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051611completeagendaCITY OF RICHFIELD, MINNESOTA MONDAY, MAY 16, 2011 REGULAR HOUSING AND REDEVELOPMENT AUTHORITY MEETING RICHFIELD CITY HALL COUNCIL CHAMBERS 6700 PORTLAND AVENUE 7:00 P.M. AGENDA Call to order Roll call 1. Approval of minutes of (1) Special HRA Worksession of April 18, 2011 and (2) Regular HRA Meeting of April 18, 2011 2. HRA approval of agenda 3. Consideration of contract for private development with Sherman Associates dba Skylark Apartments Limited Partnership for south portion of former Public Works Maintenance Facility Staff Report No. 16 Notes: 4. Consideration of resolution authorizing HRA to affirm monetary limits on municipality tort liability established by MN Statutes 466.04 Staff Report No. 17 Notes: 5. HRA discussion items Notes: 6. Executive Director report Notes: 7. Claims and payroll Adjournment Auxiliary aids for individuals with disabilities are available upon request. Requests must be made at least 96 hours in advance to the City Clerk at 612- 861 -9738. richfield: May 2011 Page 1 of 2 City of Richfield Calendar Calendars Net Navigate: 2010 Jan Feb Mar Apr May Jun Jui Aug. Sep Oct Nov Dec 2012 May 2011 Monday Tuesday Wednesday Thursday Friday 25 T Apr 26 27 2 29 5:30p Human Services 5:30 P.M. Special City Planning Council Council Worksession 6 PM Special Planning Commission 7 PM City Council Worksession Meeting 7PM Regular Planning Commission CANCELED 2 3 4 5 6 8:00a Richfield Police 7:00p Transporation 7:00p Arts Commission Civil Service Commission @ 6335 Portland Ave Commission Meeting 11:30a Richfield Tourism Promotion Board @ 6601 Lyndale Ave, Suite 106 7:00p Human Rights Commission @ Community Center 9 10 lI 12 13 7:00p Planning 6:45 PM Special City Commission Study Council Meeting Session (commission interviews) in Executive Conference Room 7 PM Regular City Council Meeting 16 17 18 19 20 7:00p Housing and 7:00p Community 7:00p Friendship City Redevelopment Services Commission @ Commission @ 6401 Authority 7000 Nicollet Avenue 14th Avenue CANCELED 23 24 25 26 27 5:30p Human Services 7:00p City Council Planning Council Meeting CANCELED 6:00p Advisory Board of Health 7:00p Planning Commission 4 -6 PM Nicollet Ave. bridge rehabilitation open house @ Assumption Catholic Church, 305 77th St. E. 30 31 1 2 3 City Administrative 7:00p Transportation 7:00p Arts Commission CITY ADMINISTRATIVE Offices closed -- Commission @ 6335 Portland Ave OFFICES CLOSED -- Memorial Day observed MOVING TO NEW MUNICIPAL CENTER - REOPEN JUNE 6 Display: Year Month Week Day_ Block List Condensed Abs Slide Calendars: Search. Add Events: Daily Duration Periodic Administer: This Calendar All meetings held at City Hall (6700 Portland Avenue) unless indicated otherwise http://www.my.calendars.net/richfield 5/12/2011 =Mad SPECIAL HOUSING AND REDEVELOPMENT AUTHORITY WORKSESSION MINUTES Richfield, Minnesota April 18, 2011 CALL TO ORDER The meeting was called to order by Chair Sandahl at 6:30 p.m. ROLL CALL HRA Members Sue Sandahl, Chair; Joan Helmberger, Debbie Goettel and Steven Quam Present: HRA Members Doris Rubenstein Absent: Staff Present: John Stark, Acting Executive Director /Community Development Director; Karen Barton, Community Development Manager; and Nancy Gibbs, City Clerk. Item #1 DISCUSSION WITH WELLINGTON MANAGEMENT, INC. REGARDING PRELIMINARY PROPOSAL FOR REDEVELOPMENT OF FORMER KMART SITE, 66TH STREET AND LYNDALE AVENUE Acting Executive Director /Community Development Director Stark stated that Wellington Management, Inc. had called and left a voice mail that said they were unable to attend the meeting. Acting Executive Director /Community Development Director Stark explained Wellington's plans for 66th Street and Lyndale Avenue redevelopment site. ADJOURNMENT The meeting was adjourned by unanimous consent at 6:57 p.m. Date Approved: May 16, 2011 Nancy Gibbs City Clerk Suzanne M. Sandahl Chair John Stark Acting Executive Director J CALL TO ORDER HOUSING AND REDEVELOPMENT AUTHORITY MEETING MINUTES Richfield, Minnesota Regular Meeting April 18, 2011 The meeting was called to order by Chair Sandahl at 7:00 p.m. ROLL CALL HRA Members Sue Sandahl, Chair; Joan Helmberger, Debbie Goettel, Present: and Steven Quam HRA Members Doris Rubenstein Absent. Staff Present: John Stark, Acting Executive Director /Community Development Director; Karen Barton, Community Development Manager; and Nancy Gibbs, City Clerk. Item #1 APPROVAL OF MINUTES OF (1) SPECIAL HRA/CITY COUNCIL /PLANNING COMMISSION WORKSESSION OF MARCH 21, 2011 AND (2) REGULAR HRA MEETING OF MARCH 21, 2011 M /Helmberger, S /Quam to approve the minutes of the Special HRA/City Council /Planning Commission Worksession of March 21, 2011 and the Regular HRA Meeting of March 21, 2011. Motion carried 4 -0. Item #2 HRA APPROVAL OF AGENDA M /Quam, S /Goettel to approve the agenda. Motion carried 4 -0. HRA Meeting -2- April 18, 2011 Item #3 CONSIDERATION OF CONTRACT FOR DEMOLITION WITH S.R. STEVENS EXCAVATING FOR DEMOLITION AT 7537 DUPONT AVENUE, 7220 RUSSELL AVENUE, 6345 BLOOMINGTON AVENUE, 6616 SECOND AVENUE AND AUTHORIZING STAFF TO CONTRACT FOR ANY UNCOVERED ABATEMENT COSTS (STAFF REPORT NO. 15) Community Development Manager Barton presented Staff Report No. 15. M /Goettel, S /Helmberger to approve the contract for demolition with S.R. Stevens Excavating for demolition at 7537 Dupont Avenue, 7220 Russell Avenue, 6345 Bloomington Avenue, 6616 Second Avenue and authorizing staff to contract for any uncovered abatement costs. Motion carried 4 -0. Item #4 HRA DISCUSSION ITEMS Chair Sandahl shared an article from the Star Tribune regarding the Lyndale Garden Center site. Commission Member Goettel asked if the city has a tool box of materials for developers when they come to us. Acting Executive Director Stark responded staff will put something together. Item #5 EXECUTIVE DIRECTOR REPORT Acting Executive Director Stark reminded commissioners that the May 16`" meeting has been cancelled. Community Development Manager Barton reminded everyone that nine Rediscover Richfield lots are for sale. Item #6 CLAIMS AND PAYROLL M /Goettel, S /Quam that the followinq claims and payrolls be approved: U.S BANK 04/18/2011 Section 8 Checks: 120338- 120470 $ 171,016.40 HRA Checks: 31175 -31190 $ 24,344.31 TOTAL $ 195, 360.71 Motion carried 4 -0. ADJOURNMENT HRA Meeting -3- April 18, 2011 The meeting was adjourned by unanimous consent at 7:10 p.m. Date Approved: May 16, 2011 Nancy Gibbs City Clerk Suzanne M. Sandahl Chair John Stark Acting Executive Director pppppp— I AGENDA ITEM #: 3 REPORT #: 16 STAFF REPORT HOUSING AND REDEVELOPMENT AUTHORITY MEETING MAY 16, 2011 REPORT PREPARED BY: REPORT PRESENTER: DEPARTMENT DIRECTOR REVIEW: REVIEWED BY EXECUTIVE DIRECTOR CHRISTINE COSTELLO, COMMUNITY DEVELOPMENT SPECIALIST N"E TIME JOHN STARK, COMMUNITY DEVELOPMENT DIRECTOR ITEM FOR HRA CONSIDERATION: Consideration of a Contract for Private Development with Sherman Associates d.b.a. Skylark Apartments Limited Partnership for the south portion of the former Public Works Maintenance Facility. L RECOMMENDED ACTION: By Motion: Approve and authorize execution of attached Contract for Private Development with Sherman Associates d.b.a. Skylark Apartments Limited Partnership for the south portion of the former Public Works Maintenance Facilitv. II. BACKGROUND At the March 21 st joint worksession of the Richfield City Council, Housing and Redevelopment Authority (HRA) and Planning Commission, the future status of the Candlewood outlot, located at 301 W. 77th Street was discussed. The development firm of Sherman and Associates (Sherman) currently has a Preliminary Agreement with the HRA that precludes the HRA from entering into any agreements with another party related to this property, soliciting any proposals for the development of this property or selling this property until its expiration on June 24, 2011. 051611 -CPD Sherman Associates.doc Richfield - Bloomington Honda (R -B Honda) expressed interest at the worksession in purchasing the property. Staff has not had any in -depth conversations with R -B Honda, but staff felt that it was our obligation to bring their interest in the property to the attention of policy makers at the worksession prior to HRA's consideration of a Contract for Private Development (Contract) with Sherman for the Candlewood outlot. Based on the feedback from policy makers at the worksession, Sherman decided that they would precede instead with a proposal for the south portion of the former Public Works Maintenance Facility instead of pursuing the Candlewood outlot. Sherman's proposal for the south portion of the Public Works Maintenance Facility is for a three -story 47 unit affordable apartment building. For this proposal Sherman is also applying for funding through the Minnesota Housing Finance Agency (MHFA) Housing Tax Credit program. The MHFA funding offers a ten year reduction in tax liability to owners and investors for eligible affordable rental housing units produced as a result of new construction, rehabilitation, or acquisition. The MHFA funding application uses a "local financial support" as evaluating criteria. A price reduction or donation would increase the likelihood that the project would get approval. Sherman is proposing to pay the City fair market value for the property and then be reimbursed for these costs through the Housing TIF District that has been in place since 2009. HRA staff, legal counsel and representatives of Sherman and their legal counsel have cooperatively drafted a revised contract for HRA consideration. Among the more notable provisions in this proposed contract (attached) are: • The public assistance shall be in the form of a Pay -As- You -Go Note (Note) to reimburse Sherman for a portion of the land acquisition and site preparation costs. • The HRA will not know the minimum market value until an Assessment Agreement is certified by the County Assessor. Therefore, the principal amount of the Note will also not be known until the Assessment Agreement. The principal amount of the Note is determined by the estimated available tax increment. • The HRA will not issue the Note until Sherman has obtained title to the property, all the necessary land use approvals have taken place, and the property has been subdivided. -If these requirements have not taken place by November 2012 or the Contract extended, the Contract will become null and void. • Per the State Tax Increment Financing (TIF) Act requires specific income requirements for residential rental projects. Those income requirements are either 20% or more of the residential units are occupied by individuals whose income is 50% or less of the area median income, or 40% or more of the units are occupied by individuals whose income is 60% or less of the area's median income. • Per the Contract, Sherman will also conduct renter screening that will include credit check, criminal history, and rental history. With the consideration of approval of this Contract and approval of the Option Agreement (vote 5 to 0) by the City Council at their May 10, 2011 meeting, the developer will submit application to the MHFA for funding on June 14th then await MFHA awarding in October 2011. Construction would most likely then begin in Spring 2012. III. BASIS OF RECOMMENDATION A. POLICY • Sherman currently has a Preliminary Agreement with the HRA for the Candlewood outlot that precludes the HRA from entering into any agreements with another party related to the property, soliciting any proposals for the development or selling this property until its expiration on June 24, 2011. • The Preliminary Agreement with Sherman was intended as a preliminary step prior to drafting and executing a Development Agreement. Sherman, HRA staff and legal counsel were in the process of drafting that Development Agreement when Richfield - Bloomington Honda (R -B Honda) expressed their interest in purchasing the property. • On March 21 st at a joint worksession of the Richfield City Council, HRA and Planning Commission, the future status of the vacant Candlewood outlot was discussed. • Based on the reaction of, and feedback from policy makers at the joint worksession, Sherman decided to shift their focus to the south portion of the former Public Works Maintenance Facility. • Currently Richfield Public Works has a contract with the Metropolitan (Met) Council Contractor for the use of the south portion of the former Public Works Maintenance Facility for on site construction offices for the Metro Sewer Interceptor /Regional Trail project. Per that agreement the City would have to give Met Council's Contractor a 90- day notice to terminate the agreement. It is felt that the Contractor could potentially be relocated to the north portion of the Public Works Maintenance Facility or another location in the vicinity of the Metro Sewer Interceptor /Regional Trail project. B. CRITICAL TIMING ISSUES • Sherman is required to have agreements pertaining to site control and public financing in place prior to making application to the Minnesota Housing Finance Agency (MHFA) for Tax Credits on June 14th. It is Sherman's hope, therefore, to seek Council approval of their purchase of the property at the May 10th City Council meeting. The site is already designated as a Housing TIF District. • Approval of the Option Agreement between Sherman and the City is dependant on the HRA's approval of a Contract for Private Development. • If Sherman does not receive funding from MHFA the City will still retain ownership of the parcel. C. FINANCIAL • The Option Agreement requires Sherman to pay the fair market value of the property, $610,000. Sherman will make an initial deposit to a title company of $2,000 upon the effective date of the agreement. Sherman will also make an additional deposit to the City of $5,000 if they elect to extend the option. • The deposited funds will be credited towards the purchase price of the property. • The Contract also requires Sherman to pay all legal and consulting fees associated with the project. • The city will receive cash for the property up front but Sherman will be reimbursed through tax increment financing (TIF) for the purchase of the property. • The HRA will not know the minimum market value until an Assessment Agreement is certified by the County Assessor. Therefore, the principal amount of the Note will also not be known until the Assessment Agreement. The principal amount of the Note is determined by the estimated available tax increment. The Assessment Agreement will be discussed and finalized after the HRA considers the Contract (attached) that is before them tonight. D. LEGAL • HRA legal counsel drafted the proposed Contract in cooperation with staff, the developer and the developer's legal counsel. • There are occasionally changes of an administrative or technical nature that are required of a contract as more information becomes available, HRA legal counsel may be given authority to make these changes without further HRA consideration. IV. ALTERNATIVE RECOMMENDATION(S) • Approve the proposed Contract for Private Development with added provisions or modifications. • Do not approve the proposed Contract for Private Development. • Continue the consideration of the proposed Contract for Private Development until a later meeting date. V. ATTACHMENTS • A proposed Contract for Private Development with Ryan Companies, Inc, for redevelopment of the Cedar Point area. VI. PRINCIPAL PARTIES EXPECTED AT MEETING • HRA Legal Counsel. • Representatives of Sherman Associates DRAFT May 11, 2011 3-t CONTRACT FOR PRIVATE DEVELOPMENT By and Between HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA and SKYLARK APARTMENTS LIMITED PARTNERSHIP Dated: This document was drafted by: KENNEDY & GRAVEN, Chartered (JBD) 470 U.S. Bank Plaza 200 South Sixth Street Minneapolis, Minnesota 55402 Telephone: 612- 337 -9300 384878v5 JBD RC125 -307 3 -;1- TABLE OF CONTENTS ARTICLE I: Definitions ARTICLE II: Representations and Warranties .................. Page ...............2 ............... 5 Section 2.1. Representations by the Authority ........................................... ..............................5 Section 2.2. Representations and Warranties by the Developer ................ ..............................6 ARTICLE III: Property Acquisition ............................. ......................... 