IP #776KRA,SS MONROE, P.A.
A T T 0 R N E Y S A T L A W
9&
F_1E_
VIA FAX AND U.S. MAIL
July 8, 2004
Mr. Michael Opat
Hennepin County Commissioner, District #7
A2400 Government Center
300 South 6th Street
Minneapolis, MN 55487-0240
Re: City of New Hope/Tax Increment Financing Activities
Dear Commissioner Opat:
The City of New Hope (the "City") is proposing to create Tax Increment District No_ 04-2
(the "Tax increment District") within their existing Redevelopment Project No. 1 (the
"Project Area"). The proposed Tax Increment District qualifies as. a housing tax
increment district and is expected to be developed in two phases. Phase I includes a
35 -unit, 100% low-income housing tax credit development with at least 75% of the units
rented to households with incomes less than 60% of the area median income and
includes underground and surface parking. Phase II includes a 41 -unit market rate, for -
sale condominium building also with underground and surface parking. The City Council
will consider creation of this Tax Increment District at a public hearing to be held at its
regular meeting on Monday, August 23, 2004 at approximately 7:00 p.m.
Because the Tax lncrement District is located within your District, we are forwarding to
you, on behalf of the City and pursuant to Minnesota Statutes, Section 469.175,
Subdivision 2a, a copy of the proposed Tax Increment Plan and the portion of Exhibit I-
A of the Redevelopment Plan for -the Project Area that is associated with the Tax
Increment District.
8000 Norman Center Drive, Suite 1000
Minneapolis. MN 55437-1178
Telephone 952.885.5999 Facsimile 952.885.5869
Website www.krassmonroo.com
The City would appreciate receiving any comments you may have concerning their tax
increment financing activities. It also would welcome the opportunity to meet with you to
discuss any questions or concerns that you may have. You may also direct questions
or comments to Kirk McDonald, Community Development Director at the City (763-531-
5119) or to Jim Casserly, EDA Development Counsel (952-885-1296).
Sincerely,
KRASS MONROE, P.A.
A" 4
Mary E. Molzahn
Senior Development Analyst
cc: Kirit McDonald (w/enclosures)
G:IWPDATAWNEW HOPEIPIITIRNOTICE TO COMMISMNERDOC
ARTICLE V
TAX INCREMENT FINANCING PLAN FOR
TAX INCREMENT FINANCING DISTRICT NO. 04-2
(PROJECT FOR PRIDE IN LIVING)
Section 5.1 Statement of Obiectives. See Article I, Section 1.4, Statement of
Objectives.
Section 5.2 Restated Redevelopment Plan. See Article I, Sections 1.1
through 1.11.
Section 5.3 Parcels to be Included. The boundaries of Tax Increment
Financing District No. 04-2 (the "TIF District") are described in Exhibit V-A and
illustrated on Exhibit V -B.
Section 5.4 Parcels in Acquisition. The EDA Authority may write down or
acquire and reconvey real property, or interests therein, within this TIF District or
elsewhere within the Project Area at the time or times as the EDA Authority may
determine to be necessary or desirable to assist or implement development or
redevelopment within the Project Area or the TIF District as further described in
Article 1, Section 1.11.
Section 5.5 Development Activity for which Contracts have been Sicined. As
of the date of adoption of the TIF Plan, the EDA Authority contemplates entering into
a signed contract with Project for Pride in Living, Inc., a Minnesota corporation, for
the activities discussed below.
Section 5.6 Specific Development Expected to Occur. At this time it is
anticipated that Phase I of the project will include a 35 -unit apartment building with
underground and surface parking. The rental apartments will be a 100% low-income
housing tax credit development with at least 75% of the units rented to households with
incomes less than 60% of the area median income. Phase II is proposed to include a
41 -unit market rate, for -sale condominium building also with underground and surface
parking. Phase I is projected for completion by December 31, 2005 and Phase 11 by
December 31, 2006. Upon completion of both phases, it is expected that the City's
tax base will increase by approximately $9.4 million.
Section 5.7 Prior Planned Improvements. The EDA Authority shall, after due
and diligent search, accompany its request to the County Auditor for the certification
of or its notice of enlargement of the TIF District with a listing of all properties within
the TIF District for which building permits have been issued during the eighteen (18)
months immediately preceding approval of the TIF Plan by the EDA Authority.
5-1
The County Auditor shall increase the original tax capacity of the TIF District
by the tax capacity of each improvement for which a building permit was issued. If
said listing does not accompany the aforementioned request or notice, the absence
of such listing shall indicate to the County Auditor that no building permits were
issued in the eighteen (18) months prior to the EDA Authority's approval of the TIF
Plan.
Section 5.8 Fiscal Disparities. The City hereby elects the method of tax
increment computation set forth in Minnesota Statutes, Section 469.177, Subdivision
3, clause (a) if and when commercial/industrial development occurs within the TIF
District.
Section 5.9 Estimated Project Costs. The estimated costs associated with
this portion of Redevelopment Project No. 1 (the "Project Area") are listed on Exhibit
-A.
Section 5.10 Estimated Amount of Indebtedness. It is anticipated that
approximately $2,626,000 of indebtedness may be incurred with respect to this
portion of the Project Area.
Section 5.11 Sources of Revenue. The anticipated revenue sources to
finance the costs associated with the Project Area are outlined in Article 1, Section
1.5.
Section 5.12 Estimated Orlainal and Captured Tax Capacity_. The tax
capacity of all taxable property in the TIF District, as most recently certified by the
Commissioner of Revenue of the State of Minnesota on January 2, 2004, is
estimated to be $3,783.
The estimated captured tax capacity of the TIF District upon completion of the
proposed improvements on January 2, 2007, is estimated to be $101,962. The EDA
Authority intends to utilize 100% of the captured tax capacity, for the duration of the
TIF District, for purposes of determining tax increment revenues.
Section 5.13 Tax Capacity Rate. The pay 2004 tax capacity rate is 1.38209.
Section 5.14 Tax Increment. Annual initial tax increment has been calculated
at approximately $141,921 assuming a static tax capacity rate and a valuation
increase of five percent (5.0%) compounded annually. A financial analysis is
provided on Exhibit V -C. Revenue has also been projected for the duration of the
TIF District and is shown on Exhibit I -A.
Section 5.15 Type of TIF District. The TIF District is, pursuant to Minnesota
5-2
Statutes, Section 469.174, Subdivision 11, a housing district.
Section 5.16 Duration of TIF District. The duration of the TIF District is
expected to be twenty-five (25) years from receipt of the first tax increment. The
date of receipt of the first tax increment is estimated to be July, 2006. Thus, it is
estimated that the TIF District, including any modifications for subsequent phases or
other changes, would terminate in the year 2030.
Section 5.17 Estimated Impact on Taxing Jurisdictions. The estimated
impact on other taxing jurisdictions assumes construction would have occurred
without the creation of the TIF District. If the construction is a result of tax increment
financing, the impact is $0 to other entities. Notwithstanding the fact that the fiscal
impact on the other taxing jurisdictions is $0, due to the fact that the financing would
not have occurred without the assistance of the EDA Authority, Exhibit V -E reflects
the estimated impact of the TIF District if the "but for" test were not met.
Section 5.18 Modification of the TIF District and/or TIF Plan. As of August
23, 2004, no modifications to the TIF District or the TIF Plan have been made.
GAWPDATAWMW HOPE1211TIb1TIF PLAN.DOC
5-3
EXHIBIT V-A
PARCELS TO BE INCLUDED IN
TAX INCREMENT FINANCING DISTRICT NO. 04-2
PIN 06-118-21-34-0021
including adjacent streets and rights-of-way
G:\WPDATA\N\NEW HOPE\21\TIF\TIF PLAN E%HIBIT.DOC
V -A-1
6701
6741
PKWY
5850
VICTORY
5632 PARK
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5600
HAN
ffiIBIT V -B
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85 P79t IX
5777 %' 8400
5700
3420
8130
85tt
Z
8431
5626
4
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5627
8317
5635
8119
Q
6629
5630
LL,
5632
5621
Z
0
Thru c
5600 5625
5624 5615
5821
Z
5618
m
8
5609
5819
�
N
5601
5803
5600
O 3600
SBi5
D
V'1
Sala
TO
874a
8420
s6os
5600
aroo
56Th! AVE N
CENTER EAST
NORTH
9210
9211
C. P. RAIL SYSTEM
5197
51ST AVE N
51.7
5018 8520 t83168<i12�C .\ S� 8�
5017 i
V -B-1
EXHIBIT V --C
v -C-1
CITY OF NEW HOPE
PPL - 5501 Boone Ave lRental & Condo Project)
ASSUMPTIONS
Area of Parcel
Original Market Values
(Acres)
(Sq. FeO)
Land
Building
Total
5501 Boone Ave 0&110-21-34-002
3.935
171,401
$
342,802
$
$ 342,802
Totals
3.935
171,401
$
342,802
$
$ 342,802
$
2.00 per sq. ft.
Original Tax Capacity
9'a of new ETC
Class Rate
3,783
Commercial /Retail
0.0%
0
@
2.00% =
0
Rental
41.4%
141,828
@
1.25% =
1,773
Owner Occupied
58.6%
200,974
@
1.00% =
2,010
100.0%
342,802
Phase 1
YEAR
Estimated Market Value
Apartment Only 1
18
units @
100,000
per unit =
1,750,000
Estimated Tax Capacity
2005
16
units @
1,250
per unit =
21,875
Estimated Taxes F
2006
18
units @
1,911
per unit =
33,447
Estimated Tax Increment
18
units @
1,429 1
per unit =
25,005
74.8% of total taxes
Phase 2 (combined)
Estimated Market Value
Apartment Only
35
units @
100,000
_
per unit'm
3,500,000
Estimated Tax Capacity
2006
35
units Q
1,250
per unit =
43,750
Estimated Taxes
2007
35
units @
1,911
per unit =
66,895
Estimated Tax Increment
35
units @
1,578
per unit =
55,2391
82.6% of total taxes
Phase 3 (combined)
Estimated Market Value
Apartments & Condo
76
units @
127,625
per unit =
9,699,500
28.3 x incr. in MV
Estimated Tax Capacity
2007
76
units @
1,391
per unit =
105,745
Estimated Taxes 1
2008
76
units @
2,157
per unit =
163,963
Estimated Tax Increment
76
units @
1,854
per unit =
140,921
85.9% of total taxes
Coverage
19.3
units per acre
Local Tax Rate - Pay 2004
1.38209
1.69%
Eff Tax Rate
Market Value Referendums & solid waste fee
0.18366%
I
Admin Fees
10.00%
Inflation (200812009)
5.00%
Present Value state
6/1/2004
6.75%
Present Value Rate - Bonds
6/1/2004
5.00%
v -C-1
EXHIBIT V -C (CONTINUED)
CASH FLOW AND PRESENT VALUE ANALYSIS
6.015.030 601,503 5,413,527 5,413.527 1 1.909,375 1,909,375
V -C-2
(a)
<-----
(b)
ANNUAL
(c)
----->
(d)
<-------
(e)
---
(f)
-- SEMI-ANNUAL
(9) (h)
------------------>
(I)
G)
Original
Estimated
Captured
Estimated
Less:
Available
Cumulative
<-- Present Value ----->
Tax
Tax
Tax
Tax
Admin
Tax
Avail. Tax
Semi Annual
Cumulative
Date
Capacity
Capacity
Capacity
Increment
Fees
Increment
Increment
Balance
Balance
(see assumptions)
(c) - (b)
(d) x
(e) x
(e) - (f)
Total of (g)
P.V. of (g)
Total of (i)
5.0%
Inflation
(prev. year)
1.38209
10.00%
6.75% 06101/04
06101/03
3,783
3,783
0
0
0
0
0
0
12101/03
3,783
3,783
0
0
0
0
0
0
06101/04
3,783
3,783
0
0
0
0
0
0
0
12101/04
3,783
3,783
0
0
0
0
0
0
0
06101/05
3,783
21,875
0
0
0
0
0
0
0
12101/05
3,783
21,875
0
0
0
0
0
0
0
1
06/01/06
3,783
43,750
18,092
12,503
1,250
11,252
11,252
9,853
9,853
12/01/06
3,783
43,750
18,092
12,503
1,250
11,252
22,505
9,532
19,385
2
06/01/07
3,783
105,745
39,967
27,619
2,762
24,857
47,362
20,369
39,754
12101/07
3,783
105,745
39,967
27,619
2,762
24,857
72,220
19,704
59,457
3
06101/08
3.783
111,032
101,962
70,461
7,046
63,415
135,634
48,626
108,083
12101/08
3,783
111,032
101,962
70,461
7,046
63,415
199,049
47,038
155,121
4
06/01/09
.3,783
116,584
107,250
74,114
7,411
66,703
265,752
47,862
202,983
12101/09
3,783
116,584
107,250
74,114
7,411
66,703
332,454
46,299
249,282
5
06/01/10
3,783
122,413
112,801
77,951
7,795
70,156
402,610
47,106
296,388
12/01/10
3,783
122,413
112,801
77,951
7,795
70,156
472,766
45,568
341,956
6
06/01/11
3,783
128,534
118,630
81,979
8,198
73,781
546,547
46,358
388,314
12/01/11
3,783
128,534
118,630
81,979 •
8,198
73,781
620,328
44,845
433,159
7
06/01/12
3,783
134,960
124,751
86,209
8,621
77,588
697,916
45,619
478,778
12101/12
3,783
134,960
124,751
86,209
8,621
77,588
775,504
44,130
522,908
8
06/01/13
3,783
141,708
131,178
90,650
9,065
81,585
857,088
44,888
567,796
12/01/13
3,783
141,708
131,178
90,650
9,065
81,585
938,673
43,422
611,218
9
06/01/14
3,783
148,794
137,926
95,313
9,531
85,782
1,024,455
44,166
655,384
12/01/14
3,783
148,794
137,926
95,313
9,531
85,782
1,110,236
42,724
698,107
10
06/01/15
3,783
156,234
145,011
100,209
10,021
90,188
1,200,425
43,452
741,559
12/01/15
3,783
156,234
145,011
100,209
10,021
90,188
1,290,613
42,033
783,593
11
06101/16
3,783
164,045
152,451
105,350
10,535
94,815
1,385,429
42,747
826,340
12/01/16
3,783
164,045
152,451
105,350
10,535
94,815
1,480,244
41,351
867,691
12
06/01/17
3,783
172,247
160,263
110,749
11,075
99,674
1,579,918
42,051
909,742
12/01/17
3,783
172,247
160,263
110,749
11,075
99,674
1,679,592
40,678
950,420
13
06/01/18
3,783
180,860
168,465
116,417
11,642
104,775
1,784,367
41,364
991,785
12/01/18
3,783
180,860
168,465
116,417
11,642
104,775
9,889,142
40,014
1,031,798
14
06/01/19
3,783
189,903
177,077
122,368
12,237
110,132
1,999,273
40,686
1,072,484
12/01/19
3,783
189,903
177,077
122,368
12,237
110,132
2,109,405
39,358
1,111,842
15
06/01/20
3,783
199,398
186,120
128,617
12,862
115,756
2,225,161
40,017
1,151,859
12/01/20
3,783
199,398
186,120
128,617
12,862
115,756
2,340,916
38,711
1,190,570
16
06/01/21
3,783
209,368
195,615
135,179
13,518
121,661
2,462,577
39,357
1,229,927
12/01/21
3,783
209,368
195,615
135,179
13,518
121,661
2,584,239
38,072
1,267,999
17
06/01/22
3,783
219,836
205,585
142,069
14,207
127,862
2,712,100
38,706
1,306,706
12/01/22
3,783
219,836
205,585
142,069
14,207
127,862
2,839,962
37,443
1,344,148
18
06/01/23
3,783
230,828
216,054
149,303
14,930
134,373
2,974,335
38,065
1,382,213
12/01/23
3,783
230,828
216,054
149,303
14,930
134,373
3,108,707
36,822
1,419,035
19
06/01/24
3,783
242,369
227,045
156,899
15,690
141,209
3,249,916
37,432
1,456,466
12/01/24
3,783
242,369
227,045
156,899
15,690
141,209
3,391,125
36,210
1,492,676
20
06/01/25
3,783
254,488
238,587
164,874
16,487
148,387
3,539,512
36,808
1,529,484
12/01/25
3,783
254,488
238,587
164,874
16,487
148,387
3,687,898
35,606
1,565,091
21
06/01/26
3,783
267,212
250,705
173,249
17,325
155,924
3,843,822
36,193
1,601,284
12101/26
3,783
267,212
250,705
173,249
17,325
155,924
3,999,746
35,012
1,636,296
22
06101/27
3,783
280,573
263,430
182,042
18,204
163,838
4,163,584
3508
1,671,883
12/01/27
3,783
280,573
263,430
182,042
18,204
163,838
4,327,421
34,426
1,706,309
23
06/01/28
3,783
294,602
276,790
191,275
19,127
172,147
4,499,569
34,991
1,741,300
12101/28
3,783
294,602
276,790
191,275
19,127
172,147
4,671,716
33,848
1,775,149
24
06101/29
3,783
309,332
290,819
200,969
20,097
180,872
4,852,588
34,403
1,809,551
12/01/29
3,783
309,332
290,819
200,969
20,097
180,872
5,033,460
33,280
1,842,831
25
06101/30
3,783
324,798
305,549
211,148
21,115
190,033
5,223,493
33,824
1,876,655
12/01/30
3,783
324,798
305,549
211,148
21,115
190,033
5,413,527
32,720
1,909,375
6.015.030 601,503 5,413,527 5,413.527 1 1.909,375 1,909,375
V -C-2
EXHIBIT V -D
"BUT FOR " ANALYSIS
Both the City and its EDA have long recognized the need for additional affordable
housing within the City. In response to this housing need, Project for Pride in Living,
Inc. ("PPL") is proposing the construction of a two phased housing project on an
undeveloped site that would provide 35 low income rental units and 41 market rate
for sale units, which together will increase the City's tax base by approximately $9.4
million. The site selected by PPL has significant soil problems which require pilings
for construction. In addition the proposed housing project requires the relocation of
a pond currently located on the northern portion of the site. These extensive soil
problems and the cost to resolve them have prevented development of this site in
the past. Because of the excessive costs involved with correcting and working
around the sal and ponding problems and the assistance needed to provide low
income housing, PPL has requested the City and EDA to assist its project with tax
increment financing.
Phase I is a 100% low-income housing tax credit development in which at least 75% of
35 rental units will be available to households with incomes less than 60% of the area
median income. This development, including both underground and surface parking, is
proposed to be completed by December 31, 2005. The assistance for this Phase I will
be used for site correction costs and to help reduce the overall cost of the rental units in
order to offer rental rates that low/moderate income families can afford. Due to
funding requirements imposed by various public agencies providing additional support
for this project, PPL has requested that the assistance be provided upfront through City
general obligation bonds.
Phase 11 includes a 41 -unit affordable market rate, for -sale condominium building, also
with underground and surface parking, that is proposed'to be completed by December
31, 2006. In order to make these units affordable, assistance for Phase II is needed
because the selling prices are less than the development and construction costs.
PPL has also requested that the assistance for this Phase be provided at the beginning
of construction of Phase II through City general obligation bonds.
Without such assistance for each Phase, the project would not be economically
feasible and could not be expected to occur solely through private investment within
the reasonably foreseeable future.
