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03-08-10 agenda packetCITY OF RICHFIELD, MINNESOTA MONDAY, MARCH 8, 2010 SPECIAL HOUSING AND REDEVELOPMENT AUTHORITY MEETING RICHFIELD CITY HALL COUNCIL CHAMBERS 6700 PORTLAND AVENUE 7:00 P.M. AGENDA Call to order - Roll call 1. HRA approval of agenda 2. Consideration of revised Richfield Rediscovered contract for private redevelopment between HRA and Charles Zawislak for redevelopment of 6320 Morgan Avenue under Richfield Rediscovered Program Staff Report No. 12 Notes: 3. Consideration of resolution authorizing purchase of real property at 1407 East 66th Street utilizing proceeds from Bonds of 1996, pending finding of consistency from Planning Commission Staff Report No. 13 Notes: 4. Consideration of resolution affirming HRA's support of housing development concept at 6401 Lyndale Avenue (Woodlake Plaza) and expressing willingness to further examine public financing for project Staff Report No. 14 Notes: 5. Consideration of proposed preliminary agreement with Ron Clark Construction and Design for exploring feasibility of redevelopment of 3.5 acre parcel occupied by former Richfield Public Works Maintenance Facility, vacant HRA-owned mortuary building and other adjacent properties and right-of--entry agreement for use of 211 76th Street West and 7608 Pillsbury Avenue by Ron Clark Construction and Design Company Staff Report No. 15 Notes: Adjournment r 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. AGENDA ITEM # 2 REPORT # 12 J STAFF REPORT HOUSING AND REDEVELOPMENT AUTHORITY MEETING MARCH 8, 2010 REPORT PREPARED BY: JULIE URBAN/MICHELLE LEWIS, HOUSING SPECIALIST NanrE, T!TLE REPORT PRESENTER: JOHN STARK, COMMUNITY DEVELOPMENT DIRECTOR NAMF_, TITLE DEPARTMENT DIRECTOR REVIEW: ~ - REVIEWED BY EXECUTIVE DIREC ITEM FOR HRA CONSIDERATION: Consideration of a revised Richfield Rediscovered Contract for Private Redevelopment between the Housing and Redevelopment Authority and Charles Zawislak for the redevelopment of 6320 Morgan Avenue under the Richfield Rediscovered Program. I. RECOMMENDED ACTION: 1. By Motion: Approve and authorize execution of a Contract for Private Redevelopment between the Housing and Redevelopment Authority and Charles Zawislak for the redevelopment of 6320 Morgan Avenue. II. BACKGROUND Charles Zawislak submitted an application for the redevelopment of 6320 Morgan Avenue under the Richfield Rediscovered Program in December 2009. The Housing and Redevelopment Authority (HRA) approved a Contract for Private Redevelopment with Mr. Zawislak contingent on variance approval and timely receipt of title work before the closing. At the time of the HRA's approval, it was not possible to estimate a closing date based on the contingencies of the HRA's approval. The revised Contract for Private Redevelopment identifies the closing date of February 26, 2010 when Mr. Zawislak took possession of the property. Construction was scheduled to begin as soon as possible after the closing date. 030810 RR Revise Contract 6320 Morgan Ave - Zawislak.doc The Promissory Note and Mortgage have been executed to establish the buyer's promise and the HRA's security to honor the Contract for Private Redevelopment. Under the terms of the Contract for Private Redevelopment, a lien is put on the property until the house is completed. The lien will be in first position. The house to be replaced was built in 1925 and has 992 square feet. The house is vacant and was in foreclosure. The house is in poor condition, has no garage and is situated within the required front yard setback. The new two-story home will have 2,039 finished square feet, 386 unfinished square feet, three bedrooms, three baths and stuck-under, two-stall garage. The home will have an estimated end value of $350,000. There is a 10-foot grade difference from the rear to the front of the property making the design of the house and garage space a challenge. Height and setback variances were approved on February 8, 2010 in order to construct the proposed house and garage on the property. III. BASIS OF RECOMMENDATION A. POLICY • The revised Contract for Private Redevelopment clarifies the closing date and additional dates in the contract that are dependent on the specific closing date. • The revised Contract for Private Redevelopment serves to honor the intent of the Agreement and to protect the HRA's interest in the property. B. CRITICAL TIMING ISSUES • The original HRA approval was contingent on the Hearing Examiner granting the necessary variance(s) to construct the proposed structure. • The Contract for Private Redevelopment will be recorded against the property after it is executed by the HRA and the buyer. C. FINANCIAL • This project is eligible fora $70,000 Redevelopment Credit subject to the terms of the Contract for Private Redevelopment. • Under the terms of the Contract, three installments would be made: o $25,000 due and payable at closing. o $25,000 would be due and payable following the issuance of a building permit for construction. o $20,000 would be due on the date of the issuance of a Certificate of Completion. D. LEGAL • The Contract has been reviewed by the HRA Attorney. Mr. Zawislak is in agreement with the terms of the Contract. IV. ALTERNATIVE RECOMMENDATION~S~ • Do not execute the Contract for Private Redevelopment. V. ATTACHMENTS • Photo of Existing House - Front Elevation, Floor Plans, Site Plan • Revised Contract for Private Redevelopment VI. PRINCIPAL PARTIES EXPECTED AT MEETING • :> N/A • Morgan Avenue South-Existi f House ~- • UPPER LEVEL FLOOR PLAN u.. a ~~a. ~ ~.-0. !90 f.F. ...,~,,...s, ~, MA'M RCO~-. aoma.^,PNn.~rsvu~:a F` -- aCn.DVI N(:OF Stu:D SFCIKwS~M1K1aL5fMU,NG SFN.1 $IiYliO: JPMEC VWALIE BONNi$IANi:(F$anDiw 9DING-CPAINIEO GWLV~ FASUAiMM'. AtK80N+D WWUCWS. MMh HiGn 1'EPfOf3.4WC[ M w N 0 3 0 ^~ ii/ a 0 c -~ 0 -a 0 N <D O. '~ N /~V\ / v ~_ ,,,. ~ 1 <, , ~' .~ J'~p""" i '.a ~. :~, !~ i ~ MULTI • ROOM ,,:., i 1 1 ,\ ` r ', : GARAGE i r I ,` MECH. ~ ~ t i urrwr jj i } ,~. DECK i_. ~ ~~ c ,~ . ..,. I J i ~ ; _. _. _.... ~. ~. ~ .. ... t i ~I I I i COINER LEVEL FLOOR PLAN ~ u, Ala., ~._y ORO D BOOR NO: 9YO f.F. (IMFINIfH®). _- = i f i I~ { j ..,~ DECK ,. i. I i 1{ ~ t ~ ~ •. ~ r.. ___ ~ _ __ _- _. _.._ '; fi - t - " ° ° '; ~ ~ KITCHEN OIL R _~ ~., iX /X \ . A `~ ~ - DINING ~ ~y~ Vs ~\ ~ ROOM L..o... ~ . : t ' .-~ { nY j~ ~... ~ ~ ~ OFFICE ; ~ ~ ~ .r r FOYOt . _.. j j i l i_i_. _ 1 MAIN 1 ~~~ FLOOR PLAN f ,OlY S.F. i, I \ { I t ~ r ~ ~ ~ __._i RoRrR A • '~V`, V_ CONTRACT FOR PRIVATE DEVELOPMENT Between THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA and CHARLES ZAWISLAK at 6320 MORGAN AVENUE SOUTH, RICHFIELD, MINNESOTA This Instrument Drafted by: Housing and Redevelopment Authority in and for the City of Richfield 6700 Portland Avenue South Richfield, MN 55423 612-861-9760 CONTRACT FOR PRIVATE DEVELOPMENT THIS AGREEMENT, made and entered into as of this 8t" day of February, by and between the Housing and Redevelopment Authority in and for the City of Richfield, a public body corporate and politic under the .laws of the State of Minnesota, having its principal office at 6700 Portland Avenue, Richfield, Minnesota (HRA), and Charles Zawislak (Buyer). WITNESSETH: WHEREAS, the City of Richfield (City) and the HRA have previously created and established a Redevelopment Project (Project) and Tax Increment Financing District (TIF District) pursuant to the authority granted in Minnesota Statutes, Sections 469.001 through 469.047 and Sections 469.174 through 469.179 (collectively, the Acts); and WHEREAS, pursuant to the Acts, the City and the HRA have previously adopted a redevelopment plan (Redevelopment Plan) and a tax increment financing plan (TIF Plan) to finance all or a portion of the public development costs of the Project; and WHEREAS, in order to achieve the objectives of the Redevelopment Plan and TIF Plan as hereinafter defined and particularly to make specified land in the Project available for development by private enterprise for and in accordance with the Redevelopment Plan, the HRA has determined to provide substantial aid and assistance to finance public development costs in the Project; and WHEREAS, the Buyer has proposed a development as hereinafter defined within the Project which the HRA has determined will promote and carry out the objectives for which the Project has been undertaken, will assist in carrying out the obligations of the Redevelopment Plan and TIF Plan, will be in the vital best interests of the City and the health, safety and welfare of its residents and is in accord with the public purposes and provisions of the applicable state and local laws and requirements under which development in the Project has been undertaken and is being assisted. NOW, THEREFORE, in consideration of the mutual covenants and obligation of the HRA and the Buyer, each party does hereby represent, covenant and agree with the other as follows: ARTICLE I. DEFINITIONS, EXHIBITS. RULES OF INTERPRETATION Section 1.1. Definitions. In this Agreement, the following terms have the meaning given below unless the context clearly requires otherwise: (a) Cam. The City of Richfield, Minnesota. (b) Construction Plans. Collectively, the plans, drawings and related documents related to the Improvements, which are listed on Exhibit D. (c) Buyer. Charles Zawislak. (d) Development. The Property and the Improvements to be constructed thereon according to the Construction Plans approved by the HRA. (e) HRA. The Housing and Redevelopment Authority in and for the City of Richfield, Minnesota. (fj Closin The date on which Buyer closes on the Purchase of the Property. (g) Housing and Redevelopment Authorities Act (HRA Act). Minnesota Statutes Sections 469.001 through 469.047. (h) Improvements. Each and all of the structures and site improvements constructed on the Property by the Buyer, as specified in the Construction Plans approved by the HRA. (i) Minimum Market Value. $300,000, which is the minimum market value for the land and Improvements as confirmed by the Hennepin County Assessor. (j) Mort~a~e and Holder. The term "mortgage" shall include the mortgages referenced in Article VI of this Agreement and any deed of trust or other instrument creating an encumbrance or lien upon the Property or any part thereof, as security for a loan. The term "holder" in reference to a mortgage includes any insurer or guarantor (other than the Buyer) of any obligation or condition secured by such mortgage or deed of trust. (k) Pro a .The real property legally described as: Lot 7, Block 10, Ray's Lynnhurst Additon, Hennepin County, Minnesota Located on land having a street address of: 6320 Morgan Avenue South (1) Redevelopment Project (Project). The Redevelopment Project established by the HRA pursuant to Minnesota Statutes Sections 469.001 through 469.047 and described in the Redevelopment Plan. (m) Redevelopment Project Plan (Redevelopment Plan). The plans for implementation of the Project adopted by the HRA pursuant to Minnesota Statutes Sections 469.001 through 469.047. (n) Tax Increment Financing Act (TIF Act). Minnesota Statutes Sections 469.174 through 469.179. 2 (o) Tax Increment Financing District (TIF District). The TIF District previously created by the HRA pursuant to Minnesota Statutes Sections 469.174 through 469.179 and described in the TIF Plan adopted therefor. (p) Tax Increment Financing Plan (TIF Plan). The plan for development of the TIF District previously adopted by the HRA pursuant to Minnesota Statutes, Sections 469.174 through 469.179. (q) Unavoidable Delays. Delays which are the direct result of strikes, labor troubles, fire or other casualty to the Improvements, litigation commenced by third parties which results in delays or acts of any federal, state or local government, except those contemplated by this Agreement, which are beyond the control of the Buyer. Section 1.2 Exhibits. The following Exhibits are attached to and by reference made a part of this Agreement: A. Form of Certificate of Completion B. Housing Design and Site Development Criteria C. The Note and Mortgage D. List of Construction Plan Documents Section 1.3 Rules of Interpretation. (a) This Agreement shall. be interpreted in accordance with and governed by the laws of the State of Minnesota. (b) The words "herein" and "hereof' and words of similar import, without reference to any particular section or subdivision refer to this Agreement as a whole rather than any particular section or subdivision hereof. (c) References herein to any particular section or subdivision hereof are to the section or subdivision of this Agreement as originally executed. (d) Any titles of the several parts, articles and sections of this Agreement are inserted for convenience and reference only and shall be disregarded in construing or interpreting any of its provisions. ARTICLE II. REPRESENTATIONS AND UNDERTAHINGS Section 2.1 By the Buyer. The Buyer makes the following representations and undertakings: (a) The Buyer has the legal authority and power to enter into this Agreement and has duly authorized the execution, delivery and performance of this Agreement; 3 (b) The Buyer has the necessary equity capital or will obtain commitments for financing necessary for construction of the Improvements; (c) The Buyer will construct the Improvements in accordance with the terms of this Agreement and all local, state and federal laws and regulations; (d) The Buyer will obtain, in a timely manner, all required permits, licenses and approvals, and will meet, in a timely manner, the requirements of all local, state and federal laws and regulations which must be obtained or met before the Improvements may be constructed; and (e) The plans for the Improvements have been prepared by a qualified draftsperson or architect. (f) Buyer intends to reside at the Property following completion of construction; and is not acquiring the Property for the purpose of resale or speculation. Section 2.2 By the HRA. The HRA makes the following representations as the basis for the undertaking on its part herein contained: (a) The HRA is authorized by law to enter into this Agreement and to carry out its obligations hereunder; and (b) The HRA will, in a timely manner, subject to all notification requirements, review and act upon all submittals and applications of the Buyer and will cooperate with the efforts of Buyer to secure the granting of any permit, license, or other approval required to allow the construction of the Improvements. ARTICLE III. ACQUISITION OF PROPERTY; CONVEYANCE TO BUYER Section 3.1 Purchase of Property by Buyer. The Buyer has, or will utilize its best efforts to enter into a binding agreement to purchase the Property. Upon determination by the HRA that Buyer has entered into a binding purchase agreement for the purchase of the Property, the HRA will deliver to Buyer the Note described in Section 5.1. If no binding purchase agreement is entered into within 30 days from the date of this Agreement, either the HRA or the Buyer may declare this Agreement null and void, and the parties will thereby be released from any further obligation hereunder. Section 3.2 Closing. Closing must take place on or before March 1, 2010, or such other date as may be agreed to by the Buyer and HRA in writing. At Closing, the Buyer will provide the HRA with a mortgage in recordable form (and pay for the cost of recording). The mortgage will be a first lien on the Property and will act as security for repayment of any of the redevelopment credit advanced to the Buyer in the event that construction of the Improvements is not completed on or before the date specified in Section 4.3. The Mortgage will be in substantially the form of the mortgage shown on the attached Exhibit C. 4 ARTICLE IV. CONSTRUCTION OF IMPROVEMENTS Section 4.1. Construction of Improvements. The Buyer shall construct the Improvements on the Property in accordance with the Construction Plans, shall meet or exceed the Minimum Market Value specified in Section 1.1, and shall maintain, preserve and keep the Improvements in good repair and condition. Section 4.2. Building Plans. No building permit will be issued by the City unless the building plans are in conformity with the Construction Plans, with the Buyer's Minimum Market Value, this Agreement, including the Housing Design and Site Development Criteria contained in Exhibit B, and all local, state and federal regulations. The HRA shall, within 25 days of receipt of Construction Plans submitted in application for a building permit, review such Construction Plans to determine whether the foregoing requirements have been met. If the HRA determines such Construction Plans to be deficient, it shall notify the Buyer in writing stating the deficiencies and the steps necessary for correction. Issuance of the building permit by the City shall be a conclusive determination that the Construction Plans have been approved and shall satisfy the provisions of this Section 4.2. Section 4.3 Schedule of Construction. Subject to Unavoidable Delays, construction of the Improvements shall be completed prior to February 8, 2011. All construction shall be in conformity with the approved Construction Plans. Periodically during construction the Buyer shall make reports in such detail as may reasonably be requested by the HRA concerning the actual progress of construction. If at any time prior to completion of construction the HRA has cause to believe that the Buyer will be unable to complete construction of the Improvements in the time permitted by this Section 4.3, it may notify the Buyer and demand assurances from the Buyer regarding the Buyer's construction schedule. If such assurances are not forthcoming or are deemed by the HRA at its sole discretion to be inadequate, the HRA may declare an Event of Default and may avail itself of any of the remedies specific in Section 8.2 of this Agreement. Section 4.4 Certificate of Completion. Promptly after notification by the Buyer of completion of construction of the Improvements, the HRA shall inspect the construction to determine whether the Improvements have been completed in accordance with the Construction Plans and the terms of this Agreement, including the date of the completion thereof. In the event that the HRA is satisfied with the construction, the HRA shall furnish the Buyer with a Certificate of Completion in the form attached hereto as Exhibit A. Such certification by the HRA shall be a conclusive determination of satisfaction and termination of the agreements and covenants in this Agreement with respect to the obligation of the Buyer to construct the Improvements. Issuance of the Certificate of Completion shall also serve as a satisfaction of any obligation of Buyer under the Note and Mortgage. If the HRA shall refuse or fail to provide certification in accordance with the provisions of this Section 4.4, the HRA shall within 15 days of such notification provide the Buyer with a written statement, indicating in adequate detail in what respects the Buyer has failed to complete the Improvements in accordance with the provisions of this Agreement necessary, in the opinion of the HRA, for the Buyer to take or perform in order to obtain such certification. 5 Section 4.5 Failure to Construct. In the event that construction of the Improvements is not completed as provided in Section 4.3 of this Agreement, an Event of Default shall be deemed to have occurred, and the HRA may proceed with its Remedies on Default under this Agreement. ARTICLE V. REDEVELOPMENT CREDIT Section 5.1 Issuance of the Note.. As consideration for Buyer's covenant to construct the Improvements, and subject to all of the conditions of this Agreement, the HRA agrees to provide the Buyer with a Redevelopment Credit in the amount of $70,000. Upon the Buyer providing the HRA with evidence that Buyer has entered into a purchase agreement for the purchase of the Property, the HRA will deliver to Buyer a promissory .note in substantially the form of the attached Exhibit C. .Payment of the Redevelopment Credit will be exclusively subject to and in accordance with the terms of the Note as such are contained in the Note or described in this Agreement. Section 5.2 Note Terms. The terms of the Note will include the following: (a) Assuming the Buyer is in compliance with Buyers obligations, the Note will be payable in three installments. The first installment of $25,000 will be due and payable upon execution of the Contract by the HRA, the second installment of $25,000 will be due and payable not later than five days following the date a building permit for construction of the Improvements is issued, and the final installment of $20,000 on the date of the issuance of a Certificate of Completion showing full completion of all of the Improvements including landscaping. (b) The Note will be cancelled if the Closing does not occur by the last date provided in Section 3.2; or if construction of the Improvements are not fully completed by the last date provided in Section 4.3. (c) The Note will not bear interest. (d) The Note may be canceled by the HRA in the event that the Buyer is in default of any of its obligations under this Agreement. (e) The Note may not be assigned or pledged unless the proposed recipient certifies to the HRA that it is aware of and accepts to the conditions of the Note governing payment. (f) The Note will provide for repayment of the any Development Credit payments paid to Buyer under the Note in the event that the Buyer fails to meet the time requirements of Sections 3.2 and 4.3. Such repayment obligation will be secured by a mortgage in substantially the form shown in Exhibit C which will be delivered by Buyer to the HRA at Closing. Unless the HRA agrees otherwise in accordance with Section 6.3, the Mortgage will be a first lien on the Property. 