make some
improvements at Seasons Park.
Commissioner Regan Gonzalez echoed appreciation for improvements.
Commissioner Elliott also inquired about interest and payments on the original loan and
discussed letting the public know the HRA does good things with funds.
Housing Manager Urban explained terms of the loan and that re -payment is not expected.
Executive Director Stark explained that re -payment is not expected.
HRA Meeting Minutes -3- June 15, 2020
RESOLUTION NO. 1362
RESOLUTION APPROVING A MASTER AMENDMENT AGREEMENT WITH AEON SEASONS
PARK LLC RELATED TO AN AFFORDABLE HOUSING PROJECT IN THE CITY OF RICHFIELD
M/Regan Gonzalez, S/Elliott to approve a resolution authorizing the execution of a Master
Amendment, promissory note and loan Agreement with Aeon Seasons Park and approve a
subordination of the mortgage to the Minnesota Housing principal mortgage.
Motion Carried 5-0
Item #6 CONSIDERATION OF A REQUEST TO CONTRIBUTE TO THE COST OF THE
REMEDIATION OF HAZARDOUS MATERIALS AT 6812 EMERSON LANE. (S.R.
NO. 21)
Housing Manager Urban presented Staff Report No. 21 and spoke of previous
developments that discovered debris or hazardous materials and assistance that was provided.
Housing Manager Urban also spoke of extensive costs for building in the area and how the lots
were not buildable.
Housing Manager Urban mentioned a letter from Mr. Endres that offers details about the
debris that was found and asked commissioners if they had a chance to review it. Commissioners
did review the letter from Mr. Endres.
Commissioner Vrieze Daniels inquired about where the funds would come from.
Housing manager Urban explained the funds would come from the HRA general fund.
Chair Supple invited Mr. Endres to speak.
Mr. Endres explained how the debris was discovered and what the process was to haul it
out and the reasoning for opening the trenches and removing all of the debris so the road wouldn't
fail and the unexpected high expenses incurred.
Commissioner Sandahl inquired about sales and asked Mr. Endres to comment on the
suggestion from staff that the HRA pay half of the expenses incurred opposed to the full amount.
M/Regan Gonzalez, S/Sandahl to authorize the Housing and Redevelopment Authority
attorney to prepare an amendment to the Contract for Private Development with Endres Custom
Homes, authorizing the Housing and Redevelopment Authority to provide $7,500 for debris
removal in the development of the property at 6812 Emerson Lane.
Commissioner Vrieze Daniels mentioned while this is unfortunate and expensive the land
was sold to Mr. Endres for $1 because of the high development costs required and that the note
stated unexpected costs could come up and she would be voting no.
Commissioner Sandahl stated that she would consider approving up to $10,000 if two other
commissioners agreed.
Motion Carried 4-1, with Commissioner Vrieze Daniels voting nay.
HRA Meeting Minutes -4- June 15, 2020
Item #7 HRA DISCUSSION ITEMS
Commissioner Sandahl inquired about the wooden structure on 66th and Lyndale Avenue.
Executive Director Stark explained the structure was intended to be temporary and was
intended to prevent over parking and to send a message that the area was intended for future
development. Chase Bank has since purchased the property and will begin development on the
site soon.
Chair Supple announced the vacancy on the Planning Commission and encouraged
residents to apply.
Commissioner Vrieze Daniels spoke of her history on the Planning Commission and
encouraged residents to apply.
Commissioner Regan Gonzalez inquired about being able to tour some of the new
developments.
Executive Director Stark stated that staff would absolutely reach out to developers about
tours for Policy Makers.
Chair Supple inquired about the Eviction Moratorium.
Housing Manger Urban stated the Moratorium was extended and mentioned the Federal
Eviction Suspension.
Commissioner Vrieze Daniels inquired about what the need would be once the moratorium
expires.
Urban mentioned results from a survey sent to property owners and stated the percentage
of those not paying rent wasn't as high as expected, but it is unknown what the need will be at this
time.
Item #8 EXECUTIVE DIRECTOR REPORT
Executive Director Stark mentioned that a grant approval at the sub -committee level of the
Metropolitan Council was received and asked Housing Manager to Urban to elaborate.
Housing Manager Urban explained the grant is for the 6501 Penn Avenue, Bumper to
Bumper, development site and predevelopment livable communities funding was recommended by
the Community Development Committee and nice things were said about the project.
HRA Meeting Minutes -5- June 15, 2020
Item #9 CLAIMS
M/Regan Gonzalez, S/Sandahl that the following claims be approved:
U.S. BANK
6/15/2020
Section 8 Checks 131778-131939
$177,353.45
HRA Checks 33838-33845
$44,993.58
Total
$222,347.03
Motion carried 5-0
Item #10 ADJOURNMENT
The meeting was adjourned by unanimous consent at 7:46 p.m.
Date Approved: July 20, 2020
Mary B. Supple
HRA Chair
LaTonia DuBois John Stark
Administrative Assistant Executive Director
AGENDA SEC110N: Consent Calendar
AGENDA ITEM # 1.A.
STAFF REPORT NO. 22
HOUSING AND REDEVELOPMENT AUTHORITY
MEETING
7/20/2020
REPORT PREPARED BY: Myrt Link, Community Development Accountant
OTHER DEPARTMENT REVIEW:
EXECUTIVE DIRECTOR REVIEW: John Stark, Executive Director
7/10/2020
ITEM FOR COUNCIL CONSIDERATION:
Consideration of the adoption of a resolution approving the issuance of, and providing the form, term,
covenants and directions for the issuance of its Tax Increment Financing Limited Revenue Note,
Series 2020 in an aggregate principal amount not to exceed $8,492,000, related to Tax Increment
Financing District 2017-1 (The Chamberlain).
EXECUTIVE SUMMARY:
The Housing and Redevelopment Authority (HRA) approved the establishment of the 2017-1 Tax Increment
Financing District and adoption of a Tax Increment Financing Plan on November 20, 2017. On June 18,
2018, the HRA entered into a Contract for Private Redevelopment (Contract) with Chamberlain Apartments,
LLC (Developer) to construct a multifamliy housing development.
The HRA is authorized to issue and sell its bonds for the purpose of financing a portion of the public
development costs (qualified costs) of the Housing District. The HRA finds and determines that it is in the
best interest of the Authority that it issue and sell its Tax Increment Limited Revenue Note, Series 2020 in the
amount of up to $8,492,000 with an annual interest rate of 4.6% for the purpose of reimbursing the Developer
for qualified costs identified in the Tax Increment Plan for the 2017-1 Tax Increment District.
RECOMMENDED ACTION:
By motion: Adopt a resolution approving the issuance of, and providing the form, term, covenants
and directions for the issuance of its Tax Increment Financing Limited Revenue Note, Series 2020 in an
aggregate principal amount not to exceed $8,492,000, related to Tax Increment Financing District 2017-
1 (The Chamberlain).
BASIS OF RECOMMENDATION:
A. HISTORICAL CONTEXT
• On November 20, 2017 the HRA established the 2017-1 Tax Increment Financing District and
adopted a Tax Increment Financing Plan.
• The HRA enter into a Contract for Private Redevelopment with Chamberlain Apartments, LLC on
June 18, 2018.
• Sale of HRA property to Chamberlain Apartments, LLC closed on July 11, 2018.
• In August 2018 construction started on 283 apartment units, rehabilitation of three 11-unit
apartment buildings and underground parking.
• Qualified costs were received in May 2020.
B. POLICIES (resolutions, ordinances, regulations, statutes, etch
• Per Minnesota Statutes, Section 469.178, the HRA is authorized to issue and sell its bonds for
the purpose of financing a portion of the public development costs of the Housing District.
• Pursuant to the Contract for Private Development (approved by the HRA on June 18, 2018), the
HRA committed itself to issue this TI F Note if all contract provisions were met by the developer.
C. CRITICALTIMING ISSUES:
The Note needs to be issued prior to August 1, 2020, when the first payment is scheduled to be
made.
D. FINANCIAL IMPACT:
The payments on Tax Increment Limited Revenue Note, Series 2020 will be made from available
tax increment and will only be made subject to sufficient increment being generated on the
property to meet the payment obligations.
As this is a "Pay -As -You -Go" Note, the developer will only receive Tax Increment payments to the
extent that the property taxes support the payment; the HRA is under no obligation to make the
TI F Note payments in the event that the property taxes collected are insufficient.
E. LEGAL CONSIDERATION:
• The resolution and Tax Increment Limited Revenue Note, Series 2020 were drafted by HRA legal
counsel.
ALTERNATIVE RECOMMENDATION .
None
PRINCIPAL PARTIES EXPECTED AT MEETING:
N/A
ATTACHMENTS:
Description Type
❑ Resolution Resolution Letter
HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE
CITY OF RICHFIELD, MINNESOTA
RESOLUTION NO.
RESOLUTION APPROVING THE ISSUANCE OF, AND
PROVIDING THE FORM, TERMS, COVENANTS AND
DIRECTIONS FOR THE ISSUANCE OF ITS TAX INCREMENT
LIMITED REVENUE NOTE, SERIES 2020 IN AN AGGREGATE
PRINCIPAL AMOUNT NOT TO EXCEED $8,492,000
BE IT RESOLVED BY the Board of Commissioners ("Board") of the Housing and Redevelopment
Authority in and for the City of Richfield, Minnesota (the "Authority"), as follows:
Section 1. Authorization; Award of Sale.
1.01. Authorization. The Authority has heretofore approved the establishment of Tax Increment
Financing District No. 2017-1 (The Chamberlain) (a housing district) (the "TIF District") within the Richfield
Redevelopment Project ("Redevelopment Project"), and has adopted a tax increment financing plan for the
purpose of financing certain improvements within the Redevelopment Project.
Pursuant to Minnesota Statutes, Section 469.178, the Authority is authorized to issue and sell its
bonds for the purpose of financing a portion of the public development costs of the Redevelopment District.
Such bonds are payable from all or any portion of revenues derived from the TIF District and pledged to the
payment of the bonds. The Authority hereby finds and determines that it is in the best interests of the
Authority that it issue and sell its Tax Increment Limited Revenue Note, Series 2020 (the "TIF Note"), in the
aggregate principal amount of up to $8,492,000 for the purpose of financing certain public redevelopment
costs of the Tax Increment Plan for the TIF District.
1.02. Issuance, Sale and Terms of the TIF Note. The Authority entered into an Amended and
Restated Contract for Private Development, dated June 18, 2018 (the "Agreement"), between the Authority
and the Owner. Pursuant to the Agreement, the TIF Note shall be sold to Chamberlain Apartments, LLC (the
"Owner"). The TIF Note shall be dated as of the date of delivery and shall bear interest at the rate of 4.6%
per annum to the earlier of maturity or prepayment. In exchange for the Authority's issuance of the TIF Note
to the Owner, the Owner shall pay certain public redevelopment costs related to the Minimum Improvements
(as defined in the Agreement) pursuant to Section 3.3 of the Agreement. The TIF Note will be delivered in
the principal amount of up to $8,492,000 for reimbursement of public redevelopment costs in accordance
with the terms of Section 3.4(a) of the Agreement.
Section 2. Form of TIF Note. The TIF Note shall be in substantially the form set forth in
Schedule A attached hereto, with the blanks to be properly filled in and the principal amount and payment
schedule adjusted as of the date of issue.
Section 3. Terms, Execution and Delivery.
3.01. Denomination, Payment. The TIF Note shall be issued as a single typewritten note
numbered R-1.
The TIF Note shall be issuable only in fully registered form. Principal of and interest on the TIF
Note shall be payable by check or draft issued by the Registrar described herein.
3.02. Dates; Interest Payment Dates. Subjection to the provisions of the Agreement, principal of
and interest on the TIF Note shall be payable by mail to the owner of record thereof as of the close of
business on the fifteenth day of the month preceding the Payment Date, whether or not such day is a business
day.
3.03. Registration. The Authority hereby appoints the Authority's Executive Director to perform
the functions of registrar, transfer agent and paying agent (the "Registrar"). The effect of registration and the
rights and duties of the Authority and the Registrar with respect thereto shall be as follows:
(a) Re ig ster. The Registrar shall keep at its office a bond register in which the Registrar shall
provide for the registration of ownership of the TIF Note and the registration of transfers and exchanges of
the TIF Note.
(b) Transfer of TIF Note. Upon surrender for transfer of the TIF Note, including any
assignment or exchange thereof, duly endorsed by the registered owner thereof or accompanied by a written
instrument of transfer, in form reasonably satisfactory to the Registrar, duly executed by the registered owner
thereof or by an attorney duly authorized by the registered owner in writing, and the payment by the Owner
of any tax, fee, or governmental charge required to be paid by or to the Authority with respect to such transfer
or exchange, the Registrar shall authenticate and deliver, in the name of the designated transferee or
transferees, a new Note of the same aggregate principal amount, bearing interest at the same rate and
maturing on the same dates. Notwithstanding the foregoing, the TIF Note shall not be transferred to any
person other than an affiliate, or other related entity, of the Owner unless the Authority has been provided
with an investment letter in a form substantially similar to the investment letter submitted by the Owner or a
certificate of the transferor, in a form satisfactory to the Authority, that such transfer is exempt from
registration and prospectus delivery requirements of federal and applicable state securities laws. The
Registrar may close the books for registration of any transfer after the fifteenth day of the month preceding
each Payment Date and until such Payment Date.
The TIF Note shall not be transferred to any person other than an affiliate, or other related entity, of
the Owner unless the Authority has been provided with an investment letter in a form substantially similar to
the investment letter in EXHIBIT C of the Agreement or a certificate of the transferor, in a form satisfactory
to the Executive Director of the Authority, that such transfer is exempt from registration and prospectus
delivery requirements of federal and applicable state securities laws. The Registrar may close the books for
registration of any transfer after the fifteenth day of the month preceding each Payment Date and until such
Payment Date.
The Owner may assign the TIF Note to a lender that provides all or part of the financing for the
acquisition of the Development Property or the construction of the Minimum Improvements. The Authority
hereby consents to such assignment, conditioned upon receipt of an investment letter from such lender in
substantially the form attached in the Agreement as EXHIBIT C, or other form reasonably acceptable to the
Executive Director of the Authority. The Authority also agrees that future assignments of the TIF Note may
be approved by the Executive Director of the Authority without action of the Authority's Board, upon the
receipt of an investment letter in substantially the form of EXHIBIT C of the Agreement or other investment
letter reasonably acceptable to the Authority from such assignees.
(c) Cancellation. The TIF Note surrendered upon any transfer shall be promptly cancelled by
the Registrar and thereafter disposed of as directed by the Authority.
(d) Improper or Unauthorized Transfer. When a Note is presented to the Registrar for transfer,
the Registrar may refuse to transfer the same until it is satisfied that the endorsement on such Note or separate
W
instrument of transfer is legally authorized. The Registrar shall incur no liability for its refusal, in good faith,
to make transfers which it, in its judgment, deems improper or unauthorized.
(e) Persons Deemed Owners. The Authority and the Registrar may treat the person in whose
name a Note is at any time registered in the bond register as the absolute owner of the TIF Note, whether the
TIF Note shall be overdue or not, for the purpose of receiving payment of, or on account of, the principal of
and interest on such Note and for all other purposes, and all such payments so made to any such registered
owner or upon the owner's order shall be valid and effectual to satisfy and discharge the liability of the
Authority upon such Note to the extent of the sum or sums so paid.
(f) Taxes, Fees and Charges. For every transfer or exchange of a Note, the Registrar may
impose a charge upon the owner thereof sufficient to reimburse the Registrar for any tax, fee, or other
governmental charge required to be paid with respect to such transfer or exchange.
(g) Mutilated, Lost, Stolen or Destroyed Note. In case any Note shall become mutilated or be
lost, stolen, or destroyed, the Registrar shall deliver a new Note of like amount, maturity dates and tenor in
exchange and substitution for and upon cancellation of such mutilated Note or in lieu of and in substitution
for such Note lost, stolen, or destroyed, upon the payment of the reasonable expenses and charges of the
Registrar in connection therewith; and, in the case the TIF Note lost, stolen, or destroyed, upon filing with the
Registrar of evidence satisfactory to it that such Note was lost, stolen, or destroyed, and of the ownership
thereof, and upon furnishing to the Registrar of an appropriate bond or indemnity in form, substance, and
amount satisfactory to it, in which both the Authority and the Registrar shall be named as obligees. The TIF
Note so surrendered to the Registrar shall be cancelled by it and evidence of such cancellation shall be given
to the Authority. If the mutilated, lost, stolen, or destroyed Note has already matured or been called for
redemption in accordance with its terms, it shall not be necessary to issue a new Note prior to payment.
3.04. Preparation and DeliverX. The TIF Note shall be prepared under the direction of the
Executive Director of the Authority and shall be executed on behalf of the Authority by the signatures of its
Chair and its Executive Director. In case any officer whose signature shall appear on the TIF Note shall
cease to be such officer before the delivery of the TIF Note, such signature shall nevertheless be valid and
sufficient for all purposes, the same as if such officer had remained in office until delivery. When the TIF
Note has been so executed, the TIF Note shall be delivered by the Authority to the Owner following the
delivery of the necessary items delineated in Section 3.3 of the Agreement.
Section 4. Security Provisions.
4.01. Pledge. The Authority hereby pledges to the payment of the principal of and interest on the
TIF Note Available Tax Increment as defined in the TIF Note. Available Tax Increment shall be applied to
payment of the principal of and interest on the TIF Note in accordance with Section 3.3 of the Agreement and
the terms of the form of TIF Note set forth in Schedule A attached to this resolution.
4.02. Bond Fund. Until the date the TIF Note is no longer outstanding and no principal thereof or
interest thereon (to the extent required to be paid pursuant to this resolution) remains unpaid, the Authority
shall maintain a separate and special "Bond Fund" to be used for no purpose other than the payment of the
principal of and interest on the TIF Note. The Authority irrevocably agrees to appropriate to the Bond Fund
in each year Available Tax Increment. Any Available Tax Increment remaining in the Bond Fund shall be
transferred to the Authority's account for TIF District upon the payment of all principal and interest to be
paid with respect to the TIF Note.
Section 5. Certification of Proceedings.
5.01. Certification of Proceedings. The officers of the Authority are hereby authorized and directed
to prepare and furnish to the Owner of the TIF Note certified copies of all proceedings and records of the
Authority, and such other affidavits, certificates, and information as may be required to show the facts
relating to the legality and marketability of the TIF Note as the same appear from the books and records
under their custody and control or as otherwise known to them, and all such certified copies, certificates, and
affidavits, including any heretofore furnished, shall be deemed representations of the Authority as to the facts
recited therein.
Section 6. Effective Date. This resolution shall be effective upon full execution of the Agreement.
Adopted by the Board of Commissioner the Housing and Redevelopment Authority in and for the City of
Richfield, Minnesota, this 20'h day of July, 2020.
Chair
Executive Director
al
EXHIBIT A
FORM OF TIF NOTE
UNITED STATE OF AMERICA
STATE OF MINNESOTA
COUNTIES OF HENNEPIN
HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE
CITY OF RICHFIELD
No. R-1
TAX INCREMENT LIMITED REVENUE NOTE
SERIES 2020
Rate
[lesser of 4.6% or actual financing rate]
$8,492,000
Date
of Original Issue
May 14, 2020
The Housing and Redevelopment Authority in and for the City of Richfield, Minnesota (the
"Authority"), for value received, certifies that it is indebted and hereby promises to pay to Chamberlain
Apartments, LLC, or registered assigns (the "Owner"), the principal sum of $8,492,000 and to pay interest
thereon at the rate of six and three quarters percent per annum, as and to the extent set forth herein.
1. Payments. Principal and interest ("Payments") shall be paid on August 1, 2020, and each
February 1 and August 1 (each a "Payment Date") and thereafter to and including February 1, 2046, in the
amounts and from the sources set forth in Section 3 herein. Payments shall be applied first to accrued
interest, and then to unpaid principal.
Payments are payable by mail to the address of the Owner or such other address as the Owner may
designate upon 30 days written notice to the Authority. Payments on this Note are payable in any coin or
currency of the United States of America which, on the Payment Date, is legal tender for the payment of
public and private debts.
2. Interest. Interest at the rate stated herein shall accrue on the unpaid principal, commencing
on the date of original issue. Interest shall accrue on a simple basis and will not be added to principal.
Interest shall be computed on the basis of a year of 360 days and charged for actual days principal is unpaid.
3. Available Tax Increment. Payments on this Note are payable on each Payment Date in the
amount of and solely payable from "Available Tax Increment," which will mean, on each Payment Date,
ninety percent (90%) of the Tax Increment (as defined in the Agreement) attributable to the Development
Property (as defined in the Agreement) and paid to the Authority by Hennepin County in the six months
preceding the Payment Date, all as the terms are defined in the Amended and Restated Contract for Private
Development, dated June 18, 2018 (the "Agreement"), between the Authority and Owner. The principal of
and interest on this Note shall be payable each Payment Date solely from Available Tax Increment.
Available Tax Increment will not include any Tax Increment if, as of any Payment Date, there is an uncured
Event of Default under the Agreement.
S-1
The Authority shall have no obligation to pay principal of and interest on this Note on each Payment
Date from any source other than Available Tax Increment, and the failure of the Authority to pay the entire
amount of principal or interest on this Note on any Payment Date shall not constitute a default hereunder as
long as the Authority pays principal and interest hereon to the extent of Available Tax Increment. The
Authority shall have no obligation to pay unpaid balance of principal or accrued interest that may remain
after the payment of Available Tax Increment from the last payment of Tax Increment the Authority is
entitled to receive from Hennepin County with respect to the Development Property.
4. Optional Prepayment. The principal sum and all accrued interest payable under this Note is
prepayable in whole or in part at any time by the Authority without premium or penalty. No partial
prepayment shall affect the amount or timing of any other regular payment otherwise required to be made
under this Note.
5. Termination. At the Authority's option, this Note shall terminate and the Authority's
obligation to make any payments under this Note shall be discharged upon the occurrence of an Event of
Default on the part of the Developer as defined in Section 9.1 of the Agreement, but only if the Event of
Default has not been cured in accordance with Section 9.2 of the Agreement.
6. Nature of Obli.ag tion. This Note is issued to aid in financing certain public development
costs and administrative costs of a housing project undertaken by the Authority pursuant to Minnesota
Statutes, Sections 469.001 through 469.047, as amended, and is issued pursuant to an authorizing resolution
(the "Resolution") duly adopted by the Authority on July 20, 2020, and pursuant to and in full conformity
with the Constitution and laws of the State of Minnesota, including Minnesota Statutes, Sections 469.174 to
469.1794, as amended. This Note is a limited obligation of the Authority which is payable solely from
Available Tax Increment pledged to the payment hereof under the Resolution. This Note and the interest
hereon shall not be deemed to constitute a general obligation of the State of Minnesota or any political
subdivision thereof, including, without limitation, the Authority. Neither the State of Minnesota, nor any
political subdivision thereof shall be obligated to pay the principal of or interest on this Note or other costs
incident hereto except out of Available Tax Increment, and neither the full faith and credit nor the taxing
power of the State of Minnesota or any political subdivision thereof is pledged to the payment of the principal
of or interest on this Note or other costs incident hereto.
