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081219 EDA Meeting Packet EDA MEETING City Hall, 4401 Xylon Avenue North Monday, August 12, 2019 President Kathi Hemken Commissioner John Elder Commissioner Cedrick Frazier Commissioner Andy Hoffe Commissioner Jonathan London 1. Call to order – EDA Meeting of August 12, 2019 2. Roll call 3. Approval of Minutes:  June 10, 2019 4. Resolution approving purchase and redevelopment agreement with Novak-Fleck Incorporated for the sale of 5212 Pennsylvania Avenue North (improvement project no. 1025) 5. Resolution awarding the contract for rehabilitation work in association with the EDA-owned property located at 3924 Utah Avenue North (improvement project no. 1020) 6. Adjournment EDA Meeting Page 1 June 10, 2019 City of New Hope 4401 Xylon Avenue North New Hope, Minnesota 55428 EDA Minutes June 10, 2019 Regular Meeting City Hall CALL TO ORDER President Hemken called the meeting of the Economic Development Authority to order at 7:32 p.m. ROLL CALL Present: Kathi Hemken, President John Elder, Commissioner Cedrick Frazier, Commissioner Andy Hoffe, Commissioner Jonathan London, Commissioner Staff Present: Jeff Alger, Community Development Specialist Dan Boyum, City Engineer Tim Fournier, Police Chief Valerie Leone, City Clerk Jeff Sargent, Director of Community Development Bernie Weber, Director of Public Works Stacy Woods, Assistant City Attorney APPROVAL OF MINUTES Item 3 Motion was made by Commissioner Frazier, seconded by Commissioner Elder, to approve the EDA minutes of March 11, 2019. All present voted in favor. Motion carried. IMP. PROJECT 1025 Item 4 President Hemken introduced for discussion EDA Item 4, Resolution approving contract with JACON, LLC for hazardous material abatement, demolition of site improvements, utility work, tree removal and site grading of 5212 Pennsylvania Avenue North (Improvement Project No. 1025). Mr. Jeff Alger, community development specialist, explained the EDA acquired the single-family home located at 5212 Pennsylvania Avenue North in September of 2018 as part of the city’s scattered site housing program. He stated Jacon LLC submitted the low bid of $23,890 for hazardous material abatement, demolition of site improvements, utility work, tree removal and site grading. He stated the work is necessary in preparing the site for redevelopment of the property. Mr. Alger reported the EDA has awarded contracts to JACON, LLC in the past with good results. He stated funding is available in the EDA budget for the site preparation work. It was noted that the house was utilized by the fire department for training purposes. Commissioner London requested that an explanation of rate of return on the project be presented. EDA Meeting Page 2 June 10, 2019 Mr. Alger indicated a budget outlining financial information will be presented when the EDA is asked to review development proposals. Commissioner Frazier inquired whether the developer of Windsor Ridge may be interested in the property. Mr. Alger stated SVK Development will be included in the Request for Proposal process. RESOLUTION 2019-02 Item 4 Commissioner London introduced the following resolution and moved its adoption “RESOLUTION APPROVING CONTRACT WITH JACON, LLC FOR HAZARDOUS MATERIAL ABATEMENT, DEMOLITION OF SITE IMPROVEMENTS, UTILITY WORK, TREE REMOVAL AND SITE GRADING OF 5212 PENNSYLVANIA AVENUE NORTH (IMPROVEMENT PROJECT NO. 1025).” The motion for the adoption of the foregoing resolution was seconded by Commissioner Elder, and upon vote being taken thereon, the following voted in favor thereof: Hemken, Elder, Frazier, Hoffe, London; and the following voted against the same: None; Abstained: None; Absent: None; whereupon the resolution was declared duly passed and adopted , signed by the president which was attested to by the executive director. ADJOURNMENT Motion was made by Commissioner Frazier, seconded by Commissioner Elder, to adjourn the meeting. All present voted in favor. Motion carried. The New Hope EDA adjourned at 7:40 p.m. Respectfully submitted, Valerie Leone, City Clerk I:\RFA\COMM DEV\2019\EDA\Scattered Site Housing\Q - 5212 Pennsylvania Ave N Lot Sale 08-12-19.docx Request for Action August 12, 2019 Approved by: Kirk McDonald, City Manager Originating Department: Community Development By: Jeff Alger, Community Development Specialist; Jeff Sargent, Director of Community Development Agenda Title Resolution approving purchase and redevelopment agreement with Novak-Fleck Incorporated for the sale of 5212 Pennsylvania Avenue North (improvement project no. 1025) Requested Action Staff requests that the Economic Development Authority conduct a public hearing and approve a resolution approving the sale of the scattered site lot located at 5212 Pennsylvania Avenue North to Novak-Fleck, Inc. Policy/Past Practice The Economic Development Authority reviews proposals for the redevelopment of EDA-owned scattered site properties prior to executing a contract with the preferred buyer/builder. Background A Request for Proposals (RFP) marketing the lot at 5212 Pennsylvania Avenue North was sent to more than 20 builders on June 26, 2019. The non-negotiable minimum lot sale price was set at $60,000 and builders were allowed the opportunity to submit a higher offer to make their proposal more competitive. The RFP stipulated that the proposed house “must be an owner-occupied, single-family home.” The occupancy requirement applies to the first buyer for period of two years. Proposals were due on July 10, 2019. The EDA received four proposals from the following three builders:  Novak-Fleck, Inc. (preferred)  Houston Homes, Inc. (two designs)  Great Buy Homes, Inc. Staff reviewed the proposals with the city manager and selected the submittal from Novak-Fleck, Inc. as the “preferred” proposal. One of the proposals from Houston Homes, Inc. (“19031”) was also viewed favorably as it featured a “side-load” garage and large front porch; however, the submittal from Novak-Fleck, Inc. included far more finished square footage (including a finished basement), more bedrooms and bathrooms, and a higher lot purchase price. The projected home sales price of $401,600 would be the highest sales price of a scattered site housing project to date, and the first to exceed $400,000. The base characteristics and attributes of each proposal are summarized as follows: Novak-Fleck (Preferred) Houston Homes “19031” Houston Homes “19064” Great Buy Homes Lot purchase price $65,000 $62,500 $60,000 $64,000 Projected sale price $401,600 Low $400,000’s Low $400,000’s $360,000 Front Yard Oregon Avenue North Oregon Avenue North Oregon Avenue North Oregon Avenue North Design 2-story 2-story with side- load garage 2-story Split-level Agenda Section EDA Item Number 4 Request for Action, Page 2 Novak-Fleck (Preferred) Houston Homes “19031” Houston Homes “19064” Great Buy Homes Finished Space 2,805 square feet  959 on main  1,066 on upper  780 in basement 2,064 square-feet  1,032 on main  1,032 on upper 2,298 square feet  1,102 on main  1,196 on upper 2,537 square-feet  1,403 on main  1,134 in basement Bedrooms 4 (3 on upper level; 1 in basement) 3 (all on upper level) 4 (all on upper level) 5 (3 on main floor; 2 in basement) Bathrooms 4 (1 full; 2 ¾; 1 ½) 3 (2 full; 1 ½) 3 (2 full; 1 ½) 3 (2 full; 1 ¾) Garage 3-stall 3-stall, side-load 3-stall 3-stall Façade  Vinyl and board/ batten siding with stone accents  Pillars with stone accents  Garage with glass inserts (not shown on elevation)  Curb appeal from both streets  32' wood front porch with railing  Front door with window  Vinyl and board/ batten siding  Pillars  Wood porch  Vinyl and board/ batten siding with stone accents  Pillars  Front door with window  Vinyl and board/ batten siding with stone accents  Wood pillar  Garage with glass inserts Other  Master suite with walk-in shower and closets  Fireplace  Soaking tub  Granite/quartz in kitchen  Wood flooring in dining room and kitchen  Stainless steel appliances  Fireplace  Granite/quartz in kitchen  Stainless steel appliances  Upgraded hard surface and carpet floors  2nd story laundry  Fireplace  Granite/quartz in kitchen  Stainless steel appliances  Upgraded hard surface and carpet floors  Master suite with walk-in closet and 3/4 bath Notes Same design as 4511 Boone Avenue with upgrades (sold in 2016 for $319,500) Unfinished basement Unfinished basement House is similar design as 6065 Louisiana Avenue and 7215 62nd Avenue, 2’ deeper Experience with Recommended Builder Novak-Fleck is a moderate-sized home builder based out of Brooklyn Park that has demonstrated a track record of selling homes at their anticipated sales price. The city has sold five lots to Novak-Fleck over the past five years. Addresses for those homes, sales price, and year of sale are as follows:  5431 Virginia Ave N: $245,000 (2015)  6059 West Broadway: $226,150 (2016) Request for Action, Page 3  9115 62nd Ave N: $296,094 (2016)  9121 62nd Ave N: $270,900 (2016)  4511 Boone Ave N: $319,500 (2016) Return on Investment It is anticipated that expenses associated with the project will be approximately $180,162. Revenue from the sale of the lot will be $65,000, resulting in a loss of $115,162. The proposed improvements would result in an increase in the taxable property value for the subject property. If the property were to be valued at $399,000 in 2020, it is estimated that taxes allocated and payable to the city in 2021 would represent an increase of $1,713.56, or 183.26%, as compared to those that were payable in 2019. Estimated Market Value 2018, Payable 2019 Projected Market Value 2020, Payable 2021 $163,000 $399,000 Taxable Market Value 2018, Payable 2019 Projected Taxable Value 2020, Payable 2021 $140,430 $397,670 Taxes Payable 2018, Payable 2019 Projected Taxes Payable 2020, Payable 2021 $2,521.90 $6,997.60 Taxes Allocated to City 2018, Payable 2019 Taxes Allocated to City 2020, Payable 2021 $935.03 $2,648.59 The following table demonstrates the tax benefit associated with the increase taxable property value over the course of 30 years: Additional Taxes Collected By City Year # of Years $1,713.56 2021 1 $3,427.12 2022 2 $5,140.68 2023 3 $6,854.24 2024 4 $8,567.80 2025 5 $17,135.60 2030 10 $25,703.40 2035 15 $34,271.20 2040 20 $42,839.00 2045 25 $51,406.80 2050 30 The increase in property taxes allocated to the city would not cover the shortfall for 68 years, unless other substantial improvements were made to the property. The primary focus of the scattered site program is to target distressed single-family properties throughout the city, with the goal of improving residential neighborhoods. It is understood that potential losses are incurred on each project, as the cost to acquire the distressed properties and redevelop often exceeds the value of the new vacant lot or rehabilitated home. Request for Action, Page 4 Staff is working with AEM on a template that can be used for future scattered site housing projects to calculate the Internal Rate of Return for potential projects. It will be discussed at the August 19, 2019, work session meeting when the Community Development Department provides an annual update to the City Council. Development Agreement and Next Steps Staff worked with the assistant city attorney to draft a resolution and Purchase and Redevelopment Agreement for the sale of the lot. The agreement ensures that the provisions set forth in the RFP will be met and sets the purchase price at $65,000. The agreement included in the attachments is considered complete by staff and the city attorney; however, some minor revisions may be necessary once fully reviewed by the buyer. Any substantial changes to the agreement would be presented to the EDA for approval. Once the agreement is fully executed, staff anticipates that the closing of the lot sale will take place in September 2019. Construction of the home would begin shortly thereafter. Funding Funding for this project would come from the EDA budget. Recommendation Staff recommends that the EDA conduct a public hearing and approve a resolution approving the sale of the scattered site lot located at 5212 Pennsylvania Avenue North to Novak-Fleck, Inc. Attachments  Resolution  Purchase and Redevelopment Agreement with RFP and proposed plans  Other proposals  Budget & Return on Investment CITY OF NEW HOPE ECONOMIC DEVELOPMENT AUTHORITY EDA RESOLUTION NO. 19-___ RESOLUTION APPROVING PURCHASE AND REDEVELOPMENT AGREEMENT WITH NOVAK-FLECK INCORPORATED FOR THE SALE OF 5212 PENNSYLVANIA AVENUE NORTH (IMPROVEMENT PROJECT NO. 1025) BE IT RESOLVED by the Economic Development Authority in and for the City of New Hope (“EDA”) as follows: WHEREAS, the EDA purchased that certain real property located at 5212 Pennsylvania Avenue North, New Hope, MN, and legally described as “Lot 7, Block 5, Sunset Heights, Hennepin County, Minnesota (the “Property”) on September 26, 2018, with the intention of razing the existing house and all site improvements in preparation of the sale of the lot for the construction of a new single family home; and WHEREAS, in response to a Request for Proposal (“RFP”) sent by New Hope City staff to various builders, the EDA received an offer from Novak-Fleck Incorporated, a Minnesota corporation (“Novak-Fleck”) regarding the sale and redevelopment of the Property; and WHEREAS, the EDA arrived at an agreement with Novak-Fleck, to sell the Property for the purchase price of $65,000.00 upon all of the terms set forth in the RFP; and WHEREAS, the EDA has accepted Novak-Fleck’s offer and has presented a draft of the Purchase and Redevelopment Agreement to Novak-Fleck, for its review, a copy of which is attached hereto as Exhibit A (“Purchase and Redevelopment Agreement”) and incorporated herein by reference; and WHEREAS, it is in the best interest of the EDA to sell the Property to Novak-Fleck for the sum of $65,000.00, in order for Novak-Fleck to redevelop and build a new single family home on the Property in accordance with the City’s scattered site housing program and policy; and WHEREAS, the City staff is hereby seeking approval from the EDA of the Purchase and Redevelopment Agreement, subject to other terms relating to the closing on the sale of the Property. NOW, THEREFORE, BE IT RESOLVED by the Economic Development Authority in and for the City of New Hope as follows: 1. That the above recitals are incorporated herein by reference. 