051925 EDA AgendaECONOMIC DEVELOPMENT AUTHORITY MEETING
RICHFIELD MUNICIPAL CENTER, COUNCIL CHAMBERS
MAY 19, 2025
7:15 PM (IMMEDI ATELY FOLLOWING THE HRA MEETING)
Call to Order
Open Forum
Please refer to the EDA 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 Economic Development Authority meeting of March 17, 2025; and the
Economic Development Authority work session of April 21, 2025.
AGENDA APPRO VAL
1. Approval of the Agenda
2.Consent Calendar contains several separate items which are acted upon by the EDA in one motion.
Once the Consent Calendar has been approved, the individual items and recommended actions have
also been approved. No further EDA action on these items is necessary. However, any EDA
Commissioner may request that an item be removed from the Consent Calendar and placed on the
regular agenda for EDA discussion and action. All items listed on the Consent Calendar are
recommended for approval.
A. Consideration of loan documents and a subordination of an Apartment Remodeling Loan to be provided
toward the preservation of three affordable rental communities.
Staff Report No. 5
3. Consideration of items, if any, removed from Consent Calendar
OTHER BUSINESS
4. Consider the creation of the Richfield Economic Vibrancy, Investment, and Visual Enhancements Program for
Richfield businesses.
Staff Report No. 6
EDA DISCUSSION ITEMS
5. EDA Discussion Items
EXECUTIVE DIRECTOR REPORT
6. Executive Director's Report
CLAIMS AND PAYROLLS
7.Claims
8.Adjournment
Auxiliary aids for individuals with disabilities are available upon request. Requests must be made at least 96
hours in advance to the City Clerk at 612-861-9739.
ECONOMIC DEVELOPMENT
AUTHORITY MEETING MINUTES
Richfield, Minnesota
Regular Meeting
March 17, 2025
President Vrieze Daniels called the meeting to order at 7:32 PM in the Council Chambers.
EDA Members Erin Vrieze Daniels, President; Mary Supple; Sean Hayford Oleary; Gordon
Present: Hanson; John Young
EDA Members Absent: None
Staff Present: Melissa Poehlman, Executive Director; Julie Urban, Assistant Community
Development Director; Michelle Friedrich, City Clerk
President Vrieze Daniels noted consideration of officers for the Richfield Economic Development Authority
for 2025. President Vrieze Daniels noted in 2024 Commissioner Vrieze Daniels was President,
Commissioner Hanson was Vice President, Commissioner Hayford Oleary was Treasurer, and staff
member Dustin Leslie was Secretary, currently vacant, and Kumud Verma was Assistant Treasurer,
currently vacant. Executive Director Poehlman noted she would make staff nominations for the two vacant
seats.
Commissioner Supple nominated Commission President Vrieze Daniels for President for 2025.
MOTION: made by Supple, seconded by Hayford Oleary.
Motion carries: 5-0
Commissioner Hayford Oleary nominated Commission Vice President Hanson to Vice President for 2025.
MOTION: made by Hayford Oleary, seconded by Supple.
Motion carried: 5-0
Commissioner Young nominated Commissioner Hayford Oleary to Treasurer for 2025.
MOTION: made by Young, seconded by Hanson.
Motion carried: 5-0
Executive Director Poehlman nominated City Clerk Michelle Friedrich to Secretary for 2025.
MOTION: made by Supple, seconded by Young.
Motion carried: 5-0
Executive Director Poehlman nominated Interim Finance Director Mary Bogie to Assistant Treasurer for
2025.
MOTION: made by Supple, seconded by Hayford Oleary.
Motion carried: 5-0
OPEN FORUM
President Vrieze Daniels gave instructions on how to participate in the open forum, there were no
participants.
CALL TO ORDER
EDA Meeting Minutes March 17, 2025
APPROVAL OF THE MINUTES
MOTION: made by Hanson, seconded by Young to approve the Minutes of the Regular Economic
Development Authority meeting of February 18, 2024.
Motion carried: 5-0
ITEM #1 APPROVAL OF THE AGENDA
MOTION: made by Hayford Oleary, seconded by Supple to approve the agenda.
Motion carried: 5-0
ITEM #2 APPROVAL OF CONSENT CALENDAR
A.Consider Resolutions designating official depositories for the Economic Development Authority for
2025, including the approval of collateral.
Executive Director Poehlman presented the Consent Calendar item 2A.
EDA RESOLUTION NO. 56
DESIGNATING U.S. BANK A DEPOSITORY OF FUNDS OF THE ECONOMIC DEVELOPMENT
AUTHORITY OF RICHFIELD FOR THE YEAR 2025
MOTION: made by Young, seconded by Hayford Oleary to adopt Resolution 56 Designating U.S. Bank a
Depository of Funds of the Economic Development Authority of Richfield for Year 2025. Staff Report No. 3.
Motion carried 5-0
EDA RESOLUTION NO. 57
DESIGNATING CERTAIN FINANCIAL INSTITUTIONS AS DEPOSITORIES FOR THE INVESTMENT OF
ECONOMIC DEVELOPMENT AUTHORITY OF RICHFIELD FUNDS IN 2025
MOTION: made by Young, seconded by Hayford Oleary to adopt Resolution 57 Designating Certain
Financial Institutions as Depositories for the Investment of Economic Development Authority of Richfield for
Year 2025. Staff Report No. 3.
Motion carried 5-0
EDA RESOLUTION NO. 58
DESIGNATING CERTAIN SAVING AND LOAN ASSOCIATIONS, BANKS AND CREDIT UNIONS AS
DEPOSITORIES FOR THE INVESTMENT OF ECONOMIC DEVELOPMENT AUTHORITY OF
RICHFIELD FUNDS IN 2025
MOTION: made by Young, seconded by Hayford Oleary to adopt Resolution 58 Designating Certain
Financial Institutions as Depositories for the Investment of Economic Development Authority of Richfield for
Year 2025. Staff Report No. 3.
Motion carried 5-0
ITEM #3 CONSIDERATION OF ITEMS, IF ANY, REMOVED FROM CONSENT CALENDAR
None.
EDA Meeting Minutes March 17, 2025
ITEM #4 RESOLUTIONS: CONSIDER ADOPTION OF A RESOLUTION AMENDING THE
BYLAWS OF THE ECOMONIC DEVELOPMENT AUTHORITY FOR 2025
Executive Director Poehlman noted the amendment to the bylaws includes revisions within Article III –
Meetings, Section 3, and related to Special Meetings procedures. Executive Director Poehlman reviewed
proposed language and noted the amendment allows the executive director to call a special meeting, and
aligns the notification period with the statutory requirement to post special meetings at least three days in
advance of the special meeting.
EDA RESOLUTION NO. 59
AMENDING THE BYLAWS OF THE ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF
RICHFIELD, MINNESOTA
MOTION: made by Supple, seconded by Hayford Oleary adopting Resolution 2025-59 Amending the
Bylaws of the Economic Development Authority of the City of Richfield, Minnesota. Staff Report No. 4.
Motion carried: 5-0
ITEM #5 EDA DISCUSSION ITEMS
Commissioner Supple thanked staff for the 2024 Year in Review presentation.
ITEM #6 EXECUTIVE DIRECTOR’S REPORT
Executive Director Poehlman noted a Work Session scheduled in April (6:00 p.m. start time), to discuss the
new business assistance program.
ITEM #7 CLAIMS
MOTION: made by Young, seconded by Hanson, that the following claims be approved:
U.S. BANK March 17, 2025
EDA Check #23652-23667 $35,780.02
TOTAL $35,780.02
Motion carried: 5-0
ITEM #8 ADJOURNMENT
This meeting was adjourned by unanimous consent at 7:40 p.m.
Date Approved: May 19, 2025
Erin Vrieze Daniels
EDA President
Michelle Friedrich Melissa Poehlman
City Clerk Executive Director
ECONOMIC DEVELOPMENT
AUTHORITY MEETING MINUTES
Richfield, Minnesota
Work Session
April 21, 2025
President Vrieze Daniels called the meeting to order at 5:45 PM in the Bartholomew Room.
EDA Present:
EDA Absent:
Staff Present:
Erin Vrieze Daniels, President; Mary Supple; Sean Hayford Oleary; Gordon
Hanson; John Young
None
Melissa Poehlman, Executive Director; Jan Youngquist, Economic Development
Manager; Michelle Friedrich, City Clerk
ITEM #1 BUSINESS ASSISTANCE PROGRAMS
President Vrieze Daniels introduced Economic Development Manager Youngquist. Economic Development
Manager Youngquist outlined the work session agenda items for discussion and introduced the Richfield
Economic Vibrancy, Investment, and Visual Enhancement Program (REVIVE) for small businesses. She
noted the purpose and vision, improvement requests that would be accepted, financial loan aspects, and
eligibility requirements of the program. Economic Development Manager Youngquist presented the past
and current business assistance programs and reviewed the proposed, new business assistance program
includes improvements to curb appeal for commercial spaces, approaches to achieve the desired outcome,
and noted consideration of the current economic climate. The Economic Development Authority provided
guidance and direction to staff regarding the small business assistance program. Economic Development
Manager Youngquist summarized the work session discussion noting inclusion of franchises, exclusion of
tax-exempt properties, sign parameter language related to percentage of loan, revisiting the loan grant
amount and increasing it to $10,000, eligibility of collector and arterial roads along Chicago, providing for
legal and design services, and first-come, first-served for applications. Economic Development Manager
Youngquist provided an overview of the next steps in the process.
ADJOURNMENT
This meeting was adjourned by unanimous consent at 6:37 PM.
Date Approved: May 19, 2025
Erin Vrieze Daniels
EDA President
Michelle Friedrich Melissa Poehlman
City Clerk Executive Director
CALL TO ORDER
AGENDA SECTION: Consent Calendar
AGENDA ITEM # 2.A.
STAFF REPORT NO. 5
ECONOMIC DEVELOPMENT AUTHORITY
MEETING
5/19/2025
Julie Urban, Asst. Community Development DirectorREPORT PREPARED BY:
EXECUTIVE DIRE CTOR RE VIEW:
ITEM FOR COUNCIL CONSIDERATION:
Consideration of loan documents and a subordination of an Apartment Remodeling Loan to be
provided toward the preservation of three affordable rental communities.
EXECUTIVE SUMMARY:
The Housing and Redevelopment Authority (HRA) approved a Contract for Private Redevelopment (Contract)
with Hempel Real Estate, dba Hempel Holdings, LLC (Developer), in which the HRA agrees to provide the
Developer with financial assistance toward the purchase of three affordable Richfield apartment
complexes: New Orleans Court, Richland Court, and Winton House (Properties).
A portion of the financing will be in the form of rehabilitation loans, for a total amount of $200,000, through the
Economic Development Authority's (EDA) Apartment Remodeling Program. The loans will be used toward
physical improvements of the properties.
Freddie Mac (Lender) and the NOAH Impact Fund (Equity Investor) are requesting some modifications to
the typical Loan Agreement, Note, and Mortgage. The modifications are administrative in nature and ensure
that the loans work with the primary financing.
The Lender and Equity Investor are also requesting that the EDA Mortgages be subordinate to the principal
loan and equity contribution, so the EDA is being asked to approve a Subordination Agreement. This is
typical and expected.
Given the sensitive timing of the closing, staff recommends that the EDA authorize that any additional
administrative changes and final loan amounts for each property be approved by the Executive Director and
EDA Attorney. A copy of a generic subordination agreement is attached to the staff report. Once final
language is approved, agreements with identical terms will be prepared for each property that the Developer
requests that a Loan be issued for.