6 Section 5.3 Payments Under the Note. On the date payments are due under the Note, the HRA will make such payments by delivering the amount due to either the lending institution providing financing for construction of the Improvements, or the title company servicing the construction loan. Such lending institution or title company may then use the delivered funds to make payment to any contractor or materialman for work or materials actually furnished in connection with the Improvements. In the event that no lending institution or title company is willing to serve in that capacity, the HRA shall disburse the payments, when due, in any manner which in its reasonable judgment will assure that the funds will be expended for construction of the Improvements. ARTICLE VI. FINANCING Section 6.1 Financing. Within 15 days of the date of .execution of this Agreement, the Buyer shall submit to the HRA evidence of financing for the Improvements in compliance with the provisions of Section 2.1(b) of this Agreement. If the HRA finds that the financing is adequate in amount to provide for the construction of the Improvements, the HRA shall notify the Buyer of its approval If the HRA rejects the evidence of financing as inadequate, the Buyer shall have 30 days or such additional period of time as the Buyer may reasonably require from the date of such notification to submit evidence of financing satisfactory to the HRA. If the Buyer fails to submit such evidence or fails to use due diligence in pursuing financing, the HRA may terminate this Agreement and both parties shall be released from any further .obligation or liability hereunder, except for the HRA's remedies pursuant to Section 4.5 of this Agreement. Section 6.2 Copy of Notice of Default to Lender. Whenever the HRA shall deliver any notice or demand to the Buyer with respect to any Event of Default by the Buyer in its obligations or covenants under this Agreement, the HRA shall at the same time forward a copy of such notice or demand to each Holder of any Mortgage authorized by the Agreement at the last address of such Holder shown in the records of the HRA. Section 6.3 Subordination. In order to facilitate obtaining financing for the construction of the Improvements by the Buyer, the HRA shall agree to modify this Agreement, the Note or the Mortgage in the manner and to the extent the HRA deems reasonable, upon request by the financial institution and the Buyer. ARTICLE VII. PROHIBITIONS AGAINST ASSIGNMENT AND TRANSFER Section 7.1 Representation as to Redevelopment. The Buyer represents and agrees that its undertakings pursuant to the Agreement, are for the purpose of development of the Property and not for speculation in land holding. The Buyer further recognizes that, in view of 7 the importance of the Development to the general welfare of Richfield and the substantial financing and other public aids that have been made available by the HRA for the purpose of making the Development possible, the qualification and identity of the Buyer are of particular concern to the HRA. The Buyer further recognizes that it is because of such qualifications and identity that the HRA is entering into this Agreement, and, in so doing, is further willing to rely on the representations and undertakings of the Buyer for the faithful performance of all undertakings and covenants agreed by the Buyer to be performed. Section 7.2 Prohibition Against Transfer of Prouerty and Assignment of Agreement. For the reasons set out in Section 7.1 of this Agreement, the Buyer represents and agrees that prior to the issuance of the Certificate of Completion by the HRA: (a) Except only by way of security for, and only for the purpose of obtaining financing necessary to enable the Buyer or any successor in interest to the Property, or any part thereof, to perform its obligations with respect to the Development under this Agreement, and any other purpose authorized by this Agreement, the Buyer, except as so authorized, has not made or created, and that it will not make or create, or suffer to be made or created, any total or partial sale, assignment, conveyance, or any trust in respect to this Agreement or the Property or any part thereof or any interest therein, or any contract or agreement to do any of the same, without the prior written approval of the HRA. ARTICLE VIII. EVENTS OF DEFAULT Section 8.1 Events of Default Defined. The following shall be deemed Events of Default under this Agreement and the term shall mean, whenever it is used in this Agreement, unless the context otherwise provides, any one or more of the following events: (a) Failure by the Buyer to pay when due the payments required to be paid or secured under any provision of this Agreement; (b) Failure by the Buyer to observe and substantially perform any covenant, condition, obligation or agreement on its part to be observed or performed hereunder, including the time for such performance; (c) If the Buyer shall admit in writing its inability to pay its debts generally as they become due, or shall file a petition in bankruptcy, or shall make an assignment for the benefit of its creditors, or shall consent to the appointment of a receiver of itself or of the whole or any substantial part of the Property; (d) If the Buyer, on a petition in bankruptcy filed against it, be adjudicated as bankrupt, or a court of competent jurisdiction shall enter an order of decree appointing, without the consent of the Buyer, a receiver of the Buyer or of the whole or substantially all of its property, or approve a petition filed against the Buyer seeking reorganization or arrangement of the Buyer under the federal bankruptcy laws, and such adjudication, order or decree shall not be vacated or set aside or stayed within 60 days from the date of entry thereof; or 8 (e) If the Development is in default under any Mortgage and has not entered into a work-out agreement with the Mortgagee. Section 8.2 Remedies on Default. Whenever any Event of Default occurs, the HRA may, in addition to any other remedies or rights given the HRA under this Agreement, take any one or more of the following actions following written notice by the HRA to the Buyer as provided in Section 9.5 of this Agreement: (a) suspend its performance under this Agreement until it receives assurances from the Buyer, deemed reasonably adequate by the HRA, that the Buyer will cure its default and continue its performance under this Agreement; (b) cancel or rescind this Agreement; (c) cancel or rescind the Note; (d) foreclose on the Mortgage; (e) withhold the Certificate of Completion; or (f) take whatever action at law or in equity may appear necessary or desirable to the HRA to enforce performance and observance of any obligation, agreement, or covenant of the Buyer under this Agreement; provided, however, that any exercise by the HRA of its rights or remedies hereunder shall always be subject to and limited by, and shall not defeat, render invalid or limit in any way (a) the lien of any Mortgage authorized by this Agreement and (b) any rights or interest provided in this Agreement for the protection of the Holders of a Mortgage; and provided further that should any Mortgagee succeed by foreclosure of the Mortgage or deed in lieu thereof to the Buyer's interest in the Property, it shall, notwithstanding the foregoing, be obligated to perform the obligations of the Buyer under this Agreement to the extent that the same have not therefore been performed by the Buyer. Section 8.3 No Remedy Exclusive. No remedy herein conferred upon or reserved to the HRA is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the HRA or the Buyer to exercise any remedy reserved to it, it shall not be necessary to give notice, other than such notice as may be required in this Article, VIII. Section 8.4 No Additional Waiver Implied by One Waiver. In the event of the occurrence of any Event of Default by either party, which Event of Default is thereafter waived by the other parry, such waiver shall be limited to the particular Event of Default so waived and shall not be deemed to waive any other concurrent, previous or subsequent Event of Default. 9 ARTICLE IX. ADDITIONAL PROVISIONS Section 9.1 Conflict of Interests; Representatives Not Individually Liable. No HRA officer who is authorized to take part in any manner in making this Agreement in his or her official capacity shall voluntarily have a personal financial interest in this Agreement or benefit financially there from. No member, official, or employee of the HRA shall be personally liable to the Buyer, or any successor in interest, for any Event of Default by the HRA or for any amount which may become due to the Buyer or successor or on any obligations under the terms of this Agreement. Section 9.2 Non-Discrimination.. The provisions of Minnesota Statutes Section 181.59, which relate to civil rights and non-discrimination, and any affirmative action program of the City shall be considered a part of this Agreement and binding on the Buyer as though fully set forth herein. Section 9.3 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 sent by mail, postage prepared, return receipt requested or delivered personally: (a) As to the HRA: Richfield HRA Attn: Mr. John Stark, AICP, Director of Community Development 6700 Portland Avenue South Richfield, MN 55423 (b) As to the Buyer: Charles Zawislak 2935 Fremont Ave S #414 Minneapolis, MN 55408 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 9.3. Section 9.4 Counterparts. This Agreement may be simultaneously executed in any number of counterparts, all of which shall constitute one and the same instrument. 10 IN WITNESS WHEREOF, the HRA has caused this Agreement to be duly executed in its name and behalf and its seal to be hereunto duly affixed and the Buyer has caused this Agreement to be duly executed as of the day and year first above written. THE HOUSING AND REDEVELOPMENT AUTHORITY IN .AND FOR THE CITY OF RICHFIELD, MINNESOTA By Its Chairperson By Its Executive Director BUYER 11 STATE OF MINNESOTA ) SS COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this day of _ 2010, by Suzanne M. Sandahl, the Chairperson of the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota (HRA), a public body corporate and politic under the laws of Minnesota, on behalf of the HRA. Notary Public STATE OF MINNESOTA COUNTY OF HENNEPIN SS The foregoing instrument was acknowledged before me this day of 2010, by Steven L. Devich, the Executive Director of the Housing and Redevelopment Authority in and for the City-of Richfield, Minnesota (HRA), a public body corporate and politic under the laws of Minnesota, on behalf of the HRA. Notary Public STATE OF MINNESOTA COUNTY OF SS The foregoing instrument was acknowledged before me this day of 2010, by Charles Zawislak. Notary Public 12 EXHIBIT A FORM OF CERTIFICATE OF COMPLETION The undersigned hereby certifies that ,has fully and completely complied with its obligations under Article IV of that document entitled "Contract for Private Development", between the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota and dated , filed as Document No. with respect to the construction of the approved construction plans at ,legally described as and is released and forever discharged from its obligations to construct under such above-referenced Article. DATED: THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY RICHFIELD sy: Its: Chairperson sy: Its: Executive Director STATE OF MINNESOTA ) SS COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this day of 20_, by and the Chairperson and Executive Director of the Housing and Redevelopment Authority in and for the City of Richfield, a public body corporate and politic under the laws of the State of Minnesota on behalf of the public body corporate and politic. Notary Public This instrument was drafted by: Housing and Redevelopment Authority in and for the City of Richfield 6700 Portland Avenue South Richfield, MN 55423 612-861-9760 A-1 EXHIBIT B HOUSING DESIGN AND SITE DEVELOPMENT CRITERIA Siding materials, exterior facade presentation, roof, window, siding and building line variability, finished landscape, interior space function and use are all important considerations. The development of all sites shall meet the development objectives listed below. The guidelines were created to ensure that the homes built on the identified lots blend in with the surrounding neighborhood and respond to specific concerns of the HRA. 1. General: a. The home shall be single-family, owner occupied. b. The value of the new home must meet or exceed the value specified for the Development in the Contract for Private Development. 2. Site Standards: a. The entire grounds shall be finish landscaped to be aesthetically pleasing in all seasons. Land forms and plant materials shall be used to define the site and neatly blend with adjoining property. b. Utility meters shall be screened from street view. c. Site drainage shall be accommodated on the site so that water is directed away from the new home and the neighboring properties. Neighboring properties should not be disturbed to create drainage swales. Construction and the finished structure must improve or not have a detrimental impact on storm water drainage patterns in the neighborhood. d. Existing trees shall be preserved as much as possible. Care should be taken to preserve existing root systems. A tree wrap with board reinforcement shall be used on trees directly adjacent to active grading and construction areas. e. The construction site, neighboring property and adjacent public street and sidewalk shall be kept free of construction debris at all times. f. Air conditioning units must be located in the rear yard of the house. g. Egress window area well foundations must meet side setback requirements (a minimum of 5' from the property line), or be located in the rear yard of the house. B-1 h. Under no circumstance during the construction period shall construction workers, construction equipment or construction materials enter, disturb, or damage neighboring properties. The HRA will solely determine whether a violation has occurred. A penalty of $50 per day will be assessed and drawn from the Letter of Credit after written notice of violation and a ten (10) day period for correction has been provided the Builder. Alternately, the Buyer may enter into a written agreement with the affected adjacent property owner(s) during this ten (10) day period. The agreement must describe the details of correction and repair which the builder will make at a specified alternate date during construction completion. The Buyer will be responsible for the cost of corrections and repairs determined necessary by the affected adjacent parties. Where disputes occur, the Buyer agrees to participate in mediation services to facilitate problem resolution. 3. Building Standards: a. A minimum of three completed bedrooms is required. b. A minimum of one full completed bath and aroughed-in 3/4 bath is required. c. A two car garage, attached or detached, must be provided on the site. d. Exterior materials (siding, soffit, doors and windows) should be low maintenance. Aluminum and vinyl are preferred. Natural cedar lap is acceptable if properly stained or painted. Hardboard panels or hardboard lap siding are not acceptable. e. Unit height and mass of the new home must be compatible with the scale of the surrounding neighborhood. f. All building plans must have been prepared in consultation with an architect or qualified draftsperson. All requirements by the Building Inspections Division must be met by the Buyer. g. A full basement shall be provided in the house unless the selected design results in a split level type of construction. h. House design is a critical element of the program. The HRA design review will include: The house building lines, window and door placement, and orientation to street for present a balanced and pleasing view from all sides. Windows that are double hung in style or appearance with muntins (window pane grids) are preferred, especially on the street-facing elevations. Garage door dominance in design must be minimized. i. All construction must conform to current sound attenuation building standards for properties located in 65-69 and 70-74 Ldn zones. B-2 EXHIBIT C PROMISSORY NOTE REDEVELOPMENT CREDIT NOTE $70,000 DATE: The Housing and Redevelopment Authority in and for the City of Richfield, Minnesota, a public body corporate and politic (the "Maker"), for value received, hereby promises to pay to Charles Zawislak (the "Holder") the principal sum of seventy thousand and No/100 Dollars ($70,000), with no interest as hereinafter provided, in any coin or currency which at the time or times of payment is legal tender for the payment of private debts in the United States of America. The principal of this Note is payable as follows: 1. The principal amount of the Note is as provided for in that certain agreement by and between Maker and Holder entitled: Contract for Private Development dated December 21, 2009 (the "Contract") and shall bear no interest. Terms contained in this Note shall have the meanings given them in the Contract unless a different meaning is clearly indicated. 2. The Note shall be due and payable the Note will be payable in three installments. The first installment of $25,000 will be due and payable upon execution of the Contract by the HRA, the second installment of $25,000 will be due and payable not later than five days following the date a building permit for construction of the Improvements is issued, and the final installment of $20,000 on the date of the issuance of a Certificate of Completion showing full completion of all of the Improvements including landscaping. No amount shall be due or payable prior to those dates. 3. This Note will be cancelled if the Closing does not occur by the last date provided in Section 3.2 of the Contract; or if construction of the Improvements are not fully completed by the last date provided in Section 4.3 of the Contract. 4. This Note is given pursuant to the Contract. All of the agreements, conditions, covenants, provisions, and stipulations and remedies contained in the Contract are hereby made a part of this Note to the same extent and with the same force and effect as if they were fully set forth herein. It is agreed that time is of the essence of this Note. If a default by the Maker or the Holder occurs under the Contract, then the Holder or Maker may at its right and option, exercise any rights it may have under law or at equity, under the Agreement, and under the Note. 5. The remedies of the Maker or Holder as provided herein, and in the Contract, or any other instrument, shall be cumulative and concurrent and may be pursued singly, successively, or together, and, at the sole discretion of the Maker or Holder, may be exercised as often as occasion therefore shall occur; and the failure to exercise any such right or remedy shall in no event be construed as a waiver or release thereof. 3 The Maker or Holder shall not be deemed, by any act of omission or commission, to have waived any of its rights or remedies hereunder unless such waiver is in writing and signed by the Maker or Holder and then only to the extent specifically set forth in the writing. A waiver with reference to one event shall not be construed as continuing or as a bar to or waiver of any right or remedy as to a subsequent event. This Note may not be amended, modified, or changed except only by an instrument in writing signed by the parry against whom enforcement of any such amendment, modifications, or change is sought. 6. This Note shall be governed by and construed in accordance with the laws of the state of Minnesota without regard to its conflict of laws provisions. Any disputes, controversies, or claims arising out of this Note shall be heard in the state or federal courts of Minnesota, and all parties to this Note waive any objection to the jurisdiction of these courts, whether based on convenience or otherwise 7. Holder may not assign, transfer or pledge this Note without the prior written consent of the Maker. Maker may condition consent on obtaining a certification from the proposed assignee, transferee or pledgee acknowledging and agreeing to Maker's rights to cancel the Note in accordance with the terms of the Note and the Contract. 8. IT IS HEREBY CERTIFIED AND RECITED that all conditions, acts, and things required to exist, happen, and be performed precedent to or in the issuance of this Note do exist, have happened, and have been performed in regular and due form as required by law. 9. Any Development Credit payments paid to Buyer under the Note will be repaid to the HRA in the event that the Buyer fails to meet the time requirements of Sections 3.2 and 4.3 of the Contract. Such repayment obligation will be secured by a mortgage in substantially the form shown in Exhibit C of the Contract which will be executed and delivered by Buyer to the HRA at Closing. Unless the HRA agrees otherwise in accordance with Section 6.3, the Mortgage will be a first lien on the Property. IN WITNESS WHEREOF, the Maker has caused this Note to be duly executed as of the day of , 2010. THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA BUYER By Its Chairperson By Its Executive Director Charles Zawislak 4 STATE OF MINNESOTA ) SS COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before. me this day of_ 2010, by Suzanne M. Sandahl, the Chairperson of the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota (HRA), a public body corporate and politic under the laws of Minnesota, on behalf of the HRA. Notary Public STATE OF MINNESOTA ) SS COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this day of _ 2010, by Steven L. Devich, the Executive Director of the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota (HRA), a public body corporate and politic under the laws of Minnesota, on behalf of the HRA. Notary Public STATE OF MINNESOTA COUNTY OF SS The foregoing instrument was acknowledged before me this 20 , by Charles Zawislak, a single person. Notary Public This Instrument was Drafted by: Housing and Redevelopment Authority in and for the City of Richfield 6700 Portland Avenue South Richfield, MN 55423 612-861-9760 day of MORTGAGE This Indenture made this day of , 2010, between CHARLES ZAWISLAK, Mortgagor, and THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA, a Minnesota public body corporate and politic under the laws of the State of Minnesota, Mortgagee. Witnesseth: That the said Mortgagor, in consideration of the sum of One ($1.00) Dollar and other good, valuable and sufficient consideration, the receipt whereof is hereby acknowledged, does hereby Grant, Bargain, Sell, and Convey unto the said Mortgagee, its successors and assigns, Forever, all the tracts or parcels of land lying and being in the County of Hennepin and State of Minnesota, described as follows, to-wit: The separate tracts and parcels of land described in the attached Exhibit A. (The "Property") To Have and to Hold the Same, Together with the hereditaments and appurtenances thereto belonging to the said Mortgagee, its successors and assigns, forever. And the said Mortgagor, for itself, and its successors and assigns, does covenant with the said Mortgagee, its successors and assigns, as follows: That it is lawfully seized of said premises and has good right to sell and convey the same; that the same are free from all incumbrances, save and except reservations, restrictions and easements of record; that the Mortgagee, its successors and assigns, shall quietly enjoy. and possess the same; and that the Mortgagor will Warrant and Defend the title to the same against all lawful claims not hereinbefore specifically excepted. Provided, Nevertheless, That if said Mortgagor, its successors and assigns, shall keep and perform each and every one of its obligations with respect to completion of construction of the Improvements to be constructed by Mortgagor under and pursuant to that certain Contract for Private development dated as of December 21, 2009 (the "Contract"), made and entered into between Mortgagor and Mortgagee, and shall keep and perform all the covenants and agreements herein contained, then this deed to be null and void, and to be released at the Mortgagor's expense. This Mortgage secures a principal debt in the amount of $70,000 payable by Mortgagor to Mortgagee under the terms of the Contract, and amendments thereto, between Mortgagor and Mortgagee. 