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092319 EDA Meeting Packet EDA MEETING City Hall, 4401 Xylon Avenue North Monday, September 23, 2019 President Kathi Hemken Commissioner John Elder Commissioner Cedrick Frazier Commissioner Andy Hoffe Commissioner Jonathan London 1. Call to order – EDA Meeting of September 23, 2019 2. Roll call 3. Approval of Minutes:  September 9, 2019 4. Resolution approving contract for private redevelopment with and awarding the sale of, and providing the form, terms, covenants and directions for the issuance of its tax increment revenue note to Nevada Hills Enterprises, LLC (dba Automotive Concepts) 5. Adjournment EDA Meeting Page 1 September 9, 2019 City of New Hope 4401 Xylon Avenue North New Hope, Minnesota 55428 EDA Minutes September 9, 2019 Regular Meeting City Hall CALL TO ORDER President Hemken called the meeting of the Economic Development Authority to order at 7:25 p.m. ROLL CALL Present: Absent: Kathi Hemken, President John Elder, Commissioner Cedrick Frazier, Commissioner Andy Hoffe, Commissioner Jonathan London, Commissioner Staff Present: Kirk McDonald, City Manager Jeff Alger, Community Development Specialist Tim Fournier, Police Chief Vicki Holthaus, AEM Valerie Leone, City Clerk Susan Rader, Director of Parks and Recreation Jeff Sargent, Director of Community Development Stacy Woods, Assistant City Attorney APPROVAL OF MINUTES Item 3 Motion was made by Commissioner Hoffe, seconded by Commissioner Elder, to approve the minutes of August 26, 2019. All present voted in favor. Motion carried. 2020 LEVY AND BUDGET Item 4 President Hemken introduced for discussion EDA Item 4, Resolution authorizing the proposed levy of a special benefit levy pursuant to Minnesota Statutes, Section 469.033, subdivision 6 and approval of a preliminary budget for fiscal year 2020. Mr. Kirk McDonald, executive director, asked the EDA to approve a $348,000 levy for 2020. He explained the amound is a $48,000 increase over last year to help support the scattered site housing program. RESOLUTION 2019-06 Item 4 Commissioner Frazier introduced the following resolution and moved its adoption “RESOLUTION AUTHORIZING THE PROPOSED LEVY OF A SPECIAL BENEFIT LEVY PURSUANT TO MINNESOTA STATUTES, SECTION 469.033, SUBDIVISION 6 AND APPROVAL OF A PRELIMINARY BUDGET FOR FISCAL YEAR 2020”. The motion for the adoption of the foregoing resolution was seconded by Commissioner Hoffe, and upon vote being taken thereon, the following voted in favor thereof: Hemken, Elder, Frazier, Hoffe; and the following voted against the same: None; Abstained: None; Absent: London; whereupon the resolution was declared duly passed and adopted, signed by the president which was attested to by the executive director. EDA Meeting Page 2 September 9, 2019 AUTOMOTIVE CONCEPTS TIF Item 5 President Hemken introduced for discussion EDA Item 5, Resolution adopting a modification to the redevelopment plan for Redevelopment Project No. 1, establishing the Automotive Concepts Tax Increment Financing District therein, and adopting a tax increment financing plan therefor, and Resolution authorizing an interfund loan for advance of certain costs in connection with the Automotive Concepts Tax Increment Financing District. Mr. Jeff Sargent, director of community development, explained that Automotive Concepts has been working with the city to seek improvements to the property at 2919 Nevada Avenue North. At the April 15 work session the Council discussed potential TIF assistance with the business owners, reviewed the business plan and was generally supportive. On June 24, 2019, Council approved a CUP for a PUD to allow for the construction of a new 22,500 sf building as an extension to the Automotive Concepts business. The site has challenging topography and there are significant costs involved with preparing the property. LHB, Inc. was hired by the city to perform the TIF survey to determine whether the property met the eligibility of a TIF district. LHB concluded that the property meets the minimum requirements for slum and blight and lot coverage in order to create a TIF district. Ehlers has conducted an analysis of the developer’s pro forma and determined that the redevelopment TIF district can support $150,000 of funding over nine years. Also, staff recommends approval of an interfund loan for up to $25,000. Mr. Sargent asked the EDA to approve a resolution recommending to the City Council to approve the TIF plan and District and to adopt a resolution authorizing an interfund loan for advance of certain costs in connection with the Automotive Concepts TIF District. RESOLUTION 2019-07 AND Item 5 Commissioner Elder introduced the following resolutions and moved their adoption “RESOLUTION ADOPTING A MODIFICATION TO THE REDEVELOPMENT PLAN FOR REDEVELOPMENT PROJECT NO. 1, ESTABLISHING THE AUTOMOTIVE CONCEPTS TAX INCREMENT FINANCING DISTRICT THEREIN, AND ADOPTING A TAX INCREMENT FINANCING PLAN THEREFOR.” The motion for the adoption of the foregoing resolutions was seconded by Commissioner Hoffe, and upon vote being taken thereon, the following voted in favor thereof: Hemken, Elder, Frazier, Hoffe; and the following voted against the same: None; Abstained: None; Absent: London; whereupon the resolutions were declared duly passed and adopted, signed by the president which was attested to by the executive director. RESOLUTION 2019-08 Item 5 Commissioner Frazier introduced the following resolutions and moved their adoption “RESOLUTION AUTHORIZING AN INTERFUND LOAN FOR ADVANCE OF CERTAIN COSTS IN CONNECTION WITH THE AUTOMOTIVE CONCEPTS TAX INCREMENT FINANCING DISTRICT.” The motion for the adoption of the foregoing resolutions was seconded by Commissioner Hoffe, and upon vote being taken thereon, the following voted in favor thereof: Hemken, Elder, Frazier, Hoffe; and the following voted against the same: None; Abstained: None; Absent: London; whereupon the resolutions were declared duly passed and adopted, signed by the president which was attested to by the executive director. EDA Meeting Page 3 September 9, 2019 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 7:39 p.m. Respectfully submitted, Valerie Leone, City Clerk I:\RFA\COMM DEV\2019\EDA\9-23-19 Automotive Concepts TIF\Q & R - EDA Automotive Concepts TIF Approval 9-23-19.docx Request for Action September 23, 2019 Approved by: Kirk McDonald, City Manager Originating Department: Community Development By: Jeff Sargent, Director Agenda Title Resolution approving contract for private redevelopment with and awarding the sale of, and providing the form, terms, covenants and directions for the issuance of its tax increment revenue note to Nevada Hills Enterprises, LLC. Requested Action Staff requests that the Economic Development Authority (EDA) approves the resolution approving the development contract and Tax Increment Financing (TIF) terms for Nevada Hills Enterprises, LLC, d/b/a Automotive Concepts. Policy/Past Practice The EDA is required to review and approve the terms of a private redevelopment contract when establishing a TIF district. Background At the September 9, 2019 Economic Development Authority (EDA) meeting, the EDA reviewed and approved a resolution establishing a TIF district for Automotive Concepts, located at 2919 Nevada Avenue N. The property in question is owned by John Prosser, who also owns the property to the south. The business installs automotive upgrades to various types of vehicles, including engine adjustments, repair work, body kits, painting, tune-ups, interior work, etc. The owner of the subject property approached city staff with the desire to construct a new 22,500 square foot building as an extension to his Automotive Concepts business. This new building would serve as their “clean” facility, and would focus on body work, installation of tires and wheels, etc. They would also lease out approximately 6,000 square feet of the building for an office use that would be compatible with their business. The owner anticipates the building will add about 35 new jobs. TIF Development Contract Ehlers and the city’s redevelopment attorney, Martha Ingram from Kennedy & Graven, finalized the redevelopment contract associated with the creation of the TIF district for Automotive Concepts. Ehlers has conducted an analysis of the developer’s pro forma and determined that the redevelopment TIF district can support $150,000 of funding over nine (9) years. The following terms have been accepted by Automotive Concepts: a. The developer is required to maintain the business (Automotive Concepts) in the space through the term of the TIF Note and will be required to provide proof of business to the EDA annually. b. The Developer will receive a pay-as-you-go note in the amount of $150,000 1. Term of the TIF note will be for 9 years 2. Interest will be at 4.45% Agenda Section EDA Item Number 4 Request for Action, Page 2 3. Developer will receive 90% of the tax increment generated (EDA retains 10% for administrative costs) 4. Payment dates are expected to be August 1, 2022 through February 1, 2031 5. Note may be assigned to a third party and EDA consents to the assignment conditioned upon receipt of an investment letter from the third party. The attached memorandum from Ehlers explains the TIF agreement terms in full detail. Representatives from Ehlers will not be in attendance, but Martha Ingram from Kennedy & Graven will be to help answer any questions pertaining to the contract. Recommendation Staff recommends that the EDA approves the resolution approving contract for private redevelopment with and awarding the sale of, and providing the form, terms, covenants and directions for the issuance of its tax increment revenue note to Nevada Hills Enterprises, LLC. Attachments • Resolution • Contract for Private Redevelopment • Ehlers Memo • TIF Plan • Automotive Concepts Work Plan • Work Session Minutes 4-15-19 612715v1NE395-5 ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR THE CITY OF NEW HOPE, MINNESOTA RESOLUTION NO. __________ RESOLUTION APPROVING CONTRACT FOR PRIVATE REDEVELOPMENT WITH AND AWARDING THE SALE OF, AND PROVIDING THE FORM, TERMS, COVENANTS AND DIRECTIONS FOR THE ISSUANCE OF ITS TAX INCREMENT REVENUE NOTE TO NEVADA HILLS ENTERPRISES L.L.C. BE IT RESOLVED BY the Board of Commissioners (“Board”) of the Economic Development Authority in and for the City of New Hope, Minnesota (the “Authority”) as follows: Section 1. Background; Authorization; Award of Sale. 1.01. Background; Authorization. (a) The Authority and the City of New Hope (the “City”) have heretofore approved the establishment of the Automotive Concepts Tax Increment Financing District (the “TIF District”) within Redevelopment Project No. 1 (the “Project”), and have adopted a tax increment financing plan for the purpose of financing certain improvements within the Project. (b) Pursuant to Minnesota Statutes, Section 469.178, the Authority is authorized to issue and sell its bonds for the purpose of financing a portion of the public redevelopment costs of the TIF District. The Authority hereby finds and determines that it is in the best interests of the Authority that it issue and sell its Tax Increment Revenue Note (Automotive Concepts Project) (the “Note”) for the purpose of financing certain public redevelopment costs of the Project, pursuant to the terms of this Resolution. 1.02. Agreement Approved; Issuance, Sale, and Terms of the Note. (a) The Authority hereby approves the Contract for Private Redevelopment between the Authority and Nevada Hills Enterprises L.L.C. (the “Agreement”), and authorizes the President and Executive Director to execute such Agreement in substantially the form on file with City, subject to modifications that do not alter the substance of the transaction and are approved by such officials, provided that execution of the Agreement by such officials is conclusive evidence of their approval. All capitalized terms in this resolution have the meaning provided in the Agreement unless the context requires otherwise. (b) The Authority hereby authorizes the President and Executive Director to issue the Note in accordance with the Agreement. All capitalized terms in this resolution have the meaning provided in the Agreement unless the context requires otherwise. (c) The Note shall be issued in the maximum principal amount of $150,000 to Nevada Hills Enterprises L.L.C. (the "Owner"), in consideration of certain eligible costs incurred by the Owner 612715v1NE395-5 under the Agreement, shall be dated the date of delivery thereof, and shall bear interest at the rate of 4.45 percent. The Note will be issued in the principal amount of Public Redevelopment Costs submitted and approved in accordance with Section 3.3 of the Agreement. The Note is secured by Available Tax Increment, as further described in the form of the Note herein. The Authority hereby delegates to the Executive Director the determination of the date on which the Note is to be delivered, in accordance with the Agreement. Section 2. Form of Note. The Note shall be in substantially the form attached hereto as Exhibit A, with the blanks to be properly filled in and the principal amount adjusted as of the date of issue. Section 3. Terms, Execution and Delivery. 3.01. Denomination, Payment. The Note shall be issued as a single typewritten note numbered R-1. The Note shall be issuable only in fully registered form. Principal of and interest on the Note shall be payable by check or draft issued by the Registrar described herein. 3.02. Payment Dates. Principal of and interest on the Note shall be payable by mail to the owner of record thereof as of the close of business on the fifteenth day of the month preceding the Payment Date, whether or not such day is a business day. 3.03. Registration. The Authority hereby appoints the City Finance Director to perform the functions of registrar, transfer agent and paying agent (the “Registrar”). The effect of registration and the rights and duties of the Authority and the Registrar with respect thereto shall be as follows: (a) Register. The Registrar shall keep at its office a bond register in which the Registrar shall provide for the registration of ownership of the Note and the registration of transfers and exchanges of the Note. (b) Transfer of Note. Upon surrender for transfer of the Note duly endorsed by the registered owner thereof or accompanied by a written instrument of transfer, in form reasonably satisfactory to the Registrar, duly executed by the registered owner thereof or by an attorney duly authorized by the registered owner in writing, the Registrar shall authenticate and deliver, in the name of the designated transferee or transferees, a new Note of a like aggregate principal amount and maturity, as requested by the transferor. The Registrar may close the books for registration of any transfer after the fifteenth day of the month preceding each Payment Date and until such Payment Date. (c) Cancellation. The Note surrendered upon any transfer shall be promptly cancelled by the Registrar and thereafter disposed of as directed by the Authority. (d) Improper or Unauthorized Transfer. When the Note is presented to the Registrar for transfer, the Registrar may refuse to transfer the same until it is satisfied that the endorsement on 612715v1NE395-5 such Note or separate instrument of transfer is legally authorized. The Registrar shall incur no liability for its refusal, in good faith, to make transfers which it, in its judgment, deems improper or unauthorized. (e) Persons Deemed Owners. The Authority and the Registrar may treat the person in whose name the Note is at any time registered in the bond register as the absolute owner of the Note, whether the Note shall be overdue or not, for the purpose of receiving payment of, or on account of, the principal of and interest on such Note and for all other purposes, and all such payments so made to any such registered owner or upon the owner's order shall be valid and effectual to satisfy and discharge the liability of the Authority upon such Note to the extent of the sum or sums so paid. (f) Taxes, Fees and Charges. For every transfer or exchange of the Note, the Registrar may impose a charge upon the owner thereof sufficient to reimburse the Registrar for any tax, fee, or other governmental charge required to be paid with respect to such transfer or exchange. (g) Mutilated, Lost, Stolen or Destroyed Note. In case any Note shall become mutilated or be lost, stolen, or destroyed, the Registrar shall deliver a new Note of like amount, interest rate, maturity dates and tenor in exchange and substitution for and upon cancellation of such mutilated Note or in lieu of and in substitution for such Note lost, stolen, or destroyed, upon the payment of the reasonable expenses and charges of the Registrar in connection therewith; and, in the case the Note lost, stolen, or destroyed, upon filing with the Registrar of evidence satisfactory to it that such Note was lost, stolen, or destroyed, and of the ownership thereof, and upon furnishing to the Registrar of an appropriate bond or indemnity in form, substance, and amount satisfactory to it, in which both the Authority and the Registrar shall be named as obligees. The Note so surrendered to the Registrar shall be cancelled by it and evidence of such cancellation shall be given to the Authority. If the mutilated, lost, stolen, or destroyed Note has already matured or been called for redemption in accordance with its terms, it shall not be necessary to issue a new Note prior to payment. 3.04. Preparation and Delivery. The Note shall be prepared under the direction of the Executive Director and shall be executed on behalf of the Authority by the signatures of its President and Executive Director. In case any officer whose signature shall appear on the Note shall cease to be such officer before the delivery of the Note, such signature shall nevertheless be valid and sufficient for all purposes, the same as if such officer had remained in office until delivery. When the Note has been so executed, it shall be delivered by the Executive Director to the Owner thereof in accordance with the Agreement. Section 4. Security Provisions. 4.01. Pledge. The Authority hereby pledges to the payment of the principal of and interest on the Note all Available Tax Increment, as defined in, and subject to the terms described in, the Note. Available Tax Increment shall be applied to payment of the principal of and interest on the Note in accordance with the terms of the form of Note set forth in Exhibit A of this resolution. 612715v1NE395-5 4.02. Bond Fund. Until the date the Note is no longer outstanding and no principal or interest thereof (to the extent required to be paid pursuant to this resolution) remains unpaid, the Authority shall maintain a separate and special “Bond Fund” to be used for no purpose other than the payment of the principal of and interest on the Note. The Authority irrevocably agrees to appropriate to the Bond Fund in each year Available Tax Increment. Any Available Tax Increment remaining in the Bond Fund shall be transferred to the Authority's account for the TIF District upon the termination of the Note in accordance with its terms. 4.03. Additional Obligations. The Authority will issue no obligations secured by Available Tax Increment unless such pledge is on a subordinate basis to the pledge to the Note. Section 5. Certification of Proceedings. 5.01. Certification of Proceedings. The officers of the Authority are hereby authorized and directed to prepare and furnish to the Owner of the Note certified copies of all proceedings and records of the Authority, and such other affidavits, certificates, and information as may be required to show the facts relating to the legality and marketability of the Note as the same appear from the books and records under their custody and control or as otherwise known to them, and all such certified copies, certificates, and affidavits, including any heretofore furnished, shall be deemed representations of the Authority as to the facts recited therein. Section 6. Effective Date. This resolution shall be effective upon full execution of the Agreement. Adopted this 23rd day of September, 2019. Kathi Hemken, President ATTEST: Kirk McDonald, Executive Director 612715v1NE395-5 Exhibit A to Authorizing Resolution FORM OF NOTE UNITED STATE OF AMERICA STATE OF MINNESOTA COUNTY OF HENNEPIN ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR THE CITY OF NEW HOPE, MINNESOTA No. R-1 $___________________ TAX INCREMENT REVENUE NOTE SERIES 20__ (AUTOMOTIVE CONCEPTS PROJECT) Date Rate of Original Issue 4.45% The Economic Development Authority in and for the City of New Hope, Minnesota (“Authority”) for value received, certifies that it is indebted and hereby promises to pay to Nevada Hills Enterprises L.L.C. or registered assigns (the "Owner"), the principal sum of $___________________________ and to pay interest thereon at the rate of 4.45 percent per annum, but solely from the sources and to the extent set forth herein. This Note shall not bear interest. Unless the context clearly requires otherwise, capitalized terms in this Note have the meaning provided in the Contract for Private Redevelopment between the Authority and Owner dated as of _____________, 2019 (the “Agreement”). 1. Payments. Principal and interest (“Payments”) shall be paid on August 1, 2021 and each February 1 and August 1 thereafter to and including February 1, 2030 (“Payment Dates”) in the amounts set forth herein, payable solely from and to the extent of the sources set forth in Section 3 hereof. Payments shall be applied first to accrued interest, and then to unpaid principal. Payments are payable by mail to the address of the Owner or such other address as the Owner may designate upon 30 days written notice to the Authority. Payments on this Note are payable in any coin or currency of the United States of America which, on the Payment Date, is legal tender for the payment of public and private debts. 2. Interest. Simple interest at the rate stated herein shall accrue on the unpaid principal, commencing on the date of original issue. Interest shall be computed on the basis of a year of 360 days consisting of twelve months of thirty days, and charged for actual days principal is unpaid. 3. Available Tax Increment. (a) Payments on this Note are payable on each Payment Date solely from and in the amount of “Available Tax Increment,” which shall mean 90 percent of 612715v1NE395-5 the total Tax Increment attributable to the TIF District that has been paid to the Authority by Hennepin County in the six months prior to the subject Payment Date. (b) The Authority shall have no obligation to pay principal and interest on this Note on each Payment Date from any source other than Available Tax Increment, and the failure of the Authority to pay the entire amount of principal or interest on this Note on any Payment Date shall not constitute a default hereunder as long as the Authority pays principal and interest hereon to the extent of Available Tax Increment. The Authority shall have no obligation to pay any unpaid balance of principal or accrued interest that may remain after the final Payment on February 1, 2030. 4. Default. If on any Payment Date there has occurred and is continuing any Event of Default under the Agreement, the Authority may withhold from payments hereunder under all Available Tax Increment. If the Event of Default is thereafter cured in accordance with the Agreement, the Available Tax Increment withheld under this Section shall be deferred and paid, without interest thereon, within thirty (30) days after the Event of Default is cured. If the Event of Default is not cured within three hundred sixty-five (365) days following the Authority’s written notice to Owner of such default, the Authority may terminate this Note by written notice to the Owner in accordance with the Agreement. 