7. Estimated Tax Increment Payments. Any estimates of Tax Increment prepared by the
Authority or its financial advisors in connection with the TIF District or the Agreement are for the benefit of
the Authority, and are not intended as representations on which the Developer may rely.
THE AUTHORITY MAKES NO REPRESENTATION OR WARRANTY THAT THE
AVAILABLE TAX INCREMENT WILL BE SUFFICIENT TO PAY THE PRINCIPAL OF AND
INTEREST ON THIS NOTE.
Registration. This Note is issuable only as a fully registered note without coupons.
9. Transfer. As provided in the Resolution, and subject to certain limitations set forth therein,
this Note is transferable upon the books of the Authority kept for that purpose at the principal office of the
City Clerk of the City of Richfield. Upon surrender for transfer of the TIF Note, including any assignment or
exchange thereof, duly endorsed by the registered owner thereof or accompanied by a written instrument of
transfer, in form reasonably satisfactory to the Registrar, duly executed by the registered owner thereof or by
an attorney duly authorized by the registered owner in writing, and the payment by the Owner of any tax, fee,
or governmental charge required to be paid by or to the Authority with respect to such transfer or exchange,
the Registrar shall authenticate and deliver, in the name of the designated transferee or transferees, a new
S-2
Note of the same aggregate principal amount, bearing interest at the same rate and maturing on the same
dates.
S-2
Notwithstanding the foregoing, the TIF Note shall not be transferred to any person other than an
affiliate, or other related entity, of the Owner unless the Authority has been provided with an investment letter
in a form substantially similar to the investment letter in EXHIBIT C of the Agreement or a certificate of the
transferor, in a form satisfactory to the Executive Director of the Authority, that such transfer is exempt from
registration and prospectus delivery requirements of federal and applicable state securities laws. The
Registrar may close the books for registration of any transfer after the fifteenth day of the month preceding
each Payment Date and until such Payment Date.
The Owner may assign the TIF Note to a lender that provides all or part of the financing for the
acquisition of the Development Property or the construction of the Minimum Improvements. The Authority
hereby consents to such assignment, conditioned upon receipt of an investment letter from such lender in
substantially the form attached in the Agreement as EXHIBIT C, or other form reasonably acceptable to the
Executive Director of the Authority. The Authority also agrees that future assignments of the TIF Note may
be approved by the Executive Director of the Authority without action of the Authority's Board, upon the
receipt of an investment letter in substantially the form of EXHIBIT C of the Agreement or other investment
letter reasonably acceptable to the Authority from such assignees.
This Note is issued pursuant to a resolution of the Board of the Authority and is entitled to the
benefits thereof, which Resolution is incorporated herein by reference.
IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions, and things required by the
Constitution and laws of the State of Minnesota to be done, to exist, to happen, and to be performed in order
to make this Note a valid and binding limited obligation of the Authority according to its terms, have been
done, do exist, have happened, and have been performed in due form, time and manner as so required.
IN WITNESS WHEREOF, the Board of Commissioners of the Housing and Redevelopment
Authority in and for the City of Richfield, Minnesota, has caused this Note to be executed with the manual
signatures of its Chair and Executive Director, all as of the Date of Original Issue specified above.
Executive Director
S-3
HOUSING AND REDEVELOPMENT
AUTHORITY IN AND FOR THE CITY OF
RICHFIELD, MINNESOTA
Chair
REGISTRATION PROVISIONS
The ownership of the unpaid balance of the within Note is registered in the bond register of the
Authority's Executive Director, in the name of the person last listed below.
Date of Registration Registered Owner Signature of Executive Director
RC125-348 (JAE)
659593v1
CHAMBERLAIN
APARTMENTS, LLC
Federal ID #
S-4
AGENDA SECTION: RESOLUTIONS
AGENDA ITEM # 3.
STAFF REPORT NO. 23
HOUSING AND REDEVELOPMENT AUTHORITY
MEETING
7/20/2020
REPORT PREPARED BY: John Stark, Executive Director
OTHER DEPARTMENT REVIEW:
EXECUTIVE DIRECTOR REVIEW: John Stark, Executive Director
7/15/2020
ITEM FOR COUNCIL CONSIDERATION:
Consideration of a resolution approving a Contract for Private Development with 6345 Partners, LLC
and authorizing the issuance of a Tax Increment Limited Revenue Note.
EXECUTIVE SUMMARY:
On November 26, 2019, NorthBay Companies (Developer) presented a redevelopment concept at 65th Street
and Lyndale Avenue to a combined work session of the Richfield Housing and Redevelopment Authority
(HRA), Planning Commission and City Council. The proposal called for the rehabilitation of the existing 22-
unit apartment building located at 6345 Lyndale Avenue South along with construction of a new apartment
building to the east. The existing apartment building is considered to be "naturally occurring affordable
housing (NOAH)."
Based on the positive feedback at the work session, the HRA approved a Preliminary Development
Agreement with NorthBay on January 21, 2020. The primary purpose of that Preliminary
Agreement was for the Developer to determine the financial viability of their proposal and for HRA
staff and financial consultants (Ehlers) to quantify the potential public assistance available to cover
any cost "gap" that the Developer's feasibility analysis identified. The original Preliminary
Agreement was subsequently extended due to the impact of the Coronavirus pandemic.
Since the Preliminary Agreement was approved by the HRA in January, the Developer has pursued Planning
and Zoning approvals that would be necessary for the development to occur. These efforts have included:
• A neighborhood meeting was held on February 27. As a result of neighbor input, the easternmost
portion of the building was reduced to 4 stories, the unit count was reduced by 8 units in an effort to
increase the number of available parking spaces per unit.
• The Planning Commission held a Public Hearing on May 27, 2020 to consider land use changes to the
site. While a majority of the site (existing apartment building and three duplexes) has been properly
zoned for higher intensity multi -family housing since 2014, one of the single-family homes to be
acquired for the project was still zoned for single-family residential. Ultimately a rezoning to "Planned
Mixed Use" was sought by the Developer to accommodate the density they were proposing. While the
Planning Commission had concerns about the parking and recommended that a stricter parking ratio
be achieved, they did recommend the overall approval of the development with that caveat.
• After the Planning Commission meeting, the development team was able to add an additional four
parking spaces by reconfiguring the parking lot.
• The City Council approved the rezoning and other land use applications for the site on July 14, 2020.
As both the Developer and the HRA have now met all of the obligations of the Preliminary Development
Agreement, HRA consideration of a Contract for Private Development (Contract) is now being sought. This
Contract was drafted by HRA Legal Counsel (Julie Eddington of Kennedy and Graven) and has been
reviewed and edited by both HRA staff and the Developer. Among the provisions of the Contract are:
• The Developer will make improvements totaling at least $18.5 million to include construction of a new 4-
to-5 story 82-unit apartment building and rehabilitation of the existing 22-unit NOAH apartment building;
• The Developer will pay and/or reimburse the HRA's up -front costs to create this Agreement, to
establish a Tax Increment Financing (TI F) District and other Administrative costs.
• At least 20% of the units (including 5 in the new building) must be made to be affordable to households
with incomes of 50% or lower than the Area Median Income (AMI) for the life of the TI F District
(projected to be 26 years, but possibly as short as 12 years). This level of affordability meets both the
HRA and City's Inclusionary Housing Policy and the State's requirements for a Housing TI F District.
• The HRA would withhold the first 10% of Tax Increment for reimbursement of its ongoing administrative
costs and the Developer would receive the remainder of the TI F generated to reimburse them for costs
incurred to allow their development to achieve the affordability requirements;
• The maximum TI F that would be available to the Developer is $2,025,987. Staff and the HRH's
Financial have concluded that the development could not occur "But For" this level of assistance.
• As a reminder, in a TIF District, the property owner continues to pay taxes on the pre -redevelopment
property values to all of the taxing jurisdictions (City, County & School District) as had been the case
prior to the establishment of a TI F District. The property owner also pays normal property taxes on the
value of the new construction; 90% of these "new" taxes can be returned to the developer to reimburse
them for costs necessary to make the project financially feasible while still meeting affordability
requirements.
• The Developer chose to buy an additional property (514 64th Street West) in order to increase their
surface parking area and to provide a park access from 65th Street to Garfield Park. This was done,
in part, at the request of the City's Recreation Services Department as they believe providing this
access makes the park more usable and more safe.
• A number of new provisions have been added to this Contract in order to help combat unfair labor
practices. These provisions include:
• Construction and ongoing operation of the project must comply with all local, state and federal
labor laws.
• The Certificate of Completion will be provided upon evidence that all contractors, subcontractors
and laborers have been paid.
• If the Developer fails to comply with labor laws, they will be in default of the Contract.
• If they are in default, the HRA can delay issuance of the tax increment, reduce the amount of
the TI F by 20%, or terminate the Contract.
RECOMMENDED ACTION:
By motion: Approve a resolution approving a Contract for Private Development with 6345 Partners,
LLC and authorizing the issuance of a Tax Increment Limited Revenue Note.
BASIS OF RECOMMENDATION:
A. HISTORICAL CONTEXT
• On November 26, 2019, NorthBay Companies (the Developer) presented a redevelopment
concept at 65th Street and Lyndale Avenue to a combined Work Session of the Richfield Housing
and Redevelopment Authority (HRA), Planning Commission and City Council for the construction
of a new 5-story multi -family housing development and the rehabilitation of the existing adjoining
22-unit apartment building.
• The HRA approved a Preliminary Development Agreement with NorthBay on January 21, 2020.
• The HRA took subsequent actions to extend the term of this Preliminary Development Agreement
due to the impact of COVI D-19.
• NorthBay held a neighborhood meeting on February 27.
• The Planning Commission held a Public Hearing to consider a number of land -use requests
for the property on May 27 and recommended a City Council approval with a requested
parking modification. The City Council approved a first reading of land -use approvals on June 9
and held a 2nd reading on July 14 at which the Comprehensive Plan designation was amended,
the property was rezoned and a Plat was approved.
B. POLICIES (resolutions, ordinances, regulations, statutes, etch
• The Preliminary Development Agreement between the Developer and the HRA was originally
approved by the HRA on January 21. That Agreement states that "the parties [the HRA and the
Developer] will attempt in good faith to negotiate the terms of a contract for private development..."
C. CRITICALTIMING ISSUES:
• With the extensions enacted in response to the impacts of the Coronavirus pandemic, the current
Preliminary Agreement is set to expire no later than October 31, 2020.
D. FINANCIAL IMPACT:
• The Contract calls for the Developer to receive up to $2,025,987 in Tax Increment Financing
(TI F).
• That TI F would be provided in the form of a "Pay -As -You -Go" Note and would not pose a
financial risk to the HRA (the risk would be to the Developer if the property failed to pay adequate
property taxes).
• The development property would continue to pay property taxes to all of the current taxing
jurisdictions (City, County and School District) on the "base value" of the property.
• The Developer would be obligated to reimburse the HRA for legal and financial costs associated
with drafting this Contract and with evaluating and establishing a TI F District.
E. LEGAL CONSIDERATION:
• HRA Legal Counsel, Julie Eddington of Kennedy & Graven, drafted the original version of this
Contract and has agreed to some of the edits requested by the Developer and their legal counsel.
ALTERNATIVE RECOMMENDATION (Sl:
• Defer a decision on this item in order to seek clarification on any outstanding questions or issues;
• Do not approve this Contract.
PRINCIPAL PARTIES EXPECTED AT MEETING:
Representatives of NorthBay Development.
ATTACHMENTS:
Description
❑ Resolution
Type
Resolution Letter
❑ Contract for Development Contract/Agreement
HOUSING AND REDEVELOPMENT AUTHORITY
IN AND FOR THE CITY OF RICHFIELD, MINNESOTA
RESOLUTION NO.
RESOLUTION APPROVING CONTRACT FOR PRIVATE
DEVELOPMENT WITH 6345 PARTNERS, LLC AND AUTHORIZING
THE ISSUANCE OF A TAX INCREMENT LIMITED REVENUE NOTE
WHEREAS, the City of Richfield, Minnesota (the "City") and the Housing and Redevelopment
Authority in and for the City of Richfield, Minnesota (the "Authority") intends to approve the creation of the
2020-1 Tax Increment Financing District - Henley II (the "TIF District"), a housing district, within the
Richfield Redevelopment Project in the City (the "Redevelopment Project") and will consider adopting a tax
increment financing plan for the purpose of financing certain improvements within the Redevelopment
Project on August 17, 2020; and
WHEREAS, 6345 Partners, LLC, a Minnesota limited liability company (the "Developer"), intends
to construct on certain property within the TIF District (the "Development Property") an approximately
82-unit multifamily housing development, including an accessible two -bedroom unit at ground level (the
"New Housing Development"); and
WHEREAS, in addition to the New Housing Development described above, the Developer intends
to purchase a 22-unit apartment building with naturally occurring affordable rents located on the
Development Property (the "NOAH Housing Development") and rehabilitate the existing building without
displacing the NOAH Housing Development's current tenants (other than a temporary displacement during
rehabilitation of each unit, if necessary); and
WHEREAS, there has been presented before this Board of Commissioners of the Authority (the
"Board") a Contract for Private Development (the "Development Agreement") proposed to be entered into
between the Authority and the Developer, pursuant to which the Developer will agree to construct the New
Housing Development and rehabilitate the NOAH Housing Development (together, the "Minimum
Improvements") and the Authority will agree to reimburse the Developer for certain public redevelopment
costs associated with the Minimum Improvements (the "Public Redevelopment Costs"); and
WHEREAS, pursuant to Minnesota Statutes, Section 469.178, the Authority is authorized to issue
and sell its bonds for the purpose of financing a portion of the Public Redevelopment Costs, and such bonds
shall be payable from all or any portion of revenues derived from the TIF District and pledged to the payment
of the bonds; and
WHEREAS, pursuant to the Development Agreement, the Authority has proposed to issue a Tax
Increment Limited Revenue Note to the Developer (the "TIF Note") in the maximum principal amount of
$2,025,987 to reimburse the Developer for the Public Redevelopment Costs; and
NOW, THEREFORE, BE IT RESOLVED, by the Board of Commissioners of the Housing and
Redevelopment Authority in and for the City of Richfield, Minnesota as follows:
Section 1. The Development Agreement.
1.01. Upon completion of the Rehabilitation Plan by the Developer, the Executive Director shall
review the Rehabilitation Plan, request changes if necessary, and approve the final Rehabilitation Plan. Upon
final approval the Rehabilitation Plan will be attached to the Development Agreement as Exhibit F.
1.02. The Development Agreement is hereby in all respects authorized, approved, and confirmed,
and the Chair and the Executive Director are hereby authorized and directed to execute the Development
Agreement for and on behalf of the Authority in substantially the form now on file with the Executive
Director but with such modifications as shall be deemed necessary, desirable, or appropriate, the execution
thereof to constitute conclusive evidence of their approval of any and all modifications therein.
Section 2. The TIF Note.
2.01. The Authority hereby approves and authorizes the Chair and Executive Director to execute
the TIF Note. The TIF Note shall be sold to the Developer with such terms provided in the Development
Agreement. The Authority hereby delegates to the Executive Director the determination of the date on which
the TIF Note is to be delivered, in accordance with Section 3.3 of the Development Agreement. The
Authority shall receive in exchange for the sale of the TIF Note the agreement of the Developer to pay or
cause to be paid the Public Redevelopment Costs.
2.02. The TIF Note shall be in substantially the form set forth in Exhibit B attached to the
Development Agreement, with the blanks to be properly filled in and the principal amount and payment
schedule adjusted as of the date of issue.
2.03. The TIF Note shall be issued as a single typewritten note numbered R-1. The TIF Note shall
be issuable only in fully registered form. Principal of the TIF Note shall be payable by check or draft issued
by the registrar described herein. Principal of the TIF Note shall be payable by mail to the owner of record
thereof as of the close of business on the fifteenth day of the month preceding the Payment Date (as defined
in the Development Agreement), whether or not such day is a business day.
2.04. The Authority hereby appoints the Executive Director of the Authority to perform the
functions of registrar, transfer agent and paying agent (the "Registrar") for the TIF Note. The effect of
registration and the rights and duties of the Authority and the Registrar with respect thereto shall be as
follows:
(a) The Registrar shall keep at its office a bond register in which the Registrar shall provide for
the registration of ownership of the TIF Note and the registration of transfers and exchanges of the TIF Note.
(b) Upon surrender for transfer of the TIF Note duly endorsed by the registered owner thereof or
accompanied by a written instrument of transfer, in form reasonably satisfactory to the Registrar, duly
executed by the registered owner thereof or by an attorney duly authorized by the registered owner in writing,
the Registrar shall authenticate and deliver, in the name of the designated transferee or transferees, a new TIF
Note or Notes of a like aggregate principal amount and maturity, as requested by the transferor.
Notwithstanding the foregoing, the TIF Note shall not be transferred to any person other than an affiliate, or
other related entity, of the Developer unless the Authority has been provided with an investment letter in a
form substantially similar to the investment letter submitted by the Developer or a certificate of the transferor,
in a form satisfactory to the Authority, that such transfer is exempt from registration and prospectus delivery
requirements of federal and applicable state securities laws. The Registrar may close the books for
registration of any transfer after the fifteenth day of the month preceding each Payment Date and until such
Payment Date.
2
(c) Any TIF Note surrendered upon any transfer shall be promptly cancelled by the Registrar
and thereafter disposed of as directed by the Authority.
(d) If the TIF Note is presented to the Registrar for transfer, the Registrar may refuse to transfer
the same until it is satisfied that the endorsement on such TIF Note or separate instrument of transfer is
legally authorized. The Registrar shall incur no liability for its refusal, in good faith, to make transfers which
it, in its judgment, deems improper or unauthorized.
(e) The Authority and the Registrar may treat the person in whose name the TIF Note is at any
time registered in the bond register as the absolute owner of such TIF Note, whether the TIF Note shall be
overdue or not, for the purpose of receiving payment of, or on account of, the principal of such TIF Note and
for all other purposes, and all such payments so made to any such registered owner or upon the owner's order
shall be valid and effectual to satisfy and discharge the liability of the Authority upon such TIF Note to the
extent of the sum or sums so paid.
(f) For every transfer or exchange of the TIF Note, the Registrar may impose a charge upon the
owner thereof sufficient to reimburse the Registrar for any tax, fee, or other governmental charge required to
be paid with respect to such transfer or exchange.
(g) In case the TIF Note shall become mutilated or be lost, stolen, or destroyed, the Registrar
shall deliver a new TIF Note of like amount, maturity dates and tenor in exchange and substitution for and
upon cancellation of such mutilated TIF Note or in lieu of and in substitution for such TIF Note lost, stolen,
or destroyed, upon the payment of the reasonable expenses and charges of the Registrar in connection
therewith; and, in the case of the TIF Note lost, stolen, or destroyed, upon filing with the Registrar of
evidence satisfactory to it that such TIF Note was lost, stolen, or destroyed, and of the ownership thereof, and
upon furnishing to the Registrar of an appropriate bond or indemnity in form, substance, and amount
satisfactory to it, in which both the Authority and the Registrar shall be named as obligees. The TIF Note so
surrendered to the Registrar shall be cancelled by it and evidence of such cancellation shall be given to the
Authority. If the mutilated, lost, stolen, or destroyed TIF Note has already matured or been called for
redemption in accordance with its terms, it shall not be necessary to issue a new TIF Note prior to payment.
2.05. The TIF Note shall be prepared under the direction of the Executive Director and shall be
executed on behalf of the Authority by the signatures of its Chair and Executive Director. In case any officer
whose signature shall appear on the TIF Note shall cease to be such officer before the delivery of the TIF
Notes, such signature shall nevertheless be valid and sufficient for all purposes, the same as if such officer
had remained in office until delivery. When the TIF Note has been so executed, it shall be delivered by the
Executive Director to the Developer in accordance with the Development Agreement.
Section 3. Security Provisions of the TIF Note.
3.01. The Authority hereby pledges to the payment of the principal of the TIF Note all Available
Tax Increment (as defined in the Development Agreement and as further described in the TIF Note).
Available Tax Increment shall be applied to payment of the principal of the TIF Note in accordance with the
terms of Development Agreement and the form of TIF Note.
3.02. Until the date the TIF Note is no longer outstanding and no principal thereof (to the extent
required to be paid pursuant to this resolution) remains unpaid, the Authority shall maintain a separate and
special "Bond Fund" for the TIF Note to be used for no purpose other than the payment of the principal of the
TIF Note. The Authority irrevocably agrees to appropriate to the Bond Fund in each year Available Tax
Increment, subject to the terms of the Development Agreement. Any Available Tax Increment remaining in
either Bond Fund shall be transferred to the Authority's account for the TIF District upon the payment of all
principal to be paid with respect to the TIF Note.
Section 4. Miscellaneous.
4.01. The Chair and the Executive Director are hereby authorized to execute and deliver to the
Developer any and all documents deemed necessary to carry out the intentions of this resolution and the
Development Agreement.
4.02. The officers of the Authority are hereby authorized and directed to prepare and furnish to the
Developer certified copies of all proceedings and records of the Authority, and such other affidavits,
certificates, and information as may be required to show the facts relating to the legality and marketability of
the TIF Note as the same appear from the books and records under their custody and control or as otherwise
known to them, and all such certified copies, certificates, and affidavits, including any heretofore furnished,
shall be deemed representations of the Authority as to the facts recited therein.
4.03. The approval of the Development Agreement is contingent upon the City and Authority
approving the establishment of the TIF District and the related documents.
4.04. This resolution shall be effective upon full execution of the Development Agreement.
Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota
this 201 day of July, 2020.
ATTEST:
Maria Regan Gonzalez, Secretary
Mary B. Supple, Chair
4
Fifth Draft
July 15, 2020
CONTRACT
FOR
PRIVATE DEVELOPMENT
between
HOUSING AND REDEVELOPMENT AUTHORITY IN AND
FOR THE CITY OF RICHFIELD, MINNESOTA
and
6345 PARTNERS, LLC
Dated , 2020
This document was drafted by:
KENNEDY & GRAVEN, Chartered (JAE)
470 U.S. Bank Plaza
200 South Sixth Street
Minneapolis, Minnesota 55402
Telephone: 612-337-9300
TABLE OF CONTENTS
Page
PREAMBLE...................................................................................................................................................I
ARTICLE I
Definitions
Section1.1. Definitions.................................................................................................................................3
ARTICLE II
Representations and Warranties
Section 2.1. Representations by the Authority.............................................................................................. 6
Section 2.2. Representations by the Developer............................................................................................ 6
ARTICLE III
Property Acquisition; Financing
Section 3.1. Status of Development Property............................................................................................... 8
Section 3.2. Environmental Conditions........................................................................................................ 8
Section 3.3. Issuance of Pay -As -You -Go TIF Note..................................................................................... 8
Section 3.4. Termination of TIF District....................................................................................................... 9
Section 3.5. Payment of Administrative Costs............................................................................................. 9
Section3.6. Records...................................................................................................................................... 9
Section 3.7. Purpose of Assistance............................................................................................................... 9
ARTICLE IV
Construction of New Housing Development and Rehabilitation of NOAH Housing Development
Section 4.1. Construction of Minimum Improvements..............................................................................10
Section 4.2. Construction Plans..................................................................................................................10
Section 4.3 Rehabilitation of NOAH Housing Development.................................................................... I I
Section 4.4. No Displacement of Tenants During Rehabilitation.............................................................. I I
Section 4.5. Market Value of Minimum Improvements.............................................................................11
Section 4.6. Commencement and Completion of Construction of New Housing
Section 4.7.