8 Section 3.1. Development Property ........................................................... ..............................8 Section3.2. Grants ..................................................................................... ..............................8 Section 3.3. Insurance of Pay -As- You -Go Note ........................................ ..............................8 Section 3.4. Payment of Administrative Costs .......................................... ..............................9 Section3.5. Records ................................................................................... ..............................9 Section 3.6. Purpose of Assistance ........................................................... .............................10 ARTICLE IV: Construction of Minimum Improvements .................................. ............................... 11 Section 4.1. Construction of Improvements ............................................. ................:............11 Section 4.2. Construction Plans ................................................................ .............................11 Section 4.3. Commencement and Completion of Construction ............... .............................12 Section 4.4. Certificate of Completion ...................................................... .............................12 Section 4.5. Affordability Covenants; Qualification of the TIF District .. .............................12 Section 4.6. Affordable Housing Reporting ............................................. .............................13 ARTICLEV: Insurance ......................................................................................... .............................14 Section5.1. Insurance ............................................................................... .............................14 Section5.2. Subordination ........................................................................ .............................15 ARTICLE VI: Tax Increment; Taxes .................................................................... .............................16 Section 6.1. Right to Collect Delinquent Taxes ................... ............................... Section 6.2. Reduction of Taxes ............................................................... .............................16 Section6.3. Qualifications ........................................................................ .............................17 Error! Unknown document property name. i 3 -3 ARTICLE VII: Financing Page .......... .............................18 Section 7.1. Mortgage Financing .............................................................. .............................18 Section 7.2. Authority's Option to Cure Default on Mortgage ................ .............................18 Section 7.3. Modification; Subordination ................................................. .............................18 Section7.4. Termination ........................................................................... .............................18 ARTICLE VIII: Prohibitions Against Assignment and Transfer; Indemnification ..........................19 Section 8.1. Representation as to Development ....................................... .............................19 Section 8.2. Prohibition Against Developer's Transfer of Property And Assignment of Agreement ........................................................... .............................19 Section 8.3. Release and Indemnification Covenants ............................... .............................20 ARTICLEIX: Events of Default ........................................................................... .............................22 Section 9.1. Events of Default Prior to Completion ................................. .............................22 Section 9.2. Remedies on Default ............................................................. .............................22 Section 9.3. No Remedy Exclusive ........................................................... .............................22 Section 9.4. No Additional Waiver Implied by One Waiver ................... .............................23 Section 9.5. Attorney Fees and Costs ....................................................... .............................23 ARTICLE X: Authority Development Requirements .......................................... .............................24 Section 10.1. Renter Screening Criteria .................................................... .............................24 Section 10.2. Crime -Free and Drug -Free Housing ................................... .............................24 ARTICLE XI: Additional Provisions .................................................................... .............................25 Section 11.1. Conflict of Interests; Authority Representatives Not Individually Liable ......25 Section 11.2. Equal Employment Opportunity ......................................... .............................25 Section 11.3. Restrictions on Use ............................................................. .............................25 Section 11.4. Provisions Not Merged with Deed ..................................... .............................25 Section 11.5. Titles of Articles and Sections ............................................ .............................25 Section 11.6. Notice and Demands ........................................................... .............................25 Section11.7. Counterparts ........................................................................ .............................26 Section11.8. Recording ............................................................................ .............................26 Signature Pages: ............................................ Error! Unknown document property name. ii .............. ............................... 27 -28 SCHEDULE A: SCHEDULE B: SCHEDULE C: SCHEDULED: SCHEDULE E: SCHEDULE F: SCHEDULE G: 3-4 Development Property Description Authorizing Resolution Certificate of Completion Apartment/Townhome Screening Criteria Lease Addendum for Crime- Free/Drug Free Housing Form of Assessment Agreement Form of Investment Letter Error! Unknown document property name. iii 3 -5 CONTRACT FOR PRIVATE DEVELOPMENT THIS AGREEMENT, made as of the day of , 2011, by and between the HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA, a public body corporate and politic under the laws of the State of Minnesota (the "Authority "), and SKYLARK APARTMENTS LIMITED PARTNERSHIP, a Minnesota limited partnership (the "Developer "). WITNESSETH: WHEREAS, the Authority was created pursuant to Minnesota Statutes, Sections 469.001 to 469.047, as amended (the "HRA Act") and was authorized to transact business and exercise its powers by a resolution of the City Council of the City of Richfield ( "City "); and WHEREAS, the Authority has undertaken a program to promote redevelopment and development of land that is underused or underutilized within the City, and in this connection the Authority administers a redevelopment project known as the Richfield Redevelopment Project ( "Redevelopment Project ") pursuant to the HRA Act; and WHEREAS, pursuant to the HRA Act, the Authority is authorized to acquire real property, or interests therein, and to undertake certain activities to facilitate the redevelopment of real property by private enterprise and promote the development of affordable housing within the City; and WHEREAS, within the Redevelopment Project, the Authority has created the TIF District No. 2009 -1 ( "TIF District ") in order to facilitate redevelopment of certain property in the Redevelopment Project and promote the development of affordable housing within the City; and WHEREAS, the Developer proposes to acquire certain property (the "Development Property ") within the TIF District and construct a 47 -unit apartment complex (the "Minimum Improvements ") that includes at least 10 apartment units that will comply with the affordability covenants contained in Section 4.5 of this Agreement; and WHEREAS, in order to achieve the objectives of the Redevelopment Plan for the Redevelopment Project and make the Minimum Improvements economically feasible for the Developer to construct, the Authority is prepared to provide the Developer with assistance in the form of tax increment generated from the Development Property as herein provided; and WHEREAS, the Authority believes that the development of the TIF District pursuant to this Agreement, and fulfillment generally of this Agreement, are in the vital and best interests of the City and the health, safety, morals, and welfare of its residents, and in accord with the public purposes and provisions of the applicable State and local laws and requirements under which the Redevelopment Project has been undertaken and is being assisted. Error? Unknown document property name. 1 3 -C. NOW, THEREFORE, in consideration of the premises and the mutual obligations of the parties hereto, each of them does hereby covenant and agree with the other as follows: ARTICLE I Definitions Section 1.1. Definitions. In this Agreement, unless a different meaning clearly appears from the context: "Agreement" means this Contract for Private Development, as the same may be from time to time modified, amended, or supplemented. "Authority" means the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota. "Authority Representative" means the Executive Director of the Authority. "Board" means the Board of Commissioners of the Authority. "Certificate of Completion" means the certification provided to the Developer pursuant to Section 4.4 of this Agreement. "City" means the City of Richfield, Minnesota. "Closing" means the gathering at which the Developer receives the deed to the Development Property from the City and the Note from the Authority, along with any other documents required in connection with those activities, or required in this Agreement or any agreements between the Developer and the City to be delivered at Closing. "Construction Plans" means the plans, specifications, drawings and related documents on the construction work to be performed by the Developer on the Development Property, including the Minimum Improvements, which (a) shall be as detailed as the plans, specifications, drawings and related documents which are submitted to the appropriate building officials of the City, and (b) shall include at least the following: (1) site plan; (2) foundation plan; (3) floor plan for each floor; (4) cross sections of each (length and width); (5) elevations (all sides, including a building materials schedule); (6) landscape and grading plan; and (7) such other plans or supplements to the foregoing plans as the City may reasonably request to allow it to ascertain the nature and quality of the proposed construction work. "County" means Hennepin County, Minnesota. "Developer" means Skylark Apartments Limited Partnership, a Minnesota limited partnership, or its permitted successors and assigns. Error! Unknown document property name. 2 3---1 "Development Property" means the real property described in Schedule A of this Agreement. "Event of Default" means an action by a party listed in Article IX of this Agreement. "Holder" means the owner of a Mortgage. "HRA Act" means Minnesota Statutes, Sections 469.001 to 469.047, as amended. "Material Change" means a change in construction plans that adversely affects generation of tax increment or changes the number of units of rental housing. "Maturity Date" means the date that the Authority will no longer be entitled to receive tax increment from the Tax Increment District. "Minimum Improvements" means the development on the Development Property of an approximately 75,396 square foot apartment complex containing 47 units of housing, including at least 10 units that will comply with the affordability covenants contained in Section 4.5 of this Agreement. "Minimum Market Value" means the minimum market value of the Development Property, including the land and Minimum Improvements to be constructed thereon, contained in the Assessment Agreement to be executed by the parties and certified by the Assessor, all in accordance with Minnesota Statutes, Section 469.177 subd. 8. "Redevelopment Plan" means the Redevelopment Plan for the Redevelopment Project approved and adopted by the Authority and the City Council of the City. "Mortgage" means any mortgage made by the Developer which is secured, in whole or in part, with the Development Property and which is a permitted encumbrance pursuant to the provisions of Article VIII of this Agreement. Project. "Project Area" means the real property located within the boundaries of the Redevelopment "Redevelopment Project" means the Richfield Redevelopment Project. "State" means the State of Minnesota. "Tax Increment" means that portion of the real property taxes which is paid with respect to the TIF District and which is remitted to the Authority as tax increment pursuant to the Tax Increment Act. "Tax Increment Act" or "TIF Act" means the Tax Increment Financing Act, Minnesota Statutes, Sections 469.174 to 469.1799, as amended. Error! Unknown document property name. 3 3 -8 "Tax Increment District" or "TIF District" means the Tax Increment Financing District No.2009 -1, a housing district. "Tax Increment Plan" or "TIF Plan" means the Tax Increment Financing Plan for Tax Increment Financing District No. 2009 -1, as approved September 8, 2009, and as it may be amended. "Tax Official" means any County assessor; County auditor; County or State board of equalization, the commissioner of revenue of the State, or any State or federal district court, the tax court of the State, or the State Supreme Court. "Unavoidable Delays" means any delay beyond the reasonable control of the party seeking to be excused as a result thereof, including, without limitation, delays which are the direct result of strikes, other labor troubles, prolonged adverse weather or acts of God, fire or other casualty to the Minimum Improvements, litigation commenced by third parties which, by injunction or other similar judicial action, directly results in delays, or acts of any federal, state or local governmental unit (other than the Authority in exercising its rights under this Agreement) which directly result in delays. (The remainder of this page is intentionally left blank.) Error! Unknown document property name. 4 3 -1 ARTICLE II Representations and Warranties Section 2.1. Representations by the Authority. The Authority makes the following representations as the basis for the undertaking on its part herein contained: (a) The Authority is a housing and redevelopment authority organized and existing under the laws of the State. Under the provisions of the Act, the Authority has the power to enter into this Agreement and carry out its obligations hereunder, and execution of this Agreement has been duly, properly and validly authorized by the Authority. (b) Based solely on advice of its counsel, the Authority has followed all of the procedures required for the establishment of the T1F District, and will duly request certification at the appropriate time. (c) The Authority proposes to assist in financing certain land acquisition costs and site improvement costs necessary to facilitate the construction of the Minimum Improvements in accordance with the terms of this Agreement to further the objectives of the Modified Redevelopment Plan. (d) The Authority finds that the Minimum Improvements are necessary to alleviate a shortage of, and maintain existing supplies of, decent, safe, and sanitary housing for persons of low or moderate income and their families as such income is determined by the Authority. (e) The execution, delivery and performance of this Agreement and of any other documents or instruments required pursuant to this Agreement by the Authority, and consummation of the transactions contemplated therein and the fulfillment of the terms thereof, do not and will not conflict with or constitute a breach of or default under any existing (i) indenture, mortgage, deed of trust or other agreement or instrument to which the Authority is a party or by which the Authority or any of its property is or may be bound; or (ii) legislative act, constitution or other proceedings establishing or relating to the establishment of the Authority or its officers or its resolutions. This representation does not apply to any recorded interests of third parties to or in the Development Property. (g) There is not pending, nor to the best of the Authority's knowledge is there threatened, any suit, action