12-20-2021 HRA Complete AgendaREGULAR HOUSING AND REDEVELOPMENT AUTHORITY MEETING
VIRTUAL MEETING VIAWEBEX
DECEMBER 20, 2021
7:00 PM
Call to Order
Attendance Roll Call
Open Forum: To participate in the open forum to address the HRA on items not on the current agenda dial 612-861-
0651.
Approval of the minutes of the regular Housing and Redevelopment Authority meeting of November 15, 2021.
AGENDAAPPROVAL
Approval of the Agenda
2. Consent Calendar contains several separate items which are acted upon by the H RA in one motion.
Once the Consent Calendar has been approved, the individual items and recommended actions have
also been approved. No further HRA action on these items is necessary. However, any HRA
Commissioner may request that an item be removed from the Consent Calendar and placed on the
regular agenda for H RA discussion and action. All items listed on the Consent Calendar are
recommended for approval.
A. Consider a resolution designating buildings located at 6501-13 Penn Avenue South as structurally
substandard within the Richfield Redevelopment Project Area and authorizing their demolition.
Staff Report No. 41
B. Consider the approval of a resolution accepting donations to the Affordable Housing Trust Fund via the Just
Deeds Project.
Staff Report No. 42
3. Consideration of items, if any, removed from Consent Calendar
RESOLUTIONS
4. Consider a resolution approving the execution and delivery of a Donation Agreement with Metro Campus 1, LLC
to accept the donation of the office building and property at 1600 78th Street East.
Staff Report No. 43
5. Consideration of a Contract for Private Development with MWF Properties to develop 55 units of multi -family
housing at 7700 PillsburyAvenue South.
Staff Report No. 44
OTHER BUSINESS
6. Consideration of the designation of Melissa Poehlman as Interim Executive Director of the Housing and
Redevelopment Authority.
Staff Report No. 45
HRA DISCUSSION ITEMS
7. HRA Discussion Items
EXECUTIVE DIRECTOR REPORT
8. Executive Director's Report
CLAIMS
9. Claims
10. Adjournment
Auxiliary aids for individuals with disabilities are available upon request. Requests must be made at
least 96 hours in advance to the City Clerk at 612-861-9739.
HOUSING AND REDEVELOPMENT
AUTHORITY MEETING MINUTES
Richfield, Minnesota
Regular Meeting
November 15, 2021
CALL TO ORDER
The meeting was called to order by Chair Supple at 7:00 p.m. in the Council Chambers.
HRA Members Mary Supple, Chair; Maria Regan Gonzalez; Sue Sandahl; and Erin Vrieze
Present: Daniels
HRA Members Lee Ohnesorge (excused)
Absent:
Staff Present: Melissa Poehlman, Assistant Community Development Director/Acting
Executive Director; Julie Urban, Housing Manager; Kate Aitchison, Housing
Specialist; and Kari Sinning, City Clerk.
Others Present: Christopher Willette, ESG
OPEN FORUM
No callers.
APPROVAL OF THE MINUTES
M/Regan Gonzalez, S/Sandahl to approve the minutes of 1) the joint City Council, Housing
and Redevelopment Authority and Planning Commission work session of October 18, 2021; and 2)
the reaular Housina and Redevelopment Authoritv meetina of October 18. 2021.
Motion carried 4-0
ITEM #1 APPROVAL OF THE AGENDA
M/Regan Gonzalez, S/Sandahl to approve the agenda.
Motion carried 4-0
HRA Meeting Minutes -2- November 15, 2021
ITEM #2 CONSIDER A RESOLUTION APPROVING AN AMENDMENT TO THE CONTRACT
FOR PRIVATE DEVELOPMENT WITH LYNK 65, LLC. (STAFF REPORT NO. 38)
Acting Executive Director Poehlman presented Staff Report No. 38.
M/Regan Gonzalez, S/Sandahl to approve a resolution approving a First Amendment to the
Contract for Private Development with Lynk 65, LLC.
HRA RESOLUTION NO. 1412
RESOLUTION APPROVING FIRST AMENDMENT TO CONTRACT FOR PRIVATE
DEVELOPMENT WITH LYNK 65, LLC
Commissioner Regan Gonzalez thanked staff for the contribution for this development as it
is important to the community.
Motion carried 4-0
CONSIDERATION OF A RESOLUTION AUTHORIZING THE TRANSFER OF
ITEM #3 FUNDS FROM THE HOUSING AND REDEVELOPMENT AUTHORITY'S
GENERAL FUND TO THE AFFORDABLE HOUSING TRUST FUND. (STAFF
REPORT NO. 39)
Housing Manager Urban presented Staff Report No. 39.
M/Sandahl, S/Vrieze Daniels to adopt a resolution authorizing the transfer of acquisition
sales proceeds to the Affordable Housina Trust Fund for affordable homeownership activities.
HRA RESOLUTION NO. 1413
RESOLUTION AUTHORIZING THE TRANSFER OF SALES PROCEEDS TO THE
AFFORDABLE HOUSING TRUST FUND
Commissioner Sandahl gave accolades for the new sites for Woodland Terrace.
Chair Supple showed support for those wanting to purchase manufactured homes with
down payment assistance just like any other buyer.
Motion carried 4-0
CONSIDERATION OF THE ADOPTION OF A RESOLUTION AUTHORIZING THE
ITEM #4 PURCHASE OF 6326 14TH AVENUE SOUTH FOR FUTURE
DEVELOPMENT AS A SINGLE-FAMILY HOME UNDER THE RICHFIELD
REDISCOVERED PROGRAM. (STAFF REPORT NO. 40)
Housing Specialist Aitchison presented Staff Report No. 40
Commissioner Vrieze Daniels questioned why the house would be sold to the HRA instead
of the owner continuing to build on their home.
HRA Meeting Minutes -3- November 15, 2021
Commissioner Sandahl commented on the Richfield Rediscovered Program.
Commissioner Regan Gonzalez asked about the subsidy for the sale. Housing Specialist
Aitchison CRG asked about the sale of the home and the lot. Housing Specialist Aitchison stated
that the lot size allows for more opportunities to build.
M/Sandahl, S/Regan Gonzalez to adopt the resolution authorizing the purchase of 6326
14th Avenue South for new construction of a single-family home under the Richfield Rediscovered
Program.
HRA RESOLUTION NO. 1414
RESOLUTION AUTHORIZING PURCHASE OF REAL PROPERTY
LOCATED AT 6326 14TH AVENUE SOUTH
Commissioner Vrieze Daniels appreciated the explanation of the lot sizes and showed
excitement.
Motion carried 4-0
ITEM #5 HRA DISCUSSION ITEMS
Commissioner asked if there was a December meeting of which Assistant Community
Development Director Poehlman stated that there will be a couple items.
ITEM #6 EXECUTIVE DIRECTOR'S REPORT
Poehlman mentioned the visual preference survey regarding missing middle that will be
ITEM #7 CLAIMS
M/Regan Gonzalez, S/Sandahl that the following claims be approved:
U.S. BANK
11/15/2021
Section 8 Checks: 133274 - 133330
$ 184,667.32
HRA Checks: 34098 - 34111
$ 45,422.71
TOTAL
$ 230,090.03
Motion carried 4-0
ITEM #8 ADJOURNMENT
The meeting was adjourned by unanimous consent at 7:23 p.m.
HRA Meeting Minutes -4- November 15, 2021
Date Approved: December 20, 2021
Kari Sinning
City Clerk
Mary B. Supple
HRA Chair
Melissa Poehlman
Interim Executive Director
AGENDA SECTON: Consent Calendar
AGENDA ITEM # 2.A.
STAFF REPORT NO.41
HOUSING AND REDEVELOPMENT AUTHORITY
MEETING
12/20/2021
REPORT PREPARED BY: Julie Urban, Housing & Redevelopment Manager
OTHER DEPARTMENT REVIEW:
EXECUTIVE DIRECTOR REVIEW: John Stark, Executive Director
12/14/2021
ITEM FOR COUNCIL CONSIDERATION:
Consider a resolution designating buildings located at 6501-13 Penn Avenue South as structurally
substandard within the Richfield Redevelopment Project Area and authorizing their demolition.
EXECUTIVE SUMMARY:
The Housing and Redevelopment Authority (HRA) owns the property located at 6501-13 Penn Avenue South.
There are two buildings on the property, and one of the two buildings was determined to be unsafe by the
City's Building Official.
The HRA has been working with a development team to redevelop the property with multi -family housing. The
project is currently waiting to hear if it has been awarded tax credit financing. If the project receives funding,
construction could begin at the end of 2022. Ideally, demolition would be undertaken by the developer in
conjunction with the beginning of construction; however, given the safety issues at the site and the length of
time before construction would begin, demolition should take place now.
The current development proposal will also require local public financing through the form of tax increment.
While a Housing Tax Increment Financing (TI F) District is the mostly likely tool for providing financial
assistance, a Redevelopment TI F District is a possible option. In order for the site to qualify as a
Redevelopment TIF District, the property within the proposed District boundaries must be found to
be blighted and structurally substandard under the requirements established by Minnesota State
Statutes. The architecture firm LHB, Inc. has conducted an extensive evaluation of the site and
issued the attached report which concludes that the site and the buildings it contains meet the
requirements necessary to qualify as a Redevelopment TIF District.
The attached resolution would make findings accepting the results of the LHB, Inc. report and designating the
buildings to be substandard, as defined in Minnesota State Statutes. The resolution would also approve the
demolition of the structures within the proposed TI F District boundaries in advance of the creation of the TI F
District.
Funding for the demolition would come from the HRA's Housing and Redevelopment Fund. A
contract for demolition will likely come before the H RA in January or February of 2022.
RECOMMENDED ACTION:
By motion: Adopt a resolution designating the buildings located at 6501-13 Penn Avenue South as
structurally substandard within the Richfield Redevelopment Project Area and authorizing their
demolition.
BASIS OF RECOMMENDATION:
A. HISTORICAL CONTEXT
The HRA purchased the property in 2018 and signed a pre -development agreement with Boisclair
Corporation and NHH Properties in 2020 to redevelop the site with multi -family housing. If tax
credit financing is secured, construction on the property could begin at the end of 2022.
Maintaining the property has been challenging given the configuration of the buildings and the fact
that many entrances and site areas are not visible from the street. The buildings have been broken
into multiple times, items have been illegally dumped on the site, and graffiti and other vandalism
has occurred.
On December 14, 2021, the City Council adopted a resolution designating the buildings as
structurally substandard.
B. POLICIES (resolutions, ordinances, regulations, statutes. etc)
• In order to establish a Redevelopment TI F District, the property within the proposed District
boundaries must be found to be blighted and structurally substandard under the requirements
established by Minnesota State Statutes.
C. CRITICALTIMING ISSUES:
• Demolition and grading specifications are being prepared by Kimley Horn, one of the City's
engineering consultants. Once the specifications are complete and the buildings designated as
substandard, staff will begin the process of procuring bids for the demolition and conducting the
demolition as quickly as possible.
D. FINANCIAL IMPACT:
• The HRA will pay for the cost of the demolition. Although the demolition is not currently in the HRA
budget for 2022, sufficient funding exists in the HRA's Housing and Redevelopment Fund to cover
the costs, and the 2022 budget will be revised accordingly. If a Redevelopment TI F District is
created, the HRA would also have the option of reimbursing itself with future tax increment.
E. LEGAL CONSIDERATION:
• The HRA's Attorney has prepared the attached resolution.
• If the demolition contract exceeds $50,000, the contract will be brought before the HRA at a future
meeti ng.
ALTERNATIVE RECOMMENDATION .
• Decide not to authorize demolition at this time.
PRINCIPAL PARTIES EXPECTED AT MEETING:
NA
ATTACHMENTS:
Description Type
❑ Resolution Resolution Letter
❑ Substandard Evaluation Backup Material
HOUSING AND REDEVELOPMENT AUTHORITY
IN AND FOR THE CITY OF RICHFIELD, MINNESOTA
RESOLUTION NO.
RESOLUTION DESIGNATING BUILDINGS AS STRUCTURALLY SUBSTANDARD WITHIN
THE RICHFIELD REDEVELOPMENT PROJECT
WHEREAS, the Housing and Redevelopment Authority in and for the City of Richfield,
Minnesota (the "Authority") was created pursuant to Minnesota Statutes, Sections 469.001 through
469.047, as amended, and was authorized to transact business and exercise its powers by a
resolution of the City Council of the City of Richfield, Minnesota (the "City"); and
WHEREAS, under Minnesota Statutes, Section 469.174, subdivision 10(d), the Authority is
authorized to deem parcels as occupied by structurally substandard buildings before the demolition
or removal of the buildings, subject to certain terms and conditions as described in this resolution;
and
WHEREAS, the Authority intends to cause demolition of the buildings located on the
property described in EXHIBIT A attached hereto (the "Designated Property"), and may in the
future include the Designated Property in a redevelopment tax increment financing district as
defined in Minnesota Statutes, Sections 469.174, subdivision 10, within the Richfield
Redevelopment Project; and
NOW, THEREFORE, BE IT RESOLVED, by the Board of Commissioners of the Housing
and Redevelopment Authority in and for the City of Richfield, Minnesota as follows:
1. The Authority finds that the buildings on the Designated Property are structurally
substandard to a degree requiring substantial renovation or clearance, based upon the analysis of
such buildings by LHB, Inc., dated November 30, 2018 and on file in City Hall. In addition, the
buildings located at 6501 and 6513 Penn Avenue South have been declared unsafe buildings by
the City's Chief Building Official pursuant to Minn. Stat. Rule 1300-0180 for unsafe electrical wiring
and unsafe fence/guardrail at the upper parking lot. 6513 Penn Avenue South is also structurally
unsafe because of deteriorated concrete masonry bearing walls and water damage to the precast
concrete ceiling..
2. After the date of approval of this resolution, the buildings on the Designated
Property may be demolished or removed by the Authority, or such demolition or removal may be
financed by the Authority, or may be undertaken by a developer under a development agreement
with the Authority.
3. The Authority intends to include the Designated Property in a redevelopment tax
increment financing district, and to file the request for certification of such district with the Taxpayer
Services Division Manager of Hennepin County, Minnesota, as the county auditor (the "County
Auditor"), within three (3) years after the date of demolition of the buildings on the Designated
Property.
4. Upon filing the request for certification of the new tax increment financing district,
the Authority will notify the County Auditor that the original tax capacity of the Designated Property
must be adjusted to reflect the greater of (a) the current net tax capacity of the parcel, or (b) the
estimated market value of the parcel for the year in which the buildings were demolished or
removed, but applying class rates for the current year, all in accordance with Minnesota Statutes,
Section 469.174, subdivision 10(d).
5. Authority staff and consultants are authorized to take any actions necessary to carry
out the intent of this resolution.
Adopted by the Housing and Redevelopment Authority in and for the City of Richfield,
Minnesota this 20'h day of December, 2021.
Mary B. Supple, Chair
ATTEST:
Maria Regan Gonzalez, Secretary
2
Error! Unknown document property name.
EXHIBIT A
LEGAL DESCRIPTION OF DESIGNATED PROPERTY
Par. 1: The West'/2 of the South 109.6 feet of the North 767.2 feet of the North 3/4 of the
West'/4 of the Southwest Quarter of the Northwest Quarter except the North 30 feet
thereof;
Par. 2: The West'/2 of the South 109.6 feet of the North 876.8 feet of the North 3/4 of the
West'/4 of theSouthwest Quarter of the Northwest Quarter;
All in Section 28, Township 28, Range 24, in the Village of Richfield, Hennepin County,
Minnesota.
Error! Unknown document property name. A-1
Report of Inspection Procedures and Results for
Determining Qualifications of a
Tax Increment Financing District as a Redevelopment District
Richfield Penn Avenue Redevelopment TIF District
Richfield, Minnesota
November 30, 2018
Prepared For the
City of Richfield
Prepared by:
LHB, Inc.
701 Washington Avenue North, Suite 200
Minneapolis, Minnesota 55401
LHB Project No. 180891
TABLE OF CONTENTS
PART 1 — EXECUTIVE SUMMARY................................................................................ 2
Purpose of Evaluation................................................................................2
Scopeof Work........................................................................................... 2
Conclusion................................................................................................. 3
PART 2 — MINNESOTA STATUTE 469.174, SUBDIVISION 10 REQUIREMENTS....... 3
A. Coverage Test...................................................................................... 3
B. Condition of Buildings Test................................................................... 4
C. Distribution of Substandard Buildings ................................................... 5
PART 3 — PROCEDURES FOLLOWED......................................................................... 6
PART 4 — FINDINGS...................................................................................................... 6
A. Coverage Test...................................................................................... 6
B. Condition of Building Test..................................................................... 7
1. Building Inspection.................................................................... 7
2. Replacement Cost..................................................................... 7
3. Code Deficiencies..................................................................... 8
4. System Condition Deficiencies.................................................. 9
C. Distribution of Substandard Structures ................................................. 9
PART 5 - TEAM CREDENTIALS..................................................................................11
APPENDIX A Property Condition Assessment Summary Sheet
APPENDIX B Building Code, Condition Deficiency and Context Analysis Reports
APPENDIX C Building Replacement Cost Reports
Code Deficiency Cost Reports
Photographs
Richfield Penn Avenue Redevelopment TIF District
LHB Project No. 180891 Page 1 of 11 Final Report
PART 1 - EXECUTIVE SUMMARY
PURPOSE OF EVALUATION
LHB was hired by the City of Richfield to inspect and evaluate the properties within a Tax Increment
Financing Redevelopment District ("TIF District") proposed to be established by the City. The
proposed TIF District is located at the southeast corner of West 65' Street and Penn Avenue South
(Diagram 1). The purpose of LHB's work is to determine whether the proposed TIF District meets
the statutory requirements for coverage, and whether two (2) buildings on one (1) parcel, located
within the proposed TIF District, meet the qualifications required for a Redevelopment District.
Diagram 1— Proposed TIF District
SCOPE OF WORK
The proposed TIF District consists of one (1) parcel with two (2) buildings. Two (2) buildings were
inspected on November 9, 2018. Building Code and Condition Deficiency Reports for the buildings
that were inspected are located in Appendix B.
Richfield Penn Avenue Redevelopment TIF District
LHB Project No. 180891 Page 2 of 11 Final Report
CONCLUSION
After inspecting and evaluating the properties within the proposed TIF District and applying current
statutory criteria for a Redevelopment District under Minnesota Statutes, Section 469.174, Subdivision 10,
it is our professional opinion that the proposed TIF District qualifies as a Redevelopment District
because:
• The proposed TIF District has a coverage calculation of 100 percent which is above the 70
percent requirement.
• 100 percent of the buildings are structurally substandard which is above the 50 percent
requirement.
• The substandard buildings are reasonably distributed.
The remainder of this report describes our process and findings in detail.
PART 2 - MINNESOTA STATUTE 469.174, SUBDIVISION 10
REQUIREMENTS
The properties were inspected in accordance with the following requirements under Minnesota Statutes,
Section 469.174, Subdivision 10(c), which states:
INTERIOR INSPECTION
"The municipality may not make such determination [that the building is structurally substandard]
without an interior inspection of the property..."
EXTERIOR INSPECTION AND OTHER MEANS
"An interior inspection of the property is not required, if the municipality finds that
(1) the municipality or authority is unable to gain access to the property after using its best efforts
to obtain permission from the party that owns or controls the property; and
(2) the evidence otherwise supports a reasonable conclusion that the building is structurally
substandard."
DOCUMENTATION
"Written documentation of the findings and reasons why an interior inspection was not conducted
must be made and retained under section 469.175, subdivision 3(1)."
QUALIFICATION REQUIREMENTS
Minnesota Statutes, Section 469.174, Subdivision 10 (a) (1) requires three tests for occupied parcels:
A. COVERAGE TEST
..."Parcels consisting of 70 percent of the area of the district are occupied by buildings, streets,
utilities, or paved or gravel parking lots..."
Richfield Penn Avenue Redevelopment TIF District
LHB Project No. 180891 Page 3 of 11 Final Report
The coverage required by the parcel to be considered occupied is defined under Minnesota
Statutes, Section 469.174, Subdivision 10(e), which states: "For purposes of this subdivision, a parcel
is not occupied by buildings, streets, utilities, paved or gravel parking lots, or other similar
structures unless 15 percent of the area of the parcel contains buildings, streets, utilities, paved
or gravel parking lots, or other similar structures."
B. CONDITION OF BUILDINGS TEST
Minnesota Statutes, Section 469.174, Subdivision 10(a) states, "...and more than 50 percent of the
buildings, not including outbuildings, are structurally substandard to a degree requiring
substantial renovation or clearance;"
1. Structurally substandard is defined under Minnesota Statutes, Section 469.174, Subdivision 10(b),
which states: "For purposes of this subdivision, `structurally substandard' shall mean
containing defects in structural elements or a combination of deficiencies in essential
utilities and facilities, light and ventilation, fire protection including adequate egress, layout
and condition of interior partitions, or similar factors, which defects or deficiencies are of
sufficient total significance to justify substantial renovation or clearance."
a. We do not count energy code deficiencies toward the thresholds required by Minnesota
Statutes, Section 469.174, Subdivision 10(b) defined as "structurally substandard", due to
concerns expressed by the State of Minnesota Court of Appeals in the Walser Auto
Sales, Inc. vs. City of Bicbfield case filed November 13, 2001.
2. Buildings are not eligible to be considered structurally substandard unless they meet certain
additional criteria, as set forth in Subdivision 10(c) which states:
"A building is not structurally substandard if it is in compliance with the building code
applicable to new buildings or could be modified to satisfy the building code at a cost of
less than 15 percent of the cost of constructing a new structure of the same square footage
and type on the site. The municipality may find that a building is not disqualified as
structurally substandard under the preceding sentence on the basis of reasonably available
evidence, such as the size, type, and age of the building, the average cost of plumbing,
electrical, or structural repairs, or other similar reliable evidence."
"Items of evidence that support such a conclusion [that the building is not disqualified]
include recent fire or police inspections, on -site property tax appraisals or housing
inspections, exterior evidence of deterioration, or other similar reliable evidence."
LHB counts energy code deficiencies toward the 15 percent code threshold required by
Minnesota Statutes, Section 469.174, Subdivision 10(c)) for the following reasons:
The Minnesota energy code is one of ten building code areas highlighted by the
Minnesota Department of Labor and Industry website where minimum
construction standards are required by law.
Chapter 13 of the 2015 Minnesota Building Code states, `Buildings shall be designed
and constructed in accordance with the International Energy Conservation Code."
Furthermore, Minnesota Rules, Chapter 1305.0021 Subpart 9 states, "References
Richfield Penn Avenue Redevelopment TIF District
LHB Project No. 180891 Page 4 of 11 Final Report
to the International Energy Conservation Code in this code mean the Minnesota Energy
Code..."
The Senior Building Code Representative for the Construction Codes and
Licensing Division of the Minnesota Department of Labor and Industry
confirmed that the Minnesota Energy Code is being enforced throughout the State
of Minnesota.
In a January 2002 report to the Minnesota Legislature, the Management Analysis
Division of the Minnesota Department of Administration confirmed that the
construction cost of new buildings complying with the Minnesota Energy Code is
higher than buildings built prior to the enactment of the code.
Proper TIF analysis requires a comparison between the replacement value of a
new building built under current code standards with the repairs that would be
necessary to bring the existing building up to current code standards. In order for
an equal comparison to be made, all applicable code chapters should be applied to
both scenarios. Since current construction estimating software automatically
applies the construction cost of complying with the Minnesota Energy Code,
energy code deficiencies should also be identified in the existing structures.
C. DISTRIBUTION OF SUBSTANDARD BUILDINGS
Minnesota Statutes, Section 469. 174, Subdivision 10, defines a Redevelopment District and requires
one or more of the following conditions, "reasonably distributed throughout the district."
(1) "Parcels consisting of 70 percent of the area of the district are occupied by buildings,
streets, utilities, paved or gravel parking lots, or other similar structures and more than
50 percent of the buildings, not including outbuildings, are structurally substandard to a
degree requiring substantial renovation or clearance;
(2) the property consists of vacant, unused, underused, inappropriately used, or infrequently
used rail yards, rail storage facilities, or excessive or vacated railroad rights -of -way;
(3) tank facilities, or property whose immediately previous use was for tank facilities..."
Our interpretation of the distribution requirement is that the substandard buildings must be
reasonably distributed throughout the district as compared to the location of all buildings in
the district. For example, if all of the buildings in a district are located on one half of the
area of the district, with the other half occupied by parking lots (meeting the required 70
percent coverage for the district), we would evaluate the distribution of the substandard
buildings compared with only the half of the district where the buildings are located. If all of
the buildings in a district are located evenly throughout the entire area of the district, the
substandard buildings must be reasonably distributed throughout the entire area of the
district. We believe this is consistent with the opinion expressed by the State of Minnesota
Court of Appeals in the A7alserAuto Sales, Inc. vs. City of Ricbfield case filed November 13,
2001.