Section 4.8.
Section 4.9.
Section 4.10.
Section 4.11.
Section 4.12.
Section 4.13.
Development..........................................................................................................................
Commencement and Completion of Construction of NOAH Housing
Development..........................................................................................................................
Certificateof Completion.......................................................................................................
AffordabilityCovenants.........................................................................................................
Disqualification of TIF District..............................................................................................
Affordable Housing Reporting..............................................................................................
Notice of Sale of Minimum Improvements...........................................................................
Easement Providing Access to Park......................................................................................
ARTICLE V
Insurance
11
11
11
12
12
12
12
12
Section5.1. Insurance.................................................................................................................................14
Section5.2. Subordination..........................................................................................................................15
ARTICLE VI
Tax Increment; Taxes
Section 6.1. Right to Collect Delinquent Taxes..........................................................................................16
Section6.2. Reduction of Taxes.................................................................................................................16
Section6.3. Qualifications..........................................................................................................................17
ARTICLE VII
Financing
Section 7.1. Mortgage Financing................................................................................................................18
Section 7.2. Authority's Option to Cure Default in Mortgage...................................................................18
Section 7.3. Modification; Subordination...................................................................................................18
Section7.4. Termination.............................................................................................................................18
ARTICLE VIII
Prohibitions Against Assignment and Transfer; Indemnification
Section 8.1. Representation as to Development..........................................................................................19
Section 8.2. Prohibition Against Developer's Transfer of Property and Assignment of
Agreement...............................................................................................................................19
Section 8.3. Release and Indemnification Covenants.................................................................................20
ARTICLE IX
Events of Default
Section9.1.
Events of Default.....................................................................................................................
21
Section 9.2.
Remedies on Default...............................................................................................................21
Section 9.3.
Termination or Suspension of TIF Note.................................................................................
22
Section9.4.
No Remedy Exclusive.............................................................................................................
22
Section 9.5.
No Additional Waiver Implied by One Waiver.....................................................................
22
Section 9.6.
Attorneys' Fees and Costs.......................................................................................................
22
ARTICLE X
Additional Provisions
Section 10.1.
Conflict of Interests; Authority Representatives Not Individually Liable ..............................
23
Section 10.2.
Equal Employment Opportunity.............................................................................................23
Section10.3.
Restrictions on Use.................................................................................................................
23
Section 10.4.
Provisions Not Merged With Deed.........................................................................................
23
Section 10.5.
Titles of Articles and Sections................................................................................................
23
Section 10.6.
Notices and Demands.............................................................................................................
23
Section10.7.
Counterparts............................................................................................................................
24
Section10.8.
Recording................................................................................................................................
24
Section10.9.
Amendment.............................................................................................................................24
Section 10.10.
Preliminary Development Agreement....................................................................................
24
SIGNATURES................................................................................................................................................ S-1
ii
EXHIBIT A
Development Property ..........................................................................................................A-1
EXHIBIT B
Form of TIF Note..................................................................................................................
B-1
EXHIBIT C
Form of Investment Letter....................................................................................................
C-1
EXHIBIT D
Form of Certificate of Completion......................................................................................D-1
EXHIBIT E
Form of Declaration of Restrictive Covenants.....................................................................
E-1
EXHIBIT F
Rehabilitation Plan................................................................................................................
F-1
EXHIBITG
Access Area...........................................................................................................................G-1
iii
CONTRACT FOR PRIVATE DEVELOPMENT
THIS CONTRACT FOR PRIVATE DEVELOPMENT, made as of the day of , 2020
(the "Agreement"), is between the HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR
THE CITY OF RICHFIELD, MINNESOTA, a public body corporate and politic under the laws of the State
of Minnesota (the "Authority"), and 6345 PARTNERS, LLC, a Minnesota limited liability company (the
"Developer").
WITNESSETH:
WHEREAS, the Authority was created pursuant to Minnesota Statutes, Sections 469.001 through
469.047, as amended (the "HRA Act"), and was authorized to transact business and exercise its powers by a
resolution of the City Council of the City of Richfield, Minnesota (the "City"); and
WHEREAS, the Authority has undertaken a program to promote redevelopment and development of
land that is underused or underutilized within the City, and in this connection the Authority administers a
redevelopment project known as the Richfield Redevelopment Project (the "Redevelopment Project")
pursuant to the HRA Act; and
WHEREAS, pursuant to the HRA Act, the Authority is authorized to acquire real property, or
interests therein, and to undertake certain activities to facilitate the redevelopment of real property by private
enterprise and promote the development of affordable housing within the City; and
WHEREAS, within the Redevelopment Project, the Authority has created the 2020-1 Tax Increment
Financing District - Henley II (the "TIF District"), a housing district, in order to facilitate redevelopment of
certain property in the Redevelopment Project and promote the development of affordable housing within the
City; and
WHEREAS, the Developer has executed purchase agreements to purchase certain property (the
"Development Property") within the TIF District and intends to construct on a portion thereof an
approximately 82-unit multifamily housing development, including an accessible two -bedroom unit at
ground level (the "New Housing Development"); and
WHEREAS, in addition to New Housing Development described above, the Developer intends to
purchase a 22-unit apartment building with naturally occurring affordable rents located on remaining portion
of the Development Property (the "NOAH Housing Development") and rehabilitate the existing building
without displacing the NOAH Housing Development's current tenants (other than a temporary displacement
during rehabilitation of each unit, if necessary); and
WHEREAS, in order to achieve the objectives of the redevelopment plan for the Redevelopment
Project and make the New Housing Development and the NOAH Housing Development economically
feasible for the Developer to construct, the Authority is prepared to reimburse the Developer for a portion of
certain site improvement costs and other costs related to the Minimum Improvements that may be reimbursed
with tax increment; and
WHEREAS, the Authority believes that the development of the TIF District pursuant to this
Agreement, and fulfillment generally of this Agreement, are in the vital and best interests of the City and the
health, safety, morals, and welfare of its residents, and in accord with the public purposes and provisions of
the applicable State of Minnesota and local laws and requirements under which the Redevelopment Project
has been undertaken and is being assisted.
NOW, THEREFORE, in consideration of the premises and the mutual obligations of the parties
hereto, each of them does hereby covenant and agree with the other as follows:
(Remainder of this page intentionally left blank)
ARTICLE I
Definitions
Section 1.1. Definitions. In this Agreement, unless a different meaning clearly appears from the
context, the following terms have the following meanings:
"Agreement" means this Contract for Private Development, as the same may be from time to time
modified, amended, or supplemented.
"Authority" means the Housing and Redevelopment Authority in and for the City of Richfield,
Minnesota.
"Authority Representative" means the Executive Director of the Authority.
"Available Tax Increment" means, on each Payment Date, the Tax Increment attributable to the
Development Property and paid to the Authority by the County in the six (6) months preceding the Payment
Date after first deducting therefrom ten percent (10%) of the Tax Increment to be used to reimburse the
Authority for administrative expenses. Available Tax Increment shall not include any Tax Increment if, as of
any Payment Date, there is an uncured Event of Default under this Agreement that has not been waived by
the Authority. Once the Event of Default is cured or waived by the Authority, withheld Tax Increment shall
be Available Tax Increment.
"Board" means the Board of Commissioners of the Authority.
"Certificate of Completion" means the certification provided to the Developer pursuant to
Section 4.5 hereof and set forth in EXHIBIT D.
"City" means the City of Richfield, Minnesota.
"City Council" means the City Council of the City.
"Construction Plans" means, with respect to the New Housing Development, the plans,
specifications, drawings and related documents on the construction work to be performed by the Developer
on the Development Property, including the New Housing Development, which (a) shall be as detailed as the
plans, specifications, drawings and related documents which are submitted to the appropriate building
officials of the City; and (b) shall include at least the following: (1) site plan, (2) foundation plan, (3) floor
plan for each floor, (4) cross -sections of each (length and width), (5) elevations (all sides, including a building
materials schedule), (6) landscape and grading plan, and (7) such other plans or supplements to the foregoing
plans as the City may reasonably request to allow it to ascertain the nature and quality of the proposed
construction work.
"County" means Hennepin County, Minnesota.
"Declaration of Restrictive Covenants" means the Declaration of Restrictive Covenants between the
Authority and the Developer in substantially the form set forth in EXHIBIT E.
"Developer" means 6345 Partners, LLC, a Minnesota limited liability company, or its permitted
successors and assigns.
"Development Property" means the real property described in EXHIBIT A.
"Event of Default" means an action by the Developer listed in Article IX hereof.
"Holder" means the owner of a Mortgage.
"HRA Act" means Minnesota Statutes, Sections 469.001 through 469.047, as amended.
"Material Change" means a change in construction plans that materially and adversely affects
generation of tax increment or changes the number of units of rental housing.
"Maturity Date" means the earlier of the date that the TIF Note has been paid in full or terminated or
the date the TIF District is decertified.
"Minimum Improvements" means the construction of New Housing Development on the
Development Property and the rehabilitation of the NOAH Housing Development.
"Minimum Market Value" has the meaning set forth in Section 4.5 hereof.
"Mortgage" means any mortgage made by the Developer which is secured, in whole or in part, with
the Development Property and which is a permitted encumbrance pursuant to the provisions of Article VII
hereof.
"New Housing Development" means the construction of an approximately 82-unit multifamily
housing development, including an accessible two -bedroom unit on ground level.
"NOAH Housing Development" a 22-unit apartment building with naturally occurring affordable
rents located on the Development Property.
"Payment Date" means each February 1 and August 1 on which principal of and interest on the TIF
Note is paid.
"Project Area" means the real property located within the boundaries of the Redevelopment Project.
"Preliminary Development Agreement" means the Preliminary Development Agreement, dated
January 21, 2020, between the Authority and the Developer.
"Public Redevelopment Costs" means costs related to the development of the Minimum
Improvements and eligible to be reimbursed with Tax Increment, including but not limited to the costs of
property acquisition, site improvements, rehabilitation of the NOAH Housing Development, and the costs of
the New Housing Development (to the extent authorized by the TIF Act).
"Redevelopment Plan" means the Redevelopment Plan for the Redevelopment Project approved and
adopted by the Board and the City Council.
"Rehabilitation Plan" means the detailed list of the rehabilitation the Developer shall complete with
respect to the NOAH Housing Project set forth in EXH]BIT F.
"Redevelopment Project" means the Richfield Redevelopment Project.
"State" means the State of Minnesota.
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"Tax Increment" means that portion of the real property taxes which is paid with respect to the TIF
District and which is remitted to the Authority as tax increment pursuant to the TIF Act.
"Tax Official" means any County assessor, County auditor, County or State board of equalization,
the commissioner of revenue of the State, or any State or federal district court, the tax court of the State, or
the State Supreme Court.
"TIF Act" means the Tax Increment Financing Act, Minnesota Statutes, Sections 469.174 through
469.1794, as amended.
"TIF District" means the 2020-1 Tax Increment Financing District - Henley II, a housing district
within the Redevelopment Project.
"TIF Note" means the Tax Increment Limited Revenue Note, substantially in the form attached
hereto as EXHIBIT B, to be delivered by the Authority to the Developer pursuant to Section 3.3(a) hereof.
"TIF Plan" means the Tax Increment Financing Plan for the TIF District, as approved by the City
Council of the City on , 2020, as it may be amended and supplemented.
"Unavoidable Delays" means delays beyond the reasonable control of the party seeking to be
excused as a result thereof which are the direct result of strikes, other labor troubles, prolonged or unusual
adverse weather or acts of God, fire or other casualty to the Minimum Improvements, litigation commenced
by third parties which, by injunction or other similar judicial action, directly results in delays, or acts of any
federal, state or local governmental unit (other than the Authority in exercising its rights under this
Agreement) which directly result in delays, acts of public enemies, wars, blockades, insurrections, riots,
earthquakes, fires, floods, disasters, sabotage, regulatory changes, or other events or circumstances not
within the reasonable control of a party preventing a party from performing its obligations, including,
without limitation, diseases, public health emergencies, pandemics (e.g., COVID-19), endemics, travel
bans, domestic or international restrictions on travel, or acts of governmental bodies (but not including
governmental actions, orders, penalties, judgments, or requirements which such party could have
prevented by compliance with applicable laws, regulations and standards).
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ARTICLE II
Representations and Warranties
Section 2.1. Representations by the Authority. The Authority makes the following representations
as the basis for the undertaking on its part herein contained:
(a) The Authority is a housing and redevelopment authority organized and existing under the
laws of the State. Under the provisions of the HRA Act, the Authority has the power to enter into this
Agreement and carry out its obligations hereunder, and execution of this Agreement has been duly, properly
and validly authorized by the Authority.
(b) The Authority proposes to assist in financing the Public Redevelopment Costs necessary to
facilitate the construction of the Minimum Improvements in accordance with the terms of this Agreement to
further the objectives of the Redevelopment Plan.
(c) The Authority finds that the Minimum Improvements are necessary to alleviate a shortage
of, and maintain existing supplies of, affordable, decent, safe, and sanitary housing in the City.
(d) The execution, delivery and performance of this Agreement and of any other documents or
instruments required pursuant to this Agreement by the Authority, and consummation of the transactions
contemplated therein and the fulfillment of the terms thereof, do not and will not conflict with or constitute a
breach of or default under any existing (i) indenture, mortgage, deed of trust or other agreement or instrument
to which the Authority is a party or by which the Authority or any of its property is or may be bound; or
(ii) legislative act, constitution or other proceedings establishing or relating to the establishment of the
Authority or its officers or its resolutions.
(e) There is not pending, nor to the best of the Authority's knowledge is there threatened, any
suit, action or proceeding against the Authority before any court, arbitrator, administrative agency or other
governmental authority that materially and adversely affects the validity of any of the transactions
contemplated hereby, the ability of the Authority to perform its obligations hereunder, or the validity or
enforcement of this Agreement.
(f) No commissioner of the Board or officer of the Authority has either a direct or indirect
financial interest in this Agreement, nor will any commissioner or officer benefit financially from this
Agreement within the meaning of Section 469.009 of the HRA Act.
Section 2.2. Representations by the Developer. The Developer represents and warrants that:
(a) The Developer is a limited liability company duly organized and in good standing under the
laws of the State, is duly authorized to transact business within the State, and has the power to enter into this
Agreement.
(b) The Developer will construct, operate, and maintain the Minimum Improvements in
accordance with the terms of this Agreement, the Redevelopment Plan, and all local, State, and federal laws
and regulations (including, but not limited to, environmental, zoning, building code, labor, and public health
laws and regulations).
(c) The Developer has received no notice or communication from any local, State or federal
official that the activities of the Developer or the Authority in or on the Development Property may be or will
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be in violation of any environmental law or regulation (other than those notices or communications of which
the Authority is aware). The Developer is aware of no facts the existence of which would cause it to be in
violation of or give any person a valid claim under any local, State, or federal environmental law, regulation,
or review procedure.
(d) The Developer will obtain, in a timely manner, all required permits, licenses and approvals,
and will meet, in a timely manner, all requirements of all applicable local, State, and federal laws and
regulations which must be obtained or met before the Minimum Improvements may be lawfully constructed.
(e) Neither the execution and delivery of this Agreement, the consummation of the transactions
contemplated hereby, nor the fulfillment of or compliance with the terms and conditions of this Agreement is
prevented, limited by or conflicts with or results in a breach of, the terms, conditions or provisions of any
corporate restriction or any evidences of indebtedness, agreement or instrument of whatever nature to which
the Developer is now a party or by which it is bound, or constitutes a default under any of the foregoing.
(f) The proposed development by the Developer hereunder would not occur but for the tax
increment financing assistance being provided by the Authority hereunder.
(g) The Developer shall promptly advise the Authority in writing of all litigation or claims
affecting any part of the Minimum Improvements and all written complaints and charges made by any
governmental authority materially affecting the Minimum Improvements or materially affecting Developer or
its business which may delay or require changes in construction of the Minimum Improvements.
(h) The Developer represents that no more than twenty percent (20%) of the square footage of
each building comprising the Minimum Improvements will consist of commercial, retail or other
nonresidential use.
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ARTICLE III
Property Acquisition; Financing
Section 3.1. Status of Development Property. The Developer has executed purchase agreements for
the Development Property and will acquire the parcels comprising the Development Property. The Authority
has no obligation to acquire the Development Property.
Section 3.2. Environmental Conditions.
(a) The Developer acknowledges that the Authority makes no representations or warranties as to
the condition of the soils on the Development Property or the fitness of the Development Property for
construction of the Minimum Improvements or any other purpose for which the Developer may make use of
such property, and that the assistance provided to the Developer under this Agreement neither implies any
responsibility by the Authority for any contamination of the Development Property nor imposes any
obligation on such parties to participate in any cleanup of the Development Property.
(b) Without limiting its obligations under Section 8.3 hereof, the Developer further agrees that it
will indemnify, defend, and hold harmless the Authority and its governing body members, officers, and
employees, from any claims or actions arising out of the presence, if any, of hazardous wastes or pollutants
existing on or in the Development Property, unless and to the extent that such hazardous wastes or pollutants
are present as a result of the actions or omissions of the indemnitees. Nothing in this Section will be
construed to limit or affect any limitations on liability of the Authority under State or federal law, including
without limitation Minnesota Statutes, Sections 466.04 and 604.02, as amended.
Section 3.3. Issuance of Pay -As -You -Go TIF Note.
(a) To reimburse the Developer for certain Public Redevelopment Costs, the Authority shall
issue and deliver and the Developer shall purchase the TIF Note in the principal amount of $2,025,987 in
substantially the form set forth in EXHIBIT B. The Authority and the Developer agree that the consideration
from the Developer for the purchase of the TIF Note shall consist of the Developer's payment of the Public
Redevelopment Costs in at least the principal amount of the TIF Note.
The Authority shall deliver the TIF Note upon delivery by the Developer of an investment letter in
substantially the form attached hereto as EXHIBIT C, together with evidence reasonably satisfactory to the
Authority that the Developer has paid the Public Redevelopment Costs in at least the principal amount of the
TIF Note. The principal of and interest on the TIF Note shall be payable each Payment Date solely with
Available Tax Increment.
(b) The Developer understands and acknowledges that the Authority makes no representations
or warranties regarding the amount of Available Tax Increment, or that revenues pledged to the TIF Note will
be sufficient to pay the principal of and interest on the TIF Note. Any estimates of Tax Increment prepared
by the Authority or its financial or municipal advisors in connection with the TIF District or this Agreement
are for the benefit of the Authority and are not intended as representations on which the Developer may rely.
(c) The Authority acknowledges that the Developer may assign the TIF Note to a lender that
provides part of the financing for the acquisition of the Development Property or the construction of the
Minimum Improvements. Pursuant to the terms of the TIF Note, the TIF Note may be assigned if the
assignee executes an investment letter in substantially the form set forth in EXHIBIT C.
Section 3.4. Termination of TIF District. At any time following the payment in full of the principal
of and interest on TIF Note, the Authority may use the remaining Tax Increment for any other authorized
uses set forth in the TIF Plan or may terminate the TIF District.
Section 3.5. Payment of Administrative Costs. Pursuant to the Preliminary Development
Agreement, the Developer previously deposited with the Authority $7,000 to pay Administrative Costs
related to the Preliminary Development Agreement and will deposit with the Authority an additional $15,000
to pay Administrative Costs. "Administrative Costs" are defined as out-of-pocket costs incurred by the
Authority, together with staff and consultant costs of the Authority, all attributable to or incurred in
connection with the negotiation and preparation of the Preliminary Development Agreement, this Agreement,
the TIF Plan, and other documents and agreements in connection with the establishment of the TIF District
and development of the Development Property, and not previously paid by Developer. At the Developer's
request, but no more often than monthly, the Authority will provide the Developer with a written report
including invoices, time sheets or other comparable evidence of expenditures for Administrative Costs and
the outstanding balance of funds deposited. At any time the deposit drops below $1,000 the Developer shall
replenish the deposit to the full $15,000 within thirty (30) days after receipt of written notice thereof from the
Authority. If at any time the Authority determines that the deposit is insufficient to pay Administrative Costs,
the Developer is obligated to pay such shortfall within fifteen (15) days after receipt of a written notice from
the Authority containing evidence of the unpaid costs. If Administrative Costs incurred, and reasonably
anticipated to be incurred, are less than the deposit by the Developer, the Authority shall return to the
Developer any funds not anticipated to be needed.
Section 3.6. Records. The Authority and its representatives shall have the right at all reasonable
times after reasonable notice to inspect, examine and copy all books and records of Developer relating to the
Minimum Improvements and the costs for which the Developer has been reimbursed with Tax Increment.
Section 3.7. Purpose of Assistance. The parties agree and understand that the purpose of the
Authority's financial assistance to the Developer is to facilitate development of housing and is not a "business
subsidy" within the meaning of Minnesota Statutes, Sections 1161993 to 1161995, as amended.
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ARTICLE IV
Construction of New Housing Development and Rehabilitation of NOAH Housing Development
Section 4.1. Construction of New Housing Development. The Developer agrees that it will
construct the New Housing Development on the Development Property substantially in accordance with the
Construction Plans as approved pursuant to Section 4.2 hereof, and at all times prior to the Maturity Date, the
Developer will operate and maintain, preserve, and keep the New Housing Development or cause such
improvements to be maintained, preserved, and kept with the appurtenances and every part and parcel
thereof, in good repair and condition. The Authority shall have no obligation to operate or maintain the New
Housing Development.
Section 4.2. Construction Plans.
(a) Before commencement of construction of the New Housing Development, the Developer
shall submit the Construction Plans to the Authority. The Authority Representative will approve the
Construction Plans in writing if (i) the Construction Plans conform to the terms and conditions of this
Agreement; (ii) the Construction Plans conform to the goals and objectives of the Redevelopment Plan; (iii)
the Construction Plans conform to all applicable federal, State, and local laws, ordinances, rules and
regulations; (iv) the Construction Plans are adequate to provide for construction of the New Housing
Development; (v) the Construction Plans do not provide for expenditures in excess of the funds available to
the Developer from all sources (including Developer's equity) for construction of the New Housing
Development; and (vi) no uncured Event of Default has occurred. Approval may be based upon a review by
the City's Building Official of the Construction Plans. No approval by the Authority Representative shall
relieve the Developer of the obligation to comply with the terms of this Agreement or of the Redevelopment
Plan, applicable federal, State, and local laws, ordinances, rules, and regulations, or to construct the New
Housing Development in accordance therewith. No approval by the Authority Representative shall constitute
a waiver of an Event of Default. If approval of the Construction Plans is requested by the Developer in
writing at the time of submission, such Construction Plans shall be deemed approved unless rejected in
writing by the Authority Representative, in whole or in part. Such rejections shall set forth in detail the
reasons therefor, and shall be made within thirty (30) days after the date of their receipt by the Authority. If
the Authority Representative rejects any Construction Plans in whole or in part, the Developer shall submit
new or corrected Construction Plans within thirty (30) days after written notification to the Developer of the
rejection. The provisions of this Section relating to approval, rejection and resubmission of corrected
Construction Plans shall continue to apply until the Construction Plans have been approved by the Authority.
