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EDA 12/09/02OFFICIAL FILE COPY CITY OF NEW HOPE EDA MEETING City Hall, 4401 Xylon Avenue North Monday, December 9, 2002 President W. Peter Enck Commissioner Sharon Cassen Commissioner Don Collier Commissioner Mary Gwin-Lenth Commissioner Pat LaVine Norby 1. Call to Order 2. Roll Call 3. Approval of Regular Meeting Minutes of November 12, 2002 Discussion Regarding Request by Collyard Group/Waldorf-Nevens, Inc. for City Assistance for Potential Redevelopment at Ware Manufacturing Property, 4300 Quebec Avenue North Resolution Approving Initial Agreement Between the Minneapolis Public Housing Authority and the New Hope Economic Development Authority for the PPL/Bass Lake Road Apartments Project at 7610 Bass Lake Road (Improvement Project No. 707) Resolution Approving Cooperation Agreement Between the Minneapolis Public Housing Authority, the New Hope Economic Development Authority and the City of New Hope for the PPL/Bass Lake Road Apartments Project at 7610 Bass Lake Road (Improvement Project No. 707) 7. Adjournment CITY OF NEW HOPE 4401 XYLON AVENUE NORTH NEW HOPE, MINNESOTA 55428 Approved EDA Minutes Regular Meeting November 12, 2002 City Hall CALL TO ORDER ROLL CALL APPROVE MINUTES IMP. PROJECT 728 Item 4 New Hope EDA Page 1 President Enck called the meeting of the Economic Development Authority to order at 8:31 p.m. Present: W. Peter Enck, President Sharon Cassen, Commissioner Don Collier, Commissioner Mary Gwin-Lenth, Commissioner Absent: Pat LaVine Norby, Commissioner Motion was made by Commissioner Collier, seconded by Commissioner Cassen, to approve the Regular Meeting Minutes of October 28, 2002. Voting in favor: Enck, Cassen, Collier, Gwin-Lenth; Voting Against: None; Absent: Norby; Abstained: None. Motion carried. President Enck introduced for discussion Item 4, Resolution Authorizing the Acquisition of Certain Property within the City of New Hope for the Purpose of Redevelopment (Improvement Project No. 728). Mr. Kirk McDonald, Director of Community Development, stated before the EDA are two resolutions: one resolution authorizes the acquisition of property for redevelopment and one resolution approving a contract for private redevelopment between the EDA and Navarre Corporation/New Hope, LLC. He briefly reviewed the initial project that was proceeding until two months ago when bids came in too high for construction of the trucking facility at 9200 49t~ Avenue. Mr. McDonald stated the EDA's previous direction to staff was to continue to work with both Navarre Corporation on their project and with Ahrens Trucking for an alternate site. Mr. McDonald reported that Navarre Corporation needs to be in their new building near the end of year 2003. In order to facilitate spring construction activities, the utilities need to be in place by February. This would require the relocation of Ahrens Trucking to another property on a temporary basis until a permanent location is obtained. Mr. Jim Casserly, Krass Monroe, was recognized. He reported that the resolutions were prepared with the assistance of the city attorney. The second resolution describes the development program, the objectives, and previously established goals. The specifics of the plan regarding the property acquisition are outlined near the end of the resolution. Ms. LaDonna Ahrens, Ahrens Trucking, was recognized. She requested the EDA to use their authority to ensure that the final resolution of the Navarre and Ahrens situation does not result in the economic hardship nor the financial demise of Ahrens Trucking. She expressed the company's willingness to relocate but must be fairly compensated so that they won't be put out of business. She emphasized that the location is an integral factor for the success. Ms. Ahrens reported on the difficulty of finding a comparable site at an affordable price. In conclusion, Ms. November 12, 2002 Ahrens conveyed that Ahrens Trucking needs "replacement value" of their property in order to survive the loss of their property. At President Enck's request, Ms. Ahrens explained her disappointment regarding the negotiation process with Navarre Corporation and the abrupt termination of negotiations. Mr. Robert Glasgow, representing Navarre Corporation, was recognized. He disputed some of the sequence of events as reported by Ms. Ahrens. He noted Ahrens Trucking requested a larger facility than their present building as a relocation incentive. The construction cost was $740,000 but Ahrens did not want to exceed $700,000. Weather conditions increased the contract price and the project went from $65,000 overage to $200,000 overage. Mr. Glasgow noted negotiation efforts with Ahrens Trucking have taken place during the past two years, and Navarre had hoped to reach a mutual settlement. He stated Navarre Corporation is anxious to obtain approval to move forward. He noted a construction deadline of September 1, 2003. He pointed out that in addition to the $340,000 purchase price offer for Ahrens Trucking property, Navarre has incurred $80,000 in related negotiation expenses. President Enck inquired whether Navarre Corporation is agreeable to all the terms of the contract. Mr. Glasgow responded affmnatively. Mr. Steve Sondrall, City Attorney, stated if the city proceeds with condemnation of the 7600 49t~ Avenue property, the city is required to pay fair market value and relocation costs. The city would be reimbursed for these expenses by Navarre Corporation. Discussion ensued regarding a property appraisal of the Ahrens Trucking property. Mr. Sondrall, City Attorney, commented on the estimated expense of $5,000 for an appraisal and that an appraisal did not seem necessary since negotiations were proceeding well. He also commented that the offer on the table exceeded the property's market value. The EDA was advised that the property's taxable market value is $160,000 and the offer by Navarre Corporation was originally $300,000 and later increased to $340,000. Ab_tens Trucking is requesting $400,000 for the property. Councilmember Cassen empathized with Ahrens Trucking. However, she pointed out the difficulties presented to businesses that want to expand in fully developed cities. She referred to the city's comprehensive plan that promotes the retention and expansion of industrial/office/warehouse businesses in the City to promote employment opportunities and expand the tax base. She also commented that the Navarre Corporation's redevelopment of 7600 49t~ Avenue North would be the highest and best use of the property. Councilmember Cassen suggested locating a temporary site for Ahrens tracking so that a spring construction date could be considered for their new facility. Councilmember Gwin-Lenth expressed disappointment that the two parties were unable to reach a settlement. She suggested taking steps to hold options open for Ahrens Trucking. President Enck advised that the city-owned property at 9200 492 Avenue is still an option for Ahrens Trucking. He explained that the change is that Navarre Corporation is no longer a part of the 9200 49t~ Avenue project. He joined staff and the other EDA members in advocating that Ahrens Trucking remain in the City. New Hope EDA Page 2 November 12, 2002 EDA RESOLUTION 02-10 Item 4 IMP. PROJECT 728 Item 5 EDA RESOLUTION 02-11 Item 5 ADJOURNMENT Mr. Don Ahrens, Ahrens Trucking, was recognized. He contended that even with the offer of $340,000 there are too many variables. He expressed the need for a specific timeline. He noted the difficulty and time-consuming process to locate an acceptable replacement property. Mr. Jim Casserly indicated an eminent domain proceeding would take three to four months. He noted it is in everyone's best interests to sell/purchase the property on a voluntary basis. Mr. Casserly briefly reported on tax implications of condemnation proceeding awards. It was noted that Commissioner Collier is refraining from participating in the discussion, as he is a member of an investment club that owns Navarre stock. President Enck introduced the following resolution and moved its adoption "RESOLUTION AUTHORIZING THE ACQUISITION OF CERTAIN PROPERTY WITHIN TIlE CITY OF NEW HOPE FOR THE PURPOSE OF REDEVELOPMENT (IMPROVEMENT PROJECT NO. 728)". The motion for the adoption of the foregoing resolution was seconded by Commissioner Cassen, and upon vote being taken thereon, the following voted in favor thereofi Enck, Cassen, Gwin-Lenth, and the following voted against the same: None; Abstained: Collier; Absent: Norby; whereupon the resolution was declared duly passed and adopted, signed by the president which was attested to by the executive director. President Enck introduced for discussion Item 5, Resolution Authorizing Execution and Delivery of a Contract for Private Redevelopment, by and Between the New Hope Economic Development Authority and New Hope, LLC (Improvement Project No. 728). President Enck introduced the following resolution and moved its adoption "RESOLUTION AUTHORIZING EXECUTION AND DELIVERY OF A CONTRACT FOR PRIVATE REDEVELOPMENT, BY AND BETWEEN THE NEW HOPE ECONOMIC DEVELOPMENT AUTHORITY AND NEW HOPE, LLC (IMPROVEMENT PROJECT NO. 728)". The motion for the adoption of the foregoing resolution was seconded by Commissioner Cassen, and upon vote being taken thereon, the following voted in favor thereof: Enck, Cassen, Gwin-Lenth, and the following voted against the same: None; Abstained: Collier; Absent: Norby; whereupon the resolution was declared duly passed and adopted, signed by the president which was attested to by the executive director. Motion was made by Commissioner Collier, seconded by Commissioner Cassen, to adjourn the meeting. All present voted in favor. Motion carried. The New Hope EDA adjourned at 9:30 p.n~ Respectfully submitted, Valerie Leone City Clerk New Hope EDA Page 3 November 12, 2002 ED~ ACk, os Originating Department Approved for Agenda Agenda Section Community