081511completeagenda CITY OF RICHFIELD, MINNESOTA
HOUSING AND REDEVELOPMENT AUTHORITY REGULAR MEETING
MONDAY, AUGUST 15, 2011
RICHFIELD MUNICIPAL CENTER
6700 PORTLAND AVENUE
COUNCIL CHAMBERS
7:00 P.M.
AGENDA
Call to order
Roll call
1. Approval of minutes of (1) Regular HRA Meeting of July 18, 2011 and (2) Special HRA
Meeting of July 25, 2011
2. HRA approval of agenda
3. Presentation and consideration of accepting Richfield HRA annual tax increment
district status update
Staff Report No. 38
Notes:
4. Consideration of resolution accepting monetary contributions for Community
Development events and programs
Staff Report No. 39
Notes:
5. Public hearing regarding business subsidy not to exceed $650,000 and consideration
of resolution approving business subsidy agreement with Lyndale Gardens, LLC and
funding agreement with Lyndale Gardens, LLC
Staff Report No. 40
Notes:
6. Consideration of resolution adopting modification to redevelopment plan for Richfield
Redevelopment Project Area and adopting amended and restated tax increment
financing plan for 2010-1 Housing Tax Increment Financing District; Woodlake Housing
Staff Report No. 41
Notes:
7. Consideration of:
a. Resolution approving contract for private development with Woodlake Richfield
Apartments, LLC;
b. Resolution approving issuance of tax increment limited revenue note, Series
2011A; and
c. Resolution authorizing interfund loan for advance of certain costs in connection with
amended and restated housing tax increment financing district 2010-1
Staff Report No. 42
Notes:
8. Consideration of resolutions approving 2012 proposed HRA budget and tax levy and
2011 Revised HRA budget
Staff Report No. 43
Notes:
9. HRA discussion items
Notes:
10.Executive Director report
Notes:
11.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.
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made HOUSING AND REDEVELOPMENT
RICHFIELD AUTHORITY MEETING MINUTES
Richfield, Minnesota
Regular Meeting
July 18, 2011
HRA Members Steven Quam, Vice Chair; Doris Rubenstein
Present:
HRA Members Sue Sandahl; Joan Helmberger, Debbie Goettel
Absent:
Staff Present. Steve Devich, Executive Director; Karen Barton, Community Development
Manager; and Nancy Gibbs, City Clerk.
The meeting could not be called to order for lack of a quorum.
Date Approved: August 15, 2011
Suzanne M. Sandahl
Chair
Nancy Gibbs Steven L. Devich
City Clerk Executive Director
HOUSING AND REDEVELOPMENT
RICHFIELD AUTHORITY MEETING MINUTES
Richfield, Minnesota
Special Meeting
July 25, 2011
CALL TO ORDER
The meeting was called to order by Chair Sandahl at 7:00 p.m.
ROLL CALL
HRA Members Sue Sandahl, Chair; Joan Helmberger, Doris Rubenstein and Debbie
Present: Goettel
HRA Members Steven Quam
Absent:
Staff Present: Steve Devich, Executive Director; Karen Barton, Community Development
Manager; and Nancy Gibbs, City Clerk.
M/Goettel, S/Sandahl to excuse Commissioner Quam from the July 25, 2011 Special HRA
Meeting.
Motion carried 4-0.
Item #1 APPROVAL OF MINUTES OF (1) REGULAR HRA MEETING OF JUNE 20, 2011
AND (2) SPECIAL CONCURRENT CITY COUNCIL/HRA WORKSESSION OF
JUNE 28, 2011
Chair Sandahl asked that the minutes of July 18, 2011 reflect that Sue Sandahl, Debbie
Goettel and Joan Helmberger be excused.
M/Rubenstein, S/Goettel to approve the minutes of the (1) Regular HRA Meeting of June
20, 2011 and (2) Special Concurrent City Council/HRA Worksession of June 28, 2011.
Motion carried 4-0.
Item #2 HRA APPROVAL OF AGENDA
Move Item #4 to follow Item #8.
HRA Meeting -2- July 25,2011
M/Sandahl, S/Rubenstein to approve the agenda as amended.
Motion carried 4-0.
Item #3 CONSIDERATION OF AGREEMENT WITH KIMLEY-HORN ASSOCIATES FOR
PLANNING AND DESIGN SERVICES ASSOCIATED WITH REDEVELOPMENT
ALONG 77TH STREET (STAFF REPORT NO. 26)
Assistant Community Development Director Barton presented Staff Report No. 26.
M/Goettel, S/Sandahl to approve the agreement with Kimely-Horn Associates for planning
and design services associated with redevelopment along 77th Street.
Motion carried 4-0.
Item #4 CONSIDERATION OF REVISION TO GUIDELINES FOR RICHFIELD
REDISCOVERED REDEVELOPMENT CREDIT PROGRAM (STAFF REPORT NO.
27)
Moved to Item #8A.
Item #5 CONSIDERATION OF RESOLUTION SUPPORTING SUBMITTAL OF
APPLICATION TO METROPOLITAN COUNCIL FOR LIVABLE COMMUNITIES
DEMONSTRATION ACCOUNT GRANT FOR REDEVELOPMENT ACTIVITIES
ASSOCIATED WITH PROPOSED LYNDALE GARDEN PROJECT (STAFF
REPORT NO. 28)
Assistant Community Development Director Barton presented Staff Report No. 28.
M/Sandahl, S/Goettel that the following resolution be adopted and that it be made part of
these minutes:
HRA RESOLUTION NO. 1095
RESOLUTION IDENTIFYING THE NEED FOR LIVABLE COMMUNITIES DEMONSTRATION
ACCOUNT FUNDING AND AUTHORIZING AN APPLICATION FOR GRANT FUNDS
Motion carried 4-0. This resolution appears as HRA Resolution No. 1095.
Item #6 CONSIDERATION OF RESOLUTION MODIFYING REDEVELOPMENT PLAN FOR
RICHFIELD REDEVELOPMENT PROJECT AREA, ESTABLISHING LYNDALE
GARDEN TAX INCREMENT FINANCING DISTRICT THEREIN AND ADOPTING
TAX INCREMENT FINANCING PLAN THEREFORE (STAFF REPORT NO. 29)
Assistant Community Development Director Barton presented Staff Report No. 29.
HRA Meeting -3- July 25,2011
Rebecca Kurtz of Ehlers and Associates explained modifications to the redevelopment plan.
Chair Sandahl confirmed that this resolution allows us to go forward, but does not bind the
HRA to anything other than a modification of the plan by resolution.
M/Sandahl, S/Goettel that the following resolution be adopted and that it be made part of
these minutes:
HRA RESOLUTION NO. 1096
RESOLUTION ADOPTING A MODIFICATION TO THE REDEVELOPMENT PLAN
FOR THE RICHFIELD REDEVELOPMENT PROJECT AREA, ESTABLISHING THE
LYNDALE GARDENS TAX INCREMENT FINANCING DISTRICT THEREIN AND
ADOPTING A TAX INCREMENT FINANCING PLAN THEREFORE
Motion carried 4-0. This resolution appears as HRA Resolution No. 1096.
Item #7 CONSIDERATION OF RESOLUTION AUTHORIZING INTERFUND LOAN FOR
ADVANCE OF CERTAIN COSTS IN CONNECTION WITH LYNDALE GARDEN TAX
INCREMENT FINANCING DISTRICT (STAFF REPORT NO. 30)
Assistant Community Development Director Barton presented Staff Report No. 30.
M/Goettel, S/Sandahl that the following resolution be adopted and that it be made part of
these minutes:
HRA RESOLUTION NO. 1097
RESOLUTION AUTHORIZING AN INTERFUND LOAN FOR ADVANCE OF
CERTAIN COSTS IN CONNECTION WITH THE LYNDALE GARDENS TAX
INCREMENT FINANCING DISTRICT
Motion carried 4-0. This resolution appears as HRA Resolution No. 1097.
Item #8 CONSIDERATION OF RESOLUTION GRANTING BUSINESS SUBSIDY TO THE
CORNERSTONE GROUP IN AMOUNT NOT TO EXCEED $650,000 AND
SPENDING PLAN FOR CERTAIN TAX INCREMENT FINANCING DISTRICTS
LOCATED WITHIN RICHFIELD REDEVELOPMENT PROJECT AREA (STAFF
REPORT NO. 31)
Assistant Community Development Director Barton presented Staff Report No. 31.
HRA Attorney Eddington explained that a small change to the resolution was needed.
Deborah Wittman, 840 W. 65th Street, representing the 800 Company spoke in favor of the
project and stated the 800 Company is negotiating with The Cornerstone Group regarding the sale
of a small piece of property that is needed for this project.
Robert Hall, 7309 Oliver Avenue South, voiced concerns about cost of the project and
concerns regarding the Kensington project.
HRA Meeting -4- July 25,2011
Colleen Carey of The Cornerstone Group stated that The Cornerstone Group has a
purchase agreement with Lyndale Garden Center.
The Cornerstone Group is also in negotiations to purchase a small piece of land located
near 840 W. 65th Street.
M/Goettel, S/Rubenstein to close the public hearing.
Motion carried 4-0.
M/Sandahl, S/Goettel that the following resolution be adopted and that it be made part of
these minutes:
HRA RESOLUTION NO. 1098
RESOLUTION APPROVING A SPENDING PLAN FOR CERTAIN
TAX INCREMENT FINANCING DISTRICTS LOCATED WITHIN THE
RICHFIELD REDEVELOPMENT PROJECT AREA
Motion carried 4-0. This resolution appears as HRA Resolution No. 1098.
Item #8A CONSIDERATION OF REVISION TO GUIDELINES FOR RICHFIELD
REDISCOVERED REDEVELOPMENT CREDIT PROGRAM (STAFF REPORT NO.
27)
Assistant Community Development Director Barton presented Staff Report No. 27.
M/Sandahl, S/Rubenstein to approve the revision to guidelines for Richfield Rediscovered
Redevelopment Credit Program.
Motion carried 4-0.
Item #9 HRA DISCUSSION ITEMS
None.
Item #10 EXECUTIVE DIRECTOR REPORT
None.
Item #11 CLAIMS AND PAYROLL
HRA Meeting -5- July 25,2011
M/Goettel, S/Sandahl that the following claims and payrolls be approved:
U.S BANK 07/12/2011
Section 8 Checks: 120734-120848 $ 153,048.91
HRA Checks: 31241-31261 $ 78,015.76
TOTAL $ 231,064.67
Motion carried 4-0.
ADJOURNMENT
The meeting was adjourned by unanimous consent at 6:40 p.m.
Date Approved: August 15, 2011
Suzanne M. Sandahl
Chair
Nancy Gibbs Steven L. Devich
City Clerk Executive Director
AGENDA ITEM#: 3
REPORT#: 38
Noill STAFF REPORT
RICHFIELD HOUSING AND REDEVELOPMENT
AUTHORITY MEETING
AUGUST 15, 2011
REPORT PREPARED BY: MYRT LINK, COMMUNITY DEVELOPMENT
ACCOUNTANT
NAME,TITLE
REPORT PRESENTER: JOHN STARK, COMMUNITY DEVELOPMENT
DIRECTOR
V NAME,TITLE
DEPARTMENT DIRECTOR REVIEW: ® /,
// �1/ ∎
I SIGNAT j� 1
REVIEWED BY EXECUTIVE DIRECTOR: j �� �'
ITEM FOR HRA CONSIDERATION:
Consideration of a presentation of the Richfield Housing and Redevelopment Authority Tax
Increment District Status Update.
I. RECOMMENDED ACTION:
By Motion: Accept the attached Richfield Housing and
Redevelopment Authority Annual Tax increment District Status
Update.
II. BACKGROUND
The Tax Increment District Status Update (TIF Status Update) is presented to the
Richfield Housing and Redevelopment Authority (HRA) annually for review. This
year, the TIF Status Update shows that the HRA is able to meet all of its Pay-As-
You-Go Note and General Obligation Tax Increment Bond obligations. A
representative of Ehlers & Associates will provide further information regarding
Richfield's TIF Districts and their current status.
08152011 TIF Status Report
III. BASIS OF RECOMMENDATION
A. POLICY
• The annual TIF Status Update is provided to the HRA to summarize
tax increment financial activity and comment on the status of the
HRA's ability to meet its tax increment obligations.
B. CRITICAL TIMING ISSUES
• The TIF Status Update indicates the HRA is able to meet all of its
current and future tax increment obligations.
C. FINANCIAL
• See detailed TIF Status Update attached.
D. LEGAL
• N/A
IV. ALTERNATIVE RECOMMENDATION(S)
• Reject the conclusions made in the Tax Increment District Status Update.
V. ATTACHMENTS
• Tax Increment District Status Update
• Map
VI. PRINCIPAL PARTIES EXPECTED AT MEETING
• Rebecca Kurtz, Ehlers &Associates, Inc.
• ® • •
10/111
1
Tax Increment District
Status U
-wade
CITY OF
RICHFIELD
C
amamor
Richfield Housing and Redevelopment
Authority
August 15, 2011
wwwehlers-inc.corn
0 EH LE RS Minnesota phone 651-697-8500 3060 Centre Pointe Drive
LEADERS IN PUBLIC FINANCE Offices also in Wisconsin and Illinois fax 651-697-8555 Roseville,MN 55113-1122
toil free 800-552-1171
Tax Increment Financing District Summary
Conclusion
The Richfield Housing and Redevelopment Authority (HRA) will be able to meet all of its tax
increment obligations.
Richfield Redevelopment Project Area
The Richfield Redevelopment Project area currently contains 8 tax increment financing districts:
• Interchange-Lyndale-Nicollet(ILN)
• Interchange
• Urban Village
• Gramercy
• Interchange West/Lyndale Gateway
• City Bella
• Lyndale Gateway West
• Cedar Corridor
In 2005, the boundaries of the Richfield Redevelopment Project Area were expanded and set to
be the same as the City's boundary in order to expand housing program service areas and provide
a wider area of tax increment spending authority. The HRA has two types of obligations
associated with these districts. The first type of obligation is the Pay As You Go Revenue Note.
All of these Notes pledge to the Note Holder a certain percentage of the available tax increment
from the specific district. Less tax increment results in lower Pay As You Go payments. To the
extent that the increment is not available to make the payment, the HRA is not required to meet
the obligation. Current projections show that the HRA will be able to meet all of its Pay As You
Go Revenue Note obligations.
The second type of obligation that the HRA has is Tax Increment Bonds. Currently, there are
bonds outstanding in the ILN, Interchange West(Best Buy), and Lyndale Gateway West
(Kensington Park) districts. Property tax law changes in 2002 --with the last phase-in in 2004 --
resulted in much lower increment receipts than in the past. These changes prompted the HRA to
start reserving cash to cover bond debt service. Also,the law provided the ability for the HRA to
share tax increment (deficit pooling) from all tax increment districts to help pay General
Obligation Tax Increment Bond obligations. In 2004,the HRA undertook modifications to
certain tax increment district plans to address shortfalls in the ILN District increment. By using
deficit pooling, projections show that the HRA will be able to meet all of its General Obligation
Tax Increment Bond obligations.
2
Assumptions
All projections are based on the most conservative assumptions. Cash balances are as of
December 31, 2010.
The calculations do not include any interest on invested cash or inflation on property market
values with a few exceptions:
The exceptions to the assumptions follow:
• Interchange West uses a 1.725%market value inflation
• Urban Village uses a 2% market value inflation
• Lyndale Gateway West uses a 1% inflation rate
Although Lyndale Gateway (Richfield Senior Housing) used a 3%market value inflation
assumption at time of closing, a 0% market value inflation rate is being used in order to be
conservative.
3
Interstate-Lyndale-Nicollet (ILN) TIF District Update
The ILN District is a commercial redevelopment project comprised of the Shops at Lyndale and
the Meridian Crossings redevelopments located at 1-494 and Lyndale Ave.
First Year of Increment: 1987
Estimated Decertification Date: 2012
Outstanding Obligations:
• $2,039,157 Pay-as-you-go Note for the Shops at Lyndale, Phase I
• $1,368,170 Pay-as-you-go Note for the Shops at Lyndale, Phase II
• $2,908,666 Pay-as-you-go Note for Meridian Crossings, Phase I
• $2,453,702 Pay-as-you-go Note for Meridian Crossings, Phase II
• General Obligation Tax Increment Bonds of 1996, which were refunded with the
$2,460,000 Taxable General Obligation Refunding Bonds, Series 2002B. (These
formerly were the pooled bonds of the LHN and ILN, and they are currently known as
the ILN Bonds)
• $1,630,000 General Obligation Tax Increment Bonds of 2000, which utilizes the
Candlewood Hotel increment to assist the Lyndale Gateway West District(Kensington
Park).
The ILN District has a cash balance of$629,616.
The cash balance will be used to pay the ILN Bonds. The TIF Plan Modification undertaken in
2004 to address deficit pooling will allow increment from the Interchange TIF District to be
pooled to the ILN District, if needed for debt service on the Bonds. The deficit pooling is
reviewed annually. Deficit pooling was not needed in 2010.
Conclusions:
The HRA will be able to meet all of its debt obligations.
The ILN TIF District will be required to be decertified by December 31, 2012, and the properties
will be placed on the tax roll at full value. In the fall of 2012, and prior to December 31, 2012,
the Council will be requested to adopt a resolution to decertify the TIF District. The final four
Pay-as-you-go Note payments and two Bond payments will be on February 1, 2013. After those
payments, the Funds will be closed. Under current legislation, to the extent excess increment is
available, it will be returned to Hennepin County and redistributed to the City, County and
School District. The funds returned will be unrestricted in their use.
4
1
Interchange TIF District Update
The Interchange District is a commercial redevelopment project comprised of the Dick's
Sporting Goods store located along 1-494. In 2004, Galyan's Trading Company became a
wholly owned subsidiary of Dick's Sporting Goods.
First Year of Increment: 1998
Estimated Decertification Date: 2023
Outstanding Obligations:
• $1,747,045 Pay-as-you-go Revenue Note
The Interchange District has a cash balance of$311,826.
The TIF Plan Modification undertaken in 2004 to address deficit pooling will allow increment
from the Interchange TIF District to be pooled to the ILN District, if needed for debt service on
the Bonds. Deficit pooling was not needed in 2010. The HRA is considering using the cash
balance to provide assistance to the redevelopment of the former Lyndale Garden Center site
through a Spending Plan, as authorized by the 2010 Jobs Bill which was extended by the
Legislature in 2011.
Conclusions:
The HRA will be able to meet its debt obligation.
5
Pre-1999 Richfield Rediscovered TIF District Update
and Post-1999 Richfield Rediscovered TIF District Update
Richfield Rediscovered TIF Districts were redevelopment districts consisting of
The Pre-1999 p
owner occupied housing scattered throughout the City. In 1990,the City and HRA advanced
funds in the amount of$762,550 to the Richfield Rediscovered Program to establish a buy/sell
program for the construction of new, contemporary, single-family housing. All advances have
been satisfied.
In December 2010, the $1,045,000 Taxable General Obligation Tax Increment Refunding Bonds
of 2002C were defeased, and the TIF Districts were decertified. A net cash balance of$646,676
remained in the Fund, and Kennedy & Graven provided an opinion that these funds are not tax
increment and could be retained by the HRA in the Development Fund for use in future projects.
6
Urban Village TIF District Update
e redevelopment project that began generating Urban Village TIF District is a mixed us ment ro'p p � g an g S tax
g
increment in 2000. Tax increment revenue is pledged to the project to assist with property
acquisition and excess site development expenses. Fifteen percent(15%) of the annual tax
increment is contributed to the Housing and Redevelopment Fund for use on TIF eligible
expenses.
First Year of Increment: 2000
Estimated Decertification Date: 2025
Outstanding Obligations:
• $2,500,000 Pay-as-you-go Tax Increment Revenue Note
• $2,388,414 Pay-as-you-go Tax Increment Revenue Note
The TIF Bond has a reset date. The Tax Exempt Bond rate was reset in February 2006 from
5.6%to its current rate of 4.98%. The Taxable Note will be reset February 2011.
The Urban Village District has a cash balance of$13,122.
Conclusions:
The HRA will be able to meet all of its debt obligations.
7
Gramercy TIF District Update
The Gramercy TIF District is a redevelopment project that began generating tax increment in
2002. The district includes the Gramercy Park Senior Housing Cooperative. Tax increment
revenue is pledged to the project to assist with property acquisition expenses. In 2002, a portion
of the Gramercy site area was eliminated from the TIF District and incorporated into the City
Bella project. Fifteen percent(15%) of the annual tax increment is contributed to the Housing
and Redevelopment Fund for use on TIF eligible expenses.
First Year of Increment: 2002
Estimated Decertification Date: 2025
Outstanding Obligations:
• $1,977,000 Pay-as-you-go Tax Increment Revenue Note
The Gramercy District has a cash balance of$119,316.
Conclusions:
The HRA will be able to meet all of its debt obligations.
8
Interchange West / Lyndale Gateway TIF District Update
The Interchange West/Lyndale Gateway TIF District has two components. A portion of the
Lyndale Gateway District was eliminated in 2002 and incorporated into the new Lyndale
Gateway West TIF District for the Cornerstone/Kensington Park Project.
Interchange West Component
The Interchange West component of the Interchange West/Lyndale Gateway District is
comprised of the Best Buy Corporate Headquarters located on the intersection of 1-494 and
Penn Ave. Tax increments are pledged to the Best Buy project to assist with site assembly
activities. A set dollar amount of funds from the Interchange West portion of the District will be
used to fund the Housing and Redevelopment Fund and administrative costs.
First Year of Increment: 2004
Estimated Decertification Date: 2025
Outstanding Obligations:
• $22,190,195 Pay-as-you-go Tax Increment Revenue Note
• $6,355,000 Tax Exempt General Obligation Tax Increment Refunding Bonds, Series
2010B. (These bonds provided for an advance refunding of the $8,350,000 Tax Exempt
General Obligation Tax Increment Bonds of 2001, for a present value savings of
$620,169.)
The Interchange West Component has a cash balance of$1,218,767.
Conclusions:
The HRA will be able to meet all of its debt obligations.
Lyndale Gateway Component
The Lyndale Gateway component is comprised of the Richfield Senior Housing project(Main
Street Village) and the Minnstar Builders, Inc. project(Casteel Place Townhouses). Tax
increment revenue is pledged to the project to assist with site assembly expenses.
In 2002, the HRA loaned Richfield Senior Housing, Inc. $338,251.76 to assist with an
unexpected condemnation award in acquiring a portion of the redevelopment property. The loan
was paid off by the developer in December, 2004.
For the Minnstar Builders project, Casteel Place Townhomes, the Contract for Private
Redevelopment included a"look back"provision that required a review of the developer's costs.
9
To the extent that certain costs would go up or down under the estimate, the associated Pay-as-
you-go Revenue Note would be reduced by a like amount. The "look back"provision analysis
was completed in 2002, which called for a reduction in the Pay-as-you-go Revenue Note from
$100,000 to $19,985.23. The cost savings of this tax increment was then used as additional gap
funding for the Cornerstone/Kensington Park redevelopment project in the Lyndale Gateway
West District.
The last increment payment to Minnstar Builders was February 1, 2005.
First Year of Increment: 2000
Estimated Decertification Date: 2025
Outstanding Obligations:
• $3,300,000 Pay-as-you-go Tax Increment Revenue Note to Richfield Senior Housing
The Lyndale Gateway Component has a cash balance of$796,086.
Conclusions:
The HRA will be able to meet its debt obligation. The HRA is considering using the cash balance
to provide assistance to the redevelopment of the former Lyndale Garden Center site through a
Spending Plan, as authorized by the 2010 Jobs Bill which was extended by the Legislature in
2011.
10
City Bella TIF District Update
The City Bella project is a redevelopment district consisting of a housing project with a retail
component located on Lyndale Ave. and 66th Street. Tax increment revenue is pledged to the
project to assist with property acquisition and site improvement expenses. After the $450,000
loan from the Development Account is paid in full, 15% of the annual tax increment is
contributed to the Housing and Redevelopment Fund for use on TIF eligible expenses.
In 2002, a portion of the Gramercy TIF District was eliminated and incorporated into the City
Bella Project.
The City Bella Project has a$450,000 loan from the Development Account to pay for land
owned by the HRA. This loan will be paid by using the 15% Housing and Redevelopment Fund.
First Year of Increment: 2006
Estimated Decertification Date: 2030
Outstanding Obligations:
• $8,473,470 Pay-as-you-go Tax Increment Revenue Note
The City Bella District has a cash balance of$299,146.
Conclusions:
The HRA will be able to meet its debt obligation.
11
Lyndale Gateway West TIF District Update
The Lyndale Gateway West TIF District is comprised of the Cornerstone (Kensington Park)
mixed-use redevelopment project located on Lyndale Ave. Tax increment revenue is pledged to
the project to assist with site assembly expenses.
A portion of Lyndale Gateway District was eliminated in 2002 and incorporated into the Lyndale
Gateway West TIF District for the Cornerstone Project.
First Year of Increment: 2006
Estimated Decertification Date: 2029
Outstanding Obligations:
• $3,470,000 Taxable General Obligation Tax Increment Bonds of 2003
In addition, the $1,630,000 General Obligation Tax Increment Bonds of 2000, which utilizes the
Candlewood Hotel increment, helped provide a$1,100,000 loan from the ILN District: $600,000
of the loan will be paid back from tax increment and the developer will pay the balance of
$500,000 when the developer refinances the development or in 2012, which ever occurs first.
The interest on the total $1,100,000 will be paid back from tax increment.
Tax increment from the Minnstar Builders townhouse project in the Lyndale Gateway District is
being used to pay obligations related to the Cornerstone project.
The Lyndale Gateway West District has a cash balance of$796,086.
Conclusions:
The HRA will be able to meet its debt obligation.
12
Cedar Corridor TIF District Update
The Cedar Corridor TIF District is a redevelopment district comprised of the commercial/retail
redevelopment in the Airport Noise Impact Area. This area is located along Cedar Ave. and 66th
Street. This District was established in 2006 using Special Legislation from the Laws of
Minnesota 2005, Chapter 152, Article 2, Section 25.
p , ,
First Year of Increment: 2008
Estimated Decertification Date: 2033
Outstanding Obligations: None at this time
The Cedar Corridor District has a cash balance of$6,246.
Conclusions:
The District currently does not have any financial obligations.
13
Decertified Tax Increment Financing Districts
The HRA has decertified five TIF Districts:
• Pre-1999 Richfield Rediscovered TIF District (a scattered site redevelopment district)
was closed as of December 31, 2010.
• Post-1999 Richfield Rediscovered TIF District (a scattered site redevelopment district)
was closed as of December 31, 2010.
• Lyndale-Hub-Nicollet(LHN) District(a redevelopment district)was closed as of
December 31, 2002.