or proceeding against the Authority before any court, arbitrator, administrative agency or other governmental authority that materially and adversely affects the validity of any of the transactions contemplated hereby, the ability of the Authority to perform its obligations hereunder, or the validity or enforcement of this Agreement. (h) No commissioner of the Board of the Authority or officer of the Authority has either a direct or indirect financial interest in this Agreement, nor will any commissioner or officer benefit financially form the Agreement within the meaning of Minnesota Statutes, Section 469.009. Error! Unknown document property name. 5 (i) The Authority will assist and reasonably cooperate with any local, state or federal environmental law or land use regulation or development review procedure applicable to the Development Property, however, this provision does not obligate the Authority to surrender the exercise of its legislative discretion, or to incur costs except when the incurring of such costs is otherwise provided in this Agreement or elsewhere. Section 2.2. Representations and Warranties by the Developer. The Developer represents and warrants that: (a) The Developer is a limited partnership duly organized and in good standing under the laws of the State, is duly authorized to transact business within the State, and has the power to enter into this Agreement. (b) The Developer will construct, operate and maintain the Minimum Improvements in accordance with the terms of this Agreement, Redevelopment Plan and all local, state and federal laws and regulations (including, but not limited to, environmental, zoning, building code and public health laws and regulations). (c) The Developer will obtain, in a timely manner, all required permits, licenses and approvals, and will meet, in a timely manner, all requirements of all applicable local, state and federal laws and regulations which must be obtained or met before the Minimum Improvements may be lawfully constructed. The Developer did not obtain a building permit for any portion of the Minimum Improvements before September 8, 2009, the date of approval of the TIF Plan for the TIF District. (d) Neither the execution and delivery of this Agreement, the consummation of the transactions contemplated hereby, nor the fulfillment of or compliance with the terms and conditions of this Agreement is prevented, limited by or conflicts with or results in a breach of, the terms, conditions or provisions of any corporate restriction or any evidences of indebtedness, agreement or instrument of whatever nature to which the Developer is now a party or by which it is bound, or constitutes a default under any of the foregoing. (e) The proposed development by the Developer hereunder would not occur but for the tax increment financing assistance being provided by the Authority hereunder. (f) The Developer shall promptly advise the Authority in writing of all litigation or claims affecting any part of the Minimum Improvements and all written complaints and charges made by any governmental authority materially affecting the Minimum Improvements or materially affecting Developer or its business which may delay or require changes in construction of the Minimum Improvements. (g) The Developer represents that no more than 20% of the square footage of the Minimum Improvements will consist of commercial, retail or other nonresidential use. (h) [Blank] Error! Unknown document property name. 6 3.-1k (i) The Developer represents that it is aware that the Authority makes no representations or warranties regarding the TIF District other than those contained in Section 2.1 (b); and further represents that it understands that activities by the Developer, following the creation of the District, which are not in conformity with the TIF Act may result in the termination of the TIF District and the termination of any Tax Increment. (The remainder of this page is intentionally left blank.) Error! Unknown document property name. 7 3 -1a- ARTICLE III Property Acquisition; Financing Section 3.1. Development Propert t. The Development Property is currently owned by the City. The Developer will be responsible for acquiring the Development Property from the City, and paying to the City all consideration required by the City for the sale. The Developer will also be responsible for securing any right of entry permission needed from the City in order for Developer to conduct environmental and geotechnical testing and other tests or examinations deemed necessary by Developer in evaluating the purchase of the Development Property. If the Closing on the purchase of the Development Property, unless extended by mutual agreement of the parties, has not taken place by December 31, 2012, either party may declare this Agreement null and void, whereupon, the parties will be relieved and discharged from any further obligation hereunder. The Authority will cooperate with Developer in Developer's activities under this Section, provided that the Authority's cooperation will be without cost to the Authority, and will not compromise the legislative judgment of the Authority. Section 3.2. Grants. The Authority agrees, at no expense to it, to cooperate with efforts of Developer to obtain grants and other funding from government agencies to assist in construction of the Minimum Improvements or site preparation activities. The Authority will also cooperate with the City and Developer in securing similar funding for the purpose of construction of infrastructure improvements. Section 3.3. Issuance of Pay -As- You -Go Note. (a) To reimburse the Developer for a portion of the land acquisition and site preparation costs incurred by the Developer, at Closing, the Authority shall issue and deliver and the Developer shall purchase the Note in substantially the form set forth in the Authorizing Resolution attached as Schedule B but subject to the terms of Section 3.3(b). The principal amount of the Note will be established based upon the estimate of Available Tax Increment generated by the Minimum Market Value over the duration of the TIF District. The Authority and the Developer agree that the consideration from the Developer for the purchase of the Note shall consist of the Developer's payment of the land acquisition and site preparation costs as described above incurred by the Developer in at least the principal amount of the Note. No payments shall be made under the Note until the Developer has supplied the Authority with information reasonably required by the Authority to determine that such costs have been incurred by Developer. The Authority shall deliver the Note upon delivery by the Developer of an investment letter reasonably acceptable to the Authority. (b) The Developer understands and acknowledges that the Authority makes no representations or warranties regarding the amount of Available Tax Increment, or that revenues pledged to the Note will be sufficient to pay the principal of and interest on the Note. Any estimates of Tax Increment prepared by the Authority or its financial advisors in connection with the TIF District or this Agreement are for the benefit of the Authority, and are not intended as representations on which the Developer may rely. Error? Unknown document property name. 8 3-13 (c) The Authority acknowledges that the Developer may assign the Note to a lender that provides part of the financing for the acquisition of the Development Property or the construction of the Minimum Improvements. The Authority also agrees that future assignments of the Note may be approved by the Executive Director without action of the Board, upon the receipt of an investment letter in substantially the form attached as Schedule G or other investment letter reasonably acceptable to the Executive Director, upon review by Authority counsel, from such assignees. (d) The Note will not be issued and delivered to the Developer until each of the following have occurred: (i) The Developer has obtained title to the Development Property (ii) All land use approvals necessary for construction and use of the Minimum Improvements have taken place (iii) The Developer has complied with any requirements of the City with respect to platting or subdividing the Redevelopment Property (e) If all the preconditions to issuance of the Note have not occurred by December 31, 2012, or extended by mutual agreement of the parties, this Agreement will, upon notice from any party to the other party, be null and void without the need for further actions by either party, and the parties will thereupon be relieved of any further obligation hereunder. Section 3.4. Payment of Administrative Costs. As a precondition to execution of this Agreement by the Authority, the Developer has deposited with the Authority $7,500. The Authority will use such deposit to pay "Administrative Costs," which term means out of pocket costs incurred by the Authority, together with staff costs and costs for the service of its consultants, including legal and fiscal advisors attributable to or incurred in connection with the negotiation, preparation or modification of this Agreement, the TIF Plan, and other documents and agreements in connection with the establishment of the TIF District and development of the Development Property, and not previously paid by Developer. At Developer's request, but no more often than monthly, the Authority will provide Developer with a written report including invoices, time sheets or other comparable evidence of expenditures for Administrative Costs and the outstanding balance of funds deposited. If at any time the Authority determines that the deposit is insufficient to pay Administrative Costs, the Developer is obligated to pay such shortfall within 15 days after receipt of a written notice from the Authority containing evidence of the unpaid costs. If Administrative Costs incurred, and reasonably anticipated to be incurred are less than the deposit by the Developer, the Authority shall return to the Developer any funds not anticipated to be needed. Notwithstanding any provision of this paragraph to the contrary, Developer shall have no obligation to make deposits, or pay for administrative expenses payable hereunder in excess of a cumulative total of $20,000; and the Authority shall have no obligation to perform work incurring Administrative Costs in excess of such cumulative total. Section 3.5. Records. The Authority and its representatives shall have the right at all reasonable times after reasonable notice to inspect, examine and copy all books and records of Developer relating to the Minimum Improvements and the costs for which the Developer has been reimbursed with Tax Increment. Error! Unknown document property name. 9 3 -14 Section 3.6. Purpose of Assistance. The parties agree and understand that the purpose of the Authority's financial assistance to the Developer is to facilitate development of affordable residential rental housing for persons of low and moderate income, and is not a "business subsidy" within the meaning of Minnesota Statutes, Sections 116J.993 to 116J.995. Error! Unknown document property name. 10 3 -t5 ARTICLE IV Construction of Minimum Improvements Section 4.1. Construction of Improvements. Provided that the Developer acquires the Development Property, the Developer agrees that it will construct the Minimum Improvements on the Development Property substantially in accordance with the Construction Plans as approved pursuant to Section 4.2, and at all times prior to the Maturity Date, will operate and maintain, preserve and keep the Minimum Improvements or cause such improvements to be maintained, preserved and kept with the appurtenances and every part and parcel thereof, in good repair and condition. The Authority shall have no obligation to operate or maintain the Minimum Improvements. Section 4.2. Construction Plans. (a) Before commencement of construction of the Minimum Improvements, the Developer shall submit the Construction Plans to the Authority. The Authority Representative will approve the Construction Plans in writing if. (i) the Construction Plans conform to the terms and conditions of this Agreement; (ii) the Construction Plans conform to the goals and objectives of the Modified Redevelopment Plan; (iii) the Construction Plans conform to all applicable federal, state and local laws, ordinances, rules and regulations; (iv) the Construction Plans are adequate to provide for construction of the Minimum Improvements; (v) the Construction Plans do not provide for expenditures in excess of the funds available to the Developer from all sources (including any deferred Developer fee and equity) for construction of the Minimum Improvements; (vi) the Construction Plans provide for the construction of Minimum Improvements having an estimated market value, including land, of at least the Minimum Market Value and (vii) no uncured Event of Default has occurred. Approval may be based upon a review by the City's Building Official of the Construction Plans. No approval by the Authority Representative shall relieve the Developer of the obligation to comply with the terms of this Agreement or of the Redevelopment Plan, applicable federal, state and local laws, ordinances, rules and regulations, or to construct the Minimum Improvements in accordance therewith. No approval by the Authority Representative shall constitute a waiver of an Event of Default. If approval of the Construction Plans is requested by the Developer in writing at the time of submission, such Construction Plans shall be deemed approved unless rejected in writing by the Authority Representative, in whole or in part. Such rejections shall set forth in detail the reasons therefore, and shall be made within 30 days after the date of their receipt by the Authority. If the Authority Representative rejects any Construction Plans in whole or in part, the Developer shall submit new or corrected Construction Plans within 30 days after written notification to the Developer of the rejection. The provisions of this Section relating to approval, rejection and resubmission of corrected Construction Plans shall continue to apply until the Construction Plans have been approved by the Authority. The Authority Representative's approval shall not be unreasonably withheld, delayed or conditioned. Said approval shall constitute a conclusive determination that the Construction Plans (and the Minimum Improvements constructed in accordance with said plans) comply to the Authority's satisfaction with the provisions of this Agreement relating thereto. (b) If the Developer desires to make any Material Change in the Construction Plans after their approval by the Authority, the Developer shall submit - the proposed change to the Error! Unknown document property name. 11 3- 1 (v Authority for its approval. If the Construction Plans, as modified by the proposed change, conform to the requirements of this Section 4.2 of this Agreement with respect to such previously approved Construction Plans, the Authority shall approve the proposed change and notify the Developer in writing of its approval. Such change in the Construction Plans shall, in any event, be deemed approved by the Authority unless rejected, in whole or in part, by written notice by the Authority to the Developer, setting forth in detail the reasons therefor. Such rejection shall be made within 30 days after receipt of the notice of such change. The Authority's approval of any such change in the Construction Plans may be conditioned on amendment to provisions of this Agreement if such amendments will mitigate the materiality of such proposed changes. Section 4.3. Commencement and Completion of Construction. Subject to Unavoidable Delays, the Developer will substantially complete construction of the Minimum Improvements by June 30, 2013. All work with respect to the Minimum Improvements to be constructed or provided by the Developer on the Development Property shall be in substantial conformity with the Construction Plans as submitted by the Developer and approved by the Authority. The Developer agrees for itself, its successors and assigns, and every successor in interest to the Development Property, or any part thereof, that the Developer, and, subject to the subordination provisions in Section 7.3, such successors and assigns, shall promptly begin and diligently prosecute to completion the development of the Development Property through the construction of the Minimum Improvements thereon. Section 4.4. Certificate