Development ' ~ 12-9-02 EDA / Item No. By: By: : 4 DISCUSSION REGARDING REQUEST' BY COLLYARD GROUPANALDORF-NEVENS, INC. FOR CITY ,ASSISTANCE FOR POTENTIAL REDEVELOPMENT AT WARE MANUFACTURING PROPERTY, 4300 QUEBEC AVENUE NORTH REQUESTED ACTION Staff requests that the Economic Development Authority discuss the attached request by the Collyard Group, who is working with Waldorf-Nevens, for possible city financial assistance for the potential renovation of the Ware Manufacturing building at 4300 Quebec Avenue North. Staff recommends authorization for staff to meet with Collyard Group and Waldorf-Nevens and the financial consultant to conduct a preliminary analysis of the financial implications of the project and options available to assist this business. POLICY/PAST PRACTICE When city staff receives requests for financial assistance, they are submitted to the EDA for consideration. In the past, the City has assisted a number of businesses with expansion, renovation and redevelopment projects using a variety of financing tools. BACKGROUND Ware Manufacturing has made announcements that it is closing its facility in New Hope and building a new facility in South Dakota and the property has been for sale for the past six months. Staff is disappointed to see Ware Manufacturing leave the City, and the City assisted Ware in the past with Industrial Development Revenue Bonds (IDRBs) for equipment/machinery purchases. Staff has been contacted by and conducted a meeting with the Collyard Group, representing Waldorf-Nevens, Inc., regarding its potential interest in acquiring and renovating the building. Staff requested that they provide a background letter stating their intentions and request and stated that the information would be presented to the EDA for discussion. The Collyard Group has submitted the attached correspondence, which includes the following background data and request: · Waldorf-Nevens, Inc. wishes to formally declare its interest in the City of New Hope and requests the New Hope City Council, staff and financial consultant to work with Waldorf-Nevens in determining what (cont.) MOTION BY SECOND BY Request for Action Page 2 12-9-02 alternatives the City of New Hope has to provide for: tax increment financing, improvement grants, city backed Iow interest improvement loans, tax rebates and/or other financial assistance to facilitate Waldorf- Nevens in redeveloping 4300 Quebec Avenue North, known as the Ware building (and establishing a new laundry plant). Waldorf-Nevens, Inc. is the result of the merging of the Nevens Company established in 1895 in Minneapolis and the Waldorf Cleaning Company, which opened for business in 1945 in northeast Minneapolis. Presently, Waldorf-Nevens has grown into four retail stores, with the market's largest home/office delivery service (nine routes) and approximately 60 full and part-time employees of diverse origins and varied skilled positions. At an annual revenue of approximately $4 million, this fast growing company is in need of establishing a proficient laundry plant that will be its flagship facility servicing personal, institutional, hospitality, restaurant and health care clients (2 major hospitals). This new facility must look as good as the results it produces. Therefore, exterior beautification as well as interior functional renovation will be required of the property we have selected as our redevelopment site. Waldorf-Nevens is recognized as one of Minnesota's finest laundry and dry cleaning companies. We approach the City of New Hope for assistance in improving the property at 4300 Quebec Avenue North. This building will need considerable improvement to accommodate the creation of 50 new jobs, the world's finest laundry technology and a new upscale facade. We kindly request the City of New Hope to consider providing $1 million to $1.8 million of financial assistance to redevelop this location. Waldorf-Nevens has engaged the Collyard Group, LLC to assist them in a comprehensive search and analysis of its real estate needs. Consequently, on behalf of Waldorf-Nevens we have performed various studies and consulted with design/engineering firms specifically acquainted with Waldorf-Nevens physical requirements to conclude that the Ware building, within the City of New Hope, is a possible site for our client. We ask the City of New Hope to indicate the approximate level of financial assistance the City may be able to offer Waldorf-Nevens for the redevelopment of 4300 Quebec Avenue North. Please accept our invitation to visit our current facility in Edina, meet the Zahhos Management Team and join us to discuss our vision for the development of a first class facility in New Hope. RECOMMENDATION Staff recommends that the EDA authorize staff to coordinate with the company and financial consultant and contact the Minnesota Department of Trade and Economic Development to explore options for potential city financial assistance. FUNDING Funding for the analysis could be paid for with EDA funds or incorporated into project costs, if the development proceeds. Staff recommends that if the EDA is interested in pursuing this request, the applicant provide a deposit to assist with consultant costs. ATrACHMENTS 12/2 Collyard Group Correspondence · Newspaper Article · Map of Property FROM :COLLYARD GROUP LLC FAX NO. :952-593-0073 D~¢. 04 2002 12:42PM P2 COLLYARD GROUP, (;O~MI';R¢'.IAI. RI!Al. I~;'l'~l'l.~ l)livr.].ol,~l!N r PILe n:~-~'T'Y M.~'.. I-[.%"I'REPBI!N ~1' HAl VENr'UKF,% Dec, eml~r 2, 2002 Kirk McDonald Director of Community Development City of New Hope 4401 Xylon Avenue North New Hope, MN :5:5428 Re: Waldorf-Nevens Production Facility Dear Kirk, I apprecHte ~he time you and Chuck Tatro spent wi~h me discussing my Clot's interest of establishing a n~v laundry plant within the City of New Hope. It is at this time that Waldorf-Nevens, Inc., wishes to formally declare it's interest in the City of New Hope, and kindly requests the New Hope City Council, Staff and financial consultant to work with Waldoff-Nevens in cletemfining what alternatives the City of New Hope has to provide for; Tax Increment Financing, Improvement Grants, City backed low interest improvement bans, tax rebates and/or other financial assistance to facilitatc Waldoff-Nevms in redeveloping 4300 Quebec Avenue North, known as the Warc Building. Waldoff-Ncvens, Inc., is actually the result of the merging of the Nevcns Company established in 1S95 in Minneapolis and the Waldorf Cleaning Company, which opened for business in 1945 in Northeast Minneapolis by George Zahhos its foundcr and Chief Executive Officer. Currently, ~3eorge's son, John Zahhns, is President of the firm, but George is still very active in assisting John with maintaining the Company's reputation for impeccable care, and personalized customer service. Thc Zahhos family has equipped its currcnt plant in Edins, with the world's fincst tcchnology in order to achievc consistent pristine quality in an environmentally .~d'e and deliberate manner. Presently, Waldorf-Nevcns has grown into 4 retail stores, with the markets largest homedoflice delivery service (nine routes) mad approximately sixty (60) full and part time employees of divcrsc origins and varied skilled positions. At an annual revenue of approximately $4 Million, this fast growing company is in need of cstablishing a proficient laundry plant that will be its flagship facility servicing personal, institutional, hospitality, restaurant and Health Care Clients (2 Major Hospitals). This new facility must look as good as the results it produces. Therefore, exterior beautification as well as interior functional renovation will be required of the property we have selected as our redevclopmcnt site. 1171)- Vi/AYZA'I~ II('~t:T.I~VAItD 7111:' Fax (952) $95-(X)73 FROM :COLLYARD GROUP LLC FAX NO. :952-593-00?3 Dec. 04 2002 12:42PM P3 Waldorf-Nevens is recognized a.s one of Minne~ta's finest laundry and dry cleaning companies. It is the Zahhos' family mission to be the very be. si in th/: Country. With this commitment 'to excellence we approach thc City of New Hope for assistance in improving the property at 4300 Quebec Avenue North. This building will need considerable improvement to accommodate the creation of fii~y (50) new jobs, the World's Finest Laundry Technology and a new upscale la, de. We kindly request the City of New Hope to consider providing $1 Million to $1.$ Million of financial assistance to redevelop this location. Waldorf-Ncvens has engaged the Collyard Group, LLC to assist thom in a comprehensive search and analysis of its real estate needs. Consequently, on behalf of Waldorf-Nevens we havc performed variou.~ studies and consulted with design / engineering flrn~ specifically aOCltmintcd wi'ch Waldorf-Nevens physical requirements to conclude that thc Ware Building, within the City of New Hope, is a possible site for our Client. We ask the City of New Hope to indicate the approximate level of financial assistance flae City may be able to offer Waldorf-Nevens for the redevelopment of 4300 Quebec Avenue North. Please accept our invitation to visit our current facility in Edina, meet the Zehhos Management Team and join us to discuss our vision for the dcvclopmcn~ of a first class facility in New Hope. Kindly contact our office to .