• Cedar Avenue Business Area (CABA) District (an economic development district)
ended in 1996. All of the accounting transactions to close the District were completed by
December 31, 2000.
• Penn Avenue and Sixty-Sixth Street (PASSS) District (a redevelopment district) was
established in 1989 and terminated in 1996 due to a lack of feasible redevelopment
opportunities.
14
Established / Non-Certified Tax Increment Financing Districts
The HRA has two TIF Districts which have been established, but have not been certified. These
Districts could be certified at the time of development on the site(s):
• Housing Tax Increment Financing District 2009-1 (a housing district) on the
Candlewood Outlot, was established to facilitate the development of an accessible,
affordable, 51 unit housing project for very low income (30%AMI) seniors age 62 or
older. The 1.13 acre site is located at 301 77th Street West, also known as the vacant
Candlewood Outlot. The site was purchased by the HRA in 1998 and since that time has
been vacant. This TIF District could be used to provide assistance for any low-to
moderate income housing development,which meets the income requirements for the
TIF assistance.
• 2010-1 Housing TIF District (a housing district) was established to redevelop the
Woodlake Plaza Shopping Center, which is currently a commercial center. The District
includes 2 parcels currently owned by the developer and 1 parcel currently owned by the
HRA. It is proposed that the Lyndale Commons development will consist of 90 units of
rental housing.
Housing Tax Increment Financing District 2009-2(a housing district) on the 0.94 acre, south
portion of the former City garage site was created to facilitate the development of a 15 unit
project for persons with physical disabilities to live independently in the community. A public
hearing was held, but the Council has not adopted the TIF District. To complete the process, the
Council would need to adopt a resolution establishing the TIF District and certify the District.
This TIF District could be used to provide assistance for any low-to moderate income housing
development, which meets the income requirements for the TIF assistance.
15
Housing and Redevelopment Fund
The Housing and Redevelopment Fund is a revenue source comprised of tax increment from the
Gramercy, Urban Village, Interchange West/Lyndale Gateway, and City Bella TIF Districts.
The purpose of the Housing and Redevelopment Fund is to fund a variety of housing needs for
the community, including but not limited to, new construction of single-family homes and town
homes; single-family home renovation and rehabilitation; and apartment rehabilitation.
Currently, a portion of the tax increment revenue from the Gramercy, Urban Village and Lyndale
Gateway/Interchange West TIF District are being transferred to the Housing and Redevelopment
Fund. The Housing and Redevelopment Fund is used to support the New Home Program,
Transformation Housing Program(a deferred loan program), the Kids at Home Program, and the
RR Loan Program.
16
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AGENDA ITEM#: 4
REPORT#: 39
STAFF REPORT
RICHFIELD HOUSING AND REDEVELOPMENT
AUTHORITY MEETING
AUGUST 15, 2011
REPORT PREPARED BY: JULIE URBAN/MICHELLE LEWIS,HOUSING
SPECIALISTS
NAME,TITLE
REPORT PRESENTER: KAREN BARTON, COMMUNITY
DEVELOPMENT ASSISTANT DIRECTOR
NAME,TITLE
ACTING DEPARTMENT DIRECTOR
REVIEW: ifsll*I_. A
ps
REVIEWED BY EXECUTIVE DIRECTOR: n
ITEM FOR HRA CONSIDERATION:
Consideration of approval of resolution accepting contributions for Community Development
events and programs.
I. RECOMMENDED ACTION:
By Motion: Approve the attached resolution allowing the acceptance
of monetary support solicited for Community Development in support
of the 2011 Landscaping Good Neighbor Award.
II. BACKGROUND
Occasionally, donations are received from various agencies, businesses and private
individuals when the Community Development Department has special events or
programs planned. Some of the events are annual and donations are solicited for,
such as the Landscaping Good Neighbor Award. Other donations are made
through programs or grants from agencies for specific areas.
A list of the donations and designated programs for the first half of 2011 is attached.
08152011 RR Credit Guidelines Revision.doc
III. BASIS OF RECOMMENDATION
A. POLICY
• Minnesota Statute 465.03 requires that every acceptance of a grant or
devise of real or personal property on terms prescribed by the donor
be made by resolution.
• The Administrative Services Department issued a memo on
November 9, 2004 requiring that all grants and restricted donations to
departments be received by resolution and passed in accordance with
Minnesota Statute 465.03.
B. CRITICAL TIMING ISSUES
• Donations have been received and applied to the designated areas as
indicated by the donors.
C. FINANCIAL
• Financial donations have been deposited in the funds supporting the
designated programs.
D. LEGAL
• N/A.
IV. ALTERNATIVE RECOMMENDATION(S)
• Monetary donations would have to be returned to the
agency/business/individuals if the Housing and Redevelopment Authority
(HRA) does not adopt the resolution.
V. ATTACHMENTS
• Resolution approving acceptance of donations.
• List of donations and specified areas for the donation to be applied.
VI. PRINCIPAL PARTIES EXPECTED AT MEETING
• N/A
RESOLUTION NO.
RESOLUTION AUTHORIZING RICHFIELD COMMUNITY DEVELOPMENT
DEPARTMENT TO ACCEPT DONATIONS FROM THE LISTED BUSINESSES FOR
DESIGNATED USES
WHEREAS, the Community Development Department, received checks and gift
cards from the following for the Landscaping Good Neighbor Award;
Richfield Bloomington Credit Union
Bachman's
Linder's Garden Center
Wagner's Greenhouses
and,
WHEREAS, Minnesota Statute requires every acceptance of a grant or devise of
real or personal property on terms prescribed by the donor be made by resolution; and,
WHEREAS, the donated funds will be used towards the designated events
sponsored by Richfield Community Development Department.
NOW, THEREFORE, BE IT RESOLVED that the Director of Community
Development will accept and distribute the donations as specified.
Adopted by the Housing and Redevelopment Authority in and for the City of
Richfield, Minnesota this 15th day of August 2011.
Suzanne M. Sandahl, Chairperson
ATTEST:
Joan Helmberger, Secretary
08152011 RR Credit Guidelines Revision.doc
CHECKS OR GIFT CARDS RECEIVED
2011
BUSINESS NAME AMOUNT DESIGNATION
Richfield/Bloomington $ 180 Landscaping Good Neighbor
Credit Union Award
Bachman's $ Landscaping Good Neighbor
(6-$25 Gift Cards) Award
Linder's $ 180 Landscaping Good Neighbor
(6-$30 Gift Cards) Award
Wagner's Greenhouses $ 150 Landscaping Good Neighbor
(6-$25 Gift Cards) Award
TOTAL $ 660
AGENDA ITEM#: 5
REPORT#: 40
IMAM STAFF REPORT
RICHFIELD HOUSING AND REDEVELOPMENT
AUTHORITY MEETING
AUGUST 15, 2011
REPORT PREPARED BY: KAREN BARTON, ASSISTANT COMMUNITY
DEVELOPMENT DIRECTOR
NAME,TITLE
REPORT PRESENTER: KAREN BARTON, ASSISTANT COMMUNITY
DEVELOPMENT DIRECTOR
NAME,TITLE
Al
DEPARTMENT DIRECTOR REVIEW: El 40,7ati
/J.,Vy/Iii■
REVIEWED BY EXECUTIVE DIRECTOR:
4r °Fr /or .,., •114
ITEM FOR HRA CONSIDERATION:
Consideration of (i) a business subsidy not to exceed $650,000; and (ii) business subsidy
agreement with Lyndale Gardens, LLC; and a funding agreement with Lyndale Gardens, LLC.
I. RECOMMENDED ACTION:
By Motion: 1) Conduct a public hearing regarding granting a
business subsidy to Lyndale Gardens, LLC in an amount not to
exceed $650,000; and 2) Consider the adoption of a Resolution
granting a business subsidy in an amount not to exceed $650,000,
approving a business subsidy agreement with Lyndale Gardens, LLC
and approving a funding agreement with Lyndale Gardens, LLC for
the acquisition and redevelopment of 6400 Lyndale Avenue South.
II. BACKGROUND
Lyndale Gardens, LLC (Developer) is requesting assistance from the Housing and
Redevelopment Authority (HRA) in the amount of $650,000 to facilitate the
acquisition and rehabilitation of the former Lyndale Garden Center property for
redevelopment into a mixed commercial/retail/housing development.
08152011 Approval of Business Subsidy to Lyndale Gardens LLC
The Developer has been working with a local non-profit planning agency, Local
Initiatives Support Corporation (LISC), to develop an overall vision for the
redevelopment through a series of public planning workshops.
The Developer is scheduled to close on the Lyndale Garden Center property in
early September of this year at a purchase price of $3,100,000. They have secured
a loan from Hennepin County in the amount of $850,000 and are seeking additional
financing of$2,100,000 through LISC. The Developer has identified a financing gap
of$1,000,000 for acquisition of the property and the first phase of development,
which includes substantial rehabilitation of the existing garden center building and
environmental remediation. They are seeking assistance of$650,000 from the HRA
to offset this gap. The Developer has also requested tax increment assistance for
future phases of the project. The HRA will be considering approval of the tax
increment plan at its meeting today and will be presented with a contract for private
development later this year.
At its meeting on July 25, 2011 the HRA approved a spending plan for the Lyndale
Gateway and Interchange TIF Districts in accordance with the Temporary TIF
Authority Act (the "Spending Plan") to utilize existing tax increment revenues from
the TIF Districts in order to stimulate construction or rehabilitation of private
development in a way that will also create or retain jobs. On August 9, 2011 the
City Council held a public hearing regarding the Spending Plan and approved the
Spending Plan.
Providing the requested assistance to the Developer for the first phase of the
project pursuant to the Funding Agreement and the Business Subsidy Agreement is
an eligible use of the excess tax increment available for use under the approved
Spending Plan.
III. BASIS OF RECOMMENDATION
A. POLICY
• Minnesota Statutes, Section 469.176, Subd. 4m, (the "temporary TIF
Authority Act") authorizes the HRA to spend available tax increment
from any existing tax increment financing district to provide assistance
in any form to private development consisting of construction or
substantial rehabilitation of buildings and ancillary facilities provided:
o Such assistance will create or retain jobs in the State of
Minnesota, including construction jobs;
o Construction commences before July 1, 2012 for private
commercial development;
o The construction would not have commenced before that
date without the assistance;
o Tax increments under the spending plan are spent by
December 31, 2012; and
o The City Council approves a written spending plan after
conducting a duly noticed public hearing that specifically
authorizes the HRA to take such actions
08152011 Approval of Business Subsidy to Lyndale Gardens LLC
B. CRITICAL TIMING ISSUES
• The Developer is scheduled to close on the property on September 5,
2011.
C. FINANCIAL
• A total of$951,445 in excess tax increment has been identified and is
eligible for the proposed uses under the Spending Plan.
• The Developer is seeking $650,000 to aid in the acquisition and
rehabilitation of the former Lyndale Garden Center.
D. LEGAL
• The HRA attorney drafted both the Business Subsidy Agreement and
the Funding Agreement
IV. ALTERNATIVE RECOMMENDATIONS)
• Do not approve the business subsidy agreement and the funding agreement.
V. ATTACHMENTS
• Resolution
• Business Subsidy Agreement
• Funding Agreement
VI. PRINCIPAL PARTIES EXPECTED AT MEETING
• Representatives of Lyndale Gardens LLC
• Julie Eddington, Kennedy and Graven
08152011 Approval of Business Subsidy to Lyndale Gardens LLC
s-I
RESOLUTION NO.
RESOLUTION APPROVING A FUNDING AGREEMENT
AND A BUSINESS SUBSIDY AGREEMENT
WHEREAS, the Housing and Redevelopment Authority in and for the City of Richfield
(the "Authority") and the City of Richfield (the "City") have previously established the
Interchange Tax Increment Financing District and the Lyndale Gateway Tax Increment
Financing District (collectively, the "TIF Districts") within the Richfield Redevelopment Project
Area and adopted tax increment financing plans therefor, pursuant to Minnesota Statutes,
Sections 469.001 to 469.047, as amended, and Sections 469.174 to 469.1799, as amended; and
WHEREAS, Minnesota Statutes, Section 469.176, Subd. 4m, (the "Temporary TIF
Authority Act") authorizes the Authority to spend available tax increment from any existing tax
increment financing district, notwithstanding any other law to the contrary, to provide
improvements, loans, interest rate subsidies, or assistance in any form to private development
consisting of construction or substantial rehabilitation of buildings and ancillary facilities, if
certain conditions are met; and
WHEREAS, at its meeting on July 25, 2011, the Authority approved a spending plan for
the TIF Districts in accordance with the Temporary TIF Authority Act (the "Spending Plan") to
utilize existing tax increment revenues from the TIF Districts in order to stimulate construction
or rehabilitation of private development in a way that will also create or retain jobs; and
WHEREAS, on August 9, 2011, the City Council of the City held a public hearing
regarding the Spending Plan and approved the Spending Plan; and
WHEREAS, the assistance authorized under the Spending Plan expressly includes, but is
not limited to, assistance to Lyndale Gardens, LLC, a Minnesota limited liability company (the
"Developer") to finance the costs of redeveloping the Lyndale Garden Center, located at 6400
Lyndale Avenue South in the City, which costs shall include the acquisition of the property, the
remediation of environmental contaminants and the substantial rehabilitation of the existing
building so that it is suitable for commercial use (the "Project"); and
WHEREAS, the Board of the Authority has been presented with a Funding Agreement,
between the Authority and the Developer (the "Funding Agreement"), pursuant to which the
Authority will provide $650,000 of the funds available under the Spending Plan to the Developer
to complete the Project under certain terms and conditions; and
WHEREAS, the Authority Board has on this date held a public hearing regarding the
business subsidy provided to the Developer pursuant to the Funding Agreement, pursuant to
Minnesota Statutes, Sections 116J.993 to 116J.995 (the"Business Subsidy Act"); and
390106v1 JAE RC125-316
WHEREAS, the the Board of the Authority has been presented with a Business Subsidy
Agreement, between the Authority and the Developer (the "Business Subsidy Agreement"),
which sets forth the terms and conditions of the business subsidy provided to the Developer
pursuant to the Funding Agreement; and
WHEREAS, the Authority has reviewed the Funding Agreement and the Business Subsidy
Agreement and finds that the execution of the same and the Authority's performance of its
obligations thereunder are in the best interest of the City and its residents; and
NOW, THEREFORE, BE IT RESOLVED, by the Housing and Redevelopment
Authority in and for the City of Richfield, Minnesota as follows:
1. The Funding Agreement presented to the Authority and on file with the Community
Development Director is hereby in all respects approved, subject to modifications that do not alter
the substance of the transaction and that are approved by the Chairperson and Executive Director;
provided that execution of such document by such officials shall be conclusive evidence of
approval.
2. The Business Subsidy Agreement presented to the Authority and on file with the
Community Development Director is hereby in all respects approved, subject to modifications that
do not alter the substance of the transaction and that are approved by the Chairperson and Executive
Director; provided that execution of such document by such officials shall be conclusive evidence
of approval.
3. The Chairperson and Executive Director are hereby authorized to execute the
Funding Agreement and the Business Subsidy Agreement on behalf of the Authority and to carry
out on behalf of the Authority the Authority's obligations thereunder.
Adopted by the Housing and Redevelopment Authority in and for the City of Richfield,
Minnesota this 15th day of August, 2011.
Suzanne M. Sandahl, Chair
ATTEST:
Joan Helmberger, Secretary
2
390106v1 JAE RC125-316
s-3
Draft
August 5,2011
BUSINESS SUBSIDY AGREEMENT
THIS BUSINESS SUBSIDY AGREEMENT, made and entered as of the day of
, 2011 (the "Agreement"), by and between the Housing and Redevelopment Authority in
and for the City of Richfield, Minnesota, a Minnesota public body corporate and politic (the
"Authority") and Lyndale Gardens, LLC, a Minnesota limited liability company(the"Developer").
RECITALS
WHEREAS, pursuant to Minn. Stat. Section 469.176, subd. 4c, the Authority is
authorized to spend available tax increment from any existing tax increment financing district,
notwithstanding any other law to the contrary, to provide improvements, loans, interest rate
subsidies, or assistance in any form to private development consisting of construction or
substantial rehabilitation of buildings and ancillary facilities, if the following conditions exist:
(i) such assistance will create or retain jobs in the State of Minnesota, including construction
jobs; (ii) construction commences before July 1, 2012; (iii) the construction would not have
commenced before that date without the assistance; (iv) the City Council approves a written
spending plan (after a duly noticed public hearing) that specifically authorizes the HRA to take
such actions; and (v) the tax increments authorized under the Spending Plan are spent by
December 31, 2012; and
WHEREAS, on July 25, 2011, the Board of the Authority approved a spending plan
spending plan (the "Spending Plan") which authorizes the Authority to expend current cash
balances on hand from two tax increment districts pursuant to Minn. Stat. Section 469.176, subd.
4c;
WHEREAS, on August 9, 2011, the City Council of the City of Richfield (the "City")
held a duly noticed public hearing and approved the Spending Plan; and
WHEREAS, the Developer has requested assistance under the Spending Plan in the
amount of$650,000 in order to finance the acquisition and redevelopment of the Lyndale Garden
Center, located at 6430-6400 Lyndale Avenue South in the City and legally described in the
attached Exhibit A (the "Development Property"), and such redevelopment will include the
remediation of environmental contaminants and the substantial rehabilitation of the existing
building so that it is suitable for commercial use (the "Project"); and
WHEREAS, the Authority has determined that the requested assistance may constitute a
"business subsidy" within the meaning of Minnesota Statutes, Section 116J.993 through
116J.995 (the "Business Subsidy Act"); and
WHEREAS, the Authority has adopted criteria for awarding business subsidies in
accordance with the Business Subsidy Act, and has determined that the assistance described in
this Agreement is consistent with those criteria; and
389371v2 JAE RC125-316 1
S-tl
WHEREAS, the Board of the Authority has approved this Agreement as a subsidy
agreement under the Business Subsidy Act, after a duly noticed public hearing held on
July 25, 2011; and
WHEREAS, on August 15, 2011, the Board of the Authority held a duly noticed public
hearing and approved this Agreement as a subsidy agreement under the Business Subsidy Act;
and
WHEREAS, on August 15, 2011, the Board of the Authority also approved a Funding
Agreement (the "Funding Agreement"), between the Authority and the Developer, which
provides the terms and conditions for a grant to the Developer in the amount of$335,000 and a
forgivable loan to the Developer in the amount of$315,000 to help finance a portion of the costs
of the Project; and
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:
1. General Terms. The parties agree and represent to each other as follows:
(a) The subsidy provided by the Authority to the Developer consists of the grant
provided under the Funding Agreement in the amount of$335,000 and the forgivable loan provided
under the Funding Agreement in the amount of$315,000.
(b) The public purpose of the subsidy is to promote the substantial rehabilitation of a
blighted building located in the City, encourage further redevelopment in the area of the
Development Property, and to increase tax base within the City.
(c) The goals for the subsidy are to (i) secure completion of the Project; (ii) ensure that
the Project is operated for at least five years as described in clause (f) below; and (iii) remedy the
blight on the Development Property.
(d) If the goals described in clause (c) are not met, the Developer must make the
payments to the Authority described in Section 3 hereof.
(e) The subsidy is needed because the costs of completing the Project are financially
infeasible without public assistance.
(f) The Developer must continue or cause to be continued operation of the Project as a
commercial facility for at least five years after the Benefit Date. For purposes of this Section,
"Benefit Date" means the earlier of (i) the date the improvements to the Development Property
referred to herein as the Project are completed or (ii) the date a business occupies the Project. For
purposes of this Section, the Project will be considered operated as a commercial facility as long as
any portion of the Project is operated by the Developer or any permitted successors and assigns,
or a tenant thereof, for commercial purposes. During any period when the Project is vacant and
not operated for commercial purposes, the Project will not constitute a commercial facility;
389371v2 JAE RC125-316 2
5-5
provided that the Project will be considered a commercial facility if Developer is using best
efforts to lease the Project for commercial purposes.
(g) The Developer must maintain commercially reasonable insurance coverage on the
Project, including without limitation insurance against loss and/or damage to the Project and
comprehensive general public liability insurance. The Developer agrees to notify the Authority
immediately in the case of damage exceeding $100,000 in amount to, or destruction of, the Project
or any portion thereof resulting from fire or other casualty. In such event the Developer will
forthwith repair, reconstruct, and restore the Project 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 Project, regardless of whether the net proceeds of insurance received by the
Developer for such purposes are sufficient to pay for the same, provided that if Developer delivers
evidence that such repair is financially infeasible or that the holder of any mortgage on the Project
withholds consent to such repair, the Authority shall waive this requirement. Any net proceeds
remaining after completion of such repairs, construction, and restoration shall be the property of the
Developer.
(h) The Developer does not have a parent corporation.
(i) The Developer expects to receive the following financial assistance from other
"grantors" as defined in the Business Subsidy Act, in connection with the Project: $850,000 from
Hennepin County's Transit Oriented Loan Program; up to $3,000,000 in tax increment financing
from the Authority; $100,000 from Metropolitan Council's Livable Communities Demonstration
Account Predevelopment Grant Program; and $38,100 from the Department of Employment and
Economic Development for environmental investigation.
2. Job and Wage Goals. In accordance with Section 116J.994, subdivision 4, the
Authority has determined after a public hearing that the creation or retention of jobs is not the goal
of the business subsidy provided under this Agreement. Accordingly,the wage and job goals are set
at zero.
3. Remedies. If the Developer fails to meet the goals described in Section 1(c), the
Developer shall repay to the Authority upon written demand from the Authority(a)the total amount
of the subsidy described in Section 1(a) hereof; and (b) interest on the amounts in clause (a) at the
rate set forth in the Business Subsidy Act, accrued from the Benefit Date to the date of the default.
If the Project is timely completed but the Developer fails to meet the five-year operation goal, the
total subsidy to be repaid will be prorated by the portion of the five-year operation period elapsed as
of the date of default.
Developer agrees and understands that it may not receive a business subsidy from the
Authority or any grantor(as defined in the Business Subsidy Act) for a period of five years from the
date of the failure or until the Developer satisfies its repayment obligation under this Section,
whichever occurs first.
389371v2 JAE RC125-316 3
5-'O
4. Reports. Developer must submit to the Authority a written report regarding business
subsidy goals and results by no later than March 1 of each year, commencing March 1, 2012 and
continuing until the later of (a) the date the goals stated Section 1(c) are met; (b) 30 days after
expiration of the five-year period described in Section 1(f) or (c) if the goals are not met, the date
the subsidy is repaid in accordance with Section 3. The report must comply with Section 116J.994,
subdivision 7 of the Business Subsidy Act. The Authority will provide information to the
Developer regarding the required forms. If Developer fails to timely file any report required under
this Section, the Authority will mail the Developer a warning within one week after the required
filing date. If, after 14 days of the postmarked date of the warning, the Developer fails to provide a
report, the Developer must pay to the Authority a penalty of$100 for each subsequent day until the
report is filed. Failure by the Authority to deliver a timely warning notice will not relieve the
Developer's obligation to pay a penalty within 14 days after receipt of a notice to pay. The
maximum aggregate penalty payable under this Section is $1,000.
5. Relation to Funding Agreement. This Agreement supplements the Funding
Agreement. In the event of any conflict between this Agreement and the Funding Agreement,
this Agreement controls.
6. Potential Exception from Business Subsidy Act. The Project is a part of a larger
multi-phased development for which the Developer is in the process of completing its
development planning and financing plans. Pursuant to Section 116J.993, subd. 3(17) of the
Business Subsidy Act, assistance for redevelopment will not be considered a business subsidy
when the recipient's investment in the purchase of the site and in site preparation (not including
any costs reimbursed with tax increment or grants) is 70% or more of the assessor's current year's
estimated market value. The Authority may in the future determine that the Developer has met
this redevelopment exception to the Business Subsidy Act and may determine, in its sole
discretion,to terminate this Agreement.
7. 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 it if is dispatched by registered or certified mail,
postage prepaid, return receipt requested, or delivered personally:
As to the Authority: Richfield Housing and Redevelopment Authority
6700 Portland Ave.
Richfield, MN 55423
Attention: Executive Director
With Copy to: Kennedy & Graven
470 U.S. Bank Plaza
Minneapolis, MN 55402
Attention: John Dean
38937Iv2 JAE RC125-316 4
As to the Developer: Lyndale Gardens, LLC
7610 Lyndale Ave South
Suite 200
Richfield, MN 55423
Attention: Colleen Carey
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.
8. Counterparts. This Agreement may be simultaneously executed in any number of
counterparts, all of which shall constitute one and the same instrument.
(Remainder of Page Intentionally Left Blank.)
389371v2 JAE RC125-316 5
5_g
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
389371v2 JAE RC125-316 6
5-9
LYNDALE GARDENS, LLC
By:
Its:
STATE OF MINNESOTA )
) SS.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this , 2011, by
the , on behalf of the
Notary Public
389371v2 JAE RC125-316 7
5-- !v
EXHIBIT A
DEVELOPMENT PROPERTY LEGAL DESCRIPTION
389371v2 JAE RC125-316 A_1
DRAFT
8/5/11
FUNDING AGREEMENT
THIS AGREEMENT, made and entered into as of the day of , 2011 by
and between, the Housing and Redevelopment Authority in and for the City of Richfield,
Minnesota, a Minnesota public body corporate and politic (the "Authority") and Lyndale
Gardens, LLC, a Minnesota limited liability company (the "Developer").
BACKGROUND
1.01. On August 9, 2011, the Richfield City Council approved a spending plan (the
"Spending Plan") which authorizes the Authority to expend current cash balances on hand from
two tax increment district for activities which will generate jobs and which are commenced not
later than July 1, 2012. One of the potential uses of the spending plan monies is the acquisition
and substantial rehabilitation of the Lyndale Garden Center.
1.02. On July 25, 2011, the Board of the Authority approved the establishment of the
Lyndale Gardens Tax Increment Financing District. On August 15, 2011 the Authority took two
separate actions with regard to the Lyndale Garden Center:
(a) approved a Business Subsidy Agreement for the expenditure of up to $650,000
subject to the terms of the Business Subsidy Agreement, and of this Funding
Agreement; and
(b) approved and authorized the execution of this Funding Agreement providing for
the expenditure of up to $650,000 subject to the terms and conditions contained
herein and in the Business Subsidy Agreement.
1.03. The Developer intends to purchase the Garden Center property, which property is
located at 6430-6400 Lyndale Avenue South and legally described in the attached Schedule B,
and to commence substantial rehabilitation activities, as described in the attached Schedule A, on
the property following purchase.
1.04. The Developer has requested the Authority provide funding in the amount of not
to exceed $650,000 to assist it in such activities.
1.05. The Authority is willing to agree with the Developer's request and provide such
funding in accordance with the terms herein.