G:\WPDATA\N\NEW HOPE\21\TIF\TIF PLAN EXHIHIT.DOC
V -D-1
EXHIBIT V -E
ESTIMATED IMPACT OF MODIFICATION TO
TAX INCREMENT FINANCING DISTRICT NO. 04-1
IMPACT ON TAX BASE
ORIGINAL
ESTIMATED
CAPTURED
DISTRICT
TAX TAX
TAX
TAX
AS %
ENTITY BASE CAPACITY
CAPACITY
CAPACITY
OF TOTAL
City of New Hope
13,464,913
3,783
105,745
101,962
0.757%
County of Hennepin
972,912,612
3,783
105,745
101,962
0.010%
ISD # 281
68,883,533
3,783
105,745
101,962
0.148%
IMPACT ON TAX RATE
ENTITY
TAX
RATE
% OF
TOTAL
TAX
INCREMENT
TAX RATE
INCREASE
City of New Hope
0.49139
35.55%
50,103
0.375%
County of Hennepin
0.47324
34.24%
48,252
0.005%
ISD # 281
0.34258
24.79%
34,930
0.051%
Other
0.07488
5.42%
7,635
1.38209
100.00%
140,921
Assumes construction would have occurred without the creation of a Tax Increment Financing
District. If construction is a result of Tax Increment Financing, the impact is $0.
V -E-1
Source of Funds
Tax Increment Revenue
Investment Earnings
Bond Proceeds
Loan Proceeds
Special Assessments
Sales/Lease Proceeds
Loan/Advance Repayments
Grants
Other
Transfers In
Total Source of Funds
Use of Funds
Land/building acquisition
Site Improvements/preparation costs
Installation of public utilities
Public Parking facilities
Streets and sidewalks
Public park facilities
Social, recreational or conference facilities
Interest reduction payments
Bond principal payments
Bond interest payments
Loan principal payments
Loan/note interest payments
Administrative costs
Other
Transfers out
Total Use of Funds
TIF No. 04-1
$ 6,000,000
600,000
2,625,000
150,000
$ 9,375,000
$ 700,000
700,000
700,000
2,625,000
1,575,000
1,575,000
600,000
MM
$ 9,375,000
6
CITY OF NEW HOPE
PROPOSED CHRONOLOGY
MODIFICATION OF TIF DISTRICT NO. 03-1 (SPECIAL LAW)
(RYLAND - PHASE III)
MONDAY, JULY 26, 2004 CITY COUNCIL MEETING
(i) call for public hearing; (ii) approve authorization to
publish notice of public hearing
THURSDAY, AUGUST 12, 2004 TIF PLAN PROVIDED TO COUNTY COMMISSIONER
(not less than 30 days prior to publication of the notice of
public hearing)
THURSDAY, AUGUST 26, 2004 TIF PLAN PROVIDED TO SCHOOL DISTRICT NO. 281
AND HENNEPIN COUNTY
(not less than 30 days prior to public hearing)
THURSDAY, SEPTEMBER 9, 2004 NOTICE OF PUBLIC HEARING PROVIDED TO
NEWSPAPER
WEDNESDAY, SEPTEMBER 15, 2004 PUBLICATION OF NOTICE OF PUBLIC HEARING
(not less than 10 days nor more than 30 days prior to
public hearing)
MONDAY, SEPTEMBER 27, 2004 EDA MEETING
(i) review and approve modifications to Redevelopment
Plan and existing TIF Plans; (ii) enlarge TIF District No.
03-1; (iii) modify TIF Plan; and (iv) authorize execution of
Redevelopment Contract
COUNCIL MEETING - PUBLIC HEARING
(i) review and approve modifications to Redevelopment
Plan and existing TIF Plans; (ii) enlarge TIF District No.
03-1; (iii) modify TIF Plan
G:\WPDATA\N\NEW H0PS\25\TIF\CHR0N0I0GY.D0C
KRASS MONROE, P.A.
ATTORNEYS AT LAW
Mary E. Molzahn
Email marym@bmsmonroe.com
trassmonroe.com
Voice Mail (952) 885-4382
MEMORANDUM
To; City of New Hope
Attn: Amy Baldwin
From: Mary E. Molzahn, Sr. Development Analyst
Date: July 21, 2004
Re: TIF District #04-2/PPL
Our File No. 10048-21
Enclosed please find a Notice of Public Hearing and map for publication on August 11th.
After publication of the notice, we would appreciate receiving an affidavit of publication
for our files. If you have any questions, please give a call.
G-UPDATAINWEW HOPEO COMBALDWIN MEM 2.DOC
8000 NORMAN CENTER DRIVE • SUITE 1000 • BLOOMINGTON, MINNESOTA 55437
TELEPHONE 9521885.5999 • FACSIMILE 9521885-5969
www.krrassmonme.com
NOTICE OF PUBLIC HEARING
CITY OF NEW HOPE
COUNTY OF HENNEPIN
STATE OF MINNESOTA
NOTICE IS HEREBY GIVEN THAT the City Council (the "Council") of the City of
New Hope, Minnesota, will hold a public hearing on Monday, August 23, 2004, at 7:00
p.m. o'clock, or shortly thereafter, at City Hall, 4401 Xylon Avenue North, New Hope,
Minnesota, 55428, relating to the following matters: (1) modification of the Restated
Redevelopment Pian for Redevelopment Project No. 1 (the "Project Area") reflecting
increased geographic area, increased project costs and increased bonding authority
within the Project Area; (2) modification of the Tax Increment Financing Plans for Tax
Increment Financing Districts Nos. 80-2, 81-1, 82-1, 85-1, 85-2, 86-1, 02-1, 03-1
(Special Law), and Tax Increment Financing District No. 04-1 (Special Law) reflecting
increased geographic area, increased project costs and increased bonding authority
within the Project Area; (3) creation of Tax Increment Financing District No. 04-2; and,
(4) adoption of a Tax Increment Financing Plan relating thereto, all pursuant to
Minnesota. Statutes, Sections 469.001 to 469.047, 469.124 to 469.134, 469.090 to
469.108 and 469.174 to 469.1799, and Laws of Minnesota 2003, Chapter 21, Article
10, Section 10, inclusive. Copies of the documentation relating to the above proposed
actions will be on file and available for public inspection in the City Clerk's office.
The property proposed to be included in Tax Increment Financing District No. 04-
2 is described below and set forth on the attached map:
PIN 06-118-21-34-0021, including adjacent streets and rights-of-way
All interested persons may appear at the hearing and present their views orally
or in writing.
BY ORDER OF THE CITY COUNCIL
Is/ Daniell Donahiie
City Manager
(attach map)
G:\WPDATA\N\NEW HOPE\21\TIF\NOTICE OF PUBLICATION_DOC
,'� ... w.......... r........
LIM
TIF ]districts
map C
Project Area — the area in vrhich lax
increment can be spent.
Now TIF District — the area in whici)
tax incrMent is generated.
RESOLUTION FINDING THAT THE INCREASE IN GEOGRAPHIC AREA
TO REDEVELOPMENT PROJECT NO. 1
IS CONSISTENT WITH THE COMPREHENSIVE LAND USE PLAN
OF THE CITY OF NEW HOPE
WHEREAS, the New Hope Economic Development Authority (the "EDA") and
the City of New Hope (the "City") are proposing the enlargement of Redevelopment
Project No. 1 (the "Project Area) by modifying its geographic boundaries and to
amend the Restated Redevelopment Plan (the "Plan") relating thereto, pursuant to
, Sections 469.001 to 469.047, 469.124 to 469.134, 469.090 to
469.108 and 469.174 to 469.1791, inclusive, as amended and supplemented from
time to time, and
WHEREAS, the additional property proposed to be added to the Project Area is
described on the attached Exhibit A and illustrated on the attached Exhibit B, and
WHEREAS, the Planning Commission has reviewed said modification to the
Plan and Project Area, and has determined its consistency to the overall
comprehensive land use plan of the City.
NOW THEREFORE, BE IT RESOLVED BY THE NEW HOPE PLANNING
COMMISSION that the adoption of the modification to the Plan for the Project Area is
consistent with the City's comprehensive land use plan.
Adopted this 4 day of Au us,+ , 2004
aZ�-� S
Chairman
ATTEST:
G:\WPDATA\N\NEW HOPE\ 21 \TIF\ PLANNING COMMISSION RESOLUPION.DOC
--i-7(p
" TTAHennepin County Taxpayer Services Department
-1
1 A-600 Hennepin County Government Center
Minneapolis, Minnesota 55487-0060
August 13, 2004
James Casserly
Krass Monroe, P.A.
8000 Norman Center Drive Suite 1000
Minneapolis, MN 55437-1178
Re: New Hope Project for Pride in Living Housing TIF District No. 04-2
Dear Mr. Casserly:
Enclosed is a report from Richara P. Johnson, Hennepin County Deputy Administrator, to the
Hennepin County Board of Commissioners, concerning the proposed New Hope Project for Pride in
Living Housing TIF District No. 04-2.
Please arrange to have the report entered into the record of the public hearing of the New Hope City
Council on Monday, August 23, 2004, to reflect the input of Hennepin County, as provided by
Minnesota Statutes, Section 469.175, Subd. 2.
If you have any questions about this information, please call me at 612-348-5076.
Sincerely,
a C/1?7
Jean 7Bierbaum, Senior Administrative Assistant
Administrative Services Division
Cc Kirk McDonald, City of New Hope, 4401 Xylon Avenue North, New Hope, MN 55428
RevuNewHopePPL8232004JTransmittalLetter
An Equal Opportunity Employer Recycled Paper
Memo
Date: August 13, 2004
To: Board of County Commissioners
From: Richard P. Johnson, Deputy County Administrator
Subject: New Hope Project for Pride in Living Housing TIF District No. 04-2
Hearing Date: New Hope City Council Monday, August 23, 2004 at 7:00 p.m.
PROPOSAL:
In response to New Hope's need for additional affordable housing, Project for Pride in Living(PPL) has proposed
construction of a rental apartment and ownership condominium development. The site chosen for the development, at
5501 Boone Avenue North (06-118-21-34-0021), has remained undeveloped because it has soil problems that require
pilings for construction and relocation of a pond at the northern portion of the parcel. Project for Pride in Living has
requested TIF assistance to help offset the excessive costs to correct and work around the soil and ponding problems
and to provide low/moderate income rental and owner -occupied housing units.
The Housing TIF District will be developed in two phases. Phase I, to be constructed by 1213112005, will contain a 35 -
unit apartment building with. underground and surface parking. The rental apartments will be a 100% low-income
housing tax credit development with at least 75% of the units rented to households with incomes less than 60% of the
area median income.
Phase 11, to be constructed by 1213112006, will contain a 41 -unit market rate, for -sale condominium building with
underground and surface parking. These owner -occupied units will be marketed to low/moderate income individuals or
families. Tax Increment assistance will be needed because the selling prices will be less than the development and
construction costs.
FISCAL IMPLICATIONS: The Housing TIF District will have a duration of 25 years from receipt of the first tax
increment. Thirty-five percent ($2,100,000) of the projected tax increment of $6,000,000 will be expended for
Land/building acquisition ($700,000), Site improvement and preparation costs ($700,000) and public parking facilities
($700,000). Bond and loan/note interest payments will expend 52.5% ($3,150,000) of the projected tax increment
The Sources and Uses of Public Funds for the New Hooe TIF District No. 04-2 are:
SOURCES of FUNDS
Amount
USES of FUNDS
Amount
Tax Increment
$6,000,000
Land/Building Acquisition
$700,000
Investment Eamings
600,000
Site ImprovementslPreparation
700,000
'Transfers In
150,000
Public Parking Facilities
700,000
Bond Proceeds
2,625,000
Bond Principal
2,625,000
Total Project & Financing Revenue
$9,375,000
Bond Interest & Loan/Note Interest
3,150,000
Administrative Costs (up to 10%)
600,000
Transfers Out
900.00
Total Financing and Project Costs
$9,375,000
Continued...
August13,2004
Board of County Commissioners
New Hope TIF District No. 04-2
Page 2
SUMMARY: This Housing TIF District will create 35 units of 1 uu�/o low-income housing tax credit rental apartments and
41 low/moderate income for -sale condominium units. In addition to the financial assistance needed by Project for Pride
in Living for construction of the low and low/moderate income housing, assistance is also needed to resolve soil and
ponding problems on the development site. For these reasons, it appears that this TIF District satisfies the Hennepin
County Board of Commissioners' preference for use of TIF both as a financing tool of last resort to deal with site
problems and for targeting public assistance to lower income housing projects of demonstrated need, as identified in'
Resolution 92-10-917R1, adopted 10/27/92.
A copy of this report will be sent to the City of New Hope with a request that it be entered into the public record of the
August 23, 2004, public hearing of the New Hope City Council, to reflect the County's position on this proposal.
RevuNewHopePPL82320o4J
EDA
A.REQUEST FOR ACTION
Originating Department
Approved for Agenda
Agenda Section
Community Development
09-13-04
EDA
Item No.
By: Kirk McDonald, Director of CD
By:
Shawn Siders, CDSpecialist
A RESOLUTION AUTHORIZING EXECUTION AND DELIVERY OF A CONTRACT FOR PRIVATE
REDEVELOPMENT BY AND BETWEEN THE NEW HOPE ECONOMIC DEVELOPMENT AUTHORITY
AND PROJECT FOR PRIDE IN LIVING, INC. FOR THE REDEVELOPMENT OF 5501 BOONE AVENUE
NORTH. (IMPROVEMENT PROJECT NO. 776)
REQUESTED ACTION
Staff requests that the EDA approve the attached resolution regarding a private redevelopment contract
between the EDA and Project for Pride in Living, Inc., prepared by Krass Monroe, the city's financial
consultant. If approved, this development agreement will facilitate the construction of a thirty-five (35) unit
affordable rental apartment building as well as a forty-one (41) unit market rate, owner occupied
condominium building. This development addresses the life cycle housing goals component outlined in the
city's Comprehensive Plan. This development agreement is drafted in accordance with the provisions of the
term sheet which was approved by the EDA at its meeting of May 10, 2004. Mr. James Casserly with Krass
Monroe will review the details of this development agreement with the EDA.
POLICY/PAST PRACTICE
City goal #2 is to emphasize the maintenance and redevelopment of commercial and residential properties
within the city. The EDA has been addressing the residential portion of this goal through the city's many
housing activities, including coordinating with potential developers on the sale and development of city -
owned property. The EDA has previously entered into contracts for private redevelopment with developers
to facilitate improvements in the city_
BACKGROUND
The property located at 5501 Boone Avenue North and a portion of the property located at 5425 Boone
Avenue North was acquired in 1993, through eminent domain proceedings. It was anticipated that an adult
daycare facility would be constructed on the site. That project did not proceed and the land has been vacant
since it was acquired.
MOTION BY j+�� SECOND BY i
TO:: `1 3
I:IRFAIPLANNING1Hous1n 15501 BoonelQ-PPL de a rvl.doc
C o
Request for Action Page 2 September 13, 2004
On June 17, 2003, city staff received the initial development proposal from PPL, Inc. for the possible
development of the site located at 5501 Boone Avenue North. At its meeting of June 23, 2003, the developer
proposed the construction of two buildings which would contain seventy (70) housing units. The first
building would consist of thirty-five (35) affordable rental units. The other would consist of thirty-five (35)
market rate, owner occupied condominium units. At that meeting, the EDA directed the developer to
consider adding additional market rate, owner occupied condominium units so that the number of owner
occupied units is greater than the number of rental units. The developer responded to this request and
proposed the construction of forty-one (41) market rate, owner occupied condominium units.
On October 27, 2003, the EDA directed staff to proceed with a financial/tax increment finance analysis for the
project located at 5501 Boone Avenue North. The proposal for which the financial analysis would be modeled
assumed the construction of thirty-five (35) affordable rental units and forty-one (41) market rate, owner
occupied condominium units. Of those thirty-five affordable rental units, it was proposed that eight of the
units would be income restricted to those families that were at or below 30% of the Area Median Income
(AMI). That proposal stipulated that those units would be Section 8 eligible.
Based on the findings of the financing/tax increment financing analysis prepared by Krass Monroe, the EDA
directed staff to proceed with developing preliminary terms for an agreement between the EDA and PPL, Inc.
That action was taken by the EDA at its meeting of March 22, 2004.
In that regard, the EDA approved the term sheet that had been developed by city staff and its consultants on
May 10, 2004. The term sheet stipulated that the development would include the construction of thirty-five
(35) affordable rental units and forty-one (41) market rate, owner occupied condominium units.
On July 26, 2004, the New Hope City Council conditionally rezoned the property located at 5501 Boone
Avenue North. Once the conditions of the approval set forth by the council had been addressed, the property
will be rezoned from I "Industrial" to R-4 "High Density Residential." The findings of the council at that time
indicated that this rezoning is in accordance with the goals and principles of the city's Comprehensive Plan
and the high-density residential designation is consistent with the adjoining land uses.
The EDA approved a resolution which modified the restated redevelopment plan and tax increment financing
plans for the project located at 5501 Boone Avenue North at its meeting of August 23, 2004. At that meeting,
there were questions regarding the disbursement of the tax revenues levied in the tax increment finance (TIS')
district. The city's financial consultant, Krass Monroe, P.A. has prepared two memoranda which are attached
for your convenience. Those memoranda highlight the financial advantages of establishing the TIF district.
Mr. James R. Casserly and Ms. Gay Greiter in a memorandum dated September 8, 2004 note that the property
is currently tax exempt and will be taxable once the property is transferred to PPL, Inc. Once developed, the
property will generate approximately $163,964 in annual tax revenue. If the property were to be developed as
either a commercial/industrial project, it would generate approximately $90,000 in annual tax revenue. Mr.
Casserly and Ms. Greiter indicate that a portion of the proceeds from the TIF district will be used to reimburse
the city for the original land acquisition cost, plus interest as well as provide approximately $14,000 annually
to assist the city with its redevelopment programs in administration fees. Finally, it is noted that any
inflationary increases in market value will allow the TIF district to be decertified more quickly.
c ,
Request for Action Page 3 September 13, 2004
Mr. Greg D. Johnson and Mr. James R. Casserly, in a memorandum dated September 8, 2004 note that each
taxing jurisdiction will receive a portion of the property taxes on the value of the land. The distribution of
revenue for each taxing district is as follows:
Property Tax Distribution - Estimate for 2008
City
$1,858
1.1%
County
$1,790
1.1%
School District (TC Levy)
$1,296
0.8%
Other Jurisdictions
$284
0.2%
School District (MV Levy)
$17,814
10.9%
City Admin Fees
$14,092
8.6%
City Land Reimbursement
$28,386
17.3%
Project Expenses
$98,444
60.0%
Total Annual Property Taxes
$163,964
100.0%
It is anticipated that the first full year of taxes being paid on the fully developed property will be 2008 and the
enclosed analysis is predicated upon the entire project being built -out by that time. In 2008, given the current
tax levy, the project will generate approximately $163,964 in annual tax revenue. Messrs. Johnson and
Casserly note that over the projected life of the TIF district, PPL will require less than half of the total taxes
paid for its project expenses, due to inflation.
There were also questions regarding the terms of the agreement with PPL, Inc. and whether or not the
proposed development has deviated from what was approved by the EDA at prior meetings. In response to
those inquiries, Messrs. Steve Cramer and Christopher Wilson with PPL, Inc. provided the city with a
breakdown of the number and type of units, the proposed rents as well as the income restrictions for each
type of unit. A copy of that letter is attached for reference. PPL, Inc. has summarized the rental rates for the
units at the 5501 Boone Avenue North development. The monthly rental rates have been compared to other
apartment complexes in New Hope. In general, the rental rates that will be charged at 5501 Boone Avenue
North are comparable to other apartrnent complexes in the area. The following table is an excerpt from the
above referenced letter forwarded to the city from PPL, Inc.
Competitive Rental Developments in New Hope*
Continental Apartments
Continental Village
Pheasant Park Apartments
1 Bedroom 2 Bedroom 3 Bedroom 4 Bedroom
$670 $760-$790 N/A N/A
$635-$655 $745-$755 N/A N/A
$600-$810 $820-$905 $1145-$1165 N/A
5501 Boone Avenue North N/A $715-$890 $920-$1090 $1060-$1285
~* Data Compiled by PPL from Maxfield Research and phone interviews
Request for Action Page 4 September 13, 2004
REQUEST FOR ACTION
Staff recommends that the EDA approve the Development Agreement between the EDA and PPL, Inc. for the
following reasons:
• The proposal conforms to the original term sheet that was previously approved by the EDA.