2. That the sale of the Property by the EDA to Novak-Fleck Incorporated, for the purchase price of $65,000.00, with other terms and conditions as set forth in the Purchase and Redevelopment Agreement attached hereto as Exhibit A, is approved subject to the review and approval by the City Attorney of the final language and exhibits to the Purchase and Redevelopment Agreement relating to the closing on the sale of the Property, it being in the best interest of the EDA to sell the Property for redevelopment and construction of a single-family home in accordance with the City’s scattered site housing program and policy. 3. The EDA shall use due diligence for selling the Property to Novak-Fleck Incorporated, for the construction of a single-family home, so as to return the Property to the tax rolls for the benefit of all taxing jurisdictions. 4. The President, Executive Director and New Hope City staff are authorized and directed to sign all appropriate documents, and to take whatever additional actions are necessary or desirable, to complete the sale of the Property in accordance with the Purchase and Redevelopment Agreement. Dated the 12th day of August 2019. ____________________________________ Kathi Hemken, President Attest: _____________________________ Kirk McDonald, Executive Director Exhibit A Purchase and Redevelopment Agreement See attached. P:\Attorney\SAS\1 Client Files\2 City of New Hope\99-11429 5212 Pennsylvania Ave N\Resolution Approving Sale of 5212 Pennsylvania Ave N.docx 1 PURCHASE AND REDEVELOPMENT AGREEMENT This Purchase and Redevelopment Agreement ("Agreement") is made by and between Novak-Fleck Incorporated. a Minnesota corporation (“Buyer") and the Economic Development Authority in and for the City of New Hope, Minnesota, a public body corporate and politic created pursuant to the laws of the State of Minnesota ("Seller") effective August ______, 2019. In consideration of the covenants and agreements of the respective parties as hereinafter set forth, Seller shall sell and Buyer shall purchase the vacant parcel of real property located in the City of New Hope at the property address of 5212 Pennsylvania Avenue North, New Hope, Minnesota, and legally described as “Lot 7, Block 5, Sunset Heights, Hennepin County, Minnesota (the “Property”). 1. Purchase Price. The purchase price for the Property is Sixty-Five Thousand and No/100 Dollars ($65,000.00) (the “Purchase Price”), which Buyer shall pay as follows: an initial payment of Two Thousand and No/100 Dollars ($2,000.00) (the “Earnest Money”), which sum shall be paid to Seller upon Buyer and Seller’s execution of this Agreement and Sixty- Three Thousand and No/100 Dollars ($63,000.00) payable by wire, cashier’s check or cash on the “Date of Closing”, as that term is defined in paragraph 6 below. There are no items of personal property or fixtures included in this sale. 2. Title Conveyed. On the Date of Closing, Seller shall deliver a Quit Claim Deed (the "Deed") to Buyer conveying marketable title of record, free and clear of liens, encumbrances, assessments, and restrictions, except for the “Permitted Encumbrances” set forth on Exhibit A and the restrictive covenants referenced below in paragraph 4.b. 3. Representations of Seller. Seller represents and agrees as follows: a. Seller owns the Property and has the right to sell the same, and that there are no unrecorded contracts, leases, easements or other agreements or claims of any third party affecting the use, title, occupancy or development of the Property, there are no parties other than Seller in possession of any portion of the Property, and no person, firm or entity has any right of refusal, option or other right to acquire all or any part of the Property. b. Seller has not received any notice from any governmental authority concerning any eminent domain, condemnation, special taxing district, or rezoning proceedings. c. To the best of Seller’s knowledge without inquiry there are no septic systems or wells on the Property other than the sealed well referenced in the Certificate on the attached Exhibit B. d. Seller represents that it has the requisite power and authority to enter into and perform this Agreement and any Seller’s Closing Documents signed by it. e. Seller is not a “foreign person,” “foreign partnership,” “foreign trust” or “foreign estate” as those terms are defined in Section 1445 of the Internal Revenue Code. 2 f. To the best of Seller’s knowledge without inquiry, no above ground or underground tanks are located in or about the Property. g. Seller makes no other warranties as to the condition of the Property. Seller agrees that any breach of Seller’s foregoing representations shall be grounds for Buyer to terminate this Agreement. In the event of such termination, the Earnest Money shall be returned. Wherever herein a representation is made “to the best of Seller’s knowledge,” such representation is limited to the actual knowledge of the President and/or Executive Director of Seller. 4. Representations of Buyer. As an essential part of this Agreement and in order to induce Seller to enter into this Agreement and sell the Property, Buyer hereby represents to Seller: a. SUBJECT TO THE FOREGOING REPRESENTATIONS BY SELLER, BUYER HEREBY ACKNOWLEDGES THAT BUYER IS PURCHASING THE PROPERTY IN “AS IS” CONDITION AS TO THE USE OF THE PROPERTY. Buyer understands and agrees that the Purchase Price is the fair market value of the Property in its “AS IS” condition. Buyer acknowledges that they have inspected or have had the opportunity to inspect the Property and agree to accept the Property "AS IS." Buyer has the right, at its own expense to take soil samples for the purpose of determining if the soil is suitable for construction of the homes described in paragraph 10 below. If the soil is determined to be unacceptable Buyer may rescind this Agreement by written notice to Seller, in which case the Agreement shall be null and void and all earnest money paid hereunder shall be refunded to Buyer. b. Buyer agrees the first sale of the separate homes on the Property will be sold to owner-occupants. An “owner-occupant” shall be defined as an individual(s) that purchases the home from Buyer by warranty deed or a contract for deed and intending to reside in the home as a primary residence. To insure the intent of the parties that the home constructed on the Property is purchased by an owner- occupant, Buyer will record restrictive covenants and assessment agreement against the Property prohibiting the leasing of the home for a period of two (2) years after the sale of such home by Buyer to an owner-occupant of the home. The restrictive covenants and assessment agreement shall be substantially in the form of the documents attached hereto as Exhibits C and D, respectively. Further, the restrictive covenants and assessment agreement shall provide that the EDA may levy a $20,000.00 assessment on the Property prior to the sale if the lot is not being sold to an owner-occupant. The EDA shall release the Property from these restrictive covenants and assessment agreement upon the issuance of a certificate of occupancy for the construction of the home on the Property and upon the receipt by the EDA of an affidavit signed by Buyer and the owner- occupants verifying owner-occupants’ intent to reside in the homes as their primary residence in compliance with the restrictive covenants described herein in the form attached as Exhibit C. 3 c. Within one (1) year of Closing, Buyer shall complete the construction of the single family home on the Property (the Improvements). The Improvements must be consistent with all building and zoning requirements and the restrictive covenants applicable to the Property. The representations set forth in this paragraph shall be incorporated into appropriate documents to be recorded against the Property (whether by declaration, restrictive covenants, or development agreement as hereinafter defined) subject to approval by Seller and Buyer as a condition of Closing. 5. Title Commitment and Policy. a. Seller shall deliver to Buyer a Commitment for an ALTA Form B owner's policy of title insurance (the “Commitment”) issued by a title insurance company of Buyer’s choice (“Title Company”) and covering title to the Property, in the amount of the Purchase Price. Buyer agrees to pay the costs associated with the preparation and issuance of the Commitment; Buyer shall pay the premium for the owner’s policy, if any, and the lender’s policy, if any, along with the price for any endorsements requested by Buyer or Buyer’s lender. b. Buyer shall have fifteen (15) days after receipt of the Commitment to review and approve the title to the Property and to object to any exception to title that is disclosed in the Commitment or which is otherwise discovered by Buyer. In the event that Buyer does not within such fifteen (15) day period give notice to Seller objecting to any such exceptions, then all such exceptions shall be deemed approved and shall be considered a part of the Permitted Encumbrances. If Buyer timely objects to an exception to title, then on or before the tenth (10) day following Buyer’s notice of exception, Seller shall remove the exception or notify Buyer that Seller is unwilling or unable to remove the exception. Within five (5) days of any notice by Seller that Seller it is unable to remove an exception to title, Buyer may elect by notice to Seller to either: (i) terminate this Agreement, whereupon all of the Earnest Money shall be returned to Buyer and the parties shall be released from all further obligations hereunder except obligations under this Agreement which provide for continued exercise following the cancellation or other termination of this Agreement; or (ii) elect to have this Agreement remain in effect, in which event Buyer will be deemed to have approved the previously-cited exception and the same shall be considered part of the Permitted Encumbrances. 4 6. Closing. a. Closing shall occur on or before October 1, 2019 (the “Date of Closing” or “Closing”), unless both parties agree, in writing, to an earlier or later time. b. Closing shall occur at the office of the Title Company. c. Seller shall deliver at closing the following executed and acknowledged documents: (i) the Deed; (ii) affidavit(s) in industry-standard form(s) stating that possession of the Property is being delivered free of any mechanic's or statutory liens in connection with work performed prior to closing; Seller is not a foreign person or entity; and addressing such other matters as Buyer may reasonably require. 7. Payments/Prorations. At Closing, Seller shall pay the cost of recording any instrument (other than the Deed) necessary to place title in the condition required under this Agreement, State deed tax, and all special assessments levied, pending or constituting a lien against the Property as of the Date of Closing, including without limitation any installments of special assessments and interest payable with general real estate taxes in the year of closing. Seller will pay general real estate taxes payable in the year prior to the year of closing and all prior years. Buyer shall pay at Closing the cost of the owner’s policy or lender’s policy of title insurance (if any), sales tax (if any) resulting from the Closing, the fees required for recording the Deed, the Purchase and Redevelopment Agreement, the assessment agreement and restrictive covenants and all customary closing fees charged by the Title Company or other closing agent, if any, utilized to close the transaction contemplated by this Agreement. General real estate taxes payable in the year of closing shall be prorated by Seller and Buyer as of the closing date based upon a calendar year. Each party shall pay its own attorney’s fees. 8. Condemnation. If, prior to the Date of Closing, all or any part of the Property shall be condemned by governmental or other lawful authority, Buyer shall have the option of (a) completing the purchase contemplated by this Agreement, in which event all condemnation proceeds or claims thereof shall be assigned to Buyer, or (b) canceling this Agreement, in which event the Earnest Money shall be refunded and this Agreement shall be terminated with neither party having any rights against or obligations to the other except rights or obligations under this Agreement which provide for continued exercise following closing or cancellation or other termination of this Agreement, and Seller shall be entitled to any and all condemnation proceeds. 