389198v5 JBD RC125-316
1
t2-
RECITALS
NOW THEREFORE, in consideration of the mutual covenants and undertaking and
understandings of the parties, the sufficiency of which is hereby acknowledged, the parties agree
as follows:
2.01 Authority Funding of Certain Activities. The Authority agrees to provide funds to
the Developer up to $650,000 to assist the Developer in the acquisition and substantial
rehabilitation of the Garden Center property. The funds will be provided to Developer at the
closing on Developer's purchase of the Garden Center property upon the Authority being
reasonably satisfied, based on assurances from the Developer, that: (i) the Developer has
sufficient additional funds, including Developer equity, to pay the full purchase price for the
Garden Center parcel; (ii) the Developer has or will obtain sufficient funds, including Developer
equity, to pay the cost of the rehabilitation activities described on the attached Schedule A, and
has or will enter into contracts providing for such work; (iii) the rehabilitation activities will
create or retain jobs in the state, including construction jobs; (iv) construction will commence
before July 1, 2012, and would not have commenced before that date without the assistance; (v)
the funds will be expended for acquisition or rehabilitation activities prior to December 31, 2012
(a closing statement showing that at least $650,000 was paid at closing for the purchase of the
Garden Center parcel will satisfy that requirement); (vi) the parties have entered into a Business
Subsidy Agreement pertaining to this assistance; and (vii)the jobs described in Section 2.09 will
be created during the completion of the rehabilitation activities described in Schedule A.
2.02 Source of Assistance. The funds provided hereunder are from the sources
identified in the Spending Plan approved by the City Council on August 9, 2011 and from no
other source. Neither the City nor the Authority shall have any obligation to provide funds
beyond the amounts available under the Spending Plan.
2.03 Form of Assistance. The Assistance will•be in two forms:
(a) a loan in the principal amount of $315,000
(b) a grant in the amount of$335,000
2.04 Loan. The loan is at the annual interest rate of 5%, commencing on the date that
funds are advanced. The full principal amount of the loan and accrued interest will be due and
payable on September 1, 2014 unless earlier accelerated by default of the Developer, or released.
2.05 Loan, Release. The loan will be released and forever discharged at any time prior
to September 1, 2014, upon: (i) the Developer providing the Authority with sufficient evidence
that the rehabilitation activities described in Schedule A have been completed as certified by the
Richfield Building Official; (ii) the parties having entered into a contract for private
redevelopment providing for the redevelopment of the Garden Center property and possibly
adjacent lands, and for the use of tax increment to assist in the payment of qualifying activities;
and (iii) the Developer providing the Authority with written evidence, in the form of a certificate
from the construction manager of the rehabilitation activities, that the jobs described in Section
2.09 were created. Upon satisfaction of these requirements, the Authority will provide the
389198v5 JBD RC125-316
2
Developer with an instrument in recordable form discharging and releasing any mortgage
described in Section 2.06 below.
2.06 Loan, Security. The loan will be secured by a mortgage in substantially the form
of the attached Schedule B. The mortgage will be initially recorded by the Developer against the
Garden Center property. Upon the acquisition by Developer of the separate parcel located at
6330 Lyndale Avenue South, the mortgage will be recorded by the Developer against said parcel,
and released as to the Garden Center property.
2.07 Security, Subordination. The Authority acknowledges that the mortgage on the
Garden Center property will be subordinate of the lien of others who are providing assistance for
the purchase of the Garden Center property. The Authority mortgage on the 6330 Lyndale
Avenue South property will be and remain prior to all other mortgages, unless the Authority
agrees, in its sole discretion, to subordinate. Provided, that the Authority agrees to subordinate
its lien on the 6330 Lyndale Avenue South property to the lien for construction financing if the
Developer represents to the Authority that such subordination will: (i) result in the funding of a
construction loan for construction on the 6330 Lyndale Avenue South property; (ii) such
construction will occur; and the improvements to be constructed are consistent with those
envisioned in the tax increment plan.
2.08 Relationship to Business Subsidy Agreement. Neither the characterization of a
portion of the assistance as a grant, nor the release and discharge of the loan shall modify or
relieve Developer of any obligations created under the Business Subsidy Agreement with respect
to repayment of the subsidy for failure to comply with the requirements of that agreement.
2.09 Job Creation Requirement. The Developer has agreed to cause the creation of at
least 25 new full-time equivalent construction jobs at the Lyndale Garden Center site
(representing jobs that would not otherwise exist elsewhere in Minnesota, or would not be
retained in Minnesota).
ADDITIONAL PROVISIONS
3.01 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.
3.02 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
389198v5 JBD RC125-316
3
S
Agreement it will comply with all applicable federal, state and local equal employment and non-
discrimination laws and regulations.
3.03 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.
3.04 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; 7610 Lyndale Avenue, Richfield, MN 55423, Attn: Colleen Carey
(b) in the case of the Authority, is addressed to or delivered personally to the
Authority at 6700 Portland Avenue South, Richfield, MN 55423,
Attn: Community Development Director;
or at such other address with respect to either such party as that party may, from
time to time, designate in writing and forward to the other as provided in this
Section.
3.05 Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall constitute one and the same instrument.
3.06 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.)
389198v5 JBD RC125-316
4
- IS
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
389198v5 JBD RC125-316
S-1
S-14
LYNDALE GARDENS, LLC.
By:
Its:
STATE OF MINNESOTA )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this , 2011, by
, the , on behalf of the
Notary Public
389198v5 JBD RC125-316
S-2
SCHEDULE A
SUBSTANTIAL REHABILITATION ACTIVITIES
• Repair or Re-roof building
• Repair exterior aluminum doors
• Replace broken/missing glass at greenhouse &building exterior
• Provide temp. electric service &temp lighting
• Clean& seal coat, & stripe parking lot
• Tuckpoint masonry as needed
• Replace deteriorated masonry as needed
• Infill existing steel roof openings
• Remove and replace roof deck as needed
• Replace existing overhead doors with new overhead doors
• Replace glass at interior frames
• Paint exposed structure
• Paint over graffiti (inside & out)
• Add restroom facilities
• Refurbish existing fire sprinkler system
• Install HVAC system at building&heaters in greenhouse
• Install electrical requirement for HVAC system
• Provide temporary electrical service
389198v5 JBD RC125-316
A-1
S- t8
SCHEDULE B
MORTGAGE
P. O. Box 198
Kennedy&Graven
This Indenture made this day of , 2011, between LYNDALE
GARDENS, LLC, a Minnesota limited liability company, Mortgagor, and THE
HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF
RICHFIELD, MINNESOTA, a Minnesota public body corporate and politic under the
laws of the State of Minnesota, Mortgagee.
Witnesseth: That the said Mortgagor, in consideration of the sum of One ($1.00) Dollar
and other good, valuable and sufficient consideration, the receipt whereof is hereby
acknowledged, does hereby Grant, Bargain, Sell, and Convey unto the said Mortgagee, its
successors and assigns, Forever, all the tracts or parcels of land lying and being in the
County of Hennepin and State of Minnesota, described as follows,to-wit:
The separate tracts and parcels of land described
in the attached Exhibit A. (The "Property")
To Have and to Hold the Same, Together with the hereditaments and appurtenances
thereto belonging to the said Mortgagee, its successors and assigns, forever. And the said
Mortgagor, for itself, and its successors and assigns, does covenant with the said Mortgagee,
its successors and assigns, as follows: That it is lawfully seized of said premises and has
good right to sell and convey the same; that the same are free from all encumbrances, save
and except reservations, restrictions and easements of record; that the Mortgagee, its
successors and assigns, shall quietly enjoy and possess the same; and that the Mortgagor
will Warrant and Defend the title to the same against all lawful claims not hereinbefore
specifically excepted.
Provided, Nevertheless, That if said Mortgagor, its successors and assigns, shall keep and
perform each and every one of its obligations under and pursuant to Section 2.05 of that
certain Funding Agreement dated as of , 2011 (the "Contract"), made and
entered into between Mortgagor and Mortgagee, and shall keep and perform all the
covenants and agreements herein contained, then this deed to be null and void, and to be
released at the Mortgagor's expense. This Mortgage secures a principal debt in the amount
of Dollars ($ )payable by Mortgagor to Mortgagee under the
terms of the Contract, and amendments thereto,between Mortgagor and Mortgagee.
And the Mortgagor, for itself, and its successors and assigns, does hereby covenant and
agree with the Mortgagee, its successors and assigns, to perform its obligations as above
specified, to pay all taxes and assessments now due or that may hereafter become liens
against said premises at least ten(10) days before penalty attaches thereto; to pay, when due,
389198v5 JBD RC125-316
B-1
both principal and interest of all prior liens or encumbrances, and to keep said premises free
and clear of all other liens or encumbrances; to commit or permit no waste on said premises
and to keep them in good repair; to complete forthwith any improvements which may
hereafter be under course of construction thereon, and to pay any other expenses and
attorneys' fees incurred by said Mortgagee, its successors or assigns, by reason of litigation
with any third party for the protection of the lien of this Mortgage.
That Mortgagor, does further covenant and agree that if any lien for labor, skill or material
shall be filed for record during the life of this Mortgage,upon or against the premises hereby
mortgaged, the said Mortgagor will, within thirty (30) days after the date of its filing for
record, either pay off the said lien and secure its satisfaction of record, or will protect the
Mortgagee against any loss or damage growing out of its enforcement, by furnishing a bond
for the same amount in the form and with the sureties to be approved by the Mortgagee.
In case of failure to pay said taxes and assessments, prior liens or encumbrances, expenses
and attorneys' fees as above specified, or to insure said buildings and deliver the policies as
aforesaid, the Mortgagee, its successors or assigns, may pay such taxes, assessments, prior
liens, expenses and attorneys' fees and interest thereon, or effect such insurance, and the
sums so paid shall bear interest at the highest rate permitted by law from the date of such
payment, shall be impressed as an additional lien upon said premises, and be immediately
due and payable from the Mortgagor, its successors or assigns, to said Mortgagee, it
successors or assigns, and this Mortgage shall from date thereof secure the repayment of
such advance with interest.
In case of default in any of the foregoing covenants, the Mortgagor confers upon the
Mortgagee the option of declaring a default and hereby authorizes and empowers said
Mortgagee, its successors and assigns, to foreclose this Mortgage by judicial proceedings or
to sell said premises at public auction and convey the same to the purchaser in fee simple in
accordance with the statute, and out of the money arising from such sail to retain all sums
secured hereby, with interest and all legal costs and charges of such foreclosure and the
maximum attorneys' fee permitted by law, which costs, charges and fees the Mortgagor
herein agrees to pay.
389198v5 JBD RC125-316
B-2
_610
In Testimony Whereof,the said Mortgagor has hereunto set its hand the day and year first
above written.
Lyndale Gardens,LLC
By:
Colleen Carey
Its: Chief Manager
STATE OF MINNESOTA )
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this day of
, 2011, by Colleen Carey, the Chief Manager of Lyndale Gardens, LLC, a
Minnesota limited liability company, on behalf of the company.
(Notary Stamp or Seal) Notary Public
This Instrument was drafted by:
Kennedy& Graven, Chartered
470 U.S. Bank Plaza
200 South Sixth Street
Minneapolis, MN 55402
(612) 337-9300
389198v5 JBD RC125-316
B-3
S
EXHIBIT A TO MORTGAGE
LEGAL DESCRIPTION
[To be added prior to execution]
389198v5 JBD RC125-316
B-4
AGENDA ITEM#: 6
REPORT#: 41
MAIN STAFF REPORT
RICHFIELD HOUSING AND REDEVELOPMENT
AUTHORITY MEETING
AUGUST 15, 2011
REPORT PREPARED BY: JOHN STARK, COMMUNITY DEVELOPMENT
DIRECTOR
NAME,TITLE
REPORT PRESENTER: JOHN STARK, COMMUNITY DEVELOPMENT
DIRECTOR
NAME,TITLE
DEPARTMENT DIRECTOR REVIEW: E 07,44\
;
, i o
REVIEWED BY EXECUTIVE DIRECTOR: ,rii
A� a �.. .
ITEM FOR BRA CONSIDERATION:
Consideration of a Resolution Adopting a Modification to the Redevelopment Plan for the
Richfield Redevelopment Project Area and Adopting an Amended and Restated Tax Increment
Financing Plan for the 2010-1 Housing Tax Increment Financing District (Woodlake Housing).
I. RECOMMENDED ACTION:
By Motion: Approve a Resolution adopting a Modification to the
Redevelopment Plan for the Richfield Redevelopment Project Area
and Adopting an' Amended and Restated Tax Increment Financing
Plan for the 2010-1 Housing Tax Increment Financing District
(Woodlake Housing).
II. BACKGROUND
On April 19, 2010 the Richfield Housing and Redevelopment Authority (HRA)
approved the establishment of a Housing Tax Increment Financing (TIF) District for
the development of the Woodlake Apartments project. This action was taken after
numerous presentations from the Developers (Terry McNellis, Mary McNellis and
Michael Swenson of Woodlake Richfield Apartments, LLC) to the Planning
Commission, HRA and City Council.
The basic development concept remains the same as it was last presented to the
HRA. The project entails the demolition of the existing 25,000 sq. ft. multi-tenant
retail building and the construction of mid-to-upper level rental housing with 20% of
that housing meeting state standards as "affordable" to households earning at or
below 50% of the area median income. There have been, however, a few revisions
to the site and building plans.
The revised proposal increases the overall value of the project by creating units that
will rent at a higher rate than the previous plan. Unit sizes throughout the project
have increased by approximately 15-20 percent per unit and the interior amenities
of the project have been improved. The community and fitness rooms are over 200
percent larger, interior finishes have been improved and offices and a business
center added. The revised proposal increases the unit count from 90 to 94 and
includes 5 studios (-2), 50 one-bedroom units (+14), 30 two-bedroom units (-7) and
9 three-bedroom units (-1). The increase in unit size has increased the building
area of the project by approximately 20,000 square feet. The revision also includes
a significant expansion of the below-grade parking garage. This has allowed for a
net increase of 17 additional parking spaces. The overall increase in the project
value will also allow for better exterior finishes. The entire exterior is brick, cement
board or metal panel. Previously, the project included large areas of vinyl siding, all
of which has been removed.
In addition to physical changes to the development proposal, the Developer has
also changed the manner in which they will be financing the project and, as a result,
the method and amount of public financing being sought. The Developer is now
finalizing its private financing, which includes tax-exempt bonds proposed to be
issued by the City in the amount of up to $15,000,000.
At the time the TIF District was approved, it was expected that the tax increment
generated by the TIF District would be used to reimburse the HRA for up to $85,000
for land to be conveyed to the Developer and to pay principal and interest on a pay-
as-you-go note in the amount of$822,000 (net present value) issued to reimburse
Woodlake Richfield Apartments, LLC (Developer) for site acquisition and site
improvement costs.
In working with its Lender, the Developer has determined that property taxes
payable for the Project, if higher than originally anticipated due to the project
improvements, may lead to a funding gap for the Project. The Developer has
requested additional tax increment assistance in the form of a second pay-as-you-
go note ("B Note") issued in the amount of $500,000 but payable only if the
Developer pays real estate taxes for the Project in the amount of more than
$144,000 in any calendar year. Payment of the B Note would not decrease the
amount of payment that the HRA would receive (either for its property or for
payment towards administrative costs). In order to allow for this request, the HRA
staff and consultants have worked to amend and restate the Tax Increment Plan to
include a second pay-as-you-go note in the TIF Plan's budget. Pursuant to
Minnesota State Statute, a change in the TIF Plan's budget requires another public
hearing before the City Council.
III. BASIS OF RECOMMENDATION
A. POLICY
• On March 8, 2010 the HRA passed a resolution affirming its support of
the housing development concept at 6401 Lyndale Avenue (Woodlake
Richfield Apartments) and expressing its willingness to further
examine public financing for that project.
• On April 19, 2010 the HRA passed a resolution adopting a
modification to the Redevelopment Plan for the Richfield
Redevelopment Project Area and the Establishment of the 2010-1
Housing Tax Increment Financing District (aka Woodlake Housing Tax
Increment Finance District).
• On April 27, 2010, the Richfield City Council held a public hearing and
passed a resolution adopting a modification to the Redevelopment
Plan for the Richfield Redevelopment Project Area and the
Establishment of the 2010-1 Housing Tax Increment Financing District
(aka Woodlake Housing Tax Increment Finance District).
B. CRITICAL TIMING ISSUES
• Pursuant to Minnesota State Statute, a change in the TIF Plan's
budget requires another public hearing before the City Council; that
Public Hearing is scheduled to occur at the September 13 City Council
meeting.
C. FINANCIAL
• The only substantive,addition to this TIF Plan Modification is the
addition of a $500,000 "B" TIF Pay-As-You-Go-Note.
• The Developer would only receive increment if they pay real estate
taxes in an amount of more than $144,000 in any calendar year and
only if such increment were available.
• The addition of this "B Note" will not reduce any TIF payable to the
HRA or have any negative financial impacts on the City or HRA.
D. LEGAL
• Legal Counsel has reviewed the attached Resolution.
IV. ALTERNATIVE RECOMMENDATION(S)
• Adopt the attached Resolution with modifications addressing any HRA
concerns.
• Continue consideration of this item to a later date.
• Deny adoption of the attached Resolution.
V. ATTACHMENTS
• Resolution
• Modified Redevelopment Plan for the Richfield Redevelopment Project Area
and Adopting an Amended and Restated Tax Increment Financing Plan for
the 2010-1 Housing Tax Increment Financing District (Woodlake Housing).
VI. PRINCIPAL PARTIES EXPECTED AT MEETING
• Representatives of the HRA's Public Finance Consultants — Ehlers &
Associates.
• Representatives of the Developer.
RESOLUTION NO.
RESOLUTION ADOPTING A MODIFICATION TO THE REDEVELOPMENT PLAN
FOR THE RICHFIELD REDEVELOPMENT PROJECT AREA AND ADOPTING AN
AMENDED AND RESTATED TAX INCREMENT FINANCING PLAN FOR THE
2010-1 HOUSING TAX INCREMENT FINANCING DISTRICT (WOODLAKE
HOUSING)
WHEREAS, it has been proposed by the Board of Commissioners (the "Board") of the
Richfield Housing and Redevelopment Authority (the "HRA") and the City of Richfield (the "City")
that the HRA adopt a Modification to the Redevelopment Plan (the "Redevelopment Plan
Modification") for the Richfield Redevelopment Project Area (the "Project Area") and adopt an
Amended and Restated Tax Increment Financing Plan (the "TIF Plan") for the 2010-1 Housing Tax
Increment Financing District (Woodlake Housing) (the Redevelopment Plan Modification and the
TIF Plan are referred to collectively herein as the "Plans"), all pursuant to and in conformity with
applicable law, including Minnesota Statutes, Sections 469.001 to 469.047, and Sections 469.174
to 469.1799, inclusive, as amended (the "Act"), all as reflected in the Plans and presented for the
Board's consideration; and
WHEREAS, the HRA has investigated the facts relating to the Plans and has caused the
Plans to be prepared; and
WHEREAS, the HRA has performed all actions required by law to be performed prior to the
adoption of the Plans. The HRA has also requested the City Planning Commission to provide for
review of and written comment on Plans and that the City Council schedule a public hearing on the
Plans upon published notice as required by law.
NOW, THEREFORE, BE IT RESOLVED, by the Board as follows:
1. The HRA hereby finds that the Plans, are intended and, in the judgment of this
Board, the effect of such actions will be, to provide an impetus for development in the public
purposes and accomplish certain objectives as specified in the Plans, which are hereby
incorporated herein.
2. The HRA also finds the 2010-1 Housing Tax Increment Financing District (Woodlake
Housing), is in the public interest and is a "housing district" under Minnesota Statutes, Section
469.174, Subd. 11 of the Act.
3. The HRA further finds that the Plans will afford maximum opportunity, consistent
with the sound needs for the City as a whole, for the development or redevelopment of the Project
Area by private enterprise in that the intent is to provide only that public assistance necessary to
make the private developments financially feasible.
4. The boundaries of the Project Area are not being expanded.
5. The reasons and facts supporting the findings in this resolution are described in the
TIF Plan and in the exhibit attached to the City resolution approving the Plans, on file in City Hall.
6. Conditioned upon a review by the City's Planning Commission and a finding of the
Planning Commission that the Plans conform to the general plan for development and
redevelopment of the City and the approval thereof by the City Council following its public hearing
thereon, the Plans, as presented to the HRA on this date, are hereby approved, established and
adopted and shall be placed on file in the office of the Community Development Director.
7. Upon the satisfaction of the conditions described above, the staff, the HRA's
advisors and legal counsel are authorized and directed to proceed with the implementation of the
Plans and for this purpose to negotiate, draft, prepare and present to this Board for its
consideration all further plans, resolutions, documents and contracts necessary for this purpose.
Approval of the Plans does not constitute approval of any project or a Development Agreement
with any developer.
8. Upon approval of the Plans by the City Council, the Community Development
Director is authorized and directed to forward a copy of the Plans to the Minnesota Department of
Revenue and the Office of the State Auditor pursuant to Minnesota Statutes 469.175, Subd. 4a.
9. The Community Development Director is authorized and directed to forward a copy
of the Plans to the Hennepin County Auditor and request that the Auditor certify the original tax
capacity of the District as described in the Plans, all in accordance with Minnesota Statutes
469.177.
Approved by the Board of Commissioners of the Richfield Housing and Redevelopment
Authority this 15th day of August, 2011.
Suzanne M. Sandahl, Chair
ATTEST:
Joan Helmberger, Secretary
• I"
As of August 10, 2011
Draft for HRA Approval
Modification to the Redevelopment Plan
for the Richfield Redevelopment Project Area
and the
Amended and Restated Tax Increment Financing Plan
for the
1
2010-1 Housing Tax Increment Financing District
(Woodlake Housing)
(a housing district)
within
the Richfield Redevelopment Project Area
Richfield Housing and Redevelopment Authority
City of Richfield
Hennepin County
State of Minnesota
Public Hearing: April 27, 2010
Adopted: May 11, 2010
Hearing for Amended Plan: September 13, 2011
Adopted:
v!.$4;.71-, Prepared by: EHLERS&ASSOCIATES, INC.
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1. �� 3060 651-697-8500 ffaxVe651-697-8555 1inn Minnesota
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7
Table of Contents
(for reference purposes only)
Section 1 - Modification to the Redevelopment Plan
for the Richfield Redevelopment Project Area
Foreword 1-1
Section 2 - Tax Increment Financing Plan
for the 2010-1 Housing Tax Increment Financing District(Woodlake Housing)
Subsection 2-1. Foreword 2-1
Subsection 2-2. Statutory Authority 2-1
Subsection 2-3. Statement of Objectives 2-1
Subsection 2-4. Redevelopment Plan Overview 2-1
Subsection 2-5. Description of Property in the District and Property To Be Acquired 2-2
Subsection 2-6. Classification of the District 2-2
Subsection 2-7. Duration and First Year of Tax Increment of the District 2-3
Subsection 2-8. Original Tax Capacity, Tax Rate and Estimated Captured Net Tax
Capacity Value/Increment and Notification of Prior Planned
Improvements 2-3
Subsection 2-9. Sources of Revenue/Bonds to be Issued 2-4
Subsection 2-10. Uses of Funds 2-5
Subsection 2-11. Fiscal Disparities Election 2-6
Subsection 2-12. Business Subsidies 2-7
Subsection 2-13. County Road Costs 2-7
Subsection 2-14. Estimated Impact on Other Taxing Jurisdictions 2-8
Subsection 2-15. Supporting Documentation 2-9
Subsection 2-16. Definition of Tax Increment Revenues 2-10
Subsection 2-17. Modifications to the District 2-10
Subsection 2-18. Administrative Expenses 2-10
Subsection 2-19. Limitation of Increment 2-11
Subsection 2-20. Use of Tax Increment 2-12
Subsection 2-21. Excess Increments 2-13
Subsection 2-22. Requirements for Agreements with the Developer 2-13
Subsection 2-23. Assessment Agreements 2-13
Subsection 2-24. Administration of the District 2-13
Subsection 2-25. Annual Disclosure Requirements 2-14
Subsection 2-26. Reasonable Expectations 2-14
Subsection 2-27. Other Limitations on the Use of Tax Increment 2-14
Subsection 2-28. Summary 2-14
Appendix A
Project Description A-1
Appendix B
Map(s) of the Richfield Redevelopment Project Area and the District B-1
Appendix C
Description of Property to be Included in the District C-1
Appendix D
Estimated Cash Flow for the District D-1
Appendix E
Housing Qualifications for the District E-1
Appendix F
Findings for the District F-1
•
Section 1 -Modification to the Redevelopment Plan
for the Richfield Redevelopment Project Area
Foreword
The following text represents a Modification to the Redevelopment Plan for the Richfield Redevelopment
Project Area: This modification represents a continuation of the goals and objectives set forth in the
Redevelopment Plan for the Richfield Redevelopment Project Area. Generally, the substantive changes
include the approval of an amended and restated Tax Increment Financing Plan for the 2010-1 Housing Tax
Increment Financing District(Woodlake Housing).
For further information,a review of the Redevelopment Plan for the Richfield Redevelopment Project Area
is recommended. It is available from the Community Development Director at the City of Richfield. Other
relevant information is contained in the Tax Increment Financing Plans for the Tax Increment Financing
Districts located within the Richfield Redevelopment Project Area.
Richfield HRA Modification to the Redevelopment Plan for the Richfield Redevelopment Project Area 1-1
Section 2-Amended and Restated Tax Increment Financing Plan
for the 2010-1 Housing Tax Increment Financing District(Woodlake Housing)
Subsection 2-1. Foreword
The Richfield Housing and Redevelopment Authority(the"HRA"),the City of Richfield(the"City"),staff
and consultants have prepared the following information to expedite the approval of an Amended and
Restated Tax Increment Financing Plan for the 2010-1 Housing Tax Increment Financing District(Woodlake
Housing)(the"District"),a housing tax increment financing district,located in the Richfield Redevelopment
Project Area.
Subsection 2-2. Statutory Authority
Within the City, there exist areas where public involvement is necessary to cause development or
redevelopment to occur. To this end,the HRA and City have certain statutory powers pursuant to Minnesota
Statutes ("MS.'), Sections 469.001 to 469.047, inclusive, as amended, and MS., Sections 469.174 to
469.1799, inclusive, as amended (the "Tax Increment Financing Act" or "TIF Act"), to assist in financing,
public costs related to this project.
This section contains the Amended and Restated Tax Increment Financing Plan (the "TIF Plan") for the
District. Other relevant information is contained in the Modification to the Redevelopment Plan for the
Richfield Redevelopment Project Area.