• The original EDA site cost of $276,764 will be reimbursed through the increment generated from the
proposed $14.5 million development.
• As requested by the EDA, the ownership portion of the proposal was increased by six (6) units for a
total of forty-one (41) ownership units. These provide additional needed life -cycle housing options
per the city's Life Cycle Housing Study prepared in 1997.
• The thirty-five (35) affordable rental units will assist in the replacement of existing affordable units
that may eventually be displaced due to other redevelopment activities in the city.
The property is currently tax-exempt and does not contribute to the city`s general fund.
• The proposed land use is compatible with the adjoining land uses. The proposed development is in
compliance with the goals and principles of the city's Comprehensive Plan.
FUNDING
The 10% administrative fee provided by annual taxes in the payment stream will cover the cost of
administering the TIF District.
ATTACHMENTS
• Memorandum from J. Casserly & G. Johnson - September 8, 2004
• Memorandum from J. Casserly & G. Greiter -September 8, 2004
• PPL, Inc. Letter - September 3, 2004
• Resolution
• Development Agreement
NEW HOPE ECONOMIC DEVELOPMENT AUTHORITY
COUNTY OF HENNEPIN
STATE OF MINNESOTA
RESOLUTION NO. 2004-34
A RESOLUTION AUTHORIZING EXECUTION AND DELIVERY OF A
CONTRACT FOR PRIVATE REDEVELOPMENT BY AND BETWEEN THE
NEW HOPE ECONOMIC DEVELOPMENT AUTHORITY AND PROJECT
FOR PRIDE IN LIVING, INC. FOR THE REDEVELOPMENT OF 5501
BOONE AVENUE NORTH
BE IT RESOLVED by the New Hope Economic Development Authority (the "EDA")
as follows:
Section 1. Recitals.
1.01 It has been proposed that the EDA enter into a Contract for Private
Redevelopment (the "Contract") with Project for Pride in Living, Inc. ("PPL") to convey to
PPL and redevelop the City -owned property at 5501 Boone Avenue North (the "Site").
1.02 The EDA has duly noticed and held a public hearing pursuant to
Minnesota Statutes, Section 469.105, Subd. 2 relating to the EDA's proposed sale of
the Site to PPL.
Section 2. Findings.
2.01 The EDA hereby finds that the Contract promotes the objectives as outlined
in its Restated Redevelopment Plan for Redevelopment Project No.1 established pursuant
to Minnesota Statutes, Section 469.001 et seq.
2.02 The EDA hereby finds that it has approved and adopted Tax Increment
Financing District No. 04-2 and the EDA has approved and adopted the Tax Increment
Financing Plan relating thereto pursuant to Minnesota Statutes, Sections 469.174 through
469.1799, inclusive, as amended and supplemented from time to time.
Section 3. Authorizations.
3.01 The President and the Executive Director (the "Officers") are hereby
authorized to execute and deliver the Contract when the following condition is met:
Substantial conformity to the Contract presented to the EDA as of this
date with such additions and modifications as those Officers may
deem desirable or necessary as evidenced by the execution thereof.
Adopted by the EDA this 13th day of September , 2004.
ident
ATTEST:
Aarn�iel. �DonahWe, Executive Director
GAWPDATAIMNEW HOPE1211DOMEDA RESOL AUTHG EXEC OF REDEV AGRMOC
KRASS MONROE, P.A.
A T T O R N EYS AT L A W
Gay Greiter, Esq.
Email: ggreiter'a)�Jcrassmonroe.corn
Direct (952) 885-4393
MEMORANDUM
To: City of New Hope
Attn: Kirk McDonald, Community Development Director
From: Gay Greiter, Esq.
James R. Casserly, Esq.
Date: September 8, 2004
James R. Casserty, Esq.
Email: jeasserly@krassmonroe.com
Direct (952) 885-1296
Re: 5501 Boone Avenue N. Summary of Redevelopment Agreement with PPL
Our File No. 10048-21
At your request, we have prepared the following summary of the principal terms of the
Authority's proposed redevelopment agreement with Project for Pride in Living, Inc. (PPL) for the
Council's review at the September 23, 2004 meeting. One of us will attend the meeting and will be
available for questions.
➢ Conveyance of Land to PPL
The Authority will convey the site to PPL at a closing on September 15, 2004, provided that
PPL has secured financing for the Apartment Project. The closing may be extended to October 15,
2004 by agreement of both parties.
➢ City Assistance
The Authority will provide a grant of up to $550,000 for the Apartment Project and up to
$650,000 for the Condo Project as follows:
. The Apartment Project Grant will be provided when site improvements begin.
The Condo Project Grant will be provided in two parts: (1) Up to $150,000 for
grading and ponding when those activities begin, provided PPL also advances $50,000
for such costs, and (2) the balance when pilings or foundation construction begins.
8000 NORMAN CENTER DRIVE, SUITE 1000 • MINNEAPOLIS, MINNESOTA 55437-1178
TELEPHONE 9521885-5999 • FACSIMILE 9521885.5969
www.krassmonme.com
• No more than $350,000 of Authority assistance is to be used for ponding and grading.
Final project costs will be reviewed upon project completion to make sure all of the
assistance given was needed. PPL's developer. fee on each Project is subject to a
dollar cap for this purpose. Any surplus assistance for one Project is not to be applied
to the other Project.
➢ Obligations of the Authority and PPL
The Authority and PPL have the following obligations:
The Authority agrees es to:
• Create a tax increment financing district (already done)
• Convey the site to PPL "as is"
Provide marketable title to the site
Provide water and sewer to the edge of the site
PPL agrees to:
• Demonstrate ability to finance project construction
Obtain necessary rezoning, permits and approvals and observe other governmental
requirements, including bonding
Pay customary City fees for approvals and construction
Build 35 Apartments and 41 Condos according to approved construction plans
Maintain required builder's risk, comprehensive general liability and workers'
compensation insurance
Qualify initial Condo buyers and Apartment residents on an ongoing basis with
respect to applicable income restrictions and comply with reporting requirements
• Manage the Apartment Project for at least five years and obtain City approval for any
change in management
If PPL fails to construct the Projects on a timely basis, the Authority may elect to take back the
portion of the site that underlies the uncompleted Project or Projects.
Construction Timing
• Apartments — commence construction on 9115104; completion by 7131106
• Condos — commence construction on 4115105; completion by 12/31/06
G:IWPDATAWWEW HOPE1211CORWCDONA:DGG01 CONTRACTSUMM.DOC
• Page 2
09/08/2004 14:12 -FAX 852 885 6969 BRASS MONROE
KRASS MONROE, P.A.
ATTORNEYS AT LAW
■ Jams R eamriy
MEMORANDUM
To: City of New Hope
Attn: Kirk McDonald, Comm. Dev. Dir.
Daryl Sulander, Finance Director
Daniel Donahue, City Manager.
From: James R. Casserly, Esq.
Gay Grefter, Esq.
Date: September 8, 2004
Re: PPL 1 Boone
Our File No. T0048-21
■ Gay Grahm. Esq
EmAMagam-afta��em
wwa:lbaunnarmcam
Voice AIlyffim 81SAM
16002
You have asked us to provide you with a brief overview of the financial advantages to the
City of New Hope for proceeding with the PPL project. Briefly they are as follows:
• The property owned by the EDA is currently tax exempt. When It is transferred to
PPL 4 will be revalued and PPL will pay taxes on the market value of the land.
• PPL's use of the property meets the requirements of the $100,000 CDBG Grant
Provided by Hennepin County. As a result, this amount does not have to be retumed
to Hennepin County.
• A tax increment district will be established to assist with the eligible project expenses.
One of the expenses is the City's land cost which will now be recovered with interest
from the tax increment district.
• Taxes for the completed project are estimated to be $163,964. From that amount the
school district would receive, using the current market value levy, the sum of
$17,814.
• The other taxing jurisdictions will be receiving a portion of the property taxes on the
value of the land. This is noted above and is further described in the attached memo
dated September 8, 2004 by Greg D. Johnson of our office.
$000 NORMAN COR DRIVE, SUITE 1000 • NINNFAPouS, MINNESOTA 55437.1178
TBBHONE 9 ALSM s FAcSMLE 9521886.5969
www.krmnrrmn=.wm
09/08/2004 14:12 FAX 952 885 5969 XRASS MONROE la 003
Any increase in the local tax rate Is not considered to be tax Increment and will go to
the local taxing jurisdictions,
The EDA will receive over $14,000 a year to assist the City with its redevelopment
programs.
Any inflationary increases in market value will allow the tax increment district to be
decertified more quicidy.
• Any future market value referendums will not contribute to tax increment receipts but
go directly to the levying jurisdiction.
Any commercial/Industrial use generates approximately 55% of the local property
taxes anticipated fior the residential uses. (Local CJI taxes would be approximately
$90,000 versus the $164,000 for residential).
We have substantial supporting documentation we can provide for the above analysis.
Please let us know if you would like a more detailed report.
JRC/jlt
w/ attachment
G'WMATAWWEW H0PE121VC'A WACD0NAID SULANDER DONAHUE MWC
0 Page 2
09/08/2004 14:12 FAX 952 885 6969 HRASS MONROE
KRASS MONROE, P.A.
ATTORNEYS AT LAW
■ Greg 0. Johnson, GPA
Nn1aH: viofnr�sanl®fQassrnonroetom
wwwaasomomw-cwvn
vake Mail {964 885
MEMORANDUM
To: City of New Nope
Attn: Kirk McDonald, Comm. Dev. Dir.
Daryl Sulander, Finance Director
Daniel Donahue, City Manager.
From: Greg D. Johnson, CPA
James R. Casserly, Esq.
Date: September 8, 2004
Re PPL 1 Boone - Distribution
Our File No. 10048-21
IM 004
■ James R. Cady
F.inary.• AzwofyffiWassmunmaemm
WWWJW&WNXVrMagm
Valve Mail (M 80-1296
Given the current tax rates and levies, we anticipate in 2008 (the first year of full taxes) that
60% of the property taxes would be used for project expenses. The total tax bill of $163,964
Would be distributed as follows. Currently the property pays $0 taxes
Property Tax Distribution - Estimate for 2008
1 City
1,858
1.1%
2 County
1,790
1.1%
3 School District (TC levy)
1,296
0.8%
4 Other Jurisdictions
284
0.2%
5 School District (MV levy)
17,814
10.9%
6 City Admin Fees
14,092
8.6%
7 City Land Reimbursement
28,386
17.3%
8 Project Expenses
98.444
60.0%
Total Annual Property Taxes 153.964 100.0%
Over the projected life of the TIF District, PPL will require less than half of the total taxes
Paid for its project expenses, due to inflation_ Any increased tax increment resulting from
inflation will be available to reduce the life of the TIF District and pay off any obligations for
this project. See the attached pie chart for a graphical depiction of the distribution of taxes.
Please review and let us know if you have any questions on this analysis.
GAMDATAWMV HWM21140RI=0NALD SULANOER DONAHLIE 04.DOC
6000 NORMAN CENTER DRIVE, SUITE 1000 • MINNEAPOLIS, MINNESOTA 65437.1178
TELEPHONE 9621886-5999 • FACSIMILE 9520886- e&g
www.Ismnroe.=n
09/08/2004 14:12 FAX 952 885 5969 BRASS MONROE
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0910112004 WED 16;22 FAI 612 813 0160 CONNECTIONS TO WORK
yglffdfr:k frrfurao' icor over 30 years
August 30, 2004
Kirk McDonald
Community Development Director
City of New Hope
4401 Xylon Ave N
New Hope, MN 55428
Dear Mr_ McDonald,
At the August 23`4 Ciiy Council Meeting, Council Members raised some
questions concerning the terms of our agreement with the City and the use of the
term "market rate" in describing most of the units in the recital .portion of the
projecL
Let us begin by saying that, in our view, nothing -substantial has changed in the
structure of the rental project since the -Council~ approved the term sheet. The
mix of tax credit, -Section 8 and MARIF units has been the some for over a year,
though the County is requiring us to lower the income restrictions on six units by
10%. The unit mix did change as the building went from three to four stories.
Two, two-bedroom units became three bedroom units and one, four-bedroom
unit became a three-bedroom unit for a net gain of one bedroom. The square
footage of the building has. however, remained essentially the same, so, again,
our feeling is that the project is basically the same as proposed last year.
The following is a complete table of rents and income restrictions for our
00021003
Affordable Homing & Oornmunktr Development EmPlollment & Job Training TWO Development Human Services
Pregovtfor Pride In Living - 1035 E. Franklin Avenue • Minneapolis, MN 554oa • 1512A55.51M • FAX -61.2-455.5104. - www.vplanc.org a plloppUne_org
0910112004 WEED 16:22 FAX 612 Sia 0160 CONNECTIONS TO WORK
The following table compares rents at 5501 Boone Avenue with nearby
apartments and illustrates that our rents are comparable to or above the market
rents in the city and that we offer larger units that aren't readily available in the
area. A comparable development with larger units would be our Bass Lake Court
property and rents for the three and four bedroom units at Boone Avenue
Apartments are about $200 per month higher than there.
Competitive Rental Developments in New Hope
uatar uompnea by PPL irnm Maxfield Research and phone intiarviews.
However, although the rants are consistent with the market, our financing
restricts our potential tenants to families earning less than 60% of the area
median income (AMI). HUD defines these families as "low income," so the
development agreement and other documents pertaining to the project will use
similar language. In Hennepin County, 60% of the AMI for a family of four is
$46,020 annually.
We certainly apologize for any misunderstanding and it was not our intention to
be misleading in any way. Hopefully our responses to the Council at the meeting
and this .letter have answered these questions about the project. We very much
value our continued relationship with the City of New Hope and are looking
forward to starting construction on this project_
,ner Christopher Wilson
Director Development Manager
9003/003
1--7
2
3
4
Continental Apartments
$670
$760-
$790
Continental Village
$635-
$745-
$655
$755
Pheasant Park
$600-
$820-
$1145 -
Apartments
$610
$905
$1965
5501 Boone Ave
$715-
$920-
$1060-
$$90$1285
uatar uompnea by PPL irnm Maxfield Research and phone intiarviews.
However, although the rants are consistent with the market, our financing
restricts our potential tenants to families earning less than 60% of the area
median income (AMI). HUD defines these families as "low income," so the
development agreement and other documents pertaining to the project will use
similar language. In Hennepin County, 60% of the AMI for a family of four is
$46,020 annually.
We certainly apologize for any misunderstanding and it was not our intention to
be misleading in any way. Hopefully our responses to the Council at the meeting
and this .letter have answered these questions about the project. We very much
value our continued relationship with the City of New Hope and are looking
forward to starting construction on this project_
,ner Christopher Wilson
Director Development Manager
9003/003
DATED: September 13, 2004
CONTRACT
FOR
PRIVATE REDEVELOPMENT
By and Between
ECONOMIC DEVELOPMENT AUTHORITY
IN AND FOR THE CITY OF NEW HOPE
And
PROJECT FOR PRIDE IN LIVING, INC.
This document was drafted by:
Krass Monroe, P.A.
8000 Norman Center Drive
Suite 1000
Minneapolis, MN 55437
G:IWPOATAIMHEW HOPEUMOC4COVERAOC
TABLE OF CONTENTS
Page
ARTICLE I
Definitions
Section 1.1. Definitions .............................
ARTICLE II
Representations, Warranties and Covenants
Section 2.1. Representations, Warranties and Covenants by the Authority.....................6
Section 2.2. Representations, Warranties and Covenants by the Redeveloper ................. 7
k1l "V Mi II
Undertalan s of Authority and Redeveloper
Section 3.1. Payment of Grants to Redeveloper..............................................................9
Section 3.2. Limitation on Undertalcing of the Authority..............................................10
Section 3.3. Conveyance of the Redevelopment Property .............................................10
Section 3.4. Conditions Precedent to Conveyance................................................:.......10
Section 3.5. Taxes and Special Assessments ..................................... .................11
Section 3.6. Assistance Review----------...........................................................................11
ARTICLE IV
Construction of Minimum Improvements
Section 4.1. Construction of Minimum Improvements.................................................12
Section 4.2. Preliminary Plans and Construction Plans.................................................12
Section 4.3. Completion of Construction.......................................................................13
Section 4.4. Certificate of Completion..........................................................................13
ARTICLE V
Events of Default
Section 5.1. Events of Default Defined..........................................................................14
Section 5.2. Remedies on Default .......................................
Section 5.3.
Revesting Title in Authority Upon Happening of Event
Section 8.2.
Subsequent to Conveyance to Redeveloper............................................15
Section 5.4.
Resale of Reacquired Property; Disposition of Proceeds
Section 8.4.
and Earnest Money..................................................................................16
Section 5.5.
Copy of Notice of Default to Lender and r,'EF..........................................16
Section 5.6.
Lender's or NEF's Option to Cure Defaults..............................................16
Section 5.7.
No Remedy Exclusive................................................................................17
Section 5.8.
Effect of Breach Relating to Apartment Project or
Section 8.9.
CondoProject Only.................................................................................17
Section 5.9.
No Implied Waiver ...................
Section 5.10.
Agreement to Pay Attorney's Fees and Expenses......................................17
ARTICLE VI
Prohibitions Against Assignment and Transfer
Section 6.1. Representation as to Redevelopment.........................................................17
Section 6.2. Prohibition Against Transfer of Property and
Assignment of Agreement......................................................................18
ARTICLE VII
Insurance and Condemnation
Section 7.1. Insurance....................................................................................................18
Section 7.2. Condemnation ............................................................................................20
Section 7.3. Subordination .....................................
ARTICLE VIII
Additional Provisions
Section 8.1.
Conflict of Interest.....................................................................................21
Section 8.2.
Restrictions on Use....................................................................................2.1
Section 8.3.
Titles of Articles and Sections...................................................................21
Section 8.4.
Notices and Demands .................................................. .......................21
Section 8.5.
Indemnification of Authority.....................................................................22
Section 8.6.
Counterparts...............................................................................................22
Section8.7.
Law Governing.........................................................................................22
Section 8.8.
Supplemental Agreements.........................................................................22
Section 8.9.
Subordination of Rights Under this Agreement.........................................22
ii
ARTICLE IX
Termination of Agreement
Section 9.1. Termination................................................................................................23
Section 9.2. Effect of Termination.................................................................................23
SIGNATURES....................................................................................................................24
SCHEDULES
Schedule.A
Legal Description of Redevelopment Property .......................................
A-1
Schedule B
Redevelopment Property Deed................................................................B-1
Schedule C
Certificate of Completion and Release of Forfeiture...............................0-1
Schedule D
Site Improvements..................................................................................
D-1
Schedule E
Declaration of Restrictive Covenants a3id Prohibition
Against Tax Exemption (Apartment Project) .......................................E-1
Schedule F
Declaration of Restrictive Covenants and Prohibition
Against Tax Exemption (Condo Project)..............................................F-1
Schedule G
Escrow Agreement and Receipt..............................................................
G-1
GIWPOATAUMEW HOPE%2MOC1TOC.00C
iii
CONTRACT FOR PRIVATE REDEVELOPMENT
THIS AGREEMENT, made as of the 13th day of September, 2004, by and between the
Economic Development Authority in and for the City of New Hope (the "Authority"), a public body
corporate and politic (the "Authority"), having its principal offices at 4401 Xylon Avenue North, New
Hope, Minnesota 55428, and Project for Pride in Living, Inc,, a Minnesota nonprofit corporation (the
"Redeveloper"), having offices at 1035 East Franklin Avenue, Minneapolis, Minnesota 55404.