Richfield Penn Avenue Redevelopment TIF District
LHB Project No. 180891 Page 5 of 11 Final Report
PART 3 - PROCEDURES FOLLOWED
LHB inspected two (2) of the two (2) buildings during the day of November 9, 2018.
PART 4 - FINDINGS
A. COVERAGE TEST
1. The total square foot area of the parcel in the proposed TIF District was obtained from City
records, GIS mapping and site verification.
2. The total square foot area of buildings and site improvements on the parcels in the
proposed TIF District was obtained from City records, GIS mapping and site verification.
3. The percentage of coverage for each parcel in the proposed TIF District was computed to
determine if the 15 percent minimum requirement was met. The total square footage of
parcels meeting the 15 percent requirement was divided into the total square footage of the
entire district to determine if the 70 percent requirement was met.
FINDING:
The proposed TIF District met the coverage test under Minnesota Statutes, Section 469.174, Subdivision
10(e), which resulted in parcels consisting of 100 percent of the area of the proposed TIF District
being occupied by buildings, streets, utilities, paved or gravel parking lots, or other similar structures
(Diagram 2). This exceeds the 70 percent area coverage requirement for the proposed TIF District
under Minnesota Statutes, Section 469.174, Subdivision (a) (1).
Richfield Penn Avenue Redevelopment TIF District
LHB Project No. 180891 Page 6 of 11 Final Report
Diagram 2 — Coverage Diagram
Shaded area depicts a parcel more than 15 percent occupied by buildings, streets, utilities,
paved or gravel parking lots or other similar structures
B. CONDITION OF BUILDING TEST
1. BUILDING INSPECTION
The first step in the evaluation process is the building inspection. After an initial walk-
thru, the inspector makes a judgment whether or not a building "appears" to have enough
defects or deficiencies of sufficient total significance to justify substantial renovation or
clearance. If it does, the inspector documents with notes and photographs code and non -
code deficiencies in the building.
2. REPLACEMENT COST
The second step in evaluating a building to determine if it is substandard to a degree
requiring substantial renovation or clearance is to determine its replacement cost. This is
the cost of constructing a new structure of the same square footage and type on site.
Richfield Penn Avenue Redevelopment TIF District
LHB Project No. 180891 Page 7 of 11 Final Report
Replacement costs were researched using R.S. Means Cost Works square foot models for
2018.
A replacement cost was calculated by first establishing building use (office, retail, residential,
etc.), building construction type (wood, concrete, masonry, etc.), and building size to obtain
the appropriate median replacement cost, which factors in the costs of construction in
Richfield, Minnesota.
Replacement cost includes labor, materials, and the contractor's overhead and profit.
Replacement costs do not include architectural fees, legal fees or other "soft" costs not
directly related to construction activities. Replacement cost for each building is tabulated
in Appendix A.
3. CODE DEFICIENCIES
The next step in evaluating a building is to determine what code deficiencies exist with
respect to such building. Code deficiencies are those conditions for a building which are
not in compliance with current building codes applicable to new buildings in the State of
Minnesota.
Minnesota Statutes, Section 469.174, Subdivision 10(c), specifically provides that a building
cannot be considered structurally substandard if its code deficiencies are not at least 15
percent of the replacement cost of the building. As a result, it was necessary to determine
the extent of code deficiencies for each building in the proposed TIF District.
The evaluation was made by reviewing all available information with respect to such
buildings contained in City Building Inspection records and making interior and exterior
inspections of the buildings. LHB utilizes the current Minnesota State Building Code as
the official code for our evaluations. The Minnesota State Building Code is actually a series
of provisional codes written specifically for Minnesota only requirements, adoption of
several international codes, and amendments to the adopted international codes.
After identifying the code deficiencies in each building, we used R.S. Means Cost Works
2018; Unit and Assembly Costs to determine the cost of correcting the identified
deficiencies. We were then able to compare the correction costs with the replacement cost
of each building to determine if the costs for correcting code deficiencies meet the required
15 percent threshold.
FINDING:
Two (2) out of two (2) buildings (100 percent) in the proposed TIF District contained code
deficiencies exceeding the 15 percent threshold required by Minnesota Statutes, Section
469.174, Subdivision 10(c). Building Code, Condition Deficiency and Context Analysis
reports for the buildings in the proposed TIF District can be found in Appendix B of this
report.
Richfield Penn Avenue Redevelopment TIF District
LHB Project No. 180891 Page 8 of 11 Final Report
4. SYSTEM CONDITION DEFICIENCIES
If a building meets the minimum code deficiency threshold under Minnesota Statutes, Section
469.174, Subdivision 10(c), then in order for such building to be "structurally substandard"
under Minnesota Statutes, Section 469.174, Subdivision 10(b), the building's defects or
deficiencies should be of sufficient total significance to justify "substantial renovation or
clearance." Based on this definition, LHB re-evaluated each of the buildings that met the
code deficiency threshold under Minnesota Statutes, Section 469.174, Subdivision 10(c), to
determine if the total deficiencies warranted "substantial renovation or clearance" based on
the criteria we outlined above.
System condition deficiencies are a measurement of defects or substantial deterioration in
site elements, structure, exterior envelope, mechanical and electrical components, fire
protection and emergency systems, interior partitions, ceilings, floors and doors.
The evaluation of system condition deficiencies was made by reviewing all available
information contained in City records, and making interior and exterior inspections of the
buildings. LHB only identified system condition deficiencies that were visible upon our
inspection of the building or contained in City records. We did not consider the amount
of "service life" used up for a particular component unless it was an obvious part of that
component's deficiencies.
After identifying the system condition deficiencies in each building, we used our
professional judgment to determine if the list of defects or deficiencies is of sufficient total
significance to justify "substantial renovation or clearance."
FINDING:
In our professional opinion, two (2) out of two (2) buildings (100 percent) in the proposed
TIF District are structurally substandard to a degree requiring substantial renovation or
clearance, because of defects in structural elements or a combination of deficiencies in
essential utilities and facilities, light and ventilation, fire protection including adequate
egress, layout and condition of interior partitions, or similar factors which defects or
deficiencies are of sufficient total significance to justify substantial renovation or clearance.
This exceeds the 50 percent requirement of Subdivision 10a(1).
C. DISTRIBUTION OF SUBSTANDARD STRUCTURES
Much of this report has focused on the condition of individual buildings as they relate to
requirements identified by Minnesota Statutes, Section 469.174, Subdivision 10. It is also
important to look at the distribution of substandard buildings throughout the geographic
area of the proposed TIF District (Diagram 3).
FINDING:
The parcels with substandard buildings are reasonably distributed compared to all parcels
that contain buildings.
Richfield Penn Avenue Redevelopment TIF District
LHB Project No. 180891 Page 9 of 11 Final Report
Diagram 3 — Substandard Buildings
Shaded green area depicts parcels with buildings.
Shaded orange area depicts substandard buildings.
Richfield Penn Avenue Redevelopment TIF District
LHB Project No. 180891 Page 10 of 11 Final Report
PART 5 - TEAM CREDENTIALS
Michael A. Fischer, AIA, LEED AP - Project Principal/TIF Analyst
Michael has 30 years of experience as project principal, project manager, project designer and project
architect on planning, urban design, educational, commercial and governmental projects. He has
become an expert on Tax Increment Finance District analysis assisting over 100 cities with strategic
planning for TIF Districts. He is an Architectural Principal at LHB and currently leads the
Minneapolis office.
Michael completed a two-year Bush Fellowship, studying at MIT and Harvard in 1999, earning Masters
degrees in City Planning and Real Estate Development from MIT. He has served on more than 50
committees, boards and community task forces, including a term as a City Council President and as
Chair of a Metropolitan Planning Organization. Most recently, he served as Chair of the Edina,
Minnesota planning commission and is currently a member of the Edina city council. Michael has
also managed and designed several award -winning architectural projects, and was one of four
architects in the Country to receive the AIA Young Architects Citation in 1997.
Philip Waugh — Project Manager/TIF Analyst
Philip is a project manager with 13 years of experience in historic preservation, building investigations,
material research, and construction methods. He previously worked as a historic preservationist and
also served as the preservation specialist at the St. Paul Heritage Preservation Commission. Currently,
Phil sits on the Board of Directors for the Preservation Alliance of Minnesota. His current
responsibilities include project management of historic preservation projects, performing building
condition surveys and analysis, TIF analysis, writing preservation specifications, historic design
reviews, writing Historic Preservation Tax Credit applications, preservation planning, and grant
writing.
Phil Fisher — Inspector
For 35 years, Phil Fisher worked in the field of Building Operations in Minnesota including White Bear
Lake Area Schools. At the University of Minnesota he earned his Bachelor of Science in Industrial
Technology. He is a Certified Playground Safety Inspector, Certified Plant Engineer, and is trained in
Minnesota Enterprise Real Properties (MERP) Facility Condition Assessment (FCA). His FCA training
was recently applied to the Minnesota Department of Natural Resources Facilities Condition
Assessment project involving over 2,000 buildings.
0:\18Proj\180891\400 Design\406 Reports\Final Report\180891 Richfield Penn Ave Redevelopment TIF Report.docx
APPENDICES
APPENDIX A Property Condition Assessment Summary Sheet
APPENDIX B Building Code and Condition Deficiencies Reports
APPENDIX C Building Replacement Cost Reports
Code Deficiency Cost Reports
Photographs
Richfield Penn Avenue Redevelopment TIF District
LHB Project No. 180891 Page 11 of 11 Final Report
APPENDIX A
Property Condition Assessment Summary Sheet
Richfield Penn Avenue Redevelopment TIF District Richfield, Minnesota
Property Condition Assessment Summary Sheet
A 2802824230023 1 6501 Penn Avenue Improved 24,675 24,675 100.0% 24,675 2
B1 Bumper to Bumper Auto Parts Interior/Exterior $518,502 $77,775 $95,902 1 1
B2 Garage Interior/Exterior $240,320 $36,048 $112,002 1 1
TOTALS 24,675 24,675 2 2 2
Total Coverage Percent: 100.0%
Percent of buildings exceeding 15 percent code deficiency threshold: 100.0%
0:\18Proj\180891\400 Design\406 Reports\Final Report\[180891 Richfield Penn Avenue Redevelopment TIF Summary Spreadsheet.xlsx]Property Info Percent of buildings determined substandard: 100.0%
Richfield Penn Avenue Redevelopment TIF District
LHB Project Number 180891 Page 1 of 1 Property Condition Assessment Summary Sheet
APPENDIX B
Building Code, Condition Deficiency and Context Analysis Reports
Richfield Penn Avenue Redevelopment TIF District
Building Code, Condition Deficiency and Context Analysis Report
Parcel No. & Building Name:
Address:
Parcel ID:
Inspection Date(s) & Time(s):
Inspection Type:
Summary of Deficiencies:
Estimated Replacement Cost:
Parcel A Building 1: Bumper to Bumper Auto Parts
6501 Penn Ave S Richfield, MN 55423
28-028-24-23-0023
November 9, 2018 12:30 PM
Interior and Exterior
It is our professional opinion that this building is Substandard
because:
- Substantial renovation is required to correct Conditions found.
- Building Code deficiencies total more than 15% of
replacement cost, NOT including energy code deficiencies.
Estimated Cost to Correct Building Code Deficiencies:
Percentage of Replacement Cost for Building Code Deficiencies:
Defects in Structural Elements
1. None observed.
Combination of Deficiencies
1. Essential Utilities and Facilities
a. There is no code -required accessible route into the building.
b. There is no code -required accessible restroom in the building.
c. There is no code -required drinking fountain in the building.
d. Door hardware does not comply with code.
e. Thresholds are not code -compliant for maximum height.
2. Light and Ventilation
a. HVAC system is not code -compliant.
b. Lighting in the basement does not comply with code.
$518,502
$95,902
18.5%
3. Fire Protection/Adequate Egress
a. Sidewalks are cracked/damaged creating an impediment for emergency egress, contrary to
code.
b. Glass doors do not have code -required 10-inch kick plates.
c. Vinyl composition floor tile is damaged, creating an impediment for emergency egress,
which is contrary to code.
d. There is no code -required fire notification system in the building.
e. There is no code -required emergency lighting in the building.
f. There are no code -required smoke detectors in the building.
g. There is no code -required building sprinkler system in the building.
h. Basement stairway does not comply with code.
i. Exposed wood joists do not have code -required fire proofing material installed.
Richfield Penn Avenue Redevelopment TIF District Page 1 of 2 Building Report
LHB Project No. 180891 Parcel A Building 1, Bumper to Bumper Auto Parts
j. Electrical circuit panels do not have code -required 36-inch clear space in front of them.
k. There is a confined space hazardous material waste trap that is not code -compliant.
4. Layout and Condition of Interior Partitions/Materials
a. Interior walls should be repainted.
b. Ceiling tiles are water stained from roof leaks and should be replaced.
c. The air compressor is not guarded and therefore not code -compliant.
d. The ceiling in the repair shop is damaged and should be repaired.
Exterior Construction
a. Stucco is missing and should be replaced.
b. Stucco had graffiti painted over and the entire exterior stucco should be repainted to match.
c. Windows are failing, allowing for water intrusion, contrary to code.
d. Wood fascia is rotting and should be replaced.
e. Roofing materials are failing, allowing for water intrusion, contrary to code.
Description of Code Deficiencies
1. A code -required accessible route into the building should be created.
2. A code -required accessible restroom should be installed.
3. A code -required drinking fountain should be installed.
4. Code -compliant door hardware should be installed.
5. Thresholds should be modified to comply with code for maximum height.
6. The HVAC system does not comply with code and should be replaced.
7. Basement lighting should be improved to comply with code.
8. Sidewalks should be repaired to comply with code for unimpeded emergency egress.
9. Glass doors should have code -required 10-inch kick plates installed.
10. Vinyl composition floor tile should be repaired replaced to comply with code for unimpeded
emergency egress.
11. Code -required smoke detectors should be installed.
12. A code -required emergency notification system should be installed.
13. Code -required emergency lighting should be installed.
14. Code -required building sprinkler system should be installed.
15. Basement stairway should have code -required second handrailing installed.
16. Exposed wood joists should have code -required fire proofing applied.
17. A code -required 36-inch clear space should be created in front of all circuit panels.
18. The confined space hazardous material waste trap should be properly identified and an entry
permitting process should be created to comply with code.
19. The air compressor pully system should be guarded per code.
20. Failing windows should be replaced to prevent water intrusion per code.
21. Failed roofing material should be removed and replaced to prevent water intrusion per code.
Overview of Deficiencies
This retail building needs exterior stucco repairs and repainting. The building is not code -compliant for
accessibility. The interior should be repainted, and stained ceiling tiles replaced. Damaged floor tiles should
be replaced. Code -required emergency systems are not present in the building. Windows and roofing
material are failing allowing for water intrusion which is contrary to code. Fire proofing on exposed wood
joists should be applied to comply with code. Basement lighting does not comply with code. The HVAC
system does not comply with code.
0:\18Proj\180891\400 Design\406 Reports\Building Reports\6501 Penn Ave South Building 1\6501 Penn Ave South Building 1 Building
Report.docx
Richfield Penn Avenue Redevelopment TIF District Page 2 of 2 Building Report
LHB Project No. 180891 Parcel A Building 1, Bumper to Bumper Auto Parts
Richfield Penn Avenue Redevelopment TIF District
Building Code, Condition Deficiency and Context Analysis Report
Parcel No. & Building Name: Parcel A Building 2 Garage
Address: 6501 Penn Ave S Richfield, MN 55423
Parcel ID: 28-028-24-23-0023
Inspection Date(s) & Time(s): November 9, 2018 12:50 PM
Inspection Type: Interior and Exterior
Summary of Deficiencies: It is our professional opinion that this building is Substandard
because:
- Substantial renovation is required to correct Conditions found.
- Building Code deficiencies total more than 15% of
replacement cost, NOT including energy code deficiencies.
Estimated Replacement Cost: $240,320
Estimated Cost to Correct Building Code Deficiencies: $112,002
Percentage of Replacement Cost for Building Code Deficiencies: 46.61 %
Defects in Structural Elements
1. Steel lintels over glass block windows have failed and should be replaced.
2. Concrete block walls are failing and should be replaced.
Combination of Deficiencies
1. Essential Utilities and Facilities
a. There is no code -required accessible route into the building.
b. There is no code -required accessible restroom in the building.
c. There is no code -required drinking fountain in the building.
d. Door hardware does not comply with code.
e. Thresholds are not code -compliant for maximum height.
2. Light and Ventilation
a. The HVAC system is not code -compliant.
b. Lighting is not code -compliant
Fire Protection/Adequate Egress
a. There is no code -required fire notification system in the building.
b. There is no code -required emergency lighting in the building.
c. There are no code -required smoke detectors in the building.
d. There is no code -required building sprinkler system in the building.
e. Electrical junction boxes are not protected per code.
4. Layout and Condition of Interior Partitions/Materials
a. The air compressor is not guarded and therefore not code -compliant.
Richfield Penn Avenue Redevelopment TIF District Page 1 of 2 Building Report
LHB Project No. 180891 Parcel A Building 2, Garage
Exterior Construction
a. Retaining wall is failing and should be repaired.
b. Roof material has failed, allowing for water intrusion, contrary to code.
c. Exterior block walls are failing, allowing for water intrusion, contrary to code.
d. Exterior walls should be repainted.
e. Steel lintels have failed, and are rusting, and should be protected/replaced per code.
f. Overhead garage doors are damaged and should be repaired/replaced.
g. Glass block windows are damaged, allowing for water intrusion, contrary to code.
Description of Code Deficiencies
1. A code -required accessible route should be created to enter the building.
2. A code -required restroom should be installed.
3. A code -required drinking fountain should be installed.
4. Code -compliant door hardware should be installed.
5. Thresholds should be modified to comply with code for maximum height.
6. A code -compliant HVAC system should be installed.
7. Code -compliant lighting should be installed.
8. Code -required smoke detectors should be installed.
9. A code -required emergency notification system should be installed.
10. Code -required emergency lighting should be installed.
11. Code -required building sprinkler system should be installed.
12. Electrical junction boxes should be properly protected per code.
13. The air compressor pully system should be guarded per code.
14. Remove/replace failed roofing material to prevent water intrusion per code.
15. Repair block walls to prevent water intrusion per code.
16. Replace failed steel lintels and protect rusting lintels per code.
17. Replace damaged glass block windows to prevent water intrusion per code.
Overview of Deficiencies
This service garage is no longer functional and has not been used for several years. There is no code -
compliant accessible route into the building. There is no code -required accessible restroom. There is no
code -required drinking fountain. Failed exterior block work should be replaced per code to prevent water
intrusion. The exterior and interior walls should be repainted. The roof is leaking, causing water intrusion,
contrary to code. There are no code -required life safety systems in the building. Glass block windows have
been vandalized and should be replaced to prevent water intrusion, per code.
0:\18Proj\180891\400 Design\406 Reports\Building Reports\6501 Penn Ave South Building 2\6501 Penn Ave South Building 2 Building
Report.docx
Richfield Penn Avenue Redevelopment TIF District Page 2 of 2 Building Report
LHB Project No. 180891 Parcel A Building 2, Garage
APPENDIX C
Building Replacement Cost Reports
Code Deficiency Cost Reports
Photographs
Richfield Penn Avenue Redevelopment TIF District
Replacement Cost Report
Mgmns data IIY1aff7 =�o rr %F4 Square Foot Cost Estimate Report
Estimate Name: Parcel A Building 1: Bumper to Bumper Auto
Parts
6501 Penn Ave South , Richfield , Minnesota ,
55423
Building Type:
Location:
Story Count:
Story Height (L.F.):
Floor Area (S.F.):
Labor Type:
Basement Included:
Data Release:
Cost Per Square Foot:
Building Cost:
Store, Retail with Stucco / Reinforced Concrete
RICHFIELD, MN
1
14
1900
OPN
Yes
Year 2018 Quarter 2
$272.90
$518,502.49
Date: 11/9/2018
0
Costs are derived from a building model with basic components.
Scope differences and market conditions can cause costs to vary significantly.
of Total
Cost Per S.F.