Subsection 2-3. Statement of Objectives
The District currently consists of 3 parcels of land and adjacent and internal rights-of-way. The District is
being created to facilitate the construction of a 94-unit,market rate housing development with an affordable
component in the City. Please see Appendix A for further District information. The HRA has not entered
into an agreement at the time of preparation of this TIF Plan,but development is likely to occur in fall 2011.
The HRA anticipates entering into an agreement with Woodlake Richfield Apartments,LLC. This TIF Plan
is expected to achieve many of the objectives outlined in the Redevelopment Plan for the Richfield
Redevelopment Project Area.
The activities contemplated in the Modification to the Redevelopment Plan and the TIF Plan do not preclude
the undertaking of other qualified development or redevelopment activities. These activities are anticipated
to occur over the life of the Richfield Redevelopment Project Area and the District.
Subsection 2-4. Redevelopment Plan Overview
1. Property to be Acquired - The HRA currently owns one parcel of property within the
District. The remaining property located within the District may be acquired by the HRA
or City and is further described in this TIF Plan.
2. Relocation - Relocation services, to the extent required by law, are available pursuant to
M.S., Chapter 117 and other relevant state and federal laws.
3. Upon approval of a developer's plan relating to the project and completion of the necessary
legal requirements,the HRA or City may sell to a developer selected properties that it owns
or may acquire within the District or may lease land or facilities to a developer.
4. The HRA or City may perform or provide for some or all necessary acquisition,construction,
relocation, demolition, and required utilities and public street work within the District.
Richfield HRA Tax Increment Financing Plan for the 2010-1 Housing Tax Increment Financing District(Woodlake Housing) 2-1
Subsection 2-5. Description of Property in the District and Property To Be Acquired
The District encompasses all property and adjacent rights-of-way and abutting roadways identified by the
parcels listed in Appendix C of this TIF Plan. Please also see the map in Appendix B for further information
on the location of the District.
The HRA currently owns one parcel to be included in the District.
Subsection 2-6. Classification of the District
The HRA and City, in determining the need to create a tax increment financing district in accordance with
M.S., Sections 469.174 to 469.1799, as amended, inclusive, find that the District, to be established, is a
housing district pursuant to M.S., Section 469.174, Subd. 11 and M.S., Section 469.1761 as defined below:
M.S., Section 469.174, Subd.11:
"Housing district"means a type of tax increment financing district which consists of a project, or a
portion of a project, intended for occupancy, in part, by persons or families of low and moderate
income, as defined in chapter 462A, Title II of the National Housing Act of 1934, the National
Housing Act of 1959, the United States Housing Act of 1937, as amended, Title V of the Housing Act
of 1949, as amended, any other similar present or future federal, state, or municipal legislation, or
the regulations promulgated under any of those acts, and that satisfies the requirements of M.S.,
Section 469.1761. Housing project means a project, or portion of a project, that meets all the
qualifications of a housing district under this subdivision, whether or not actually established as a
housing district.
M.S., Section 469.1761:
Subd. 1. Requirement imposed.
(a) In order for a tax increment financing district to qualify as a housing district:
(1) the income limitations provided in this section must be satisfied; and
(2) no more than 20 percent of the square footage of buildings that receive assistance from tax
increments may consist of commercial, retail, or other nonresidential uses.
(b) The requirements imposed by this section apply to property receiving assistance financed with
tax increments, including interest reduction, land transfers at less than the Authority's cost of
acquisition, utility service or connections, roads, parking facilities, or other subsidies. The
provisions of this section do not apply to districts located within a targeted area as defined in
Section 462C.02 Subd 9, clause (e).
(c) For purposes of the requirements of paragraph (a), the authority may elect to treat an addition
to an existing structure as a separate building f
(1) construction of the addition begins more than three years after construction of the
existing structure was completed; and
(2) for an addition that does not meet the requirements of paragraph (a), clause (2),if it is
treated as a separate building, the addition was not contemplated by the tax increment
financing plan which includes the existing structure.
Richfield HRA Tax Increment Financing Plan for the 2010-1 Housing Tax Increment Financing District(Woodlake Housing) 2-2
Subd. 2. Owner occupied housing.
For owner occupied residential property, 95 percent of the housing units must be initially
purchased and occupied by individuals whose family income is less than or equal to the
income requirements for qualified mortgage bond projects under section 143(f) of the
Internal Revenue Code.
Subd. 3. Rental property.
For residential rental property, the property must satisfy the income requirements for a
qualified residential rental project as defined in section 142(d) of the Internal Revenue
Code. The requirements of this subdivision apply for the duration of the tax increment
financing district.
Subd. 4. Noncompliance; enforcement.
Failure to comply with the requirements of this section is subject to M.S., Section 469.1771.
In meeting the statutory criteria the HRA and City rely on the following facts and findings:
• The District consists of 3 parcels.
• The development will consist of 94 units of multi-family rental housing.
• 20%of the units will be occupied by person with incomes less than 50%of median income.
Pursuant to M.S., Section 469.176, Subd. 7,the District does not contain any parcel or part of a parcel that
qualified under the provisions of M.S., Sections 273.111 or 273.112 or Chapter 473H for taxes payable in
any of the five calendar years before the filing of the request for certification of the District.
Subsection 2-7. Duration and First Year of Tax Increment of the District
Pursuant to M.S., Section 469.175, Subd. 1, and Section 469.176, Subd. 1,the duration and first year of tax
increment of the District must be indicated within the TIF Plan. Pursuant to M.S.,Section 469.176,Subd. lb.,
the duration of the District will be 25 years after receipt of the first increment by the HRA or City(a total of
26 years of tax increment). The HRA or City elects to receive the first tax increment in 2014,which is no
later than four years following the year of approval of the District. Thus, it is estimated that the District,
including any modifications of the TIF Plan for subsequent phases or other changes, would terminate after
2039,or when the TIF Plan is satisfied. The HRA or City reserves the right to decertify the District prior to
the legally required date.
Subsection 2-8. Original Tax Capacity,Tax Rate and Estimated Captured Net Tax Capacity
Value/Increment and Notification of Prior Planned Improvements
Pursuant to M.S.,Section 469.174,Subd. 7 and MS.,Section 469.177,Subd. 1,the Original Net Tax Capacity
(ONTC)as certified for the District will be based on the market values placed on the property owned by the
developer by the assessor in 2011 for taxes payable 2012. The HRA parcel within the District is currently
exempt from property taxes. Upon conveyance of the HRA parcel to the Developer, the assessor will
determine the market value of the property at the time of transfer of the HRA parcel.
Pursuant to M.S., Section 469.177, Subds. 1 and 2,the County Auditor shall certify in each year(beginning
in the payment year 2014)the amount by which the original value has increased or decreased as a result of:
1. Change in tax exempt status of property;
2. Reduction or enlargement of the geographic boundaries of the district;
Richfield HRA Tax Increment Financing Plan for the 2010-1 Housing Tax Increment Financing District(Woodlake Housing) 2-3
3. Change due to adjustments, negotiated or court-ordered abatements;
4. Change in the use of the property and classification;
5. Change in state law governing class rates; or
6. Change in previously issued building permits.
In any year in which the current Net Tax Capacity(NTC)value of the District declines below the ONTC,no
value will be captured and no tax increment will be payable to the City.
The original local tax rate for the District will be the local tax rate for taxes payable 2012, assuming the
request for certification is made before June 30,2012. The ONTC and the Original Local Tax Rate for the
District appear in the table below.
Pursuant to M.S., Section 469.174 Subd. 4 and M.S., Section 469.177, Subd. 1, 2, and 4, the estimated
Captured Net Tax Capacity (CTC) of the District,within the Richfield Redevelopment Project Area, upon
completion of the projects within the District,will annually approximate tax increment revenues as shown
in the table below. The City requests 100 percent of the available increase in tax capacity for repayment of
its obligations and current expenditures,beginning in the tax year payable 2014. The Project Tax Capacity
(PTC) listed is an estimate of the captured tax capacity of the District in the final year of collection of tax
increment(year 26 of the District).
Project Estimated Tax Capacity upon Completion(PTC) $326,382
Original Estimated Net Tax Capacity(ONTC) $17,625
Fiscal Disparities Reduction $0
Estimated Captured Tax Capacity(CTC) $308,757
Original Local Tax Rate 1.38568 Pay 2011
Estimated Annual Tax Increment(CTC x Local Tax Rate) $427,838
Percent Retained by the HRA 100%
`Tax capacity includes a 4%inflation factor for the duration of the District. The tax capacity included in this
chart is the estimated tax capacity of the District in year 26. The tax capacity of the District in year one is
estimated to be$127,329.
Pursuant to M.S., Section 469.177, Subd. 4, the HRA shall, after a due and diligent search, accompany its
request for certification to the County Auditor or its notice of the District enlargement pursuant to MS..
Section 469.175, Subd. 4,with a listing of all properties within the District or area of enlargement for which
building permits have been issued during the eighteen(18) months immediately preceding approval of the
TIF Plan by the municipality pursuant to M.S., Section 469.175, Subd. 3. The County Auditor shall increase
the original net tax capacity of the District by the net tax capacity of improvements for which a building
permit was issued.
The City has reviewed the area to be included in the District and has determined that no building
permits have been issued during the 18 months immediately preceding approval of the TIF Plan by the
City.
Subsection 2-9. Sources of Revenue/Bonds to be Issued
The costs outlined in the Uses of Funds will be financed primarily through the annual collection of tax
increments. The HRA or the City reserve the right to incur bonds or other indebtedness as a result of the TI F
Richfield HRA Tax Increment Financing Plan for the 2010-1 Housing Tax Increment Financing District(Woodlake Housing) 2-4
Plan. As presently proposed,the projects within the District will be financed by a pay-as-you-go note. In
addition,the HRA intends to enter into an interfund loan pursuant to M.S.,Section 469.178 to reimburse itself
for funds advanced for the project through the conveyance of land to a developer for less than fair market
value and administrative costs. It is estimated that$1,322,000 in one or more pay-as-you-go notes will be
issued to a developer and payable from tax increment revenues. Additional indebtedness may be required
to finance other authorized activities. Any refunding amounts will be deemed a budgeted cost without a
formal TIF Plan Modification. This provision does not obligate the HRA or the City to incur debt. The HRA
or the City will issue bonds or incur other debt only upon the determination that such action is in the best
interests of the HRA or the City.
The total estimated tax increment revenues for the District are shown in the table below:
SOURCES OF FUNDS TOTAL
Tax Increment $6,890,000
Interest $10,000
TOTAL $6,900,000
The HRA or City may issue bonds(as defined in the TIF Act)secured in whole or in part with tax increments
from the District in a maximum principal amount of$2,889,500. Such bonds may be in the form of pay-as-
you go notes, revenue bonds or notes, general obligation bonds, or interfund loans. This estimate of total
bonded indebtedness is a cumulative statement of authority under this TIF Plan as of the date of this
modification.
Subsection 2-10. Uses of Funds
Currently under consideration for the District is a proposal to facilitate the construction of a 94-unit,market
rate housing development with an affordable component. The HRA and City have determined that it will be
necessary to provide assistance to the projects for certain District costs,as described. The HRA has studied
the feasibility of the development or redevelopment of property in and around the District. To facilitate the
establishment and development or redevelopment of the District, this TIF Plan authorizes the use of tax
increment financing to pay for the cost of certain eligible expenses. The estimate of public costs and uses of
funds associated with the District is outlined in the table on the following page.
USES OF TAX INCREMENT FUNDS TOTAL
Land/Building Acquisition $1,500,000
Site Improvements/Preparation $699,500
Utilities $0
Other Qualifying Improvements $0
Administrative Costs (up to 10%) $690,000
PROJECT COST TOTAL $2,889,500
Interest $4,010,500
PROJECT AND INTEREST COSTS TOTAL $6,900,000
Richfield HRA Tax Increment Financing Plan for the 2010-1 Housing Tax Increment Financing District(Woodlake Housing) 2-5
The total project cost, including financing costs(interest) listed in the table above does not exceed the total
projected tax increments for the District as shown in Appendix D.
Estimated costs associated with the District are subject to change among categories without a modification
to this TIF Plan. The cost of all activities to be considered for tax increment financing will not exceed,
without formal modification,the budget above pursuant to the applicable statutory requirements. The HRA
may expend funds for qualified housing activities outside of the District boundaries.
Subsection 2-11. Fiscal Disparities Election
Pursuant to M.S., Section 469.177, Subd. 3, the City may elect one of two methods to calculate fiscal
disparities. If the calculations pursuant to M.S., Section 469.177, Subd. 3, clause b,(within the District)are
followed,the following method of computation shall apply:
(1) The original net tax capacity shall be determined before the application of the fiscal disparity
provisions of Chapter 276A or 473F. The current net tax capacity shall exclude any fiscal
disparity commercial-industrial net tax capacity increase between the original year and the
current year multiplied by the fiscal disparity ratio determined pursuant to M.S., Section
276A.06, subdivision 7 or M.S., Section 473F.08, subdivision 6. Where the original net tax
capacity is equal to or greater than the current net tax capacity,there is no captured tax capacity
and no tax increment determination. Where the original tax capacity is less than the current tax
capacity, the difference between the original net tax capacity and the current net tax capacity
is the captured net tax capacity. This amount less any portion thereof which the authority has
designated, in its tax increment financing plan, to share with the local taxing districts is the
retained captured net tax capacity of the authority.
(2) The county auditor shall exclude the retained captured net tax capacity of the authority from the
net tax capacity of the local taxing districts in determining local taxing district tax rates. The
local tax rates so determined are to be extended against the retained captured net tax capacity
of the authority as well as the net tax capacity of the local taxing districts. The tax generated by
the extension of the less of(A)the local taxing district tax rates or(B)the original local tax rate
to the retained captured net tax capacity of the authority is the tax increment of the authority.
The City will choose to calculate fiscal disparities by clause b. However,it is not anticipated that the
District will contain commercial/industrial property. As a result,there should be no impact due to the
fiscal disparities provision on the District.
According to M.S., Section 469.177, Subd. 3.
(c) The method of computation of tax increment applied to a district pursuant to paragraph (a) or
(b) shall remain the same for the duration of the district, except that the governing body may
elect to change its election from the method of computation in paragraph (a) to the method in
paragraph (b).
Subsection 2-12. Business Subsidies
Pursuant to M.S., Section 116J.993, Subd. 3,the following forms of financial assistance are not considered
a business subsidy:
(I) A business subsidy of less than$150,000;
(2) Assistance that is generally available to all businesses or to a general class of similar businesses,
such as a line of business, size, location, or similar general criteria;
Richfield HRA Tax Increment Financing Plan for the 2010-1 Housing Tax Increment Financing District(Woodlake Housing) 2-6
(3) Public improvements to buildings or lands owned by the state or local government that serve a
public purpose and do not principally benefit a single business or defined group of businesses at
the time the improvements are made;
(4) Redevelopment property polluted by contaminants as defined in M.S., Section 1161552, Subd. 3;
(5) Assistance provided for the sole purpose of renovating old or decaying building stock or bringing
it up to code and assistance provided for designated historic preservation districts, provided that
the assistance is equal to or less than 50%of the total cost;
(6) Assistance to provide job readiness and training services if the sole purpose of the assistance is to
provide those services;
(7) Assistance for housing;
(8) Assistance for pollution control or abatement, including assistance for a tax increment financing
hazardous substance subdistrict as defined under M.S., Section 469.174, Subd. 23;
(9) Assistance for energy conservation;
(10) Tax reductions resulting from conformity with federal tax law;
(11) Workers' compensation and unemployment compensation;
(12) Benefits derived from regulation;
(13) Indirect benefits derived from assistance to educational institutions;
(14) Funds from bonds allocated under chapter 474A, bonds issued to refund outstanding bonds,and
bonds issued for the benefit of an organization described in section 501 (c) (3) of the Internal
Revenue Code of 1986,as amended through December 31, 1999;
(15) Assistance for a collaboration between a Minnesota higher education institution and a business;
(16) Assistance for a tax increment financing soils condition district as defined under M.S., Section
469.174, Subd. 19;
(17) Redevelopment when the recipient's investment in the purchase of the site and in site preparation
is 70 percent or more of the assessor's current year's estimated market value;
(18) General changes in tax increment financing law and other general tax law changes of a principally
technical nature;
(19) Federal assistance until the assistance has been repaid to, and reinvested by, the state or local
government agency;
(20) Funds from dock and wharf bonds issued by a seaway port authority;
(21) Business loans and loan guarantees of$150,000 or less;
(22) Federal loan funds provided through the United States Department of Commerce, Economic
Development Administration; and
(23) Property tax abatements granted under M.S., Section 469.1813 to property that is subject to
valuation under Minnesota Rules, chapter 8100.
The HRA will comply with M.S., Sections 1161993 to 1161995 to the extent the tax increment assistance
under this TIF Plan does not fall under any of the above exemptions.
Subsection 2-13. County Road Costs
Pursuant to M.S., Section 469.175, Subd. la,the county board may require the HRA or City to pay for all or
part of the cost of county road improvements if the proposed development to be assisted by tax increment
will, in the judgment of the county,substantially increase the use of county roads requiring construction of
road improvements or other road costs and if the road improvements are not scheduled within the next five
years under a capital improvement plan or within five years under another county plan.
If the county elects to use increments to improve county roads, it must notify the HRA or City within forty-
five days of receipt of this TIF Plan. In the opinion of the HRA and City and consultants, the proposed
development outlined in this TIF Plan will have little or no impact upon county roads,therefore the TIF Plan
was not forwarded to the county 45 days prior to the public hearing. The HRA and City are aware that the
county could claim that tax increment should be used for county roads, even after the public hearing.
Richfield HRA Tax Increment Financing Plan for the 2010-1 Housing Tax Increment Financing District(Woodlake Housing) 2-7
Subsection 2-14. Estimated Impact on Other Taxing Jurisdictions
The estimated impact on other taxing jurisdictions assumes that the redevelopment contemplated by the TIF
Plan would occur without the creation of the District. Through an analysis of the project financials, a
financing gap exists and assistance is needed to move the project forward.The estimated fiscal impact of the
District would be as follows if the "but for"test was not met:
IMPACT ON TAX BASE
Estimated Estimated Captured
2010/Pay 2011 Tax Capacity(CTC) Percent of CTC
Total Net Upon Completion to Entity Total
Tax Capacity
Hennepin County 1,320,682,751 308,757 0.0234%
City of Richfield 24,776,100 308,757 1.2462%
Richfield ISD No. 280 32,204,673 308,757 0.9587%
IMPACT ON TAX RATES
Estimated Pay 2011 Percent Potential
Extension Rates of Total CTC Taxes
Hennepin County 0.458400 33.08% 308,757 141,534
City of Richfield 0.567970 40.99% 308,757 175,365
Richfield ISD No. 280 0.267590 19.31% 308,757 82,620
Other 0.091720 6.62% 308,757 28,319
Total 1.385680 100.00% 427,838
The estimates listed above display the captured tax capacity when all construction is completed. The tax rate
used for calculations is the estimated Pay 2011 rate. The total net capacity for the entities listed above are
based on estimated Pay 2011 figures. The District will be certified under the actual Pay 2012 rates, which
were unavailable at the time this TIF Plan was prepared.
Pursuant to M.S. Section 469.175 Subd. 2(b):
(1) Estimate of total tax increment. It is estimated that the total amount of tax increment that will be
generated over the life of the District is$6,900,000;
(2) Probable impact of the District on city provided services and ability to issue debt. The probable
impact of the District on police protection is not expected to be significant.With any addition of new
residents or businesses, police calls for service will be increased. The City does not expect that the
proposed development, in and of itself, will necessitate new capital investment in vehicles or
facilities.
The probable impact of the District on fire protection is not expected to be significant. Typically new
buildings generate few calls, if any, and are of superior construction. The City may have a slight
increase in medical related calls;however,the development is not expected to require an increase in
capital investment in vehicles or facilities.
Richfield HRA Tax Increment Financing Plan for the 2010-1 Housing Tax Increment Financing District(Woodlake Housing) 2-8
The impact of the District on public infrastructure is expected to be minimal. The development is
not expected to significantly impact any traffic movements in the area.The current infrastructure for
sanitary sewer, storm sewer and water will be able to handle the additional volume generated from
the proposed development. Based on the development plans,there are no additional costs associated
with street maintenance, sweeping,plowing,lighting and sidewalks. The development in the District
will contribute sanitary sewer(SAC)and water(WAC)connection fees.
The probable impact of any District general obligation tax increment bonds on the ability to issue
debt for general fund purposes is expected to be minimal. It is not anticipated that there will be any
general obligation debt issued in relation to this project, therefore there will be no impact on the
City's ability to issue future debt or on the City's debt limit.
(3) Estimated amount of tax increment attributable to school district levies. It is estimated that the
amount of tax increments over the life of the District that would be attributable to school district
levies, assuming the school district's share of the total local tax rate for all taxing jurisdictions
remained the same is$1,332,390;
•
(4) Estimated amount of tax increment attributable to county levies. It is estimated that the amount of
tax increments over the life of the District that would be attributable to county levies,assuming the
county's share of the total local tax rate for all taxing jurisdictions remained the same is$2,282,520;
(5) Additional information requested by the county or school district. The City is not aware of any
standard questions in a county or school district written policy regarding tax increment districts and
impact on county or school district services. The county or school district must request additional
information pursuant to M.S. Section 469.175 Subd. 2(b) within 15 days after receipt of the tax
increment financing plan.
No requests for additional information from the county or school district regarding the proposed
development for the District have been received.
Subsection 2-15. Supporting Documentation
Pursuant to M.S. Section 469.175, Subd. 1 (a), clause 7 the TIF Plan must contain identification and
description of studies and analyses used to make the findings that are required in the resolution approving the
District. Following is a list of reports and studies on file at the City that support the HRA and City's findings:
• Application from Michael Development,January 15,2010.
• Market Study by Maxfield Research,June 4,2008.
• Updated appraisal and market value information,June 2011.
Subsection 2-16. Definition of Tax Increment Revenues
Pursuant to M.S., Section 469.174, Subd. 25,tax increment revenues derived from a tax increment financing
district include all of the following potential revenue sources:
1. Taxes paid by the captured net tax capacity,but excluding any excess taxes,as computed under M.S.,
Section 469.177;
2. The proceeds from the sale or lease of property,tangible or intangible,to the extent the property was
purchased by the Authority with tax increments;
3. Principal and interest received on loans or other advances made by the Authority with tax increments;
Richfield HRA Tax Increment Financing Plan for the 2010-1 Housing Tax Increment Financing District(Woodlake Housing) 2-9
4. Interest or other investment earnings on or from tax increments;
5. Repayments or return of tax increments made to the Authority under agreements for districts for
which the request for certification was made after August 1, 1993; and
6. The market value homestead credit paid to the Authority under M.S., Section 273.1384.
Subsection 2-17. Modifications to the District
In accordance with MS., Section 469.175, Subd. 4,any:
1. Reduction or enlargement of the geographic area of the District, if the reduction does not meet the
requirements of M.S., Section 469.175, Subd. 4(e);
2. Increase in amount of bonded indebtedness to be incurred;
3. A determination to capitalize interest on debt if that determination was not a part of the original TIF
Plan;
4. Increase in the portion of the captured net tax capacity to be retained by the HRA or City;
5. Increase in the estimate of the cost of the District,including administrative expenses,that will be paid
or financed with tax increment from the District; or
6. Designation of additional property to be acquired by the HRA or City,
shall be approved upon the notice and after the discussion,public hearing and findings required for approval
of the original TIF Plan.
Pursuant to MS.Section 469.175 Subd. 40,the geographic area of the District may be reduced,but shall not
be enlarged after five years following the date of certification of the original net tax capacity by the county
auditor. If a housing district is enlarged, the reasons and supporting facts for the determination that the
addition to the district meets the criteria of M.S., Section 469.1 74, Subd. 11 must be documented. The
requirements of this paragraph do not apply if(1)the only modification is elimination of parcel(s)from the
District and(2)(A)the current net tax capacity of the parcel(s)eliminated from the District equals or exceeds
the net tax capacity of those parcel(s) in the District's original net tax capacity or(B)the HRA agrees that,
notwithstanding M.S.,Section 469.177,Subd. 1,the original net tax capacity will be reduced by no more than
the current net tax capacity of the parcel(s)eliminated from the District.
The HRA or City must notify the County Auditor of any modification that reduces or enlarges the geographic
area of the District. Modifications to the District in the form of a budget modification or an expansion of the
boundaries will be recorded in the TIF Plan.
Subsection 2-18. Administrative Expenses
In accordance with M.S., Section 469.1 74, Subd. 14, administrative expenses means all expenditures of the
HRA or City,other than:
1. Amounts paid for the purchase of land;
2. Amounts paid to contractors or others providing materials and services, including architectural and
engineering services, directly connected with the physical development of the real property in the
District;
3. Relocation benefits paid to or services provided for persons residing or businesses located in the
District; or
4. Amounts used to pay principal or interest on, fund a reserve for, or sell at a discount bonds issued
pursuant to M.S., Section 469.178; or
5. Amounts used to pay other financial obligations to the extent those obligations were used to finance
costs described in clauses(1)to(3).
Richfield HRA Tax Increment Financing Plan for the 2010-1 Housing Tax Increment Financing District(Woodlake Housing) 2-10
For districts for which the request for certification were made before August 1, 1979,or after June 30, 1982,
and before August 1,2001,administrative expenses also include amounts paid for services provided by bond
counsel,fiscal consultants, and planning or economic development consultants. Pursuant to M.S., Section
469.176, Subd. 3, tax increment may be used to pay any authorized and documented administrative
expenses for the District up to but not to exceed 10 percent of the total estimated tax increment expenditures
authorized by the TIF Plan or the total tax increments,as defined by M.S., Section 469.174,Subd. 25, clause
(1), from the District, whichever is less.
For districts for which certification was requested after July 31,2001,no tax increment may be used to pay
any administrative expenses for District costs which exceed ten percent of total estimated tax increment
expenditures authorized by the TIF Plan or the total tax increments,as defined in M.S.,Section 469.174,Subd.
25, clause (1), from the District, whichever is less.
Pursuant to M.S., Section 469.176, Subd. 4h, tax increments may be used to pay for the County's actual
administrative expenses incurred in connection with the District and are not subject to the percentage limits
of M.S.,Section 469.176, Subd. 3. The county may require payment of those expenses by February 15 of the
year following the year the expenses were incurred.
Pursuant to MS., Section 469. 177, Subd. 11, the County Treasurer shall deduct an amount(currently .36
percent) of any increment distributed to the HRA or City and the County Treasurer shall pay the amount
deducted to the State Treasurer for deposit in the state general fund to be appropriated to the State Auditor
for the cost of financial reporting of tax increment financing information and the cost of examining and
auditing authorities' use of tax increment financing. This amount may be adjusted annually by the
Commissioner of Revenue.