RECOMMENDED ACTION:
By Motion: Adopt a resolution approving the execution and delivery of Apartment Remodeling Loan
Agreements, Promissory Notes, and Mortgages with three legal entities owning the affordable rental
communities of New Orleans Court, Richland Court, Winton House and approving a Subordination
Agreement.
BASIS OF RECOMMENDATION:
A.HISTORICAL CONTEXT
Melissa Poehlman, Executive Director
The 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. The Properties,
built in the 1960s, are considered NOAH properties. The buildings contain a mix of one,
two, and three bedroom units, and rent levels are considered affordable to households
earning between 50% and 60% Area Median Income (AMI).
On January 28, 2025, the City Council approved the use of the 4d tax status in exchange
for the preservation of affordability.
On February 18, 2025, the HRA approved a Contract for Private Redevelopment with the
Developer providing $1.77 million in financial assistance to the Properties. On April 21,
2025, the HRA approved an amended Contract for Private Redevelopment containing
administrative language changes to the Contract and related Agreements.
On February 18, 2025, the EDA authorized the Developer to apply for one Apartment
Remodeling Loan per property up to a total amount of $200,000.
B.EQUITABLE OR STRATEGIC CONSIDERATIONS OR IMPACTS
Preserving the City's NOAH apartment communities furthers the Strategic Plan goal to maintain
Richfield as an affordable place to live. The City's rental housing is also occupied by a significant
number of Black, Indigenous, and People of Color (BIPOC) residents and residents with lower
incomes. Investing in housing stability is an investment in the health and vitality of these communities.
C.POLICIES (resolutions, ordinances, regulations, statutes, exc):
N/A
D.CRITICAL TIMING ISSUES:
The Developer is working toward closing on the Properties on June 10-11 of this year.
E.FINANCIAL IMPACT:
Under the terms of the Contract for Private Redevelopment, the HRA agrees to provide $1.57 million in
funds from the Affordable Housing Trust Fund and $200,000 in Apartment Remodeling Program loans.
The EDA and HRA will receive $191,021 in loan repayments from the current Property owner, which
can be directed towards new loans for the Properties.
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.
A Mortgage will be recorded against the Properties to secure, along with a Promissory Note, the EDA's
loans. The Mortgage will be in position behind the Developer's Lender and Equity Investor, which will be
confirmed by approval of the Subordination Agreement. The EDA Attorney and Executive Director will
approve any additional minor changes to these and other documents requested by the principal funders.
More substantive changes would be brought back to the EDA for consideration.
ALTERNATIVE RECOMMENDATION(S):
Decide not to approve the Loan documents and Subordination.
PRINCIPAL PARTIES EXPECTED AT MEETING:
NA
ATTACHMENTS:
Description Type
Resolution Resolution Letter
Subordination Agreement Contract/Agreement
Apartment Remodeling Loan Agreement Contract/Agreement
RICHFIELD ECONOMIC DEVELOPMENT AUTHORITY
RESOLUTION NO. 60
RESOLUTION APPROVING THE EXECUTION AND DELIVERY OF APARTMENT
REMODELING LOAN DOCUMENTS AND SUBORDINATION OF APARTMENT
REMODELING LOAN FOR THREE AFFORDABLE HOUSING APARTMENT PROPERTIES
WHEREAS, the Richfield Economic Development Authority (the “Authority”) 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 undertake modest
rehabilitation of the properties, and to that end the Board of Commissioners of the Authority (the
“Board”) authorized the Redeveloper to apply for three Apartment Remodeling Loans up to
$200,000 at its meeting on February 18, 2025; and
WHEREAS, the Board has been presented with loan documents between the Authority
and the Redeveloper, consisting of a Loan Agreement, Promissory Note, and Mortgage (the
“Loan Documents”) which provides for loans to be given and mortgages to be filed against each
property; and
WHEREAS, the Redeveloper’s lender and equity investor have requested administrative
changes to the Agreements; and
WHEREAS, the Redeveloper’s lender and equity investor have requested that the EDA
Subordinate its mortgages to the primary financing; and
WHEREAS, the Board has reviewed the Loan Documents and the Subordination
Agreement 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
Richfield Economic Development Authority as follows:
1.The Loan Documents and Subordination Agreement 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 President and
Executive Director; provided that execution of such documents by such officials shall be conclusive
evidence of approval.
2.The President and Executive Director are hereby authorized to execute the Loan
Documents and the Subordination Agreement on behalf of the Authority and to carry out the
Authority’s obligations thereunder.
2
RC125-402-1008022.v1
3.The President 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 and previous Authority approvals.
4.This resolution shall be in full force and effect upon its adoption.
Adopted by the Richfield Economic Development Authority this 19th day of May, 2025.
Erin Vrieze Daniels, President
Melissa Poehlman, Executive Director
Prepared by, and after recording
return to:
Moss & Barnett (______)
A Professional Association
150 South Fifth Street, Suite 1200
Minneapolis, MN 55402
SUBORDINATION AGREEMENT
GOVERNMENTAL ENTITY
(Revised 2-25-2025)
Freddie Mac Loan No. «FHLMCLoanNo»
Property Name: «ProjectName»
Freddie Mac Loan Number: «FHLMCLoanNo»
Property Name: «ProjectName»
SUBORDINATION AGREEMENT
GOVERNMENTAL ENTITY
(Revised 2-25-2025)
THIS SUBORDINATION AGREEMENT (“Agreement”) is entered into as of «DateofLoan»,
by and between (i) «LenderName», a «TypeofLenderEntity» organized and existing under the
laws of «StateofLenderOrganization» (“Senior Lender”) and (ii) [GOVERNMENTAL
ENTITY], a ____________ organized and existing under the laws of the [State]
[Commonwealth] of ____________ (“Subordinate Lender”).
RECITALS
A.«BorrowerName», a «TypeofBorrowerEntity» organized under the laws of
«StateofBorrowerOrganization» (“Borrower”) is the owner of certain land located in
«CountyofProjectLocation» County, «StateofProjectLocation», described in Exhibit A
(“Land”). The Land is improved with a multifamily rental housing project
(“Improvements”).
B.Senior Lender has made or is making a loan to Borrower in the original principal amount
of $«NumericalLoanAmount» (“Senior Loan”) upon the terms and conditions of a
Multifamily Loan and Security Agreement dated as of «DateofLoan» between Senior
Lender and Borrower (“Senior Loan Agreement”) in connection with the Mortgaged
Property. The Senior Loan is secured by a «TypeofSecurityInstrument» dated as of the
date of the Senior Loan Agreement (“Senior Mortgage”) encumbering the Land, the
Improvements and related personal and other property described and defined in the
Senior Mortgage as the “Mortgaged Property.”
C.Pursuant to a [NAME OF SUBORDINATE LOAN AGREEMENT] dated [as of]
___________ between Subordinate Lender and Borrower (“Subordinate Loan
Agreement”), Subordinate Lender has made or is making a loan to Borrower in the
original principal amount of $______________ (“Subordinate Loan”). The Subordinate
Loan is or will be secured by a [NAME OF SUBORDINATE MORTGAGE] dated [as
of] _________ (“Subordinate Mortgage”) encumbering all or a portion of the
Mortgaged Property.
D.The Senior Mortgage [is] [will be] recorded in [DESCRIBE APPLICABLE
RECORDING OFFICE] (“Recording Office”) at [INSERT RECORDING
INFORMATION IF KNOWN]. The Subordinate Mortgage [is] [will be] recorded in
the Recording Office at [INSERT RECORDING INFORMATION IF KNOWN]
[INCLUDE IF SUBORDINATE MORTGAGE IS NOT ALREADY OF RECORD:
following the recording of the Senior Mortgage].
Subordination Agreement – Governmental Entity Page 2
E.The execution and delivery of this Agreement is a condition of Senior Lender’s
[CHOOSE ONE: making of the Senior Loan OR consenting to Subordinate Lender’s
making of the Subordinate Loan and Borrower’s granting of the Subordinate Mortgage].
AGREEMENT
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are
acknowledged, the parties agree as follows:
1.Definitions. The following terms, when used in this Agreement (including, as
appropriate, when used in the above recitals), will have the following meanings:
The terms “Condemnation,” “Imposition Reserve Deposits,” “Impositions,” “Leases,”
“Rents” and “Restoration,” as well as any term used in this Agreement and not
otherwise defined in this Agreement, will have the meanings given to those terms in the
Senior Loan Agreement.
“Bankruptcy Proceeding” means any bankruptcy, reorganization, insolvency,
composition, restructuring, dissolution, liquidation, receivership, assignment for the
benefit of creditors, or custodianship action or proceeding under any federal or state law
with respect to Borrower, any guarantor of any of the Senior Indebtedness, any of their
respective properties, or any of their respective partners, members, officers, directors, or
shareholders.
“Borrower” means all persons or entities identified as “Borrower” in the first Recital of
this Agreement, together with their successors and assigns, and any other person or entity
who acquires title to the Mortgaged Property after the date of this Agreement; provided
that the term “Borrower” will not include Senior Lender if Senior Lender acquires title to
the Mortgaged Property.
“Casualty” means the occurrence of damage to or loss of all or any portion of the
Mortgaged Property by fire or other casualty.
“Enforcement Action” means any of the following actions taken by or at the direction of
Subordinate Lender: the acceleration of all or any part of the Subordinate Indebtedness,
the advertising of or commencement of any foreclosure or trustee’s sale proceedings, the
exercise of any power of sale, the acceptance of a deed or assignment in lieu of
foreclosure or sale, the collecting of Rents, the obtaining of or seeking of the appointment
of a receiver, the seeking of default interest, the taking of possession or control of any of
the Mortgaged Property, the commencement of any suit or other legal, administrative, or
arbitration proceeding based upon the Subordinate Note or any other of the Subordinate
Loan Documents, the exercising of any banker’s lien or rights of set-off or recoupment,
or the exercise of any other remedial action against Borrower, any other party liable for
any of the Subordinate Indebtedness or obligated under any of the Subordinate Loan
Documents, or the Mortgaged Property.
Subordination Agreement – Governmental Entity Page 3
“Enforcement Action Notice” means a Notice given from Subordinate Lender to Senior
Lender following one or more Subordinate Mortgage Default(s) and the expiration of any
applicable notice or cure periods, setting forth in reasonable detail the Subordinate
Mortgage Default(s) and the Enforcement Actions proposed to be taken by Subordinate
Lender.
“Lien” means any lien, encumbrance, estate or other interest, recorded against or secured
by the Mortgaged Property.
“Loss Proceeds” means all monies received or to be received under any insurance policy,
from any condemning authority, or from any other source, as a result of any
Condemnation or Casualty.
“Notice” means all notices, requests, demands, consents, approvals or other
communication pursuant to this Agreement provided in accordance with the provisions of
Section 10.
“Regulatory Agreement” means the [NAME OF REGULATORY AGREEMENT,
DEED RESTRICTIONS, OR LAND USE RESTRICTIONS] between Borrower and
Subordinate Lender dated [as of] ______________, _____ and [recorded] [to be
recorded] [at] [INSERT RECORDING INFORMATION IF AVAILABLE] in the
Recording Office of «CountyofProjectLocation» County, «StateofProjectLocation».
“Senior Indebtedness” means the “Indebtedness” as defined in the Senior Loan
Agreement.
“Senior Lender” means the “Lender” as defined in the Senior Mortgage. When any other
person or entity becomes the legal holder of the Senior Note, such other person or entity
will automatically become Senior Lender.
“Senior Loan Documents” means the “Loan Documents” as defined in the Senior Loan
Agreement, as such documents may be amended.
