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021825 HRAREGULAR HOUSING AND REDEVELOPMENT AUTHORITY MEETING RICHFIELD MUNICIPAL CENTER, COUNCIL CHAMBERS FEBRUARY 18, 2025 7:00 PM Call to Order Open Forum Please refer to the HRA agenda and minutes web page for additional ways to submit comments. Appr oval of t he M inut es Approval of the minutes of the Regular Housing and Redevelopment Authority meeting of January 21, 2025. AGENDA APPROVAL 1.Approval of the Agenda 2.Consent Calendar contains several separate items which are acted upon by the HRA in one motion. Once the Consent Calendar has been approved, the individual items and recommended actions have also been approved. No further 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 HRA discussion and action. All items listed on the Consent Calendar are recommended for approval. A.Consideration of the approval of a Second Amendment to the Preliminary Development Agreement with Penn Station Apartments LLLP for the development of 40 units of affordable housing at 6501-25 Penn Avenue South. Staff Report No. 4 B.Consideration of a resolution authorizing the acceptance of environmental remediation funding through the Minnesota Brownfields Program by JO Companies, LLC for 6501-25 Penn Avenue South. Staff Report No. 5 3.Consideration of items, if any, removed from Consent Calendar RESOLUTIONS 4.Consideration of a Contract for Private Redevelopment with Hempel Real Estate, dba Hempel Holdings, LLC to provide financial assistance toward the acquisition and preservation of three affordable rental communities. Staff Report No. 6 OTHER BUSINESS HRA DISCUSSION ITEMS 5.HRA Discussion Items E X E C U T IV E D IR E C TO R R E P O R T 6.E xecutive D irector's Report C LAIMS 7.C laims 8.A djournment 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 January 21, 2025 Chair Vrieze Daniels called the meeting to order at 7:01 PM in the Council Chambers. HRA Members Erin Vrieze Daniels, Chair; Mary B. Supple; Sean Hayford Oleary; Gordon Hanson; Present: John Young; HRA Members Absent: Staff Present: Melissa Poehlman, Executive Director; Julie Urban, Assistant Community Development Director; Mark McKinley, Administrative Assistant; OPEN FORUM Chair Vrieze Daniels gave instructions on how to participate in the open forum. Scott Dahlquist, 6913 11th Ave South, shared his perspective on the importance of stable housing for individuals. He expressed his support for approving a memorandum of understanding that would back a request for financial assistance and 4d tax status for Hempel Real Estate regarding the three identified apartment communities. Mr. Dahlquist opined this action is vital to preserving naturally occurring affordable housing in Richfield. David Snyder, 543 W 70th Street, expressed his agreement with Mr. Dahlquist’s comments and the memorandum of understanding. Mr. Snyder acknowledged the HRA’s efforts to avoid setting a precedent but emphasized that the investment is valuable as it supports affordability and stability for working-class residents. Mr. Snyder also expressed his support for the provision requiring a formal process for scheduled tenant and management discussions to quickly address and resolve issues to the satisfaction of tenants. Melissa Gonzalez, 7045 Lyndale Ave South, expressed her support for the HRA’s plan to provide financial assistance and 4d tax status to Hempel Real Estate. Ms. Gonzalez highlighted the difficulty of finding affordable housing and emphasized the importance of preserving existing housing to support Richfield's most vulnerable residents. Ms. Gonzalez referenced the 2015 sale of the now-named Concierge Apartments (formerly Crossroads), noting its impact on federally protected groups. Ms. Gonzalez also raised concerns about possible litigation and urged the city to carefully consider this factor, based on her firsthand experience with the Crossroads sale. She thanked the City of Richfield for taking a proactive approach to addressing housing issues. APPROVAL OF THE MINUTES CALL TO ORDER MOTION: made by Supple, seconded by Hayford Oleary to approve the minutes of the Regular Housing and Redevelopment Authority meeting of December 16,2024. Motion carried: 5-0 ITEM #1 APPROVAL OF THE AGENDA MOTION: made by Hanson, seconded by Young to approve the agenda. Motion carried: 5-0 ITEM #2 APPROVAL OF THE CONSENT CALENDAR Executive Director Poehlman presented the consent calendar. A. Consideration of a resolution authorizing the execution of a Developer Agreement with the West Hennepin Affordable Housing Land Trust, dba Homes Within Reach, for the acquisition, rehabilitation and sale of houses under the New Home Program. Staff Report No. 1 B. Consider a resolution approving an extension of a Contract for Private Redevelopment with Beacon Interfaith Housing Collaborative for the development of 6613-25 Portland Avenue. Staff Report No. 2 MOTION: made by Young, seconded by Hayford Oleary to approve the Consent Calendar items 2A-B. Motion carried 5-0 ITEM #3 CONSIDERATION OF ITEMS, IF ANY, REMOVED FROM THE CONSENT CALENDAR None. ITEM #4 CONSIDERATION OF A MEMORANDUM OF UNDERSTANDING SUPPORTING A REQUEST FOR FINANCIAL ASSISTANCE AND 4D TAX STATUS FROM HEMPEL REAL ESTATE FOR THE ACQUISITION AND PRESERVATION OF THREE AFFORDABLE RENTAL COMMUNITES Assistant Community Development Director Urban presented the report, Commissioners discussed the Memorandum of Understanding (MOU) for Hempel Real Estate’s request for 4d tax status. Commissioner Supple asked if tenant meetings and a tenant council would be held, to which Hempel CEO Josh Krsnak explained tenant surveys and gatherings are already in place to foster community. Commissioner Young asked about the purpose of the MOU, with Assistant Community Development Director Urban explaining it helps gauge City Council support for the tax status. Assistant Community Development Director Urban addressed concerns regarding 43 housing choice voucher residents, clarifying the city would assist as a liaison if the tenant were displaced by a non-preservation buyer but cannot provide financial aid. The commission discussed the potential $9 annual property tax increase, with Executive Director Poehlman stating the tax impact would likely be neutral due to the upcoming decertification of two Tax Increment Financing (TIF) districts. Additional public input opportunities were confirmed for meetings in February. Commissioners and staff discussed the necessary funds were available within the Housing and Redevelopment Authority (HRA) budget and would require reallocation commitment. MOTION: made by Supple, seconded by Hanson to adopt a Memorandum of Understanding supporting a request for financial assistance and 4d tax status from Hempel Real Estate for the acquisition and preservation of three affordable rental communities. Motion carried: 5-0 Commissioner Supple expressed support for the proposal,and emphasized the importance of preserving affordable 2- and 3-bedroom units, which are difficult for families to secure. Commissioner Supple noted that the project would help protect vulnerable residents from displacement, provide options for rental assistance programs, and reduce the risk of gentrification. While acknowledging that the 4d tax status may have broader implications, Commissioner Supple assured that this decision would not set a precedent. Commissioner Hayford Oleary shared concerns about the availability of affordable 2- and 3-bedroom units in Richfield and noted the challenge of compelling private owners to accept Section 8 housing. Despite these concerns, he expressed support for the proposal, as it would provide stability for Section 8 households. Commissioner Young echoed the need for affordable family housing and stressed the serious issue of property taxes and the impact on residents, particularly those on fixed incomes. Commissioner Young supported the memorandum, seeing it as a valuable project for HRA funding. Chair Vrieze Daniels agreed with her fellow commissioners, recognizing the complexities of the tax status but noted the timing with the TIF district properties decertifying minimizes its impact on the remaining tax capacity. Drawing on her years of experience with the HRA, Chair Vrieze Daniels emphasized how hard it is to secure and retain affordable housing and expressed excitement about moving forward with the project. Commissioner Supple concluded by calling for further policy discussions, including exploring the requirement for Section 8 voucher acceptance and the pros and cons of 4d tax status, while Chair Vrieze Daniels thanked attendees for their participation. ITEM #5 HRA DISCUSSION ITEMS No HRA discussion items were presented. ITEM #6 EXECUTIVE DIRECTOR’S REPORT Executive Director Poehlman referenced a request for information future release for properties the HRA owns at 494 and Highway 77, and noted the difficulty of the current commercial market and acknowledged staff time in gauging interest in those sites. Executive Director Poehlman noted Economic Development Manager Jan Youngquist will present a report at a future meeting. Executive Director Poehlman confirmed the upcoming January 28 City Council work session would not be a joint meeting with the HRA. ITEM #7 CLAIMS MOTION: made by Hanson, seconded by Hayford Oleary that the following claims be approved: U.S. BANK 01/21/2025 HRA Checks: #37179-37190 $91,171.53 Section 8 Checks: #136406-136484 $214,895.27 TOTAL $306,066.80 Motion carried: 5-0 ITEM #8 ADJOURNMENT This meeting was adjourned by unanimous consent at 7:40 p.m. Date Approved: February 18, 2025 Erin Vrieze Daniels HRA Chair Mark McKinley Melissa Poehlman Administrative Assistant Executive Director AGENDA SECTION:Consent Calendar AGENDA ITEM #2.A. STAFF REPORT NO. 4 HOUSING AND REDEVELOPMENT AUTHORITY MEETING 2/18/2025 REPORT PREPARED BY: Julie Urban, Asst. Community Development Director OTHER DEPARTMENT REVIEW: EXECUTIVE DIRECTOR REVIEW: ITEM FOR COUNCIL CONSIDERATION: Consideration of the approval of a Second Amendment to the Preliminary Development Agreement with Penn Station Apartments LLLP for the development of 40 units of affordable housing at 6501-25 Penn Avenue South. EXECUTIVE SUMMARY: In 2024, the Housing and Redevelopment Authority (HRA) approved a Preliminary Development Agreement (Agreement) and Amended Agreement with JO Companies, LLC and its affiliates (Developer) for the development of 40 units of affordable housing on HRA-owned property located at 6501 and 6525 Penn Avenue South. In December 2024, the Developer received an award of federal Low Income Housing Tax Credits (LIHTC) and other assistance to finance the development. The next step in the process is for the Developer to apply for land use entitlements and to seek a Contract for Private Redevelopment with the HRA. The Amended Agreement expires on February 28, 2025, and the Developer is seeking an extension along with two modifications to the Amended Agreement. The modifications in the Second Amendment include: extending the Agreement through August 31, 2025; changing the responsible party to the affiliate entity Penn Station Apartments LLLP, and adding language subjecting the Amended Agreement to the successful completion of a Part 58 Environmental Review as required by federal HOME funding. The remaining terms of the Agreement would remain the same. RECOMMENDED ACTION: By Motion: Adopt a resolution approving the extension of a Preliminary Development Agreement with JO Companies, LLC for the development of 40 units of affordable housing on Housing and Redevelopment Authority-owned property located at 6501-6525 Penn Avenue South. BASIS OF RECOMMENDATION: A.HISTORICAL CONTEXT The HRA purchased the property at 6501 Penn Avenue South in 2019 and the adjacent tax-forfeited property at 6525 Penn Avenue South in 2024. The proposed development would include a five-story building with 40 housing units and 34 underground and 14 surface parking spaces. The affordability mix would include 15 units affordable to households earning up to 30% of the Area Median Income (AMI), 18 units affordable at 50% of the AMI, and 7 units Melissa Poehlman, Executive Director 2/12/2025 affordable at 60% of the AMI. Two units will be accessible with roll-in showers. On June 17, 2024, the HRA approved a Preliminary Development Agreement and on July 9, 2024, approved an amendment to that Agreement. Under the terms of the Amended Agreement, the HRA agreed to work with the Developer to: consider financial assistance in the amount of up to $1.485 million in the form of a grant or loan from the Affordable Housing Trust Fund (Trust Fund) and/or a reduced price for the land; agree to not negotiate with any other parties with respect to selling the HRA-owned property and grant a right-of-entry for activities such as environmental testing, and support and cooperate with the Developer as he applies for additional funding. B.EQUITABLE OR STRATEGIC CONSIDERATIONS OR IMPACTS The proposed affordable housing development provides an opportunity for the development of accessible housing units, units with a larger number of bedrooms for families with children, and housing units affordable to households earning 30% of the AMI. The proposed affordable housing development would help to meet the Strategic Plan goal to maintain Richfield as an affordable place to live. C.POLICIES (resolutions, ordinances, regulations, statutes, exc): The City's Inclusionary Housing Policy requires at least 20% of the units receiving financial assistance from the City be affordable at 60% of the AMI. The proposed development would provide a greater number of affordable units at greater levels of affordability. The project received an award of federal HOME funds. A Part 58 Environmental Review must be completed on the property as a condition of these funds. The review must determine that the property is a desirable property for the project in order for the funds to be provided and any agreements must be contingent on this determination. D.CRITICAL TIMING ISSUES: The Developer anticipates applying for land use entitlements in the next few weeks. At the same time that the entitlements are being processed, staff will continue its work with the Developer to finalize the terms of financial assistance through a Contract for Private Redevelopment. Consideration of all items are anticipated in Spring of this year. E.FINANCIAL IMPACT: The development has demonstrated a need for financial assistance from the HRA in an amount up to $1.485 million. Staff and the HRA's financial consultant will work with the Developer to determine if the assistance takes the form of a land write-down and/or an award from the Trust Fund. F.LEGAL CONSIDERATION: The HRA Attorney prepared the Preliminary Development Agreement. Several additional approvals will be needed before the project can move forward, including: HRA approval of a Contract for Private Redevelopment, HRA approval of the sale of land following a public hearing, and City Council approval of zoning and subdivision entitlements. ALTERNATIVE RECOMMENDATION(S): Decide not to approve the Second Amendment to the Preliminary Development Agreement with Penn Station Apartments LLLP. PRINCIPAL PARTIES EXPECTED AT MEETING: NA ATTACHMENTS: Description Type Resolution Resolution Letter Second Amendment Contract/Agreement HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA RESOLUTION NO. 1497 RESOLUTION APPROVING A SECOND AMENDMENT TO PRELIMINARY REDEVELOPMENT AGREEMENT WITH PENN STATION APARTMENTS LLLP 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, the “Authority” owns the real property located at 6501 and 6525 Penn Avenue South in the City of Richfield, Minnesota (the “City”); and WHEREAS, JO Companies, LLC, a Minnesota limited liability company, or one of its wholly owned affiliates (collectively, the “Redeveloper”), proposed to purchase the real property located at 6501 Penn Avenue South and 6525 Penn Avenue South (collectively, the “Redevelopment Property”) and construct thereon a multifamily housing project consisting of approximately 40 affordable housing units and approximately 34 underground and 14 surface parking spaces (the “Project”); and WHEREAS, on June 17, 2024, the Board of Commissioners of the Authority (the “Board”) approved a Preliminary Redevelopment Agreement (the “Preliminary Agreement”) between the Authority and the Redeveloper, which sets forth the Redeveloper’s intentions and the conditions under which the Redeveloper will undertake the Project; and WHEREAS, on July 9, 2024, the Board approved an Amendment to the Preliminary Development Agreement (the “Amended Agreement”) between the Authority and the Redeveloper, which provided an updated valuation of the Redevelopment Property of $1,500,000 and sets a total amount of financial assistance at no more than $1,485,000; and WHEREAS, the Redeveloper has created an affiliate, Penn Station Apartments LLLP, a limited liability limited partnership, for the development and is requesting that the Second Amendment to the Preliminary Agreement (the “Second Amendment”) be between the Authority and Penn Station Apartments LLLP; and WHEREAS, in order to obtain all necessary land use approvals and approval of a Contract for Private Redevelopment with the Authority, the Redeveloper is requesting an extension of the Amended Agreement deadline for six months to August 31, 2025; and WHEREAS, as a condition of federal HOME funds that the Redeveloper has been awarded, a Part 58 Environmental Review process is required, and language stating that the agreement is subject to completion of the review and a determination of desirability of the property for the project is required to be included in the Second Amendment; and WHEREAS, the Board has reviewed the requests and finds that the Second Amendment terms are in the best interest of the City and its residents; and 2 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 Contract is hereby amended. 