9. Construction of Homes. Buyer agrees that it will construct a new single family home on the Property. This covenant shall survive the delivery of the Deed. 5 a. The single family home described in this paragraph is referred to as the "Minimum Improvements.” b. The Minimum Improvements shall consist of one new single family home, and shall be constructed substantially in accordance with the RFP Guidelines attached as Exhibit E and the proposal approved by Seller on August 12, 2019 attached as Exhibit F. c. Construction of the Minimum Improvements must be substantially completed within one (1) year following Closing. Construction will be considered substantially complete when the final certificate of occupancy has been issued by the City of New Hope building inspector. d. Promptly after substantial completion of the Minimum Improvements in accordance with those provisions of the Agreement relating solely to the obligations of Buyer to construct such Minimum Improvements (including the date for completion thereof), Seller will furnish Buyer with a Certificate of Completion for such improvements. Such certification by Seller shall be (and it shall be so provided in the Deed and in the certification itself) a conclusive determination of satisfaction and termination of the agreements and covenants in the Agreement and in the Deed with respect to the obligations of Buyer and its successors and assigns, to construct the Minimum Improvements and the dates for completion thereof. The certificate provided for in this paragraph of this Agreement shall be in such form as will enable it to be recorded in the Hennepin County Recorder’s Office and other instruments pertaining to the Property. If Seller shall refuse or fail to provide any certification in accordance with the provisions of this paragraph, Seller shall, within thirty (30) days after written request by Buyer, provide Buyer with a written statement, indicating in adequate detail in what respects Buyer 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 it will be necessary, in the opinion of Seller for Buyer to take or perform in order to obtain such certification. e. Buyer represents and agrees that until issuance of the Certificate of Completion for the Minimum Improvements: (i) Buyer 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 this Agreement or the Property or any part thereof or any interest therein, or any contract or agreement to do any of the same, to any person or entity (collectively, a “Transfer”), without the prior written approval of Seller. The term "Transfer" does not include encumbrances made or granted by way of security for, and only for, the purpose of obtaining construction, interim or 6 permanent financing necessary to enable Buyer or any successor in interest to the Property, or any part thereof, to construct the Minimum Improvements or component thereof. (ii) If Buyer seeks to effect a Transfer prior to issuance of the Certificate of Completion, Seller shall be entitled to require as conditions to such Transfer that: (1) any proposed transferee shall have the qualifications and financial responsibility, in the reasonable judgment of Seller, necessary and adequate to fulfill the obligations undertaken in this Agreement by Buyer as to the portion of the Property to be transferred; and (2) Any proposed transferee, by instrument in writing satisfactory to Seller and in form recordable in the public land records of Hennepin County, Minnesota, shall, for itself and its successors and assigns, and expressly for the benefit of Seller, have expressly assumed all of the obligations of Buyer under this Agreement as to the portion of the Property to be transferred and agreed to be subject to all the conditions and restrictions to which Buyer is subject as to such portion; provided, however, that the fact that any transferee of, or any other successor in interest whatsoever to, the 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 Seller) deprive Seller of any rights or remedies or controls with respect to the Property, the Minimum Improvements 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 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 Seller of or with respect to any rights or remedies on controls provided in or resulting from this Agreement with respect to the Property that Seller would have had, had there been no such transfer or change. In the absence of specific written agreement by Seller to the contrary, no such transfer or approval by Seller thereof shall be deemed to relieve Buyer, or any other party bound in any way by this Agreement or otherwise with respect to the Property, from any of its obligations with respect thereto. (3) Any and all instruments and other legal documents involved in effecting the transfer of any interest in this Agreement or the 7 Property governed by this subparagraph shall be in a form reasonably satisfactory to Seller. (iii) If the conditions described above are satisfied then the Transfer will be approved and Buyer shall be released from its obligation under this Agreement, as to the portion of the Property that is transferred, assigned, or otherwise conveyed. The provisions of this paragraph (iii) apply to all subsequent transferors. (iv) Upon issuance of the Certificate of Completion, Buyer may transfer or assign the Minimum Improvements and/or Buyer's rights and obligations under this Agreement with respect to such Property without the prior written consent of Seller. f. Buyer agrees that (a) it will use the Minimum Improvements as only a single family, owner-occupied homes, (b) it will not seek exemption from real estate taxes on the Property under State law, and (c) it will not transfer or permit transfer of the Property to any entity whose ownership or operation of the property would result in the Property being exempt from real estate taxes under State law (other than any portion thereof dedicated or conveyed to the City of New Hope or Seller in accordance with this Agreement). The covenants in this paragraph run with the land, survive both delivery of the Deed and issuance of the Certificate of Completion for the Minimum Improvements, and shall remain in effect for at least 30 years after the Date of Closing. g. Buyer shall comply with all recommendations of the City Engineer. h. Buyer’s construction plans shall be approved by the City Building Official. 10. Revesting Title in Seller upon Happening of Event Subsequent to Conveyance to Buyer. In the event that subsequent to conveyance of the Property or any part thereof to Buyer and prior to receipt by Buyer of the Certificate of Completion of the Minimum Improvements, Buyer fails to carry out its obligations with respect to the construction of the Minimum Improvements (including the nature and the date for the completion thereof), or abandons or substantially suspends construction work, and any such failure, abandonment, or suspension shall not be cured, ended, or remedied within thirty (30) days after written demand from Seller to Buyer to do so, then Seller shall have the right to re-enter and take possession of the Property and to terminate (and revert in Seller) the estate conveyed by the Deed to Buyer, it being the intent of this provision, together with other provisions of the Agreement, that the conveyance of the Property to Buyer shall be made upon, and that the Deed shall contain a condition subsequent to the effect that in the event of any default on the part of Buyer and failure on the part of Buyer to remedy, end, or abrogate such default within the period and in the manner stated in such subdivisions, Seller at its option may declare a termination in favor of Seller of the title, and of all the rights and interests in and to the Property conveyed to Buyer, and that such title and all rights and interests of Buyer, and any assigns or successors in interest to and in the Property, shall revert to Seller, but only if the events stated in this paragraph have not been cured within the time periods provided above. 8 Notwithstanding anything to the contrary contained in this paragraph, Seller shall have no right to reenter or retake title to and possession of a portion of the Property for which a Certificate of Completion has been issued. 11. Resale of Reacquired Property; Disposition of Proceeds. Upon the revesting in Seller of title to and/or possession of the Property or any part thereof as provided in paragraph 10, Seller shall apply the Purchase Price paid by Buyer under paragraph 1 of this Agreement as follows: a. First, to reimburse Seller for all costs and expenses incurred by Seller, including but not limited to proportionate salaries of personnel, in connection with the recapture, management, and resale of the Property or part thereof (but less any income derived by Seller from the Property or part thereof in connection with such management); all taxes, assessments, and water and sewer charges with respect to the Property or part thereof (or, in the event the Property is exempt from taxation or assessment or such charge during the period of ownership thereof by Seller, an amount, if paid, equal to such taxes, assessments, or charges (as determined by Seller assessing official) as would have been payable if the Property were not so exempt); any payments made or necessary to be made to discharge any encumbrances or liens existing on the Property or part thereof at the time of revesting of title thereto in Seller or to discharge or prevent from attaching or being made any subsequent encumbrances or liens due to obligations, defaults or acts of the Buyer, its successors or transferees; any expenditures made or obligations incurred with respect to the making or completion of the Minimum Improvements or any part thereof on the Property or part thereof; and any amounts otherwise owing Seller by the Buyer and its successor or transferee; and b. Second, to reimburse Buyer for the balance of the Purchase Price remaining after the reimbursements specified in paragraph (a) above. Such reimbursement shall be paid to Buyer upon delivery of executed, recordable warranty deed to the Property by Buyer to Seller. 12. Notices. All notices required hereunder shall be in writing and shall be deemed to have been duly given and received (a) two (2) business days after depositing of the same in the mail if sent by regular, registered or certified mail, postage prepaid, to the party to whom directed, at such party's address herein set forth; or (b) upon delivery, or attempted delivery if delivered by overnight courier service or hand delivery. Any party shall have the right to designate any other address for notice purposes by written notice to the other party in the manner aforesaid. The addresses of the parties are as follows: SELLER: Economic Development Authority in and for the City of New Hope Kirk McDonald, Executive Director 4401 Xylon Avenue North New Hope, MN 55428-4898 9 with copy to: Stacy A. Woods, New Hope Assistant City Attorney Jensen Sondrall Persellin & Woods, P.A. 8525 Edinbrook Crossing, Suite 201 Brooklyn Park, MN 55443 BUYER: Novak-Fleck Incorporated 8857 Zealand Avenue North Brooklyn Park, MN 55445 13. No Broker Involved. Seller and Buyer represent and warrant to each other that there is no broker involved in this transaction with whom it has negotiated or to whom it has agreed to pay a broker commission. Buyer agrees to indemnify Seller for any and all claims for brokerage commissions or finders' fees in connection with negotiations for purchase of the Property arising out of any alleged agreement or commitment or negotiation by Buyer, and Seller agrees to indemnify Buyer for any and all claims for brokerage commissions or finders' fees in connection with negotiations for purchase of the Property arising out of any alleged agreement or commitment or negotiation by Seller. 14. Remedies. If Buyer defaults under this Agreement, Seller shall have the right to terminate this Agreement by giving written notice to Buyer as provided by law. If Buyer fails to cure such default as provided by law, this Agreement will terminate, and upon such termination Seller will retain the Earnest Money and neither party shall have any rights or obligations against the other except rights or obligations under this Agreement which provide for continued exercise following the cancellation or other termination of this Agreement. If Seller defaults under this Agreement, Buyer’s only remedy shall be to terminate the Agreement and recover the Earnest Money paid to Seller. Buyer shall not have any right to the remedy of specific performance 15. Assignment/Prohibition Against Transfer of Property. Buyer may not assign its rights and obligations hereunder without the prior written consent of Seller, which consent may be granted or withheld by Seller in its sole discretion. 