The Authority Representative's approval shall not be unreasonably withheld, delayed or conditioned. Said
approval shall constitute a conclusive determination that the Construction Plans (and the New Housing
Development constructed in accordance with said plans) comply to the Authority's satisfaction with the
provisions of this Agreement relating thereto.
(b) If the Developer desires to make any Material Change in the Construction Plans after their
approval by the Authority, the Developer shall submit the proposed change to the Authority for its approval.
If the Construction Plans, as modified by the proposed change, conform to the requirements of this
Section 4.2 with respect to such previously approved Construction Plans, the Authority Representative shall
approve the proposed change and notify the Developer in writing of its approval. Such change in the
Construction Plans shall, in any event, be deemed approved by the Authority unless rejected, in whole or in
part, by written notice by the Authority to the Developer, setting forth in detail the reasons therefor. Such
rejection shall be made within thirty (30) days after receipt of the notice of such change. The Authority's
approval of any such change in the Construction Plans may be conditioned on amendment to provisions of
this Agreement if such amendments will mitigate the materiality of such proposed changes.
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Section 4.3. Rehabilitation of NOAH Housing Development. The Developer shall rehabilitate the
NOAH Housing Development pursuant to the Rehabilitation Plan set forth in EXHIBIT F.
Section 4.4. No Displacement of Tenants During Rehabilitation. The Developer agrees to
rehabilitate the NOAH Housing Development without displacing the NOAH Housing Development's current
tenants (other than a temporary displacement during rehabilitation of each unit, if necessary). All work with
respect to the rehabilitation of the NOAH Housing Development shall be in substantial conformity with the
Rehabilitation Plan as submitted by the Developer and approved by the Authority.
Section 4.5. Market Value of Minimum Improvements. The Developer agrees that the Construction
Plans provide for the construction of New Housing Development having an estimated market value of
$15,785,000. The Developer further agrees that, following the completion of the Rehabilitation Plan, the
NOAH Housing Project will have an estimated market value of $2,805,000. The Minimum Market Value for
the Minimum Improvements is $18,590,000.
Section 4.6. Commencement and Completion of Construction of New Housing Development.
Subject to Unavoidable Delays, the Developer will commence the construction of the New Housing
Development by July 1, 2021, and substantially complete construction of the New Housing Development by
July 1, 2023. Construction is considered to be commenced upon the beginning of physical improvements
beyond grading. All work with respect to the New Housing Development to be constructed or provided by
the Developer on the Development Property shall be in substantial conformity with the Construction Plans as
submitted by the Developer and approved by the Authority.
The Developer agrees for itself, its successors and assigns, and every successor in interest to the
Development Property, or any part thereof, that the Developer, and such successors and assigns, shall
promptly begin and diligently prosecute to completion the New Housing Development.
Section 4.7. Commencement and Completion of Construction of NOAH Housing Development.
Subject to Unavoidable Delays, the Developer will commence the rehabilitation of the NOAH Housing
Development by July 1, 2021, and substantially complete rehabilitation of the NOAH Housing Development
by July 1, 2024.
The Developer agrees for itself, its successors and assigns, and every successor in interest to the
Development Property, or any part thereof, that the Developer, and such successors and assigns, shall
promptly begin and diligently prosecute to completion the rehabilitation of the NOAH Housing Development
taking into consideration the need to minimize disruption to the existing tenants.
Section 4.8. Certificate of Completion.
(a) Promptly after completion of the New Housing Development and after completion of the
rehabilitation of the NOAH Housing Project, each in accordance with those provisions of this Agreement
relating solely to the obligations of the Developer to construct the applicable Minimum Improvements
(including the dates for beginning and completion thereof), the Authority Representative will furnish the
Developer with a Certificate of Completion shown in EXHIBIT D hereof; provided, however, that prior to
the issuance of the Certificate of Completion for the applicable Minimum Improvements, the Developer must
provide the Authority with evidence satisfactory to the Authority Representative that all contractors,
subcontractors, and project laborers have been paid for the applicable Minimum Improvements.
(b) If the Authority Representative shall refuse or fail to provide any certification in accordance
with the provisions of this Section 4.5, the Authority Representative shall, within thirty (30) days after written
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request by the Developer, provide the Developer with a written statement, indicating in adequate detail in
what respects the Developer has failed to complete the applicable Minimum Improvements in accordance
with the provisions of this Agreement, or is otherwise in default, and what measures or acts will be necessary,
in the opinion of the Authority, for the Developer to take or perform in order to obtain such certification.
(c) Regardless of whether a Certificate of Completion is issued by the Authority, the
construction of the New Housing Development shall be deemed to be complete upon issuance of a certificate
of occupancy by the City.
Section 4.9. Affordability Covenants. The Developer agrees that at all times from initial occupancy
of the Minimum Improvements constructed within the TIF District through the date that the TIF District is
decertified, at least twenty percent (20%) of the units within the Minimum Improvements shall be reserved
for occupancy by individuals whose income is fifty percent (50%) or less of the area's median gross income
constructed and satisfy the income requirements for a qualified residential rental project as defined in
Section 142(d) of the Internal Revenue Code. With respect to the New Housing Development, at least five
(5) units shall be reserved for occupancy by individuals whose income is fifty percent (50%) or less of the
area's median gross income. On the date this Agreement is executed, the Developer and the Authority shall
execute the Declaration of Restrictive Covenants in substantially the form set forth in EXHIBIT E and record
such agreement against the Development Property.
During the term of the Declaration, the Developer shall not adopt any policies specifically
prohibiting or excluding any rental to tenants holding certificates/vouchers under Section 8 of the United
Stated Housing Act of 1937, as amended, codified as 42 U.S.C. Sections 1401 et seq., or its successor
because of such prospective tenant's status as such a certificate/voucher holder.
Section 4.10. Disqualification of TIF District. If the Authority or the City receives notice from the
State Department of Revenue, the State Auditor, any Tax Official or any court of competent jurisdiction that
the TIF District does not qualify as a "housing district" due to the failure to satisfy the income restrictions
described in Section 4.6 hereof, such event shall be deemed an Event of Default under this Agreement;
provided, however, that the Authority may not exercise any remedy under this Agreement so long as such
determination is being contested and has not been finally adjudicated. If the TIF District is disqualified, the
Authority is required by the TIF Act to stop payments of Available Tax Increment to pay principal of and
interest on the TIF Note. In addition to any remedies available to the Authority and the City under Article IX
hereof, the Developer shall indemnify, defend and hold harmless the Authority and the City for any damages
or costs resulting therefrom.
Section 4.11. Affordable Housing Reporting. At least annually, no later than April 1 of each year
commencing on the April 1 first following the issuance of the Certificate of Completion, the Developer shall
provide a report to the Authority evidencing that the Developer complied with the income affordability
covenants set forth in Section 4.6 hereof during the previous calendar year. The income affordability
reporting shall be on the form entitled "Tenant Income Certification" from the Minnesota Housing Finance
Agency (MHFA HTC Form 14), or if unavailable, any similar form. The Authority may require the
Developer to provide additional information reasonably necessary to assess the accuracy of such certification.
Unless earlier excused by the Authority, the Developer shall send affordable housing reports to the Authority
until TIF District is decertified. If the Developer fails to provide the annual reporting required under this
Section, the Authority may withhold payments of Available Tax Increment under the TIF Note.
Section 4.12. Notice of Sale of Minimum Improvements. hi consideration of the financial
assistance provided to the Developer pursuant to Article III hereof, the Developer agrees to provide the
Authority with at least ninety (90) days' notice of any sale of the Minimum Improvements.
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Section 4.13. Easement Providing Access to Park. hi the area shown as the Trail Access Area on
the attached EXHIBIT G, the Developer shall create a public pedestrian access to the City's park that is
adjacent to the Development Property, including installation of a concrete sidewalk, landscaping, screening,
and all other work required by the planning approvals provided by the City of Richfield. The Developer shall
grant the City an easement for the limited purpose of providing pedestrian access to the park, subject to the
Developer's right of reverter if the City ceases to use the Access Area for pedestrian park access purposes,
pursuant to an easement agreement in form and substance reasonable acceptable to both parties, which will
include the City's obligation to maintain the easement area after the initial Developer installation work.
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ARTICLE V
Insurance
Section 5.1. Insurance.
(a) The Developer will provide and maintain at all times during the process of constructing the
Minimum Improvements an All Risk Broad Form Basis Insurance Policy and, from time to time during that
period, at the request of the Authority, furnish the Authority with proof of payment of premiums on policies
covering the following:
(i) builder's risk insurance, written on the so-called `Builder's Risk — Completed Value
Basis," in an amount equal to one hundred percent (100%) of the insurable value of the Minimum
Improvements at the date of completion, and with coverage available in nonreporting form on the so-
called "all risk" form of policy; the interest of the Authority shall be protected in accordance with a
clause in form and content satisfactory to the Authority;
(ii) comprehensive general liability insurance (including operations, contingent liability,
operations of subcontractors, completed operations and contractual liability insurance) together with
a Protective Liability Policy with limits against bodily injury and property damage of not less than
$2,000,000 for each occurrence (to accomplish the above -required limits, an umbrella excess liability
policy may be used); the Authority shall be listed as an additional insured on the policy; and
(iii) workers' compensation insurance, with statutory coverage.
(b) Upon completion of construction of the Minimum Improvements and prior to the Maturity
Date, the Developer shall maintain, or cause to be maintained, at its cost and expense, and from time to time
at the request of the Authority shall furnish proof of the payment of premiums on, insurance as follows:
(i) insurance against loss and/or damage to the Minimum Improvements under a policy
or policies covering such risks as are ordinarily insured against by similar businesses;
(ii) comprehensive general public liability insurance, including personal injury liability
(with employee exclusion deleted), against liability for injuries to persons and/or property, in the
minimum amount for each occurrence and for each year of $2,000,000, and shall be endorsed to
show the Authority as an additional insured; and
(iii) such other insurance, including workers' compensation insurance respecting all
employees, if any, of the Developer, in such amount as is customarily carried by like organizations
engaged in like activities of comparable size and liability exposure; provided that the Developer may
be self -insured with respect to all or any part of its liability for workers' compensation.
(c) All insurance required in this Article V shall be taken out and maintained in responsible
insurance companies selected by the Developer which are authorized under the laws of the State to assume
the risks covered thereby. Upon request, the Developer will deposit annually with the Authority policies
evidencing all such insurance, or a certificate or certificates or binders of the respective insurers stating that
such insurance is in force and effect. Unless otherwise provided in this Article V each policy shall contain a
provision that the insurer shall not cancel nor modify it in such a way as to reduce the coverage provided
below the amounts required herein without giving written notice to the Developer and the Authority at least
thirty (30) days before the cancellation or modification becomes effective. In lieu of separate policies, the
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Developer may maintain a single policy, blanket or umbrella policies, or a combination thereof, having the
coverage required herein, in which event the Developer shall deposit with the Authority a certificate or
certificates of the respective insurers as to the amount of coverage in force upon the Minimum Improvements.
(d) The Developer agrees to notify the Authority immediately in the case of damage exceeding
$250,000 in amount to, or destruction of, the Minimum Improvements or any portion thereof resulting from
fire or other casualty. In such event the Developer will forthwith repair, reconstruct and restore the Minimum
Improvements to substantially the same or an improved condition or value as it existed prior to the event
causing such damage and, to the extent necessary to accomplish such repair, reconstruction and restoration,
the Developer will apply the net proceeds of any insurance relating to such damage received by the
Developer to the payment or reimbursement of the costs thereof.
The Developer shall complete the repair, reconstruction, and restoration of the Minimum
Improvements, whether or not the net proceeds of insurance received by the Developer for such purposes are
sufficient to pay for the same. Any net proceeds remaining after completion of such repairs, construction,
and restoration shall be the property of the Developer.
(e) Notwithstanding anything to the contrary contained in this Agreement, in the event of
damage to the Minimum Improvements in excess of $250,000 and the Developer fails to complete any repair,
reconstruction or restoration of the Minimum Improvements within eighteen (18) months from the date of
damage, the Authority may, at its option, terminate the TIF Note as provided in Section 9.3(b) hereof. If the
Authority terminates the TIF Note, such termination shall constitute the Authority's sole remedy under this
Agreement as a result of the Developer's failure to repair, reconstruct, or restore the Minimum
Improvements. Thereafter, the Authority shall have no further obligations to make any payments under the
TIF Note.
(f) The Developer and the Authority agree that all of the insurance provisions set forth in this
Article V shall terminate upon the termination of this Agreement.
Section 5.2. Subordination. Notwithstanding anything to the contrary contained in this Article V,
the rights of the Authority with respect to the receipt and application of any proceeds of insurance shall, in all
respects, be subject and subordinate to the rights of any lender under a Mortgage approved pursuant to
Article VH hereof.
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ARTICLE VI
Tax Increment; Taxes
Section 6. L Right to Collect Delinquent Taxes. The Developer acknowledges that the Authority is
providing substantial aid and assistance in furtherance of the redevelopment through issuance of the TIF
Note. The Developer understands that the Tax Increments pledged to payment of the TIF Note are derived
from real estate taxes on the Development Property, which taxes must be promptly and timely paid. To that
end, the Developer agrees for itself, its successors and assigns, in addition to the obligation pursuant to statute
to pay real estate taxes, that it is also obligated by reason of this Agreement to pay before delinquency all real
estate taxes assessed against the Development Property and the Minimum Improvements. The Developer
acknowledges that this obligation creates a contractual right on behalf of the Authority to sue the Developer
or its successors and assigns to collect delinquent real estate taxes and any penalty or interest thereon and to
pay over the same as a tax payment to the county auditor. In any such suit, the Authority shall also be
entitled to recover its costs, expenses and reasonable attorneys' fees.
Section 6.2. Reduction of Taxes. The Developer agrees that after the date of certification of the TIF
District and prior to completion of the Minimum Improvements, it will not cause a reduction in the real
property taxes paid in respect of the Development Property through (a) willful destruction of the
Development Property or any part thereof (except for the demolition of structures required for construction of
the New Housing Development or the rehabilitation of the NOAH Housing Development); or (b) willful
refusal to reconstruct damaged or destroyed property pursuant to Section 5.1 hereof.
The Developer also agrees that it will not, prior to the Maturity Date, (i) seek exemption from
property tax for the Development Property; (ii) convey or transfer or allow conveyance or transfer of the
Development Property to any entity that is exempt from payment of real property taxes under State law; or
(iii) seek or agree to any reduction of the assessor's estimated market value to below the Minimum Market
Value.
The Developer may, at any time following the issuance of the Certificate of Completion, seek
through petition or other means to have the assessor's estimated market value for the Development Property
reduced to not less than the Minimum Market Value. Such activity must be preceded by written notice from
the Developer to the Authority indicating its intention to do so.
Upon receiving such notice, or otherwise learning of the Developer's intentions, the Authority may
suspend or reduce payments due under the TIF Note except for the portion of such payments from Available
Tax Increment based on the Minimum Market Value, or the assessor's estimated market value for the year in
which the Minimum Improvements have been completed, if less than Minimum Market Value, until the
actual amount of the reduction in market value is determined, whereupon the Authority will make the
suspended payments less any amount that the Authority is required to repay the County as a result of any
retroactive reduction in market value of the Development Property.
During the period that the payments are subject to suspension, the Authority may make partial
payments on the TIF Note, from the amounts subject to suspension, if it determines, in its sole and absolute
discretion, that the amount retained will be sufficient to cover any repayment which the County may require.
Upon resolution of the Developer's tax petition, any Available Tax Increment deferred and withheld under
this Section shall be paid, without interest thereon, to the extent payable under the assessor's final
determination of market value.
16
The Authority's suspension of payments on the TIF Note pursuant to this Section shall not be
considered a default under Section 9.1 hereof.
Section 6.3. Qualifications. Notwithstanding anything herein to the contrary, the parties
acknowledge and agree that upon a transfer of the Development Property to another person or entity, the
Developer will remain obligated under Sections 6.1 and 6.2 hereof, unless the Developer is released from
such obligations in accordance with the terms and conditions of Section 8.2(b) or 8.3 hereof.
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17
ARTICLE VII
Financing
Section 7.1. Mortgage Financing.
(a) Before commencement of construction of the Minimum Improvements, the Developer shall
submit to the Authority evidence of one or more commitments for financing which, together with committed
equity for such construction, is sufficient for payment of the Minimum Improvements. Such commitments
may be submitted as short-term financing, long-term mortgage financing, a bridge loan with a long-term
take-out financing commitment, or any combination of the foregoing.
(b) If the Authority finds that the financing is sufficiently committed and adequate in amount to
pay the costs specified in subsection (a) above, then the Authority shall notify the Developer in writing of its
approval. Such approval shall not be unreasonably withheld and either approval or rejection shall be given
within thirty (30) days from the date when the Authority is provided the evidence of financing. A failure by
the Authority to respond to such evidence of financing shall be deemed to constitute an approval hereunder.
If the Authority rejects the evidence of financing as inadequate, it shall do so in writing specifying the basis
for the rejection. In any event the Developer shall submit adequate evidence of financing within thirty (30)
days after such rejection.
Section 7.2. Authority's Option to Cure Default in Mortgage. In the event that any portion of the
Developer's funds is provided through mortgage financing, and there occurs a default under any Mortgage
authorized pursuant to this Article VII, the Developer shall cause the Authority to receive copies of any
notice of default received by the Developer from the Holder of such Mortgage. Thereafter, the Authority
shall have the right, but not the obligation, to cure any such default on behalf of the Developer within such
cure periods as are available to the Developer under the Mortgage documents.
Section 7.3. Modification; Subordination. In order to facilitate the Developer obtaining financing
for the development of the Minimum Improvements, the Authority agrees to subordinate its rights under this
Agreement to the Holder of any Mortgage securing construction or permanent financing, under terms and
conditions reasonably acceptable to the Authority. An agreement to subordinate this Agreement must be
approved by the Board.
Section 7.4. Termination. All the provisions of this Article VII shall terminate with respect to the
Minimum Improvements, upon delivery of the Certificate of Completion for the Minimum Improvements.
The Developer or any successor in interest to the Minimum Improvements or portion thereof, may sell or
engage in financing or any other transaction creating a mortgage or encumbrance or lien on the Minimum
Improvements or any portion thereof for which a Certificate of Completion has been obtained, without
obtaining prior written approval of the Authority; provided that such sale, financing or other transaction
creating a mortgage or encumbrance shall not be deemed as resulting in any subordination of the Authority's
rights under this Agreement unless the Authority expressly consents to such a subordination.
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IN
ARTICLE VIII
Prohibitions Against Assignment and Transfer; Indemnification
Section 8.1. Representation as to Development. The Developer represents and agrees that its
purchase of the Development Property, and its other undertakings pursuant to this Agreement, are, and will
be used, for the purpose of development of the Development Property and not for speculation in land holding.
Section 8.2. Prohibition Against Developer's Transfer of Property and Assignment of Agreement.
The Developer represents and agrees that prior to issuance of the Certificate of Completion for the applicable
Minimum Improvements:
(a) Except only by way of security for, and only for, the purpose of obtaining financing
necessary to enable the Developer or any successor in interest to the Development Property, or any part
thereof, to perform its obligations with respect to making the Minimum Improvements under this Agreement,
and any other purpose authorized by this Agreement, the Developer has not made or created and will not
make or create or suffer to be made or created any total or partial sale, assignment, conveyance, or lease, or
any trust or power, or transfer in any other mode or form of or with respect to this Agreement or the
Development Property or any part thereof or any interest therein, or any contract or agreement to do any of
the same (except a lease to a residential occupant), without the prior written approval of the Authority unless
the Developer remains liable and bound by this Agreement in which event the Authority's approval is not
required. Any such transfer shall be subject to the provisions of this Agreement.
(b) Prior to the issuance of the applicable Certificate of Completion, in the event the Developer,
upon transfer or assignment of the Development Property seeks to be released from its obligations under this
Agreement, the Authority shall be entitled to require, except as otherwise provided in this Agreement, as
conditions to any such release that:
(i) Any proposed transferee shall have the qualifications and financial responsibility, in
the reasonable judgment of the Authority, necessary and adequate to fulfill the obligations
undertaken in this Agreement by the Developer.
(ii) Any proposed transferee, by instrument in writing satisfactory to the Authority and
in form recordable among the land records, shall, for itself and its successors and assigns, and
expressly for the benefit of the Authority, have expressly assumed all of the obligations of the
Developer under this Agreement and agreed to be subject to all the conditions and restrictions to
which the Developer is subject; provided, however, that the fact that any transferee of, or any other
successor in interest whatsoever to, the Development Property, or any part thereof, shall not, for
whatever reason, have assumed such obligations or so agreed, and shall not (unless and only to the
extent otherwise specifically provided in this Agreement or agreed to in writing by the Authority)
deprive the Authority of any rights or remedies or controls with respect to the Development Property
or any part thereof or the construction of the Minimum Improvements; it being the intent of the
parties as expressed in this Agreement that (to the fullest extent permitted at law and in equity and
excepting only in the manner and to the extent specifically provided otherwise in this Agreement) no
transfer of, or change with respect to, ownership in the Development Property or any part thereof, or
any interest therein, however consummated or occurring, and whether voluntary or involuntary, shall
operate, legally or practically, to deprive or limit the Authority of or with respect to any rights or
remedies on controls provided in or resulting from this Agreement with respect to the Minimum
Improvements that the Authority would have had, had there been no such transfer or change. In the
absence of specific written agreement by the Authority to the contrary, no such transfer or approval
19
by the Authority thereof shall be deemed to relieve the Developer or any other party bound in any
way by this Agreement or otherwise with respect to the construction of the Minimum Improvements,
from any of its obligations with respect thereto.
(iii) Any and all instruments and other legal documents involved in effecting the transfer
of any interest in this Agreement or the Development Property governed by this Article VIII, shall be
in a form reasonably satisfactory to the Authority.
In the event the foregoing conditions are satisfied then the Developer shall be released from its obligation
under this Agreement.
(c) After issuance of the Certificate of Completion for the applicable Minimum Improvements,
the Developer may transfer or assign the applicable portion of the Development Property or the Developer's
interest in this Agreement if it obtains the prior written consent of the Authority (which consent will not be
unreasonably withheld) and the transferee or assignee is bound by all the Developer's obligations hereunder.
The Developer shall submit to the Authority written evidence of any such transfer or assignment, including
the transferee or assignee's express assumption of the Developer's obligations under this Agreement. If the
Developer fails to provide such evidence of transfer and assumption, the Developer shall remain bound by all
its obligations under this Agreement.
Section 8.3. Release and Indemnification Covenants.
(a) The Developer releases from and covenants and agrees that the Authority and its governing
body members, officers, agents, servants and employees thereof shall not be liable for and agrees to
indemnify and hold harmless the Authority and its respective governing body members, officers, agents,
servants and employees thereof against any loss or damage to property or any injury to or death of any person
occurring at or about or resulting from any defect in the Minimum Improvements.
(b) Except for any willful misrepresentation, gross negligence or any willful or wanton
misconduct of the Authority, or its governing body members, officers, agents or employees, the Developer
agrees to protect and defend the Authority and its governing body members, officers, agents, servants and
employees thereof, now or forever, and further agrees to hold the aforesaid harmless from any claim,
demand, suit, action or other proceeding whatsoever by any person or entity whatsoever arising or
purportedly arising from this Agreement, or the transactions contemplated hereby or the acquisition,
construction, installation, ownership, maintenance and operation of the Minimum Improvements. As to any
willful misrepresentation, gross negligence or any willful or wanton misconduct of the Authority, or its
governing body members, officers, agents or employees, the Authority agrees to protect and defend the
Developer, its officers, agents, servants and employees and hold the same harmless from any such
proceedings.