2.The Chair and Executive Director are hereby authorized to execute and deliver any and all documents deemed necessary to carry out the intentions of this resolution and the Contract. . Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 18th day of February, 2025. Erin Vrieze Daniels, Chair Sean Hayford Oleary, Secretary RC125-399 (JAE) 955888v4 SECOND AMENDMENT TO AMENDED PRELIMINARY REDEVELOPMENT AGREEMENT THIS SECOND AMENDMENT TO AMENDED PRELIMINARY REDEVELOPMENT AGREEMENT, made as of the 18th day of February, 2025 (the “Agreement”), is between the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota, a Minnesota public body corporate and politic (the “Authority”), and Penn Station Apartments LLLP, a Minnesota limited liability limited partnership (the “Redeveloper”). The Authority and the Redeveloper are referred to herein as the “Parties” or a “Party.” RECITALS First: The Redeveloper and the Authority have been engaged in informal discussions regarding the redevelopment of certain real property located at 6501 and 6525 Penn Avenue South in the City of Richfield, Minnesota (the “City”), which is legally described in EXHIBIT A attached hereto (the “Redevelopment Property”); Second: The portion of the Redevelopment Property located at 6525 Penn Avenue South is forfeited property that the Authority has submitted payment to the County to purchase and is waiting for the State of Minnesota to provide a deed for the property; Third: The Redeveloper proposes to purchase the Redevelopment Property from the Authority and construct on the Redevelopment Property a multifamily housing project consisting of approximately 40 affordable housing units and approximately 34 underground and 14 surface parking spaces (the “Project”); Fourth: All of the units within the Project will be affordable, with a portion of the units occ upied by residents whose incomes do not exceed thirty percent (30%) of the area median gross income, a portion occupied by residents whose incomes do not exceed fifty percent (50%) of the area median gross income, and the remainder of the units occupied by residents whose incomes do not exceed sixty percent (60%) of the area median gross income; Fifth: In order to assist the Redeveloper with the Project, the Authority is considering financial assistance for the Project in an amount of up to $1,485,000 by selling the Redevelopment Property to the Redeveloper at a reduced cost of $500,000 (the Authority requested a Broker Opinion regarding the value of the Property and the value was determined to be $1.5 million) and providing financial assistance for the Project using pooled tax increment from the Affordable Housing Trust Fund in an amount up to $485,000; Sixth: Based on initial reviews of the proposal, it appears that the Project is potentially feasible; however, further review is needed; Seventh: The Parties wish to cooperate in further analyzing the potential and the feasibility of the Project and are willing to proceed with such analysis as described in this Agreement; Eighth: The Parties acknowledge that the Redeveloper will expend substantial time and effort, and incur substantial expense in pursuing the Project; Ninth: The Redeveloper is willing to undertake the activities described in this Agreement only with the reasonable assurance from the Authority that it will support and cooperate with the Redeveloper in its efforts; 2 Tenth: The Authority and the Redeveloper have executed this Agreement to document their understanding with respect to the proposed Project. Eleventh: This Agreement is extended through August 31, 2025 (the “Term”) but may be extended by the mutual agreement of both Parties. AGREEMENT NOW, THEREFORE, in consideration of the premises and mutual obligations of the Parties contained herein, each of them does hereby represent, covenant and agree with the other as follows: 1.Statement of Intent. It is the intention of the Parties that during the Term of this Agreement the following activities will take place; provided, however, that the Authority obtains the deed to the portion of the Redevelopment Property located at 6525 Penn Avenue South: (a)Plan Review and Refinement. The Redeveloper will complete and provide a general redevelopment plan, including parking layout and design, to the Authority for review and comment. This submission shall be made on or before February 25, 2025, as an application for sketch plan review. This review involves a staff review of the general redevelopment plan by Authority staff. Following the sketch plan review, the Redeveloper will undertake any additional studies or refinements to the general redevelopment plan for the Project that are necessary to determine that the plan (i)complies with the City’s land use requirements; and (ii) provides sufficient detail to permit the reviews described in Section 1(d) below. (b)Financial Feasibility. The Redeveloper has provided the Authority with a financial feasibility analysis of the Project, including detailed sources and uses of all funding and all expenditures expected for the construction of the Project and a Project pro forma. (c)Authority Analysis of Project. The Authority’s fiscal consultant will conduct a financial analysis of the Redeveloper and the Project. The purpose of the Authority’s analysis is to determine the Redeveloper’s ability to finance the proposed Project. The analysis will consider such factors as the Redeveloper’s capability to arrange for financing, the anticipated level of assistance available to the Project from the Authority or other sources, and the Redeveloper’s ability to provide equity to the Project. (d)Acquisition of Redevelopment Property by Redeveloper. The Authority currently owns the portion of the Redevelopment Property located at 6501 Penn Avenue South and anticipates obtaining a deed to the portion of the Redevelopment Property located at 6525 Penn Avenue South by the end of July 2024. The Authority understands that in order for the Project to proceed, the Redeveloper must purchase the Redevelopment Property from the Authority. The Authority Board must hold a duly noticed public hearing before conveying the Redevelopment Property to the Redeveloper. During the Term of this Agreement, the Authority will not negotiate with other parties with respect to the purchase of the Redevelopment Property. (e)Contract Negotiation. Under the condition that the Redeveloper is awarded tax credits for the Project, the Parties will attempt in good faith to negotiate the terms of a contract 3 for private development (the “Contract”) which will provide the terms of sale and the purchase price of the Redevelopment Property, the nature and timing of the Project and any private improvements to be constructed, and the form, amount and conditions of any economic assistance to be provided by the Authority for the Project. The Contract will contain such additional terms as either Party believes are necessary for the transaction. (f)Right of Entry. During the Term of this Agreement (as may be extended by the mutual agreement of both Parties), the Authority will grant the Redeveloper a right to enter the Redevelopment Property as necessary for surveying the Redevelopment Property, geotechnical and environmental tests, and other studies of the Redevelopment Property. The Authority will also allow the Redeveloper to post a development and/or marketing sign on the Redevelopment Property. (g)Cooperation with Grant and Entitlement Applications. The Redeveloper plans to prepare applications for various grants and entitlements for the Project. The Authority agrees to cooperate with the Redeveloper to obtain the various grants, including supplying information for the grant applications and requesting approval from the Authority Board if necessary. (h)Tax Credit Application. The Redeveloper will apply for 9% tax credits for the Project on or before July 11, 2024. The Authority agrees to cooperate with the Redeveloper in its application for low income housing tax credits, including requesting approval from the Authority Board if necessary. 2.Undertaking by Redeveloper. During the Term of this Agreement, the Redeveloper will undertake all of the activities necessary, in the Redeveloper’s discretion, to accomplish the activities described in Section 1 of this Agreement required to be performed by the Redeveloper. 3.Undertaking and Agreement by Authority. The Authority agrees to cooperate with the Redeveloper in the Redeveloper’s undertakings and agrees to utilize its best efforts, subject to the Redeveloper’s performance, to accomplish the activities described in Section 1 of this Agreement, which includes an analysis of the financial feasibility of the Project and the nature, area, and financial implications of any tax increment financing district which might be established. 4.Term. This Agreement is effective from the date hereof through February 28, 2025, unless extended with approval of the Authority Board, provided, in the event either Party, after consultation with the other Party, determines in good faith that the other Party is not diligently pursuing the Project or its obligations hereunder; or the Redeveloper determines, in good faith, that the Project is not feasible, such determining Party may terminate this Agreement upon thirty (30) days’ written notice to the other. The Authority may also terminate this Agreement for failure of the Redeveloper to provide additional funds pursuant to Section 5 below. The Parties each waive any claim or cause of action that they may have against the other Party based upon the termination of this Agreement by such other Party. The Parties may, by mutual written agreement, extend the Term of this Agreement for such further periods as determined to be appropriate from time to time. 4 5.Administrative Costs of Authority. The Redeveloper agrees and understands that it is responsible for and will pay to the Authority $2,000 in Authority staff costs, along with all out-of-pocket costs incurred by the Authority (including without limitation reasonable attorney and fiscal consultant fees) in the negotiation and preparation of this Agreement and other documents and agreements in connection with the activities and the Project contemplated hereunder (collectively, the “Administrative Costs”). The Authority and Redeveloper agree that the Administrative Costs shall not exceed $15,000 unless agreed to by both Parties. The Administrative Costs shall be evidenced by invoices, statements or other reasonable written evidence of the costs incurred by the Authority. The Redeveloper provided a deposit to the Authority in the amount of $5,000 (the “Deposit”) to pay Administrative Costs. If at any time the Deposit drops below $1,000, the Redeveloper shall replenish the deposit to the full $5,000 within thirty (30) days after receipt of written notice thereof from the Authority. The Authority shall provide invoices to the Redeveloper for all payments deducted from the Deposit. If at any time the Deposit is insufficient to pay invoices related to the Project, the Authority will ask for additional Deposits from the Redeveloper. If the additional Deposit is not made within thirty (30) days following the date of such request, the Authority may elect to either suspend its performance under this Agreement or terminate this Agreement. Such suspension or termination will be effective on the date it is given in writing, or on such later date specified in the notification. Any unexpended or unencumbered portion of the Deposit shall be returned to the Redeveloper upon the expiration or termination of this Agreement. 6.Termination of Agreement. This Agreement may be terminated upon five (5) days’ written notice by a Party to the other Party if: (a)the Authority is unable to obtain the deed to the portion of the Redevelopment Property located at 6525 Penn Avenue South; (b)in the respective good faith judgment of any Party, an impasse has been reached in the negotiation or implementation of any material term or the completion or execution of any material condition of this Agreement or the Contract; or (c)a Party fails to perform any of its obligations under this Agreement. 7.Miscellaneous. (a)This Agreement constitutes the entire agreement between the Parties relative to the proposed Project. Unless specifically described herein, no obligation shall be inferred or construed. (b)The redevelopment of the Redevelopment Property will be in accordance with the Contract or other agreements which the Parties shall, in good faith, attempt to negotiate during the Term of this Agreement. (c)The Redeveloper understands that further and separate action, for which no obligation is created hereunder, will be required before the Authority or the Redeveloper is obligated 5 to take various actions with respect to the Project. Those actions may include, without limitation: 1)Zoning and subdivision approvals to the extent any are required; 2)Construction of public improvements to serve the Project; and 3)Negotiation of and approval of the Contract by the Authority Board. (d)The Redeveloper further understands that many of the actions which the Authority or the City may be called upon to take require the reasonable discretion and, in some instances, the legislative judgment of the Authority or the City, and such actions may be made only following established procedures; and the Authority may not, by agreement, agree in advance to any specific decision in such matters. (e)Notice or demand or other communication between or among the Parties shall be sufficiently given if sent by certified or registered mail, postage prepaid, return receipt requested or delivered personally: Penn Station Apartments LLLP c/o JO Companies, LLC 510 Brunson Street, Suite 100 Saint Paul, MN 55130 Attn: Johnny Opara Housing and Redevelopment Authority in and for the City of Richfield, Minnesota 6700 Portland Avenue South Richfield, MN 55423 Attn: Melissa Poehlman, Executive Director (f)This Agreement is contingent upon the Authority obtaining the deed to the portion of the Redevelopment Property located at 6525 Penn Avenue South. In the event that the Authority is unable to obtain the deed to this property, this Agreement shall terminate. (g)“This agreement is subject to the completion of an environmental review in accordance with 24 CFR Part 58 and final determination of the desirability of the property for the project by the Responsible Entity, as defined in 24 CFR 58.2(a)(7).” (The remainder of this page is intentionally left blank.) S-1 IN WITNESS WHEREOF, the Parties have executed this Preliminary Redevelopment Agreement effective the date and year first above written. HOUSING AND REDEVELOPMENT PENN STATION APARTMENTS LLLP, a AUTHORITY IN AND FOR THE CITY OF Minnesota limited liability limited partnership RICHFIELD, MINNESOTA company By: _____________________________ By: Erin Vrieze Daniels Its: Chair Its: By: _____________________________ Melissa Poehlman Its: Executive Director A-1 EXHIBIT A LEGAL DESCRIPTION OF THE REDEVELOPMENT PROPERTY 6501 Penn Avenue South: Par. 1: The West ½ of the South 109.6 feet of the North 767.2 feet of the North ¾ of t he West ¼ of the Southwest Quarter of the Northwest Quarter except the North 30 feet thereof; Par. 2: The West ½ of the South 109.6 feet of the North 876.8 feet of the North ¾ of the West ¼ of the Southwest Quarter of the Northwest Quarter; All in Section 28, Township 28, Range 24, in the Village of Richfield, Hennepin County, Minnesota. Par. 3: The South 109.6 feet of the North 767.2 feet of the North 3/4 of the West Quarter of the Southwest Quarter of the Northwest Quarter of Section 28, Township 28, Range 24, except the South 50 feet of the East 1/2 thereof and except that part of the West 1/2 lying South of the North 30 feet thereof, in the City of Richfield, Hennepin County, Minnesota. 