5. Prepayment. The principal sum and all accrued interest payable under this Note is prepayable in whole or in part at any time by the Authority without premium or penalty. No partial prepayment shall affect the amount or timing of any other regular payment otherwise required to be made under this Note. 6. Nature of Obligation. This Note is one of an issue in the total principal amount of $_____________________ issued to aid in financing certain public redevelopment costs of a Project undertaken by the Authority pursuant to Minnesota Statutes, Sections 469.001 through 469.047, and is issued pursuant to an authorizing resolution (the “Resolution”) duly adopted by the Authority on __________________, 2019, and pursuant to and in full conformity with the Constitution and laws of the State of Minnesota, including Minnesota Statutes, Sections 469.174 to 469.1794. This Note is a limited obligation of the Authority which is payable solely from Available Tax Increment pledged to the payment hereof under the Resolution. This Note shall not be deemed to constitute a general obligation of the State of Minnesota or any political subdivision thereof, including, without limitation, the Authority. Neither the State of Minnesota, nor any political subdivision thereof shall be obligated to pay the principal of or interest on this Note or other costs incident hereto except out of Available Tax Increment, and neither the full faith and credit nor the taxing power of the State of Minnesota or any political subdivision thereof is pledged to the payment of the principal of or interest on this Note or other costs incident hereto. 7. Registration and Transfer. This Note is issuable only as a fully registered note without coupons. As provided in the Resolution, and subject to certain limitations set forth therein, this Note is transferable upon the books of the Authority kept for that purpose at the principal office of the City Finance Director, by the Owner hereof in person or by such Owner's attorney duly authorized in writing, upon surrender of this Note together with a written instrument of transfer satisfactory to the Authority, duly executed by the Owner. Upon such transfer or exchange and the 612715v1NE395-5 payment by the Owner of any tax, fee, or governmental charge required to be paid by the Authority with respect to such transfer or exchange, there will be issued in the name of the transferee a new Note of the same aggregate principal amount, bearing interest at the same rate and maturing on the same date. IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions, and things required by the Constitution and laws of the State of Minnesota to be done, to exist, to happen, and to be performed in order to make this Note a valid and binding limited obligation of the Authority according to its terms, have been done, do exist, have happened, and have been performed in due form, time and manner as so required. IN WITNESS WHEREOF, the Board of Commissioners of the Economic Development Authority in and for the City of New Hope, Minnesota has caused this Note to be executed with the manual signatures of its President and Executive Director, all as of the Date of Original Issue specified above. ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR THE CITY OF NEW HOPE, MINNESOTA _________________________________________ Kirk McDonald, Executive Director ___________________________________ Kathi Hemken, President REGISTRATION PROVISIONS The ownership of the unpaid balance of the within Note is registered in the bond register of the City Finance Director, in the name of the person last listed below. Date of Signature of Registration Registered Owner____ City Finance Director Nevada Hills Enterprises L.L.C. Federal Tax I.D. No. _________________ 608971v3NE395-5 Approval Draft, September 16, 2019 CONTRACT FOR PRIVATE REDEVELOPMENT By and Between ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR THE CITY OF NEW HOPE, MINNESOTA and NEVADA HILLS ENTERPRISES L.L.C. Dated as of: _________, 2019 This document was drafted by: KENNEDY & GRAVEN, Chartered (MNI) 470 U.S. Bank Plaza Minneapolis, Minnesota 55402 (612) 337-9300 http://www.kennedy-graven.com 608971v3NE395-5 i TABLE OF CONTENTS Page PREAMBLE ...................................................................................................................................1 ARTICLE I Definitions Section 1.1. Definitions................................................................................................................2 ARTICLE II Representations and Warranties Section 2.1. Representations by the Authority.............................................................................5 Section 2.2. Representations and Warranties by the Redeveloper ...............................................5 ARTICLE III Property Acquisition; Public Redevelopment Costs Section 3.1. Status of Redevelopment Property ...........................................................................7 Section 3.2. Environmental Undertakings ...................................................................................7 Section 3.3 Issuance of TIF Note ................................................................................................7 Section 3.4. Business Subsidy .....................................................................................................8 Section 3.5. Administrative Costs ................................................................................................9 ARTICLE IV Construction of Minimum Improvements Section 4.1. Construction of Improvements ..............................................................................10 Section 4.2. Construction Plans .................................................................................................10 Section 4.3. Commencement and Completion of Construction .................................................11 Section 4.4. Certificate of Completion ......................................................................................12 Section 4.5. Records ..................................................................................................................12 ARTICLE V Insurance Section 5.1. Insurance ................................................................................................................13 Section 5.2. Subordination .........................................................................................................14 ARTICLE VI Tax Increment; Taxes Section 6.1. Right to Collect Delinquent Taxes .........................................................................15 Section 6.2. Review of Taxes ....................................................................................................15 608971v3NE395-5 ii ARTICLE VII Other Financing Section 7.1. Generally ................................................................................................................16 Section 7.2. Authority’s Option to Cure Default on Mortgage ..................................................16 Section 7.3. Modification; Subordination ..................................................................................16 ARTICLE VIII Prohibitions Against Assignment and Transfer; Indemnification Section 8.1. Representation as to Redevelopment .....................................................................17 Section 8.2. Prohibition Against Redeveloper’s Transfer of Property and Assignment of Agreement .....................................................................................17 Section 8.3. Release and Indemnification Covenants ................................................................18 ARTICLE IX Events of Default Section 9.1. Events of Default Defined .....................................................................................20 Section 9.2. Remedies on Default ..............................................................................................20 Section 9.3. No Remedy Exclusive............................................................................................21 Section 9.4. No Additional Waiver Implied by One Waiver ....................................................21 Section 9.5. Attorney Fees .........................................................................................................21 ARTICLE X Additional Provisions Section 10.1. Conflict of Interests; Representatives Not Individually Liable .............................22 Section 10.2. Equal Employment Opportunity ............................................................................22 Section 10.3. Restrictions on Use ................................................................................................22 Section 10.4. Provisions Not Merged With Deed ........................................................................22 Section 10.5. Titles of Articles and Sections ...............................................................................22 Section 10.6. Notices and Demands ............................................................................................22 Section 10.7. Counterparts ...........................................................................................................23 Section 10.8. Recording ...............................................................................................................23 Section 10.9. Amendment ............................................................................................................23 Section 10.10. Authority Approvals ..............................................................................................23 TESTIMONIUM ...........................................................................................................................24 SIGNATURES ..............................................................................................................................24 SCHEDULE A Redevelopment Property SCHEDULE B Form of Authorizing Resolution SCHEDULE C Certificate of Completion 1 608971v3NE395-5 CONTRACT FOR PRIVATE REDEVELOPMENT THIS AGREEMENT, made as of the 23rd day of September, 2019, by and between the Economic Development Authority in and for the City of New Hope, Minnesota (the “Authority”), a public body corporate and politic under the laws of Minnesota, and Nevada Hills Enterprises L.L.C. (the “Redeveloper”), a Minnesota limited liability company. WITNESSETH: WHEREAS, the Authority was established pursuant to Minnesota Statutes, Sections 469.090 to 469.1081 (hereinafter referred to as the “Act”), and was authorized to transact business and exercise its powers by a resolution of the City Council of the City of New Hope (“City”); and WHEREAS, the Authority has undertaken a program to promote economic development and redevelopment within the City, and in this connection created a redevelopment project known as Redevelopment Project No. 1 (“Project”) pursuant to the Act; and WHEREAS, pursuant to the Act and to Minnesota Statutes, Sections 469.001 to 469.047 (the “HRA Act”), the Authority is authorized to undertake certain activities to prepare real property for development and redevelopment by private enterprise; and WHEREAS, the Redeveloper has acquired certain property (the “Redevelopment Property”) within the Project to redevelop into an office and automotive detailing facility (the “Minimum Improvements”), as further described herein; and WHEREAS, the Authority has established the Automotive Concepts Tax Increment Financing District (the “TIF District”) pursuant to Minnesota Statutes, Sections 469.174 to 469.1794, as amended (the “TIF Act”), consisting of the Redevelopment Property located within the Project; and WHEREAS, the Authority believes that the redevelopment of the Redevelopment Property pursuant to and in general fulfillment of this Agreement is in the vital and best interests of the City, will promote the health, safety, morals, and welfare of its residents, and will be in accord with the public purposes and provisions of the applicable State and local laws and requirements under which the Project has been undertaken and is being assisted. NOW, THEREFORE, in consideration of the premises and the mutual obligations of the parties hereto, each of them does hereby covenant and agree with the other as follows: 2 608971v3NE395-5 ARTICLE I Definitions Section 1.1. Definitions. In this Agreement, unless a different meaning clearly appears from the context: “Act” means Minnesota Statutes Sections 469.090 to 469.1081, as amended. “Affiliate” means with respect to any entity (a) any corporation, partnership, limited liability company or other business entity or person controlling, controlled by or under common control with the entity, or for which the controlling interest is commonly owned, and (b) any successor to such party by merger, acquisition, reorganization or similar transaction involving all or substantially all of the assets of such party (or such Affiliate). For the purpose hereof the words “controlling”, “controlled by” and “under common control with” shall mean, with respect to any corporation, partnership, limited liability company or other business entity, the ownership of fifty percent or more of the voting interests in such entity or possession, directly or indirectly, of the power to direct or cause the direction of management policies of such entity, whether through ownership of voting securities or by contract or otherwise. “Agreement” means this Agreement, as the same may be from time to time modified, amended, or supplemented. “Authority” means the Economic Development Authority in and for the City of New Hope, Minnesota. “Authority Representative” means the Executive Director of the Authority, or any person designated by the Executive Director to act as the Authority Representative for the purposes of this Agreement. “Available Tax Increment” has the meaning provided in the Authorizing Resolution. “Business Day” means any day except a Saturday, Sunday, legal holiday, a day on which the City is closed for business, or a day on which banking institutions in the City are authorized by law or executive order to close. “Business Subsidy Act” means Minnesota Statutes, Sections 116J.993 to 116J.995, as amended. “City” means the City of New Hope, Minnesota. “Certificate of Completion” means the certification provided to the Redeveloper pursuant to Section 4.4 of this Agreement. 3 608971v3NE395-5 “Construction Plans” means the plans, specifications, drawings and related documents on the construction work to be performed by the Redeveloper on the Redevelopment Property which (a) shall be as detailed as the plans, specifications, drawings and related documents which are submitted to the appropriate building officials of the City, and (b) shall include at least the following: (1) site plan; (2) floor plan; (3) cross sections of each (length and width); (4) elevations (all sides); (5) landscape plan; and (6) such other plans or supplements to the foregoing plans as the Authority may reasonably request to allow it to ascertain the nature and quality of the proposed construction work. “County” means the County of Hennepin, Minnesota. “Event of Default” means an action by the Redeveloper listed in Article IX of this Agreement. “Grant” has the meaning provided in Section 3.3(a) hereof. “Holder” means the owner of a Mortgage. “HRA Act” means Minnesota Statutes, Sections 469.001 to 469.047, as amended. “Minimum Improvements” means the construction on the Redevelopment Property of an approximately 22,500 square-foot automotive detailing facility, along with associated office space, parking lot and landscaping. “Mortgage” means any mortgage made by the Redeveloper that is secured, in whole or in part, with the Redevelopment Property and that is a permitted encumbrance pursuant to the provisions of Article VIII of this Agreement. “Project” means the Authority’s Redevelopment Project No. 1. “Public Redevelopment Costs” has the meaning provided in Section 3.4(a) hereof. “Redeveloper” means Nevada Hills Enterprises L.L.C., a Minnesota limited liability company, or its permitted successors and assigns. “Redevelopment Plan” means the Redevelopment Plan for the Project, as amended. “Redevelopment Property” means the real property described in Schedule A of this Agreement. “State” means the state of Minnesota. “Tax Increment” means that portion of the real property taxes that is paid with respect to the Redevelopment Property and that is remitted to the Authority as tax increment pursuant to the Tax Increment Act. 4 608971v3NE395-5 “Tax Increment Act” or “TIF Act” means the Tax Increment Financing Act, Minnesota Statutes Sections 469.174 to 469.1794, as amended. “Termination Date” means the earlier of (a) date of the Authority’s last receipt of Tax Increment from the TIF District in accordance with Section 469.176, subd. 1b(3) of the TIF Act; or (b) the date the TIF Note has been paid in full, defeased, or terminated in accordance with the terms of the resolution set forth in Schedule B. “TIF District” means the Automotive Concepts Tax Increment Financing District, created by the City and Authority on September 9, 2019. “TIF Note” has the meaning provided in Section 3.4 hereof. “Tax Increment Plan” or “TIF Plan” means the Tax Increment Financing Plan for the TIF District approved by the City Council on September 9, 2019, and as it may be amended. “Tax Official” means any County assessor, County auditor, County or State board of equalization, the commissioner of revenue of the State, or any State or federal district court, the tax court of the State, or the State Supreme Court. “Transfer” has the meaning set forth in Section 8.2(a) hereof. “Unavoidable Delays” means delays beyond the reasonable control of the party seeking to be excused as a result thereof which are the direct result of strikes, other labor troubles, prolonged adverse weather or acts of God, fire or other casualty to the Minimum Improvements, litigation commenced by third parties which, by injunction or other similar judicial action, directly results in delays, or acts of any federal, state or local governmental unit (other than the Authority or City in exercising their rights under this Agreement), including without limitation condemnation or threat of condemnation of any portion of the Redevelopment Property, which directly result in delays. Unavoidable Delays shall not include delays experienced by the Redeveloper in obtaining permits or governmental approvals necessary to enable construction of the Minimum Improvements by the dates such construction is required under Section 4.3 of this Agreement, so long as the Construction Plans have been approved in accordance with Section 4.2 hereof. 5 608971v3NE395-5 ARTICLE II Representations and Warranties Section 2.1. Representations by the Authority. (a) The Authority is an economic development authority duly organized and existing under the laws of the State. Under the provisions of the Act and the HRA Act, the Authority has the power to enter into this Agreement and carry out its obligations hereunder. (b) The Authority will use its best efforts to facilitate redevelopment of the Minimum Improvements, including but not limited to cooperating with the Redeveloper in obtaining necessary administrative and land use approvals and financing pursuant to Section 7.1 hereof. (c) The activities of the Authority are undertaken pursuant to the TIF Act for the purpose of fostering the development and redevelopment of certain real property that is occupied by a substandard and obsolete building, which will provide employment opportunities, revitalize this portion of the Project, and increase the tax base. (d) The Minimum Improvements are allowed uses under the zoning ordinances of the City and are consistent with the Redevelopment Plan. (e) No member of the Board of Commissioners of the Authority or officer of the Authority has either a direct or indirect financial interest in this Agreement, nor will any Commissioner of the Authority or officer of the Authority benefit financially from this Agreement within the meaning of Minnesota Statutes, Section 469.098. (f) The Authority will issue the TIF Note, subject to all the terms and conditions of this Agreement. Section 2.2. Representations and Warranties by the Redeveloper. The Redeveloper represents and warrants that: (a) The Redeveloper is a limited liability company, duly registered with and in good standing under the laws of the State of Minnesota, is not in violation of any provisions of its articles of organization or bylaws, is duly qualified as a domestic limited liability company and authorized to transact business within the State, has power to enter into this Agreement and has duly authorized the execution, delivery, and performance of this Agreement by proper action of its members. (b) The Redeveloper will construct the Minimum Improvements in accordance with the terms of this Agreement, the Redevelopment Plan, and all local, state and federal laws and regulations (including, but not limited to, environmental, zoning, building code and public health laws and regulations). 6 608971v3NE395-5 (c) The Redeveloper will use reasonable efforts to secure all permits, licenses and approvals necessary for construction of the Minimum Improvements. (d) The Redeveloper has received no written notice or other written communication from any local, state or federal official that the activities of the Redeveloper or the Authority on the Redevelopment Property may be or will be in violation of any environmental law or regulation (other than those notices or communications of which the Authority is aware). The Redeveloper is aware of no facts the existence of which would cause it to be in violation of or give any person a valid claim under any local, state or federal environmental law, regulation or review procedure. (e) Neither the execution and delivery of this Agreement, the consummation of the transactions contemplated hereby, nor the fulfillment of or compliance with the terms and conditions hereof, is prevented, limited by or conflicts with or results in a breach of, the terms, conditions or provisions of any corporate restriction or any evidences of indebtedness, agreement or instrument of whatever nature to which the Redeveloper is now a party or by which it is bound, or constitutes a default under any of the foregoing. (f) The proposed construction of the Minimum Improvements by the Redeveloper hereunder would not occur but for the assistance being provided by the Authority hereunder. [The remainder of this page is intentionally left blank.] 