6 And the Mortgagor, for itself, and its successors and assigns, does hereby covenant and agree with the Mortgagee, its successors and assigns, to perform its obligations as above specified, to pay all taxes and assessments now due or that may hereafter become liens against said premises at least ten (10) days before penalty attaches thereto; to pay, when due, both principal and interest of all prior liens or incumbrances, and to keep said premises free and clear of all other liens or incumbrances; to commit or permit no waste on said premises and to keep them in good repair; to complete forthwith any improvements which may hereafter be under course of construction thereon, and to pay any other expenses and attorneys' fees incurred by said Mortgagee, its successors or assigns, by reason of litigation with any third parry for the protection of the lien of this Mortgage. That Mortgagor, does further covenant and agree that if any lien for labor, skill or material shall be filed for record during the life of this Mortgage, upon or against the premises hereby mortgaged, the said Mortgagor will, within thirty (30) days after the date of its filing for record, either pay off the said lien and secure its satisfaction of record, or will protect the Mortgagee against any loss or damage growing out of its enforcement, by furnishing a bond for the same amount in the form and with the sureties to be approved by the Mortgagee. In case of failure to pay said taxes and assessments, prior liens or incumbrances, expenses and attorneys' fees as above specified, or to insure said buildings and deliver the policies as aforesaid, the Mortgagee, its successors or assigns, may pay such taxes, assessments, prior liens, expenses and attorneys' fees and interest thereon, or effect such insurance, and the sums so paid shall bear interest at the highest rate permitted by law from the date of such payment, shall be impressed as an additional lien upon said premises, and be immediately due and payable from the Mortgagor, its successors or assigns, to said Mortgagee, it successors or assigns, and this Mortgage shall from date thereof secure the repayment of such advance with interest. In case of default in any of the foregoing covenants, the Mortgagor confers upon the Mortgagee the option of declaring a default and hereby authorizes and empowers said Mortgagee, its successors and assigns, to foreclose this Mortgage by judicial proceedings or to sell said premises at public auction and convey the same to the purchaser in fee simple in accordance with the statute, and out of the money arising from such sail to retain all sums secured hereby, with interest and all legal costs and charges of such foreclosure and the maximum attorneys' fee permitted by law, which costs, charges and fees the Mortgagor herein agrees to pay. In Testimony Whereof, The said Mortgagor has hereunto set its hand the day and year first above written. STATE OF MINNESOTA ) SS COUNTY OF ) 7 The foregoing instrument was acknowledged before me this .day of , 2010, by Charles Zawislak, a single person. (Notary Stamp or Seal) Notary Public This Instrument was Drafted by: Housing and Redevelopment Authority in and for the City of Richfield 6700 Portland Avenue South Richfield, MN 55423 612-861-9760 g EXHIBIT A LEGAL DESCRIPTION Lot 7, Block 10, Ray's Lynnhurst Addition, Hennepin County, Minnesota C-1 EXHIBIT D LIST OF CONSTRUCTION PLAN DOCUMENTS • Contract for Private Development, fully executed • Building Plans, approved by the HRA for design considerations and approved by the Building Official for construction considerations • Approved Site Plan • Landscape Plan • Purchase Agreement for sale of Property from Buyer to Homeowner D-1 AGENDA ITEM # 3 REPORT # 13 STAFF REPORT HOUSING AND REDEVELOPMENT AUTHORITY MEETING MARCH 8, 2010 REPORT PREPARED BY: KAREN BARYON, ASST COMMUNITY DEVELOPMENT DIRECTOR NAME, T/TLE REPORT PRESENTER: KAREN BARYON, ASST COMMUNITY DEVELOPMENT DIRECTOR NAME, TITLE DEPARTMENT DIRECTOR REVIEW: REVIEWED BY EXECUTIVE DIRECTO ITEM FOR HRA CONSIDERATION: Consideration of a resolution authorizing the purchase of real property located at 1407 East 66th Street utilizing proceeds from the Bonds of 1996, pending a finding of consistency from the Planning Commission. I. RECOMMENDED ACTION: By Motion: Approve the attached resolution authorizing the purchase of real property located at 1407 East 66th Street utilizing proceeds from the Bonds of 1996, pending a finding of consistency from the Plannina Commission. II. BACKGROUND East 66th Street, between 11th Avenue and Cedar Avenue is characterized by a mix of commercial and residential buildings. The area was rezoned a number of years ago to a uniform General Commercial (C-2). The existing residential structures were grandfathered with the intention that the area would eventually become entirely commercial in nature. Recently, several single-family residential structures have become available for purchase, including 1407 East 66th Street. The property is a foreclosure, is currently vacant, and has substantial freeze damage. In an effort to facilitate the 03082010 1407 E. 66th St. Acquisition redevelopment and revitalization of this corridor, staff is recommending the Housing and Redevelopment Authority (HRA) authorize the purchase of this property. Funding for this acquisition is available from proceeds remaining from the sale of the Bonds of 1996 associated with the Interstate-Lyndale-Nicollet (ILN) and Lyndale-Hub-Nicollet (LHN) Redevelopment Districts. The acquisition of this property is an eligible expense associated with use of these funds. The purchase price is $77,500, plus closing costs, not to exceed a total cost of $87,500. III. BASIS OF RECOMMENDATION A. POLICY • A stated goal of the City's Comprehensive Plan is "Beyond the City Center, develop identifiable nodes, corridors and gateways throughout the community." • Policy statements in the Comprehensive Plan include the following: o Encourage the development of viable and responsive neighborhood commercial services. o .Promote development that broadens the tax base. o Create commercial districts that sustain specific types of development and stabilize the economic base. o In an effort to provide contemporary working environments, Richfield will need to promote targeted redevelopment efforts. o Expand business opportunities through new and/or redevelopment opportunities for offices, entertainment, and service businesses. B. CRITICAL TIMING ISSUES • The property is a foreclosed and vacant property owned by Fannie Mae. • Per contingency agreement with Fannie Mae, the HRA has until March 9, 2010 to take formal action relating to the acquisition. • After March 9, 2010, Fannie Mae will place the property on the open market which will likely result in continued use as anon-conforming residential property. C. FINANCIAL • Due to the current market, the HRA is able to purchase the property at a very reasonable price of $77,500, plus closing costs. • The 2010 County Estimated Market Value: $149,000, with a land value of $77,000. • Funds are available for acquisition through proceeds remaining from the sale of the Bonds of 1996 D. LEGAL • The HRA attorney has reviewed the Purchase Agreement. • The HRA attorney has concluded that this would constitute proper use of the Bonds of 1996 funds. IV. ALTERNATIVE RECOMMENDATION(S~ • Do not authorize the acquisition V. ATTACHMENTS • Resolution • Purchase Agreement • Photo of property VI. PRINCIPAL PARTIES EXPECTED AT MEETING • N/A 3_/ HRA RESOLUTION NO. RESOLUTION AUTHORIZING PURCHASE OF REAL PROPERTY LOCATED AT 1407 EAST 66TH STREET WHEREAS, the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota ("the HRA") desires to purchase certain real property pursuant to and in furtherance of redevelopment and the City's Comprehensive Plan, said property being described as: 1407 East 66th Street That part of the North 125 feet of Block 2, Rich Fields, Hennepin County, Minn. lying East of the West .104 feet of said block and lying West of the East 28.1 feet of said block.; and WHEREAS, the HRA is authorized by Minnesota Statutes Section 469.012 to acquire real property within its area of operation; and WHEREAS, Bonds of 1996 Proceeds Funds are available for acquisition purposes. NOW THEREFORE, BE IT RESOLVED, by the Housing and Redevelopment Authority in and for the City of Richfield: 1. The purchase price for the property identified is approved at $77,500, plus closing costs, not to exceed $87,500. 2. The Chairperson and Executive Director are authorized to execute a Purchase Agreement and to take other actions necessary to purchase the property for the amount set forth in this resolution. Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota on this 8th day of March, 2010. Suzanne M. Sandahl, Chair ATTEST: Joan Helmberger, Secretary ~ -a PllRCFiASE ACa~EEfUiEIVT This form approved by the Minnesota Association'',of REALTORS'", which disclaims any liability arising out of use or misuse of this form, ©2009 Minnesota Association of REALTORSd°, Edina, MN 1. Date ~~ ~=E>C~s Z~l~ 2. Page 1 of 3. RECEIVED OF ~_e ~'°` Ol= ~1 Gt~C"lf=~~, $-~-F3L~e r. ~,~ Ge 841 ~ 4. 1R~ ~=~1~L.~~vv1.~~- ~-c,~_r[~-apt. ~1 t--jY 5. the sum of ~-~~ -V">`~ '~C~+a~'a1~ Z~"~ yk~l.~d"" - Dollars (g ~! U,. t~ ~ ) 6. by ^ CHECK ^ CASH ^ NOTE as earnest money to be deposited upo Final Acceptance of Purchase -°------(Check one.}--------- 7. Agreement by all parties, on or before the third Business Day after Final Acceptance, in the trust account of listing 8. broker, unless otherwise agreed to in writing, but to be returned to Buyer if Purchase Agreement is not accepted 9. by Seller. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. including all fixtures on the following property, if any, owned by Seller and used and located on said property, including but not limited to garden bulbs, plants, shrubs and trees; storm sash, storm doors, screens and awnings; window shades, blinds, traverse and curtain and drapery rods; attached lighting fixtures and bulbs; plumbing fixtures, water heater, heating plants (with any burners, non-fuel tanks, stokers and o#her equipment used in conne ion therewith), built-in air-conditioning equipment, electronic air filter, water softener ^ OWNED RENTED NONE, (Check one.}----...-------- built-in humidifier and dehumidifier, liquid fuel tanks} ^ OWNED ^ RENTED ' NONE and controls (if the --------°-----(Check one.}-..-.-..-._.-_ property of Seller), sump pump; attached television antenna, cable TV jacks and wiring; BUILT @NS:: dishwashers, garbage disposals, trash compactors, ovens, cook-top stoves, microwave ovens, hood fans, intercoms; ATTACHED: carpeting; mirrors; garage door openers and all controls; smoke detectors; fireplace screens, doors and heatilators; AND the following personal property: 30. 31. 32. all of which property Seller has this day agreed to sell to Buyer for sum of ($ ~ ~•~0 • ®~ ) 33. ~~3e'X~~t. " ~ W,~ ~ ~~~../d~-i`~~ Dollars, 34. which Buyer agrees to pay in the following manner: 35. . 1. Cash of at least ~_ percent {%) of the sale price; which includes the earnest money; PLUS 36. 2. Financing, the total amount secured against this property to fund this purchase, not to exceed 37. percent (%) of the sale price. 38. Such.. financing shall be (check one} ^ a first mortgage; [] a contract for deed; or ^ a first mortgage with 39. subordinate financing, as described in the attached Addendum: 40. ^ Conventional ^ F/iA ^ DV.4 ^ Assumption ^ Contract for Deed ^ Other: -•-------_.__..-------------------------------°__.-.-.._..._ .............-(Check one.1---_-~..---_--------------------.~:•--------- •--------- 41. The date of closing shall be _S9~ L'a1Q„ ~~~ , 20 L O . MN: PA-1 (8109) "~~ ~ 1 Said earnest money is part payment for the purchase of the property located at Street Address: ~~'~' ~~.lQ~ T~ ~'F' b2.~ ~!+'F= !mil _r~ ~l.~ -._ City of ~- ~' C°-'° +! ~~_+~~ ,County of ~~ ~~~ ~ ! ~ , State of Minnesota, legally described as _~~T" i~~ 1 ~ {~ A~ ~! 3-3 PURC~H/ASE AGRIEEMENT 42. Address _~ ~°'a ~ ~• ~~" ~~ 43- Page 2 Date 44. This Purchase Agreement IS ^ IS NOT subject to a Contingency Addendum for sale of Buyer's property. --(Check one.}----- 45. (If answer is IS, see attached Addendum.) 46. (If answer is IS NOT, the closing of Buyer's property, if any, may still affect Buyer's ability to obtain financing, if financing 47. is applicable.) 48. This Purchase Agreement ^ -S IS NOT subject to cancellation of a previously written purchase agreement -(Che one.}---- 49. dated , 20 50. (If answer is IS, said cancellation shall be obtained no later than , 20 . if 51. said cancellation is not obtained by said date, this Purchase Agreement is canceled. Buyer and Seller shall immediately 52. sign a Cancellation of Purchase Agreement confirming said cancellation and directing all earnest money paid 53. hereunder to be refunded to Buyer.} 54. Buyer has been made aware of the availability of property inspections. BuyerElects ^ Declines to have a ---•--(Check one.}--- 55. property inspection performed at Buyer's expense. 56. This Purchase Agreemeni~IS ^ !S NOT subject to an Inspection Contingency Addendum. ---(Check one.}--- 57. (If answer is IS, see attached Addendum.) 58. DEED/IUTARKETABLE TITLE: Upon performance by Buyer, Seller shalt deliver a 59. ^ Warranty Deed or (,Other: -" Deed joined in by spouse, if any, conveying °------------------------------(Check one.}..._..-._._-.___...._._--_-___..- 60. marketable title, subject to 61. (a) building and zoning laws, ordinances, and state and federal regulations; 62. (b) restrictions relating to use or improvement of the property without effective forfeiture provisions; 63. (c) reservation of any mineral rights by the State of Minnesota; 64. (d) utility and drainage easements which do not interfere with existing improvements; 65. (e) rights of tenants as follows (unless specified, not subject to tenancies): 66. __-- ;and 67. {f) others (must be specified in wri#ing): 68. 69. Seller shall pay on the date of closing all real estate taxes due and payable in all prior years including all penalties and 70. interest. 71. ^ BUYER SHALL PAY ELLER SHALL PAY on date of closing any deferred real estate taxes (e.g., Green -•-°------------(Check one. -•-°-------.-.~._- 72. Acres) or special assessments, payment of which is required as a result of the closing of this sale. 73. BUYER AND SELLER SHALL PRORATE AS OF THE DATE OF CLOSING ^ SELLER SHALL PAY ON --_..--------------------_-_-----------------------(Check one.}-- 74. BATE OF CLOSING all installments of special assessments certified for payment, with the real estate taxes due and 75. payable in the year of closing. 76. DYER SHALL ASSUME ^ SELLER SHALL PAY on date of closing alt other special assessments levied as --°-----------•-----------(Check one.}-..--_........-.-_.----__.- 77. of e date of this Purchase Agreement. 78. BUYER SHALL ASSUME ^ SELLER SHALL PROVIDE FOR PAYMENT OF special assessments pending as -------------------lChedc one.}------------------ 79. of the date of this Purchase Agreement for improvements that have been ordered by any assessing authorities. (Seller's 80. provision for payment shall be by payment into escrow of two (2} times the estimated amount of the assessments or 81. less, as required by Buyer's lender.) 82. Buyer shall pay any unpaid special assessments payable in the year following closing and thereafter, the payment of 83. which is not otherwise herein provided. ~fiN:PA-2 (8/09) 3-~ ~~,~~~ASE A~~I_EI~E~~ 84. Address t ~! ~ ~ ~~~ ~~~~ 85. Page 3 Date 86. As of the date of this Purchase Agreement, Seller represents that Seller ^ l-IAS ^ FiAS NOT received a notice --(Check one.}------ 87. regarding any new improvement project from any assessing authorities, the costs of which project may be assessed 88. against the property. Any such notice received by Seller after the date of this Purchase Agreement and before closing 89. shall be provided to Buyer immediately. If such notice is issued after the date of this Purchase Agreement and on 90. or before the date of closing, then the parties may agree in writing, on or before the date of closing, to pay, provide 91, for the payment of or assume the special assessments. In the absence of such agreement, either party may declare 92. this Purchase Agreement canceled by written notice to the other party, or licensee representing or assisting the other 93. party, in which case this Purchase Agreement is canceled. If either party declares this Purchase Agreement canceled, 94. Buyer and Seller shall immediately sign a Cancellation of Purchase Agreement confirming said cancellation and 95. directing all earnest money paid hereunder to be refunded to Buyer. 96. Buyer shall pay~PRORATED FROM DAY OF CLOSING ^ 12ths OF ^ ALL [] NO real estate taxes due 97. and payable in the year 20 98. Seller shall pay ~PRORATEDTO DAY OF CLOSING ^ 12ths OF ^ ALL ^ NO real estate taxes due and ___~.... ____.___._._____--.___ Check one. 99. payable in the year 20 . If the closing date is changed, the real estate taxes paid shall, if prorated, be adjusted 100. to the new closing date. Seller warrants taxes due and payable in the year 20 ~ ~ shall be ^ Fl9LL-^ ~AR'I=^ NON- .._.~_»»._»(Check one.}-_...____.._._. 101. homestead classification. 102. if part- or non-homestead classification is checked, Seiler agrees to pay Buyer at closing $ 103. toward the non-homestead real estate taxes. Buyer agrees to pay any remaining ba{ance of non-homestead taxes 104. when they become due and payable. Buyer shall pay real estate taxes due and payable in the year following closing 105. and thereafter, the payment of which is not otherwise herein provided. No representations are made concerning the 106. amount of subsequent real estate taxes. 107. POSSESSION: Seller shall deliver possession of the property no later than ~~,_~,~{,~?a after closing. 108. All interest; unit owners' association dues; rents; and charges for city water, city sewer, electricity and natural gas shall 109. be prorated between the parties as of date of closing. Buyer shalt pay Seller for remaining gallons of fuel oil or liquid 110. petroleum gas on the day of closing, at the rate of the last fil{ by Seller. Seller agrees to remove ALL DEBRIS AND 111. ALL PERSONAL PROPERTY NOT INCLUDED HEREIN from the property by possession date. 112. TITLE AND EXAMINATION: Within a reasonable time period after Final Acceptance of this Purchase Agreement, Seiler 113. shall provide one of the following title evidence options, at Seller's- selection, which shall include proper searches 114. covering bankruptcies, state and federal judgments and liens, and Eevied and pending special assessments to Buyer 115. or Buyer's designated title service provider: 116. (1) A commitment for an owner's policy of title insurance on a current ALTA form issued by an insurer licensed 117. to write title insurance in Minnesota as selected by Buyer. Seller shall be responsible for the title search and 118. exam costs related to the commitment. Buyer shall be responsible for all additional costs related to the issuance 119. of the title insurance policy(ies) including but not limited to the premium(s), Buyer's name search and plat 120. drawing, if any. Seller shall surrender a copy of any owner's title insurance policy and Abstract of Title, if in 121. Seller's possession or control, for this property to Buyer or Buyer's designated title service provider. 122. (2) An Abstract of Title certified to date if Abstract Property or a Registered Property Abstract (RPA) certified to 123. date if Registered (Torrens) property. Seller shall pay for the abstracting or RPA costs and surrender any 124. abstract for this property in Seller's possession or control to Buyer or Buyer's designated title service provider. 125. If property is Abstract and Seller does not have an Abstract of Title, Option (1) will automatically apply. 126. Seller shall use Seller's best efforts to provide marketable title by the date of closing. In the event Seller has not 127. provided marketable title by the date of closing, Seller shall have an additional 30 days to make title marketable, or in 128. the alternative, Buyer may waive title defects by written notice to Seller. in addition to the 30-day extension, Buyer 129. and Seller may, by mutual agreement, further extend the closing date. Lacking such extension, either party may declare 130. this Purchase Agreement canceled by written notice to the other party, or licensee representing or assisting the other 131. party, in which case this Purchase Agreement is canceled. If either party declares this Purchase Agreement canceled, 132. Buyer and Seller shall immediately sign a Cancellation of Purchase Agreement confirming said cancellation and 133. directing all earnest money paid hereunder to be refunded to Buyer. MN: PA-3 (8/09) 3 -5 ~~,~~~~5~ ~~~~~~E~,- 134. Page 4 135. SUBDIVISION OF LAND: If this sale constitutes or requires a subdivision of land owned by Seller, Seller shall pay 136. all subdivision expenses and obtain all necessary governmental approvals. Seller warrants that the legal description 137. of the real property to be conveyed has been or shall be approved for recording as of the date of closing. Seller warrants 138. that the buildings are or shall be constructed entirely within the boundary lines of the property. Seller warrants that 139. there is a right of access to the property from a public right-of-way. These warranties shall survive the delivery of the 140. deed or contract for deed. 141. Seller warrants that prior to the closing, payment in full will have been made for all labor, materials, machinery, fixtures 142. or tools furnished within the 120 days immediately preceding the closing in connection with construction, alteration or 143. repair of any structure on, or improvement to, the property. 144. Seller warrants that Seller has not received any notice from any governmental authority as to condemnation proceedings, 145. or violation of any law, ordinance or regulation. If the property is subject to restrictive covenants, Seller warrants that 146. Seller has not received any notice from any person or authority as to a breach of the covenants. Any such notices 147. received by Seller shall be provided to Buyer immediately. 148. Seller agrees to allow reasonable access to the property for performance of any surveys or inspections agreed to 149. herein. 150_ RISK OF LOSS: If there is any loss or damage to the property between the date hereof and the date of closing for any 151. reason, including fire, vandalism, flood, earthquake or act of God, the risk of lass shall be on Seller. If the property 152. is destroyed or substantially damaged before the closing date, this Purchase Agreement is canceled, at Buyer's option, 153. by written notice to Seller or licensee representing or assisting Seller. If Buyer cancels this Purchase Agreement, 154. Buyer and Seller shall immediately sign a Cancellation of Purchase Agreemenf confirming said cancellation and 155. directing all earnest money paid hereunder to be refunded to Buyer. 156. TIME OF ESSENCE: Time is of the essence in this Purchase Agreement. 157. ENTIRE AGREEMENT: This Purchase Agreement, any attached exhibits and any addenda or amendments signed 158. by the parties shall constitute the entire agreement between Seller and Buyer and supersedes any other written or 159. oral agreements between Seller and Buyer. This Purchase Agreement can be modified or canceled only in writing 160. signed by Seller and Buyer or by operation of law. All monetary sums are deemed to be United States currency for 161. purposes of this Purchase Agreement. Buyer or Seller maybe required to pay certain closing costs, which may effectively 162. increase the cash outlay at closing or reduce the proceeds from the sale. 163. FINAL ACCEPTANCE: To be binding, this Purchase Agreement must be fully executed by both parties and a copy 164. must be delivered. 165. CALCULATION OF DAYS: Any calculation of days begins on the first day (calendar or Business Days as specified) 166. following the occurrence of the event specified and includes subsequent days (calendar or Business Days as specified) 167. ending at 11:59 P.M. on the last day. 168. BUSINESS DAYS: "Business Days" are days which are not Saturdays, Sundays or state or federal holidays unless 169. stated elsewhere by the parties in writing. 170. DEFAULT: if Buyer defaults in any of the agreements hereunder, Seller may terminate this Purchase Agreement 171. under the provisions of MN Statute 559.21. If either Buyer or Seller defaults in any of the agreements hereunder or 172. there exists an unfulfilled condition after the date specified for fulfillment, either party may cancel this Purchase 173. Agreement under MN Statute 559.217, Subd. 3. Whenever it is provided herein that this Purchase Agreement is 174. canceled, said language shall be deemed a provision authorizing a Declaratory Cancellation under MN Statute 559.217, 175. Subd. 4. 176. If this Purchase Agreement is not canceled or terminated as provided hereunder, Buyer or Seller may seek actual 177. damages for breach of this Purchase Agreement or specific performance of this Purchase Agreement;.and, as to 178. specific performance, such action must be commenced within six months after such right of action arises. 179. NOTICE REGARDING PREDATORY OFFENDER INFORMATION: Information regarding the predatory offender 180. registry and persons registered with the predatory offender registry under MN Statute 243.166 may be obtained 181. by contacting the local law enforcement offices in the community where the property is located or the Minnesota 182. Department of Corrections at (651} 361-7200, or from the Department of Corrections web site at 183. www.corrstate.mn.us. MN:PA-4 (8/09) -~ PLIRtCI-IASE AC,REEIUI QEI_VI(~ c ~ 184. Address s ~ ® ~" ~° ~LL `~'~ ~ T 185. Page 5 Date 186. ENVIRONMENTAL CONCERNS:To the best of Seller's knowledge, there are no hazardous substances or underground 187. storage tanks except herein noted: 188. 189. 190- 191. 192. 193. 194. 195. 196. 197. (Check appropriate boxes. 198. SELLER WARRANTS THAT THE PROPERTY IS EITHER DIRECTLY OR INDIRECTLY CONNECTED TO: 199. CITY SEWER~ES ^ NO /CITY WATERES ^ NO 200. SUBSURFACE SEWAGE TREATMENT SYSTEM 201. SELLER CERTIFIES THAT SELLER ^ DOES ^ DOES NOT KNOW OF A SUBSURFACE SEWAGE TREATMENT ------(Check one.}---------- 202. SYSTEM ON OR SERVING THE PROPERTY (If answer is DOES, and the system does not require a state permit, 203. see Subsurface Sewage Treatment System Disclosure Statement.) 204. PRIVATE WELL 205. SELLER CERTIFIES THAT SELLER ^ DOES ^ DOES NOT KNOW OF A WELL ON OR SERVING THE --- (Check one.)------- 206. PROPERTY. (If answer is DOES and well is located on the property, see Wet! Disclosure Statement) 207. THIS PURCHASE AGREEMENT ^ IS ^ IS NOT SUBJECT TO A SUBSURFACE SEWAGETREATMENT SYSTEM -•----(Check one.}------ 208. AND WELL INSPECTION CONTINGENCY ADDENDUM. (!f answer is IS, see attached Addendum.) 209. IF A WELL OR SUBSURFACE SEWAGE TREATMENT SYSTEM EXISTS ON THE PROPERTY, .BUYER FIRS 210. RECEIVED A WE'LL DISCLOSURE STl~TEMENT AND/OR A SUBSURFACE' SEWAGE TREATMENT SYSTEM 2 i 1. DISCLOSURE STATEMENT. 212. 213. ~ ~ _~-"-'' / (`~ (~~s'(~Licensee) 214. ~~~~ V'yu' i~C~,.- ~~ (Reat Est[a~te Compan~yName~) 215.c ~ 't-'~~Y~ Il-~~'' 1~ ~Yr (Licensee) 216. ~ ~~1(r (Real Estate Co pony Name) NOTICE is Seller's Agent ^ Buyer's Agent ^ Dual Agent ^ Facilitator. -- _..__--_--(Check one.}--------------------------------- is ^ Seller's Agent uyer's Agent ^ Dual Agent ^ Facilitator. -------------- -(Check one.}---- ---_.....------- 217. THIS NOTICE DOES IVOT SATISFY MINNESOTA STATUTORY AGENCY DISCLOSURE REC2UIREMENTS. MN: PA-5 (8/09) ~ ,1 PURCHASE ~4faREElVIE 218. Address p ~ ~ ~m ~~ 219. Page 6 Date 220. SELLER WARRANTS THAT CENTRAL AIR-CONDITIONING, HEATING, PLUMBING AND WIRING SYSTEMS USED 221. AND LOCATED ON SAID PROPERTY SHALL BE IN WORKING ORDER ON DATE OF CLOSING, EXCEPT AS 222. NOTED IN THIS PURCHASE AGREEMENT. 