of Completion. (a) Promptly after completion of the Minimum Improvements substantially in accordance with those provisions of the Agreement relating solely to the obligations of the Developer to construct the Minimum Improvements (including the dates for beginning and completion thereof), the Authority Representative will furnish the Developer with a Certificate of Completion shown as Schedule C. The Authority agrees that a Certificate of Completion will not be withheld if exterior Minimum Improvements cannot be completed by the Developer due to inclement weather if. (i) a certificate of occupancy has been issued by the building official, and (ii) funds have been escrowed with the construction lender sufficient to cover the cost of completion of the uncompleted exterior Minimum Improvements. (b) If the Authority Representative shall refuse or fail to provide any certification in accordance with the provisions of this Section 4.4 of this Agreement, the Authority Representative shall, within thirty (30) days after written request by the Developer, provide the Developer with a written statement, indicating in adequate detail in what respects the Developer has failed to complete the Minimum Improvements in accordance with the provisions of the Agreement, or is otherwise in default, and what measures or acts will be necessary, in the opinion of the Authority, for the Developer to take or perform in order to obtain such certification. (c) Regardless of whether a Certificate of Completion is issued by the City, the construction of the Minimum Improvements shall be deemed to be complete upon issuance of a certificate of occupancy by the City. Section 4.5. Affordability Covenants; Qualification of the TIF District. The City and the Developer understand and agree that the TIF District constitutes a "housing district" under Section Error! Unknown document property name. 12 3 -11 469.174, Subdivision 11 and Section 469.1761 of the TIF Act. In that regard, Developer agrees that the Minimum Improvements are subject to the following affordability covenants: (a) At all times from initial occupancy of the Minimum Improvements through the date that the District is decertified, the Minimum Improvements must comply with Section 469.1761, Subdivision 3 of the TIF Act, which requires that the Minimum Improvements satisfy the income requirements for a qualified residential rental project as defined in Section 142(d) of the Internal Revenue Code. Those income requirements are either (i) 20% or more of the residential units are occupied by individuals whose income is 50% or less of the area's median gross income, or (ii) 40% or more of the residential units are occupied by individuals whose income is 60% or less of the area's median gross income. (b) In consideration of the financial assistance provided by this Agreement (from tax increment), the Developer represents and covenants that from the date the Minimum Improvements are completed through the date the District is decertified, the rent charged for each of the at least 10 income - restricted units shall not exceed the maximum rent that is determined by the Minnesota Housing Finance Agency (or any successor entity) to be affordable to persons who meet the income restrictions set forth in this Section. (c) If the Authority or the City receives notice from the State Department of Revenue, the State Auditor, any Tax Official or any court of competent jurisdiction that the TIF District does not qualify as a "housing district," such event shall be deemed an Event of Default under this Agreement; provided, however, that the Authority may not exercise any remedy under this Agreement so long as such determination is being contested and has not been finally adjudicated. In addition to any remedies available to the Authority and the City under Article IX hereof, the Developer hereby agrees to indemnify, defend and hold harmless the Authority and the City for any damages or costs resulting therefrom. Section 4.6. Affordable Housing Reporting. At least annually, no later than April 1 of each year commencing on the April 1 first following the issuance of the Certificate of Completion, the Developer shall provide a report to the Authority evidencing that the Developer complied with the income and rent affordability covenants set forth in Section 4.5 hereof during the previous calendar year. The income affordability reporting shall be on the form entitled "Tenant Income Certification" from the Minnesota Housing Finance Agency (MHFA HTC Form 14), or if unavailable, any similar form. The rent affordability reporting shall be in the form of a certification from the Developer to the effect that it has met the rent affordability requirements of Section 4.5 for the period. The Authority may require the Developer to provide additional information in order to access the accuracy of such certification. Unless earlier excused by the Authority, the Developer shall send affordable housing reports to the Authority until the date of decertification of the TIF District. If Developer is sending reports to other agencies regarding low income requirements which contain the information required in this section, then the reporting requirement will be satisfied for the periods covered in such reports if the Developer sends copies of such reports to the Authority. (The remainder of this page is intentionally left blank.) Error! Unknown document property naive. 13 3-1% ARTICLE V Insurance Section 5.1. Insurance. (a) The Developer will provide and maintain at all times during the process of constructing the Minimum Improvements an All Risk Broad Form Basis Insurance Policy and, from time to time during that period, at the request of the Authority, furnish the Authority with proof of payment of premiums on policies covering the following: (i) Builder's risk insurance, written on the so- called "Builder's Risk — Completed Value Basis," in an amount equal to one hundred percent (100 %) of the insurable value of the Minimum Improvements at the date of completion, and with coverage available in nonreporting form on the so- called "all risk" form of policy. The interest of the Authority shall be protected in accordance with a clause in form and content satisfactory to the Authority; (ii) Comprehensive general liability insurance (including operations, contingent liability, operations of subcontractors, completed operations and contractual liability insurance) together with a Protective Liability Policy with limits against bodily injury and property damage of not less than $1,000,000 for each occurrence (to accomplish the above - required limits, an umbrella excess liability policy may be used). The Authority shall be listed as an additional insured on the policy; and (iii) Workers' compensation insurance, with statutory coverage. (b) Upon completion of construction of the Minimum Improvements and prior to the Maturity Date, the Developer shall maintain, or cause to be maintained, at its cost and expense, and from time to time at the request of the Authority shall furnish proof of the payment of premiums on, insurance as follows: (i) Insurance against loss and/or damage to the Minimum Improvements under a policy ' or policies covering such risks as are ordinarily insured against by similar businesses. (ii) Comprehensive general public liability insurance, including personal injury liability (with employee exclusion deleted), against liability for injuries to persons and/or property, in the minimum amount for each occurrence and for each year of $1,000,000, and shall be endorsed to show the Authority as additional insured. (iii) Such other insurance, including workers' compensation insurance respecting all employees, if any, of the Developer, in such amount as is customarily carried by like organizations engaged in like activities of comparable size and liability exposure; provided that the Developer may be self- insured with respect to all or any part of its liability for workers' compensation. Error! Unknown document property name. 14 3-r9 (c) All insurance required in this Article V shall be taken out and maintained in responsible insurance companies selected by the Developer which are authorized under the laws of the State to assume the risks covered thereby. Upon request, the Developer will deposit annually with the Authority policies evidencing all such insurance, or a certificate or certificates or binders of the respective insurers stating that such insurance is in force and effect. Unless otherwise provided in this Article V of this Agreement each policy shall contain a provision that the insurer shall not cancel nor modify it in such a way as to reduce the coverage provided below the amounts required herein without giving written notice to the Developer and the Authority at least thirty (30) days before the cancellation or modification becomes effective. In lieu of separate policies, the Developer may maintain a single policy, blanket or umbrella policies, or a combination thereof, having the coverage required herein, in which event the Developer shall deposit with the Authority a certificate or certificates of the respective insurers as to the amount of coverage in force upon the Minimum Improvements. (d) The Developer agrees to notify the Authority immediately in the case of damage exceeding $150,000 in amount to, or destruction of, the Minimum Improvements or any portion thereof resulting from fire or other casualty. In such event the Developer will forthwith repair, reconstruct and restore the Minimum Improvements to substantially the same or an improved condition'or value as it existed prior to the event causing such damage and, to the extent necessary to accomplish such repair, reconstruction and restoration, the Developer will apply the Net Proceeds of any insurance relating to such damage received by the Developer to the payment or reimbursement of the costs thereof. The Developer shall complete the repair, reconstruction and restoration of the Minimum Improvements, whether or not the Net Proceeds of insurance received by the Developer for such purposes are sufficient to pay for the same. Any Net Proceeds remaining after completion of such repairs, construction and restoration shall be the property of the Developer. Notwithstanding the foregoing, if the Net Proceeds are not sufficient to repair, reconstruct or restore the Minimum Improvements, the Developer shall be provided sufficient time to find financing for such gap in proceeds before commencing any such work and the Developer shall not be in default under this Agreement as a result of such delay. (e) Notwithstanding anything to the contrary contained in this Agreement, in the event of damage to the Minimum Improvements in excess of $150,000 and the Developer fails to complete any repair, reconstruction or restoration of the Minimum Improvements within eighteen months from the date of damage, the Authority may, at its option, delay payments under the Note as provided in Section 9.3(b) hereof. If the Authority delays payments under the Note, such delay shall constitute the Authority's sole remedy under this Agreement as a result of the Developer's failure to repair, reconstruct or restore the Minimum Improvements. Thereafter, the Authority shall have no further obligations to make any payments under the Note until the repair, reconstruction or restoration is completed. (f) The Developer and the Authority agree that all of the insurance provisions set forth in this Article V shall terminate upon the termination of this Agreement. Error! Unknown document property name. 15 3 -ao Section 5.2. Subordination. Notwithstanding anything to the contrary contained in this Article V, the rights of the Authority with respect to the receipt and application of any proceeds of insurance shall, in all respects, be ' subject and subordinate to the rights of any lender under a Mortgage approved pursuant to Article VII of this Agreement. (The remainder of this page is intentionally left blank.) Error! Unknown document property name. 16 3 -a1 ARTICLE VI Tax Increment; Taxes Section 6.1. Right to Collect Delinquent Taxes. The Developer acknowledges that the Authority is providing substantial aid and assistance in furtherance of the development. The Developer understands that the Tax Increments pledged to payment of the Note are derived from real estate taxes on the Development Property, which taxes must be promptly and timely paid. To that end, the Developer agrees for itself, its successors and assigns, in addition to the obligation pursuant to statute to pay real estate taxes, that it is also obligated by reason of this Agreement to pay before delinquency all real estate taxes assessed against the Development Property and the Minimum Improvements. The Developer acknowledges that this obligation creates a contractual right on behalf of the Authority to sue the Developer or its successors and assigns to collect delinquent real estate taxes and any penalty or interest thereon and to pay over the same as a tax payment to the county auditor. In any such suit, the Authority shall also be entitled to recover its costs, expenses and reasonable attorney fees. Section 6.2. Reduction of Taxes. The Developer agrees that after the date of certification of the Tax Increment District and prior to completion of the Minimum Improvements, it will not cause a reduction in the real property taxes paid in respect of the Development Property through: (A) willful destruction of the Development Property or any part thereof (except for the demolition of structures required for construction of the Minimum Improvements); or (B) willful refusal to reconstruct damaged or destroyed property pursuant to Section 5.1 of this Agreement. The Developer also agrees that it will not, prior to the Maturity Date: (i) seek exemption from property tax for the Development Property; (ii) convey or transfer or allow conveyance or transfer of the Development Property to any entity that is exempt from payment of real property taxes under State law. The Developer may, at any time following the issuance of the Certificate of Completion and until the Note is fully paid, seek through petition or other means to have the Assessors Estimated Market Value for the Development Property reduced to not less than the Minimum Market Value. Such activity must be preceded by written notice from the Developer to the Authority indicating its intention to do so. Upon receiving such notice, or otherwise learning of the Developer's intentions, the Authority may suspend payments due under the Note, except for the portion of such payments from Available Tax Increment, as defined in the Note, based on the Minimum Market Value contained in the Assessment Agreement (form of Assessment Agreement is attached as Schedule F), until the actual amount of the reduction is determined, whereupon the Authority will make the suspended payments less any amount that the Authority is required to repay the County as a result any retroactive reduction in market value of the Development Property. During the period that the payments are subject to suspension, the Authority may make partial payments on the Note if it determines, in its sole and absolute discretion, that the amount retained will be sufficient to cover any repayment which the County may require. Error! Unknown document property name. 17 3- O-a The Authority's suspension of payments on the Note pursuant to this Section shall not be considered a default under Section 9.1 hereof. Section 6.3. Qualifications. Notwithstanding anything herein to the contrary, the parties acknowledge and agree that upon Transfer of the Development Property to another person or entity, the Developer will remain obligated under Section 6.2 hereof, unless the Developer is released from such obligations in accordance with the terms and conditions of Section 8.2(b) hereof. (The remainder of this page is intentionally left blank.) Error! Unknown document property name. 18 3 - a3 ARTICLE VII Financing Section 7.1. Mortgage Financing. (a) Before commencement of construction of the Minimum Improvements, the Developer shall submit to the Authority evidence of one or more commitments for financing which, together with committed equity for such construction, is sufficient for payment of the Minimum Improvements. Such commitments may be submitted as short term financing, long term 'mortgage financing, a bridge loan with a long term take -out financing commitment, or any combination of the foregoing. (b) If the Authority finds