6525 Penn Avenue South: W 1/8 OF THAT PART OF N ¾ OF SW ¼ OF NW ¼ LYING S OF N 876.8 FT THOF EX HWY UNPLATTED 28 028 24 RC125-399 (JAE) 955866v1 AGENDA SECTION:Consent Calendar AGENDA ITEM #2.B. STAFF REPORT NO. 5 HOUSING AND REDEVELOPMENT AUTHORITY MEETING 2/18/2025 REPORT PREPARED BY: Julie Urban, Asst. Community Development Director OTHER DEPARTMENT REVIEW: EXECUTIVE DIRECTOR REVIEW: ITEM FOR COUNCIL CONSIDERATION: Consideration of a resolution authorizing the acceptance of environmental remediation funding through the Minnesota Brownfields Program by JO Companies, LLC for 6501-25 Penn Avenue South. EXECUTIVE SUMMARY: The Housing and Redevelopment Authority (HRA) purchased the property at 6501 Penn Avenue South in 2019. The HRA ordered Phase I and Phase II environmental investigations of the property, and soil contamination was identified. The HRA chose to disclose the contamination to potential developers with the expectation that the developer would take responsibility for remediation. In 2024, the HRA approved a Preliminary Development Agreement (Agreement) with JO Companies, LLC (Developer) for the development of 40 units of affordable housing on 6501 and 6525 Penn Avenue South. The Developer is moving forward with various aspects of the development process, including planning for the remediation of the contamination. As part of that process, the Developer has applied for and received a grant from the Minnesota Brownfields Gap Financing Program, contingent upon a resolution from the City or HRA. RECOMMENDED ACTION: By Motion: Adopt a resolution authorizing JO Companies, LLC to accept a grant from Hennepin County's Minnesota Brownfields Gap Financing Program to fund remediation activities on 6501-25 Penn Avenue South. BASIS OF RECOMMENDATION: A.HISTORICAL CONTEXT The HRA purchased the property at 6501 Penn Avenue South in 2019 and the adjacent tax-forfeited property at 6525 Penn Avenue South in 2024. A Phase I investigation found soil contamination on the 6501 Penn Avenue South property; no investigation has been done yet for 6525 Penn Avenue South. On June 17, 2024, the HRA approved a Preliminary Development Agreement and and on July 9, 2024, approved an amendment to that Agreement. Under the terms of the Amended Agreement, the HRA agreed to work with the Developer to support and cooperate with the Developer as he applies for funding. A request to extend the Preliminary Development Agreement for six months is also on the HRA agenda for February 18. B.EQUITABLE OR STRATEGIC CONSIDERATIONS OR IMPACTS The proposed affordable housing development provides an opportunity for the development of accessible housing units, units with a larger number of bedrooms for families with children, and housing Melissa Poehlman, Executive Director 2/12/2025 units affordable to households earning 30% of the A rea Median Income (A MI). The proposed affordable housing development would help to meet the S trategic P lan goal to maintain Richfield as an affordable place to live. C .P OL IC IE S (resolutions, ordinances, regulations, statutes, exc): S tate law requires that contaminated soil be remediated before a new development can take place. It is the HRA 's practice to encourage the use of outside resources to help finance redevelopment activities. D .C R IT IC AL T IMIN G IS S U E S: The D eveloper anticipates applying for land use entitlements in the next few weeks. A t the same time that the entitlements are being processed, staff will continue its work with the D eveloper to finalize the terms of financial assistance through a C ontract for P rivate Redevelopment. C onsideration of all items are anticipated in S pring of this year. E .F IN AN C IAL IMPAC T: The D eveloper was awarded $24,950 in grant funding from the Minnesota B rownfields P rogram, contingent upon a resolution from the C ity or HRA . The P rogram is funded by Hennepin C ounty so has no financial impact on the HRA . F.L E GAL C ON S ID E R AT ION: The Minnesota B rownfields P rogram requires a resolution from the C ity where a project is located. In this case, because the HRA is the owner of the P roperty, a resolution from the HRA is acceptable. ALTE R N AT IV E R E C O MME N D ATIO N(S): Decide not to approve the resolution. P R IN C IPAL PAR TIE S E X P E C TE D AT ME E TIN G: NA AT TAC H ME N T S: D escription Type Resolution Resolution L etter HRA RESOLUTION NO. 1498 RESOLUTION AUTHORIZING JO COMPANIES, LLC TO ACCEPT A GRANT FROM HENNEPIN COUNTY’S MINNESOTA BROWNFIELDS GAP FINANCING PROGRAM WHEREAS, JO Companies, LLC (the “Developer”) is proposing to construct Penn Station (the “Project”), a development containing 40 units of work force housing on property owned by the City’s Housing and Redevelopment Authority (the “HRA”) located at 6501-25 Penn Avenue South (the “Property”); and WHEREAS, the HRA conducted environmental testing on the Property that indicates that some environmental contamination is present and needs to be remediated; and WHEREAS, on June 17, 2024, the HRA approved a Preliminary Development Agreement (the “Agreement”) with the Developer to purchase the Property and develop the Project; and WHEREAS, the Developer applied for $24,950 in funding through Hennepin County’s Minnesota Brownfields Gap Financing Program (the “Program”); and WHEREAS, the Program’s application requires a resolution from the HRA as owner of the Property; and NOW, THEREFORE, BE IT RESOLVED 1.The HRA authorizes JO Companies, LLC to accept funding from the Minnesota Brownfields Gap Financing Program. Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 18th day of February, 2025. Erin Vrieze Daniels, Chair ATTEST: Sean Hayford Oleary, Secretary AGENDA SECTION:RESOLUTIONS AGENDA ITEM #4. STAFF REPORT NO. 6 HOUSING AND REDEVELOPMENT AUTHORITY MEETING 2/18/2025 REPORT PREPARED BY: Julie Urban, Asst. Community Development Director OTHER DEPARTMENT REVIEW: EXECUTIVE DIRECTOR REVIEW: ITEM FOR COUNCIL CONSIDERATION: Consideration of a Contract for Private Redevelopment with Hempel Real Estate, dba Hempel Holdings, LLC to provide financial assistance toward the acquisition and preservation of three affordable rental communities. EXECUTIVE SUMMARY: Hempel Real Estate, dba Hempel Holdings, LLC (Developer) is proposing to purchase three affordable Richfield apartment complexes: New Orleans Court, Richland Court, and Winton House (Properties), containing a total of 236 units (current estimate of 477+ residents). In order to retain the affordability of the properties and to undertake moderate rehabilitation activities, the Developer is seeking financial assistance from the Housing and Redevelopment Authority (HRA) in exchange for limiting rents and capping resident income levels, which would enable the Properties to qualify for 4d tax status (0.25% compared to a non- affordable apartment rate of 1.25%). Under the proposed Contract for Private Redevelopment, the HRA would provide the Developer with a $1.57 million 15-year, deferred loan, funded from the City's Affordable Housing Trust Fund (Trust Fund). The Developer would also apply for $200,000 from the Economic Development Authority's (EDA) Apartment Remodeling Loan Program toward remodeling activities. A Declaration of Restrictive Covenants (Declaration) would be filed against the Properties requiring that rent and income limits in all one and two bedroom units be restricted to 60% of the Area Median Income (AMI) and in all three bedroom units at 70% AMI. The Declaration would also require the Properties to accept Section 8, Kids@Home, and other forms of rental assistance operated by the HRA; to agree to meetings between property management and City staff; and to regularly seek feedback from residents. Filing the Declaration will qualify the Properties for 4d tax status, thereby reducing the taxes paid by the Properties. The City Council approved the use of 4d tax status on January 28, 2025. RECOMMENDED ACTION: By Motion: Adopt a resolution approving the execution and delivery of a Contract for Private Redevelopment and Declaration of Restrictive Covenants with Hempel Real Estate, dba Hempel Holdings, LLC or a subsidiary thereof. BASIS OF RECOMMENDATION: A.HISTORICAL CONTEXT Melissa Poehlman, Executive Director 2/12/2025 T he Properties, containing a total of 236 units (current estimate of 477+ residents) are located along 77th Street at Wentworth, and on 14th and Cedar Avenues (see attached map). T he Properties, built in the 1960s, are considered Naturally Occurring Affordable Housing, or N OAH properties. T he buildings contain a mix of one, two, and three bedroom units, and rent levels are considered affordable to households earning between 50% and 60% AMI. F ailure to support a preservation-oriented buyer could result in the P roperties being purchased by a market-rate buyer who could raise rents, displace residents, and/or displace rental assistance residents. S upporting the purchase of the P roperties by a preservation-oriented buyer guarantees continued affordability for the P roperties and offers many benefits to the residents and the community, including the following: housing stability for the 477+ residents, including no displacement of current residents; preservation of the affordability of larger apartment units, including 24 three bedroom and 132 two bedroom apartments; preservation of housing for 43 S ection 8 and 5 K ids@Home households and continued partnership with a preservation-oriented owner to provide more deeply affordable housing opportunities for rental assistance clients, the majority of whom earn less than 30% of the A MI (80% of the current S ection 8 residents in the P roperties earn less than 30% of the A MI); an investment of up to $2.5 million in physical improvements to the aging buildings including safety and security, building mechanicals, roofs and windows, energy-efficiency measures, amenity improvements, paint, flooring, lighting, and kitchen upgrades; and local ownership with in-house property management services offering opportunities to partner for the benefit of residents. On January 21, 2025, the H R A approved a Memorandum of Understanding with the Developer laying out potential terms for providing financial assistance toward the acquisition. On January 28, 2025, the City Council approved the use of the 4d tax status in exchange for the preservation of affordability. B .E QU ITAB L E OR S T R AT E GIC C ON S ID E R AT ION S OR IMPAC T S P reserving the C ity's NOA H apartment communities furthers the S trategic P lan goal to maintain Richfield as an affordable place to live. The C ity's rental housing is also occupied by a significant number of B lack, Indigenous, and P eople of C olor (B IP O C ) residents and residents with lower incomes. Investing in housing stability is an investment in the health and vitality of these communities. C .P OL IC IE S (resolutions, ordinances, regulations, statutes, exc): Minnesota S tatutes 273.128 provides a property tax break for affordable rental properties under the L ow Income Rental C lassification P rogram (L IRC ), commonly referred to as the 4d P rogram. The C lass 4d property class rate is 0.25%, and the typical rate for rental housing is 1.25%. Affordable rental properties are eligible for the 4d tax classification when a property restricts at least 20% of the units at rents affordable at 60% of the AMI and when financial assistance is provided by federal, state, or local government requiring these rent and income restrictions. D .C R IT IC AL T IMIN G IS S U E S: The D eveloper is in the due diligence period and anticipates closing on the properties in March. A pplications for 2026 4d property tax status are due to Minnesota Housing by March 31st. E .F IN AN C IAL IMPAC T: The NO A H Impact F und is providing over $8.7 million in equity for the acquisition and preservation of the P roperties; however, a financial gap remains. High interest rates, high operating costs, the large number of units, modest rents, and limit to the amount of equity the NO A H Impact F und can provide create the gap that the D eveloper is asking the HRA to fill with funds from the Trust F und, A partment Remodeling L oans, and with 4d tax status. $200,000 of the request can be provided with A partment Remodeling L oans, funded from repayments of loans that were made to the current property owner. The remainder would be funded by the Trust F und and 4d tax status. There is a small amount of funds remaining in the Trust F und, and additional funds are available ($2.8 million) in the S pending P lan fund that could be transferred to the Trust F und for the assistance. E hlers, the C ity/HRA 's financial consultant, reviewed the proposal and determined that, if the HRA were to provide the requested assistance, the returns on investment to the Developer would not exceed what is typical in the market. The returns are well below an average 10% return on equity over 20 years. Forty-three Section 8 recipients reside in the Properties (out of 177 total Section 8 clients living in Richfield). If the Properties were to sell to a non-preservation buyer and rents raised, the loss of this housing for rent-assistance clients could impact the viability of the Section 8 program here in Richfield. Eighty percent of these Section 8 households earn less than 30% of the AMI. The 4d tax classification provides a benefit to the property owner but shifts the burden to other taxpayers. If 4d is approved for the Properties, all taxing jurisdictions will have their tax capacity reduced by $278,432. The City taxes paid by the owner of the median-valued home would increase by an estimated $9.97 annually. The increase in tax capacity anticipated in 2026 when two large Tax Increment Financing districts de-certify will offset the reduced tax capacity from the 4d tax classification. F.LEGAL CONSIDERATION: A Declaration of Restrictive Covenants will be recorded against the Properties requiring that all one and two bedroom units charge rents affordable at 60% AMI and three bedroom units affordable at 70% AMI, and that units be restricted to households meeting those income requirements. The limits will be required for 15 years. The Declaration will also require that the Properties accept households using Section 8 and other local rental assistance programs, to agree to meetings between property management and City staff, and to regularly seek feedback from residents Providing assistance and placing rent/income restrictions will make the Properties automatically eligible for the 4d tax classification. A Mortgage will be recorded against the Properties to secure, along with a Promissory Note, the HRA's loan. The Mortgage will be in position behind the Developer's primary lender and the NOAH Impact Fund. Not all details regarding the principal lender have been finalized, so adjustments will likely need to be made to the final form of the documents. The HRA Attorney and Executive Director will approve any minor changes to these and other documents requested by the principal funders. More substantive changes would be brought back to the HRA for consideration. ALTERNATIVE RECOMMENDATION(S): 1. Approve the Contract for Private Redevelopment with modifications. 2. Decide not to approve the Contract for Private Redevelopment. PRINCIPAL PARTIES EXPECTED AT MEETING: Josh Krsnak, Hemple Holdings, LLC ATTACHMENTS: Description Type Resolution Resolution Letter Contract for Private Redevelopment Contract/Agreement Map of Properties Exhibit Memorandum of Understanding Backup Material RC125-402-1008022.v1 HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA RESOLUTION NO. 1499 RESOLUTION APPROVING THE EXECUTION AND DELIVERY OF CONTRACT FOR PRIVATE REDEVELOPMENT AND DECLARATION OF RESTRICTIVE COVENANTS WITH HEMPEL HOLDINGS, LLC, OR A SUBSIDIARY THEREOF WHEREAS, the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota (the “Authority”) has recently learned that there are three naturally occurring affordable housing (“NOAH”) properties up for sale in the City of Richfield (the “City”) and a preservation buyer is interested in purchasing the properties; and WHEREAS, the NOAH properties consist of the New Orleans Court Apartments and Townhomes (located at 50 West 78th St), the Richland Court Apartments (located at 1300-1324 East 78th St), and the Winton House Apartments (located at 7500/7544 Cedar Ave); and WHEREAS, the Authority proposes to work with Hempel Holdings, LLC, a Minnesota limited liability company, or a subsidiary thereof (collectively, the “Redeveloper”), to preserve and maintain the affordability of the three existing NOAH properties, and to that end the Board of Commissioners of the Authority (the “Board”) approved the execution and delivery of a Memorandum of Understanding with the Redeveloper at its meeting on January 21, 2025; and WHEREAS, the Board has been presented with a Contract for Private Redevelopment (the “Agreement”) between the Authority and the Redeveloper, which sets forth the responsibilities of and actions to be taken by the Redeveloper and the Authority with respect to the purchase and redevelopment of the NOAH properties by the Redeveloper; and WHEREAS, to preserve the affordability of the NOAH properties and to ensure that the Redeveloper continues to maintain the affordability of the NOAH properties, the Authority requires that the Redeveloper execute and deliver a Declaration of Restrictive Covenants (the “Declaration”), a form of which is included in the Agreement on file with the Board, which will allow the NOAH properties to be eligible for 4d tax classification; and WHEREAS, the Board has reviewed the Agreement and the Declaration and finds that the execution thereof by the Authority and performance of the Authority’s obligations thereunder are in the best interest of the City and its residents; and NOW, THEREFORE, BE IT RESOLVED, by the Board of Commissioners of the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota as follows: 1.The Agreement and the Declaration presented to the Board and on file with the staff of the Authority are 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 documents by such officials shall be conclusive evidence of approval. 