~hedule a time that would be convenient for the City of New Hope to meet. Pie, mc call if you havc any questions, comn~.'nts, or to confwm that City Staff wi!! reque, st thc City Council to consider our request for financial assistance during their December 9TM meeting. Sincerely Gary A. CoHyard Cc: John Zahhos, President & C.E.O., WaldorfNcvens FRIDAY, NOVEMBER 22 ° 2002 REGIONAL NEWS New Hope manufacturer moving to S.D. LENNOX, S.D. -- A Minne- sota manufacturing company plans to move to South Dakota next spring and open a plant that is expected to employ 125 people within three years. Ware Manufacturing Inc., New Hope, intends to begin operations at the Lennox in- dustrial park byluly 1. An official transfer of land was completed Wednesday, ending more than eight months of discussions and planning between Ware and the Lennox Area Development Corp., the Lincoln County Eco- nomic Development Associa- tion and the Governor's Office of Economic Development. Ware forms and shapes metal for a number of compa- nies; for example, it makes lawn-mower pans for Tom. Ware President Dave Rob- ertson said the company looked at several places in four states before deciding on Len- nox. South Dakota's amactive business climate was a factor in the decision. The company employs 56 people at its New Hope plant but hopes to more than double its staff within three years. Some employees will relocate to Lennox, which is about 15 miles south of Sioux Falls, but Robertson said he expects most of the jobs will be filled by new employees. Ware will move into a 68,000-square-foot building worth $2.4 ion. Peska Con- struction of Sioux Fails will own the property and lease it to Ware. 47 1 AVE 4656 4657 4646 4649 4640 4641 4652 ~ 4624 4625 4616 4617 4608 4609 4600 4601 4686 4657 4648 4649 4640 4641 4652 4633 4624 ,4625 4616 4617 48O8 4609 4800 4801 451/2 AVE N ~ J 7801~ 4224 4220 4210 )AVEN 4215 4211 4751 4401 4501 7600 473O 470O 46,]0 4~01 4.555 4557 4549 ,4,541 4525 4517 45O9 4501 --4752 4733 4724 4725 4716 4717 4708 4709 4700 4701 4656 ,14157 4648 4648 4652 4841 4624 4633 4616 4625 4.617 Z 4525 4524 4516 4517 45O8 45O9 45O0 4501 ~4225 ~ 72~ ~ 7240 4215 4216 4.7TH A' 46TH AVE 7140 4-5TH Ilmallll~ I1~11 FRED SIMS PARK 45RD AVE N 42ND AVE N EDA REQUEST FOR ACTION Originating Department Approved for Agenda Agenda Section Community Development ' ..,,, 12-9-02 EDA By: Ken Doresky, Community // /~ Item No. Development Specialist By: / ..-' RESOLUTION APPROVING INITIAL AGREEMENT BETWEEN THE MINNEAPOLIS PUBLIC HOUSING AUTHORITY AND THE NEW HOPE ECONOMIC DEVELOPMENT AUTHORITY FOR THE PPI/BASS LAK5 ROAD APARTMENTS PROJECT AT 7610 BASS LAKE ROAD (IMPROVEMENT PROJECT NO. 707) ACTION REQUESTED Staff recommends that the EDA approve the attached resolution approving the Initial Agreement between the Minneapolis Public Housing Authority and New Hope Economic Development Authority for the PPL/Bass Lake Road Apartments project at 7610 Bass Lake Road. POLICY/PAST PRACTICF City goal #2 is to pursue the maintenance and redevelopment of commercial and residential properties within the City. The City Council has been addressing the residential portion of this goal through the City's many housing activities, including partnering with different agencies and organizations on housing projects. In the past, the City has been requested to approve similar agreements in multi-partner redevelopment projects. As the EDA is aware, projects of this size require a variety of funding partners and usually require the expertise of an experienced development agency, such as PPL. Often times, other jurisdictions and agencies approve funding, contingent upon the City's consent and project participation. BACKGROUND Staff is requesting EDA approval of the attached resolution prepared by the City Attorney approving the Initial Agreement with the Minneapolis Public Housing Authority for the PPL rehabilitation project at 7610 Bass Lake Road (11 unit rehabilitation). Please see the following' comments offered by the City Attorney regarding the requested action: "The Initial Agreement basically indicates the EDA is willing to participate with the MPHA and PPL in the proposal process to HUD for funding of the MHOP units. It also requires the EDA to enter into a Housing Development Agreement with the MPHA and PPL that will, among other things, establish design specifications ~or the units, confirm amenities in and around the development and require PPL to execute a Regulatory and Operating Agreement and provide Declaration of Restrictive Covenants relating to the operation of the units. MOTION BY '~/-~r SECOND BY Request for Action Page 2 12-9-02 The main responsibility of the EDA under the Initial Agreement will be the maintenance of an applicant waiting list and the administration of grievance procedures for the MHOP units. As you know, these lists and procedures have or are being developed by the Metropolitan Council. The EDA's responsibility for these issues can be satisfied by delegation to the Met Council, as we did in the 1998 project with PPL." On May 13, 2002, the EDA approved a redevelopment and loan agreement with PPL for partial funding and participating in 7610 Bass Lake Road Redevelopment Project. Staff recommends approval of this resolution. FUNDING The total cost of this project is approximately $1.32 million. The financing is a combination of a traditional bank mortgage, investments from the City of New Hope and Hennepin County HOME and AHIF funds. Four affordable units will be paid for by the Metropolitan Housing Opportunities Program (MHOP), which was created to increase the supply of rental housing outside of the central cities. The City's portion of funding for the project is as follows: · Total loan: $223,000 (30 year 0% interest deferred loan with a balloon payment due June 1, 2032). Sources: o $ 78,000 CDBG, and; o $145,000 EDA. At the November 11, 2001 Council work session, the Council elected to fund the project in this manner. Included in the total amount is $5,000 to be used match funding for playground equipment. At that time, PPL ensured the Council that $5,000 could be raised to match the City's contribution. Staff has made it clear to PPL and the NCRC that the amount of EDA funding for this project is firm and will not increase. ATTACHMENTS · Resolution · City Attorney Correspondence · Location Map · Initial Agreement 12/04/2002 15:43 FAX 765 493 5193 JENSEN & $0NDRALL. P.A. ~ CNH-CH ~0o4/uo5 CITY OF NEW HOPE EDA RESOLUTION NO. 02 - RESOLUTION APPROVING INITIAL AGIII~.gMENT BETWEEN ~ MINNEAPOLIS PUBLIC HOUSING AUTHORITY AND THE NEW HOPE ECONOMIC DEVELOPMENT AUTHORITY FOR THE, PPL/BASS LAKE APARTMENTS PROJECT AT 7610 BASS LAKE ROAD BE IT RESOLVED by the Economic Development Authority of the Civj of New Hope as follows: WHEREAS, the New Hope Economic Development Authority (EDA) desires to cooperate with Project fer Pride in Living, Inc. (PPL) and Bass Lake Road Apartments LLC, on the redevelopment of an apartment complex located at 7610 Bass Lake Road; a,d WHEREAS, a Cooperation Agreement will be entered into between the City of New Hope (City), the EDA and the Minneapolis Public Housing Authority (MPHA) which will permit PPL, on behalf of Bass Lak~ Road Apartments LLC, to obtain funding from the MHOP program for said project; and WHEREAS, the Cooperation Agreement states that thc City will not assess real estate taxes against the four (4) MHOP units within the development for the defined exemption period and that in lieu ol' real estate taxes, the Owner will pay the City of New Hope or the EDA the PILOT (payment in lieu of taxes); and WHEREAS, an Initial Agreement between the EDA and the MPHA is now also necessary to permit PPL, on behalf of Bass Lake Road Apartments LLC, to obtain funding from the MHOP program for sa/d project; and WHEREAS, the Initial Agreement basicany defines the relationship of the MPHA and the EDA with respect to the planning, construction, ownership and operation of the MHOP units; and WHER~.4~S, the Initial Agreement further indicates the MPHA and the EDA will cooperate to submit a proposal to HUD for development funds, the amount still to be determined, to assist in the development, constn~ction and operation of three (3) replacement and one (1) incentive MHOP units of housing; and WI-I~.REAS, the Initial Agreement will require the EDA, the MPHA ~nrl PPL, on behalf of Bass Lake Road Apartments, LLC, to enter into a Housing Development Agreement yet to be prepared which will establish the design specificatiom for the units, conf~'m amenities in and around the development, establish a float system for the MHOP units within 1~/04/2002 15:4~ FA~ 763 493 ~lg3 JENSEN & SONDRALL, P.A. ~ CN~-CH ~005zoub the development rather ,~n specify specific units, and requi_~ PPL, on behalf of the Bass Lak~ Road AparUmmts, LLC, to ;execute a R~gulamry and Operating Agree, m~nt and provide a Declaration of Restrictive Covenants relating to the operation of tho dcvelopmem; and WHEREAS, thc ED'A will be required to maintain a Waiting List and ~_dmlnis~er a Grievance Procedure for those people applying to occupy and occupying the MHOP un/ts. However, this EDA responsibility may be satisfied through a subcontract with the Metropolitan Council. NOW, THE~~, BE IT RESOLVED by the Economic Development Authority of the City of New Hope Th_'~t the Initial Agreement is approved and that the President and Executive Director are authorized to execute the Initial Agreement on behalf of the Economic Development Authority of th~ City of New Hope. Further, that the Executive Director take all necessa-w steps to subcon~act with the Metropolitan Council to assume responsibility to maintai~ the Walt/ag List and administer the Grievance Procedure. Adopted by the Economic'Development Authority of the City of New Hope, Henna'pin County, Minnesota this 9'" d/y of December, 2002. Attest; Daniel I. Donahue, Executive Director p:xAantm'y~C, ah R,mludm~\Cl~4~9.1ll6f~00~*UDA l~m Ai~mvi~ ~i~ AgtO~c W. Peter Brick, President 2 12/04/2002 15:42 FAX 763 493 5193 JENSEN & S0~RALL. P.A. ~ CNH-CH ~002/oo5 OF COUNn~L l.OV.~s Q, BP. YNF. STAO JENSEN & SONDRALL, P.A. Attorneys At Lam 8S2S I~.DINBROOK CROSSING, STE. 201 BROOKLYN PAR~ MINNESOT,*, SS443-1968 TF&EPHONE (763) 424-8811 · TELEFAX (763) 493-5] 93 e-mail Inw(~jensen-sondrall.