16. Miscellaneous. This Agreement shall be governed by the laws of the State of Minnesota. No amendment of this Agreement shall be valid or binding unless executed by authorized representatives of both Seller and Buyer. The headings and captions of this Agreement are for the convenience of the parties only and shall not be looked to in the interpretation or enforcement of this Agreement. Seller and Buyer acknowledge and agree that each has had opportunity to participate in the drafting of this Agreement and accordingly acknowledge and agree that this Agreement as a whole and each of is clauses are not to be interpreted in favor of or against either party. This Agreement may be signed in counterpart, with each copy of the Agreement binding upon the signing party at the time of signing and together which shall constitute a single document. 17. Survival. The Parties representations contained herein shall survive the delivery of the Deed. 10 IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the above date (“Effective Date”). SELLER: Economic Development Authority in and for the City of New Hope By: _______________________________ Kathi Hemken Its: President Dated: August____, 2019 By: _______________________________ Kirk McDonald Its: Executive Director Dated: August_____, 2019 BUYER: Novak-Fleck Incorporated By: ________________________________ Richard M. Novak Its: President Dated: August____, 2019 STATE OF MINNESOTA ) ) ss. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this _____ day of August, 2019, by Kathi Hemken and Kirk McDonald, the President and Executive Director, respectively, of the Economic Development Authority in and for the City of New Hope, a public body corporate and politic created pursuant to the laws of the State of Minnesota. _______________________________ Notary Public 11 STATE OF MINNESOTA ) ) ss. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this ___ day of August, 2019, by Richard M. Novak, the President of Novak-Fleck Incorporated, a Minnesota corporation, on behalf of said corporation. _______________________________ Notary Public DRAFTED BY: Jensen Sondrall Persellin & Woods, P.A. 8525 Edinbrook Crossing, #201 Brooklyn Park, MN 55443 (763) 424-8811 12 Exhibit A Permitted Encumbrances 1. Restrictions, reservations, covenants and easements relating to use or improvement of the Property without effective forfeiture provisions of record on the Effective Date; 2. Building and zoning laws, ordinances, city, state and federal regulations; 3. Governmental regulations, if any, affecting the use and occupancy of the Property; 4. All rights in public highways upon the land; 5. Easements for public rights-of-way and public and private utilities, which do not interfere with present improvements; 6. Reservations to the State, in trust for the taxing districts concerned, of minerals and mineral rights in those portions of the Property the title to which may have at any time heretofore been forfeited to the State for nonpayment of real estate taxes. 7. The lien of unpaid special assessments, if any, not presently payable but to be paid as a part of the annual taxes to become due; 8. The lien of unpaid real estate taxes, if any, not presently payable but to be paid as part of the annual taxes to become due. 13 Exhibit B Well Sealing Certificate See attached. 14 Exhibit C Restrictive Covenants See attached. 1 RESTRICTIVE COVENANTS THESE RESTRICTIVE COVENANTS (“Agreement”) dated effective the ____ day of ________________, 2019, by and between the City of New Hope, a Minnesota municipal corporation (“City”) and Novak-Fleck Incorporated, a Minnesota corporation (“Novak-Fleck”). RECITALS WHEREAS, pursuant to that certain Purchase and Redevelopment Agreement between the City and Novak-Fleck dated effective August, ___, 2019 (“Purchase Agreement”), Novak- Fleck purchased the real property located at 5212 Pennsylvania Avenue North in the City of New Hope from City, which property is legally described as “Lot 7, Block 5, Sunset Heights, Hennepin County, Minnesota” (“Property”) which purchase closed on ________________, 2019; and WHEREAS, Novak-Fleck has committed to constructing a new residential home on the Property pursuant to the terms of the Purchase Agreement; and WHEREAS, the City and Novak-Fleck have agreed Novak-Fleck shall complete the construction of the home as described in the Purchase Agreement within one (1) year of the date of closing on the purchase of the Property; and WHEREAS, the City and Novak-Fleck have agreed the City may levy a $20,000.00 assessment against the Property prior to Novak-Fleck’s sale of the Property with the completed home if it is not being sold to an owner-occupant. Further, said assessment may be certified to Hennepin County for collection with real estate taxes payable in a single installment; and WHEREAS, compliance with the restrictions imposed by this Agreement is an additional consideration for the sale of the Property to Novak-Fleck. 2 NOW THEREFORE, for good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, Novak-Fleck agrees as follows: AGREEMENT 1. Restrictive Covenants. Novak-Fleck hereby covenants and agrees with the City that the Property is restricted by the following covenants: a) The initial conveyance of the residential dwelling (“Dwelling”) constructed upon the Property will be only to “Owner-occupant(s)”. “Owner-occupant” is defined as an individual that purchases the Property from Novak-Fleck with a bona fide intent to reside in the Dwelling as a primary residence; and b) The Dwelling constructed on the Property shall be occupied only by the Owner- occupant, and/or by the “Immediate Family Member(s)” of the Owner-occupant for a period of two (2) consecutive years commencing on the date of initial conveyance to an Owner-occupant. “Immediate Family Member” shall only mean a parent, step-parent, child, step-child, grandparent, grandchild, brother, sister, uncle, aunt, nephew or niece. Relationship may be by blood or marriage. 2. Release of Restrictions. The Property will be released from the restrictions imposed by this Agreement as follows: a) Upon the issuance of a Certificate of Occupancy for a Dwelling constructed upon the Property and receipt by the City of an Affidavit signed by Novak-Fleck and the Owner-occupant verifying the Owner-occupant’s intent to occupy the Dwelling as a primary residence the Property shall be released from the restriction stated in paragraph 1(a) above. b) The Property shall be released from the restriction of paragraph 1(b) above on the two (2) year anniversary of the date the Property was conveyed in compliance with paragraph 1(a). 3. Waiver by City. Notwithstanding the restrictions stated above, the City may waive the restrictions stated above upon a finding of hardship or other extenuating circumstances sufficient to justify the waiver in its sole discretion. 4. Agreement to Assessment. Novak-Fleck acknowledges and agrees the City may levy a $20,000.00 assessment against the Property if: (a) the Property is not improved with a single family house on or before _____________, 2020; and/or (b) if Novak-Fleck sells the Property with the completed home to a non-owner-occupant in violation of paragraph 1(a) above. Further, Novak-Fleck agrees the assessment provided by this paragraph may be certified to Hennepin County as a special assessment and collected with the real estate taxes against the Property in a single installment. 5. Waiver by Novak-Fleck. Novak-Fleck expressly waives objection to any irregularity with regard to any assessment levied against the Property per this Agreement or any 3 claim that the amount thereof levied against the Property is excessive, together with all rights to appeal the assessment in the courts. 6. Additional Remedies. It is further understood that if Novak-Fleck or an Owner- occupant should breach their respective obligations under this Agreement, the City will suffer irrevocable harm from which a recovery of money damages would be an inadequate remedy. It is therefore agreed that the City shall be entitled, as a matter of right, in any Court of competent jurisdiction to a mandatory injunction restraining and enjoining pending litigation, as well as upon final determination thereof, from attempting to violate or violating this Agreement. It is further agreed that the City’s rights to such injunctive relief shall be cumulative with and in addition to any other rights, remedies or actions which the City may have. 7. Novak-Fleck’s Successors. This Agreement shall not be terminated by: a) Voluntary dissolution of Novak-Fleck or any parent, subsidiary or successor of Novak-Fleck; b) Merger whereby Novak-Fleck (or such parent, subsidiary or successor of Novak- Fleck) is not the surviving or resulting entity; or c) Any transfer of all or substantially all of the assets of Novak-Fleck. In the event of any such merger or consolidation or transfer of assets, the provisions of this Agreement shall inure to the benefit of and shall be binding upon the surviving or resulting entity to which such assets shall be transferred. 8. Running of Benefits and Burdens. All provisions of this Agreement, including the benefits and burdens run with the land and are binding upon and shall inure to the benefit of the assigns and successors of the parties to this Agreement, such that the provisions of this Agreement shall restrict the Property, and subdivision thereof, notwithstanding any sale or transfer of the Property or any subdivision thereof to a third party. 9. Notices. Any notice to be given by a party to this Agreement shall be personally delivered, sent by registered or certified mail, sent by confirmed electronic transmission, or sent by a nationally recognized overnight courier that issues a receipt to the address set forth for the other party in this section (or to such other address as may be designated by notice to the other parties), and shall be deemed given upon the earlier of personal delivery, the date postmarked, confirmation of electronic transmission, delivery to such courier or the refusal to accept such service. If to the City: City of New Hope Attn: Kirk McDonald 4401 Xylon Avenue North New Hope, MN 55428 kmcdonald@ci.new-hope.mn.us 4 If to Novak-Fleck: Novak-Fleck Incorporated Attn: Richard M. Novak 8857 Zealand Avenue North Brooklyn Park, MN 55445 10. Governing Law. All matters relating to the interpretation, construction, validity and enforcement of this Agreement shall be governed by the internal laws of the State of Minnesota. 11. Cumulative Rights. Each and all of the various rights, power and remedies of the City in this Agreement shall be considered as cumulative with and in addition to any other rights, powers, or remedies of City, and no one of them is exclusive to the others, or is exclusive to any other rights, powers and remedies allowed by law. The exercise or partial exercise of any right, power or remedy shall neither constitute the election thereof, nor the waiver of any other power or remedy. 12. Amendment. This Agreement may be modified or amended only by a written instrument executed by Novak-Fleck and the City. IN AGREEMENT, the parties have executed these Restrictive Covenants effective the day and year first above-written. 5 City of New Hope By: ________________________________ Kirk McDonald Its: City Manager Dated: _________________, 2019 Novak-Fleck Incorporated By: ________________________________ Richard M. Novak Its: President Dated: ____________________, 2019 STATE OF MINNESOTA COUNTY OF HENNEPIN }ss. The foregoing instrument was acknowledged before me this ____ day of ___________, 2019, by Kirk McDonald, the City Manager of the City of New Hope, a Minnesota municipal corporation, on behalf of said municipal corporation. (Notary Public Seal) _______________________________________ Notary Public STATE OF MINNESOTA } ss. COUNTY OF HENNEPIN The foregoing instrument was acknowledged before me this ____ day of ___________, 2019, by Richard M. Novak, the President of Novak-Fleck Incorporated, a Minnesota corporation, on behalf of said corporation. (Notary Public Seal) ______________________________________ Notary Public Drafted By: JENSEN SONDRALL PERSELLIN & WOODS, P.A. 8525 Edinbrook Crossing, Suite 201 Brooklyn Park, MN 55443 (763) 424-8811 P:\Attorney\SAS\1 Client Files\2 City of New Hope\99-11429 5212 Pennsylvania Ave N\Restrictive Covenant - 5212 Pennsylvania Ave. N.docx 15 Exhibit D Assessment Agreement See attached. 