2.The Chair and Executive Director are hereby authorized to execute the Agreement and the Declaration on behalf of the Authority and to carry out the Authority’s obligations thereunder. 2 RC125-402-1008022.v1 3.The Chair and the Executive Director are hereby also authorized to execute any additional documents or certificates determined to be necessary by staff and counsel to the Authority in order to carry out the intention of this resolution, the Agreement, and the Declaration. 4.This resolution shall be in full force and effect upon its adoption. Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 18th day of February, 2025. Erin Vrieze Daniels, Chair Sean Hayford Oleary, Secretary RC125-402-1007612.v1 CONTRACT FOR PRIVATE REDEVELOPMENT between HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA and HEMPEL HOLDINGS, LLC Dated ____________, 2025 This document was drafted by: Kennedy & Graven, Chartered (JAE) 150 South Fifth Street, Suite 700 Minneapolis, Minnesota 55402-1299 Telephone: 612-337-9300 i RC125-402-1007612.v1 TABLE OF CONTENTS Page PREAMBLE ................................................................................................................................................... 1 ARTICLE I Definitions Section 1.1. Definitions ................................................................................................................................. 3 ARTICLE II Representations and Warranties Section 2.1. Representations by the Authority .............................................................................................. 5 Section 2.2. Representations by the Redeveloper ......................................................................................... 5 ARTICLE III Property Acquisition; Financing Section 3.1. Status of Redevelopment Property ........................................................................................... 7 Section 3.2. Environmental Conditions ........................................................................................................ 7 Section 3.3. AHTF Loan ............................................................................................................................... 7 Section 3.4. Other Sources of Funding ......................................................................................................... 8 Section 3.5. Payment of Administrative Costs ............................................................................................. 8 Section 3.6. Records ...................................................................................................................................... 8 Section 3.7. Purpose of Assistance ............................................................................................................... 8 ARTICLE IV Affordability Covenants Section 4.1. Affordability Covenants ............................................................................................................ 9 Section 4.2. Affordable Housing Reporting ................................................................................................. 9 Section 4.3. Notice of Sale of Properties ...................................................................................................... 9 ARTICLE V Insurance Section 5.1. Insurance ................................................................................................................................. 10 ARTICLE VI [Reserved] ARTICLE VII [Reserved] ARTICLE VIII Prohibitions Against Assignment and Transfer; Indemnification Section 8.1. Representation as to Redevelopment ...................................................................................... 14 Section 8.2. Redeveloper’s Transfer of Property and Assignment of Agreement ..................................... 14 ii RC125-402-1007612.v1 Section 8.3. Release and Indemnification Covenants ................................................................................. 14 ARTICLE IX Events of Default Section 9.1. Events of Default ..................................................................................................................... 15 Section 9.2. Remedies on Default ............................................................................................................... 15 Section 9.3. Repayment of AHTF Loan ..................................................................................................... 16 Section 9.4. [Reserved] ............................................................................................................................... 16 Section 9.5. [Reserved] ............................................................................................................................... 16 Section 9.6. No Remedy Exclusive ............................................................................................................. 16 Section 9.7. No Additional Waiver Implied by One Waiver ...................................................................... 16 Section 9.8. Attorneys’ Fees and Costs....................................................................................................... 16 ARTICLE X Additional Provisions Section 10.1. Conflict of Interests; Authority Representatives Not Individually Liable.............................. 17 Section 10.2. Equal Employment Opportunity ............................................................................................. 17 Section 10.3. Restrictions on Use ................................................................................................................. 17 Section 10.4. Provisions Not Merged With Deed ......................................................................................... 17 Section 10.5. Titles of Articles and Sections ................................................................................................ 17 Section 10.6. Notices and Demands ............................................................................................................. 17 Section 10.7. Counterparts ............................................................................................................................ 17 Section 10.8. Recording ................................................................................................................................ 18 Section 10.9. Amendment ............................................................................................................................. 18 Section 10.10. Interpretation; Concurrence .................................................................................................... 18 Section 10.10. Memorandum of Understanding ............................................................................................. 18 SIGNATURES ................................................................................................................................................ S-1 EXHIBIT A Redevelopment Property ....................................................................................................... A-1 EXHIBIT B Form of Declaration of Restrictive Covenants ..................................................................... B-1 1 RC125-402-1007612.v1 CONTRACT FOR PRIVATE REDEVELOPMENT THIS CONTRACT FOR PRIVATE REDEVELOPMENT, made as of the ___ day of ________, 2025 (the “Agreement”), is between the HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA, a public body corporate and politic under the laws of the State of Minnesota (the “Authority”), and HEMPEL HOLDINGS, LLC, a Minnesota limited liability company (the “Redeveloper”). WITNESSETH: WHEREAS, the Authority was created pursuant to Minnesota Statutes, Sections 469.001 through 469.047, as amended (the “HRA Act”), and was authorized to transact business and exercise its powers by a resolution of the City Council of the City of Richfield, Minnesota (the “City”); and WHEREAS, the Authority has undertaken a program to promote redevelopment and development of land that is underused or underutilized within the City, and in this connection the Authority administers a redevelopment project known as the Richfield Redevelopment Project (the “Redevelopment Project”) pursuant to the HRA Act; and WHEREAS, pursuant to the HRA Act, the Authority is authorized to acquire real property, or interests therein, and to undertake certain activities to facilitate the redevelopment of real property by private enterprise and promote the development of affordable housing within the City, including naturally occurring affordable housing (“NOAH”) properties; and WHEREAS, the Redeveloper proposes to acquire the following NOAH properties (the “Properties”) in the City and preserve and maintain the affordability of such properties which are legally described in EXHIBIT A attached hereto (collectively, the “Redevelopment Property”): New Orleans Court Apartments and Townhomes are located at 50 West 78th Street in the City, and consist of eleven separate structures containing 104 affordable rental apartment and townhome units; prospective tenants will earn 60% AMI or less (3 BR Townhomes at 70% AMI or less); the property includes 56 one bedroom, 24 two bedroom and 24 three bedroom units with 60 surface parking spaces and 24 garages; Richland Court Apartments are located at 1300-1324 East 78th Street in the City, and consist of two separate structures containing 90 affordable rental apartment units; prospective tenants will earn 60% AMI or less; the property includes 90 two bedroom units, with 50 surface parking spaces and 21 garages; and Winton House Apartments are located at 7500/7544 Cedar Avenue in the City, and consist of 2 separate structures containing 42 affordable rental apartment units; prospective tenants will earn 60% AMI or less; the property contains 24 one bedroom and 18 two bedroom units with 50 surface parking spaces and 19 garages; and WHEREAS, in order to achieve the objectives of the redevelopment plan for the Redevelopment Project and make the acquisition of the Properties economically feasible for the Redeveloper, the Authority is prepared to provide funds from the City’s Affordable Housing Trust Fund to the Redeveloper for land acquisition costs; and 2 RC125-402-1007612.v1 WHEREAS, the Redeveloper will agree to maintain certain affordability requirements for the Properties pursuant to a Declaration of Restrictive Covenants of even date herewith (the “Declaration of Restrictive Covenants”) between the Redeveloper and the Authority; and WHEREAS, the Authority believes that the fulfillment generally of this Agreement, are in the vital and best interests of the City and the health, safety, morals, and welfare of its residents, and in accord with the public purposes and provisions of the applicable State of Minnesota and local laws and requirements under which the Redevelopment Project has been undertaken and is being assisted. NOW, THEREFORE, in consideration of the premises and the mutual obligations of the parties hereto, each of them does hereby covenant and agree with the other as follows: (The remainder of this page is intentionally left blank.) 3 RC125-402-1007612.v1 ARTICLE I Definitions Section 1.1. Definitions. In this Agreement, unless a different meaning clearly appears from the context, the following terms have the following meanings: “Affordable Housing Trust Fund” means the fund established by the City and administered by the Authority to be used for making grants, loans, and loan guarantees for development, rehabilitation or financing of housing or providing matches for other federal, state, or private resources for housing projects. “Agreement” means this Contract for Private Redevelopment, as the same may be from time to time modified, amended, or supplemented. “AHTF Loan” means the deferred loan from the Affordable Housing Trust Fund in the amount of up to $1,570,000 to be made by the Authority to the Redeveloper pursuant to the terms of this Agreement. “Area Median Income” means the area median income of the Minneapolis-St. Paul metropolitan statistical area. “Authority” means the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota. “Authority Representative” means the Executive Director of the Authority. “Board” means the Board of Commissioners of the Authority. “City” means the City of Richfield, Minnesota. “City Council” means the City Council of the City. “Closing” has the meaning given such term in Section 3.2 hereof. “County” means Hennepin County, Minnesota. “Declaration of Restrictive Covenants” means the Declaration of Restrictive Covenants between the Authority and the Redeveloper in substantially the form set forth in EXHIBIT B attached hereto. “Event of Default” means an action by the Redeveloper listed in Article IX hereof. “HRA Act” means Minnesota Statutes, Sections 469.001 through 469.047, as amended. “Memorandum of Understanding” means the Memorandum of Understanding, dated January 21, 2025, between the Authority and the Redeveloper. “NOAH” means naturally occurring affordable housing. “Properties” means the NOAH properties on the Redevelopment Property to be acquired by the Redeveloper and described in the recitals hereto. 4 RC125-402-1007612.v1 “Qualified Project Period” has the meaning provided in the Declaration of Restrictive Covenants. “Redevelopment Plan” means the Redevelopment Plan for the Redevelopment Project approved and adopted by the Board and the City Council. “Redevelopment Project” means the Richfield Redevelopment Project. “Redeveloper” means Hempel Holdings, LLC, a Minnesota limited liability company, or its permitted successors and assigns. “Redevelopment Property” means the real property described in EXHIBIT A attached hereto. “State” means the State of Minnesota. “Unavoidable Delays” means delays beyond the reasonable control of the party seeking to be excused as a result thereof which are the direct result of strikes, other labor troubles, prolonged adverse weather or acts of God, fire or other casualty to the Properties, 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. (The remainder of this page is intentionally left blank.) 5 RC125-402-1007612.v1 ARTICLE II Representations and Warranties Section 2.1. Representations by the Authority. The Authority makes the following representations as the basis for the undertaking on its part herein contained: (a) The Authority is a housing and redevelopment authority organized and existing under the laws of the State. Under the provisions of the HRA Act, the Authority has the power to enter into this Agreement and carry out its obligations hereunder, and execution of this Agreement has been duly, properly and validly authorized by the Authority. (b) The Authority proposes to assist in financing costs by the Redeveloper related to the acquisition of the Properties in accordance with the terms of this Agreement to further the objectives of the Redevelopment Plan. (c) The Authority finds that the acquisition of the Properties by the Redeveloper is necessary to maintain existing supplies of, decent, safe, and sanitary affordable housing in the City. (d) The execution, delivery and performance of this Agreement and of any other documents or instruments required pursuant to this Agreement by the Authority, and consummation of the transactions contemplated therein and the fulfillment of the terms thereof, do not and will not conflict with or constitute a breach of or default under any existing (i) indenture, mortgage, deed of trust or other agreement or instrument to which the Authority is a party or by which the Authority or any of its property is or may be bound; or (ii) legislative act, constitution or other proceedings establishing or relating to the establishment of the Authority or its officers or its resolutions. (e) There is not pending, nor to the best of the Authority’s knowledge is there threatened, any suit, action or proceeding against the Authority before any court, arbitrator, administrative agency or other governmental authority that materially and adversely affects the validity of any of the transactions contemplated hereby, the ability of the Authority to perform its obligations hereunder, or the validity or enforcement of this Agreement. (f) No commissioner of the Board or officer of the Authority has either a direct or indirect financial interest in this Agreement, nor will any commissioner or officer benefit financially from this Agreement within the meaning of Section 469.009 of the HRA Act. Section 2.2. Representations by the Redeveloper. The Redeveloper represents and warrants that: (a) The Redeveloper 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 Redeveloper will operate and maintain the Properties in accordance with the terms of this Agreement, the Redevelopment Plan, and all local, State, and federal laws and regulations (including, but not limited to, environmental, zoning, building code, labor, and public health laws and regulations). (c) The Redeveloper has received no notice or communication from any local, State or federal official that the activities of the Redeveloper or the Authority in or on the Redevelopment Property may be or will be in violation of any environmental law or regulation (other than those notices or communications of 6 RC125-402-1007612.v1 which the Authority is aware). The Redeveloper 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) [Reserved]. (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 Redeveloper 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 Redeveloper hereunder would not occur but for the AHTF Loan being provided by the Authority hereunder. (g) The Redeveloper shall promptly advise the Authority in writing of all litigation or claims affecting any part of the Properties and all written complaints and charges made by any governmental authority materially affecting the Properties. (The remainder of this page is intentionally left blank.) 