“Senior Mortgage Default” means any act, failure to act, event, condition, or occurrence
which constitutes, or which with the giving of Notice or the passage of time, or both,
would constitute, an “Event of Default” as defined in the Senior Loan Agreement.
“Senior Note” means the promissory note or other evidence of the Senior Indebtedness
and any replacement of the Senior Note.
“Subordinate Indebtedness” means all sums evidenced or secured or guaranteed by, or
otherwise due and payable to Subordinate Lender pursuant to, the Subordinate Loan
Documents.
Subordination Agreement – Governmental Entity Page 4
“Subordinate Lender” means the person or entity named as such in the first paragraph
of this Agreement and any other person or entity who becomes the legal holder of the
Subordinate Note after the date of this Agreement.
“Subordinate Loan Documents” means the Subordinate Mortgage, the Subordinate
Note, the Subordinate Loan Agreement, the Regulatory Agreement and all other
documents at any time evidencing, securing, guaranteeing, or otherwise delivered in
connection with the Subordinate Indebtedness, as such documents may be amended.
“Subordinate Mortgage Default” means any act, failure to act, event, condition, or
occurrence which allows (but for any contrary provision of this Agreement), Subordinate
Lender to take an Enforcement Action.
“Subordinate Note” means the promissory note or other evidence of the Subordinate
Indebtedness and any replacement of the Subordinate Note.
[PROVISION FOR SOFT DEBT]
“Surplus Cash” means, with respect to any period, any revenues of Borrower remaining
after paying, or setting aside funds for paying, all the following:
(a)All sums due or currently required to be paid under the Senior Loan Documents,
including any reserves and Imposition Reserve Deposits.
(b)All reasonable operating expenses of the Mortgaged Property, including real
estate taxes, insurance premiums, utilities, building maintenance, painting and
repairs, management fees, payroll, administrative expenses, legal expenses and
audit expenses (excluding any developer fees payable with respect to the
Mortgaged Property).
2.Subordinate Lender’s Representations and Warranties.
(a)Subordinate Lender represents and warrants that each of the following is true as
of the date of this Agreement:
(i)Subordinate Lender is now the owner and holder of the Subordinate Loan
Documents.
(ii)No Subordinate Mortgage Default has occurred and is continuing.
(iii)The current unpaid principal balance of the Subordinate Indebtedness is
$________.
(iv)No scheduled payments under the Subordinate Note have been prepaid.
Subordination Agreement – Governmental Entity Page 5
(b) Without the prior written consent of Senior Lender, Subordinate Lender will not
do any of the following:
(i) Pledge, assign, transfer, convey, or sell any interest in the Subordinate
Indebtedness or any of the Subordinate Loan Documents.
(ii) Take any action which has the effect of increasing the Subordinate
Indebtedness, except to cure a Senior Mortgage Default as contemplated
under Section 5(a) of this Agreement.
(iii) Accept any prepayment of the Subordinate Indebtedness.
3. Terms of Subordination.
(a) Agreement to Subordinate. The Subordinate Indebtedness is and will at all times
continue to be subject and subordinate in right of payment to the prior payment in
full of the Senior Indebtedness. Each of the Subordinate Loan Documents is, and
will at all times remain, subject and subordinate in all respects to the liens, terms,
covenants, conditions, operations, and effects of each of the Senior Loan
Documents.
(b) Subordination of Subrogation Rights. If Subordinate Lender, by indemnification,
subrogation or otherwise, acquires any Lien on any of the Mortgaged Property,
then that Lien will be fully subject and subordinate to the receipt by Senior
Lender of payment in full of the Senior Indebtedness, and to the Senior Loan
Documents, to the same extent as the Subordinate Indebtedness and the
Subordinate Loan Documents are subordinate pursuant to this Agreement.
(c) Payments Before Senior Mortgage Default [; Soft Subordinate Debt]. Until the
occurrence of a Senior Mortgage Default, Subordinate Lender will be entitled to
retain for its own account all payments of the principal of and interest on the
Subordinate Indebtedness pursuant to the Subordinate Loan Documents; provided
that Subordinate Lender expressly agrees that it will not accept any such payment
that is made more than 10 days in advance of its due date [PROVISION FOR
SOFT DEBT: and provided further that Subordinate Lender will not accept any
payment in an amount that exceeds 75% of then available Surplus Cash].
(d) Payments After Senior Mortgage Default or Bankruptcy.
(i) Immediately upon Subordinate Lender’s receipt of Notice or actual
knowledge of a Senior Mortgage Default, Subordinate Lender will not
accept any payments of the Subordinate Indebtedness, and the provisions
of this Section 3(d) will apply.
(ii) If Subordinate Lender receives any of the following, whether voluntarily
or by action of law, after a Senior Mortgage Default of which Subordinate
Subordination Agreement – Governmental Entity Page 6
Lender has actual knowledge (or is deemed to have actual knowledge as
provided in Section 4(c)) or has been given Notice, such will be received
and held in trust for Senior Lender:
(A) Any payment, property, or asset of any kind or in any form in
connection with the Subordinate Indebtedness.
(B) Any proceeds from any Enforcement Action.
(C) Any payment, property, or asset in or in connection with any
Bankruptcy Proceeding.
(iii) Subordinate Lender will promptly remit, in kind and properly endorsed as
necessary, all such payments, properties, and assets described in Section
3(d)(ii) to Senior Lender. Senior Lender will apply any payment, asset, or
property so received from Subordinate Lender to the Senior Indebtedness
in such order, amount (with respect to any asset or property other than
immediately available funds), and manner as Senior Lender determines in
its sole and absolute discretion.
(e) Bankruptcy. Without the prior written consent of Senior Lender, Subordinate
Lender will not commence, or join with any other creditor in commencing, any
Bankruptcy Proceeding. In the event of a Bankruptcy Proceeding, Subordinate
Lender will not vote affirmatively in favor of any plan of reorganization or
liquidation unless Senior Lender has also voted affirmatively in favor of such
plan.
4. Default Under Subordinate Loan Documents.
(a) Notice of Subordinate Mortgage Default and Cure Rights.
(i) Subordinate Lender will deliver to Senior Lender a copy of each Notice
delivered by Subordinate Lender pursuant to the Subordinate Loan
Documents within 5 Business Days of sending such Notice to Borrower.
Neither giving nor failing to give a Notice to Senior Lender pursuant to
this Section 4(a) will affect the validity of any Notice given by
Subordinate Lender to Borrower.
(ii) For a period of 90 days following delivery to Senior Lender of an
Enforcement Action Notice, Senior Lender will have the right, but not the
obligation, to cure any Subordinate Mortgage Default. However, if such
Subordinate Mortgage Default is a non-monetary default and is not
capable of being cured within such 90-day period and Senior Lender has
commenced and is diligently pursuing such cure to completion, Senior
Lender will have such additional period of time as may be required to cure
Subordination Agreement – Governmental Entity Page 7
such Subordinate Mortgage Default or until such time, if ever, as Senior
Lender takes either of the following actions:
(A) Discontinues its pursuit of any cure.
(B) Delivers to Subordinate Lender Senior Lender’s written consent to
the Enforcement Action described in the Enforcement Action
Notice.
(iii) Senior Lender will not be subrogated to the rights of Subordinate Lender
under the Subordinate Loan Documents as a result of Senior Lender
having cured any Subordinate Mortgage Default.
(iv) Subordinate Lender acknowledges that all amounts advanced or expended
by Senior Lender in accordance with the Senior Loan Documents or to cure
a Subordinate Mortgage Default will be added to and become a part of the
Senior Indebtedness and will be secured by the lien of the Senior Mortgage.
(b) Subordinate Lender’s Exercise of Remedies After Notice to Senior Lender.
(i) In the event of a Subordinate Mortgage Default, Subordinate Lender will
not commence any Enforcement Action until 90 days after Subordinate
Lender has delivered to Senior Lender an Enforcement Action Notice.
During such 90-day period or such longer period as provided in Section
4(a), Subordinate Lender will be entitled to seek specific performance to
enforce covenants and agreements of Borrower relating to income, rent, or
affordability restrictions contained in the Regulatory Agreement, subject
to Senior Lender’s right to cure a Subordinate Mortgage Default set forth
in Section 4(a).
(ii) Subordinate Lender may not commence any other Enforcement Action,
including any foreclosure action under the Subordinate Loan Documents,
until the earlier of:
(A) The expiration of such 90-day period or such longer period as
provided in Section 4(a).
(B) The delivery by Senior Lender to Subordinate Lender of Senior
Lender’s written consent to such Enforcement Action by
Subordinate Lender.
(iii) Subordinate Lender acknowledges that Senior Lender may grant or refuse
consent to Subordinate Lender’s Enforcement Action in Senior Lender’s
sole and absolute discretion. At the expiration of such 90-day period or
such longer period as provided in Section 4(a) and, subject to Senior
Subordination Agreement – Governmental Entity Page 8
Lender’s right to cure set forth in Section 4(a), Subordinate Lender may
commence any Enforcement Action.
(iv) Senior Lender may pursue all rights and remedies available to it under the
Senior Loan Documents, at law, or in equity, regardless of any
Enforcement Action Notice or Enforcement Action by Subordinate
Lender. No action or failure to act on the part of Senior Lender in the
event of a Subordinate Mortgage Default or commencement of an
Enforcement Action will constitute a waiver on the part of Senior Lender
of any provision of the Senior Loan Documents or this Agreement.
(c) Cross Default. Subordinate Lender acknowledges that a Subordinate Mortgage
Default constitutes a Senior Mortgage Default. Accordingly, upon the occurrence
of a Subordinate Mortgage Default, Subordinate Lender will be deemed to have
actual knowledge of a Senior Mortgage Default. If Subordinate Lender notifies
Senior Lender in writing that any Subordinate Mortgage Default of which Senior
Lender has received Notice has been cured or waived, as determined by
Subordinate Lender in its sole discretion, then provided that Senior Lender has
not conducted a sale of the Mortgaged Property pursuant to its rights under the
Senior Loan Documents, any Senior Mortgage Default under the Senior Loan
Documents arising solely from such Subordinate Mortgage Default will be
deemed cured, and the Senior Loan will be reinstated.
5. Default Under Senior Loan Documents.
(a) Notice of Senior Mortgage Default and Cure Rights.
(i) Senior Lender will deliver to Subordinate Lender a copy of any Notice sent
by Senior Lender to Borrower of a Senior Mortgage Default within 5
Business Days of sending such Notice to Borrower. Failure of Senior Lender
to send Notice to Subordinate Lender will not prevent the exercise of Senior
Lender’s rights and remedies under the Senior Loan Documents.
(ii) Subordinate Lender will have the right, but not the obligation, to cure any
monetary Senior Mortgage Default within 30 days following the date of such
Notice. During such 30-day period Senior Lender will be entitled to continue
to pursue its remedies under the Senior Loan Documents.
(iii) Subordinate Lender may, within 90 days after the date of the Notice, cure a
non-monetary Senior Mortgage Default if during such 90-day period,
Subordinate Lender keeps current all payments required under the Senior
Loan Documents. If such a non-monetary Senior Mortgage Default creates
an unacceptable level of risk relative to the Mortgaged Property, or Senior
Lender’s secured position relative to the Mortgaged Property, as determined
by Senior Lender in its sole discretion, then during such 90-day period
Senior Lender may exercise all available rights and remedies to protect and
Subordination Agreement – Governmental Entity Page 9
preserve the Mortgaged Property and the Rents, revenues and other proceeds
from the Mortgaged Property.