223. BUYER HAS THE RIGHT TO AWALK-THROUGH REVIEW OF THE PROPERTY PRIOR TO CLOSING TO 224. ESTABLISH THAT THE PROPERTY IS IN SUBSTANTIALLY THE SAME CONDITION AS OF THE DATE OF 225. THIS PURCHASE AGREEMENT. 226. BUYER ^ HAS ^ HAS NOT RECEIVED A SELLER'S PROPERTY DISCLOSURE STATEMENT OR A -----•--(Check one.}------- 227. SELLER'S DISCLOSURE ALTERNATIVES FORM. 228. BUYER HAS RECEIVED THE INSPECTION REPORTS, IF REQUIRED BY MUNICIPALITY. SELLER AGREES TO 229. NOTIFY BUYER IMMEDIATELY @N WRITING OF ANY SUBSTANTIVE CHANGES FROM ANY PRIOR 230. REPRESENTATIONS REGARDING THE PROPERTY. 231. IN THE EVENT BUYER AND SELLER HAVE ELECTED `WAIVER' ON THE SELLER'S D/SCLOSUREALTERNATlVES 232. FORM, THEN DO NOT COMPLETE LINES 233-238. 233. BUYER ACKNOWLEDGES THAT NO ORAL REPRESENTATIONS HAVE BEEN MADE REGARDING POSSIBLE 234. PROBLEMS OF WATER IN BASEMENT OR DAMAGE CAUSED BY WATER ICE OR ICE BUILDUP ON ROOF OF 235. THE PROPERTY, AND BUYER RELIES SOLELY IN THAT REGARD ON THE FOLLOWING STATEMENT BY 236. SELLER. 237. SELLER ^ HAS ^ HAS NOT HAD A WET BASEMENT AND ^ HAS ^ HAS NOT HAD ROOF, WALL OR ------(Check one.}---------• ---- (Check one.}-- 238. CEILING DAMAGE CAUSED BY WATER OR !CE BUILDUP. 239. DUAL AGENCY REPRESENTATION 240. PLEASE CHECK OAlEOFTHE FOLLOWING SELECTIONS: 241. ^ Dual Agency representation ®OES iVOT apply in this transaction. Do not comp/ete lines 242 258. 242. ^ Dual Agency representation DOES apply in this transaction. Complete the disclosure in lines 243 258. 243. Broker represents both the Seller(s) and the Buyer(s) of the property involved in this transaction, which creates a 244. dual agency. This means that Broker and its salespersons owe fiduciary duties to both Seller(s) and Buyer(s). Because 245. the parties may have conflicting interests, Broker and its salespersons are prohibited from advocating exclusively for 246. either party. Broker cannot act as a dual agent in this transaction without the consent of both Seller(s) and Buyer(s). 247. Seller(s) and Buyer(s) acknowledge that 248. (1) confidential information communicated to Broker which regards price, terms, or motivation to buy or sell will 249. remain confidential unless Seller(s) or Buyer(s) instructs Broker in writing to disclose this information. Other 250. information wil! be shared; 251. (2) Broker and its salespersons will not represent the interest of either party to the detriment of the other; and 252. (3) within fhe limits of dual agency, Broker and its salespersons will work diligently to facilitate the mechanics of 253. the sale. 254. With the knowledge and understanding of the explahation above, Seller(s) and Buyer(s) authorize and instruct Broker 255. and its salesperson tc act as dual agents in this transaction. 256. Seller Buyer 257. Seller Buyer 258. Date Date MN:PA-6 (8/09) v /~ Pt1F8CEiASE ACa13EEIVtE(VT' 259. Address ~~®~ ~ ° lIlt.G~ ~~ ~~ f1°.r,' 4 0 CwC ~?MtN^i, ~1;9 ~'l.~ ~5,n .. ~..:.. r'. 261. OTHER: /.3rt9~~r.e+~i°~' t{;. ' ^~„ , . r+; tfs~~~ ;~;taa,< ~::`.`-z~~a~. I w G a~l Ya°.rei"rd - o-?9 '~~.i~f,'a„ t tC 262. ~ c.rDd C..r~i31'F'~CYSGei'> 3~)@ t(Sg"4bn 're aR. ~..~t~Ye PMrcfads~; Rcaa'et~dusra 263. 264. 260. Page 7 Date 265. Other addenda may be attached which are made a part of this Purchase Agreement. (Enter total number of pages of 266. this Purchase Agreement, including addenda, on line two (2} of page one (1).) 267. I, the owner of the property, accept this Purchase I agree to purchase the property for the .price and on 268. Agreement and authorize the listing broker to withdraw the terms and conditions set forth above 269. said property from the market, unless instructed I have reviewed all pages of this Purchase 270. otherwise in writing. A ee ent~,,. ~ 271. 1 have reviewed all pages of this Purchase Agreement. 272. ~ if checked, this Purchase Agreement is subject to 273. attached CounterofferAddendum. 27a. x (Seller's Signature) 275. X (Sellers Printed Name) 276. X (Marital Status) 277. X (Sellers Signature) 278. X (Sellers Printed Name) 279. x (Marital Status) 280. FINAL ACCEPTANCE DATE (Date) ~i~ (Date) (buyer's Printed Name) I~~'.I.tJt'~vC ..1~~trL~G-c.'~g 1f~tG~tt~ x ~:t-,a~etlJ~ ~ tR.~tl~J~'£~~C-fit' (Marital Stat s /~r6n~tP' -3~ t~~i ~~ ~~- Y'8'i~ C8'~'`f X ---~~ ~Z-a~f - o (buyers Sigr ) (Date) x ~'~.~tJti~~ M.. ~iV ®/as~ (Buyers Printed Name) x~? L~~~CC~NV~~4~1i" iF~IIfZ~ [`t~ (Marital Status) ~ 1~~„ yam, 281. THIS IS A LEGALLY BINDING CONTRACT BETWEEN BUYER(S) AND SELLER{S). 282. IF YOU DESIRE LEGAL OR TAX ADVICE, CONSULT AN APPRO~TE PROFESSIONAL. 283. I ACICNOWLEDGETHAT t HAVE RECEfVEDAND HAVE HADTHE OPPO UNI TO EVIEWTHI 284. DISCLOSURE AIVD RESIDEflITIAL RF~Bl. PROPERTY ARB/TRATIOflI IDIE T, WHIG IS 285. VOLUNTARY AGREEMENT AND IS NOT PART OF THIS PURCHAS G EME 286. SELLER(S) ~S NAL, 1~. 287. SELLI MN:PA-7 (8/09) ~sR6... Kv: • ~; 1 ~~ .~~~". ~~ VI se.~ AGENDA ITEM # 4 REPORT # ~~ STAFF REPORT HOUSING AND REDEVELOPMENT AUTHORITY MEETING MARCH 8, 2010 REPORT PREPARED BY: REPORT PRESENTER: DEPARTMENT DIRECTOR REVIEW: REVIEWED BY EXECUTIVE DIRECTOR: C JOHN STARK, COMMUNITY DEVELOPMENT DIRECTOR NAME, TI!'LE JOHN STARK, COMMUNITY DEVELOPMENT DIRECTOR ITEM FOR HRA CONSIDERATION: Consideration of a Resolution affirming the Housing Redevelopment Authority's support of the housing development concept at 6401 Lyndale Avenue (Woodlake Plaza) and expressing its willin Hess to further examine public financin for that ro~ect. RECOMMENDED ACTION: By Motion: Adopt the attached Resolution affirming support for the 90-unit housing development concept for the property located at 6401 Lyndale Avenue and expressing a willingness to continue to examine public financing for that project and recommending the City Council call for a public hearing on the establishment of the Woodlake Plaza Housing Tax Increment Financing District. II. BACKGROUND On October 19, 2009 Michael Development presented a proposal to the Housing and Redevelopment Authority (HRA) for their development of the property at 6401 Lyndale Avenue (currently designated as Woodlake Plaza) with 90 units of upscale market-rate rental housing with an affordable component. Since that time, the developers have presented their concept to the Richfield City Council at Work Session meetings on October 27, 2009 and January 26, 2010. 03082010 Woodlake Plaza Currently, Woodlake Plaza contains approximately 25,000 square feet of retail space and contains tenants such as the Donut Connection, Golden Tan, and Metropolitan Financial Mortgage Company as well as a number of vacant spaces. In recent years, however, occupancy and rental incomes have not been adequate to render this as a feasible retail development. The developers, who also own the existing development, have worked with market analysts to identify the most attractive use as market-rate rental housing with an affordable component. The developers have created a concept plan for market-rate rental housing with 20-40% affordable units on the current site plus the inclusion of a small HRA-owned property that immediately abuts the Woodlake Plaza center. Their initial financial analysis, however, identifies a funding gap for the project. In order to fill the gap, the developers will be requesting Tax Increment Financing (TIF) for the project in addition to their infusing more of their own equity than is customary in a development project. As part of their proposal, the developers submitted a formal development proposal to the City Council on January 15, 2010. That proposal (attached) contains the following documents: ^ A description of the history of the existing retail center; ^ An explanation of the difficulties the owners have experienced in their recent efforts to market/lease retail space; ^ A description of the proposed multi-family housing project and the financing that is being sought; ^ Maps of the general area, comprehensive planning in the area and zoning in the area; ^ Architectural drawings of the proposed project; ^ A market study and supplemental market study; ^ A sources and uses statement showing project funding; and ^ Tax Increment Financing projections. Several additional documents and letters that are related to the project have been drafted since the January 15 proposal letter, these documents (attached) include: ^ A letter of support from Metes and Bounds Management Company and; ^ Council Memorandum No. 27 (dated February 25, 2010) which provides further analysis on market rate rents, affordability, parking, taxes and tax increment financing. In 2009 the existing development paid $21,400 in City property taxes; this was a 3% reduction from the City taxes it paid in 2008. If the project were established as a TIF District, its market value would be "frozen" at its current $2.3 million value. The tax class rate, however, would change from commercial to housing -which results in a reduced taxation. The resulting projected City tax revenue, therefore, would be $14,080 once the construction was complete. This represents a $7,320 decrease in annual City property tax revenues. If the project were constructed, however, the fiscal benefits over and above property tax revenues would include: $8,288 of TIF revenues to the HRA for administrative funding, approximately $30,000 in building permit fees and the potential to elevate neighboring property values which would result in increased taxation of those properties. The developer is seeking is up to $822,000 in .TIF funds. Their financial documentation shows that this amount of assistance is necessary in order to provide the "debt service coverage" needed to secure financing for the project. As a comparison, the Oaks on Pleasant development (which is the only other non-age-restricted rental development that has been developed in Richfield in the past 25 years) received a portion of the $10 million in TIF that was approved for the entire Urban Village development (which also includes the Wood Lake Centre office/retail development, the Pines senior housing development, a parking ramp and a McDonald's restaurant). The proposal has been refined since it was last presented to the HRA on October 19, 2009. The developers will be present at the March 8 HRA meeting to provide an update on their development concept. On March 9 the City Council is scheduled to consider a Call for a Public Hearing on the creation of a Housing Tax Increment Financing District. If the Council were to approve this action, the HRA would take formal action related to the TIF District at the April 19 meeting and a Public Hearing would take place at the April 27 City Council meeting. At that time, the Council could vote on whether or not to create a Housing Tax Increment Financing District for this redevelopment proposal. III. BASIS OF RECOMMENDATION A. POLICY • The Richfield HRA plays a key role in the consideration of, implementation of, and assistance to housing and redevelopment projects. • It would be appropriate for the HRA to declare its support of the proposed project prior to the City Council taking any formal action. B. CRITICAL TIMING ISSUES • The Richfield City Council is scheduled to consider a Call for a Public Hearing on the Creation of a Tax Increment Financing District on March 9. If approved, the Public Hearing would occur on April 27. C. FINANCIAL • The developers have requested up to $822,000 (net present value) in TIF in order to make this project financially feasible. D. LEGAL • HRA Legal Counsel has been a party to discussions with the developer regarding their proposal. • HRA Legal Council has reviewed the attached Resolution. IV. ALTERNATIVE RECOMMENDATION(S~ • Seek further clarification from staff or the developer before considering the attached Resolution; • Adopt the attached Resolution with amended language in order to meet the desires or concerns of HRA Commissioners; Do not adopt the attached Resolution. V. ATTACHMENTS • Resolution • January 15, 2010 Proposal Letter from Michael Development (with numerous attachments); A letter of support from Metes and Bounds Management Company and; Council Memorandum No. 27 (dated February 25, 2010) which provides further analysis on market rate rents, affordability, parking, taxes and tax increment financing. VI. PRINCIPAL PARTIES EXPECTED AT MEETING • Terry McNellis and/or Michael Swenson of Michael Development. HRA RESOLUTION NO. RESOLUTION AFFIRMING SUPPORT FOR THE 90-UNIT HOUSING DEVELOPMENT CONCEPT FOR THE PROPERTY LOCATED AT 6401 LYNDALE AVENUE AND EXPRESSING A WILLINGNESS TO CONTINUE TO EXAMINE PUBLIC FINANCING FOR THAT PROJECT AND RECOMMENDING THE CITY COUNCIL CALL FOR A PUBLIC HEARING ON THE ESTABLISHMENT OF THE WOODLAKE PLAZA HOUSING TAX INCREMENT FINANCE DISTRICT WHEREAS, the Richfield Housing and Redevelopment Authority (the "HRA") has as one of its objectives providing decent, safe and sanitary housing affordable to persons of low and moderate income; and WHEREAS, the HRA is charged with considering, implementing and/or assisting housing and redevelopment projects that further the Comprehensive Plan for the City of Richfield; and WHEREAS, the City of Richfield's Comprehensive Plan (the Comprehensive Plan) provides goals, objectives, policies and implementation strategies to achieve the desired future growth of the community; WHEREAS, the Comprehensive Plan contains the following policy statements: ^ Promote the development of a balanced housing stock that is available to a range of income levels; ^ Promote additional housing diversity to serve families at all stages of their life-cycle through assistance, incentive programs, and the exploration of possible partnerships; ^ Promote the development, management, and maintenance of affordable housing in the City through assistance programs; alternative funding sources; Promote the development, management, and maintenance of affordable housing in the City through assistance programs; alternative funding sources; ^ Maintain an appropriate mix of housing types in each neighborhood based on available amenities, transportation resources and adjacent land uses. WHEREAS, the HRA has concluded that the proposed housing project achieves those policy statements as set forth in the Comprehensive Plan, and is in furtherance of the affordable housing objectives for which the HRA was established; and WHEREAS, the HRA regards the use of public financing tools (such as tax increment financing) to be generally appropriate when those tools are required to assist development projects in achieving the community's established policies in such a way that would not be possible but-for such assistance. NOW, THEREFORE, BE IT RESOLVED, that the HRA supports the 90-unit housing redevelopment concept for the property located at 6401 Lyndale Avenue and is prepared to continue to examine public financing for that project; and 03082010 Woodlake Plaza BE IT FURTHER RESOLVED, that the HRA recommends that the City Council take the necessary first step of calling for the public hearing on the proposed establishment of the Woodlake Plaza Housing Tax Increment District. Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 8th day of March, 2010. Suzanne M. Sandahl, Chair ATTEST: Joan Helmberger, Secretary • ~'~ Michael 2177 Youngman Avenue, Suite 180 St. Paul, MN 55116 (651)698-3452 (65])699-6433--fax January 15, 2010 Mayor Goettel and Members of the City Council City of Richfield PROPOSED DEVELOPMENT Dear Mayor Goettel and Council Members: We have been the owners of Woodlake Plaza Shopping Center located at 64~' and Lyndale Avenue South for over 17 years and are pleased to present a proposal for a new housing development to replace the existing center. • This proposed 90-unit rental housing development is the result of several years spent exploring numerous alternative uses and was a difficult decision; in addition to asking for City assistance in the form of a housing tax increment district, the owners need to assume substantial risk and make a substantial cash investment as well. The enclosed report provides a detailed history of our efforts to date as well as detailed financial and architectural information on the proposed project. To summarize the current situation and opportunity, we would ask you to consider the following: • This center is physically and structurally obsolete • Despite extensive leasing efforts by the owners and a major regional leasing agent, the center is currently 49 percent vacant • The surrounding area has declined significantly; vacant and boarded Lyndale Garden Center, vacant Kmart store, vacant/competing retail immediately adjacent to the center, etc. • The owners are asking that the increased taxes from the proposed development be captured and applied to the cost of the project • The owners have worked with City staff and the City's legal and financial consultants prior to submitting this proposal for your consideration. • Hopefully, this development acts as a catalyst for further development/redevelopment in this portion of the city. • City of Richfield Page 2 January 15, 2010 The proposed project works today because the current costs of construction are attractive and interest rates are low. We believe that failure to act will see a continuing decline in the neighborhood and this property. The City of Richfield has an overabundance of this type of retail development and as we all compete for tenants, we end up attracting or acquiring the type of tenants that neither we, nor the City, would like to see just for economic survival. We hope that you will look favorably upon this request; we see it as an opportunity to inject some new life into an area of the City that needs it and to bring some much needed employment to the area as well. We look forward to meeting with you on January 26. If you have any question in the meantime, please do-not hesitate to contact me at 612-991-9062. Sincerely, • Terry c elks TM:pk Enclosure: Lyndale Commons Proposed Sources & Uses • McNellis. WoodlakeRedevelopment Proposal.doc January 15, 2010 Proposed Redevelopment/Housing Project _Woodlake Plaza Shopping Center 64th and Lvndale Avenue South Backeround Mary and Terry McNellis and Mike Swenson (the "Owners") of Woodlake Plaza are proposing an alternative use for the property known as the Woodlake Plaza shopping center at the intersection of 64th and Lvndale Avenue South in Richfield. The property is economically obsolete as a retail building and the surrounding neighborhood is in the early stages of visible decline and deterioration. Despite extensive efforts, the Owners of the building have been unable to lease the centerto viable commercial tenants for a number of years, and after extensive examination of alternatives are proposing a change in use to multifamily housing. The feasibility of the housing development is dependent on the use of Tax Increment Financing within a Housing District and the acquisition of a small residential lot owned by the Richfield Housing and Redevelopment Authority (HRA). The Owners have owned this property for over seventeen (17) years and would be the owners of the proposed housing project. History The Woodlake Plaza shopping center was constructed in 1960, was remodeled and expanded in 1985, and again, most recently in 2003 when a new facade and sign band were installed. The center is well maintained and is comprised of approximately 24,000 square feet with the majority of its parking in the rear of the building. The building fa.~ade is constructed at the sidewalk edge with no on-street parking available on Lvndale Avenue, its primary commercial frontage. Over most of the building's history, it has provided rental space for small businesses serving primarily the immediate neighborhood. It has provided a good start for new businesses and for several national tenants such as Weight Watchers, H & R Block and Pizza Hut. • However, the commercial real estate market, especially for retail tenants, is an ever changing environment based on the changing tastes and shopping patterns of the American consumer. The Woodlake Plaza shopping center, as well as many the neighboring properties, has become physically obsolete and an unattractive choice for the new age of retail and service businesses. These market trends have hit Woodlake Plaza especially hard over the past five years. The property has lost almost all of its viable tenants as many of its long time local businesses either went out of business or relocated to presumably superior locations within Richfield or in other more suburban locations. Currently, the property is 49 percent vacant. Several of the new tenants leasing space in the past five years have already gone out of business or have moved on. There are a number of reasons for the lack of business and leasing activity at Woodlake Plaza and the other commercial properties in the neighborhood. They include, among others: 1. Chaneine neiehborhood economics: There has been a concerted effort by the City of Richfield to redevelop the area near 66th and Lyndale, and it appears to have been a great success; however, travel north two blocks and you will find several deteriorated • buildings including the former Lyndale Garden Center, vacant Kmart, several freestanding small vacant commercial buildings and three strip centers in excess of 50 percent vacant; the closing of the Garden Center resulted in the removal of this area from the leasing market for small tenants because the Lyndale Garden Center had served as regional identification of the location and as an "anchor" to draw traffic for decades; the City of Richfield has seen many failed attempts to redevelop the Garden Center site over the years and its current condition and the resulting lack of a large retailer has had a devastating impact on occupancy at the surrounding properties; 2. Hi~hway construction: over the past two years, the Crosstown/I 35W project has closed Lyndale completely as well as the interchange at the Crosstown; this has crippled our existing tenants and the ability to draw any new tenants to this location; intermittent closures and congestion on the freeway will continue for at least the next year or two; 3. Decline in small businesses; even before the credit crisis and the Great Recession hit the scene, leasing to small business was very minimal; this was caused by the "one, two punch" of the consumer movement to the "big box" discount retailers and the termination of credit to small businesses; the credit crisis has shut down the ability of small businesses to borrow money to start and/or maintain their businesses; this has resulted in no leasing activity for this sector of the commercial market for the past three years; the only exception is side shop space next to a anchor grocery store or some other big box anchor; these factors and trends were in place well before the Great Recession; projections are that we will see a long, slow recovery period which does not improve prospects for small business leasing; • 4. Over supply of Product; Richfield has an abundance of vacant retail space and, we would suggest, an over abundance of older neighborhood based strip centers. This provides tenants with many options, but results in a number of vacant, economically struggling, centers. This proposed project would help remove some of that excess space from the market and would increase the number of households in the area to assist the remaining strip center properties and businesses. 5. Recession; the Great Recession, as it has become known, has cut off credit to businesses and the consumer, has strangled consumer spending and created record levels of unemployment creating in the "knock- out punch" for the Woodlake Plaza commercial neighborhood. Recently, Kmart announced the closing of the store just a block down the street. 