¢om Dec~nber 4, 2002 VIA FACSIMILE TO (763) 531-5136 AND BY REG~ U.S. MAIL Ken Doreslcy Commutfity Development Special/s: City of New Hope 4401 Xylon Avenue North New Hope, MN 55428 Re: MPHA Initial Agreement relating to PPL/Bass Lake Apartments Hous/ag Project Our File No.: 99.11166 Dear Ken: Please find enclosed a proposed FDA Resolution approving the Tnitial Agreement required by the Minneapolis Public Housing Authority ia connection with the PPL.Bass Lake Aparlxne~ MHOP hottsiag project. Also enclosed is a copy of the draft Initial Agreement for consideration by the EDA. along with the enclosed Resolution, at the December 9, 2002 meeting. The Initial Agreement basically indicates the EDA is willing to participate with the MPHA m~d PPL in thc proposal process to HUD for funding of the MHOP uni~. It also r~quir~s the E/DA to ~nter into a Housing Development Agreement with the MPHA and PPL that will, amozlg other rhlngS, establish design specifications for the ullits, confiral amenkies in and around the development and require PPL to execute a Regulatory and Operating Agreement and provide Declaration of R~strictive Covcnants relating to the o~ration of the units. The main responsibility of the EDA undm' rite Initial Agreed:ut will be the maintenance of an applicant wa/ting 1k~t and thc administration of grievance procedures for the MI-IOP unks. As you know, these lists and procedures have or are being developed by the Metropolit~an Council. The EDA's responsibility for these issues can be satisfied by delegation to the Met Council, as we did in the 1998 project with PPL. 12/04/2~02 15:42 FA~ 763 493 5193 JENSEN & SONDRALL, P.A. ~ CNh-Ch ~o0~/uuo December 4, 2002 Page 2 If you have any questions or comments regarding thc Initial Agrt~cmcat or th,~ enclosed Resolution, plea.~e do not hesitate w contact mc. Very truly yours, Steven A. Sondrall, City Attorney, City of New Hope JENSON & SONDRALL, P.A. sas~i~asca*4oadrall.com After Hours Ext~a~ioa #147 Ellclosttres Dan Donahue (w/eat.) Kirk McDonald (w/fmc.) Valerie Leone (w/eno.) p:xAuotaey~SAS~I.~nICNH99.11116-~/-gea Lit.doc 5716 552,D 7621 7101 j ~ ~ ~ ~ CHURCH '~' AVE N PARK ~< ST RAPHAEL DR. II1~111 7201 11/26/02 INITIAL AGREEMENT THIS AGREEMENT, made this day of , 2002 by and between the Minneapolis Public Housing Authority in and for the City of Minneapolis, a public body corporate and politic (the "MPHA") and the Economic Development Authority in and for the City of New Hope, a public body corporate and politic (the "EDA") is entered into pursuant to Minnesota Statutes, § 471.59 and § 469.012, Subds. 1(11) and 3. WHEREAS, the MPHA has entered into an Annual Contributions Contract ("ACC") with the United States Department of Housing and Urban Development ("HUD") for funding the capital and operating costs of low rent public housing units and projects throughout the Minneapolis-St. Paul metropolitan area; and WHEREAS, the MPHA has established the Metropolitan Housing Opportunities Program ("MHOP") pursuant to which it will cooperate with suburban counties and municipalities in the construction and operation of qualified housing units (the "MHOP Units"); and WHEREAS, Project for Pride in Living, Inc., a Minnesota nonprofit corporation, on behalf of Bass Lake Apartments LLC (the "Owner") has applied to the MPHA to locate four (4) MHOP Units within its development of an 11-unit multifamily housing project to be known as Bass Lake Apartments (the "Development") to be located in the City of New Hope (the "City"); and WHEREAS, the MPHA, the EDA and the City have agreed to cooperate in the location of four (4) MHOP Units in the Development; and WHEREAS, the purpose of this Agreement is to define the relationship of the MPHA and EDA, with respect to the planning, construction, ownership and operation of the MHOP Units. NOW, THEREFORE, it is agreed by the parties hereto as follows: PROPOSAL. The parties will jointly prepare and submit to HUD a proposal for development funds in the approximate amount of $505,000 (including administration funds) and ongoing operating subsidy under a MPHA ACC for the rehabilitation, construction and operation of 3 replacement units and 1 incentive unit of MHOP housing. All required Development information, including financial pro formas and design and construction documents, will be gathered and assembled by the EDA and delivered to the MPHA. C:[WINDOW S\TEMP~NITIAL. DOC 1 INITIAL AGREEMENT II. Bo Final document preparation, including initial operating budgets, and conformity with federal regulations and HUD requirements will be the responsibility of the MPHA. Co The MPHA shall be responsible for administering the processing of the Proposal and obtaining its approval by HUD. The EDA shall be responsible for all liaison with the Metropolitan Council and the Minnesota Housing Finance Agency ("MHFA") with respect to all other funding effecting the Development. Eo The EDA will provide to the MPHA a copy of the EDA's Equal Opportunity Housing Plan and the MPHA will provide the EDA with a copy of the current MPHA plan. The parties will make reasonable efforts to coordinate the substance and implementation of these plans in the development and operation of the MHOP Units. Fo The MPHA will monitor the application of federal Davis-Bacon wage requirements which shall apply to the Development provided that the Housing Development Agreement between and among the EDA, MPHA and the Owner shall require the Owner and construction contractors to provide the MPHA such information as it may reasonably require in order to meet its obligation hereunder. Go Upon completion of MHOP Units, the MPHA may, without further action by the EDA, assign all documents related thereto to the Metropolitan Council for ongoing administration of the operating subsidy and grievance procedures as well as management of the waiting lists (the "Assignment and Reformulation"). In that event, MHOP Units shall be removed fi.om the MPHA ACC and added to the ACC of the Metropolitan Council (the "Metro ACC"). Subsequent to the Assignment and Reformulation: All of the duties of the MPHA described herein that are yet to be performed shall be performed by the Metropolitan Council; o All of the rights of the MPHA described herein shall be rights of the Metropolitan Council; and The Operating Subsidy described in Section VII will be determined or re- determined in accordance with the Metro ACC and based upon the Metropolitan Council Fiscal Year. DEVELOPMENT. The MPHA and the EDA shall enter into a Housing Development Agreement with the Owner which will: C:\WINDOW~TEMPLINITIAL. DOC 2 n,~n~ AGREEMENT Establish the design and construction specifications of the four (4) MHOP Units as four (4) two-bedroom units; B. Confirm the amenities to be provided within and around the Development; Provide that the level of MHOP funding for the Development will equal certified construction costs (pro rata based on bedroom size but not to exceed allowable total development costs established by HUD); Do Provide that the operating subsidy reserve fund be drawn upon in the event operating subsidies paid by the MPHA are inadequate to pay the difference between MHOP Unit income and expenses, as defined below; Provide for the draw-down of public housing development funds on a pro rata basis with other Development funding sources; Establish a system by which the MHOP units within the Development will not be physically identified, but rather will "float" throughout the Development depending upon vacancies and availability; Identify the system for construction inspections, cost certifications and development audits; Ho Require execution by the Owner of the Regulatory and Operating Agreement and a Declaration of Restrictive Covenants creating a covenant running with the land obligating the Owner of the Development and all successors in interest to maintain and operate the MHOP Units in compliance with all applicable requirements of Section 5 of the United States Housing Act of 1937 and the ACC; and Require the recording of the Declaration of Restrictive Covenants against the Development property. III. MANAGEMENT. The Regulatory and Operating Agreement shall provide that the Owner or its agent (the "Managing Agent") shall manage all the units at the Development, including the MHOP Units and: A. shall comply with all federal law, regulations and policies and the ACC. Bo shall provide the MPHA/EDA and HUD with access to all books and records maintained by the manager or managers with respect to the MHOP Units. Co shall be subject to termination and replacement as to the entire Development if it is determined by the MPHA/EDA, subject to appropriate judicial review by any court of competent jurisdiction, that the Managing Agent or any successor has C:\WINDOWSXTEMPXINITIAL. DOC 3 INITIAL AGREEMENT IV. materially violated, breached, or failed to comply with any provision of federal law, regulation, policy, or the ACC. shall receive from the MPHA/EDA the names of persons mad families who meet the income and waiting list criteria for admission into the MHOP Units and shall carry out such administrative functions as (but not limited to) applicant interviews and screening, verifications, determination of suitability for admission, unit assignment, execution of leases, terminations and evictions. WAITING LIST MANAGEMENT. The EDA, in cooperation with the Metropolitan Council, shall maintain the waiting lists for those applying for housing in the MHOP Units, using applicable federal, MHOP and local priorities: Ao Applicants for the MHOP Replacement Units (as defined in the Regulatory and Operating Agreement) will be selected from waiting lists based upon the following priorities: First, to families displaced by the demolition of Minneapolis public housing units pursuant to that certain Consent Decree entered in settlement of Hollman et al. vs. Cisneros et al., U.S.D.C. (Minn. Dist., 4th Div.) Civil Case No. 4-92-712. Second, to families on the MPHA waiting and transfer lists who live in minority or poverty concentrated areas in the metropolitan area. o Third, to families on the MPHA waiting list. This will include all families wishing to participate in