7 608971v3NE395-5 ARTICLE III Property Acquisition; Acquisition Costs Section 3.1. Status of Redevelopment Property. The Redevelopment Property consists of the parcels legally described in Schedule A hereof. As of the date of this Agreement, the Redeveloper owns the Redevelopment Property. The Redeveloper acknowledges that the Authority has no obligation to acquire any of the Redevelopment Property. Section 3.2. Environmental Undertakings. (a) The Redeveloper acknowledges that the Authority makes no representations or warranties as to soil and environmental condition on the Redevelopment Property or the fitness of the Redevelopment Property for construction of the Minimum Improvements or any other purpose for which the Redeveloper may make use of such property, and that the assistance provided to the Redeveloper under this Agreement neither implies any responsibility by the Authority for any contamination of the Redevelopment Property or poor soil conditions nor imposes any obligation on the Authority to participate in any cleanup of the Redevelopment Property and/or correction of any soil problems (other than the financing described in this agreement). (b) Without limiting its obligations under Section 8.3 of this Agreement the Redeveloper further agrees that it will indemnify, defend, and hold harmless the Authority, the City, and their governing body members, officers, and employees, from any claims or actions arising out of the presence, if any, of hazardous wastes or pollutants existing on or in the Redevelopment Property unless and to the extent that such hazardous wastes or pollutants are present as a result of the actions or omissions of the indemnitees. Nothing in this section will be construed to limit or affect any limitations on liability of the City or Authority under State or federal law, including without limitation Minnesota Statutes, Sections 466.04 and 604.02. Section 3.3. Issuance of TIF Note. (a) Public Redevelopment Costs. In order to make construction of the Minimum Improvements financially feasible, the Authority will reimburse the Redeveloper for a portion of the costs of demolition, site preparation, and construction of public infrastructure and utilities incurred by the Redeveloper on the Redevelopment Property (the “Public Redevelopment Costs”), through issuance of the TIF Note in accordance with this Section. (b) Terms. The Authority shall issue and the Redeveloper shall purchase the TIF Note in the maximum principal amount of $150,000. The TIF Note will be issued as reimbursement of Public Redevelopment Costs, and secured solely from Available Tax Increment. The terms of the TIF Note, including maturity and payment dates, will be substantially those set forth in the form of the TIF Note shown in Schedule B, and the TIF Note will be subject to all terms of the Authorizing Resolution, which is incorporated herein by reference. The Authority shall issue and deliver the TIF Note upon Redeveloper having: 8 608971v3NE395-5 (i) delivered to the Authority written evidence satisfactory to the Authority that Redeveloper has incurred Public Redevelopment Costs in an amount least equal to the principal amount of the TIF Note, which evidence must include copies of the paid invoices or other comparable evidence for costs of allowable Public Redevelopment Costs; (ii) submitted and obtained Authority approval of financing in accordance with Section 7.1; and (iii) delivered to the Authority an investment letter in a form reasonably satisfactory to the Authority. (c) Termination of right to TIF Note. All conditions for delivery of the TIF Note must be met by no later than the date which is less than five (5) years after the date of certification of the TIF District by the County and complies with the so-called five-year rule under Section 469.1763, subd. 3(c) of the TIF Act. If the conditions for delivery of the TIF Note are not satisfied by the date described in this paragraph, the Authority has no further obligations under this Section 3.4. (d) Assignment of TIF Note. The Authority acknowledges that the Redeveloper may assign the TIF Note to a third party. The Authority consents to such an assignment, conditioned upon receipt of an investment letter from such third party in a form reasonably acceptable to the Authority. (e) Qualifications. The Redeveloper understands and acknowledges that all Public Redevelopment Costs must first be paid by the Redeveloper and will be reimbursed from Available Tax Increment pursuant to the terms of the TIF Note. The Authority makes no representations or warranties regarding the amount of Tax Increment, or that revenues pledged to the TIF Note will be sufficient to pay the principal of the TIF Note. Any estimates of Tax Increment prepared by the Authority or its financial advisors in connection with the TIF District or this Agreement are for the benefit of the Authority, and are not intended as representations on which the Redeveloper may rely. Public Redevelopment Costs exceeding the principal amount of the TIF Note are the sole responsibility of Redeveloper, subject to Section 3.5 of this Agreement. Section 3.4. Business Subsidy. (a) The Redeveloper warrants and represents that the Redeveloper’s investment in the purchase of the Redevelopment Property and in site preparation equals at least 70% of the County assessor’s estimated market value of the Redevelopment Property for the 2019 assessment year, calculated as follows: Aggregate cost of acquisition of Redevelopment Property……...…..$140,000 Plus Estimated cost of site preparation...................…………………$336,250 9 608971v3NE395-5 Less acquisition and site preparation costs reimbursed by the Authority….. ………............................................................($150,000) Equals net land and site preparation cost...................………………$326,250 Assessor’s estimated market value of Redevelopment Property (2019)...................……………………..$169,000 $326,250 (net acquisition and site preparation cost) is 193.05% of $169,000 (assessor’s estimated market value of the Redevelopment Property for 2019). Accordingly, the parties agree and understand that the financial assistance described in this Agreement does not constitute a business subsidy within the meaning of the Business Subsidy Act. The Redeveloper releases and waives any claim against the Authority and its governing body members, officers, agents, servants and employees thereof arising from application of the Business Subsidy Act to this Agreement, including without limitation any claim that the Authority failed to comply with the Business Subsidy Act with respect to this Agreement. (b) Notwithstanding the exemption of the financial assistance described in this Agreement from the Business Subsidy Act, the Redeveloper acknowledges that the Authority is providing this assistance with the expectation that the Minimum Improvements shall be continually operated and maintained as an automotive detailing business through the Termination Date of this Agreement. To that end, the Redeveloper agrees that until the Termination Date, it will annually provide evidence reasonably acceptable to the Authority that the Minimum Improvements remain in operation as such a business. Section 3.5. Payment of Authority Costs. The Redeveloper agrees that it will pay, within thirty (30) days after written notice from the Authority, the reasonable costs of consultants and attorneys retained by the Authority in connection with the creation of the TIF District and the negotiation in preparation of this Agreement and other incidental agreements and documents related to the development contemplated hereunder (the “Authority Costs”). The Authority will provide written reports describing the costs accrued under this Section upon request from the Redeveloper, but not more often than intervals of forty-five (45) days. Notwithstanding the foregoing, any Authority Costs incurred by the Authority after the receipt by the Authority of the first payment of Tax Increment by the County will be paid by the Authority, and the Redeveloper will have no obligation to pay any Authority Costs incurred after such date. The sum of $5,000, which was deposited by the Redeveloper upon filling its application for tax increment financing with the Authority, will be credited to the Redeveloper’s obligation under this Section. Upon termination of this Agreement in accordance with its terms, the Redeveloper remains obligated under this section for costs incurred through the date of first receipt by the Authority of Tax Increment. [The remainder of this page is intentionally left blank.] 10 608971v3NE395-5 ARTICLE IV Construction of Minimum Improvements Section 4.1. Construction of Improvements. The Redeveloper agrees that it will construct or cause construction of the Minimum Improvements on the Redevelopment Property in accordance with the approved Construction Plans and that it will, during any period while the Redeveloper retains ownership of any portion of the Minimum Improvements, operate and maintain, preserve and keep the Minimum Improvements or cause the Minimum Improvements to be maintained, preserved and kept with the appurtenances and every part and parcel thereof, in good repair and condition. Section 4.2. Construction Plans. The Redeveloper shall follow a separate permitting process for each of three phases of construction of the Minimum Improvements, consisting of demolition, construction of footings, and construction of the facility (each a “Construction Phase”), as follows: (a) Before commencing construction of any Construction Phase of the Minimum Improvements, the Redeveloper shall submit to the Authority Construction Plans for the applicable Construction Phase. The Construction Plans shall provide for the construction of such Construction Phase and shall be in conformity with this Agreement, the Redevelopment Plan and all applicable State and local laws and regulations. The Authority will approve the Construction Plans in writing if (i) the Construction Plans conform to all terms and conditions of this Agreement; (ii) the Construction Plans conform to the goals and objectives of the Redevelopment Plan; (iii) the Construction Plans conform to all applicable federal, state and local laws, ordinances, rules and regulations; (iv) Construction Plans are adequate to provide for construction of the applicable Construction Phase; (v) the Redeveloper certifies that Redeveloper reasonably anticipates that the Construction Plans do not provide for expenditures in excess of the funds available to the Redeveloper for construction of the Minimum Improvements; and (vi) no Event of Default has occurred and remains outstanding. No approval by the Authority shall relieve the Redeveloper of the obligation to comply with the terms of this Agreement, applicable federal, state and local laws, ordinances, rules and regulations, or to construct the Minimum Improvements in accordance therewith. No approval by the Authority shall constitute a waiver of an Event of Default. If approval of the Construction Plans is requested by the Redeveloper in writing at the time of submission, such Construction Plans shall be deemed approved unless rejected in writing by the Authority, in whole or in part. Such rejections shall set forth in detail the reasons therefor based upon the criteria set forth in (i) through (vi) above, and shall be made within twenty (20) days after the date of receipt of final plans from the Redeveloper. If the Authority fails to reject any Construction Plans submitted to the Authority within said twenty (20) day period, the Authority shall be deemed to have approved such plans. If the Authority rejects any Construction Plans in whole or in part, the Redeveloper shall submit new or corrected Construction Plans within twenty (20) days after written notification to the Redeveloper of the rejection. The provisions of this Section relating to approval, rejection and resubmission of corrected Construction Plans shall continue to apply until the Construction Plans have been approved by the Authority. The Authority’s approval shall not be unreasonably 11 608971v3NE395-5 withheld. Said approval shall constitute a conclusive determination that the approved Construction Plans (and the Construction Phase of the Minimum Improvements constructed in accordance with said plans) comply to the Authority’s satisfaction with the provisions of this Agreement relating thereto. The Redeveloper hereby waives any and all claims and causes of action whatsoever resulting from the review of the Construction Plans by the Authority and/or any changes in the Construction Plans requested by the Authority. Neither the Authority nor any employee or official of the Authority shall be responsible in any manner whatsoever for any defect in the Construction Plans or in any work done pursuant to the Construction Plans, including changes requested by the Authority. (b) If the Redeveloper desires to make any material change in the Construction Plans or any component thereof after their approval by the Authority, the Redeveloper shall submit the proposed change to the Authority for its approval. For the purpose of this section, the term “material” means changes that increase or decrease construction costs by 10% or more. If the Construction Plans, as modified by the proposed change, conform to the requirements of this Section 4.2 of this Agreement with respect to such previously approved Construction Plans, the Authority shall approve the proposed change and notify the Redeveloper in writing of its approval. Such change in the Construction Plans shall, in any event, be deemed approved by the Authority unless rejected, in whole or in part, by written notice by the Authority to the Redeveloper, setting forth in detail the reasons therefor. Such rejection shall be made within ten (10) days after receipt of the notice of such change. The Authority’s approval of any such change in the Construction Plans will not be unreasonably withheld. Section 4.3. Commencement and Completion of Construction. Subject to Unavoidable Delays, the Redeveloper shall commence construction of the Minimum Improvements by June 1, 2020, and shall complete the construction of the Minimum Improvements by June 1, 2021. All work with respect to the Minimum Improvements to be constructed or provided by the Redeveloper on the Redevelopment Property shall be in conformity with the Construction Plans as submitted by the Redeveloper and approved by the Authority. For purposes of this Agreement, construction shall be deemed to commence upon the commencement of environmental remediation activities necessary to carry out the construction of the Minimum Improvements. The Redeveloper agrees for itself, its successors, and assigns, and every successor in interest to the Redevelopment Property, or any part thereof, that the Redeveloper, and such successors and assigns, shall promptly begin and diligently prosecute to completion the development of the Redevelopment Property through the construction of the Minimum Improvements thereon, and that such construction shall in any event be commenced and completed within the period specified in this Section 4.3 of this Agreement. After the date of this Agreement and until the Minimum Improvements have been fully constructed, the Redeveloper shall make reports, in such detail and at such times as may reasonably be requested by the Authority, but no more than monthly, as to the actual progress of the Redeveloper with respect to such construction. 12 608971v3NE395-5 Section 4.4. Certificate of Completion. (a) Within 15 days after completion of the Minimum Improvements in accordance with those provisions of the Agreement relating solely to the obligations of the Redeveloper to construct the Minimum Improvements (including the dates for beginning and completion thereof), the Authority Representative shall deliver to the Redeveloper a Certificate of Completion in substantially the form shown as Schedule E, in recordable form and executed by the Authority. (b) If the Authority Representative shall refuse or fail to provide any certification in accordance with the provisions of this Section 4.4 of this Agreement, the Authority Representative shall, within thirty (30) days after written request by the Redeveloper, provide the Redeveloper with a written statement, indicating in adequate detail in what respects the Redeveloper 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 the Authority, for the Redeveloper to take or perform in order for the Authority to issue the Certificate of Completion. Issuance of the Certificate of Completion shall not be unreasonably withheld. (c) The construction of the Minimum Improvements shall be deemed to be complete upon issuance of a final certificate of occupancy for the Minimum Improvements, and upon determination by the Authority Representative that all related site improvements on the Redevelopment Property have been substantially completed in accordance with approved Construction Plans. Section 4.5. Records. The Authority, through any authorized representatives, shall have the right at all reasonable times after reasonable notice to inspect, examine and copy all books and records of Redeveloper relating to the Minimum Improvements. Such records shall be kept and maintained by Redeveloper through the Termination Date. [The remainder of this page is intentionally blank.] 13 608971v3NE395-5 ARTICLE V Insurance Section 5.1. Insurance. (a) The Redeveloper will provide and maintain at all times during the process of constructing the Minimum Improvements an All Risk Broad Form Basis Insurance Policy and, from time to time during that period, at the request of the Authority, furnish the Authority with proof of payment of premiums on policies covering the following: (i) Builder’s risk insurance, written on the so-called “Builder’s Risk -- Completed Value Basis,” in an amount equal to 100% of the principal amount of the TIF Note, and with coverage available in nonreporting form on the so-called “all risk” form of policy. The interest of the Authority shall be protected in accordance with a clause in form and content satisfactory to the Authority; (ii) Comprehensive general liability insurance (including operations, contingent liability, operations of subcontractors, completed operations, and contractual liability insurance) together with an Owner’s Protective Liability Policy with limits against bodily injury and property damage of not less than $1,000,000 for each occurrence (to accomplish the above-required limits, an umbrella excess liability policy may be used). The Authority shall be listed as an additional insured on the policy; and (iii) Workers’ compensation insurance, with statutory coverage, provided that the Redeveloper may be self-insured with respect to all or any part of its liability for workers’ compensation. (b) Upon completion of construction of the Minimum Improvements and prior to the Termination Date, the Redeveloper shall maintain, or cause to be maintained, at its cost and expense, and from time to time at the request of the Authority shall furnish proof of the payment of premiums on, insurance as follows: (i) Insurance against loss and/or damage to the Minimum Improvements under a policy or policies covering such risks as are ordinarily insured against by similar businesses. (ii) Comprehensive general public liability insurance, including personal injury liability (with employee exclusion deleted), against liability for injuries to persons and/or property, in the minimum amount for each occurrence and for each year of $1,000,000, and shall be endorsed to show the City and Authority as additional insureds. (iii) Such other insurance, including workers’ compensation insurance respecting all employees of the Redeveloper, in such amount as is customarily carried by like organizations engaged in like activities of comparable size and liability exposure; 14 608971v3NE395-5 provided that the Redeveloper may be self-insured with respect to all or any part of its liability for workers’ compensation. (c) All insurance required in this Article V of this Agreement shall be taken out and maintained in responsible insurance companies selected by the Redeveloper that are authorized under the laws of the State to assume the risks covered thereby. Upon request, the Redeveloper will deposit annually with the Authority a certificate or certificates or binders of the respective insurers stating that the insurance required herein is in force and effect. Unless otherwise provided in this Article V of this Agreement each policy shall contain a provision that the insurer shall not cancel the policy without giving written notice to the Redeveloper and the Authority at least thirty (30) days before the cancellation becomes effective. In lieu of separate policies, the Redeveloper may maintain a single policy, blanket or umbrella policies, or a combination thereof, having the coverage required herein, in which event the Redeveloper shall deposit with the Authority a certificate or certificates of the respective insurers as to the amount of coverage in force upon the Minimum Improvements. (d) The Redeveloper agrees to notify the Authority immediately in the case of damage exceeding $100,000 in amount to, or destruction of, the Minimum Improvements or any portion thereof resulting from fire or other casualty. In such event the Redeveloper will forthwith repair, reconstruct, and restore the Minimum Improvements to substantially the same or an improved condition or value as it existed prior to the event causing such damage and, to the extent necessary to accomplish such repair, reconstruction, and restoration, the Redeveloper will apply the net proceeds of any insurance relating to such damage received by the Redeveloper to the payment or reimbursement of the costs thereof. Any net proceeds remaining after completion of such repairs, construction, and restoration shall be the property of the Redeveloper. (e) In lieu of its obligation to reconstruct the Minimum Improvements as set forth in this Section, the Redeveloper shall have the option of: (i) paying to the Authority an amount that, in the opinion of the Authority and its fiscal consultant, is sufficient to pay or redeem the outstanding principal of the TIF Note, or (ii) so long as the Redeveloper is the owner of the TIF Note, waiving its right to receive subsequent payments under the TIF Note. (f) The Redeveloper and the Authority agree that all of the insurance provisions set forth in this Article V shall terminate upon the termination of this Agreement. Section 5.2. Subordination. Notwithstanding anything to the contrary herein, the rights of the Authority with respect to the receipt and application of any insurance proceeds shall, in all respects, be subordinate and subject to the rights of any Holder under a Mortgage allowed pursuant to Article VII of this Agreement. 15 608971v3NE395-5 ARTICLE VI Tax Increment; Taxes Section 6.1. Right to Collect Delinquent Taxes. The Redeveloper acknowledges that the Authority is providing substantial aid and assistance in furtherance of the development through reimbursement of Public Redevelopment Costs. The Redeveloper understands that the Tax Increments pledged to payment on the TIF Note are derived from real estate taxes on the Redevelopment Property, which taxes must be promptly and timely paid. To that end, the Redeveloper agrees for itself, its successors and assigns, that in addition to the obligation pursuant to statute to pay real estate taxes, it is also obligated by reason of this Agreement to pay before delinquency all real estate taxes assessed against the Redevelopment Property and the Minimum Improvements. The Redeveloper acknowledges that this obligation creates a contractual right on behalf of the Authority to sue the Redeveloper or its successors and assigns to collect delinquent real estate taxes and any penalty or interest thereon and to pay over the same as a tax payment to the county auditor. In any such suit, the Authority shall also be entitled to recover its costs, expenses and reasonable attorney fees. Section 6.2. Review of Taxes. (a) The Redeveloper agrees that prior to the Termination Date, it will not cause a reduction in the real property taxes paid in respect of the Redevelopment Property through: (A) willful destruction of the Redevelopment Property or any part thereof; or (B) willful refusal to reconstruct damaged or destroyed property pursuant to Section 5.1 of this Agreement, except as provided in Section 5.1(e). The Redeveloper also agrees that it will not, prior to the Termination Date, seek exemption from property tax for the Redevelopment Property or any portion thereof or transfer or permit the transfer of the Redevelopment Property to any entity that is exempt from real property taxes and state law (other than any portion thereof dedicated or conveyed to the City in accordance with platting of the Redevelopment Property), or apply for a deferral of property tax on the Redevelopment Property pursuant to any law. (b) Nothing in this Agreement shall limit the right of the Redeveloper, or its successors and assigns, to bring a tax petition challenging a Market Value determination for the Redevelopment Property or the Minimum Improvements; provided that if the Redeveloper brings such a challenge, the Redeveloper must inform the Authority of such tax petition in writing. During the pendency of such challenge, the Authority shall have the right to withhold all payments of principal of and interest on the TIF Note until the Redeveloper’s challenge is resolved. Upon resolution of Redeveloper’s tax petition, any Available Tax Increment deferred and withheld under this Section shall be paid, without interest thereon, to the extent payable under the assessor’s final determination of Market Value. [The remainder of this page is intentionally blank.] 