that the financing is sufficiently committed and adequate in amount to pay the costs specified in paragraph (a) then the Authority shall notify the Developer in writing of its approval. Such approval shall not be unreasonably withheld and either approval or rejection shall be given within 30 days from the date when the Authority is provided the evidence of financing. A failure by the Authority to respond to such evidence of financing shall be deemed to constitute an approval hereunder. If the Authority rejects the evidence of financing as inadequate, it shall do so in writing specifying the basis for the rejection. In any event the Developer shall submit adequate evidence of financing within 30 days after such rejection. Section 7.2. Authority's Option to Cure Default on Mortgajze. In the event that any portion of the Developer's funds is provided through mortgage financing, and there occurs a default under any Mortgage authorized pursuant to Article VII of this Agreement, the Developer shall cause the Authority to receive copies of any notice of default received by the Developer from the holder of such Mortgage. Thereafter, the Authority shall have the right, but not the obligation, to cure any such default on behalf of the Developer within such cure periods as are available to the Developer under the Mortgage documents. Notwithstanding the foregoing, the Authority acknowledges that Developer's lenders may not agree to the terms of this section with respect to the giving of notice, and the Developer shall only be obligated to request, in good faith, that the provisions of this section be included in any of its mortgage financing documents. Section 7.3. Modification; Subordination. In order to facilitate the Developer obtaining financing for the development of the Minimum Improvements, the Authority agrees to subordinate its rights under this Agreement to the Holder of any Mortgage securing construction or permanent financing, under terms and conditions reasonably acceptable to the Authority. Section 7.4. Termination. All the provisions of this Article VII shall terminate with respect to the Minimum Improvements, upon delivery of the Certificate of Completion for the Minimum Improvements. The Developer or any successor in interest to the Minimum Improvements or portion thereof, may sell or engage in financing or any other transaction creating a mortgage or encumbrance or lien on the Minimum Improvements or any portion thereof for which a Certificate of Completion has been obtained, without obtaining prior written approval of the Authority, provided that such sale, financing or other transaction creating a mortgage or encumbrance shall not be deemed as resulting in any subordination of the Authority's rights under this Agreement unless the Authority expressly consents to such a subordination. Error! Unknown document property name. 19 3 - ay (The remainder of this page is intentionally left blank.) Error! Unknown document property name. 20 3 -as ARTICLE VIII Prohibitions Against Assignment and Transfer; Indemnification Section 8.1. Representation as to Development. The Developer represents and agrees that its purchase of the Development Property, and its other undertakings pursuant to the Agreement, are, and will be used, for the purpose of development of the Development Property and not for speculation in land holding. Section 8.2. Prohibition Against Developer's Transfer of Property and Assignment of Agreement. The Developer represents and agrees that prior to issuance of the Certificate of Completion for the Minimum Improvements: (a) Except only by way of security for, and only for, the purpose of obtaining financing necessary to enable the Developer or any successor in interest to the Development Property, or any part thereof, to perform its obligations with respect to making the Minimum Improvements under this Agreement, and any other purpose authorized by this Agreement, the Developer has not made or created and will not make or create or suffer to be made or created any total or partial sale, assignment, conveyance, or lease, or any trust or power, or transfer in any other mode or form of or with respect to the Agreement or the Development Property or any part thereof or any interest therein, or any contract or agreement to do any of the same (except a lease to a residential occupant), without the prior written approval of the Authority unless the Developer remains liable and bound by this Agreement in which event the Authority's approval is not required. Any such transfer shall be subject to the provisions of this Agreement. (b) In the event the Developer, upon transfer or assignment of the Development Property seeks to be released from its obligations under this Agreement, the Authority shall be entitled to require, except as otherwise provided in this Agreement, as conditions to any such release that: (i) Any proposed transferee shall have the qualifications and financial responsibility, in the reasonable judgment of the Authority, necessary and adequate to fulfill the obligations undertaken in this Agreement by the Developer. (ii) Any proposed transferee, by instrument in writing satisfactory to the Authority and in form recordable among the land records, shall, for itself and its successors and assigns, and expressly for the benefit of the Authority, have expressly assumed all of the obligations of the Developer under this Agreement and agreed to be subject to all the conditions and restrictions to which the Developer is subject; provided, however, that the fact that any transferee of, or any other successor in interest whatsoever to, the Development Property, or any part thereof, shall not, for whatever reason, have assumed such obligations or so agreed, and shall not (unless and only to the extent otherwise specifically provided in this Agreement or agreed to in writing by the Authority) deprive the Authority of any rights or remedies or controls with respect to the Development Property or any part thereof or the construction of the Minimum Improvements; it being the intent of the parties as expressed in Error! Unknown document property name. 21 3 —aco this Agreement that (to the fullest extent permitted at law and in equity and excepting only in the manner and to the extent specifically provided otherwise in this Agreement) no transfer of, or change with respect to, ownership in the Development Property or any part thereof, or any interest therein, however consummated or occurring, and whether voluntary or involuntary, shall operate, legally or practically, to deprive or limit the Authority of or with respect to any rights or remedies on controls provided in or resulting from this Agreement with respect to the Minimum Improvements that the Authority would have had, had there been no such transfer or change. In the absence of specific written agreement by the Authority to the contrary, no such transfer or approval by the Authority thereof shall be deemed to relieve the Developer, or any other party bound in any way by this Agreement or otherwise with respect to the construction of the Minimum Improvements, from any of its obligations with respect thereto. (iii) Any and all instruments and other legal documents involved in effecting the transfer of any interest in this Agreement or the Development Property governed by this Article VIII, shall be in a form reasonably satisfactory to the Authority. In the event the foregoing conditions are satisfied then the Developer shall be released from its obligation under this Agreement. After issuance of the Certificate of Completion for the Minimum Improvements, the Developer may transfer or assign the Development Property or the Developer's interest in this Agreement without obtaining the prior written consent of the Authority provided that the transferee or assignee is bound by all the Developer's obligations hereunder. The Developer shall submit to the Authority written evidence of any such transfer or assignment, including the transferee or assignee's express assumption of the Developer's obligations under this Agreement. If the Developer fails to provide such evidence of transfer and assumption, the Developer shall remain bound by all its obligations under this Agreement. Section 8.3. Release and Indemnification Covenants. (a) The Developer releases from and covenants and agrees that the Authority, the City and their respective governing body members, officers, agents, servants and employees thereof shall not be liable for and agrees to indemnify and hold harmless the Authority, the City and their respective governing body members, officers, agents, servants and employees thereof against any loss or damage to property or any injury to or death of any person occurring at or about or resulting from any defect in the Minimum Improvements. (b) Except for any willful misrepresentation, gross negligence or any willful or wanton misconduct of the Authority, or its board members, officers, agents or employees, the Developer agrees to protect and defend the Authority and its governing body members, officers, agents, servants and employees thereof, now or forever, and further agrees to hold the aforesaid harmless from any claim, demand, suit, action or other proceeding whatsoever by any person or entity whatsoever arising or purportedly arising from this Agreement, or the transactions contemplated hereby or the acquisition, construction, installation, ownership, maintenance and operation of the Minimum Improvements. As to any willful misrepresentation, gross negligence or any willful or wanton misconduct of the Authority, or its board members, officers, agents or employees, the Error! Unknown document property name. 22 3-a'7 Authority agrees to protect and defend the Developer, its officers, agents, servants and employees and hold the same harmless from any such proceedings. (c) The Authority and its governing body members, officers, agents, servants and employees thereof shall not be liable for any damage or injury to the persons or property of the Developer or its officers, agents, servants or employees or any other person who may be about the Development Property or Minimum Improvements due to any act of negligence of any person. (d) All covenants, stipulations, promises, agreements and obligations of the Authority contained herein shall be deemed to be the covenants, stipulations, promises, agreements and obligations of the Authority and not of any governing body member, officer, agent, servant or employee of the Authority in the individual capacity thereof. Section 8.4. Transfer of Partnership Interests. Notwithstanding anything to the contrary in this Agreement, the following shall not constitute a breach hereunder: (i) sale, transfer, conveyance or pledge of a limited partnership interest in the Developer, provided that the Authority shall receive notice of such sale, transfer, conveyance or pledge; (ii) the sale, transfer, conveyance or pledge of any partnership interest in the Limited Partner of the Developer, provided that the Authority shall receive notice of such sale, transfer, conveyance or pledge; (iii) the appointment of an additional or substitute general partner, provided that either the Developer or Limited Partner delivers prior notice thereof to the Authority, and any substitute general partner is reasonable acceptable to the Authority. (The remainder of this page is intentionally left blank.) Error! Unknown document property name. 23 3 -as ARTICLE IX Events of Default Section 9.1. Events of Default Prior to Completion. The following shall be "Events of Default" under this Agreement and the term "Event of Default" shall mean, whenever it is used in this Agreement (unless the context otherwise provides), subject to the period of Unavoidable Delays, any failure by any party to observe or perform any covenant, condition, obligation or agreement on its part to be observed or performed under this Agreement or under any loan agreement, promissory note, or related document in connection with this Agreement. Section 9.2. Remedies on Default. Whenever any Event of Default referred to in Section 9.1 of this Agreement occurs, the non - defaulting party may exercise its rights under this Section 9.2 after providing thirty days written notice to the defaulting party of the Event of Default, but only if the Event of Default has not been cured within said thirty days or, if the Event of Default is by its nature incurable within thirty days, the defaulting party does not provide assurances reasonably satisfactory to the non - defaulting party that the Event of Default will be cured and will be cured as soon as reasonably possible: (i) If the non - defaulting party is the Authority: (a) Suspend its performance under the Agreement until it receives assurances that the defaulting party will cure its default and continue its performance under the Agreement. (b) Delay issuance or delivery of the Note, or delay payments under the Note, which will be released to Developer upon cure of the default. (c) Terminate the Note if the Event of Default is based on a finally adjudicated determination under Section 4.5 (c) of this Agreement that the TIF District does not qualify as a "housing district ". (d) Cancel and rescind or terminate the Agreement. (ii) If the non - defaulting party is either the Developer or the Authority: (a) Take whatever action, not inconsistent with the remedies provided in Section 9.2 (i) a through d, including legal, equitable or administrative action, which may appear necessary or desirable to collect any payments due under this Agreement, or to enforce performance and observance of any obligation, agreement, or covenant under this Agreement, provided that any action for specific performance must be commenced within six months of the Event of Default. Section 9.3. No Remedy Exclusive. No remedy herein conferred upon or reserved to the Authority, the City or the Developer is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or now or hereafter existing at law or in equity or by Error! Unknown document property name. 24 3 -act statute. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Authority to exercise any remedy reserved to it, it shall not be necessary to give notice, other than the notices already required in Sections 9.2 and 9.3 hereof. Section 9.4. No Additional Waiver Implied by One Waiver. In the event any agreement contained in this Agreement should be breached by either party and thereafter waived by the other party, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other concurrent, previous or subsequent breach hereunder. Section 9.5. Attorney Fees and Costs. The prevailing party in any action for the collection of payments due or to become due or for the enforcement of performance or observance of any obligation or agreement on the part of the other party shall be entitled to recover, and the other party, on ten days written demand, pay the reasonable fees of such attorneys and such other expenses so incurred by the prevailing party. (The remainder of this page is intentionally left blank.) Error! Unknown document property name. 25 3-30 ARTICLE X Authority Development Requirements Section 10.1. Renter Screening Criteria. The Developer represents and covenants that each potential tenant for the Minimum Improvements will be screened prior to occupancy using criteria similar to what is set forth in the Schedule D. Prior to the issuance of the Note, the Developer shall execute the Apartment Screening Criteria worksheet attached as Schedule D or a worksheet similar in nature and provide one copy to the City. Section 10.2. Crime -Free and Drug -Free Housing. The Developer represents and covenants that until the Maturity Date, each new tenant's lease shall include the Lease Addendum for Crime - Free/Drug -Free Housing similar to the form attached hereto as Schedule E. Further, the Developer represents and covenants to enforce the requirements of the Lease Addendum for Crime-Free/Drug- Free Housing. (The remainder of this page is intentionally left blank) Error! Unknown document property name. 26 3 -3t ARTICLE XI Additional Provisions Section 11.1. Conflict of Interests; Authority Representatives Not Individually Liable. The Authority and the Developer, to the best of their respective knowledge, represent and agree that no member, official, or employee of the Authority shall have any personal interest, direct or indirect, in the Agreement, nor shall any such member, official, or employee participate in any decision relating to the Agreement which affects his personal interests or the interests of any corporation, partnership, or association in which he is, directly or indirectly, interested. No member, official, or employee of the Authority shall be personally liable to the Developer, or any successor in interest, in the event of any default or breach by the Authority or County or for any amount which may become due to the Developer or successor or on any obligations under the terms of the Agreement. Section 11.2. Equal Employment Opportunity. The Developer, for itself and its successors and assigns, agrees that during the construction of the Minimum Improvements provided for in the Agreement it will comply with all applicable federal, state and local equal employment and non- discrimination laws and regulations. Section 11.3. Restrictions on Use. The Developer agrees that, prior to the Maturity Date, the Developer, and such successors and assigns, shall use the Development Property solely for the development of residential rental housing in accordance with the terms of this Agreement, and shall not discriminate upon the basis of race, color, creed, sex or national origin in the sale, lease, or rental or in the use or occupancy of the Development Property or any improvements erected or to be erected thereon, or any part thereof. Section 11.4. Provisions Not Merged With Deed. None of the provisions of this Agreement are intended to or shall be merged by reason of any deed transferring any interest in the Development Property and any such deed shall not be deemed to affect or impair the provisions and covenants of this Agreement. Section 11.5. Titles of Articles and Sections. Any titles of the several parts, Articles, and Sections of the Agreement are inserted for convenience of reference only and shall be disregarded in construing or interpreting any of its provisions. Section 11.6. Notices and Demands. Except as otherwise expressly provided in this Agreement, a notice, demand, or other communication under the Agreement by either party to the other shall be sufficiently given or delivered if it is dispatched by registered or certified mail, postage prepaid, return receipt requested, or delivered personally; and (a) in the case of the Developer, is addressed to or delivered personally to the Developer at 233 Park Avenue So. Suite 201, Minneapolis, MN 55415, Attn: George Sherman; with a copy to Angela Christy at Faegre &, Benson LLP, 2200 Wells Fargo Center, 90 South 7th Street, Minneapolis, MN 55402 -3901. Error! Unknown document property name. 27 3 -,Sx (b) in the case of the Authority, is addressed to or delivered personally to the Authority at 6700 Portland Ave. So., Richfield, MN 55423, Attn: Community Development Director; or at such other address with respect to either such party as that party may, from time to time, designate in writing and forward to the other as provided in this Section. Section 11.7. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall constitute one and the same instrument. Section 11.8. Recording. The Authority may record a memorandum of this Agreement and any amendments thereto with the Hennepin County recorder. The Developer shall pay all costs for recording. (The remainder of this page is intentionally left blank.) Error! Unknown document property name. 28 3 - 3'5 IN WITNESS WHEREOF, the Authority has caused this Agreement to be duly executed in its name and behalf and its seal to be hereunto duly affixed and the Developer has caused this Agreement to be duly executed in its name and behalf as of the date first above written. HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA By: Its: Chair (SEAL) By Its: Executive Director STATE OF MINNESOTA ) SS. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this , 2011, by and , the Chair and Executive Director, respectively, of the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota, on behalf of the Authority. Notary Public Error! Unknown document property name. 29 3 -3y SKYLARK APARTMENTS LIMITED PARTNERSHIP By: Skylark Apartments GP LLC, Its: General Partner STATE OF MINNESOTA ) SS. COUNTY OF ) George Sherman Chief Manager The foregoing instrument was acknowledged before me this , 2011, by , the , of Skylark Apartments Limited Partnership, a Minnesota limited partnership, on behalf of the Notary Public (Signature Page of Developer to the Contract for Private Development) Error! Unknown document property name. 30 3-39 SCHEDULE A DEVELOPMENT PROPERTY [To be completed prior to execution] Error! Unknown document property name. A -1 -3—No SCHEDULE B Authorizing Resolution HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA RESOLUTION NO. RESOLUTION APPROVING THE ISSUANCE OF, AND PROVIDING THE FORM, TERMS, COVENANTS AND DIRECTIONS FOR THE ISSUANCE OF ITS TAX INCREMENT LIMITED REVENUE NOTE, SERIES 2011 IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $ BE IT RESOLVED BY the Board of Commissioners (`Board ") of the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota (the "Authority "), as follows: Section 1. Authorization; Award of Sale. 1.01. Authorization. The Authority has heretofore approved the establishment of Tax Increment Financing District No. 2009 -1 (the "TIF District ") within the Richfield Redevelopment Project ( "Redevelopment Project "), and has adopted a tax increment financing plan for the purpose of financing certain improvements within the Redevelopment Project. Pursuant to Minnesota Statutes, Section 469.178, the Authority is authorized to issue and sell its bonds for the purpose of financing a portion of the public development costs of the Redevelopment District. Such bonds are payable from all or any portion of revenues derived from the TIF District and pledged to the payment of the bonds. The Authority hereby finds and determines that it is in the best interests of the Authority that it issue and sell its Tax Increment Revenue Note, Series 2011 (the "Note "), in the aggregate principal amount of up to $ , for the purpose of financing certain public costs of the Tax Increment Plan for the TIF District. 1.02. Agreement Approved; Issuance, Sale and Terms of the Note. The Authority hereby approves the Contract for Private Development between the Authority and the Owner (the "Agreement "), and authorizes the Chair and the Executive Director to execute such Agreement in substantially the form on file with Authority, subject to modifications that do not alter the substance of the transaction and are approved by such officials, provided that execution of the Agreement by such officials is conclusive evidence of their approval. Pursuant to the Agreement, the Note shall be sold to Skylark Apartments Limited Partnership (the "Owner"). The Note shall be dated as of the date of delivery and shall bear interest at the rate of % per annum to the earlier of maturity or prepayment. In exchange for the Authority's issuance of the Note to the Owner, the Owner shall pay certain land acquisition costs and site improvement costs related to the Minimum Improvements (as defined in the Agreement) pursuant to Section 3.2 of the Agreement. The Note will be delivered Error! Unknown document property name. B -1 3-3-7 in the principal amount of up to $ for reimbursement of land acquisition and site improvement costs in accordance with the terms of Section 3.5 of the Agreement. Section 2. Form of Note. The Note shall be in substantially the following form, with the blanks to be properly filled in and the principal amount and payment schedule adjusted as of the date of issue: M. Rate UNITED STATE OF AMERICA STATE OF MINNESOTA COUNTIES OF HENNEPIN HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD TAX INCREMENT LIMITED REVENUE NOTE SERIES 2011 Date of Original Issue The Housing and Redevelopment Authority in and for the City of Richfield, Minnesota (the "Authority "), for value received, certifies that it is indebted and hereby promises to pay to Skylark Apartments Limited Partnership, or registered assigns (the "Owner "), the principal sum of $ and to pay interest thereon at the rate of per annum, as and to the extent set forth herein. 1. Pam. Principal and interest ( "Payments ") shall be paid on August 1, 20_, and each February 1 and August 1 thereafter to and including February 1, 20_ ( "Payment Dates "), in the amounts and from the sources set forth in Section 3 herein. Payments shall be applied first to accrued interest, and then to unpaid principal. Payments are payable by mail to the address of the Owner or such other address as the Owner may designate upon 30 days written notice to the Authority. Payments on this Note are payable in any coin or currency of the United States of America which, on the Payment Date, is legal tender for the payment of public and private debts. 2. Interest. Interest at the rate stated herein shall accrue on the unpaid principal, commencing on the date of original issue. Interest shall be computed on the basis of a year of 360 days and charged for actual days principal is unpaid. 3. Available Tax Increment. Payments on this Note are payable on each Payment Date in the amount of and solely payable from "Available Tax Increment," which shall mean, on each Error! Unknown document property name. B -2 S-,16% Payment Date, the Tax Increment attributable to the Development Property (defined in the Agreement) and paid to the Authority by Hennepin County in the six months preceding the Payment Date, after first deducting therefrom (i) ten percent of the Tax Increment to be used to reimburse the Authority for administrative expenses incurred after completion of construction of the Minimum Improvements. Available Tax Increment shall not include any Tax Increment if, as of any Payment Date, there is: (i) an uncured Event of Default under the Agreement, or (ii) a suspension of payments pursuant to Section 6.2 of the Agreement. The Authority shall have no obligation to pay principal of and interest on this Note on each Payment Date from any source other than Available Tax Increment, and the failure of the Authority to pay the entire amount of principal or interest on this Note on any Payment Date shall not constitute a default hereunder as long as the Authority pays principal and interest hereon to the extent of Available Tax Increment. The Authority shall have no obligation to pay unpaid balance of principal or accrued interest that may remain after the payment of Available Tax Increment from the last payment of Tax Increment the Authority is entitled to receive from Hennepin County with respect to the Development Property. 4. Optional Prepayment. The principal sum and all accrued interest payable under this Note is prepayable in whole or in part at any time by the Authority without premium or penalty. No partial prepayment shall affect the amount or timing of any other regular payment otherwise required to be made under this Note. 5. Termination, Suspension or Delay of Pqyments. At the Authority's option, this Note shall terminate, and the Authority's obligation to make any payments under this Note shall be discharged, or payments under the Note may be delayed or suspended all as provided in Article IX of the Agreement, and subject to the cure provisions also contained in Article IX. 6. Nature of Obligation. This Note is issued to aid in financing certain public development costs and administrative costs of a Redevelopment Project undertaken by the Authority pursuant to Minnesota Statutes, Sections 469.001 through 469.047, as amended, and is issued pursuant to an authorizing resolution (the "Resolution ") duly adopted by the Authority on , 2011, and pursuant to and in full conformity with the Constitution and laws of the State of Minnesota, including Minnesota Statutes, Sections 469.174 to 469.1799, as amended. This Note is a limited obligation of the Authority which is payable solely from Available Tax Increment pledged to the payment hereof under the Resolution. This Note and the interest hereon shall not be deemed to constitute a general obligation of the State of Minnesota or any political subdivision thereof, including, without limitation, the Authority. Neither the State of Minnesota, nor any political subdivision thereof shall be obligated to pay the principal of or interest on this Note or other costs incident hereto except out of Available Tax Increment, and neither the full faith and credit nor the taxing power of the State of Minnesota or any political subdivision thereof is pledged to the payment of the principal of or interest on this Note or other costs incident hereto. 7. Estimated Tax Increment Pam. Any estimates of Tax Increment prepared by the Authority or its financial advisors in connection with the TIF District or the Agreement are for Error! Unknown document property name. B -3 3 -39 the benefit of the Authority, and are not intended as representations on which the Developer may rely. THE AUTHORITY MAKES NO REPRESENTATION OR WARRANTY THAT THE AVAILABLE TAX INCREMENT WILL BE SUFFICIENT TO PAY THE PRINCIPAL OF AND INTEREST ON THIS NOTE. 8. Registration. This Note is issuable only as a fully registered note without coupons. 9. Transfer. As provided in the Resolution, and subject to certain limitations set forth therein, this Note is transferable upon the books of the Authority kept for that purpose at the principal office of the City Clerk of the City of Richfield. Upon surrender for transfer of the Note, including any assignment or exchange thereof, duly endorsed by the registered owner thereof or accompanied by a written instrument of transfer, in form reasonably satisfactory to the Registrar, duly executed by the registered owner thereof or by an attorney duly authorized by the registered owner in writing, and the payment by the Owner of any tax, fee, or governmental charge required to be paid by or to the Authority with respect to such transfer or exchange, the Registrar shall authenticate and deliver, in the name of the designated transferee or transferees, a new Note of the same aggregate principal amount, bearing interest at the same rate and maturing on the same dates. Notwithstanding the foregoing, the Note shall not be transferred to any person other than an affiliate, or other related entity, of the Owner unless the Authority has been provided with an investment letter in a form substantially similar to the investment letter in Schedule _ of the Agreement or a certificate of the transferor, in a form satisfactory to the Executive Director of the Authority, that such transfer is exempt from registration and prospectus delivery requirements of federal and applicable state securities laws. The Registrar may close the books for registration of any transfer after the fifteenth day of the month preceding each Payment Date and until such Payment Date. The Owner may assign the Note to a lender that provides all or part of the financing for the acquisition of the Development Property or the construction of the Minimum Improvements. The Authority hereby consents to such assignment, conditioned upon receipt of an investment letter from such lender in substantially the form attached in the Agreement as Schedule , or other form reasonably acceptable to the Executive Director of the Authority. The Authority also agrees that future assignments of the Note may be approved by the Executive Director of the Authority without action of the Authority's Board, upon the receipt of an investment letter in substantially the form of Schedule of the Agreement or other investment letter reasonably acceptable to the Authority from such assignees. This Note is issued pursuant to a resolution of the Board of the Authority and is entitled to the benefits thereof, which Resolution is incorporated herein by reference. IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions, and things required by the Constitution and laws of the State of Minnesota to be done, to exist, to happen, and to be performed in order to make this Note a valid and binding limited obligation of the Authority Error! Unknown document property name. B -4 3 -yo according to its terms, have been done, do exist, have happened, and have been performed in due form, time and manner as so required. IN WITNESS WHEREOF, the Board of Commissioners of the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota, has caused this Note to be executed with the manual signatures of its Chair and Executive Director, all as of the Date of Original Issue specified above. HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA Executive Director Chair REGISTRATION PROVISIONS The ownership of the unpaid balance of the within Note is registered in the bond register of the Authority's Executive Director, in the name of the person last listed below. Date of Registration Registered Owner Signature of Executive Director SKYLARK APARTMENTS LIMITED PARTNERSHIP _ Federal ID # [End of Form of Note] Section 3. Terms, Execution and Delivery. 