Cost
A Substructure
E�
'
A1010
Standard Foundations
7.65
14,537.94
Strip footing, concrete, reinforced, load 11.1 KLF, soil bearing capacity 6
KSF, 12" deep x 24" wide
4.06
7,718.14
Spread footings, 3000 PSI concrete, load 100K, soil bearing capacity 6 KSF,
4' - 6" square x 15" deep
3.59
6,819.80
A1030
Slab on Grade
5.79
11,005.16
Slab on grade, 4" thick, non industrial, reinforced
5.79
11,005.16
A2010
Basement Excavation
3.89
7,395.47
Excavate and fill, 10,000 SF, 8' deep, sand, gravel, or common earth, on site
storage
3.89
7,395.47
A2020
Basement Walls
25.29
48,057.12
Foundation wall, CIP, 12' wall height, pumped, .444 CY/LF, 21.59 PLF, 12"
thick
25.29
48,057.12
B1010
Floor Construction
81.14
154,158.24
Cast -in -place concrete column, 12" square, tied, 200K load, 12' story height,
142 Ibs/LF, 4000PSI
8.15
15,483.25
Cast -in -place concrete column, 12", square, tied, minimum reinforcing,
150K load, 10'-14' story height, 135 Ibs/LF, 4000PSI
6.29
11,945.86
Concrete I beam, precast, 18" x 36", 790 PLF, 25' span, 6.44 KLF
superimposed load
35.33
67,132.92
Flat slab, concrete, with drop panels, 6" slab/2.5" panel, 12" column,
15'x15' bay, 75 PSF superimposed load, 153 PSF total load
14.37
27,301.86
Precast concrete double T beam, 2" topping, 24" deep x 8' wide, 50' span,
75 PSF superimposed load, 165 PSF total load
17.00
32,294.34
B2010
Exterior Walls
31.29
59,446.11
Stucco, 3 coat, self furring metal lath 3.4 Lb/SY, on regular CMU, 12" x 8" x
16"
31.29
59,446.11
Richfield Penn Avenue Redevelopment TIF District Replacement Cost Report
LHB Project No. 180891 Page 1 of 3 Parcel A Building 1, Bumper to Bumper Auto Parts
B2020
Exterior Windows
5.05
9,589.52
intermediate horizontals
0.38
729.24
Glazing panel, insulating, 1/2" thick, 2 lites 1/8" float glass, clear
4.66
8,860.28
B2030
Exterior Doors
1.73
3,283.89
Door, aluminum & glass, without transom, bronze finish, hardware, 3'-0" x
7'-0" opening
1.37
2,593.71
Door, steel 18 gauge, hollow metal, 1 door with frame, no label, 3'-0" x 7'-
0" opening
0.36
690.18
B3010
Roof Coverings
10.03
19,058.22
Roofing, single ply membrane, EPDM, 60 mils, loosely laid, stone ballast
1.73
3,283.54
Insulation, rigid, roof deck, extruded polystyrene, 40 PSI compressive
strength, 4" thick, R20
4.36
8,282.73
Roof edges, aluminum, duranodic, .050" thick, 6" face
2.76
5,239.95
Gravel stop, aluminum, extruded, 4", mill finish, .050" thick
1.19
2,251.99
B3020
Roof Openings
0.63
1,198.75
Roof hatch, with curb, 1" fiberglass insulation, 2'-6" x 3'-0", galvanized
steel, 165 Ibs
0.63
1,198.75
C1010
Partitions
2.72
5,161.00
Metal partition, 5/8"fire rated gypsum board face, no base,3 -5/8" @ 24"
OC framing, same opposite face, no insulation
0.76
1,438.79
Gypsum board, 1 face only, exterior sheathing, fire resistant, 5/8"
1.19
2,257.70
Add for the following: taping and finishing
0.77
1,464.51
C1020
Interior Doors
2.09
3,970.62
Door, single leaf, kd steel frame, hollow metal, commercial quality, flush, 3'-
0" x 7'-0" x 1-3/8"
2.09
3,970.62
C1030
Fittings
0.20
379.97
Toilet partitions, cubicles, ceiling hung, stainless steel
0.20
379.97
C3010
Wall Finishes
1.59
3,012.09
Painting, interior on plaster and drywall, walls & ceilings, roller work,
primer & 2 coats
0.27
516.02
Painting, interior on plaster and drywall, walls & ceilings, roller work,
primer & 2 coats
1.04
1,982.24
Ceramic tile, thin set, 4-1/4" x 4-1/4"
0.27
513.82
C3020
Floor Finishes
3.12
5,926.77
Vinyl, composition tile, maximum
3.12
5,926.77
C3030
Ceiling Finishes
7.68
14,583.36
Acoustic ceilings, 3/4"mineral fiber, 12" x 12" tile, concealed 2" bar &
channel grid, suspended support
7.68
14,583.36
D2010
Plumbing Fixtures
2.67
5,080.57
Water closet, vitreous china, tank type, 2 piece close coupled
0.37
697.49
Urinal, vitreous china, wall hung
0.72
1,372.16
Lavatory w/trim, vanity top, PE on Cl, 20" x 18"
0.32
615.27
Service sink w/trim, PE on Cl,wall hung w/rim guard, 24" x 20"
0.95
1,801.02
Water cooler, electric, wall hung, dual height, 14.3 GPH
0.31
594.64
D2020
Domestic Water Distribution
14.81
28,148.35
Gas fired water heater, commercial, 100< F rise, 500 MBH input, 480 GPH
14.81
28,148.35
Richfield Penn Avenue Redevelopment
TIF District
Replacement Cost Report
LHB Project No. 180891
Page 2 of 3 Parcel A Building 1, Bumper
to Bumper Auto Parts
D2040
Rain Water Drainage
1.59
3,024.01
Roof drain, Cl, soil,single hub, 4" diam, 10' high
1.44
2,735.64
Roof drain, Cl, soil,single hub, 4" diam, for each additional foot add
0.15
288.37
D3050
Terminal & Package Units
8.48
16,103.13
Rooftop, single zone, air conditioner, department stores, 10,000 SF, 29.17
ton
8.48
16,103.13
D4010
Sprinklers
4.62
8,785.03
Wet pipe sprinkler systems, steel, ordinary hazard, 1 floor, 10,000 SF
4.62
8,785.03
D4020
Standpipes
1.15
2,181.62
Wet standpipe risers, class III, steel, black, sch 40, 4" diam pipe, 1 floor
1.15
2,181.62
D5010
Electrical Service/Distribution
12.15
23,082.90
Overhead service installation, includes breakers, metering, 20' conduit &
wire, 3 phase, 4 wire, 120/208 V, 400 A
3.11
5,905.68
Feeder installation 600 V, including RGS conduit and XHHW wire, 400 A
2.53
4,809.13
Switchgear installation, incl switchboard, panels & circuit breaker, 120/208
V, 3 phase, 400 A
6.51
12,368.10
D5020
Lighting and Branch Wiring
10.95
20,814.02
Receptacles incl plate, box, conduit, wire, 8 per 1000 SF, .9 watts per SF
2.85
5,410.84
Miscellaneous power, 1.5 watts
0.40
759.22
Central air conditioning power, 4 watts
0.81
1,542.34
Fluorescent fixtures recess mounted in ceiling, 1.6 watt per SF, 40 FC, 10
fixtures @32watt per 1000 SF
6.90
13,101.62
D5030
Communications and Security
1.78
3,382.04
Communication and alarm systems, fire detection, addressable, 25
detectors, includes outlets, boxes, conduit and wire
0.97
1,849.35
Fire alarm command center, addressable without voice, excl. wire &
conduit
0.81
1,532.69
Equipment
E1090
Other Equipment
0
0
SubTotal 100% $248.09 $471,365.90
Contractor Fees (General Conditions,Overhead,Profit) 10.00% $24.81 $47,136.59
Architectural Fees 0.00% $0.00 $0.00
User Fees 0.00% $0.00 $0.00
Richfield Penn Avenue Redevelopment TIF District Replacement Cost Report
LHB Project No. 180891 Page 3 of 3 Parcel A Building 1, Bumper to Bumper Auto Parts
Richfield Penn Avenue Redevelopment TIF District
Code Deficiency Cost Report
Parcel A - 6501 Penn Ave South Richfield, Minnesota 55423 - PID 28-028-24-23-0023
Buildina 1: BumDer to Bumper Auto Parts
Accessibility Items
Accessible Route
Create a code required accessible route into building
Restroom
Create a code required accessible restroom
Drinking Fountain
Install a code required accessible drinking fountain
Door Hardware
Install code compliant door hardware
Structural Elements
Exiting
Sidewalks
Repair/replace damaged sidewalks to create a code required
unimpeded means of egress
Glass Doors
Install code required 10-inch kick plates on glass doors
Vinyl Composition Tile
Repair/replace damaged floor tile to create a code required
unimpeded means of egress
Basement Stairway
Install code required second stair railing
Thresholds
Modify thresholds to comply with code for maximum height
Fire Protection
Smoke Detectors
Install code required smoke detectors
Emergency Lighting
Install code required emergency lighting
Emergency Notification System
Install code required emergency notification system
Building Sprinkler System
Install code required building sprinkler system
Fire Proofing
Apply code required fire proofing to exposed wood joists
$ 3,500.00
Lump
1
$
3,500.00
$ 2.36
SF
1900
$
4,484.00
$ 0.31
SF
1900
$
589.00
$ 250.00
EA
7
$
1,750.00
$ 2,500.00
Lump
1
$
2,500.00
$ 100.00
EA
4
$
400.00
$ 3.12
SF
1900
$
5,928.00
$ 250.00
EA
1
$
250.00
$ 250.00
EA
5
$
1,250.00
$ 0.97
SF
1900
$
1,843.00
$ 1.10
SF
1900
$
2,090.00
$ 0.81
SF
1900
$
1,539.00
$ 5.77
SF
1900
$
10,963.00
$ 2.25
SF
1900
$
4,275.00
Richfield Penn Avenue Redevelopment TIF District Code Deficiency Cost Report
LHB Project No. 180891 Page 1 of 2 Parcel A Building 1, Bumper to Bumper Auto Parts
Electrical Circuit Panels
Establish code required 36-inch clear space in front of circuit
panels $ 50.00 Lump 1 $ 50.00
Hazardous Waste Trap
Inspect, certify, and create code required management plan for
confined space hazardous waste trap $ 500.00 Lump 1 $ 500.00
Exterior Construction
Windows
Install code compliant windows to prevent water intrusion $ 5.05
Roof Construction
Roofing Material
Remove failed roofing material $ 0.75
Install new roofing material to prevent water intrusion per code $ 10.66
Mechanical- Electrical
Mechanical
SF
1900
$
9,595.00
SF
1900
$
1,425.00
SF
1900
$
20,254.00
Install code compliant HVAC system $ 8.48 SF
Install code required guard around exposed pully on air
compressor $ 50.00 Lump
Electrical
Install code compliant lighting in basement $ 6.90 SF
1900 $
1 $
950 $
16,112.00
50.00
6,555.00
Total Code Improvements $ 95,902
Richfield Penn Avenue Redevelopment TIF District Code Deficiency Cost Report
LHB Project No. 180891 Page 2 of 2 Parcel A Building 1, Bumper to Bumper Auto Parts
Richfield Penn Avenue Redevelopment TIF District
Photos: Parcel A Building 1 - 6501 Penn Avenue South - Bumper to Bumper Auto Parts
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Richfield Penn Avenue Redevelopment TIF District
Photos: Parcel A Building 1 - 6501 Penn Avenue South - Bumper to Bumper Auto Parts
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Photos: Parcel A Building 1 - 6501 Penn Avenue South - Bumper to Bumper Auto Parts
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Richfield Penn Avenue Redevelopment TIF District
Photos: Parcel A Building 1 - 6501 Penn Avenue South - Bumper to Bumper Auto Parts
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Richfield Penn Avenue Redevelopment TIF District
Replacement Cost Report
RSMeans dal Square Foot Cost Estimate Report
r� �iiC0l8w q p
Estimate Name:
Parcel A Building 2, Garage
City of Richfield
6501 Penn Ave South , Richfield , Minnesota ,
55423
Garage, Repair with Concrete Block / Steel
Building Type:
Joists
Location:
RICHFIELD, MN
Story Count:
1
Story Height (L.F.):
10
Floor Area (S.F.):
2100
Labor Type:
OPN
Basement Included:
No
Data Release:
Year 2018 Quarter 2
Cost Per Square Foot:
$114.43
Building Cost:
$240,320.67
Date: 11/9/2018
_
are derived from a building model with basic components.
differences and market conditions can cause costs to vary significantly.
% of Total Cost Per S.F. Cost
A1010
Standard Foundations
13.03
27,365.85
Foundation wall, CIP, 4' wall height, direct chute, .148 CY/LF, 7.2 PLF, 12"
thick
8.42
17,676.23
Strip footing, concrete, reinforced, load 11.1 KLF, soil bearing capacity 6 KSF,
12" deep x 24" wide
4.61
9,689.62
A1030
Slab on Grade
8.22
17,256.16
Slab on grade, 6" thick, light industrial, reinforced
8.22
17,256.16
A2010
Basement Excavation
0.32
679.14
Excavate and fill, 10,000 SF, 4' deep, sand, gravel, or common earth, on site
storage
0.32
679.14
B2010
Exterior Walls
11.54
24,232.91
Concrete block (CMU) wall, regular weight, 75% solid, 8 x 8 x 16, 4500 PSI,
reinforced, vertical #5@32", grouted
11.54
24,232.91
B2030
Exterior Doors
3.54
7,431.93
Door, steel 18 gauge, hollow metal, 1 door with frame, no label, 3'-0" x 7'-0"
opening
0.87
1,830.78
Door, steel 24 gauge, overhead, sectional, manual operation, 12'-0" x 12'-0"
opening
2.67
5,601.15
B3010
Roof Coverings
17.11
35,931.00
Precast concrete plank, 2" topping, 12" total thickness, 35' span, 40 PSF
superimposed load, 135 PSF total load
17.11
35,931.00
Interiors
C1010
Partitions
4.96
10,418.70
Lightweight block 4" thick
1.76
3,698.18
Concrete block (CMU) partition, light weight, hollow, 8" thick, no finish
3.20
6,720.52
Richfield Penn Avenue Redevelopment TIF District Replacement Cost Report
LHB Project No. 180891 Page 1 of 3 Parcel A Building 2, Garage
C1020
Interior Doors
0.42
877.72
Door, single leaf, kd steel frame, hollow metal, commercial quality, flush, 3'-
0" x 7'-0" x 1-3/8"
0.42
877.72
C1030
Fittings
0.76
1,599.88
Toilet partitions, cubicles, ceiling hung, stainless steel
0.76
1,599.88
C3010
Wall Finishes
4.20
8,813.20
2 coats paint on masonry with block filler
2.80
5,875.46
Painting, masonry or concrete, latex, brushwork, primer & 2 coats
0.79
1,655.98
Painting, masonry or concrete, latex, brushwork, addition for block filler
0.61
1,281.76
C3020
Floor Finishes
1.29
2,699.67
Concrete topping, hardeners, metallic additive, minimum
1.04
2,177.19
Vinyl, composition tile, minimum
0.25
522.48
C3030
Ceiling Finishes
0.44
929.61
Acoustic ceilings, 5/8" fiberglass board, 24" x 48" tile, tee grid, suspended
support
0.44
929.61
D Services
D2010
Plumbing Fixtures
2.93
6,179.03
Water closet, vitreous china, bowl only with flush valve, wall hung
1.14
2,397.83
Urinal, vitreous china, wall hung
0.23
489.86
Lavatory w/trim, wall hung, PE on Cl, 19" x 17"
0.59
1,242.16
Service sink w/trim, PE on Cl,wall hung w/rim guard, 24" x 20"
0.64
1,353.61
Water cooler, electric, wall hung, wheelchair type, 7.5 GPH
0.33
695.57
D2020
Domestic Water Distribution
0.69
1,449.72
Gas fired water heater, residential, 100< F rise, 30 gal tank, 32 GPH
0.69
1,449.72
D2040
Rain Water Drainage
4.59
9,635.51
Roof drain, steel galv sch 40 threaded, 4" diam piping, 10' high
1.71
3,596.45
Roof drain, steel galv sch 40 threaded, 4" diam piping, for each additional
foot add
2.88
6,039.06
D3050
Terminal & Package Units
9.68
20,318.84
Rooftop, single zone, air conditioner, factories, 10,000 SF, 33.33 ton
9.68
20,318.84
D4010
Sprinklers
4.62
9,709.77
Wet pipe sprinkler systems, steel, ordinary hazard, 1 floor, 10,000 SF
4.62
9,709.77
D4020
Standpipes
1.00
2,104.18
Wet standpipe risers, class III, steel, black, sch 40, 4" diam pipe, 1 floor
0.92
1,929.01
Wet standpipe risers, class III, steel, black, sch 40, 4" diam pipe, additional
floors
0.08
175.17
D5010
Electrical Service/Distribution
2.25
4,728.08
Overhead service installation, includes breakers, metering, 20' conduit &
wire, 3 phase, 4 wire, 120/208 V, 200 A
1.41
2,967.40
Feeder installation 600 V, including RGS conduit and XHHW wire, 200 A
0.69
1,451.48
Switchgear installation, incl switchboard, panels & circuit breaker, 120/208
V, 3 phase, 400 A
0.15
309.20
D5020
Lighting and Branch Wiring
8.62
18,104.13
Receptacles incl plate, box, conduit, wire, 4 per 1000 SF, .5 watts per SF
2.21
4,631.78
Miscellaneous power, 1 watt
0.30
623.24
Central air conditioning power, 3 watts
0.60
1,264.52
Fluorescent fixtures recess mounted in ceiling, 1.6 watt per SF, 40 FC, 10
fixtures @32watt per 1000 SF
5.52
11,584.59
Richfield Penn Avenue Redevelopment TIF District Replacement Cost Report
LHB Project No. 180891 Page 2 of 3 Parcel A Building 2, Garage
D5030
Communications and Security
3.72
7,802.49
Communication and alarm systems, fire detection, addressable, 25 detectors,
includes outlets, boxes, conduit and wire
2.16
4,542.27
Fire alarm command center, addressable with voice, excl. wire & conduit
1.30
2,735.36
Internet wiring, 4 data/voice outlets per 1000 S.F.
0.25
524.86
D5090
Other Electrical Systems
0.10
205.82
Generator sets, w/battery, charger, muffler and transfer switch, gas/gasoline
operated, 3 phase, 4 wire, 277/480 V, 15 kW
0.10
205.82
Equipment
E1090
Other Equipment
0
0
F Special Construction
SubTotal
100%
$104.03
$218,473.34
Contractor Fees (General Con ditions,Overhead,Profit) 10.00%
$10.40
$21,847.33
Architectural Fees
0.00%
$0.00
$0.00
User Fees
0.00%
$0.00
$0.00
Richfield Penn Avenue Redevelopment TIF District Replacement Cost Report
LHB Project No. 180891 Page 3 of 3 Parcel A Building 2, Garage
Richfield Penn Avenue Redevelopment TIF District
Code Deficiency Cost Report
Parcel A - 6501 Penn Ave South Richfield, Minnesota 55423 - PID 28-028-24-23-0023
Buildina 2: Garaae
Accessibility Items
Accessible Route
A code required accessible route into the building should be
created
Restroom
A code required accessible restroom should be installed
Drinking Fountain
A code required drinking fountain should be installed
Door Hardware
Code compliant door hardware should be installed
Structural Elements
Block Walls
Repair/replace damaged block walls to prevent water intrusion
per code
Steel Lintels
Replace/Protect failed steel lintel per code
Protect rusting steel lintels per code
$ 1,500.00
Lump
1
$
1,500.00
$ 2.60
SF
2100
$
5,460.00
$ 0.33
SF
2100
$
693.00
$ 250.00
EA
5
$
1,250.00
$ 5.00
SF
2100
$
10,500.00
$ 750.00
EA
1
$
750.00
$ 100.00
EA
3
$
300.00
Exiting
Thresholds
Thresholds should be modified to comply with code for maximum
height
$
250.00
Fire Protection
Smoke Detectors
Install code required smoke detectors
$
2.16
Emergency Notification System
Install code required emergency notification system
$
1.30
Emergency Lighting
Install code required emergency lighting system
$
0.81
Building Sprinkler System
Install code required building sprinkler system
$
5.62
Exterior Construction
Glass Block Windows
Replace vandalized glass block windows to prevent water
intrusion per code
$ 1,500.00
Richfield Penn Avenue Redevelopment TIF District
LHB Project No. 180891 Page 1 of 2
EA 3 $ 750.00
SF
2100
$
4,536.00
SF
2100
$
2,730.00
SF
2100
$
1,701.00
SF
2100
$
11,802.00
Lump 1 $ 1,500.00
Code Deficiency Cost Report
Parcel A Building 2, Garage
Roof Construction
Roofing Material
Remove failed roofing material
Install new roofing material to prevent water intrusion per code
Mechanical- Electrical
Mechanical
The HVAC system should be replaced to comply with code
The air compressor should have a code required guard around
the pully
Electrical
Code compliant lighting should be installed
Electrical junction boxes should be protected per code
$ 3.00
SF
2100
$
6,300.00
$ 17.11
SF
2100
$
35,931.00
$ 9.68
SF
2100
$
20,328.00
$ 50.00
EA
1
$
50.00
$ 2.76
SF
2100
$
5,796.00
$ 125.00
EA
1
$
125.00
Total Code Improvements $ 112,002
Richfield Penn Avenue Redevelopment TIF District Code Deficiency Cost Report
LHB Project No. 180891 Page 2 of 2 Parcel A Building 2, Garage
Richfield Penn Avenue Redevelopment TIF District
Photos: Parcel A Building 2 - 6501 Penn Avenue South - Garage
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Page 4 of 4
AGENDA SECTON: Consent Calendar
AGENDA ITEM # 2.B.
STAFF REPORT NO.42
HOUSING AND REDEVELOPMENT AUTHORITY
MEETING
12/20/2021
REPORT PREPARED BY: Kate Aitchison, Housing Specialist
OTHER DEPARTMENT REVIEW:
EXECUTIVE DIRECTOR REVIEW: John Stark, Executive Director
12/15/2021
ITEM FOR COUNCIL CONSIDERATION:
Consider the approval of a resolution accepting donations to the Affordable Housing Trust Fund via
the Just Deeds Project.
EXECUTIVE SUMMARY:
In April 2021, the City of Richfield joined the Just Deeds project to address the numerous discriminatory
covenants that were once in effect on Richfield properties. As part of the project, yard signs were created to
promote the program and celebrate the renunciation of these discriminatory covenants.
The yard signs are being distributed to homeowners who have their covenants discharged through the City's
program. Additionally, yard signs are available for sale at community events and at the Richfield Municipal
Center. The suggested donation is $10 per sign.
All proceeds from the yard sign sale are going directly to the Affordable Housing Trust Fund and the Richfield
First Time Homebuyer program. To date, $100 has been donated towards this cause.
RECOMMENDED ACTION:
By motion: Approve a resolution allowing the acceptance of monetary donations to the Affordable
Housing Trust Fund.
BASIS OF RECOMMENDATION:
A. HISTORICAL CONTEXT
• The Just Deeds project was initiated in the spring of 2021.
• To date, 39 discriminatory covenants have been discharged or are being processed for
renunciation under the program.
• Eight yard signs have been sold for voluntary donations to the Affordable Housing Trust Fund and
$100 in donations have been collected.
B. POLICIES (resolutions, ordinances, regulations, statutes. etch
Advancing equity is a core value and goal of the City.
• The Just Deeds project seeks to acknowledge, educate, and work to address systemic
racism in housing in Minnesota. As part of this project, Richfield can provide free help to
homeowners to find and discharge discriminatory covenants from property titles.
• There are 3,714 parcels in the City that contain some form of racial covenant on the
property deed
The Affordable Housing Trust Fund and the Richfield First Time Homebuyer program seek to
promote equitable housing solutions that aid all people in finding secure and stable housing.
C. CRITICALTIMING ISSUES:
• A resolution accepting the donations needs to be passed before the end of the calendar year.
D. FINANCIAL IMPACT:
• To date, $100 has been donated towards yard signs and the Affordable Housing Trust Fund.
E. LEGAL CONSIDERATION:
• Minnesota Statute 465.03 requires that every acceptance of a grant or devise of real or personal
property on terms prescribed by the donor be made by resolution.
ALTERNATIVE RECOMMENDATIONS .
• Direct staff to return the donations to the donors.
PRINCIPAL PARTIES EXPECTED AT MEETING:
None.
ATTACHMENTS:
Description Type
❑ Resolution Resolution Letter
❑ Just Deeds yard sign Backup Material
RESOLUTION NO.
RESOLUTION AUTHORIZING RICHFIELD HOUSING AND REDEVELOPMENT
AUTHORITY TO ACCEPT DONATIONS TO THE AFFORDABLE HOUSING TRUST
FUND
WHEREAS, the Housing and Redevelopment Authority received checks and cash
from several individuals in the amount of $100.00 to the Affordable Housing Trust Fund;
and,
WHEREAS, Minnesota Statute requires every acceptance of a grant or devise of
real or personal property on terms prescribed by the donor be made by resolution; and,
WHEREAS, the donated funds will be deposited in the Affordable Housing Trust
Fund and used to promote affordable homeownership.
NOW, THEREFORE, BE IT RESOLVED that the Executive Director will accept and
distribute the donations as specified.
Adopted by the Housing and Redevelopment Authority in and for the City of
Richfield, Minnesota this 20t" day of December, 2021.
Mary B. Supple, Chair
ATTEST:
Maria Regan Gonzalez, Secretary
DISCHARGE Y
RACIAL C
OUR H
SM!
OME'S
OVENANT
Learn more at: www.Richfield mn.
ov/JustDeeds
AGENDA SECTION: RESOLUTIONS
AGENDA ITEM # 4.
STAFF REPORT NO.43
HOUSING AND REDEVELOPMENT AUTHORITY
MEETING
12/20/2021
REPORT PREPARED BY: Melissa Poehlman,Asst. Community Development Director
OTHER DEPARTMENT REVIEW:
EXECUTIVE DIRECTOR REVIEW: John Stark, Executive Director
12/14/2021
ITEM FOR COUNCIL CONSIDERATION:
Consider a resolution approving the execution and delivery of a Donation Agreement with Metro
Campus 1, LLC to accept the donation of the office building and property at 1600 78th Street East.
EXECUTIVE SUMMARY:
Over the past ten to fifteen years, Housing and Redevelopment Authority (HRA) staff and the ownership and
management of Metro Sales, Inc. have developed and maintained an excellent working relationship. Recently
a representative of owner Jerry Mathwig (acting as a Power of Attorney) approached staff about the
possibility of donating a part of their property (owned under Metro Campus 1, LLC) located at 1600 78th
Street East to the HRA. The office building on this site was the former home of EcoSmart, a water filtration
company, and has been in a state of perpetual construction for more than 10 years. The current owner
purchased the property from EcoSmart in 2019 with the intent of completing construction and using the office
space to consolidate employees that were scattered in several locations throughout the metro. These plans
have changed and the owner is interested in donating the property to the HRA for future redevelopment. The
property is located near the future 77th Street underpass and could provide the HRA with additional
influence over redevelopment in this important area.
On September 20, 2021, the HRA approved a Preliminary Donation Agreement (Preliminary
Agreement) directing staff to contract for the review of property title work, inspection and appraisal of
the property, and completion of a Phase I Environmental Site Assessment. The Preliminary
Agreement also stipulated that if the HRA concluded that it would like to accept the property, the
HRA would take possession of the property before December 31, 2021 and agree to reimburse the
owner for the second half 2021 taxes ($40,486.60).
Staff and the H RA and City Attorneys have completed this review and no unforeseen concerns have
arisen. Staff recommends that the HRA approve the attached Donation Agreement (Agreement) for
the property.
RECOMMENDED ACTION:
By motion: Approve the attached resolution approving the execution and delivery of a Donation
Agreement with Metro Campus 1 LLC.
BASIS OF RECOMMENDATION:
A. HISTORICAL CONTEXT
• The City currently owns property at 1710 78th Street East.
• Ownership of 1600 78th Street East would strengthen the City/HRA's position in influencing
redevelopment in the area immediately adjacent to the 77th Street underpass.
• The properties in this area are guided for Regional Commercial Use by the 2040 Comprehensive
Plan.
B. POLICIES (resolutions. ordinances. reaulations. statutes. etc):
• The HRA Attorney has concluded that the HRA is eligible to receive a land donation such as the
one contemplated.
C. CRITICALTIMING ISSUES:
• The owner would prefer for the HRA to accept the donated property in 2021 for tax purposes. The
Preliminary Agreement committed the HRA to accept the property prior to December 31, 2021.
D. FINANCIAL IMPACT:
• Hennepin County's current estimated market value of the property is approximately $2.3 million. A
Broker's Opinion of Value from October values the property between $2.4 and $2.6 million.
• Second half 2021 property taxes for the property are $40,486.60. The HRA would agree to
reimburse the owner for these second half taxes.
• Following closing, the HRA would apply to Hennepin County for tax exempt status for the property.