Subsection 2-19. Limitation of Increment
The tax increment pledged to the payment of bonds and interest thereon may be discharged and the District
may be terminated if sufficient funds have been irrevocably deposited in the debt service fund or other escrow
account held in trust for all outstanding bonds to provide for the payment of the bonds at maturity or
redemption date.
Pursuant to M.S., Section 469.176, Subd. 6:
if, after four years from the date of certification of the original net tax capacity of the tax
increment financing district pursuant to MS.,Section 469.177,no demolition,rehabilitation
or renovation of property or other site preparation, including qualified improvement of a
street adjacent to a parcel but not installation of utility service including sewer or water
systems, has been commenced on a parcel located within a tax increment financing district
by the authority or by the owner of the parcel in accordance with the tax increment financing
plan, no additional tax increment may be taken from that parcel and the original net tax
capacity of that parcel shall be excluded from the original net tax capacity of the tax
increment financing district. If the authority or the owner of the parcel subsequently
commences demolition,rehabilitation or renovation or other site preparation on that parcel
including qualified improvement of a street adjacent to that parcel, in accordance with the
tax increment financingplan,the authority shall cert to the county auditor that the activity
has commenced and the county auditor shall certify the net tax capacity thereof as most
recently certified by the commissioner of revenue and add it to the original net tax capacity
of the tax increment financing district. The county auditor must enforce the provisions of this
subdivision. The authority must submit to the county auditor evidence that the required
activity has taken place for each parcel in the district. The evidence for a parcel must be
Richfield HRA Tax Increment Financing Plan for the 2010-1 Housing Tax Increment Financing District(Woodlake Housing) 2-11
•
submitted by February 1 of the fifth year•following the year in which the parcel was certified
as included in the district. For purposes of this subdivision, qualified improvements of a
street are limited to (1) construction or opening of a new street, (2) relocation of a street,
and(3)substantial reconstruction or rebuilding of an existing street.
The HRA or City or a property owner must improve parcels within the District by approximately September
2016 and report such actions to the County Auditor.
Subsection 2-20. Use of Tax Increment
The HRA or City hereby determines that it will use 100 percent of the captured net tax capacity of taxable
property located in the District for the following purposes:
1. To pay the principal of and interest on bonds issued to finance a project;
2. to finance,or otherwise pay public redevelopment costs ofthe Richfield Redevelopment Project Area
pursuant to M.S., Sections 469.001 to 469.047;
3. To pay for project costs as identified in the budget set forth in the TIF Plan;
4. To finance,or otherwise pay for other purposes as provided in M.S., Section 469.176, Subd. 4;
5. To pay principal and interest on any loans,advances or other payments made to or on behalf of the
HRA or City or for the benefit of the Richfield Redevelopment Project Area by a developer;
6. To finance or otherwise pay premiums and other costs for insurance or other security guaranteeing
the payment when due of principal of and interest on bonds pursuant to the TIF Plan or pursuant to
M.S., Chapter 462C. MS., Sections 469.152 through 469.165, and/or M.S., Sections 469.178; and
7. To accumulate or maintain a reserve securing the payment when due of the principal and interest on
the tax increment bonds or bonds issued pursuant to M.S., Chapter 462C, M.S., Sections 469.152
through 469.165, and/or M.S., Sections 469.178.
Revenues derived from tax increment from a housing district must be used solely to finance the cost
of housing projects as defined in M.S., Sections 469.174, Subd. 11 and 469.1761. The cost of public
improvements directly related to the housing projects and the allocated administrative expenses of the
HRA or City may be included in the cost of a housing project.
These revenues shall not be used to circumvent any levy limitations applicable to the City nor for other
purposes prohibited by M.S., Section 469.176, Subd. 4.
Tax increments generated in the District will be paid by Hennepin County to the HRA for the Tax Increment
Fund of said District. The HRA or City will pay to the developer(s) annually an amount not to exceed an
amount as specified in a developer's agreement to reimburse the costs of land acquisition, public
improvements,demolition and relocation,site preparation,and administration. Remaining increment funds
will be used for HRA or City administration(up to 10 percent)and the costs of housing projects outside the
District.
Subsection 2-21. Excess Increments
Excess increments,as defined in M.S., Section 469.176, Subd. 2,shall be used only to do one or more of the
following:
1. Prepay any outstanding bonds;
2. Discharge the pledge of tax increment for any outstanding bonds;
3.- Pay into an escrow account dedicated to the payment of any outstanding bonds; or
4. Return the excess to the County Auditor for redistribution to the respective taxing jurisdictions in
proportion to their local tax rates.
Richfield HRA Tax Increment Financing Plan for the 2010-1 Housing Tax Increment Financing District(Woodlake Housing) 2-12
The HRA or City must spend or return the excess increments under paragraph (c)within nine months after
the end of the year. In addition,the HRA or City may, subject to the limitations set forth herein,choose to
modify the TIF Plan in order to finance additional public costs in the Richfield Redevelopment Project Area
or the District.
Subsection 2-22. Requirements for Agreements with the Developer
The HRA or City will review any proposal for private development to determine its conformance with the
Redevelopment Plan and with applicable municipal ordinances and codes. To facilitate this effort, the
following documents may be requested for review and approval: site plan, construction, mechanical, and
electrical system drawings,landscaping plan,grading and storm drainage plan,signage system plan,and any
other drawings or narrative deemed necessary by the HRA or City to demonstrate the conformance of the
development with City plans and ordinances. The HRA or City may also use the Agreements to address other
issues related to the development.
Pursuant to M.S., Section 469.176, Subd. 5, no more than 10 percent, by acreage, of the property to be
acquired in the District as set forth in the TIF Plan shall at any time be owned by the HRA or City as a result
of acquisition with the proceeds of bonds issued pursuant to M.S., Section 469.178 to which tax increments
from property acquired is pledged,unless prior to acquisition in excess of 10 percent of the acreage,the HRA
or City concluded an agreement for the development of the property acquired and which provides recourse
for the HRA or City should the development not be completed.
Subsection 2-23.Assessment Agreements
Pursuant to M.S., Section 469.177,Subd. 8,the HRA or City may enter into a written assessment agreement
in recordable form with the developer of property within the District which establishes a minimum market
value of the land and completed improvements for the duration of the District. The assessment agreement
shall be presented to the County Assessor who shall review the plans and specifications for the improvements
to be constructed,review the market value previously assigned to the land upon which the improvements are
to be constructed and,so long as the minimum market value contained in the assessment agreement appears,
in the judgment of the assessor, to be a reasonable estimate, the County Assessor shall also certify the
minimum market value agreement.
Subsection 2-24.Administration of the District
Administration of the District will be handled by the Community Development Director.
Subsection 2-25.Annual Disclosure Requirements
Pursuant to M.S., Section 469.175, Subds. 5, 6, and 6b the HRA or City must undertake financial reporting
for all tax increment financing districts to the Office of the State Auditor,County Board and County Auditor
on or before August 1 of each year. M.S., Section 469.175, Subd. 5 also provides that an annual statement
shall be published in a newspaper of general circulation in the City on or before August 15.
If the City fails to make a disclosure or submit a report containing the information required by M.S., Section
469.175 Subd. S and Subd. 6, the OSA will direct the County Auditor to withhold the distribution of tax
increment from the District.
Richfield HRA Tax Increment Financing Plan for the 2010-1 Housing Tax Increment Financing District(VVoodlake Housing) 2-13
Subsection 2-26. Reasonable Expectations
As required by the TIF Act,in establishing the District,the determination has been made that the anticipated
development would not reasonably be expected to occur solely through private investment within the
reasonably foreseeable future. In making said determination, reliance has been placed upon written
representation made by the developer to such effects and upon HRA and City staff awareness ofthe feasibility
of developing the project site(s)within the District.
Subsection 2-27. Other Limitations on the Use of Tax Increment
1. General Limitations. All revenue derived from tax increment shall be used in accordance with the TIF
Plan. The revenues shall be used to finance, or otherwise pay public redevelopment costs of the the
Richfield Redevelopment Project Area pursuant to M.S., Sections 469.001 to 469.047. Tax increments
may not be used to circumvent existing levy limit law. No tax increment may be used for the acquisition,
construction,renovation,operation,or maintenance of a building to be used primarily and regularly for
conducting the business of a municipality,county,school district,or any other local unit of government
or the state or federal government. This provision does not prohibit the use of revenues derived from tax
increments for the construction or renovation of a parking structure.
2. Housing District Exceptions to Restriction on Pooling;Five Year Limit. Tax increment derived from the
District must be used solely to finance the cost of housing projects(including administrative expenses
and public improvement costs) as defined in M.S. Section 469.174, Subd. 11 and subject to the
requirements set forth in M.S. Section 469.1761.
Pursuant to M.S. Section 469.1763, Subd. 3 (the "Five Year Rule"), expenditures of tax increment for
housing purposes within the Richfield.Redevelopment Project Area are considered to be an activity
within the District,and therefore,such costs may be reimbursed with tax increment without regard to the
Five Year Rule.
Subsection 2-28. Summary
The Richfield Housing and Redevelopment Authority is establishing the District to provide an impetus for
residential development and provide safe and decent life cycle housing in the City. The TIF Plan for the
District was prepared by Ehlers&Associates, Inc.,3060 Centre Pointe Drive, Roseville, Minnesota 55113-
1105,telephone(651)697-8500.
Richfield HRA Tax Increment Financing Plan for the 2010-1 Housing Tax Increment Financing District(Woodlake Housing) 2-14
Appendix A
Project Description
The Amended and Restated TIF Plan for the 2010-1 Housing TIF District is being adopted to redevelop the
Woodlake Plaza Shopping Center,which is currently a commercial center. According to Woodlake Richfield
Apartments, LLC,the property is obsolete as a retail building.
The Lyndale Commons development will be located on 2 parcels currently owned by the developer and 1
parcel currently owned by the HRA.
The Lyndale Commons development will consist of 94 units of rental housing. Currently the plan will
include 5 studio apartments,50 one bedroom apartments,30 two bedroom apartments and 9 three bedroom
apartments. It is planned that 20 percent of the units will be affordable at 50 percent of median income.The
current design provides two three-story elements defining the edge of Lyndale Avenue. Between these two
elements,there is a landscaped courtyard that will provide a very"liveable"amenity for the resident,and will
provide green space along Lyndale Avenue. Parking is available with sixty-nine below grade and sixty-five
above grade stalls.
It is anticipated that the developer will be issued two pay-as-you-go notes. The Note A will reimburse the
developer for a portion of the land acquisition expenses,and the Note B will reimburse the developer for the
remainder of the land acquisition expenses and a portion of the site improvements.
In addition,the HRA will be paid for the property it owns within the District that it conveys to the developer.
It is estimated that the fair market value is$85,000.
Appendix A-1
Appendix B
Map of the Richfield Redevelopment Project Area and the District
Appendix g_1
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Appendix C
Description of Property to be Included in the District
The District encompasses all property and adjacent rights-of-way and abutting roadways identified by the
parcels listed below.
Parcel Numbers Address Owner
27-028-24-23-0092 6401 Lyndale Avenue South Woodlake Plaza Partnership
27-028-24-23-0060 521 64th Street West Woodlake Plaza Partnership
27-028-24-23-0059 515 64th Street West Richfield HRA
Appendix C-1
Appendix D
Estimated Cash Flow for the District
Appendix D-1
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Appendix E
Housing Qualifications for the District
INCOME RESTRICTIONS-ADJUSTED FOR FAMILY SIZE
(HOUSING DISTRICT)-HENNEPIN COUNTY
HENNEPIN COUNTY MEDIAN INCOME: $83,900
No. of Persons 50%of Median Income 60%of Median
Income
I-person $29,400 $35,280
2-person $33,600 $40,320
3-person $37,800 $45,360
4-person $42,000 $50,400
Source: Department of Housing and Urban Development and Minnesota
Housing Finance Agency
The two options for income limits on a standard housing district are 20% of the units at 50% of median
income or 40%of the units at 60%of median income. There are no rent restrictions for a housing district.
Appendix E-1
. •
Appendix F
.Findings for the District
To be added prior to the public hearing.
Appendix F-1
AGENDA ITEM#: 7
REPORT#: 42
STAFF REPORT
RICHFIELD HOUSING AND REDEVELOPMENT
AUTHORITY MEETING
AUGUST 15, 2011
REPORT PREPARED BY: JOHN STARK, COMMUNITY DEVELOPMENT
DIRECTOR
NAME,TITLE
REPORT PRESENTER: JOHN STARK, COMMUNITY DEVELOPMENT
DIRECTOR ■
NAME,TITLE
DEPARTMENT DIRECTOR REVIEW: 0 %�
/,/ l
REVIEWED BY EXECUTIVE DIRECTOR: r IA `
...„ ..... _voulif
• _ . /
ITEM FOR HRA CONSIDERATION:
Consideration of a Contract for Private Development with Woodlake Richfield Apartments, LLC
for the development of the Woodlake Apartments project.
II. RECOMMENDED ACTION:
By Motion: Consider adoption of:
A) Resolution approving a Contract for Private Development with
Woodlake Richfield Apartments, LLC;
B) Resolution approving the Issuance of, and providing the form,
terms, covenants and directions for the issuance of its Tax
Increment Limited Revenue Note, Series 2011A; and
C) Resolution Authorizing Interfund Loan for Advance of Certain
Costs in Connection with the Amended and Restated Housing Tax
Increment Financing District 2010-1
II. BACKGROUND
On April 19, 2010 the Richfield Housing and Redevelopment Authority (HRA)
approved the establishment of a Housing Tax Increment Financing (TIF) District for
the development of the Woodlake Apartments project. This action was taken after
numerous presentations from the Developers (Terry McNellis, Mary McNellis and
08152011 Woodlake Contract
Michael Swenson of Woodlake Richfield Apartments, LLC) to the Planning
Commission, HRA and City Council.
The basic development concept remains the same as it was last presented to the
HRA. The project entails the demolition of the existing 25,000 sq. ft. multi-tenant
retail building and the construction of mid-to-upper level rental housing with 20% of
that housing meeting state standards as "affordable" to households earning at or
below 50% of the area median income. There have been, however, a few revisions
to the site and building plans.
The revised proposal increases the overall value of the project by creating units that
will rent at a higher rate than the previous plan. Unit sizes throughout the project
have increased by approximately 15-20 percent per unit and the interior amenities
of the project have been improved. The community and fitness rooms are over 200
percent larger, interior finishes have been improved and offices and a business
center added. The revised proposal increases the unit count from 90 to 94 and
includes 5 studios (-2), 50 one-bedroom units (+14), 30 two-bedroom units (-7) and
9 three-bedroom units (-1). The increase in unit size has increased the building
area of the project by approximately 20,000 square feet. The revision also includes
a significant expansion of the below-grade parking garage. This has allowed for a
net increase of 17 additional parking spaces. The overall increase in the project
value will also allow for better exterior finishes. The entire exterior is brick, cement
board or metal panel. Previously, the project included large areas of vinyl siding, all
of which has been removed.
In addition to physical changes to the development proposal, the Developer has
also changed the manner in which they will be financing the project and, as a result,
the method and amount of public financing being sought. The Developer is now
finalizing its private financing, which includes tax-exempt bonds proposed to be
issued by the City in the amount of up to $15,000,000.
At the time the TIF District was approved, it was expected that the tax increment
generated by the TIF District would be used to reimburse the HRA for up to $85,000
for land to be conveyed to the Developer and to pay principal and interest on a pay-
as-you-go note in the amount of $822,000 (net present value) issued to reimburse
Woodlake Richfield Apartments, LLC (Developer) for site acquisition and site
improvement costs.
In working with its Lender, the Developer has determined that property taxes
payable for the Project, if higher than originally anticipated due to the project
improvements, may lead to a funding gap for the Project. The Developer has
requested additional tax increment assistance in the form of a second pay-as-you-
go note ("B Note") issued in the amount of$500,000 but payable only if the
Developer pays real estate taxes for the Project in the amount of more than
$144,000 in any calendar year. Payment of the B Note would not decrease the
amount of payment that the HRA would receive (either for its property or for
payment towards administrative costs). In order to allow for this request, the HRA
staff and consultants have worked to amend and restate the Tax Increment Plan to
include a second pay-as-you-go note in the TIF Plan's budget. Pursuant to
Minnesota State Statute, a change in the TIF Plan's budget requires another public
hearing before the City Council.
Other Contract provisions that may be of interest to the HRA include:
• Tax Increment generated by the project will be used first to reimburse the
HRA in an amount of$85,000 (with 4.00% interest) on an accelerated
schedule for the sale of the HRA-owned vacant residential property at 515
64th Street West;
• The Developer will continue paying the HRA's administrative costs
associated with the project; and
• Barring unavoidable delays, the construction of the development will be
completed by July 31, 2013 (although it is anticipated to be completed
sooner).
The other two resolutions being considered as part of this action are:
B) A Resolution authorizing the issuance of Tax Increment Financing Notes (A and
B) in accordance with the terms of the Contract, and;
C) A Resolution that recognizes the City/HRA may advance funds from funds other
than the TIF being generated by this development to pay preliminary project
costs— in particular costs associated with the HRA owned vacant
residential parcel at 515 64th Street West. This resolution identifies such
expenditures as an "Interfund Loan" and will allow project TIF to reimburse such
costs.
III. BASIS OF RECOMMENDATION
A. POLICY
• On March 8, 2010 the HRA passed a resolution affirming its support of
the housing development concept at 6401 Lyndale Avenue (Woodlake
Richfield Apartments) and expressing its willingness to further
examine public financing for that project.
• On April 19, 2010 the HRA passed a resolution adopting a
modification to the Redevelopment Plan for the Richfield
Redevelopment Project Area and the Establishment of the 2010-1
Housing Tax Increment Financing District (aka Woodlake Housing Tax
Increment Finance District).
• On April 27, 2010, the Richfield City Council held a public hearing and
passed a resolution adopting a modification to the Redevelopment
Plan for the Richfield Redevelopment P roject Area and the
2010-1 Housing Tax Increment Financing District
Establishment of the 2010 g g
(aka Woodlake Housing Tax Increment Finance District).
B. CRITICAL TIMING ISSUES
• The Developer has secured preliminary approvals for their private
financing, but cannot finalize those approvals until the HRA has
approved the attached Contract.
C. FINANCIAL
• The HRA will be paid for the land it conveys to the Developer from tax
increment on an accelerated schedule.
• Based on tax increment projections, the principal of and interest on
both TIF Notes would be paid prior to the intended duration of the TIF
District.
• In addition to tax increment financing assistance, the Developer is also
asking the City to issue conduit revenue bonds in order to finance the
project. This is essentially "pass-through" financing that has no
financial risk for the City and is a role that the City regularly takes.
• Otherwise, the public financing contemplated in this Contract reflects
that which was previously discussed, and approved by the HRA.
D. LEGAL
• HRA Legal Counsel, with the input of staff and the Developers, drafted
the attached Contract for Private Redevelopment and associated
Resolutions.
IV. ALTERNATIVE RECOMMENDATIONS)
• Approve the attached Resolutions with revisions addressing the concerns of
HRA Commissioners;
• Continue the consideration of the Resolutions in order to receive additional
information on the project or the specifics of the Contract;
• Deny approval of the Resolutions.
V. ATTACHMENTS
• Resolution approving a Contract for Private Development with Woodlake
Richfield Apartments, LLC.
• Contract for Private Redevelopment with Woodlake Richfield Apartments,
LLC.
• Resolution Approving the Issuance of, and Providing the Form, Terms,
Covenants and Directions for the Issuance of its Tax Increment Limited
Revenue Note, Series 2011A.
• Resolution Authorizing Interfund Loan for Advance of Certain Costs in
Connection with the Amended and Restated Housing Tax Increment
Financing District 2010-1
VI. PRINCIPAL PARTIES EXPECTED AT MEETING
• Representatives of Woodlake Richfield Apartments, LLC.
7- •
HOUSING AND REDEVELOPMENT AUTHORITY
IN AND FOR THE CITY OF RICHFIELD, MINNESOTA
RESOLUTION NO.
RESOLUTION APPROVING A CONTRACT FOR PRIVATE DEVELOPMENT
BETWEEN THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR
THE CITY OF RICHFIELD AND WOODLAKE RICHFIELD APARTMENTS,LLC
WHEREAS, the Housing and Redevelopment Authority in and for the City of Richfield
(the "Authority") and the City of Richfield (the "City") has approved an Amended and Restated
Tax Increment Financing Plan for the establishment of the 2010-1 Housing Tax Increment
Financing District (Woodlake Housing) (the "TIF District") within the Richfield Redevelopment
Project Area pursuant to Minnesota Statutes, Sections 469.001 to 469.047, as amended, and
Sections 469.174 to 469.1799, as amended; and
WHEREAS, the Board of the Authority has been presented with a Contract for Private
Development(the "Contract"), between the Authority and Woodlake Richfield Apartments, LLC
(the "Developer"), which sets forth the terms and conditions of the housing development project to
be constructed by the Developer within the TIF District; and
WHEREAS, the purpose of the Contract is to provide tax increment financing assistance to
the Developer in order to facilitate redevelopment of the property within the TIF District and
provide affordable housing in the area, which will increase the City's tax base and encourage
redevelopment of property in the area; and
WHEREAS,the Authority has reviewed the Contract and finds that the execution thereof by
the Authority and performance of the Authority's obligations thereunder are in the best interest of
the City and its residents; and
NOW, THEREFORE, BE IT RESOLVED, by the Housing and Redevelopment
Authority in and for the City of Richfield, Minnesota as follows:
1. The Contract presented to the Authority and on file with the Community
Development Director is hereby in all respects approved, subject to modifications that do not alter
the substance of the transaction and that are approved by the Chairperson and Executive Director;
provided that execution of such document by such officials shall be conclusive evidence of
approval.
2. The Chairperson and Executive Director are hereby authorized to execute the
Contract on behalf of the Authority and to carry out on behalf of the Authority the Authority's
obligations thereunder.
Adopted by the Housing and Redevelopment Authority in and for the City of Richfield,
Minnesota this 15th day of August, 2011.
390150v1 JAE RC125-290
Suzanne M. Sandahl, Chair
ATTEST:
Joan Helmberger, Secretary
2
390150v1 JAE RC125-290
7-3
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 2011A IN AN
AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $822,000 AND ITS TAX
INCREMENT LIMITED REVENUE NOTE, SERIES 2011B IN AN AGGREGATE
PRINCIPAL AMOUNT NOT TO EXCEED$500,000
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. 2010-1 (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 2011A (the "Series A Note"), in the aggregate
principal amount of up to $822,000 and its Tax Increment Revenue Note, Series 2011B (the
"Series B Note"), in the aggregate principal amount of up to $500,000, for the purpose of
financing certain public costs of the Tax Increment Plan for the TIF District. The Series A
Note and the Series B Note will be referred to herein as the"Notes."
1.02. Issuance, Sale and Terms of the Notes. Pursuant to the Contract for Private
Development between the Authority and the Owner (the "Agreement"), the Notes shall be
sold to Woodlake Richfield Apartments, LLC (the "Owner"). The Notes shall be dated as
of the date of delivery and shall bear interest at the rate of 6.75%per annum to the earlier of
maturity or prepayment. In exchange for the Authority's issuance of the Notes 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
3.3 of the Agreement. The Series A Note will be delivered in the principal amount of up to
$822,000 for reimbursement of land acquisition costs in accordance with the terms of
Section 3.3(a) of the Agreement. The Series B Note will be delivered in the principal
390139v1 JAE RC125-290
7-�
amount of up to $500,000 for reimbursement of land acquisition and site improvement costs
in accordance with the terms of Section 3.3(b) of the Agreement. The Series B Note shall
be payable only to the extent that the Developer pays more than$144,000 in real estate taxes
on the Development Property in each calendar year that the TIF District remains
outstanding. Further, the Series B Note is payable only to the extent that Available Tax
Increment remains following the payment of principal of and interest on the Series A Note.
Section 2. Form of Notes. The Series A Note shall be in substantially the form
set forth in Exhibit A attached hereto, with the blanks to be properly filled in and the
principal amount and payment schedule adjusted as of the date of issue. The Series B Note
shall be in substantially the form set forth in Exhibit B attached hereto,with the blanks to be
properly filled in and the principal amount and payment schedule adjusted as of the date of
issue.
Section 3. Terms, Execution and Delivery.
3.01. Denomination, Payment. The Notes shall be issued as a single typewritten
note numbered R-1.
The Notes shall be issuable only in fully registered form. Principal of and interest
on the Notes 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 Notes 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.
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 Notes and the registration of
transfers and exchanges of the Notes.
(b) Transfer of Notes. Upon surrender for transfer of the Notes, 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
Notes 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
390139v1 JAE RC125-290
7 -5
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 Notes 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 D 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 Notes 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 D, or other form reasonably acceptable to the Executive Director of
the Authority. The Authority also agrees that future assignments of the Notes 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 D of the
Agreement or other investment letter reasonably acceptable to the Authority from such
assignees.
(c) Cancellation. The Notes 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 a 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
is at any time registered in the bond register as the absolute
in whose name a Note g
person
Y g
owner of the 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 a Note, the
Registrar may impose a charge upon the owner thereof sufficient to reimburse the Registrar
390139v1 JAE RC125-290
— '
for any tax, fee, or other governmental charge required to be paid with respect ect 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.
shall be re
3.04. Preparation and Delivery. The No tes e p p ared under the direction of
p
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 Notes shall cease to be such officer before the delivery of the Notes, such
sg
i nature shall nevertheless be valid and sufficient for all purposes, the same as if such
officer had remained in office until delivery. When the Notes have been so executed, the
Notes 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 Notes all Available Tax Increment as defined in the Notes. Available Tax
Increment shall be applied to payment of the principal of and interest on the Notes in
accordance with Section 3.3 of the Agreement and the terms of the forms of Note set forth
in Exhibit A and Exhibit B attached to this resolution.
4.02. Bond Fund. Until the date the Notes are 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
Notes. 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 2010-1 upon the payment of all
principal and interest to be paid with respect to the Notes.
390139v1 JAE RC125-290
7-,
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 Notes 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 Notes 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. Issuance of Notes. The Authority shall not issue the Notes until (i)
the Agreement is executed by all parties; (ii)the requirements to issue each of the Notes set
forth in Section 3.3 of the Agreement are satisfied; (iii)the Planning Commission of the City
of Richfield reviews the Amended and Restated Tax Increment Financing Plan for the
establishment of the 2010-1 Housing Tax Increment Financing District(Woodlake Housing)
and opines that the plan conforms with the general plans for the development and
redevelopment of the City as described in the comprehensive plan for the City; and (iv) the
City Council of the City of Richfield reviews and approves the Amended and Restated Tax
Increment Financing Plan for the establishment of the 2010-1 Housing Tax Increment
Financing District(Woodlake Housing).
Section 7. 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 15th day of August, 2011.