WITNESSETH:
WHEREAS, the Authority is a political subdivision of the State of Minnesota and is governed by
a Board of Commissioners (the "Board");
WHEREAS, in furtherance of the Authority's objectives, there has been established a Restated
Redevelopment Plan for Redevelopment Project No. 1 (the "Project Area") in the City of New Hope,
Minnesota (the "City") to encourage and provide maximum opportunity for private development and
redevelopment of certain property in the City which is not now in its highest and best use;
WHEREAS, as of the date of this Agreement the Restated Redevelopment Plan has been prepared
and approved, and the Project -Area has been established pursuant to Minnesota Statutes, Sections
469.001 through 469.047 and 469.090 through 469.108;
WHEREAS, in connection with the Project Area the City Council of the City intends to create a
housing tax increment financing district (the "Tax Increment District") pursuant to Minnesota Statutes
Section 469.174 et seq. (the "Tax Increment Act");
WHEREAS, in connection with the establishment of the Tax Increment District the Council will
approve a tax increment financing plan and will forward it to the County of Hennepin for certification of
the original net tax capacity;
WHEREAS, the Authority currently owns land within the proposed Tax Increment District (the
"Redevelopment Property) and, in order to achieve the objectives of the Restated Redevelopment Plan,
the Authority is willing to convey the Redevelopment Property to the Redeveloper subject to the
Redeveloper proceeding with construction in accordance with this Agreement and the Restated
Redevelopment Plan;
WHEREAS, the Redeveloper plans to construct a building with 35 low to moderate income
apartment units (the "Apartment Project') and a building with 41 market -rate owner -occupied
condominium units (the "Condo Project") on the Redevelopment Property. The Redevelopment Property
requires extensive soil correction, including ponding and pilings. Because of the high costs of site
preparation and underground parking below both buildings, the Redevelopment Property would not be
developed without tax increment assistance;
WHEREAS, the major objectives in establishing the Project Area are to:
1. Promote and secure the prompt development or redevelopment of certain property in the
Project Area, which property is not now in productive use or in its highest and best use, in a manner
consistent with the City's comprehensive plan and with a minimum adverse impact on the environment
and thereby promote and secure the development of other land in the City.
2. Promote and secure additional employment opportunities within the Project Area and the
City for residents of the City and surrounding area, thereby improving living standards, reducing
unemployment and the loss of skilled and unskilled labor and other human resources in the City.
3. Secure the increased valuation ofproperty subject to taxation by the City, County, School
District and other taxing jurisdictions in order to better enable such entities to pay for governmental
services and programs required to be provided by them.
4. Provide for the financing and construction of public improvements in and adjacent to the
Project Area necessary for the orderly and beneficial development or redevelopment of the Project Area
and adjacent areas of the City.
5. Promote the concentration of new desirable residential, commercial, office and other
appropriate development or redevelopment in the Project Area so as to maintain the area in a manner
compatible with its accessibility and prominence in the City.
6. Encourage local business expansion, improvement, development or redevelopment
whenever possible.
7. Create a desirable and unique character within the Project Area through quality land use
alternatives and design quality in new and remodeled buildings.
8. Encourage and provide maximum opportunity for private development or redevelopment
of existing areas and structures which are compatible with the Restated Redevelopment Plan.
9. Create viable environments which would upgrade and maintain housing stock, maintain
housing health and safety quality standards, and maintain and strengthen individual neighborhoods.
10. Stimulate private activity and investment to stabilize and balance the City's housing
supply.
11. Eliminate code violations and nuisance conditions that adversely affect neighborhoods.
12. Revitalize property to create a safe, attractive, comfortable, convenient and efficient area
for residential use.
13. Recreate and reinforce a sense of residential place and security which creates
neighborhood cohesiveness through City investment in neighborhood infrastructure and public
improvements, including landscaping, park improvements, local street modifications to reduce traffic
impacts, street repaving, curb and gutter replacement, and streetlight updating.
14. Encourage infill development and redevelopment that is compatible in use and scale with
surrounding neighborhoods.
2
15. Rehabilitate the existing housing stock and preserve existing residential neighborhoods
wherever possible.
16. Demolish and reconstruct, where necessary, aging residential buildings to preserve
neighborhoods.
17. Removal of substandard structures.
WHEREAS, under the Tax Increment Act, the Authority is authorized to finance certain costs of
projects with tax increment revenues derived from a tax increment financing district established within the
Project Area;
WHEREAS, in order to achieve the objectives of the Authority and City in creating the Project
Area and in adopting the Restated Redevelopment Plan, the Authority is prepared to provide assistance in
accordance with this Agreement; and
WHEREAS, the Authority believes that the development and redevelopment of the Proj ect Area
pursuant to this Agreement, and fulfillment generally of the terms of this Agreement, are in the vital and
best interests of the Authority and the health, safety, morals and welfare'of its residents, and in accord
with the public purposes and provisions of applicable federal, state and local laws under which the
development and redevelopment are being undertaken and assisted;
NOW, THEREFORE, in consideration of the premises and the mutual obligation of the parties
hereto, each of them does hereby covenant and agree with the other as follows:
ARTICLE I
Definitions
Section 1.1. Definitions. In this Agreement, unless a different meaning clearly appears from the
context:
"Act" means Minnesota Statutes, Section 469.001 et seq.
"Agreement" means this Agreement, as the same maybe from time to time modified, amended, or
supplemented.
"Apartment Project Grant" means a grant of $550,000 to be furnished to the Redeveloper by the
Authority for the Apartment Project pursuant to Section 3.1.
"Apartment Project" means a building to be constructed with 35 units of 2, 3 and 4 bedrooms of
low/moderate income rental housing with surface and underground parking. The Apartment Project will
be a 100% low-income housing tax credit project with at least 75% of the units rented to households with
incomes of no more than 60% of area median income.
"Authority" means the Economic Development Authority in and for the City ofNew Hope or any
successor or assigns.
"Certificate of Completion" means the certification, in the form of the certificate contained in
Schedule C, to be provided to the Redeveloper pursuant to Section 4.3.
"City" means the City of New Hope, Minnesota, or its successors or assigns.
"Closing Date" means the date set forth in Section 3.3(b) for the conveyancebythe Authority ofthe
Redevelopment Property to the Redeveloper.
"Condo Project Grant" means a grant ofup to $650,000 to be furnished to the Redeveloper by the
Authority for the Condo Project pursuant to Section 3.1.
"Condo Project" means a building to be constructed with 41 units ofmarket-rate, owner -occupied
1-, 2- and 3 -bedroom condominiums with surface and underground parking.
"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) will be
as detailed as the plans, specifications, drawings and related documents which are submitted to the
building official of the City, and (b) will include at least the following for each building: (1) site pian; (2)
foundation plan; (3) floorplan for each floor; (4) elevations (all sides); (5) facade and landscape plan; (6)
cross sections (length and width) and (6) such other plans or supplements to the foregoing plans as the
Authority may reasonably request.
"Council" means the Council of the City.
"County" means the County of Hennepin, Minnesota.
4
"Declarations of Restrictive Covenants and Prolubition Against Tax Exemption" or "Declarations
of Restrictive Covenants" means the restrictive covenants substantially in the form of Schedule E for the
Apartment Project and Schedule F for the Condo Project.
"Eligible Public Expenses" means all of the costs and expenses incurred by the City or the
Authority in connection with the Redevelopment Project which are eligible to be paid or reimbursed with
Tax Increment under Minnesota Statutes Section 469.176, including the Apartment Project Grant and the
Condo Project Grant.
"Minimum Improvements" means the Apartment Project and the Condo Project.
"Minnesota Environmental Rights Act" means Minnesota Statutes, Sections 116B.01 et seq., as
amended.
"Mortgage" means any mortgage or security agreement in which the Redeveloper has granted or
acquiesced in a security interest in the Redevelopment Property, or any portion thereof, or any
improvements constructed thereon, and which is a permitted encumbrance pursuant to the provisions of
Article VIII.
"NEF" means NEF Assignment Corporation, as nominee, who has executed or will execute an
amended and restated limited partnership agreement with PPL Boone Avenue Apartments LLC, as
general partner, of which the Redeveloper is the sole member, relating to the syndication of the low
income housing tax credits relating to the Apartment Project.
"Party" means either the Redeveloper or the Authority, as the context may require.
"Plan" means, collectively, (i) the Restated Redevelopment Plan adopted by the Authority and
approved by the City for Redevelopment Project No. 1, and (ii) the Tax Increment Plan.
"Project Area" means Redevelopment Project No. 1, as amended, established in accordance with
the Act.
"Public Improvements" means water mains and laterals and sanitary sewer mains to the edge of
the Redevelopment Property, to be constructed by the Authority.
"Redeveloper" means Proj ect for Pride in Living, Inc., a Minnesota nonprofit corporation, and its
permitted successors and assigns.
"Redevelopment Project" means the Redevelopment Property and the Minimum Improvements.
"Redevelopment Property" means the real property owned by the Authority described in Schedule
0
"Redevelopment Property Deed" means a quitclaim deed substantially in the form of the deed
attached as Schedule B used to convey title to the Redevelopment Property from the Authority to the
Redeveloper.
J
"Site Improvements" means the site improvements described on Schedule D as qualified
improvements of the Redevelopment Property.
"State" means the. State of Minnesota.
"Tax Increment" means the real estate taxes paid with respect to the Redevelopment Property
which is remitted to the Authority as tax increment pursuant to the Tax Increment Act.
"Tax Increment Act" means the Tax Increment Financing Act, Minnesota Statutes, Section
469.174 et seq., as amended_
"Tax Increment District" means Tax Increment Financing District No. 4, which was approved by
the Authority and by the Council of the City pursuant to the Tax Increment Act.
"Tax Increment Plan" means the tax increment financing plan adopted by the Authority and
approved by the City in connection with the creation of the Tax Increment District.
"Tax Official" means any City or County assessor; County auditor, City, 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, the State Court of Appeals or the State Supreme Court.
"Termination Date" means the earliest of (i) December 31, 2032, (ii) the date of any termination
of this Agreement in accordance with the provisions of Article V or (iii) the date upon which all Eligible
Public Expenses have been fully reimbursed.
"Unavoidable Delays" means delays which are the result of strikes, acts ofterrorism, casualties to
the Minimum Improvements, the Redevelopment Property or the equipment used to construct the
Minimum Improvements, delays related to financing, delays which are the result of governmental actions
or changes in plans, delays which are the result of judicial action commenced by third parties, citizen
opposition or action affecting this Agreement or adverse weather conditions or acts of God.
ARTICLE II
Representations. Warranties and Covenants
Section 2.1. R resentations Warranties and Covenants by the Authori . The Authority makes
the following representations as the basis for the undertaking on its part herein contained:
(a) The Authority is a public body duly organized and existing under the laws of the State.
Under the provisions of the Act, the Authority has the power to enter into this Agreement and cavy out its
obligations hereunder.
(b) The Authority has approved the Plan in accordance with the terms of the Act.
(c) The Authority will undertake, in good faith, to comply with all statutory requirements of
the Tax Increment Act relating to the creation of the Tax Increment District.
(d) To finance the costs of certain activities to be undertaken by the Redeveloper, the
Authority proposes, in accordance with the provisions of this Agreement, to provide assistance to the
Redeveloper in accordance with the terms of this Agreement.
(e) The Authority will cooperate with the Redeveloper with respect to any litigation
commenced by third parties in connection with this Agreement.
(f) The Authority makes no representation, guarantee, or warranty, either express or implied,
that the. Redevelopment Property will be suitable for the Redeveloper's purposes or needs and hereby
assumes no responsibility or liability as to the Redevelopment Property or its condition (whether
regarding soils, pollutants, hazardous wastes or otherwise), except as stated below. The Authority will
deliver the Redevelopment Property to the Redeveloper in the following condition:
(i) The Authority will have performed the Public Improvements; and
(ii) The Redevelopment Property will have direct access to Boone Avenue.
Section 2.2. Representations Warranties and Covenants by the Redeveloper. The Redeveloper
represents and warrants that:
(a) The Redeveloper is a corporation organized under the laws of the State of Minnesota and
has duly authorized the execution of this Agreement and the performance of its obligations hereunder.
None of the execution- and delivery of this Agreement, the consummation of the transactions
contemplated hereby, nor the compliance with the terms and conditions of this Agreement would result in
a breach of the terms of any agreement or instrument of whatever nature to which the Redeveloper is a
party or by which it is bound.
(b) Subject to Unavoidable Delays, the Redeveloper will construct, operate and maintain the
Minimum Improvements in accordance with the terms of this Agreement, the Plan and all local, state and
federal laws and regulations (including, but not limited to, environmental, zoning, building code and
public health laws and regulations).
(c) The Redeveloper will cooperate with the Authority to rezone the Redevelopment
Property.
(d) As of the date of execution of this Agreement, the Redeveloper has received no notice or
communication from any local, state or federal official that the activities of the Redeveloper or the
Authority in the Project Area may be or will be in violation of any environmental law or regulation.
(e) As of the date of execution of this Agreement, the Redeveloper is aware of no facts, the
existence of which would cause it to be in violation of any local, state or federal environmental law,
regulation or review procedure or which would give any person a valid claim under the Minnesota
Environmental Rights Act.
(f) The Redeveloper will, within one hundred twenty (120) days after the date of this
Agreement for the Apartment Project and within one (1) year after the date of this Agreement for the
Condo Project, use its best efforts to obtain, in a timely manner, all required permits, licenses and
approvals, and will meet, in a timely manner, all requirements of all applicable local, state and federal
laws and regulations which must be obtained or met before the Minimum Improvements may be lawfully
constructed_
(g) The Redeveloper will pay the normal and customary City fees and expenses for the
approval and construction of the Redevelopment Project including, but .not limited to, bonding
requirements, building permit fees, state surcharges, sewer accessibility charges (SAC), water
accessibility charges (WAGS and. park dedication fees.
(h) The Redeveloper agrees that it will cooperate with the Authority and will indemnify the
Authority against all costs, including the costs of defense incurred by the Authority through an attorney
reasonably acceptable to the Authority and Redeveloper, with respect to any litigation commenced by
third parties in connection with Redeveloper's failure to perform according to the terms and conditions of
this Agreement.
(i) The financing arrangements which the Redeveloper has obtained or will obtain to finance
construction of the Minimum Improvements, together with financing provided by the Authority pursuant
to this Agreement, will be sufficient to enable the Redeveloper to successfully complete the Minimum
Improvements as contemplated in this Agreement.
'G) The construction of the Minimum Improvements, in the opinion of the Redeveloper,
would not reasonably be expected to occur solely through private investment within the reasonably
foreseeable future without the use of tax increment financing provided by the City pursuant to this
Agreement.
(k) Until the Termination Date, the Redeveloper willmaintain the Apartment Project as rental
housing in accordance with the provisions of Minnesota Statutes, Section 469.174 Subd. 11 and Section
469.1761 Subd. 3, which require that the Apartment Project or a portion thereof be occupied by persons
or families of low or moderate income.
(1) On February I of each year, commencing February 1, 2006 and continuing until the
Termination. Date, the Redeveloper will certify to the Authority that it is in compliance with those
provisions of Minnesota Statutes referred to in Section 2.2(k). The reporting forms used by the
Redeveloper for certification to the Authority will be as prescribed by the Authority and will include the
forms used by the Minnesota. Housing Financing Agency ("META") to verify eligibility for tax exempt
housing revenue bonds or low income housing tax credits, which includes at least MHFA Form LINC-14
(Tenant income Certification) and MHFA Form LILAC -13 (Cumulative Compliance Report).
(m) The Redeveloper will initially act as the manager of the Apartment Project. The
Redeveloper will obtain the written approval of the Authority for the appointment of any successor
manager, which approval shall not be unreasonably withheld.
(n) The Redeveloper will ensure that the Condo Project initially qualifies as owner occupied
housing in accordance with the provisions of Minnesota Statutes, Section 469.174 Subd.1 I and Section
469.1761 Subd. 2, which require that 95 % of the units be initially purchased and occupied by persons or
families of low or moderate income.
(o) Once acquired by the Redeveloper, the Redevelopment Property will not become exempt
from the levy of ad valorem property taxes, or any statutorily authorized alternative, and any
improvements of any kind constructed on the Redevelopment Properly will similarly not become exempt
until the Termination Date.
(p) The Redeveloper agrees, notwithstanding the provisions of Article VI, that it will not
assign, convey or lease any interest in the Redevelopment Property or any portion thereof, or this
Agreement or any portion thereof, to any tax-exempt entity under the U.S. Internal Revenue Code of
1986, as the same may be amended from time to time, without the prior written approval of the Authority
(whose approval will be conditioned upon the Redeveloper obtaining an agreement upon terms reasonably
satisfactory to the Authority from its assignee or lessee to make payments in lieu of tax).
(q) The Redeveloper will execute, and will also cause the homeowners' association for the
Condo Project to execute, appropriate maintenance and easement agreements relating to playground use
and pond maintenance.
ARTICLE III
Undertakings of Authority and Redeveloper;
Conv ance of the Redevelop -anent Pro
Section 3.1. Payment of Grants to Redeveloper.
(a) As consideration for the execution of this Agreement and the construction of the
Apartment Project and the Condo Project by the Redeveloper and subject to the further provisions of this
Agreement:
(i) Apartment Project Grant. The Authority will provide a grant of up to $550,000
when the Redeveloper begins Site Improvements. The funds shall be delivered to Old Republic National
Title Insurance Company (the "Title Company') by January l4' 2005. The funds shall be held in trust by
the Title Company as escrow agent pursuant to an agreement substantially in the form of Schedule G.
(ii) Condo Project Grant. The Authority will irrevocably commit to provide a grant of
up to $650,000 as follows:
(A) Up to $150,000 for grading and ponding at the time the Redeveloper
begins those activities for both Projects, provided that the Redeveloper also advances $50,000 for the
Condo Project grading and ponding, and
(B) The balance of the Condo Project Grant will be provided: (1) when the
Redeveloper begins pilings and the remaining Site Improvements for the Condo Project (if pilings for the
Apartment Project and for the Condo Proj ect were constructed in separate phases) or (2) when foundation
construction begins (if pilings for both of the Apartment Project and Condo Project were done at one
time).
The Redeveloper will perform grading and ponding for both Projects at the same time. In no event shall
more than $350,000 of Authority assistance be used for ponding and grading, both Proj ects.
(b) It a portion of the Site Improvement costs that must be incunred to construct the
Apartment Project are more properly attributable to the Condo Project, such costs will nonetheless be
counted as a portion of the Apartment Project Grant if the Condo Project is not completed (and will not
result in an increase in the amount of the Apartment Project Grant). If both Projects are completed, such
costs will be allocated appropriately between the Projects for purposes of the assistance review set forth in
Section 3.6.
Section 3.2. Limitation on Undertaking of the Authority. The Authority will have no obligation
to, the Redeveloper under this Agreement to furnish the Grants if the Authority, at the time a Grant is to be
delivered, is entitled under Section 5.2 to exercise any of the remedies set forth therein as a result of an
Event of Default which has not been cured. If the Authority has not exercised its remedies under Section
5.2 and if a Grant is withheld due to an Event of Default which is later cured, such Grant will be delivered
after such Event of Default has been cured.
Section 3.3. Convffance of the Redevelopment Pro
(a) Title: The Authority will convey title to, and possession of, the Redevelopment Properly
to the Redeveloper by the Redevelopment Property Deed. The conveyance of title to the Redevelopment
Property pursuant to the Redevelopment Property Deed will be subject to all of the conditions, covenants,
restriction, and limitations imposed by this Agreement and the Redevelopment Property Deed. The
Redevelopment Property Deed will be in recordable form and will be promptly recorded. The
Redeveloper will pay all costs for such recording except the state deed transfer tax, if applicable.
(b) Time of Conveyance. Subject to Unavoidable Delays, the Authority will execute and
deliver to the Redeveloper the Redevelopment Property Deed for the Redevelopment Property on
September 15, 2004, or on such later date as the Authority and the Redeveloper shall mutually agree in
writing, but in no event later than October 29, 2004 '(the "Closing Date"). The Redeveloper will take
possession of the Redevelopment Property on the Closing Date.