6. Finally, the factor that ties all the other factors to>?ether for Woodlake Plaza is the physical construction of the buildings which is economically obsolete; the buildings do not have a major anchor, the suites are small in size designed for small businesses for which there is no market, the buildings are constructed with the front door at the street and the parking behind the building, which was desirable in the 1950's, but does not serve the modern shopper consisting of busy families with a desire to park at the front door, run in and move on; in fact, if you examine the location of the few tenants we have left in this center, you will find that they are located on the ends of the center, where the parking is closer to the front doors of the individual suites; in addition, several of the separating or demising walls in the shopping center are constructed of concrete block which does not allow flexibility in accommodating newer or larger tenant specifications. Alternative Uses For the past three years, the Owners have hired Welsh Companies, one of the major commercial real estate brokers in the Twin Cities area, to market this center to new tenants; in all that time, they have produced one, 500 square foot tenant; they report to us that since the recession has hit, there is major discounting of rents in the Class A retail locations, therefore, what few prospects there are for smaller suites have gravitated to the Class A properties, resulting in no grospect traffic at all at the Class B or Class C properties. Based on the bleak prospects for leasing Woodlake Plaza to viable, neighborhood based tenants; the Owners have spent the past two years exploring alternative uses for the property. Two years ago, there was good activity for freestanding drug store development (Walgreen's and CVS), freestanding bank facility development and specialty grocery store and hardware store development. The owners have explored all of these alternative users for a redevelopment within the property's existing commercial zoning classification. Prospective tenants and users have indicated they were not interested in a new building at 64th and lyndale because it is not located on a "hard corner", which is a retail term for property located on the intersection of two major thoroughfares with high levels of traffic. lyndale Avenue certainly meets the • requirement of a major thoroughfare, but 64th most definitively does not because it simply provides access to a small residential area. The intersections of 66th and Lyndale and 65th and Lyndale meet the requirements of being a "hard corner". The banking facility development market has come to a standstill in light of the broader credit/banking crisis. Many of the smaller specialty grocery stores find the site too small for their buildings and parking requirements or they also require a "hard corner" for their location. Other users we have pursued for the center include Ace Hardware, a medical clinic and several fitness facilities. Ace Hardware rejected the location for lack of the "hard corner" and the inflexibility of the building construction to accommodate a larger user; the medical clinic was unable to sell its existing building within the current market conditions and the fitness centers could not be accommodated due to the inflexible lay out of the building. The research into alternative uses eventually brought the owners to.the concept of multifamily housing. Two of the partners in the ownership structure of Woodlake Plaza are area experts in the construction, management and financing of multifamily rental housing with decades of experience. After preliminary discussions with the Richfield development staff, and the City's legal and financial consultants, the Owners prepared architectural plans and studies and professional market studies to determine the type, amount and style of multifamily housing which might be successful at this location. The Owners also . explored several avenues for financing a project given the limited sources available in today's capital/financing environment. . The Owners believe they have arrived at an attractive, market rate housing development of 90 units which would be an appropriate re-use of the property, a positive contribution to Richfield's housing stock and, hopefully, a jump start (or stimulus) to the revitalization of the section of Lyndale Avenue from 65th Street north to the Crosstown Highway. Proposed Multifamily Housine The Owners have spent much of the past year working with architects, market researchers, contractors and finance professionals to design the proposed housing development. The project consists of 90 units of rental housing currently planned to consist of nine studios, forty-two one bedroom, thirty-five two bedroom and four three bedroom units. The building is three and four stories high and creates an attractive urban edge to the Lyndale Avenue corridor. The current design provides two three-story elements defining the edge of Lyndale Avenue. Between these two elements, there is a landscaped courtyard that will provide a very"livable" amenity for the resident, and will provide green space along Lyndale Avenue. The shape of the building also provides a high level of articulation to add interest as well as defining this urban courtyard area. The "step back" from the street also provides attractive green space between the development and it s neighbors. A front entry to the building, along with individual unit access is provided from the courtyard, and Lyndale Avenue to help activate the street. The exterior is a combination of brick, rock face block and siding providing additional interest. The • design provides good articulation in both the "stepped back" smaller fourth story and with the balconies and material selections. Parking is available with sixty-nine below grade and sixty-five above grade stalls, consistent with the City's building and zoning code. The units have individual controls for heating and air conditioning, as well as individual washers and dryers, high quality interior finishes for the kitchens, bathrooms and bedrooms and many energy efficient features. Residents will have access to common areas within the building including a fitness room and community room. There is a leasing office with direct access to the entry which will be staffed seven days a week. The architectural drawings are attached to this report and electronic versions can be made available for public meetings and discussions. The market studies show a demand for market rents that would serve "workforce" households which is consistent with the Tax Increment Financing requirements the either 20 percent of the units be available at 50 percent of area median income or that 40 percent of the units be available for households making 60 percent of area median income. This is rental housing for working families and households at income levels serving the existing population of the City of Richfield. This site is on a transportation corridor which the Owners believe would be attractive to young professional and service workers in downtown Minneapolis. The proposed development is consistent • with the City's Comprehensive Plan, and the Owners would hope to work with the City on "streetscape" improvements that would eventually extend south to 66th street for future connections in the neighborhood. Financine Methods The Owners have worked diligently with local finance professionals and the City's financial and legal consultants to determine the most feasible methods of financing the proposed development. The current financing environment is incredibly challenging; FNMA, Freddie Mac and commercial banks are virtually out of the market. The only source available to the developers is a HUD insured mortgage. The sources of funds for the proposed project consist of a HUD insured first mortgage, developer equity, tax increment financing and sale of a small HRA owned lotto complete the site. This is a not a "luxury" housing project and consequently the proposed rents, while affordable, also limit the total project revenue which presents a financing challenge. The Owners have struggled with the amount of cash that they will need to contribute-over $800,000 to date-to this project and even this amount is only achievable because of current "depressed "construction activity. If the City will approves our Tax Increment request we will commit to bring our resources to the table if we can move quickly enough to take advantage of the current construction environment. The Owners are requesting assistance from the City of Richfield in the form ofTax Increment Financing for the portion of the taxes generated by the increased tax value created by the project. The existing level of taxation would remain available to the City and other taxing jurisdictions. The Tax Increment • assistance would be provided within a Housing District, and the legal and financial assumptions assumed in this proposal have been reviewed and approved by the City's consultants. The other source of public assistance is the sale of one residential HRA owned lot adjacent to the shopping center site to provide additional surface parking and green space for the number of proposed units. The payment will be deferred and paid through excess TIF proceeds. Attached to this report is a summary of the proposed sources and uses of funds and a Tax Increment Financing cash flow statement and other relevant documents. Summary The Owners of Woodlake Plaza have owned and operated this property for approximately seventeen years, and after extensive efforts to try to make it a success as a retail/service building, have determined that it is best to find another use for this property. The construction of the existing building, designed for small businesses, with no convenient parking at the front doors of the suites in an area devastated by the loss of its "anchor business", the Lyndale Garden Center, does not support economically feasible commercial investment, and this trend is expected to continue for the foreseeable future. The Owners believe, and the market study supports, a need in Richfield for new, affordable, non-elderly housing at this location and this development would be a good complement to what the City has accomplished at 66th and Lyndale. We believe that the redevelopment of this site will; remove an economically obsolete building, help adjacent properties both with the new project itself and by providing new potential tenants as our existing ones need to relocate, and, hopefully, the development of ninety housing units could help stimulate the return of viable neighborhood commercial development and preserve and grow the overall tax base of the City of Richfield. Lastly, this project will provide much needed employment in our local economy. Failure to act will likely result in the continued decline of this property and of this portion of Lyndale Avenue and, ultimately, the surrounding neighborhood as well. Attachments: Site map Site zoning map Architectural drawings of the proposed project Market study/Supplemental market study Sources and Uses of Funds • 64th and Lyndale Site Plan Comprehensive Plan Map - Woodlake Plaza and HRA Property -- -- --r i ~ i i ~~ .... . .. . ..... ~.,_. E_ ,, . - I -- - - ----- ~ ~ I ~ , ', ': I F-- ~ i ~ I I ~ i I i i ~ i ~~ ~ '~ ! ; ! =., ~ i 64th Street D Proposed Development sill Regional Commercial !11~ Regional Commercial/Offic Comm Commercial Comm Commercial/Office Neighborhood Commercial office High Density Res 7' '~ High Density Res/Office Medium-High Density Res _ Medium Density Res _ ;Low Density Res ~~ Mixed Use - Park - Public - Quasi-Public SchooUQP - Church / QP ROW 65th Street Zoning Map - Woodlake Plaza and HRA Property ~m U _ 0 ~ y 0 p A • i ;~ i ;~ a~ m a c JI a z W s t~ <, ~C (PUBLIC RLC1iT-OF-Ii'AY J FiL'S7' 64TH ~~. ~~ 9,~ 'Cn G ~\\ ~~C' \~~ ~~ 9 ~ ~ ~a ~~ .\ o~ ~~ ~ Y .~. J Ova STf~EET _ _-- i, ~ l _ .. / LL i_5- --- ~ -- ~ I 66 STALLS ~ I_~~'.~.~.. .• ~' 6 4 t h a n d L y n d a l e -SITE PLAN o3.0~.200~ 1 l~cnael -~ DeVelo~~ent coy ~a ~ ~~._-_ _ ~ a r c h a t e c t s • DECK 1 2'-O" X S'-O" 2 i'--U" • -- ----- 64th and Lyndale 03.D3.2005 STUDIO 3i1 ~" = 1 '-o° 571 SF 72 SF DECK 1 BATH 0 4• 8• I~-~ ."' UT. • • O O N ~7 O C~ O m m 'a z J) z a s t0 O I~ ~. 0 ~ Y p ~ w W~UJQ m 0~~~ ~t 0 ,~_ y - k______ ._. ___ ~i i---_ ___-._ ~ ._ = I ~ I ~ ~~\ 7 r ~ ~ --- ----'- ~ r .__ 1 ! di I .., .,•, ,, II i ~ _. :. ,_ ~;_ -----.-- ;~_a ~ ~. ~! ~; ~ o w m ',\~ ill Y I '.. _- I I tU ; :,: I I ~ ~ i ! ~. '~ ~' u;; --~ ~ •u~ ~~ -_ ~,~ l =n~ I J ~ I _.__ ie ~ i ._- ..-..._..-.. i L ; ~ to -~ ----_~ .._ - I ~----- l~~ _ ..._/ ~ ~ ~~ - ------_ .. __ :_- / ~.;. W ------ ----- , I fi m N .. _ ~ ~, i ` ,1 ,,, ., ~ ~ ~ ~N -~ i,,1 - - --~ xf! ~-- ~. , ~ ~ i ~ ~: t...-__-_ ------- -- Y---.-.-.._--_._------------~-----.._-----.._ _...__._. • • •3 Ql O O N ~7 O ~7 O W C a J s d' tD 0 n (0 0 0 ~ W I'~ m UJ u.. II- IwmmQ /r~n n m ~~~ O l!J i ` r 00 ~r 0 i i DECK ~'~'_O.. X 6~.0~~ :c .,~. ,~ ~. 64th and Lyndale 03.03.2009 3/1 6" - 1 ' O" ~~: ';-~; ~_,:, ~ _' TWO BEDROOM - J14 SF 78 SF DECK 1 BATH 0 4' 8' ~: - .1~ 00 u O'. ~- .c,-.7 --_ .... ~ I f, ....._ .~ _ ._... _._. .... .._ .__ ~ I -.: ... ___ r~ i I ... . ~~' i _ ... /'~ i ~~. I ' ;, ~ / ~ i ~ ~ - ~ ~,: ~ '~ m ~ D m I ~~ 0 0 3 - -- ~ _ ~ ~ X Cl x i '- Q. ~ ~ ~ 0 ,y _ .~ o -, i o ~._ - ~~ i - ~ ;; ' ~-----I O ,~ i I it ~7 i ~. ~C 't - ,~ --, j 1. --=_._ 3 _ -' ~ -- - -- - _ .. _ .-... __ ~„ I ~~ ., ,.... i-- ~._.-.-.__ _.. __ _ y___.. _..__ ._ ~~~ Q. k ~' ' __ __ i- ~I L ! =:: _ ~, ~ ~ ~ T ~. I -~I ~~~ I„ J I I ~ \~` rJ 1 ~_ I .. ~, , Z ~ ~ ,. ~ + r i ._ - ---- m i ~ `-- ~ i ,~ I J ~ _ ~~`_ _ _ ~ ~- :~:~~ I i~ ~. __ __ x:11) O ~ __; ~ .I 1 z i II 0 i N - __ ._, II __ -- __ I I U ~' i ~~ I _ /~ ~ i I~ ~ O ~ ~ % ,- _ ~~ --~~ - --- - I . ~~ ~~. I ._~ it T7 ~ I nI ~ ~ ~ ~ ..U _ . i ~ I ._ ~ ~ it i ` __..._ .~ .__ 1 ~ i _. ._ ~, . , ~ ~ c:: 11 ~( \~\ I (~ N O O fD ;; _ ~„ • ~.. __...... _ .. ........_.... _. _... _...._ ...... ....... _..... _....... _ _ _ _._y „8 -,_. Z i i • 64th. and Lyndale 03.03.2009 -E TWO BEDROOM 1025 SF 72 SF DECK 2 BATH ~ 4• ~~ ~ ~ .~. • ~, '~ ~' ~\ ~~ ,~ ~~.~/ 1 2'-O" ,7C 1 O'-E" -~ ;l rl. ~...__.._...._...---~, _; J .__--__ i - , ~' ~ r =~` ~ '' KITCHEN j a 7._ ~ 'I i-'=~ '-,~ -. -.. i ~' - ~, _, !~ ii _' J' ~;, 1 ~~ ~; `~ ~: c ~ / IY_ i r --_ BEDROOM ~' ~'-' ~•^ 12'-2" X 14'-O" (~ ~, ~ ~ j ~ ii ~...__.._._.i! i ~ _ -------....__..U..._........------' i -----~ i ` ------- ~ -+E j ~'a DECK ~ _~ 1 2'-O" X 6'-0" ~' ~ ~~ `\ ~ I ~ 64th end Lyndale ~ 03.03.2005 THREE BEDROOM 3/1 6" = 1 '-O" 1055 SF = 72 SF DECK 2 BATH 0 4' 8' _ 1 W/D iC~ -U i __~ _ j _~_ ..._.. ~-IIIIIIIIIIIIIIIII.L - "_31_. ~ -._. `i !-___ ' _~ DECK - ~ -- ` --' ~' I ! . 'r I I , 1 2'-O" X 6'-O" i ` I I ~ - ~ - J I J .~_- _._ . . ..__ ~~ I "`~~~ I '; --L-1 - ~; I ! BEDROOM it it I-- ~' ~Z_~ i I i I ~~I j ij j ~ ~ BED OOM i i ! ~~__~~~ ~! ' ---~, ~_ `-~ - GREAT ROOM '-_._.____I - --.-1 I~ i __ __-- _. u f_~ -_ I ~!~ rl!!~ I ~ _-~ _-- -=~~'=~_=-'- r ,; ~: __..,; ~. ;. ~ -- ---- - i~ - ~ 1~I ----- -- I r , _ -- __ . 11 _ ~- ! u t ~~ I ' _ ; r \1 i L.~ ~ i ~ L i i ~~L°. ~I `.._% I ~ i ! i "~ I ' BEDF~OOM ". ~' ~2'-6" X 11'-O" ~_»i'j. KITCHEN ,' ~ ! i~I i i ~ ----- L_-__-_._______. _- .-I `~ I--.I ...-i I'~ i ' !. I I ~ I l~ ~ 64th and Lyndale 03.03.2009 THREE BEDROOM air 6" _ ~ '-o" 1 21 O SF 72 SF DECK 1 BATH 0 4' $~ ~ ~ ~-~~ ~ f_;~; -~..._- -~.__.- ~w , , . - -- ~...~ ~, ~~ ~:~ ~c 1 C!f ~1 ~ ~ ~~ ".-_ , ___ __.~_~ _ ~ ~: ~ ~~ ~ ~ ~ r ~. '_~ '~~ e ®a ~~; ,~ 'J ~Y_ ~, ,-~ ~ ~ =~ f,~_ _ -= ~f f ,' ~ i l ~ ; '" .a , .~ ~ 64th and Lyndale Richfield, MN November 70, 2009 ~~ Michael DeV~loPnle~t Collage h~~a~t:. • `. z e ., ~. ~ ~ -. ,..... ~ ... a. ~.. ..:,.i .~ , . .. ,,. c :a~ ... ,..a ~.. o-.n~, ,r ~. ,oc Y r.,.,~~, r.,o -~. .., . ~.; ,~, _ - y . ~.i a :'~.n s ;.,. c .,. ~:a c-+y ~ ,r,. ,. r. 'iG~ .....,. -t.... ~. .;:.'. ... : ~i b. i,. .- . ^..~..'<. > > ~ ',~.; c .. .,.'.. c..., o .u1.. 5 ~..a ~. i.~.r es tt t i. ~, v. ', a ~. .. _. ~~ - ~ ., .: ~~~ . _,. .~~~ .. .. _ .. ..c ~:, s..c ... ,. . ~. .. ~. .. ~. .,.,. ~, a, .. a..., a g .. ,.. , ., -:~:. ~__ ~. :pxa ..... ~ ~ ~ r c ;. ,:, ~~ ~ , .~ ~ ,.~. ~ ~ a s '~, ._ ~ ~ o ~' i _. ~ ~ ~ _ . .. . ~~ ~ ~~ ~ ~ ~r _. .,.. .., ,. .>_: e.s ,. ..e aw e. .,. ., i., ,. ...,. v,1_~. ,o. .~ ,, ., ~.: ~ r i - .. - ~ j v t.A a .... ~ ~/-_ . ~~ . rr~~ 'P ' \ i / _ ?l ~ / is a., ..~q ~~a. ..v .. E. / " ~ ......... ... . ...~. . r .... .., .. .. J s.. .....,. ..,, ... . ..i. . ... .1 .3. .: .. . _ - ~' / ,~ v ~ v ~. ~. _.~. ~ .i. ... *. ~- r i '.~ ... .\ .. .e.e.. ... .. .... . H. .. G ...... . e ,. .. / :.,~~ ~. .. .2 ,. ..... ~~ ~~„ ~~ f ti .~ ~ ,. ~..,.. / ~ - , . ... , .. - ., r,. .. .. -... .~ - _F -. \ - ~ ~;~ / '~~ . - \ r r ..-. .. ..~,... _ '. ~~l ~ - ~ ,... ', f .~ K -. ~ i / ~ r... .. ,. „r. _ ~ VICINITY MAP Z ., i..;~ ',. ~~ .. . , .. IN , .. r~ _ • ," ~ , .. ~ r _ _- __ ~ ., - .. _ .... ~ :'>;. REVISIONS SURVEY FOR PROPERTY ADDRESS , SURYEYO & NOWAK, INC. EGAN, FIELD, _ _ . ALTAIACSM PHarrv 9 RS SINCE 187x" MICHAEL DEVELOPMENT ANC, 6401.6435 LYNDALE AVENUE SOUTH E/}~F LAND TITLE SURVEY RICHFIELD. MINNESOTA ;N 7415W.aru~TnBwcMir,nEnrous.MinuESOT:~55426 E (52 546-6637 F.4X, (952? 54E-6639 - WEB'. EFNSURVEY.COM • WFS'T 6~Tfl STkEET • (na~rlr, r~~ch7~-o~~-war ~~ ,, ~, ~~~ ~~ ~~~~ \ ., .~, ~ ~ ,.. -'~~ ; .` ~~~\ ~~ ,~ •~ ~cl ~` ~'r \\\ ~~ ~~ ~ ~~n ~r ~ \i ~ .y ~ rC, \` ./ \. `\\ Site Site Area 1.955 Acres (1.635 + .32 City Owned) Building Footprint 26,180 SF (30.7%J Vllalks and Drives 28,350 SF [33.3%) Total Impervious 54,530 SF (64%J Courtyard 12,301 SF (14.4%) `~ ,, ~y ~~ ' \ ~ ~. 64th and Lyndale ~ SITE PLAN: 1" . 40' Richfield, MN November 10, 2009 ~' ~cha~l '~~- ~ D~V~IoP~ite~t Collage hicaccr rr-d ~~,. .~ Illli .~ ~~ _lil v- ~-~-~ II = .'!1111 Nli F 3 BEDR.N I;NIi G ~~ BTD'nM ~~ ~ ~ ~ .1:: h ?~I t LNR E p[fMtM ~~ ~;~ `. 1st Total 24, 960 GSF i ' \~V/ i ,' . 64th and Lyndale FIRST LEVEL PLAN: 1" . 30' Richfield, MN November ?0, 2009 Type Sq. Ft. Oty. 5q.ft. A Studio 571 9 5139 Total 9 5139 B One Bedroom 688 23 15824 61 One Bedroom 721 16 11536 B2 One Bedroom 688 3 2064 Total 42 21360 C Two Bedroom 914 6 5484 C1 Two Bedroom 882 2 1764 D Two Bedroom 1022 9 9198 2 Bath D1 Two Bedroom 1022 3 3066 E Two Bedroom 1025 15 15375 2 Bath Total 35 34554 F Three Bedroom 1255 3 3765 2 Bath G Three Bedroom 1210 1 1210 Total 4 4975 Total 90 12,028 TOTAL GSF 116,262 !.i? E 8_Ce?t ~ I ! P', i ~.,,v ~ J - y ~'i. ST. ST. SL +- ~i ar4U J ~ G. __ ~ EI /CGMM ~ ~ T i~ hl A~ 9 ~ ~~~~' ~~ FITN"SS _ i J oF,~E SL Si. / .fi.. _ i~ ~_ ~ ~ ~ F_~~`!,'' ~~~~ DeVelop~te~t Col,la~e 2nd Total 24, 547 GSF b 64th and Lyndale SECOND LEVEL PLAN: 1" . 30' Richfield, MN November 70, 2009 5 4 ~~ ~c>lael De~~loPn~ent Collage • • 64th and Lyndale 3rd Total 24,547 GSF b THIRD LEVEL PLAN: 1" . 30' Richfield, MN November 70, X009 '' ~cna~I ~~ DeVCloPnte~t Collage n~~d_rE 4th Total 18,074 GSF • i 64th and L ,~ _ yndale FOURTH LEVEL PLAN. 1 _30 Richfield, MN lUovember 70, 2009 7 !~ Michael ~~ - DeVeloD~le~t Collage .~„~.. Parking -69 Below Grade Stalls -66 Above Grade Stalls Total Parking Stalls -135 Stalls • ~ 64th and Lvndale b PARKING FLOOR PLAN: 1" . 30' Richfield, MN November 70, 2009 ~'; ~iclcacl De~eloP~l~~t COlla~e I i i I I II - ' ~ ~~ SOUTHWEST ELEVATION ____ -_ i - - - - ; -- ~ _ _. -_ G~ ~r _ _ -~ 8 I ~ Ii I~ ~~', _ - i ~ _ _ ~ ~ ~ ~ ~'~~' ~~i( I - -- 1 ~__ WEST COURTYARD ELEVATION ~ 64th and Lyndale Richfield, MN MATERIAL INDEX +^ • FACE BRICK • BRICK SOLDIER COURSE - ROCK•FACE BLOCK -YINYL SIDING #1 • VINYL SIDING #2 • CEMENT BOARD )FLAT PANEL) -CEMENT BOARD TRIM •PREPINISHED METAL RAILING ~ -YINYL YYINDOW YVI VINYL TRIM +a -PREPINISHED METAL TRIM ++ -MECHANICALLOUYERIGRILL +_ • PRECAST SILL u u - ~ - - Micna~l DeVeloP~te~tt ELEVATIONS: 1/16" . 1'-O" November 10, 2009 COI ia~e „~~<<5 • NORTHWEST COURTYARD ELEVATION • ~ 64th and Lyndale Richfield, MN November ?D, 2009 MATERI~,~ INDEX • FACE BRICK • BRICK SOLDIER COURSE • ROCK•FACE BLOCK ~ • VINYL SIDING #1 -VINYL SIDING #2 • CEMENT 80ARD (FLAT PANEL) Q • CEMENT BOARD TRIM •PREFINISHED METAL RAILING • VINYL WINDOW WI VINYL TRIM +a -PREFINISHED METAL TRIM ++ • MECHANICAL LOUVER 1 GRILL +_ •PRECASTSILL v ,~ Collage ,, ~s<<= NORTH COURTYARD ELEVATION ~c~na~1 t_ - -De~~lonnlent • MATERIAL INDEX ^+ • FACE BRICK ^~ • BRICK SOLDIER COURSE • ROCK•FACE BLOCK • VINYL SIDING #t -VINYL SIDING #2 • CEMENT BOARD (FLAT PANEL) • CEMENT BOARD iRIM ~ - PREFINISHED METAL RAILING Q -VINYL WINDOW WI VINYL TRIM +~ -PREFINISHED METAL TRIM ++ • MECHANICAL LOUVER 1 GRILL +~ -PRECAST SILL +s u i I I ~~ i ANGLED PORTION OF BUILDING j ~ I 1 I ~ I I I I I ~ I ~------------ I I I i I I I I i L--- - ~--~---~- ----------~--1 -~--------~------------L-------------'------~-------~----------- - ---- ~ -1------- 1 ----- ----L~ EAST ELEVATION ~ 64th and Lyndale ELEVATIONS: 1/16" . 1'-O" Richfield, MN November 10, 2009 ~'~~ Michael D~Velo~~t~~t COlla~e h l a MATERIAL INDEX +^ • FACE BRICK ~ • BRICK SOLDIER COURSE • ROCK•FACE BLOCK • VINYL SIDING #1 • VINYL SIDING #2 -CEMENT BOARD (FLAT PANEL) -CEMENT BOARD TRIM •PREFINISHED METAL RAILING • VINYL WINDOW WI VINYL TRIM +~ •PREFINISHED METAL TRIM ++ • MECHANICAL LOUVER! GRILL +~ • PRECAST SILL ,~ 14 L1--~--- -J--- -----------------1-----------J---------L----------1---------- 1-----L1-----------~ ~ 64th and Lyndale ELEVATIONS: 1/16" . 1'-O" Richfield, MN November 10, 2009 12 Collage ,e NORTH ELEVATION Mlcnael DeV~lo~~t~~tt n' cp v v O h~ V O • ct S r _~ D r N Am \^ 0 Z V I I Y O M MATERIAL INDEX +®-FACE BRICK ~ -BRICK SOLDIER COURSE • ROCK-FACE BLOCK ~ -VINYL SIDING #1 ®s -VINYL SIDING #2 -CEMENT 80ARD (FLAT PANEL) ~ -CEMENT BOARD TRIM ~ -PREFINISHED METAL RAILING Q -VINYL WINDOW W/ VINYL TRIM to -PREFINISHED METAL TRIM ++ -MECHANICAL LOUVER 1 GRILL ,z -PRECAST SILL 1] 14 • • • i 4:~ is ry1 A!i t i ,~ ~ . `, t f ..: nl ' Y t 7 ' ~f:~ ~ '~ • (.~ I) F ~:;u ~, ~ I. ~ ,l,~ t . ~ t I .._. Y n Y 1 +1 '1 l ti r' A . (, ~:., 1 ht :1- 1 / . • t l 1.:!.` 1 ! A ~ _ _ ____.__. r II t ::n :. . .., v" .. ~. •. ~ rc la ~... . i r i ` t u Y rr u.. . i I ' ~ , I 1 1 1 1 i 2, . . ,. , ' •<.: •.~ rF '(. .. ~ ~,.. t:.~ .:,,:. ,, ~, .;,;:,, :.,..... ~,.... .~ ~ '.•79 ,I .. 5 ; 1 i Y • .I'. . en 1 .~ mn o ~~~ ~W ~~ ~ ~ W T CD .'~. 5 - ~ EL = 146'-1 1 /2 ~- 7 - 0 -- - -- "_M _%~%'\ _ E _~__ ROOF BEARING EL = 141-6 3/4 5 «, i ii 4 ~' ~ I I FOURTH FLOOR _ 4 _ - TOP OF SUBFLR. -- -- ~ EL = 132'-5 5/E - - ~~"-~ 1 14 I i i THIRD FLOOR TOP OF SUBFLR. ~; EL = 121'-7 3/4' m c0 m SECOND FLOOR + _ ____ _ - _ _~; TOP OF SUBFLR. ~1 EL = 110'-9 7/8' :~~~ r ~ _ \ _ `~ ___ i 12 - - - --- ~ LLLJ I I ~ u7 ,i ~~ I 12 ~. ~ 'll ,I. TOP OF PRECAST ~ ~ FIRST FLOOR __.... - - - - ~ EL = 100'-0 - 3 GRADE d I Cl--- ~ TOP OF SLAB ___ _ ,~ GARAGE LEVEL ~1 ~ ~ ~ EL = 90'-8" MARKS T • STUDY • Inc: MEMORANDUM TO: Mr. Michael Swenson Michael Development FROM: Ms. Mary C. Bujold Mazfield Research Inca RE: Preliminary Assessment of Market Conditions for General Occupancy Rental Units in Richfield, Minnesota Introduction • This memo provides a preliminary assessment of the potential demand for market rate general occupancy rental units in Richfield, Minnesota. We also comment on the demand for affordable rentals and the proportion of affordable to market rate that would appropriate for the proposed development. This assessment includes: • Identification of an appropriate Market Area for the proposed development; • An analysis of population, household and employment growth trends in the Market Area; • An overview of current rental rates and vacancy rates for apartment developments in Richfield; a review of selected newer rental properties in Richfield and adjacent surrounding communities, including the size of development, rents and estimated vacancies; • Calculation of demand for general-occupancy rental housing in the Market Area, the target market and the market share that the proposed development could capture in Richfield; • Preliminary recommendations regarding an appropriate development concept including: rental rates, unit mix, and unit sizes, and . • An estimate of absorption • (phone) 612.338.0012 (fax) 612.904.7979 615 First Avenue NE, Suite 400, Minneapolis, MN 55413 ......... ...wfiinl.irnener~6 r•nm June 4, 2008 Mr. Michael Swenson June 4, 2008 Michael Development Page 2 • Market Area Definition Maxfield Research Inc, deternuned the draw area for housing in Richfield based on geographic and man-made boundaries, commuting patterns, and our knowledge of Richfield and the south Metro Area. The draw area, or Market Area, includes the Cities. of Richfield, Bloomington, and portions of South Minneapolis. We also estimate a portion of housing demand will come from outside the Market Area. A map of the Market Area is shown below.. RICHFIELD 11~4RI~ET ARR~A • 1blti~'ielcl Reseaucli, fi-c. • MAXFIELD RESEARCH INC. Mr. Michael Swenson June 4, 2008 Michael Development Page 3 • Population, Household and Employment growth Trends Table 1 presents population, household, and employment growth trends and projections for the Market Area from 2000 to 2020. The data for 2000 is from the Census Bureau. The 2008 to 2020 estimates for population, households, and employment were determined by Maxfield Research, based on data from the Census Bureau and the Metropolitan Council. • The Richfield Market Area is projected to experience modest growth through the remainder of this decade and next decade as in-fill and redevelopment occurs. The communities in the Market Area remain populaz residential locations and households preferring to live closer in to the urban area continue to consider new properties located on attractive sites. • The table reveals that Richfield is projected to add 3,990 people during the 2000s, about 40% of the Market Area's growth. South Minneapolis is projected to add the next highest number of people at 3,868 for the decade. There is virtually no land available for new development and neazly all new housing constructed has been through redevelopment. Because of the ongoing popularity of the Market Area communities, new developments have continued to be successful. • Since households represent occupied housing units, household growth trends are a much better indicator of housing demand than population growth trends. Between 2008 and 2020, • the Market Area is foxecast to add 3',215 households, a growth rate of 4.5%. This rate of growth compares to nearly 37.0% for the Twin Cities Metro Area as a whole. • Richfield is 1,627 households (10.8%) from 2000 to 2010 and another 1,900 households from 2010 to 2020, a growth rate of 11.4%. • Employment growth is projected for the 2010s, but has been lackluster the latter half of the 2000s. As shown on the table, Market Area communities are projected to experience growth of between 18,600 new jobs from 2000 to 2010, but only 6,840 new jobs from 2010 to 2020. Because of the slowdown in job growth during the latter half of the 2000s, some of the projected job growth for the 2010s may spill over into the next decade, increasing job growth there and reducing overall job growth in this decade. Employment increases however, will fuel demand for housing long-term as new employees move to live near their jobs. Typically, households prefer to live near work for convenience. This is particularly true for renters. Young adults entering the work force, a primary target market for rental housing, often place great value on living near employment, shopping, and entertainment. In addition, because young adults usually have more moderate incomes, transportation costs often account for a greater percentage of their budgets. Thus, the projected employment growth in the Market Area is prof ected to translate into demand for new rental housing. . • The current lack of new rental product in Richfield has caused some renters to look elsewhere for new housing. New construction with market rate rent levels has performed MAXFIELD RESEARCH INC. Mr. Michael Swenson June 4, 2008 Michael Development Page 4 • well in the area, although the lack of new rental construction may initially constrain rent levels to some degree. The existence of limited competition and generally low vacancy rates throughout the area, indicate that new construction would bewell-received by the market. • TABLE 1 POPULATION, HOUSEHOLD AND EMPLOYMENT GROWTH TRENDS AND PROJECTIONS RICHFIELD MARKET AREA 1990 to 2020 Census 2000 ~~ Estimate 2008 ~~ Projection 2010 2020 ~~ ~~ 2000 to 2010 No. Pct. •~: 2010 to 2020 No. Pct. ~aL~~n P Richfield Bloomington South Minnea olis t. 34,310 85,172 36 783 37,500 87,035 39 880 38,300 87,500 40 651 42,700 90,500 42,414 3,990 2,328 3 868 11.6 2.7 10.5 4,400 3,000 1763 11.5 3.4 4.3 Total 156,265 164,415 166,451 175,614 10186 6.5 9,163 5.5 Twin Cities Metro Area 2,288,729 2 861,750 3 005,000 3,334,000 716,271 31.3 329,000 10.9 .; ,:4 ~: Hou ..:;...., . seholds. . • ,...: :.: •.. .