16 608971v3NE395-5 ARTICLE VII Other Financing Section 7.1. Generally. Before issuance of the Note, the Redeveloper shall submit to the Authority or provide access thereto for review by Authority staff, consultants and agents, evidence reasonably satisfactory to the Authority that Redeveloper has available funds, or commitments to obtain funds, whether in the nature of mortgage financing, equity, grants, loans, or other sources sufficient for paying the cost of the developing the Minimum Improvements, provided that any lender or grantor commitments shall be subject only to such conditions as are normal and customary in the commercial lending industry. Section 7.2. Authority’s Option to Cure Default on Mortgage. In the event that any portion of the Redeveloper’s funds is provided through mortgage financing, and there occurs a default under any Mortgage reviewed by the Authority pursuant to Article VII of this Agreement, the Redeveloper shall cause the Authority to receive copies of any notice of default received by the Redeveloper from the holder of such Mortgage. Thereafter, the Authority shall have the right, but not the obligation, to cure any such default on behalf of the Redeveloper within such cure periods as are available to the Redeveloper under the Mortgage documents. Section 7.3. Modification; Subordination. In the event any portion of the Redeveloper’s funds is provided through mortgage financing, the Authority agrees to subordinate its rights under this Agreement to the Holder of any Mortgage securing construction or permanent financing, in accordance with the terms of a subordination agreement in a form reasonably acceptable to the Authority and approved by the Authority by formal action. [The remainder of this page is intentionally blank.] 17 608971v3NE395-5 ARTICLE VIII Prohibitions Against Assignment and Transfer; Indemnification Section 8.1. Representation as to Development. The Redeveloper represents and agrees that its purchase of the Redevelopment Property, and its other undertakings pursuant to the Agreement, are, and will be used, for the purpose of development of the Redevelopment Property and not for speculation in land holding. Section 8.2. Prohibition Against Redeveloper’s Transfer of Property and Assignment of Agreement. The Redeveloper represents and agrees that prior to the issuance of the Certificate of Completion for the Minimum Improvements: (a) Except only by way of security for, and only for, the purpose of obtaining financing necessary to enable the Redeveloper or any successor in interest to the Redevelopment Property, or any part thereof, to perform its obligations with respect to undertaking the development contemplated under this Agreement, and any other purpose authorized by this Agreement, the Redeveloper 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 Redevelopment 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 whether or not related in any way to the Redeveloper (collectively, a “Transfer”), without the prior written approval of the Authority (whose approval will not be unreasonably withheld, subject to the standards described in paragraph (b) of this Section) unless the Redeveloper remains liable and bound by this Redevelopment Agreement in which event the Authority’s approval is not required. Any such Transfer shall be subject to the provisions of this Agreement. For the purposes of this Agreement, the term Transfer does not include (i) acquisition of all or substantially all of the assets of Redeveloper (including the Redevelopment Property) by another person or equity; (ii) acquisition of a controlling interest in Redeveloper by another person or entity or merger of Redeveloper with another entity; or (iii) any sale, conveyance, or transfer in any form to any Affiliate. (b) In the event the Redeveloper, upon Transfer of the Redevelopment Property or any portion thereof prior to or following issuance of the Certificate of Completion for the Minimum Improvements, seeks to be released from its obligations under this Redevelopment Agreement as to the portions of the Redevelopment Property that are transferred, the Authority shall be entitled to require, except as otherwise provided in the Agreement, as conditions to any such release that: (i) Any proposed transferee shall have the qualifications and financial responsibility, in the reasonable judgment of the Authority, necessary and adequate to fulfill the obligations undertaken in this Agreement by the Redeveloper as to the portion of the Redevelopment Property to be transferred. 18 608971v3NE395-5 (ii) Any proposed transferee, by instrument in writing satisfactory to the Authority 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 the Authority, have expressly assumed all of the obligations of the Redeveloper under this Agreement as to the portion of the Redevelopment Property to be transferred and agreed to be subject to all the conditions and restrictions to which the Redeveloper is subject as to such portion; provided, however, that the fact that any transferee of, or any other successor in interest whatsoever to, the Redevelopment Property, or any part thereof, shall not, for whatever reason, have assumed such obligations or so agreed, and shall not (unless and only to the extent otherwise specifically provided in this Agreement or agreed to in writing by the Authority) deprive the Authority of any rights or remedies or controls with respect to the Redevelopment 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 Redevelopment Property or any part thereof, or any interest therein, however consummated or occurring, and whether voluntary or involuntary, shall operate, legally, or practically, to deprive or limit the Authority of or with respect to any rights or remedies on controls provided in or resulting from this Agreement with respect to the Redevelopment Property that the Authority would have had, had there been no such transfer or change. In the absence of specific written agreement by the Authority to the contrary, no such transfer or approval by the Authority thereof shall be deemed to relieve the Redeveloper, or any other party bound in any way by this Agreement or otherwise with respect to the Redevelopment Property, from any of its obligations with respect thereto. (iii) Any and all instruments and other legal documents involved in effecting the transfer of any interest in this Agreement or the Redevelopment Property governed by this Article VIII, shall be in a form reasonably satisfactory to the Authority. In the event the foregoing conditions are satisfied then the Redeveloper shall be released from its obligation under this Agreement, as to the portion of the Redevelopment Property that is transferred, assigned, or otherwise conveyed. Section 8.3. Release and Indemnification Covenants. (a) Except for any willful misrepresentation or any willful or wanton misconduct or negligence of the Indemnified Parties as hereinafter defined, and except for any breach by any of the Indemnified Parties of their obligations under this Agreement, the Redeveloper releases from and covenants and agrees that the Authority, the City, and the governing body members, officers, agents, servants, and employees thereof (the “Indemnified Parties”) shall not be liable for and agrees to indemnify and hold harmless the Indemnified Parties against any loss or damage to property or any injury to or death of any person occurring at or about or resulting from any defect in the Redevelopment Property or the Minimum Improvements. 19 608971v3NE395-5 (b) Except for any willful misrepresentation or any willful or wanton misconduct or negligence of the Indemnified Parties, and except for any breach by any of the Indemnified Parties of their obligations under this Agreement, the Redeveloper agrees to protect and defend the Indemnified Parties, now and forever, and further agrees to hold the aforesaid harmless from any claim, demand, suit, action, or other proceeding whatsoever by any person or entity whatsoever arising or purportedly arising from this Agreement, or the transactions contemplated hereby or the acquisition, construction, installation, ownership, maintenance, and operation of the Redevelopment Property. (c) Except for any willful misrepresentation or any willful or wanton misconduct or negligence of the Indemnified Parties, and except for any breach by any of the Indemnified Parties of their obligations under this Agreement, the Indemnified Parties shall not be liable for any damage or injury to the persons or property of the Redeveloper or its officers, agents, servants, or employees or any other person who may be about the Redevelopment Property or Minimum Improvements. (d) All covenants, stipulations, promises, agreements and obligations of the Authority contained herein shall be deemed to be the covenants, stipulations, promises, agreements, and obligations of such entity and not of any governing body member, officer, agent, servant, or employee of such entities in the individual capacity thereof. [The remainder of this page is intentionally blank.] 20 608971v3NE395-5 ARTICLE IX Events of Default Section 9.1. Events of Default Defined. The following shall be “Events of Default” under this Agreement and the term “Event of Default” shall mean, whenever it is used in this Agreement, any one or more of the following events, after the non-defaulting party provides thirty (30) days written notice to the defaulting party of the event, but only if the event has not been cured within said thirty (30) days or, if the event is by its nature incurable within thirty (30) days, the defaulting party does not, within such thirty-day period, provide assurances reasonably satisfactory to the party providing notice of default that the event will be cured and will be cured as soon as reasonably possible: (a) Failure by the Redeveloper or Authority to observe or perform any covenant, condition, obligation, or agreement on its part to be observed or performed under this Agreement, unless such failure to perform is the result of an Unavoidable Delay. (b) If, before issuance of the Certificate of Completion for all the Minimum Improvements, the Redeveloper shall (i) file any petition in bankruptcy or for any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under the United States Bankruptcy Act or under any similar federal or State law, which action is not dismissed within sixty (60) days after filing; or (ii) make an assignment for benefit of its creditors; or (iii) admit in writing its inability to pay its debts generally as they become due; or (iv) be adjudicated a bankrupt or insolvent. Section 9.2. Remedies on Default. Whenever any Event of Default referred to in Section 9.1 of this Agreement occurs, the non-defaulting party may: (a) Suspend its performance under this Agreement until it receives assurances that the defaulting party will cure its default and continue its performance under the Agreement. (b) Upon a default by the Redeveloper under this Agreement, the Authority may terminate the Note and this Agreement. (c) Take whatever action, including legal, equitable, or administrative action, which may appear necessary or desirable to collect any payments due under this Agreement, or to enforce performance and observance of any obligation, agreement, or covenant under this 21 608971v3NE395-5 Agreement, provided that nothing contained herein shall give the Authority the right to seek specific performance by Redeveloper of the construction of the Minimum Improvements. Section 9.3. No Remedy Exclusive. No remedy herein conferred upon or reserved to any party is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. To entitle the Authority to exercise any remedy reserved to it, it shall not be necessary to give notice, other than such notice as may be required in this Article IX. Section 9.4. No Additional Waiver Implied by One Waiver. In the event any agreement contained in this Agreement should be breached by either party and thereafter waived by the other party, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other concurrent, previous or subsequent breach hereunder. Section 9.5. Attorney Fees. Whenever any Event of Default occurs and if the non- defaulting party employs attorneys or incurs other expenses for the collection of payments due or to become due or for the enforcement of performance or observance of any obligation or agreement on the part of the defaulting party under this Agreement, the defaulting party shall, within ten (10) days of written demand by the non-defaulting party, pay to the non-defaulting party the reasonable fees of such attorneys and such other expenses so incurred by the non- defaulting party. [The remainder of this page is intentionally blank.] 22 608971v3NE395-5 ARTICLE X Additional Provisions Section 10.1. Conflict of Interests; Representatives Not Individually Liable. The Authority and the Redeveloper, to the best of their respective knowledge, represent and agree that no member, official, or employee of the Authority shall have any personal interest, direct or indirect, in the Agreement, nor shall any such member, official, or employee participate in any decision relating to the Agreement that affects his personal interests or the interests of any corporation, partnership, or association in which he, directly or indirectly, is interested. No member, official, or employee of the City or Authority shall be personally liable to the Redeveloper, or any successor in interest, in the event of any default or breach by the Authority or for any amount that may become due to the Redeveloper or successor or on any obligations under the terms of the Agreement. Section 10.2. Equal Employment Opportunity. The Redeveloper, for itself and its successors and assigns, agrees that during the construction of the Minimum Improvements provided for in the Agreement it will comply with all applicable federal, state, and local equal employment and non-discrimination laws and regulations. Section 10.3. Restrictions on Use. The Redeveloper agrees that until the Termination Date, the Redeveloper, and such successors and assigns, shall not discriminate upon the basis of race, color, creed, sex or national origin in the sale, lease, or rental or in the use or occupancy of the Redevelopment Property or any improvements erected or to be erected thereon, or any part thereof. Section 10.4. Provisions Not Merged With Deed. None of the provisions of this Agreement are intended to or shall be merged by reason of any deed transferring any interest in the Redevelopment Property and any such deed shall not be deemed to affect or impair the provisions and covenants of this Agreement. Section 10.5. Titles of Articles and Sections. Any titles of the several parts, Articles, and Sections of the Agreement are inserted for convenience of reference only and shall be disregarded in construing or interpreting any of its provisions. Section 10.6. Notices and Demands. Except as otherwise expressly provided in this Agreement, a notice, demand, or other communication under the Agreement by either party to the other shall be sufficiently given or delivered if it is dispatched by registered or certified mail, postage prepaid, return receipt requested, or delivered personally, to the following addresses (or to such other addresses as either party may notify the other): 23 608971v3NE395-5 To Redeveloper: Nevada Hills Enterprises L.L.C. 2731 Nevada Avenue North New Hope, Minnesota 55427 To Authority: Economic Development Authority in and for the City of New Hope, Minnesota Attn: Executive Director 4401 Xlyon Avenue North New Hope, Minnesota 55428 Section 10.7. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall constitute one and the same instrument. Section 10.8. Recording. The Authority may record this Agreement, or, at Redeveloper’s option, a memorandum of this Agreement and any amendments thereto with the Hennepin County recorder. The Redeveloper shall pay all costs for recording. Section 10.9 Amendment. This Agreement may be amended only by written agreement approved by the Authority and the Redeveloper. Section 10.10. Authority Approvals. Unless otherwise specified, any approval required by the Authority under this Agreement may be given by the Authority Representative, except that final approval of issuance of the TIF Note shall be made by the Authority’s board of commissioners. [The remainder of this page is intentionally left blank.] 24 608971v3NE395-5 IN WITNESS WHEREOF, the Authority and Redeveloper have caused this Agreement to be duly executed by their duly authorized representatives as of the date first above written. ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR THE CITY OF NEW HOPE, MINNESOTA By Its President By Its Executive Director STATE OF MINNESOTA ) ) SS. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this ____ day of _____________, 2019 by _________________ and ____________________, the President and Executive Director of the Economic Development Authority in and for the City of New Hope, Minnesota, on behalf of the Authority. Notary Public 25 608971v3NE395-5 Nevada Hills Enterprises L.L.C. By Its _______________________ STATE OF MINNESOTA ) ) SS. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this _________ day of ____________, 2019, by _____________________, the ___________________ of Nevada Hills Enterprises L.L.C., a Minnesota limited liability company, on behalf of the company. Notary Public A-1 608971v3NE395-5 SCHEDULE A REDEVELOPMENT PROPERTY Parcel Identification Numbers: 20-118-21-34-0007 20-118-21-34-0031 B-1 608971v3NE395-5 SCHEDULE B AUTHORIZING RESOLUTION ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR THE CITY OF NEW HOPE, MINNESOTA RESOLUTION NO. __________ RESOLUTION APPROVING CONTRACT FOR PRIVATE REDEVELOPMENT WITH AND AWARDING THE SALE OF, AND PROVIDING THE FORM, TERMS, COVENANTS AND DIRECTIONS FOR THE ISSUANCE OF ITS TAX INCREMENT REVENUE NOTE TO NEVADA HILLS ENTERPRISES L.L.C. BE IT RESOLVED BY the Board of Commissioners (“Board”) of the Economic Development Authority in and for the City of New Hope, Minnesota (the “Authority”) as follows: Section 1. Background; Authorization; Award of Sale. 1.01. Background; Authorization. (a) The Authority and the City of New Hope (the “City”) have heretofore approved the establishment of the Automotive Concepts Tax Increment Financing District (the “TIF District”) within Redevelopment Project No. 1 (the “Project”), and have adopted a tax increment financing plan for the purpose of financing certain improvements within the Project. (b) Pursuant to Minnesota Statutes, Section 469.178, the Authority is authorized to issue and sell its bonds for the purpose of financing a portion of the public redevelopment costs of the TIF District. The Authority hereby finds and determines that it is in the best interests of the Authority that it issue and sell its Tax Increment Revenue Note (Automotive Concepts Project) (the “Note”) for the purpose of financing certain public redevelopment costs of the Project, pursuant to the terms of this Resolution. 1.02. Agreement Approved; Issuance, Sale, and Terms of the Note. (a) The Authority hereby approves the Contract for Private Redevelopment between the Authority and Nevada Hills Enterprises L.L.C. (the “Agreement”), and authorizes the President and Executive Director to execute such Agreement in substantially the form on file with City, subject to modifications that do not alter the substance of the transaction and are approved by such officials, provided that execution of the Agreement by such officials is conclusive evidence of their approval. All capitalized terms in this resolution have the meaning provided in the Agreement unless the context requires otherwise. B-2 608971v3NE395-5 (b) The Authority hereby authorizes the President and Executive Director to issue the Note in accordance with the Agreement. All capitalized terms in this resolution have the meaning provided in the Agreement unless the context requires otherwise. (c) The Note shall be issued in the maximum principal amount of $150,000 to Nevada Hills Enterprises L.L.C. (the "Owner"), in consideration of certain eligible costs incurred by the Owner under the Agreement, shall be dated the date of delivery thereof, and shall bear interest at the rate of 4.45 percent. The Note will be issued in the principal amount of Public Redevelopment Costs submitted and approved in accordance with Section 3.3 of the Agreement. The Note is secured by Available Tax Increment, as further described in the form of the Note herein. The Authority hereby delegates to the Executive Director the determination of the date on which the Note is to be delivered, in accordance with the Agreement. Section 2. Form of Note. The Note shall be in substantially the form attached hereto as Exhibit A, with the blanks to be properly filled in and the principal amount adjusted as of the date of issue. Section 3. Terms, Execution and Delivery. 3.01. Denomination, Payment. The Note shall be issued as a single typewritten note numbered R-1. The Note shall be issuable only in fully registered form. Principal of and interest on the Note shall be payable by check or draft issued by the Registrar described herein. 3.02. Payment Dates. Principal of and interest on the Note shall be payable by mail to the owner of record thereof as of the close of business on the fifteenth day of the month preceding the Payment Date, whether or not such day is a business day. 3.03. Registration. The Authority hereby appoints the City Finance Director to perform the functions of registrar, transfer agent and paying agent (the “Registrar”). The effect of registration and the rights and duties of the Authority and the Registrar with respect thereto shall be as follows: (a) Register. The Registrar shall keep at its office a bond register in which the Registrar shall provide for the registration of ownership of the Note and the registration of transfers and exchanges of the Note. (b) Transfer of Note. Upon surrender for transfer of the Note duly endorsed by the registered owner thereof or accompanied by a written instrument of transfer, in form reasonably satisfactory to the Registrar, duly executed by the registered owner thereof or by an attorney duly authorized by the registered owner in writing, the Registrar shall authenticate and deliver, in the name of the designated transferee or transferees, a new Note of a like aggregate principal amount and maturity, as requested by the transferor. The Registrar may close the books for registration of any transfer after the fifteenth day of the month preceding each Payment Date and until such Payment Date. B-3 608971v3NE395-5 (c) Cancellation. The Note surrendered upon any transfer shall be promptly cancelled by the Registrar and thereafter disposed of as directed by the Authority. (d) Improper or Unauthorized Transfer. When the Note is presented to the Registrar for transfer, the Registrar may refuse to transfer the same until it is satisfied that the endorsement on such Note or separate instrument of transfer is legally authorized. The Registrar shall incur no liability for its refusal, in good faith, to make transfers which it, in its judgment, deems improper or unauthorized. (e) Persons Deemed Owners. The Authority and the Registrar may treat the person in whose name the Note is at any time registered in the bond register as the absolute owner of the Note, whether the Note shall be overdue or not, for the purpose of receiving payment of, or on account of, the principal of and interest on such Note and for all other purposes, and all such payments so made to any such registered owner or upon the owner's order shall be valid and effectual to satisfy and discharge the liability of the Authority upon such Note to the extent of the sum or sums so paid. (f) Taxes, Fees and Charges. For every transfer or exchange of the Note, the Registrar may impose a charge upon the owner thereof sufficient to reimburse the Registrar for any tax, fee, or other governmental charge required to be paid with respect to such transfer or exchange. (g) Mutilated, Lost, Stolen or Destroyed Note. In case any Note shall become mutilated or be lost, stolen, or destroyed, the Registrar shall deliver a new Note of like amount, interest rate, maturity dates and tenor in exchange and substitution for and upon cancellation of such mutilated Note or in lieu of and in substitution for such Note lost, stolen, or destroyed, upon the payment of the reasonable expenses and charges of the Registrar in connection therewith; and, in the case the Note lost, stolen, or destroyed, upon filing with the Registrar of evidence satisfactory to it that such Note was lost, stolen, or destroyed, and of the ownership thereof, and upon furnishing to the Registrar of an appropriate bond or indemnity in form, substance, and amount satisfactory to it, in which both the Authority and the Registrar shall be named as obligees. The Note so surrendered to the Registrar shall be cancelled by it and evidence of such cancellation shall be given to the Authority. If the mutilated, lost, stolen, or destroyed Note has already matured or been called for redemption in accordance with its terms, it shall not be necessary to issue a new Note prior to payment. 