1 ASSESSMENT AGREEMENT THIS ASSESSMENT AGREEMENT (“Agreement”) dated effective as of the ___ day of __________________, 2019, by and between the City of New Hope, a Minnesota municipal corporation (“City”) and Novak-Fleck Incorporated, a Minnesota corporation (“Novak-Fleck”). RECITALS WHEREAS, pursuant to that certain Purchase and Redevelopment Agreement between City and Novak-Fleck dated effective August ____, 2019 (“Purchase Agreement”) Novak-Fleck purchased the real property located at 5212 Pennsylvania Avenue North in the City of New Hope from City, which property is legally described as “Lot 7, Block 5, Sunset Heights, Hennepin County, Minnesota (“Property”) which purchase closed on ________________, 2019; and WHEREAS, Novak-Fleck has committed to constructing a new residential home on the Property pursuant to the terms of the Purchase Agreement; and WHEREAS, the City and Novak-Fleck have agreed Novak-Fleck shall complete the construction of the home as described in the Purchase Agreement within one (1) year of the date of closing on the purchase of the Property; and WHEREAS, the City and Novak-Fleck have further agreed the City may levy a $20,000.00 assessment against the Property prior to Novak-Fleck’s sale of the Property with the completed home if it is not being sold to an owner-occupant. Further, said assessment may be certified to Hennepin County for collection with real estate taxes payable in a single installment. AGREEMENT 1. Completion of Project. Novak-Fleck hereby covenants and agrees with the City that the new home on the Property shall be fully completed on or before __________________, 2020. Fully completed shall mean the Property shall be improved with a new single- family house. 2. Agreement to Assessment. Novak-Fleck acknowledges and agrees the City may levy a $20,000.00 assessment against the Property if: (a) the Property is not improved with a 2 single-family house on or before ________________, 2020; and/or (b) if Novak-Fleck sells the Property with the completed home to a non-owner-occupant. Further, Novak- Fleck agrees the assessment provided by this paragraph may be certified to Hennepin County as a special assessment and collected with the real estate taxes against the Property in a single installment. 3. Waiver by Novak-Fleck. Novak-Fleck expressly waives objection to any irregularity with regard to any assessment levied against the Property per this Agreement or any claim that the amount thereof levied against the Property is excessive, together with all rights to appeal the assessment in the courts. 4. Novak-Fleck’s Successors. This Agreement shall not be terminated by: a) The voluntary dissolution of Novak-Fleck or any parent, subsidiary or successor of Novak-Fleck; b) Merger whereby Novak-Fleck (or such parent, subsidiary or successor of Novak- Fleck) is not the surviving or resulting entity; or c) Any transfer of all or substantially all of the assets of Novak-Fleck. In the event of any such merger or consolidation or transfer of assets, the provisions of this Agreement shall be binding upon the surviving or resulting entity to which such assets shall be transferred. 5. Running of Benefits and Burdens. All provisions of this Agreement, including the benefits and burdens run with the land and are binding upon and shall inure to the benefit of the assigns and successors of the parties to this Agreement, such that the provisions of this Agreement shall restrict the Property, and subdivision thereof, notwithstanding any sale or transfer of the Property or any subdivision thereof to a third party. 6. Notices. Any notice to be given by a party to this Agreement shall be personally delivered, sent by registered or certified mail, sent by confirmed electronic transmission, or sent by a nationally recognized overnight courier that issues a receipt to the address set forth for the other party in this section (or to such other address as may be designated by notice to the other parties), and shall be deemed given upon the earlier of personal delivery, the date postmarked, confirmation of electronic transmission, delivery to such courier or the refusal to accept such service. If to the City: City of New Hope Attn: Kirk McDonald 4401 Xylon Avenue North New Hope, MN 55428-4898 kmcdonald@ci.new-hope.mn.us 3 If to Novak-Fleck: Novak-Fleck Incorporated Attn: Richard M. Novak 8857 Zealand Avenue North Brooklyn Park, MN 55445 7. Governing Law. All matters relating to the interpretation, construction, validity and enforcement of this Agreement shall be governed by the internal laws of the State of Minnesota. 8. Cumulative Rights. Each and all of the various rights, power and remedies of the City in this Agreement shall be considered as cumulative with and in addition to any other rights, powers, or remedies of the City, and no one of them is exclusive to the others, or is exclusive to any other rights, powers and remedies allowed by law. The exercise or partial exercise of an y right, power or remedy shall neither constitute the election thereof, nor the waiver of any other power or remedy. 9. Amendment. This Agreement may be modified or amended only by a written instrument executed by Novak-Fleck and the City. IN AGREEMENT, the parties have executed this Assessment Agreement effective the day and year first above-written. City of New Hope By: ________________________________ Kirk McDonald Its: City Manager Dated: ___________________, 2019 Novak-Fleck Incorporated By: ________________________________ Richard M. Novak Its: President Dated: ___________________, 2019 STATE OF MINNESOTA COUNTY OF HENNEPIN }ss. The foregoing instrument was acknowledged before me this ____ day of ____________, 2019, by Kirk McDonald, the City Manager of the City of New Hope, a Minnesota municipal corporation, on behalf of said municipal corporation. (Notary Public Seal) _______________________________________ Notary Public 4 STATE OF MINNESOTA } ss. COUNTY OF HENNEPIN The foregoing instrument was acknowledged before me this ____ day of ___________, 2019, by Richard M. Novak the President of Novak-Fleck Incorporated, a Minnesota corporation, on behalf of said corporation. (Notary Public Seal) ______________________________________ Notary Public Drafted By: JENSEN SONDRALL PERSELLIN & WOODS, P.A. 8525 Edinbrook Crossing, Suite 201 Brooklyn Park, MN 55443 (763) 424-8811 P:\Attorney\SAS\1 Client Files\2 City of New Hope\99-11429 5212 Pennsylvania Ave N\Assessment Agreement - 5212 Pennsylvania Ave. N.docx 16 Exhibit E Request for Proposal (“RFP”) Guidelines See attached. R E Q U E S T F O R P R O P O S A L S ( R F P ) 5 2 1 2 P E N N S Y LVA N I A AV E N U E N O R T H L O T P R I C E $ 6 0 , 0 0 0 ( M I N I M U M ) The City of New Hope Economic Development Authority (EDA) is requesting proposals from builders to purchase the vacant lot located at 5212 Pennsylvania Avenue North, for the construction of a new single- family home. The lot is being offered as part of the city’s scattered site housing program, which focuses on the removal or rehabilitation of distressed properties. The site currently contains a vacant home that will be razed by the EDA in the coming weeks. Enclosed, please ffnd the Proposal Form and Guidelines for submitting a proposal. To receive consideration, proposals must be submitted on a completed Proposal Form and the required attachments and additional information must be included. Incomplete proposals will not be considered. Proposals are due on Wednesday, July 10, 2019, at noon. If you have questions about the RFP process or the enclosed Guidelines, please contact Jeff Alger in the Community Development Department at the city of New Hope, 763-531-5119 or jalger@newhopemn.gov. Thank you for your interest! Regards, Jeff Alger Community Development Specialist G U I D E L I N E S 5 2 1 2 P E N N S Y LVA N I A AV E N U E N O R T H General Notes: 1. Only complete proposals will be considered. The city retains absolute discretion in deciding whether to accept any particular proposal. 2. Proposals must be submitted by state-licensed builders who have built at least three houses in Minnesota in the last ffve years, or have equivalent experience acceptable to the city. The house may be built speculatively or for a speciffc buyer. 3. The city is interested in proposals that will generate the highest valued home possible. The new house must be an owner-occupied, single family home. Owner occupancy restrictions will be documented in the development agreement and secured with a recorded restrictive covenant. The occupancy requirement shall apply to the ffrst buyer only and shall last for a period of two years. Full details regarding the legal language of this requirement are available upon request. 4. The city would like to see a two-story home placed on the site, as the two-story homes built in the pro- gram have commanded the highest prices when compared to other home styles such as split-entry. Preference will be given to concept plans that propose to finish the most square footage and those that include high quality exterior materials and upgraded interior amenities. 5. Following proposal approval by the City Council, the selected builder will be asked to enter into a purchase and development agreement. This agreement will address the sale of the lot and secure all applicable development and performance standards outlined in the proposal guidelines. At the time of this agreement the builder must submit a $2,000 nonrefundable earnest money deposit. 6. Construction of the new house must be completed within one year of closing on the purchase of the lot. G U I D E L I N E S 5 2 1 2 P E N N S Y LVA N I A AV E N U E N O R T H Specifications: 1. Utilities a) All utility service lines shall be underground. Utilities may locate necessary facilities such as pedestals or boxes in the street right-of-way or utility and drainage easements. b) Any expenses for connection of the house to private utilities shall be the responsibility of the builder. c) Municipal water is available into the lot on the west side of the property and the location of the service will be marked onsite. The EDA will install a new curb stop and box in conjunction with the demoli- tion of the home. d) Municipal sanitary sewer is available into the lot on the west side of the property and the location of the service will be marked onsite. The EDA will line the existing service from the termination point all the way to the main line in conjunction with the demolition of the home. 2. Building Standards and Design Guidelines a) All site improvements shall comply with the New Hope City Code. b) The parcel is located on the corner of Pennsylvania and Oregon avenues. Orientation of the house is at the discretion of the builder - it may face either Pennsylvania Avenue North or Oregon Avenue North. c) The house shall have at least three (3) ffnished bedrooms and two (2) ffnished bathrooms. d) The house shall have an attached garage that will accommodate a minimum of two (2) vehicles. Three (3) stall garages are preferred. e) The design should emphasize the front door as the focal point for the front of the house. A large and usable front porch is desired. Garage door dominance in design should be minimized as much as possible. f) The driveway for the new home must be completely new and fully paved from the street to the gar- age. The demolition contractor will leave a portion of the old driveway as a construction entrance. This remaining section of the old driveway must be fully removed with the construction of the new home. G U I D E L I N E S 5 2 1 2 P E N N S Y LVA N I A AV E N U E N O R T H Specifications: e) Plans should present a balanced and pleasing distribution of wall and window areas from all views. Blank walls are not permitted. To the extent that southern exposures are present, house designs are expected to enhance wintertime natural light and passive solar heating. f ) No equipment such as air-conditioning cooling structures or condensers that generate noise shall be located within a side setback or drainage and utility easement. g) Exterior materials (siding, solfit, doors, and windows) shall be low maintenance. The use of brick or stone accents is preferred. Vinyl or other low maintenance siding materials are generally acceptable and can be made more desirable through the use of shakes, ffsh scales or other styles to break up the pattern. 3. Landscaping a) The lot shall be landscaped to be aesthetically pleasing in all seasons. Land forms and plant materials shall be used to deffne the site and blend neatly with adjoining property. The lot area remaining after providing for off-street parking, sidewalks, driveways, buildings, and other requirements shall be landscaped using ornamental grass, shrubs, trees or other acceptable vegetation or treatment generally used in landscaping. The use of grass seed or hydro-seed is not acceptable for restoration of disturbed areas. All grass that is planted must be sod. Additionally, all lawn areas must be irrigated with underground irrigation systems. b) A minimum of one (1) large-species deciduous shade tree shall be planted in the front yard. A minimum of two (2) large-species deciduous shade tree shall be planted in the side or rear yard. Trees should be a minimum of 2” in diameter. A list of prohibited trees is attached. 