MHOP, including both Minneapolis waiting list families and applicants from the EDA. The MPHA will automatically place all applicants from the EDA on its waiting list, thus making both Minneapolis and City of New Hope residents equally eligible for this priority. Bo The MHOP Incentive Units (as defined in the Regulatory and Operating Agreement) will be filled pursuant to the EDA's waiting list procedures. The EDA will have full and complete control over the management of the waiting list, and the Managing Agent will have complete control over the selection of residents, so long as the MHOP priorities and all federal and state laws are followed. The MPHA will promptly and continuously refer all Minneapolis applicants to the EDA for placement on the MHOP waiting list. If the referral system results in no eligible and suitable tenant with Consent Decree priorities, the unit can be filled with other applicants on the waiting list. The EDA shall provide HUD a certification, in the form attached hereto as Exhibit A, certifying that its waiting list procedures will conform with applicable law and regulations. C:\WINDOWS\TEMP'4NITIAL.DOC 4 INITIAL AGREEMENT VI. VII. POST CONSTRUCTION DUTIES. As a part of the HUD close-out requirements with respect to the MHOP Units, the following responsibilities will be assigned: Ao The MPHA shall designate the End of the Initial Operating Period ("EIOP") and shall coordinate the inclusion of the MHOP Units in the MPHA Annual Operating Budget. Within 12 months of EIOP, the EDA shall gather information and provide HUD with the Actual Development Cost Certificate ("ADCC"). Co The MPHA shall be responsible for the preparation of an audit by an independent public accountant as a part of its submission of the ADCC. The EDA shall provide such information as is in its possession or can be reasonably obtained in order to assist the MPHA with such audit. Do The MPHA shall monitor the Managing Agent's procedures and results in screening applicants provided from the EDA waiting lists and report the results thereof to HUD as may be requested or required. TAX CERTIFICATIONS The MPHA and EDA shall provide in its agreements with the Owner that the Owner, or its Managing Agent, shall annually prepare and present to the EDA a certification to the appropriate assessing officials of the number of MHOP units located within the Development. The EDA shall annually certify to the appropriate assessing officials the number of MHOP units located within the Development, pursuant to Minnesota Statutes, Section 469.040, subdivision 4. OPERATING SUBSIDY. Under the ACC, HUD contracts to provide an operating subsidy to the MPHA for all units subject to the ACC, which will include these MHOP Units. It is therefore necessary to establish a methodology by which the MPHA will pay operating subsidy to the Owner of the MHOP Units. That system, to be described more fully in a Regulatory and Operating Agreement between the MPHA and the Owner, will be generally as follows: A. As used in this Section VII., the following terms shall have the following meanings: "Allowed Project Expenses" means all necessary and reasonable operating expenses of the Development for any period, including: (a) all ordinary and necessary expenses of operations of the Development shown as line items on Form HUD-92547-A (Budget Worksheet), exclusive of real estate taxes and debt service requirements of any lender and exclusive of utility expenses which C:\WINDOWS\TEMPWNIT1AL. DOC 5 INITIAL AGREEMENT are the direct responsibility of tenants; provided, however, that if the Owner shall be required to borrow funds for repairs, replacements or improvements not funded from a Development reserve fund for replacements, debt service requirements for any such borrowing approved by the MPHA (which approval shall not unreasonably be withheld) shall be included in Allowed Project Expenses; provided, further, that MHOP Unit Expenses (as hereinafter defined) shall be reduced by any amounts contributed by the MPHA or EDA, on a grant basis, for repairs, replacements or improvements; Co) management fees payable pursuant to the Property Management Agreement; (c) legal expenses associated with the operation of the Development as well as accounting and audit expenses, including tax return preparation expenses, permitted to be charged as project expenses pursuant to HUD Handbook 4370.2 REV-l, Financial Operations and Accounting Procedures for Insured Multifamily Projects, or any successor thereto; and (d) reserves for replacements and for any other purposes, as required by any lender and approved by the MPHA. o "MHOP Percentage" shall mean the higher of (i) the number of MHOP Units, divided by the total number of units at the Development, or (ii) the net rentable square feet of the MHOP Units (assuming 4 two-bedroom units), divided by the net rentable square feet of all the units at the Development. "MHOP Unit Expenses" shall mean (A) Allowed Project Expenses, multiplied by the MHOP Percentage, plus (B) the payment in lieu of real estate taxes made in respect of the MHOP Units, if any, plus (C) amounts paid to MHOP Unit occupants as utility reimbursement (i.e., "negative rent"); provided, however, that if any line item expense shall be included in Estimated MHOP Unit Expenses on the basis of a percentage other than the MHOP Percentage pursuant to the second sentence of Section VII.B. 1. hereof, such expense shall be included in MHOP Unit Expenses on the basis of the same percentage; "MHOP Unit Income" shall mean all income received in respect of MHOP Units, including tenant rents ("Tenant Rent" as defined in 24 CFR § 913.102) and any other sources of income received in respect of MHOP Units, including all types of revenue shown as line items on Form HUD 92547-A, but exclusive of operating subsidy. C:\W1NDOWS\TEMP~NITIAL. DOC 6 nmT~ AGREEMENT Bo o "Estimated Allowed Project Expenses," "Estimated MHOP Unit Expenses," and "Estimated MHOP Unit Income" shall mean the estimated amounts of such items for any period determined in accordance with subsection B. hereof. Not later than 90 days prior to the anticipated Date of Full Availability ("DOFA") for occupancy of any unit of the Development, and not later than 150 days before the first day of any subsequent MPHA Fiscal Year, the Owner shall prepare and submit to the MPHA a proposed operating budget for the following MPHA Fiscal Year (or, in the case of the year in which DOFA occurs, the remainder thereof) ("Operating Budget"). The Operating Budget shall project Estimated Allowed Project Expenses, Estimated MHOP Unit Expenses, and Estimated MHOP Unit Income for the subject period, subject to the following conditions: Estimated Allowed Project Expenses shall be as reasonably estimated by the Owner. The MPHA may comment upon and propose changes to the Estimated Allowed Project Expenses as provided by the Owner and set forth in the Operating Budget submitted to the MPHA, but the Owner shall not be required to reduce any estimated expense below the Development- wide amount for such expenditure reasonably anticipated by the Owner for the period. However, the portion of any line item within the Estimated Allowed Project Expenses included in Estimated MHOP Unit Expenses shall be altered from the MHOP Percentage if the MPHA demonstrates satisfactorily that allocation of such item to the MHOP Units on the basis of the MHOP Percentage is inappropriate (e.g., marketing and advertising costs, if such relate solely or preponderantly to the non MHOP units). Until the completion of initial rent-up of the MHOP Units, Estimated MHOP Unit Income shall be determined on the basis of assumed tenant rent collections for each unit size equal to the average tenant rent collections for all units of comparable size owned and administered by the MPHA in the most recent annual or semiannual period for which such statistics are available at the time of the Owner's submission of the Operating Budget for such period to the MPHA. For each subsequent MPHA Fiscal Year, Estimated MHOP Unit Income shall be determined on the basis of the aggregate tenant rents actually collected for all MHOP Units during the first six months of the preceding MPHA Fiscal Year. Notwithstanding the foregoing, with respect to any MPHA Fiscal Year, the MPHA may agree to project Estimated MHOP Unit Income at a level different from that which would otherwise be established pursuant to the preceding sentence, taking into account (a) the reasonably anticipated level of incomes of tenants anticipated to be admitted to the MHOP Units during such period, based on anticipated turnover and the admissions policies, and (b) reasonably anticipated increases in income levels of C:\WINDOWS\TEMP~NITIAL.DOC 7 INITIAL AGREEMENT VIII. IX. existing tenants based on tenant participation in employment training and other supportive services programs. During each MPHA Fiscal Year commencing with the first MPHA Fiscal Year after DOFA, and subject to any limitations arising from application of Section 20 (e) of the Act and operation of the Development Operating Subsidy Cap, the MPHA shall pay to the Owner an amount equal to (1) Estimated MHOP Unit Expenses for such period, less (2) Estimated MHOP Unit Income for the period (the "Operating Subsidy Requirement"). The MPHA shall pay to the Owner, on the first day of each month of an MPHA Fiscal Year, one-twelfth (1/12) of the Operating Subsidy Requirement for such MPHA Fiscal Year; provided, however, that the Owner and the MPHA may agree, upon determination of the Operating Budget and operating Subsidy Requirement for any MPHA Fiscal Year, to provide for unequal monthly payments for such year. REGULATORY AND OPERATING AGREEMENT RESPONSIBILITY. The Regulatory and operating Agreement provides for ongoing joint monitoring and decision- making by the EDA and MPHA. If the two entities cannot agree as to any action or response called for