Suzanne M. Sandahl, Chair
ATTEST:
Joan Helmberger, Secretary
390139v1 JAE RC125-290
- $
EXHIBIT A OF SCHEDULE B
FORM OF SERIES A NOTE
UNITED STATE OF AMERICA
STATE OF MINNESOTA
COUNTIES OF HENNEPIN
HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE
CITY OF RICHFIELD
No. R-1 $822,000
TAX INCREMENT LIMITED REVENUE NOTE
SERIES 2011A
Date
Rate of Original Issue
6.75%
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 WOODLAKE RICHFIELD APARTMENTS, LLC, or registered assigns
(the "Owner"), the principal sum of$822,000 and to pay interest thereon at the rate of six
and three quarters percent per annum, as and to the extent set forth herein.
1. Payments. 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 the payments set forth in Schedule D of the Agreement and
solely payable from "Available Tax Increment," which shall mean, on each Payment Date,
the Tax Increment attributable to the Development Property(defined in the Agreement) and
390139v1 JAE RC125-290
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; and (ii) the amounts shown on Schedule C of the Contract for
Private Development between the Authority and Owner dated as of , 2011
(the "Agreement"), including any amounts contained in said Schedule C which were
previously due and not paid.
Available Tax Increment shall not include any Tax Increment if, as of any Payment
Date,there is an uncured Event of Default under 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 the 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. At the Authority's option, this Note shall terminate and the
Authority's obligation to make any payments under this Note shall be discharged upon the
occurrence of an Event of Default on the part of the Developer as defined in Section 9.1 of
the Agreement, but only if the Event of Default has not been cured in accordance with
Section 9.2 of the Agreement.
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 August 15, 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.
390139v1 JAE RC125-290
7 - 10
7. Estimated Tax Increment Payments. Any estimates of Tax Increment
prepared by the Authority or its financial advisors in connection with the TIF District or the
Agreement are for the benefit of the Authority, and are not intended as representations on
which the Developer may rely.
THE AUTHORITY MAKES NO REPRESENTATION OR WARRANTY THAT
THE AVAILABLE TAX INCREMENT WILL BE SUFFICIENT TO PAY THE
PRINCIPAL OF AND INTEREST ON THIS NOTE.
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
D 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 D, 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 D of the
Agreement or other investment letter reasonably acceptable to the Authority from such
assignees.
390139v1 JAE RC125-290
- � t
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 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
390139v1 JAE RC125-290
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
WOODLAKE RICHFIELD
APARTMENTS,LLC.
Federal ID#
[End of Form of Series A Note]
390139v1 JAE RC125-290
1 - 13
EXHIBIT B OF SCHEDULE B
FORM OF SERIES B NOTE
UNITED STATE OF AMERICA
STATE OF MINNESOTA
COUNTIES OF HENNEPIN
HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE
CITY OF RICHFIELD
No. R-1 $500,000
TAX INCREMENT LIMITED REVENUE NOTE
SERIES 2011B
Date
Rate of Original Issue
6.75%
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 WOODLAKE RICHFIELD APARTMENTS, LLC, or registered assigns
(the "Owner"), the principal sum of$500,000 and to pay interest thereon at the rate of six
and three quarters percent per annum, as and to the extent set forth herein.
1. Payments. Principal and interest ("Payments") shall be paid annually on
February 1, 20_, and each February 1 thereafter to and including February 1, 20_
("Payment Dates"), in the amounts described in Section 2 and 3 herein and from the sources
set forth in Section 4 herein. Payments shall be applied first to accrued interest, and then to
unpaid principal. Notwithstanding the foregoing, payment of principal of or interest on the
Series B Note will not be due and owing until the Owner has delivered to the Authority
evidence reasonably satisfactory to the Authority that Owner has paid certain costs eligible
for reimbursement with tax increment in at least the principal amount of this Note, as
provided in Section 3.3(b) of the Contract for Private Development between the Authority
and Owner dated as of , 2011 (the"Agreement").
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. Principal. The principal amount of this Note shall be payable on the
Payment Date only to the extent that the Developer pays more than $144,000 in real estate
390139v1 JAE RC125-290
1 - 14
taxes on the Development Property in any calendar year and the Developer provides written
evidence of such expenditure to the Authority on or before December 31St of that year.
3. Interest. At anytime that principal of this Note is determined to be due and
payable pursuant to Section 2 hereof, interest at the rate stated herein shall begin to accrue
on the principal determined to be due and payable and unpaid commencing as of October
15th of the calendar year in which the Developer pays more than $144,000 in real estate
taxes on the Development Property. Interest shall be computed on the basis of a year of 360
days and charged for actual days principal is unpaid.
4. 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 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; (ii) the amounts shown on
Schedule C of the Agreement, for the repayment of the Authority's interfund loan, including
any amounts contained in said Schedule C which were previously due and not paid; and(iii)
the amounts shown on Schedule E of the Agreement, for the payment of principal of and
interest on the Tax Increment Limited Revenue Note, Series 2011A, including any amounts
contained in said Schedule E which were previously due and not paid.
Available Tax Increment shall not include any Tax Increment if, as of any Payment
Date,there is an uncured Event of Default under 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 the principal of this Note that has been determined to be payable pursuant
to Section 2 hereof but remains unpaid 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.
5. 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.
6. Termination. At the Authority's option, this Note shall terminate and the
Authority's obligation to make any payments under this Note shall be discharged upon (i)
the payment of$500,000 in principal amount of the Note and accrued interest thereon; (ii)
the termination of the TIF District; or (iii) the occurrence of an Event of Default on the part
390139v1 JAE RC125-290
7- 15
of the Developer as defined in Section 9.1 of the Agreement, but only if the Event of Default
has not been cured in accordance with Section 9.2 of the Agreement.
7. 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 August 15, 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.
8. Estimated Tax Increment Payments. Any estimates of Tax Increment
prepared by the Authority or its financial advisors in connection with the TIF District or the
Agreement are for the benefit of the Authority, and are not intended as representations on
which the Developer may rely.
THE AUTHORITY MAKES NO REPRESENTATION OR WARRANTY THAT
THE AVAILABLE TAX INCREMENT WILL BE SUFFICIENT TO PAY THE
PRINCIPAL OF AND INTEREST ON THIS NOTE.
9. Registration. This Note is issuable only as a fully registered note without
coupons.
10. 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
D of the Agreement or a certificate of the transferor, in a form satisfactory to the Executive
390139v1 JAE RC125-290
1 - Ito
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 D, 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 D 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 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
390139v1 JAE RC125-290
1 - 1 1
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
WOODLAKE RICHFIELD
APARTMENTS,LLC.
Federal ID#
[End of Form of Series B Note]
390139v1 JAE RC125-290
HOUSING AND REDEVELOPMENT AUTHORITY
IN AND FOR THE CITY OF RICHFIELD
RESOLUTION NO.
RESOLUTION AUTHORIZING INTERFUND LOAN FOR ADVANCE
OF CERTAIN COSTS IN CONNECTION WITH AMENDED AND RESTATED HOUSING
TAX INCREMENT FINANCING DISTRICT 2010-1 (WOODLAKE HOUSING)
BE IT RESOLVED By the Board of Commissioners of the Housing and Redevelopment
Authority in and for the City of Richfield,Minnesota(the"Authority")as follows:
Section 1. Background.
1.01. The Authority has established Housing Tax Increment Financing District 2010-1
(Woodlake Housing) within the Richfield Redevelopment Project Area (the "Redevelopment
Project") pursuant to Minnesota Statutes, Sections 469.174 to 469.179, as amended (the "TIF Act")
and Sections 469.001 to 469.047, as amended (the "HRA Act").
1.02. The Authority may incur certain costs related to the TIF District, which costs may be
financed on a temporary basis from available Authority funds.
1.03. Under Section 469.178, Subdivision 7 of the TIF Act, the Authority is authorized to
advance or loan money from any fund from which such advances may be legally made in order to
finance expenditures that are eligible to be paid with tax increments under the TIF Act.
1.04. The Authority owns certain property (the "Redevelopment Property") and has
incurred or will incur certain costs to prepare such property for redevelopment. The Authority has
determined that the market price of the improved Redevelopment Property is at least$85,000.
1.05. It is proposed that the Authority enter into a Contract for Private Development, dated
on or after August 1, 2011 (the "Contract"), between the Authority and Woodlake Richfield
Apartments, LLC (the "Developer"), pursuant to which the Authority will convey the
Redevelopment Property to the Developer for$1.00.
1.06. Pursuant to the Contract, the Authority has agreed to forego receipt of the full market
value of the Redevelopment Property. Such forbearance represents an advance of Authority funds
in the amount of approximately$85,000 (the write-down in purchase price).
1.07. In addition to the land write-down, the Authority has determined to pay for other
costs identified in the TIF Plan consisting of land/building acquisition, site
improvements/preparation, public parking facilities, interest and administrative costs (collectively,
the "Qualified Costs"), which costs may be financed on a temporary basis from HRA funds
available for such purposes.
1.08. The Authority intends to reimburse itself for the write-down in purchase price and
other Qualified Costs from tax increments derived from the TIF District in accordance with the
terms of this resolution(which terms are referred to collectively as the "Interfund Loan").
1
366811vI JAE RC125-297
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Section 2. Repayment of Interfund Loan.
2.01. The Authority will reimburse itself for the land advance in the principal amount of
up to $85,000 and other Qualified Costs in the amount of up to $200,000, together with interest at
the rate per annum described below. Interest accrues on the principal amount of the Interfund Loan
from the date the property is conveyed (hereafter, the "Closing Date"). The Interfund Loan shall
bear interest at the rate of 4.0% per annum, which is the greater of the rate specified under
Minnesota Statutes, Section 270C.40 and Section 549.09 in effect for the calendar year in which the
Closing Date occurred.
2.02. Principal and interest ("Payments") on the Interfund Loan shall be paid semi-
annually on each August 1 and February 1 (each a "Payment Date"), commencing on the first
Payment Date on which the Authority has Tax Increment (defined below), or on any other dates
determined by the Executive Director, through the date of last receipt of Tax Increment from the
TIF District.
2.03. Payments on the Interfund Loan will be made from Tax Increment, defined as tax
increment from the TIF District received by the Authority from Hennepin County in the six-month
period before any Payment Date, less any amounts determined by the Authority to be applied
toward administrative expenses in accordance with the TIF Act. It is anticipated that payments on
the Interfund Loan will be made in the amounts and on the dates set forth in Schedule C of the
Contract. Payments shall be applied first to accrued interest, and then to unpaid principal. Interest
accruing from the Closing Date will be compounded semiannually on February 1 and August 1 of
each year and added to principal until the first Payment Date, unless otherwise specified by the
Executive Director.
2.04. The principal sum and all accrued interest payable under this resolution is pre-
payable in whole or in part at any time by the Authority without premium or penalty.
2.05. This resolution is evidence of an internal borrowing by the Authority in accordance
with Section 469.178, subdivision 7 of the TIF Act, and is a limited obligation payable solely from
Available Tax Increment pledged to the payment hereof under this resolution. The Interfund Loan
shall not be deemed to constitute a general obligation of the State of Minnesota or any political
subdivision thereof, including, without limitation, the Authority and the City. Neither the State of
Minnesota, nor any political subdivision thereof shall be obligated to pay the principal of or interest
on the Interfund Loan or other costs incident hereto except out of Available Tax Increment. The
Authority shall have no obligation to pay any principal amount of the Interfund Loan or accrued
interest thereon, which may remain unpaid afer the final Payment Date.
2.06. The Authority may at any time make a determination to forgive the outstanding
principal amount and accrued interest on the Interfund Loan to the extent permissible under law.
2.07. The Authority may from time to time amend the terms of this Resolution to the
extent permitted by law, including without limitation amendment to the payment schedule and the
interest rate; provided that the interest rate may not be increased above the maximum specified in
Section 469.178. subd. 7 of the TIF Act.
2
I366811v1 JAE RC125-297
Section 3. Effective Date. This resolution is effective upon approval.
Adopted this 15th day of August, 2011
Suzanne M. Sandahl, Chair
ATTEST:
Joan Helmberger, Secretary
3
366811v1 JAE RC125-297
HOUSING AND REDEVELOPMENT AUTHORITY
IN AND FOR THE CITY OF RICHFIELD
RESOLUTION NO.
RESOLUTION AUTHORIZING INTERFUND LOAN FOR ADVANCE
OF CERTAIN COSTS IN CONNECTION WITH AMENDED AND RESTATED HOUSING
TAX INCREMENT FINANCING DISTRICT 2010-1 (WOODLAKE HOUSING)
BE IT RESOLVED By the Board of Commissioners of the Housing and Redevelopment
Authority in and for the City of Richfield,Minnesota(the"Authority")as follows:
Section 1. Background.
1.01. The Authority has established Housing Tax Increment Financing District 2010-1
(Woodlake Housing) within the Richfield Redevelopment Project Area (the "Redevelopment
Project") pursuant to Minnesota Statutes, Sections 469.174 to 469.179, as amended (the "TIF Act")
and Sections 469.001 to 469.047, as amended (the "HRA Act").
1.02. The Authority may incur certain costs related to the TIF District, which costs may be
financed on a temporary basis from available Authority funds.
1.03. Under Section 469.178, Subdivision 7 of the TIF Act, the Authority is authorized to
advance or loan money from any fund from which such advances may be legally made in order to
finance expenditures that are eligible to be paid with tax increments under the TIF Act.
1.04. The Authority owns certain property (the "Redevelopment Property") and has
incurred or will incur certain costs to prepare such property for redevelopment. The Authority has
determined that the market price of the improved Redevelopment Property is at least$85,000.
1.05. It is proposed that the Authority enter into a Contract for Private Development, dated
on or after August 1, 2011 (the "Contract"), between the Authority and Woodlake Richfield
Apartments, LLC (the "Developer"), pursuant to which the Authority will convey the
Redevelopment Property to the Developer for$1.00.
1.06. Pursuant to the Contract, the Authority has agreed to forego receipt of the full market
value of the Redevelopment Property. Such forbearance represents an advance of Authority funds
in the amount of approximately $85,000 (the write-down in purchase price).
1.07. In addition to the land write-down, the Authority has determined to pay for other
costs identified in the TIF Plan consisting of land/building acquisition, site
improvements/preparation, public parking facilities, interest and administrative costs (collectively,
the "Qualified Costs"), which costs may be financed on a temporary basis from HRA funds
available for such purposes.
1.08. The Authority intends to reimburse itself for the write-down in purchase price and
other Qualified Costs from tax increments derived from the TIF District in accordance with the
terms of this resolution(which terms are referred to collectively as the"Interfund Loan").
1
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Section 2. Repayment of Interfund Loan.
2.01. The Authority will reimburse itself for the land advance in the principal amount of
up to $85,000 and other Qualified Costs in the amount of up to $200,000, together with interest at
the rate per annum described below. Interest accrues on the principal amount of the Interfund Loan
from the date the property is conveyed (hereafter, the "Closing Date"). The Interfund Loan shall
bear interest at the rate of 4.0% per annum, which is the greater of the rate specified under
Minnesota Statutes, Section 270C.40 and Section 549.09 in effect for the calendar year in which the
Closing Date occurred.
2.02. Principal and interest ("Payments") on the Interfund Loan shall be paid semi-
annually on each August 1 and February 1 (each a "Payment Date"), commencing on the first
Payment Date on which the Authority has Tax Increment (defined below), or on any other dates
determined by the Executive Director, through the date of last receipt of Tax Increment from the
TIF District.
2.03. Payments on the Interfund Loan will be made from Tax Increment, defined as tax
increment from the TIF District received by the Authority from Hennepin County in the six-month
period before any Payment Date, less any amounts determined by the Authority to be applied
toward administrative expenses in accordance with the TIF Act. It is anticipated that payments on
the Interfund Loan will be made in the amounts and on the dates set forth in Schedule C of the
Contract. Payments shall be applied first to accrued interest, and then to unpaid principal. Interest
accruing from the Closing Date will be compounded semiannually on February 1 and August 1 of
each year and added to principal until the first Payment Date, unless otherwise specified by the
Executive Director.
2.04. The principal sum and all accrued interest payable under this resolution is pre-
payable in whole or in part at any time by the Authority without premium or penalty.
2.05. This resolution is evidence of an internal borrowing by the Authority in accordance
with Section 469.178, subdivision 7 of the TIF Act, and is a limited obligation payable solely from
Available Tax Increment pledged to the payment hereof under this resolution. The Interfund Loan
shall not be deemed to constitute a general obligation of the State of Minnesota or any political
subdivision thereof, including, without limitation, the Authority and the City. Neither the State of
Minnesota, nor any political subdivision thereof shall be obligated to pay the principal of or interest
on the Interfund Loan or other costs incident hereto except out of Available Tax Increment. The
Authority shall have no obligation to pay any principal amount of the Interfund Loan or accrued
interest thereon, which may remain unpaid afer the final Payment Date.
2.06. The Authority may at any time make a determination to forgive the outstanding
principal amount and accrued interest on the Interfund Loan to the extent permissible under law.
2.07. The Authority may from time to time amend the terms of this Resolution to the
extent permitted by law, including without limitation amendment to the payment schedule and the
interest rate; provided that the interest rate may not be increased above the maximum specified in
Section 469.178. subd. 7 of the TIF Act.
2
366811v1 JAE RC125-297
'7- a3
Section 3. Effective Date. This resolution is effective upon approval.
Adopted this 15th day of August, 2011
Suzanne M. Sandahl, Chair
ATTEST:
Joan Helmberger, Secretary
3
366811v1 JAE RC125-297
DRAFT
August 5,2011
CONTRACT
FOR
PRIVATE DEVELOPMENT
By and Between
HOUSING AND REDEVELOPMENT AUTHORITY
IN AND FOR THE
CITY OF RICHFIELD,MINNESOTA
and
WOODLAKE RICHFIELD APARTMENTS,LLC
Dated: ,2011
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
371382v6 JBD RC125-290
-as
TABLE OF CONTENTS
Page
PREAMBLE 1
ARTICLE I
Definitions
Section 1.1. Definitions 2
ARTICLE II
Representations and Warranties
Section 2.1. Representations by the Authority 5
Section 2.2. Representations and Warranties by the Developer 6
ARTICLE III
Property Acquisition;Financing
Section 3.1. Status of Development Property 8
Section 3.2. Authority Property 8
Section 3.3. Issuance of Pay-As-You-Go Notes 9
Section 3.4. Termination of TIF District 10
Section 3.5. Grants 10
Section 3.6. Payment of Administrative Costs 10
Section 3.7. Records 10
Section 3.8. Purpose of Assistance 11
ARTICLE IV
Construction of Minimum Improvements
Section 4.1. Construction of Improvements 12
Section 4.2. Construction Plans 12
Section 4.3. Commencement and Completion of Construction 13
Section 4.4. Certificate of Completion 13
Section 4.5. Affordability Covenants; Qualification of the TIF District 13
Section 4.6. Affordability Housing Reporting 14
ARTICLE V
Insurance and Condemnation
Section 5.1. Insurance 15
Section 5.2. Subordination 16
ARTICLE VI
Tax Increment; Taxes
Section 6.1. Right to Collect Delinquent Taxes 17
Section 6.2. Reduction of Taxes 17
Section 6.3. Qualifications 18
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1
ARTICLE VII
Financing
Section 7.1. Mortgage Financing 19
Section 7.2. Authority's Option to Cure Default in Mortgage 19
Section 7.3. Modification; Subordination 19
Section 7.4. Termination 19
ARTICLE VIII
Prohibitions Against Assignment and Transfer;Indemnification
Section 8.1. Representation as to Development 20
Section 8.2. Prohibition Against Developer's Transfer of Property and Assignment of
Agreement 20
Section 8.3. Release and Indemnification Covenants 21
ARTICLE IX
Events of Default
Section 9.1. Events of Default Prior to Completion 22
Section 9.2. Remedies on Default 22
Section 9.3. Termination or Suspension of Notes 22
Section 9.4. No Remedy Exclusive 23
Section 9.5. No Additional Waiver Implied by One Waiver 23
Section 9.6. Attorney Fees and Costs 23
ARTICLE X
City Development Requirements
Section 10.1. Renter Screening Criteria 24
Section 10.2. Crime-Fee and Drug-Free Housing 24
ARTICLE XI
Additional Provisions
Section 11.1. Conflict of Interests; City 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. Notices and Demands 25
Section 11.7. Counterparts 25
Section 11.8. Recording 26
TESTIMONIUM S-1
SIGNATURES S-1
371382v6 JBD RC125-290
it
SCHEDULE A Development Property
SCHEDULE B Authorizing Resolution
SCHEDULE C Authority Property Reimbursement Payment Schedule
SCHEDULE D Form of Investment Letter
SCHEDULE E Series A Note Payment Schedule
SCHEDULE F Certificate of Completion
SCHEDULE G Form of Assignment and Subordination Agreement
SCHEDULE H Renter Screening Criteria
SCHEDULE I Lease Addendum
371382v6 JBD RC125-290
111
a4Z
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
WOODLAKE RICHFIELD APARTMENTS, LLC, a Minnesota limited liability company (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. 2010-
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 94-unit apartment complex (the "Minimum Improvements") that
includes 19 apartment units that will be affordable to families at or below 50%of the area median income for
the Minneapolis-St. Paul-Bloomington Metropolitan Statistical Area as determined by the U.S. Department
of Housing and Urban Development;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 reimburse the Developer for a portion of the land acquisition costs and certain site
improvement costs related to the Minimum Improvements; and
WHEREAS, the Authority believes that the development of the TIF District pursuant to this
Agreement, and fulfillment generally of this Agreement, are in the vital and best interests of the City and the
health, safety, morals, and welfare of its residents, and in accord with the public purposes and provisions of
the applicable State and local laws and requirements under which the Redevelopment Project has been
undertaken and is being assisted.
NOW, THEREFORE, in consideration of the premises and the mutual obligations of the parties
hereto,each of them does hereby covenant and agree with the other as follows:
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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 Property"means the parcel of land designated as such in Schedule A.
"Authority Representative"means the Executive Director of the Authority.
"Authorizing Resolution" means the resolution of the Authority, substantially in the form of the
attached Schedule B to be adopted by Board to authorize the issuance of the Notes.
"Available Tax Increment," means, on each Payment Date, Tax Increment attributable to the
Development Property 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; and (ii)the amounts shown on Schedule C, including any amounts contained in Schedule C
which were previously due and not paid. Available Tax Increment shall not include any Tax Increment if,
as of any Payment Date,there is an uncured Event of Default under this Agreement.
"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.
"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 Woodlake Richfield Apartments, LLC, a Minnesota limited liability company,
or its permitted successors and assigns.
"Development Property"means the real property described in Schedule A of this Agreement.
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7_ 3a
"Event of Default"means an action by the Developer 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 both of the Notes have been paid in full or terminated,
whichever is earlier.
"Minimum Improvements" means the development on the Development Property of an
approximately 110,000 square foot apartment complex containing 94 units of housing, including 19 units that
will be affordable to families at or below 50%of the area median income within the County.
"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.
"Notes"means the Series A Note and the Series B Note.
"Project Area"means the real property located within the boundaries of the Redevelopment Project.
"Redevelopment Project"means the Richfield Redevelopment Project.
"Series A Note"means a Tax Increment Limited Revenue Note, substantially in the form contained
in Exhibit A attached to the Authorizing Resolution, to be delivered by the Authority to the Developer
pursuant to Section 3.3(a)hereof,and any obligation issued to refund the Series A Note.
"Series B Note" means a Tax Increment Limited Revenue Note, substantially in the form contained
in Exhibit B attached to the Authorizing Resolution, to be delivered by the Authority to the Developer
pursuant to Section 3.3(b)hereof,and any obligation issued to refund the Series B Note.
"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.
"Tax Increment District"or"TIF District"means the Tax Increment Financing District No.2010-1, a
housing district.
"Tax Increment Plan" or "TIF Plan" means the Tax Increment Financing Plan for Tax Increment
Financing District No. 2010-1, as approved by the City Council on April 27, 2010, which was amended and
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1
restated by the Amended and Restated Tax Increment Financing Plan approved by the City Council on
September 13,2011,and as it may be further 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 delays beyond the reasonable control of the party seeking to be
excused as a result thereof which are the direct result of strikes, other labor troubles, prolonged adverse
weather or acts of God, fire or other casualty to the 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.)
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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 TIF District,and will duly request certification at the appropriate time.
(c) The Authority proposes to assist in fmancing 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 Authority will not voluntarily take any action to reduce the amount of Available Tax
Increment until the Notes have been fully paid according to its terms.
(f) 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.
(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.
(i) The Authority will reasonably cooperate with the Developer with respect to any litigation
commenced by third parties with respect to the Development Property; however, this provision does not
obligate the Authority to incur costs,except as provided otherwise in this Agreement or elsewhere.
(j) 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
371382v6 JBD RC125-290
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discretion, or to incur costs except when the incurring of such costs is otherwise provided in this Agreement
or elsewhere.
(k) The Authority, as regards the Authority Property, has reviewed its files and records, and
based solely on that review it is not aware of any fact,the existence of which would cause it to be in violation
of any environmental law or which would give any person a valid claim under the Minnesota Environmental
Rights Act or the Minnesota Environmental Policy Act. The Authority does not make any similar
representations regarding the other parcels comprising the Development Property.
Section 2.2. Representations and Warranties by the Developer. The Developer represents and
warrants that:
(a) The Developer is a limited liability company duly organized and in good standing under the
laws of the State, is duly authorized to transact business within the State, and has the power to enter into this
Agreement.
(b) The Developer will construct, operate and maintain the Minimum Improvements in
accordance with the terms of this Agreement, Redevelopment Plan and all local, state and federal laws and
regulations (including, but not limited to, environmental, zoning, building code and public health laws and
regulations).
(c) The Developer has received no notice or communication from any local, state or federal
official that the activities of the Developer or the Authority in or on the Development Property may be or will
be in violation of any environmental law or regulation(other than those notices or communications of which
the Authority is aware). The Developer is aware of no facts the existence of which would cause it to be in
violation of or give any person a valid claim under any local, state or federal environmental law,regulation or
review procedure.
(d) The Developer will obtain, in a timely manner, all required permits, licenses and approvals,
and will meet, in a timely manner, all requirements of all applicable local, state and federal laws and
regulations which must be obtained or met before the Minimum Improvements may be lawfully constructed.
The Developer did not obtain a building permit for any portion of the Minimum Improvements before
September 13,2011,the date of approval of the TIF Plan for the TIF District.
(e) Neither the execution and delivery of this Agreement, the consummation of the transactions
contemplated hereby,nor the fulfillment of or compliance with the terms and conditions of this Agreement is
prevented, limited by or conflicts with or results in a breach of, the terms, conditions or provisions of any
corporate restriction or any evidences of indebtedness, agreement or instrument of whatever nature to which
the Developer is now a party or by which it is bound,or constitutes a default under any of the foregoing.