•.,.....,.:. ~.. - - Richfield Bloomington SouthMinnea olis t. 15,073 36,400 15,868 16,375 37,440 16,100 16,700 37,700 16156 18,600 39,200 16,816 1,627 1,300 288 10.8 3.6 1.8 1,900 1,500 660 11.4 4.0 4.1 Total 67,341 69,915 70,556 74;616 3,215 4.8 4,060 5.8 Twin Cities Metro Area 875,504 1,133,500 1,198,000 1,362,000 322,496 36.8 164,000 13.7 to enf• Ein' - Richfield Bloomington South Minnea olis t. 11,762 104,548 7,080 16,030 115,790 6,455 17,100 118,600 6 301 17,600 126,200 5 044 5,338 14,052 -779 45.4 13.4 -11.0 500 7,600 -1257 2.9 6.4 -19.9 Total 123,390 138,275 142,001 148,844 18,611 15.1 6,843 4.8 Twin Cities Metro Area 1,272,773 1,707 355 1,816,000 1,990 000 543,227 42.7 174 000 9.6 Sources: Bureau of the Census: Census of Population and Housing; Metro clitan Council; Maxfield Research Inc. Overall Rental Market Trends Table 2 shows average rents and vacancy rates for Richfield, Bloomington and South Minneapolis submarkets. According to the Metro Trends Report First Quarter 2008, published by GVA Marquette Advisors, the City of Richfield had a 2.9% vacancy rate, Bloomington. a 3.7% vacancy rate and South Minneapolis, a 3.1% vacancy rate. The vacancy rates are lower than the overall rate for the Twin Cities Metropolitan area vacancy rate of 3.9%. The overall rental market in the Twin Cities Area has strengthened over the past 12 months between March 2007 and March 2008, with the overall Twin Cities vacancy rate dropping from 4.4% to 3.9%. MAXFIELD RESEARCH INC. Mr. Michael Swenson June 4, 2008 Michael Development Page 5 • From March 2007 to March 2008, Metro Trends Report shows that average rents increased in all of the submarkets shown on the table, from a low of 2.7% to a high of 9.1 % over a 12-month period. On average, rents have increased on an average annual basis by about 4.0% to 5.0%. • TABLE 2 AVERAGE RENTSNACANCIES AMONG MARKET AREA SUBMARKETS 4TH Quarter 2007 and 1st Q uarter 2008 °~ Overall::: vg:~;Rent Inc. Communi :Studio ':"1BR ~•. • 1BR/D~ r::2BR ::'.: ~ 2BR/D : :. 3BR ,:. ,Avera•e'~• ~ `•~12•mos `•~•.' Riehfleld 4th Quarter 07 Rent $593 $658 $1,295 $862 $1,420 $1,197 $749 4.6% Vacancy Rate 0.0% 3.9% 0.0% 1.7% 0.0% 2.3% 3.0% Tst Quarter 08 Rent $593 $676 n/a $889 n/a $1,237 $765 9.1% Vacan Rate 6.7% 2.7% 4.3% 3.2% 10.9% 2.8% 2.9% Bloomington 4th Quarter 07 Rent $653 $787 $956 $977 $1,001 $1,157 $889 2.9% Vacancy Rate, 0.5% 3.3% 3.8% 5.2% 1.8% 9.0% 4.3% Ist Quarter OS Rent $661 $794 $959 $974 $1,008 $1,137 $893 3.6% Vacant Rate 2.0% 2.8% 5.0% 4.3% 1.8% 6.8% 3.7% South ~nneapolis 4th Quarter 07 Rent $590 $715 $818 $970 $1,450 $5,120 $750 2.7% Vacancy Rate 2.6% 3.5% 0.0% 3.5% 33.3% 4.5% 3.4% Ist Quarter 08 Rent $618 $720 n/a $983 n/a $1,583 $769 5.0% Vacan Rate 3.4% 2.3% n/a 4.4% n/a 1.5% 3.1% Notes: Ist Quarter 2008 South Central Suburban =Average Rent: $907 per month; Average Vacancy: 3.9%. Larger Developments (Over 200 units) =Average Market Rent = $998; Average Vacancy Rate 3.4% (Metro-wide) Sources: GVA Marquette Advisors Inc.; Maxf eld Reseazeh Inc. Average vacancies declined, from 3.0% to 2.9% in Richfield, from 4.3% to 3.7% in Bloomington and from 3.4% to 3.1% in South Minneapolis. We note that average rents as shown on the table are much lower than would be rents for new construction. The substantial amount of older rental product in these submarkets accounts for the lower average rent profile. However, newer rental developments across the Twin Cities are also reporting reasonable vacancy levels. According to the Metro Trends Report, the average vacancy rate for new construction is 5.8%, essentially at market equilibrium with an average rent of $1,257 per month. MAXFEM LD RESEARCH INC. Mr. Michael Swenson June 4, 2008 Michael Development Page 6 • Comparable Rental Projects Maxfield Research identified four selected newer (1990+) rental properties in the area that provide examples of features, amenities and market positioning similar to new product that would be developed on the subject site. These properties span a wide range in product offerings; from modestly appointed to fully-appointed. The properties are shown here to provide an example of the diversity in rental rates and features among newer products, those built only just recently and those that are newer in the marketplace, but built in the 1990s. These properties are listed in Table 3, along with their number of units, a rent range and average rent, asquare-foot range and average square feet, vacancies and an average rent per square foot. This information provides examples of the ability of these properties to successfully capture a portion of the market, rent levels currently charged and overall vacancies. The following are key points from our survey of existing competitive developments. The four developments shown on the table have a total of 2,428 units. Overall mix among the properties is less than one percent studio units, 34% one-bedrooms units, 48% one- bedroomplus den and two-bedroom units, and 18%two-bedroom plus den and three- bedroom units. These competitive properties generally have fewer studio units, more one- bedroomplus den units than the Twin Cities market as a whole. • The overall average vacancy rate for the identified competitive projects is 4.2%, slightly higher than the Metro Area's vacancy rate of 4.7%. We note that vacancies maybe somewhat higher at this time due to higher rates of turnover during the peak leasing and moving months from June through September. • The newest property is Cornelia Place apartments in Edina. This property serves an affluent renter segment and offers distinctive features such as granite counters, built-ins, hardwood floors and stainless appliances. We do not expect that the level of finishing for a new property would equal that of Cornelia Place. • Oaks on Pleasant is a newer rental property in Richfield that has continued to increase rents and maintain low vacancy rates. Oaks offers newer contemporary features and amenities, but below the level currently offered by Cornelia Place. We envision that new rental product would be similar in quality and character to The Oaks on Pleasant. Currently, the Oaks is fully-occupied. The renter profile is a mix, but is predominantly older adults and seniors. • The average rent per square foot at the projects surveyed was $1.02 per square foot. • MAXFIELD RESEARCH INC. chael Swenson June 4,08 Michael Development Page 7 TABLE3 SELECTED NEWER MARKET-RATE GENERAL OCCUPANCY RENTAL PROJECTS RICHFIELD MARKET AREA Jane 2008 Year Units/ Monthly Avg Rent Project Name/I.ocation Bnilt Vacant Unit Mix Unit Siu Rent Rent Per Sq Ft ~~ Amenities/Comments Oaks on Pleasant 2000 129 2 -Studio 605 - 620 $845 - $845 $845 $1.40 - $1.36 3-story elevator building; ceiling fans, in-unitwasher-dryer, 6600 Pleasant Avenue 0 22 - IBR 756 - 793 $865 - $915 $890 $1.14 - $1.15 central av, fireplace in some units; full appliance package, Riclp:eld 0.0% 78 - 2BR 1,107 -1,436 $1,340 - $1,505 $1,423 $1.21 - $1.05 balco~+/patio, UG Parking, one stall included; outdoor pool, 27 -3BR 1,436 -1,436 $1,525 -$1,605 $1,565 $1.06 - $1.12 fitness center, jacuub Ha 1986': :•:,:.;520`:•:::~i•~32.=Studio:>~:;~,:s_:550:::550<:-:~.`•;':::':$729:-:$729~:s•: ::`~~• 729.:::,_.:.,, mpshire'H'~Ls :::~.; .: *; •;:.,:;;;'.. -•::• :.;,.:. $.. •:.., -- $133. = $133.:;::- ; •. .. -.. Three-story elevatorbmldmgs, busmesscenter extra ::.:;:~ .... . ....:.. ~°PS. ~:..ye:::...;:,,`.r::_s-.'-,:: .:::::.....::~s:;1 ;::::;::::::198:-:1BR._,.~ ~:::"'.'.:792::=:926:,i?:_.::;`•:~''$789''~:$869, _...:....5829.-: _'.... 1.00.-a 0.94:::':•.::: •. ~° . .; . - : .:,• _:,; , .:: ~ ~:: : .: .;. . . „ storage amts, fitness cents ,clubhouse, outdoor, pool ~ . .... . . _ $ :. . . : ... :... ...., . ~_.:.... ~.. .walk : = ' • .. :.: ; : , , .• : , , ~ . - - . ; ..:. ,. < , , . .. . :: • . , :... : :: Bloomm on.: •:::..::::..:- ••:. ::- :2. o ....: •..-.;.:e - ...:a.r 1/0.... 8:= B X03 :~ ''0 - _. gt..... ,.... _.::.....::c~:.:-:~:'• ::::: • .:. ...:..- 29 •..2. R~i=:::';;~j.. 1,w'•.1,.St~v:~;<`-;:';$949:=S1•`039~"- ::~. 994.;i;:?-.:: 92:-:$0.I8 =_;;;c .: :malosits;:fullkitchen .:.:. : ...:: - .... _... <: . . . • : :: $~ : appliance l?~k?~; :: , , $ ~, ._~ .: _ • .... : ......:..... ...... ......_•._.::..12. 2BR::':.•:-;:.1;212,=,1;212-:i.~.::51~139-.«$1.139 • .. .... ...::. - ..-.:.. . . .. : .. ,:. . . . :: ., ":.:=_:..: -~13 .~"'~.::. ".`~ •'::''.:- S Jr; .. 50.94.. 50.94 . - • '~:.;.::..::,•..,.:.:~ .: -:. ~: , . •- _.; . ,- ...- : :: - • .•:.~. .v. .. rt:: - ... .. -• `i' ~• •~ '- d• .4i:: i•=.•:~ e • Devonshire Gates 1987 498 130 - jBR 690 - 900 $862 - $1,040 $951 $1.25 - $1.16 Three-story elevator buildings; fitness center, outdoor pool; 10310 Devonshire Road 9 66 1BRTEI 744 - 744 $959 - $1,004 $982 $129 $135 in-unitwasher/dryer, vaulted celing on 3rd floor, fiill Bloomington 1.8% 178 - 2BR 911 -1,086 $990 - $1,140 $1,065 $1.09 - $1.05 kitchen appliance package; some units have wood-burning • 95 2BRTH 1,020 - I,O80 $1,167 - $1,253 $1,210 $1.14 $1.16 fireplaces; balcony/patio. 29 -2BRTH 1,238 $1,321 $1,321 $1.07 -$1.07 CorneliaPlace~g~;~.::,•.::'..::~-~.:2003.;;•,:::._100'. •~:;:::12'-;1BR.--.:•:q:;:,~835:=:3;313:;•_:;;$1;195;-$1,420 :....... ' ;,:.;:: $1;308`.:::::•:$1.43=$1:17..,::;: ° :Onefour-stn .bld -resident ashea electri hoaeand 4025w::65th~St~.;``'''.:,•...s._=::- :;~;:~:':::.e8.°~E'•`'? ~':':24'•ct1BR+D:°'.':~~<:°.x_!1.944 ..........:... 1 50- , ...:.: -:..:. .: : ..::.:::.. : _•:: --.•:; .-,..:-• .:...,...•. $ ,3, -...•$1,955. ' ;.rr-- :r•:~~;~. , : ..+:: •:. $1653::<:..,;.$1:43_~.$2,07.`;;;:e:-cable;:UGpazku-g, oneglall included'centralair,granite .......:..~ :: . . . :;::: 3 • ;:.1 I:.: :.1 9 , .1 99~.:~.`.•.w$t6T5s; 0,;;:;:.,.. -• •.:'.::~~: ~;?';8:0%;:>i~"•.`;~~;;49•;.2BR...... ... ... _ ...9 ...._.. >.... - 45 ........._$ 063.'-:::x:$1:4.1°:=$1,23:':'::::~:~counters.9. .cedm .- : .. ~= ~':~ ~ ~.~'.,'=':::':•?.`::;°; : . fl: gs, hardwood floors, cherry cabmets -. ~.; :. .. ..... .. -. 2>; _.._ . .., :: . . . • , • ...............~.-.:.!-:.::.-.:...::.::.;,..::.~..; ..•....:..--::.-,::.:1];..2BR+D~:-::~:;1;416~-7;416::<:~..~52,350.:=. ~850~ :. :: . ....,...-- :. ;. .. - , .:;::$2600'r-:=.:51.66'- 201 a...... -...... ... ..•. .. ~ .. $ , .,........staudessappltances:~::::-`;:'~~~:':~'=:~:::-`~~~~~.:i::::=.c'~`: . `: ~ ~ . ..... • : _ :: ~:':.:;::::,..'::.::r.';:..:_=_:.: =~. ~ : ~ ~:. _::-::.,..;.::.;•~::'::;•4•,- e"= ~::~:,.::;, 988._ • .. .. ... .. -.. .Fibs .... .1 .2;186:•;'•;:.c:$3300:-$4,20b -. ~ :•::;::.. : ::.. •.,, :_ :::::=:.$3;750~z::$1:66'?$1:92-:'•:::: . . ;~ - ~~ - .t;_.::•: .: •.,~:~; :z.::-.:.::•':=:`:= .~.:.;•::-.=•:`~::~< •°:; •~:.: .-~`• The Gables 1988 102 48 -1BR 680 - 700 $940 - $940 $940 $138 - $134 One, three-story elevator building w/[IG pazking; one stall 9741 Grand Ave. S. 0 24 -1BR+D 900 - 900 $1,065 - $1,065 $1,065 $1.18 - $1.18 included in ~en~ heat; wale , sews , and trash included in Bloomington 0.0% 30 - 2BR 980 -1,002 $1,125 - $1,155 $1,140 $1.15 - $1.15 rent; walk in closets, in~nit washer/drye ,full appliance package, fitness center, party room Total Units 1,349 Total Vacant 28 2.1% , Average Rent $1,356 Avg Rent/Sq. Ft. 51.28 Sources: GVA Marquette Advisors, Maxfield Research Ine- MAx~Ir,.LD RESEARCH INC. Mr. Michael Swenson June 4, 2008 Ivlichael Development Page 8 • • Typical in-unit amenities are central air, modern kitchen amenities such as a built-in microwave and dishwasher and walk-in closets. Features such as balconies/patios and . underground parking are found inmost newer properties. Common area and recreational amenities found among the comparable properties include outdoor pools, party rooms, picnic areas, fitness centers and business~centers. In-unit features and amenities vary but typically include open floor plan designs, center kitchen islands or open galley kitchens, stainless appliances, and high ceilings. Rental Unit Demand Analysis Table 4 shows our preliminary demand calculations fox general occupancy rental housing for a project in Richfield between 2008 and 2015. The table presents demand for market rate and low- and moderate income housing. Below is a discussion of our calculations. • The Market Area is expected to add 2,674 households between 2008 and 2015. Of this projected growth in households, we estimate the general occupancy rental market to capture about 30% of this growth. The potential demand for rental housing from new household growth is 802 units over the next eight years. • We expect that 30% of the total demand for rental units in the Market Area will come from projected growth outside the Richfield Market Area. This demand can be from individuals who would move into the Market Area for a specific product, or because of a lack of available product just outside the Market Area, or for other reasons. Adding the additional 30% results in a total estimated demand for 1,146 rental units from 2008 to 2015. • We estimate that of the demand for 1,146 rental units, 50% of that demand will be for market rate units. The remainder of demand will be from lower-and moderate-income households seeking subsidized and affordable units. This equates to demand for 573 market rate and 573 affordable (moderate and low-income) units. • From the total demand for rental units in Market Area, we subtract the planned and pending rental units, of which there are currently none. • Na one project or location can capture all of the rental demand. We estimate that your property in Richfield could capture approximately 20% to 25% of the demand in the Market Area for market rate rental housing. This results in demand for about 115 to 143 rental units on a subject Site between 2008 and 2015. • In addition, we estimate that your Richfield property could capture approximately 25% to 30% of the demand for low- and moderate-income rental housing. This results in demand for about 143 to 172 rental units on the subject Site between 2008 and 2015. • MAXFIELD RESEARCH TNC. Mr. Michael Swenson June 4, 2008 Pvtichael Development Page 9 • • TABLE 4 PROJECTED DEMAND FOR RENTAL HOUSING RICHFIELD MARKET AREA 2008 to 2015 ~,~~ Housing :.:;; Projected new housing unit demand from household growth, 2008 to 2015 2,674 (times) Estimated percent of demand for general occupancy rental housing x 30.0% (equals) Estimated G-O rental demand in the Market Area, 2008 to 2015 = 802 (plus) Demand from outside the Market Area (30%) + 201 (equals) Demand for rental housing in Market Area = 1,146 (times) Percent of rental demand for market rate units x 50.0% (equals) Demand for market rate rentalunits = 573 (less) Competitive units pending in the MarketArea - 0 (equals) Total demand for market rate rental housing in Market Area = 573 times Estimated ercent of demand ca tunable on the Site in Richfield x 20% - 25% . , :. - y.~'J~~' '.t.~ e' uals 'MarketRate:nnits`su ~ ~ortalile`on~ttieSife'in~Riclifield:`:`~~:?'='~'~ ,~:~~: ' ~: ~'143~- 115.:~~~= (times} Percent of rental demand for moderate rent units x 50.0% (equals) Demand for moderate rentunits = 573 (less) Competitive units pending in the MarketArea - 0 (equals) Total demand far moderate rent rental housing in Market Area = 573 times Estimated ercent of moderate rent demand ca tunable on the Site in Richfiel x 25% - 30% ~:. :;. . e uals Moderate ~tenf ~units•su ~~ ~ortable on the Site in Richfield : ~ - ~ ~ ~~. ~-~~ .~. ~ :.: ~..: ~' :::•143 :.~ ~=: °~~1Z2 Source: Maxfield Research Inc. In addition to the demand identified here, we also note there is pent-up demand for units in the Market Area. Based on current vacancy rates, pent-up demand in the Market Area totals another 240 units. Approximately 30%. of these units would be for market rate housing (72 units)• and the remainder (168 units) would be far moderate income rental housing. Preliminary Conclusions and Recommendations The rental market has improved considerably from two years ago; rents have increased between 3% and 5% and vacancies are below market equilibrium, in the 3.0% to 4.5% range. Based on the calculated level of demand for rental housing in the Richfield Market Area, we believe there is sufficient demand to support between 120 and 150 units on the property that would have a mix MA,XFIELD RESEARCH INC. Mr. Michael Swenson June 4, 2008 Michael Development Page 10 of market rate and moderate-income units. We recommend that the moderate-income units account for no more than 3 0% of the units in the building and preferably no more than 20%. Suggested Rent Levels, Unit 112ix and Unit Sizes • Table 5 shows our suggested unit mix, sizes, and rents for the proposed development. We recommend market rate rents of $825 to $875 for studio units, $925 to $950 for one-bedroom rents, $1,350 to $1,400 for two-bedroom rents and $1,500 to $1,600 for three-bedroom units. Moderate rent units would range in price from $700 per month for a studio unuit to $1,100 per month for atwo-bedroom unit. Table 5 shows average base rents for market rate units to be $1.31 per square foot. Total average per square foot rent for market rate and affordable would be $1.27 per square foot. TABLE 5 PRELIMINARY SUGGESTED UNIT MIX AND RENTS RICHFIELD PROPERTY June 2008 %of Suggested Rent/ Unit Type Rent Basis Units Square Feet Rent Sq. Ft. Studio ~ Market 5% - 5% 600 - 625 $825 - $875 $1.38 -$1.40 Studio Affordable 2% - 2% 500 - 535 $700 - $725 $1.40 - $1.36 IBR/1BA Market 35% - 35% 700 - 725 $925 - $950 $1.32 - $1.31 1BR/1BA Affordable 10% - 10% 650 - 700 $800 - $850 $1.23 -$1.21 2BR/2BA Market 30% - 30% 1,000 -1,100 $1,350 - $1,450 $1.35 -$1.32 2BR/2BA Affordable 8% - 8% 950 -1,050 $1,000 - $1,100 $1.05 -$1.05 3BR/2BA Market 10% - 10% 1,250 -1,300 $1,500 - $1,600 $1.20 -$1.23 TOTAI,.t:':;_>: ~ ~:.:',•.:~ ~ ...,:. .. ~~ :::.:..::::.:„ ~?::..:.::.:;.;;:., ..•-.:100 /0'.--100 /o • ,.,'.AVG':;; ,'~:~,::'835 ~ :.. ~ .:..:: $1,046 ~•: ``':''`:: ;r•:`'$1:27:•~::~`.~;; a'rke Avera' a Onl M t - ~•:,:: Y.31 ~ $ *Rents include water, sewer, trash, and one under ound stall. Source: Maxfield Research Inb. Residents of the proposed project should pay for gas heat and electricity. The newest rental properties in the marketplace require their tenants to pay for heat as well. Water, sewer and trash charges are typically incorporated into the monthly rent as is the monthly charge far one covered parking stall We recommend floor designs that maximize flexibility and use open spaces that flow into one another. We also recommend the following in-unit amenities. • High-speed Internet access; • Digital cable/satellite TV access; • Full kitchen appliance package including microwave oven; • One bath in one-bedroom /plus den and two baths in larger units; • • Walk-in closet in master bedroom; MAXFIELD RESEARCH INC. Mr. Michael Swenson June 4, 2008 iylichael Development Page 11 • Mini/vertical blinds; • Private balconies or patios; • In-unit washer/dryer. We also recommend the following recreation /common area amenities: • Outdoor gas grills and a picnic area; • Rooftop terrace with outdoor sundeck; • Community room with serving kitchen and big screen TV; • Business center; • Exercise room; • Bike room; • Storage lockers. These common area features will also attract residents to the property and will offer an additional value to the apartment community. We recommend 1.0 stall of underground parking per unit with the option for tenants to pay an additional $50 /month for extra stalls. Projected Absorption If a property is developed with.approximately 150 units, we estimate that 20% of the units could be preleased with the remaining units leasing at a rate of 12 units per month. At this rate, the project would reach stabilized occupancy (95%) m 9 to 10 months of opening. This absorption rate assumes that the project would open during the peak leasing season. If the property opens in the late fall or winter months, the absorption period would be extended by between 3 to 4 months. • MAXFIELD RESEARCH INC. ! . '---, axfieId 4 .p. Rcscarcl:lnr. ~ ~,: July 31, 2009 Mr. Michael Swenson Michael Development 2177 Youngman Ave. #180 5t. Paul, MN 55116 RE: Preliminary Unit Mix, Sizes and Rents for Proposed Workforce Housing in Richfield, Minnesota Maxfield Research Inc. has compiled a preliminary unit mix, unit sizes and rents for a proposed workforce housing development that would be located on South Lyndale Avenue and roughly 64a' Street in Richfield, Minnesota. The project would be comprised of a mix of retail and residential uses and would replace neighborhood strip center development. Table 1 presents a suggested development concept for the residential component of the property. Rents include heat, water, sewer and trash removal and one enclosed parking stall. Electricity and telephone would be paid for by the resident. TABLE 1 PRII,IlV~tARY 1J1~I' 1V>QX1S TLF,S /RiNTS RIC>~D RENTAL July 2009 of Average Unft Type Total Sq. Ft. RentRan a Rent/Sq. Ft. Rental Building Studio 5.0 550 $860 - $885 $1.56 - $1.61 1BR/IBA 50.0 750 $985 - $1,085 $1.3I.