Given the timing of this acceptance, it is likely the HRA will have to pay first half 2022 property
taxes in approximately the same amount.
E. LEGAL CONSIDERATION:
• HRAAttorney Julie Eddington has been consulted and prepared the attached Resolution and
Agreement.
ALTERNATIVE RECOMMENDATION(S):
• Decline the offer of the property donation.
PRINCIPAL PARTIES EXPECTED AT MEETING:
Tim Pabst, for Metro Campus 1, LLC
ATTACHMENTS:
Description
❑ Resolution
❑ Agreement
❑ Property Map
Type
Resolution Letter
Contract/Agreement
Exhibit
HOUSING AND REDEVELOPMENT AUTHORITY
IN AND FOR THE CITY OF RICHFIELD, MINNESOTA
RESOLUTION NO.
RESOLUTION APPROVING THE EXECUTION AND DELIVERY OF A DONATION
AGREEMENT WITH METRO CAMPUS 1 LLC
WHEREAS, Metro Campus 1 LLC, a Minnesota limited liability company (the "Owner"),
is the fee simple owner of property located at 1600 781h Street East, Richfield, Minnesota (the
"Property"); and
WHEREAS, the Owner has proposed to donate the Property, including the office
building on the Property, to the Housing and Redevelopment Authority in and for the City of
Richfield, Minnesota (the "Authority"); and
WHEREAS, the Authority and the Owner entered into a Preliminary Donation
Agreement, dated October 1, 2021, which set forth the terms under which the Authority was
allowed to conduct due diligence on the Property to determine the Property's suitability and
feasibility for redevelopment; and
WHEREAS, following its completion of the due diligence, the Authority has determined
to move forward with accepting the donation of the Property by the Owner; and
WHEREAS, the Board of Commissioners of the Authority has been presented with a
form of a Donation Agreement (the "Agreement") between the Authority and the Owner, which
sets forth the terms of the donation of the Property to the Authority; and
NOW, THEREFORE, BE IT RESOLVED, by the Board of Commissioners of the
Housing and Redevelopment Authority in and for the City of Richfield, Minnesota as follows:
1. The Agreement presented to the Authority and on file with the Executive Director
is hereby in all respects approved, subject to modifications that do not alter the substance of the
transaction and that are approved by the Chair and Executive Director; provided that execution of
such document by such officials shall be conclusive evidence of approval.
2. The Chair and Executive Director are hereby authorized to execute the
Agreement on behalf of the Authority and to carry out on the Authority's obligations thereunder.
Adopted by the Housing and Redevelopment Authority in and for the City of Richfield,
Minnesota this 20th day of December, 2021.
Mary B. Supple, Chair
ATTEST:
Maria Regan Gonzalez, Secretary
DONATION AGREEMENT
THIS DONATION AGREEMENT (the "Agreement") is made and entered into this _ day of
, 2021 (the "Effective Date"), between the Housing and Redevelopment Authority in
and for the City of Richfield, Minnesota, a Minnesota public body corporate and politic (the "HRA"),
and Metro Campus 1 LLC, a Minnesota limited liability company (the "Owner").
1. OWNER'S PROPERTY. The Owner is the owner in fee simple of real estate located at 1600 781h
Street East in the City of Richfield, Hennepin County, Minnesota, consisting of land identified by Tax
Parcel Identification Number 35-028-24-44-0034 which is legally described in EXHIBIT A attached hereto
(the "Donated Property").
2. OFFER/ACCEPTANCE. In consideration of the mutual agreements between the Owner and the
HRA contained herein, the Owner agrees to donate the Property to the HRA, and the HRA agrees to accept
the Donated Property from the Owner.
3. VALUE OF DONATED PROPERTY. The parties agree that for taxation purposes the value of
the Donated Property is Two Million Five Hundred Thousand Dollars ($2,500,0000.00) based on a Broker
Opinion of Value provided by IAG Commercial, dated October 28, 2021.
4. CONTINGENCIES. This Donation Agreement is contingent upon the satisfaction of the
following condition:
A. Condition of title being satisfactory to the HRA following the HRA's examination of title as
provided for in Section 9 of this Donation Agreement.
B. Owner will work cooperatively with the HRA to create a separate parcel for the easement created
by the Grant of Perpetual Easements and Declaration of Restrictions in favor of Clear Channel
Outdoor, Inc., dated December 7, 2001 and filed on December 13, 2001, in the Office of Registrar
of Titles of Hennepin County, Minnesota, as Document No. T3472192 and to require the Clear
Channel Outdoor, Inc. pay its own taxes directly to Hennepin County.
The parties shall have until the Closing Date, as herein defined, of the donation of the Donated
Property ("Closing") to satisfy the foregoing contingency. If the contingency is duly satisfied or waived in
writing by the HRA, then the HRA and the Owner shall proceed to close the transaction as contemplated
herein. If, however, the contingency is not timely satisfied and is not waived in writing by the HRA, then
this Donation Agreement shall thereupon be void, at the option of the HRA. If this Donation Agreement is
voided, then the HRA and the Owner shall execute and deliver to each other a termination of this Donation
Agreement.
5. PERSONAL PROPERTY INCLUDED IN DONATION. The following items of personal
property and fixtures owned by the Owner and currently located on the Donated Property are included in
this donation: None. The Owner will remove all personal property from the Donated Property.
6. CLOSING DATE. The Closing shall take place on or before , 202_ (the "Closing
Date"), unless otherwise mutually agreed upon by the Owner and the HRA. The Closing shall take place at
, or such other location as mutually agreed upon by the Owner and the HRA.
7. DOCUMENTS TO BE DELIVERED AT CLOSING. The Owner agrees to deliver the
following documents to the HRA at Closing:
A. A duly recordable limited warranty deed conveying marketable fee simple title to the
Donated Property to the HRA, free and clear of any mortgages, liens or encumbrances
other than matters created by or acceptable to the HRA;
B. An affidavit from the Owner sufficient to remove any exception in the HRA's policy of
title insurance for mechanics' and materialmens' liens and rights of parties in possession;
C. Affidavit of the Owner confirming that the Owner is not a foreign person within the
meaning of Section 1445 of the Internal Revenue Code;
D. A completed Minnesota Well Disclosure Certificate;
E. Any notices, certificates, and affidavits regarding any private sewage systems, underground
storage tanks, and environmental conditions as may be required by Minnesota statutes,
rules or ordinances; and
F. Customary affidavits, certificates and such other documents as the HRA may request to
carry out this transaction.
G. Contact information for Clear Channel Outdoor, Inc. or its successor under the Grant of
Perpetual Easements and Declaration of Restrictive Covenants, dated December 7, 2001
(the "Billboard Easement").
8. REAL ESTATE TAXES AND SPECIAL ASSESSMENTS.
A. The Owner shall pay at or before Closing all special assessments levied or pending
against the Property as of the date of Closing.
B. The HRA shall pay the Owner for the property taxes the Owner paid on October 15,
2021.
C. The HRA shall be responsible for all taxes and special assessments for the Donated
Property for all years after Closing.
9. EXAMINATION OF TITLE; CURING TITLE DEFECTS. The Owner will provide to the
HRA any available title records in its possession. The HRA will obtain a commitment for title insurance
("Commitment") for the Donated Property, and the HRA shall have 20 business days after receipt thereof
to examine the same and to deliver written objections to title, if any, to the Owner, or the HRA's right to do
so shall be deemed waived. The Owner shall have until Closing to make title marketable at the Owner's
cost. In the event that title to the Donated Property cannot be made marketable or is not made marketable
by the Owner by Closing, then this Donation Agreement may be terminated at the option of the HRA.
10. CLOSING COSTS AND RELATED ITEMS. The Owner shall be responsible for the following
closing costs and related items: all charges relating to the filing of any instrument required to make title
marketable and its own legal fees associated with this transaction. The HRA shall be responsible for the
following costs and related items: premiums required for issuance of the HRA's title insurance policy, if
2
purchased by the HRA; any costs of preparation of a title commitment, including any abstracting fees and
fees for standard searches with respect to the Owner and the Donated Property; any state deed tax and
conservation fee with respect to the limited warranty deed; its own legal fees associated with this
transaction; all other recording fees; fees of any soil tests, environmental assessments, inspection reports,
appraisals, or other tests or reports ordered by the HRA in connection with its acquisition of the Donated
Property; and closing fees charged by the title company or closer.
11. POSSESSION/CONDITION OF PROPERTY. The Owner shall deliver possession of the
Donated Property to the HRA at Closing in the same condition as the Donated Property existed on the date
of execution of this Donation Agreement.
12. DONOR'S WARRANTIES. The Owner has good, indefeasible and marketable fee simple title to
the Donated Property. The Owner has the legal capacity and is authorized to enter into this Donation
Agreement. The Owner warrants that there has been no labor or material furnished to the Property for
which payment has not been made. The Owner agrees not to place any liens or encumbrances on the
Donated Property after the date of execution of this Donation Agreement. The Owner warrants that there
are not any tenants, or third parties entitled to possession of all or any portion of the Property (except for the
Billboard Easement) and there are no leases, oral or written, affecting all or any portion of the Property.
The Owner warrants that it has no knowledge of any "Hazardous Substance," "pollutant" or "contaminant"
ever being released from any "facility" or "vessel" located on or used in connection with the Donated
Property and has not taken any action in "response" to a "release" in connection with the Donated Property
(the terms set forth in quotation marks shall have the meanings given to them in the federal Comprehensive
Environmental Compensation and Liability Act). The Owner warrants that as of Closing, there will be no
obligations or liabilities of any kind or nature whatsoever, including, but not limited to, any tax liabilities,
contract liabilities, or tort liabilities for which or in which the HRA or the Donated Property will be liable or
subject except for non -delinquent real estate tax obligations. To the best of the Owner's knowledge, there
are no septic systems on the Donated Property. Owner has not filed, voluntarily, or involuntarily for
bankruptcy relief within the last year under the United States Bankruptcy Code or has any petition for
bankruptcy or receivership been filed against the Owner within the last year. The Owner warrants that the
Owner has not received any notice from any governmental authority regarding a violation of any regulation,
ordinance, or law related to the Donated Property. If the Donated Property is subject to any restrictive
covenants, then the Owner warrants that the Owner has not received any notice from any person or authority
concerning a breach of those covenants. The Owner shall provide any notices which the Owner receives
concerning a breach of those covenants to the HRA immediately. These representations shall survive
closing for a period of 12 months.
13. EASEMENTS. The Owner represents and warrants that there are no easements, or claims of
easements, other than the easements of public record on the Donated Property.
14. BROKER COMMISSIONS. The Owner and the HRA represent and warrant to each other that
there is no real estate agent or broker involved in this transaction with whom either has negotiated, or to
whom either has agreed to pay any agent or broker commission or fees. Each party agrees to defend,
indemnify, and hold harmless the other for any and all claims for any agent or brokerage commissions or
fees in connection with negotiations for conveyance of the Property arising out of any alleged agreement or
commitment or negotiation by the indemnifying party.
3
15. NO MERGER OF REPRESENTATIONS, WARRANTIES. The representations and
warranties contained in this Donation Agreement will not be merged into any instrument or conveyance
delivered at the Closing, and the parties shall be bound accordingly.
16. ENTIRE AGREEMENT; AMENDMENTS. This Donation Agreement constitutes the entire
agreement between the parties and no other agreement prior to this Donation Agreement or
contemporaneous herewith shall be effective except as expressly set forth or incorporated herein. Any
purported amendment hereto shall not be effective unless it shall be set forth in writing and executed by
both parties or their respective successors or assigns.
17. BINDING EFFECT; ASSIGNMENT. This Donation Agreement shall be binding upon and inure
to the benefit of the parties and their respective successors and assigns.
18. NOTICE. Any notice, demand, request or other communication which may or shall be given or
served by the parties shall be deemed to have been given or served on the date the same is deposited in the
United States Mail, registered or certified, postage prepaid and addressed as follows:
To the HRA: Richfield Housing and Redevelopment Authority
6700 Portland Avenue South
Richfield, MN 55422
Attn: Melissa Poehlman, Acting Executive Director
To the Owner: Metro Campus 1, LLC
c/o Timothy J. Pabst
Stinson LLP
50 South Sixth Street, Suite 2600
Minneapolis, MN 55402
or such other address as either party may give to another party in accordance with this Section 18.
19. DEFAULT; REMEDIES; SPECIFIC PERFORMANCE. If either party defaults in any of its
obligations under this Donation Agreement, then the other party may terminate this Donation Agreement by
written notice delivered pursuant to Section 18 hereof. If this Donation Agreement is not so terminated,
then the HRA or the Owner may seek specific performance of this Donation Agreement, provided that any
action for specific enforcement of this Donation Agreement must be brought within six months after the
date the party receives actual notice of the alleged breach.
20. COUNTERPARTS. This Donation Agreement may be executed in any number of counterparts,
each of which will, for all purposes, be deemed to be an original, and all of which are identical. This
Donation Agreement may further be evidenced by facsimile and email scanned signature pages.
21. FURTHER ASSURANCES. Each party agrees that it will, without further consideration,
execute and deliver such other documents and take such other action, whether prior or subsequent to
Closing, as may be reasonably requested by the other party to consummate more effectively the purposes
or subject matter of this Donation Agreement.
22. SEVERABILITY. In case any one or more of the provisions contained in this Donation
Agreement shall for any reason be held to be invalid, illegal, or unenforceable in any respect, such
El
invalidity, illegality, or unenforceability shall not affect any other provision hereof, and this Donation
Agreement shall be construed as if such invalid, illegal, or unenforceable provision had never been
contained herein.
23. WAIVER. The waiver by any party of a breach of any provision of this Donation Agreement
shall not be deemed a continuing waiver or a waiver of any subsequent breach whether of the same or
another provision of this Donation Agreement.
24. INDEPENDENT REVIEW. The Owner warrants to the HRA that it has undertaken an
independent review of the transaction contemplated herein, and has, to the extent necessary, engaged the
services of professional advisors to determine the availability of any tax benefits which may be realized
upon completion of this transaction. The HRA makes no warranties about any tax benefit which may be
received, and the Owner hereby waives any claims against the HRA related to any such benefits which
may or may not be realized upon completion of this transaction.
25. USE OF DONATED PROPERTY. The parties hereto agree that the underlying purpose of this
Donation Agreement is to provide the Donated Property to the HRA for redevelopment. The HRA shall
exercise its discretion in determining what activities to allow on the Property. Nothing herein shall be
construed as constituting a deed restriction.
E
IN WITNESS WHEREOF, the parties have executed this Preliminary Donation Agreement
effective on the date and year first written above.
HOUSING AND REDEVELOPMENT
AUTHORITY IN AND FOR THE CITY OF
RICHFIELD, MINNESOTA
By Mary B. Supple
Its Chair
By Melissa Poehlman
Its Interim Executive Director
S-1
Execution page of the Owner to the Preliminary Agreement, dated the date and year first written above.
METRO CAMPUS 1, LLC, a Minnesota
limited liability company
LM
Timothy J. Pabst, as attorney -in -fact for
Jerry E. Mathwig, the sole member of
Owner
S-2
Olin 1, LLC, an affiliate of the Owner owns a parcel adjacent to the Donated Property with a street
address of 1620 78th Street East, in the City of Richfield, Hennepin County, Minnesota, consisting
of land identified by Tax Parcel Identification Number 35-028-24-44-0033 ("Adjacent Parcel").
Olin 1, LLC may consider donating its parcel to the HRA. If it does not decide to donate the
Adjacent Parcel, Olin 1, LLC agrees to provide the HRA with sixty (60) days' notice of its intent to
sell the Adjacent Parcel in order for the HRA to have sufficient time to provide an offer to purchase
the Adjacent Property.
OLIN 1, LLC, a Minnesota limited liability
company
Timothy J. Pabst, as attorney -in -fact for
Jerry E. Mathwig, the sole member of
Owner
S-3
EXHIBIT A
PROPERTY
That part of the East 150 feet of the West 480 feet of the South 1/2 of the Southeast Quarter of the
Southeast Quarter of Section 35, Township 28, Range 24, lying South of the North 180.26 feet thereof.
RC 125-383(JAE)
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AGENDA SECTION: RESOLUTIONS
AGENDA ITEM # 5.
STAFF REPORT NO.44
HOUSING AND REDEVELOPMENT AUTHORITY
MEETING
12/20/2021
REPORT PREPARED BY: Julie Urban, Housing & Redevelopment Manager
OTHER DEPARTMENT REVIEW:
EXECUTIVE DIRECTOR REVIEW: John Stark, Executive Director
12/14/2021
ITEM FOR COUNCIL CONSIDERATION:
Consideration of a Contract for Private Development with MW F Properties to develop 55 units of
multi -family housing at 7700 Pillsbury Avenue South.
EXECUTIVE SUMMARY:
MW F Properties (the Developer) is proposing to construct 55 units of multi -family housing on Housing and
Redevelopment Authority (HRA)-owned property located at 7700 Pillsbury Avenue South. The Developer is
seeking bonds and four percent tax credits from the State of Minnesota, along with Tax Increment Financing
(TI F) from the HRA, to finance the project.
The project would provide apartment units affordable at 30, 50 and 60 percent of the Area Median Income
(AMI) in a mix of bedroom sizes, for a period of 30 years. The proposed mix of sizes and affordability is as
follows:
• 2 one -bedroom units affordable at 30% AMI (with supportive services)
• 5 two -bedroom units affordable at 50% AMI
• 11 one -bedroom units affordable at 60% AMI
• 22 two -bedroom units affordable at 60% AMI
• 15 three -bedroom units affordable at 60% AMI
Consistent with the City's Inclusionary Housing Policy, the Developer will provide either two units that are
ADA-accessible or three Type A units (accessible -ready) with roll -in showers.
The Developer is seeking TIF in the amount of $881,848 over the full length of the district (26 years) in the
form of a PayGo Note, along with a write -down of the land to $70,000.
A decision on the bond financing, which is a competitive process, is expected in February. If the Project is
not awarded funding, the Developer has the option of applying for any leftover bonds offered later in the year.
The Developer has requested a September 1 Contract deadline for securing financing, which would allow for
the possibility of applying for bonds in the second round, if needed.
RECOMMENDED ACTION:
By motion: Adopt a resolution approving a Contract for Private Development with MW F Properties for
the development of 55 units of multi -family housing at 7700 Pillsbury Avenue South and; adopt a
resolution authorizing an internal loan to advance certain costs associated with the proposed
development.
BASIS OF RECOMMENDATION:
A. HISTORICAL CONTEXT
The property at 7700 Pillsbury Avenue South was originally the site of the City Garage/Public
Works facility offices. After garage operations were moved to the new Public Works facility at
66th Street and Trunk Highway 77, the property was transferred to the HRA to be marketed for
redevelopment.
In 2019, the HRA approved a Contract with MW F Properties to develop 55 units of work force
housing on the HRA-owned property at 7700 Pillsbury Avenue South. The project applied for but
was not awarded nine percent tax credits, and the Contract expired.
MW F presented the project at a work session on October 18, 2021.
B. POLICIES (resolutions, ordinances, regulations, statutes, etch
The proposed project would exceed the requirements of the Inclusionary Housing Policy, which
requires that 20 percent of all projects assisted with public financing be affordable at 60 percent of
the AMI.
The project provides two units affordable at 30 percent of the AMI for people with disabilities,
which meets two goals of the City to increase accessible housing options and to offer more deeply
affordable units. In addition, five two -bedroom units affordable at 50 percent of the AMI will be
provided, which also meets goals to provide units affordable at a mix of prices and mix of sizes.
C. CRITICALTIMING ISSUES:
• The application for four percent tax credits is due in January of 2022. The Developer is asking for
a commitment from the HRA to sell the property to them before applying for bonds.
• If bonds are awarded, the Developer will have 180 days to close on the bonds. Within that time
period, the Developer will submit for entitlements on the property and plan to begin construction
following the bond closing.
D. FINANCIAL IMPACT:
• Approval of the interfund resolution will enable the HRA to reimburse itself with TI F for
administrative costs incurred to establish the TI F District.
• TI F in the amount of $881,848 and in the form of a Pay Go Note would be issued for the project.
It would take the entire life of the District to meet this obligation.
• The property has been tax exempt for many years (its prior use was as the City Garage). Upon
approval of the TI F District, a base value of the vacant land will be established and that amount of
taxes collected on that value will be paid to all taxing jurisdictions.
• The Developer would pay $70,000 for the land. Under the terms of an agreement reached years
ago, those sales proceeds would be transferred to the City to be used to buy down the bonds that
were sold to pay for the construction of the City's Public Works facility.
E. LEGAL CONSIDERATION:
• A public hearing was held on May 20, 2019, regarding the sale of property to the Developer.
• A Housing TI F District would need to be established to provide tax increment to the project. The
property is currently within a Redevelopment TI F District; however, the project would not meet the
requirement to begin construction within five years of the District's establishment.
ALTERNATIVE RECOMMENDATION .
• Decide not to approve a Contract for Private Development with MW F Properties.
PRINCIPAL PARTIES EXPECTED AT MEETING:
Ryan Schwickert, MW F Properties
ATTACHMENTS:
Description Type
❑ Resolution
Resolution Letter
❑ Internal Loan Resolution
❑ Contract for Private Development
❑ Site Plan
Resolution Letter
Contract/Agreement
Backup Material
HOUSING AND REDEVELOPMENT AUTHORITY
IN AND FOR THE CITY OF RICHFIELD, MINNESOTA
RESOLUTION NO.
RESOLUTION APPROVING CONTRACT FOR PRIVATE DEVELOPMENT
WITH MWF PROPERTIES, LLC
WHEREAS, the Housing and Redevelopment Authority in and for the City of Richfield,
Minnesota (the "Authority") was created pursuant to Minnesota Statutes, Sections 469.001 through
469.047, as amended, and was authorized to transact business and exercise its powers by a
resolution of the City Council of the City of Richfield, Minnesota (the "City"); and
WHEREAS, MWF Properties, LLC, a Minnesota limited liability company (the "Developer"),
intends to acquire certain property from the Authority (the "Development Property") and construct
thereon an approximately 55-unit multifamily housing development, including two (2) one bedroom
units of housing for people with disabilities, accompanied by supportive services for persons or
families whose income is thirty percent (30%) or less of the metro area's median gross income and
five (5) two bedroom units reserved for persons or families whose income is fifty percent (50%) or
less of the metro area's median gross income (the "Minimum Improvements"); and
WHEREAS, there has been presented before this Board of Commissioners of the Authority
(the "Board") a Contract for Private Development (the "Development Agreement") between the
Authority and the Developer, pursuant to which the Developer will agree to construct the Minimum
Improvements, and the Authority will agree to reimburse the Developer for certain public
redevelopment costs associated with the Minimum Improvements (the "Public Redevelopment
Costs"); and
WHEREAS, pursuant to Development Agreement, the Authority proposes to convey
property to the Developer with a land write -down of $700,000, which land write -down can be repaid
with available sources, including pooled tax increment; and
WHEREAS, in order to make the Minimum Improvements economically feasible for the
Developer to construct, the Authority plans to reimburse the Developer for public redevelopment
costs in the amount of up to $881,848 by either (i) establishing a housing Tax Increment Financing
District (the "TIF District") within the Richfield Project pursuant to Minnesota Statutes, Section
469.174 through 469.1794, as amended; or (ii) drawing funds from the City's Affordable Housing
Trust Fund; and
NOW, THEREFORE, BE IT RESOLVED, by the Board of Commissioners of the Housing
and Redevelopment Authority in and for the City of Richfield, Minnesota as follows:
Section 1. The Development Agreement. The Development Agreement is hereby in all
respects authorized, approved, and confirmed, and the Chair and the Executive Director are
hereby authorized and directed to execute the Development Agreement for and on behalf of the
Authority in substantially the form now on file with the Executive Director but with such
modifications as shall be deemed necessary, desirable, or appropriate, the execution thereof to
constitute conclusive evidence of their approval of any and all modifications therein.
Section 2. The Chair and the Executive Director are hereby authorized to execute and
deliver to the Developer any and all documents deemed necessary to carry out the intentions of
this resolution and the Development Agreement.
Section 3. This resolution shall be effective upon full execution of the Development
Agreement.
Adopted by the Housing and Redevelopment Authority in and for the City of Richfield,
Minnesota this 2011 day of December, 2021.
Mary B. Supple, Chair
ATTEST:
Maria Regan Gonzalez, Secretary
2
Error! Unknown document property name.
HOUSING AND REDEVELOPMENT AUTHORITY
IN AND FOR THE CITY OF RICHFIELD, MINNESOTA
RESOLUTION NO.