(iv) All amounts paid by Subordinate Lender to Senior Lender to cure a Senior
Mortgage Default will be deemed to have been advanced by Subordinate
Lender pursuant to, and will be secured by the lien of, the Subordinate
Mortgage. Notwithstanding anything in this Section 5(a) to the contrary,
Subordinate Lender’s right to cure any Senior Mortgage Default will
terminate immediately upon the occurrence of any Bankruptcy Proceeding.
(b) Release of Mortgaged Property.
(i) Subordinate Lender consents to and authorizes any future release by
Senior Lender of all or any portion of the Mortgaged Property from the
lien, operation, and effect of the Senior Loan Documents. Subordinate
Lender waives to the fullest extent permitted by law, all equitable or other
rights it may have in connection with the release of all or any portion of
the Mortgaged Property, including any right to require Senior Lender to do
any of the following:
(A) To conduct a separate sale of any portion of the Mortgaged
Property.
(B) To exhaust its remedies against all or any portion of the Mortgaged
Property or any combination of portions of the Mortgaged Property
or any other collateral for the Senior Indebtedness.
(C) To proceed against Borrower, any other party that may be liable
for any of the Senior Indebtedness (including any general partner
of Borrower if Borrower is a partnership), all or any portion of the
Mortgaged Property or combination of portions of the Mortgaged
Property or any other collateral, before proceeding against all or
such portions or combination of portions of the Mortgaged
Property as Senior Lender determines. [ADD FOR
CALIFORNIA TRANSACTIONS: Subordinate Lender waives
to the fullest extent permitted by law any and all benefits under
California Civil Code Sections 2845, 2849 and 2850.]
(ii) Subordinate Lender consents to and authorizes, at the option of Senior
Lender, the sale, either separately or together, of all or any portion of the
Mortgaged Property. Subordinate Lender acknowledges that without
Notice to Subordinate Lender and without affecting any of the provisions
of this Agreement, Senior Lender may do any of the following:
(A) Extend the time for or waive any payment or performance under
the Senior Loan Documents.
Subordination Agreement – Governmental Entity Page 10
(B) Modify or amend in any respect any provision of the Senior Loan
Documents.
(C) Modify, exchange, surrender, release, and otherwise deal with any
additional collateral for the Senior Indebtedness.
(c) Termination Upon Foreclosure. The lien of the Subordinate Loan Documents will
automatically terminate upon the acquisition by Senior Lender or by a third-party
purchaser of title to the Mortgaged Property pursuant to a foreclosure of, deed in
lieu of foreclosure, or trustee’s sale or other exercise of a power of sale or similar
disposition under the Senior Mortgage.
6. Conflicts. If there is any conflict or inconsistency between the terms of the Subordinate
Loan Documents and the terms of this Agreement, then the terms of this Agreement will
control. Borrower acknowledges that the terms and provisions of this Agreement will not,
and will not be deemed to do any of the following:
(a) Extend Borrower’s time to cure any Senior Mortgage Default or Subordinate
Mortgage Default.
(b) Give Borrower the right to receive notice of any Senior Mortgage Default or
Subordinate Mortgage Default, other than that, if any, provided, respectively
under the Senior Loan Documents or the Subordinate Loan Documents.
(c) Create any other right or benefit for Borrower as against Senior Lender or
Subordinate Lender.
7. Rights and Obligations of Subordinate Lender Under the Subordinate Loan
Documents and of Senior Lender under the Senior Loan Documents.
(a) Insurance.
(i) All requirements pertaining to insurance under the Subordinate Loan
Documents (including requirements relating to amounts and types of
coverages, deductibles and special endorsements) will be deemed satisfied
if Borrower complies with the insurance requirements under the Senior
Loan Documents and of Senior Lender.
(ii) All original policies of insurance required pursuant to the Senior Loan
Documents will be held by Senior Lender.
(iii) Nothing in this Section 7(a) will preclude Subordinate Lender from
requiring that it be named as a mortgagee and loss payee, as its interest
may appear, under all policies of property damage insurance maintained
by Borrower with respect to the Mortgaged Property, provided such action
Subordination Agreement – Governmental Entity Page 11
does not affect the priority of payment of Loss Proceeds, or that
Subordinate Lender be named as an additional insured under all policies of
liability insurance maintained by Borrower with respect to the Mortgaged
Property.
(b) Condemnation or Casualty.
In the event of a Condemnation or a Casualty, the following provisions will apply:
(i) The rights of Subordinate Lender (under the Subordinate Loan Documents
or otherwise) to participate in any proceeding or action relating to a
Condemnation or a Casualty, or to participate or join in any settlement of,
or to adjust, any claims resulting from a Condemnation or a Casualty, will
be and remain subordinate in all respects to Senior Lender’s rights under
the Senior Loan Documents, and Subordinate Lender will be bound by any
settlement or adjustment of a claim resulting from a Condemnation or a
Casualty made by Senior Lender.
(ii) All Loss Proceeds will be applied either to payment of the costs and
expenses of Restoration or to payment on account of the Senior
Indebtedness, as and in the manner determined by Senior Lender in its
sole discretion; provided however, Senior Lender agrees to consult with
Subordinate Lender in determining the application of Casualty proceeds.
In the event of any disagreement between Senior Lender and Subordinate
Lender over the application of Casualty proceeds, the decision of Senior
Lender, in its sole discretion, will prevail.
(iii) If Senior Lender holds Loss Proceeds, or monitors the disbursement of
Loss Proceeds, Subordinate Lender will not do so. Nothing contained in
this Agreement will be deemed to require Senior Lender to act for or on
behalf of Subordinate Lender in connection with any Restoration or to
hold or monitor any Loss Proceeds in trust for or otherwise on behalf of
Subordinate Lender, and all or any Loss Proceeds may be commingled
with any funds of Senior Lender.
(iv) If Senior Lender elects to apply Loss Proceeds to payment on account of
the Senior Indebtedness, and if the application of such Loss Proceeds
results in the payment in full of the entire Senior Indebtedness, any
remaining Loss Proceeds held by Senior Lender will be paid to
Subordinate Lender unless another party has asserted a claim to the
remaining Loss Proceeds.
(c) Modification of Subordinate Loan Documents. Subordinate Lender agrees that,
until the principal of, interest on and all other amounts payable under the Senior
Loan Documents have been paid in full, it will not, without the prior written
consent of Senior Lender, increase the amount of the Subordinate Loan, increase
Subordination Agreement – Governmental Entity Page 12
the required payments due under the Subordinate Loan, decrease the term of the
Subordinate Loan, increase the interest rate on the Subordinate Loan, or otherwise
amend the Subordinate Loan terms in a manner that creates an adverse effect
upon Senior Lender under the Senior Loan Documents. If Subordinate Lender
either (i) amends the Subordinate Loan Documents in the manner set forth above
or (ii) assigns the Subordinate Loan without Senior Lender’s consent, then such
amendment or assignment will be void ab initio and of no effect whatsoever.
(d) Modification of Senior Loan Documents. Senior Lender may amend, waive,
postpone, extend, renew, replace, reduce or otherwise modify any provisions of
the Senior Loan Documents without the necessity of obtaining the consent of or
providing Notice to Subordinate Lender, and without affecting any of the
provisions of this Agreement. Notwithstanding the foregoing, Senior Lender may
not modify any provision of the Senior Loan Documents that increases the Senior
Indebtedness, except for increases in the Senior Indebtedness that result from
advances made by Senior Lender to protect the security or lien priority of Senior
Lender under the Senior Loan Documents or to cure defaults under the
Subordinate Loan Documents.
(e) Commercial or Retail Leases. If requested, Subordinate Lender will enter into
attornment and non-disturbance agreements with all tenants under commercial or
retail Leases, if any, to whom Senior Lender has granted attornment and non-
disturbance, on the same terms and conditions given by Senior Lender.
(f) Consent Rights. Whenever the Subordinate Loan Documents give Subordinate
Lender approval or consent rights with respect to any matter, and a right of
approval or consent for the same or substantially the same matter is also granted
to Senior Lender pursuant to the Senior Loan Documents or otherwise, Senior
Lender’s approval or consent or failure to approve or consent will be binding on
Subordinate Lender. None of the other provisions of Section 7 are intended to be
in any way in limitation of the provisions of this Section 7(f).
(g) Escrows. Except as provided in this Section 7(g), and regardless of any contrary
provision in the Subordinate Loan Documents, Subordinate Lender will not
collect any escrows for any cost or expense related to the Mortgaged Property or
for any portion of the Subordinate Indebtedness. However, if Senior Lender is not
collecting escrow payments for one or more Impositions, Subordinate Lender may
collect escrow payments for such Impositions; provided that all payments so
collected by Subordinate Lender will be held in trust by Subordinate Lender to be
applied only to the payment of such Impositions.
(h) Certification. Within 10 days after request by Senior Lender, Subordinate Lender
will furnish Senior Lender with a statement, duly acknowledged and certified
setting forth the then-current amount and terms of the Subordinate Indebtedness,
confirming that there exists no default under the Subordinate Loan Documents (or
Subordination Agreement – Governmental Entity Page 13
describing any default that does exist), and certifying to such other information
with respect to the Subordinate Indebtedness as Senior Lender may request.
8. Refinancing. Subordinate Lender agrees that its agreement to subordinate under this
Agreement will extend to any new mortgage debt which is for the purpose of refinancing
all or any part of the Senior Indebtedness (including reasonable and necessary costs
associated with the closing and/or the refinancing, and any reasonable increase in
proceeds for rehabilitation in the context of a preservation transaction). All terms and
covenants of this Agreement will inure to the benefit of any holder of any such
refinanced debt, and all references to the Senior Loan Documents and Senior Lender will
mean, respectively, the refinance loan documents and the holder of such refinanced debt.
9. Governmental Powers. Nothing in this Agreement is intended, nor will it be construed,
to in any way limit the exercise by Subordinate Lender of its governmental powers
(including police, regulatory and taxing powers) with respect to Borrower or the
Mortgaged Property to the same extent as if it were not a party to this Agreement or the
transactions contemplated by this Agreement.
10. Notices.
(a) Any Notice required or permitted to be given pursuant to this Agreement will be
in writing and will be deemed to have been duly and sufficiently given if (i)
personally delivered with proof of delivery (any Notice so delivered will be
deemed to have been received at the time so delivered), or (ii) sent by a national
overnight courier service (such as FedEx) designating earliest available delivery
(any Notice so delivered will be deemed to have been received on the next
Business Day following receipt by the courier), or (iii) sent by United States
registered or certified mail, return receipt requested, postage prepaid, at a post
office regularly maintained by the United States Postal Service (any Notice so
sent will be deemed to have been received on the date of delivery as confirmed by
the return receipt), addressed to the respective parties as follows:
Notices intended for Senior Lender will be addressed to:
«LenderName»
«LenderAddress»
Attention: _________________
Notices intended for Subordinate Lender will be addressed to:
_____________________________ [Name]
_____________________________ [Address]
Attention: _________________
(b) Any party, by Notice given pursuant to this Section 10, may change the person or
persons and/or address or addresses, or designate an additional person or persons
Subordination Agreement – Governmental Entity Page 14
or an additional address or addresses, for its Notices, but Notice of a change of
address will only be effective upon receipt. Neither party will refuse or reject
delivery of any Notice given in accordance with this Section 10.