- $1,45 2BR/1.75BA 35.0 I,O50 $1,335 - $1,430 $1,27 - $1.36 3BR/2.SBA I0.0 2,300 $],545 - $1,595 $1.19 - $1.23 Total 100.0 Median = $1.34 Note: Rents include heat, water, sewer and trash removal; Reats include wall-unit au conditioning one parking stallinckuded; additional parking stalls, $75.OOpermonth, Rents are in 2009 dollars with an annual trend factor of 2.5% to occupancy. Source; Maxfield Research Inc. • 615 1~` Avenue NE, #500, Minneapolis, MN 55413 (612) 338-0012 (612) 904-7979 fax www.maxfieldresearch.coin • Mr. Michael Swenson July 31, 2009 Michael Development Page 2 In marketing of mid price properties, we find that the target markets respond very well to properties that include the heat in the rent rather than provide separately metered heating and cooling units. Although same case is attempted to be made that the resident has more control over utility costs by managing their own heating and cooling, there is almost always a trade off in that the rents for new product do not appear to be less to accommodate this feature. Inmost instances, rent levels are higher because of the additional cost to add separate the separate utility units irrespective of what is paid by the tenant inutility costs later on. As such, prospects tend to prefer having their heat included in the rent. If you have .questions or need additional infoanation, please contact me at (612) 904-7977. Sincerely, MAXFIELD RESEARCI3 INC. Mary C. Bujold President • 6l 51°1 Avenue NE, #500, Minneapolis, MN 55413 (612)338-0012 {612)904-7979 fax www.maxfieldresearch.com • SOURCES • AND USES OF FUNDS • LYNDALE COMMONS PROPOSED SOURCES AND USES SOURCES OF FUNDS HUD First Mortgage Loan Proceeds TIF Pay as You Go Note HRA Land HUD Required Developer Contribution Owner Equity TOTAL SOURCES OF FUNDS USES Land Site Work/Pre-Construction Total structure, including garage General, Requirements Builders Overhead Total architectural Engineering Permits & Fees SAC/WAC Third Party Reports-Phase 1 Environmental, Architectural Review, Cost Review, Capitalized Interest & Taxes FHA Application, Insurance, Inspection, Legal & Accounting Working Capital 2% Operating Deficit (3%) Payment & Performance Bond HRA Land Contingency HUD Required Developer Contribution Footnotes 8,311,000.00 832,000.00 *** 806,245.00 795, 394.00 $10,744,639.00 1,200, 000.00 499,608.00 6,168,455.00 104,800.00 135,457.00 160, 000.00 13,800.00 55,373.00 164,000.00 ** 32, 500.00 348,800.00 '~ 340,100.00 ** 181,000.00 ~* 271,500.00 *~ 760,000.00 *** 203,000.00 806,245.00 TOTAL USES OF FUNDS • $10,744,639 *This is shown as both a source and a use. If the owner agrees to act as the General Contractor, and assume that additional risk, HUD. treats this as additional equity for for underwriting purposes **These amounts are either estimates from the HUD Mortgage Underwriter or formula driven amounts under the FHA/HUD mortgage program. ***The purchase of the HRA Land will be paid for with excess TIF proceeds once the TIF I 1 /21 /2010:9:27 AM McNellis: Lyndalecommons. ProposedSources. . " e~ M~ ^~ Metes Management~Camppny MEl"ES bt BOUNDS Management Company Suite 100 6640 Lyndale Avenue "South Richfield; Minnesota 55423-2385 612:861.856 FAX 612.861..8535 `~ ~~ ~~ -~~ DES. a"~ • February 5, -2010 , TO: Mayor Goettel and .Members of the City Council - ' Re: Proposed Development at 64t" and Lyndale Dear. Mayor and Council Members: I have been a practicing attorney, property manager and developer located in the City of Richfield.-for over 30 years. One of our companies is Metes & Bounds Management Company.. which manages over 5Q apartment-properties throughout the-upper 1Vlidwest, including The Oaks on Eleasant at 66`" and Pleasant. Our, current offices are located -in City Bella's commercial spaces. I write in support of a proposed 90-unit rental housing development for the area known as of Woodlake Plaza Shopping:Center at 64th and Lyndale Avenue South': Some ,reasons. are as follows.: 1. The area ,along Lyndale north of 65th: Street has been blighted for, some time-Lyndale Garden Center vacant; other. businesses `vacant, substandard housing,: `arid 'now the recently closed ~ K-mart site south of 65th: This' struggling.. area. is 'the `concern of the • nearby businesses 'and residential areas as it continues to deteriorate .and close` in upon our most promising and successful commercial and. residential area in the City at 66th and Lyndale: 'We must stop the: blight.. 2. We have responsible, long time owners willing to put heir dollars into something that will benefit the City. 3. The developers have presented a reasonable plan with-well-thought oizt justification for replacing the outdated strip,mall with an attractive housing development.: 4: ~~Ve need this type of housing. 'hhe units are affordable and with a variety of sizes. The design is attractive., 5. We need to start investing in the area. This improvement can be the catalyst to spur other development along Lyndale. The '"unspoken" message is: "we' believe in, the future- of this area'.': Property values for. all nearby land.will increase. We have an opportunity to catch ;the-next wave of expansion and growth .for. the City. ` • 6. Few .developers. are willing to -jump into this market. The City needs to encourage all reasonable.proposals. .. .. .. . _. 7. The.`developer's request for tax increment fnancing is essential in today's: development. world. Developers can only build where the'costs allow for a reasonable financial balance richfield 5 .. :..- -i ~- Mayor and Council Members , City of Richfield February 5, 2010 Page 2 between. risk and reward. The benefit to the overall City tax base makes awarding TIF funding its major tool, to encourage redevelopment. 8. This proposal accomplishes three goals: (1) enhanced housing opportunities; (2) elimination of the existing struggling eyesore, strip mall;-and (3) an investment in this area to spur additional redevelopment. We have 'a first-ring location with first .rate, access #o all metropolitan amenities. This is an . opportunity the City cannot pass up. T encourage you to approve this redevelopment with grant of TIF funds and continue to make a plan that.will bring a better future for all of Richf eid. Very truly yours, `METES & BOUN ANA.. ElVIE 1VI:PANY BY: Jan H: Susee, Deve op' of he O son Pleasant, Woodlake Commercial Center, The Pines Assisted Livmg, City Bella Commercial, and counsel for Developers of , Gramercy Park and City Bella Commercial . ; Debbie Goette1,1V1ayor of Richfield 652'5 James Avenue South Richfeld. MN 55423. ' . Suzanne Sandahl, City' Council _ .7601: Bryant Ave South Richfield MN 55423 Pat :Elliott, ...City Council 6720.Oliver Ave South Richfield MN 55423 Fred Wroge, City Council 124 East 79th Street. Richfield MN 55423 , Tom Fitzhenry, Gity Council 6737 Park Avenue South Richfield MN 55423 Steve Devich, City Manager Richfield City Hah 6700 Portland Avenue Richfield MN 55423 zj~; ~ CITY OF RICHFIELD, MINNESOTA Office of City Manager February 25, 2010 Council Memorandum No. 2~ The Honorable Mayor and Members of the City Council Subject: Woodlake Plaza Redevelopment Proposal Council Members: On January 26, Michael Development presented their redevelopment proposal for the Woodlake Plaza property (6401 Lyndale Avenue) at a City Council Work Session. At that meeting several questions and issues were raised; primarily related to parking and to taxes and Tax increment Financing (TIF). The purpose of this memo is to address those questions and issues. Rental Rates and Markets Served ^ The housing that is being proposed at this location is upscale market rate rental housing with an affordable component. The majority of the housing in this development (60-80%) would rent at a market rate. This is a very similar ratio to the Oaks on Pleasant development that has a mix of 80% market rate housing and 20% affordable housing. ^ Currently, the Metropolitan Council considers 29% of Richfield's overall housing to be "affordable." When considering rental housing alone, however, the 2000 U.S. Census reported that 61 % of all Richfield renters were living in affordable rental housing. ^ This development would represent a significant step-up for most Richfield renters. This "step-up" would result in enhanced amenities (such as dishwashers and individual washers and dryers) not found in many existing apartment communities in Richfield. ^ The following table shows rental rates in the proposed development and at neighboring rental communities: y-~~ Studio Rental 1 Bedroom 2 Bedroom>. 3 Bedroom Rate Ren#al Rate Rental Rate Rental Rate Proposed $710 - $870 $750 - $990 $900 - $1,400 $1,046 - $1,500 Pro'ect Lyndale Garden None $610 ~ None None (6301-6335 L ndale Woodlake Park None $675 $840 None Apartments (6304 Dupont} 800/820/840 W. None $677 $776 None 66th Street A artments Oaks on $825 (affordable $950 $1,325 $1,535 Pleasant"` unit must make 6600 Pleasant under $40,000 The Feasibility of Buildings 100% Market Rate Aaartment Project? ^ The developer has concluded that it would not be financially feasible to construct a 100% market rate rental community due to the current state of real estate financing. The only lender that is currently giving rental construction loans/mortgages is the' U.S. Department of Housing and Urban Development (HUD). In order to meet HUD financing guidelines, the development must have a reliable income stream for a portion of their debt over and above the rental income - in the case of this proposed project, the reliable income stream would be in the .form of tax increment housing from a housing TIF District (which requires 20-40% of the units to be affordable). Parkinca . ^ Proposal: The number of parking spaces for the proposed 90-unit development is currently planned at 135 (a ratio of 1.5 spaces per unit). The parking equates to one space for each studio unit, 1.5 spaces for each one and two bedroom unit and two spaces for each three bedroom uni#. Code Requirement: The Zoning Ordinance has a general requirement of two parking spaces per unit in all multifamily developments. It allows reductions, however, for larger developments. These reductions result in a minimal requirement of 1.25 spaces per unit for developments of ten or more units in a MR3 Zoning District (which the proposed project would be zoned). Using these current standards (a range of 1.25.to two spaces per unit), the proposed development would, be required to have 113 to 180 spaces. Parking problems in recent redevelopment projects have been cited on numerous occasions. The only resident complaint regarding parking adequacy that staff is aware of is at Kensington Place. There appears to be two distinct issues at Kensington: first, that there is insufficient parking during weekdays due to the retail parking demand (which would not be an issue in this case), and second, that residents and guests were choosing to park on Aldrich Avenue instead of the, -I ~ I parking accessed from the east of the dwelling units -this issue has been successfully resolved. Parking ratios for comparable developments: The only non-age restricted rental housing that has been constructed in Richfield in the past 30 years is the Oaks on Pleasant development. Staff has no indication that there have been any parking problems at the Oaks on Pleasan#. l'he following is a description of the parking, provided in that devebpment: o Total units = 138; total parking spaces =194. The resulting parking ratio is 1.4 spaces per unit. o Parking spaces per bedroom: one space per studio and one bedroom unit and 1.,5 spaces per two and three bedrooms. o Using the ratios as the Oaks on Pleasant as minimal standards, the proposed development would be required to have 110 to 126 parking spaces (rather than the 135 proposed parking spaces). ^ Another comparable development would be the Village Green Apartments (at 901 - 1001 East 77th Street). This 88-unit property received an updated Conditional Use Permit in July 2000. ,The staff report for that action includes the following statement: o "The parking requirement for amulti-family complex is two spaces, for every unit. The Council can reduce the ratio to 1.25 parking spaces per unit considering factors such as transit availability, shared parking, pedestrian orientation, and occupancy characteristics. The reduced parking ratio of 1.47 spaces to units has existed without problems since the complex was built in the 1960s." Residents not utilizing the structured parking: This has not been an issue in the Oaks on Pleasant and the developers have expressed a commitment that it would not be a problem in this development. If the structured parking is underutilized and the surface parking is over-utilized, the developer could take a number of actions, such as decreasing the cost of the structured parking pass and/or requiring a pass for surface parking. Propert~Tax Revenues and Tax Increment Financing ^ As was indicated in a tax summary provided by Ehlers and Associates (attached), the curren# development will provide $21,400 in tax revenues to the City of Richfield in 2010 (a 3% reduction in Richfield tax generation from the previous year). ^ The developers have requested $800 to $825,000 in TIF. ^ Under a "zero inflation" scenario there is likely to be a net present value (npv) of $822,000 in TIF if the project did not appreciate during the life of the TIF District. ^ The TIF that the developer is requesting would not be generated without the construction of their development. L~-I b ^ The tax summary also estimated Richfield's tax revenues for the proposed development at $14,080 in 2011 -this is a $7,320 reduction from the current taxes because the Class Rate of the proposed residential development is lower than that of the existing commercial development. ^ If the TIF District. were approved, the Richfield Housing and Redevelopment Authority (HRA)-would receive an estimated annual payment of $8,288 for administration of the TIF District. ^ if the development were to appreciate in market value by %i% annually, there would be sufficient TIF proceeds to reimburse the Richfield HRA for the value of the properly it owns at 515 W. 64th Street. ^ Under this scenario, the City would collect its "base" taxes of $14,080 and the HRA would receive $8,288 in TIF to cover its administrative costs and an average annual -payment of $2,250 for reimbursement for the cost of the HRA-owned lot. The -. primary administrative costs that the HRA would incur would be in the form of staff salaries; the HRA currently reimburses the City for staff salaries related to . redevelopment and TIF activities. Other Revenues ^ The proposed development would likely pay $27,500 to $37,500 in permit fees to the City of Richfield. While these fees are designed to cover costs incurred by the City, many of those costs are fixed (staff salaries, etc.) and would be expended regardless of the permit and fee revenues from any one particular development. Next Steps Michael Development has indicated that #hey wish to pursue their project as proposed. The next step would be a request that the City Council call for a public hearing on the. creation of a TIF District. The call for a Public Hearing is tentatively planned for the March 9, 2010 City Council meeting with the actual public hearing and Council consideration to occur on March 23, 2010. SLD:cak Attachment Email: Department~Directors Assistant to the City Manager City of Richfield Summary Tax Analysis for the Propased.Lyndale Commons Redevelopment MV 2007; MV 2008; MV 2009; Pay MV 2010;. Pay 2008. Pay 2009 2010 Pay 2011 Total Market Value: $2,518,000 $2,521,000 $2,269,000- Total Annual City ON<.Y Taxes: $19,499 $22,020 $2>'1~,400 Estimatetl Total Market Value (90 Units Rental Housing): $7,850,000 Total Annual City QNLY Taxes; $14,080 - Administration, (10°!° of TIF): $8,288 ,.. _ Estimated-Annual Funds Available to ~Ity of Richfield:: $~~,~~$ Estimated Annual TIF Funds Available for Development: $74,588 ti -s AGENDA ITEM # 5 REPORT # 1 S STAFF REPORT HOUSING AND REDEVELOPMENT AUTHORITY MEETING MARCH 8, 2010 REPORT PREPARED BY: REPORT PRESENTER: CHRISTINE COSTELLO, COMMUNITY DEVELOPMENT SPECIALIST NAME, TITLE JOHN STARK, COMMUNITY DEVELOPMENT DIRECTOR NAME, TITLE DEPARTMENT DIRECTOR REVIEW: SIGNA REVIEWED BY EXECUTIVE ITEM FOR HRA CONSIDERATION: Consideration of a proposed Preliminary Agreement with Ron Clark Construction for exploring the feasibility of the redevelopment a 3.5 acre parcel occupied by the former Richfield Public Works Maintenance Facility, the vacant HRA-owned mortuary building and other adjacent properties and consideration of a Right-of-Entry Agreement for those properties owned by the H RA. I. RECOMMENDED ACTION: By Motion: Approve and authorize execution by the Chair and Executive Director: 1. Attached Preliminary.Agreementtyith Ron Clark Construction and Design Company for exploring the feasibility of redevelopment of a 3.5 acre area at the former site of the Richfield Public Works Maintenance Facility and adjacent properties; and 2. Attached Right-of-Entry Agreement for use of 211 76th Street West and 7608 Pillsbury Avenue by Ron Clark Construction and Design Company II. BACKGROUND Ron Clark Construction and Design (Ron Clark) has presented a proposal to both the Richfield City Council (May 12, 2009) and the Richfield HRA (January 19, 2010) 030810-Prelim Agreement Ron Clark regarding their plan to develop the former City Garage/HRA Mortuary site. That proposal includes the development of 66 for-sale two and three-story townhome units. Before expending additional time and expense on their proposal for this site, Ron Clark Construction has expressed a desire to enter into a Preliminary Development Agreement (Agreement) that would give them exclusive development rights to the property. In recent months, another party (Minnesota Life College) had expressed an interest in developing this property as well. Staff has been informed, however, that Minnesota Life College's development plans will take quite some time to formulate and that they do not wish to hinder other development opportunities from proceeding. The attached Preliminary Agreement was drafted jointly by HRA staff, legal counsel and representatives of Ron Clark. In summary, this Agreement would prohibit the HRA from soliciting proposals from, or entering into a development agreement with, any other party for a period of eight months while Ron Clark conducts the studies necessary to determine the feasibility of the project. During this time, the HRA would obtain appraisals for all of the publicly owned land in the project area; the expense of such appraisals would be reimbursed by Ron Clark if they ultimately proceed with the project. As part of the preliminary agreement process, environmental studies such as soil borings and sample monitoring will need to be conducted to ensure that any hazardous substance or contaminants that may be found in the soils or groundwater can be remediated. Therefore, aRight-of-Entry Agreement is needed between Ron Clark and the Housing and Redevelopment Authority (HRA) as well as the City. Ron Clark will go before the City Council at their March 23rd meeting for consideration of a Right-of-Entry Agreement for the City property which is the north half of the former Public Works Maintenance Facility (7700 Pillsbury Avenue). III. BASIS OF RECOMMENDATION A. POLICY The Richfield Comprehensive Plan has been used as a guide for the redevelopment of the former Richfield Public Works Maintenance Facility. • The Comprehensive Plan indicates that this area is guided for Medium-High Density residential use. • Medium High Density Residential is considered a density that would range from 12 to 24 units per acre and no greater than four stories tall. • The City Council will consider aRight-of-Entry Agreement for the City property at its March 23rd meeting. B. CRITICAL TIMING ISSUES • This is a unique opportunity to realize the greatest potential for this area for the future of the community. • The term of the Agreement is eight months. • The Agreement restricts the HRA from assisting any other developer with redevelopment of this project site. • The Preliminary Agreement requires the HRA to undertake a Financial Feasibility Study. • Should development prove feasible, the Agreement requires Ron Clark to submit site plans and building elevations for HRA review and comment. • If the development project is deemed feasible during the term of the Agreement, the HRA and Ron Clark would negotiate a Private Development Contract. • The Right-of Entry Agreement is necessary so that Ron Clark may enter HRA and City owned property to undertake environmental work prior to the conveyance of the property to Ron Clark. The Right-of- Entry Agreement for the City property is attached for reference. C. FINANCIAL • The Agreement requires Ron Clark to reimburse the HRA for expenses related to consultants. D. LEGAL • HRA legal counsel drafted the Agreement and Right-of-Entry Agreement in cooperation with staff and Ron Clark. IV. ALTERNATIVE RECOMMENDATION(S~ • Approve the Preliminary Agreement and Right-of-Entry Agreement with added provisions or modifications. • Do not approve the Preliminary Agreement and Right-of-Entry Agreement. • Continue the consideration of the Preliminary Agreement and Right-of-Entry Agreement to a later meeting date. V. ATTACHMENTS • Preliminary Agreement and Right of Entry Agreement with Ron Clark VI. PRINCIPAL PARTIES EXPECTED AT MEETING • Ron Clark, Founder and Owner of Ron Clark Construction • Mike Roebuck, Vice President of Ron Clark Construction 5~- I A PRELIMINARY AGREEMENT THIS AGREEMENT is made and entered into this day of , 2010, by and between the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota, a Minnesota public body corporate and politic ("HRA") and R.E.C.,Inc.a Minnesota Corporation DBA RON CLARK CONSTRUCTION AND DESIGN, (" CLARK") RECITALS: First: CLARK and the HRA have been engaged in informal discussions regarding the possible development of an area of land within the City of Richfield that is generally shown in the attached Exhibit A (the "Area"). The Area includes property owned by the HRA, the City of Richfield, Richfield Properties, LLC (which is owned by CLARK) and a private party. Ownership is indicated on Exhibit A. Second: CLARK is proposing redevelopment within the Area which will a include residential use (hereinafter the "Project"); Third: Based on initial reviews of the proposal, it appears that the Project is potentially feasible; however, further review and detail are needed; Fourth: The parties wish to cooperate doing the things necessary in analyzing the potential and feasibility of Project and are willing to proceed as described in this Agreement; Fifth: The parties acknowledge that CLARK will expend substantial time and effort, and incur substantial expense in pursuing the Project; Sixth: CLARK 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 CLARK in its efforts. Seventh; The HRA and CLARK 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) Financial Feasibility. Clark will conduct a financial feasibility analysis of the 358788v6 JBD RC125-292 s-a Project, in such detail and nature as CLARK, in its sole judgment determines necessary. The HRA's fiscal consultant will also conduct a financial analysis of CLARK and the Project. The purpose of the HRA's analysis is to determine CLARK's ability to finance the Project as proposed. CLARK will, as a part of the HRA financial study, provide any internally prepared market /development feasibility study for the HRA. The analysis will consider such factors as CLARK's capability to arrange for borrowing, the anticipated level of other assistance available to the Project from the HRA other sources, and CLARK's ability to provide equity to the Project. Information obtained from CLARK in connection with this analysis will be subject to such confidentiality provisions as are permitted by law. It is understood that it will not be possible for CLARK to provide a loan term sheet at this stage in the process due to the fact that CLARK will not have sufficient information (full proforma, TIF agreement, Development Agreement, Plans & Project Documents etc.) for any bank to do a proper evaluation of the project at this time. (b) Plan Review and Refinement. CLARK will present the general development plan, including parking layout and design, to the City for review and comment; and will also undertake any additional studies or refinements to the plan for the Project that are necessary to determine that the plan (i) complies with the City's land use requirements; (ii) provides sufficient detail to permit the reviews described in paragraphs (a) and (b) above. In formulating the general development plan, to the extent determined necessary by the HRA, CLARK and the HRA will jointly cooperate in conducting sufficient neighborhood open houses to provide information and seek input from the neighborhood as such is defined by the HRA. The general development plan will also address the incorporation of any privately owned parcel in the Area into the Project. (c) Contract Negotiation. Either during or on completion of the activities described in (a), and (b,) above, the parties will attempt in good faith to negotiate the terms of a contract for private development (the "Contract") which will provide for the acquisition of the necessary property, the nature and timing of the private improvements to be constructed, the form, amount and conditions of any economic assistance to be provided by the HRA in aid of the Project. The Contract will contain such other and additional terms as either party believes are necessary for the transaction. (d) Right of Entry. In fulfillment of its responsibilities under this Agreement and as further defined in Article SG, CLARK and the HRA desire to initially conduct environmental testing. on the portions of the Area owned by the City and/or the HRA. Upon receipt of the environmental testing and after appropriate review and investigation Clark will determine and conduct what additional soil testing and survey work would be required. Upon execution of this Agreement, the HRA will also execute and deliver to CLARK a right of entry agreement in substantially the form of the attached Exhibit B. The HRA will cooperate with CLARK in securing a right of entry agreement from the City of Richfield for the purpose of inspecting the portion of the Area owned by the City and conducting testing and other examinations on the portions of the Area currently owned by 358788v6 JBD RC 125-292 2 5-3 the City. The proposed form of agreement that would be presented to the City for consideration is contained in Exhibit C. 2. Undertaking by CLARK. During the term of this Agreement, CLARK will undertake all of the activities necessary to accomplish the activities described in paragraph 1 above to be performed by CLARK, including, without limitation, providing project and financial information to the HRA. 3. HRA's Undertaking and Agreement. The HRA agrees to cooperate with CLARK in CLARK's undertakings, agrees to utilize its best efforts, subject to CLARK's performance, to accomplish the activities described in paragraph 1 above, which also includes an analysis of the nature, area, and financial implications of any tax increment district which might be established. The HRA further agrees that during the term of this Agreement the HRA will not: (i) provide or enter into an agreement for provision of financial assistance to any third parry in connection with any proposed development within the Area, (ii) except as may be necessary in connection with the provision of public improvements, condemn or agree to proceed with the condemnation of any property within the Area to assist or facilitate development within such area by any third party, (iii) solicit proposals from any third party regarding any proposed development within the Area, or (iv) sell or encumber any land owned by it located within the Area. A. The HRA further agrees that it will undertake an appraisal of the parcels owned by the HRA and by the City located within the Area.. It is currently estimated that the cost for such appraisals will be .not more than $5,000. The HRA will be responsible for initially paying such cost subject to reimbursement by CLARK at the time the Contract is executed. If the actual cost of the appraisals exceeds such amount, CLARK will be responsible for such additional amount only if it so agrees. 