4. Setbacks Front Yard (south, abutting Oregon) Rear Yard (north) Side Corner (west, abutting Pennsylvania) Interior Side Yard Attached Garage (east) Interior Side Yard House (east) 25 feet 25 feet 20 feet 5 feet 10 feet G U I D E L I N E S 5 2 1 2 P E N N S Y LVA N I A AV E N U E N O R T H Specifications: 5. Builder Selection Criteria a) Builder must a licensed in the State of Minnesota as a Residential Building Contractor. b) Builder shall provide the addresses of three houses they have built in Minnesota within the last ffve years, or evidence of qualiffcation acceptable to the EDA. c) Builder must be capable of completing the house within one year of closing on the purchase of the lot. 6. Required Attachments by Builder a) Site plan showing the layout of the home on the lot. Please include dimensions and setbacks. b) Floor plans with dimensions. Clearly indicate square footages of each ifoor. c) List overall square footage. d) List total finished square feet. e) Elevations, must indicate types of exterior materials (color elevations preferred). f) Narrative description of the interior trim package. Include description of ifooring. g) Estimated sales price of the home. h) Pictures of similar homes (if available). 7. Attachments  Location map  Sample lot layout  Windsor Ridge Development Update - May 2019  Prohibited tree list P R O P O S A L F O R M 5 2 1 2 P E N N S Y LVA N I A AV E N U E N O R T H This lot is being offered at a minimum base price of $60,000. The EDA will consider higher offers for the lot. However, submitting a higher offer will not guarantee selection of your proposal. This proposal is not a purchase agreement or other binding contract. At this time, the builder is submitting a proposal to purchase this lot for $_____________________ ($60,000 minimum), and build a new single-family house in accordance with the RFP guidelines. If a builders proposal is accepted by the EDA, builder will be asked to enter into a purchase and development agreement and provide $2,000 earnest money for the lot. Only after such an agreement is signed would a binding contract exist between the EDA and the builder. Company Name:____________________________________ State License Number:_________________ Telephone:_______________________________________ E-mail_________________________________ Address:_______________________________ City/State/Zip:____________________________________ Signature:______________________________________________ Date:____________________________ Print Name and Title:_____________________________________________________________________ Proposals are due by Wednesday, July 10, 2019, at noon Submit this proposal form and required attachments to: Jeff Alger City of New Hope | Community Development Specialist 4401 Xylon Avenue North | New Hope, MN 55428 763.531.5119 jalger@newhopemn.gov Proposals may be submitted by hand delivery, U.S. Mail, or email 17 Exhibit F Buyer’s Proposed Plans See attached. P:\Attorney\SAS\1 Client Files\2 City of New Hope\99-11429 5212 Pennsylvania Ave N\Purchase and Redevelopment Agreement 5212 Pennsylvania Ave N.docx Houston Homes “19031” Houston Homes “19064” Great Buy Homes Budget & Return on Investment for 5212 Pennsylvania Avenue North EXPENSES AMOUNT Acquisition (including closing costs)(147,742.34)$ Legal (purchase)(1,176.00)$ Demolition survey (650.00)$ Demolition and site prep (23,890.00)$ Well sealing (1,630.75)$ 1st half real estate taxes (1,260.95)$ Lawn services (290.00)$ Utility billing (198.16)$ Closing costs for sale (estimated)(1,500.00)$ Legal costs for sale (estimated)(1,000.00)$ 2nd half real estate taxes (estimated)(630.48)$ Future lawn services (estimated)(100.00)$ Future utility billing (estimated)(93.00)$ TOTAL (180,161.68)$ REVENUE AMOUNT EDA (lot sale proceeds) 65,000.00$ TOTAL 65,000.00$ RETURN ON INVESTMENT TOTAL COST/REVENUE (115,161.68)$ -63.92% PROJECTED ADDITIONAL TAX REVENUE AMOUNT TOTAL COST/REVENUE Year 1 (2021)1,713.56$ (113,448.12)$ -62.97% Year 2 (2022)3,427.12$ (111,734.56)$ -62.02% Year 3 (2023)5,140.68$ (110,021.00)$ -61.07% Year 4 (2024)6,854.24$ (108,307.44)$ -60.12% Year 5 (2025)8,567.80$ (106,593.88)$ -59.17% Year 10 (2030)17,135.60$ (98,026.08)$ -54.41% Year 15 (2035)25,703.40$ (89,458.28)$ -49.65% Year 20 (2040)34,271.20$ (80,890.48)$ -44.90% Year 25 (2045)42,839.00$ (72,322.68)$ -40.14% Year 30 (2050)51,406.80$ (63,754.88)$ -35.39% Year 68 (2088)116,522.08$ 1,360.40$ 0.76% *Based on new home valued at $399,000 I:\RFA\COMM DEV\2019\EDA\Scattered Site Housing\Q - 3924 Utah Ave N Rehab Contract 08-12-19.docx Request for Action August 12, 2019 Approved by: Kirk McDonald, City Manager Originating Department: Community Development By: Jeff Alger, Community Development Specialist; Jeff Sargent, Director of Community Development Agenda Title Resolution approving awarding the contract for rehabilitation work in association with the EDA owned property located at 3924 Utah Avenue North (improvement project no. 1020) Requested Action Staff requests that the Economic Development Authority approve a resolution awarding the rehabilitation contract for the remodel and rehabilitation of 3924 Utah Avenue North to Day Construction in the amount of $173,671. This includes the base bid of $158,794 and alternate #1 at a cost of $14,877. Policy/Past Practice The Economic Development Authority reviews proposals for the redevelopment of EDA-owned scattered site properties prior to executing a contract with the preferred buyer/builder. Background In December of 2018, the Economic Development Authority (EDA) purchased the vacant and distressed property located at 3924 Utah Avenue North for $190,100 as part of the city’s scattered site housing program. The intent of the purchase was to rehabilitate the home for resale and maximize the value of the finished product. The house is in disrepair and substantial exterior and interior work is needed in order to make it habitable and desirable. Since 2014, the EDA has acquired 15 single-family homes and one vacant lot. Of the 15 single-family homes, 13 have been demolished (four lot splits), one has be rehabilitated, and staff is proposing that the home at 3924 Utah Avenue North be rehabilitated. Staff remains committed to identifying scattered site housing opportunities for demolition; however, these properties have become more difficult to acquire for a variety of reasons. The primary barrier is lack of inventory, as the EDA has purchased many of the worst single-family nuisance properties available in the city. Secondly, the acquisition price for distressed properties has increased steadily over the past five years, as property values have risen citywide. These market forces have led staff to pursue opportunities within the rehabilitation market, including 3924 Utah Avenue North. Staff believes the EDA has an opportunity to make a substantial impact with its neighborhood revitalization efforts relating to rehabilitation. The most recent rehabilitation project completed by the EDA was at 3984 Zealand Avenue North, which is located in the same neighborhood as the subject property. The EDA purchased the home for $165,000, completed a broad scope of work that improved nearly every aspect of the home, and sold the home for $295,000. All costs associated with the improvements were covered with proceeds from the sale of the property. When the purchase of 3924 Utah Avenue North for $190,100 was approved at the December 10, 201 8, EDA meeting, it was noted that the larger scope of work and possible recommendation of alternates would likely increase the budget to a point where proceeds from the sale would not cover all costs. The possibility of an open house or multiple open houses was also discussed as the project could serve as a “demonstration project” for the neighborhood. Agenda Section EDA Item Number 5 Request for Action, Page 2 After the property was acquired, community development staff developed a scope of work that include d a “base” level of work to be completed in order to make the home habitable and desirable. Staff worked with the builder that completed the rehabilitation project at 3984 Zealand Avenue North and the building official to develop and refine the scope of work. The complete scope of work is attached and involves improving nearly every aspect of the house (interior and exterior). Major exterior improvements include a new driveway, garage door, siding, windows, doors, and landscaping. Major interior improvements include removing the partition walls that separate the kitchen from the dining room and a complete kitchen renovation with quartz countertops, new cabinets, appliances, hardwood flooring (kitchen and dining room), light fixtures, and a five- foot island with overhang seating. The new appliances were retained from the property the EDA acquired at 5212 Pennsylvania Avenue North and will be utilized as part of the rehabilitation at 3924 Utah Avenue North. The previous owner installed them in an effort to better market the property before the city purchased the home. The main level and upper level bathrooms would be completely renovated and the hardwood floors in the living room would be refinished. Second floor bedrooms would receive new carpeting and light fixtures. All rooms would receive new doors, outlets, appliances, and painted/repaired walls and ceilings. Drain tile would be installed in the basement and half of it would be finished. The house has 1,598 square feet of finished space above ground, and finishing half of the basement would result in 300 square feet of finished space below ground. Two alternates were also denoted: 1. Remodel northeast second-floor bedroom to create a master-suite. This would convert the northeast bedroom into a bathroom and walk-in closet. 2. Install cultured stone accent wall to front of home in area where vertical board and batten siding is located. A Request for Proposals (RFP) outlining the scope of work and alternates was sent to five contractors on June 14, 2019. The contractors were asked to provide a cost for the base improvements and individual costs for each alternate. Staff received one quote for the project, from Day Construction, the New Hope-based builder that completed the rehabilitation project at 3984 Zealand Avenue North. Other contractors stated that they were too busy to bid on the project at this time. The bid from Day Construction is as follows: Base bid $158,794 Alternate #1 $14,877 Alternate #2 $7,128 According to Day Construction, a contingency of $3,200 has been built into the bid to cover items such as unforeseen mechanical (plumbing, electrical, heating) changes within the original scope of work, variances in trade partner and supplier pricing, and minor changes that typically occur during construction. Staff is recommending that the EDA approve the base bid and alternate #1 as part of the project. Staff believes creating a master-suite with a bathroom and walk-in closet will significantly improve the marketability and overall value of the property. The city was able to sell the property at 3984 Zealand Avenue North without a realtor, saving thousands of dollars in realtor fees. These savings were reinvested into the home in the form of a new roof. Staff would like to attempt to sell the home at 3924 Utah Avenue North without a realtor in order to reduce costs and limit potential losses for the EDA. Request for Action, Page 3 Return on Investment As previously stated, it is not anticipated that revenue from the sale of the property would cover all costs. A “best case scenario” involving a sales price of $365,000, no realtor fees, and no unexpected costs beyond what is included within the contingency (total expenses of $377,080) would result in a loss of approximately $12,080. A “worst case scenario” involving a sales price of $330,000, $12,000 in realtor fees, and $5,000 in unexpected costs (total expenses of $394,080) would result in a loss of approximately $64,080. If the housing market where to change significantly, that would also affect the sales price of the house. The proposed improvements would result in an increase in the taxable property value for the subject property. If the property were to be valued at $330,000 in 2020, it is estimated that taxes allocated and payable to the city in 2021 would represent an increase of $929.71, or 76.33%, as compared to those that were payable in 2019. Estimated Market Value 2018, Payable 2019 Projected Market Value 2020, Payable 2021 $202,000 $330,000 Taxable Market Value 2018, Payable 2019 Projected Taxable Value 2020, Payable 2021 $182,940 $322,460 Taxes Payable 2018, Payable 2019 Projected Taxes Payable 2020, Payable 2021 $3,267.52 $5,674.32 Taxes Allocated to City 2018, Payable 2019 Taxes Allocated to City 2020, Payable 2021 $1,218.07 $2,147.78 The following table demonstrates the tax benefit associated with the increase taxable property value over the course of 30 years: Additional Taxes Collected By City Year # of Years $929.71 2021 1 $1,859.42 2022 2 $2,789.13 2023 3 $3,718.84 2024 4 $4,648.55 2025 5 $9,297.10 2030 10 $13,945.65 2035 15 $18,594.20 2040 20 $23,242.75 2045 25 $27,891.30 2050 30 Utilizing the “best case scenario,” the increase in property taxes allocated to the city would cover the shortfall associated with the project after 13 years. Under the “worst case scenario,” the increase in