11. Reserved.
12. Miscellaneous Provisions.
(a) Assignments/Successors. This Agreement will be binding upon and will inure to
the benefit of the respective legal successors and permitted assigns of the parties
to this Agreement. Without prior notice to or the consent of the Subordinate
Lender or the Borrower, the Senior Lender may freely transfer or assign the
Senior Loan and the Senior Loan Documents, including this Agreement, in whole
or in part, and the Subordinate Lender acknowledges and agrees that any future
legal holder of the Senior Note will automatically be a legal successor and
permitted assignee of Senior Lender hereunder, without the necessity of any
further action or instrument. No other party will be entitled to any benefits under
this Agreement, whether as a third-party beneficiary or otherwise.
(b) No Partnership or Joint Venture. Nothing in this Agreement or in any of the
Senior Loan Documents or Subordinate Loan Documents will be deemed to
constitute Senior Lender as a joint venturer or partner of Subordinate Lender.
(c) Further Assurances. Upon Notice from Senior Lender, Subordinate Lender will
execute and deliver such additional instruments and documents, and will take
such actions, as are required by Senior Lender to further evidence or implement
the provisions and intent of this Agreement.
(d) Amendment. This Agreement may be amended, changed, modified, altered or
terminated only by a written instrument signed by the parties to this Agreement or
their successors or assigns.
(e) Governing Law. This Agreement will be governed by the laws of the State in
which the Land is located.
(f) Severable Provisions. If any one or more of the provisions contained in this
Agreement, or any application of any such provisions, is invalid, illegal, or
unenforceable in any respect, the validity, legality, enforceability, and application
of the remaining provisions contained in this Agreement will not in any way be
affected or impaired.
(g) Term. The term of this Agreement will commence on the date of this Agreement
and will continue until the earliest to occur of the following events:
Subordination Agreement – Governmental Entity Page 15
(i) The payment of all the Senior Indebtedness; provided that this Agreement
will be reinstated in the event any payment on account of the Senior
Indebtedness is avoided, set aside, rescinded or repaid by Senior Lender.
(ii) The payment of all the Subordinate Indebtedness other than by reason of
payments which Subordinate Lender is obligated to remit to Senior Lender
pursuant to this Agreement.
(iii) The acquisition by Senior Lender or by a third-party purchaser of title to
the Mortgaged Property pursuant to a foreclosure of, deed in lieu of
foreclosure, or trustee’s sale or other exercise of a power of sale or similar
disposition under the Senior Mortgage.
(iv) With the prior written consent of Senior Lender, without limiting the
provisions of Section 4(b)(iv), the acquisition by Subordinate Lender of
title to the Mortgaged Property subject to the Senior Mortgage pursuant to
a foreclosure, or a deed in lieu of foreclosure, of (or the exercise of a
power of sale under) the Subordinate Mortgage.
(h) Counterparts. This Agreement may be executed in two or more counterparts, each
of which will be deemed an original but all of which together will constitute one
and the same instrument.
(i) Entire Agreement. This Agreement represents the entire understanding and
agreement between the parties regarding the matters addressed in this Agreement,
and will supersede and cancel any prior agreements regarding such matters.
(j) Authority. Each person executing this Agreement on behalf of a party to this
Agreement represents and warrants that such person is duly and validly
authorized to do so on behalf of such party with full right and authority to execute
this Agreement and to bind such party with respect to all of its obligations under
this Agreement.
(k) No Waiver. No failure or delay on the part of any party to this Agreement in
exercising any right, power, or remedy under this Agreement will operate as a
waiver of such right, power, or remedy, nor will any single or partial exercise of
any such right, power or remedy preclude any other or further exercise of such
right, power, or remedy or the exercise of any other right, power or remedy under
this Agreement.
(l) Remedies. Each party to this Agreement acknowledges that if any party fails to
comply with its obligations under this Agreement, the other parties will have all
rights available at law and in equity, including the right to obtain specific
performance of the obligations of such defaulting party and injunctive relief.
13. Attached Riders. The following Riders are attached to this Agreement:
Subordination Agreement – Governmental Entity Page 16
[LIST EACH RIDER ATTACHED OR STATE “NONE”; INSERT ANY RIDER
AFTER THE SIGNATURE PAGE AND PRIOR TO EXHIBIT A]
14. Attached Exhibits. The following Exhibits, if marked with an “X” in the space provided,
are attached to this Agreement:
Exhibit A Description of the Land (required)
Exhibit B Ground Lease Description (if applicable)
[SIGNATURE AND ACKNOWLEDGMENT PAGES FOLLOW]
Subordination Agreement – Governmental Entity
Signature Page - «ProjectName» Page S - 1
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the day and year
first above written.
SENIOR LENDER:
«LenderName»,
a «StateofLenderOrganization» «TypeofLenderEntity»
By: __________________________________
Name: «LenderSigner»
Title: «TitleofLenderSigner»
[INSERT NOTARY BLOCK FOR RECORDATION]
[The remainder of this page intentionally left blank; signature page follows.]
Subordination Agreement – Governmental Entity
Signature Page - «ProjectName» Page S - 2
SUBORDINATE LENDER:
_______________ [GOVERNMENTAL ENTITY],
a ______________________________
By: ___________________________________
Name: ___________________________________
Title: ___________________________________
[INSERT NOTARY BLOCK FOR RECORDATION]
[The remainder of this page intentionally left blank; signature page follows.]
Subordination Agreement – Governmental Entity
Signature Page - «ProjectName» Page S - 3
CONSENT OF BORROWER
Borrower acknowledges receipt of a copy of this Subordination Agreement, dated
«DateofLoan», by and between «LenderName», a «StateofLenderOrganization»
«TypeofLenderEntity» and _____________________________ [NAME OF
GOVERNMENTAL ENTITY] and consents to the agreement of the parties set forth in this
Agreement.
«BorrowerName»,
a «StateofBorrowerOrganization»
«TypeofBorrowerEntity»
By: ____________________________
Name: «BorrowerSigner1»
Title: «TitleofBorrowerSigner1»
Date: ____________________________
[INSERT NOTARY BLOCK FOR RECORDATION]
Subordination Agreement – Governmental Entity Page A - 1
EXHIBIT A
LEGAL DESCRIPTION
521455v2 JAE RC260-2
LOAN AGREEMENT
(APARTMENT REMODELING PROGRAM)
THIS LOAN AGREEMENT (the “Agreement”) is made and entered into this ___ day of
____________, 20___, between the Richfield Economic Development Authority, a public body corporate
and politic under the laws of the State of Minnesota (the “EDA”), and ____________________________
(the “Borrower”).
RECITALS
WHEREAS, the EDA has established the Apartment Remodeling Program (the “Program”), which
is a local incentive program designed to provide owners of residential apartment property located within
the City of Richfield (the “City”) with financial support in order to encourage such owners to make physical
improvements to their property; and
WHEREAS, the EDA has approved the Apartment Remodeling Program Procedural Guidelines
(the “Program Guidelines”), which are attached hereto as EXHIBIT A and fully incorporated into this
Agreement, providing, in part, a summary and background of the Program, Program eligibility
requirements, Program terms, a list of Program-eligible improvements, and other Program-specific policies
and procedures; and
WHEREAS, the Borrower is fee owner of certain real property located at _________________,
Richfield MN 55423 in the City (the “Property”), which contains _________ building[s] with __________
units per building, which the Borrower proposes to make improvements to with Program assistance; and
WHEREAS, pursuant to the Program Guidelines, the Borrower has made application to the EDA
to participate in the Program, and the EDA has determined that the Borrower is eligible to participate; and
WHEREAS, the EDA has agreed to lend to the Borrower, upon execution of this Agreement, a
loan in the amount of $_______ for improvements of the Property (the “Loan”), subject to additional
approvals by the EDA and compliance with all requirements of the Program Guidelines; and
WHEREAS, the parties understand that if the Borrower satisfies certain requirements contained in
this Agreement, the Loan shall be forgiven; and
WHEREAS, the EDA has reviewed this Agreement and finds that execution of this Agreement by
the EDA and performance of the EDA’s obligations hereunder are in the best interests of the EDA, the City,
and its residents; and
WHEREAS, the parties are authorized and empowered to enter into this Agreement under the laws
of the State of Minnesota; and
NOW, THEREFORE, in consideration of the mutual covenants and promises hereinafter set forth,
the EDA and the Borrower agree as follows:
1. The recitals set forth in the preamble to this Agreement and the exhibits attached to this
Agreement are incorporated into this Agreement as if fully set forth herein. The Borrower agrees to fully
comply with the Program Guidelines and acknowledges that all terms, conditions, and requirements
contained in the Program Guidelines, as attached hereto as EXHIBIT A, are made a part of this Agreement.
521455v2 JAE RC260-2 2
2. The Borrower intends to make certain Program-eligible improvements to the Property in
accordance with its application, including, but not limited to, the scope of work listed in Exhibit C (the
“Improvements”). The EDA agrees to provide the Loan in an amount not to exceed $_______ to the
Borrower as reimbursement for up to 50% of the total cost of the Improvements upon delivery of the
following items to the EDA: (i) a final invoice from the contractor for the Improvements (the “Contractor”);
(ii) lien waivers for the full amount of the payment; and (iii) a completion certificate (in the form provided
by the Program Guidelines) executed by the City inspector, the Borrower, and the Contractor. The
Improvements must be completed and the Borrower must request the disbursement of the Loan within 180
days of _________ (the “Loan Closing Date”). The parties understand that proceeds of the Loan may not
be disbursed until the Improvements have been completed.
3. The Loan is evidenced by a Promissory Note of even date herewith (the “Note”), from the
Borrower to the EDA. The Loan shall be for a term of 15 years (the “Term of the Loan”), commencing on
the Loan Closing Date, and shall not accrue interest. If the Borrower retains ownership of and continues to
rent out the residential apartment property during the full Term of the Loan, then the Loan shall be forgiven
at the end of the Term of the Loan. The Note is substantially in the form attached hereto as EXHIBIT B.
4. In connection with the execution of this Agreement, the Borrower has executed and
delivered to the EDA a Mortgage of even date herewith (the “Mortgage”). The Mortgage shall be filed
with the County Recorder and/or the Registrar of Titles of Hennepin County, Minnesota (the “County”), as
applicable. The EDA shall maintain a lien on the Property pursuant to the Mortgage. Followi ng the
satisfaction of the term of the Loan, whether by forgiveness or a default by the Borrower under the terms
hereof, the EDA shall satisfy the Mortgage and cause such satisfaction to be filed against the Property in
the real estate records of the County. All recording fees shall be paid by the Borrower. The Mortgage is
substantially in the form attached hereto as EXHIBIT D.
5. The Borrower shall not discriminate against holders of Section 8 vouchers or other forms
of rental assistance.
6. The Borrower shall provide the EDA with at least 90 days’ written notice prior to closing
on the sale of the Property. If the sale of the Property occurs before the maturity date of the Loan, the Loan
must be repaid in full within thirty (30) days. For purpo ses of this Agreement, a “sale” shall not include
the transfer of the Property to an heir of the Borrower or the transfer of the Property to an affiliate, co -
owner, partner or member of the Borrower. Notwithstanding the foregoing, a transfer of or removal of the
OP Member or Manager’s interest in the Borrower pursuant to Sections 4.11(A) or 5.2(B) of the Member
Control Agreement and Operating Agreement of the Borrower shall be permitted.
7. The EDA acknowledges receipt of executed copies of the Errors and Omissions
Acknowledgement Agreement and the Certificate and Request for Notice: Foreclosure, in forms deemed
acceptable to the EDA.
8. Failure to comply with any term, covenant, condition, or requirement contained in this
Agreement, including the Program Guidelines, or contained in the Note, the Mortgage, or other instrument
executed in connection with this Agreement, following thirty (30) days’ written notice by the EDA
specifying the form of said non-compliance, shall constitute a breach of this Agreement and a default by
the Borrower. If the Borrower does not repay the Loan within thirty (30) days of sale of the Property as
described in Section 6, such failure to repay shall also constitute a default under this Agreement.