in said Agreement, or any other agreement involving the MHOP Units, the decision of the MPHA shall be controlling with respect to all matters which directly or indirectly effect either its financial obligations with respect to the MHOP Units or its relationship with HUD arising from the ACC. In all other matters, the decision of the EDA shall control. RESERVE FUND. An operating reserve will be created by the Owner from its funds. The reserve will equal three years' estimated operating subsidy for the MHOP Units, but will be allowed to grow through interest earnings and certain operating subsidy reimbursements, if any. Shortfalls, either because of the recalculation of three years' estimated operating subsidy or because of necessary withdrawal from the reserve may be made up by the MPHA or EDA, but they are not obligated to do so. ADMINISTRATIVE COSTS. The MPHA and EDA shall each bear the costs associated with their respective obligations and responsibilities described herein or otherwise related to the construction and operation of the MHOP Units. The MPHA and the EDA shall separately agree as to reimbursements to the EDA, if any, for administering the waiting list and grievance procedure. TERMINATION AND/OR ASSIGNMENT A. In the event the EDA wishes to terminate this Agreement it may do so as follows: Ninety (90) days' notice of its intention to terminate shall be served upon the MPHA by the EDA in writing; C:\WINDOWS\TEMPLrNITIAL. DOC 8 INITIAL AGREEMENT The EDA shall assume and undertake all of the obligations and responsibilities of the MPHA as set forth in all written agreements relating to the Development between the MPHA, on the one hand, and the EDA, the Owner, the MHFA, HUD or any other contracting party, on the other; o The EDA shall become the contracting party with HUD with respect to the annual contributions contract governing the construction and operation of the Development; 4. Subject to HUD's review and approval in writing to such termination; and The MPHA shall be released from all future liability arising from and responsibility for the ongoing construction or operation of the Development. Bo In the event the EDA and the Metropolitan Council or any other eligible governmental entity ("Successor Public Entity") agree that the Successor Public Entity will undertake the responsibilities and obligations of the MPHA with respect to the Development, and provided that the Successor Public Entity fulfills the conditions described in paragraph XI.A. 1. through 5, above, the MPHA shall assign to the Successor Public Entity all of the agreements to which it is a party as they may relate to the construction or operation of the Development. All agreements executed by the MPHA with respect to the Development shall provide for the eventualities described in this paragraph XI. MISCELLANEOUS. Ao No member, official, or employee of the MPHA or EDA shall have any personal interest, direct or indirect, in this Agreement, nor shall any such member, official, or employee participate in any decision relating to this Agreement which affects his or her personal interests or the interests of any corporation, partnership, or association in which he or she is, directly or indirectly, interested. No member, official, or employee of the MPHA or EDA shall be personally liable to a party to this Agreement, or any successor in interest, in the event of any default or breach by any party or for any amount which may become due a party or successor or on any obligations under the terms of this Agreement. Bo The parties hereto, for themselves and their successors and assigns, agree that during the term of this Agreement they will comply with all affirmative action and non-discrimination requirements of applicable federal, state or local laws or regulations. C:\WINDOWSXTEMPXINITIAL.DOC 9 INI*I~ AGREEMENT Any titles of the several parts, Articles, and Sections of this Agreement are inserted for convenience of reference only and shall be disregarded in construing or interpreting any of its provisions. Do Except as otherwise expressly provided in this Agreement, a notice, demand, or other communication under the Agreement by either party to the other shall be sufficiently given or delivered if it is dispatched by registered or certified mail, postage prepaid, return receipt requested, or delivered personally; and in the case of the MPHA, is addressed to or delivered personally to the MPHA at 1001 North Washington Avenue, Minneapolis, MN 55401, Attention: Executive Director; and in the case of the EDA, is addressed to or delivered personally to the EDA at 4401 Xylon Avenue North, New Hope, MN 55428-4898 Attention: Executive Director, or at such other address with respect to either such party as that party may, from time to time, designate in writing and forward to the other as provided in this Section. Eo This Agreement may be executed in any number of counterparts, each of which shall constitute one and the same instrument. C:\WINDOWS\TEMPXINITiAL.DOC 10 INITIAL AGREEMENT IN WITNESS WHEREOF, the MPHA has caused this Agreement to be duly executed in its name and behalf and its seal to be hereunto duly affixed and the EDA has caused this Agreement to be duly executed in its name and behalf on or as of the date first above written. MINNEAPOLIS PUBLIC HOUSING AUTHORITY IN AND FOR THE CITY OF MINNEAPOLIS By Comell L. Moore Its Chairman By Cora McCorvey Its Executive Director STATE OF MINNESOTA ) ) SS. CITY OF HENNEPIN ) On this ~ day of ,2002, before me, a notary public within and for Hennepin County, personally appeared Comell L. Moore and Cora McCorvey, the Chairman and Executive Director, respectively, of the Minneapolis Public Housing Authority in and for the City of Minneapolis, a public body corporate and politic under the laws of the State of Minnesota (the "MPHA"), named in the foregoing instrument and acknowledged said instrument on behalf of the MPHA. Notary Public C :\WINDOWS\TEMPLVNITIAL'DOC 1 INITIAL AGREEMENT ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR THE CITY OF NEW HOPE By. Its By. Its STATE OF MINNESOTA COUNTY OF On this ~ day of ,2002, before me, a notary public within and for County, personally appeared and , the and , respectively, of the Economic Development Authority in and for the City of New Hope, a public body corporate and politic under the laws of the State of Minnesota (the "EDA"), named in the foregoing instrument and acknowledged said instrument on behalf of the EDA. Notary Public C:\WINDOWSXTEMPL1NITIAL. DOC 2 INITIAL AGREEMENT EXHIBIT A Waiting List Certification We hereby certify that the waiting list of the Economic Development Authority in and for the City of New Hope for the Metropolitan Housing Opportunity Program at the Bass Lake Apartments Development in New Hope, Minnesota will conform to a Consent Decree in settlement of Hollman et al. v. Cisneros et al., U.S.D.C. (Minn. Dist., 4th Div.) Civil No. 4-92- 712 and 24 CFR Part 5, Part 8, 9,13, 960 and 966 and applicable Fair Housing and Equal Opportunity laws and regulations. Dated: ,2002 ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR THE CITY OF NEW HOPE By Its By Its STATE OF MINNESOTA COUNTY OF On this __ day of ., 2002, before me, a notary public within and for County, personally appeared and ., the and , respectively, of the Economic Development Authority in and for the City of New Hope, a public body corporate and politic under the laws of the State of Minnesota (the "EDA"), named in the foregoing instrument and acknowledged said instrument on behalf of the EDA. Notary Public C:\WINDOWS~TEMP~NITIAL. DOC A-1 INITIAL AGREEMENT MPHA/NEW HOPE EDA BASS LAKE TOWN'HOMES EDA REQUEST FOR ACTION Originating Department Approved for Agenda Agenda Section Community Development ~ 12-9-02 EDA By: Ken Doresky, Community ~ Item No. Development Specialist By: ,' RESOLUTION APPROVING COOPERATION AGREEMENT BETWEEN THE MINNEAPOLIS PUBLIC HOUSING AUTHORITY, THE NEW HOPE ECONOMIC DEVELOPMENT AUTHORITY AND THE CITY OF NEW HOPE FOR THE PPL/BASS LAKE ROAD APARTMENTS PROJECT AT 7610 BASS LAKE ROAD (IMPROVEMENT PROJECT NO. 707) ACTION REQUESTED Staff recommends that the EDA approve the attached resolution approving the Cooperation Agreement between the Minneapolis Public Housing Authority, New Hope Economic Development Authority and the City of New Hope for the PPL/Bass Lake Road Apartments project at 7610 Bass Lake Road. POLICY/PAST PRACTICE City goal #2 is to pursue the maintenance and redevelopment of commercial and residential properties within the City. The City Council has been addressing the residential portion of this goal through the City's many housing activities, including partnering with different agencies and organizations on housing projects. In the past the EDA approved a similar agreement as part of the PPL Bass Lake Court Townhomes project. As the EDA is aware, projects of this size require a variety of funding partners and usually require the expertise of an experienced development agency, such as PPL. Often times, other jurisdictions and agencies approve funding, contingent upon the City's consent and project participation. BACKGROUND Staff is requesting Council and EDA approval of the attached resolution prepared by the City Attorney approving a Cooperation Agreement with the Minneapolis Public HouSing Authority for the PPL rehabilitatior project at 7610 Bass Lake Road (11 unit rehabilitation). This project is being handled in the same manner as the previous PPL redevelopment project, the Bass Lake Court Townhomes. Please see the following comments offered by the City Attorney regarding the requested action: "The Cooperation Agreement indicates the City, in its capacity as the taxing authority, will not assess real estate taxes against the four MHOP units within the development for the entire 40-year exemption period. In lieu of real estate taxes, the Owner will pay the EDA a PILOT. This amount will be