3.01. Denomination, Pam ent. The Note shall be issued as a single typewritten note numbered _. The Note shall be issuable only in fully registered form. Principal of and interest on the Note shall be payable by check or draft issued by the Registrar described herein. 3.02. Dates; Interest Payment Dates. Principal of and interest on the Note shall be payable by mail to the owner of record thereof as of the close of business on the fifteenth day of the month preceding the Payment Date, whether or not such day is a business day. Error! Unknown document property name. B -5 3-4t 3.03. Registration. The Authority hereby appoints the Authority's Executive Director to perform the functions of registrar, transfer agent and paying agent (the "Registrar "). The effect of registration and the rights and duties of the Authority and the Registrar with respect thereto shall be as follows: (a) Register. The Registrar shall keep at its office a bond register in which the Registrar shall provide for the registration of ownership of the Note and the registration of transfers and exchanges of the Note. (b) Transfer of Note. Upon surrender for transfer of the Note, including any assignment or exchange thereof, duly endorsed by the registered owner thereof or accompanied by a written instrument of transfer, in form reasonably satisfactory to the Registrar, duly executed by the registered owner thereof or by an attorney duly authorized by the registered owner in writing, and the payment by the Owner of any tax, fee, or governmental charge required to be paid by or to the Authority with respect to such transfer or exchange, the Registrar shall authenticate and deliver, in the name of the designated transferee or transferees, a new Note of the same aggregate principal amount, bearing interest at the same rate and maturing on the same dates. Notwithstanding the foregoing, the Note shall not be transferred to any person other than an affiliate, or other related entity, of the Owner unless the Authority has been provided with an investment letter in a form substantially similar to the investment letter submitted by the Owner or a certificate of the transferor, in a form satisfactory to the Authority, that such transfer is exempt from registration and prospectus delivery requirements of federal and applicable state securities laws. The Registrar may close the books for registration of any transfer after the fifteenth day of the month preceding each Payment Date and until such Payment Date. The Owner may assign the Note to a lender that provides all or part of the financing for the acquisition of the Development Property or the construction of the Minimum Improvements. The Authority hereby consents to such assignment, conditioned upon receipt of an investment letter from such lender in substantially the form attached in the Agreement as Schedule _, or other form reasonably acceptable to the Executive Director of the Authority. The Authority also agrees that future assignments of the Note may be approved by the Executive Director of the Authority without action of the Authority's Board, upon the receipt of an investment letter in substantially the form of Schedule of the Agreement or other investment letter reasonably acceptable to the Authority from such assignees. (c) Cancellation. The Note surrendered upon any transfer shall be promptly cancelled by the Registrar and thereafter disposed of as directed by the Authority. (d) Improper or Unauthorized Transfer. When the Note is presented to the Registrar for transfer, the Registrar may refuse to transfer the same until it is satisfied that the endorsement on such Note or separate instrument of transfer is legally authorized. The Registrar shall incur no liability for its refusal, in good faith, to make transfers which it, in its judgment, deems improper or unauthorized. (e) Persons Deemed Owners. The Authority and the Registrar may treat the person in whose name the Note is at any time registered in the bond register as the absolute owner of the Error! Unknown document property name. B -6 3 -qa Note, whether the Note shall be overdue or not, for the purpose of receiving payment of, or on account of, the principal of and interest on such Note and for all other purposes, and all such payments so made to any such registered owner or upon the owner's order shall be valid and effectual to satisfy and discharge the liability of the Authority upon such Note to the extent of the sum or sums so paid. (f) Taxes, Fees and Charges. For every transfer or exchange of the Note, the Registrar may impose a charge upon the owner thereof sufficient to reimburse the Registrar for any tax, fee, or other governmental charge required to be paid with respect to such transfer or exchange. (g) Mutilated, Lost, Stolen or Destroyed Note. In case any Note shall become mutilated or be lost, stolen, or destroyed, the Registrar shall deliver a new Note of like amount, maturity dates and tenor in exchange and substitution for and upon cancellation of such mutilated Note or in lieu of and in substitution for such Note lost, stolen, or destroyed, upon the payment of the reasonable expenses and charges of the Registrar in connection therewith; and, in the case the Note lost, stolen, or destroyed, upon filing with the Registrar of evidence satisfactory to it that such Note was lost, stolen, or destroyed, and of the ownership thereof, and upon furnishing to the Registrar of an appropriate bond or indemnity in form, substance, and amount satisfactory to it, in which both the Authority and the Registrar shall be named as obligees. The Note so surrendered to the Registrar shall be cancelled by it and evidence of such cancellation shall be given to the Authority. If the mutilated, lost, stolen, or destroyed Note has already matured or been called for redemption in accordance with its terms, it shall not be necessary to issue a new Note prior to payment. 3.04. Preparation and Delivery. The Note shall be prepared under the direction of the Executive Director of the Authority and shall be executed on behalf of the Authority by the signatures of its Chair and its Executive Director. In case any officer whose signature shall appear on the Note shall cease to be such officer before the delivery of the Note, such signature shall nevertheless be valid and sufficient for all purposes, the same as if such officer had remained in office until delivery. When the Note has been so executed, it shall be delivered by the Authority to the Owner following the delivery of the necessary items delineated in Section 3.3 of the Agreement. Section 4. Security Provisions. 4.01. Pledge. The Authority hereby pledges to the payment of the principal of and interest on the Note all Available Tax Increment as defined in the Note. Available Tax Increment shall be applied to payment of the principal of and interest on the Note in accordance with the terms of the form of Note set forth in Section 2 of this resolution. 4.02. Bond Fund. Until the date the Note is no longer outstanding and no principal thereof or interest thereon (to the extent required to be paid pursuant to this resolution) remains unpaid, the Authority shall maintain a separate and special "Bond Fund" to be used for no purpose other than the payment of the principal of and interest on the Note. The Authority irrevocably agrees to appropriate to the Bond Fund in each year Available Tax Increment. Any Available Tax Increment remaining in the Bond Fund shall be transferred to the Authority's account for TIF District No 2009 -1 upon the payment of all principal and interest to be paid with respect to the Note. Error! Unknown document property name. B -7 3-q3 Section 5. Certification of Proceedings. 5.01. Certification of Proceedings. The officers of the Authority are hereby authorized and directed to prepare and furnish to the Owner of the Note certified copies of all proceedings and records of the Authority, and such other affidavits, certificates, and information as may be required to show the facts relating to the legality and marketability of the Note as the same appear from the books and records under their custody and control or as otherwise known to them, and all such certified copies, certificates, and affidavits, including any heretofore furnished, shall be deemed representations of the Authority as to the facts recited therein. Section 6. Effective Date. This resolution shall be effective upon full execution of the Agreement. Adopted by the Board of Commissioner the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota, this day of , 20_. Chair Executive Director Error! Unknown document property naive. B -8 3 --UN SCHEDULE C CERTIFICATE OF COMPLETION The undersigned hereby certifies that Skylark Apartments Limited Partnership (the "Developer "), has fully complied with its obligations under Articles III and IV of that document titled "Contract for Private Development," dated , 201_, between the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota and the Developer ( "Agreement"), a memorandum of which was recorded on , as document no. , with respect to construction of the Minimum Improvements in accordance with Article IV of the Agreement, and that the Developer ,is released and forever discharged from its obligations with respect to construction of the Minimum Improvements under Articles III and IV of the Agreement. Dated: , 20_. STATE OF MINNESOTA ) SS. COUNTY OF HENNEPIN ) HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA Executive Director The foregoing instrument was acknowledged before me this , 2011, by , the Executive Director of the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota, on behalf of the Authority. Notary Public Error! Unknown document property name. C -1 -3 - 4S SCHEDULED FORM OF APARTMENT/TOWNHOME SCREENING CRITERIA RENTAL QUALIFYING CRITERIA Sherman Associates is committed to supporting the Fair Housing Act, as amended.,, prohibiting discrimination in housing based on Race, Color, Religion, Sex, Ancestry, Handicap, Familial Status or National Origin- The following qualification standards apply to ALL Applicants'. Applications for apartment homes are accepted on a first come, first served basis and subject to the availability of apartment type requested. Rental rates are subject to change without notice. AGE • Applicant must be of legal contractual age as designated by the state. A government issued photo ID must be must be presented by all applicants and is required to tour an apartment borne or model.. Applicants from foreign countries who have no social security number or citizenship "lust have proper and current US Visa, 1-9 documentation, and meet other criteria for consideration- • An Application for Occupancy must be completed and maintained for each legal adult prospective resident who will be living in the apartment and/or contributing to the payment of rent. Any false information will constitute grounds for rejection of the application. INCOME AND EMPLOYMENT: • Applicants must provide proof of current employment. Wages and length of employment must be verified in writing by either. upervisory personnel or by the Human Resources Department at the Applica nt's current and past employers- • Total monthly household GROSS INCOME must be at least two (2) times the amount of the monthly apartment rent. RENTAL HISTORY: ANY NEGATIVE RENTAL HISTORY MAY BE GROUNDS FOR APPLICATION DENIAL. Negative rental history is described as including, but not limited to any of the following: • Any breach of any lease agreement unless documentation of proven negligence on the part of the Management and/or Owner(s) of the property is provided. Breach of lease is defined as any monetary or non-monetary violation of the lease agreement, and any evictions and/or judgments for rental payments and/or damages, • Any evictions or unlawful detainer in the past 7 years of rental will result in denial. CREDIT HISTORY: Sherman Associates uses a credit score, which is a numerical expression based on real data and statistics from the analysis of a person's credit files, so it treats all applicants objectively. Your consumer credit report contains information about you and your credit experiences, such as your bill-payment history, the number and type of your accounts, late payments, collection actions, outstanding debt, and the age of your accounts- Using a statistical program, we compare this information to the credit performance of other applicants with similar profiles which allows us to predict how likely it is that you will pay your rent in a timely manner and fulfill your other lease obligations. Based upon your credit score, your application will be accepted, rejected or accepted on the condition of the payment of an additional security deposit. If your application is rejected, you Will be given the name,, address and telephone number of the consumer reporting agencies which provided us your consumer information. An applicant rejected for unsatisfactory credit is encouraged to obtain a copy of the credit report, correct any erroneous information that may be on the report and submit a new application to this community for further consideration. Error! Unknown document property name. D-1 S-4(0 The absence of a credit file shall not adversely affect any applicant', however, the applicant will be required to pay an additional security deposit in the amount of one (1) month's rent, in addition to the standard security deposit currently being charged at the time of application- This deposit must be retained until move-out. NUMBER OF OCCUPANTS PERMITTED IN AN APARTMENT: • The maximum number of occupants for any studio apartment shall be two (2) persons. • The maximum number of occupants for any studio and one-bedroom apartment shall be two (2) persons_ • The maximum number of occupants for any two-bedroom apartment shall be four (4) persons • The maximum number of occupants for any three- bedroom apartment shall be six (6) persons_ in the event that any minimum requirement contained within this document is in conflict with any Local, State or Federal rule or law, the appropriate Local, State or Federal rule or law will prevail. CRIMINAL BACKGROUND SEARCH: Any applicant with any felony convictions within the past seven (7) years will not be accepted. In addition, any applicant currently under indictment or with charges pending for any criminal offense (except minor traffic violations) will not be approved until proof is furnished that said indictments and/or charges are dropped- We do not discuss individual credit reports with Applicants- You will be provided with the name, address and phone number of the credit bureau we used, and you must contact them directly if you dispute anything they reported to us about your credit. YOUR RENTAL APPLICATION FEE IS NON-REFUNDABLE regardless of the circumstances. Please review these policies carefully before submitting an application. Applicant Signature Date Applicant Signature LAST REVISION DATE. (April 1, 20101 Error! Unknown document property name. Im 3-4-7 SCHEDULE I&snerinan ASS 0 C1 AT ES DRUGICRIME-FREE HOUSING ADDENDUM In consideration of the execution or renewal of a lease of the dwelling unit identified in the lease, owner and Resident agree as follows: I . Resident, any members of the Resident's household or a guest or other person under the Resident's direction/control shall not engage in criminal activity, including drug-related criminal activity, on or off the premises. "Drug- related criminal activity' means the illegal manufacture, sale., distribution, use or possession With intent to manufacture, sell, distribute, or use of a controlled substance (as defined in Chapter 102 of the Controlled Substance Act 121 U.S.C. 8021). 2- Resident, any members of the Resident's household or a guest or other person under the Resident's direction/control shall not enpape in any act intended to facilitate criminal activity, including drug-related criminal activity, on or off the said premises. 3. Resident, or any members of the Resident's household will not permit the dwelling unit to be used for, or to facilitate criminal activity, including drug-related criminal activity, regardless or whether the individual engaging in such activity is a member of the Resident's household, or a guest. 