7 RC125-402-1007612.v1 ARTICLE III Property Acquisition; Financing Section 3.1. Status of Redevelopment Property. The Redeveloper has entered into a purchase agreement to purchase the Redevelopment Property. The Authority has no obligation to purchase the Redevelopment Property. Section 3.2. Environmental Conditions. (a) The Redeveloper acknowledges that the Authority makes no representations or warranties as to the condition of the soils on the Redevelopment Property or the fitness of the Redevelopment Property for any purpose for which the Redeveloper may make use of such property, and that the assistance provided to the Redeveloper under this Agreement neither implies any responsibility by the Authority for any contamination of the Redevelopment Property nor imposes any obligation on such parties to participate in any cleanup of the Redevelopment Property. (b) Without limiting its obligations under Section 8.3 hereof, the Redeveloper further agrees that it will indemnify, defend, and hold harmless the Authority and its governing body members, officers, and employees, from any claims or actions arising out of the presence, if any, of hazardous wastes or pollutants existing on or in the Redevelopment Property, unless and to the extent that such hazardous wastes or pollutants are present as a result of the actions or omissions of the indemnitees. Nothing in this Section will be construed to limit or affect any limitations on liability of the Authority under State or federal law, including without limitation Minnesota Statutes, Sections 466.04 and 604.02, as amended. Section 3.3. AHTF Loan. The Authority will provide the AHTF Loan to the Redeveloper in an amount not to exceed $1,570,000. The AHTF Loan will be a deferred, forgivable loan with a maximum term of fifteen (15) years. The Redeveloper will use the proceeds of the AHTF Loan to finance a portion of the costs of the acquisition of the Properties. The AHTF Loan shall be disbursed to the Redeveloper in one installment at the closing on the Redeveloper’s purchase of the Properties and after the following conditions have occurred: (a) the Redeveloper having submitted to the Authority a sources and uses statement for the Properties; (b) the Redeveloper having submitted to the Authority an income and expense budget showing the anticipated monthly and annual income and expenses; (c) the Redeveloper having developed and provided to the Authority a ten (10) year operating proforma, along with assumptions and estimated return on investment, with and without public finance assistance; and (d) the Redeveloper having provided to the Authority information regarding any grants and/or equity the Redeveloper will pursue, including the NOAH Impact Fund. So long as the Redeveloper is not in default under this Agreement at the end of the term of the AHTF Loan (i.e., on the date that is fifteen (15) years from the date of disbursement of the AHTF Loan), then the AHTF Loan will be forgiven. 8 RC125-402-1007612.v1 Section 3.4. Other Sources of Funding. In addition to the AHTF Loan described in Section 3.3 hereof, the Redeveloper expects to receive Apartment Remodeling Loans from the Richfield Economic Development Authority, which loans will be administered by the Minnesota Center for Energy and Environment. Each of the loans described in this Section will also be a deferred, forgivable loan with a maximum term of fifteen (15) years, and one loan will be provided for each Property. Section 3.5. Payment of Administrative Costs. The Redeveloper has deposited with the Authority $5,000 to pay Administrative Costs. “Administrative Costs” are defined as out-of-pocket costs incurred by the Authority, together with staff costs in the amount of $2,000 and actual consultant costs of the Authority in an amount not to exceed $15,000, all attributable to or incurred in connection with the negotiation and preparation of this Agreement and other documents and agreements in connection with the redevelopment of the Redevelopment Property, and not previously paid by the Redeveloper. At the Redeveloper’s request, but no more often than monthly, the Authority will provide the Redeveloper 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 Redeveloper shall replenish the deposit to the full $5,000 within thirty (30) days after receipt of written notice thereof from the Authority. If at any time the Authority determines that the deposit is insufficient to pay Administrative Costs, the Redeveloper is obligated to pay such shortfall within fifteen (15) days after receipt of a written notice from the Authority containing evidence of the unpaid costs. If Administrative Costs incurred, and reasonably anticipated to be incurred, are less than the deposit by the Redeveloper, the Authority shall return to the Redeveloper any funds not anticipated to be needed. Section 3.6. Records. The Authority and its representatives shall have the right at all reasonable times after reasonable notice to inspect, examine and copy all books and records of Redeveloper relating to the Properties and the costs for which the Redeveloper has been reimbursed from proceeds of the AHTF Loan. Section 3.7. Purpose of Assistance. The parties agree and understand that the purpose of the Authority’s financial assistance to the Redeveloper is to facilitate development of housing and is not a “business subsidy” within the meaning of Minnesota Statutes, Sections 116J.993 to 116J.995, as amended. (The remainder of this page is intentionally left blank.) 9 RC125-402-1007612.v1 ARTICLE IV Affordability Covenants Section 4.1. Affordability Covenants. The Redeveloper agrees that at all times during the Qualified Project Period, as set forth in the Declaration of Restrictive Covenants, the Redeveloper will ensure and maintain the units within the Properties with the following income and rent restrictions: Type of Unit Area Median Income Number of Units One-Bedroom 60% 80 Two-Bedroom 60% 132 Three-Bedroom 70% 24 The Redeveloper and the Authority shall execute the Declaration of Restrictive Covenants in substantially the form set forth in EXHIBIT B attached hereto and record such agreement against the Redevelopment Property. During the term of the Declaration, the Redeveloper shall not adopt any policies specifically prohibiting or excluding any rental to tenants holding certificates/vouchers under Section 8 of the United Stated Housing Act of 1937, as amended, codified as 42 U.S.C. Sections 1401 et seq., or its successor, or any participants in the Kids@Home program or other rental assistance program operated by the City of Richfield or its Housing and Redevelopment Authority or its Economic Development Authority because of such prospective tenant’s status as such a certificate/voucher holder or participant in the Kids@Home program, as the case may be. The Redeveloper shall agree to meetings between property management and City housing staff to discuss ways to best serve residents and to regularly seek feedback from residents. Section 4.2. Affordable Housing Reporting. At least annually, no later than April 1 of each year commencing on April 1, 2026, the Redeveloper shall provide a report to the Authority evidencing that the Redeveloper complied with the income affordability covenants set forth in Section 4.1 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 Redeveloper to provide additional information reasonably necessary to assess the accuracy of such certification. Unless earlier excused by the Authority, the Redeveloper shall send affordable housing reports to the Authority until April 1, 2041. If the Redeveloper fails to provide the annual reporting required under this Section, the Authority may terminate this Agreement and demand the repayment of the AHTF Loan. It is the intention of the parties hereto that if tax-exempt revenue obligations are issued by the City or the Authority for the benefit of the Redeveloper, the annual report required under this Section may be used to satisfy the reporting requirements under a regulatory agreement between the City or the Authority, the Redeveloper, and the trustee for such tax-exempt revenue obligations. Section 4.3. Notice of Sale of Properties. In consideration of the financial assistance provided to the Redeveloper pursuant to Article III hereof, the Redeveloper agrees to provide the Authority with at least ninety (90) days’ notice of any sale of the Properties. 10 RC125-402-1007612.v1 (The remainder of this page is intentionally left blank.) 11 RC125-402-1007612.v1 ARTICLE V Insurance Section 5.1. Insurance. (a) [Reserved]. (b) So long as the AHTF Loan it outstanding, the Redeveloper 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 Properties under a policy or policies covering such risks as are ordinarily insured against by similar businesses; (ii) comprehensive general public liability insurance, including personal injury liability (with employee exclusion deleted), against liability for injuries to persons and/or property, in the minimum amount for each occurrence and for each year of $2,000,000, and shall be endorsed to show the Authority as an additional insured; and (iii) such other insurance, including workers’ compensation insurance respecting all employees, if any, of the Redeveloper, in such amount as is customarily carried by like organizations engaged in like activities of comparable size and liability exposure; provided that the Redeveloper 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 Redeveloper which are authorized under the laws of the State to assume the risks covered thereby. Upon request, the Redeveloper will deposit annually with the Authority policies evidencing all such insurance, or a certificate or certificates or binders of the respective insurers stating that such insurance is in force and effect. Unless otherwise provided in this Article V, each policy shall contain a provision that the insurer shall not cancel nor modify it in such a way as to reduce the coverage provided below the amounts required herein without giving written notice to the Redeveloper and the Authority at least thirty (30) days before the cancellation or modification becomes effective. In lieu of separate policies, the Redeveloper may maintain a single policy, blanket or umbrella policies, or a combination thereof, having the coverage required herein, in which event the Redeveloper shall deposit with the Authority a certificate or certificates of the respective insurers as to the amount of coverage in force upon the Properties. (d) The Redeveloper agrees to notify the Authority immediately in the case of damage exceeding $200,000 in amount to, or destruction of, the Properties or any portion thereof resulting from fire or other casualty. In such event, the Redeveloper will forthwith repair, reconstruct and restore the Properties 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 Redeveloper will apply the net proceeds of any insurance relating to such damage received by the Redeveloper to the payment or reimbursement of the costs thereof. The Redeveloper shall complete the repair, reconstruction, and restoration of the Properties, whether or not the net proceeds of insurance received by the Redeveloper 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 Redeveloper. 12 RC125-402-1007612.v1 (e) Notwithstanding anything to the contrary contained in this Agreement, in the event of damage to the Properties in excess of $200,000 and the Redeveloper fails to complete any repair, reconstruction or restoration of the Properties within eighteen (18) months from the date of damage, the Authority may, at its option, terminate this Agreement and demand the repayment of the AHTF Loan. If the Authority demands the repayment of the AHTF Loan, such repayment shall constitute the Authority’s sole remedy under this Agreement as a result of the Redeveloper’s failure to repair, reconstruct, or restore the Properties. Thereafter, the Authority shall have no further obligations to make any payments under the AHTF Loan. (f) The Redeveloper and the Authority agree that all of the insurance provisions set forth in this Article V shall terminate upon the termination of this Agreement. (The remainder of this page is intentionally left blank.) 13 RC125-402-1007612.v1 ARTICLE VI [Reserved] 14 RC125-402-1007612.v1 ARTICLE VII [Reserved] 15 RC125-402-1007612.v1 ARTICLE VIII Prohibitions Against Assignment and Transfer; Indemnification Section 8.1. Representation as to Redevelopment. The Redeveloper represents and agrees that its purchase of the Redevelopment Property, and its other undertakings pursuant to this Agreement, are, and will be used, for the purpose of development of the Redevelopment Property and not for speculation in land holding. Section 8.2. Redeveloper’s Transfer of Property and Assignment of Agreement. The Redeveloper may transfer or assign the Redevelopment Property or the Redeveloper’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 Redeveloper’s obligations hereunder. The Redeveloper shall submit to the Authority written evidence of any such transfer or assignment, including the transferee or assignee’s express assumption of the Redeveloper’s obligations under this Agreement. If the Redeveloper fails to provide such evidence of transfer and assumption, the Redeveloper shall remain bound by all its obligations under this Agreement. Section 8.3. Release and Indemnification Covenants. (a) The Redeveloper 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 Properties. (b) Except for any willful misrepresentation, gross negligence or any willful or wanton misconduct of the Authority, or its governing body members, officers, agents or employees, the Redeveloper 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 Properties. As to any willful misrepresentation, gross negligence or any willful or wanton misconduct of the Authority, or its governing body members, officers, agents or employees, the Authority agrees to protect and defend the Redeveloper, 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 Redeveloper or its officers, agents, servants or employees or any other person who may be about the Redevelopment Property or the Properties due to any act of negligence of any person. (d) All covenants, stipulations, promises, agreements and obligations of the Authority contained herein shall be deemed to be the covenants, stipulations, promises, agreements and obligations of the Authority and not of any governing body member, officer, agent, servant or employee of the Authority in the individual capacity thereof. 16 RC125-402-1007612.v1 ARTICLE IX Events of Default Section 9.1. Events of Default. The following will be “Events of Default” under this Agreement and the term “Event of Default” means, whenever it is used in this Agreement, any one or more of the following events, after the non-defaulting party provides thirty (30) days’ written notice to the defaulting party of the event, but only if the event has not been cured within said thirty (30) days or, if the event is by its nature incurable within thirty (30) days, the defaulting party does not, within the thirty (30) day period, provide assurances reasonably satisfactory to the party providing notice of default that the event will be cured and will be cured as soon as reasonably possible: (a) failure by the Redeveloper or the Authority to observe or perform any covenant, condition, obligation, or agreement on its part to be observed or performed under this Agreement; or (b) if the Redeveloper: (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 Redevelopment Property or the Properties as they become due; (iv) admits in writing its inability to pay its debts generally as they become due; (v) is adjudicated a bankrupt or insolvent; (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 thirty (30) days’ written notice to the defaulting party of the Event of Default, but only if the Event of Default has not been cured within said thirty (30) days or, if the Event of Default is by its nature incurable within thirty (30) days, the defaulting party does not provide assurances reasonably satisfactory to the non-defaulting party that the Event of Default will be cured and will be cured as soon as reasonably possible: (a) suspend its performance under this Agreement until it receives assurances that the defaulting party will cure its default and continue its performance under this Agreement; (b) cancel and rescind or terminate this Agreement, subject to the provisions of Section 9.3; (c) upon a default by the Redeveloper resulting from the Redeveloper’s noncompliance with labor laws, the Authority may demand immediate repayment of all or a portion of the AHTF Loan and/or terminate this Agreement; 17 RC125-402-1007612.v1 (d) 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. Repayment of AHTF Loan. As permitted by Section 9.2 hereof, the Authority may exercise its option to demand immediate repayment of all or a portion of the AHTF Loan if the Redeveloper fails to comply with the Declaration of Restrictive Covenants. Section 9.4. [Reserved]. Section 9.5. [Reserved]. Section 9.6. No Remedy Exclusive. No remedy herein conferred upon or reserved to the Authority or the Redeveloper is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Authority to exercise any remedy reserved to it, it shall not be necessary to give notice, other than the notices already required in Sections 9.2 and 9.3 hereof. Section 9.7. 