(c) Price and Payment. Unless otherwise mutually agreed by the Authority and the
Redeveloper, the execution and delivery of all closing documents and the payment of the Purchase Price
will be made at the principal offices of the Authority. The price to be paid by the Redeveloper for the
conveyance of the Redevelopment Property from the Authority to the Redeveloper will be One Dollar
($1.00), the Purchase Price.
Section 3.4. Conditions Precedent to Conveyance. The obligation of the Authority to conveythe
Redevelopment Property to the Redeveloper will be subject to the following conditions precedent:
(a) On the Date of Closing, the Redeveloper is in material compliance with all of the terms
and provisions of this Agreement;
(b) The Redeveloper has secured the financing necessary to construct the Apartment Project;
(c)The Redeveloper has executed the Declarations of Restrictive Covenants; and
(d) The Redeveloper has paid the Purchase Price.
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Section 3.5. Taxes and Special Assessments. The Authority will pay all real estate taxes and all
special assessments pending or levied prior to the year of closing on the Redevelopment Property. Real
estate taxes and installments of special assessments payable in the year of closing will be prorated as of
the Date of Closing based on the Parties' respective period of ownership. Subsequent to the year of
closing the Redeveloper will pay all real estate taxes and special assessments on the Redevelopment
Project.
Section 3.6. Assistance Review.
(a) The Parties intend for the Grant for each Project to not exceed the amount necessary to
cover Project costs not defrayed by sales proceeds (in the case of the Condo Project), grant and loan
proceeds and other revenue sources, including Community Development Block Grants. Following
completion of each Project:
(i) Apartment Project. Any excess funds received by the Redeveloper above the
actual total costs of utility construction, site preparation and construction will be invested in the Project in
the form of additional amenities. The Redeveloper's Developer Fee for the Apartment Project may not
exceed $630,000, of which at least $100,000 shall be deferred and paid from the cash flow from the
Apartment Project.
(ii) Condo Project. Following the sale and closing on all Condo units, the
Redeveloper will provide to the Authority an accounting of grants received, gross sales revenue and the
total actual costs of site preparation, construction and sales expenses. Such accounting shall include a
sworn statement in a form reasonably acceptable to the Authority signed by the Redeveloper's project
architect or construction manager and indicating that the indicated costs have been incurred. Any excess
of grants and sales revenues over such costs will be reimbursed to the Authority. The Redeveloper's
Developer Fee for the Condo Project may not exceed $450,000.
(b) Each Project will be treated on a stand-alone basis for purposes of the maximum amount
of each Grant to be furnished by the Authority and for purposes of this Section. Thus, surplus revenue on
one Project will be disposed of as provided in subparagraph (a) above and will not be applied to any
shortfall with respect to the other Project.
(c) Third -party payments and soft costs (such as for planning, financing, legal, architectural
and engineering) will be included in Project costs for purposes of this Section. Such payments and costs
shall not be counted as Developer Fee even ifpaid to or incurred by the Redeveloper or an affiliate of the
Redeveloper, as long as such payments and charges are reasonable and within normal and customary
industry standards.
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ARTICLE IV
Construction of Minimum Improvements
Section 4.1. Construction of Minimum Im rovements. The Redeveloper shall construct and pay
for all Site Improvements described in Schedule D. The Redeveloper will construct the Minimum
Improvements on the Redevelopment Property in accordance with Construction Plans approved -by the
City.
Section 4.2. PrelinbigU Plans and Construction Plans.
(a) Preliminary Plans. Prior to the commencement of construction of the Minimum
Improvements, the Redeveloper shall submit Preliminary Plans to the Authority consisting of typical floor
plans and sketches of the typical exterior and interior of the.proposed Minimum Improvements which
illustrate the size and character of the proposed buildings. The Preliminary Plans shall not be inconsistent
with this Agreement or any applicable state and local laws and regulations, insofar as said consistency
may be determined at said preliminary stage. If approval of the Preliminary Plans is requested in writing
by the Redeveloper at the time of submission thereof to the Authority, the Authority shall approve or
reject (in whole or in part) such Preliminary Plans in writing within thirty (3 0) days after the date of
receipt thereof. If no written rejection is made within said thirty (30) days, the Preliminary Plans shall be
deemed approved by the Authority. Any rejection shall set forth in detail the reasons therefor. If the
Authority rejects the Preliminary Plans, in whole or in part, the Redeveloper shall submit new or revised
Preliminary Plans within a reasonable time after receipt by the Redeveloper of the notice of rejection.
The provisions of this Section relating to approval, rejection and resubmission of new or revised
Preliminary Plans shall continue to apply until the Preliminary Plans have been approved by the
Authority. The Authority's approval of the Preliminary Plans shall not be unreasonably withheld.
(b) Construction Plans. Prior to the Redeveloper's commencement of construction of each
Proj ect, the Redeveloper shall submit to the Authority Construction Plans for the Minimum Improvements
in that Project. The Construction Plans shall provide for the construction of the Minimum Improvements
and shall be in conformity in all material respects with this Agreement, the Preliminary Plans, and all
applicable state and local laws and regulations. The Authority shall approve the Construction Plans in
writing if (i) the Construction Plans conform in all material respects to the terms and conditions of the
Preliminary Plans and this Agreement; (ii) the Construction Plans conform to all applicable federal, State
and local laws, ordinances, rules and regulations; (iii) the Construction Plans are adequate to provide for
the construction of the Minimum Improvements; (iv) the Construction Plans do not provide for
expenditures in excess of the funds available to the Redeveloper for the construction of the Minimum
Improvements; and (v) no Event of Default has occurred and is continuing.
No approval by the Authority shall relieve the Redeveloper of the obligation to comply with the terms of
this Agreement and 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 any Event of Default.
Upon the Redeveloper's submittal of the Construction Plans to the Authority, such Construction Plans
shall be deemed approved unless rejected in writing by the Authority, in whole or in part, within thirty
(30) days after the date of their receipt by the Authority. Such rejection shall set forth in detail the
reasons therefor. If the Authority rejects any Construction Plans in whole or in part, the Redeveloper
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shall submit new or corrected Construction Plans within a reasonable time 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 withheld. Said
approval shall constitute a conclusive determination that the Construction Plans (and the Minimum
Improvements relating thereto, if constructed in accordance with said plans) comply with the provisions
of this Agreement relating thereto. The Construction Plans shall not be rejected due to any objection
which could have been raised upon review of the Preliminary Plans and corrected more economically at
that time_
(c) Changes. If the Redeveloper desires to make anymaterial change in the Preliminary Plans
or Construction Plans after their approval by the Authority, then the Redeveloper shall submit the
proposed change to the Authority for its approval. If the Preliminary Plans or Construction Plans, as
modified by the proposed change, conform to the requirements of this Section 4.2 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 Preliminary Plans or Construction Plans shall,
in any event, be deemed approved by the Authority unless rejected in writing by the Authority, in whole
or in part, within thirty (30) days after receipt of the notice of such change, setting forth in detail the
reasons therefor.
Section 4.3. Completion of Construction.
(a) Subject to Unavoidable Delays, the Redeveloper will achieve substantial completion of
the construction of the Minimum Improvements as follows:
(i) AaartmentProi ect. Begin Site Improvements on or about November 15, 2004;
completion of the Apartment Project by July 31, 2006.
(ii) Condo Project. Begin construction of building on or about April 15, 2005;
completion of the Condo Project by December 31, 2006. Site Improvements shall be constructed timely
so as to permit building construction to begin as scheduled.
(b) All work with respect to the Minimum Improvements to be constructed or provided by the
Redeveloper on the Redevelopment Property will be in conformity with the Construction Plans.
(c) 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, will diligently prosecute to completion the development of the Redevelopment Property through
the construction of the Minimum Improvements thereon, and that such construction will in any event be
completed within the period specified in this Section.
Section 4.4. Certificate of Completion.
(a) Promptly after completion of the Minimum Improvements for each building in accordance
with the provisions of this Agreement relating to the obligations of the Redeveloper to construct such
improvements (including the date for completion thereof), the Authority will furnish the Redeveloper with
a Certificate of Completion for such Building in substantially the form attached as Schedule D. The
Certificate of Completion shall be a conclusive determination and conclusive evidence of the satisfaction
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and termination of the agreements and covenants in this Agreement and in the Redevelopment Property
Deed with respect to the obligations of the Redeveloper and its successors and assigns, to construct the
Minimum Improvements for each building and the date for the completion thereof.
(b) if the Authority believes the Redeveloper has failed to complete the Minimum
Improvements as to any building for which a Certificate of Completion is requested by the Redeveloper,
the Authority shall, within thirty (30) days after such written request by the Redeveloper, provide the
Redeveloper with a written statement, indicating in adequate detail in what respects the Authority believes
the Redeveloper has failed to complete the Minimum Improvements in accordance with the provisions of
this Agreement, and what measures or acts will be necessary, in the opinion of the Authority, for the
Redeveloper to take or perform in order to obtain a Certificate of Completion.
(c) The construction of the Minimum Improvements for each building shall be deemed to be
completed in accordance with the Redeveloper's obligations hereunder when the City has issued a
certificate of occupancy for any individual residential unit of that Building.
ARTICLE V
Events of Default
Section 5.1. Events of Default Defined. Whenever it is used in this Agreement, the term "Event
of Default" will mean any one or more of the following events:
(a) Failure by the Redeveloper to complete the Minimum Improvements pursuant to the
terms, conditions and limitations of this Agreement.
(b) The holder of any Mortgage on the Redevelopment Property or any improvements
thereon, or any portion thereof, commences foreclosure proceedings and such proceedings proceed to a
sale as a result of any default under the applicable Mortgage documents.
(c) Failure by the Redeveloper to substantially observe or perform any other covenant,
condition, obligation or agreement on its part to be observed or performed under this Agreement.
(d) If the Redeveloper:
(i) files any petition in bankruptcy or for any reorganization, arrangement,
composition, readjustment, liquidation, dissolution, or similar relief under the United States Bankruptcy
Act of 1978, as amended or under any similar federal or state law; or
(ii) makes an assignment for the benefit of its creditors; or
(iii) admits in writing its inability to pay its debts generally as they become due; or
(iv) is adjudicated as bankrupt or insolvent; or if a petition or answer proposing the
adjudication of the Redeveloper, as bankrupt or its reorganization under any present or future federal
bankruptcy act or any similar federal or state law is filed in any court and such petition or answer is not
discharged or denied within ninety (90) days after the filing thereof; or a receiver, trustee or liquidator of
14
the Redeveloper, or of the Minimum improvements, or part thereof, is appointed in any proceeding
brought against the Redeveloper, and is not discharged within ninety (90) days after such appointment, or
if the Redeveloper consents to or acquiesces in such appointment
Section 5.2. Remedies on Default. Whenever any Event of Default referred to in Section 5.1
occurs and is continuing (and subject to Sections 5.5 and 5.6), the Authority may take any one or more of
the following actions after providing thirty (30) days' written notice to the Redeveloper, but only if the
Event of Default has not been cured within said thirty (30) days or if the Redeveloper is not making its
best efforts to cure a default which cannot be cured within thirty (30) days:
(a) The Authority may suspend its performance under this Agreement until it receives
assurances from the Redeveloper, deemed adequate by the Authority, that the Redeveloper will cure its
default and continue its performance under this Agreement.
(b) The Authority may cancel and rescind this Agreement.
(c) The Authority may withhold a Certificate of Completion.
Section 5.3. Revesting Title in Authority Upon Happening of Event Subsequent to Conve ante
to Redevelo er. In the event that subsequent to conveyance of the Redevelopment Property to the
Redeveloper and prior to receipt by the Redeveloper of a Certificate of Completion:
(a) Subject to Unavoidable Delays, the Redeveloper fails to carry out its obligations with
respect to the construction of the Minimum Improvements (including the nature and the date for the
initiation and completion thereof), or abandons or substantially suspends construction work, and any such
failure, abandonment, or suspension is not cured, ended, remedied or assurances reasonably satisfactory
to the Authority made within sixty (60) days after written demand from the Authority to the Redeveloper
to do so; or
(b) The Redeveloper fails to pay any real estate taxes or assessments on any portion of the
Redevelopment Property which has been conveyed to the Redeveloper when due (which taxes or
assessments the Redeveloper is responsible for hereunder), or creates, suffers, assumes, or agrees to any
encumbrance or lien on the Redevelopment Property which is unauthorized by this Agreement, or suffers
any levy or attachment to be made, or any materialmen's or mechanics' lien, or any other unauthorized
encumbrance or lien to attach, and such taxes or assessments are not paid, or the encumbrance or lien
removed or discharged or provision reasonably satisfactory to the Authority made for such payment,
removal, or discharge, within thirty (30) days after written demand by the Authority to do so; provided,
that if the Redeveloper first notifies the Authority of its intention to do so, it may in good faith contest any
mechanics' or other lien filed or established and, in such event, the Authority will permit such mechanics'
or other lien to remain undischarged and unsatisfied during the period of such contest and any appeal, but
only if the Redeveloper provides the Authority with a bank letter of credit, a statutory lien bond as
provided by Minnesota Statutes or other security in the amount of the lien, in a form satisfactory to the
Authority pursuant to which the bank or other obligor will pay to the Authority the amount of any lien in
the event that the lien is finally determined to be valid. During the course of such contest the Redeveloper
will keep the Authority informed respecting the status of such defense; or
(c) There is, in violation of Article Vl, any transfer of the Redevelopment Property or any
part thereof, or any change with respect to the identity of the parties in control of the Redeveloper and
15
such violation is not cured within sixty (60) days after written demand by the Authority to the
Redeveloper;
Then, subject to Sections 5.5 and 5.6, the Authority will have the right to re-enter and take possession of
the Redevelopment Property and to terminate (and revest in the Authority) the estate conveyed by the
Redevelopment Property Deed to the Redeveloper, it being the intent of this provision, together with other
provisions of the Agreement,. that the conveyance of the Redevelopment Property to the Redeveloper will
be made upon, and that the Redevelopment Property Deed will contain a condition subsequent to the
effect that in the event of any default on the part of the Redeveloper and failure on the part of the
Redeveloper to remedy, end, or abrogate such default within the period and in the manner stated in such
subdivisions, the Authority at its option may declare a termination in favor of the Authority of the title,
and of all the rights and interests in and to the Redevelopment Property conveyed to the Redeveloper, and
that such title and all rights and interests of the Redeveloper, and any assigns or successors in interest to
and in the Redevelopment Property, will revert to the Authority, but only if the events stated in Section
5.3 (a), (b) or (c) have not been cured within the time periods provided above.
Notwithstanding anything to the contrary contained in this Section, the Authority will have no right to re-
enter or retake title to and possession of any part of the Redevelopment Property for which a Certificate of
Completion has been issued or if the Authority has subordinated its rights to the holder of a Mortgage as
provided for in Section 7.3.
Section 5.4. Resale of Reac aired P=p. Dis osition of Proceeds and Earnest Mom. Upon
the revesting in the Authority of title to the Redevelopment Property as provided in Section 5.3, the
Authority will have no further responsibility to the Redeveloper hereunder. The Authority may sell or
otherwise devote the Redevelopment Property to such other uses as the Authority may in its sole
discretion determine, without reimbursement of any sums paid by the Redeveloper to the Authority under
this Agreement.
Section 5.5. CM ofNotice of Default to Lender and NEF. Prior to the issuance of a Certificate
of Completion, whenever the Authority shall deliver any notice or demand to the Redeveloper with
respect to any breach or default bythe Redeveloper in its obligations under this Agreement, the Authority
shall at the same time forward a copy of such notice or demand: (i) to each holder of a Mortgage which
relates to the same portion of the Redevelopment Property to which such breach or default relates (a
"Holder') at the Holder's address as shown in the records of the Authority, and (ii) if such breach or
default relates to the Apartment Project, to NEF at: National Equity Fund, Inc., 120 South Riverside
Plaza, 15th Floor, Chicago, IL 60606, Attention: General Counsel.
Section 5.6. Lender's or NEF's Ovtion to Cure Defaults. After any breach or default by the
Redeveloper in its obligations under this Agreement, each Holder and/or NEF, as applicable, shall
(insofar as the rights of the Authority are concerned) have the right, but not the obligation, for a period of
thirty (30) days, at such Holder's or NEF's option, to cure or remedy such breach or default and (with
respect to a Holder) to add the cost thereof to the debt and the lien of its Mortgage, provided, that if the
breach or default relates to construction of the Minimum Improvements, such Holder or NEF shall not,
either before or after foreclosure or action in lieu thereof, undertake to complete construction of the
Minimum Improvements (beyond the extent necessary to preserve any such construction already
completed) without first having assumed in writing the Redeveloper's obligations described inArticle IV
to complete (i) the portion of the Minimum Improvements to which the Mortgage of such Holder relates
or (ii) the Apartment Project, in the case of NEF
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Section 5.7. No Remedy Exclusive. No remedy herein conferred upon or reserved to the
Authority is intended to be exclusive of any other available remedy or remedies, but each and every such
remedy will be cumulative and will be in addition to every other remedy given under this Agreement or
now or hereafter existing at law, in equity or by statute_ No delay or omission to exercise any right or
power accruing upon any default will impair any such right or power or will 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.
Section 5.8. Effect of Breach Relating to Apartment Projector Condo Project Onl .
(a) If a breach or default by the Redeveloper hereunder relates solely to the Apartment .
Project, the Authority shall be entitled to exercise the remedies provided in Sections 5.2 and 5.3 as to the
Apartment Project only; provided that the Authority shall be entitled to exercise its remedies as to the
entire Redevelopment Property if at the time of such breach or default neither: (i) has construction on the
Condo Project begun nor (ii) has the Redeveloper secured the financing necessary to construct the Condo
Project.
(b) If a breach or default by the Redeveloper hereunder relates solely to the Condo Project,
the Authority shall be entitled to exercise the remedies provided in Sections 5.2 and 5.3 as to the Condo
Project only; provided that the Authority shall be entitled to exercise its remedies as to the entire
Redevelopment Property if at the time of such breach or default neither: (i) has construction on the
Apartment Project begun nor (ii) has the Redeveloper secured the financing necessary to construct the
Apartment Project.
Section 5.9. No implied Waiver. In the event any agreement contained in this Agreement should
be breached by any Party and thereafter waived by any other Party, such waiver will be limited to the
particular breach so waived and will not be deemed to waive any other concurrent, previous or subsequent
breach hereunder.
Section 5.1.0. Agnement to Pgy AMm 's Fees and Ex enses. Whenever any Event of Default
occurs and the Authority employs attorneys or incurs other expenses for the collection of payments due or
to become due or for the enforcement or performance or observance of any obligation or agreement on
the part of the Redeveloper herein contained, the Redeveloper agrees that it will, on demand therefor, pay
to the Authority the reasonable fees of such attorneys and such other expenses so incurred by the
Authority.
ARTICLE VI
Prohibitions Against Assigniment and Transfer
Section 6.1. R resentation as to Redevelo ent. The Redeveloper represents and agrees that its
purchase of the Redevelopment Property, and its other undertakings pursuant to this Agreement, are, and
will be used, for the purpose of redevelopment of the Redevelopment Property and not for speculation in
land holding. The Redeveloper further recognizes that, in view of (a) the importance of the
redevelopment of the Redevelopment Property to the general welfare of the Authority, and (b) the
substantial financing that will be made available by the Authority for the purpose of making such
17
redevelopment possible, the qualifications and identity of the Redeveloper are of particular concern to the
Authority. The Redeveloper further recognizes that it is because of such qualifications and identity that
the Authority is entering into this Agreement with the Redeveloper, and, in so doing, is further willing to
accept and rely on the obligations of the Redeveloper for the faithful performance of all undertakings and
covenants hereby by it to be performed.