3.04. Preparation and Delivery. The Note shall be prepared under the direction of the Executive Director and shall be executed on behalf of the Authority by the signatures of its President and Executive Director. In case any officer whose signature shall appear on the Note shall cease to be such officer before the delivery of the Note, such signature shall nevertheless be valid and sufficient for all purposes, the same as if such officer had remained in office until delivery. When the Note has been so executed, it shall be delivered by the Executive Director to the Owner thereof in accordance with the Agreement. B-4 608971v3NE395-5 Section 4. Security Provisions. 4.01. Pledge. The Authority hereby pledges to the payment of the principal of and interest on the Note all Available Tax Increment, as defined in, and subject to the terms described in, the Note. Available Tax Increment shall be applied to payment of the principal of and interest on the Note in accordance with the terms of the form of Note set forth in Exhibit A of this resolution. 4.02. Bond Fund. Until the date the Note is no longer outstanding and no principal or interest thereof (to the extent required to be paid pursuant to this resolution) remains unpaid, the Authority shall maintain a separate and special “Bond Fund” to be used for no purpose other than the payment of the principal of and interest on the Note. The Authority irrevocably agrees to appropriate to the Bond Fund in each year Available Tax Increment. Any Available Tax Increment remaining in the Bond Fund shall be transferred to the Authority's account for the TIF District upon the termination of the Note in accordance with its terms. 4.03. Additional Obligations. The Authority will issue no obligations secured by Available Tax Increment unless such pledge is on a subordinate basis to the pledge to the Note. Section 5. Certification of Proceedings. 5.01. Certification of Proceedings. The officers of the Authority are hereby authorized and directed to prepare and furnish to the Owner of the Note certified copies of all proceedings and records of the Authority, and such other affidavits, certificates, and information as may be required to show the facts relating to the legality and marketability of the Note as the same appear from the books and records under their custody and control or as otherwise known to them, and all such certified copies, certificates, and affidavits, including any heretofore furnished, shall be deemed representations of the Authority as to the facts recited therein. Section 6. Effective Date. This resolution shall be effective upon full execution of the Agreement. Adopted this _________ day of __________________, 2019. President ATTEST: Secretary B-5 608971v3NE395-5 Exhibit A to Authorizing Resolution FORM OF NOTE UNITED STATE OF AMERICA STATE OF MINNESOTA COUNTY OF HENNEPIN ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR THE CITY OF NEW HOPE, MINNESOTA No. R-1 $___________________ TAX INCREMENT REVENUE NOTE SERIES 20__ (AUTOMOTIVE CONCEPTS PROJECT) Date Rate of Original Issue 4.45% The Economic Development Authority in and for the City of New Hope, Minnesota (“Authority”) for value received, certifies that it is indebted and hereby promises to pay to Nevada Hills Enterprises L.L.C. or registered assigns (the "Owner"), the principal sum of $___________________________ and to pay interest thereon at the rate of 4.45 percent per annum, but solely from the sources and to the extent set forth herein. This Note shall not bear interest. Unless the context clearly requires otherwise, capitalized terms in this Note have the meaning provided in the Contract for Private Redevelopment between the Authority and Owner dated as of _____________, 2019 (the “Agreement”). 1. Payments. Principal and interest (“Payments”) shall be paid on August 1, 2022 and each February 1 and August 1 thereafter to and including February 1, 2031 (“Payment Dates”) in the amounts set forth herein, payable solely from and to the extent of the sources set forth in Section 3 hereof. Payments shall be applied first to accrued interest, and then to unpaid principal. Payments are payable by mail to the address of the Owner or such other address as the Owner may designate upon 30 days written notice to the Authority. Payments on this Note are payable in any coin or currency of the United States of America which, on the Payment Date, is legal tender for the payment of public and private debts. 2. Interest. Simple interest at the rate stated herein shall accrue on the unpaid principal, commencing on the date of original issue. Interest shall be computed on the basis of a year of 360 days consisting of twelve months of thirty days, and charged for actual days principal is unpaid. B-6 608971v3NE395-5 3. Available Tax Increment. (a) Payments on this Note are payable on each Payment Date solely from and in the amount of “Available Tax Increment,” which shall mean 90 percent of the total Tax Increment attributable to the TIF District that has been paid to the Authority by Hennepin County in the six months prior to the subject Payment Date. (b) The Authority shall have no obligation to pay principal and interest on this Note on each Payment Date from any source other than Available Tax Increment, and the failure of the Authority to pay the entire amount of principal or interest on this Note on any Payment Date shall not constitute a default hereunder as long as the Authority pays principal and interest hereon to the extent of Available Tax Increment. The Authority shall have no obligation to pay any unpaid balance of principal or accrued interest that may remain after the final Payment on February 1, 2030. 4. Default. If on any Payment Date there has occurred and is continuing any Event of Default under the Agreement, the Authority may withhold from payments hereunder under all Available Tax Increment. If the Event of Default is thereafter cured in accordance with the Agreement, the Available Tax Increment withheld under this Section shall be deferred and paid, without interest thereon, within thirty (30) days after the Event of Default is cured. If the Event of Default is not cured within three hundred sixty-five (365) days following the Authority’s written notice to Owner of such default, the Authority may terminate this Note by written notice to the Owner in accordance with the Agreement. 5. Prepayment. The principal sum and all accrued interest payable under this Note is prepayable in whole or in part at any time by the Authority without premium or penalty. No partial prepayment shall affect the amount or timing of any other regular payment otherwise required to be made under this Note. 6. Nature of Obligation. This Note is one of an issue in the total principal amount of $_____________________ issued to aid in financing certain public redevelopment costs of a Project undertaken by the Authority pursuant to Minnesota Statutes, Sections 469.001 through 469.047, and is issued pursuant to an authorizing resolution (the “Resolution”) duly adopted by the Authority on __________________, 2019, and pursuant to and in full conformity with the Constitution and laws of the State of Minnesota, including Minnesota Statutes, Sections 469.174 to 469.1794. This Note is a limited obligation of the Authority which is payable solely from Available Tax Increment pledged to the payment hereof under the Resolution. This Note shall not be deemed to constitute a general obligation of the State of Minnesota or any political subdivision thereof, including, without limitation, the Authority. Neither the State of Minnesota, nor any political subdivision thereof shall be obligated to pay the principal of or interest on this Note or other costs incident hereto except out of Available Tax Increment, and neither the full faith and credit nor the taxing power of the State of Minnesota or any political subdivision thereof is pledged to the payment of the principal of or interest on this Note or other costs incident hereto. 7. Registration and Transfer. This Note is issuable only as a fully registered note without coupons. As provided in the Resolution, and subject to certain limitations set forth therein, this Note is transferable upon the books of the Authority kept for that purpose at the principal office of the City Finance Director, by the Owner hereof in person or by such Owner's attorney duly B-7 608971v3NE395-5 authorized in writing, upon surrender of this Note together with a written instrument of transfer satisfactory to the Authority, duly executed by the Owner. Upon such transfer or exchange and the payment by the Owner of any tax, fee, or governmental charge required to be paid by the Authority with respect to such transfer or exchange, there will be issued in the name of the transferee a new Note of the same aggregate principal amount, bearing interest at the same rate and maturing on the same date. IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions, and things required by the Constitution and laws of the State of Minnesota to be done, to exist, to happen, and to be performed in order to make this Note a valid and binding limited obligation of the Authority according to its terms, have been done, do exist, have happened, and have been performed in due form, time and manner as so required. IN WITNESS WHEREOF, the Board of Commissioners of the Economic Development Authority in and for the City of New Hope, Minnesota has caused this Note to be executed with the manual signatures of its President and Executive Director, all as of the Date of Original Issue specified above. ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR THE CITY OF NEW HOPE, MINNESOTA _________________________________________ Executive Director ___________________________________ President REGISTRATION PROVISIONS The ownership of the unpaid balance of the within Note is registered in the bond register of the City Finance Director, in the name of the person last listed below. Date of Signature of Registration Registered Owner____ City Finance Director Nevada Hills Enterprises L.L.C. Federal Tax I.D. No. _________________ C-1 608971v3NE395-5 SCHEDULE C CERTIFICATE OF COMPLETION (See following page.) C-2 608971v3NE395-5 CERTIFICATE OF COMPLETION WHEREAS, the Economic Development Authority in and for the City of New Hope, Minnesota (the “Authority”) and Nevada Hills Enterprises L.L.C. (the “Redeveloper”) entered into a certain Contract for Private Redevelopment dated as of September 23, 2019 (the “Agreement”); and WHEREAS, the Agreement contains certain covenants and restrictions set forth in Articles III and IV thereof related to completing certain Minimum Improvements; and WHEREAS, the Redeveloper has performed said covenants and conditions insofar as it is able in a manner deemed sufficient by the Authority to permit the execution and recording of this certification; NOW, THEREFORE, this is to certify that all construction and other physical improvements related to the Minimum Improvements specified to be done and made by the Redeveloper have been completed and the agreements and covenants in Articles III and IV of the Agreement have been performed by the Redeveloper, and this Certificate is intended to be a conclusive determination of the satisfactory termination of the covenants and conditions of Articles III and IV of the Agreement related to completion of the Minimum Improvements, but any other covenants in the Agreement shall remain in full force and effect until the Termination Date (as such term is defined in the Agreement). Dated: ___________________________, 20__. ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR THE CITY OF NEW HOPE, MINNESOTA By Authority Representative C-3 608971v3NE395-5 STATE OF MINNESOTA ) ) SS. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this ____ day of _____________, 20__ by ______________________________________, the ______________________________ of the Economic Development Authority in and for the City of New Hope, Minnesota, a public body corporate and politic and political subdivision of the State of Minnesota, on behalf of the Authority. Notary Public This document drafted by: Kennedy & Graven, Chartered (MNI) 470 U.S. Bank Plaza Minneapolis, Minnesota 55402 Phone: 612-337-9300 Memo To: Kirk McDonald – EDA Executive Director From: Stacie Kvilvang - Ehlers Date: September 23, 2019 Subject: Automotive Concepts - TIF Agreement The City‘s EDA received an application for public financial assistance from Nevada Hills Enterprises, LLC (the “Developer”) to redevelop two parcels located at 2919 Nevada Avenue North. They intend to construct a 22,500 square foot, precast car detailing facility that would contain office, manufacturing, and warehouse uses for the above referenced use. The Developers’ application requested that a redevelopment TIF district be established and the EDA provide approximately $336,000 in financial assistance to address site topography issues as follows: Soil export: $252,515 Retaining Wall: $63,235 Testing Services: $20,500 TOTAL $336,250 Ehlers completed an analysis of the Developers proforma and determined that $150,000 in assistance would be appropriate to assist the project in moving forward. On April 9, 2019 the EDA authorized staff to proceed with the steps necessary to create the TIF District and to negotiate the terms of a TIF Agreement. On September 9, 2019 the EDA and City Council approved creation of the TIF district and the EDA reviewed the preliminary terms for assistance that are noted below: 1. General a. Redevelopment Agreement with Nevada Hills Enterprises LLC. 2. Development and Timing of Construction a. Construction of a 22,500 sq/ft commercial space for use by Automotive Concepts b. Must commence construction (included site demolition, grading, etc.) by June 1, 2020 and be substantially complete by June 1, 2021 (this is a change from previous memo on terms. Originally we had October 1, 2019 and December 31, 2020 respectively, but developer requested an extension of the dates to allow for a spring construction). 3. Business Subsidy a. Development is exempt from business subsidy requirements (job and wage goals), since the cost of site acquisition and site preparation exceeds 70% of the County Assessor’s estimated market value. b. The Developer is required to maintain the business (Automotive Concepts) in the space through the term of the TIF Note and will be required to provide proof of business to the EDA annually. 4. Payment of Authority Costs a. Developer has deposited $5,000 with the EDA to pay costs associated with required blight inspection/determination, analyzing their TIF request, creating the TIF district and development of the TIF agreement. The Redeveloper will replenish the deposit as needed to pay 100% of the EDA’s costs (LHB, fiscal and legal). 5. Taxes a. Developer is required to inform the EDA of any tax petitions submitted for the property so the EDA can adjust TIF payments accordingly until such time the petition is stipulated or dismissed. 6. Tax Increment a. City/EDA approved creation of a redevelopment TIF District (Automotive Concepts) b. The Developer will receive a pay-as-you-go note in the amount of $150,000 i. Term of the TIF note will be for 9 years ii. Interest will be at 4.45% iii. Developer will receive 90% of the tax increment generated (EDA retains 10% for administrative costs). iv. Payment dates are expected to be August 1, 2022 through February 1, 2031 (The payment dates changed from the previous memo on terms due to the dates of construction changing, which pushed these dates out one year on each end). v. Note may be assigned to a third party and EDA consents to the assignment conditioned upon receipt of an investment letter from the third party. Please contact me at 651-697-8506 with any questions. MODIFICATION TO THE REDEVELOPMENT PLAN Redevelopment Project Area No. 1 - AND - TAX INCREMENT FINANCING PLAN Establishment of the Automotive Concepts Tax Increment Financing District (a redevelopment district) Economic Development Authority in and for the City of New Hope City of New Hope, Hennepin County, Minnesota Public Hearing: September 9, 2019 New Hope Economic Development Authority Automotive Concepts Tax Increment Financing District 2 Table of Contents Modification to the Redevelopment Plan for Redevelopment Project No. 1 ................................. 3 Foreword ................................................................................................................................... 3 Tax Increment Financing Plan for the Automotive Concepts Tax Increment Financing District ... 4 Foreword ................................................................................................................................... 4 Statutory Authority .................................................................................................................... 4 Statement of Objectives ............................................................................................................ 4 Redevelopment Plan Overview ................................................................................................. 4 Description of Property in the District and Property to be Acquired .......................................... 5 Classification of the District ....................................................................................................... 5 Duration and First Year of Tax Increment of the District ........................................................... 6 Original Tax Capacity, Tax Rate and Estimated Captured Net Tax Capacity Value/Increment and Notification of Prior Planned Improvements ....................................................................... 6 Sources of Revenue/Bonds to be Issued .................................................................................. 7 Uses of Funds ........................................................................................................................... 8 Estimated Impact on Other Taxing Jurisdictions ....................................................................... 9 Supporting Documentation ..................................................................................................... 10 Administration of the District ................................................................................................... 11 Appendix A: Map of Redevelopment Project No. 1 and the TIF District ................................ 12 Appendix B: Estimated Cash Flow for the District .................................................................. 13 Appendix C: Findings Including But/For Qualifications .......................................................... 14 Appendix D: Redevelopment Qualifications for the District .................................................... 15 New Hope Economic Development Authority Automotive Concepts Tax Increment Financing District 3 Modification to the Redevelopment Plan for Redevelopment Project Area No. 1 Foreword The following text represents a Modification to the Redevelopment Plan for Redevelopment Project Area No. 1. This modification represents a continuation of the goals and objectives set forth in the Redevelopment Plan for Redevelopment Project Area No. 1. Generally, the substantive changes include the establishment of the Automotive Concepts Tax Increment Financing District. For further information, a review of the Redevelopment Plan for Redevelopment Project Area No. 1, is recommended. It is available from the Director of Community Development at the City of New Hope. Other relevant information is contained in the Tax Increment Financing Plans for the Tax Increment Financing Districts located within Redevelopment Project Area No. 1. New Hope Economic Development Authority Automotive Concepts Tax Increment Financing District 4 Tax Increment Financing Plan for the Automotive Concepts Tax Increment Financing District Foreword The Economic Development Authority in and for the City of New Hope, Minnesota (the "EDA"), the City of New Hope (the "City"), staff and consultants have prepared the following information to expedite the establishment of the Automotive Concepts Tax Increment Financing District (the "District"), a redevelopment tax increment financing district, located in Redevelopment Project Area No. 1. Statutory Authority Within the City, there exist areas where public involvement is necessary to cause development or redevelopment to occur. To this end, the EDA and City have certain statutory powers pursuant to Minnesota Statutes ("M.S."), Sections 469.090 - 469.1081, inclusive, as amended, and M.S., Sections 469.174 to 469.1794, inclusive, as amended (the "Tax Increment Financing Act" or "TIF Act"), to assist in financing public costs related to this project. This section contains the Tax Increment Financing Plan (the "TIF Plan") for the District. Other relevant information is contained in the Modification to the Redevelopment Plan for Redevelopment Project Area No. 1. Statement of Objectives The District currently consists of two parcels of land and adjacent and internal rights-of-way. The District is being created to facilitate development of a 22,500 square foot office / manufacturing facility in the City. The EDA anticipates entering into a contract with Automotive Concepts and development is anticipated to begin in 2019. This TIF Plan is expected to achieve many of the objectives outlined in the Redevelopment Plan for Redevelopment Project Area No. 1. The activities contemplated in the Modification to the Redevelopment Plan and the TIF Plan do not preclude the undertaking of other qualified development or redevelopment activities. These activities are anticipated to occur over the life of Redevelopment Project Area No. 1 and the District. Redevelopment Plan Overview Pursuant to the Redevelopment Plan and authorizing state statutes, the EDA or City are authorized to undertake the following activities in the District: 1. Property to be Acquired - Selected property located within the District may be acquired by the EDA or City and is further described in this TIF Plan. 2. Relocation - Relocation services, to the extent required by law, are available pursuant to M.S., Chapter 117 and other relevant state and federal laws. New Hope Economic Development Authority Automotive Concepts Tax Increment Financing District 5 3. Upon approval of a developer's plan relating to the project and completion of the necessary legal requirements, the EDA or City may sell to a developer selected properties that it may acquire within the District or may lease land or facilities to a developer. 