RESOLUTION AUTHORIZING INTERNAL LOAN FOR ADVANCE OF CERTAIN COSTS IN
CONNECTION WITH A MULTIFAMILY HOUSING DEVELOPMENT PROPOSED BY MWF
PROPERTIES, LLC
WHEREAS, the City of Richfield, Minnesota (the "City") and the Housing and
Redevelopment Authority in and for the City of Richfield, Minnesota (the "Authority") have
established, and the Authority administers, the Richfield Redevelopment Project (the
"Redevelopment Project") located within the City and have approved a Redevelopment Plan
(the "Redevelopment Plan") therefor, pursuant to Minnesota Statutes, Sections 469.001 through
469.047, as amended; and
WHEREAS, MWF Properties, LLC, a Minnesota limited liability company (the
"Developer"), intends to acquire certain property from the Authority (the "Development
Property") and construct thereon an approximately 55-unit multifamily housing development,
including two (2) one bedroom units of housing for people with disabilities, accompanied by
supportive services for persons or families whose income is thirty percent (30%) or less of the
metro area's median gross income and five (5) two bedroom units reserved for persons or
families whose income is fifty percent (50%) or less of the metro area's median gross income
(the "Minimum Improvements"); and
WHEREAS, the Authority proposes to
write -down of $700,000, which land write -down
pooled tax increment; and
convey property to the Developer with a land
can be repaid with available sources, including
WHEREAS, in order to make the Minimum Improvements economically feasible for the
Developer to construct, the Authority plans to reimburse the Developer for public redevelopment
costs in the amount of up to $881,848 by either (i) establishing a housing Tax Increment Financing
District (the "TIF District") within the Redevelopment Project pursuant to Minnesota Statutes,
Section 469.174 through 469.1794, as amended (the "TIF Act"); or (ii) drawing funds from the
City's Affordable Housing Trust Fund; and
WHEREAS, on the date hereof, the Board of Commissioners of the Authority is considering
a resolution approving the execution and delivery of a Contract for Private Development (the
"Development Agreement") with the Developer; and
WHEREAS, the Authority may incur certain costs related to a tax increment financing
district, which costs may be financed on a temporary basis from available Authority funds; and
WHEREAS, under Section 469.178, subdivision 7 of the TIF Act, the Authority is
authorized to advance or loan money from any fund from which such advances may be legally
made in order to finance expenditures that are eligible to be paid with tax increments under the
TIF Act; and
WHEREAS, if the Authority moves forward with creating the TIF District, the Authority
may pay for certain administrative costs related to the proposed TIF District (the "Qualified
Costs"), which costs may be financed on a temporary basis from Authority funds available for
such purposes, and the Authority may reimburse itself for the Qualified Costs from tax increments
derived from the property within the TIF District or from any other available source (the "Interfund
Loan") in accordance with the terms of this resolution; and
NOW, THEREFORE, BE IT RESOLVED by the Board of Commissioners of the Housing
and Redevelopment Authority in and for the City of Richfield, Minnesota that:
1. The Authority shall reimburse itself for the Qualified Costs in the amount of up to
$50,000 from the Development Account or any other fund designated by the Authority, together
with interest at the rate stated below. Interest accrues on the principal amount from the date of
each advance. The maximum rate of interest permitted to be charged is limited to the greater of
the rates specified under Minnesota Statutes, Section 270C.40 and Section 549.09 as of the
date the loan or advance is authorized, unless the written agreement states that the maximum
interest rate will fluctuate as the interest rates specified under Minnesota Statutes,
Section 270C.40 or Section 549.09 are from time to time adjusted. The interest rate shall be
4.0% and will not fluctuate.
2. Principal and interest (the "Payments") on the Interfund Loan shall be paid
semiannually on each February 1 and August 1 (each a "Payment Date"), commencing on the
first Payment Date on which the Authority has Available Tax Increment (defined below), or on
any other dates determined by the Executive Director of the Authority, through the date of last
receipt of tax increment from the TIF District.
3. Subject to Section 6 hereof, payments on this Interfund Loan are payable solely
from "Available Tax Increment," which shall mean, on each Payment Date, tax increment
available after other obligations have been paid, or as determined by the Executive Director of
the Authority, generated in the preceding six (6) months with respect to the property within the
TIF District and remitted to the Authority by Hennepin County, Minnesota, all in accordance with
the TIF Act. Payments on this Interfund Loan may be subordinated to any outstanding or future
bonds or notes issued by the Authority and secured in whole or in part with Available Tax
Increment. The Interfund Loan shall be paid prior to any pay-as-you-go notes or contracts
secured in whole or in part with Available Tax Increment, and any other outstanding or future
interfund loans secured in whole or in part with Available Tax Increment.
4. The principal sum and all accrued interest payable under this Interfund Loan are
prepayable in whole or in part at any time by the Authority without premium or penalty. No
partial prepayment shall affect the amount or timing of any other regular payment otherwise
required to be made under this Interfund Loan.
5. This Interfund Loan is evidence of an internal borrowing by the Authority in
accordance with Section 469.178, subdivision 7 of the TIF Act, and, subject to Section 6 hereof,
is a limited obligation payable solely from Available Tax Increment pledged to the payment
hereof under this resolution. This Interfund Loan and the interest hereon shall not be deemed to
constitute a general obligation of the State of Minnesota or any political subdivision thereof,
including, without limitation, the Authority. Neither the State of Minnesota nor any political
subdivision thereof shall be obligated to pay the principal of or interest on this Interfund Loan or
other costs incident hereto except out of Available Tax Increment, subject to Section 6 hereof,
and neither the full faith and credit nor the taxing power of the State of Minnesota or any political
2
Error! Unknown document property name.
subdivision thereof is pledged to the payment of the principal of or interest on this Interfund
Loan or other costs incident hereto. The Authority shall have no obligation to pay any principal
amount of the Interfund Loan or accrued interest thereon, which may remain unpaid after the
final Payment Date.
6. In the event that the City and the Authority do not create the TIF District, the
Interfund Loan shall be repayable from any available source or funds.
7. The Authority may at any time make a determination to forgive the outstanding
principal amount and accrued interest on the Interfund Loan to the extent permissible under law.
8. The Authority may from time to time amend the terms of this resolution to the
extent permitted by law, including without limitation amendment to the payment schedule and
the interest rate; provided, however, that the interest rate may not be increased above the
maximum specified in Section 469.178, subdivision 7 of the TIF Act.
9. This resolution is effective on the date hereof.
Adopted by the Housing and Redevelopment Authority in and for the City of Richfield,
Minnesota this 20t" day of December, 2021.
Mary B. Supple, Chair
ATTEST:
Maria Regan Gonzalez, Secretary
3
Error! Unknown document property name.
DRAFT
December 16, 2021
CONTRACT
MW7
PRIVATE DEVELOPMENT
between
HOUSING AND REDEVELOPMENT AUTHORITY IN AND
FOR THE CITY OF RICHFIELD, MINNESOTA
and
MWF PROPERTIES, LLC
Dated: December , 2021
THIS INSTRUMENT DRAFTED BY:
Kennedy & Graven, Chartered (JAE)
150 South Fifth Street, Suite 700
Minneapolis, MN 55402
(612) 337-9300
TABLE OF CONTENTS
Page
PREAMBLE...................................................................................................................................................I
ARTICLE I
Definitions
Section1.1. Definitions.................................................................................................................................2
ARTICLE II
Representations and Warranties
Section 2.1. Representations by the Authority.............................................................................................. 5
Section 2.2. Representations by the Developer............................................................................................ 5
ARTICLE III
Property Acquisition; Financing
Section 3.1.
Status of Development Property ............................................................................................... 7
Section 3.2.
Conveyance of Development Property .....................................................................................
7
Section 3.3.
Land Write -Down; Reimbursement for Development Property Purchase
Price...........................................................................................................................................
8
Section 3.4.
Reimbursement of Public Redevelopment Costs.....................................................................
8
Section 3.5.
Creation of TIF District.............................................................................................................
8
Section 3.6.
Draw on Affordable Housing Trust Fund.................................................................................
9
Section 3.5.
Payment of Administrative Costs.............................................................................................
9
Section3.6.
Records....................................................................................................................................10
Section 3.7.
Purpose of Assistance.............................................................................................................10
ARTICLE IV
Construction of Minimum Improvements
Section 4.1.
Construction of Improvements............................................................................................... I I
Section 4.2.
Construction Plans..................................................................................................................11
Section 4.3.
Commencement and Completion of Construction.................................................................12
Section 4.4.
Certificate of Completion........................................................................................................12
Section 4.5.
Affordability Covenants..........................................................................................................12
Section 4.6.
Affordability Housing Reporting............................................................................................13
Section4.7.
Records....................................................................................................................................13
ARTICLE V
Insurance
Section5.1. Insurance.................................................................................................................................15
Section5.2. Subordination..........................................................................................................................16
ARTICLE VI
Tax Increment; Taxes
Section 6.1.
Right to Collect Delinquent Taxes..........................................................................................17
Section 6.2.
Reduction of Taxes.................................................................................................................17
Section6.3.
Qualifications..........................................................................................................................17
ARTICLE VII
Financing
Section 7.1.
Mortgage Financing................................................................................................................18
Section 7.2.
Authority's Option to Cure Default in Mortgage...................................................................18
Section 7.3.
Modification; Subordination...................................................................................................18
Section7.4.
Termination.............................................................................................................................18
ARTICLE VIII
Prohibitions against Assignment and Transfer; Indemnification
Section 8.1. Representation as to Development..........................................................................................19
Section 8.2. Prohibition against Developer's Transfer of Property and Assignment of
Agreement...............................................................................................................................19
Section 8.3. Release and Indemnification Covenants.................................................................................20
ARTICLE IX
Events of Default
Section9.1. Events of Default..................................................................................................................... 22
Section9.2. Remedies on Default............................................................................................................... 22
Section9.3. [Reserved]............................................................................................................................... 23
Section 9.4. Revesting Title in Authority upon Happening of Event Subsequent to
Conveyance to Developer.......................................................................................................23
Section 9.5. Resale of Reacquired Property; Disposition of Proceeds...................................................... 23
Section 9.6. No Remedy Exclusive............................................................................................................. 24
Section 9.7. No Additional Waiver Implied by One Waiver...................................................................... 24
Section 9.8. Attorney Fees and Costs......................................................................................................... 24
ARTICLE X
Additional Provisions
Section 10.1.
Conflict of Interests; Authority Representatives Not Individually Liable ..............................
25
Section 10.2.
Equal Employment Opportunity.............................................................................................
25
Section10.3.
Restrictions on Use.................................................................................................................
25
Section 10.4.
Provisions Not Merged With Deed.........................................................................................
25
Section 10.5.
Titles of Articles and Sections................................................................................................
25
Section 10.6.
Notices and Demands.............................................................................................................
25
Section10.7.
Counterparts............................................................................................................................
25
Section10.8.
Recording................................................................................................................................
26
Section10.9.
Amendment.............................................................................................................................26
Section10.10.
Termination.............................................................................................................................26
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SIGNATURES................................................................................................................................................ S-1
EXHIBIT A Development Property..........................................................................................................A-1
EXHIBIT B Certificate of Completion...................................................................................................... B-1
EXHIBIT C Form of Declaration of Restrictive Covenants..................................................................... C-1
EXHIBIT D Form of TIF Note.................................................................................................................. D-1
EXHIBIT E Form of Investment Letter.................................................................................................... E-1
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CONTRACT FOR PRIVATE DEVELOPMENT
THIS CONTRACT FOR PRIVATE DEVELOPMENT (the "Agreement") is made as of the
day of December, 2021, between the HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR
THE CITY OF RICHFIELD, MINNESOTA, a public body corporate and politic under the laws of the State
of Minnesota (the "Authority"), and MWF PROPERTIES, LLC, a Minnesota limited liability company (the
"Developer").
WITNESSETH:
WHEREAS, the Authority was created pursuant to Minnesota Statutes, Sections 469.001 through
469.047, as amended (the "HRA Act"), and was authorized to transact business and exercise its powers by a
resolution of the City Council of the City of Richfield (the "City"); and
WHEREAS, the Authority has undertaken a program to promote redevelopment and development of
land that is underused or underutilized within the City, and in this connection the Authority administers a
redevelopment project known as the Richfield Redevelopment Project (the "Redevelopment Project")
pursuant to the HRA Act; and
WHEREAS, pursuant to the HRA Act, the Authority is authorized to acquire real property, or
interests therein, and to undertake certain activities to facilitate the redevelopment of real property by private
enterprise and promote the development of housing within the City; and
WHEREAS, the Developer proposes to acquire certain property from the Authority located in the
TIF District (the "Development Property") and construct thereon approximately fifty-five (55) units of
workforce housing, including two (2) one bedroom units of housing reserved for people with disabilities,
accompanied by supportive services, for persons or families whose income is thirty percent (30%) or less of
the metro area's median income and five (5) two bedroom units reserved for persons or families whose
income is fifty percent (50%) or less of the metro area's median gross income (the "Minimum
Improvements"), which project is expected to receive federal low income tax credits; and
WHEREAS, in order to achieve the objectives of the Redevelopment Plan for the Redevelopment
Project and make the Minimum Improvements economically feasible for the Developer to construct, the
Authority plans to either (i) establish a housing Tax Increment Financing District (the "TIF District") within
the Richfield Project pursuant to Minnesota Statutes, Section 469.174 through 469.1794, as amended; or
(ii) draw funds from the City's Affordable Housing Trust Fund; and
WHEREAS, in addition, the Authority is prepared to write -down the cost of the Development
Property to the Developer and proposes to convey the Development Property to the Developer for a purchase
price of $70,000 (representing a write -down of approximately $700,000); and
WHEREAS, the Authority believes that the development of the TIF District pursuant to this
Agreement, and fulfillment generally of this Agreement, are in the vital and best interests of the City and the
health, safety, morals, and welfare of its residents, and in accord with the public purposes and provisions of
the applicable state and local laws and requirements under which the Redevelopment Project has been
undertaken and is being assisted.
NOW, THEREFORE, in consideration of the premises and the mutual obligations of the parties
hereto, each of them does hereby covenant and agree with the other as follows:
ARTICLE I
Definitions
Section 1.1. Defmitions. In this Agreement, unless a different meaning clearly appears from the
context:
"Agreement" means this Contract for Private Development, as the same may be from time to time
modified, amended, or supplemented.
"Authority" means the Housing and Redevelopment Authority in and for the City of Richfield,
Minnesota.
"Authority Representative" means the Executive Director of the Authority.
"Available Tax Increment" means, on each February 1 and August 1, the Tax Increment attributable
to the Development Property and paid to the Authority by the County in the six (6) months preceding each
February 1 and August 1 after first deducting therefrom ten percent (10%) of the Tax Increment to be used to
reimburse the Authority for administrative expenses and the promotion of redevelopment and housing.
"Board" means the Board of Commissioners of the Authority.
"Certificate of Completion" means the certification provided to the Developer pursuant to
Section 4.4 hereof and set forth in EXHIBIT B attached hereto.
"City" means the City of Richfield, Minnesota.
"Closing" has the meaning given such term in Section 3.2 hereof.
"Code" means the Internal Revenue Code of 1986, as amended, and the Treasury Regulations
promulgated thereunder.
"Construction Plans" means the plans, specifications, drawings and related documents on the
construction work to be performed by the Developer on the Development Property, including the Minimum
Improvements, which (a) shall be as detailed as the plans, specifications, drawings and related documents
which are submitted to the appropriate building officials of the City, and (b) shall include at least the
following: (1) site plan; (2) foundation plan; (3) floor plan for each floor; (4) cross -sections of each (length
and width); (5) elevations (all sides, including a building materials schedule); (6) landscape and grading plan;
and (7) such other plans or supplements to the foregoing plans as the City may reasonably request to allow it
to ascertain the nature and quality of the proposed construction work.
"County" means Hennepin County, Minnesota.
"Declaration" means Declaration of Restrictive Covenants substantially in the form set forth in
EXHIBIT C.
"Developer" means MWF Properties, LLC, a Minnesota limited liability company, or its permitted
successors and assigns.
"Development Property" means the real property described in EXHIBIT A attached hereto.
2
"Development Property Purchase Price" means $770,000, as adjusted pursuant to the terms of this
Agreement.
"Event of Default" means an action by the Developer listed in Article IX hereof.
"Holder" means the owner of a Mortgage.
"HRA Act" means Minnesota Statutes, Sections 469.001 through 469.047, as amended.
"Material Change" means a change in construction plans that adversely affects generation of tax
increment or changes the number of units of rental housing.
"Metro Area" means the Minneapolis -St. Paul metropolitan statistical area.
"Minimum Improvements" means the construction of a multifamily housing development with
approximately fifty-five (55) units of workforce housing, including two (2) one bedroom units of housing
reserved for people with disabilities, accompanied by supportive services, for persons or families whose
income is thirty percent (30%) or less of the Metro Area's median income and five (5) two bedroom units
reserved for persons or families whose income is fifty percent (50%) or less of the Metro Area's median
gross income, on the Development Property.
"Minimum Market Value" has the meaning set forth in Section 4.2(a)(vi) hereof.
"Mortgage" means any mortgage made by the Developer which is secured, in whole or in part, with
the Development Property and which is a permitted encumbrance pursuant to the provisions of Article VII
hereof.
"Project Area" means the real property located within the boundaries of the Redevelopment Project.
"Public Redevelopment Costs" means costs related to the development of the Minimum
Improvements and eligible to be reimbursed with Tax Increment, including but not limited to the costs of
land acquisition, public infrastructure and constructing affordable housing.
"Redevelopment Plan" means the Redevelopment Plan for the Redevelopment Project approved and
adopted by the Authority and the City Council of the City.
"Redevelopment Project" means the Richfield Redevelopment Project.
"Rental Housing Units" means the workforce rental housing units constructed as part of the
Minimum Improvements.
"State" means the State of Minnesota.
"Tax Credit Law" means Section 42 of the Code.
"Tax Increment" means that portion of the real property taxes which is paid with respect to a TIF
District and which is remitted to the Authority as tax increment pursuant to the Tax Increment Act.
"Tax Increment Act" or "TIF Act" means the Tax Increment Financing Act, Minnesota Statutes,
Sections 469.174 through 469.1794, as amended.
"Tax Increment District" or "TIF District" means a housing district established within the
Redevelopment Project.
"Tax Increment Plan" or "TIF Plan" means the Tax Increment Financing District Plan, as it may be
amended and supplemented.
"Tax Official" means any County assessor; County auditor; County or State board of equalization,
the commissioner of revenue of the State, or any State or federal district court, the tax court of the State, or
the State Supreme Court.
"Termination Date" means the date the Declaration expires.
"TIF Note" means the Tax Increment Limited Revenue Note, substantially in the form attached
hereto as EXHIBIT D, to be delivered by the Authority to the Developer pursuant to Section 3.5 hereof if a
TIF District is created.
"Unavoidable Delays" means delays beyond the reasonable control of the parry seeking to be
excused as a result thereof which are the direct result of strikes, other labor troubles, prolonged adverse
weather or acts of God, fire or other casualty to the Minimum Improvements, litigation commenced by third
parties which, by injunction or other similar judicial action, directly results in delays, or acts of any federal,
state or local governmental unit (other than the Authority in exercising its rights under this Agreement) which
directly result in delays.
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El
ARTICLE II
Representations and Warranties
Section 2.1. Representations by the Authority. The Authority makes the following representations
as the basis for the undertaking on its part herein contained:
(a) The Authority is a housing and redevelopment authority organized and existing under the
laws of the State. Under the provisions of the Act, the Authority has the power to enter into this Agreement
and carry out its obligations hereunder, and execution of this Agreement has been duly, properly and validly
authorized by the Authority.
(b) The activities of the Authority are being undertaken to facilitate the construction of the
Minimum Improvements in accordance with the terms of this Agreement to further the objectives of the
Redevelopment Plan.
(c) The activities of the Authority undertaken pursuant to this Agreement are necessary to foster
the redevelopment of certain real property which for a variety of reasons is presently underutilized, to
eliminate current blighting factors and prevent the emergence of further blight at a critical location in the
City, to promote affordable housing in the City, and to stimulate further development of the TIF District and
Redevelopment Project as a whole.
(d) The execution, delivery and performance of this Agreement and of any other documents or
instruments required pursuant to this Agreement by the Authority, and consummation of the transactions
contemplated therein and the fulfillment of the terms thereof, do not and will not conflict with or constitute a
breach of or default under any existing (i) indenture, mortgage, deed of trust or other agreement or instrument
to which the Authority is a party or by which the Authority or any of its property is or may be bound; or
(ii) legislative act, constitution or other proceedings establishing or relating to the establishment of the
Authority or its officers or its resolutions.
(e) There is not pending, nor to the best of the Authority's knowledge is there threatened, any
suit, action or proceeding against the Authority before any court, arbitrator, administrative agency or other
governmental authority that materially and adversely affects the validity of any of the transactions
contemplated hereby, the ability of the Authority to perform its obligations hereunder, or the validity or
enforcement of this Agreement.
(f) No commissioner of the Board of the Authority or officer of the Authority has either a direct
or indirect financial interest in this Agreement, nor will any commissioner or officer benefit financially from
the Agreement within the meaning of Section 469.009 of the HRA Act.
Section 2.2. Representations by the Developer. The Developer represents and warrants that:
(a) The Developer is a limited liability company duly organized and in good standing under the
laws of the State, is duly authorized to transact business within the State, and has the power to enter into this
Agreement.
(b) The Developer will construct, operate and maintain the Minimum Improvements in
accordance with the terms of this Agreement, Redevelopment Plan and all local, state and federal laws and
regulations (including, but not limited to, environmental, zoning, building code and public health laws and
regulations).
(c) The Developer has received no notice or communication from any local, state or federal
official that the activities of the Developer or the Authority in or on the Development Property may be or will
be in violation of any environmental law or regulation (other than those notices or communications of which
the Authority is aware). The Developer is aware of no facts the existence of which would cause it to be in
violation of or give any person a valid claim under any local, state or federal environmental law, regulation or
review procedure.
(d) The Developer will obtain, in a timely manner, all required permits, licenses and approvals,
and will meet, in a timely manner, all requirements of all applicable local, state and federal laws and
regulations which must be obtained or met before the Minimum Improvements may be lawfully constructed.
(e) Neither the execution and delivery of this Agreement, the consummation of the transactions
contemplated hereby, nor the fulfillment of or compliance with the terms and conditions of this Agreement is
prevented, limited by or conflicts with or results in a breach of, the terms, conditions or provisions of any
corporate restriction or any evidences of indebtedness, agreement or instrument of whatever nature to which
the Developer is now a party or by which it is bound, or constitutes a default under any of the foregoing.
(f) The proposed development by the Developer hereunder would not occur but for the tax
increment financing assistance being provided by the Authority hereunder.
(g) The Developer shall promptly advise the Authority in writing of all litigation or claims
affecting any part of the Minimum Improvements and all written complaints and charges made by any
governmental authority materially affecting the Minimum Improvements or materially affecting Developer or
its business which may delay or require changes in construction of the Minimum Improvements.
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ARTICLE III
Property Acquisition; Financing
Section 3.1. Status of Development Property. The Authority currently owns fee absolute title to the
Development Property and shall convey the Development Property to the Developer pursuant to the
provisions of Section 3.2 hereof.
Section 3.2. Conveyance of Development Property.
(a) The Authority will convey the Development Property to the Developer via a quit claim deed.
The conveyance of the Development Property to the Developer is contingent on the Board of the Authority
holding a public hearing and approving the sale of the Development Property. The Authority held a public
hearing and approved the sale of the Development Property on May 20, 2019. The Development Property
will be conveyed "as -is" and "where -is." Within sixty (60) days following execution of this Agreement, the
Developer will obtain a commitment for title insurance from a title insurance company (the "Title
Company") acceptable to Developer. The Developer shall pay for the cost of obtaining a policy of title
insurance.
(b) Within sixty (60) days after the Developer's receipt of the title commitment, the Developer
may give the Authority written notice of any alleged defect(s) in the marketability of the Authority's actual
and/or record title to the Development Property, or any portion thereof (the "Objections") and request that the
Authority make the Authority's title marketable or conforming. The Developer's failure to object to defects
in the marketability of Authority's title to the Property, in writing, within the time period set forth above or at
any time prior to Closing, shall be deemed a waiver of the Developer's right to require the Authority to cure
such defects. If the Developer notifies the Authority of Objections within the time period set forth above, the
Authority shall use good faith efforts to make the Authority's actual and record title to the Property
marketable. The Authority shall have up to forty-five (45) days from the Authority's receipt of the
Developer's Objections to use good faith efforts to make the Authority's actual and record title to the
Property marketable. In no event will the Authority be required to expend more than $1,000 in its good faith
efforts to make the Authority's actual and record title to the Property marketable. If the Authority makes the
Authority's title marketable within the forty-five (45) day period, the Authority shall notify the Developer, in
writing, and the parties shall close pursuant to the terms of this Agreement. If the Authority is unable to
make title marketable within the forty-five (45) day period, the Developer may either: (i) terminate this
Agreement by delivering written notice of termination to the Authority; or (ii) notify the Authority that the
Developer waives the Developer's Objections. If the Developer waives the Developer's Objections, the
matters giving rise to such Objections shall be deemed a permitted encumbrance and the parties shall
otherwise perform their obligations under this Agreement. The Authority shall have no obligation to take any
action to clear defects in the title to the Property other than the good faith efforts described above.