Section 6.2. Prohibition Against Transfer of P=gMjanad Assi !�t nLA mg
(a) Also, for the foregoing reasons the Redeveloper represents and agrees that prior to the
date of the Certificate of Completion as provided in Section 4.4, except 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 constructing the Minimum Improvements,
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 orpower, or transfer in any other form
of 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, without the prior written approval of the Authority, unless
the Redeveloper remains liable and bound by this Redevelopment Agreement in which event the
Authority's approval is not required. Any such transfer will be subject to the provisions of this
Agreement.
(b) This Section 6.2 does not apply to (i) leases made between the Redeveloper and tenants of
the Apartment Project, (ii) purchase agreements between the Redeveloper and purchasers of units in the
Condo Project, (iii) assignment or transfer of this Agreement or the Redevelopment Property in whole or
in part to one or more entities wholly-owned or controlled by the Redeveloper, or (iv) any transfer of the
interest of a limited partner in an entity described in (iii). With respect to the Apartment Project, the
Redeveloper may lend the proceeds of the Apartment Project Grant to an entity wholly-owned or
controlled by the Redeveloper in connection with an assignment or transfer permitted by clause (iii)_
ARTICLE VII
Insurance and Condemnation
Section 7.1. Insurance.
(a) The Redeveloper will provide and maintain at all times during the process of constructing
the Minimum Improvements and, from time to time at the request of the Authority, will furnish the
Authority with proof of payment of premiums on:
(i) builder's risk insurance, written on the so-called `Builder's Risk -- Completed
Value Basis," in an amount equal to one hundred percent (100%) ofthe insurable value of the Minimum
Improvements at the date of completion, and with coverage available in nonreporting form on the so-
called "all risk" form of policy. The interest of the Authority will be protected in accordance with a
clause in form and content reasonably satisfactory to the Authority;
(ii) comprehensive general liability insurance together with an Owner's Contractor's
Policy with limits against bodily injury and property damage of not less than $2,000,000 for each
occurrence (to accomplish the above -required limits, an umbrella excess liability policy may be used); and
is
(iii) workers' compensation insurance, with statutory coverage.
(b) Upon completion of construction of the Apartment Project and prior to the Termination
Date, the Redeveloper will maintain, or cause to be maintained, at its cost and expense, and from time to
time at the request of the Authority will furnish proof of the payment of premiums on, insurance as
follows:
(i) Insurance against loss and/or damage to the Apartment Project under a policy or
policies covering such risks as are ordinarily insured against by similar businesses, including (without
limiting the generality of the foregoing) fire, extended coverage, vandalism and malicious mischief, boiler
explosion, water damage, demolition cost, debris removal, and collapse in an amount not less than the full
insurable replacement value of such improvements, but any such policy may have a deductible amount of
not more than $25,000. No policy of insurance will be so written that the proceeds thereof will produce
less than the minimum coverage required by the preceding sentence, by reason of co-insurance provisions
or otherwise, without the prior consent thereto in writing by the Authority. The term "full insurable
replacement value" will mean the actual replacement cost of the Apartment Project (excluding foundation
and excavation costs and costs of underground flues, pipes, drains and other uninsurable items) and
equipment, and may be determined from time to time at the request of the Authority, but not more
frequently than once every five (5) years, by an insurance consultant or insurer, selected and paid for and
approved by the Authority. All policies evidencing insurance required by this subparagraph (i) will be
carried in the names of the Redeveloper, the Redeveloper's Mortgagee and the Authority as their
respective interests may appear and will contain standard clauses which provide for net proceeds (the
amount remaining after the deduction of expenses incurred in the collection of such proceeds, the
"Net Proceeds") of insurance resulting from claims per casualty thereunder to the Apartment Project
which are equal to or less than $1,000,000 for loss or damage covered thereby to be made payable directly
to the Redeveloper and/or its Mortgagee, and Net Proceeds from such claims in excess of $1,000,000 to
be made payable jointly to the Redeveloper, its Mortgagee and the Authority. The Authority, the
Redeveloper and its Mortgagee will jointly agree on the amount of settlement.
(ii) Comprehensive general public liability insurance, including personal injury
liability and liability for injuries to persons and/or property, in the minimum amount for each occurrence
and for each year of $2,000,000, which will be endorsed to show the Authority as additional insured.
(c) All insurance required by this Article will be taken out and maintained in responsible
insurance companies selected by the Redeveloper which are authorized under the laws of the State to
assume the risks covered thereby. The Redeveloper will deposit annually with the Authority policies
evidencing all such insurance, or a certificate'or certificates or binders of the respective insurers stating
that such insurance is in force and effect. Unless otherwise provided in this Article, each policy will
contain a provision that the insurer will not cancel nor modify it without giving written notice to the
Redeveloper and the Authority at least thirty (30) days before the cancellation or modification becomes
effective. Not less than fifteen (15) days prior to the expiration of any policy, the Redeveloper will
furnish the Authority with evidence satisfactory to the Authority that the policy has been renewed or
replaced by another policy conforming to the provisions of this Article, or that there is no necessity
therefor under the terms hereof. 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 will deposit with the Authority a certificate or certificates of the respective
insurers as to the amount of coverage in force upon the Minimum Improvements.
19
(d) The Redeveloper agrees to notify the Authority immediately in the case of damage
exceeding $100,000 in amount to, or destruction of, the Apartment Project or any portion thereof
resulting from fire or other casualty. In the event that any such damage does not exceed $750,000, the
Redeveloper will forthwith repair, reconstruct and restore the Apartment Project to substantially the same
or an improved condition or value -as it existed prior to the event causing such damage and, to the extent
necessary to accomplish such repair, insurance relating to such damage received by the Redeveloper will
be applied to the payment or reimbursement of the costs thereof. Net Proceeds of any insurance relating
to such damage up to $750,000 will be paid directly to the Redeveloper.
If the Apartment Project or any portion thereof is destroyed by fire or other casualty and the damage or
destruction is estimated to equal or exceed $750,000, then the Redeveloper, within one hundred and
twenty (120) days after such damage or destruction, will proceed forthwith to repair, reconstruct and
restore the Apartment Project to substantially the same condition or value as existed prior to the event
causing such damage or destruction and, to the extent necessary to accomplish such repair, reconstruction
and restoration, the Redeveloper, its Mortgagee and the Authority will apply the Net Proceeds of any
insurance relating to such damage or destruction received by its Mortgagee and the Authority to the
payment or reimbursement of the costs thereof. Any Net Proceeds remaining after completion of
construction will be disbursed to the Redeveloper. If the damage exceeds seventy percent (70%) of the
County assessor's assessed value, the Redeveloper may elect not to rebuild if all Eligible Public Expenses
are or have been fully reimbursed, from Net Proceeds of insurance or otherwise.
(e) If the Redeveloper is in compliance with the terms and conditions of this Agreement, then
any Net Proceeds of insurance relating to such damage or destruction received by the Authority will be
released from time to time by the Authority to the Redeveloper upon the receipt of:
(i) A certificate of an authorized representative of the Redeveloper specifying the
expenditures made or to be made or the indebtedness incurred in connection with such repair,
reconstruction and restoration and stating that such Net Proceeds, together with any other moneys legally
available for such purposes, will be sufficient to complete such repair, construction and restoration; and
(ii) If Net Proceeds equal or exceed $750,000 in amount, the written approval of such
certificate by an independent engineer.
The Redeveloper will complete the repair, reconstruction and restoration of the Apartment Project,
whether or not the Net Proceeds of insurance received by the Redeveloper for suchpurposes are sufficient
to pay for the same. Any Net Proceeds remaining after completion of such repairs, construction and
restoration will be remitted to the Redeveloper.
Section 7.2. Condemnation. In the event that title to and possession of the Minimum
Improvements or any material part thereof is taken in condemnation or by the exercise of the power of
eminent domain or deed in lieu of condemnation, by any governmental body or other person (except the
City or the Authority) prior to the Termination Date, the Redeveloper will, with reasonable promptness
after such taking, notify the Authority as to the nature and extent of such taking. Upon receipt of any
condemnation award the Redeveloper will use such portion of the condemnation award as is necessary to
reconstruct the Minimum Improvements (or, in the event only a part of the Minimum Improvements has
been taken, then to reconstruct such part) within the Tax Increment District.
20
Section 7.3. Subordination. Notwithstanding anything to the contrary contained herein, the rights
of the Authority with respect to the receipt and application of the proceeds of insurance or condemnation
will be subject to and subordinate to the rights of any holder of any Mortgage with respect to the
Redevelopment Property.
ARTICLE VIII
Additional Provisions
Section 8.1. Conflict of Interest. No member, official, or employee of the Authority will have
any personal interest, direct or indirect, in the Agreement, nor will any such member, official or employee
participate in any decision relating to the Agreement which affects his personal interests or the interests of
any corporation, partnership, or association in which he is, directly or indirectly, interested.
Section 8.2. Restrictions on Use. The Redeveloper will 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 8.3. Titles o€Articles and Sections. Any titles of the several parts, Articles and Sections
of the Agreement are inserted for convenience of reference only and will be disregarded in construing or
interpreting any of its provisions.
Section 8.4. Notices and Demands. Except as otherwise expressly provided in this Agreement, a
notice, demand, or other communication under this Agreement by either Party to the other will be
sufficiently given or delivered if it is dispatched by registered or certified mail, postage prepaid, return
receipt requested, transmitted by facsimile, delivered by a recognized overnight courier or delivered
personally to the following addresses:
Redeveloper: Project for Pride in Living, Inc.
1035 East Franklin Avenue
Minneapolis, MN 55404
Fax: (612) 455-5101
Attention: Steve Cramer, Executive Director
with a copy to: Halleland Lewis Nilan Sipkins & Johnson P.A.
220 South 6th Street, Suite 600
Minneapolis, MN 55402-4501
Fax: (612) 338-7858
Attention: Ronald B. Peterson, Esq.
Authority: City of New Hope
4401 Xylon Avenue North
New Hope, MN 55428
Fax: (763) 531-5136
Attention: Daniel J. Donahue, City Manager
21
with a copy to: Krass Monroe, PA.
8000 Norman Center Drive, Suite 1000
Minneapolis, WN 55437-1178
Fax: (952) 885-5969
Attention: James R. Casserly, Esq.
Section 8.5. Indemnification of Authority.
(a) The Redeveloper releases from and covenants and agrees that the Authority, the City and
its governing body members, officers, and agents, including independent contractors, consultants and
legal counsel, servants and employees thereof (hereinafter, for purposes of this Section, collectively the
"Indemnified Parties") will 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 Minimum Improvements or the Redevelopment Property;
provided, that this indemnification will not apply to any defect in the Minimum Improvements or the
Redevelopment Property which arose after title to such Minimum Improvements or Redevelopment
Property has revested in the Authority pursimt to Section 5.3.
(b) Except for any willful misrepresentation or any willful or wanton misconduct of the
Indemnified Parties, the Redeveloper agrees to protect and defend the Indemnified Parties, now and
forever, and further agrees to hold the Indemnified Parties harmless from any claim, demand, suit, action
or other proceeding whatsoever by any person or entity whatsoever arising orpurportedly arising from the
actions or inactions of the Redeveloper (or of other persons acting on its behalf or under its direction or
control) under this Agreement, or the construction, installation, ownership, and operation of the Minimum
Improvements or the Redevelopment Property; provided, that this indemnification will not apply to (i) the
warranties made or obligations undertaken by the Authority in this Agreement or (ii) any construction,
installation, ownership, and operation of the Minimum Improvements or the Redevelopment Property by
the Authority after title to such Minimum Improvements or Redevelopment Property has revested in the
Authority pursuant to Section 5.3.
(c) All covenants, stipulations, promises, agreements and obligations of the Authority
contained herein will be deemed to be the covenants, stipulations, promises, agreements and obligations
of the Authority and not of any governing body member, officer, agent, servant or employee of the
Authority.
Section 8.6. Counterparts_ This Agreement is executed in any number of counterparts, each of
which will constitute one and the same instrument.
Section 8.7. Law Governing. This Agreement will be governed and construed in accordance
with the laws of the State.
Section 8.8. Supplemental Agreements. The parties agree to execute such additional
agreements or instruments as shall be necessary in order to implement the intended purposes of this
Agreement.
Section 8.9. Subordination of Rights Linder this Agreement. In order to facilitate the obtaining
of financing of the Redevelopment Project, the Authority agrees to subordinate its rights under this
Agreement at any time and from time to time with the following exceptions:
22
(i) The Declarations of Restrictive Covenants and Prohibition Against Tax
Exemption, and
(ii) Sections 2.2(o) and (p).
ARTICLE IX
Termination of A eement
Section 9.1. Termination. This Agreement shall terminate upon its Termination Date and the
discharge of all of the Authority's and Redeveloper's respective obligations hereunder, but no such
termination shall terminate the applicability of Section 5.10 or any indemnification or other rights or
remedies arising hereunder due to any Event of Default which occurred and was continuing prior to such
termination.
Section 9.2. Effect of Termination. Upon a termination of this Agreement pursuant to this
Article DC, this Agreement shall be null and void and neither Parry shall have any further obligations or
liabilities hereunder except as specifically stated in this Agreement. Upon such termination the
Redeveloper and Authority shall deliver to each other such documents as may be necessary to evidence
the termination of this Agreement.
IN WITNESS WHEREOF, the Authority has caused this Agreement to be duly executed in its
name and behalf and the Redeveloper has caused this Agreement to be duly executed as of the date first
above written.
G.NWPDATAX"EW HOPE12 =C%REDEV AGREEMENT V7 (FINAL)_DOC
23
Date: , 2004
ECONOMIC DEVELOPMENT AUTHORITY IN AND
FOR THE CITY OF NEW HOPE
ECRolfier
Its President
.t ,
A .
By .,fig-Gc
Daniel J. Dondiue
Its Executive Director
STATE OF MINNESOTA )
)ss
COUNTY OF HENNEPIN )
On this_ day of IAC' , 2004, before me, a notary public within and for
Hennepin County, personally appeared Don Collier and Daniel J. Donahue, to me personally known who
by me duly sworn, did say that they are the President and Executive Director, respectively, of the
Economic Development Authority in and for the City of New Hope, and acknowledged the foregoing
instrument on behalf of said Authority.
.. VALERIE J. LEONE
ROTARY PUBLIC -MINNESOTA
s = MY Commiesioe� E Fires &i. 31,2X5
/azztu "_Z�
Notary Public
Authority Signature Page — Contract for Private Redevelopment
24
Date: //J-,2004
By
Its
STATE OF�
J }ss
COUNTY OF
On this A_ day 2004 before me, a notary public within and for
County, personally appeared and
to me personally known who by me duly sworn, did say that they are the
and , respectively, of Project for Pride in Living, Inc., a Minnesota
nonprofit corporation, and acknowledged the foregoing instrument on behalf of said corporation.
1
f'
Notary Public
Redeveloper Signature Page — Contract for Private Redevelopment
25
W,
CATHERINE BORER
NOTARY PUB CMI NESOTA
MY COMMISSION EXPIRES I-31- 6
8� �AMd►MMM�°JV�"4+y
Q
Redeveloper Signature Page — Contract for Private Redevelopment
25
SCHEDULE A
LEGAL DESCRIPTION OF REDEVELOPMENT PROPERTY
Lot 2, Block 1, Science and Industry Center 3rd Addition
A-1
SCHEDULE B
REDEVELOPMENT PROPERTY DEED
THIS INDENTURE, made this day of ' 2004, between the Economic
Development Authority in and for the City of New Hope, a public body corporate and politic under the
laws of Minnesota (the "Grantor"), and Project for Pride in Living, Inc., a Minnesota nonprofit
corporation (the "Grantee').
WITNESSETH, that Grantor, in consideration of the sum of One Dollar ($1.00) and other good
and valuable consideration the receipt whereof is hereby acknowledged, does hereby convey and quit
claim to the Grantee, its successors and assigns forever, all the tract or parcel of land lying and being in
the County of Hennepin and State of Minnesota described as follows:
Lot 2, Block 1, Science and Industry Center 3rd Addition
together with all hereditaments and appurtenances belonging thereto, Grantor covenants and represents
that:
Grantee has committed to construct certain improvements and Grantor has a right of re-
entry in accordance with Sections 4.3 and 5.3, respectively, of the Contract for Private
Redevelopment by and between the Economic Development Authority in and for the City
ofNew Hope and Project for Pride in Living, Inc. dated as of September 13, 2004. The
completion of the improvements and the release of the right of re-entry will be evidenced
by the recording of the Certificate of Completion and Release of Forfeiture attached as
Exhibit 1 to this deed.
B-1
IN WITNESS WHEREOF, the Grantor has caused this deed to be duly executed in its behalfby
its President and its Executive Director as of the day and year written above.
ECONOMIC DEVELOPMENT AUTHORITY IN AND
FOR THE CITY OF NEW HOPE
By
Its President
By
Its Executive Director
STATE OF MINNESOTA )
) ss
COUNTY OF HENNEPIN )
On this day of 2-004 before me, a notary public within and for
Hennepin County, personally appeared and to me
personally known who by me duly sworn, did say that they are the President and Executive Director,
respectively, of the Economic Development Authority in and for the City of New Hope, a public body
corporate and politic under the laws of Minnesota, and acknowledged the foregoing instrument on behalf
of said Authority.
This instrument was drafted by:
Krass Monroe, P.A.
8000 Norman Center Drive, Suite 1000
Minneapolis, MN 55437-1178
B-2
SCHEDULE C
CERTIFICATE OF COMPLETION AND RELEASE OF FORFEITITRE
WHEREAS, the Economic Development Authority in and for the City of New Hope, a body
corporate and politic under the laws of Minnesota (the "Grantor'), by a Deed recorded in the Office ofthe
County Recorder or the Registrar of Titles in and for the County of Hennepin and State of Minnesota, as
Deed Document Number , has conveyed to Project for Pride in Living, Inc., a Minnesota
nonprofit corporation (the "Grantee'), the following described land in County of Hennepin and State of
Minnesota, to -wit:
Lot 2, Block 1, Science and Industry Center 3rd Addition
WHEREAS, said Deed contained certain covenants and restrictions, the breach of which by
Grantee, its successors and assigns, would result in, a forfeiture and right of re-entry by Grantor, its
successors and assigns, said covenants and restrictions being set forth in said Deed; and
WHEREAS, said Grantee has performed said covenants and conditions insofar as it is able in a
manner deemed sufficient by the Grantor to permit the execution and recording of this certification;
NOW, THEREFORE, this is to certify that all building construction and other physical
improvements specified to be done and made by the Grantee have been completed and the above
covenants and conditions in said Deed have been performed by the Grantee therein and that the provisions
for forfeiture of title and right to re-entry for breach of condition subsequent by the Grantor therein is
hereby released absolutely and forever insofar as it applies to the land described herein, and the County
Recorder or the Registrar of Titles in and for the County of Hennepin and State of Minnesota is hereby
authorized to accept for recording and to record this instrument, and the filing of this instrument will be a
conclusive determination of the satisfactory termination of the covenants and conditions of the contract
referred to in said Deed, the breach of which would result in a forfeiture and right of re-entry.
C-1
Date: _ c . 2004
ECONOMIC DEVELOPMENT AUTHORITY IN AND
FOR THE CITY OF NEW HOPE
By
Its President
By
Its Executive Director
STATE OF MINNESOTA )
)ss
COUNTY OF HENNEPIN )
On this day of 2004 before me, a notary public within and for
Hennepin County, personally appeared and
to me personally known who by me duly sworn, did say that they are the
President and Executive Director, respectively, of the Economic Development Authority in and for the
City ofNew Hope, a public body corporate and politic under the laws of Minnesota, and acknowledged
the foregoing instrument on behalf of said Authority.