(c) The Authority and its governing body members, officers, agents, servants and employees
thereof shall not be liable for any damage or injury to the persons or property of the Developer or its officers,
agents, servants or employees or any other person who may be about the Development Property or Minimum
Improvements due to any act of negligence of any person.
(d) All covenants, stipulations, promises, agreements and obligations of the Authority contained
herein shall be deemed to be the covenants, stipulations, promises, agreements and obligations of the
Authority and not of any governing body member, officer, agent, servant or employee of the Authority in the
individual capacity thereof.
20
ARTICLE IX
Events of Default
Section 9.1. Events of Default. The following will be "Events of Default" under this Agreement and
the term "Event of Default" means, whenever it is used in this Agreement, any one or more of the following
events, after the non -defaulting party provides thirty (30) days' written notice to the defaulting party of the
event, but only if the event has not been cured within said thirty (30) days or, if the event is by its nature
incurable within thirty (30) days, the defaulting party does not, within the thirty (30) day period, provide
assurances reasonably satisfactory to the party providing notice of default that the event will be cured and will
be cured as soon as reasonably possible:
(a) failure by the Developer or the Authority to observe or perform any covenant, condition,
obligation, or agreement on its part to be observed or performed under this Agreement; or
(b) if the Developer:
(i) files any petition in bankruptcy or for any reorganization, arrangement,
composition, readjustment, liquidation, dissolution, or similar relief under the United States
Bankruptcy Act or under any similar federal or State law;
(ii) makes an assignment for benefit of its creditors;
(iii) fails to pay real estate taxes on the Development Property or the Minimum
Improvements as they become due;
(iv) admits in writing its inability to pay its debts generally as they become due;
(v) is adjudicated a bankrupt or insolvent; or
(vi) fails to comply with labor laws.
Section 9.2. Remedies on Default. Whenever any Event of Default referred to in Section 9.1 hereof
occurs, the non -defaulting parry may exercise its rights under this Section 9.2 after providing thirty (30) days'
written notice to the defaulting parry of the Event of Default, but only if the Event of Default has not been
cured within said thirty (30) days or, if the Event of Default is by its nature incurable within thirty (30) days,
the defaulting parry does not provide assurances reasonably satisfactory to the non -defaulting party that the
Event of Default will be cured and will be cured as soon as reasonably possible:
(a) suspend its performance under this Agreement until it receives assurances that the defaulting
parry will cure its default and continue its performance under this Agreement;
(b) cancel and rescind or terminate this Agreement, subject to the provisions of Section 9.3
below;
(c) upon a default by the Developer resulting from the Developer's noncompliance with labor
laws, the Authority may do one or more of the following: (i) delay the issuance of the TIF Note until the
Developer is in compliance with labor laws; (ii) reduce the principal amount of the TIF Note issued or to be
issued by up to 20%; and/or (iii) if compliance with labor laws cannot be accomplished, terminate this
Agreement;
21
(d) upon a default by the Developer, other than as provided in subsection (c) above, the
Authority may suspend payments under the TIF Note or terminate the TIF Note and the TIF District, subject
to the provisions of Section 9.3 hereof; or
(e) take whatever action, including legal, equitable or administrative action, which may appear
necessary or desirable to collect any payments due under this Agreement, or to enforce performance and
observance of any obligation, agreement, or covenant under this Agreement.
Section 9.3. Termination or Suspension of TIF Note. After the Authority has issued its Certificate of
Completion for the Minimum Improvements, the Authority may exercise its rights under Section 9.2 hereof
only for the following Events of Default:
(a) the Developer fails to pay real estate taxes or assessments on the Development Property or
any part thereof when due, and such taxes or assessments shall not have been paid, or provision satisfactory
to the Authority made for such payment, within thirty (30) days after written demand by the Authority to do
so;
(b) the Developer fails to comply with Developer's obligation to operate and maintain, preserve,
and keep the Minimum Improvements or cause such improvements to be maintained, preserved, and kept
with the appurtenances and every part and parcel thereof, in good repair and condition, pursuant to
Sections 4.1 and 5.1 hereof; provided that, upon Developer's failure to comply with Developer's obligations
under Section 4.1 or 5.1 hereof, if uncured after thirty (30) days' written notice to the Developer of such
failure, the Authority may only suspend payments under the TIF Note until such time as Developer complies
with said obligations; if the Developer fails to comply with said obligations for a period of eighteen (18)
months, the Authority may terminate the TIF Note and the TIF District; or
(c) if the Developer fails to provide the annual reports required by Section 4.8 hereof regarding
compliance with the income restrictions described in Section 4.6 hereof, the Authority may suspend
payments of Available Tax Increment under the TIF Note.
Section 9.4. No Remedy Exclusive. No remedy herein conferred upon or reserved to the Authority
or the Developer is intended to be exclusive of any other available remedy or remedies, but each and every
such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement
or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or
power accruing upon any default shall impair any such right or power or shall be construed to be a waiver
thereof, but any such right and power may be exercised from time to time and as often as may be deemed
expedient. In order to entitle the Authority to exercise any remedy reserved to it, it shall not be necessary to
give notice, other than the notices already required in Sections 9.2 and 9.3 hereof.
Section 9.5. No Additional Waiver Implied by One Waiver. In the event any agreement contained
in this Agreement should be breached by either party and thereafter waived by the other party, such waiver
shall be limited to the particular breach so waived and shall not be deemed to waive any other concurrent,
previous or subsequent breach hereunder.
Section 9.6. Attorneys' Fees and Costs. Whenever any Event of Default occurs and if the Authority
employs attorneys or incur other expenses for the collection of payments due or to become due or for the
enforcement of performance or observance of any obligation or agreement on the part of the Developer under
this Agreement, and the Authority prevails in the action, the Developer agrees that it will, within ten (10)
days of written demand by the Authority, pay to the Authority the reasonable fees of the attorneys and the
other expenses so incurred by the Authority.
22
ARTICLE X
Additional Provisions
Section 10.1. Conflict of Interests; Authority Representatives Not Individually Liable. The
Authority and the Developer, to the best of their respective knowledge, represent, and agree that no member,
official, or employee of the Authority shall have any personal interest, direct or indirect, in this Agreement,
nor shall any such member, official, or employee participate in any decision relating to this Agreement which
affects his or her personal interests or the interests of any corporation, partnership, or association in which he
is, directly or indirectly, interested. No member, official, or employee of the Authority shall be personally
liable to the Developer, or any successor in interest, in the event of any default or breach by the Authority or
County or for any amount which may become due to the Developer or successor or on any obligations under
the terms of this Agreement.
Section 10.2. Equal Employment Opportunity. The Developer, for itself and its successors and
assigns, agrees that during the construction of the Minimum Improvements provided for in this Agreement it
will comply with all applicable federal, State, and local equal employment and non-discrimination laws and
regulations.
Section 10.3. Restrictions on Use. The Developer agrees that, prior to the Maturity Date, the
Developer, and such successors and assigns, shall use the Development Property solely for the development
of housing in accordance with the terms of this Agreement, including the affordability requirements of
Section 4.6, and shall not discriminate upon the basis of race, color, creed, sex or national origin in the sale,
lease, or rental or in the use or occupancy of the Development Property or any improvements erected or to be
erected thereon, or any part thereof.
Section 10.4. Provisions Not Merged With Deed. None of the provisions of this Agreement are
intended to or shall be merged by reason of any deed transferring any interest in the Development Property
and any such deed shall not be deemed to affect or impair the provisions and covenants of this Agreement.
Section 10.5. Titles of Articles and Sections. Any titles of the several parts, Articles, and Sections of
this Agreement are inserted for convenience of reference only and shall be disregarded in construing or
interpreting any of its provisions.
Section 10.6. Notices and Demands. Except as otherwise expressly provided in this Agreement, a
notice, demand, or other communication under this Agreement by either party to the other shall be
sufficiently given or delivered if it is dispatched both by (i) registered or certified mail, postage prepaid,
return receipt requested, or delivered personally; and (ii) email at the addresses set forth below (provided,
however, delivery by registered or certified mail shall be sufficient if the email addresses provided are no
longer accurate); and
(a) in the case of the Developer, is addressed to or delivered personally to the Developer at 6345
Partners, LLC, c/o North Bay Companies, LLC, 2316 4' Ave South, Minneapolis, MN 55404, Attn:
President, e-mail:lbarrett@northbaycos.com, with a copy to Faegre Drinker Biddle & Reath, 90 South
Seventh Street, Suite 2200, Minneapolis, MN 55402, ATTN: Peter Berrie, e-mail;
Peter.Berrie@faegredrinker.com; and
(b) in the case of the Authority, is addressed to or delivered personally to the Authority at
6700 Portland Avenue South, Richfield, MN 55423, Attn: Community Development Director, email
j stark@richfield.gov;
23
or at such other address with respect to either such party as that parry may, from time to time, designate in
writing and forward to the other as provided in this Section.
Section 10.7. Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall constitute one and the same instrument.
Section 10.8. Recording. The Authority may record a memorandum of this Agreement and any
amendments thereto with the County Recorder and/or Registrar of Titles of the County, as the case may be.
The Developer shall pay all costs for recording.
Section 10.9. Amendment. This Agreement may be amended only by written agreement executed
by the Authority and the Developer.
Section 10.10. Preliminary Development Agreement. On the date of this Agreement, the
Preliminary Development Agreement shall terminate.
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24
IN WITNESS WHEREOF, the Authority has caused this Contract for Private Development to be
duly executed in its name and behalf and the Developer has caused this Contract for Private Development to
be duly executed in its name and behalf as of the date and year first written above.
HOUSING AND REDEVELOPMENT AUTHORITY
IN AND FOR THE CITY OF RICHFIELD,
MINNESOTA
By
Its Chair
By
Its Executive Director
STATE OF MINNESOTA )
) SS.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this day of , 2020, by Mary
Supple, the Chair of the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota, a
public body corporate and politic under the laws of the State of Minnesota, on behalf of the Authority.
Notary Public
STATE OF MINNESOTA )
) SS.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this day of , 2020, by John
Stark, the Executive Director of the Housing and Redevelopment Authority in and for the City of Richfield,
Minnesota, a public body corporate and politic under the laws of the State of Minnesota, on behalf of the
Authority.
Notary Public
S-1
Execution page of the Developer to the Contract for Private Development, dated the date and year first
written above.
6345 PARTNERS, LLC
By
Its
STATE OF MINNESOTA )
SS.
COUNTY OF )
The foregoing instrument was acknowledged before
, the
Minnesota limited liability company, on behalf of the Developer.
Notary Public
me this day of , 2020, by
of 6345 Partners, LLC, a
S-2
EXHIBIT A
DEVELOPMENT PROPERTY
PARCEL 1:
Real property in the City of Richfield, County of Hennepin, State of Minnesota, described as follows:
Lots 7 and 8, Block 5, Lyndale Oaks, Hennepin County, Minnesota.
(Abstract property)
Along with:
Easement for parking purposes as contained in Parking Easement recorded January 23, 1990 as
Document No. 5619455.
PARCEL 2:
Real property in the City of Richfield, County of Hennepin, State of Minnesota, described as follows:
Lot 6, Block 5, Lyndale Oaks, Hennepin County, Minnesota.
(Abstract Property)
PARCEL 3:
Real property in the City of Richfield, County of Hennepin, State of Minnesota, described as follows:
Lot 5, Block 5, Lyndale Oaks, Hennepin County, Minnesota.
(Abstract property)
PARCEL 4:
Real property in the City of Richfield, County of Hennepin, State of Minnesota, described as follows:
Lot 4, Block 5, Lyndale Oaks, Hennepin County, Minnesota
(Abstract property)
PARCEL 5:
Real property in the City of Richfield, County of Hennepin, State of Minnesota, described as follows:
Lot 3, Block 5, "Lyndale Oaks", Hennepin County, Minnesota, according to the recorded plat thereof.
[Abstract Property]
A-1
EXHIBIT B
FORM OF TIF NOTE
UNITED STATES OF AMERICA
STATE OF MINNESOTA
COUNTY OF HENNEPIN
HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE
CITY OF RICHFIELD
No. R-1
TAX INCREMENT LIMITED REVENUE NOTE
SERIES
Rate
Date
of Original Issue
, 20
The Housing and Redevelopment Authority in and for the City of Richfield, Minnesota (the
"Authority"), for value received, certifies that it is indebted and hereby promises to pay to 6345 Partners,
LLC, a Minnesota limited liability company, or registered assigns (the "Owner"), the principal sum of
$ and to pay interest thereon at the rate per annum set forth above, as and to the extent set forth
herein. Capitalized terms used herein that are otherwise not defined shall have the meanings provided in the
Contract for Private Development, dated , 2020 (the "Agreement"), between the Authority
and the Owner.
1. Payments. Principal and interest (the "Payments") shall be paid on August 1, 20_, and
each February 1 and August 1 thereafter (each a "Payment Date") to and including February 1, 20 , in the
amounts and from the sources set forth in Section 3 herein. Payments shall be applied first to accrued
interest, and then to unpaid principal.
Payments are payable by mail to the address of the Owner or such other address as the Owner may
designate upon thirty (30) days' written notice to the Authority. Payments on this Note are payable in any
coin or currency of the United States of America which, on the Payment Date, is legal tender for the payment
of public and private debts.
2. Interest. Interest at the rate stated above shall accrue on the unpaid principal, commencing
on the Date of Original Issue. Interest shall accrue on a simple basis and will not be added to principal.
Interest shall be computed on the basis of a year of three hundred sixty (360) days and charged for actual days
principal is unpaid.
3. Available Tax Increment. Payments on this Note are payable on each Payment Date in the
amount of and solely payable from "Available Tax Increment," which will mean, on each Payment Date,
ninety percent (90%) of the Tax Increment attributable to the Development Property and paid to the
Authority by the County in the six (6) months preceding the Payment Date. The principal of and interest on
this Note shall be payable each Payment Date solely from Available Tax Increment. Available Tax
Increment shall not include any Tax Increment if, as of any Payment Date, there is an uncured Event of
Its
Default under this Agreement that has not been waived by the Authority. Once the Event of Default is cured
or waived by the Authority, withheld Tax Increment shall be Available Tax Increment.
The Authority shall have no obligation to pay principal of and interest on this Note on each Payment
Date from any source other than Available Tax Increment, and the failure of the Authority to pay the entire
amount of principal or interest on this Note on any Payment Date shall not constitute a default hereunder as
long as the Authority pays principal and interest hereon to the extent of Available Tax Increment. The
Authority shall have no obligation to pay unpaid balance of principal or accrued interest that may remain
after the payment of Available Tax Increment from the last payment of Tax Increment the Authority is
entitled to receive from the County with respect to the Development Property.
4. Optional Prepayment. The principal sum and all accrued interest payable under this Note is
prepayable in whole or in part at any time by the Authority without premium or penalty. No partial
prepayment shall affect the amount or timing of any other regular payment otherwise required to be made
under this Note.
5. Termination. At the Authority's option, this Note shall terminate and the Authority's
obligation to make any payments under this Note shall be discharged upon the occurrence of an Event of
Default on the part of the Developer, but only if the Event of Default has not been cured in accordance with
Section 9.2 of the Agreement.
6. Nature of Obli ag tion. This Note is issued to aid in financing certain public development
costs and administrative costs of a Redevelopment Project undertaken by the Authority pursuant to
Minnesota Statutes, Sections 469.001 through 469.047, as amended, and is issued pursuant to an authorizing
resolution (the "Resolution") duly adopted by the Board of Commissioners of the Authority on
, 2020, and pursuant to and in full conformity with the Constitution and laws of the State of
Minnesota, including Minnesota Statutes, Sections 469.174 through 469.1794, as amended. This Note is a
limited obligation of the Authority which is payable solely from Available Tax Increment pledged to the
payment hereof under the Resolution. This Note and the interest hereon shall not be deemed to constitute a
general obligation of the State of Minnesota or any political subdivision thereof, including, without limitation,
the Authority. Neither the State of Minnesota, nor any political subdivision thereof shall be obligated to pay
the principal of or interest on this Note or other costs incident hereto except out of Available Tax Increment,
and neither the full faith and credit nor the taxing power of the State of Minnesota or any political subdivision
thereof is pledged to the payment of the principal of or interest on this Note or other costs incident hereto.
7. Estimated Tax Increment Payments. Any estimates of Tax Increment prepared by the
Authority or its financial or municipal advisors in connection with the TIF District or the Agreement are for
the benefit of the Authority, and are not intended as representations on which the Developer may rely.
THE AUTHORITY MAKES NO REPRESENTATION OR WARRANTY THAT THE
AVAILABLE TAX INCREMENT WILL BE SUFFICIENT TO PAY THE PRINCIPAL OF AND
INTEREST ON THIS NOTE.
Registration. This Note is issuable only as a fully registered note without coupons.
9. Transfer. As provided in the Resolution, and subject to certain limitations set forth therein,
this Note is transferable upon the books of the Authority kept for that purpose at the principal office of the
City Clerk of the City of Richfield. Upon surrender for transfer of this Note, including any assignment or
exchange thereof, duly endorsed by the registered owner thereof or accompanied by a written instrument of
transfer, in form reasonably satisfactory to the Executive Director, as registrar (the "Registrar"), duly
executed by the registered owner thereof or by an attorney duly authorized by the registered owner in writing,
and the payment by the Owner of any tax, fee, or governmental charge required to be paid by or to the
Authority with respect to such transfer or exchange, the Registrar shall authenticate and deliver, in the name
of the designated transferee or transferees, a new Note of the same aggregate principal amount, bearing
interest at the same rate and maturing on the same dates.
Notwithstanding the foregoing, this Note shall not be transferred to any person other than an affiliate,
or other related entity, of the Owner unless the Authority has been provided with an investment letter in a
form substantially similar to the investment letter in Exhibit C attached to the Agreement or a certificate of
the transferor, in a form satisfactory to the Executive Director of the Authority, that such transfer is exempt
from registration and prospectus delivery requirements of federal and applicable state securities laws. The
Registrar may close the books for registration of any transfer after the fifteenth day of the month preceding
each Payment Date and until such Payment Date.
The Owner may assign this Note to a lender that provides all or part of the financing for the
acquisition of the Development Property or the construction of the Minimum Improvements. The Authority
hereby consents to such assignment, conditioned upon receipt of an investment letter from such lender in
substantially the form attached to the Agreement as Exhibit C, or other form reasonably acceptable to the
Executive Director of the Authority. The Authority also agrees that future assignments of this Note may be
approved by the Executive Director of the Authority without action of the Board of Commissioners of the
Authority, upon the receipt of an investment letter in substantially the form of Exhibit C of the Agreement or
other investment letter reasonably acceptable to the Authority from such assignees.
This Note is issued pursuant to the Resolution and is entitled to the benefits thereof, which
Resolution is incorporated herein by reference.
IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions, and things required by the
Constitution and laws of the State of Minnesota to be done, to exist, to happen, and to be performed in order
to make this Note a valid and binding limited obligation of the Authority according to its terms, have been
done, do exist, have happened, and have been performed in due form, time and manner as so required.
IN WITNESS WHEREOF, the Board of Commissioners of the Housing and Redevelopment
Authority in and for the City of Richfield, Minnesota has caused this Note to be executed with the manual
signatures of its Chair and Executive Director, all as of the Date of Original Issue specified above.
Executive Director
HOUSING AND REDEVELOPMENT
AUTHORITY IN AND FOR THE CITY OF
RICHFIELD, MINNESOTA
Chair
REGISTRATION PROVISIONS
The ownership of the unpaid balance of the within Note is registered in the bond register of the
Authority's Executive Director, in the name of the person last listed below.
Date of Registration Registered Owner Signature of Executive Director
6345 Partners, LLC
Federal ID #
EXHIBIT C
FORM OF INVESTMENT LETTER
To the Housing and Redevelopment Authority in and for the City of Richfield (the "Authority")
Attention: Executive Director
Re: $ Tax Increment Limited Revenue Note, Series 20
The undersigned, as Owner of $ in principal amount of the above -captioned Note (the
"Note") issued pursuant to a resolution adopted by the Board of Commissioners of the Authority on
, 20 (the "Resolution"), hereby represents to you and to Kennedy & Graven, Chartered,
Minneapolis, Minnesota, development counsel, as follows:
1. We understand and acknowledge that the TIF Note is delivered to the Owner as of this date
pursuant to the Resolution and the Contract for Private Development, dated , 20 (the
"Contract"), between the Authority and the Owner.
2. We understand that the TIF Note is payable as to principal and interest solely from Available
Tax Increment (as defined in the TIF Note).
3. We further understand that any estimates of Tax Increment prepared by the Authority or its
financial or municipal advisors in connection with the TIF District, the Contract or the TIF Note are for the
benefit of the Authority, and are not intended as representations on which the Owner may rely.
4. We have sufficient knowledge and experience in financial and business matters, including
purchase and ownership of municipal obligations, to be able to evaluate the risks and merits of the investment
represented by the purchase of the above -stated principal amount of the TIF Note.
5. We acknowledge that no offering statement, prospectus, offering circular or other
comprehensive offering statement containing material information with respect to the Authority and the TIF
Note has been issued or prepared by the Authority, and that, in due diligence, we have made our own inquiry
and analysis with respect to the Authority, the TIF Note and the security therefor, and other material factors
affecting the security and payment of the TIF Note.
6. We acknowledge that we have either been supplied with or have access to information,
including financial statements and other financial information, to which a reasonable investor would attach
significance in making investment decisions, and we have had the opportunity to ask questions and receive
answers from knowledgeable individuals concerning the Authority, the TIF Note and the security therefor,
and that as a reasonable investor we have been able to make our decision to purchase the above -stated
principal amount of the TIF Note.
7. We have been informed that the TIF Note (i) is not being registered or otherwise qualified
for sale under the "Blue Sky" laws and regulations of any state, or under federal securities laws or
regulations; (ii) will not be listed on any stock or other securities exchange; and (iii) will carry no rating from
any rating service.
8. We acknowledge that neither the Authority nor Kennedy & Graven, Chartered has made any
representations as to the status of interest on the TIF Note for state or federal income tax purposes.
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9. We represent to you that we are purchasing the TIF Note for our own accounts and not for
resale or other distribution thereof, except to the extent otherwise provided in the TIF Note, the Resolution, or
any other resolution adopted by the Authority.
10. All capitalized terms used herein have the meaning provided in the Contract unless the
context clearly requires otherwise.
11. The Owner's federal tax identification number is
12. We acknowledge receipt of the TIF Note as of the date hereof.
Dated: 120
6345 PARTNERS, LLC
By
Its
C-2
EXHIBIT D
FORM OF CERTIFICATE OF COMPLETION
The undersigned hereby certifies that 6345 Partners, LLC, a Minnesota limited liability company (the
"Developer"), has fully complied with its obligations under Articles III and IV of that document titled
"Contract for Private Development," dated , 2020, between the Housing and
Redevelopment Authority in and for the City of Richfield, Minnesota and the Developer (the "Agreement"),
a memorandum of which was recorded in the office of [County Recorder] [Registrar of Titles] of Hennepin
County, Minnesota on 120 , as document number with respect to
construction of the [New Housing Development] [NOAH Housing Development] in accordance with
Article IV of the Agreement, and that the Developer is released and forever discharged from its
obligations with respect to construction of such Minimum Improvements under Articles III and IV of the
Agreement.