If any default shall occur, the EDA may declare the Loan provided to Borrower to be due and
payable in accordance with the terms of the Note. The EDA may also pursue remedies available under the
521455v2 JAE RC260-2 3
terms of any mortgage or other instrument executed to secure its interests in the Loan or the Property, and
other such remedies as may be available under local, state, or federal laws.
Notwithstanding anything to the contrary herein, the Note shall be nonrecourse, and the Holder’s
sole recourse with respect to the Note shall be the net proceeds available from the refinancing or sale of the
Property.
Further, the indebtedness evidenced by the Note is and shall be subordinate in right of payment to
the prior payment in full of (i) 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 Freddie Mac (the “Freddie Mac Note”); and (ii) the “EP Exit Payment” due to NOAH
Pool II LLC as the EP Member of the Maker, as that term is defined in the Member Control Agreement and
Operating Agreement of the Maker.
9. Without limitation of any provision set forth herein, the Borrower agrees to pay to the EDA
any costs or expenses, including without limitation attorneys’ fees, incurred by the EDA in enforcing any
provision of this Agreement.
10. Except as expressly set forth herein, nothing in this Agreement shall constitute a limitation
or waiver of the EDA’s or the City’s right to enforce any ordinance, law, rule, or regulation.
11. The Borrower shall and does hereby agree to protect, defend, indemnify and hold the EDA,
including its officers, agents, and employees, harmless of and from any and all liability, loss, or damage
that it may incur under or by reason of this Agreement, and of and from any and all claims and demands
whatsoever that may be asserted against the EDA by reason of any alleged obligations or undertakings on
the part of the EDA to perform or discharge any of the terms, covenants, or agreements contained in this
Agreement. This indemnification and hold harmless provision shall survive the execution, delivery, and
performance of this Agreement and the payment or repayment of the Loan. The Borrower waives notice
of the acceptance of this Agreement by the EDA. Nothing in this Agreement shall constitute a waiver or
limitation of the EDA’s immunities or limitations on liability as set forth in Minnesota Statutes, Chapter
466, or otherwise.
12. 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:
To the Borrower: ____________________
[Attn: ]
To the EDA: Richfield Economic Development Authority
6700 Portland Avenue
Richfield, MN 55423
Attn: Executive 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.
13. This Agreement may be executed in any number of counterparts, each of which shall
constitute one and the same instrument.
521455v2 JAE RC260-2 4
14. The EDA and the Borrower acknowledge that nothing contained in this Agreement or any
act by the EDA and the Borrower shall be deemed or construed by the parties or by any third person to
create any relationship of third-party beneficiary, principal and agent, limited or general partner, or joint
venture between the EDA, the City, and the Borrower.
15. This Agreement shall be governed by and construed in accordance with the laws of the
State of Minnesota. Any disputes, controversies, or claims arising out of this Agreement shall be heard in
the state or federal courts of the State of Minnesota, and all parties to this Agreement waive any objection
to the jurisdiction of these courts, whether based on convenience or otherwise.
16. The performance or observance of any promise or condition set forth in this Agreement
may be waived, amended, or modified only by a writing signed by both parties. No delay in the exercise
of any power, right, or remedy operates as a waiver thereof, nor shall any single or partial exercise of any
other power, right, or remedy.
17. This Agreement may be modified solely through written amendments executed by both the
Borrower and the EDA.
18. The Borrower shall not assign, subcontract, transfer, or pledge this Agreement whether in
whole or in part, without the prior written consent of the EDA.
19. Wherever possible, each provision of this Agreement and each related document shall be
interpreted so that it is valid under applicable law. If any provision of this Agreement or any related
document is to any extent found invalid by a court or other governmental entity of compe tent jurisdiction,
that provision shall be ineffective only to the extent of such invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Agreement or any other related document.
20. This Agreement, together with the exhibits hereto, which are expressly incorporated by
reference, constitutes the complete and exclusive statement of all mutual understandings between the parties
with respect to this Agreement, superseding all prior or contemporaneous proposals, communications, and
understandings, whether oral or written, pertaining to the subject matter of this Agreement or concerning
the Loan.
21. The Borrower warrants that all work performed pursuant to this Agreement shall be in
compliance with existing laws, ordinances, pertinent regulations, standards, and specifications. This
Agreement does not act as a substitute for any permits or approvals that are otherwise required by the
Borrower in order to complete any of the Improvements.
22. Each of the undersigned parties warrants it has the full authority to execute this Agreement.
(The remainder of this page is intentionally left blank.)
521455v2 JAE RC260-2 S-1
IN WITNESS WHEREOF, the EDA and the Borrower have executed this Loan Agreement as of
the date and year first written above.
RICHFIELD ECONOMIC DEVELOPMENT
AUTHORITY
By
Its President
By
Its Executive Director
521455v2 JAE RC260-2 S-2
Execution page of the Borrower to the Loan Agreement dated as of the date and year first written above.
[BORROWER -- entity]
By
Its
[BORROWER – individual]
By
Printed Name
[If individual married, include spouse as party]
521455v2 JAE RC260-2 A-1
EXHIBIT A
THE PROGRAM GUIDELINES
521455v2 JAE RC260-2 A-2
521455v2 JAE RC260-2 A-3
521455v2 JAE RC260-2 A-4
521455v2 JAE RC260-2 A-5
521455v2 JAE RC260-2 A-6
521455v2 JAE RC260-2 A-7
EXHIBIT B
FORM OF PROMISSORY NOTE
PROMISSORY NOTE
(APARTMENT REMODELING PROGRAM)
$_________ Dated: __________
________________________. (the “Maker”), for value received, hereby promises to pay to the
Richfield Economic Development Authority, a public body corporate and politic under the laws of the State of
Minnesota, or its assigns (collectively referred to herein as the “Holder”), at its designated principal office or
such other place as the Holder may designate in writing, the principal sum of $_______ or so much thereof as
may be advanced under this Note, without interest thereon, in any coin or currency that at the time or times of
payment is legal tender for the payment of private debts in the United States of America. Any capitalized terms
used herein that are otherwise not defined shall have the meanings assigned such terms in the Loan Agreement
of even date herewith (the “Agreement”) between the Holder and the Maker.
1. If the Maker does not sell the Property within 15 years of the Loan Closing Date and does not
default under the Agreement, no payments shall be payable on this Note and the entire principal balance shall
be forgiven.
2. If the Loan is not forgiven by the Holder, the entire unpaid balance of principal shall be due
and payable upon the earlier of the following: (i) 30 days after written notification by Holder to Maker of the
occurrence of any default or non-compliance with any provision or requirement of the Agreement of even date
herewith between the Maker and the Holder, which includes the Program Guidelines; or (ii) 10 days after the
Maker makes or allows to be made any total or partial transfer, sale, assignment, conveyance or transfer in any
other mode, of the Property, if such transfer occurs within 15 years following the date of this Note, except a
transfer of or removal of the OP Member or Manager’s interest in the Maker pursuant to Sections 4.11(A) or
5.2(B) of the Member Control Agreement and Operating Agreement of the Maker shall be permitted.
3. This Note is given pursuant to the Agreement between the Maker and the Holder. If any
information in the Agreement is found to be invalid for whatever reason, such invalidity shall constitute an
Event of Default hereunder.
4. All of the agreements, conditions, covenants, provisions, and stipulations contained in the
Agreement are hereby made a part of this Note to the same extent and with the same force and effect as if they
were fully set forth herein. It is agreed that time is of the essence of this Note. If an Event of Default occurs
under the Agreement, or any other instrument securing this Note, then the Holder of this Note may at its right
and option, without notice, declare immediately due and payable the principal balance of this Note, together
with reasonable attorneys’ fees and expenses incurred by the Holder of this Note in collecting or enforcing
payment hereof, whether by lawsuit or otherwise, and all other sums due hereunder or any instrument securing
this Note. The Maker of this Note agrees that the Holder of this Note may, without notice to and without
affecting the liability of the Maker, accept additional or substitute security for this Note, or release any security
or any party liable for this Note or extend or renew this Note.
5. The remedies of the Holder of this Note as provided herein, and in the Agreement, or any
other instrument securing this Note shall be cumulative and concurrent and may be pursued singly,
successively, or together, and, at the sole discretion of the Holder of this Note, may be exercised as often as
521455v2 JAE RC260-2 A-8
occasion therefor shall occur; and the failure to exercise any such right or remedy shall in no event be construed
as a waiver or release thereof.
The Holder of this Note shall not be deemed, by any act of omission or commission, to have waived
any of its rights or remedies hereunder unless such waiver is in writing and signed by the Holder and then only
to the extent specifically set forth in the writing. A waiver with reference to one event shall not be construed
as continuing or as a bar to or waiver of any right or remedy as to a subsequent event. This Note may not be
amended, modified, or changed except only by an instrument in writing signed by the party against whom
enforcement of any such amendment, modifications, or change is sought.
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 Agreement.
Further, the indebtedness evidenced by this Note is and shall be subordinate in right of payment to the
prior payment in full of the “EP Exit Payment” due to NOAH Pool II LLC as the EP Member of the Maker, as
that term is defined in the Member Control Agreement and Operating Agreement of the Maker.
6. 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.
7. If any Event of Default occurs, and if the Holder engages legal counsel or others in connection
with providing advice to the Holder or the Holder’s rights and remedies under the Agreement or this Note, the
Maker shall pay all reasonable expenses incurred by the Holder for such persons, irrespective of whether any
suit 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.
8. It is intended that this Note is made with reference to and shall be construed as a Minnesota
contract and is governed by the laws thereof. Any disputes, controversies, or claims arising out of this Note
shall be heard in the state or federal courts of Minnesota, and all parties to this Note waive any objection to the
jurisdiction of these courts, whether based on convenience or otherwise.
9. The performance or observance of any promise or condition set forth in this Note may be
waived, amended, or modified only by a writing signed by the Maker and the Holder. No delay in the exercise
of any power, right, or remedy operates as a waiver thereof, nor shall any single or partial exercise of any other
power, right, or remedy.
IT IS HEREBY CERTIFIED AND RECITED that all conditions, acts, and things required to exist,
happen, and be performed precedent to or in the issuance of this Note do exist, have happened, and have been
performed in regular and due form as required by law.
(The remainder of this page is intentionally left blank.)
521455v2 JAE RC260-2 A-9
IN WITNESS WHEREOF, the Maker has caused this Promissory Note to be duly executed as of the
date and year first written above.
[BORROWER -- entity]
By
Its
[BORROWER – individual]
By
Printed Name
[include spouse if married individual]
521455v2 JAE RC260-2 C-1
EXHIBIT C
Scope of Work
521455v2 JAE RC260-2 C-2
EXHIBIT D
FORM OF MORTGAGE
(Top 3 inches reserved for recording data)
MORTGAGE
MORTGAGE REGISTRY TAX
DUE: $______________
DATE: ________________, 20___
CHECK IF APPLICABLE: NOTWITHSTANDING ANYTHING TO THE CONTRARY
HEREIN, ENFORCEMENT OF THIS MORTGAGE IN MINNESOTA IS LIMITED TO A
DEBT AMOUNT OF $[…] UNDER CHAPTER 287 OF MINNESOTA STATUTES.