(1) The proposed development by the Developer hereunder would not occur but for the tax
increment financing assistance being provided by the Authority hereunder.
(g) The Developer shall promptly advise the Authority in writing of all litigation or claims
affecting any part of the Minimum Improvements and all written complaints and charges made by any
governmental authority materially affecting the Minimum Improvements or materially affecting Developer or
its business which may delay or require changes in construction of the Minimum Improvements.
(h) 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.
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(i) The Developer has reviewed all matters pertaining to the creation and the certification of the
Tax Increment District, and has independently concluded that the Tax Increment District was created and
certified in full compliance with all legal requirements.
(j) 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.
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ARTICLE III
Property Acquisition;Financing
Section 3.1. Status of Development Property. The Developer currently owns or, in its sole and
absolute discretion, will acquire the Development Property. The Authority has no obligation to acquire the
Development Property or any portion thereof,and has played no role in any acquisition Developer's activities
except as described in Section 3.2. To the extent it is necessary to provide assistance to the Developer in the
form of a land write-down to make the development of the Minimum Improvements financially feasible, it
will be in the form of a payment to the Developer without the transfer of the Development Property to the
Authority. This approach is deemed desirable in light of potential liability that could be incurred by the
Authority if the Authority takes title to the Development Property directly.
The Developer hereby indemnifies, and agrees to defend and hold harmless the Authority from any
claims for relocation benefits or assistance made against the Authority by third parties based on a claim that
they were displaced as a result of the Minimum Improvements. This obligation does not extend to claims
from third parties based upon the Authority Property.
Section 3.2. Authority Property. One of the parcels of land comprising the Development Property
is owned by the Authority and is described and shown as such on Schedule A. Subject to all of the terms of
this Agreement,the Authority will transfer title to the Authority Property by quit claim deed(the"Closing").
(a) The Authority Property will be conveyed"as-is" and"where-is". Within 30 days following
execution of this Agreement the Authority will provide the Developer with a commitment for title insurance
from a title insurance company acceptable to Developer. The Authority will be responsible for the cost of
preparation of the commitment,but the Developer will be responsible for obtaining a policy of title insurance.
Without limitation,the Developer is responsible for satisfying itself as to matters such as contamination, soils
and soil stability,title and survey. The Authority shall have no obligation to cure any defect or other matter,
but agrees to cooperate,at no cost or expense to it,in any efforts by Developer to achieve such a cure.
(b) At the Closing, the Authority will execute and deliver to the Developer the following, in
form and content reasonably acceptable to the Developer:
i. A Quit Claim Deed conveying the Authority Property to the Developer.
ii. A non-foreign affidavit, properly executed, containing such information as is
required by Internal Revenue Code section 1445(b)(2)and its regulations.
iii. A standard form Seller's Affidavit.
iv. A Well Certificate in the form required by law.
v. Any affidavit and disclosures required by law pertaining to private sewage treatment
systems.
(c) The Developer acknowledges that the Authority will be conveying the Authority Property to
the Developer for a cash payment of$1.00 and with the understanding that Tax Increment generated by the
Development Property, at the times and in the amounts shown on Schedule C, will be used to reimburse the
Authority for the actual value of the Authority Property at Closing which is$85,000,plus interest.
(d) The Closing will not take place until the Developer has obtained all necessary land use
approvals from the City, and has met any requirements of the City regarding subdivision of the Development
Property.
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(e) In the event that the Closing has not taken place by December 31, 2011,and unless extended
by mutual agreement of the parties, this Agreement will terminate and be on no further force and effect, and
the parties will be relieved of any further obligations hereunder.
Section 3.3. Issuance of Pay-As-You-Go Notes. (a) To reimburse the Developer for a portion of the
land acquisition costs, including land acquisition costs in the form of assumption and payment of a mortgage,
incurred by the Developer in at least the principal amount of the Series A Note,the Authority shall issue and
deliver and the Developer shall purchase the Series A Note in the principal amount of $822,000 in
substantially the form set forth in Exhibit A of the Authorizing Resolution attached as Schedule B but subject
to the terms of Section 3.3(c). The Authority and the Developer agree that the consideration from the
Developer for the purchase of the Series A Note shall consist of the Developer's payment of the land
acquisition costs as described above incurred by the Developer in at least the principal amount of the Series A
Note.
The Authority shall deliver the Series A Note upon delivery by the Developer of an investment letter
in substantially the form attached to this Agreement as Schedule D, together with evidence reasonably
satisfactory to the Authority that Developer has paid the costs associated with land acquisition related to the
Minimum Improvements in at least the principal amount of the Series A Note. The Series A Note shall be
paid from Available Tax Increment based on the schedule set forth in Schedule E, including any amounts
contained in Schedule E which were previously due and not paid.
(b) To reimburse the Developer for a portion of the land acquisition costs described above and site
improvements related to the Minimum Improvements incurred by the Developer in at least the principal
amount of the Series B Note,the Authority shall issue and deliver and the Developer shall purchase the Series
B Note in the principal amount of$500,000 in substantially the form set forth in Exhibit B of the Authorizing
Resolution attached as Schedule B but subject to the terms of Section 3.3(c). The Authority and the
Developer agree that the consideration from the Developer for the purchase of the Series B Note shall consist
of the Developer's payment of the land acquisition costs as described above and site improvements related to
the Minimum Improvements incurred by the Developer in at least the principal amount of the Series B Note.
The Authority shall deliver the Series B Note at the same time the Series A Note is delivered,as long
as the Developer provides the Authority with an investment letter in substantially the form attached to this
Agreement as Schedule D. The first payment of principal of or interest on the Series B Note will not be due
and owing until the Developer delivers to the Authority evidence reasonably satisfactory to the Authority that
Developer has paid the costs associated with land acquisition and site improvements related to the Minimum
Improvements in at least the principal amount of the Series B Note.
Principal of the Series B Note shall be payable only to the extent that,in any calendar year during the
term of the Series B Note, the Developer pays more than $144,000 in real estate taxes on the Development
Property. For any calendar year in which the Developer pays more than $144,000 in real estate taxes on the
Development Property, the Developer must provide written evidence to the Authority of such expenditures
by December 31 of that year. Interest shall accrue in each calendar year in which the Developer pays more
October 15th of that year.
h Development Property commencing as of O y
than 144 000 in real estate taxes on the rty g
$144,000 P p
174 000 in real estate taxes in 2016, and provides written evidence of such
For example, if Developer pays $174,000 � p
P � p pY
expenditure to the Authority by December 31,2016,principal of the Series B Note will be due in the amount
of $30,000 and interest on such principal amount shall accrue from and after October 15th of that year.
Payment of the principal of and interest on the Series B Note is described in detail in Exhibit B of the
Authorizing Resolution attached as Schedule B.
(c) The Developer understands and acknowledges that Tax Increment generated by the Development
Property will first be used to reimburse the Authority for the Authority Property, as described in Section 3.2.
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Available Tax Increment will first be used to pay principal of and interest on the Series A Note, using the
payment schedule set forth in Schedule E attached to this Agreement. Available Tax Increment will then be
applied to the payment of principal of and interest on the Series B Note, if any is due. Remaining Available
Tax Increment will be utilized by the Authority for any other authorized uses set forth in the TIF Plan.
(d) 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 Notes will be
sufficient to pay the principal of and interest on the Notes. 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.
(e) The Authority acknowledges that the Developer may assign the Notes 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 hereby consents to such assignment to Wells Fargo Bank, National
Association, or an affiliate, conditioned upon receipt of an investment letter from such lender in substantially
the form attached to this Agreement as Schedule D, or other form reasonably acceptable to the Authority.
The Authority also agrees that future assignments of the Notes 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 D or other investment letter reasonably acceptable to the Executive Director, upon review by
Authority counsel,from such assignees.
Section 3.4. Termination of TIF District. At anytime following the reimbursement of the Authority
for the Authority Property and the payment in full of the principal of and interest on Series A Note, if the
Authority determines that it has collected sufficient Available Tax Increment to pay in full all principal of and
interest on the Series B Note,the Authority may, in its reasonable discretion,terminate the TIF District. Prior
to any such termination,the Authority shall provide at least thirty(30)days notice to the Developer.
Section 3.5. 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 3.6. 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 and consultant costs of the Authority, all attributable to or incurred in connection with the negotiation
and preparation 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.
Section 3.7. 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.
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Section 3.8. 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.
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ARTICLE IV
Construction of Minimum Improvements
Section 4.1. Construction of Improvements. Provided that the Developer acquires the Development
Property, including the Authority 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 Developer's equity) for construction of the
Minimum Improvements; (vi) the Construction Plans provide for the construction of Minimum
Improvements having an estimated market value of at least $11,082,318 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 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.
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Section 4.3. Commencement and Completion of Construction. Subject to Unavoidable Delays,the
Developer will substantially complete construction of the Minimum Improvements by July 31, 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 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 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 F.
(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 469.174, Subdivision
Improvements
11 and Section 469.1761 of the TIF Act. In that regard, Developer agrees that the Minimum Im p
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 19 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,
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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 shall indemnify, defend and hold harmless the Authority and the
City for any damages or costs resulting therefrom. Such indemnification and hold harmless will include the
immediate payment to the Authority for any portion of the value of the Authority Property not already
reimbursed from tax increment.
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.
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371382v6 JBD RC125-290
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ARTICLE V
Insurance
Section 5.1. Insurance. (a)The Developer will provide and maintain at all times during the process
of constructing the Minimum Improvements an All Risk Broad Form Basis Insurance Policy and, from time
to time during that period, at the request of the Authority, furnish the Authority with proof of payment of
premiums on policies covering the following:
(i) Builder's risk insurance, written on the so-called `Builder's Risk — Completed
Value Basis," in an amount equal to one hundred percent (100%) of the insurable value of the
Minimum Improvements at the date of completion,and with coverage available in nonreporting form
on the so-called "all risk" form of policy. The interest of the Authority shall be protected in
accordance with a clause in form and content satisfactory to the Authority;
(ii) Comprehensive general liability insurance (including operations, contingent
liability, operations of subcontractors, completed operations and contractual liability insurance)
together with a Protective Liability Policy with limits against bodily injury and property damage of
not less than $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.
(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
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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.
(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, terminate the Notes as provided in Section 9.3(b) hereof. If the
Authority terminates the Notes, such termination 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 Notes.
(0 The Developer and the Authority agree that all of the insurance provisions set forth in this
Article V shall terminate upon the termination of this Agreement.
Section 5.2. Subordination. Notwithstanding anything to the contrary contained in this Article V,
the rights of the Authority with respect to the receipt and application of any proceeds of insurance shall, in all
respects,be subject and subordinate to the rights of any lender under a Mortgage approved pursuant to Article
VII of this Agreement.
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371382v6 JBD RC125-290
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ARTICLE VI
Tax Increment; Taxes
Section 6.1. Right to Collect Delinquent Taxes. The Developer acknowledges that the Authority is
providing substantial aid and assistance in furtherance of the redevelopment through issuance of the Notes.
The Developer understands that the Tax Increments pledged to payment of the Notes 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; or
(iii) seek or agree to any reduction of the assessor's estimated market value to below the estimated market
value set forth in Section 4.2(a)(vi)hereof.
The Developer may, at any time following the issuance of the Certificate of Completion and until the
Notes are 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 estimated market value contained in Section 4.2(a)(vi).
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 or reduce payments due under the Notes except for the portion of such payments from Available Tax
Increment,as defined in the Notes,based on the estimated market value contained in section 4.2(a)(vi),or the
assessor's estimated market value for the year in which the Minimum Improvements have been completed, if
less than the amount in 4.2(a)(vi), until the actual amount of the reduction in market value 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 Notes, from the amounts subject to suspension, if it determines, in its reasonable discretion,
that the amount retained will be sufficient to cover any repayment which the County may require.
' on the Notes pursuant to this Section shall not be considered
The Authority's suspension of payments p
a default under Section 9.1 hereof.
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Section 6.3. Qualifications. Notwithstanding anything herein to the contrary, the parties
acknowledge and agree that upon Transfer of the Development Property to another person or entity, the
Developer will remain obligated under Sections 6.1 and 6.2 hereof, unless the Developer is released from
such obligations in accordance with the terms and conditions of Section 8.2(b)or 8.3 hereof.
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ARTICLE VII
Financing
Section 7.1. Mortgage Financing. (a) Before 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 fmancing 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 in Mortgage. In the event that any portion of the
Developer's funds is provided through mortgage financing, and there occurs a default under any Mortgage
authorized pursuant to Article VII 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.
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. Notwithstanding the foregoing,the Authority will approve
any such subordination request in substantially the form of the agreement attached as Schedule G; and the
Executive Director and Board Chair may execute any such agreement on behalf of the Authority without
further action of the Board.
Section 7.4. Termination. All the provisions of this Article VII shall terminate with respect to the
Minimum Improvements, upon delivery of the Certificate of Completion for the Minimum Improvements.
The Developer or any successor in interest to the Minimum Improvements or portion thereof, may sell or
engage in financing or any other transaction creating a mortgage or encumbrance or lien on the Minimum
Improvements or any portion thereof for which a Certificate of Completion has been obtained, without
obtaining prior written approval of the Authority, provided that such sale, financing or other transaction
creating a mortgage or encumbrance shall not be deemed as resulting in any subordination of the Authority's
rights under this Agreement unless the Authority expressly consents to such a subordination.
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ARTICLE VIII
Prohibitions Against Assignment and Transfer;Indemnification
Section 8.1. Representation as to Development. The Developer represents and agrees that its
purchase of the Development Property,and its other undertakings pursuant to the Agreement,are,and will be
used,for the purpose of development of the Development Property and not for speculation in land holding.
Section 8.2. Prohibition Against Developer's Transfer of Property and 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 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
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way by this Agreement or otherwise with respect to the construction of the Minimum Improvements,
from any of its obligations with respect thereto.
(iii) Any and all instruments and other legal documents involved in effecting the transfer
of any interest in this Agreement or the Development Property governed by this Article VIII,shall be
in a form reasonably satisfactory to the Authority.
In the event the foregoing conditions are satisfied then the Developer shall be released from its obligation
under this Agreement.
After issuance of the Certificate of Completion for the Minimum Improvements,the Developer may
transfer or assign the Development Property or the Developer's interest in this Agreement if it obtains the
prior written consent of the Authority(which consent will not be unreasonably withheld)and the transferee or
assignee is bound by all the Developer's obligations hereunder. The Developer shall submit to the Authority
written evidence of any such transfer or assignment, including the transferee or assignee's express
assumption of the Developer's obligations under this Agreement. If the Developer fails to provide such
evidence of transfer and assumption, the Developer shall remain bound by all its obligations under this
Agreement.
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
p rotect and defend the Authority nand its governing body members, officers, agents,ents, servants and employees
thereof, now or forever, and further agrees to hold the aforesaid harmless from any claim, demand, suit,
action or other proceeding whatsoever by any person or entity whatsoever arising or purportedly arising from
this Agreement, or the transactions contemplated hereby or the acquisition, construction, installation,
ownership, maintenance and operation of the Minimum Improvements. As to any willful misrepresentation,
gross negligence or any willful or wanton misconduct of the Authority, or its board members,officers,agents
or employees, the Authority agrees to protect and defend the Developer, its officers, agents, servants and
employees and hold the same harmless from any such proceedings.
(c) The Authority and its governing body members, officers, agents, servants and employees
thereof shall not be liable for any damage or injury to the persons or property of the Developer or its officers,
agents, servants or employees or any other person who may be about the Development Property or Minimum
Improvements due to any act of negligence of any 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.
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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) Cancel and rescind or terminate the Agreement.
(c) Upon a default by the Developer, the Authority may suspend payments under the Notes or
terminate the Notes and the TIF District, subject to the provisions of Section 9.3 hereof.
(ii) If the non-defaulting party is either the Developer or the Authority
(d) Take whatever action, including legal, equitable or administrative action,which may appear
necessary or desirable to collect any payments due under this Agreement, or to enforce performance and
observance of any obligation, agreement, or covenant under this Agreement, provided that any action for
specific performance must be commenced within six months of the Event of Default.
Section 9.3. Termination or Suspension of Notes. After the Authority has issued its Certificate of
Completion for the Minimum Improvements, the Authority and the City may exercise its rights under
Section 9.2(c)only for the following Events of Default:
(a) the Developer fails to pay real estate taxes or assessments on the Development Property or
any part thereof when due, and such taxes or assessments shall not have been paid, or provision satisfactory
to the Authority made for such payment, within thirty(30) days after written demand by the Authority to do
so;or
(b) the Developer fails to comply with Developer's obligation to 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, pursuant to Sections 4.1
and 5.1(e); provided that, upon Developer's failure to comply with Developer's obligations under
Sections 4.1 or 5.1(e), if uncured after thirty days' written notice to the Developer of such failure, the
Authority may only suspend payments under the Notes until such time as Developer complies with said
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obligations. If the Developer fails to comply with said obligations for a period of eighteen months, the
Authority may terminate the Notes and the TIF District;or
(c) the Developer fails to comply with the rent and income restrictions or to deliver annual rent
and income reports as provided in Sections 4.5 and 4.6;provided that,upon the Developer's failure to provide
annual reports, if uncured after thirty days' written notice to the Developer of such failure,the Authority may
only suspend payments under the Notes until such time as the Developer delivers said reports. If the
Developer fails to deliver rent and income reports for a period of six months following the date such reports
are due after written notice to the Developer of such failure, the Authority may terminate the Notes and the
TIF District.
Section 9.4. 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 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 9.5. 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 9.6. 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 perfo rmance 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
part-Y.
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•
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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 H. Prior to the issuance of the Notes, the Developer shall execute the Apartment
Screening Criteria worksheet attached as Schedule H 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 I. Further, the Developer represents and covenants
to enforce the requirements of the Lease Addendum for Crime-Free/Drug-Free Housing.
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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 971
Sibley Memorial Highway, Suite 300,Lilydale,MN 55118,Attn: Michael Swenson;
(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.
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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.
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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
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WOODLAKE RICHFIELD APARTMENTS,LLC.
By
Its
STATE OF MINNESOTA )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this , 2011, by
,the ,on behalf of the
Notary Public
(Signature Page of Developer to the Contract for Private Development)
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Sla
SCHEDULE A
DEVELOPMENT PROPERTY
Development Property includes the following properties:
Developer Property
Authority Property
[To be completed prior to execution]
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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 2011A IN AN AGGREGATE
PRINCIPAL AMOUNT NOT TO EXCEED $822,000 AND ITS TAX
INCREMENT LIMITED REVENUE NOTE, SERIES 2011B IN AN
AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED$500,000
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. 2010-1 (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 2011A (the "Series A Note"), in the
aggregate principal amount of up to $822,000 and its Tax Increment Revenue Note, Series 2011B (the
"Series B Note"), in the aggregate principal amount of up to $500,000, for the purpose of financing certain
public costs of the Tax Increment Plan for the TIF District. The Series A Note and the Series B Note will be
referred to herein as the"Notes."
1.02. Issuance, Sale and Terms of the Notes. Pursuant to the Contract for Private Development
between the Authority and the Owner (the "Agreement"), the Notes shall be sold to Woodlake Richfield
Apartments,LLC(the"Owner"). The Notes shall be dated as of the date of delivery and shall bear interest at
the rate of 6.75% per annum to the earlier of maturity or prepayment. In exchange for the Authority's
issuance of the Notes 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 3.3 of the
Agreement. The Series A Note will be delivered in the principal amount of up to $822,000 for
reimbursement of land acquisition costs in accordance with the terms of Section 3.3(a) of the Agreement.
The Series B Note will be delivered in the principal amount of up to $500,000 for reimbursement of land
acquisition and site improvement costs in accordance with the terms of Section 3.3(b)of the Agreement. The
Series B Note shall be payable only to the extent that the Developer pays more than $144,000 in real estate
taxes on the Development Property in each calendar year that the TIF District remains outstanding. Further,
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the Series B Note is payable only to the extent that Available Tax Increment remains following the payment
of principal of and interest on the Series A Note.
Section 2. Form of Notes. The Series A Note shall be in substantially the form set forth in
Exhibit A attached hereto, with the blanks to be properly filled in and the principal amount and payment
schedule adjusted as of the date of issue. The Series B Note shall be in substantially the form set forth in
Exhibit B attached hereto, with the blanks to be properly filled in and the principal amount and payment
schedule adjusted as of the date of issue.
Section 3. Terms,Execution and Delivery.
3.01. Denomination, Payment. The Notes shall be issued as a single typewritten note numbered
R-1.
The Notes shall be issuable only in fully registered form. Principal of and interest on the Notes 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 Notes 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.
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 Notes and the registration of transfers and exchanges of the
Notes.
(b) Transfer of Notes. Upon surrender for transfer of the Notes, 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 Notes 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 Notes 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 D 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.
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The Owner may assign the Notes 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 D, or other form reasonably acceptable to the
Executive Director of the Authority. The Authority also agrees that future assignments of the Notes 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 D of the Agreement or other investment letter
reasonably acceptable to the Authority from such assignees.
(c) Cancellation. The Notes 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 a 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 a Note is at any time registered in the bond register as the absolute owner of the 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 a 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 Notes 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 Notes shall cease to be such
officer before the delivery of the Notes, 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 Notes have been so
executed,the Notes shall be delivered by the Authority to the Owner following the delivery of the necessary
items delineated in Section 3.3 of the Agreement.
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Section 4. Security Provisions.
4.01. Pledge. The Authority hereby pledges to the payment of the principal of and interest on the
Notes all Available Tax Increment as defined in the Notes. Available Tax Increment shall be applied to
payment of the principal of and interest on the Notes in accordance with Section 3.3 of the Agreement and
the terms of the forms of Note set forth in Exhibit A and Exhibit B attached to this resolution.
4.02. Bond Fund. Until the date the Notes are 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 Notes. 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 2010-1 upon the payment of all principal and
interest to be paid with respect to the Notes.
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 Notes 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 Notes 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. Issuance of Notes. The Authority shall not issue the Notes until(i)the Agreement is
executed by all parties; (ii) the requirements to issue each of the Notes set forth in Section 3.3 of the
Agreement are satisfied; (iii) the Planning Commission of the City of Richfield reviews the Amended and
Restated Tax Increment Financing Plan for the establishment of the 2010-1 Housing Tax Increment
Financing District (Woodlake Housing) and opines that the plan conforms with the general plans for the
development and redevelopment of the City as described in the comprehensive plan for the City; and(iv)the
City Council of the City of Richfield reviews and approves the Amended and Restated Tax Increment
Financing Plan for the establishment of the 2010-1 Housing Tax Increment Financing District (Woodlake
Housing).
Section 7. 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 ,2011.
Chair
Executive Director
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EXHIBIT A OF SCHEDULE B
FORM OF SERIES A NOTE
UNITED STATE OF AMERICA
STATE OF MINNESOTA
COUNTIES OF HENNEPIN
HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE
CITY OF RICHFIELD
No.R-1 $822,000
TAX INCREMENT LIMITED REVENUE NO"I'E
SERIES 2011A
Date
Rate of Original Issue
6.75%
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 WOODLAKE
RICHFIELD APARTMENTS, LLC, or registered assigns (the"Owner"),the principal sum of$822,000 and
to pay interest thereon at the rate of six and three quarters percent per annum, as and to the extent set forth
herein.
1. Payments. 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 the payments set forth in Schedule E of the Agreement and solely payable from "Available Tax
Increment," which shall mean, on each 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; and(ii)the amounts shown on Schedule C of the Contract for Private Development
between the Authority and Owner dated as of , 2011 (the "Agreement"), including any
amounts contained in said Schedule C which were previously due and not paid.
B-5
371382v6 JBD RC125-290
Available Tax Increment shall not include any Tax Increment if, as of any Payment Date,there is an
uncured Event of Default under 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 the 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. At the Authority's option, this Note shall terminate and the Authority's
obligation to make any payments under this Note shall be discharged upon the occurrence of an Event of
Default on the part of the Developer as defined in Section 9.1 of the Agreement, but only if the Event of
Default has not been cured in accordance with Section 9.2 of the Agreement.
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 August 15, 2011, and pursuant to and in full
conformity with the Constitution and laws of the State of Minnesota, including Minnesota Statutes, Sections
h is payable solely
of the Authority whic s
469.174 to 469.1799, as amended. This Note is a limited obligation ty p Y Y
from Available Tax Increment pledged to the payment hereof under the Resolution. This Note and the
interest hereon shall not be deemed to constitute a general obligation of the State of Minnesota or any
political subdivision thereof, including,without limitation,the Authority. Neither the State of Minnesota nor
any political subdivision thereof shall be obligated to pay the principal of or interest on this Note or other
costs incident hereto except out of Available Tax Increment, and neither the full faith and credit nor the
taxing power of the State of Minnesota or any political subdivision thereof is pledged to the payment of the
principal of or interest on this Note or other costs incident hereto.
7. Estimated Tax Increment Payments. Any estimates of Tax Increment prepared by the
Authority or its financial advisors in connection with the TIF District or the Agreement are for the benefit of
the Authority,and are not intended as representations on which the Developer may rely.
THE AUTHORITY MAKES NO REPRESENTATION OR WARRANTY THAT THE
AVAILABLE TAX INCREMENT WILL BE SUFFICIENT TO PAY THE PRINCIPAL OF AND
INTEREST ON THIS NOTE.
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
B-6
371382v6 JBD RC125-290
-7 -- l0 3
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 D 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 D, 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 D 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 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
B-7
371382v6 JBD RC125-290
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
WOODLAKE RICHFIELD
APARTMENTS,LLC.
Federal ID#
[End of Form of Series A Note]
B-8
371382v6 JBD RC125-290
7- (O5
EXHIBIT B OF SCHEDULE B
FORM OF SERIES B NOTE
UNITED STATE OF AMERICA
STATE OF MINNESOTA
COUNTIES OF HENNEPIN
HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE
CITY OF RICHFIELD
No.R-1 $500,000
TAX INCREMENT LIMITED REVENUE NOTE
SERIES 2011B
Date
Rate of Original Issue
6.75%
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 WOODLAKE
RICHFIELD APARTMENTS, LLC, or registered assigns (the"Owner"),the principal sum of$500,000 and
to pay interest thereon at the rate of six and three quarters percent per annum, as and to the extent set forth
herein.
1. Payments. Principal and interest("Payments") shall be paid annually on February 1, 20_,
and each February 1 thereafter to and including February 1, 20_ ("Payment Dates"), in the amounts
described in Section 2 and 3 herein and from the sources set forth in Section 4 herein. Payments shall be
applied first to accrued interest, and then to unpaid principal. Notwithstanding the foregoing, payment of
principal of or interest on the Series B Note will not be due and owing until the Owner has delivered to the
Authority evidence reasonably satisfactory to the Authority that Owner has paid certain costs eligible for
reimbursement with tax increment in at least the principal amount of this Note, as provided in Section 3.3(b)
of the Contract for Private Development between the Authority and Owner dated as of , 2011
(the"Agreement").