property taxes allocated to the city would not cover the shortfall for 69 years, unless other substantial improvements were made to the property. It should be noted that demolition and rebuild projects often involve a much larger loss margin as compared to a rehabilitation project. The primary focus of the scattered site program is to target Request for Action, Page 4 distressed single-family properties throughout the city, with the goal of improving residential neighborhoods. It is understood that potential losses are incurred on each project, as the cost to acquire the distressed properties and redevelop or rehabilitate often exceeds the value of the new vacant lot or rehabilitated home. Staff is working with AEM on a template that can be used for future scattered site housing projects to calculate the Internal Rate of Return for potential projects. It will be discussed at the August 19, 2019, work session meeting when the Community Development Department provides an annual update to the City Council. Funding Funding for this project would come from the EDA budget. Any loss incurred on this project would diminish the EDA fund balance. Recommendation Staff recommends approval of a resolution awarding the rehabilitation contract for the remodel and rehabilitation of 3924 Utah Avenue North to Day Construction in the amount of $173,671. This includes the base bid of $158,794 and alternate #1 at a cost of $14,877. The assistant city attorney has indicated that the City Council may award a contract to a single bidder if the contract amount is less than $175,000 and the contractor is capable of doing the work. The City Council has the option of awarding the bid to the lowest responsible bidder, Day Construction, or directing staff to request bids again with the goal of receiving additional bids. Attachments  Resolution with RFP and proposal  Budget & Return on Investment (2 scenarios) CITY OF NEW HOPE ECONOMIC DEVELOPMENT AUTHORITY EDA RESOLUTION NO. 19-___ RESOLUTION APPROVING AWARDING THE CONTRACT FOR REHABILITATION WORK IN ASSOCIATION WITH THE EDA OWNED PROPERTY LOCATED AT 3924 UTAH AVENUE NORTH (IMPROVEMENT PROJECT NO. 1020) BE IT RESOLVED by the Economic Development Authority in and for the City of New Hope (“EDA”) as follows: WHEREAS, the Economic Development Authority in and for the City of New Hope (“EDA”) purchased the single family home located at 3924 Utah Avenue North, New Hope, MN, P.I.D. 18-118-21-41-0077, and legally described as Lot 23, Block 6, Hopewood Hills, Hennepin County, Minnesota (the “Property”) on December 21, 2019 for $190,100; WHEREAS, the exterior and interior of the house located at the Property requires rehabilitation to bring the house into compliance with the City Building Code, achieve suitable living conditions and create a marketable home for re-sale as a part of the City’s scattered site housing program; WHEREAS, the EDA solicited rehabilitation quotes pursuant to a Request for Proposal with Guidelines outlining the Scope of Work of rehabilitation work that is needed (“Work”); WHEREAS, Day Construction, LLC submitted a proposal that meets the Scope of Work and is the low bid for the Work with a base bid of $158,794 and bid for Alternate #1 of $14,877 for a total bid of $173,671; WHEREAS, the Proposal is attached hereto with the Request for Proposal as Exhibit A (“Proposal”); WHEREAS, it is in the best interests of the EDA to enter into a contract with Day Construction, LLC for the purpose of performing the Work including Alternate 1 but not Alternate 2; WHEREAS, the EDA is requested to approve the selection of Day Construction, LLC as the duly qualified contractor to perform the Work and approval of the Proposal; and WHEREAS, City staff, EDA and City Attorney have reviewed the Proposal and are agreeable with the terms, believing them to be in the best interest of the EDA that Day Construction, LLC be selected to perform the Work. NOW, THEREFORE, BE IT RESOLVED, by the Economic Development Authority in and for the City of New Hope as follows: 1.That the EDA hereby approves the Proposal submitted by Day Construction, LLC for the base bid of $158,794 and Alternate #1 bid of $14,877, for a total bid of $173,671, attached as Exhibit A. 2.The President, Executive Director, New Hope City staff and the City Attorney are authorized and directed to draft the contract and all other appropriate documents, and to take whatever additional actions are necessary or desirable, to complete the Contract and engage the services of Day Construction, LLC. Dated the 12th day of August 2019. ____________________________________ Kathi Hemken, President Attest: _____________________________ Kirk McDonald, Executive Director Exhibit A Proposal See attached Request for Proposal with Proposal. P:\Attorney\SAS\1 Client Files\2 City of New Hope\99-11432 3924 Utah Ave N\Resolution approving award to rehabilitation contractor.docx The City of New Hope Economic Development Authority (EDA) is requesting proposals from builders to renovate and remodel the single-family home located at 3924 Utah Avenue North. The home was purchased as part of the city’s scattered site housing program, which focuses on the removal or rehabilitation of dis- tressed properties. The home, which is currently vacant, will be completely rehabilitated and sold upon com- pletion. Enclosed, please find the Proposal Form and Guidelines for submitting a proposal. To receive consideration, proposals must be submitted on a completed Proposal Form and the required attachments and additional information must be included. Incomplete proposals will not be considered. Proposals are due on Friday, July 5, 2019, at noon. If you would like to setup a time to walk-through the house or have questions about the RFP process or the enclosed Guidelines, please contact Jeff Alger in the Community Development Department at the city of New Hope, 763-531-5119 or jalger@newhopemn.gov. Thank you for your interest! Regards, Jeff Alger Community Development Specialist R E Q U E S T F O R P R O P O S A L S ( R F P ) 3 9 2 4 U TA H AV E N U E N O R TH Exhibit A G U I D E L I N E S 3 9 2 4 U TA H AV E N U E N O R TH General Notes: 1.Only complete proposals will be considered. The city retains absolute discretion in deciding whether to accept any particular proposal. 2.Proposals must be submitted by state-licensed builders. 3.Following proposal approval by the City Council, the selected builder will be asked to enter into a remodeling contract, which limits the number of payments or draws that can be requested by the contrac- tor. With each invoice, the contractor must submit lien waivers that cover all itemized components of the invoice. If subcontractors are being paid, lien waivers will be required for each subcontractor. Following project completion the contractor must submit a sworn construction statement. 4.Upon execution of the remodeling contract, all interior and exterior work must be completed and permits must be closed within six (6) months. G U I D E L I N E S 3 9 2 4 U TA H AV E N U E N O R TH Scope of Work Exterior  Remove existing bituminous driveway and replace with new bituminous pavement. Retain existing con- crete garage apron.  Fill holes in with concrete for both damaged block sections on both sides of overhead garage door.  Remove all siding from home, and replace with new vinyl siding, color by owner.  Remove address numbers and install new address numbers. Style and color by owner.  Remove all existing gutters and downspouts from home. Replace with new seamless gutters. Color by owner. New downspouts to match new gutters. Install 5’ kick-outs to all new downspouts. Include new gutters and downspouts on garage.  Install new roof edge to entire home and garage. Color by owner.  Install new aluminum soffit and fascia to entire home and garage as part of the siding project. Color by owner.  Remove all existing windows from home, including frames. Replace with new, mid-grade, Energy Star qualified white vinyl windows with nail fins. The windows in the front of the home should include decora- tive colonial style grids. Meet egress requirements when necessary.  Remove existing overhead garage door and replace with new insulated door. Color by owner. Retain exist- ing opener. Wrap door frame with aluminum coil stock. Color by owner. New overhead door shall have windows with grids in the top panel.  Remove front door and replace with similar style new door with double sidelites.  Remove and replace walk door from rear of garage to back yard. New door should be a six-panel insulated door.  Remove and replace the rear door to the home that exits to the back yard. This door should be insulated with, ¾ glass, with grids.  Provide and install matching lock sets that are keyed alike for all exterior doors (3).  Remove all existing orange colored landscaping rock from perimeter of entire home and garage. Re-grade around entire home and garage to provide positive drainage. Install plastic edging to separate the lawn from areas where rock was removed. Replace orange rock with new clean landscaping rock, color by own- er. Install new heavy-duty plastic sheeting between ground and new rocks.  Remove patio pavers from rear of home.  Remove gas grill from back of home and ensure that the gas connection is terminated properly.  Remove and dispose of garden shed in backyard.  Remove miscellaneous refuse, debris, brush and yard waste that is located throughout the entire lot, includ- ing the area behind the garden shed.  Install sod and/or grass seed in disturbed or dirt areas.  Remove all exterior lights (4) from home and replace with new lights. Style and color by owner. Provide fixture allowance with bid. General Interior (apply these specs to entire home):  Remove all wallpaper from entire home.  Fix and repair all sheetrock defects.  Remove all trim from home, casing, baseboard, etc. Replace with new pre-finished white poplar trim. Co- lonial detail for new baseboard and casing. G U I D E L I N E S 3 9 2 4 U TA H AV E N U E N O R TH Scope of Work General Interior (apply these specs to entire home): Remove all interior doors, and replace with new white, pre-finished, hollow-core, three-panel doors. Color to match casing. Provide new handle sets. Locking handles for bathrooms and bedrooms. Color by owner. All walls should be finished to a flat finish and painted the same color with eggshell interior paint. Color by owner. Remove all existing ceiling texture from entire home. All ceilings should be textured with new medium knock-down finish and painted with white ceiling paint. Remove all outlets, switches, and cover plates from home and replace with new white outlets, switches and cover plates. Install GFCI outlets to meet code. Hardwire entire home to be compliant with current code for smoke and CO2 detectors. Remove all existing HVAC grills for supply and return ducts. Replace with new white grill covers. Kitchen, Dining, Back Door Hall, and Front Entry: Remove all existing kitchen cabinets, countertops, soffit, sink, and appliances, dispose of appliances. Remove existing door from garage to house and replace with white, insulated, six-panel, 20-minute fire- rated door. Install new, mid-grade, pre-finished white kitchen cabinets with quartz counters. New layout should in- clude a 5’ island with overhang seating. Install and move utilities as necessary (countertop color by own- er). Retain current general layout of kitchen. However, the new kitchen should have a full height pantry cabinet in place of the current oven, and the drop in range should be replaced with a freestanding gas range/oven combo. The new kitchen appliances have already been purchased for this home and are stored in the garage. Please ask city staff for dimensions. New kitchen cabinets should include crown molding. Install new stainless steel, under mount double basin sink and faucet with sprayer. Remove existing light fixture over kitchen sink and replace with new hanging pendant, provide fixture al- lowance. Color by owner. Remove and abandon existing fluorescent fixture in middle of kitchen. Install six (6) new can lights in kitchen, evenly spaced. These lights should cover the hallway area towards the back door. Remove existing hanging light in kitchen. Replace with hanging pendant over new kitchen island. Completely remove the partition walls that separate the kitchen from the dining room. Transfer loads in this area as necessary with new beams. Re-arrange mechanical work as necessary, electrical, and HVAC. This will include removal of the second hall closet in this vicinity. Remove existing flooring from kitchen and dining rooms. Install oak hardwood to match existing flooring in living room. Stain and finish all wood flooring, new and old to match (color by owner). Run new wood flooring in kitchen and dining in same direction as wood floor in living room. The new wood flooring will run through the front entryway. Remove and replace dining room light fixture, new fixture will be chandelier style, provide fixture allow- ance. Remove existing light fixture at front entry. Replace with new 3-bulb surface mounted fixture. Color by owner, provide allowance. Remove existing doorbell button and chime, replace with new. Remove existing light fixture near back door. Replace with new 3-bulb surface mounted fixture. Color by owner, provide allowance. G U I D E L I N E S 3 9 2 4 U TA H AV E N U E N O R TH Scope of Work Main Floor Living Room:  Re-finish existing hardwood floors to match kitchen and dining.  