THIS MORTGAGE (“Mortgage”) is given by _________________________,a [entity type/individual]
[include spouse if married individual], as mortgagor (“Borrower”), to the Richfield Economic Development
Authority, a public body corporate and politic under the laws of the State of Minnesota, as mortgagee
(“Lender”). In consideration of the receipt of ___________________ Dollars ($____________) (the
“Indebtedness”) from Lender, Borrower hereby mortgages, with power of sale, the real property in
Hennepin County, Minnesota, legally described as follows:
[Insert legal description]
Check here if all or part of the described real property is Registered (Torrens)
together with all hereditaments and appurtenances belonging thereto (the “Property”), subject to the
following exceptions:
(a) Covenants, conditions, restrictions (without effective forfeiture provisions) and
declarations of record, if any;
(b) Reservations of minerals or mineral rights by the State of Minnesota, if any;
(c) Utility and drainage easements which do not interfere with present improvements;
(d) Applicable laws, ordinances, and regulations;
(e) The lien of real estate taxes and installments of special assessments not yet due and
payable; and
(f) The following liens or encumbrances, if any: [insert encumbrances]
Borrower covenants with Lender as follows:
1. Repayment of Indebtedness. If Borrower (a) pays the Indebtedness to Lender according
to the terms of the Promissory Note or other instrument of even date herewith that evidences the
521455v2 JAE RC260-2 C-3
Indebtedness and all renewals, extensions, and modifications thereto (the “Note”), final payment of which
is due on ______________, 20___; (b) repays to Lender, at the times as specified, all sums advanced in
protecting the lien of this Mortgage, if any; and (c) keeps and performs all the covenants and agreements
contained herein, then Borrower’s obligations under this Mortgage will be satisfied, and Lender will deliver
an executed satisfaction of this Mortgage to Borrower. No interest shall accrue on the Indebtedness. It is
Borrower’s responsibility to record any satisfaction of this Mortgage at Borrower’s expense.
2. Statutory Covenants. Borrower makes and includes in this Mortgage the following
covenants and provisions set forth in Minn. Stat. 507.15, and the relevant statutory covenant equivalents
contained therein are hereby incorporated by reference:
(a) To warrant the title to the Property;
(b) To pay the Indebtedness as herein provided;
(c) To pay all taxes;
(d) That the Property shall be kept in repair and no waste shall be committed;
(e) To pay principal and interest on prior mortgages (if any).
3. Additional Covenants and Agreements of Borrower. Borrower makes the following
additional covenants and agreements with Lender:
(a) Borrower shall keep all buildings, improvements, and fixtures now or later located on all
or any part of the Property (collectively, the “Improvements”) i nsured against loss by fire, lightning, and
such other perils as are included in a standard all-risk endorsement, and against loss or damage by all other
risks and hazards covered by a standard extended coverage insurance policy, including, without limitation,
vandalism, malicious mischief, burglary, theft, and if applicable, steam boiler explosion. Such insurance
shall be in an amount no less than the full replacement cost of the Improvements, without deduction for
physical depreciation. If any of the Improvements are located in a federally designated flood prone area,
and if flood insurance is available for that area, Borrower shall procure and maintain flood insurance in
amounts reasonably satisfactory to Lender. Borrower shall procure and maintain liability insurance against
claims for bodily injury, death, and property damage occurring on or about the Property in amounts
reasonably satisfactory to Lender and naming Lender as an additional insured, all for the protection of the
Lender.
(b) Each insurance policy required pursuant to Paragraph 3(a) must contain provisions in favor
of Lender affording all right and privileges customarily provided under the so-called standard mortgagee
clause. Each policy must be issued by an insurance company or companies li censed to do business in
Minnesota and acceptable to Lender. Each policy must provide for not less than ten (10) days written notice
to Lender before cancellation, non-renewal, termination, or change in coverage. Borrower will deliver to
Lender a duplicate original or certificate of such insurance policies and of all renewals and modifications
of such policies.
(c) If the Property is damaged by fire or other casualty, Borrower must promptly give notice
of such damage to Lender and the insurance company. In such event, the insurance proceeds paid on account
of such damage will be applied to payment of the amounts owed by Borrower pursuant to the Note, even if
such amounts are not otherwise then due, unless Borrower is permitted to make an election as described in
the next paragraph. Such amounts will be applied to the principal to be paid as provided in the Note. The
balance of insurance proceeds, if any, will be the property of Borrower.
(d) Notwithstanding the provisions of Paragraph 3(c), and unless otherwise agreed by
Borrower and Lender in writing, if (i) Borrower is not in default under this Mortgage (or after Borrower
has cured any such default); (ii) the mortgagees under any prior mortgages do not require otherwise; and
521455v2 JAE RC260-2 C-4
(iii) such damage does not exceed ten percent (10%) of the then assessed market value of the Improvements,
then Borrower may elect to have that portion of such insurance proceeds necessary to repair, replace, or
restore the damaged Property (the “Repairs”) deposited in escrow with a bank or title insurance company
qualified to do business in Minnesota, or such other party as may be mutually agreeable to Lender and
Borrower. The election may only be made by written notice to Lender within sixty (60) days after the
damage occurs; and the election will only be permitted if the plans, specifications, and contracts for the
Repairs are approved by Lender, which approval shall not be unreasonably withheld, conditioned, or
delayed. If such a permitted election is made by Borrower, Lender and Borrower shall jointly deposit the
insurance proceeds into escrow when paid. If such insurance proceeds are insufficient for the Repairs,
Borrower shall, before the commencement of the Repairs, deposit into such escrow sufficient additional
money to insure the full payment for the Repairs. Even if the insurance proceeds are unavailable or are
insufficient to pay the cost of the Repairs, Borrower shall at all times be responsible to pay the full cost of
the Repairs. All escrowed funds shall be disbursed in accordance with sound, generally accepted,
construction disbursement procedures. The costs incurred or to be incurred on account of such escrow shall
be deposited by Borrower into such escrow before the commencement of the Repairs. Borrower shall
complete the Repairs as soon as reasonably possible and in a good and workmanlike manner, and in any
event the Repairs shall be completed by Borrower within one (1) year after the damage occurs. If, following
the completion of and payment for the Repairs, there remains any undisbursed escrow funds, such funds
shall be applied to payment of the amounts owed by Borrower under the Note in accordance with Paragraph
3(c).
(e) If all or any part of the Property is taken in condemnation proceedings instituted under
power of eminent domain or is conveyed in lieu thereof under threat of condemnation, the money paid
pursuant to such condemnation or conveyance in lieu thereof must be applied to payment of the amounts
due by Borrower to Lender under the Note as set forth in Paragraph 3(c), even if such amounts are not then
due to be paid.
(f) Borrower will diligently complete all Improvements, if any, that may now or hereafter be
under construction on the Property.
(g) Borrower will pay all dues, fees, or assessments, if any, which are due and payable by
Borrower to any homeowners or similar association as a result of the Property’s inclusion therein.
(h) Borrower will pay any other expenses and attorneys’ fees incurred by Lender pursuant to
the Note or as reasonably required for the protection of the lien of this Mortgage.
4. Payment by Lender. If Borrower fails to pay any amounts to be paid hereunder to Lender
or any third parties, or to insure the Improvements, and deliver the policies as required herein, Lender may
make such payments or secure such insurance. The sums so paid shall be additional Indebtedness, bear
interest from the date of such payment at the same rate set forth in the Note, be an additional lien upon the
Property, and be immediately due and payable upon written demand. This Mortgage secures the repayment
of such advances.
5. Default. In case of default (i) in the payment of sums to be paid under the Note or this
Mortgage, when the same becomes due, (ii) in any of the covenants set forth in this Mortgage, (iii) under
the terms of the Note, or (iv) under any addendum attached to this Mortgage, Lender may declare the unpaid
balance of the Note, together with all sums advanced hereunder, immediately due and payable without
notice, and Borrower hereby authorizes and empowers Lender to foreclose this Mortgage by judicial
proceedings or to sell the Property at public auction and convey the same in fee simple in accordance with
Minn. Stat. Ch. 580, and out of the monies arising from such sale, to retain all sums sec ured hereby, with
521455v2 JAE RC260-2 C-5
interest and all legal costs and charges of such foreclosure and the maximum attorneys’ fees permitted by
law, which costs, charges, and fees Borrower agrees to pay.
6. Residential Mortgages. Notwithstanding the provisions of Paragraph 5, if the
Indebtedness is a “conventional loan” as defined in Minn. Stat. 47.20, subd. 2(3), Borrower and Lender
further covenant and agree as follows:
(a) Lender shall furnish to Borrower a conformed copy of the Note and this Mortgage at the
time of execution or within a reasonable time after recordation hereof.
(b) Upon default by Borrower of any covenant or agreement under the terms of this Mortgage,
Lender shall give notice to Borrower prior to foreclosure as provided in Paragraph 6(c) and such notice
shall specify: (i) the nature of the default; (ii) the action required to cure the default; (iii) a date, not less
than thirty (30) days from the date the notice is mailed to Borrower, by which the default must be cured;
(iv) that failure to cure the default on or before the date specified in the notice may result in acceleration of
the sums secured by this Mortgage and sale of the Property; (v) that Borrower has the right to reinstate this
Mortgage after acceleration; and (vi) that Borrower has the right to bring a court action to assert the non -
existence of the default or any other defense of Borrower to acceleration and sale.
(c) In addition to any notice required under applicable law to be given in another manner, (i)
any notice to Borrower provided for in this Mortgage shall be addressed to Borrower and given by mailing
the notice via certified mail to the Property address (or to such other address as Borrower may designate by
written notice to Lender as provided herein), and (ii) any notice to Lender shall be given by mailing the
notice via certified mail to the following address (or to such other address as Lender may designate by
written notice to Borrower as provided herein):
To Lender: Richfield Economic Development Authority
6700 Portland Avenue
Richfield, MN 55423
Attn: Executive Director
To Borrower: [BORROWER]
[ADDRESS]
[Attn: ______________________]
7. Governing Law; Severability. This Mortgage shall be governed by the laws of
Minnesota. In the event that any provision or clause of this Mortgage or the Note conflicts with applicable
law, such conflict shall not affect other provisions of this Mortgage or the Note which can be given effect
without the conflicting provision.
8. Additional Terms. Check this box if Minnesota Uniform Conveyancing Blank 20.2.1
or any other addendum (either one or more) containing additional terms and conditions is attached to this
Mortgage. If the foregoing box is not checked, then this Mortgage shall not contain any such additional
terms and conditions. The number of additional attached pages is ____________. Terms of this Mortgage
will run with the Property and bind the parties hereto and their successors in interest.
521455v2 JAE RC260-2 C-6
IN WITNESS WHEREOF, the Mortgagor has caused this Mortgage to be duly executed as of the
day and year first above written.
[BORROWER -- entity]
By
Its
[BORROWER – individual]
By
Printed Name
[include spouse if married individual]
STATE OF MINNESOTA )
)ss.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this _____ day of _____________, 20___, by
_______________________________, the __________________ of _________________________, a
__________________, on behalf of the Mortgagor.
Notary Public
This document drafted by:
Richfield Economic Development Authority
6700 Portland Avenue
Richfield, MN 55423
Note: Failure to record or file this mortgage may give other parties priority over this mortgage.
AGENDA SECTION:OTHER BUSINESS
AGENDA ITEM #4.
STAFF REPORT NO. 6
ECONOMIC DEVELOPMENT AUTHORITY
MEETING
5/19/2025
Jan Youngquist, Economic Development ManagerREPORT PREPARED BY:
EXECUTIVE DIRE CTOR RE VIEW:
ITEM FOR COUNCIL CONSIDERATION:
Consider the creation of the Richfield Economic Vibrancy, Investment, and Visual Enhancements
Program for Richfield businesses.