calculated as 5% of the "Shelter Rent" as that term is defined in the Agreement. Shelter Rent is approximately 30% of the income of V Request for Action Page 2 12-9-02 the occupants of the four MHOP units. As a result, the rental payment will be quite Iow. The EDA will be required to pay the PILOT to the County for distribution to the various taxing bodies as if it were the actual real estate tax payment. Other provisions of the Agreement will require the City to provide the MHOP units with basic City services as provided to all other properties in the City and to cooperate in the successful development and operation of the housing units. This means vacating streets if necessary, granting reasonable deviations and variances from the building and zoning codes, accepting dedication of interior streets within the development, if any, and providing sidewalks, water mains and storm and sanitary sewers leading to the development area. Most of these things the City has already done, is in the process of doing or is not applicable to this development. Keep in mind, this Agreement contains boiler plate language used on all such projects by the MPHA. It has not been drafted specifically for the subject development." On May 13, 2002, the EDA approved a redevelopment and loan agreement with PPL for partial funding and participating in 7610 Bass Lake Road Redevelopment Project. Staff recommends approval of this resolution. FUNDING The total cost of this project is approximately $1.32 million. The financing is a combination of a traditional bank mortgage, investments from the City of New Hope and Hennepin County HOME and AHIF funds. Four affordable units will be paid for by the Metropolitan Housing Opportunities Program (MHOP), which was created to increase the supply of rental housing outside of the central cities. The City's portion of funding for the project is as follows: · Total loan: $223,000 (30 year 0% interest deferred loan with a balloon payment due June 1, 2032). Sources: o $ 78,000 CDBG, and; o $145,000 EDA. At the November 11, 2001 Council work session, the Council elected to fund the project in this manner. Included in the total amount is $5,000 to be used match funding for playground equipment. At that time, PPL ensured the Council that $5,000 could be raised to match the City's contribution. Staff has made it clear to PPL and the NCRC that the amount of EDA funding for this project is firm and will not increase. A'I-rACHMENTS · Resolution · City Attorney Correspondence · Location Map · Cooperation Agreement · =~u~/=uu~ aa:~a ~-~ ?~a 4~ $1S~ JE~SE~ & $ONDRALL, P.A. ~ C~B-CB ~00~/005 CITY OF NEW HOPE EDA RESOLUTION NO. 02 - RESOLUTION APPROVING COOPERATION AGREEMENT BETWEEN TILE MINNEAPOLLq PUBLIC HOUSING AUTHORITY, THE NEW HOPE ECONOMIC DEVELOPMENT AUTHORITY AND THE CITY OF NEW HOPE FOR THE PPL/BAS$ LAKE APARTMENTS PROJECT AT 7//10 BASS LAKE ROAD BE IT RESOLVED by the Economic Development Authority of the City of New Hope as follows: WI2~.REAS, the City of New Hope (City) and the New Hope Economic Development Authority (~DA) desire to cooperate with Project for Pride m Living, Inc. (PPL), on behalf of Bass Lake Road Apartments LLC, on the redevelopment of an apartment complex located at 7610 Bass Lake Road; imd WFW. REAS, a Cooperation Agreement (Agreement) between the City, the EDA and the Minneapolis PubJic Housing Authority is necessary to permit PPL, on behalf of Bass Lake Road Apartments LLC, to obtain l~mttlng from the MHOP program for said project; and WHEREAS, Section 3 of the Agreement states that the City will not assess mai estate taxes again,~t the four (4) MIiOP units within the development for the defined exemption period and that in lieu of real estate taxes, the Owner will pay the City or the EDA the PILOT (payment in lieu of taxes); and WHEREAS, other provisions of the Agreement will require the City to provide the MHOP units with basic City services as provided to all other properties in the City and to cooperate in the successful developmem and operation of the housing units. Now, TFWREFORE, BE IT RESOLVED by thc Economic Development Authority of the City of New Hope that the Cooperation Agreement is approved and that thc President and t/xccutive Director are authorized to execute the Agreement on behalf of the Economic Development Authority of the City of New Hope. Adopted by the t/connmic Development Authority of the City of New Hope, Hennepin County, Minnesota this 9'" day of December, 2002. Attest: Daniel J. Donahue, Executive Director P:tazmracy~C~h R~olufiom~CNH~9.1116~001-1/DA ~ A~zc~/~S Coop W. Peter Enck, President 12/04/2002 15:43 FAX 763 493 5193 JENSE.N & SO~Di~LL. DOUGL~ J. I)~1~~ GO~.OO~ L, JBNSB¢' GLEN A. NORTON S'r~VEN A. SONDe. ALL WILUA~ C. S'r~rlc S?ACY A. WOOI~ OF COUNSEL LOIU~NS Q. BRYn. STAP ~i/iml ADR N~'~ JENSEN & SONDRALL, P.A. Attorneys A t Law 8525 EDINBROOK CROSSI~TG, STE. 201 BROOKLYN PARK~ lVlINNESOTA 55443-1968 TEL~.~IIONR (763) 4248811 · TLT~F~x [763) 493-5193 e-mail law~j emen-sondraU.com December 4, 2002 VIA FACSIMILiT. TO (76~) Bl-fl~ AND BY REGULAR U.S. MAn. Ken Dore~y Community Developm~nI Specialist City of New Hope zaO1 Xylon Awnue North New Hope, MN 55428 Re: Resolutions Approving Cooperation Agreement for 7610 Bass Lake Road Project Our File No.: 99.11166 Dear Ken: Enclosed is a draft copy of r~e required Cooperation Agreement bofil the City and thc EDA must sign to permk PPL to obtain ,fand~%o fi'om file MHOP program on the 7610 Ba~s Lake Road pwject. Basically, tl~ project will be handled icl~nti~ to the townhome project we did with PPL in 1998. The Cooperation Agreement indkates the Cio/, in i~ capacity as the taxing authority, will not assess real ate taxes agaimr file four MHOP units wimP- fl~ development for the entire 40-year ex~ption period. In lieu of real esuue taxes, the Owner will pay r~ EDA a PILOT. This amoun~ will be calculat~l as 5% of thc "Shclm' Rent" as that term is defined in the Agreement. Sl~lter Rent is approximately 30% of the income of the occupmts of the four MHOP u~ks. As a result, the rental payment will be quite low. The EDA will be required to pay the PILOT to file County for dis~iburJon to the various taxing bodies a~ i/it were thc actual real esmm tax payment. Other provisions of the Agrccmcm will require thc City to provide du: MHOP units with basic City services as provided to all other properties in ~e City and to cooperate in the successful developmellt and operation of the housing anks. This meatus vacatil2g streets if necessary, granting reasonable deviations and variances from the building and zoning codes, accepting dedication of interior s~reetz within thc drvelopmenL if any, and providing sidewalks, water rosins and storm and sanitary sewers leading ro thc development area. Most of these things thc City has ah'eady done, is in the procass of doing or is not appUcaNe to this development. Keep in mind, this Agreem__cnr contains borer plate language used on all such projccrs by file MHPA. It has nor been drafted specifically/bt the subject development. December 4, 2002 Pag~ 2 The Agreement should be considered at the December 9,. 2002 meeting by both thc City Council and the EDA. Resolutiom authorLziag the Mayor and City Manager to sign on behalf of the City and thc Pres/dent and Executive Director to sign on behalf of the EDA are enclosed for adoption ar the meeting. ?Iea.~e contact me ff you have questions or comment~ regarding this mar~er. Very truly yours, Steven A. Sondrall, City Attorney, City of New Hope I~NSF~N & SONDRALL, P.A. Attar Hour~ FA[eado.~ #147 cc: Dan Donahue (w/enc.) Kirk McDonald (w/erie.) Valerie Leone (w/enc.) P:~.rmn:~AS~et~ C.N[,~99,1 ) 116-OOi.-l~eu Lit.doc [[1[ f 56TH AVE ~lll ~ ' GEOV~ CATHOLIC ~ rill~ -- ~ ~ ~ ~ : CHURCH : :~< 531 --~l.~_J 54.14 5413 5420 M.19 ), ~ MOB ~ I 8330 S317- IIl~lll 11/26/02 COOPERATION AGREEMENT This Agreement made and entered into this ~ day of ,2002, by and between the Minneapolis Public Housing Authority in and for the City of Minneapolis (the "Authority"), the Economic Development Authority in and for the City of New Hope (the "EDA") and the City of New Hope, State of Minnesota (the "Municipality"). WITNESSETH: In consideration of the mutual covenants hereinafter set forth, the parties hereto agree as follows: Whenever used in this Agreement: (a) The term "MHOP Units" means four (4) units of low-rent housing hereafter to be developed with the financial assistance of the United States of America acting through the Secretary of Housing and Urban Development (the "Government") and located within an eleven (11) unit multifamily development (the "Development") to be owned by Bass Lake Apartments LLC ("Owner"), a Minnesota limited liability company to be formed in which Project for Pride in Living, Inc., a Minnesota nonprofit corporation, will be the controlling member and located at 7610 Bass Lake Road in the City of New Hope, Minnesota. (b) The term "Taxing Body" or "Taxing Bodies" means the State of Minnesota and any and all political subdivisions or taxing units thereof in which the MHOP Units are situated and which would have authority to assess or levy real or personal property taxes, or to certify such taxes to a taxing body or public officer, to be levied for its use and benefit with respect to the MHOP Units if they were not exempt from such taxation. (c) The term "Shelter Rent" means the total of all charges to all MHOP Unit tenants for dwelling rents and nondwelling rents (excluding all other income of the MHOP Units) less the cost of all dwelling and nondwelling utilities. The Authority shall endeavor: (a) to secure a contract with the Government for capital grants and annual contributions for the MHOP Units; and (b) to cause the development of the MHOP Units. C:\WINDOW~TE/vlp,C~p.