4. Term. The term of this Agreement shall be for a period of eight (8) months, provided, in the event (i) the HRA determines, in good faith, that CLARK is not diligently pursuing the Project; or (ii) CLARK determines, in good faith, that the HRA is not diligently pursuing its obligations hereunder, or (iii) if CLARK determines, in good faith, that the Project is not feasible, such determining party may terminate this Agreement upon thirty days written notice to the other. The HRA may also terminate this Agreement for failure of CLARK to provide additional funds to the Deposit pursuant to paragraph 5 E. below. 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 they shall determine to be appropriate from time to time. Such extension will not be deemed as an extension of any Right of Entry Agreement executed by the parties, or by the 358788v6 JBD RC 125-292 3 S-'~ parties and the City. Any such notice shall be deemed delivered if either actually delivered, or if faxed and mailed to the parties at the following addresses: Ron Clark RON CLARK Construction and Design 7500 West 78t" Street Edina, MN 555439 Fax: 952.947.3030 Richfield Housing and Redevelopment Authority 6700 Portland Avenue South Richfield, MN 55422 Attn: Executive Director Fax: 612.861.9749 5. Miscellaneous. A. 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. B. Redevelopment of the Area will be in accordance with further agreements which the parties shall, in good faith attempt to negotiate during the term of this Agreement. C. As expansion of the foregoing, CLARK understands that further and separate action, for which no obligation is created hereunder, will be required before the HRA or CLARK is obligated to take various actions with respect to the Project. Those actions may include, without limitation: a) Modification of Project Area and/or Tax Increment District; b) Zoning and subdivision approvals; c) Acquisition of land within the Area; d) Construction of public improvements to serve the Project; and e) Approval of separate contracts calling for the actual redevelopment of the Area. D. CLARK further understands that many of the actions which the HRA may be called upon to take require the reasonable discretion and in some instances the legislative judgment of the HRA, such actions may be made only following established procedures; and HRA may not, by agreement, agree in advance to 358788v6 JBD RC125-292 4 5-5 any specific decision in such matters. E. With the execution of this Agreement CLARK will deliver a deposit to the HRA in the amount of $7,500 (the "Deposit"). The deposit shall be used to reimburse the HRA for the service of its consultants including appraisers retained pursuant to paragraph 3, incurred from the date of this Agreement and thereafter. If the amount remaining in the Deposit is reduced to below $2,500, CLARK shall, upon five days written notice from the HRA, make an additional deposit in an amount sufficient to return the amount on deposit to $7,500. If such deposit is not made, the HRA may elect to suspend or terminate its performance hereunder. Such election will be effective on the date it is given in writing, or on such later date specified in the election. Any unexpended or unencumbered portion of the Deposit shall be returned to CLARK upon the expiration or termination of this Agreement. F. The environmental examination and testing to be contracted and conducted by the HRA will consist of a Phase I review and, as needed a Phase II review. It is currently estimated that the Phase I review will cost not more than $2,150. The HRA will be responsible for paying such cost subject to reimbursement by CLARK at the time the Contract is executed. If the cost of the Phase I review exceeds such amount, CLARK will be responsible for such additional amount only if it so agrees. At such time as the cost of any needed Phase II can be estimated, the parties may agree to proceed with. the Phase II; and if they do proceed, the costs will be paid and reimbursed in the same manner as Phase I. 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 By: Its: By: Its: By: RON CLARK CONSTRUCTION AND DESIGN, a Minnesota limited liability company Ron Clark Its: Founder and Owner 358788v6 JBD RC125-292 5 s-1 EXHIBIT B HRA RIGHT OF ENTRY AGREEMENT THIS AGREEMENT, made on this day of , 2010, by and between THE HOUSING AND REDEVELOPMENT AUTHORITY 1N FOR THE CITY OF RICHFIELD, a Minnesota public body corporate and politic ("Owner") and R.E.C.,Inc.a Minnesota Corporation DBA RON CLARK CONSTRUCTION AND DESIGN, (" CLARK") I. RECITALS 1.01. Owner is the fee simple owner of the real estate located at the addresses identified and legally described on the attached Attachment A ("HRA Property") 1.02. CLARK is investigating the possibility of purchasing the HRA Property for the purpose of redevelopment. 1.03. CLARK wishes to have its consultants conduct geotechnical testing, and other related studies on the HRA Property in order to identify whether the HRA Property is suitable for the intended uses. CLARK has requested that Owner grant CLARK, its employees, agents and contractors, the right to enter the HRA Property to conduct said testing and studies. 1.04. CLARK also desires to secure the consent of Owner to enter the HRA Property for the purpose of conducting land surveys of the HRA Property. CLARK has requested that Owner grant its consent to the entry of these additional consultants onto the HRA Property to conduct their studies. 1.05. It is understood that in executing this agreement, Owner will not be granting (a) any permanent interest in the HRA Property to CLARK, or (b) exclusive use or possession of the HRA Property to CLARK. 358788v6 JBD RC 125-292 B-1 5 -~ II. AGREEMENT NOW, THEREFORE, in consideration of the premises and their mutual promises, the parties hereto hereby agree as follows: 2.01. Ri t of Entry. Effective upon the date hereof, Owner hereby grants to CLARK, its agents, employees, contractors and invitees, and such other consultants as CLARK may elect (collectively, "Consultants") the right to enter upon the HRA Property, for the purpose of carrying out the activities described in sections 1.03 and 1.04 above relative to CLARK's possible purchase of the HRA Property. 2.02. Consideration. In consideration for such right of entry, CLARK agrees to: (a) Notify Owner of the date and time that work by CLARK or its Consultants on the HRA Property will commence under this Agreement which notice shall be at least five (5) business days prior to doing any work on the HRA Property in order to permit Owner's employees or consultants retained by Owner to be present during the time any work is being done by CLARK or its Consultants; (b) Secure all appropriate government approvals and permits for any work that will occur within public streets adjacent to the HRA Property; (c) Provide a copy of all test results and reports prepared by CLARK's employees or Consultants (except appraisal reports) evaluating the conditions present on the HRA Property to Owner as soon as reasonably possible following final completion thereof. (d) Dispose of all solid waste generated during the course of CLARK's sampling activities and other work on the HRA Property in accordance with applicable 358788v6 JBD RC125-292 B-2 5-~ federal, state and local laws, rules and regulations. (e) Do the work in the shortest period of time reasonably necessary to complete such activities authorized under this Agreement as CLARK, in its sole discretion, shall elect to undertake; (f) Use the HRA Property only for the purposes described herein and not park or store any equipment on the HRA Property, except during the limited periods of time when the work on the HRA Property which is contemplated by this Agreement is actually in progress; (g) Do no unnecessary damage to the HRA Properly and restore the HRA Property to substantially the same condition as the condition in which it was found by CLARK at the time of CLARK's or its Consultants' entry upon the HRA Property pursuant to this Agreement. (h) Hold Owner harmless from and indemnify Owner from any and all claims, damages, judgments or obligations, including the cost of defense of suit, arising out of damage to HRA Property or arising out of injury to anyone incurred or alleged to have been incurred in connection with or as a result of any work done pursuant to this Right of Entry, or as a result of CLARK's or its Consultants' intentional torts or negligence; (i) CLARK shall ensure that its Consultants or their contractors or invitees which enter the HRA Property pursuant to this Agreement shall carry insurance during the time any work is done on the HRA Property in accordance with the following minimum requirements: Workers' Compensation Insurance with limits as provided by statute, with all 358788v6 JBD RC125-292 B-3 ~/~~ necessary statutory elections to provide coverage for and/or claims made by any person doing work on the HRA Property pursuant to this Right of Entry; Employer's liability insurance (often included as coverage (b) in the Workers' Compensation policy) with limits of $100,000; Comprehensive Auto (and truck) Liability Insurance with minimum combined single limits of $1 million per occurrence; Comprehensive General Liability Insurance (including coverage for contractual liability, products and completed operations liability, liability arising out of explosion, or underground related incidents) with minimum combined single limits of $1 million per occurrence. In addition, the Comprehensive General Liability policy shall include Owner and CLARK as additional insureds with respect to work done on the HRA Property. (j) Clark will upon completion of all soils testing provide a complete copy of all soils reports to the OWNER. 2.03. Expiration. The right of entry provided under this Agreement will automatically expire on November 1, 2010. 2.04. Governing Law. This Agreement shall be interpreted in accordance with the laws of the state of Minnesota. 2.05. Notices and Demands. All notices, demands or other communications under this Agreement shall be effective only if made in writing and shall be sufficiently given and deemed given when delivered personally, transmitted by facsimile, or mailed by certified mail, return receipt requested, postage prepaid, properly addressed as follows: 358788v6 JBD RC125-292 B-4 5,~~ If to Owner: Richfield HRA Attn: 6700 Portland Avenue South Richfield, MN 55423 With a copy to: John B. Dean Kennedy & Crraven, Chartered 470 U. S. Bank Plaza. 200 South Sixth Street Minneapolis, MN 55402 If to CLARK: Ron Clark RON CLARK CONSTRUCTION AND DESIGN 7500 West 78`" Street Edina, MN 55439 With Copy to: Or to such other persons as the parties may from time to time designate in writing and forward to the other persons entitled to receive notice as provided in this section. 2.06. Amendment. This Agreement may be amended by the parties hereto only by written instrument executed with the same procedures and formality as were followed in the execution of this Agreement. IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed in their names and on their behalves on or as of the above date. 358788v6 JBD RC125-292 B-5 5,~~" Owner: RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY By: Its Chair By: Its Executive Director RON CLARK Construction and Design, a Minnesota By: Its: 358788v6 JBD RC125-292 B-6 '~'~~ ATTACHMENT A List of HRA Property Addresses and Legal Descriptions 211 West 76th Street Lots 1, 2, 3, Block 4, Soens Addition, except the East 121.99 feet, according to the recorded plat thereof on file or of record in the office of the Registrar of Titles, Hennepin County, Minnesota. 7608 Pillsbury Avenue South The East 121.99 feet of Lots 2, Block 4, Soens Addition, according to the recorded plat thereof on file or of record in the office of the Registrar of Titles, Hennepin County, Minnesota. 358788v6 JBD RC125-292 B-A-1 ~' ~~ EXHIBIT C CITY RIGHT OF ENTRY AND STANDSTILL AGREEMENT. THIS AGREEMENT, made on this day of , 2010, by and between THE CITY OF RICHFIELD, a Minnesota municipal corporation ("City") and THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, a Minnesota public body corporate and politic ("HRA") and R.E.C.,Inc.a Minnesota Corporation DBA RON CLARK CONSTRUCTION AND DESIGN, (" CLARK") I. RECITALS 1.01. City is the fee simple owner of the real estate located at the addresses and legally described as such on the attached Attachment A ("City Property"). HRA is the owner of real estate located at the address and legally described as such on the attached Attachment A ("HRA Property"). 1.02. HRA is undertaking discussions Clark concerning the possibility of redeveloping all of the property shown on Attachment A. Such redevelopment would necessitate Clark purchasing the City Property and the HRA Property. 1.03. HRA wishes to have its consultants conduct soil borings, dig and sample monitoring wells and conduct other environmental studies on the City Property in order to identify whether there may be hazardous substances, pollutants or contaminants present on the City Property, and to conduct appraisals to determine the fair market value of the City Property. 1.04.. Clark also desires to secure the consent of City to enter the City Properly for the 358788v6 JBD RC125-292 C-1 °~'~~ purpose of conducting land surveys, and geotechnical testing. CLARK has requested that City grant its consent to the entry of these additional consultants onto the City Property to conduct their studies. 1.05. It is understood that in executing this agreement, City will not be granting (a) any permanent interest in the City Property to CLARK or the HRA, or (b) exclusive use or possession of the City Property to CLARK or the HRA. II. AGREEMENT NOW, THEREFORE, in consideration of the premises and their mutual promises, the parties hereto hereby agree as follows: 2.01. Right of Entry. Effective upon the date hereof, City hereby grants: (i) to Clark, its agents, employees, contractors and invitees, and such other consultants as Clark may elect, the right to enter upon the City Property, for the purpose of conducting the activities described in 1.04 above; and (ii) to the HRA, its agents, employees, contractors and invitees and such other consultants as the HRA may elect, the right to enter upon the City Property, for the purpose of conducting the activities described in 1.03 above. 2.02. Consideration. In consideration for such right of entry, as to their separate activities, Clark and the HRA agree to: (a) Notify City of the date and time that work by Clark or the HRA or Consultants on the City Property will commence under this Agreement which notice shall be at least five (5) business days prior to doing any work on the City Property in order to permit City's employees or consultants retained by City to be present during the time any work is being done by CLARK or its Consultants; 358788v6 JBD RC125-292 C-2 J /' (b) Secure all appropriate government approvals and permits for any work that will occur within public streets adjacent to the City Property; (c) Provide a copy of all test results and reports prepared by Clark's or HRA's employees or Consultants (except appraisal reports) evaluating the conditions present on the City Property to City as soon as reasonably possible following final completion thereof. (d) Dispose of all solid waste generated during the course of Clark's or HRA's sampling activities and other work on the City Property in accordance with applicable federal, state and local laws, rules and regulations. (e) Do the work in the shortest period of time reasonably necessary to complete such activities authorized under this Agreement as Clark or HRA, in their sole discretion, shall elect to undertake; (f) Use the City Property only for the purposes described herein and not park or store any equipment on the City Property, except during the limited periods of time when the work on the City Property which is contemplated by this Agreement is actually m progress; (g) Do no unnecessary damage to the City Property and restore the City Property to substantially the same condition as the condition in which it was found by Clark or HRA at the time of Clark's or HRA's or their Consultants' entry upon the City Property pursuant to this Agreement. As soon after completion of its work on the City Property as allowed by applicable authorities, HRA shall properly abandon and remove any well installed by HRA or its Consultants, in accordance with Minnesota Department of Health regulations; 358788v6 JBD RC125-292 C-3 ~ ~~1 (h) Hold City harmless from and indemnify City from any and all claims, damages, judgments or obligations, including the cost of defense of suit, arising out of damage to City Property or arising out of injury to anyone incurred or alleged to have been incurred in connection with or as a result of any work done pursuant to this Right of Entry, or as a result of Clark's or the HRA or their Consultants' intentional torts or negligence. Notwithstanding the ,foregoing, unless the City Property is acquired by it, neither Clark nor the HRA shall not be responsible for any submission or application for further investigation or feasibility analysis or the proper methods or cost of removal, treatment or disposal of any pollutants, contaminants or hazardous substances present on the City Property, it being the sole responsibility of City to perform these tasks if required; (i) Clark or HRA shall ensure that its Consultants or their contractors or invitees which enter the City Property pursuant to this Agreement shall carry insurance during the time any work is done on the City Properly in accordance with the following minimum requirements: Workers' Compensation Insurance with limits as provided by statute, with all necessary statutory elections to provide coverage for and/or claims made by any person doing work on the City Property pursuant to this Right of Entry; Employer's liability insurance (often included as coverage (b) in the Workers' Compensation policy) with limits of $100,000; Comprehensive Auto (and truck) Liability Insurance with minimum combined single limits of $1 million per occurrence; 358788v6 JBD RC125-292 C-4 /~~ Comprehensive General Liability Insurance (including coverage for contractual liability, products and completed operations liability, liability arising out of explosion, or underground related incidents) with minimum combined single limits of $1 million per occurrence. In addition, the Comprehensive General Liability policy shall include City as additional insured with respect to work done on the City Property. (j) Clark will upon completion of all soils testing provide a complete copy of all soils reports to the City and HRA (k) Protect all monitoring wells with lockable caps and at least three protected posts. 2.03. Expiration. Unless extended by the mutual agreement of the parties, the right of entry provided under this Agreement will automatically expire on November 1, 2010. 2.04 Standstill. Until the expiration of this Agreement, the City agrees that it will not: (i) sell or encumber or engage in discussions involving the sale or encumbrance of the City Property to anyone other than the parties to this Agreement; (ii) solicit proposals from any third party involving the proposed development of the City Property. Nothing herein shall be construed: (i) as obligating the City to subsequently agree to sell the City Property to the HRA or Clark; (ii) as agreeing to any of the terms of any sale; or (iii) as agreeing to any potential use or development of the City Property in the event of sale. 2.05. Governing Law. This Agreement shall be interpreted in accordance with the laws of the state of Minnesota. 2.06. Notices and Demands. All notices, demands or other communications under this Agreement shall be effective only if made in writing and shall be sufficiently given and deemed given when delivered personally, transmitted by facsimile, or mailed by certified mail, return receipt 358788v6 JBD RC125-292 C-5 ~it 1 requested, postage prepaid, properly addressed as follows: If to City: City of Richfield Attn: 6700 Portland Avenue South Richfield, MN 55423 With a copy to: Corrine A. Heine Kennedy & Graven, Chartered 470 U. S. Bank Plaza 200 South Sixth Street Minneapolis, MN 55402 If to CLARK: Ron Clark RON CLARK Construction and Design 7500 West 78~' Street Edina, MN 55439 With Copy to: If to HRA: Richfield HRA Attn: 6700 Portland Avenue South Richfield, MN 55423 With a copy to: John B. Dean Kennedy & Graven, Chartered 470 U. S. Bank Plaza. 200 South Sixth Street Minneapolis, MN 55402 Or to such other persons as the parties may from time to time designate in writing and forward to the other persons entitled to receive notice as provided in this section. 2.07. Amendment. This Agreement may be amended by the parties hereto only by written 358788v6 JBD RC 125-292 C-6 i ~.~ instrument executed with the same procedures and formality as were followed in the execution of this Agreement. IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed in their names and on their behalves on or as of the above date. City: CITY OF RICHFIELD By: Its Mayor By: Its City Manager RON CLARK Construction and Design, a Minnesota By: Its: Richfield HRA By: Its Chair By: Its Executive Director 358788v6 JBD RC125-292 C-7 / ~~ ATTACHMENT A List of City Property Addresses and Legal Descriptions 7700 Pillsb~Avenue South (north~ortion only) Lot 3, except the north 75.00 feet thereof, all of Lots 4 and 5, Block 4, R.C. Soens Addition, according to the recorded plat thereof on file or of record in the office of the Registrar of Titles, Hennepin County, Minnesota. 358788v6 JBD RC125-292 C-A-1