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. Principal. The principal amount of this Note shall be payable on the Payment Date only to
the extent that the Developer pays more than $144,000 in real estate taxes on the Development Property in
any calendar year and the Developer provides written evidence of such expenditure to the Authority on or
before December 31St of that year. For example, if Developer(as defined in the Agreement)pays$174,000 in
real estate taxes in 2016,and provides written evidence of such expenditure to the Authority by December 31,
2016,principal of this Note will be due in the amount of$30,000 and interest on such principal amount shall
accrue from and after October 15,2016.
B-9
371382v6 JBD RC125-290
3. Interest. At anytime that principal of this Note is determined to be due and payable pursuant
to Section 2 hereof, interest at the rate stated herein shall begin to accrue on the principal determined to be
due and payable and unpaid commencing as of October 15th of the calendar year in which the Developer
pays more than$144,000 in real estate taxes on the Development Property. Interest shall be computed on the
basis of a year of 360 days and charged for actual days principal is unpaid.
4. 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 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; (ii) the amounts shown on
Schedule C of the Agreement, for the repayment of the Authority's interfund loan, including any amounts
contained in said Schedule C which were previously due and not paid; and (iii) the amounts shown on
Schedule E of the Agreement, for the payment of principal of and interest on the Tax Increment Limited
Revenue Note, Series 2011A, including any amounts contained in said Schedule E which were previously
due and not paid.
Available Tax Increment shall not include any Tax Increment if, as of any Payment Date,there is an
uncured Event of Default under 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 the principal of this Note that has been determined to be payable
pursuant to Section 2 hereof but remains unpaid 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.
5. 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.
6. Termination. At the Authority's option, this Note shall terminate and the Authority's
obligation to make any payments under this Note shall be discharged upon (i) the payment of$500,000 in
principal amount of the Note and accrued interest thereon; (ii)the termination of the TIF District; or(iii)the
occurrence of an Event of Default on the part of the Developer as defined in Section 9.1 of the Agreement,
but only if the Event of Default has not been cured in accordance with Section 9.2 of the Agreement.
7. 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 August 15, 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
B-10
371382v6 JBD RC125-290
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.
8. Estimated Tax Increment Payments. Any estimates of Tax Increment prepared by the
Authority or its financial advisors in connection with the TIF District or the Agreement are for the benefit of
the Authority,and are not intended as representations on which the Developer may rely.
THE AUTHORITY MAKES NO REPRESENTATION OR WARRANTY THAT THE
AVAILABLE TAX INCREMENT WILL BE SUFFICIENT TO PAY THE PRINCIPAL OF AND
INTEREST ON THIS NOTE.
9. Registration. This Note is issuable only as a fully registered note without coupons.
10. 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 D 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 D, 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 D 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 according to its terms, have been
done,do exist,have happened,and have been performed in due form,time and manner as so required.
B-1 l
371382v6 JBD RCI25-290
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
B-12
371382v6 JBD RC125-290
.7- G9
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
WOODLAKE RICHFIELD
APARTMENTS, LLC.
Federal ID#
[End of Form of Series B Note]
B-13
371382v6 JBD RC125-290
7 - 70
SCHEDULE C
AUTHORITY PROPERTY REIMBURSEMENT
Semi-Annual Payment Payment Date
$6,275 02/02/15
$6,275 08/02/15
$6,275 02/02/16
$6,275 08/02/16
$6,275 02/02/17
$6,275 08/02/17
$6,275 02/02/18
$6,275 08/02/18
$ 6,275 02/02/19
$6,275 08/02/19
$ 6,275 02/02/20
$ 6,275 08/02/20
$ 6,275 02/02/21
$ 6,275 08/02/21
$ 6,275 02/02/22
$ 6,275 08/02/22
$ 6,275 02/02/23
$ 6,275 08/02/23
$ 6,275 02/02/24
$ 5,663 08/02/24
C-1
371382v6 JBD RC125-290
SCHEDULE D
INVESTMENT LETTER
To the Housing and Redevelopment Authority in and for the City of Richfield(the"Authority")
Attention: Executive Director
Re: $ Tax Increment Limited Revenue Note, Series 2011_
The undersigned, as Owner of$ in principal amount of the above captioned Note(the"Note")
pursuant to a resolution of the Authority adopted on , 2011 (the "Resolution"), hereby
represents to you and to Kennedy & Graven, Chartered, Minneapolis, Minnesota, development counsel, as
follows:
1. We understand and acknowledge that the Note is delivered to the Owner as of this date
pursuant to the Resolution and the Contract for Private Development between the Authority and the Owner,
dated as of ,2011 (the"Contract").
2. We understand that the Notes are payable as to principal and interest solely from Available
Tax Increment as defined in the Note and the provisions of the Contract.
3. We further understand that any estimates of Tax Increment (as defined in the Contract)
prepared by the Authority or its financial advisors in connection with the TIP District (as defined in the
Contract),the Contract or the Note are for the benefit of the Authority,and are not intended as representations
on which the Owner may rely.
4. We further understand that, as more fully described in Section 3.3(b) of the Contract, the
principal of and interest on the Series B Note shall be payable only to the extent that, in any calendar year
during the term of the Series B Note,the Developer(as defined in the Contract)pays more than $144,000 in
real estate taxes on the Development Property(as defined in the Contract).
5. We acknowledge and understand that, if at anytime,the Developer fails to meet the housing
income restrictions required for a housing tax increment district as set forth in Minnesota Statutes, Section
469,174, subd. 11 and Section 469.1761, and therefore, the tax increment district will no longer qualify as a
housing tax increment district,no further payments will be made under the Notes.
6. 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.
7. 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.
8. We acknowledge that we have either been supplied with or have access to information,
including financial statements and other financial information, to which a reasonable investor would attach
371382v6 JBD RC125-290 D-1
_7 -72.
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 a reasonable investor we have been able to make our decision to purchase the above stated principal
amount of the Note.
9. 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.
10. We acknowledge that neither the Authority nor Kennedy & Graven, Chartered have made
any representations as to the status of interest on the Note for state or federal income tax purposes.
11. 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.
12. All capitalized terms used herein have the meaning provided in the Contract unless the
context clearly requires otherwise.
13. The Owner's federal tax identification number is:
14. We acknowledge receipt of the Note as of the date hereof.
(Remainder of this page intentionally left blank)
371382v6 JBD RC125-290 D_2
[OWNER]
By
Its
Dated: ,2011
371382v6 JBD RC125-290 D-3
-1-741
SCHEDULE E
PAYMENT SCHEDULE FOR SERIES A NOTE
Semi-Annual Payment Payment Date
$ 14,419 02/02/15
$ 14,419 08/02/15
$ 42,109 02/02/16
$ 42,109 08/02/16
$ 42,109 02/02/17
$ 42,109 08/02/17
$ 42,109 02/02/18
$42,109 08/02/18
$ 42,109 02/02/19
$ 42,109 08/02/19
$42,109 02/02/20
$ 42,109 08/02/20
$ 42,109 02/02/21
$42,109 08/02/21
$ 42,109 02/02/22
$ 42,109 08/02/22
$ 42,109 02/02/23
$ 42,109 08/02/23
$ 42,109 02/02/24
$ 42,109 08/02/24
$ 42,109 02/02/25
$ 42,109 08/02/25
$ 42,109 02/02/26
$ 42,109 08/02/26
$ 42,109 02/02/27
$ 42,109 08/02/27
$ 42,109 02/02/28
$ 42,109 08/02/28
$ 42,109 02/02/29
$ 42,109 08/02/29
$ 42,109 02/02/30
$ 42,109 08/02/30
$ 42,109 02/02/31
$ 42,109 08/02/31
$ 42,109 02/02/32
$ 42,109 8/02/32
$ 16,117 2/02/33
371382v6 JBD RC125-290 E_1
_1 -7s
SCHEDULE F
CERTIFICATE OF COMPLETION
The undersigned hereby certifies that WOODLAKE RICHFIELD APARTMENTS, LLC.
(the "Developer"), has fully complied with its obligations under Articles III and IV of that document titled
"Contract for Private Development," dated , 2011, 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_
HOUSING AND REDEVELOPMENT AUTHORITY
IN AND FOR THE CITY OF RICHFIELD,
MINNESOTA
By
Executive Director
STATE OF MINNESOTA )
) SS.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this , 2011, by
, the Executive Director, respectively, of the Housing and Redevelopment Authority in
and for the City of Richfield,Minnesota,on behalf of the Authority.
Notary Public
371382v6 JBD RC125-290 F-1
SCHEDULE G
FORM OF ASSIGNMENT AND SUBORDINATION AGREEMENT
ASSIGNMENT AND SUBORDINATION OF CONTRACT FOR PRIVATE DEVELOPMENT
THIS ASSIGNMENT AND SUBORDINATION OF CONTRACT FOR PRIVATE DEVELOPMENT(this
"Agreement"), is made and entered into as of the day of , 2011, by and among THE
HOUSING 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"), WOODLAKE RICHFIELD APARTMENTS,LLC,a Minnesota limited liability company(the
"Developer"), and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association
(the"Lender").
WITNESSETH:
WHEREAS, the Authority and the Developer entered into that certain Contract for Private Development
dated as of , 2011 (the "Development Contract") pertaining to the development of an
approximately 110,000 square foot apartment complex containing 94 units of housing(the"Improvements"),
located in Richfield,Minnesota, on property legally described on Exhibit A attached hereto and hereby made
a part hereof(the"Land")(the Land and the Improvements are hereinafter at times collectively referred to as
the"Project"); and
WHEREAS, a memorandum of the Development Contract has been filed of recorded in the office of the
Hennepin County on as Document No. ;and
WHEREAS, pursuant to the Development Contract, the Authority is to execute that certain Tax Increment
Limited Revenue Note, Series 2011A, in the principal amount of$822,000 and that certain Tax Increment
Limited Revenue Note, Series 2011B, in the principal amount of$500,000(collectively,the"Notes");and
h City of Richfield has issued its Variable Rate Demand Multi-Family Housing Revenue
WHEREAS, the ty Y
Bonds (Woodlake Richfield Apartments, LLC Project), Series 2011 (the "Bonds"), in connection with the
acquisition and construction of the Project;and
WHEREAS, in order to provide credit and liquidity enhancement with respect to the Bonds,the Lender will
issue its Irrevocable Letter Of Credit for the Developer's account in the amount of$ (the "Letter
of Credit");and
WHEREAS, as a condition to the issuance of the Letter of Credit,the Lender has required that the Developer
execute and deliver to the Lender that certain Reimbursement Agreement dated as of , 2011 (the
"Reimbursement Agreement"),which requires, among other things,that the Developer reimburse the Lender
for any and all draws made under the Letter of Credit; and
WHEREAS, the obligations of the Developer under the Reimbursement Agreement are secured by, among
other things, that certain Mortgage, Security Agreement, Assignment of Leases and Rents and Fixture
G-1
-7 --77
Financing Statement dated as of , 2011 (the"Mortgage"), and filed of record in the office of the
Hennepin County on as Document No. ; and
WHEREAS,the Lender has required, as an express condition to the issuance of the Letter of Credit, (a)that
the Developer assign all of its rights under the Development Contract and the Notes to the Lender to secure
the obligations of the Developer to the Lender under the Reimbursement Agreement,(b)that certain rights of
the Authority under the Development Contract be subordinated to the Mortgage,and(c)that the City agree to
certain other matters,all as more fully contained herein.
NOW, THEREFORE, in consideration of the foregoing recitals and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,the parties hereto hereby agree
as follows:
1. The Developer hereby assigns to the Lender all of its right, title and interest,
including, but not limited to,the right to receive payments under the Notes as described in Section 4,
under and pursuant to the Development Contract and the Notes to secure the Developer's obligations
under the Reimbursement Agreement.
2. To perfect the Lender's security interests in the Notes,upon receipt of the Notes,the
Developer shall endorse and deliver the Notes to the Lender to be held pursuant to the terms of this
Agreement.
3. The Developer hereby represents and warrants that there have been no prior
assignments of the Development Contract or either of the Notes,that the Development Contract and
the Notes are valid and enforceable agreements and that neither the Authority nor the Developer is
default thereunder and that all covenants, conditions and agreements have been performed as
required therein, except those not to be performed until after the date hereof. The Developer agrees
not to sell, assign, pledge, mortgage or otherwise transfer or encumber its interest in the
Development Contract or either of the Notes as long as this Agreement is in effect. The Developer
irrevocably constitutes and appoints the Lender as its attorney-in-fact to demand,receive and enforce
the Developer's rights with respect to the Development Contract and/or the Notes for and on behalf
of and in the name of the Developer, or, at the option of the Lender, in the name of the Lender,with
the same force and effect as the Developer could do if this Agreement had not been made.
4. The Authority hereby agrees that, until it receives notice to the contrary from the
Lender, all payments of principal and interest under both of the Notes shall be made to the Lender at
its address set forth in Section 16 below.
5. This Agreement shall constitute a perfected, absolute and present assignment,
provided that, except for the right to receive payments as set forth in Section 4 above, the Lender
shall have no right under this Agreement to enforce the provisions of the Development Contract or
the Notes or exercise any of its rights or remedies under this Agreement until an Event of Default(as
that term is defined in the Reimbursement Agreement)shall occur and be continuing.
6. Upon the occurrence of an Event of Default,the Lender may,without affecting any
of its rights or remedies against the Developer under any other instrument, document or agreement,
exercise its rights under this Agreement as the Developer's attorney-in-fact in any matter permitted
by law and, in addition,the Lender shall have the right to exercise and enforce any and all rights and
remedies available after a default to a secured party under the Uniform Commercial Code as adopted
in the State of Minnesota. If notice to the Developer of any intended disposition of collateral or of
any intended action is required by law in any particular instance, such notice shall be deemed
G-2
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commercially reasonable if given at least ten (10) days prior to the intended disposition or other
action.
7. The Authority hereby consents and agrees to the terms and conditions of this
Agreement. The Authority further represents and warrants to the Lender that the Development
Contract and the Notes are valid agreements enforceable in accordance with their terms and that
neither the Authority nor the Developer is in default thereunder and that all covenants,conditions and
agreements have been performed as required therein, except those not to be performed until after the
date hereof.
8. The Authority hereby acknowledges and agrees that pursuant to Article IV of the
Development Contract,the Authority has approved the Construction Plans (as that term is defined in
the Development Contract)in connection with the construction of the Project.
9. The Authority acknowledges that the rights of the Authority with respect to receipt
and application of any proceeds of insurance as set forth in Article V of the Development Contract
shall,in all respects,be subject and subordinate to the rights of the Lender under the Mortgage.
10. Notwithstanding the provisions of Article VI of the Development Contract, the
Authority agrees that the agreement to pay real estate taxes as set forth in Section 6.1 of the
Development Contract are not the personal obligation of, nor shall such Article VI impose any
personal obligation upon,the Lender.
11. Pursuant to Section 7.1 of the Development Contract, the Authority hereby
approves the financing of the Project as contemplated by the Letter of Credit and the Reimbursement
Agreement.
12. Pursuant to Section 7.3 of the Development Contract, the Authority hereby agrees
that all of its rights under the Development Contract shall be subject and subordinate to the
Mortgage.
13. The Authority hereby agrees to provide the Lender with any notice of default under
the Development Contract, and agrees that the Lender shall have the right, but not the obligation, to
cure any such default on behalf of the Developer with the periods of time afforded to the Developer
as set forth in the Development Contract.
14. The Authority and the Developer hereby agree that no change or amendment shall
be made to the terms of the Development Contract or either of the Notes without the prior written
consent of the Lender.
15. This Agreement can be waived, modified, amended, terminated or discharged only
explicitly in a writing signed by the parties hereto. A waiver by the Lender shall be effective only in
a specific instance and for the specific purpose given. Mere delay or failure to act shall not preclude
the exercise or enforcement of any of the Lender's rights or remedies hereunder. All rights and
remedies of the Lender shall be cumulative and may be exercised singularly or concurrently at the
Lender's option, and any exercise or enforcement of any one such right or remedy shall neither be a
condition to nor bar the exercise or enforcement of any other.
16. Any notice, request, demand or communication hereunder shall be deemed fully
given if delivered or postage prepaid,certified or registered,addressed to the party as set forth below.
G-3
If to the Authority: The Housing and Redevelopment Authority in and for the
City of Richfield,Minnesota
6700 Portland Avenue South
Richfield,Minnesota 55423
Attention: Community Development Director
If to the Developer: Woodlake Richfield Apartments,LLC
971 Sibley Memorial Highway, Suite 300
Lilydale,Minnesota 55118
Attention: G.Terry McNellis
If to the Lender: Wells Fargo Bank,National Association
MAC N9345-011
425 East Hennepin Avenue
Minneapolis,Minnesota 55414
Attn: Jason Radel
17. This Agreement shall be governed and construed in accordance with the laws of the
State of Minnesota.
(The remainder of this page is intentionally left blank.)
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7 - So
IN WITNESS WHEREOF, the parties hereto have executed this Assignment as of the date first above
written.
AUTHORITY:
THE HOUSING REDEVELOPMENT
AUTHORITY IN AND FOR THE CITY OF
RICHFIELD,MINNESOTA, a public body
corporate and politic under the laws of the State of
Minnesota
By:
Its Chair
B
Its Executive Director
STATE OF MINNESOTA )
)ss
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this day of , 2011, by
, the Chair of the Housing Redevelopment Authority in and for the City of
Richfield,Minnesota,a public body corporate and politic under the laws of the State of Minnesota.
Notary Public
STATE OF MINNESOTA )
ss
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this day of , 2011, by
,the Executive Director of the Housing Redevelopment Authority in and for the
City of Richfield,Minnesota,a public body corporate and politic under the laws of the State of Minnesota.
Notary Public
G-5
7 - SI
DEVELOPER:
WOODLAKE RICHFIELD
APARTMENTS,LLC
By:
Its:
STATE OF MINNESOTA )
)ss
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this day of , 2011, by
,the of Woodlake Richfield Apartments, LLC, a Minnesota limited
liability company,for and on behalf of said limited liability company.
Notary Public
LENDER:
WELLS FARGO BANK,NATIONAL
ASSOCIATION
By:
Its:
STATE OF MINNESOTA )
)ss
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this day of , 2011, by
, the of Wells Fargo Bank, National Association, a national
banking association,for and on behalf of said association.
Notary Public
THIS INSTRUMENT DRAFTED BY:
Winthrop &Weinstine, P.A. (JJH)
Suite 3500
225 South Sixth Street
Minneapolis, Minnesota 55402-4629
G-6
-7 - 8A
EXHIBIT A
Legal Description
G-7
-7 - q3
SCHEDULE H
APARTMENT/TOWNHOME SCREENING CRITERIA
In order to be considered at , each applicant must meet the
minimum screening criteria with regard to income, credit, criminal and rental histories. Our
criteria is as follows:
• All applicants must be at least 18 years of age.
CREDIT
• Consistent NSF checks: Applicants with consistent history of NSF checks will be
denied.
• Collections/Judgments: Applicants with outstanding collections and/or judgments in
the last twelve months will be denied.
• UD's: Any Unlawful Detainers/Eviction Actions will be denied.
• Bankruptcy: If you have filed for bankruptcy in the last year you may be denied.
Extenuating circumstances may be considered in the event of medical or other
catastrophe. These circumstances must be adequately explained with proof.
• Consistent Late Payment of Obligations: Households with a consistent history of late
payment of their financial obligations will be denied.
• Applicants with little or no credit history may be denied.
UNLAWFUL/CRIMINAL HISTORY
• Any person convicted of a felony will be denied. Any person convicted of a gross
misdemeanor that involves illegal drugs or sex offenses will be denied. Registered sex
offenders will be denied. Persons involved in drug related - criminal activity will be
denied.
• Applicants with dependents in the household with criminal offenses will be denied.
RENTAL HISTORY
• Applicants with a rental history must provide at least one verifiable rental landlord
reference covering a significant part of the rental history.
will grant equal opportunity in housing to all
persons regardless of race, color, religion, creed, gender, national origin, familial status,
marital status, sexual orientation, disability, receipt of public assistance or ancestry.
We use as our tenant screening service to conduct an investigation of your
background.
Acknowledged:
I have read the above information and understand.
(Print)-Applicant's Name(s)
Signature Date
Apt. #Applied for:
Updated 04/17/03 Effective 04/17/03
371382v6 JBD RC125-290
H-1
SCHEDULE I
LEASE ADDENDUM FOR CRIME-FREE / DRUG-FREE HOUSING
unit identified the lease, Owner and
In consideration of the execution or renewal of a lease of the dwelling m ]dentif d to ,
g
Resident(s)agree as follows:
1. Resident(s), any members of the resident's household or a guest or other person under the resident's
control shall not engage in criminal activity, including drug-related criminal activity, on or near the said
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 Section 102 or the
Controlled Substance Act[21 U.S.C. 802])or possession of drug paraphernalia.
2. Resident(s), any member of the resident's household or a guest or other person under the resident's
control shall not engage in any act intended to facilitate criminal activity, including drug related criminal
activity,on or near the said premises.
3. Resident(s) or member of the household will not permit the dwelling 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 household.
4. Resident(s) or members of the household will not engage in the manufacture, sale, or distribution of
illegal drugs at any locations,whether on or near the dwelling unit premises or otherwise.
5. Resident(s), any member of the resident's household, or a guest or other person under the resident's
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 agent(s)or tenants.
6. VIOLATION OF THE ABOVE PROVISIONS SHALL BE 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 single violation shall be good cause for termination of the lease.Unless otherwise
provided by law, proof of violation shall not require criminal conviction, but shall be by the 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(s).
MANAGEMENT
(Resident)
b Y (Resident)
Date signed (Resident)
Date Signed
Resident(s)acknowledges receipt of this addendum by signature of this document.
Amended 12/95
LOCAL HOUSING
White-Corporation Yellow-Site Pink-Resident OPPORTUNITY
371382v6 JBD RC125-290 I-1
AGENDA ITEM#: 8
REPORT#: 43
STAFF REPORT .
RICHFIELD HOUSING AND REDEVELOPMENT
AUTHORITY MEETING
AUGUST 15, 2011
REPORT PREPARED BY: CHRIS REGIS,FINANCE MANAGER
NAME,TITLE
REPORT PRESENTER: CHRIS REGIS,FINANCE MANAGER
1
REVIEWED BY DEPARTMENT g(
DIRECTOR I` ,
,.10
REVIEWED BY HRA EXECU TIVE DIRECTOR:
eitalirlia a_ +ae
ITEM FOR HRA CONSIDERATION:
Consideration of resolutions approving proposed property tax levy for payable 2012 for
certification to Hennepin County.
I. RECOMMENDED ACTION:
By Motion: Adopt the resolutions approving the 2012 Proposed
Housing and Redevelopment Authority Budget and Tax Levy and
2011 Revised Housing and Redevelopment Authority Budget.
II. BACKGROUND
N/A
III. BASIS OF RECOMMENDATION
A. POLICY
• Minnesota Statutes require adoption of a preliminary levy from each
taxing authority.
• The budget and accompanying proposed levy for 2012 are ready for
consideration.
08152011 HRABudget
• Even though a pubic hearing for the HRA tax levy is not required by
State Statute, this does not preclude the HRA from opening this item
up for public discussion if the HRA desires to do so.
B. CRITICAL ISSUES
• As required by State Statutes, each taxing authority must certify its
proposed tax levy for the payable year 2012 to the County Auditor on
or before September 15, 2011.
C. FINANCIAL
• The Proposed 2011 HRA levy represents an 8.87% decrease from the
previous year's levy.
• The levy as proposed is for the maximum levy established by law of
the .0185% of the City's total taxable market value.
D. LEGAL
• N/A
IV. ALTERNATIVE RECOMMENDATION(S)
• The HRA could adopt a preliminary levy less than the one proposed herein.
However, that would not provide for programs that are recommended in the
2011 Revised/2012 Proposed budget.
V. ATTACHMENTS
• Resolution Approving Proposed 2012 Housing and Redevelopment Authority
Budget and Certifying the 2012 Tax Levy
• Resolution Authorizing Revision of the 2011 Budget of the Housing and
Redevelopment Authority of Richfield
VI. PRINCIPAL PARTIES EXPECTED AT MEETING
• N/A
HRA RESOLUTION NO.
RESOLUTION APPROVING PROPOSED 2012 HOUSING AND REDEVELOPMENT
AUTHORITY BUDGET AND CERTIFYING THE 2012 TAX LEVY
BE IT RESOLVED by the Housing and Redevelopment Authority of the City of
Richfield, Minnesota as follows:
Section 1. The budget for the Housing and Redevelopment Authority
General Fund of Richfield for the year 2012 in the amount of
$569,320 is hereby ratified.
Section 2. The estimated gross revenue of the Housing and Redevelopment
Authority General Fund of Richfield from all sources, including
general ad valorem tax levies as hereinafter set forth for the year
2012, and as the same are more fully detailed in the Executive
Director's official copy of the budget for the year 2012, in the
amount of$513,880 is hereby approved.
Section 3. There is hereby levied upon all taxable property in the City of
Richfield an ad valorem tax in 2011, payable in 2012 for the
following purposes:
Housing and Redevelopment Authority $503,777
Section 4. A certified copy of this resolution shall be transmitted to the County
Auditor.
Adopted by the Housing and Redevelopment Authority in and for the City of
Richfield, Minnesota this 15th day of August, 2011.
Suzanne M. Sandahl, Chair
ATTEST:
Joan Helmberger, Secretary
HRA RESOLUTION NO.
RESOLUTION AUTHORIZING REVISION OF THE 2011 BUDGET OF THE
HOUSING AND REDEVELOPMENT AUTHORITY OF RICHFIELD
WHEREAS, Resolution No. 1078 appropriated funds for personal services and
other expenses and capital outlay for the Housing and Redevelopment Authority for the
year 2011, and
WHEREAS, The Executive Director has requested a revision of the 2011 budget as
detailed in the 2012 budget document.
NOW, THEREFORE, BE IT RESOLVED by the Housing and Redevelopment
Authority of Richfield, Minnesota as follows:
Section 1. That the 2011 appropriation for the Housing and Redevelopment
Authority General Fund is revised as follows:
$97,600 decrease
Section 2. Estimated 2011 gross revenue of the Housing and Redevelopment
Authority General Fund from all sources, as the same is more fully
detailed in the Executive Director's official copy of the 2012 budget
document, are hereby revised as follows:
$15,960 increase
Section 3. That the Executive Director bring into effect the provisions of this
resolution.
Adopted by the Housing and Redevelopment Authority in and for the City of
Richfield, Minnesota this 15th day of August, 2011.
Suzanne M. Sandahl, Chair
ATTEST:
Joan Helmberger, Secretary