Install six new can lights evenly spaced in room.  Remove pocket door from living room to kitchen. Abandon this door and finish opening with white jambs and casing to match other trim. Stairs:  Remove existing metal handrail and replace with wooden rail, top and bottom of stairs.  Install carpet over stairs, to match bedrooms, color by owner.  Secure existing treads and risers. Main-floor Bath:  Gut entire existing bathroom.  Remove tile wainscoting, replace with sheetrock.  Install new ceramic tile flooring, color by owner  Install new vanity cabinet and sink, to replace existing wall mounted sink. New vanity top should be cul- tured marble with built-in sink.  Provide and install new faucet.  Provide and install new toilet with elongated bowl.  Install new can light fixture.  Abandon laundry chute.  Install new decorative mirror with wood frame. Second-floor Bath:  Gut entire bathroom.  Remove existing toilet. Replace with new white toilet with elongated bowl.  Remove existing vanity and counter top. Replace with new, white vanity cabinet to match kitchen cabinets and pre-formed cultured top with built-in sink. Install new faucet.  Remove existing tile wainscoting and replace with sheetrock.  Remove existing tile flooring.  Install new tile flooring (color by owner).  Install new fan/light combo in main area of bathroom, vent to outside.  Remove and replace existing can light.  Install new decorative mirror with wood frame. Second-floor Bedrooms, Including Master: (4 total)  Install new carpet and pad in all rooms. Color by owner ($20/yard allowance).  Remove existing light fixtures. Install new surface mounted light fixtures in center of each room, provide fixture allowance.  Remove existing closet shelving and replace with new wire shelving and rod. G U I D E L I N E S 3 9 2 4 U TA H AV E N U E N O R TH Scope of Work Basement Living Room:  Remove and replace bottom stair tread.  Remove all sheetrock from stairwell and basement walls and ceiling.  Remove carpet from stairs.  Remove and replace all rotten wood from stair well framing.  Remove all paneling, insulation, and firing strips from basement walls.  Install four can lights evenly spaced in room.  Paint entirety of interior foundation walls white with moisture sealant paint before installing insulation and sheet rock.  Fir-out all exterior walls and insulate with rigid foam insulation.  Hang new sheet rock throughout entire room. Finish with flat walls and medium knock-down on the ceil- ing. Paint to match rest of house.  Install carpet to match second-floor bedrooms.  Install drain tile along all walls. Utility and Laundry Room:  Inspect and repair plumbing as necessary.  Have furnace inspected and cleaned.  Have water heater inspected and cleaned.  Remove all fluorescent light fixtures and replace with new similar fixtures.  Clean entire floor, and paint floor with garage floor paint.  Paint entirety of interior foundation walls white with moisture sealant paint.  Gut entire bathroom in this area. Close off plumbing as necessary to prepare for potential future bathroom.  Install drain tile along all walls except garage (north) wall. Garage:  Repair hole in foundation wall between garage and house.  Pressure wash garage floor. Attic:  Blow in cellulose insulation to entire attic to meet current energy code. Build up attic access area to accom- modate the new insulation. Insulate attic access lid.  Install or extend existing vent chutes between every rafter to maintain attic ventilation and prevent insula- tion from contacting roof deck. Alternates 1. Remodel northeast second-floor bedroom to create a master-suite. This project would convert the NE bed- room into a bathroom and walk-in closet. Design the bathroom with 3’ X 4’ tile walled shower with fiber- glass pan. The vanity cabinet should match specs from the other two bathrooms. Floors should be ceramic tile. Include all necessary mechanical upgrades to make this conversion possible. Include new vent fan that is vented to exterior, can light over shower, and wall-mounted vanity light over the sink. 2. Install cultured stone accent wall to front of home in area where vertical board and batten siding is located. P R O P O S A L F O R M 3 9 2 4 U TA H AV E N U E N O R TH This proposal is not a purchase agreement or other binding contract. At this time, the builder is submitting a proposal to complete the scope of work for $_____________________ in accordance with the RFP guidelines. Please attach allowances for items specified within the scope of work. The builder is also submitting a proposal to complete alternates specified within the scope of work: Alternate #1: $_____________________ Alternate #2: $_____________________ Company Name:____________________________________ State License Number:_________________ Telephone:_______________________________________ E-mail_________________________________ Address:_______________________________ City/State/Zip:____________________________________ Signature:______________________________________________ Date:____________________________ Print Name and Title:_____________________________________________________________________ Proposals are due by Friday, July 5, 2019, at noon Submit this proposal form and required attachments to: Jeff Alger City of New Hope | Community Development Specialist 4401 Xylon Avenue North | New Hope, MN 55428 763.531.5119 jalger@newhopemn.gov Proposals may be submitted by hand delivery, U.S. Mail, or email PROPOSAL FORM 3924 UTAH AVENUE NORTH This proposal is not a purchase agreement or other binding contract. At this time, the builder is submitting a proposal to complete the scope of work for $_____________________ in accordance with the RFP guidelines. Please attach allowances for items specified within the scope of work. The builder is also submitting a proposal to complete alternates specified within the scope of work: Alternate #1: $_____________________ Alternate #2: $_____________________ Company Name:____________________________________ State License Number:_________________ Telephone:_______________________________________ E-mail_________________________________ Address:_______________________________ City/State/Zip:____________________________________ Signature:______________________________________________ Date:____________________________ Print Name and Title:_____________________________________________________________________ Proposals are due by Friday, July 5, 2019, at noon Submit this proposal form and required attachments to: Jeff Alger City of New Hope | Community Development Specialist 4401 Xylon Avenue North | New Hope, MN 55428 763.531.5119 jalger@newhopemn.gov Proposals may be submitted by hand delivery, U.S. Mail, or email Day Construction BC641777 651-565-7877 Matthew@Day-Construction.com 8716 30th Ave N New Hope MN 55427 July 5th, 2019 Matthew Day- Owner 158,794 7,128 14,877 3924 Utah Ave - Notes on RFP and bid submittal Bid Notes •Regarding removal of wall between kitchen and dining room •A portion of the wall near the garage entrance will be retained. This section of the wall is needed for an existing heating supply duct, and to provide space for plumbing lines for the possible addition of the master bathroom. As much of the wall will be removed as is practical. The aesthetics of the open plan will not be impacted by this adjustment. •Connection to existing range vent is included- not speciﬁed in RFP •New bathtub and tub/shower faucet not speciﬁcally identiﬁed in RFP. These items are included in our price. •Carpet allowance of $25/yard has been included. Prices from suppliers have increased since the Zealand project and this is the allowance we recommend. •Siding budget includes LP SmartSide 4” window and door casing to match the aesthetic of the surrounding neighborhood. The alternative would be no trim around the windows which isn’t common in older neighborhoods. •Removal of chain link fence on north and south sides of home is included •Removal of clothes-line posts is included •Work will be done in compliance with EPA Lead RRP best practices •Abatement of asbestos, if found, is not included •Duct Cleaning and ﬁnal cleaning are included as part of bid price •Building Permit fee not included Additional Recommended Options: •New air conditioning condenser- $4260 •Existing unit is at least 15 years old and the refrigerant (R22) has become very expensive which makes maintenance impractical •New laundry tub in basement - $792 •includes white plastic laundry tub, brass faucet, demo and disposal of existing laundry tub -DAY CONSTRUCTION- 651-565-7877 - info@day-construction.com - www.day-construction.com License #BC641777 Main: 651-565-7877 Fax: 651-565-7876 info@day-construction.com www.day-construction.com License BC641777 -DAY CONSTRUCTION- 651-565-7877 - info@day-construction.com - www.day-construction.com License #BC641777 Allowances Item Quantity Needed Each House Numbers 4 $1 0 . 0 0 Bathtub- enameled steel 1 $2 2 0 . 0 0 Kitchen Faucet 1 $3 0 0 . 0 0 Bathroom Faucet 2 $1 5 0 . 0 0 Shower/Tub Faucet 1 $1 8 0 . 0 0 Toilet 2 $1 5 0 . 0 0 Bathroom Hardware Set 2 $7 5 . 0 0 General Lighting Allowance 1 $1 , 5 0 0 . 0 0 Cabinets (kitchen)1 $9 , 5 0 0 . 0 0 Cabinets (bathrooms)1 $1 , 2 0 0 . 0 0 Countertop (granite/quartz) (quantity is estimated based on general kitchen layout) 60 $6 5 . 0 0 Door Handle- Interior 16 $2 0 . 0 0 Door handle- Exterior 3 $6 0 . 0 0 Carpet 171 yards $2 4 . 0 0 Floor Tile 5/sf Wall Tile 5/sf Backsplash Tile 15/sf MASTER BATHROOM OPTION ALLOWANCES Vanity Light 1 $1 2 5 . 0 0 Floor Tile $5/sf Wall Tile $5/sf Accent Tile (recessed shelf)$3 0 . 0 0 Shower Door 1 $1 , 2 0 0 . 0 0 Mirror(s)$1 5 0 . 0 0 Vanity Cabinet 1 $6 0 0 . 0 0 Vanity Top 1 $5 0 0 . 0 0 Budget & Return on Investment for 3924 Utah Avenue North (1 of 2) "Best case scenario" EXPENSES AMOUNT Acquisition (including closing costs)(191,968.70)$ Legal (purchase)(1,812.00)$ 1st half real estate taxes (1,633.76)$ Lawn services (270.00)$ Utility billing (197.29)$ CenterPoint - gas (748.82)$ Xcel Energy - electric (estimated)(350.00)$ Base improvements (158,794.00)$ Alternate #1 (14,877.00)$ Closing costs for sale (estimated)(1,500.00)$ Legal costs for sale (estimated)(1,000.00)$ 2nd half real estate taxes (estimated)(1,633.76)$ Tree branch removal (estimated)(750.00)$ Future lawn services (estimated)(220.00)$ Future utility billing (estimated)(200.00)$ Future CenterPoint - gas (estimated)(700.00)$ Future Xcel Energy - electric (estimated)(425.00)$ TOTAL (377,080.33)$ REVENUE AMOUNT EDA (home sale proceeds) 365,000.00$ TOTAL 365,000.00$ RETURN ON INVESTMENT TOTAL COST/REVENUE (12,080.33)$ -3.20% PROJECTED ADDITIONAL TAX REVENUE AMOUNT TOTAL COST/REVENUE Year 1 (2021)929.71$ (11,150.62)$ -2.96% Year 2 (2022)1,859.42$ (10,220.91)$ -2.71% Year 3 (2023)2,789.13$ (9,291.20)$ -2.46% Year 4 (2024)3,718.84$ (8,361.49)$ -2.22% Year 5 (2025)4,648.55$ (7,431.78)$ -1.97% Year 10 (2030)9,297.10$ (2,783.23)$ -0.74% Year 13 (2033)12,086.23$ 5.90$ 0.00% Year 15 (2035)13,945.65$ 1,865.32$ 0.49% Year 20 (2040)18,594.20$ 6,513.87$ 1.73% Year 25 (2045)23,242.75$ 11,162.42$ 2.96% Year 30 (2050)27,891.30$ 15,810.97$ 4.19% *Based on new home valued at $330,000 Budget & Return on Investment for 3924 Utah Avenue North (2 of 2) "Worst case scenario" EXPENSES AMOUNT Acquisition (including closing costs)(191,968.70)$ Legal (purchase)(1,812.00)$ 1st half real estate taxes (1,633.76)$ Lawn services (270.00)$ Utility billing (197.29)$ CenterPoint - gas (748.82)$ Xcel Energy - electric (estimated)(350.00)$ Base improvements (158,794.00)$ Alternate #1 (14,877.00)$ Closing costs for sale (estimated)(1,500.00)$ Legal costs for sale (estimated)(1,000.00)$ 2nd half real estate taxes (estimated)(1,633.76)$ Tree branch removal (estimated)(750.00)$ Future lawn services (estimated)(220.00)$ Future utility billing (estimated)(200.00)$ Future CenterPoint - gas (estimated)(700.00)$ Future Xcel Energy - electric (estimated)(425.00)$ Contingency (estimated)(5,000.00)$ Realtor Listing Fee/Broker Commission (estimated)(12,000.00)$ TOTAL (394,080.33)$ REVENUE AMOUNT EDA (home sale proceeds) 330,000.00$ TOTAL 330,000.00$ RETURN ON INVESTMENT TOTAL COST/REVENUE (64,080.33)$ -16.26% PROJECTED ADDITIONAL TAX REVENUE AMOUNT TOTAL COST/REVENUE Year 1 (2021)929.71$ (63,150.62)$ -16.02% Year 2 (2022)1,859.42$ (62,220.91)$ -15.79% Year 3 (2023)2,789.13$ (61,291.20)$ -15.55% Year 4 (2024)3,718.84$ (60,361.49)$ -15.32% Year 5 (2025)4,648.55$ (59,431.78)$ -15.08% Year 10 (2030)9,297.10$ (54,783.23)$ -13.90% Year 15 (2035)13,945.65$ (50,134.68)$ -12.72% Year 20 (2040)18,594.20$ (45,486.13)$ -11.54% Year 25 (2045)23,242.75$ (40,837.58)$ -10.36% Year 30 (2050)27,891.30$ (36,189.03)$ -9.18% Year 69 (2088)64,149.99$ 69.66$ 0.02% *Based on new home valued at $330,000