(c) Without limitation, the Developer is responsible for satisfying itself as to matters such as
contamination, soils conditions and soil stability, and survey. The Authority shall have no obligation to cure
any defect or other matter regarding contamination, soils conditions and soil stability, and survey, but agrees
to cooperate, at no cost or expense to it, in any efforts by Developer to achieve such a cure.
(d) On the date the Development Property is conveyed to the Developer (the "Closing"), the
Developer shall provide the Authority with an executed Declaration and the Authority will execute and
deliver to the Developer the following, in form and content reasonably acceptable to the Developer:
(i) A quit claim deed conveying the Development Property to the Developer;
7
(ii) A non -foreign affidavit, properly executed, containing such information as is
required by Internal Revenue Code Section 1445(b)(2) and its regulations;
(iii) A standard form Seller's Affidavit;
(iv) A well certificate in the form required by law;
(v) Any affidavit and disclosures required by law pertaining to private sewage treatment
systems; and
(vi) Any affidavits, certificates, or other documents that may be required under
applicable law and/or that are reasonably determined by Developer or the Title Company to be
necessary to transfer the Development Property to Developer and to evidence that the Authority has
duly authorized the transactions contemplated hereby.
(e) The Developer acknowledges that the Authority will be conveying the Development
Property to the Developer for the fair market value of the Development Property, which is $770,000 (the
"Development Property Purchase Price"). The Developer will provide the Authority with $70,000 of the
Development Property Purchase Price at Closing. To make the Minimum Improvements economically
feasible, the Authority has agreed to provide the Developer with a subsidy of $700,000 by writing -down the
remainder of the Development Property Purchase Price.
(f) If the Developer receives housing allocation in 2022, the Developer shall obtain all of the
land use approvals required for the Minimum Improvements on or prior to 180 days after receiving housing
allocation but in no event later than December 31, 2022. If the Developer receives housing allocation on or
prior to January 15, 2023, the Developer shall obtain all of the land use approvals required for the Minimum
Improvements on or prior to 180 days after receiving housing allocation.
(g) Notwithstanding the foregoing, the Closing will not take place until the Developer has
received housing allocation from Minnesota Management and Budget and obtained all necessary land use
approvals from the City. In the event that the Developer has not obtained housing allocation on or prior to
January 15, 2023, and unless extended by mutual agreement of the parties, this Agreement will terminate and
be of no further force and effect, and the parties will be relieved of any further obligations hereunder.
Section 3.3. Land Write -Down; Reimbursement for Development Property Purchase Price. The
parties acknowledge that the Development Property Purchase Price is $770,000 and the Authority will
convey the Development Property to the Developer for an amount less than the fair market value of the
Development Property pursuant to Section 3.2(e) hereof. The Authority may reimburse itself for the land
write -down in the amount of $700,000 (the "Land Write -Down") from available sources, with an interest at a
rate of three percent (3%) per annum.
Section 3.4. Reimbursement of Public Redevelopment Costs. To reimburse the Developer for
certain Public Redevelopment Costs, the Authority shall provide the Developer with $881,848. The
Authority shall provide such funds to the Developer by either (i) creating a housing TIF District and making
payments of Available Tax Increment to the Developer on a semi-annual basis; or (ii) drawing funds from the
City's Affordable Housing Trust Fund, which may be paid in a lump sum or paid semi-annually.
Section 3.5. Creation of TIF District.
(a) If a TIF District is created to reimburse the Developer for its Public Redevelopment Costs,
the Authority shall issue and deliver and the Developer shall purchase the TIF Note in the principal amount of
$881,848 in substantially the form set forth in EXHIBIT D. The Authority and the Developer agree that the
consideration from the Developer for the purchase of the TIF Note shall consist of the Developer's payment
of the Public Redevelopment Costs in at least the principal amount of the TIF Note.
(b) If a TIF District is created, the Authority shall deliver the TIF Note upon delivery by the
Developer of an investment letter in substantially the form attached hereto as EXHIBIT E, together with
evidence reasonably satisfactory to the Authority that the Developer has paid the Public Redevelopment
Costs in at least the principal amount of the TIF Note. The principal of and interest on the TIF Note shall be
payable each Payment Date solely with Available Tax Increment.
(c) The Developer understands and acknowledges that the Authority makes no representations
or warranties regarding the amount of Available Tax Increment, or that revenues pledged to the TIF Note will
be sufficient to pay the principal of and interest on the TIF Note. Any estimates of Tax Increment prepared
by the Authority or its financial or municipal advisors in connection with the TIF District or this Agreement
are for the benefit of the Authority and are not intended as representations on which the Developer may rely.
(d) If a TIF Note is issued, the Authority acknowledges that the Developer may assign the TIF
Note to a lender that provides part of the financing for the acquisition of the Development Property or the
construction of the Minimum Improvements. Pursuant to the terms of the TIF Note, the TIF Note may be
assigned if the assignee executes an investment letter in substantially the form set forth in EXHIBIT E.
(e) At any time following payment in full of the principal of and interest on TIF Note, the
Authority may use the remaining Tax Increment for any other authorized uses set forth in the TIF Plan or
may terminate the TIF District.
Section 3.6. Draw on Affordable Housing? Trust Fund.
(a) If the Authority chooses to draw on the City's Affordable Housing Trust Fund to reimburse
the Developer for its Public Redevelopment Costs, the Developer may choose to have one lump sum
payment or semi-annual payments over time. No interest shall accrue if the Developer chooses semi-annual
payments over time. Prior to any payments to the Developer, the Developer must provide the Authority with
evidence reasonably satisfactory to the Authority that the Developer has paid the Public Redevelopment
Costs in at least the principal amount of $881,848.
Section 3.7. Payment of Administrative Costs. Prior to the date of execution of this Agreement, the
Developer deposited with the Authority $3,500 and shall cause to be deposited with the Authority an
additional $5,000 (for a total deposit of $8,500). The Authority will use such deposit to pay "Administrative
Costs," which term means out of pocket costs incurred by the Authority, together with staff costs up to
$2,000 and consultant costs of the Authority, all attributable to or incurred in connection with the negotiation,
preparation or modification of this Agreement and other documents and agreements in connection with the
development of the Development Property, and not previously paid by the Developer. In addition, if a TIF
District is created, the Developer will deposit an additional $17,500 with the Authority to cover the costs of
establishing a Housing TIF District. At the Developer's request, but no more often than monthly, the
Authority will provide the Developer with a written report including invoices, time sheets or other
comparable evidence of expenditures for Administrative Costs and the outstanding balance of funds
deposited. At any time the deposit drops below $1,000, the Developer shall replenish the deposit to the full
$8,500 within thirty (30) days after receipt of written notice thereof from the HRA. If at any time the
Authority determines that the deposit is insufficient to pay Administrative Costs, the Developer is obligated
to pay such shortfall within fifteen (15) days after receipt of a written notice from the Authority containing
evidence of the unpaid costs. If Administrative Costs incurred, and reasonably anticipated to be incurred are
0
less than the deposit by the Developer, the Authority shall return to the Developer any funds not anticipated
to be needed.
Section 3.8. Records. The Authority and its representatives shall have the right at all reasonable
times after reasonable notice to inspect, examine and copy all books and records of Developer relating to the
Minimum Improvements and the costs for which the Developer has been reimbursed with Available Tax
Increment.
Section 3.9. Purpose of Assistance. The parties agree and understand that the purpose of the
Authority's financial assistance to the Developer is to facilitate development of housing, and is not a
"business subsidy" within the meaning of Minnesota Statutes, Sections 1161993 to 1161995, as amended.
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10
ARTICLE IV
Construction of Minimum Improvements
Section 4.1. Construction of Improvements. Following the conveyance of the Development
Property to the Developer, the Developer agrees that it will construct the Minimum Improvements on the
Development Property substantially in accordance with the Construction Plans as approved pursuant to
Section 4.2 hereof, and at all times prior to the Termination Date, will operate and maintain, preserve and
keep the Minimum Improvements or cause such improvements to be maintained, preserved and kept with the
appurtenances and every part and parcel thereof, in good repair and condition. The Authority shall have no
obligation to operate or maintain the Minimum Improvements.
Section 4.2. Construction Plans.
(a) Before commencement of construction of the Minimum Improvements, the Developer shall
submit the Construction Plans to the Authority. The Authority Representative will approve the Construction
Plans in writing if. (i) the Construction Plans conform to the terms and conditions of this Agreement; (ii) the
Construction Plans conform to the goals and objectives of the Redevelopment Plan; (iii) the Construction
Plans conform to all applicable federal, state and local laws, ordinances, rules and regulations; (iv) the
Construction Plans are adequate to provide for construction of the Minimum Improvements; (v) the
Construction Plans do not provide for expenditures in excess of the funds available to the Developer from all
sources (including Developer's equity) for construction of the Minimum Improvements; (vi) the Construction
Plans provide for the construction of Minimum Improvements having an estimated market value of at least
$11,550,000 (the "Minimum Market Value"); and (vii) no uncured Event of Default has occurred. Approval
may be based upon a review by the City's Building Official of the Construction Plans. No approval by the
Authority Representative shall relieve the Developer of the obligation to comply with the tenns of this
Agreement or of the Redevelopment Plan, applicable federal, state and local laws, ordinances, rules and
regulations, or to construct the Minimum Improvements in accordance therewith. No approval by the
Authority Representative shall constitute a waiver of an Event of Default. If approval of the Construction
Plans is requested by the Developer in writing at the time of submission, such Construction Plans shall be
deemed approved unless rejected in writing by the Authority Representative, in whole or in part. Such
rejections shall set forth in detail the reasons therefor, and shall be made within thirty (30) days after the date
of their receipt by the Authority. If the Authority Representative rejects any Construction Plans in whole or
in part, the Developer shall submit new or corrected Construction Plans within thirty (30) days after written
notification to the Developer of the rejection. The provisions of this Section relating to approval, rejection
and resubmission of corrected Construction Plans shall continue to apply until the Construction Plans have
been approved by the Authority. The Authority Representative's approval shall not be unreasonably
withheld, delayed or conditioned. Said approval shall constitute a conclusive determination that the
Construction Plans (and the Minimum Improvements constructed in accordance with said plans) comply to
the Authority's satisfaction with the provisions of this Agreement relating thereto.
(b) If the Developer desires to make any Material Change in the Construction Plans after their
approval by the Authority, the Developer shall submit the proposed change to the Authority for its approval.
If the Construction Plans, as modified by the proposed change, conform to the requirements of this
Section 4.2 with respect to such previously approved Construction Plans, the Authority shall approve the
proposed change and notify the Developer in writing of its approval. Such change in the Construction Plans
shall, in any event, be deemed approved by the Authority unless rejected, in whole or in part, by written
notice by the Authority to the Developer, setting forth in detail the reasons therefor. Such rejection shall be
made within thirty (30) days after receipt of the notice of such change. The Authority's approval of any such
11
change in the Construction Plans may be conditioned on amendment to provisions of this Agreement if such
amendments will mitigate the materiality of such proposed changes.
Section 4.3. Commencement and Completion of Construction. Subject to Unavoidable Delays, if
the Developer receives housing allocation from Minnesota Management and Budget in 2022, the Developer
will commence the construction of the Minimum Improvements within 180 days of receipt of the housing
allocation, and will substantially complete construction of the Minimum Improvements by December 31,
2023. Subject to Unavoidable Delays, if the Developer receives housing allocation from Minnesota
Management and Budget in January 2023, the Developer will commence the construction of the Minimum
Improvements within 180 days of receipt of the housing allocation, and will substantially complete
construction of the Minimum Improvements by December 31, 2024. Construction is considered to be
commenced upon the beginning of physical improvements beyond grading. All work with respect to the
Minimum Improvements to be constructed or provided by the Developer on the Development Property shall
be in substantial conformity with the Construction Plans as submitted by the Developer and approved by the
Authority. If the Closing is postponed pursuant to Section 3.2(g) hereof, the Developer shall commence
construction of the Minimum Improvements within sixty (60) days of the Closing.
The Developer agrees for itself, its successors and assigns, and every successor in interest to the
Development Property, or any part thereof, that the Developer, and such successors and assigns, shall
promptly begin and diligently prosecute to completion the development of the Minimum Improvements.
Section 4.4. Certificate of Completion.
(a) Promptly after substantial completion of the Minimum Improvements in accordance with
those provisions of the Agreement relating solely to the obligations of the Developer to construct the
Minimum Improvements (including the dates for beginning and completion thereof), the Authority
Representative will furnish the Developer with a Certificate of Completion shown as EXHIBIT B attached
hereto. Notwithstanding anything to the contrary contained herein, the Authority shall issue the Certificate of
Completion upon the City's issuance of a certificate of occupancy that allows tenants to occupy the Minimum
Improvements. The Certificate of Completion will be a conclusive determination of the satisfaction and
termination of the agreements and covenants in Articles lIl and IV of this Agreement and in the deed
conveying the Development Property to the Developer with respect to the obligations of the Developer and
its successors and assigns to construct the Minimum Improvements.
(b) If the Authority Representative shall refuse or fail to provide any certification in accordance
with the provisions of this Section 4.4, the Authority Representative shall, within thirty (30) days after written
request by the Developer, provide the Developer with a written statement, indicating in adequate detail in
what respects the Developer has failed to complete the Minimum Improvements in accordance with the
provisions of the Agreement, or is otherwise in default, and what measures or acts will be necessary, in the
opinion of the Authority, for the Developer to take or perform in order to obtain such certification.
(c) Regardless of whether a Certificate of Completion is issued by the Authority, the
construction of the Minimum Improvements shall be deemed to be complete upon issuance of a certificate of
occupancy by the City.
Section 4.5. Affordability Covenants. The Developer agrees that the Minimum Improvements are
subject to the following affordability covenants:
(a) Recent Federal legislation has introduced an income averaging option for the low-income
housing tax credit program. This legislation allows projects to accept residents with higher average median
incomes as along as the overall average of the income of tenants in the project does not exceed sixty percent
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(60%) of the Metro Area median income, which provides LIHTC projects the ability to serve tenants with a
greater range of incomes ("Income Averaging"). The Minnesota Housing Finance Agency allows Income
Averaging for the low-income housing tax credit program to be used for the Minimum Improvements. This
Agreement requires the Developer to cause one hundred percent (100%) of the Rental Housing Units in the
Minimum Improvements to be affordable to families at various levels using Income Averaging, if applicable;
provided, however, the overall average of the income of tenants of the Minimum Improvements shall not
exceed sixty percent (60%) of the Metro Area median income.
(b) Pursuant to the City's Inclusionary Housing Policy, the Minimum Improvements must
include (i) at least three (3) "Type A" units per ANSI A117.1, Section 1003 of the 2020 Minnesota
Accessibility Code that include roll -in showers and grab bars; or (ii) at least two (2) Rental Housing Units
that are ADA accessible units per ANSI Al 17.1 Section 1002 of the 2020 Minnesota Accessibility Code.
(c) The Authority and its representatives will have the right at all reasonable times while the
covenants in this Section are in effect, after reasonable notice to inspect, examine, and copy all books and
records of the Developer and its successors and assigns relating to the covenants described in this Section and
in the Declaration.
(d) During the term of the Declaration, the Developer shall not adopt any policies specifically
prohibiting or excluding rental to tenants holding certificates/vouchers under Section 8 of the United States
Housing Act of 1937, as amended, codified as 42 U.S.C. Sections 1401 et seq., or its successor because of
such prospective tenant's status as such a certificate/voucher holder.
(e) The Developer will immediately notify the Authority if at any time during the term of the
Declaration the dwelling units in the Minimum Improvements are not occupied or available for occupancy as
required by the terms of the Declaration.
(f) The Developer shall include the following mix of Rental Housing Units within the
Minimum Improvements:
Unit Tyge Number of Units
One Bedroom 13
Two Bedroom 27
Three Bedroom 15
(g) The Developer shall reserve five (5) two bedroom Rental Housing Units within the
Minimum Improvements for persons or families whose income does not exceed fifty percent (50%) of the
Metro Area median income.
(h) The Developer shall reserve two (2) Rental Housing Units within the Minimum
Improvements for people with disabilities, accompanied by supportive services for persons or families whose
income is thirty percent (30%) or less of the Metro Area's median income.
Section 4.6. Affordable Housing Reporting. At least annually, no later than April 1 of each year
commencing on the April 1 first following the issuance of the Certificate of Completion for the Minimum
Improvements, the Developer shall provide a report to the Authority evidencing that the Developer complied
with the income affordability covenants set forth in Section 4.5 hereof during the previous calendar year. The
income affordability reporting shall be on the form entitled "Tenant Income Certification" from the
Minnesota Housing Finance Agency (MHFA HTC Form 14), or if unavailable, any similar form. The
Authority may require the Developer to provide additional information reasonably necessary to assess the
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accuracy of such certification. If such reports are not provided, the Authority may withhold tax increment
payments until the reports are provided.
Section 4.7. Records. The Authority, the City, the legislative auditor, and the State auditor's office,
through any authorized representatives, shall have the right after reasonable notice to inspect, examine and
copy all books and records of the Developer relating to the construction of the Minimum Improvements. The
Developer shall maintain such records and provide such rights of inspection for a period of six (6) years after
issuance of the Certificate of Completion for the Minimum Improvements.
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ARTICLE V
Insurance
Section 5.1. Insurance.
(a) The Developer will provide and maintain at all times during the process of constructing the
Minimum Improvements an All Risk Broad Form Basis Insurance Policy and, from time to time during that
period, at the request of the Authority, furnish the Authority with proof of payment of premiums on policies
covering the following:
(i) Builder's risk insurance, written on the so-called `Builder's Risk — Completed
Value Basis," in an amount equal to one hundred percent (100%) of the insurable value of the
Minimum Improvements at the date of completion, and with coverage available in nonreporting form
on the so-called "all risk" form of policy. The interest of the Authority shall be protected in
accordance with a clause in form and content satisfactory to the Authority;
(ii) Comprehensive general liability insurance (including operations, contingent
liability, operations of subcontractors, completed operations and contractual liability insurance)
together with a Protective Liability Policy with limits against bodily injury and property damage of
not less than $2,000,000 for each occurrence (to accomplish the above -required limits, an umbrella
excess liability policy may be used). The Authority shall be listed as an additional insured on the
policy; and
(iii) Workers' compensation insurance, with statutory coverage.
(b) Upon completion of construction of the Minimum Improvements and prior to the
Termination Date, the Developer shall maintain, or cause to be maintained, at its cost and expense, and from
time to time at the request of the Authority shall furnish proof of the payment of premiums on, insurance as
follows:
(i) Insurance against loss and/or damage to the Minimum Improvements under a policy
or policies covering such risks as are ordinarily insured against by similar businesses.
(ii) Comprehensive general public liability insurance, including personal injury liability
(with employee exclusion deleted), against liability for injuries to persons and/or property, in the
minimum amount for each occurrence and for each year of $2,000,000, and shall be endorsed to
show the Authority as additional insured.
(iii) Such other insurance, including workers' compensation insurance respecting all
employees, if any, of the Developer, in such amount as is customarily carried by like organizations
engaged in like activities of comparable size and liability exposure; provided that the Developer may
be self -insured with respect to all or any part of its liability for workers' compensation.
(c) All insurance required in this Article V shall be taken out and maintained in responsible
insurance companies selected by the Developer which are authorized under the laws of the State to assume
the risks covered thereby. Upon request, the Developer will deposit annually with the Authority policies
evidencing all such insurance, or a certificate or certificates or binders of the respective insurers stating that
such insurance is in force and effect. Unless otherwise provided in this Article V each policy shall contain a
provision that the insurer shall not cancel nor modify it in such a way as to reduce the coverage provided
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below the amounts required herein without giving written notice to the Developer and the Authority at least
thirty (30) days before the cancellation or modification becomes effective. In lieu of separate policies, the
Developer may maintain a single policy, blanket or umbrella policies, or a combination thereof, having the
coverage required herein, in which event the Developer shall deposit with the Authority a certificate or
certificates of the respective insurers as to the amount of coverage in force upon the Minimum Improvements.
(d) The Developer agrees to notify the Authority immediately in the case of damage exceeding
$100,000 in amount to, or destruction of, the Minimum Improvements or any portion thereof resulting from
fire or other casualty. In such event the Developer will forthwith repair, reconstruct and restore the Minimum
Improvements to substantially the same or an improved condition or value as it existed prior to the event
causing such damage and, to the extent necessary to accomplish such repair, reconstruction and restoration,
the Developer will apply the Net Proceeds of any insurance relating to such damage received by the
Developer to the payment or reimbursement of the costs thereof.
The Developer shall complete the repair, reconstruction and restoration of the Minimum
Improvements, whether or not the Net Proceeds of insurance received by the Developer for such purposes are
sufficient to pay for the same. Any Net Proceeds remaining after completion of such repairs, construction
and restoration shall be the property of the Developer.
(e) The Developer and the Authority agree that all of the insurance provisions set forth in this
Article V shall terminate upon the termination of this Agreement.
Section 5.2. Subordination. Notwithstanding anything to the contrary contained in this Article V,
the rights of the Authority with respect to the receipt and application of any proceeds of insurance shall, in all
respects, be subject and subordinate to the rights of any lender under a Mortgage approved pursuant to
Article VH hereof.
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ARTICLE VI
Tax Increment; Taxes
Section 6.1. Right to Collect Delinquent Taxes. The Developer acknowledges that the Authority is
providing substantial aid and assistance in furtherance of the redevelopment through the Land Write -Down.
The Developer agrees for itself, its successors and assigns, in addition to the obligation pursuant to statute to
pay real estate taxes, that it is also obligated by reason of this Agreement to pay before delinquency all real
estate taxes assessed against the Development Property and the Minimum Improvements. The Developer
acknowledges that this obligation creates a contractual right on behalf of the Authority to sue the Developer
or its successors and assigns to collect delinquent real estate taxes and any penalty or interest thereon and to
pay over the same as a tax payment to the county auditor. In any such suit, the Authority shall also be
entitled to recover its costs, expenses and reasonable attorney fees.
Section 6.2. Reduction of Taxes. The Developer agrees that after the date of certification of the Tax
Increment District and prior to completion of the Minimum Improvements, it will not cause a reduction in the
real property taxes paid in respect of the Development Property through: (A) willful destruction of the
Development Property or any part thereof (except for the demolition of structures, if any, required to
construct the Minimum Improvements); or (B) willful refusal to reconstruct damaged or destroyed property
pursuant to Section 5.1 hereof.
The Developer also agrees that it will not, prior to the Termination Date, (i) seek exemption from
property tax for the Development Property; (ii) convey or transfer or allow conveyance or transfer of the
Development Property to any entity that is exempt from payment of real property taxes under State law; or
(iii) seek or agree to any reduction of the assessor's estimated market value to below the Minimum Market
Value described in Section 4.2(a)(vi) hereof.
The Developer may, at any time following the issuance of the Certificate of Completion, seek
through petition or other means to have the Assessors Estimated Market Value for the Development Property
reduced to not less than the Minimum Market Value. Such activity must be preceded by written notice from
the Developer to the Authority indicating its intention to do so. Notwithstanding the foregoing, the Authority
acknowledges that the Developer intends for the Minimum Improvements to qualify as Class 4d low income
rental housing, as defined in Minn. Stat. Section 273.13, subd. 25(e) for purposes of the property taxes
imposed against the Minimum Improvements.
Section 6.3. Qualifications. Notwithstanding anything herein to the contrary, the parties
acknowledge and agree that upon transfer of the Development Property to another person or entity, the
Developer will remain obligated under Sections 6.1 and 6.2 hereof, unless the Developer is released from
such obligations in accordance with the terms and conditions of Section 8.2(b) or 8.3 hereof.
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ARTICLE VII
Financing
Section 7.1. Mortgage Financing.
(a) Before the date of the Closing, the Developer shall submit to the Authority evidence of
receipt of a reservation of low income tax credits under the Tax Credit Law from the Minnesota Housing
Finance Agency. Before commencement of construction of the Minimum Improvements, the Developer
shall submit to the Authority evidence of one or more commitments for financing which, together with
committed equity for such construction and the low income tax credits, is sufficient for payment of the
Minimum Improvements. Such commitments may be submitted as short term financing, long term mortgage
financing, a bridge loan with a long term take-out financing commitment, or any combination of the
foregoing.