Notary Public
C-2
SCHEDULED
SITE IMPROVEMENTS
• Survey (the Authority will provide any surveys in its possession)
Title work
• Platting
• Piling and other soils correction
Environmental testing and remediation
Grading and importlexport of soil in accordance with City -approved grading plans
Sanitary sewer from City mains
Water mains and stubs on the site
Storm sewers and storm water system elements (ponds, pipes, infiltration system) both on and off
site according to the approved site plan, including extension of the storm water main into the
existing pond
• Landscaping according to City -approved landscape plans
Pedestrian improvements pursuant to City -approved site plans
• Retaining walls and fences
• Underground parking with 35 stalls under the Apartment Project and 41 stalls under the Condo
Project
D-1
SCHEDULE E
DECLARATION OF RESTRICTIVE COVENANTS
AMID PROHIBITION AGAINST TAX EXEMPTION
(Apartment Project)
This Declaration is made and executed as of the 13th day of September, 2004 by Project for Pride
in Living, Inc., a Minnesota nonprofit corporation ("Declarant").
RECITALS
A. Declarant is fee owner of the premises located in the County of Hennepin, State of
Minnesota described on Exhibit A attached hereto (the "Property").
B. The Economic Development Authority in and for the City of New Hope, a public body
corporate and politic (the "Authority") has entered into a Contract for Private Redevelopment dated as of
September 13, 2004 (the "Redevelopment Agreement") with the Declarant. The Redevelopment
Agreement provides for certain assistance, financial and otherwise, to be provided by the Authority in
connection with the construction by the Declarant of an affordable apartment building on the Property.
NOW, THEREFORE, in consideration of the foregoing, Declarant, for itself and its successors
and assigns, does hereby declare that the Property will be owned, used, occupied, sold and conveyed
subject to the following covenants and restrictions:
1. No part of the Property or improvements constructed thereon shall become tax exempt
from the levy of ad valorem property taxes, or any statutorily authorized alternative, until December 31,
2032.
2. The covenants and restrictions herein contained will run with the title to the Property and
will be binding upon all present and future owners and occupants of the Property, provided, however, that
the covenants and restrictions herein contained will inure only to the benefit of the Authority and may be
-released or waived in whole or in part at any time, and from time to time, by the sole act of the Authority,
and variances may be granted to the covenants and restrictions herein contained by the sole act of the
Authority. These covenants and restrictions will be enforceable only by the Authority, and only the
Authority will have the right to sue for and obtain an injunction, prohibitive or mandatory, to prevent the
breach of the covenants and restrictions herein contained, or to enforce the performance or observance
thereof.
3. The covenants and restrictions herein contained will remain in effect until December 31,
2032 and thereafter will be null and void.
4. If any one or more of the covenants or restrictions contained in this Declaration are held to
be invalid or enforceable, the same will in no way affect any of the other provisions of this Declaration,
which will remain in full force and effect.
PROJECT FOR PRIDE IN LIVING, INC.
IM
STATE OF )
)ss
COUNTY OF )
2004 before me, a notary public within and for
On this day of and
County, personally appeared did say that they are the
to me personally known who by me duly sworn,
and respectively, of Project for Pride in Living, Inc., a Minnesota
nonprofit corporation, and acknowledged the foregoing instrument on behalf of said corporation.
This Instrument Drafted By
KRASS MONROE, P.A.
8000 Norman Center Drive, Suite 1000
Minneapolis, MN 55437-1178
(612) 885-5999
Notary Public
E-2
SCHEDULE F
DECLARATION OF RESTRICTIVE COVENANTS
AND PROHIBITION AGAINST TAX EXEMPTION
(Condo Project)
This Declaration is made and executed as of the 13th day of September, 2004 by project for Pride
in Living, Inc., a Minnesota nonprofit corporation ("Declarant").
RECITALS
A. Declarant is fee owner of the premises located in the County of Hennepin, State of
Minnesota described on Exhibit A attached hereto (the "Property'l.
B. The Economic Development Authority in and for the City of New Hope, a public body
corporate and politic (the "Authority") has entered into a Contract for Private Redevelopment dated as of
September 13, 2004 (the "Redevelopment Agreement"), with the Declarant. The Redevelopment
Agreement provides for certain assistance, financial and otherwise, to be provided by the Authority in
connection with the construction by the Declarant of a condominium building on the Property.
NOW, THEREFORE, in consideration of the foregoing, Declarant, for itself and its successors
and assigns, does hereby declare that the Property will be owned, used, occupied, sold and conveyed
subject to the following covenants and restrictions:
1. No part of the Property or improvements constructed thereon shall become tax exempt
from the levy of ad valorem property taxes, or any statutorily authorized alternative, until December 31,
2032.
2. The covenants and restrictions herein contained will run with the title to the Property and
will be binding upon all present and future owners and occupants of the Property, provided, however, that
the covenants and restrictions herein contained will inure only to the benefit of the Authority and may be
released or waived in whole or in part at any time, and from time to time, by the sole act of the Authority,
and variances may be granted to the covenants and restrictions herein contained by the sole act of the
Authority. These covenants and restrictions will be enforceable only by the Authority, and only the
Authority will have the right to sue for and obtain an injunction, prohibitive or mandatory, to prevent the
breach of the covenants and restrictions herein contained, or to enforce the performance or observance
thereof.
3. The covenants and restrictions herein contained will remain in effect until December 31,
2032 and thereafter will be null and void.
4. If any one or more of the covenants or restrictions contained in this Declaration are held to
be invalid or enforceable, the same will in no way affect any of the other provisions of this Declaration,
which will remain in full force and effect,
F-1
PROJECT FOR PRIDE IN LIVING, INC.
By
Its
STATE OF )
)ss
COUNTY OF )
On this day of 2004 before me, a notary public within and for
County, personally appeared and
to me personally known who by me duly sworn, did say that they are the
and, respectively, ofProject for Pride in Living, Inc., a Minnesota
nonprofit corporation, and acknowledged the foregoing instrument on behalf of said corporation.
This Instrument Drafted By:
KRASS MONROE, P.A.
8000 Norman Center Drive, Suite 1000
Minneapolis, MN 55437-1178
(612) 885-5999
Notary Public
F-2
SCHEDULE G
ESCROW AGREEMENT AND RECEIPT
The undersigned, Old Republic National Title Insurance Company (the `Escrow Agent),
acknowledges receipt of and No/ 100 Dollars
(the "Escrowed Funds") to be held by it pursuant to the Contract for Private Redevelopment dated as
of September 13, 2004 (the "Redevelopment Agreement) by and between the Economic
Development Authority in and for the City of New Hope, a public body corporate and politic (the
"Authority") and Project for Pride in Living, Inc., a Minnesota nonprofit corporation (the
"Redeveloper"). The Escrow Agent agrees to hold and disburse the Escrowed Funds as set forth
herein.
The Escrow Agent shall, if directed by the Authority, invest the Escrowed Funds in such accounts
or instruments as shall be selected by the Escrow Agent; provided that any such investment shall comply
with the guidelines or restrictions, if any, supplied by the Authority to the Escrow Agent. Any interest on
the accounts or instruments shall accrue for the benefit of the Authority.
The Authority and the Redeveloper shall execute a disbursement direction in substantially the form
of Annex A attached hereto, directing the Escrow Agent to pay in accordance with such instructions.
Upon receipt of the joint disbursement direction, the Escrow Agent shall make disbursement in
accordance therewith.
The Authority and the Redeveloper represent that their respective Tax I.D. Numbers are as follows:
Authority, 41-6008870 ; Redeveloper, 23-7232208.
The Escrow Agent shall have no responsibility for any decision concerning performance or
effectiveness of the Redevelopment Agreement or to resolve any disputes concerning the Redevelopment
Agreement. The Escrow Agent shall be responsible only to act in accordance with the joint and mutual
direction of both the Authority and the Redeveloper or, in lieu thereof, the direction of a court of competent
jurisdiction. The Authority and the Redeveloper undertake to hold the Escrow Agent harmless from all
claims for damages arising out of this Escrow Agreement and do hereby agree to indemnify the Escrow
Agent for all costs and expenses in connection with this escrow, including court costs and attorneys' fees,
except for the Escrow Agent's failure to account for the Escrowed Funds, or acting in conflict with the terms
of this Escrow Agreement.
The usual and customary fees and charges of the Escrow Agent shall be paid by the Authority and
the Redeveloper in equal shares.
This Escrow Agreement and Receipt may be executed in one or more counterparts, each ofwhich is
binding upon a party when executed and together which will constitute a single document.
G-1
Date: , 2064
OLD REPUBLIC NATIONAL TITLE INSURANCE
COMPANY
By:
ECONOMIC DEVELOPMENT AUTHORITY IN AND
FOR THE CITY OF NEW HOPE
By
Its President
By
Its Executive Director
PROJECT FOR PRIDE IN LIVING, INC.
By
Its
By
Its
G-2
ANNEXA
INSTRUCTIONS TO ESCROW AGENT
Pursuant to that certain Escrow Agreement dated September , 2004 by and between
Economic Development Authority in and for the City of New Hope, having offices at 4401 Xylon
Avenue North, New Hope, MN 55428, Project for Pride in Living, Inc., having its principal offices
at 1035 East Franklin Avenue, Minneapolis, MN 55404, and Old Republic National Title Insurance
Company, having offices at 400 Second Avenue South, Minneapolis, MN 55401 ("Escrow Agent"},
the Escrow Agent is hereby instructed to disburse the sum of as
follows:
ECONOMIC DEVELOPMENT AUTHORITY IN AND
FOR THE CITY OF NEW HOPE
By
Its President
By
Its Executive Director
PROJECT FOR PRIDE IN LIVING, INC.
Its v
By _
Its
G-3
Originating Department
Community Development
By: Kirk McDonald, Director CD
Curtis Jacobsen, CD Specialist
COUNCIL
Request for Action
Approved for Agenda
November 1, 2006
Discussion regarding Linden Park Condominium project (Improvement Project No. 776)
Agenda Section
Development.
and Planning
Item No.
Requested Action
Staff requests to update the City Council regarding recent correspondence and activities relating to the
Linden Park Condominiums proposed by Project for Pride in Living (PPL).
Policy/Past Practice
It is city policy for staff to provide updates regarding projects in the city.
Background
The New Hope EDA entered into a Contract for Private Redevelopment dated September 13, 2004. with PPL
relating to the construction of an apartment project and a condominium project. PPL has completed the
apartment project and is now seeking to close on its construction financing with Wells Fargo Bank for the
condo project.
Four documents have been forwarded by PPL and its legal counsel to the city for signature by the City and
EDA as appropriate. All of the transactions contemplated by the documents were specifically contemplated
and permitted by Sections 6.2 and 8.9 of the Redevelopment Agreement (these provisions are attached as
Exhibit A of the Krass Monroe Memo of October 31, 2006) The EDA specifically agreed to subordinate its
rights under the Redevelopment Agreement if required for PPL to obtain financing. The City has executed
substantially similar documents for the financing of the apartment project.
The Citv's
at Krass Monroe are of the opinion that the City and the EDA are
Motion by t Second by
To:
I:\RFAIPLANNING\PLANNING\Q - Linden Park Condominiums - PPL.doc
to execute each of the four documents in order to meet its contractual obligations under the Redevelopment
Agreement. It is further their opinion that should the City and EDA not execute the documents until further
assurances are provided that are not in the original Redevelopment Agreement, the City and EDA will be
subject to a breach of contract claim.
On October 27, 2006, PPL submitted correspondence indicating they understood the city concern regarding
rental and that they would undertake to amend their documents to address that concern. PPL representatives
met with the Mayor, City Manager, City Attorney and other staff on October 31 to address how they would
further address this issue. They are requesting that the City Council execute the appropriate documents so
that the closing can take place on November 3, 2006.
Funding
Tax increment funding as authorized in the 2004, Contract for Private Redevelopment and pass through
funding in the form of a grant from the Metropolitan Council are associated with this contract. No additional
or new financing is requested.
Next steps
Staff recommends that the documents be signed and forwarded to PPL to facilitate the construction financing
of the project.
Attachment(s)
• PPL letter, dated October 27, 2006
• Krass Monroe memo, dated October 31, 2006
Krass Monroe memo, dated October 31, 2006
• Krass Monroe memo, dated October 31, 2006 and attachments
I: \RFA\PLANNING \PLANNING \Q -Linden Park Condominiums - PPL.doc
_ A
PP -L
Bu iditW fgiure'-€vr; over 30 years
October 27, 2006
Mr. Curtis Jacobsen
City of New Hope
4401 Xylon Avenue North
New Hope, :VIN 55428
Dear Mr. Jacobsen:
With regard to our discussion earlier this morning as to leasing provisions in the
Declaration for the Linden Park Condominiums:
The Declaration currently provides the following provisions:
1. All leases are subject to reasonable regulation by the association
2. All leases shall be in writing and shall not be for less than 6 months
3. All leases shall be for entire units and not for individual rooms
4. All leases must provide that they are subject to the terms of the Declaration, Rules
and Regulations, and the Minnesota common Interest Community Act, and that
failure to comply with these provisions shall be a default under the terms of the
leases
5. Garage units may be leased only to unit owners and not for a period longer than 1
year
To provide the assurances that the city is interested in seeing, which we have discussed,
we would propose to add the following provisions to the declaration:
1. The Association shall not allow more than 10% of the Living Units to be leased at
any one time
2. Copies of all leases affecting any units or garage units shall be submitted to the
Board of Directors of the Association.
The exact legal language around these provisions will need to be closely considered. I
will provide you with copies of the document after it is revised. We are planning to
present our reservation holders with purchase agreements in late November and early
December, and will need to have the language amended and in place prior to that.
I would also point out that Section 2.2, Paragraph N of our Contract for Private
Development with the city requires us to ensure that the Condo Project will initially
qualify as owner -occupied housing. So, we do have provisions in place that provide
assurances that the development will initially be owner -occupied.
We also want to be clear that, while we will put the provisions in place to reasonably
limit the eventual owners' ability to rent units, to the best of our ability, there are also
Affordable Housing & Community Development Employment & Job Tralning Youth Development Human Services
Project for Pride In Uving ■ 1035 E. Franklin Avenue • Minneapolis, MN 55404 ■ 612.455-5100 • FAX:612.455.5101 • www.ppl-Inc.org • ppl@ppHnc.org
provisions in the Declaration that allow the owners to change the terms of the Declaration
with a vote of 3/ or unit owners and 213 of eligible mortgagees. Such provisions are very
common for homeowner's associations throughout the state. So, as would be the case for
any other housing developer, we certainly cannot guarantee that association will not take
such action in the future.
My hope is that the Mayor, City council and staff will find these assurances with regard
to leasing to be acceptable. We appreciate the partnership we have enjoyed with the City
of New Hope, and look forward to completing what we believe will be an outstanding
housing development. Please contact me at (612) 455-5215, or by email at (61.2) 455-
5215, with any questions or concerns you may have.
Sincerely,
e✓'!cam,Z2
Matt Soucek,
Housing Development Project Manager
CC: Barbara McCormick, PPL
Chris Wilson, PPL
Chris Dettling, PPL
■ V IOV
! MKO�id�OE
Gay L. Carney
gcemey@krassmonroe. eom
Direct 952.885.4393
Also admitted in Now York
James R. Casserly
Jcasserty@kressmor,rae.com
Direct 952.$85.9296
MEMORANDUM
To: City of New Hope
Attn: Hon. Martin Opem, Sr., Mayor
Attn: Daniel J. Donahue, City Manager
Attn: Kirk McDonald, Community Development Director
Attn: Curtis Jacobsen, Community Development Specialist
cc: Jensen Anderson Sondrall, P.A.
Attn: Steven A. Sondrall, Esq.
From: Gay L. Cemey, Esq.V
James R. Casserly, Esq.
Date: October 31, 2006
Re: New Hope/Project for Pride in Living, Inc,
Our t=ile No. 10048-21
The New Hope EDA entered into a Contract for Private Redevelopment dated September 13,
2004 (the "Redevelopment Agreement") with Project for Pride in Living, Inc. ("PPL") relating to
PPL's construction of an apartment project (the "Apartment Project") and a condominium project
(the "Condo Project").
PPL completed the Apartment Project earlier, and is now seeking to close on its construction
financing with Wells l=argo Bank for the Condo Project. PPL has named the Condo Project the
Linden Park Condominiums.
The documents which PPL and its counsel, Angela Christy, forwarded to us for signature by the
City or EDA, as appropriate, and the purpose of each is as follows:
Assignment and Assumption of Redevelopment Contract-- PPL has
requested that the EDA consent to the assignment of the Redevelopment
Agreement to Linden Park Condominiums, LLC, a single -asset entity owned by
PPL, to the extent that the Redevelopment Agreement relates to the Condo
Project
8WO Norman Center Drim Suite 1000
MlnneVolis, Minnesota 55437.1178
TEL 952.885.5999 FAX 952.885.5969
www.krasSm0nrae.com
Assignment and Subordination of Contract for Private Redevelopment —
PPL has requested the EDA's consent to a further assignment of the
Redevelopment Agreement, and subordination of the EDA's rights thereunder, to
Wells Fargo Bank as security for the loan.
Assignment of Contract Documents and Intangibles — PPL has requested
the City to agree to the assignment of certain contracts and other intangibles to
Wells Fargo Bank, also as security for the loan.
Master Disbursement Agreement — PPL has requested the City to execute this
Agreement, which provides -for the priority in which the grants and loans PPE. has
obtained to finance the Condo Project will be disbursed. The City's portion of
that financing includes a $125,000 Metropolitan Council Livable Communities
grant administered by the City and a $650,000 grant provided by the City
pursuant to the Redevelopment Agreement.
All of the transactions contemplated by the abovementioned documents were specifically
contemplated and permitted by Sections 6.2 and 8.9 of the Redevelopment Agreement. These
provisions are attached as Exhibit A, with the most relevant provisions underlined. In Section
8.9, the EDA agreed to subordinate its rights under the Redevelopment Agreement if required
for PPL to obtain financing for both Projects.
The City and EDA executed substantially similar documents as these when the -Apartment
Project was financed in 2004.
We have been advised that the City has refused to execute these documents until PPL agrees
to a restriction on the ability of the condo buyers to lease their units.
It is our view that the City and the EDA are required to execute each of the above -
referenced documents in order to meet its contractual obligations under the
Redevelopment Agreement If the City and the EDA do not execute these documents, or
refuse to execute the documents until additional conditions are met that were not
provided for in the Redevelopment Agreement (such as the rental restriction), the City
and the EDA will be subject to a breach of contract claim.
Rental Restrictions
It is our understanding that PPL offered to agree that no more than 10% of units may be leased
at any one time.
Ms. Christy and her colleague, Peter Berrie, have advised us that the financing of this
transaction is based on obtaining Freddie Mac and FHA approval of the mortgages to be offered
to the condo buyers. HUD guidelines for Freddie Mac and FHA mortgages do not permit a
lease restriction of this nature. According to Ms. Christy, if a lease restriction such as that being
discussed is entered into, the individuals and families to whom PPL has presold condo units will
not be able to obtain mortgages and Wells Fargo Bank will not proceed with the financing of the
Condo Project.
EXHIBIT A
EXCERPTS FROM THE REDEVELOPMENT AGREEMENT
Section 6.2. Prohibition Against transfer of Property and Assignment of
Agreement.
(a) Also, for the foregoing reasons the Redeveloper represents and agrees that prior
to the date of the Certificate of Completion as provided in Section 4.4, except for the purpose of
obtainin-g 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
constructing the Minimum Improvements, 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 form of 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, without the prior written approval of the Authority, unless the
Redeveloper remains liable and bound by this Redevelopment Agreement in which event the
Authority's approval is not required. Any such transfer will be subject to the provisions of this
Agreement.
(b) This Section 6.2 does not apply to (i) leases made between the Redeveloper and
tenants of the Apartment Project, (!i) purchase agreements between the Redeveloper and
purchasers of units in the Condo Project, (iii) assignment or transfer of this Agreement or the
Redevelopment Property in whole or in part to one or more entities wholly-owned or controlled
by the Redeveloper, or (iv) any transfer of the interest of a limited partner in an entity described
in (iii). With respect to the Apartment Project, the Redeveloper may lend the proceeds of the
Apartment Project Grant to an entity wholly-owned or controlled by the Redeveloper in
connection with an assignment or transfer permitted by clause (iii).