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. Attorneys’ Fees and Costs. Whenever any Event of Default occurs and if the Authority employs attorneys or incur other expenses for the collection of payments due or to become due or for the enforcement of performance or observance of any obligation or agreement on the part of the Redeveloper under this Agreement, and the Authority prevails in the action, the Redeveloper agrees that it will, within ten (10) days of written demand by the Authority, pay to the Authority the reasonable fees of the attorneys and the other expenses so incurred by the Authority. (The remainder of this page is intentionally left blank.) 18 RC125-402-1007612.v1 ARTICLE X Additional Provisions Section 10.1. Conflict of Interests; Authority Representatives Not Individually Liable. The Authority and the Redeveloper, to the best of their respective knowledge, represent and agree that no member, official, or employee of the Authority shall have any personal interest, direct or indirect, in this Agreement, nor shall any such member, official, or employee participate in any decision relating to this Agreement which affects his or her personal interests or the interests of any corporation, partnership, or association in which he is, directly or indirectly, interested. No member, official, or employee of the Authority shall be personally liable to the Redeveloper, 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 Redeveloper or successor or on any obligations under the terms of this Agreement. Section 10.2. Equal Employment Opportunity. The Redeveloper, for itself and its successors and assigns, agrees that 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 Redeveloper agrees that, so long as the Declaration of Restrictive Covenants is in effect, the Redeveloper, and such successors and assigns, shall use the Redevelopment Property solely for the development of affordable housing in accordance with the terms of this Agreement, including the affordability requirements set forth in Section 4.1 hereof, 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 Redevelopment 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 Redevelopment Property and any such deed shall not be deemed to affect or impair the provisions and covenants of this Agreement. Section 10.5. Titles of Articles and Sections. Any titles of the several parts, Articles, and Sections of this Agreement are inserted for convenience of reference only and shall be disregarded in construing or interpreting any of its provisions. Section 10.6. Notices and Demands. Except as otherwise expressly provided in this Agreement, a notice, demand, or other communication under this Agreement by either party to the other shall be sufficiently given or delivered if it is dispatched by registered or certified mail, postage prepaid, return receipt requested, or delivered personally; and (a) in the case of the Redeveloper, is addressed to or delivered personally to the Redeveloper at 10500 Crosstown Circle, Suite 600, Eden Prairie, MN 55344, Attn: Josh Krsnak, CEO; and (b) in the case of the Authority, is addressed to or delivered personally to the Authority at 6700 Portland Avenue South, Richfield, MN 55423, Attn: Community Development Director; 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. 19 RC125-402-1007612.v1 Section 10.8. Recording. The Authority may record a memorandum of this Agreement and any amendments thereto with the County Recorder and/or Registrar of Titles of the County, as the case may be. The Redeveloper shall pay all costs for recording. Section 10.9. Amendment. This Agreement may be amended only by written agreement executed by the Authority and the Redeveloper. Section 10.10. Interpretation; Concurrence. The language in this Agreement shall be construed simply according to its generally understood meaning, and not strictly for or against any party and no interpretation shall be affected by which party drafted any part of this Agreement. By executing this Agreement, the parties acknowledge that they (a) enter into and execute this Agreement knowingly, voluntarily and willingly of their own volition with such consultation with legal counsel as they deem appropriate; (b) have had a sufficient amount of time to consider this Agreement’s terms and conditions, and to consult an attorney before signing this Agreement; (c) have read this Agreement, understand all of its terms, appreciate the significance of those terms and have made the decision to accept them as stated herein; and (d) have not relied upon any representation or statement not set forth herein. Section 10.11. Memorandum of Understanding. The Memorandum of Understanding shall terminate as of the date of this Agreement. (The remainder of this page is intentionally left blank.) S-1 RC125-402-1007612.v1 IN WITNESS WHEREOF, the Authority has caused this Contract for Private Redevelopment to be duly executed in its name and behalf and the Redeveloper has caused this Contract for Private Redevelopment to be duly executed in its name and behalf as of the date and year first written above. HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA By Its Chair By Its Executive Director STATE OF MINNESOTA ) ) SS. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this ____ day of __________, 2025, by Erin Vrieze Daniels, the Chair of the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota, a public body corporate and politic under the laws of the State of Minnesota, on behalf of the Authority. Notary Public STATE OF MINNESOTA ) ) SS. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this ____ day of __________, 2025, by Melissa Poehlman, the Executive Director of the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota, a public body corporate and politic under the laws of the State of Minnesota, on behalf of the Authority. Notary Public S-2 RC125-402-1007612.v1 Execution page of the Redeveloper to the Contract for Private Redevelopment, dated the date and year first written above. HEMPEL HOLDINGS, LLC By Its STATE OF MINNESOTA ) ) SS. COUNTY OF __________ ) The foregoing instrument was acknowledged before me this ____ day of __________, 2025 by _________________________________, the _____________________________ of Hempel Holdings, LLC, a Minnesota limited liability company, on behalf of the Redeveloper. Notary Public A-1 RC125-402-1007612.v1 EXHIBIT A REDEVELOPMENT PROPERTY [Insert legal description of Redevelopment Property] 4932-8977-5383.1 EXHIBIT B FORM OF DECLARATION OF RESTRICTIVE COVENANTS THIS DECLARATION OF RESTRICTIVE COVENANTS, made as of the _____ day of _______________, 2025 (the “Declaration”), is by HEMPEL HOLDINGS, LLC, a Minnesota limited liability company (the “Redeveloper”), in favor of the HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA, a public body corporate and politic under the laws of the State of Minnesota (the “Authority”). RECITALS: WHEREAS, pursuant to a Contract for Private Redevelopment of even date herewith (the “Contract”) between the Authority and the Redeveloper, the Redeveloper intends to acquire the following three (3) naturally occurring affordable housing properties (the “Properties”) located on the real property legally described in EXHIBIT A attached hereto (the “Redevelopment Property”) and to cause compliance with certain affordability covenants described in Section 4.1 of the Contract: New Orleans Court Apartments and Townhomes are located at 50 West 78th Street in the City, and consist of eleven separate structures containing 104 affordable rental apartment and townhome units; prospective tenants will earn 60% AMI or less (3 BR Townhomes at 70% AMI or less); the property includes 56 one bedroom, 24 two bedroom and 24 three bedroom units with 60 surface parking spaces and 24 garages; Richland Court Apartments are located at 1300-1324 East 78th Street in the City, and consist of two separate structures containing 90 affordable rental apartment units; prospective tenants will earn 60% AMI or less; the property includes 90 two bedroom units, with 50 surface parking spaces and 21 garages; and Winton House Apartments are located at 7500/7544 Cedar Avenue in the City, and consist of 2 separate structures containing 42 affordable rental apartment units; prospective tenants will earn 60% AMI or less; the property contains 24 one bedroom and 18 two bedroom units with 50 surface parking spaces and 19 garages; and WHEREAS, Section 4.1 of the Contract requires that the Redeveloper cause to be executed an instrument in recordable form substantially reflecting the covenants set forth in Section 4.1 of the Contract; and WHEREAS, the Redeveloper intends, declares, and covenants that the restrictive covenants set forth herein will be and are covenants running with the Redevelopment Property for the term described herein and binding upon all subsequent owners of the Redevelopment Property for the term described herein, and are not merely personal covenants of the Redeveloper; 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 Redeveloper agrees as follows: 3 4932-8977-5383.1 1. Term of Restrictions. (a) Occupancy and Rental Restrictions. The term of the Occupancy Restrictions set forth in Section 3 hereof will commence on the date the Redeveloper closes on the acquisition of the Properties. The period from commencement to termination is the “Qualified Project Period.” (b) Termination of Declaration. This Declaration will terminate upon the date that is _______________, 2040, fifteen (15) years after the commencement of the Qualified Project Period. (c) Removal from Real Estate Records. Upon termination of this Declaration, the Authority will, upon request by the Redeveloper 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 Redeveloper represents, warrants, and covenants that: (i) All leases of Rental Housing Units to Qualifying Tenants (as defined in Section 3(a)(i) hereof) will contain clauses, among others, wherein each individual lessee: (1) certifies the accuracy of the statements made in its application and Eligibility Certification (as defined in Section 3(a)(ii) hereof); and (2) agrees that the family income at the time the lease is executed will be deemed substantial and material obligation of the lessee’s tenancy, that the lessee will comply promptly with all requests for income and other information relevant to determining low or moderate income status from the Redeveloper or the Authority, and that the lessee’s failure or refusal to comply with a request for information with respect thereto will be deemed a violation of a substantial obligation of the lessee’s tenancy. (ii) The Redeveloper will permit any duly authorized representative of the Authority to inspect the books and records of the Redeveloper pertaining to the income of Qualifying Tenants residing in the Project. 3. Occupancy Restrictions. (a) Tenant Income Provisions. The Redeveloper represents, warrants, and covenants that: (i) Qualifying Tenants. From the commencement of the Qualified Project Period, all of the Rental Housing Units will be occupied (or treated as occupied as provided herein) or held vacant and available for occupancy by Qualifying Tenants. Qualifying Tenants means those persons and families who are determined from time to time by the Redeveloper to have combined adjusted income that does not exceed sixty percent (60%) or seventy percent (70%) of the Minneapolis-St. Paul metropolitan statistical area (the “Metro Area”) median income for the applicable calendar year, subject to the following: (1) all of the one-bedroom and two-bedroom Rental Housing Units shall be occupied or held vacant and available for occupancy by Qualifying Tenants with a combined adjusted income that does not exceed sixty percent (60%) of the Metro Area median income for the applicable calendar year; and (2) all of the three-bedroom Rental Housing Units shall be occupied or held vacant and available for occupancy by Qualifying Tenants with a combined adjusted income that does not exceed seventy percent (70%) of the Metro Area median income for the applicable calendar year. For purposes of this definition, the occupants of a residential unit will not be deemed 4 4932-8977-5383.1 to be Qualifying Tenants if all the occupants of such residential unit at any time are “students,” as defined in Section 151(c)(4) of the Internal Revenue Code of 1986, as amended (the “Code”), not entitled to an exemption under the Code. The determination of whether an individual or family is of low or moderate income will be made at the time the tenancy commences. (ii) Certification of Tenant Eligibility. As a condition to initial occupancy, each person who is intended to be a Qualifying Tenant will be required to sign and deliver to the Redeveloper a Certification of Tenant Eligibility substantially in the form attached hereto as EXHIBIT B, or in any other form as may be approved by the Authority (the “Eligibility Certification”), in which the prospective Qualifying Tenant certifies as to qualifying as low or moderate income. In addition, the person will be required to provide whatever other information, documents, or certifications are deemed necessary by the Authority to substantiate the Eligibility Certification and to verify that the tenant is a Qualifying Tenant within the meaning of Section 3(a) hereof. Eligibility Certifications will be maintained on file by the Redeveloper with respect to each Qualifying Tenant who moves into a Rental Housing Unit during the immediately preceding calendar year. (iii) Lease. The form of lease to be utilized by the Redeveloper in renting any Rental Housing Units to any person who is intended to be a Qualifying Tenant will provide for termination of the lease and consent by the person to immediate eviction for failure to qualify as a Qualifying Tenant as a result of any material misrepresentation made by the person with respect to the Eligibility Certification. (iv) Annual Report. The Redeveloper covenants and agrees that during the term of this Declaration, it will prepare and submit to the Authority on or before April 1 of each year, a certificate substantially in the form of EXHIBIT C hereto, executed by the Redeveloper, (a) identifying the tenancies and the dates of occupancy (or vacancy) for all Qualifying Tenants in the Project, including the percentage of the Rental Housing Units which were occupied by Qualifying Tenants (or held vacant and available for occupancy by Qualifying Tenants) at all times during the year preceding the date of the certificate; (b) describing all transfers or other changes in ownership of the Project or any interest therein; and (c) stating, that to the best knowledge of the person executing the certificate after due inquiry, all the Rental Housing Units were rented or available for rental on a continuous basis during the year to members of the general public and that the Redeveloper was not otherwise in default under this Declaration during the year. (v) Notice of Non-Compliance. The Redeveloper will immediately notify the Authority if at any time during the term of this Declaration the Rental Housing Units are not occupied or available for occupancy as required by the terms of this Declaration. (b) Section 8 Housing; Kids@Home. During the term of this Declaration, the Borrower shall not adopt any policies specifically excluding rental to tenants holding Section 8 certificate/voucher holders or participants in the Kids@Home program or other rental assistance program operated by the City of Richfield or its Housing and Redevelopment Authority or Economic Development Authority. 4. Transfer Restrictions. The Redeveloper covenants and agrees that the Redeveloper will cause or require as a condition precedent to any conveyance, transfer, assignment, or any other disposition of the Project prior to the termination of the Rental Restrictions and Occupancy Restrictions provided herein (the “Transfer”) that the transferee of the Project pursuant to the Transfer assume in writing, in a form acceptable to the Authority, all duties and obligations of the Redeveloper under this Declaration, including this Section 4, in the event of a subsequent Transfer by the transferee prior to expiration of the Rental Restrictions and Occupancy Restrictions provided herein (the “Assumption Agreement”). The Redeveloper will deliver the Assumption Agreement to the Authority prior to the Transfer. 