Dated: 920
HOUSING AND REDEVELOPMENT AUTHORITY
IN AND FOR THE CITY OF RICHFIELD,
MINNESOTA
By
Its
STATE OF MINNESOTA )
) SS.
COUNTY OF HENNEPIN )
Executive Director
The foregoing instrument was acknowledged before me this , 20 by
, the Executive Director of the Housing and Redevelopment Authority in and for the
City of Richfield, Minnesota, on behalf of the Authority.
Notary Public
D-1
EXHIBIT E
FORM OF DECLARATION OF RESTRICTIVE COVENANTS
THIS DECLARATION OF RESTRICTIVE COVENANTS, made as of the day of
, 2020 (the "Declaration"), is by 6345 Partners, LLC, a Minnesota limited liability
company (the "Developer"), in favor of the HOUSING AND REDEVELOPMENT AUTHORITY IN AND
FOR THE CITY OF RICHFIELD, MINNESOTA, a public body corporate and politic under the laws of the
State of Minnesota (the "Authority").
RECITALS:
WHEREAS, the Authority has provided to the Developer certain financial assistance with respect
to real property legally described in EXHIBIT A attached hereto (the "Development Property") to the
Developer pursuant to a Contract for Private Development, dated , 2020 (the "Contract"),
between the Authority and the Developer; and
WHEREAS, pursuant to the Contract, the Developer will construct a multifamily housing
development consisting of the construction of an approximately 82-unit multifamily housing development,
including an accessible two -bedroom unit at ground level, on the Development Property (the "New Housing
Development") and the purchase and rehabilitation of a 22-unit apartment building with naturally occurring
affordable rents located on the Development Property (the "NOAH Housing Development," and collectively
with the New Housing Development, the "Project"), and to cause compliance with certain affordability
covenants described in Section 4.6 of the Contract; and
WHEREAS, Section 4.6 of the Contract requires that the Developer cause to be executed an
instrument in recordable form substantially reflecting the covenants set forth in Section 4.6 of the Contract;
and
WHEREAS, the Developer intends, declares, and covenants that the restrictive covenants set forth
herein will be and are covenants running with the Development Property for the term described herein and
binding upon all subsequent owners of the Development Property for the term described herein, and are not
merely personal covenants of the Developer; and
WHEREAS, capitalized terms in this Declaration have the meaning provided in the Contract unless
otherwise defined herein.
NOW, THEREFORE, in consideration of the promises and covenants hereinafter set forth, and of
other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Developer
agrees as follows:
Term of Restrictions.
(a) Occupancy and Rental Restrictions. The term of the Occupancy Restrictions set forth in
Section 3 hereof will commence on the date a certificate of occupancy is received from the City of Richfield,
Minnesota (the "City") for all rental units within the Project. All rental units in the Project will be referred to
herein as "Rental Housing Units." The period from commencement to termination is the "Qualified Project
Period."
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(b) Termination of Declaration. This Declaration will terminate upon the date that is twenty-six
(26) years after the commencement of the Qualified Project Period; provided, however, that if the TIF Note is
paid in full, the Contract is terminated, or the TIF District expires, terminates, or is decertified, this
Declaration shall terminate. Notwithstanding the foregoing, pursuant to the City's Inclusionary Housing
Policy, this Declaration must be in effect for at least ten (10) years after the date the New Housing
Development is placed in service.
(c) Removal from Real Estate Records. Upon termination of this Declaration, the Authority
will, upon request by the Developer or its assigns, provide a document appropriate to remove this Declaration
from the real estate records of Hennepin County, Minnesota.
2. Project Restrictions.
(a) the Developer represents, warrants, and covenants that:
(i) All leases of Rental Housing Units to Qualifying Tenants (as defined in
Section 3(a)(i) hereof) will contain clauses, among others, wherein each individual lessee:
(1) certifies the accuracy of the statements made in its application and
Eligibility Certification (as defined in Section 3(a)(ii) hereof); and
(2) agrees that the family income at the time the lease is executed will be
deemed substantial and material obligation of the lessee's tenancy, that the lessee will
comply promptly with all requests for income and other information relevant to determining
low or moderate income status from the Developer or the Authority, and that the lessee's
failure or refusal to comply with a request for information with respect thereto will be
deemed a violation of a substantial obligation of the lessee's tenancy.
(ii) Upon at least forty-eight (48) hours' notice, the Developer will permit any duly
authorized representative of the Authority to inspect the books and records of the Developer
pertaining to the income of Qualifying Tenants residing in the Project.
Occupancy Restrictions.
(a) Tenant Income Provisions. The Developer represents, warrants, and covenants that:
(i) Qualifying Tenants. From the commencement of the Qualified Project Period, at
least twenty percent (20%) of the Rental Housing Units (i.e., 21 Rental Housing Units) will be
occupied (or treated as occupied as provided herein) or held vacant and available for occupancy by
Qualifying Tenants. Qualifying Tenants means those persons and families who are determined from
time to time by the Developer to have combined adjusted income that does not exceed fifty percent
(50%) of the Minneapolis -St. Paul metropolitan statistical area (the "Metro Area") median income
for the applicable calendar year, except as provided in the last sentence of this paragraph. For
purposes of this definition, the occupants of a residential unit will not be deemed to be Qualifying
Tenants if all the occupants of such residential unit at any time are "students," as defined in
Section 151(c)(4) of the Internal Revenue Code of 1986, as amended (the "Code"), not entitled to an
exemption under the Code. The determination of whether an individual or family is of low or
moderate income will be made at the time the tenancy commences and on an ongoing basis
thereafter, determined at least annually. If during their tenancy a Qualifying Tenant's income
exceeds one hundred forty percent (140%) of the maximum income qualifying as low or moderate
income for a family of its size, the next available unit (determined in accordance with the Code and
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applicable regulations) (the "Next Available Unit Rule") must be leased to a Qualifying Tenant or
held vacant and available for occupancy by a Qualifying Tenant. If the Next Available Unit Rule is
violated, the Rental Housing Unit will not continue to be treated as a unit occupied by a Qualifying
Tenant. A tenant that initially qualified as a Qualifying Tenant, will continue to qualify as a
Qualifying Tenant even if such Qualifying Tenant's income exceeds fifty percent (50%) of the Metro
Area median income so long as the Next Available Unit Rule is complied with if the Qualifying
Tenant's income exceeds 140% of the maximum qualifying income.
(ii) Placement of Affordable Units. At least five (5) of the Rental Housing Units in the
New Housing Development will be occupied (or treated as occupied as provided herein) or held
vacant and available for occupancy by Qualifying Tenants.
(ii) Certification of Tenant Eli .ig bility. As a condition to initial and continuing
occupancy, each person who is intended to be a Qualifying Tenant will be required annually to sign
and deliver to the Developer a Certification of Tenant Eligibility substantially in the form attached
hereto as EXHIBIT B, or in any other form as may be approved by the Authority (the "Eligibility
Certification"), in which the prospective Qualifying Tenant certifies as to qualifying as low or
moderate income. In addition, so long as the Authority notifies the Developer in writing of such
requirements prior to the applicable lease signing, the person will be required to provide whatever
other information, documents, or certifications are deemed necessary by the Authority to substantiate
the Eligibility Certification, on an ongoing annual basis, and to verify that the tenant continues to be
a Qualifying Tenant within the meaning of Section 3(a) hereof. Eligibility Certifications will be
maintained on file by the Developer with respect to each Qualifying Tenant who resides in a Rental
Housing Unit or resided therein during the immediately preceding calendar year.
(iii) Lease. The form of lease to be utilized by the Developer in renting any Rental
Housing Units to any person who is intended to be a Qualifying Tenant will provide for termination
of the lease and consent by the person to immediate eviction for failure to qualify as a Qualifying
Tenant as a result of any material misrepresentation made by the person with respect to the Eligibility
Certification.
(iv) Annual Report. The Developer covenants and agrees that during the term of this
Declaration, it will prepare and submit to the Authority on or before April 1 of each year, a certificate
substantially in the form of EXHIBIT C hereto, executed by the Developer, (a) identifying the
tenancies and the dates of occupancy (or vacancy) for all Qualifying Tenants in the Project, including
the percentage of the Rental Housing Units which were occupied by Qualifying Tenants (or held
vacant and available for occupancy by Qualifying Tenants) at all times during the year preceding the
date of the certificate; (b) describing all transfers or other changes in ownership of the Project or any
interest therein; and (c) stating, that to the best knowledge of the person executing the certificate after
due inquiry, all the Rental Housing Units were rented or available for rental on a continuous basis
during the year to members of the general public and that the Developer was not otherwise in default
under this Declaration during the year.
(v) Notice of Non -Compliance. The Developer will immediately notify the Authority if
at any time during the term of this Declaration the Rental Housing Units are not occupied or
available for occupancy as required by the terms of this Declaration.
(b) Section 8 Housing. During the term of this Declaration, the Developer shall not adopt any
policies specifically excluding rental to tenants holding Section 8 certificate/voucher holders.
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4. Transfer Restrictions. The Developer covenants and agrees that the Developer will cause or
require as a condition precedent to any conveyance, transfer, assignment, or any other disposition of the
Project prior to the termination of the Rental Restrictions and Occupancy Restrictions provided herein (the
"Transfer") that the transferee of the Project pursuant to the Transfer assume in writing, in a form acceptable
to the Authority, all duties and obligations of the Developer under this Declaration, including this Section 4,
in the event of a subsequent Transfer by the transferee prior to expiration of the Rental Restrictions and
Occupancy Restrictions provided herein (the "Assumption Agreement"). The Developer will deliver the
Assumption Agreement to the Authority prior to the Transfer.
5. Notice of Sale. In consideration of the financial assistance provided to the Developer
pursuant to Article IV of the Contract, the Developer agrees to provide the Authority with at least ninety (90)
days' notice of any sale of the Project.
Enforcement.
(a) The Developer will permit, during normal business hours and upon at least forty-eight (48)
hours' prior written notice, any duly authorized representative of the Authority to inspect any books and
records of the Developer regarding the Project with respect to the incomes of Qualifying Tenants.
(b) The Developer will submit any other information, documents or certifications requested by
the Authority which the Authority deems reasonably necessary to substantial the Developer's continuing
compliance with the provisions specified in this Declaration.
(c) The Developer acknowledges that the primary purpose for requiring compliance by the
Developer with the restrictions provided in this Declaration is to ensure compliance of the property with the
housing affordability covenants set forth in Section 4.6 of the Contract, and by reason thereof, the Developer,
in consideration for assistance provided by the Authority under the Contract that makes possible the
construction of the Project on the Development Property, hereby agrees and consents that the Authority will
be entitled, for any breach of the provisions of this Declaration, and in addition to all other remedies provided
by law or in equity, to enforce specific performance by the Developer of its obligations under this Declaration
in a state court of competent jurisdiction. The Developer hereby further specifically acknowledges that the
Authority cannot be adequately compensated by monetary damages in the event of any default hereunder.
(d) The Developer understands and acknowledges that, in addition to any remedy set forth
herein for failure to comply with the restrictions set forth in this Declaration, the Authority may exercise any
remedy available to it under Article IX of the Contract.
7. Indemnification. The Developer hereby indemnifies, and agrees to defend and hold
harmless the Authority and its members, officers, and agents from and against all liabilities, losses, damages,
costs, expenses (including attorneys' fees and expenses), causes of action, suits, allegations, claims, demands,
and judgments of any nature arising from the consequences of a legal or administrative proceeding or action
brought against them, or any of them, on account of any failure by the Developer to comply with the terms of
this Declaration, or on account of any representation or warranty of the Developer contained herein being
untrue.
8. Agent of the Authority. The Authority will have the right to appoint an agent to carry out
any of its duties and obligations hereunder, and will inform the Developer of any agency appointment by
written notice.
9. Severability. The invalidity of any clause, part or provision of this Declaration will not
affect the validity of the remaining portions thereof.
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10. Notices. All notices to be given pursuant to this Declaration must be in writing and will be
deemed given when mailed by certified or registered mail, return receipt requested, to the parties hereto at the
addresses set forth below, or to any other place as a party may from time to time designate in writing. The
Developer and the Authority may, by notice given hereunder, designate any further or different addresses to
which subsequent notices, certificates, or other communications are sent. The initial addresses for notices
and other communications are as follows:
To the Authority: Housing and Redevelopment Authority
in and for the City of Richfield, Minnesota
6700 Portland Avenue South
Richfield, MN 55423
Attn: Community Development Director
To the Developer: 6345 Partners, LLC
c/o North Bay Companies, LLC
2316 41 Ave South
Minneapolis, MN 55404
Attn: President
11. Governing Law. This Declaration is governed by the laws of the State of Minnesota and,
where applicable, the laws of the United States of America.
12. Attorneys' Fees. In case any action at law or in equity, including an action for declaratory
relief, is brought against the Developer to enforce the provisions of this Declaration, the Developer agrees to
pay the reasonable attorneys' fees and other reasonable expenses paid or incurred by the Authority in
connection with the action.
13. Declaration Binding. This Declaration and the covenants contained herein will run with the
real property comprising the Project and will bind the Developer and its successors and assigns and all
subsequent owners of the Project or any interest therein, and the benefits will inure to the Authority and its
successors and assigns for the term of this Declaration as provided in Section 1(b) hereof.
(The remainder of this page is intentionally left blank.)
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IN WITNESS WHEREOF, the Developer has caused this Declaration of Restrictive Covenants to
be signed by its duly authorized representative as of the date and year first written above.
6345 PARTNERS, LLC
By
Its
STATE OF MINNESOTA )
SS.
COUNTY OF )
The foregoing instrument was acknowledged before
, the
Minnesota limited liability company, on behalf of the Developer.
This document was drafted by:
KENNEDY & GRAVEN, Chartered (JAE)
470 U.S. Bank Plaza
200 South Sixth Street
Minneapolis, Minnesota 55402
Telephone: 612-337-9300
Notary Public
me this day of , 2020, by
of 6345 Partners, LLC, a
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This Declaration of Restrictive Covenants is acknowledged and consented to by:
HOUSING AND REDEVELOPMENT AUTHORITY
IN AND FOR THE CITY OF RICHFIELD,
MINNESOTA
By
Its Chair
By
Its Executive Director
STATE OF MINNESOTA )
) SS.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this day of , 2020, by Mary
Supple, the Chair of the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota, a
public body corporate and politic under the laws of the State of Minnesota, on behalf of the Authority.
Notary Public
STATE OF MINNESOTA )
) SS.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this day of , 2020, by John
Stark, the Executive Director of the Housing and Redevelopment Authority in and for the City of Richfield,
Minnesota, a public body corporate and politic under the laws of the State of Minnesota, on behalf of the
Authority.
Notary Public
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EXHIBIT A TO DECLARATION OF RESTRICTIVE COVENANTS
LEGAL DESCRIPTION OF DEVELOPMENT PROPERTY
PARCEL 1:
Real property in the City of Richfield, County of Hennepin, State of Minnesota, described as follows:
Lots 7 and 8, Block 5, Lyndale Oaks, Hennepin County, Minnesota.
(Abstract property)
Along with:
Easement for parking purposes as contained in Parking Easement recorded January 23, 1990 as
Document No. 5619455.
PARCEL 2:
Real property in the City of Richfield, County of Hennepin, State of Minnesota, described as follows:
Lot 6, Block 5, Lyndale Oaks, Hennepin County, Minnesota.
(Abstract Property)
PARCEL 3:
Real property in the City of Richfield, County of Hennepin, State of Minnesota, described as follows:
Lot 5, Block 5, Lyndale Oaks, Hennepin County, Minnesota.
(Abstract property)
PARCEL 4:
Real property in the City of Richfield, County of Hennepin, State of Minnesota, described as follows:
Lot 4, Block 5, Lyndale Oaks, Hennepin County, Minnesota
(Abstract property)
PARCEL 5:
Real property in the City of Richfield, County of Hennepin, State of Minnesota, described as follows:
Lot 3, Block 5, "Lyndale Oaks", Hennepin County, Minnesota, according to the recorded plat thereof.
[Abstract Property]
I-:1
EXHIBIT B TO DECLARATION OF RESTRICTIVE COVENANTS
CERTIFICATION OF TENANT ELIGIBILITY
Certification of Tenant Eligibility
(INCOME COMPUTATION AND CERTIFICATION)
Project: 6345 Lyndale Avenue South, Richfield, Minnesota
Owner:
Unit Type: [studio] [1 BR] [2 BR]
1. I/We, the undersigned, being first duly sworn, state that Uwe have read and answered fully,
frankly and personally each of the following questions for all persons (including minors) who are to occupy
the unit in the above apartment development for which application is made, all of whom are listed below:
date,
Name of Relationship
Members of the To Head of Place of
Household Household Age Employment
Income Computation
2. The anticipated income of all the above persons during the 12-month period beginning this
(a) including all wages and salaries, overtime pay, commissions, fees, tips and bonuses
before payroll deductions; net income from the operation of a business or profession or from the
rental of real or personal property (without deducting expenditures for business expansion or
amortization of capital indebtedness); interest and dividends; the full amount of periodic payments
received from social security, annuities, insurance policies, retirement funds, pensions, disability or
death benefits and other similar types of periodic receipts; payments in lieu of earnings, such as
unemployment and disability compensation, worker's compensation and severance pay; the
maximum amount of public assistance available to the above persons; periodic and determinable
allowances, such as alimony and child support payments and regular contributions and gifts received
from persons not residing in the dwelling; and all regular pay, special pay and allowances of a
member of the Armed Forces (whether or not living in the dwelling) who is the head of the
household or spouse; but
(b) excluding casual, sporadic or irregular gifts; amounts which are specifically for or in
reimbursement of medical expenses; lump sum additions to family assets, such as inheritances,
insurance payments (including payments under health and accident insurance and workmen's
compensation), capital gains and settlement for personal or property losses; amounts of educational
L=
scholarships paid directly to the student or the educational institution, and amounts paid by the
government to a veteran for use in meeting the costs of tuition, fees, books and equipment, but in
either case only to the extent used for these types of purposes; special pay to a serviceman head of a
family who is away from home and exposed to hostile fire; relocation payments under Title II of the
Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970; foster child care
payments; the value of coupon allotments for the purchase of food pursuant to the Food Stamp Act
of 1964 which is in excess of the amount actually charged for the allotments; and payments received
pursuant to participation in ACTION volunteer programs, is as follows: $
3. If any of the persons described above (or whose income or contributions was included in
item 2) has any savings, bonds, equity in real property or other form of capital investment, provide:
(a) the total value of all such assets owned by all such persons: $ ;
(b) the amount of income expected to be derived from such assets in the 12 month
period commencing this date: $ ; and
(c) the amount of such income which is included in income listed in item 2:
4. (a) Will all of the persons listed in item 1 above be or have they been full-time students
during at least five calendar months of this calendar year at an educational institution (other than a
correspondence school) with regular faculty and students?
Yes No
(b) Is any such person (other than nonresident aliens) married and eligible to file a joint
federal income tax return?
Yes No
THE UNDERSIGNED HEREBY CERTIFY THAT THE INFORMATION SET FORTH ABOVE
IS TRUE AND CORRECT. THE UNDERSIGNED ACKNOWLEDGE THAT THE LEASE FOR THE
UNIT TO BE OCCUPIED BY THE UNDERSIGNED WILL BE CANCELLED UPON 10 DAYS
WRITTEN NOTICE IF ANY OF THE INFORMATION ABOVE IS NOT TRUE AND CORRECT.
Head of Household
Spouse
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FOR COMPLETION BY OWNER
(OR ITS MANAGER) ONLY
Calculation of Eligible Tenant Income:
(a) Enter amount entered for entire household in 2 above: $
(b) If the amount entered in 3(a) above is greater than $5,000, enter the greater of (i) the
amount entered in 3(b) less the amount entered in 3(c) or (ii) 10% of the amount entered in 3(a):
(c) TOTAL ELIGIBLE INCOME (Line 1(a) plus Line 1(b)): $
2. The amount entered in l(c) is less than or equal to 50% of median income for the area in
which the Project is located, as defined in the Declaration. 50% is necessary for status as a "Qualifying
Tenant" under Section 3(a) of the Declaration.
Number of apartment unit assigned:
4. This apartment unit was was not last occupied for a period of at least
31 consecutive days by persons whose aggregate anticipated annual income as certified in the above manner
upon their initial occupancy of the apartment unit was less than or equal to 50% of Median Income in the
area.
5. Check as applicable: Applicant qualifies as a Qualifying Tenant (tenants of at least
_ units must meet), or Applicant otherwise qualifies to rent a unit.
THE UNDERSIGNED HEREBY CERTIFIES THAT HE/SHE HAS NO KNOWLEDGE OF ANY FACTS
WHICH WOULD CAUSE HIM/HER TO BELIEVE THAT ANY OF THE INFORMATION PROVIDED
BY THE TENANT MAY BE UNTRUE OR INCORRECT.
6345 PARTNERS, LLC
By
Its
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EXHIBIT C TO DECLARATION OF RESTRICTIVE COVENANTS
CERTIFICATE OF CONTINUING PROGRAM COMPLIANCE
Certificate of
Continuing Program Compliance
Date:
The following information with respect to the multifamily housing development located at 6345
Lyndale Avenue South, Richfield, Minnesota (the "Project"), is being provided by 6345 Partners, LLC, a
Minnesota limited liability company (the "Owner"), to the Housing and Redevelopment Authority in and for
the City of Richfield, Minnesota (the "Authority"), pursuant to that certain Declaration of Restrictive
Covenants, dated , 20_ (the "Declaration"), with respect to the Project:
(A) The total number of residential units which are available for occupancy is
. The total number of these units occupied is
(B) The following residential units (identified by unit number) are currently occupied by
"Qualifying Tenants," as the term is defined in the Declaration (for a total of units):
[Studio Units]:
[1 BR Units]:
[2 BR Units]:
(C) The following residential units which are included in (B) above, have been re-
designated as units for Qualifying Tenants since , 20___, the date on which the
last "Certificate of Continuing Program Compliance" was filed with the Authority by the Owner:
Unit Previous Designation Replacing
Number of Unit (if any) Unit Number
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(D) The following residential units are considered to be occupied by Qualifying Tenants
based on the information set forth below:
Unit
Number
Name of Tenant
Number of
Persons
Residing in
the Unit
Number of
Bedrooms
Total Adjusted
Gross Income
Date of Initial
Occupancy
Rent
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
[etc.]
(E) The Owner has obtained a "Certification of Tenant Eligibility," in the form provided
as EXHIBIT B to the Declaration, from each Tenant named in (D) above, and each such Certificate
is being maintained by the Owner in its records with respect to the Project. Attached hereto is the
most recent "Certification of Tenant Eligibility" for each Tenant named in (D) above who signed
such a Certification since , 20 , the date on which the last "Certificate of
Continuing Program Compliance" was filed with the Authority by the Owner.