4. The EDA or City may perform or provide for some or all necessary acquisition, construction, relocation, demolition, and required utilities and public street work within the District. Description of Property in the District and Property to be Acquired The District encompasses all property and adjacent rights-of-way and abutting roadways identified by the parcels listed below. Please also see the map in Appendix A for further information on the location of the District. The EDA or City may acquire any parcel within the District including interior and adjacent street rights of way. Any properties identified for acquisition will be acquired by the EDA or City only in order to accomplish one or more of the following: storm sewer improvements; provide land for needed public streets, utilities and facilities; carry out land acquisition, site improvements, clearance and/or development to accomplish the uses and objectives set forth in this plan. The EDA or City may acquire property by gift, dedication, condemnation or direct purchase from willing sellers in order to achieve the objectives of this TIF Plan. Such acquisitions will be undertaken only when there is assurance of funding to finance the acquisition and related costs. Classification of the District The EDA and City, in determining the need to create a tax increment financing district in accordance with the TIF Act, find that the District, to be established, is a redevelopment district pursuant to Section 469.174, Subd. 10(a)(1) of the TIF Act. $ The District is a redevelopment district consisting of two parcels. $ An inventory shows that parcels consisting of more than 70 percent of the area in the District are occupied by buildings, streets, utilities, paved or gravel parking lots or other similar structures. $ An inspection of the buildings located within the District finds that more than 50 percent of the buildings are structurally substandard as defined in the TIF Act. (See Appendix D). Pursuant to M.S., Section 469.176, Subd. 7, the District does not contain any parcel or part of a parcel that qualified under the provisions of M.S., Sections 273.111, 273.112, or 273.114 or Chapter 473H for taxes payable in any of the five calendar years before the filing of the request for certification of the District. Parcel number Address Owner 20-118-21-34-0007 2919 Nevada Ave N Nevada Hills Ent. LLC 20-118-21-34-0031 Unassigned Nevada Hills Ent. LLC New Hope Economic Development Authority Automotive Concepts Tax Increment Financing District 6 Duration and First Year of Tax Increment of the District Pursuant to M.S., Section 469.175, Subd. 1, and Section 469.176, Subd. 1, the duration and first year of tax increment of the District must be indicated within the TIF Plan. Pursuant to M.S., Section 469.176, Subd. 1b., the duration of the District will be 25 years after receipt of the first increment by the EDA or City (a total of 26 years of tax increment). The EDA and City elect to receive the first tax increment in 2021, which is no later than four years following the year of approval of the District. Thus, it is estimated that the District, including any modifications of the TIF Plan for subsequent phases or other changes, would terminate after 2046, or when the TIF Plan is satisfied. The EDA or City reserve the right to decertify the District prior to the legally required date. Original Tax Capacity, Tax Rate and Estimated Captured Net Tax Capacity Value/Increment and Notification of Prior Planned Improvements Pursuant to M.S., Section 469.174, Subd. 7 and M.S., Section 469.177, Subd. 1, the Original Net Tax Capacity (ONTC) as certified for the District will be based on the market values placed on the property by the assessor in 2019 for taxes payable 2020. Pursuant to M.S., Section 469.177, Subds. 1 and 2, the County Auditor shall certify in each year (beginning in the payment year 2021) the amount by which the original value has increased or decreased as a result of: 1. Change in tax exempt status of property; 2. Reduction or enlargement of the geographic boundaries of the district; 3. Change due to adjustments, negotiated or court-ordered abatements; 4. Change in the use of the property and classification; 5. Change in state law governing class rates; or 6. Change in previously issued building permits. In any year in which the current Net Tax Capacity (NTC) value of the District declines below the ONTC, no value will be captured, and no tax increment will be payable to the EDA or City. The original local tax rate for the District will be the local tax rate for taxes payable 2020, assuming the request for certification is made before June 30, 2020. The ONTC and the Original Local Tax Rate for the District appear in the table below. Pursuant to M.S., Section 469.174 Subd. 4 and M.S., Section 469.177, Subd. 1, 2, and 4, the estimated Captured Net Tax Capacity (CTC) of the District, within Redevelopment Project No. 1, upon completion of the projects within the District, will annually approximate tax increment revenues as shown in the table below. The EDA and City request 100 percent of the available increase in tax capacity for repayment of its obligations and current expenditures, beginning in the tax year payable 2021. The Project Tax Capacity (PTC) listed is an estimate of values when the projects within the District are completed. New Hope Economic Development Authority Automotive Concepts Tax Increment Financing District 7 Note: Tax capacity includes a 3.0% inflation factor for the duration of the District. The tax capacity included in this chart is the estimated tax capacity of the District in year 25. The tax capacity of the District in year one is estimated to be $28,500. Pursuant to M.S., Section 469.177, Subd. 4, the EDA shall, after a due and diligent search, accompany its request for certification to the County Auditor or its notice of the D istrict enlargement pursuant to M.S., Section 469.175, Subd. 4, with a listing of all properties within the District or area of enlargement for which building permits have been issued during the eighteen (18) months immediately preceding approval of the TIF Plan by the municipality pursuant to M.S., Section 469.175, Subd. 3. The County Auditor shall increase the original net tax capacity of the District by the net tax capacity of improvements for which a building permit was issued. The City is reviewing the area to be included in the District to determine if any building permits have been issued during the 18 months immediately preceding approval of the TIF Plan by the City. Sources of Revenue/Bonds to be Issued The total estimated tax increment revenues for the District are shown in the table below: SOURCES Tax Increment 983,535 Interest 98,353 TOTAL 1,081,888 The costs outlined in the Uses of Funds will be financed primarily through the annual collection of tax increments. The EDA or City reserve the right to incur bonds or other indebtedness as a result of the TIF Plan. As presently proposed, the projects within the District will be financed by pay-as- you-go notes and interfund loans. Any refunding amounts will be deemed a budgeted cost without a formal TIF Plan Modification. This provision does not obligate the EDA or City to incur debt. The EDA or City will issue bonds or incur other debt only upon the determination that such action is in the best interest of the City. The EDA or City may issue bonds (as defined in the TIF Act) secured in whole or in part with tax increments from the District in a maximum principal amount of $687,138. Such bonds may be in the form of pay-as-you-go notes, revenue bonds or notes, general obligation bonds, or interfund loans. This estimate of total bonded indebtedness is a cumulative statement of authority under Project estimated Tax Capacity upon completion $59,673 Original estimated Net Tax Capacity $2,670 Fiscal Disparities $20,361 Estimated Captured Tax Capacity $36,642 Original Local Tax Rate 149.1820%Pay 2019 Estimated Annual Tax Increment $54,663 Percent Retained by the City 100% Project Tax Capacity New Hope Economic Development Authority Automotive Concepts Tax Increment Financing District 8 this TIF Plan as of the date of approval. Uses of Funds Currently under consideration for the District is a proposal to facilitate development of 22,500 square foot office / manufacturing facility. The EDA and City have determined that it will be necessary to provide assistance to the project(s) for certain District costs, as described. The EDA has studied the feasibility of the development or redevelopment of property in and around the District. To facilitate the establishment and development or redevelopment of the District, this TIF Plan authorizes the use of tax increment financing to pay for the cost of certain eligible expenses. The estimate of public costs and uses of funds associated with the District is outlined in the following table. USES Land/Building Acquisition 50,000 Site Improvements/Preparation 400,000 Utilities 50,000 Other Qualifying Improvements 88,785 Administrative Costs (up to 10%)98,353 PROJECT COSTS TOTAL 687,138 Interest 394,750 PROJECT AND INTEREST COSTS TOTAL 1,081,888 The total project cost, including financing costs (interest) listed in the table above does not exceed the total projected tax increments for the District as shown in the Sources of Revenue section. Estimated costs associated with the District are subject to change among categories without a modification to this TIF Plan. The cost of all activities to be considered for tax increment financing will not exceed, without formal modification, the budget above pursuant to the applicable statutory requirements. Pursuant to M.S., Section 469.1763, Subd. 2, no more than 25 percent of the tax increment paid by property within the District will be spent on activities related to development or redevelopment outside of the District but within the boundaries of Redevelopment Project No. 1, (including administrative costs, which are considered to be spent outside of the District) subject to the limitations as described in this TIF Plan. Fiscal Disparities Election Pursuant to M.S., Section 469.177, Subd. 3, the EDA or City may elect one of two methods to calculate fiscal disparities. The EDA will choose to calculate fiscal disparities by clause b (inside). New Hope Economic Development Authority Automotive Concepts Tax Increment Financing District 9 Estimated Impact on Other Taxing Jurisdictions The estimated impact on other taxing jurisdictions assumes that the redevelopment contemplated by the TIF Plan would occur without the creation of the District. However, the EDA and City have determined that such development or redevelopment would not occur "but for" tax increment financing and that, therefore, the fiscal impact on other taxing jurisdictions is $0. The estimated fiscal impact of the District would be as follows if the "but for" test was not met: Entity 2018/Pay 2019 Total Net Tax Capacity Estimated Captured Tax Capacity (CTC) upon completion Percent of CTC to Entity Total Hennepin County 1,817,980,868 36,642 0.0020% City of New Hope 18,962,717 36,642 0.1932% ISD 281 97,653,903 36,642 0.0375% Impact on Tax Base Entity Pay 2019 Extension Rate Percent of Total CTC Potential Taxes Hennepin County 41.8610%28.06%36,642 15,339 City of New Hope 67.9900%45.58%36,642 24,913 ISD 281 29.9090%20.05%36,642 10,959 Other 9.4220%6.32%36,642 3,452 Total 149.1820%100.00%54,663 Impact on Tax Rates The estimates listed above display the captured tax capacity when all construction is completed. The tax rate used for calculations is the Pay 2019 rate. The total net capacity for the entities listed above are based on Pay 2019 figures. The District wi ll be certified under the Pay 2020 rates, which were unavailable at the time this TIF Plan was prepared. Pursuant to M.S. Section 469.175 Subd. 2(b): (1) Estimate of total tax increment. It is estimated that the total amount of tax increment that will be generated over the life of the District is $983,535; (2) Probable impact of the District on city provided services and ability to issue debt. An impact of the District on police protection is not expected. The City does not expect that the proposed development, in and of itself, will necessitate new capital investment in vehicles or facilities. The probable impact of the District on fire protection is not expected to be significant. Typically, new buildings generate few calls, if any, and are of superior construction. The City does not expect that the proposed development, in and of itself, will necessitate new capital investment in vehicles or facilities. The impact of the District on public infrastructure is expected to be minimal. The New Hope Economic Development Authority Automotive Concepts Tax Increment Financing District 10 development is not expected to significantly impact any traffic movements in the area. The current infrastructure for sanitary sewer, storm sewer and water will be able to handle the additional volume generated from the proposed development. Based on the development plans, there are no additional costs associated with street maintenance, sweeping, plowing, lighting and sidewalks. The probable impact of any District general obligation tax increment bonds on the ability to issue debt for general fund purposes is expected to be minimal. It is not anticipated that there will be any general obligation debt issued in relation to this project, therefore there will be no impact on the City's ability to issue future debt or on the City's debt limit. (3) Estimated amount of tax increment attributable to school district levies. It is estimated that the amount of tax increments over the life of the District that would be attributable to school district levies, assuming the school district's share of the total local tax rate for all taxing jurisdictions remained the same, is $197,786; (4) Estimated amount of tax increment attributable to county levies. It is estimated that the amount of tax increments over the life of the District that would be attributable to county levies, assuming the county's share of the total local tax rate for all taxing jurisdictions remained the same, is $275,983; (5) Additional information requested by the county or school district. The City is not aware of any standard questions in a county or school district written policy regarding tax increment districts and impact on county or school district services. The county or school district must request additional information pursuant to M.S. Section 469.175 Subd. 2(b) within 15 days after receipt of the tax increment financing plan. No requests for additional information from the county or school district regarding the proposed development for the District have been received. Supporting Documentation Pursuant to M.S. Section 469.175, Subd. 1 (a), clause 7 the TIF Plan must contain identification and description of studies and analyses used to make the determination set forth in M.S. Section 469.175, Subd. 3, clause (b)(2) and the findings are required in the resolution approving the District. (i) In making said determination, reliance has been placed upon (1) written representation made by the developer to such effects, (2) review of the developer’s proforma; and (3) City staff awareness of the feasibility of developing the project site within the District, which is further outlined in the City Council resolution approving the establishment of the TIF District and Appendix C. (ii) A comparative analysis of estimated market value both with and without establishment of the TIF District and the use of tax increments has been performed. Such analysis is included with the cashflow in Appendix B and indicates that the increase in estimated market value of the proposed development (less the indicated subtractions) exceeds the estimated market value of the site absent the establishment of the TIF District and the use of tax increments. New Hope Economic Development Authority Automotive Concepts Tax Increment Financing District 11 Administration of the District Administration of the District will be handled by the Director of Community Development at the City of New Hope. New Hope Economic Development Authority Automotive Concepts Tax Increment Financing District 12 Appendix A: Map of Redevelopment Project Area No. 1 and the TIF District 0 10.5 Miles City of New Hope Hennepin County, MN Automotive Concepts TIF District located in Project Area No. 1 B A S S LAKERD 62ND AVENUE N 49TH AVENUE N W I N N E T K A A V E N U E N 42ND AVENUE 36TH AVENUE N BO O N E A V E N U E N MEDICINE LAKE RD H I G H W A Y 1 6 9 ´ BROOKLYN PARK GOLDEN VALLEY CR Y S T A L PL Y M O U T H Legend Automotive Concepts TIF District Project Area No. 1 Automotive Concepts TIF District New Hope Economic Development Authority Automotive Concepts Tax Increment Financing District 13 Appendix B: Estimated Cash Flow for the District 8/6/2019 Base Value Assumptions - Page 1 Automotive Concepts - No Inflation City of New Hope, MN 22,500 Sq. Ft. Commercial ASSUMPTIONS AND RATES DistrictType:Redevelopment District Name/Number:Automotive Concepts County District #:Exempt Class Rate (Exempt)0.00% First Year Construction or Inflation on Value 2019 Commercial Industrial Preferred Class Rate (C/I Pref.) Existing District - Specify No. Years Remaining First $150,000 1.50% Inflation Rate - Every Year:3.00%Over $150,000 2.00% Interest Rate:4.00%Commercial Industrial Class Rate (C/I)2.00% Present Value Date:1-Feb-20 Rental Housing Class Rate (Rental)1.25% First Period Ending 1-Aug-20 Affordable Rental Housing Class Rate (Aff. Rental) Tax Year District was Certified:Pay 2020 First $150,000 0.75% Cashflow Assumes First Tax Increment For Development:2021 Over $150,000 0.25% Years of Tax Increment 26 Non-Homestead Residential (Non-H Res. 1 Unit) Assumes Last Year of Tax Increment 2046 First $500,000 1.00% Fiscal Disparities Election [Outside (A), Inside (B), or NA]Inside(B)Over $500,000 1.25% Incremental or Total Fiscal Disparities Incremental Homestead Residential Class Rate (Hmstd. Res.) Fiscal Disparities Contribution Ratio 35.7194%Pay 2019 First $500,000 1.00% Fiscal Disparities Metro-Wide Tax Rate 143.9920%Pay 2019 Over $500,000 1.25% Maximum/Frozen Local Tax Rate: 149.182%Pay 2019 Agricultural Non-Homestead 1.00% Current Local Tax Rate: (Use lesser of Current or Max.)149.182%Pay 2019 State-wide Tax Rate (Comm./Ind. only used for total taxes)42.4160%Pay 2019 Market Value Tax Rate (Used for total taxes)0.26683%Pay 2019 Building Total Percentage Tax Year Property Current Class After Land Market Market Of Value Used Original Original Tax Original After Conversion Map ID PID Owner Address Market Value Value Value for District Market Value Market Value Class Tax Capacity Conversion Orig. Tax Cap. 1 20-118-21-34-0007 Nevada Hills Ent. LLC2919 Nevada Ave N 134,000 8,000 142,000 100%142,000 Pay 2020 C/I Pref.2,130 C/I Pref.2,130 1 2 20-118-21-34-0031 Nevada Hills Ent. LLC Unassigned 27,000 0 27,000 100%27,000 Pay 2020 C/I Pref.405 C/I 540 161,000 8,000 169,000 169,000 2,535 2,670 Note: 1. Base values are for pay 2020 based upon review of County website on 8-6-19. 2. Located in SD # 281 and WS # 7 Area/ Phase Tax Rates BASE VALUE INFORMATION (Original Tax Capacity) Prepared by Ehlers & Associates, Inc. - Estimates Only N:\Minnsota\New Hope\Housing - Economic - Redevelopment\TIF\TIF Districts\Automotive Concepts - Est. 2019\TIF Plan Documents\TIF Run 8-6-19 - FINAL 8/6/2019 Base Value Assumptions - Page 2 Automotive Concepts - No Inflation City of New Hope, MN 22,500 Sq. Ft. Commercial Estimated Taxable Total Taxable Property Percentage Percentage Percentage Percentage First Year Market Value Market Value Total Market Tax Project Project Tax Completed Completed Completed Completed Full TaxesArea/Phase New Use Per Sq. Ft./Unit Per Sq. Ft./Unit Sq. Ft./Units Value Class Tax Capacity Capacity/Unit 2019 2020 2021 2022 Payable 1 Office/Man 65 65 22,500 1,462,500 C/I Pref.28,500 1 100%100%100%100%2021 TOTAL 1,462,500 28,500 Subtotal Residential 0 0 0 Subtotal Commercial/Ind.22,500 1,462,500 28,500 Note: 1. Market values are based upon estimates. Total Fiscal Local Local Fiscal State-wide Market Tax Disparities Tax Property Disparities Property Value Total Taxes Per New Use Capacity Tax Capacity Capacity Taxes Taxes Taxes Taxes Taxes Sq. Ft./Unit Office/Man 28,500 10,180 18,320 27,330 14,658 11,452 3,902 57,343 2.55 TOTAL 28,500 10,180 18,320 27,330 14,658 11,452 3,902 57,343 Note: 1. Taxes and tax increment will vary significantly from year to year depending upon values, rates, state law, fiscal disparities and other factors which cannot be predicted. Total Property Taxes 57,343 Current Market Value - Est.169,000 less State-wide Taxes (11,452)New Market Value - Est.1,462,500 less Fiscal Disp. Adj.