5 4932-8977-5383.1 5. Notice of Sale. In consideration of the financial assistance provided to the Redeveloper pursuant to Article IV of the Contract, the Redeveloper agrees to provide the Authority with at least ninety (90) days’ notice of any sale of the Project. 6. Enforcement. (a) The Redeveloper will permit, during normal business hours and upon reasonable notice, any duly authorized representative of the Authority to inspect any books and records of the Redeveloper regarding the Project with respect to the incomes of Qualifying Tenants. (b) The Redeveloper will submit any other information, documents or certifications requested by the Authority which the Authority deems reasonably necessary to substantial the Redeveloper’s continuing compliance with the provisions specified in this Declaration. (c) The Redeveloper acknowledges that the primary purpose for requiring compliance by the Redeveloper with the restrictions provided in this Declaration is to ensure compliance of the property with the housing affordability covenants set forth in Section 4.1 of the Contract, and by reason thereof, the Redeveloper, in consideration for assistance provided by the Authority under the Contract that makes possible the construction of the Project on the Redevelopment Property, hereby agrees and consents that the Authority will be entitled, for any breach of the provisions of this Declaration, and in addition to all other remedies provided by law or in equity, to enforce specific performance by the Redeveloper of its obligations under this Declaration in a state court of competent jurisdiction. The Redeveloper hereby further specifically acknowledges that the Authority cannot be adequately compensated by monetary damages in the event of any default hereunder. (d) The Redeveloper understands and acknowledges that, in addition to any remedy set forth herein for failure to comply with the restrictions set forth in this Declaration, the Authority may exercise any remedy available to it under Article IX of the Contract. 7. Indemnification. The Redeveloper hereby indemnifies, and agrees to defend and hold harmless the Authority and its members, officers, and agents from and against all liabilities, losses, damages, costs, expenses (including attorneys’ fees and expenses), causes of action, suits, allegations, claims, demands, and judgments of any nature arising from the consequences of a legal or administrative proceeding or action brought against them, or any of them, on account of any failure by the Redeveloper to comply with the terms of this Declaration, or on account of any representation or warranty of the Redeveloper contained herein being untrue. 8. Agent of the Authority. The Authority will have the right to appoint an agent to carry out any of its duties and obligations hereunder, and will inform the Redeveloper of any agency appointment by written notice. 9. Severability. The invalidity of any clause, part or provision of this Declaration will not affect the validity of the remaining portions thereof. 10. Notices. All notices to be given pursuant to this Declaration must be in writing and will be deemed given when mailed by certified or registered mail, return receipt requested, to the parties hereto at the addresses set forth below, or to any other place as a party may from time to time designate in writing. The Redeveloper and the Authority may, by notice given hereunder, designate any further or different addresses to which subsequent notices, certificates, or other communications are sent. The initial addresses for notices and other communications are as follows: 6 4932-8977-5383.1 To the Authority: Housing and Redevelopment Authority in and for the City of Richfield, Minnesota 6700 Portland Avenue South Richfield, MN 55423 Attn: Community Development Director To the Redeveloper: Hempel Holdings, LLC 10500 Crosstown Circle, Suite 600 Eden Prairie, MN 55344 Attn: Josh Krsnak, CEO 11. Governing Law. This Declaration is governed by the laws of the State of Minnesota and, where applicable, the laws of the United States of America. 12. Attorneys’ Fees. In case any action at law or in equity, including an action for declaratory relief, is brought against the Redeveloper to enforce the provisions of this Declaration, the Redeveloper agrees to pay the reasonable attorneys’ fees and other reasonable expenses paid or incurred by the Authority in connection with the action. 13. Declaration Binding. This Declaration and the covenants contained herein will run with the real property comprising the Project and will bind the Redeveloper and its successors and assigns and all subsequent owners of the Project or any interest therein, and the benefits will inure to the Authority and its successors and assigns for the term of this Declaration as provided in Section 1(b) hereof. (The remainder of this page is intentionally left blank.) 7 4932-8977-5383.1 IN WITNESS WHEREOF, the Redeveloper has caused this Declaration of Restrictive Covenants to be signed by its duly authorized representative as of the date and year first written above. HEMPEL HOLDINGS, LLC By Its STATE OF MINNESOTA ) ) SS. COUNTY OF __________ ) The foregoing instrument was acknowledged before me this ____ day of __________, 2025 by _________________________________, the _____________________________ of Hempel Holdings, LLC, a Minnesota limited liability company, on behalf of the Redeveloper. Notary Public This document was drafted by: Kennedy & Graven, Chartered (JAE) 150 South Fifth Street, Suite 700 Minneapolis, Minnesota 55402-1299 Telephone: 612-337-9300 8 4932-8977-5383.1 This Declaration of Restrictive Covenants is acknowledged and consented to by: HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA By Its Chair By Its Executive Director STATE OF MINNESOTA ) ) SS. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this ____ day of __________, 2025, by Erin Vrieze Daniels, the Chair of the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota, a public body corporate and politic under the laws of the State of Minnesota, on behalf of the Authority. Notary Public STATE OF MINNESOTA ) ) SS. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this ____ day of __________, 2025, by Melissa Poehlman, the Executive Director of the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota, a public body corporate and politic under the laws of the State of Minnesota, on behalf of the Authority. Notary Public 9 4932-8977-5383.1 EXHIBIT A TO DECLARATION OF RESTRICTIVE COVENANTS LEGAL DESCRIPTION OF REDEVELOPMENT PROPERTY [Insert legal description] 10 4932-8977-5383.1 EXHIBIT B TO DECLARATION OF RESTRICTIVE COVENANTS CERTIFICATION OF TENANT ELIGIBILITY Certification of Tenant Eligibility (INCOME COMPUTATION AND CERTIFICATION) Project: [Address], Richfield, Minnesota Owner: ________________ Unit Type: ______ [1 BR] _____ [2 BR] _____ [3 BR] 1. I/We, the undersigned, being first duly sworn, state that I/we have read and answered fully, frankly and personally each of the following questions for all persons (including minors) who are to occupy the unit in the above apartment development for which application is made, all of whom are listed below: Name of Members of the Household Relationship To Head of Household Age Place of Employment _____________ _____________ ___ _________________ _____________ _____________ ___ _________________ _____________ _____________ ___ _________________ _____________ _____________ ___ _________________ _____________ _____________ ___ _________________ Income Computation 2. The anticipated income of all the above persons during the 12-month period beginning this date, (a) including all wages and salaries, overtime pay, commissions, fees, tips and bonuses before payroll deductions; net income from the operation of a business or profession or from the rental of real or personal property (without deducting expenditures for business expansion or amortization of capital indebtedness); interest and dividends; the full amount of periodic payments received from social security, annuities, insurance policies, retirement funds, pensions, disability or death benefits and other similar types of periodic receipts; payments in lieu of earnings, such as unemployment and disability compensation, worker’s compensation and severance pay; the maximum amount of public assistance available to the above persons; periodic and determinable allowances, such as alimony and child support payments and regular contributions and gifts received from persons not residing in the dwelling; and all regular pay, special pay and allowances of a member of the Armed Forces (whether or not living in the dwelling) who is the head of the household or spouse; but (b) excluding casual, sporadic or irregular gifts; amounts which are specifically for or in reimbursement of medical expenses; lump sum additions to family assets, such as inheritances, insurance payments (including payments under health and accident insurance and workmen’s compensation), capital gains and settlement for personal or property losses; amounts of educational scholarships paid directly to the student or the educational institution, and amounts paid by the government to a veteran for use in meeting the costs of tuition, fees, books and equipment, but in either case only to the extent used for these types of purposes; 11 4932-8977-5383.1 special pay to a serviceman head of a family who is away from home and exposed to hostile fire; relocation payments under Title II of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970; foster child care payments; the value of coupon allotments for the purchase of food pursuant to the Food Stamp Act of 1964 which is in excess of the amount actually charged for the allotments; and payments received pursuant to participation in ACTION volunteer programs, is as follows: $_____________. 3. If any of the persons described above (or whose income or contributions was included in item 2) has any savings, bonds, equity in real property or other form of capital investment, provide: (a) the total value of all such assets owned by all such persons: $____________; (b) the amount of income expected to be derived from such assets in the 12 month period commencing this date: $_______________; and (c) the amount of such income which is included in income listed in item 2: $__________. 4. (a) Will all of the persons listed in item 1 above be or have they been full-time students during five calendar months of this calendar year at an educational institution (other than a correspondence school) with regular faculty and students? Yes _________________ No ________________ (b) Is any such person (other than nonresident aliens) married and eligible to file a joint federal income tax return? Yes _________________ No ________________ THE UNDERSIGNED HEREBY CERTIFY THAT THE INFORMATION SET FORTH ABOVE IS TRUE AND CORRECT. THE UNDERSIGNED ACKNOWLEDGE THAT THE LEASE FOR THE UNIT TO BE OCCUPIED BY THE UNDERSIGNED WILL BE CANCELLED UPON 10 DAYS WRITTEN NOTICE IF ANY OF THE INFORMATION ABOVE IS NOT TRUE AND CORRECT. Head of Household Spouse 12 4932-8977-5383.1 FOR COMPLETION BY OWNER (OR ITS MANAGER) ONLY 1. Calculation of Eligible Tenant Income: (a) Enter amount entered for entire household in 2 above: $__________ (b) If the amount entered in 3(a) above is greater than $5,000, enter the greater of (i) the amount entered in 3(b) less the amount entered in 3(c) or (ii) 10% of the amount entered in 3(a): $__________ (c) TOTAL ELIGIBLE INCOME (Line 1(a) plus Line 1(b)): $__________ 2. The amount entered in 1(c) is less than or equal to [60%] [70%] of median income for the area in which the Project is located, as defined in the Declaration. [60%] [70%] is necessary for status as a “Qualifying Tenant” under Section 3(a) of the Declaration. 3. Rent: (a) The rent for the unit is $________________. (b) The amount entered in 3(a) is less than or equal to the maximum rent permitted under the Declaration. 4. Number of apartment unit assigned: ___________. 5. This apartment unit was ____ was not ____ last occupied for a period of at least 31 consecutive days by persons whose aggregate anticipated annual income as certified in the above manner upon their initial occupancy of the apartment unit was less than or equal to [60%] [70%] of Median Income in the area. 6. Check as applicable: _______ Applicant qualifies as a Qualifying Tenant (tenants of at least ________ units must meet), or ____ Applicant otherwise qualifies to rent a unit. THE UNDERSIGNED HEREBY CERTIFIES THAT HE/SHE HAS NO KNOWLEDGE OF ANY FACTS WHICH WOULD CAUSE HIM/HER TO BELIEVE THAT ANY OF THE INFORMATION PROVIDED BY THE TENANT MAY BE UNTRUE OR INCORRECT. HEMPEL HOLDINGS, LLC By ________________________ Its ________________________ 13 4932-8977-5383.1 EXHIBIT C TO DECLARATION OF RESTRICTIVE COVENANTS CERTIFICATE OF CONTINUING PROGRAM COMPLIANCE Certificate of Continuing Program Compliance Date: ___________________ The following information with respect to the multifamily housing development located at __________________, Richfield, Minnesota (the “Project”), is being provided by Hempel Holdings, LLC, a Minnesota limited liability company (the “Owner”), to the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota (the “Authority”), pursuant to that certain Declaration of Restrictive Covenants, dated ___________, 2025 (the “Declaration”), with respect to the Project: (A) The total number of residential units which are available for occupancy is ___________. The total number of these units occupied is _________________. (B) The following residential units (identified by unit number) are currently occupied by “Qualifying Tenants,” as the term is defined in the Declaration (for a total of ____units): [1 BR Units]: _____________ [2 BR Units]: _____________ [3 BR Units]: _____________ (C) The following residential units which are included in (B) above, have been re- designated as units for Qualifying Tenants since _______________, 20___, the date on which the last “Certificate of Continuing Program Compliance” was filed with the Authority by the Owner: Unit Number Previous Designation of Unit (if any) Replacing Unit Number ___________ _________________ _________________ ___________ _________________ _________________ 14 4932-8977-5383.1 (D) The following residential units are considered to be occupied by Qualifying Tenants based on the information set forth below: Unit Number Name of Tenant Number of Persons Residing in the Unit Number of Bedrooms Total Adjusted Gross Income Date of Initial Occupancy Rent 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 [etc.] (E) The Owner has obtained a “Certification of Tenant Eligibility,” in the form provided as EXHIBIT B to the Declaration, from each Tenant named in (D) above, and each such Certificate is being maintained by the Owner in its records with respect to the Project. Attached hereto is the most recent “Certification of Tenant Eligibility” for each Tenant named in (D) above who signed such a Certification since ______________, 20___, the date on which the last “Certificate of Continuing Program Compliance” was filed with the Authority by the Owner. (F) In renting the residential units in the Project, the Owner has not given preference to any particular group or class of persons (except for persons who qualify as Qualifying Tenants); and none of the units listed in (D) above have been rented for occupancy entirely by students, no one of which is entitled to file a joint return for federal income tax purposes. All of the residential units in the Project have been rented pursuant to a written lease, and the term of each lease is at least twelve (12) months. (G) The information provided in this “Certificate of Continuing Program Compliance” is accurate and complete, and no matters have come to the attention of the Owner which would indicate that any of the information provided herein, or in any “Certification of Tenant Eligibility” obtained from the Tenants named herein, is inaccurate or incomplete in any respect. (H) The Project is in continuing compliance with the Declaration. (I) The Owner certifies that as of the date hereof at least ______ of the residential dwelling units in the Project are occupied or held open for occupancy by Qualifying Tenants, as defined and provided in the Declaration. 15 4932-8977-5383.1 (J) The rental levels for each Qualifying Tenant comply with the maximum permitted under the Declaration. IN WITNESS WHEREOF, I have hereunto affixed my signature, on behalf of the Owner, on ____________________, 20___. HEMPEL HOLDINGS, LLC By Its 16 4932-8977-5383.1 EXHIBIT C PROMISSORY NOTE $1,570,000 _______, 2025 HEMPEL HOLDINGS, LLC, a Minnesota limited liability company (the “Maker”), for value received, hereby promises to pay to the HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA, a public body corporate and politic of the State of Minnesota (the “Authority”), or its assigns (the Authority and any assigns are hereinafter referred to as the “Holder”), at its designated principal office or such other place as the Holder may designate in writing, the principal sum of One Million Five Hundred Seventy Thousand and No/100ths Dollars ($1,570,000), or so much thereof as may be advanced under this Note, with interest as hereinafter provided, in any coin or currency which at the time or times of payment is legal tender for the payment of private debts in the United States of America. All terms capitalized herein and not defined have the definitions given such terms in the Loan Agreement of even date herewith (the “Loan Agreement”) between the Maker and the Holder. The principal of and interest on this Note is due and payable as follows: 1. The funds loaned by the Holder to the Maker (the “Loan”) pursuant to the terms of the Loan Agreement shall not bear interest. 