(F) hi renting the residential units in the Project, the Owner has not given preference to
any particular group or class of persons (except for persons who qualify as Qualifying Tenants); and
none of the units listed in (D) above have been rented for occupancy entirely by students, no one of
which is entitled to file a joint return for federal income tax purposes. All of the residential units in
the Project have been rented pursuant to a written lease, and the term of each lease is at least twelve
(12) months.
(G) The information provided in this "Certificate of Continuing Program Compliance"
is accurate and complete, and no matters have come to the attention of the Owner which would
indicate that any of the information provided herein, or in any "Certification of Tenant Eligibility"
obtained from the Tenants named herein, is inaccurate or incomplete in any respect.
(H) The Project is in continuing compliance with the Declaration.
(I) The Owner certifies that as of the date hereof at least of the residential
dwelling units in the Project are occupied or held open for occupancy by Qualifying Tenants, as
defined and provided in the Declaration.
E-13
(J) The rental levels for each Qualifying Tenant comply with the maximum permitted
under the Declaration.
IN WITNESS WHEREOF, I have hereunto affixed my signature, on behalf of the Owner, on
920
6345 PARTNERS, LLC
By
Its
E-14
EXHIBIT F
REHABILITATION PLAN
Action Expected Commencement Date Expected Completion Date
F-1
RC125-2 (JAE)
638419v1
EXHIBIT G
ACCESS AREA
G-1
AGENDA SECTION: RESOLUTIONS
AGENDA ITEM # 4.
STAFF REPORT NO. 24
HOUSING AND REDEVELOPMENT AUTHORITY
MEETING
7/20/2020
REPORT PREPARED BY: Melissa Poehlman,Asst. Community Development Director
OTHER DEPARTMENT REVIEW: N/A
EXECUTIVE DIRECTOR REVIEW: John Stark, Executive Director
7/15/2020
ITEM FOR COUNCIL CONSIDERATION:
Consider the attached resolution approving a Preliminary Development Agreement between the
Housing and Redevelopment Authority and PLH & Associates - Construction Services, LLC for
redevelopment of property at 101 - 66th Street East.
EXECUTIVE SUMMARY:
On June 15, 2020, representatives of PLH &Associates, LLC (Developer) presented updated concepts of
their previously approved mixed use development at 101 - 66th Street East to the Housing and Redevelopment
Authority (HRA) and City Council. The Developer is proposing to reduce ground floor retail space in order to
provide additional, affordable apartment units.
Based on feedback received at that meeting, the Developer would like to proceed with the development of
plans and further discussion of potential HRA assistance through creation of a Tax Increment Financing
(TI F) District. The attached Preliminary Development Agreement (Agreement) provides for the
support and cooperation of the H RA as the Developer works to develop a feasible project for the
site. The Agreement provides several benchmarks that must be met, including submitting a financial
proforma, applying for a sketch plan review, and contracting for a blight study of the existing
buildings, or the HRA may terminate the Agreement. The Agreement requires that a Development
Agreement be negotiated by October 20, 2020.
RECOMMENDED ACTION:
By motion:
1. Approve the Preliminary Development Agreement between the Housing and Redevelopment
Authority and PLH & Associates - Construction Services, LLC for the development of property
at 101 - 66th Street East ; and
2. Authorize execution of the Agreement by the Housing and Redevelopment Authority Chair and
Executive Director.
BASIS OF RECOMMENDATION:
A. HISTORICAL CONTEXT
• The Emi mixed use project was approved with 31 market -rate apartments and 6,000
square feet of first floor commercial space in 2018.
• One year extension of land use approvals granted in June 2019, additional six month
extension granted in May 2020.
B. POLICIES (resolutions, ordinances, regulations, statutes. etch
• The property is zoned and guided for Mixed Use and located along a major corridor of investment
for the City (66th Street).
• The City's Comprehensive Plan and Housing Visioning statement encourage the development of a
full range of housing choices.
• The City's Inclusionary Housing Policy requires the inclusion of at least 20% of units affordable at
60% of the Area Median Income for all projects receiving city financial assistance.
• Changes that would increase the number of units in the project by more than five percent (1 unit
in this case), will require a Major Amendment to the approved Planned Unit Development.
C. CRITICALTIMING ISSUES:
• The following benchmarks have been established to ensure that progress is made toward land use
approvals and approval of a Development Agreement:
• Submit for Sketch Plan Review by July 27, 2020
• Revised proforma by July 27, 2020
• Development Agreement approved by October 20, 2020
D. FINANCIAL IMPACT:
The Preliminary Development Agreement provides for the reimbursement of all out-of-pocket
administrative costs, including legal and financial consultant fees and nominal staff time.
Additional financial considerations, including the issuance of any Tax Increment Financing, would
be considered as part of the Development Agreement.
E. LEGAL CONSIDERATION:
• The attached Agreement was prepared by the HRA Attorney.
ALTERNATIVE RECOMMENDATION(S)-
• Do not approve the Agreement.
• Approve the Agreement with modifications.
PRINCIPAL PARTIES EXPECTED AT MEETING:
Paul Lynch, PLH & Associates -Construction Services, LLC
ATTACHMENTS:
Description
❑ Resolution
Type
Resolution Letter
❑ Preliminary Development Agreement Contract/Agreement
HOUSING AND REDEVELOPMENT AUTHORITY
IN AND FOR THE CITY OF RICHFIELD, MINNESOTA
RESOLUTION NO.
RESOLUTION APPROVING PRELIMINARY DEVELOPMENT AGREEMENT
WITH PLH & ASSOCIATES — CONSTRUCTION SERVICES, LLC
WHEREAS, PLH & Associates — Construction Services, LLC, a Minnesota limited liability
company, or one of its wholly owned affiliates (the "Developer"), has proposed the redevelopment of
certain property that it owns located at 66t1i Street and I't Avenue in Richfield, Minnesota (the
"Development Property"), for the purpose of constructing approximately 30 to 39 housing units and
approximately 1,800 square feet of retail space (the "Project"); and
WHEREAS, the Developer and the Housing and Redevelopment Authority in and for the City of
Richfield, Minnesota (the "HRA"), have been engaged in informal discussion regarding the Project and
the proposed creation of a redevelopment tax increment financing district and plan including the
Development Property; and
WHEREAS, the Board of the Commissioners of the HRA (the "HRA Board") has been presented
with a Preliminary Development Agreement (the "Preliminary Development Agreement") proposed to be
entered into between the HRA and the Developer, which sets forth the Developer's intentions and the
conditions under which the Developer will undertake the Project; and
WHEREAS, the HRA Board has reviewed the Preliminary Development Agreement and finds that
the execution thereof by the HRA and performance of the HRA's obligations thereunder are in the best
interest of the City of Richfield, Minnesota, and its residents; and
NOW, THEREFORE, BE IT RESOLVED, by the Board of Commissioners of the Housing and
Redevelopment Authority in and for the City of Richfield, Minnesota as follows:
1. The Preliminary Development Agreement presented to the HRA and on file with the
Executive Director is hereby in all respects approved, subject to modifications that do not alter the substance
of the transaction and that is approved by the Chair and Executive Director; provided that execution of such
document by such officials shall be conclusive evidence of approval.
2. The Chair and Executive Director are hereby authorized to execute the Preliminary
Development Agreement on behalf of the HRA and to carry out on behalf of the HRA the HRH's obligations
thereunder.
Adopted by the Housing and Redevelopment Authority in and for the City of Richfield,
Minnesota this 20t' day of July, 2020.
Mary B. Supple, Chair
ATTEST:
Maria Regan Gonzalez, Secretary
PRELIMINARY DEVELOPMENT AGREEMENT
THIS PRELIMINARY DEVELOPMENT AGREEMENT (the "Agreement") is made and
entered into this 20' day of July, 2020, by and between the Housing and Redevelopment Authority in and
for the City of Richfield, Minnesota, a Minnesota public body corporate and politic (the "HRA"), and
PLH & Associates — Construction Services, LLC, a Minnesota limited liability company, or one of its
wholly owned affiliates (the "Developer").
RECITALS:
First: The Developer and the HRA have been engaged in informal discussions regarding the
development of certain property located at 661}i Street and 1 st Avenue in Richfield, Minnesota (the
"City"), that the Developer owns, which is legally described in EXHIBIT A attached hereto (the
"Development Property");
Second: The Developer is proposing to redevelop the Development Property and construct
approximately 30 to 39 housing units and approximately 1,800 square feet of retail space (the
"Project");
Third: In order to assist the Developer with the redevelopment of the Development Property, the
HRA is considering the establishment of a redevelopment tax increment financing district that
includes the Development Property;
Fourth: Based on initial reviews of the proposal, it appears that the Project is potentially feasible;
however, further review is needed;
Fifth: The parties wish to cooperate in further analyzing the potential and feasibility of the
Project and are willing to proceed with such analysis as described in this Agreement;
Sixth: The parties acknowledge that the Developer will expend substantial time and effort, and
incur substantial expense in pursuing the Project;
Seventh: The Developer is willing to undertake the activities described in this Agreement only
with the reasonable assurance from the HRA that it will support and cooperate with the
Developer in its efforts;
Eighth: The HRA and the Developer have executed this Agreement to document their
understanding with respect to the proposed Project.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and mutual obligations of the parties
contained herein, each of them does hereby represent, covenant and agree with the other as follows:
1. Statement of Intent.
It is the intention of the parties that during the term of this Agreement the following activities will
take place:
(a) Plan Review and Refinement. The Developer will complete and provide a revised
general development plan, including parking layout and design, to the HRA for review
and comment. This submission shall be made on or before July 27, 2020 as an
Application for Sketch Plan Review. This Review involves a staff review of the general
development plan by HRA staff. Following the Sketch Plan Review, the Developer will
undertake any additional studies or refinements to the general development plan for the
Project that are necessary to determine that the plan (i) complies with the City's land use
requirements; and (ii) provides sufficient detail to permit the reviews described in
paragraph (d) below. Upon completion of the staff -level Sketch Plan Review, either
party may request that the general development plan be brought before a work session of
the City Council of the City (the "City Council") and/or Board of Commissioners (the
"Board") of the HRA.
(b) Financial Feasibility. The Developer will provide to the HRA a financial feasibility
analysis of the Project, including a detailed sources and uses of all funding and all
expenditures expected for the construction of the Project and a Project pro forma on or
before July 27, 2020. The financial feasibility analysis should specify what financing
will be obtained for the Project and from what sources and the amount of equity to be
contributed to the Project.
(c) Blight Study. The HRA will engage LHB to provide a blight study of the Development
Property to determine whether the Development Property would qualify for a
redevelopment tax increment district. The Developer shall pay the costs of such study.
(d) HRA Analysis of Project. Following the receipt from the Developer of the information
set forth in Section 1(a) and (b), the HRA's fiscal consultant will conduct a financial
analysis of the Developer and the Project. The purpose of the HRA's analysis is to
determine the Developer's ability to finance the proposed Project. The analysis will
consider such factors as the Developer's capability to arrange for financing, the
anticipated level of assistance available to the Project from the HRA or other sources,
and the Developer's ability to provide equity to the Project.
(e) Contract Negotiation. On or before October 20, 2020, the parties will attempt in good
faith to negotiate the terms of a contract for private development (the "Contract") which
will provide the nature and timing of the private improvements to be constructed, the
form, the amount, and conditions of any economic assistance to be provided by the HRA
for the Project. The Contract will contain such additional terms as either party believes
are necessary for the transaction.
(f) Developer's Compliance with City's Inclusionary Housing Policy Pursuant to the City's
Inclusionary Housing policy, the Developer will be required to contribute fifteen percent
(15%) of the total tax increment financing derived from the tax increment district to the
HRA's Housing and Redevelopment Fund, unless at least twenty percent (20%) of all
housing units in the Project are available at rates of sixty percent (60%) of AMI or less.
The Developer expects that at least twenty percent (20%) of the housing units of the
Project will be available at sixty percent (60%) of AMI or less.
2
2. Undertaking by Developer.
During the term of this Agreement, the Developer will undertake all of the activities necessary,
in the Developer's discretion, to accomplish the activities described in Section 1 hereof required
to be performed by the Developer.
HRA's Undertaking and Agreement.
The HRA agrees to cooperate with the Developer in the Developer's undertakings, agrees to
utilize its best efforts, subject to the Developer's performance, to accomplish the activities
described in Section 1 hereof, which includes an analysis of the financial feasibility of the Project
and the nature of, area to be included, and the financial implications of any tax increment district
which might be established.
4. Term.
This Agreement is effective from the date hereof through December 31, 2020, unless extended
with approval of the Board, provided, in the event either party, after consultation with the other
party, determines in good faith that the other party is not diligently pursuing the Project or its
obligations hereunder; or the Developer determines, in good faith, that the Project is not feasible,
such determining party may terminate this Agreement upon thirty (30) days written notice to the
other. The HRA may also terminate this Agreement for failure of the Developer to provide
additional funds pursuant to Section 5 hereof. The parties each waive any claim or cause of
action that they may have against the other party based upon the termination of this Agreement
by such other party. The parties may, by mutual written agreement, extend this Agreement for
such further periods as determined to be appropriate from time to time.
Administrative Costs of HRA.
The Developer agrees and understands that it is responsible for and will pay to the HRA $2,000 in
HRA staff costs and all out-of-pocket costs incurred by the HRA (including without limitation
reasonable attorney and fiscal consultant fees) in the negotiation and preparation of this
Agreement and other documents and agreements in connection with the activities and the Project
contemplated hereunder (collectively, the "Administrative Costs"). Administrative Costs shall be
evidenced by invoices, statements or other reasonable written evidence of the costs incurred by
the HRA.
In addition to the $2,000 deposit for described above, upon execution of this Agreement, the
Developer will deliver a deposit to the HRA in the amount of $5,000 (the "Deposit") to pay
Administrative Costs. At any time the Deposit drops below $1,000, the Developer shall
replenish the deposit to the full $5,000 within thirty (30) days after receipt of written notice
thereof from the HRA. The HRA shall provide invoices to the Developer for all payments
deducted from the Deposit. At any time the Deposit is insufficient to pay invoices related to the
Project, the HRA will ask for additional Deposits from the Developer. If the additional Deposit
is not made within thirty (30) days following the date of such request, the HRA may elect to
either suspend its performance under this Agreement or terminate this Agreement. Such
suspension or termination will be effective on the date it is given in writing, or on such later date
specified in the notification. Any unexpended or unencumbered portion of the Deposit shall be
returned to the Developer upon the expiration or termination of this Agreement.
In addition, the Developer shall pay the fees related to the blight study prepared by LHB within
ten (10) days of the HRA providing the invoice to the Developer.
6. Termination of Agreement.
This Agreement may be terminated upon five (5) days written notice by a party to the other party
if.
(a) in the respective good faith judgment of any party, an impasse has been reached in
the negotiation or implementation of any material term or the completion or execution of any
material condition of this Agreement or the Contract; or
(b) a party fails to perform any of its obligations under this Agreement.
Miscellaneous.
(a) This Agreement may be assigned to an affiliate of the Developer at a later date; provided,
however, that the Developer or its principals will be the owner of the entity that will
develop the Project.
(b) This Agreement constitutes the entire agreement between the parties relative to the
proposed Project. Unless specifically described herein, no obligation shall be inferred or
construed.
(c) Redevelopment of the Development Property will be in accordance with the Contract or
other agreements which the parties shall, in good faith, attempt to negotiate during the
term of this Agreement.
(d) The Developer understands that further and separate action, for which no obligation is
created hereunder, will be required before the HRA or the Developer is obligated to take
various actions with respect to the Project. Those actions may include, without
limitation:
1) Creation of and approval of a tax increment district by the City Council and the
Board;
2) Zoning and subdivision approvals to the extent any are required;
3) Construction of public improvements to serve the Project; and
4) Negotiation of and approval of the Contract by the Board.
(e) The Developer further understands that many of the actions which the HRA or the City
may be called upon to take require the reasonable discretion and in some instances the
legislative judgment of the HRA or the City, such actions may be made only following
established procedures; and HRA may not, by agreement, agree in advance to any
specific decision in such matters.
4
(f) Notice or demand or other communication between or among the Parties shall be
sufficiently given if sent by certified or registered mail, postage prepaid, return receipt
requested or delivered personally:
PLH & Associates — Construction Services, LLC
P.O. Box 390157
Minneapolis, MN 55439
Attn:
Richfield Housing and Redevelopment Authority
6700 Portland Avenue South
Richfield, MN 55422
Attn: John Stark, Executive Director
(The remainder of this page is intentionally left blank.)
E
IN WITNESS WHEREOF, the parties have executed this Agreement effective the date and year first
above written.
HOUSING AND REDEVELOPMENT
AUTHORITY IN AND FOR THE CITY OF
RICHFIELD, MINNESOTA
51
Mary B. Supple
Its: Chair
John Stark
Its: Executive Director
PLH & ASSOCIATES — CONSTRUCTION
SERVICES, LLC
By:
Name:
Its:
0
EXHIBIT A
LEGAL DESCRIPTION OF DEVELOPMENT PROPERTY
[PID 2702824420134]
RC125-378 (JAE)
660025v4
[Insert legal description of Development Property]
A-1
AGENDA SECTION: OTHER BUSINESS
AGENDA ITEM # 5.
STAFF REPORT NO. 25
HOUSING AND REDEVELOPMENT AUTHORITY
MEETING
7/20/2020
REPORT PREPARED BY: Julie Urban, Housing Manager
OTHER DEPARTMENT REVIEW: N/A
EXECUTIVE DIRECTOR REVIEW: John Stark, Executive Director
7/10/2020
ITEM FOR COUNCIL CONSIDERATION:
Consider the adoption of a resolution approving revisions to the Inclusionary Affordable Housing
Policy.
EXECUTIVE SUMMARY:
In 2018, the City adopted an Inclusionary Affordable Housing Policy (Policy) requiring that all new
development receiving financial assistance from the City include affordable housing. Specifically, the Policy
requires all housing developers receiving public subsidy to either:
• Make at least 20% of all housing units be affordable to either renters earning less than 60% of the Area
Median Income (AMI) or owners earning less than 115% of the AMI, or
• Pledge 15% of the net -present -value of the subsidy they receive to the Richfield Housing and
Redevelopment Fund, and
• Provide 90-day notice of sale, and
• Agree to not discriminate against renters receiving rental subsidies (including the Section 8 Housing
Choice program).
At a work session on August 16, 2019, policymakers reviewed several potential revisions to the Policy and
directed staff to do further research on the following potential changes:
1. Encourage units with deeper affordability;
2. Encourage accessible and affordable units;
3. Apply the policy to all public land sales regardless of whether or not it constitutes "Financial
Assistance;"
4. Consider the cost of requiring that affordable units be spread across a mix of bedroom sizes, and
5. Consider the impact converting the policy to an ordinance, thereby requiring affordability in all
developments, would have on new development.
A follow-up work session was scheduled for March 16, 2020, which was then cancelled due to the COVI D-
19 pandemic which caused limits on public meetings. While there continues to be a significant need for
affordable housing, the economic uncertainty caused by the pandemic has resulted in a market in which
developers are using more discretion about the financial viability of projects and, thus, potentially makes an
Inclusionary Housing Policy/Ordinance a less useful tool.
Given that consideration, staff recommends the following:
1. Update the Inclusionary Housing policy to encourage deeper affordability:
Affordability Level % of Units
RENTAL
60% of Area Median Income (AMI)
20%
50% of AMI
15%
30% of AMI
10%1
OWNER -OCCUPIED
115% of AMI
20%
100% of AMI
15%
80% of AMI
10%
A mix of affordability would also be allowed.
Note: The City's primary local source for subsidizing development is Tax Increment Financing (TI F). In the
case of a Redevelopment TI F District, the lower percentage of more deeply affordable units would be an
option; however, Housing TI F Districts do not allow for fewer affordable units if deeper affordability is
provided, so we're unlikely to see deeper affordability in Housing TI F Districts without additional outside
resources. Staff was working with other cities on a change to the current law to allow greater flexibility in
using TI F for more deeply affordable units; however, no progress was made this past Legislative session.
2. Require that one percent of all new units constructed be fully accessible. Because TIF is the City's
primary source for subsidizing affordable units, and T IF does not allow for fewer affordable units if
accessible units are provided, a minimal requirement of one percent is recommended. An estimated
cost to provide a fully accessible unit is $4,400-$5,400 and staff believes that amount can be
absorbed by most projects.
3. The Policy would apply to all property purchased from the City, regardless of the sale price.
4. A review of the costs associated with providing affordable units with a greater number of bedrooms
indicates that current projects would be unable to do so without additional funding (e.g., $60,000-$70,000 per
unit). Because of the tight economics of most Richfield projects and the current economic uncertainty, staff
recommends that we not move forward on this provision at this time.
5. At the August work session, policymakers also discussed the possibility of applying the
Inclusionary Housing Policy to all new development but wanted a better understanding of how that
might impact development. Since that time, staff has spoken with the City's financial consultant and
developers of recent Richfield projects, analyzed pro formas and rents per square foot, estimated
the cost of providing affordable units at various sizes and income levels, and reviewed other cities'
ordinances and markets. The conclusion of that analysis was that Richfield's rental housing market
is not strong enough and the financial resources not great enough to support a requirement of
affordability for all developments without curtailing development in the community. Given that
conclusion and the added economic uncertainty caused by the pandemic, staff does not recommend
converting the Policy to an ordinance at this time.
An additional change recommended by staff is to increase the number of units required in a project,
before the Policy is applicable, from five to twenty. Since the August work session, staff has gained
a deeper understanding of what is involved in income -qualifying tenants and the monitoring
required. Given the significant staff and financial resources needed to do this work, it would be
onerous and inefficient to require it of small projects and would serve as a deterrent to small infill
projects.
RECOMMENDED ACTION:
By motion: Adopt a resolution approving revisions to the Inclusionary Affordable Housing Policy.
BASIS OF RECOMMENDATION:
A. HISTORICAL CONTEXT
• I n 2013 the Richfield City Council and HRA adopted a Housing Policy Vision Statement that
supports a "full range and balance of housing types that match the choices of its diverse
residents."
• Since April of 2017, the HRA has been considering the need to preserve the City's Naturally
Occurring Affordable Housing (NOAH) and to ensure the construction of a mix of housing
affordability.
• In October 2017 the City Council and Housing and Redevelopment Authority (HRA) established
goals and a work plan for strengthening the City's apartment communities. The proposed Policy
supports these goals and is one step in the work plan.
• In May 2018, the City Council and HRA directed staff to move forward on drafting a Policy.
• On July 16, 2018, the HRA reviewed a draft Policy.
• The City Council adopted the proposed Policy in concept at their September 25 meeting and will
vote to affirm this action at their October 23 meeting.
B. POLICIES (resolutions, ordinances, regulations, statutes, etch
The Policy furthers the Comprehensive Plan goal to provide a full range of housing
choices that meet residents' needs at every stage of their lives, and ensure a healthy
balance of housing types that meets the needs of a diverse population with diverse
needs.
The Comprehensive Plan identifies the need in the community for an additional 66 units of
housing affordable at 30% of the AMI. The proposed Policy change encourages the development
of these more deeply affordable units.
The Policy is consistent with the City's Housing Visioning Statement that calls for a full range and
balance of housing types and its Affordable Housing Policy Statement, which encourages
developments to contain a mix of market -rate and affordable units, with a higher proportion of
market -rate units.