EXECUTIVE SUMMARY:
At its April 21, 2025 work session, the Economic Development Authority (EDA) discussed Richfield’s
past and current business assistance programs as well as the creation of a new program to support
businesses in making improvements to the exterior of their commercial spaces, regardless of
whether they own the property. Based on the work session discussion, staff is proposing that the
EDA establish the Richfield Economic Vibrancy, Investment, and Visual Enhancements Program
(REVIVE Program), a pilot program designed to support eligible businesses located along key
commercial corridors and nodes in making visual enhancements to their buildings and sites.
Much of Richfield developed in the post-World War II era. Although redevelopment has occurred over time,
there are commercial corridors and nodes in Richfield with the original buildings, many of which are 30-75
years old and are leased to local business owners. Some of these older commercial corridors are gateways to
the City and can shape people's impression of the community's economic vibrancy.
Under the REVIVE Program, eligible businesses located in a commercial building that was constructed
before 1995 may qualify for financial assistance between $2,000-$10,000 to make exterior improvements that
are visible from a public street or sidewalk. The award amount would be based on the identified eligible
expenses and would be structured as a forgivable loan with no interest and no payments. The loan would be
forgiven after the recipient satisfactorily completes the requirements outlined in the attached REVIVE
Program guidelines.
Upon approval of the REVIVE Program, staff will work with the EDA Attorney to prepare the forgivable loan
agreement and will develop program materials with the intent to launch the REVIVE Program this summer.
RECOMMENDED ACTION:
By motion: Approve the Richfield Economic Vibrancy, Investment, and Visual Enhancements Program.
BASIS OF RECOMMENDATION:
A.HISTORICAL CONTEXT
The EDA was formed in 2017 to promote and provide incentives for economic development in
Richfield.
Melissa Poehlman, Executive Director
In 2022, the E D A contracted with J ohn S tark of E nduring C ities to evaluate Richfield's business
assistance services and accepted the Richfield B usiness A ssistance A nalysis and Recommendations
Report (Report) in A pril 2023. The Report identified desired outcomes for business assistance
activities, including two outcomes that the RE V IV E P rogram helps advance:
A ssist commercial tenants, regardless of whether they own the space they occupy.
Improve commercial spaces and curb appeal.
The E D A discussed the proposed RE V IV E P rogram at a work session on A pril 21, 2025. B ased on
this discussion, staff made the following revisions to the RE V IV E P rogram guidelines:
Increased the maximum forgivable loan amount from $5,000 to $10,000.
Required that a business be located on a site that is not exempt from property taxes.
A dded a requirement that an eligible business be located on a parcel that abuts one of the
following thoroughfares: 66th S treet, 70th S treet, 77th S treet, C hicago Avenue, Lyndale Avenue,
Nicollet Avenue, P enn Avenue, or P ortland Avenue, but indicated that the E D A E xecutive
D irector may approve other locations that meet the intent of the RE V IV E P rogram.
C larified that corporate-owned chains or businesses are ineligible, which allows franchisees of
corporate chains to be eligible.
Removed the reference to sexually oriented businesses, pawn shops, tobacco or cannabis
shops, gun shops or check cashing businesses in the list of ineligible applicants.
L imited the funds that can be used for signage to be up to 50 percent of the total loan amount.
S taff also confirmed that businesses may seek design assistance for signs through select
E levate Hennepin advisors.
A dded language indicating that there may be instances where a property owner requires a lease
amendment for projects proposed by a commercial tenant, and that the business owner may
seek no-cost legal assistance from E levate Hennepin.
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
Equity: The RE V IV E P rogram is designed to reduce barriers to participation by offering a forgivable
loan with no payments, interest, or financial match required, and by providing financial assistance to
eligible business owners, regardless of whether they own the property.
Strategic Plan: The RE V IV E P rogram helps support the S trategic P lan desired outcomes of a vibrant
downtown and a diversified tax base.
C .P OL IC IE S (resolutions, ordinances, regulations, statutes, exc):
Minnesota S tatutes 469.090 through 469.1082, the enabling legislation for economic development
authorities, allows an E D A to create business assistance programs.
D .C R IT IC AL T IMIN G IS S U E S:
A summer launch would help maximize utilization of the RE V IV E P rogram, since warm weather is
conducive to many of the eligible improvements to commercial sites and the exterior of buildings.
E .F IN AN C IAL IMPAC T:
The E D A 's 2025 budget includes $60,000 for a new business assistance program.
F.L E GAL C ON S ID E R AT ION:
T he EDA Attorney will prepare a forgivable loan agreement for the R EVIVE Program.
ALTE R N AT IV E R E C O MME N D ATIO N(S):
Approve a modified version of the RE V I V E Program.
Do not approve.
P R IN C IPAL PAR TIE S E X P E C TE D AT ME E TIN G:
N/A
AT TAC H ME N T S:
D escription Type
RE V IV E P rogram Guidelines B ackup Material
RE V IV E Map B ackup Material
Richfield Economic Vibrancy, Investment,
and Visual Enhancements (REVIVE) Program
PURPOSE
The Richfield Economic Development Authority (EDA) recognizes the importance of local
businesses to our economy and that attractive business districts enhance the vibrancy of the
community. The EDA is launching a pilot Richfield Economic Vibrancy, Investment, and Visual
Enhancement (REVIVE) Program to support eligible businesses in making visual enhancements
to their buildings and sites, and to encourage revitalization of older commercial nodes and
corridors.
OBJECTIVES
The REVIVE Program is designed to provide forgivable loans of between $2,000 to $10,000 to
eligible businesses for projects that help achieve the following objectives:
Stimulate investment in older commercial building exteriors and sites to improve the
aesthetic appearance and vitality of commercial nodes and corridors.
Encourage business and property owners to make visual enhancements to their
buildings and sites.
Support local small business owners, regardless of whether they own the property.
Enhance and activate the space in between commercial buildings and the public realm
to create more desirable bicycle and pedestrian environments.
Support projects that increase the vibrancy of Richfield businesses and improve local
economic conditions.
Make commercial nodes and corridors more welcoming to attract and retain customers.
ELIGIBILITY
Eligible Applicants
To be considered for the program, the business must:
Be located in a commercial building within the City of Richfield that was built before
1995.
Be located on a parcel that is zoned commercial or mixed use and that is not exempt
from property taxes.
Be located on a parcel that abuts one of the following thoroughfares*:
66th Street
70th Street
77th Street
Chicago Avenue
Lyndale Avenue
Nicollet Avenue
Penn Avenue
Portland Avenue
*The EDA Executive Director may approve other locations that meet
the intent of the REVIVE Program.
Own the property or be a commercial tenant with written permission from the property
owner.
Be a legal entity registered and in good standing with the Minnesota Secretary of State.
Be in compliance with the Richfield City Code and not have any delinquent bills, fines, or
other charges due to the City. If the property or business is not in compliance, correction
of any outstanding issues or orders of noncompliance must be incorporated into the
broader project.
Ineligible Applicants
Home based businesses.
Businesses located on sites with delinquent property taxes, regardless of whether the
business owns the property.
Corporate-owned chains or businesses.
The EDA encourages all eligible Richfield businesses to apply for the program, especially those
owned or managed by women, persons of color, veterans, and Richfield residents.
Eligible Improvements
Eligible improvements must be located on the exterior of the building or the site, and publicly
visible from the adjacent street or sidewalk. Eligible improvements include:
Exterior painting.
Canopy or awning installation or repair.
Exterior building or accent lighting (overhead parking lot lighting is ineligible).
Repair or replacement of exterior signage, (up to 50% of the total forgivable loan
amount). Signs are subject to City approval of design and size.
Decorative bicycle parking.
Outdoor seating.
Installation of window boxes and permanent planters.
Improvements to building access for pedestrians and people with disabilities .
Landscaping.
Permanent public art such as murals and sculptures (subject to City approval of design
and location).
Trash and mechanical enclosures.
Conversion of excess impervious surfaces to a patio or landscaped area.
Other improvements deemed similar by the EDA Executive Director or designee .
Ineligible Improvements
The following improvements are not eligible:
•Improvements already in progress or completed prior to forgivable loan approval.
•Improvements to a building’s interior, rear, or side not visible from a public street.
•Improvements to non-commercial buildings.
•Roofing.
•HVAC systems, building mechanical or security systems.
•Fencing (excludes decorative fencing as part of landscaping improvement).
•Billboards, roof signs or temporary signs.
•Dynamic display or electronic message signs.
•Seasonal decorations or temporary improvements.
•Purchase or rental of tools and equipment or for labor performed by t he building or
business owner, family members, employees or any other person with a financial
interest in the property or business.
Any other improvement not deemed eligible.
FORGIVABLE LOAN
Amount: A business or property owner may apply for a forgivable loan award between
$2,000 and $10,000. The award will be limited to the identified eligible expenses.
Interest: All loans shall have an interest rate of 0 percent.
Forgiveness: The loan will be forgiven and the loan agreement terminated by the EDA
upon satisfactory completion of the following requirements:
1.Loan recipient shall provide proof of passing final inspection for any work requiring a
permit.
2.The program administrator will inspect the work for conformance with the approved
application.
3.Loan recipient shall submit a report of how the loan funds were used and evidence
of paid invoices, statements, or other supporting documentation.
4.Loan recipient shall:
Subscribe to the Richfield Business Bulletin e-newsletter.
Subscribe to the Elevate Hennepin e-newsletter.
Take part in an educational opportunity sponsored by SCORE (chose one):
o In person event
o Live webinar
o Recorded webinar
TERMS AND CONDITIONS
1.Funds for this program are limited and shall be awarded to qualifying applicants on
a first-come, first-serve basis.
2.Business or property owners may only receive one forgivable loan through the REVIVE
Program per calendar year.
3.The EDA may consider granting the funds on a case-by-case basis. At any time, the EDA
may discontinue the option to provide any forgivable loans and approval is contingent
upon funding.
4.Approvals are granted by the EDA Executive Director. An application that was denied
by the EDA Executive Director may be appealed by the applicant to the EDA Board.
5.The EDA reserves the right to determine and limit the amount of assistance that is
granted to any one applicant, allowing for the maximum utilization and benefit of the
program. Nothing herein shall imply or suggest that the EDA is under any obligation
to provide loan funds to any business owner or property owner.
6.All work must be done in accordance with applicable state and local building codes and
the Richfield Zoning Code. Forgivable loan recipients must obtain all applicable permits
and approvals for the project prior to starting the work.
7.If qualified to do so, loan recipients may perform the work on their own. Forgivable
loan funds may be used for materials; however, the funds cannot be used to pay for
tools and/or equipment purchase or rental, or for labor provided by the applicant,
friends, relatives, or anyone with a financial interest in the business or the building.
Permit requirements still apply and need to be met.
8.Commercial tenants must obtain permission from the property owner for proposed
projects prior to submitting an application to the REVIVE Program. In instances where a
commercial lease amendment is required by the property owner, no-cost legal
assistance is available for business owners through Elevate Hennepin.
9.Projects must be completed within nine (9) months of forgivable loan approval unless
an extension request is approved by the EDA Executive Director or designee.
10.The EDA retains the right to terminate any agreement for the program funds and
demand repayment of the loan if a loan recipient is found to be in violation of any
conditions set forth in the eligibility guidelines or loan agreement.
DATA PRIVACY
The EDA is subject to Minnesota Statutes Chapter 13 (the “Minnesota Government Data
Practices Act”). Under the Minnesota Government Data Practices Act, the names and
addresses of applicants for or recipients of assistance under this program and the amount
of assistance received under this program are public data.