2. The entire unpaid balance of principal shall be due and payable in full on the earliest of the following: (i) subject to Section 12 hereof, thirty (30) days after written notification by the Holder to the Maker of the occurrence of an Event of Default which is not cured and demand of payment according to Section 6 of the Loan Agreement; or (ii) ten (10) days after Maker makes or allows to be made any total or partial transfer, sale, assignment, conveyance, lease (except a lease to a residential tenant of a unit within the Project (as defined in the Loan Agreement)), or transfer in any other mode, of the Project; or (iii) __________, 2040, unless extended by written agreement between the Maker and the Holder. 3. The Maker shall have the right to fully or partially prepay this Note at any time without penalty. Any partial prepayment shall be applied first to any unpaid, accrued interest with the balance, if any, applied to principal. 4. This Note is given pursuant to the Loan Agreement, as the same may be amended from time to time, and is secured by a Mortgage of even date herewith (the “Mortgage”) by the Maker in favor of the Authority, covering certain real property located in Hennepin County and legally described in the Mortgage (the “Property”). All of the agreements, conditions, covenants, provisions, and stipulations contained in the Loan Agreement, the Declaration of Restrictive Covenants, and the Mortgage are hereby made a part of this Note to the same extent and with the same force and effect as if they were fully set forth herein. It is agreed that time is of the essence of this Note. 5. If an Event of Default occurs under the Loan Agreement or the Declaration of Restrictive Covenants, then the Holder of this Note may, at its right and option, but subject in all respects to Section 12 hereof, declare immediately due and payable the principal balance of this Note and interest accrued thereon, without notice, demand or presentment for payment to Maker or others. The remedies of Holder, as provided herein and in the Loan Agreement, the Declaration of Restrictive Covenants, and the Mortgage, shall be cumulative and concurrent, may be pursued singly, successively, or together, and, at the sole discretion of the Holder of this Note, and may be exercised as often as occasion therefor shall occur, subject in all respects to the provisions of Section 12 hereof. 6. The Holder of this Note shall not be deemed, by any act of omission or commission, to have 17 4932-8977-5383.1 waived any of its rights or remedies hereunder unless such waiver is in writing and signed by the Holder of this Note and then only to the extent specifically set forth in the writing. A waiver with reference to one event shall not be construed as continuing or as a bar to or waiver of any right or remedy as to a subsequent event. This Note may not be amended, modified, or changed except only by an instrument in writing signed by the party against whom enforcement of any such amendment, modifications, or change is sought. 7. If any Event of Default occurs, and if the Holder engages legal counsel or others in connection with advice to the Holder or the Holder’s rights and remedies under the Loan Agreement or this Note, the Maker shall pay all reasonable expenses incurred by the Holder for such persons, irrespective of whether any suite or other proceeding has been or is filed or commenced. Any such expenses, costs and charges shall constitute additional principal, payable upon demand, and subject to this Note, the Loan Agreement, and the Declaration of Restrictive Covenants. 8. Except as otherwise provided in this Note, the Loan Agreement, or the Declaration of Restrictive Covenants, the Maker hereby (a) waives demand, presentment for payment, notice of nonpayment, protest, notice of protest, and all other notice; (b) agrees to any substitution, exchange, addition, or release of any party or person primarily or secondarily liable hereon; (c) agrees that Holder shall not be required first to institute any suit or to exhaust its remedies against the Maker or any other person or party in order to enforce payment of this Note; (d) consents to any extension, rearrangement, renewal, or postponement of time or payment of this Note and to any other indulgence with respect hereto without notice, consent, or consideration to any of them. 9. If any term of this Note, or the application thereof to any person or circumstances shall, to any extent, be invalid or unenforceable, the remainder of this Note, or the application of such term to persons or circumstances other than those to which it is invalid or unenforceable shall not be affected thereby, and each term of this Note shall be valid and enforceable to the fullest extent permitted by law. 10. It is intended that this Note is made with reference to and shall be construed as a Minnesota contract and governed by the laws thereof. 11. Notwithstanding anything to the contrary herein, this Note shall be nonrecourse, and the Holder’s sole recourse with respect to the Note shall be as set forth in the Mortgage. 12. The indebtedness evidenced by this Note is and shall be subordinate in right of payment to the prior payment in full of the indebtedness evidenced by a promissory note in the principal amount of $_______, executed by the Maker and payable to the order of _______________, which Note has been assigned to ___________ (the “__________ Note”), to the extent and in the manner provided in that certain Subordination Agreement of even date herewith (the “Subordination Agreement”) between the Maker, Fannie Mae, and the Holder. The Mortgage (and any exhibits) securing the Fannie Mae Note is and shall be subject and subordinate in all respects to the liens, terms, covenants and conditions of the mortgage securing the Fannie Mae Note, as more fully set forth in the Subordination Agreement. The rights and remedies of the payee and each subsequent holder of this Note under the Mortgage (and any exhibits) securing this Note are subject to the restrictions and limitations set forth in the Subordination Agreement. Each subsequent holder of this Note shall be deemed, by virtue of such holder’s acquisition of this Note, to have agreed to perform and observe all of the terms, covenants and conditions to be performed or observed by the Holder under the Subordination Agreement. Any capitalized terms used specifically in this Section that are otherwise not defined shall have the meanings assigned such terms in the Subordination Agreement. 13. IT IS HEREBY CERTIFIED AND RECITED that all conditions, acts, and things required to exist, happen, and be performed precedent to or in the issuance of this Note do exist, have 18 4932-8977-5383.1 happened, and have been performed in regular and due form as required by law. (The remainder of this page is intentionally left blank.) 4922-2553-6535.1 IN WITNESS WHEREOF, the Maker has caused this Note to be duly executed as of the date and year first written above. HEMPEL HOLDINGS, LLC By: ___________________________________ Its: ___________________________________ 2 4922-2553-6535.1 MORTGAGE THIS MORTGAGE, made as of _________, 2025 (the “Mortgage”), is by HEMPEL HOLDINGS, LLC, a Minnesota limited liability company, as mortgagor (the “Mortgagor”), in favor of the HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA, a public body corporate and politic of the State of Minnesota, as mortgagee (the “Mortgagee”). WITNESSETH: That the Mortgagor, in consideration of the sum of One Million Five Hundred Fifty Seven Thousand ($1,570,000.00) Dollars and other good, valuable and sufficient consideration, the receipt whereof is hereby acknowledged, does hereby grant, bargain, sell, and convey unto the Mortgagee, its successors and assigns, forever, all the tract or parcel of land lying and being in the County of Hennepin and State of Minnesota and legally described in EXHIBIT A attached hereto (the “Land”). To have and to hold the same, together with the hereditaments and appurtenances thereto belonging to the Mortgagee, its successors and assigns, forever. And the Mortgagor, for itself, and its successors and assigns, does covenant with the Mortgagee, its successors and assigns, as follows: That it is lawfully seized of said premises and has good right to sell and convey the same; that the same are free from all encumbrances, save and except reservations, restrictions and easements set forth on EXHIBIT B attached hereto; that the Mortgagee, its successors and assigns, shall quietly enjoy and possess the same; and that the Mortgagor will warrant and defend the title to the same against all lawful claims not hereinbefore specifically excepted; and Provided, nevertheless, that if the Mortgagor, its successors and assigns, shall keep and perform each and every one of its obligations under and pursuant to that certain Promissory Note of even date herewith (the “Note”), given by the Mortgagor to the Mortgagee, and shall keep and perform all the covenants and agreements herein contained, then this deed to be null and void, and to be released at the Mortgagor’s expense. This Mortgage secures a principal debt in the amount of One Million Fifty Seven Thousand Dollars ($1,570,000) payable by the Mortgagor to the Mortgagee under the terms of the Note and the Contract for Private Development of even date herewith (the “Loan Agreement”) between the Mortgagor and the Mortgagee, which Note matures no later than _______, 2040, unless extended by written agreement between the Mortgagor and the Mortgagee. Notwithstanding the provisions of this Mortgage or any other document, the Mortgagor shall not be personally liable for payment of the indebtedness evidenced by the Note, and the Mortgagee’s sole recourse for payment of such indebtedness upon the occurrence of an Event of Default (hereinafter defined) shall be to pursue the security provided by this Mortgage and other instruments securing payment of the Note. Nothing in this Section shall affect, limit or impair (i) the security provided by this Mortgage or any other document, (ii) the right to seek monetary judgment against the Mortgagor or any owner of the mortgaged property to the extent necessary to permit foreclosure of this Mortgage by action (except that the Mortgagor shall not be personally liable for payment of any such judgment to the extent that the judgment is for payment of the indebtedness evidenced by the Note and no deficiency judgment will be sought or obtained against the Mortgagor for payment of the indebtedness evidenced by the Note), (iii) the enforcement by the Mortgagee of any other legal or equitable rights or remedies or any other provision of any instrument by which the Note is secured, or (iv) the personal liability of the Mortgagor for the failure to observe or perform any of the covenants or obligations of the Mortgagor and other instruments securing payment of the Note other than the obligation to pay the indebtedness evidenced by the Note. 3 4922-2553-6535.1 1. The Mortgagor, for itself, and its successors and assigns, does hereby covenant and agree with the Mortgagee, its successors and assigns, to perform its obligations as above specified, to pay all taxes and assessments now due or that may hereafter become liens against said premises at least ten (10) days before penalty attaches thereto; to pay, when due, both principal and interest of all prior liens or encumbrances, if any, above mentioned and to keep said premises free and clear of all other prior liens or encumbrances; to commit or permit no waste on said premises and to keep them in good repair; to complete forthwith any improvements which may hereafter be under course of construction thereon, and to pay any other expenses and attorneys’ fees incurred by the Mortgagee, its successors or assigns, by reason of litigation with any third party for the protection of the lien of this Mortgage. 2. The Mortgagor does further covenant and agree that if any lien for labor, skill or material shall be filed for record during the life of this Mortgage, upon or against the premises hereby mortgaged, the Mortgagor will, within thirty (30) days after the date of its filing for record, either pay off the said lien and secure its satisfaction of record, or will protect the Mortgagee against any loss or damage growing out of its enforcement, by furnishing a bond for the same amount in the form and with the sureties to be approved by the Mortgagee. 3. In case of failure to pay said taxes and assessments, prior liens or encumbrances, expenses and attorneys’ fees as above specified, or to insure said buildings and deliver the policies as aforesaid, the Mortgagee, its successors or assigns, may pay such taxes, assessments, prior liens, expenses and attorneys’ fees and interest thereon, or effect such insurance, and the sums so paid shall bear interest at the highest rate permitted by law from the date of such payment, shall be impressed as an additional lien upon said premises, and be immediately due and payable from the Mortgagor, its successors or assigns, to the Mortgagee, it successors or assigns, and this Mortgage shall from date thereof secure the repayment of such advance with interest. 4. In case of default in any of the foregoing covenants (each an “Event of Default”), the Mortgagor confers upon the Mortgagee the option, of declaring a default and hereby authorizes and empowers the Mortgagee, its successors and assigns, to foreclose this Mortgage by judicial proceedings or to sell said premises at public auction and convey the same to the purchaser in fee simple in accordance with the statute, and out of the money arising from such sale to retain all sums secured hereby, with interest and all legal costs and charges of such foreclosure and the maximum attorneys’ fee permitted by law, which costs, charges and fees the Mortgagor herein agrees to pay. 5. Any member or partner of the Mortgagor shall have the right, but not the obligation, to cure any Event of Default by the Mortgagor under this Mortgage or any default under the Note, the Loan Agreement, or the Declaration of Restrictive Covenants, and the Mortgagee shall accept performance by the member or partner of the Mortgagor of any obligation of the Mortgagor thereunder as though tendered by the Mortgagor itself, provided such performance by the member or partner of the Mortgagor has occurred during the applicable cure period, if any, provided to the Mortgagor thereunder with respect to such default or Event of Default. 4 4922-2553-6535.1 6. [The indebtedness evidenced by the Note is and shall be subordinate in right of payment to the prior payment in full of the indebtedness evidenced by a promissory note in the principal amount of $_________, executed by the Mortgagor and payable to the order of ____________, which Note has been assigned to __________ (the “_____________ Note”), to the extent and in the manner provided in that certain Subordination Agreement of even date herewith (the “Subordination Agreement”) between the Mortgagor, Fannie Mae, and the Mortgagee. This Mortgage (and any exhibits) securing the Note is and shall be subject and subordinate in all respects to the liens, terms, covenants and conditions of the mortgage securing the Fannie Mae Note, as more fully set forth in the Subordination Agreement. The rights and remedies of the payee and each subsequent holder of the Note under this Mortgage (and any exhibits) securing the Note are subject to the restrictions and limitations set forth in the Subordination Agreement. Each subsequent holder of the Note shall be deemed, by virtue of such holder’s acquisition of the Note, to have agreed to perform and observe all of the terms, covenants and conditions to be performed or observed by the Mortgagee under the Subordination Agreement. Any capitalized terms used specifically in this Section that are otherwise not defined shall have the meanings assigned such terms in the Subordination Agreement.] (The remainder of this page is intentionally left blank.) S-1 4922-2553-6535.1 IN WITNESS WHEREOF, the Mortgagor has executed this Mortgage as of the date and year first written above. HEMPEL HOLDINGS, LLC By Its STATE OF MINNESOTA ) ) SS COUNTY OF ) The foregoing instrument was acknowledged before me this _____ day of __________, 2025, by ________________________________, the ________________________ of Hempel Holdings, LLC, a Minnesota limited liability company, on behalf of the Mortgagor. Notary Public This instrument drafted by: Kennedy & Graven, Chartered (JAE) 470 U.S. Bank Plaza 200 South Sixth Street Minneapolis, MN 55402 612-337-9300 4922-2553-6535.1 EXHIBIT A DESCRIPTION OF LAND RC125-402-1007612.v1 B-1