(b) If the Authority finds that the financing is sufficiently committed and adequate in amount to
pay the costs specified in paragraph (a) then the Authority shall notify the Developer in writing of its
approval. Such approval shall not be unreasonably withheld and either approval or rejection shall be given
within twenty (20) days from the date when the Authority is provided the evidence of financing. A failure by
the Authority to respond to such evidence of financing shall be deemed to constitute an approval hereunder.
If the Authority rejects the evidence of financing as inadequate, it shall do so in writing specifying the basis
for the rejection. In any event the Developer shall submit adequate evidence of financing within twenty (20)
days after such rejection.
Section 7.2. Authority's Qption to Cure Default in Mortgage. In the event that any portion of the
Developer's funds is provided through mortgage financing, and there occurs a default under any Mortgage
authorized pursuant to Article VII hereof, the Developer shall cause the Authority to receive copies of any
notice of default received by the Developer from the holder of such Mortgage. Thereafter, to the extent
permitted by the Holder of any Mortgage, the Authority shall have the right, but not the obligation, to cure
any such default on behalf of the Developer within such cure periods as are available to the Developer under
the Mortgage documents. In the event there is an Event of Default under this Agreement, the Authority will
transmit to the Holder of any Mortgage and any tax credit investor of the Developer a copy of any notice of
an Event of Default given by the Authority pursuant to Article IX hereof if the Developer provides the names
and contact information necessary to deliver such notices.
Section 7.3. Modification; Subordination. In order to facilitate the Developer obtaining financing
for the development of the Minimum Improvements, the Authority agrees to subordinate its rights under this
Agreement to the Holder of any Mortgage securing construction or permanent financing, under terms and
conditions reasonably acceptable to the Authority. An agreement to subordinate this Agreement must be
approved by the Board of the Authority.
Section 7.4. Termination. All the provisions of this Article VII shall terminate with respect to the
Minimum Improvements, upon delivery of the Certificate of Completion for the Minimum Improvements.
The Developer or any successor in interest to the Minimum Improvements or portion thereof, may sell or
engage in financing or any other transaction creating a mortgage or encumbrance or lien on the Minimum
Improvements or any portion thereof for which a Certificate of Completion has been obtained, without
obtaining prior written approval of the Authority, provided that such sale, financing or other transaction
creating a mortgage or encumbrance shall not be deemed as resulting in any subordination of the Authority's
rights under this Agreement unless the Authority expressly consents to such a subordination.
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ARTICLE VIII
Prohibitions against Assignment and Transfer; Indemnification
Section 8.1. Representation as to Development. The Developer represents and agrees that its
purchase of the Development Property, and its other undertakings pursuant to the Agreement, are, and will be
used, for the purpose of development of the Development Property and not for speculation in land holding.
Section 8.2. Prohibition against Developer's Transfer of Property and Assiamnent of Agreement.
The Developer represents and agrees that prior to issuance of the Certificate of Completion for the Minimum
Improvements:
(a) Except only by way of security for, and only for, the purpose of obtaining financing
necessary to enable the Developer or any successor in interest to the Development Property, or any part
thereof, to perform its obligations with respect to constructing the Minimum Improvements under this
Agreement, and any other purpose authorized by this Agreement, the Developer has not made or created and
will not make or create or suffer to be made or created any total or partial sale, assignment, conveyance, or
lease, or any trust or power, or transfer in any other mode or form of or with respect to the Agreement or the
Development Property or any part thereof or any interest therein, or any contract or agreement to do any of
the same (except a lease to a residential occupant, a license, easement or similar arrangement entered into in
the ordinary course of business, or transfers of partnership interests in the Developer, or its successors or
assigns, pursuant to the Developer's (or its successors and assigns') organization documents (including an
amended and restated agreement of limited partnership)), without the prior written approval of the Authority
unless the Developer remains liable and bound by this Agreement in which event the Authority's approval is
not required. Any such transfer shall be subject to the provisions of this Agreement.
(b) In the event the Developer, upon transfer or assignment of the Development Property seeks
to be released from its obligations under this Agreement, the Authority shall be entitled to require, except as
otherwise provided in this Agreement, as conditions to any such release that:
(i) Any proposed transferee shall have the qualifications and financial responsibility, in
the reasonable judgment of the Authority, necessary and adequate to fulfill the obligations
undertaken in this Agreement by the Developer.
(ii) Any proposed transferee, by instrument in writing satisfactory to the Authority and
in form recordable among the land records, shall, for itself and its successors and assigns, and
expressly for the benefit of the Authority, have expressly assumed all of the obligations of the
Developer under this Agreement and agreed to be subject to all the conditions and restrictions to
which the Developer is subject; provided, however, that the fact that any transferee of, or any other
successor in interest whatsoever to, the Development Property, or any part thereof, shall not, for
whatever reason, have assumed such obligations or so agreed, and shall not (unless and only to the
extent otherwise specifically provided in this Agreement or agreed to in writing by the Authority)
deprive the Authority of any rights or remedies or controls with respect to the Development Property
or any part thereof or the construction of the Minimum Improvements; it being the intent of the
parties as expressed in this Agreement that (to the fullest extent permitted at law and in equity and
excepting only in the manner and to the extent specifically provided otherwise in this Agreement) no
transfer of, or change with respect to, ownership in the Development Property or any part thereof, or
any interest therein, however consummated or occurring, and whether voluntary or involuntary, shall
operate, legally or practically, to deprive or limit the Authority of or with respect to any rights or
remedies on controls provided in or resulting from this Agreement with respect to the Minimum
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Improvements that the Authority would have had, had there been no such transfer or change. In the
absence of specific written agreement by the Authority to the contrary, no such transfer or approval
by the Authority thereof shall be deemed to relieve the Developer or any other party bound in any
way by this Agreement or otherwise with respect to the construction of the Minimum Improvements,
from any of its obligations with respect thereto.
(iii) Any and all instruments and other legal documents involved in effecting the transfer
of any interest in this Agreement or the Development Property governed by this Article VIII, shall be
in a form reasonably satisfactory to the Authority.
In the event the foregoing conditions are satisfied then the Developer shall be released from its obligation
under this Agreement.
After issuance of the Certificate of Completion for the Minimum Improvements, the Developer may
transfer or assign the Development Property or the Developer's interest in this Agreement if it obtains the
prior written consent of the Authority (which consent will not be unreasonably withheld) and the transferee or
assignee is bound by all the Developer's obligations hereunder. The Developer shall submit to the Authority
written evidence of any such transfer or assignment, including the transferee or assignee's express
assumption of the Developer's obligations under this Agreement. If the Developer fails to provide such
evidence of transfer and assumption, the Developer shall remain bound by all its obligations under this
Agreement.
Notwithstanding anything to the contrary contained herein, the Developer may assign the rights and
obligations under this Agreement to an affiliate of the Developer without the written consent of the Authority.
Section 8.3. Release and Indemnification Covenants.
(a) The Developer releases from and covenants and agrees that the Authority and its governing
body members, officers, agents, servants and employees thereof shall not be liable for and agrees to
indemnify and hold harmless the Authority and its respective governing body members, officers, agents,
servants and employees thereof against any loss or damage to property or any injury to or death of any person
occurring at or about or resulting from any defect in the Minimum Improvements.
(b) Except for any willful misrepresentation, gross negligence or any willful or wanton
misconduct of the Authority, or its board members, officers, agents or employees, the Developer agrees to
protect and defend the Authority and its governing body members, officers, agents, servants and employees
thereof, now or forever, and further agrees to hold the aforesaid harmless from any claim, demand, suit,
action or other proceeding whatsoever by any person or entity whatsoever arising or purportedly arising from
this Agreement, or the transactions contemplated hereby or the acquisition, construction, installation,
ownership, maintenance and operation of the Minimum Improvements. As to any willful misrepresentation,
gross negligence or any willful or wanton misconduct of the Authority, or its board members, officers, agents
or employees, the Authority agrees to protect and defend the Developer, its officers, agents, servants and
employees and hold the same harmless from any such proceedings.
(c) The Authority and its governing body members, officers, agents, servants and employees
thereof shall not be liable for any damage or injury to the persons or property of the Developer or its officers,
agents, servants or employees or any other person who may be about the Development Property or Minimum
Improvements due to any act of negligence of any other person.
(d) All covenants, stipulations, promises, agreements and obligations of the Authority contained
herein shall be deemed to be the covenants, stipulations, promises, agreements and obligations of the
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Authority and not of any governing body member, officer, agent, servant or employee of the Authority in the
individual capacity thereof
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ARTICLE IX
Events of Default
Section 9.1. Events of Default. The following will be "Events of Default" under this Agreement and
the term "Event of Default" means, whenever it is used in this Agreement, any one or more of the following
events, after the non -defaulting parry provides sixty (60) days' written notice to the defaulting party of the
event, but only if the event has not been cured within said sixty (60) days or, if the event is by its nature
incurable within sixty (60) days, the defaulting party does not, within the sixty (60) day period, provide
assurances reasonably satisfactory to the parry providing notice of default that the event will be cured and will
be cured as soon as reasonably possible:
(a) The failure by the Developer or the Authority to observe or perform any covenant,
condition, obligation, or agreement on its part to be observed or performed under this Agreement;
(b) The Developer:
(i) files any petition in bankruptcy or for any reorganization, arrangement,
composition, readjustment, liquidation, dissolution, or similar relief under the United States
Bankruptcy Act or under any similar federal or State law;
(ii) makes an assignment for benefit of its creditors;
(iii) fails to pay real estate taxes on the Development Property or the Minimum
Improvements as they become due;
(iv) admits in writing its inability to pay its debts generally as they become due;
(v) is adjudicated as bankrupt or insolvent;
(vi) fails to comply with the Declaration; or
(vii) fails to comply with labor laws.
Section 9.2. Remedies on Default. Whenever any Event of Default referred to in Section 9.1 hereof
occurs, the non -defaulting party may exercise its rights under this Section 9.2 after providing sixty (60) days
written notice to the defaulting parry of the Event of Default, but only if the Event of Default has not been
cured within said sixty (60) days or, if the Event of Default is by its nature incurable within sixty (60) days,
the defaulting parry does not provide assurances reasonably satisfactory to the non -defaulting party that the
Event of Default will be cured and will be cured as soon as reasonably possible:
(a) Suspend its performance under the Agreement until it receives assurances that the defaulting
party will cure its default and continue its performance under the Agreement.
(b) Cancel and rescind or terminate the Agreement.
(c) Upon a default by the Developer resulting from the Developer's noncompliance with labor
laws, the Authority may determine not to issue the TIF Note, delay the issuance of the TIF Note until the
Developer is in compliance with labor laws, reduce the principal amount of the TIF Note issued or to be
issued, and/or terminate this Agreement;
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(c) Take whatever action, including legal, equitable or administrative action, which may appear
necessary or desirable to collect any payments due under this Agreement, or to enforce performance and
observance of any obligation, agreement, or covenant under this Agreement.
Section 9.3. Reserved].
Section 9.4. Revesting Title in Authority upon Happening of Event Subsequent to Conveyance to
Developer. In the event that subsequent to conveyance of the Development Property to the Developer and
prior to Developer satisfying the conditions for receipt by the Developer of the Certificate of Completion for
the Minimum Improvements, the Developer, subject to Unavoidable Delays, fails to commence or complete
construction of the Minimum Improvements by the dates specified in Section 4.3 hereof, and such failure to
commence or complete is not cured within ninety (90) days (or such longer amount of time agreed to by the
Authority) after written notice from the Authority to the Developer to do so; then the Authority shall have the
right to re-enter and take possession of the Development Property and to terminate and revest in the Authority
the Development Property, it being the intent of this provision, together with other provisions of the
Agreement, that the conveyance of the Development Property to the Developer shall be made upon, and that
the deeds shall contain a condition subsequent to the effect that in the event of any default on the part of the
Developer in performance of the obligations specified in this Section 9.4 and failure on the part of the
Developer to remedy, end, or abrogate such default within the period and in the manner stated in this Section,
the Authority at its option may declare a termination in favor of the Authority of the title, and of all the rights
and interests in and to the Development Property and that such title and all rights and interests of the
Developer, and any assigns or successors in interest to and in the Development Property, shall revert to the
Authority, as applicable, but only if the events stated in this Section have not been cured within the time
periods provided above. Any agreement to subordinate this Agreement to the Holder of any Mortgage
pursuant to Section 7.3 shall also subordinate the Authority's rights granted in this Section 9.4.
Section 9.5. Resale of Reacquired Property; Disposition of Proceeds. Upon the revesting in the
Authority of title to and/or possession of the Development Property, the Authority shall, pursuant to their
responsibilities under law, use their best efforts to sell the Development Property and in such manner as the
Authority to a qualified and responsible parry or parties (as determined by the Authority) who will assume the
obligation of making or completing the Minimum Improvements or such other improvements in their stead as
shall be satisfactory to the Authority in accordance with the uses specified for the Development Property in
this Agreement. During any time while the Authority has title to and/or possession of a parcel of property
obtained by reverter, the Authority will not disturb the rights of any tenants under any leases encumbering
such parcel. Upon resale of the Development Property, the proceeds thereof shall be applied:
(a) First, to reimburse the Authority for all costs and expenses incurred by them, including but
not limited to salaries of personnel, in connection with the recapture, management, and resale of the
Development Property (but less any income derived by the Authority from the property or part thereof in
connection with such management); all taxes, assessments, and water and sewer charges with respect to the
Development Property or part thereof (or, in the event the Development Property is exempt from taxation or
assessment or such charge during the period of ownership thereof by the Authority, an amount, if paid, equal
to such taxes, assessments, or charges (as determined by the Authority assessing official) as would have been
payable if the Development Property were not so exempt); any payments made or necessary to be made to
discharge any encumbrances or liens existing on the Development Property, or part thereof at the time of
revesting of title thereto in the Authority, or to discharge or prevent from attaching or being made any
subsequent encumbrances or liens due to obligations, defaults or acts of the Developer, its successors or
transferees; any expenditures made or obligations incurred with respect to the making or completion of the
subject improvements or any part thereof on the Development Property; and any amounts otherwise owing
the Authority by the Developer and its successor or transferee; and
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(b) Second, to reimburse the Developer, its successor or transferee, up to the amount equal to
the portion of the Development Property Purchase Price paid by the Developer under Section 3.2 hereof and
the amount actually invested by it in making any of the subject improvements on the Development Property
or part thereof, less any gains or income withdrawn or made by it from the Agreement or the Development
Property.
Any balance remaining after such reimbursements shall be retained by the Authority as its property.
Section 9.6. No Remedy Exclusive. No remedy herein conferred upon or reserved to the Authority
or the Developer is intended to be exclusive of any other available remedy or remedies, but each and every
such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement
or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or
power accruing upon any default shall impair any such right or power or shall be construed to be a waiver
thereof, but any such right and power may be exercised from time to time and as often as may be deemed
expedient. In order to entitle the Authority to exercise any remedy reserved to it, it shall not be necessary to
give notice, other than the notices already required in Section 9.2 hereof.
Section 9.7. No Additional Waiver Implied by One Waiver. In the event any agreement contained
in this Agreement should be breached by either party and thereafter waived by the other party, such waiver
shall be limited to the particular breach so waived and shall not be deemed to waive any other concurrent,
previous or subsequent breach hereunder.
Section 9.8. Attorney Fees and Costs. Whenever any Event of Default occurs and if the Authority
employs attorneys or incur other expenses for the collection of payments due or to become due or for the
enforcement of performance or observance of any obligation or agreement on the part of the Developer under
this Agreement, and the Authority prevails in the action, the Developer agrees that it will, within ten days of
written demand by the Authority, pay to the Authority the reasonable fees of the attorneys and the other
expenses so incurred by the Authority.
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ARTICLE X
Additional Provisions
Section 10.1. Conflict of Interests; Authority Representatives Not Individually Liable. The
Authority and the Developer, to the best of their respective knowledge, represent and agree that no member,
official, or employee of the Authority shall have any personal interest, direct or indirect, in the Agreement,
nor shall any such member, official, or employee participate in any decision relating to the Agreement which
affects his personal interests or the interests of any corporation, partnership, or association in which he is,
directly or indirectly, interested. No member, official, or employee of the Authority shall be personally liable
to the Developer, or any successor in interest, in the event of any default or breach by the Authority or
County or for any amount which may become due to the Developer or successor or on any obligations under
the terms of the Agreement.
Section 10.2. Equal Employment Opportunity. The Developer, for itself and its successors and
assigns, agrees that during the construction of the Minimum Improvements provided for in the Agreement it
will comply with all applicable federal, state and local equal employment and non-discrimination laws and
regulations.
Section 10.3. Restrictions on Use. The Developer agrees that, prior to the Termination Date, the
Developer, and such successors and assigns, shall use the Development Property solely for the development
of multifamily housing in accordance with the terms of this Agreement, and shall not discriminate upon the
basis of race, color, creed, sex or national origin in the sale, lease, or rental or in the use or occupancy of the
Development Property or any improvements erected or to be erected thereon, or any part thereof.
Section 10.4. Provisions Not Merged with Deed. None of the provisions of this Agreement are
intended to or shall be merged by reason of any deed transferring any interest in the Development Property
and any such deed shall not be deemed to affect or impair the provisions and covenants of this Agreement.
Section 10.5. Titles of Articles and Sections. Any titles of the several parts Articles and Sections of
the Agreement are inserted for convenience
interpreting any of its provisions.
of reference only and shall be disregarded in construing or
Section 10.6. Notices and Demands. Except as otherwise expressly provided in this Agreement, a
notice, demand, or other communication under the Agreement by either party to the other shall be sufficiently
given or delivered if it is dispatched by registered or certified mail, postage prepaid, return receipt requested,
or delivered personally; and
(a) in the case of the Developer, is addressed to or delivered personally to the Developer at 7645
Lyndale Avenue South, Minneapolis, MN 55423, Attn: Christopher I Stokka with a copy to Winthrop &
Weinstine, P.A., 225 South Sixth Street, Suite 3500, Minneapolis, MN 55402, Attn: Shawn Alexander;
(b) in the case of the Authority, is addressed to or delivered personally to the Authority at
6700 Portland Avenue South, Richfield, MN 55423, Attn: Community Development Director;
or at such other address with respect to either such party as that party may, from time to time, designate in
writing and forward to the other as provided in this Section.
Section 10.7. Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall constitute one and the same instrument.
25
Section 10.8. Recording. The Authority may record a memorandum of this Agreement and any
amendments thereto with the County Recorder or the Registrar of Titles, as the case may be, of the County.
The Developer shall pay all costs for recording.
Section 10.9. Amendment. This Agreement may be amended only by written agreement approved
by the Authority and the Developer. The Authority and the Developer agree to amend this Agreement upon
terms acceptable to both parties, as may be required by the Developer's tax credit investor and lenders in
connection with the construction of the Minimum Improvements.
Section 10.10. Termination. This Agreement terminates on the Termination Date, except that such
termination does not terminate, limit, or affect the rights of any party that arise before the Termination Date.
(The remainder of this page is intentionally left blank.)
26
IN WITNESS WHEREOF, the Authority has caused this Contract for Private Development to be
duly executed in its name and behalf and the Developer has caused this Contract for Private Development to
be duly executed in its name and behalf as of the date and year first written above.
HOUSING AND REDEVELOPMENT AUTHORITY
IN AND FOR THE CITY OF RICHFIELD,
MINNESOTA
By
Its Chair
By
Its Executive Director
STATE OF MINNESOTA )
) SS.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this , 20 , by Mary B.
Supple, the Chair of the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota,
on behalf of the Authority.
Notary Public
STATE OF MINNESOTA )
) SS.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this , 20 , by
, the Executive Director of the Housing and Redevelopment Authority in and for the City of
Richfield, Minnesota, on behalf of the Authority.
Notary Public
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MWF PROPERTIES, LLC
By Christopher J. Stokka
Its Vice President
STATE OF MINNESOTA )
SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this , 20_, by
Christopher J. Stokka, the Vice President of MWF Properties, LLC, a Minnesota limited liability company,
on behalf of the Developer.
Notary Public
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EXHIBIT A
DEVELOPMENT PROPERTY
Lot 6, Block 4, "R.C. Soens Addition," according to the recorded plat thereof, Hennepin County, Minnesota.
FEW
EXHIBIT B
CERTIFICATE OF COMPLETION
The undersigned hereby certifies that MWF Properties, LLC, a Minnesota limited liability company
(the "Developer"), has fully complied with its obligations under Articles III and IV of that document titled
"Contract for Private Development," dated , 20_ (the "Agreement"), between the
Housing and Redevelopment Authority in and for the City of Richfield, Minnesota and the Developer, a
memorandum of which was recorded in the Office of [County Recorder] [Registrar of Titles] of Hennepin
County, Minnesota on , 20_, as Document No. , with
respect to construction of the Minimum Improvements in accordance with Article IV of the Agreement,
and that the Developer is released and forever discharged from its obligations with respect to construction
of the Minimum Improvements under Articles III and IV of the Agreement.
Dated: , 20
HOUSING AND REDEVELOPMENT AUTHORITY
IN AND FOR THE CITY OF RICHFIELD,
MINNESOTA
Executive Director
STATE OF MINNESOTA )
) SS.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this , 20_, by
, the Executive Director of the Housing and Redevelopment Authority in and for the
City of Richfield, Minnesota, on behalf of the Authority.
Notary Public
EXHIBIT C
FORM OF DECLARATION OF RESTRICTIVE COVENANTS
THIS DECLARATION OF RESTRICTIVE COVENANTS (this "Declaration") dated
, 20_, by MWF PROPERTIES, LLC, a Minnesota limited liability company (the
"Developer"), is given to the HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE
CITY OF RICHFIELD, MINNESOTA, a public body corporate and politic under the laws of the State of
Minnesota (the "Authority").
RECITALS
WHEREAS, the Authority entered into that certain Contract for Private Development, dated
, 20 , filed , 20 in the Office of the [County Recorder] [Registrar of
Titles] of Hennepin County as Document No. (the "Contract"), between the Authority and the
Developer; and
WHEREAS, pursuant to the Contract, the Developer is obligated to cause construction of fifty-five
(55) units of workforce rental housing, including two (2) units of housing reserved for people with
disabilities, accompanied by supportive services persons or families whose income is thirty percent (30%) or
less of the Metro Area's median income and five (5) two bedroom units reserved for persons or families
whose income is fifty percent (50%) or less of the Metro Area's median gross income on the property
described in EXHIBIT A attached hereto (the "Property'), and to cause compliance with certain affordability
covenants described in Section 4.5 of the Contract; and
WHEREAS, Section 4.5 of the Contract requires that the Developer cause to be executed an
instrument in recordable form substantially reflecting the covenants set forth in Section 4.5 of the Contract;
and
WHEREAS, the Developer intends, declares, and covenants that the restrictive covenants set forth
herein shall be and are covenants running with the Property for the term described herein and binding upon
all subsequent owners of the Property for such term, and are not merely personal covenants of the Developer;
and
WHEREAS, capitalized terms in this Declaration have the meaning provided in the Contract unless
otherwise defined herein.
NOW, THEREFORE, in consideration of the promises and covenants hereinafter set forth, and of
other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Developer
agrees as follows:
Term of Restrictions.
(a) Occupancy Restrictions. The term of the Occupancy Restrictions set forth in Section 3
hereof shall commence at the end of the first taxable year of the credit period for the Property under the Tax
Credit Law for all rental units on the Property. The period from commencement to termination is the
"Qualified Project Period."
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(b) Termination of Declaration. This Declaration shall terminate upon the date that is thirty (30)
years after the commencement of the Qualified Project Period.
(c) Removal from Real Estate Records. Upon termination of this Declaration, the Authority
shall, upon request by the Developer or its assigns, file any document appropriate to remove this Declaration
from the real estate records of Hennepin County, Minnesota.
2. Project Restrictions.
(a) The Developer represents, warrants, and covenants that:
(i) All leases of units to Qualifying Tenants (as defined in Section 3(a)(i) hereof) shall
contain clauses, among others, wherein each individual lessee:
(1) Certifies the accuracy of the statements made in its application and
Eligibility Certification (as defined in Section 3(a)(ii) hereof); and
(2) Agrees that the family income at the time the lease is executed shall be
deemed substantial and material obligation of the lessee's tenancy, that the lessee will
comply promptly with all requests for income and other information relevant to determining
low or moderate income status from the Developer or the Authority, and that the lessee's
failure or refusal to comply with a request for information with respect thereto shall be
deemed a violation of a substantial obligation of the lessee's tenancy.
(ii) The Developer shall permit any duly authorized representative of the Authority to
inspect the books and records of the Developer pertaining to the income of Qualifying Tenants
residing in the Project.