~ 1 COOPERATION AGREEMENT (c) (a) Co) (c) (d) to assign to the Metropolitan Council its responsibilities under this and other agreements relating to the MHOP Units for purposes of ongoing administration thereof. Pursuant to Minnesota Statutes, Section 469.040, the MHOP Units are exempt from all real and personal property taxes levied or imposed by any Taxing Body for so long as either (i) the MHOP Units are owned by a public body or governmental agency and are used for low-rent housing purposes, (ii) the MHOP Units are subject to the requirements of Section 5 of the United States Housing Act of 193 7, (iii) the contract between the Authority and the Owner in connection with the MHOP Units continues to obligate the Owner to operate the MHOP Units as a low income housing project, or (iv) any obligations issued in connection with the MHOP Units or any moneys due to the Government in connection with such MHOP Units remain unpaid, whichever period is the longest (the "Exemption Period"). During the Exemption Period, the Municipality, on behalf of the Taxing Bodies, agrees that it will not levy or impose any real or personal property taxes upon the MHOP Units or upon the Authority with respect thereto. Because the MHOP Units consist of four (4) units located within and under common private ownership with 7 additional housing units which comprise the Development, the property taxes and property tax exemption shall be determined as follows: (i) the tax capacity of the total Development shall be multiplied by a fraction, the numerator of which equals the total number of MHOP Units and the denominator of which equals the total number of housing units in the Development and (ii) the product thereof shall be deducted from said tax capacity. During the Exemption Period, the EDA shall make, or cause to be made, annual payments in lieu of taxes ("PILOT") in payment for the public services and facilities furnished fi'om time to time without other cost or charge for or with respect to the MHOP Units. Each PILOT shall be .made at the time when real property taxes on the MHOP Units would be paid if it was subject to taxation, and shall be in an amount equal to either (i) five percent (5%) of the Shelter Rent actually collected but in no event to exceed five percent (5%) of the Shelter Rent charged with respect to such MHOP Units during the preceding calendar year, or (ii) the amount permitted to be paid by applicable State law in effect on the date such payment is made, whichever is lower. Pursuant to Minnesota Statutes, Section 469.040, subdivision 3, the County of Hennepin shall distribute the PILOT among the Taxing Bodies in the proportion which the real property taxes which would have been paid to each Taxing Body for such year if the MHOP Units were not exempt from taxation; provided, however, that no payment for any year shall be made to any Taxing Body in excess of the amount of the real property taxes which would have been paid to such Taxing Body for such year if the MHOP Units were not exempt from taxation. C:\WINDOW ~TEMP'~OOP.DOC 2 COOPERATION AGREEML~IT (e) In the event the PILOT is not paid, no lien against the MHOP Units or assets of the Authority or EDA shall attach, nor shall any interest or penalties accrue or attach on account thereof. During the Exemption Period, the Municipality, or other appropriate Taxing Body, without cost or charge to the Authority, the EDA or tenants of the MHOP Units (other than PILOT) shall: (a) Furnish or cause to be furnished to the MHOP Units public services and facilities of the same character and to the same extent as are furnished from time to time without cost or charge to other dwellings and inhabitants in the Municipality; (b) Insofar as the Municipality may lawfully do so, vacate such streets, roads, and alleys within the area of the MHOP Units as may be necessary in the development thereof, and convey without charge to the Authority, the EDA or Owner of the MHOP Units such interest as the Municipality, or other Taxing Body may have in such vacated areas; and, in so far as it is lawfully able to do so without cost or expense to the Authority, the EDA, the Owner of the MHOP Units or to the Municipality or other Taxing Body, cause to be removed fi'om such vacated areas, in so far as it may be necessary, all public or private utility lines and equipment; (c) Insofar as the Municipality or other Taxing Body may lawfully do so, (i) grant such deviations from the building code of the Municipality or other Taxing Body as are reasonable and necessary to promote economy and efficiency in the development and administration of the MHOP Units, and at the same time safeguard health and safety, and (ii) make such changes in any zoning of the site and surrounding territory of the MHOP Units as are reasonable and necessary for the development and protection of the MHOP Un/ts and the surrounding territory; (d) Accept grants of easements necessary for the development of the MHOP Units; and (e) Cooperate with the Authority and EDA by such other lawful action or ways as the Municipality or other Taxing Body and the Authority may find necessary in connection with the development and administration of the MHOP Units. In the initial development of the MHOP Units, the Municipality further agrees, on behalf of all Taxing Bodies, that within a reasonable time atter receipt of a written request fi'om the Authority or EDA: (a) that it will accept the dedication of all interior streets, roads, alleys, and adjacent sidewalks within the area of the Development, together with all storm and sanitary sewer mains in such dedicated areas, after the Owner of the MHOP Units, at its own expense, has completed the grading, improvement, paving, and installation C :\WINDOWSkTEMP~COOP. DOC 3 COOPERATION AGREEMENT thereof in accordance with specifications acceptable to the Municipality or other Taxing Body; (b) that it will accept necessary dedications of land for, and will grade, improve, pave, and provide sidewalks for, all streets bounding the Developments as are necessary to provide adequate access thereto (in consideration whereof the Owner shall pay to the Municipality or other Taxing Body such amount as are or could be assessed against the Development); and (c) that it will provide, or cause to be provided, water mains, and storm and sanitary sewer mains, leading to the Development and serving the bounding streets thereof (in consideration whereof the Owner of the MHOP Units shall pay to the Municipality or other Taxing Body such amount as are or could be assessed against the Development). If by reason of the Municipality's or other Taxing Body's failure or refusal to furnish or cause to be furnished any public services or facilities which it has agreed hereunder to furnish or cause to be furnished to the Authority, the EDA, the Owner or tenants of the MHOP Units, and the Authority, the EDA or the Owner of the MHOP Units incurs any expense to obtain such services or facilities, then the Authority or EDA may cause to be deducted the amount of such expense from any PILOT due or to become due to the Municipality or other Taxing Body in respect to the MHOP Units, provided that the Authority shall notify the Municipality or other taxing body of the alleged failure in writing at least thirty (30) days prior to deducting such expense from any PILOT. No Cooperation Agreement heretofore entered into between the Municipality and the Authority or EDA shall be construed to apply to any MHOP Units covered by this Agreement. No member of the governing body or any other public official of the Municipality or other Taxing Body who exercises any responsibilities or functions with respect to the MHOP Units during his/her tenure or for one year thereafter shall have any interest, direct or indirect, in the MHOP Units or any property included or planned to be included in the MHOP Units, or any contracts in connection with the MHOP Units or property. If any such governing body member or such other public official of a Taxing Body involuntarily acquires or had acquired prior to the beginning of his/her tenure any such interest, he/she shall immediately disclose such interest to the Authority. During the Exemption Period this Agreement shall not be abrogated, changed, or modified without the consent of the Government. The privileges and obligations of the Municipality and other Taxing Bodies hereunder shall also remain in full force and effect with respect to the MI-IOP Units so long as the beneficial title to the MHOP Units is held by the Authority or by any other public body or governmental agency, including the Government, authorized by law to engage in the development or administration of low- rent housing projects. If at any time the beneficial title to, or possession of, the MHOP C:\WINDOWS~TEMP'COOP.DOC 4 COOPERATION AGRF_.EMENT Units is held by such other public body or governmental agency, including the Government, the provisions hereof shall inure to the benefit of and may be enforced by, such other public body or governmental agency, including the Government. 10. The Government, the Municipality and the I-IRA hereby consent to the future assignment of the Authority's interest in this Agreement to the Metropolitan Council. C:\WrNDOWS~TEMPM2OOP.DOC 5 COOPERATION AGREEMENT IN WITNESS WHEREOF the Municipality, the EDA and the Authority have respectively signed this Agreement and caused their seals to be affixed and attested as of the day and year first above written. MINNEAPOLIS PUBLIC HOUSING AUTHORITY IN AND FOR THE CITY OF MINNEAPOLIS By Comell L. Moore Its Chairman And by. Cora McCorvey Its Executive Director C:\WINDOWSXTEMP~OOP.DOC 6 COOPERATioN AGREEMENT CITY OF NEW HOPE, MINNESOTA By. Its And by Its C:\WINDOWS\TEMP~OOP. DOC 7 COOPERATioN AGREEMENT ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR THE CITY OF NEW HOPE By. Its And by Its This Document Drafted by: Holmes & Associates, Ltd. Two Carlson Parkway, Suite 155 Minneapolis, MN 55447 763-249-0888 763-249-0777 (Fax) C:\WINDOWS~TEMPXlZOOP'DOC 8 COOPERATION AGREEMENT