(14,658) Difference 1,293,500 less Market Value Taxes (3,902)Present Value of Tax Increment 546,893less Base Value Taxes (2,560) Difference 746,607 Annual Gross TIF 24,770 Value likely to occur without Tax Increment is less than:746,607 WHAT IS EXCLUDED FROM TIF?MARKET VALUE BUT / FOR ANALYSIS TAX CALCULATIONS PROJECT INFORMATION (Project Tax Capacity) Prepared by Ehlers & Associates, Inc. - Estimates Only N:\Minnsota\New Hope\Housing - Economic - Redevelopment\TIF\TIF Districts\Automotive Concepts - Est. 2019\TIF Plan Documents\TIF Run 8-6-19 - FINAL 8/6/2019 Tax Increment Cashflow - Page 3 Automotive Concepts - No Inflation City of New Hope, MN 22,500 Sq. Ft. Commercial TAX INCREMENT CASH FLOW Project Original Fiscal Captured Local Annual Semi-Annual State Admin.Semi-Annual Semi-Annual PERIOD % of Tax Tax Disparities Tax Tax Gross Tax Gross Tax Auditor at Net Tax Present ENDING Tax Payment OTC Capacity Capacity Incremental Capacity Rate Increment Increment 0.36%10%Increment Value Yrs.Year Date - - - - 08/01/20 - - - - 02/01/21 100%28,500 (2,670) (9,226) 16,604 149.182%24,770 12,385 (45) (1,234) 11,106 10,466 0.5 2021 08/01/21 100%28,500 (2,670) (9,226) 16,604 149.182%24,770 12,385 (45) (1,234) 11,106 20,726 1 2021 02/01/22 100%29,355 (2,670) (9,532) 17,153 149.182%25,590 12,795 (46) (1,275) 11,474 31,118 1.5 2022 08/01/22 100%29,355 (2,670) (9,532) 17,153 149.182%25,590 12,795 (46) (1,275) 11,474 41,307 2 2022 02/01/23 100%30,236 (2,670) (9,846) 17,719 149.182%26,434 13,217 (48) (1,317) 11,853 51,625 2.5 2023 08/01/23 100%30,236 (2,670) (9,846) 17,719 149.182%26,434 13,217 (48) (1,317) 11,853 61,741 3 2023 02/01/24 100%31,143 (2,670) (10,170) 18,302 149.182%27,304 13,652 (49) (1,360) 12,243 71,985 3.5 2024 08/01/24 100%31,143 (2,670) (10,170) 18,302 149.182%27,304 13,652 (49) (1,360) 12,243 82,028 4 2024 02/01/25 100%32,077 (2,670) (10,504) 18,903 149.182%28,200 14,100 (51) (1,405) 12,644 92,198 4.5 2025 08/01/25 100%32,077 (2,670) (10,504) 18,903 149.182%28,200 14,100 (51) (1,405) 12,644 102,168 5 2025 02/01/26 100%33,039 (2,670) (10,848) 19,522 149.182%29,123 14,561 (52) (1,451) 13,058 112,262 5.5 2026 08/01/26 100%33,039 (2,670) (10,848) 19,522 149.182%29,123 14,561 (52) (1,451) 13,058 122,158 6 2026 02/01/27 100%34,030 (2,670) (11,202) 20,159 149.182%30,073 15,037 (54) (1,498) 13,484 132,177 6.5 2027 08/01/27 100%34,030 (2,670) (11,202) 20,159 149.182%30,073 15,037 (54) (1,498) 13,484 142,000 7 2027 02/01/28 100%35,051 (2,670) (11,566) 20,815 149.182%31,052 15,526 (56) (1,547) 13,923 151,943 7.5 2028 08/01/28 100%35,051 (2,670) (11,566) 20,815 149.182%31,052 15,526 (56) (1,547) 13,923 161,691 8 2028 02/01/29 100%36,103 (2,670) (11,942) 21,491 149.182%32,061 16,030 (58) (1,597) 14,375 171,559 8.5 2029 08/01/29 100%36,103 (2,670) (11,942) 21,491 149.182%32,061 16,030 (58) (1,597) 14,375 181,233 9 2029 02/01/30 100%37,186 (2,670) (12,329) 22,187 149.182%33,099 16,550 (60) (1,649) 14,841 191,025 9.5 2030 08/01/30 100%37,186 (2,670) (12,329) 22,187 149.182%33,099 16,550 (60) (1,649) 14,841 200,625 10 2030 02/01/31 100%38,302 (2,670) (12,727) 22,904 149.182%34,169 17,084 (62) (1,702) 15,321 210,341 10.5 2031 08/01/31 100%38,302 (2,670) (12,727) 22,904 149.182%34,169 17,084 (62) (1,702) 15,321 219,866 11 2031 02/01/32 100%39,451 (2,670) (13,138) 23,643 149.182%35,271 17,635 (63) (1,757) 15,815 229,505 11.5 2032 08/01/32 100%39,451 (2,670) (13,138) 23,643 149.182%35,271 17,635 (63) (1,757) 15,815 238,956 12 2032 02/01/33 100%40,634 (2,670) (13,561) 24,404 149.182%36,406 18,203 (66) (1,814) 16,324 248,519 12.5 2033 08/01/33 100%40,634 (2,670) (13,561) 24,404 149.182%36,406 18,203 (66) (1,814) 16,324 257,895 13 2033 02/01/34 100%41,853 (2,670) (13,996) 25,187 149.182%37,575 18,787 (68) (1,872) 16,848 267,382 13.5 2034 08/01/34 100%41,853 (2,670) (13,996) 25,187 149.182%37,575 18,787 (68) (1,872) 16,848 276,683 14 2034 02/01/35 100%43,109 (2,670) (14,444) 25,994 149.182%38,779 19,389 (70) (1,932) 17,388 286,094 14.5 2035 08/01/35 100%43,109 (2,670) (14,444) 25,994 149.182%38,779 19,389 (70) (1,932) 17,388 295,321 15 2035 02/01/36 100%44,402 (2,670) (14,906) 26,826 149.182%40,019 20,010 (72) (1,994) 17,944 304,656 15.5 2036 08/01/36 100%44,402 (2,670) (14,906) 26,826 149.182%40,019 20,010 (72) (1,994) 17,944 313,808 16 2036 02/01/37 100%45,734 (2,670) (15,382) 27,682 149.182%41,296 20,648 (74) (2,057) 18,516 323,066 16.5 2037 08/01/37 100%45,734 (2,670) (15,382) 27,682 149.182%41,296 20,648 (74) (2,057) 18,516 332,144 17 2037 02/01/38 100%47,106 (2,670) (15,872) 28,564 149.182%42,612 21,306 (77) (2,123) 19,106 341,326 17.5 2038 08/01/38 100%47,106 (2,670) (15,872) 28,564 149.182%42,612 21,306 (77) (2,123) 19,106 350,329 18 2038 02/01/39 100%48,519 (2,670) (16,377) 29,472 149.182%43,967 21,984 (79) (2,190) 19,714 359,436 18.5 2039 08/01/39 100%48,519 (2,670) (16,377) 29,472 149.182%43,967 21,984 (79) (2,190) 19,714 368,364 19 2039 02/01/40 100%49,975 (2,670) (16,897) 30,408 149.182%45,363 22,682 (82) (2,260) 20,340 377,395 19.5 2040 08/01/40 100%49,975 (2,670) (16,897) 30,408 149.182%45,363 22,682 (82) (2,260) 20,340 386,249 20 2040 02/01/41 100%51,474 (2,670) (17,433) 31,372 149.182%46,801 23,400 (84) (2,332) 20,985 395,205 20.5 2041 08/01/41 100%51,474 (2,670) (17,433) 31,372 149.182%46,801 23,400 (84) (2,332) 20,985 403,985 21 2041 02/01/42 100%53,018 (2,670) (17,984) 32,364 149.182%48,282 24,141 (87) (2,405) 21,649 412,865 21.5 2042 08/01/42 100%53,018 (2,670) (17,984) 32,364 149.182%48,282 24,141 (87) (2,405) 21,649 421,571 22 2042 02/01/43 100%54,609 (2,670) (18,552) 33,387 149.182%49,807 24,903 (90) (2,481) 22,332 430,376 22.5 2043 08/01/43 100%54,609 (2,670) (18,552) 33,387 149.182%49,807 24,903 (90) (2,481) 22,332 439,008 23 2043 02/01/44 100%56,247 (2,670) (19,137) 34,440 149.182%51,378 25,689 (92) (2,560) 23,037 447,738 23.5 2044 08/01/44 100%56,247 (2,670) (19,137) 34,440 149.182%51,378 25,689 (92) (2,560) 23,037 456,297 24 2044 02/01/45 100%57,935 (2,670) (19,740) 35,524 149.182%52,996 26,498 (95) (2,640) 23,762 464,952 24.5 2045 08/01/45 100%57,935 (2,670) (19,740) 35,524 149.182%52,996 26,498 (95) (2,640) 23,762 473,438 25 2045 02/01/46 100%59,673 (2,670) (20,361) 36,642 149.182%54,663 27,331 (98) (2,723) 24,510 482,019 25.5 2046 08/01/46 100%59,673 (2,670) (20,361) 36,642 149.182%54,663 27,331 (98) (2,723) 24,510 490,431 26 2046 02/01/47 Total 987,088 (3,554) (98,353) 885,181 Present Value From 02/01/2020 Present Value Rate 4.00%546,893 (1,969) (54,492) 490,431 Prepared by Ehlers & Associates, Inc. - Estimates Only N:\Minnsota\New Hope\Housing - Economic - Redevelopment\TIF\TIF Districts\Automotive Concepts - Est. 2019\TIF Plan Documents\TIF Run 8-6-19 - FINAL New Hope Economic Development Authority Automotive Concepts Tax Increment Financing District 14 Appendix C: Findings Including But/For Qualifications The reasons and facts supporting the findings for the adoption of the Tax Increment Financing Plan (TIF Plan) for the Automotive Concepts Tax Increment Financing District (the “District”), as required pursuant to Minnesota Statutes, Section 469.175, Subdivision 3 are as follows: 1. Finding that the Automotive Concepts Tax Increment Financing District is a redevelopment district as defined in M.S., Section 469.174, Subd. 10(a)(1). The District consists of two parcels with plans to redevelop the area for office and manufacturing purposes. At least 70 percent of the area of the parcels in the District are occupied by buildings, streets, utilities, paved or gravel parking lots or other similar structures and more than 50 percent of the buildings in the District, not including outbuildings, are structurally substandard to a degree requiring substantial renovation or clearance. (See Appendix D of the TIF Plan.) 2. Finding that the proposed development, in the opinion of the City Council, would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future and that the increased market value of the site that could reasonably be expected to occur without the use of tax increment financing would be less than the increase in the market value estimated to result from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of the District permitted by the TIF Plan. The proposed development, in the opinion of the City, would not reasonabl y be expected to occur solely through private investment within the reasonably foreseeable future: This finding is supported by the fact that the redevelopment proposed in the TIF Plan meets the City's objectives for redevelopment but due to the high costs of demolition and site preparation (due to the unusually steep grades) this project is feasible only through assistance, in part, from tax increment financing. The developer was asked for and provided a letter and a proforma as justification that the developer would not have gone forward without tax increment assistance. The increased market value of the site that could reasonably be expected to occur without the use of tax increment financing would be less than the increase in market value estimated to result from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of the District permitted by the TIF Plan: This finding is justified on the grounds that the cost of demolition, site improvements and public improvements and utilities add to the total redevelopment cost. The City reasonably determines that no other redevelopment of similar scope is anticipated on this site wi thout substantially similar assistance being provided to the development. Therefore, the City concludes as follows: a. The City's estimate of the amount by which the market value of the entire District will increase without the use of tax increment financing is $0. b. If the proposed development occurs, the total increase in market value will be $1,293,500 (see Appendix A of the TIF Plan) New Hope Economic Development Authority Automotive Concepts Tax Increment Financing District 15 c. The present value of tax increments from the District for the maximum duration of the district permitted by the TIF Plan is estimated to be $546,893 (see Appendix A of the TIF Plan). d. Even if some development other than the proposed development were to occur, the Council finds that no alternative would occur that would produce a market value increase greater than $746,607 (the amount in clause b less the amount in clause c) without tax increment assistance. 3. Finding that the TIF Plan for the District conforms to the general plan for the development or redevelopment of the municipality as a whole. The City Council reviewed the TIF Plan and found that the proposed development is consistent with the City’s Comprehensive Plan and current zoning for the site, and that the TIF Plan conforms to the general development plan of the City. 4. Finding that the TIF Plan for the District will afford maximum opportunity, consistent with the sound needs of the City as a whole, for the development or redevelopment of Redevelopment Project No. 1 by private enterprise. The project to be assisted by the District will result in increased employment in the City and the State of Minnesota, the renovation of substandard properties, increased tax base of the State and add a high-quality development to the City. New Hope Economic Development Authority Automotive Concepts Tax Increment Financing District 16 Appendix D: Redevelopment Qualifications for the District Report of Inspection Procedures and Results for Determining Qualifications of a Tax Increment Financing District as a Redevelopment District Automotive Concepts Redevelopment TIF District New Hope, Minnesota April 2, 2019 Prepared For the City of New Hope Prepared by: LHB, Inc. 701 Washington Avenue North, Suite 200 Minneapolis, Minnesota 55401 LHB Project No. 190152 Automotive Concepts Redevelopment TIF District LHB Project No. 190152 Page 1 of 11 Final Report TABLE OF CONTENTS PART 1 – EXECUTIVE SUMMARY ................................................................................ 2 Purpose of Evaluation ................................................................................ 2 Scope of Work ........................................................................................... 3 Conclusion ................................................................................................. 3 PART 2 – MINNESOTA STATUTE 469.174, SUBDIVISION 10 REQUIREMENTS ....... 3 A. Coverage Test ...................................................................................... 4 B. Condition of Buildings Test ................................................................... 4 C. Distribution of Substandard Buildings ................................................... 5 PART 3 – PROCEDURES FOLLOWED ......................................................................... 6 PART 4 – FINDINGS ...................................................................................................... 6 A. Coverage Test ...................................................................................... 6 B. Condition of Building Test ..................................................................... 8 1. Building Inspection .................................................................... 8 2. Replacement Cost ..................................................................... 8 3. Code Deficiencies ..................................................................... 8 4. System Condition Deficiencies .................................................. 9 C. Distribution of Substandard Structures ............................................... 10 PART 5 - TEAM CREDENTIALS .................................................................................. 11 APPENDIX A Property Condition Assessment Summary Sheet APPENDIX B Building Code, Condition Deficiency and Context Analysis Reports APPENDIX C Building Replacement Cost Reports Code Deficiency Cost Reports Photographs Automotive Concepts Redevelopment TIF District LHB Project No. 190152 Page 2 of 11 Final Report PART 1 – EXECUTIVE SUMMARY PURPOSE OF EVALUATION LHB was hired by the City of New Hope to inspect and evaluate the properties within a Tax Increment Financing Redevelopment District (“TIF District”) proposed to be established by the City. The proposed TIF District is located on Nevada Avenue North, east of the Canadian Pacific Soo Rail Line and north of 27th Avenue North (Diagram 1). The purpose of LHB’s work is to determine whether the proposed TIF District meets the statutory requirements for coverage, and whether one (1) building on two (2) parcels, located within the proposed TIF District, meet the qualifications required for a Redevelopment District. Diagram 1 – Proposed TIF District Automotive Concepts Redevelopment TIF District LHB Project No. 190152 Page 3 of 11 Final Report SCOPE OF WORK The proposed TIF District consists of two (2) parcels with one (1) building. The building was inspected on March 14, 2019. A Building Code and Condition Deficiency report for the building that was inspected is located in Appendix B. CONCLUSION After inspecting and evaluating the properties within the proposed TIF District and applying current statutory criteria for a Redevelopment District under Minnesota Statutes, Section 469.174, Subdivision 10, it is our professional opinion that the proposed TIF District qualifies as a Redevelopment District because: •The proposed TIF District has a coverage calculation of 100 percent which is above the 70 percent requirement. •100 percent of the buildings are structurally substandard which is above the 50 percent requirement. •The substandard buildings are reasonably distributed. The remainder of this report describes our process and findings in detail. PART 2 – MINNESOTA STATUTE 469.174, SUBDIVISION 10 REQUIREMENTS The properties were inspected in accordance with the following requirements under Minnesota Statutes, Section 469.174, Subdivision 10(c), which states: INTERIOR INSPECTION “The municipality may not make such determination [that the building is structurally substandard] without an interior inspection of the property...” EXTERIOR INSPECTION AND OTHER MEANS “An interior inspection of the property is not required, if the municipality finds that (1) the municipality or authority is unable to gain access to the property after using its best efforts to obtain permission from the party that owns or controls the property; and (2) the evidence otherwise supports a reasonable conclusion that the building is structurally substandard.” DOCUMENTATION “Written documentation of the findings and reasons why an interior inspection was not conducted must be made and retained under section 469.175, subdivision 3(1).” QUALIFICATION REQUIREMENTS Minnesota Statutes, Section 469.174, Subdivision 10 (a) (1) requires three tests for occupied parcels: Automotive Concepts Redevelopment TIF District LHB Project No. 190152 Page 4 of 11 Final Report A. COVERAGE TEST …“parcels consisting of 70 percent of the area of the district are occupied by buildings, streets, utilities, or paved or gravel parking lots…” The coverage required by the parcel to be considered occupied is defined under Minnesota Statutes, Section 469.174, Subdivision 10(e), which states: “For purposes of this subdivision, a parcel is not occupied by buildings, streets, utilities, paved or gravel parking lots, or other similar structures unless 15 percent of the area of the parcel contains buildings, streets, utilities, paved or gravel parking lots, or other similar structures.” B. CONDITION OF BUILDINGS TEST Minnesota Statutes, Section 469.174, Subdivision 10(a) states, “…and more than 50 percent of the buildings, not including outbuildings, are structurally substandard to a degree requiring substantial renovation or clearance;” 1. Structurally substandard is defined under Minnesota Statutes, Section 469.174, Subdivision 10(b), which states: “For purposes of this subdivision, ‘structurally substandard’ shall mean containing defects in structural elements or a combination of deficiencies in essential utilities and facilities, light and ventilation, fire protection including adequate egress, layout and condition of interior partitions, or similar factors, which defects or deficiencies are of sufficient total significance to justify substantial renovation or clearance.” a. We do not count energy code deficiencies toward the thresholds required by Minnesota Statutes, Section 469.174, Subdivision 10(b) defined as “structurally substandard”, due to concerns expressed by the State of Minnesota Court of Appeals in the Walser Auto Sales, Inc. vs. City of Richfield case filed November 13, 2001. 2. Buildings are not eligible to be considered structurally substandard unless they meet certain additional criteria, as set forth in Subdivision 10(c) which states: “A building is not structurally substandard if it is in compliance with the building code applicable to new buildings or could be modified to satisfy the building code at a cost of less than 15 percent of the cost of constructing a new structure of the same square footage and type on the site. The municipality may find that a building is not disqualified as structurally substandard under the preceding sentence on the basis of reasonably available evidence, such as the size, type, and age of the building, the average cost of plumbing, electrical, or structural repairs, or other similar reliable evidence.” “Items of evidence that support such a conclusion [that the building is not disqualified] include recent fire or police inspections, on-site property tax appraisals or housing inspections, exterior evidence of deterioration, or other similar reliable evidence.” LHB counts energy code deficiencies toward the 15 percent code threshold required by Minnesota Statutes, Section 469.174, Subdivision 10(c)) for the following reasons: • The Minnesota energy code is one of ten building code areas highlighted by the Minnesota Department of Labor and Industry website where minimum construction standards are required by law. Automotive Concepts Redevelopment TIF District LHB Project No. 190152 Page 5 of 11 Final Report • Chapter 13 of the 2015 Minnesota Building Code states, “Buildings shall be designed and constructed in accordance with the International Energy Conservation Code.” Furthermore, Minnesota Rules, Chapter 1305.0021 Subpart 9 states, “References to the International Energy Conservation Code in this code mean the Minnesota Energy Code…” • Chapter 11 of the 2015 Minnesota Residential Code incorporates Minnesota Rules, Chapters, 1322 and 1323 Minnesota Energy Code. • The Senior Building Code Representative for the Construction Codes and Licensing Division of the Minnesota Department of Labor and Industry confirmed that the Minnesota Energy Code is being enforced throughout the State of Minnesota. • In a January 2002 report to the Minnesota Legislature, the Management Analysis Division of the Minnesota Department of Administration confirmed that the construction cost of new buildings complying with the Minnesota Energy Code is higher than buildings built prior to the enactment of the code. • Proper TIF analysis requires a comparison between the replacement value of a new building built under current code standards with the repairs that would be necessary to bring the existing building up to current code standards. In order for an equal comparison to be made, all applicable code chapters should be applied to both scenarios. Since current construction estimating software automatically applies the construction cost of complying with the Minnesota Energy Code, energy code deficiencies should also be identified in the existing structures. C. DISTRIBUTION OF SUBSTANDARD BUILDINGS Minnesota Statutes, Section 469.174, Subdivision 10, defines a Redevelopment District and requires one or more of the following conditions, “reasonably distributed throughout the district.” (1) “Parcels consisting of 70 percent of the area of the district are occupied by buildings, streets, utilities, paved or gravel parking lots, or other similar structures and more than 50 percent of the buildings, not including outbuildings, are structurally substandard to a degree requiring substantial renovation or clearance; (2) the property consists of vacant, unused, underused, inappropriately used, or infrequently used rail yards, rail storage facilities, or excessive or vacated railroad rights-of-way; (3) tank facilities, or property whose immediately previous use was for tank facilities…” Our interpretation of the distribution requirement is that the substandard buildings must be reasonably distributed throughout the district as compared to the location of all buildings in the district. For example, if all of the buildings in a district are located on one half of the area of the district, with the other half occupied by parking lots (meeting the required 70 percent coverage for the district), we would evaluate the distribution of the substandard buildings compared with only the half of the district where the buildings are located. If all of the buildings in a district are located evenly throughout the entire area of the district, the substandard buildings must be reasonably distributed throughout the entire area of the district. We believe this is consistent with the opinion expressed by the State of Minnesota Court of Appeals in the Walser Auto Sales, Inc. vs. City of Richfield case filed November 13, 2001. Automotive Concepts Redevelopment TIF District LHB Project No. 190152 Page 6 of 11 Final Report PART 3 – PROCEDURES FOLLOWED LHB inspected one (1) building during the day of March 14, 2019. PART 4 – FINDINGS A.COVERAGE TEST 1. The total square foot area of the parcel in the proposed TIF District was obtained from City records, GIS mapping and site verification. 2.The total square foot area of buildings and site improvements on the parcels in the proposed TIF District was obtained from City records, GIS mapping and site verification. 3.The percentage of coverage for each parcel in the proposed TIF District was computed to determine if the 15 percent minimum requirement was met. The total square footage of parcels meeting the 15 percent requirement was divided into the total square footage of the entire district to determine if the 70 percent requirement was met. FINDING: The proposed TIF District met the coverage test under Minnesota Statutes, Section 469.174, Subdivision 10(e), which resulted in parcels consisting of 100 percent of the area of the proposed TIF District being occupied by buildings, streets, utilities, paved or gravel parking lots, or other similar structures (Diagram 2). This exceeds the 70 percent area coverage requirement for the proposed TIF District under Minnesota Statutes, Section 469.174, Subdivision (a) (1). Automotive Concepts Redevelopment TIF District LHB Project No. 190152 Page 7 of 11 Final Report Diagram 2 – Coverage Diagram Shaded area depicts a parcel more than 15 percent occupied by buildings, streets, utilities, paved or gravel parking lots or other similar structures Automotive Concepts Redevelopment TIF District LHB Project No. 190152 Page 8 of 11 Final Report B. CONDITION OF BUILDING TEST 1. BUILDING INSPECTION The first step in the evaluation process is the building inspection. After an initial walk- thru, the inspector makes a judgment whether or not a building “appears” to have enough defects or deficiencies of sufficient total significance to justify substantial renovation or clearance. If it does, the inspector documents with notes and photographs code and non- code deficiencies in the building. 2. REPLACEMENT COST The second step in evaluating a building to determine if it is substandard to a degree requiring substantial renovation or clearance is to determine its replacement cost. This is the cost of constructing a new structure of the same square footage and type on site. Replacement costs were researched using R.S. Means Cost Works square foot models for 2019. A replacement cost was calculated by first establishing building use (office, retail, residential, etc.), building construction type (wood, concrete, masonry, etc.), and building size to obtain the appropriate median replacement cost, which factors in the costs of construction in New Hope, Minnesota. Replacement cost includes labor, materials, and the contractor’s overhead and profit. Replacement costs do not include architectural fees, legal fees or other “soft” costs not directly related to construction activities. Replacement cost for each building is tabulated in Appendix A. 3. CODE DEFICIENCIES The next step in evaluating a building is to determine what code deficiencies exist with respect to such building. Code deficiencies are those conditions for a building which are not in compliance with current building codes applicable to new buildings in the State of Minnesota. Minnesota Statutes, Section 469.174, Subdivision 10(c), specifically provides that a building cannot be considered structurally substandard if its code deficiencies are not at least 15 percent of the replacement cost of the building. As a result, it was necessary to determine the extent of code deficiencies for each building in the proposed TIF District. The evaluation was made by reviewing all available information with respect to such buildings contained in City Building Inspection records and making interior and exterior inspections of the buildings. LHB utilizes the current Minnesota State Building Code as the official code for our evaluations. The Minnesota State Building Code is actually a series of provisional codes written specifically for Minnesota only requirements, adoption of several international codes, and amendments to the adopted international codes. After identifying the code deficiencies in each building, we used R.S. Means Cost Works 2019; Unit and Assembly Costs to determine the cost of correcting the identified deficiencies. We were then able to compare the correction costs with the replacement cost Automotive Concepts Redevelopment TIF District LHB Project No. 190152 Page 9 of 11 Final Report of each building to determine if the costs for correcting code deficiencies meet the required 15 percent threshold. FINDING: One (1) out of one (1) building (100 percent) in the proposed TIF District contained code deficiencies exceeding the 15 percent threshold required by Minnesota Statutes, Section 469.174, Subdivision 10(c). Building Code, Condition Deficiency and Context Analysis reports for the buildings in the proposed TIF District can be found in Appendix B of this report. 