C. CRITICALTIMING ISSUES:
• The Policy revisions would not apply to projects currently in process, although staff has been
encouraging both deeper affordability and accessible units with some of the projects in process.
D. FINANCIAL IMPACT:
Providing affordable housing requires a subsidy, and the deeper the affordability, the greater the
amount of the subsidy. To balance that greater cost, the proposed Policy revisions require a
lesser percentage of units the greater the affordability.
Staff is not recommending the Policy be broadened to apply to all new development because
market -rate rents in Richfield are not currently high enough for projects to absorb the cost of
providing affordable units without government subsidy, and the available subsidy is not enough to
realize all developments. If projects are not financially feasible, they will not occur, and the City
will lose the opportunity to see redevelopment occur and help us realize other City goals (e.g.,
diversified tax base, range of housing choices, removal of blighted buildings). In addition,
increasing the supply of market -rate rental housing can improve the affordability of existing rental
housing and also reduce the pressure to convert Naturally Occurring Affordable Housing (NOAH)
to more upscale housing.
E. LEGAL CONSIDERATION:
• The City has the authority to create an I nclusionary Affordable Housing Policy that applies to the
use of its financial resources.
ALTERNATIVE RECOMMENDATION .
• The HRA may choose to:
approve the revisions with changes;
wait to approve the revisions until such time that an ordinance applying to all new development
can be proposed, or
o not approve the revisions.
PRINCIPAL PARTIES EXPECTED AT MEETING:
N/A
ATTACHMENTS:
Description Type
❑ Resolution Resolution Letter
❑ Proposed Policy Revisions Backup Material
RESOLUTION NO.
A RESOLUTION APPROVING THE ADOPTION OF
AMENDMENTS TO THE INCLUSIONARY AFFORDABLE HOUSING POLICY
WHEREAS, the Richfield Housing and Redevelopment Authority (HRA) adopted an
Inclusionary Housing Policy in 2018 that furthers the development of affordable housing within
in the City; and
WHEREAS, the HRA wishes to further support development of high quality housing in
the community for households of various income levels, ages and sizes in order to help the City
meet its goals of preserving and promoting economically diverse housing options in the City; and
WHEREAS, the HRA wants to ensure that both the public and private sectors continue
to create affordable housing opportunities in the City; and
WHEREAS, the HRA believes that adoption of a policy setting criteria and incentives
for developers to build new affordable units will assist the City in achieving its inclusionary
housing goals; and
WHEREAS, the HRA regularly reviews its policies and periodically makes changes to
ensure consistency with current City policies and market conditions.
NOW, THEREFORE, BE IT RESOLVED by the Housing and Redevelopment
Authority in, and of, the City of Richfield, Minnesota, that:
1. The Inclusionary Affordable Housing Policy as revised is hereby approved and
adopted.
2. HRA staff is authorized to carry out the policy effective immediately.
Adopted by the Housing and Redevelopment Authority in, and of, the City of Richfield,
Minnesota this 20th day of July, 2020.
Mary B. Supple, Chair
ATTEST:
Maria Regan Gonzalez, Secretary
City of Richfield
Richfield Housing and Redevelopment Authority
Richfield Economic Development Authority
Inclusionary Affordable Housing Policy
The City of Richfield, Richfield Housing and Redevelopment Authority, and Richfield Economic
Development Authority are committed to building a community that is welcoming and affordable to
a diverse population of individuals and families at all stages of their lives. As such, we hereby
establish the following policy for the inclusion of affordable housing in development proposals.
Requirements
1. Housing Development Projects containing the construction of at least -520 new units whieh
that receive Financial Assistance or that purchase property from the HRA, EDA or City
a. must contain at least a oercentaRe of units that are affordable at one or more of the
following levels over a period of ten years or the duration of the subsidy (whichever is
longer):
Affordability Level
% of Units
RENTAL
60% of Area Median Income (AMI)
20%
50% of AMI
10%
30% of AMI
5%
OWNER -OCCUPIED
115% of AMI
20%
100% of AMI
10%
80% of AMI
5%
ii. A combination of affordability levels may be considered (e.g., 10% at 60% AMI
and 5% at 30% AMI);
iii. must contain at least 1% of all rental units that are fully -accessible;
iv. At least 20% of the grand total of housing units in a mixed rental/ownership
development must be affordable at the affordability levels established in 1.a)i,
and
a. nay St A*aiA -;# I.,-,-S+ 20%a49F,dable units
k At least 0
0
duration of the subsidy (whieheyeF is lengeF)j
H. At least 20
%
heusing be
initially
te,
ef ewneF eccupied
units Must Made
-;;ffe.rdlable and
0
IncPntivPt
Exceptions
or;
b. Must contribute to the Richfield Housing and Redevelopment Fund
i. 15% of the "net present value" of Tax Increment generated by the project (or
15% of the net present value of other types of assistance) must be pledged to
the Richfield Housing and Redevelopment Fund over a period of ten years or the
duration of the subsidy (whichever is longer), or;
ii. A pro-rata combination of the above (i.e. 10% affordable units and a 7.5%
contribution) may be considered, and;
c. Must agree to provide 90 days' advance notice to the public body providing funding of
any sale of the property,
and;
d. Must agree to not discriminate against households utilizing Housing Choice Vouchers
(Section 8) or other forms of rental assistance.
2. Non -Housing Development Projects that receive Financial Assistance from HRA, EDA or City
and which result in the loss of affordable housing:
b. Affordable housing units eliminated by the project must be replaced on -site or at
another location in Richfield by the developer at similar affordability levels, or;
c. 5-15% (depending on the magnitude of the loss of affordable housing) of the "net
present value" of the Financial Assistance provided must be pledged to the Richfield
Housing and Redevelopment Fund over a period of ten years or the duration of the
subsidy (whichever is longer).
3. Housing Development Projects which include affordable units (as outlined in 1a above) are
eligible to apply to the City for the following considerations regardless of whether or not
they receive Public Financial Assistance:
i. Building Permit Fee Reductions (10% reduction for rehabilitation and/or 5%
reduction for new construction);
ii. 4d Property Tax Reduction (rental projects);
iii. Consideration of code flexibility (e.g., smaller setbacks, excessive impervious
surface, etc.) in planned unit developments;
iv. A housing unit density bonus of 5-15% (e.g., a project in an area that allows 8-24
units/acre could add an additional 1-4 units/acre and remain in compliance).
4. With regards to "scattered -site single family housing development," at least 20% of the units
newly constructed or rehabilitated and converted to long-term affordability in any three-
year period must meet the proscribed affordability requirements.
5. The City Council or Board of Commissioners of the Housing and Redevelopment Authority or
Economic Development Authority may vary the application of this policy as circumstances
warrant with the adoption of findings of the reasons for doing so.
Adopted as revised:
This day of , 2020, by the Richfield City Council.
Mayor
City Manager
This _ day of , 2020, by the Richfield Housing and Redevelopment
Authority.
Chair
This _ day of
Authority.
President
Secretary
2020, by the Richfield Economic Development
Secretary
AGENDA SECTION: OTHER BUSINESS
AGENDA ITEM # 6.
STAFF REPORT NO. 26
HOUSING AND REDEVELOPMENT AUTHORITY
MEETING
7/20/2020
REPORT PREPARED BY: Melissa Poehlman, Asst. Community Development Director
OTHER DEPARTMENT REVIEW:
EXECUTIVE DIRECTOR REVIEW: John Stark, Executive Director
7/16/2020
ITEM FOR COUNCIL CONSIDERATION:
Consider a request to purchase the property at 6701 17th Avenue South for $412,000.
EXECUTIVE SUMMARY:
On June 25, 2020, staff was contacted by Attorney Craig Greenberg of Huffman, Usem, Crawford,
Greenberg & Smith, P.A. who indicated that he had been hired by the owner of property located at 6701 17th
Avenue South (Property) to request that the Housing and Redevelopment Authority (HRA) consider a
proposal to purchase the Property. On behalf of the Property owner, Mr. Greenberg has submitted a proposal
for the HRA to purchase the Property for $412,000 ($350,000 for the purchase of the home and $62,000 in
relocation benefits) and all closing costs. HRA staff has consulted with the HRA Attorney and we recommend
that the HRA reject this proposal.
On October 24, 2017, the HRA entered into a contract for private development with Chamberlain Apartments
LLC (Developer) related to the construction of a new multi -family development consisting of 283 new
apartments, the rehabilitation of 33 existing apartments, and the construction of a new public road
(Development Project). The Property is located on the corner of 17th Avenue and a remaining half -block of
67th Street East, immediately adjacent to the Development Project area. As part of the Development Project,
the Developer attempted to purchase the Property; however, the parties were unable to come to an agreement
and the project moved forward without including the Property in the Development Project.
In 2018, the owner of the Property expressed an interest in selling the Property to the HRA. HRA staff met
with the owner, hired a relocation services company to help her find a home, and ultimately brought before
the HRA a proposal to purchase the home for $310,000. This offer was based on valuations by the City's
appraiser ($248,000) and the land owner's appraiser ($281,000), plus "relocation costs" as defined by the
Federal Uniform Relocation Act; despite the fact that this was a voluntary sale and the HRA would not be
required to pay any relocation benefits. On November 19, 2018, the HRA adopted a resolution approving the
terms of a Purchase Agreement for 6701 17th Avenue South. Six weeks later, on December 31, 2018, the
HRA's offer to purchase the home expired.
City and HRA staff continued to meet with the owner after the expiration of the Purchase Agreement, and in
July 2019 hired a mediator to help the parties negotiate. On August 21, 2019, the mediator informed both
parties that she was terminating the mediation process, as both parties were at an impasse. On August 29,
2019, in response to inquiries, HRA Executive Director Stark sent the owner an email stating that there was
no pending offer for either the City or the HRA to purchase the Property and that neither entity was required
to do so.
RECOMMENDED ACTION:
By motion: Reject an offer to purchase property at 6701 17th Avenue South.
BASIS OF RECOMMENDATION:
A. HISTORICAL CONTEXT
See Executive Summary & attached Proposal from Owner's Attorney.
B. POLICIES (resolutions, ordinances, regulations, statutes, etch
• The Minnesota Uniform Relocation Act requires payment of relocation benefits if an occupant of a
dwelling is displaced from that dwelling. A displaced person is a person who moves as a direct
result of a written notice of an intent to acquire or the acquisition of real property in whole or part.
• It is the opinion of the HRA Attorney that the owner of 6701 17th Avenue South is not a displaced
person and the HRA has no obligation to purchase the Property or pay any relocation benefits.
C. CRITICALTIMING ISSUES:
• The HRA has been requested to provide the owner of 6701 17th Avenue South with a Relocation
Letter or equivalent stating that the owner of the Property will qualify to buy a home with a value up
to $350,000 (estimate of current home value/replacement cost) on or before July 21, 2020.
D. FINANCIAL IMPACT:
• Funds for the purchase of the Property were not allocated in either the 2020 HRA Budget or 2021
Proposed HRA Budget.
• Purchase of the Property is not an identified priority for the HRA.
E. LEGAL CONSIDERATION:
• See attached legal opinion
ALTERNATIVE RECOMMENDATION (Sl:
• None
PRINCIPAL PARTIES EXPECTED AT MEETING:
Craig Greenberg, Attorney for Owner of 6701 17th Ave S
ATTACHMENTS:
Description Type
❑ Proposal from Owner's Attorney Exhibit
❑ Legal Opinion Exhibit
Communication from Attorney regarding 6701 17" Avenue South
June 25, 2020 Communication
Ms. Rodriguez:
Please be advised that my law firm has been retained by Jeanne Streitz with regard to her ongoing
dispute with the Richfield Housing and Redevelopment Authority ("HRA"). As you know, Ms. Streitz's
property is located at 6701 17`h Ave South, Richfield, Minnesota (the "Property"). It is my hope that our
assistance in this matter will result in acceptable settlement. Please direct all communication going
forward to my attention.
I have reviewed some of Ms. Streitz's extensive file on this matter and I believe that time is right
to get this matter resolved in the next 30 days. Before we proceed any further, I would like to have a
phone call with you or another appropriate representative to discuss prospects and procedures to move
this matter toward a final resolution. I see that at one point a mediation took place and perhaps that might
be a successful tool with my involvement. It is our preference to resolve this matter amicably without the
need to commence legal proceedings.
Ms. Streitz is now actively seeking a replacement home and timing will be critical. As part of any
resolution, we will need to be able to show that she is a viable cash buyer.
Please let me know when it would be a good time to have a brief phone call. I look forward to
hearing from you. Thank you.
Very Truly Yours,
Huffinan, Usem, Crawford, Greenberg & Smith, P.A.
Craig D. Greenberg
Craig D. Greenberg
5101 Highway 55
Suite 1000
Golden Valley, MN 55422
763-545-2720 (p)
763-545-2350 (f)
July 13, 2020 Communication
Julie and Mary:
Thank you for the phone call last week. I have talked with my client and have formulated a proposal as
you requested. Ms. Streitz proposes the following:
1. On or before July 21, 2020, the HRA/City will provide Ms. Streitz with a Relocation Letter or
equivalent, which will allow Ms. Streitz to search for and make a qualified offer on new housing.
She will then proceed in good faith to find new housing within 60 days. The letter will indicate
that she would qualify up to $350,000 (estimate of current home value/replacement cost).
0= 1 "" RC125-348-663826.v1 RC125-348-663826.v1 RC125-348-663826.v1
2. During the next 20 days, the parties will exchange written offers in an attempt to reach a global
settlement and enter into a purchase agreement. That settlement would also include an additional
relocation payment in an amount not less than $62,000. The parties may, but shall not be required
to exchange new appraisals.
3. If a purchase agreement is not executed within 30 days from the date hereof, the parties agree to
mediate the dispute before a mutually acceptable mediator. The mediation would be scheduled as
soon as possible after the expiration of the 30 day period.
My client would prefer to resolve this matter without the need for litigation. I hope that my involvement
will move this matter towards an amicable resolution. Please contact me once you have reviewed the
foregoing. Thank you.
Very Truly Yours,
Huffinan, Usem, Crawford, Greenberg & Smith, P.A.
Craig D. Greenberg
Craig D. Greenberg
5101 Highway 55
Suite 1000
Golden Valley, MN 55422
763-545-2720 (p)
763-545-2350 (f)
July 15, 2020 Communication
FOR PURPOSES OF SETTLEMENT DISCUSIONS ONLY
Julie:
Thank you for your email. The $62,000 comes from the prior offer that was proposed in the 2018
Purchase Agreement. (See paragraph 313). We agree that the total would be $412,000. However,
the HRA would also pay all closing costs, including deed tax and recording costs. If this matter
is not resolved quickly, Seller will also seek reimbursement of her attorney's fees.
Please let me know if you have any other questions. We look forward to a substantive response
this week. Time is of the essence. Thank you.
Very Truly Yours,
Huffman, Usem, Crawford, Greenberg & Smith, P.A.
=,
Craig D. Greenberg
5101 Highway 55
0= 1 "" RC125-348-663826.v1 RC125-348-663826.v1 RC125-348-663826.v1
Suite 1000
Golden Valley, MN 55422
763-545-2720 (p)
763-545-2350 (f)
0= 1 "" RC125-348-663826.v1 RC125-348-663826.v1 RC125-348-663826.v1
C H A R T E R E D
Offices in
470 U.S. Bank Plaza
200 South Sixth Street
Minneapolis
Minneapolis, MN 55402
Saint Paul
(612) 337-9300 telephone
(612) 337-9310 fax
St. Cloud
www.keDnedy-graven.com
Affirmative Action, Equal Opportunity Employer
JULIE A. EDDINGTON
Attorney at Law
Direct Dial (612) 337-9213
Email: jeddington@kennedy-graven.com
September 4, 2019
Katie Rodriguez, City Manager
John Stark, HRA Executive Director
Melissa Poehlman, Assistant Community Development Director
Re: 6701 17th Avenue
Dear Katie, John, and Melissa,
You have asked for our opinion regarding Jeanne Eileen Streitz's assertion that the City of
Richfield (the "City") and/or the Housing and Redevelopment Authority in and for the City of Richfield
(the "HRA") is required to purchase her home and provide relocation benefits to her pursuant to Minn.
Stat. Sections 117.50 to 117.56 (the "Minnesota Uniform Relocation Act"), including but not limited to
the provision of `last resort housing' benefits. It is our opinion that Ms. Streitz is not eligible for
relocation benefits under the Minnesota Uniform Relocation Act and neither the City nor the HRA are
required to buy Ms. Streitz's property or pay her relocation benefits. Our legal reasoning for this
opinion is set forth below.
BACKGROUND
As you know, on October 24, 2017, the HRA entered into a contract for private development (the
"Contract") with Chamberlain Apartments LLC (the "Developer") pursuant to which the Developer
agreed to develop a multifamily housing development consisting of three buildings with approximately
283 apartment units, substantially rehabilitate three 11-unit apartment buildings, construction of
underground parking, and construct a public roadway (the "Project") in the City. The Project was
intended to be constructed on property owned by both the HRA and the Developer, and on additional land
to be purchased by the Developer after the Contract was executed.
In order to comply with the Minnesota Uniform Relocation Act, the HRA required the
Developer to pay relocation benefits for any additional property it purchased for the Project. Section 3.4
of the Contract required the following:
Section 3.4. Relocation. For each parcel of the Additional Property yet to be acquired by
the Developer (as described in EXHIBIT A), the Developer is responsible for complying
with Minn. Stat. Sections 117.50 to 117.56 (the "Minnesota Uniform Relocation Act")
and providing evidence of such compliance to the Authority. The Parties acknowledge
that no tenants will be relocated from the three buildings located on the Additional
Property to be purchased by Kraus Anderson (to be contributed to Developer). All
rehabilitation of the three buildings will be done with tenants remaining in their units.
Although the Developer approached the homeowner of 6701 1711' Avenue (Jeanne Eileen Streitz)
multiple times to purchase her property, the Developer was unable to obtain an executed purchase
agreement from Ms. Streitz. The Developer determined it was necessary to move forward with the
Project without purchasing Ms. Streitz's property.
The Developer attempted to purchase her property, but she was unwilling to execute a purchase
agreement. Ms. Streitz continued to contact HRA staff noting her unhappiness regarding the
development and construction of the Project. The HRA met with Ms. Streitz, hired a relocation services
company to help her find a home, and ultimately offered to purchase her home and voluntarily agreed to
provide relocation benefits. Ms. Streitz refused numerous reasonable offers to purchase her home
provided by the Developer and the HRA. Instead, Ms. Streitz repeatedly requested that the HRA build
her a new home since she believes there is no comparable replacement dwelling in the area. However,
the relocation services consultant found four comparable replacement dwellings for her in September
2018. In order to find a compromise, the City and HRA initiated a mediation between Ms. Streitz and
the City and HRA. Unfortunately, an agreement could not be reached due to Ms. Streitz's unwillingness
to either accept the HRA's offer or to make a formal counteroffer for the sale of her home. The
mediator eventually terminated the mediation process.
TIMELINE
Below is the timeline regarding the offers to purchase Ms. Streitz's property:
• On October 24, 2017, the Contract was executed by HRA and the Developer.
■ In July 2018, the HRA conveyed property to the Developer and the Developer commenced the
Project.
• On August 21, 2018, Evergreen Land Services Company (an independent relocation benefits
consultant) delivered an initial offer to purchase Ms. Streitz's home for $248,000. This letter
indicated that the offer was based on an independent appraisal by BCL Appraisals, Inc.
■ On September 5, 2018, Ms. Streitz submitted her own appraisal by Crawford Appraisal to
Evergreen Land Services, indicating an appraised value of $281,000 for her home.
• On September 6, 2018, Ms. Streitz was sent a letter from Evergreen Land Services Company
indicating that the HRA had offered to buy her home and was willing to pay relocation benefits.
• Over the course of the next several weeks, Evergreen Land Services provided close to a dozen
comparable homes to Ms. Stretiz for consideration.
■ On October 2, 2018, Melissa Poehlman sent an email to Ms. Streitz stating that a sale of her
property would be considered a "voluntary sale" and that provisions of the Minnesota Uniform
Relocation Act, including "last resort housing," would only apply if it were an involuntary sale.
■ On November 19, 2018, Evergreen Land Services Company sent another letter to Ms. Streitz
indicating that the purchase agreement provided to Ms. Streitz was the HRA's final offer for her
home and the offer would expire on December 31, 2018.
• On November 19, 2018, the Richfield Housing and Redevelopment Authority adopted a
Resolution approving the terms of a Purchase Agreement for a "global settlement" of $310,000.
This Agreement required Ms. Streitz to waive any claim to relocation benefits under the Uniform
Relocation Act and required Ms. Streitz's acceptance by December 31, 2018.
• On December 31, 2018, HRH's offer to purchase Ms. Streitz's property, as offered through
Evergreen Land Services, expired.
■ On December 31, 2018, HRH's "global offer" to purchase Ms. Streitz's property expired.
• On February 5, 2019, City and HRA staff and the HRA attorney met with Ms. Streitz and
reiterated that the HRA's offer to buy Ms. Streitz's property was a voluntary sale and the HRA
had no obligation to comply with the Minnesota Uniform Relocation Act.
• On March 1, 2019, the City Manager sent Ms. Streitz an email containing the following: "I want
to reiterate that the HRH's offer to purchase your home was, and continues to be, on a voluntary
basis. The HRA is not required to buy your home nor are you required to sell your home to the
HRA. As such, many provisions of the Uniform Relocation Act will not apply in this case (such
as a requirement to make a `payment of last resort' or facilitate the construction of a new
home... )"
• On July 18, 2019, City and HRA staff met with Ms. Streitz and mediator Aimee Gourlay, and
again stated that the HRH's offer to purchase Ms. Streitz's property would be on a voluntary
basis and would not trigger the requirement to comply with the Minnesota Uniform Relocation
Act.
• On August 21, 2019, mediator Aimee Gourlay informed both parties that she was terminating the
mediation process, as both parties were at an impasse.
• On August 29, 2019, HRA Executive Director John Stark sent you an email stating, "there is no
pending offer for the City or HRA to buy your home and our attorneys have continued to
conclude that neither the City nor the HRA have any legal responsibility to buy your home."
LEGAL ANALYSIS AND OPINION
The Minnesota Uniform Relocation Act requires the payment of relocation benefits if an
occupant of a dwelling is displaced from that dwelling. A displaced person is a person who moves from
real property or moves her personal property from real property as a direct result of a written notice of
intent to acquire or the acquisition of real property in whole or in part.
It is our opinion that if the Developer had purchased Ms. Streitz's property for the Project, Ms.
Streitz would have been entitled to relocation benefits if she had moved from her property. However,
once the Developer determined it could not reach an agreement with Ms. Streitz to buy her property and
determined to construct the Project without utilizing her property, Ms. Streitz was no longer eligible for
relocation benefits. The HRH's offer to acquire Ms. Streitz's property, including a voluntary payment of
relocation benefits, expired on December 31, 2018.
It is our further opinion that Ms. Streitz is not a displaced person as defined under the Minnesota
Uniform Relocation Act. Because she is not a displaced person, neither the City nor the HRA is required
to buy Ms. Streitz's property or pay her relocation benefits.
Please contact me with any questions.
Sincerely,
tlie Eddington