4. Resident, or any members of the Resident's household will not engage in the manufacture, sale, or distribution of illegal drugs at any locations, whether on or off the dwelling unit premises or otherwise. 5. Resident, any members of the Resident's household, or a guest or other person under the Resident's direction/control shall not engage in acts of violence or threats of violence including, but not limited to, the unlawful discharge of firearms, prostitution, criminal street gang activity, intimidation, or any other breach of the rental agreement that otherwise jeopardizes the health, safety or welfare of the landlord, his/her agents or Residents. 6- VIOLATION OF THE ABOVE PROVISIONS SHALL BE DEEMED A MATERIAL VIOLATION OF THE LEASE AND GOOD CAUSE FOR TERMINATION OF TENANCY. A single violation of any of the provisions of this added addendum shall be deemed a serious Violation and material non-compliance with the lease. It is understood and agreed that a gnJ& violation shall be good cause for termination of the lease. Unless otherwise provided by law, proof of the violation shall not require criminal conviction, but shall be by a preponderance of the evidence. 7. In case of conflict between the provisions of this addendum and any other provisions of the lease, the provisions of the addendum shall govern. 8- This Lease Addendum is incorporated into the lease executed or renewed this day between Owner and Resident. Resident's Signature Date Resident's Signature Date Resident's Signature Date Resident's Signature Date Management's Signature Date By signing this form, the Resident agrees to all of its terms and acknowledges its receipt. Error! Unknown document property name. E-1 3 -qT SCHEDULE F ASSESSMENT AGREEMENT THIS AGREEMENT, made on or as of the day of , 20 , by and between the Housing and Redevelopment Authority in and for the City of Richfield, a public body, corporate and politic (the "Authority ") and Skylark Apartments Limited Partnership, a Minnesota limited partnership (the "Developer "). WITNESSETH, that WHEREAS, on or before the date hereof the Authority and the Developer have entered into a Contract for Private Development dated , 2011 (the "Contract"), pursuant to which the Authority is to facilitate development of certain property in the City Richfield (the "City ") hereinafter referred to as the "Property" and legally described in Exhibit A hereto; and WHEREAS, pursuant to the Contract the Developer is obligated to construct certain improvements upon the Property, of the Minimum Improvements under the Contract; and WHEREAS, the Authority and Developer desire to establish a minimum market value for the Property and the Minimum Improvements to be constructed thereon, pursuant to Minnesota Statutes, Section 469.177, Subdivision 8; and WHEREAS, the Authority represents that it has acquired and now owns fee title to all of the Development Property and convey the same to the Developer in accordance with the terms of the Contract; and WHEREAS, the Authority and the City Assessor (the "Assessor ") have reviewed the preliminary plans and specifications for the improvements and have inspected the land; NOW, THEREFORE, the parties to this Agreement, in consideration of the promises, covenants and agreements made by each to the other, do hereby agree as follows: 1. The minimum market value which shall be assessed for ad valorem tax purposes for the Property described in Exhibit A, together with the portion of the Minimum Improvements constructed thereon, shall be $ , as of January 2, 20 notwithstanding the progress of construction by such date, and as of each January 2 thereafter the minimum market value shall be $ until termination of this Agreement under Section 2 hereof. 2. The minimum market value herein established shall be of no further force and effect and this Agreement shall terminate on the earlier of the following: a) the date of receipt by the Authority of the final payment from Hennepin County of Tax Increments from the Tax Increment District, (b) the Termination Date as defined in the Contract, or (c) the date of execution of a release of this Agreement by the Authority upon direction of the Authority's bond counsel pursuant to Section 6.3 of the Contract. The event referred to in paragraph (a), (b) or (c) of this Section shall be evidenced by a certificate or affidavit executed by the Authority. Error! Unknown document property name. F -1 3 -4q 3. This Agreement shall be promptly recorded by the Authority. The Developer shall pay all costs of recording. 4. Neither the preambles nor provisions of this Agreement are intended to, nor shall they be construed as, modifying the terms of the Contract between the Authority and the Developer. The terms used in this Agreement shall have the meaning given them in the Contract, unless a different meaning is clearly indicated. 5. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of the parties. 6. Each of the parties has authority to enter into this Agreement and to take all actions required of it, and has taken all actions necessary to authorize the execution and delivery of this Agreement. 7. In the event any provision of this Agreement shall be held invalid and unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. 8. The parties hereto agree that they will, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements, amendments and modifications hereto, and such further instruments as may reasonably be required for correcting any inadequate, or incorrect, or amended description of the Property or the Minimum Improvements or for carrying out the expressed intention of this Agreement, including, without limitation, any further instruments required to delete from the description of the Property such part or parts as may be included within a separate assessment agreement. 9. Except as provided in Section 8 of this Agreement, this Agreement may not be amended nor any of its terms modified except by a writing authorized and executed by all parties hereto. 10. This Agreement may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. 11. This Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota. Error! Unknown document property name. F -2 3-'50 IN WITNESS WHEREOF, the Authority and the Developer have caused this Assessment Agreement to be executed in their names and on their behalf by their duly authorized representatives all as of the date set forth above. HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD By: Its Chair By: Its Executive Director STATE OF MINNESOTA ) ) ss. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this day of , 20_, by and , the Chair and Executive Director, respectively, of the Housing and Redevelopment Authority in and for the City of Richfield, on behalf of said Authority. Notary Public Error? Unknown document property name. F -3 3-51 SKYLARK APARTMENTS LIMITED PARNTERSHIP Im STATE OF MINNESOTA ) ss. COUNTY OF HENNEPIN ) Its This instrument was acknowledged before me on the an Minnesota corporation on behalf of said corporation. Notary Public Error! Unknown document property name. F -4 , 20_, by of Sherman Associates, Inc., 3_s A CERTIFICATION BY ASSESSOR The undersigned, having reviewed certain plans for the Minimum Improvements to be constructed and the market value assigned to the land upon which the Minimum Improvements are to be constructed, as described in this Assessment Agreement, hereby states as follows: The undersigned Assessor, being legally responsible for the assessment of the above described property, hereby certifies that the $ market value hereinabove assigned to the relevant portion of the Property and Minimum Improvements is reasonable. Assessor STATE OF MINNESOTA ) ) ss COUNTY OF HENNEPIN ) This instrument was acknowledged before me on , 201_, by the Assessor. Notary Public Error! Unknown document property name. F -5 3 -53 EXHIBIT A TO ASSESSMENT AGREEMENT Legal Description of Redevelopment Property Error! Unknown document property name. F -6 3_su SCHEDULE G FORM OF INVESTMENT LETTER [Insert Form of Investment Letter] INVESTMENT LETTER To: Housing and Redevelopment Authority in and for the City of Richfield, Minnesota, Attention: Chairperson of the Board of Commissioners Re: $ Tax Increment Revenue Note, Series 20_ The undersigned, as Purchaser of $ in principal amount of the above - captioned Tax Increment Revenue Note (the "Note "), approved pursuant to Resolution No. , adopted by the Board of Commissioners of the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota (the "Authority "), on , 20_ (the "Resolution "), hereby represent to you and to Kennedy & Graven, Chartered, Minneapolis, Minnesota, as counsel to the Authority, as follows: 1. We understand and acknowledge that the Note is delivered to the Purchaser on this date pursuant to the Resolution and the Contract for Private Development (the "Agreement "), by and between the Authority, and Skylark Apartments Limited Partnership, a Minnesota limited partnership, dated 2. The Note is payable as to principal and interest solely from Available Tax Increment pledged to the Note, as defined therein. 3. We have sufficient knowledge and experience in financial and business matters, including purchase and ownership of municipal obligations, to be able to evaluate the risks and merits of the investment represented by the purchase of the above stated principal amount of the Note. 4. We acknowledge that no offering statement, prospectus, offering circular or other comprehensive offering statement containing material information with respect to the Authority and the Note has been issued or prepared by the Authority, and that, in due diligence, we have made our own inquiry and analysis with respect to the Authority, the Note and the security therefor, and other material factors affecting the security and payment of the Note. 5. We acknowledge that we have either been supplied with or have access to information, including financial statements and other financial information, to which a reasonable Error! Unknown document property name. G -1 3 -s5 investor would attach significance in making investment decisions, and we have had the opportunity to ask questions and receive answers from knowledgeable individuals concerning the Authority, the Note and the security therefor, and that as reasonable investors we have been able to make our decision to purchase the above - stated principal amount of the Note. 6. We have been informed that the Note (i) is not being registered or otherwise qualified for sale under the "Blue Sky" laws and regulations of any state, or under federal securities laws or regulations, (ii) will not be listed on any stock or other securities exchange, and (iii) will carry no rating from any rating service. 7. We acknowledge that the Authority, the City, Kennedy & Graven, Chartered, as counsel to the Authority, and Ehlers & Associates, Inc., as financial consultant to the Authority, have not made any representations or warranties as to the status of interest on the Note for the purpose of federal or state income taxation. 8. We represent to you that we are purchasing the Note for our own accounts and not for resale or other distribution thereof, except to the extent otherwise provided in the Note, the Resolution, or any other resolution adopted by the Authority. 9. All capitalized terms used herein have the meaning provided in the Agreement unless the context clearly requires otherwise. 10. The Purchaser's federal tax identification number is 11. We acknowledge receipt of the Note on the date hereof. [Purchaser] Its: Dated: . 20 Error! Unknown document property name. G -2 AGENDA ITEM #: 4 REPORT #: 17 momm STAFF REPORT HOUSING AND REDEVELOPMENT AUTHORITY MEETING MAY 169 2011\ REPORT PREPARED BY: STEV L. DEVICH, EXECUTIVE DI CT. NAME, TITLE REVIEWED BY EXECUTIVE _- DIRECTOR: - -- 1 ITEM FOR HRA CONSIDERATION: Consideration of resolution authorizing the HRA to affirm the monetary limits on statutory municipality tort liability. L RECOMMENDED ACTION: By Motion: Adopt a resolution authorizing the HRA to affirm the monetary limits on municipal tort liability established by Minnesota Statutes 466.04. II. BACKGROUND - The HRA purchases its insurance from the League of Minnesota Cities Insurance Trust (LMCIT). A requirement of that insurance coverage is that each participating entity must annually either affirm or waive its statutory limits of liability. This action must be taken on or before July 1 of each year. The current statutory limits of liability for Minnesota cities apply identically to other municipal entities such as the HRA. Those statutory limits are $500,000 for an individual claimant and $1,500,000 per occurrence. Cities can waive those limits by allowing an individual claimant to recover more than $500,000, up to the $1,500,000 occurrence limit or more if limits are waived and excess liability insurance is purchased. They may also waive the per occurrence limit and purchase excess liability insurance. Historically, the Richfield HRA has not waived its limits of liability. This is true of the City of Richfield also. The majority of cities in Minnesota have not waived their limits in the past. 0516tort III. BASIS OF RECOMMENDATION A. POLICY • The State Statute establishing liability limits for cities at the current $1,500,000 level was established fairly recently and appears to be a reasonable limit. • Historically, just over one -half of the municipalities in Minnesota have not waived the monetary limits on municipality tort liability as was established by statutes 466.04. • The HRA could waive its statuary limits in future years if the Commissioners should decide to do so. • The City of Richfield has historically not waived its limits of liability. B. CRITICAL ISSUES • The HRA's insurance policy with the League of Minnesota Cities Insurance Trust renews on July 1, 2011. This action must be completed before that time. • The HRA does not have to make a decision on purchasing excess liability coverage at this time. Coverage such as excess liability may be added at any time. C. FINANCIAL • There is a slight premium savings for political entities that affirm the statutory monetary limits. For the Richfield HRA the savings would be less than $1,000 for the coverage year. • The. HRA has historically not purchased excess liability coverage because of the relatively high cost of such coverage. The cost for $1,000,000 of excess coverage would likely be between $6,000 and $8,000 per year. D. LEGAL • The tort liability limits established by Minnesota statutes have historically protected cities and no Minnesota court has ever established a monetary award in excess of the statutory limits against a municipality. • Each municipal entity must annually decide whether the City would voluntarily waive the statute for both the single claims each occurrence limits. IV. ALTERNATIVE RECOMMENDATION(S) • If the HRA feels that any single claimant should receive more than the $500,000 limit, the HRA could elect to waive the statutory monetary limits. • If the HRA feels that the $1,500,000 per occurrence limit is not adequate, the HRA could purchase excess liability coverage and subsequently waive the limits of liability up to the amount of excess coverage purchased by the HRA. V. ATTACHMENTS • Resolution I V 1. . PRINCIPAL PARTIES EXPECTED AT MEETING I • ivone 4 -1 HRA RESOLUTION NO. RESOLUTION AFFIRMING MUNICIPAL TORT LIABILITY LIMITS ESTABLISHED BY MINNESOTA STATUTES 466.04 WHEREAS, Minnesota Statute 466.04 provides for Municipal tort liability limits for Minnesota cities and for other municipal entities like the Richfield Housing and Redevelopment Authority; and WHEREAS, the League of Minnesota Cities Insurance Trust has asked that each participating entity review the tort liability limits and determine if the respective entity would choose to waive its limits; and WHEREAS, such decision to affirm or waive the tort liability limits must be filed with the League of Minnesota Cities Insurance Trust at the insurance renewal date. NOW, THEREFORE, BE IT RESOLVED that the Executive Director is directed to report to the League of Minnesota Cities Insurance Trust that the Richfield HRA does not waive the monetary limits on the municipal tort liability established by Minnesota statutes 466.04. Approved by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 16th day of May 2011. Suzanne M. Sandahl, Chair ATTEST: Joan Helmberger, Secretary