Occupancy Restrictions.
(a) Tenant Income Provisions. The Developer represents, warrants, and covenants that:
(i) Qualifying Tenants. Recent Federal legislation has introduced an income -averaging
option for the low-income housing tax credit program. This legislation allows projects to accept
residents with higher average median incomes as along as the overall average of the income of
tenants in the project does not exceed sixty percent (60%) of the Metro Area median income, which
provides LIHTC projects the ability to serve tenants with a greater range of incomes ("Income
Averaging"). The Minnesota Housing Finance Agency allows Income Averaging for the
low-income housing tax credit program to be used for the Minimum Improvements (as defined in the
Contract). From the commencement of the Qualified Project Period, one hundred percent (100%) of
the Rental Housing Units shall be occupied (or treated as occupied as provided herein) or held vacant
and available for occupancy by Qualifying Tenants. Qualifying Tenants shall mean those persons
and families who shall be determined from time to time by the Developer to have combined adjusted
income that does not exceed sixty percent (60%) of the Minneapolis -St. Paul metropolitan statistical
area (the "Metro Area") median income for the applicable calendar year, or such other income level
in connection with any Income Averaging so long as the overall average of the income of tenants of
the Rental Housing Units shall not exceed sixty percent (60%) of the Metro Area median income.
For purposes of this definition, the occupants of a Rental Housing Unit shall not be deemed to be
Qualifying Tenants if all the occupants of such residential unit at any time are "students," as defined
in Section 151(c)(4) of the Internal Revenue Code of 1986, as amended (the "Code"), not entitled to
an exemption under the Code. The determination of whether an individual or family is of low or
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moderate income shall be made at the time the tenancy commences and on an ongoing basis
thereafter, determined at least annually. If during their tenancy a Qualifying Tenant's income
exceeds one hundred forty percent (140%) of the maximum income qualifying as low or moderate
income for a family of its size, the next available unit (determined in accordance with the Code and
applicable regulations) (the "Next Available Unit Rule") must be leased to a Qualifying Tenant or
held vacant and available for occupancy by a Qualifying Tenant. If the Next Available Unit Rule is
violated, the Rental Housing Unit will not continue to be treated as a Qualifying Unit. The annual
recertification and Next Available Unit Rule requirements of this paragraph 3(a)(i) shall not apply to
a given year if, during such year, no residential unit in the Project is occupied by a new resident
whose income exceeds the applicable income limit for Low Income Tenants.
(ii) Certification of Tenant Eligibility. As a condition to initial and continuing
occupancy, each person who is intended to be a Qualifying Tenant shall be required annually to sign
and deliver to the Developer a form entitled "Tenant Income Certification" from the Minnesota
Housing Finance Agency (MHFA HTC Form 14), or if unavailable, any similar form (the
`Eligibility Certification"), in which the prospective Qualifying Tenant certifies as to qualifying as
low or moderate income. In addition, such person shall be required to provide whatever other
information, documents, or certifications are deemed necessary by the Authority to substantiate the
Eligibility Certification, on an ongoing annual basis, and to verify that such tenant continues to be a
Qualifying Tenant within the meaning of Section 3(a)(i) hereof. Eligibility Certifications will be
maintained on file by the Developer with respect to each Qualifying Tenant who resides in a Rental
Housing Unit or resided therein during the immediately preceding calendar year.
(iii) Lease. The form of lease to be utilized by the Developer in renting any units in the
Project to any person who is intended to be a Qualifying Tenant shall provide for termination of the
lease and consent by such person to immediate eviction for failure to qualify as a Qualifying Tenant
as a result of any material misrepresentation made by such person with respect to the Eligibility
Certification.
(iv) Annual Report. The Developer covenants and agrees that during the term of this
Declaration, it will prepare and submit to the Authority on or before April 1 of each year the
Eligibility Certification.
(v) Notice of Non -Compliance. The Developer will immediately notify the Authority if
at any time during the term of this Declaration the dwelling units in the Project are not occupied or
available for occupancy as required by the terms of this Declaration.
(b) Reserved Rental Housing Units. During the term of this Declaration, the Developer agrees
to reserve (i) two (2) units of housing for people with disabilities, accompanied by supportive services for
persons or families whose income is thirty percent (30%) or less of the Metro Area's median income; and
(ii) five (5) two bedroom units for persons or families whose income is fifty percent (50%) or less of the
Metro Area's median gross income.
(c) Section 8 Housing. During the term of this Declaration, the Developer shall not adopt any
policies specifically prohibiting or excluding rental to tenants holding certificates/vouchers under Section 8 of
the United States Housing Act of 1937, as amended, codified as 42 U.S.C. Sections 1401 et seq., or its
successor, because of such prospective tenant's status as such a certificate/voucher holder.
4. Reserved.
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5. Transfer Restrictions. The Developer covenants and agrees that the Developer will cause or
require as a condition precedent to any transfer that the transferee of the Project pursuant to the Transfer
assume in writing, in a form acceptable to the Authority, all duties and obligations of the Developer under
this Declaration, including this Section 5, in the event of a subsequent transfer by the transferee prior to
expiration of the Occupancy Restrictions provided herein (the "Assumption Agreement"). The Developer
shall deliver the Assumption Agreement to the Authority prior to the transfer.
6. Notice of Sale of Minimum Improvements. In consideration of the financial assistance
provided to the Developer pursuant to Article III hereof, the Developer agrees to provide the Authority with
at least ninety (90) days' notice of any sale of the Minimum Improvements.
7. Enforcement.
(a) The Developer shall permit, during normal business hours and upon reasonable notice, any
duly authorized representative of the Authority to inspect any books and records of the Developer regarding
the Project with respect to the incomes of Qualifying Tenants.
(b) The Developer shall submit any other information, documents or certifications requested by
the Authority which the Authority deems reasonably necessary to substantial continuing compliance with the
provisions specified in this Declaration.
(c) The Developer acknowledges that the primary purpose for requiring compliance by the
Developer with the restrictions provided in this Declaration is to ensure compliance of the property with the
housing affordability covenants set forth in Section 4.5 of the Contract, and by reason thereof, the Developer,
in consideration for assistance provided by the Authority under the Contract that makes possible the
construction of the Minimum Improvements (as defined in the Contract) on the Property, hereby agrees and
consents that the Authority shall be entitled, upon any breach of the provisions of this Declaration and the
Developer's failure to cure such breach within the cure periods described in Section 9.1 of the Contract, and
in addition to all other remedies provided by law or in equity, to enforce specific performance by the
Developer of its obligations under this Declaration in a state court of competent jurisdiction. The Developer
hereby further specifically acknowledges that the Authority cannot be adequately compensated by monetary
damages in the event of any default hereunder.
(d) The Developer understands and acknowledges that, in addition to any remedy set forth
herein for failure to comply with the restrictions set forth in this Declaration, the Authority may exercise any
remedy available to it under Article IX of the Contract.
8. Indemnification. The Developer hereby indemnifies, and agrees to defend and hold
harmless, the Authority from and against all liabilities, losses, damages, costs, expenses (including reasonable
attorneys' fees and expenses), causes of action, suits, allegations, claims, demands, and judgments of any
nature arising from the consequences of a legal or administrative proceeding or action brought against them,
or any of them, on account of any failure by the Developer to comply with the terms of this Declaration, or on
account of any representation or warranty of the Developer contained herein being untrue.
9. Agent of the Authority. Upon any default hereunder, after first providing the Developer
with a reasonable amount of time to cure such default, the Authority shall have the right to appoint an agent
to carry out any of its duties and obligations hereunder, and shall inform the Developer of any such agency
appointment by written notice.
10. Severability. The invalidity of any clause, part or provision of this Declaration shall not
affect the validity of the remaining portions thereof.
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11. Notices. All notices to be given pursuant to this Declaration shall be in writing and shall be
deemed given when mailed by certified or registered mail, return receipt requested, to the parties hereto at the
addresses set forth below, or to such other place as a party may from time to time designate in writing. The
Developer and the Authority may, by notice given hereunder, designate any further or different addresses to
which subsequent notices, certificates, or other communications shall be sent. The initial addresses for
notices and other communications are as follows:
To the Authority: Housing and Redevelopment Authority in and for
the City of Richfield
6700 Portland Avenue
Richfield, MN 55423
Attention: Community Development Director
To the Developer: MWF Properties, LLC
7645 Lyndale Avenue South
Minneapolis, MN 55423
Attn: Christopher I Stokka
with a copy to: Winthrop & Weinstine, P.A.
225 South Sixth Street, Suite 3500
Minneapolis, MN 55402
Attn: Shawn Alexander
12. Governing Law. This Declaration shall be governed by the laws of the State of Minnesota
and, where applicable, the laws of the United States of America.
13. Attorneys' Fees. In case any action at law or in equity, including an action for declaratory
relief, is brought against the Developer to enforce the provisions of this Declaration, the Developer agrees to
pay the reasonable attorneys' fees and other reasonable expenses paid or incurred by the Authority in
connection with such action.
14. Declaration Binding. This Declaration and the covenants contained herein shall run with the
real property comprising the Project and shall bind the Developer and its successors and assigns and all
subsequent owners of the Project or any interest therein, and the benefits shall inure to the Authority and its
successors and assigns for the term of this Declaration as provided in Section 1(b) hereof.
15. Relationship to Tax Credit Law Requirements. Notwithstanding anything to the contrary,
during any period while at least fifty-five (55) units in the Property are subject to income and rent limitations
under the Tax Credit Law, evidence of compliance with such Tax Credit Law requirements filed with the
Authority at least annually will satisfy any requirements otherwise imposed under this Declaration.
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IN WITNESS WHEREOF, the Developer has caused this Declaration of Restrictive Covenants to be
signed by its respective duly authorized representatives, as of the day and year first written above.
MWF PROPERTIES, LLC
By Christopher J. Stokka
Its Vice President
STATE OF MINNESOTA )
SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this , 20, by
Christopher J. Stokka, the Vice President of MWF Properties, LLC, a Minnesota limited liability company,
on behalf of the Developer.
This document was drafted by:
KENNEDY & GRAVEN, CHARTERED (JAE)
150 South Fifth Street, Suite 700
Minneapolis, MN 55402
Notary Public
M:
This Declaration is acknowledged and consented to by:
HOUSING AND REDEVELOPMENT AUTHORITY
IN AND FOR THE CITY OF RICHFIELD,
MINNESOTA
By
Its Chair
By
Its Executive Director
STATE OF MINNESOTA )
) SS.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this , 20 , by Mary B.
Supple, the Chair of the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota,
on behalf of the Authority.
Notary Public
STATE OF MINNESOTA )
) SS.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this , 20_, by
, the Executive Director of the Housing and Redevelopment Authority in and for the City of
Richfield, Minnesota, on behalf of the Authority.
Notary Public
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EXHIBIT A TO DECLARATION OF RESTRICTIVE COVENANTS
LEGAL DESCRIPTION
Lot 6, Block 4, "R.C. Soens Addition," according to the recorded plat thereof, Hennepin County, Minnesota.
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EXHIBIT D
FORM OF TIF NOTE
UNITED STATES OF AMERICA
STATE OF MINNESOTA
COUNTY OF HENNEPIN
HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE
CITY OF RICHFIELD
No. R-1
TAX INCREMENT LIMITED REVENUE NOTE
SERIES
Rate
Date
of Original Issue
520
The Housing and Redevelopment Authority in and for the City of Richfield, Minnesota (the
"Authority"), for value received, certifies that it is indebted and hereby promises to pay to MWF Properties,
LLC, a Minnesota limited liability company, or registered assigns (the "Owner"), the principal sum of
$ and to pay interest thereon at the rate per annum set forth above, as and to the extent set forth
herein. Capitalized terms used herein that are otherwise not defined shall have the meanings provided in the
Contract for Private Development, dated December _, 2021 (the "Agreement"), between the Authority and
the Owner.
1. Payments. Principal and interest (the "Payments") shall be paid on 1, 20_, and
each February 1 and August 1 thereafter (each a "Payment Date") to and including 1, 20_, in the
amounts and from the sources set forth in Section 3 herein. Payments shall be applied first to accrued
interest, and then to unpaid principal.
Payments are payable by mail to the address of the Owner or such other address as the Owner may
designate upon thirty (30) days' written notice to the Authority. Payments on this Note are payable in any
coin or currency of the United States of America which, on the Payment Date, is legal tender for the payment
of public and private debts.
2. Interest. Interest at the rate stated above shall accrue on the unpaid principal, commencing
on the Date of Original Issue. Interest shall accrue on a simple basis and will not be added to principal.
Interest shall be computed on the basis of a year of three hundred sixty (360) days and charged for actual days
principal is unpaid.
3. Available Tax Increment. Payments on this Note are payable on each Payment Date in the
amount of and solely payable from "Available Tax Increment," which will mean, on each Payment Date,
ninety percent (90%) of the Tax Increment attributable to the Development Property and paid to the
Authority by the County in the six (6) months preceding the Payment Date. The principal of and interest on
this Note shall be payable each Payment Date solely from Available Tax Increment. Available Tax
Increment shall not include any Tax Increment if, as of any Payment Date, there is an uncured Event of
D-1
Default under this Agreement that has not been waived by the Authority. Once the Event of Default is cured
or waived by the Authority, withheld Tax Increment shall be Available Tax Increment.
The Authority shall have no obligation to pay principal of and interest on this Note on each Payment
Date from any source other than Available Tax Increment, and the failure of the Authority to pay the entire
amount of principal or interest on this Note on any Payment Date shall not constitute a default hereunder as
long as the Authority pays principal and interest hereon to the extent of Available Tax Increment. The
Authority shall have no obligation to pay unpaid balance of principal or accrued interest that may remain
after the payment of Available Tax Increment from the last payment of Tax Increment the Authority is
entitled to receive from the County with respect to the Development Property.
4. Optional Prepayment. The principal sum and all accrued interest payable under this Note is
prepayable in whole or in part at any time by the Authority without premium or penalty. No partial
prepayment shall affect the amount or timing of any other regular payment otherwise required to be made
under this Note.
5. Termination. At the Authority's option, this Note shall terminate and the Authority's
obligation to make any payments under this Note shall be discharged upon the occurrence of an Event of
Default on the part of the Developer, but only if the Event of Default has not been cured in accordance with
Section 9.2 of the Agreement.
6. Nature of Obli ag tion. This Note is issued to aid in financing certain public development
costs and administrative costs of a Redevelopment Project undertaken by the Authority pursuant to
Minnesota Statutes, Sections 469.001 through 469.047, as amended, and is issued pursuant to an authorizing
resolution (the "Resolution") duly adopted by the Board of Commissioners of the Authority on
December 20, 2021, and pursuant to and in full conformity with the Constitution and laws of the State of
Minnesota, including Minnesota Statutes, Sections 469.174 through 469.1794, as amended. This Note is a
limited obligation of the Authority which is payable solely from Available Tax Increment pledged to the
payment hereof under the Resolution. This Note and the interest hereon shall not be deemed to constitute a
general obligation of the State of Minnesota or any political subdivision thereof, including, without limitation,
the Authority. Neither the State of Minnesota, nor any political subdivision thereof shall be obligated to pay
the principal of or interest on this Note or other costs incident hereto except out of Available Tax Increment,
and neither the full faith and credit nor the taxing power of the State of Minnesota or any political subdivision
thereof is pledged to the payment of the principal of or interest on this Note or other costs incident hereto.
7. Estimated Tax Increment Payments. Any estimates of Tax Increment prepared by the
Authority or its financial or municipal advisors in connection with the TIF District or the Agreement are for
the benefit of the Authority, and are not intended as representations on which the Developer may rely.
THE AUTHORITY MAKES NO REPRESENTATION OR WARRANTY THAT THE
AVAILABLE TAX INCREMENT WILL BE SUFFICIENT TO PAY THE PRINCIPAL OF AND
INTEREST ON THIS NOTE.
Registration. This Note is issuable only as a fully registered note without coupons.
9. Transfer. As provided in the Resolution, and subject to certain limitations set forth therein,
this Note is transferable upon the books of the Authority kept for that purpose at the principal office of the
City Clerk of the City of Richfield. Upon surrender for transfer of this Note, including any assignment or
exchange thereof, duly endorsed by the registered owner thereof or accompanied by a written instrument of
transfer, in form reasonably satisfactory to the Executive Director, as registrar (the "Registrar"), duly
executed by the registered owner thereof or by an attorney duly authorized by the registered owner in writing,
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and the payment by the Owner of any tax, fee, or governmental charge required to be paid by or to the
Authority with respect to such transfer or exchange, the Registrar shall authenticate and deliver, in the name
of the designated transferee or transferees, a new Note of the same aggregate principal amount, bearing
interest at the same rate and maturing on the same dates.
Notwithstanding the foregoing, this Note shall not be transferred to any person other than an affiliate,
or other related entity, of the Owner unless the Authority has been provided with an investment letter in a
form substantially similar to the investment letter in Exhibit C attached to the Agreement or a certificate of
the transferor, in a form satisfactory to the Executive Director of the Authority, that such transfer is exempt
from registration and prospectus delivery requirements of federal and applicable state securities laws. The
Registrar may close the books for registration of any transfer after the fifteenth day of the month preceding
each Payment Date and until such Payment Date.
The Owner may assign this Note to a lender that provides all or part of the financing for the
acquisition of the Development Property or the construction of the Minimum Improvements. The Authority
hereby consents to such assignment, conditioned upon receipt of an investment letter from such lender in
substantially the form attached to the Agreement as Exhibit C, or other form reasonably acceptable to the
Executive Director of the Authority. The Authority also agrees that future assignments of this Note may be
approved by the Executive Director of the Authority without action of the Board of Commissioners of the
Authority, upon the receipt of an investment letter in substantially the form of Exhibit E of the Agreement or
other investment letter reasonably acceptable to the Authority from such assignees.
This Note is issued pursuant to the Resolution and is entitled to the benefits thereof, which
Resolution is incorporated herein by reference.
IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions, and things required by the
Constitution and laws of the State of Minnesota to be done, to exist, to happen, and to be performed in order
to make this Note a valid and binding limited obligation of the Authority according to its terms, have been
done, do exist, have happened, and have been performed in due form, time and manner as so required.
IN WITNESS WHEREOF, the Board of Commissioners of the Housing and Redevelopment
Authority in and for the City of Richfield, Minnesota has caused this Note to be executed with the manual
signatures of its Chair and Executive Director, all as of the Date of Original Issue specified above.
Executive Director
HOUSING AND REDEVELOPMENT
AUTHORITY IN AND FOR THE CITY OF
RICHFIELD, MINNESOTA
Chair
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REGISTRATION PROVISIONS
The ownership of the unpaid balance of the within Note is registered in the bond register of the
Authority's Executive Director, in the name of the person last listed below.
Date of Repistration Registered Owner Signature of Executive Director
MWF Properties, LLC
Federal ID #
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EXHIBIT E
FORM OF INVESTMENT LETTER
To the Housing and Redevelopment Authority in and for the City of Richfield (the "Authority")
Attention: Executive Director
Re: $ Tax Increment Limited Revenue Note, Series 20
The undersigned, as Owner of $ in principal amount of the above -captioned Note (the
"Note") issued pursuant to a resolution adopted by the Board of Commissioners of the Authority on
December 20, 2021 (the "Resolution"), hereby represents to you and to Kennedy & Graven, Chartered,
Minneapolis, Minnesota, development counsel, as follows:
1. We understand and acknowledge that the TIF Note is delivered to the Owner as of this date
pursuant to the Resolution and the Contract for Private Development, dated December 2021 (the
"Contract"), between the Authority and the Owner.
2. We understand that the TIF Note is payable as to principal and interest solely from Available
Tax Increment (as defined in the TIF Note).
3. We further understand that any estimates of Tax Increment prepared by the Authority or its
financial or municipal advisors in connection with the TIF District, the Contract or the TIF Note are for the
benefit of the Authority, and are not intended as representations on which the Owner may rely.
4. We have sufficient knowledge and experience in financial and business matters, including
purchase and ownership of municipal obligations, to be able to evaluate the risks and merits of the investment
represented by the purchase of the above -stated principal amount of the TIF Note.
5. We acknowledge that no offering statement, prospectus, offering circular or other
comprehensive offering statement containing material information with respect to the Authority and the TIF
Note has been issued or prepared by the Authority, and that, in due diligence, we have made our own inquiry
and analysis with respect to the Authority, the TIF Note and the security therefor, and other material factors
affecting the security and payment of the TIF Note.
6. We acknowledge that we have either been supplied with or have access to information,
including financial statements and other financial information, to which a reasonable investor would attach
significance in making investment decisions, and we have had the opportunity to ask questions and receive
answers from knowledgeable individuals concerning the Authority, the TIF Note and the security therefor,
and that as a reasonable investor we have been able to make our decision to purchase the above -stated
principal amount of the TIF Note.
7. We have been informed that the TIF Note (i) is not being registered or otherwise qualified
for sale under the "Blue Sky" laws and regulations of any state, or under federal securities laws or
regulations; (ii) will not be listed on any stock or other securities exchange; and (iii) will carry no rating from
any rating service.
8. We acknowledge that neither the Authority nor Kennedy & Graven, Chartered has made any
representations as to the status of interest on the TIF Note for state or federal income tax purposes.
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9. We represent to you that we are purchasing the TIF Note for our own accounts and not for
resale or other distribution thereof, except to the extent otherwise provided in the TIF Note, the Resolution, or
any other resolution adopted by the Authority.
10. All capitalized terms used herein have the meaning provided in the Contract unless the
context clearly requires otherwise.
11. The Owner's federal tax identification number is
12. We acknowledge receipt of the TIF Note as of the date hereof.
Dated: .20
RC 125-371(JAE)
562229v.10
MWF PROPERTIES, LLC
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MWF PROPERTIES
7645 Lyndale Ave. S.
Minneapolis, MN 55423
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MILLER HANSON ARCHITECTS
218 Washington Avenue North
Suite 230
Minneapolis, Minnesota 55401
h St � W 77th St•
7700 Pillsbury Ave. S.
Richfield, MN
0 25' 50' 100'
SITE PLAN
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55 DWELLING UNITS:
• 13 1 BR Units
• 27 2BR Units
• 15 3BR Units
• 48 Parking Stalls in Garage
• 35 Parking Stalls on grade
AGENDA SECTION: OTHER BUSINESS
AGENDA ITEM # 6.
STAFF REPORT NO.45
HOUSING AND REDEVELOPMENT AUTHORITY
MEETING
12/20/2021
REPORT PREPARED BY: Melissa Poehlman,Asst. Community Development Director
OTHER DEPARTMENT REVIEW:
EXECUTIVE DIRECTOR REVIEW: John Stark, Executive Director
12/14/2021
ITEM FOR COUNCIL CONSIDERATION:
Consideration of the designation of Melissa Poehlman as Interim Executive Director of the Housing
and Redevelopment Authority.
EXECUTIVE SUMMARY:
Community Development Director John Stark has served as the Housing and Redevelopment Authority's
(HRA) Executive Director since 2018. Director Stark has accepted the City Manager position with the City
of North St. Paul and his last day with the City of Richfield will be December 17, 2021. Melissa Poehlman has
been designated Interim Community Development Director by the City Manager and it is recommended that
she be appointed as Interim Executive Director of the HRA as well.
The Bylaws of the HRA state that the Executive Director "shall have such term as the Authority fixes." In this
case, it is recommend that Ms. Poehlman serve as the Interim Executive Director for a period of time that is
coterminous with her appointment as the Interim Community Development Director, but not to exceed six
months.
RECOMMENDED ACTION:
By motion: Designate Melissa Poehlman as the Interim Executive Director of the Housing and
Redevelopment Authority coterminous with her appointment as the Interim Community Development
Director, but not to exceed six months.
BASIS OF RECOMMENDATION:
A. HISTORICAL CONTEXT
• Past practice has been for the HRA to designate an Interim Executive Director for times of staff
transition.
B. POLICIES (resolutions, ordinances, regulations, statutes. etc)
• Typically, designation of an Executive Director is made at the first meeting in January of each
year; however, given timing of Executive Director Stark's departure, staff recommends an
alternative schedule.
C. CRITICALTIMING ISSUES:
• It is necessary to designate a person to serve as Interim Executive Director to ensure
continuation of HRA operations.
D. FINANCIAL IMPACT:
• There are financial obligations of the HRA that require an Interim Executive Director.
E. LEGAL CONSIDERATION:
• An Executive Director is required to continue with normal business of the HRA.
ALTERNATIVE RECOMMENDATION(S1:
• Appoint someone else as Executive Director, Interim or otherwise.
• Consider a different term of appointment.
PRINCIPAL PARTIES EXPECTED AT MEETING:
N/A