4. SYSTEM CONDITION DEFICIENCIES If a building meets the minimum code deficiency threshold under Minnesota Statutes, Section 469.174, Subdivision 10(c), then in order for such building to be “structurally substandard” under Minnesota Statutes, Section 469.174, Subdivision 10(b), the building’s defects or deficiencies should be of sufficient total significance to justify “substantial renovation or clearance.” Based on this definition, LHB re-evaluated each of the buildings that met the code deficiency threshold under Minnesota Statutes, Section 469.174, Subdivision 10(c), to determine if the total deficiencies warranted “substantial renovation or clearance” based on the criteria we outlined above. System condition deficiencies are a measurement of defects or substantial deterioration in site elements, structure, exterior envelope, mechanical and electrical components, fire protection and emergency systems, interior partitions, ceilings, floors and doors. The evaluation of system condition deficiencies was made by reviewing all available information contained in City records, and making interior and exterior inspections of the buildings. LHB only identified system condition deficiencies that were visible upon our inspection of the building or contained in City records. We did not consider the amount of “service life” used up for a particular component unless it was an obvious part of that component’s deficiencies. After identifying the system condition deficiencies in each building, we used our professional judgment to determine if the list of defects or deficiencies is of sufficient total significance to justify “substantial renovation or clearance.” FINDING: In our professional opinion, one (1) out of one (1) building (100 percent) in the proposed TIF District are structurally substandard to a degree requiring substantial renovation or clearance, because of defects in structural elements or a combination of deficiencies in essential utilities and facilities, light and ventilation, fire protection including adequate egress, layout and condition of interior partitions, or similar factors which defects or deficiencies are of sufficient total significance to justify substantial renovation or clearance. This exceeds the 50 percent requirement of Subdivision 10a(1). Automotive Concepts Redevelopment TIF District LHB Project No. 190152 Page 10 of 11 Final Report C. DISTRIBUTION OF SUBSTANDARD STRUCTURES Much of this report has focused on the condition of individual buildings as they relate to requirements identified by Minnesota Statutes, Section 469.174, Subdivision 10. It is also important to look at the distribution of substandard buildings throughout the geographic area of the proposed TIF District (Diagram 3). FINDING: The parcels with substandard buildings are reasonably distributed compared to all parcels that contain buildings. Diagram 3 – Substandard Buildings Shaded green area depicts parcels with buildings. Shaded orange area depicts substandard buildings. Automotive Concepts Redevelopment TIF District LHB Project No. 190152 Page 11 of 11 Final Report PART 5 - TEAM CREDENTIALS Michael A. Fischer, AIA, LEED AP - Project Principal/TIF Analyst Michael has 30 years of experience as project principal, project manager, project designer and project architect on planning, urban design, educational, commercial and governmental projects. He has become an expert on Tax Increment Finance District analysis assisting over 100 cities with strategic planning for TIF Districts. He is an Architectural Principal at LHB and currently leads the Minneapolis office. Michael completed a two-year Bush Fellowship, studying at MIT and Harvard in 1999, earning Masters degrees in City Planning and Real Estate Development from MIT. He has served on more than 50 committees, boards and community task forces, including a term as a City Council President and as Chair of a Metropolitan Planning Organization. Most recently, he served as Chair of the Edina, Minnesota planning commission and is currently a member of the Edina city council. Michael has also managed and designed several award-winning architectural projects, and was one of four architects in the Country to receive the AIA Young Architects Citation in 1997. Philip Waugh – Project Manager/TIF Analyst Philip is a project manager with 13 years of experience in historic preservation, building investigations, material research, and construction methods. He previously worked as a historic preservationist and also served as the preservation specialist at the St. Paul Heritage Preservation Commission. Currently, Phil sits on the Board of Directors for the Preservation Alliance of Minnesota. His current responsibilities include project management of historic preservation projects, performing building condition surveys and analysis, TIF analysis, writing preservation specifications, historic design reviews, writing Historic Preservation Tax Credit applications, preservation planning, and grant writing. Phil Fisher – Inspector For 35 years, Phil Fisher worked in the field of Building Operations in Minnesota including White Bear Lake Area Schools. At the University of Minnesota he earned his Bachelor of Science in Industrial Technology. He is a Certified Playground Safety Inspector, Certified Plant Engineer, and is trained in Minnesota Enterprise Real Properties (MERP) Facility Condition Assessment (FCA). His FCA training was recently applied to the Minnesota Department of Natural Resources Facilities Condition Assessment project involving over 2,000 buildings. M:\19Proj\190152\400 Design\406 Reports\Final Report\190152 New Hope Automotive Concepts TIF Final Report.docx APPENDICES APPENDIX A Property Condition Assessment Summary Sheet APPENDIX B Building Code and Condition Deficiencies Reports APPENDIX C Building Replacement Cost Reports Code Deficiency Cost Reports Photographs APPENDIX A Property Condition Assessment Summary Sheet Au t o m o t i v e C o n c e p t s R e d ev e l o p m e n t T I F D i s t r i c t New Hope, Minnesota Pr o p e r t y C o n d i t i o n A s s e s s m e n t S u m m a r y S h e e t TI F Ma p N o . PI D # P r o p e r t y A d d r e s s Im p r o v e d o r Va c a n t Su r v e y M e t h o d Us e d Si t e A r e a (S . F . ) Co v e r a g e A r e a o f Im p r o v e m e n t s (S . F . ) Co v e r a g e Pe r c e n t o f Im p r o v e m e n t s Co v e r a g e Qu a n t i t y (S . F . ) No . o f Bu i l d i n g s Building Replacement Cost15% of Replacement CostBuilding Code DeficienciesNo. of Buildings Exceeding 15% CriteriaNo. of buildings determined substandard A 20 1 1 8 2 1 3 4 0 0 0 7 2 9 1 9 N e v a d a A v e N I m p r o v e d I n t e r i o r / E x t e r i o r 8 4 , 2 9 9 4 9 ,4 3 4 5 8 . 6 % 8 4 , 2 9 9 1 $ 5 5 5 , 7 1 0 $ 8 3 , 3 5 7 $ 1 9 7 , 0 4 4 1 1 B 20 1 1 8 2 1 3 4 0 0 3 1 N / A I m p r o v e d E x t e r i o r 6 , 7 8 0 6 , 7 8 0 1 0 0 . 0 % 6 , 7 8 0 0 TO T A L S 9 1 , 0 7 9 9 1 , 0 7 9 1 1 1 10 0 . 0 % 100.0% M: \ 1 9 P r o j \ 1 9 0 1 5 2 \ 4 0 0 D e s i g n \ 4 0 6 Re p o r t s \ F i n a l R e p o r t \ [ 1 9 0 1 5 2 N e w H o p e A u t o m o t i v e C o n c e p t s R e d e v e l o p m e n t T I F S u m m a r y S p r e a d s h e e t. x l s x ] P r o p e r t y I n f o 100.0% To t a l C o v e r a g e P e r c e n t : Pe r c e n t o f b u i l d i n g s e x c e e d i n g 1 5 p e r c e n t c o d e d e f i c i e n c y t h r e s hold: Percent of buildings d etermined substandard: Au t o m o t i v e C o n c e p t s R e d e v e l o p m e n t T I F D i s t r i c t LH B P r o j e c t N o . 1 9 0 1 5 2 Pa g e 1 o f 1 Property Condition Assessment Summary Sheet APPENDIX B Building Code, Condition Deficiency and Context Analysis Reports Automotive Concepts Redevelopment TIF District Page 1 of 2 Building Report LHB Project No. 190152 Parcel A – Office Building Automotive Concepts Redevelopment TIF District Building Code, Condition Deficiency and Context Analysis Report Parcel No. & Building Name: Parcel A Office Building Address and Parcel ID: 2919 Nevada Ave N, New Hope, MN 55427 PID 2011821340007 Inspection Date(s) & Time(s): March 14, 2019 1:40 PM Inspection Type: Interior and Exterior Summary of Deficiencies: It is our professional opinion that this building is Substandard because: - Substantial renovation is required to correct Conditions found. - Building Code deficiencies total more than 15% of replacement cost, NOT including energy code deficiencies. Estimated Replacement Cost: $555,710 Estimated Cost to Correct Building Code Deficiencies: $197,044 Percentage of Replacement Cost for Building Code Deficiencies: 35.46% Defects in Structural Elements 1. None observed. Combination of Deficiencies 1. Essential Utilities and Facilities a. There is no code-required accessible route into the building. b. There is no code-required accessible route to all levels of the building. c. There is no code-required accessible restroom. d. There is no code-required drinking fountain. 2. Light and Ventilation a. Electrical service needs to be reconnected to the building. b. The HVAC system does not comply with code. c. Potable water needs to be reconnected to the building. 3. Fire Protection/Adequate Egress a. Interior wood parquet flooring is warped, causing an impediment to emergency egress, which is contrary to code. b. There are no code-compliant smoke detectors. c. There is no code-required emergency lighting. d. There is no code-required emergency notification system. e. There is no code-required building sprinkler system. f. There is no code-required fire proofing in the building. Automotive Concepts Redevelopment TIF District Page 2 of 2 Building Report LHB Project No. 190152 Parcel A – Office Building 4. Layout and Condition of Interior Partitions/Materials a. The basement stairway does not comply with code. b. Interior foundation walls are cracked, allowing for water intrusion, contrary to code. c. Interior ceiling should be scraped and repainted. d. Interior walls should be repainted. e. Interior carpet is stained and damaged and should be replaced. f. There are dead animals present in the closet. g. Basement ceiling tile is missing and should be replaced. h. Mold is growing on the walls in the basement. 5. Exterior Construction a. Roofing material has failed, allowing for water intrusion, contrary to code. b. Windows have failed, allowing for water intrusion, contrary to code. c. Gutters have failed, and should be repaired/replaced. d. Exposed wood surfaces should be repainted. Description of Code Deficiencies 1. A code-required accessible route into the building should be created. 2. A code-required accessible route to all levels should be created. 3. A code-required accessible restroom should be created. 4. A code-required drinking fountain should be installed. 5. A code-compliant HVAC system should be installed. 6. Damaged wood parquet flooring should be replaced to create a code-compliant means for emergency egress. 7. Code-compliant smoke detectors should be installed. 8. Code-required emergency lighting should be installed. 9. Code-required emergency notification system should be installed. 10. Code-required building sprinkler system should be installed. 11. Fire proofing material should be applied within the building per code. 12. Basement stairway should be modified to comply with code. 13. Interior foundation walls should be repaired to prevent water intrusion per code. 14. Roofing material has failed, allowing for water intrusion, contrary to code. 15. Windows should be replaced to prevent water intrusion per code. Overview of Deficiencies According to staff, this commercially zoned building was most recently used as an office for a landscaping company. The building is not code-compliant for accessibility. The building does not have code-required life safety systems installed. The building roof has failed, allowing for water intrusion, contrary to code. Windows have also failed and do not comply with code. The HVAC system does not comply with code. Interior walls and ceiling should be repaired/repainted. Interior flooring is damaged and should be replaced. M:\19Proj\190152\400 Design\406 Reports\Building Reports\2919 Nevada Ave N Building Report.docx APPENDIX C Building Replacement Cost Reports Code Deficiency Cost Reports Photographs Automotive Concepts Redevelopment TIF District Replacement Cost Report Square Foot Cost Estimate Report Date:3/15/2019 2919 Nevada Ave N City of New Hope 2919 Nevada Ave N , New Hope , Minnesota ,  55427 Building Type: Office 1 Story with Vinyl Clapboard / Wood  Frame Location:NEW HOPE, MN Story Count:1 Story Height (L.F.):8 Floor Area (S.F.):2200 Labor Type:OPN Basement Included:Yes  Data Release:Year 2019 Cost Per Square Foot:$252.60  Building Cost:$555,710.06  % of Total Cost Per S.F. Cost 19.24% 42.26 92,978.09 A1010 Standard Foundations 7.72 16,991.41 3.98 8,757.76 3.74 8,233.65 A1030 Slab on Grade 5.73 12,597.90 5.73 12,597.90 A2010 Basement Excavation 3.97 8,730.96 3.97 8,730.96 A2020 Basement Walls 24.84 54,657.82 24.84 54,657.82 23.98% 52.66 115,855.89 B1010 Floor Construction 18.99 41,767.05 8.45 18,590.13 0.45 989.43 5.19 11,418.00 4.90 10,769.49 B1020 Roof Construction 7.46 16,404.08 7.46 16,404.08 B2010 Exterior Walls 13.19 29,027.79 11.59 25,501.08 Cast‐in‐place concrete column, 12" square, tied, 200K load, 12' story height,  142 lbs/LF, 4000PSI Estimate Name: Costs are derived from a building model with basic components. Scope differences and market conditions can cause costs to vary significantly. A Substructure Strip footing, concrete, reinforced, load 11.1 KLF, soil bearing capacity 6 KSF,  12" deep x 24" wide Spread footings, 3000 PSI concrete, load 100K, soil bearing capacity 6 KSF, 4' ‐  6" square x 15" deep Slab on grade, 4" thick, non industrial, reinforced Excavate and fill, 10,000 SF, 8' deep, sand, gravel, or common earth, on site  storage Foundation wall, CIP, 12' wall height, pumped, .444 CY/LF, 21.59 PLF, 12" thick B Shell Wood column, 8" x 8", 20' x 20' bay, 10' unsupported height, 133 BF/MSF, 160  PSF total allowable load Floor, wood joist, 2 x 12 @12" O.C., 1/2" CDX subfloor Fireproofing, gypsum board, fire rated, 2 layer, 1" thick, 14" steel column, 3  hour rating, 22 PLF Wood roof, truss, 4/12 slope, 24" O.C., 30' to 43' span Wood siding, 2"x6" studs 16"OC, insulated wall, 8" plain vinyl siding Automotive Concepts Redevelopment TIF District LHB Project No. 190152 Page 1 of 3 Replacement Cost Report Parcel A - Office Building 1.60 3,526.71 B2020 Exterior Windows 6.20 13,636.52 6.20 13,636.52 B2030 Exterior Doors 4.08 8,982.70 2.13 4,693.31 1.10 2,427.24 0.85 1,862.15 B3010 Roof Coverings 2.74 6,037.75 2.18 4,786.52 0.45 992.12 0.12 259.11 11.70% 25.69 56,516.67 C1010 Partitions 4.35 9,559.56 1.77 3,902.21 1.31 2,875.46 0.77 1,685.35 0.50 1,096.54 C1020 Interior Doors 6.25 13,758.72 6.25 13,758.72 C3010 Wall Finishes 1.58 3,486.99 0.68 1,501.64 0.90 1,985.35 C3020 Floor Finishes 5.26 11,561.40 3.15 6,933.12 0.91 2,006.73 1.19 2,621.55 C3030 Ceiling Finishes 8.25 18,150.00 8.25 18,150.00 45.09% 99.04 217,875.49 D1010 Elevators and Lifts 33.84 74,449.60 33.84 74,449.60 D2010 Plumbing Fixtures 4.32 9,494.16 1.48 3,252.53 0.20 436.98 0.56 1,231.04 0.54 1,196.05 1.22 2,676.33 0.32 701.23 D2020 Domestic Water Distribution 1.71 3,757.10 1.71 3,757.10 D3050 Terminal & Package Units 21.92 48,228.84 Gutters, box, aluminum, .032" thick, 5", enameled finish Insulation, fiberglass batts, 6" thick, R19 Windows, aluminum, awning, insulated glass, 4'‐5" x 5'‐3" Door, aluminum & glass, with transom, narrow stile, double door, hardware,  6'‐0" x 10'‐0" opening Door, aluminum & glass, with transom, bronze finish, hardware, 3'‐0" x 10'‐0"  opening Door, steel 18 gauge, hollow metal, 1 door with frame, no label, 3'‐0" x 7'‐0"  opening Asphalt roofing, strip shingles, inorganic, Class A, 4" slope, 210‐235 lbs/SQ Tile, ceramic natural clay Downspout, aluminum, rectangular, 2" x 3", enameled, .024" thick C Interiors framing,same opposite face, 0 insul Wood partition, 5/8" fire rated gypsum board face, 1/4"sound deadening  gypsum board, 2x4 @ 16" OC framing, same opposite face, sound attenuation  Gypsum board, 1 face only, exterior sheathing, fire resistant, 5/8" Add for the following: taping and finishing Door, single leaf, kd steel frame, hollow metal, commercial quality, flush, 3'‐0"  x 7'‐0" x 1‐3/8" Painting, interior on plaster and drywall, walls & ceilings, roller work, primer &  2 coats Painting, interior on plaster and drywall, walls & ceilings, roller work, primer &  2 coats Carpet tile, nylon, fusion bonded, 18" x 18" or 24" x 24", 35 oz Vinyl, composition tile, maximum Plaster ceilings, 2 coat perlite painted, 3/8" gypsum lath, 1" x 3" wood, 16" OC  furring, wood support D Services Hydraulic, passenger elevator, 3000 lb, 2 floors, 100 FPM Water closet, vitreous china, bowl only with flush valve, wall hung Urinal, vitreous china, wall hung Lavatory w/trim, vanity top, PE on CI, 20" x 18" Service sink w/trim, PE on CI,wall hung w/rim guard, 24" x 20" Bathtub, recessed, PE on CI, mat bottom, 5' long Water cooler, electric, floor mounted, dual height, 14.3 GPH Gas fired water heater, commercial, 100< F rise, 100 MBH input, 91 GPH Automotive Concepts Redevelopment TIF District LHB Project No. 190152 Page 2 of 3 Replacement Cost Report Parcel A - Office Building 21.92 48,228.84 D4010 Sprinklers 3.63 7,975.79 3.63 7,975.79 D4020 Standpipes 1.60 3,516.57 1.60 3,516.57 D5010 Electrical Service/Distribution 16.15 35,540.16 3.36 7,401.88 4.36 9,602.00 8.43 18,536.28 D5020 Lighting and Branch Wiring 8.32 18,297.30 4.99 10,967.97 0.34 758.96 0.62 1,365.41 2.37 5,204.96 D5030 Communications and Security 7.55 16,615.97 1.69 3,717.38 3.11 6,831.03 0.93 2,045.75 1.83 4,021.81 0% 0 0 E1090 Other Equipment 0 0 0% 0 0 0% 0 0 100% $219.65  $483,226.14  15.00% $32.95  $72,483.92  0.00% $0.00  $0.00  0.00% $0.00  $0.00  $252.60  $555,710.06  Wet pipe sprinkler systems, steel, light hazard, 1 floor, 10,000 SF Rooftop, multizone, air conditioner, offices, 10,000 SF, 31.66 ton Internet wiring, 8 data/voice outlets per 1000 S.F. Wet standpipe risers, class III, steel, black, sch 40, 4" diam pipe, 1 floor Overhead service installation, includes breakers, metering, 20' conduit & wire,  3 phase, 4 wire, 120/208 V, 400 A Feeder installation 600 V, including RGS conduit and XHHW wire, 400 A Switchgear installation, incl switchboard, panels & circuit breaker, 120/208 V,  3 phase, 600 A Receptacles incl plate, box, conduit, wire, 16.5 per 1000 SF, 2.0 W per SF, with  transformer Miscellaneous power, 1.2 watts Central air conditioning power, 4 watts Motor installation, three phase, 460 V, 15 HP motor size Telephone wiring for offices & laboratories, 8 jacks/MSF Communication and alarm systems, fire detection, addressable, 25 detectors,  includes outlets, boxes, conduit and wire Fire alarm command center, addressable without voice, excl. wire & conduit Architectural Fees User Fees Total Building Cost E Equipment & Furnishings F Special Construction G Building Sitework SubTotal Contractor Fees (General Conditions,Overhead,Profit) Automotive Concepts Redevelopment TIF District LHB Project No. 190152 Page 3 of 3 Replacement Cost Report Parcel A - Office Building Automotive Concepts Redevelopment TIF District Code Deficiency Cost Report Parcel A - 2919 Nevada Ave N, New Hope, MN 55427 - PID 20.118.21.34.0007 Code Related Cost Items Unit Cost Units Unit Quantity Total Accessibility Items Accessible Routes Create a code required accessible route into building 1,000.00$ Lump 1 1,000.00$ Create a code required accessible route to all levels 33.84$ SF 2200 74,448.00$ Restroom Install a code required accessible restroom 4.00$ SF 2200 8,800.00$ Drinking Fountain Install a code required drinking fountain 0.32$ SF 2200 704.00$ Basement Stairway Modify basement stairway to comply with code 3,500.00$ Lump 1 3,500.00$ Structural Elements Foundation Walls Repair foundation walls to prevent water intrusion per code 2.25$ SF 2200 4,950.00$ Exiting Wood parquet Flooring Replace damaged wood parquet flooring to create a code required unimpeded means for egress.1.19$ SF 2200 2,618.00$ Fire Protection Smoke Detectors Install code compliant smoke detectors 3.11$ SF 2200 6,842.00$ Emergency Lighting Install code required emergency lighting 1.00$ SF 2200 2,200.00$ Emergency Notification System Install code required emergency notification system 0.93$ SF 2200 2,046.00$ Building Sprinkler System Install code required building sprinkler system 4.93$ SF 2200 10,846.00$ Fire Proofing Material Install code required fire proofing material 4.90$ SF 2200 10,780.00$ Exterior Construction Windows Replace failed windows to prevent water intrusion per code 6.20$ SF 2200 13,640.00$ Automotive Concepts Redevelopment TIF District LHB Project No. 190152 Page 1 of 2 Code Deficiency Cost Report Parcel A - Office Building Code Related Cost Items Unit Cost Units Unit Quantity Total Roof Construction Roofing System Remove failed roofing system 0.75$ SF 2200 1,650.00$ Install roofing system to prevent water intrusion per code 2.18$ SF 2200 4,796.00$ Mechanical- Electrical Mechanical Install a code compliant HVAC system 21.92$ SF 2200 48,224.00$ Total Code Improvements 197,044$ Automotive Concepts Redevelopment TIF District LHB Project No. 190152 Page 2 of 2 Code Deficiency Cost Report Parcel A - Office Building Automotive Concepts Redevelopment TIF District Photos: Parcel A - 2919 Nevada Avenue North Page 1 of 5 20190314_130251.jpg 20190314_130254.jpg 20190314_130309.jpg 20190314_130325.jpg 20190314_130335.jpg 20190314_130352.jpg 20190314_130406.jpg 20190314_130417.jpg 20190314_130430.jpg 20190314_130450.jpg 20190314_130513.jpg 20190314_130515.jpg Automotive Concepts Redevelopment TIF District Photos: Parcel A - 2919 Nevada Avenue North Page 2 of 5 20190314_130527.jpg 20190314_130539.jpg 20190314_130559.jpg 20190314_130623.jpg 20190314_130633.jpg 20190314_130641.jpg 20190314_130651.jpg 20190314_130709.jpg 20190314_130843.jpg 20190314_130847.jpg 20190314_130859.jpg 20190314_134516.jpg Automotive Concepts Redevelopment TIF District Photos: Parcel A - 2919 Nevada Avenue North Page 3 of 5 20190314_134518.jpg 20190314_134521.jpg 20190314_134530.jpg 20190314_134534.jpg 20190314_134538.jpg 20190314_134547.jpg 20190314_134555.jpg 20190314_134559.jpg 20190314_134603.jpg 20190314_134608.jpg 20190314_134616.jpg 20190314_134620.jpg Automotive Concepts Redevelopment TIF District Photos: Parcel A - 2919 Nevada Avenue North Page 4 of 5 20190314_134624.jpg 20190314_134627.jpg 20190314_134634.jpg 20190314_134643.jpg 20190314_134649.jpg 20190314_134700.jpg 20190314_134710.jpg 20190314_134714.jpg 20190314_134754.jpg 20190314_134757.jpg 20190314_134812.jpg 20190314_134818.jpg Automotive Concepts Redevelopment TIF District Photos: Parcel A - 2919 Nevada Avenue North Page 5 of 5 20190314_134822.jpg 20190314_134842.jpg 20190314_134852.jpg 20190314_134919.jpg 20190314_134923.jpg 20190314_134938.jpg 20190314_135014.jpg 20190314_135030.jpg