Section 8.9. Subordination of Rights Under this Agreement. In order to facilitate
the obtaining of financing of the Redevelopment Project the Authority a Tees to subordinate its
rights under this A reement at any time and from time to time with the following exceptions:
(1) The Declarations of Restrictive Covenants and Prohibition Against Tax
Exemption, and . .
01) Sections 2.2(o) and (p).
G.\WPDATAWWEW HOPW1 GORVOPEM MCDONALD OONAHUE JACOBSEN GLO OtDOC
Page 1 of 1
Jacobsen Curtis
From: Gay Cerney [gcerney@krassmonroe.com]
Sent: Tuesday, October 31, 2006 10:30 AM
To: McDonald Kirk; Donahue Dan; Steve Sondrall; Jacobsen Curtis
Cc: James Casserly
Subject: PPL condo closing
I spoke to Angela Christy and she is having one of her colleagues locate the regulation which disallows restrictions on private
homeowners' ability to rent Fannie Mae and FHA -financed units. She thinks it's in a HUD handbook. As I may have mentioned,
she is running off to another closing but will make sure someone at her firm looks that up for us.
She explained that neither Fannie Mae nor FHA is providing project financing to PPL. Rather, the concern is that they will be
providing the mortgage financing to the condo buyers in the secondary market. These mortgages will not be marketable in the
2ndary market without being HUD -insured. If, as Angela claims, a rental restriction would violate Fannie Mae and FHA
guidelines, PPL's condo buyers would no longer be able to obtain these mortgages and PPL would lose its buyers. If PPL loses
its presale buyers, the financing will fall apart because Wells Fargo. will not agree to fund the construction loan without those
presales.
Gay
Gay Cerney I Krass Monroe, P.A. 1 8000 Norman Center Dr, Suite 1000 1 Minneapolis, MN 55437
Direct: (952) 885-4393 1 Fax: (952) 885-5969
Also admitted in New York
THE INFORMATION CONTAINED IN THIS EMAIL MESSAGE AND IN ANY ACCOMPANYING ATTACHMENT IS CONFIDENTIAL AND PRIVILEGED. IT IS INTENDED
ONLY FOR THE USE OF EACH RECIPIENT. IF YOU ARE NOT AN INTENDED RECIPIENT, OR THE EMPLOYEE OR AGENT RESPONSIBLE FOR DELIVERING THIS
MESSAGE TO AN INTENDED RECIPIENT, YOU ARE HEREBY NOTIFIED THAT ANY DISCLOSURE, COPYING, OR DISTRIBUTION OF THE CONTENTS OF THIS
TRANSMISSION IS STRICTLY PROHIBITED. IF YOU HAVE RECEIVED THIS EMAIL IN ERROR, PLEASE NOTIFY US IMMEDIATELY BY TELEPHONE.
ANY TAX ADVICE CONTAINED IN THIS ELECTRONIC OR WRITTEN COMMUNICATION (INCLUDING ANY ATTACHMENT) IS NOT INTENDED BY OUR FIRM TO BE
USED, AND CANNOT BE USED, BY ANY PERSON FOR THE PURPOSE OF AVOIDING ANY PENALTIES IMPOSED UNDER THE INTERNAL REVENUE CODE OR
APPLICABLE STATE OR LOCAL TAX LAW PROVISIONS. NO WRITTEN ADVICE FROM OUR FIRM MAY BE USED IN PROMOTING, MARKETING OR
RECOMMENDING ANY PARTNERSHIP, ENTITY, INVESTMENT PLAN OR ARRANGEMENT TO ANY TAXPAYER WITHOUT OUR EXPRESS CONSENT. THIS NOTICE
IS PROVIDED PURSUANT TO U.S. TREASURY DEPARTMENT CIRCULAR 230.
10/31/2006
Page 1 of 1
Jacobsen Curtis
From: Gay Cemey [gcerney@krassmonroe.com]
Sent: Tuesday, October 31, 2006 10:59 AM
To: Steve Sondrall
Cc: Donahue Dan; Jacobsen Curtis; McDonald Kirk; James Casserly
Subject: FW: PPUI-inden Park
Attachments: HUD Home Mortgage Insurance.pdf; FNMA Selling.pdf
Steve,
See below and attached.
Gay
Gay Cerney I Krass Monroe, P.A. 1 8000 Norman Center Dr, Suite 1000 : Minneapolis, MN 55437
Direct: (952) 885-4393 1 Fax: (952) 885-5969
Also admitted in New York
From: Wertish, Keri N. [mailto:KWertish@Megre.comJ
Sent: Tuesday, October 31, 2006 10:46 AM
To: Gay Cerney
Cc: Christy, Angela M.; Lansing, Carol
Subject: Linden Park
At Angela Christy`s request, attached are copies of HUD and FNMA regulations regarding rental restrictions. Please refer to
Section 8(f) on the last page of the first attachment and to Section 609.03 on page 2 of the 2nd attachment.
If you have any questions or comments, please let me or Angela know.
LAWYER BIOGRAPHIES I PRACTICE EXPERIENCE I CONTACT U5
Kerf N. Werttsh
Attorney
e E Faegre Et Benson LLA
a 2200 Wells Fargo Center
90 South Seventh Street
Minneapolis, MN 55402-3901
612-766-7908 / FAX 612-766-1600
KWertish@faegre,com
Biography I Download My Contact Info as V -Card I www.faegre.com
MINNESOTA 1 COLORADO I IOWA I LONDON I FRANKFURT I SHANGHAI
10/31/2006
www.hudclips.org
Page 1 of 35
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APPENDIX 24
APPENDIX 24
HUD LEGAL POLICIES. The attached policy statements will serve
to assist attorneys certifying that legal documents meet HUD's
objectives. Legal documents submitted to HUD for project approval
must be accompanied by certification from the mortgagee's attorney
or other attorney that the documents comply with State and local
condominium laws, HUD regulations and with the BUR policy statements
attached.
NOTE: = will accept legal documents that have been accepted
by FNMA, FHLMC, and/or VA. Evidence shall be submitted that
the documents have been approved.
Page 1 12/80
HUD -Wash., D.C.
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APPENDIX 24
October, 1980
REVISED LEGAL POLICIES*
1. TYPES OF CONDOMINIUMS
The following types of basic ownership arrangements are
generally acceptable provided they are established in
compliance with the applicable condominium law of the
jurisdiction(s) in which the condominium is located:
(a) ownership of units by individual owners coupled with
an undivided interest in all common elements.
(b) Ownership of units by individual owners coupled with
an undivided interest in general common elements and
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specified limited common elements.
The agencies and corporations will consider for approval,
on an individual case basis, an arrangement involving
ownership of units by individual owners coupled with an
undivided interest in the general common elements and/or
limited common elements, with title to additional property
for common use vested in an association of unit owners,
where such a configuration of ownership is not precluded
* The Revised Legal Policies set forth herein provide a listing
of those general policies agreed to by HUD, VA, FNMA,
and FHLMC with respect to provisions of legal significance
usually contained in the constituent legal documentation
for a condominium project. The applicable regulations and
related publications of the Department of Housing and Urban
Development and the Veterans Administration and the basic
contracts and guides of the Federal National Mortgage
Association MM) and the Federal Home Loan Mortgage
Corporation (FHLMC) should be consulted for a complete
statement of the respective legal policies and requirements
of each Task Force member organization governing their
approval of condominiums or unit mortgages.
** Not applicable to conventionally financed existing condominium
projects.
12/80 Page 2
HUD -Wash., D.C.
2
Page 2 of 35
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APPENDIX 24 -
by the applicable condominium law. As to this type of ownership
arrangement, in addition to compliance with the requirements
of the organizations, respective condominium programs,
there must be compliance with the applicable requirements
of the organizations, respective planned unit development
(PUD) programs.
The above descriptions of types of ownership arrangements
are not intended to exclude other variations. Other forms
of ownership may be. acceptable, on an individual case
basis, to any or all of the agencies and corporations.
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Page 3 of 35
2. ESTATE OF UNIT OWNER
The legal estate of each unit owner must generally be
held in fee simple or acceptable leasehold estate. The
acceptability of leasehold estates varies among the agencies
and corporations.
The declaration or equivalent document shall allocate an
undivided interest in the common elements to each unit.
Such interest may be allocated equally to each unit, may
be proportionate to that unit's relative size or value,
or may be allocated according to any other specified
criteria provided that the method chosen is equitable
and reasonable for that condominium.
3. CONDOMINIUM DOCUMENTATION
(a) Compliance with applicable law. The declaration, by-laws
and other enabling documentation shall conform to the
--' -- - Page 3 12/80
HUD -bash., D. C.
[Prev Hit][Next Hit]4265.1 CHG 4
APPENDIX 24
3
laws governing the establishment and maintenance of
condominium regimes within the jurisdiction in which
the condominium is located, and to all other laws
which apply to the condominium.
(b) Recordation. The declaration and all amendments or
modifications thereof shall be placed of record in
the manner prescribed by the appropriate jurisdiction.
If recording of plats, plans, or by-laws or equivalent
documents and all amendments or modifications thereof
is the prevailing practice or is required -by law
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Page 4 of 35
within the jurisdiction where the project is located,
then such documents shall be placed of record. if
the by-laws are not recorded, then covenants,
restrictions and other matters requiring record notice
should be contained in the declaration or equivalent
document.
(c) Availability. The owners association shall be required
to make available to unit owners, lenders and the
holders and insurers of the first mortgage on any unit,
current copies of the declaration, by-laws and other
rules governing the condominium, and other books,
records and financial statements of the owners
association. The owners association also shall.be
required to make available to prospective purchasers
current copies of the declaration, by-laws, other rules
governing the condominium, and the most recent annual
audited financial statement, if such is prepared.
12/80 Page 4
HUD -Wash., D.C.
(Prev Hit] [Next Hit] 4265.1
APPMWIX 24
4
*Available* shall at least mean available for inspection
upon request, during normal business hours or
under other reasonable circumstances.
The declaration, or its equivalent, shall provide that
upon written request from any of the agencies or
corporation which has an interest or prospective
interest in the condominium, the owners association
shall be required to prepare and furnish within a
reasonable time an audited financial statement of
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www.hudclips.org Page 5 of 35
the owners association for the immediately preceding
fiscal year.
4. REAL PROPERTY DESCRIPTION
(a) Property Description. The description of the units,
common elements, any recreational facilities and other
related amenities, and any limited common elements
shall be clear and in conformity with the law
of the jurisdiction where the project is located.
Responsibility for maintenance and repair of all
portions of the condominium shall be clearly set
forth.
** (b) Developmental Plan. The description or other legally
enforceable and binding document must state in a
reasonable manner the overall development plan of the
condominium, including building types, architectural
style and the size of the units. Under the applicable
42651.4 CEG 4
APPENDIX 24
Page 5 12/80
HUD -Wash., D.C.
provisions of the declaration or such other legally
enforceable and binding document, the development of
the condominium must be consistent with the overall
plan, except that the declarant may reserve the right
to change the overall plan or decide not to construct
planned units or improvements to the common elements
if the declaration sets forth the conditions required
to be satisfied prior to the exercise of that right,
the time within which the right may be exercised, and
any other limitations and criteria that would be necessary
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Page 6 of 35
or appropriate under the particular circumstances.
Such conditions, time restraints and other limitations
must be reasonable in light of the overall plan for the
condominium.
S. DECLARANT'S RIGHTS AND RESTRICTIONS
(a) Disclosure and Reasonableness of Reserved Rights.
Any right reserved by the declarant must be reasonable
and set forth in the declaration.
(b) Examples of Acts and Reserved Rights Which are
Usually Unacceptable. The following action on the part
of the declarant, the developer, an affiliate of the
declarant, the sponsor of a project, or any other party,
(collectively referred to as "declarant") usually would
be unacceptable.
12/80 Page 6
[Prev Hit] INext Hit] 4365.1 C
APPMMIX 24
6
Binding the owners association either directly or
indirectly to any cf the following agre6aente unless the
owners association shall have a right of termination
thereof which is exercisable without penalty at any
time after transfer of control, upon not more than 90
days' notice to the other party thereto:
(i) Any management contract, employment contract or
lease of recreational or parking areas or facilities;
(ii) Any contract or lease, including franchises and
licenses, to which a declarant is a party.
The requirements of (i) and (ii) of this subparagraph
do not apply to acceptable ground leases.
As used in this section, -*affiliate of a declarant"
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shall mean any person or entity which controls, is
controlled by, or is under common control with, a
declarant. A.person or entity shall be deemed to control
a declarant if that person or entity (i) is a general
partner, officer, director, or employee of the declarant;
(ii) directly or indirectly or acting in concert with
one or more persons, or through one or more subsidiaries,
owns, controls, or holds with power to vote, or holds
proxies representing, more than 20 percent of the voting
shares of the declarant; (iii) controls in any manner
the election of a majority of the directors of the
declarant; or (iv) has contributed more than 20 percent
Page 7 .12/80
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APPENDIX 24
7
of the capital of the declarant. A person or entity
shall be deemed to be controlled by a declarant if the
declarant (i) is a general partner, officer, director,
or employee of that person or entity; (ii) directly or
indirectly or acting in concert with one or more persons
or through one or more subsidiaries, owns, controls, or
holds with power to vote, or holds proxies representing,
more than 20 percent of the voting share of that person
or entity; (iii) controls in any manner the election of
a majority of the directors of that person or entity;
or (ivy has contributed more than 20 percent of the
capital of that person or entity.
(c) Examples of Reserved Rights Which are usually Acceptable.
The following rights in the common elements may usually
be reserved by the declarant for a reasonable period
Page 7 of 35
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wvvw.hudclips.arg Page $ of 35
Of time, subject to a concomitant obligation to restore:
(1) Easement over and upon the common elements and
upon lands appurtenant to the condominium for the
Purpose of completing improvements for which
provision is made in the declaration, but only if
access thereto is otherwise not reasonably available.
(2) Easement over and upon the common elements for
the purpose of making repairs required pursuant
to the declaration or contracts of sale made with
unit purchasers.
12/80 Page 8
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APPRIMIX 24
8
(3) Flight to maintain facilities in the common areas
which are identified in the declaration and which
are reasonably necessary to market the units.
These may include sales and management offices,
model units, parking areas, and advertising signs.
6. TRANSFER OF CONTROL
(a) The declarant shall relinquish all special rights,
expressed or implied, through which the declarant may
directly or indirectly control, direct, modify, or
veto any action of the owners association, its executive
board, or a majority of unit.owners, and control
of the owners association shall pass to the owners of
units within the project, not later than the earlier
of the following;
** (1) 120 days after the date by which 75 percent of the
units have been conveyed to unit purchasers, or
** (2) The last date of a specified period of time following
the first conveyance to a unit purchaser,
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such period of time to be reasonable for the
particular project and to be subject to approval
in each instance by the agency or corporation
concerned. The maximum acceptable period usually
will be from.three to five years for single
phased condominium regimes and five to seven
years for expandable condominiums.
{Prey Hit)[Next Hit] 4265.1 CHG 4
APPEMIX 24
Page 9 12/80
J
(b) The foregoing requirements shall not affect the declarant s
rights, as a unit owner, to exercise the votes
allocated to units which it owns.
** (c) Declarants should provide for and foster early
participation of unit owners in the management of the
pro j ect
** (d) FMA and FHLMC will consider on a case basis possible
modifications or variations of the requirements in
subparagraph'(a) above particularly in circumstances
involving very large condominium developments.
7_ OWNERS ASSOCIATION I S RIGHTS AMID RESTRICTIONS
(a) Right of Entry Upon ants and Limited Common Elements.
The owners association, shall be granted a right of
entry upon unit premises and any limited common elements
to effect emergency repairs, and a reasonable
right of entry thereupon to effect other repairs,
improvements, replacement or maintenance deemed
necessary.
(b) Power to Grant Rights and Restrictions in Common Elements.
The owners association should be granted other rights,
Page 9 of 35
htty://www.hudclips.org/sub nonbud/cgi/nph-brs.cgi?d=HBNT&sl=4265.1&opl=AND&1=1OO&... 9/26/2003
www.hudclips.org Page 10 of 35
such as the right to grant utility easements under,
through or over the common elements, which are reasonably
necessary to the ongoing development and operation
of the project.
12/80 Page -10
[Prev Hit Next Hit] 4265.1 CHG 4
APPENDIX 24
10
(c) Responsibility for Damage to Common Elements and units.
A provision may be made in the declaration or by-laws
for allocation of responsibility for damages resulting
from the exercise of any of the above rights.
(d) Assessments. (1) Levy and collection. The declaration
or its equivalent shall describe the authority of the
owners association to levy and enforce the collection
of general and special assessments for common expenses
and shall describe adequate remedies for failure to
pay such common expenses. The common expenses assessed
against any unit, with interest, costs and reasonable
attorney's fees -shall be a lien upon such unit in
accordance with applicable law. Each such assessment,
together with interest, costs, and attorney's fees shall
also be the personal obligation of the person who was
the owner of such unit at the time the assessment fell
due. The personal obligation for delinquent assessments
shall, not pass to successors in title or interest
unless assumed by them, or required by applicable
law.
common expenses as used in this Statement of Policies
shall mean expenditures made or liabilities incurred
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www.hudclips.org . Page 11 of 35
by or on behalf of the owners association, together
with any assessments for the creation and maintenance
of reserves.
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(2) Reserves and Working Capital. There shall be established
an adequate reserve fund for the periodic
maintenance, repair and replacement of the common
elements, which fund shall be maintained out of
regular assessments for common expenses. Additionally,
a working capital fund must be established
for the initial months of the project
operations equal to at least a two months' estimated
common area charge for each unit.
(3) Priority of Lien. To the extent permitted by
applicable law, HM, VA, FMA and PHLMC require
that the declaration shall provide any lien of
the owners association for common expense charges
and assessments becoming payable on or after the
date of recordation of the first mortgage, shall
be subordinats to the first mortgage on the
unit. Such a lien for common expense charges
and assessments shall not be affected by any
sale or transfer of a unit, except that a sale
or transfer of a unit pursuant to a foreclosure
of a first mortgage shall extinguish a subordinate
lien for common expense charges and assessments
which became payable prior to such sale
or transfer. Any such sale or transfer pursuant
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to a foreclosure shall not relieve the purchaser
or transferee of a unit from liability for, nor
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the unit so sold or transferred from the lien
of, any common expense charges thereafter
becoming due.
B. UNIT OMMS' RIGHTS AND RESTRICTIONS
(a) Obligation to pay expenses. The declaration or equivalent
document shall establish a duty on each unit
owner, including the declarant, to pay a proportionate
share of common expenses upon being assessed therefor
by the owners association. Such share may be allocated
equally to each unit, may. -be proportionate to that
unit's common element interest, relative size or value,
or may be allocated according to any other specified
criteria provided that the method chosen is equitable -
and reasonable for that condominium.
(b) Voting Rights. The declaration or equivalent document
shall allocate a portion of the votes in the association
to each unit. Such portion may be allocated
equally -to each unit, may be proportionate to that
unit's common expense liability, common element interest,
relative size or value, or may be allocated
according to any other specified criteria provided
that the method is equitable and reasonable for that
condominium. The declaration may provide different
criteria for allocations of votes to the units on
particular specified matters and may also provide
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different percentages of required unit owner approvals
for such particular specified matters.
(c) Ingress and Egress of Unit owners. There may not be any
restriction upon any unit owner's right of ingress and
egress to his or her unit. It is recommended that the
declaration affirmatively provide for the right of
ingress to and egress from such unit, with such right
being perpetual and appurtenant to the unit ownership.
(d) Easements for Encroachments - units and Common Elements.
In the event any portion of the common elements encroaches
upon any unit or any unit encroaches upon the common
elements or another unit as a result of the construction,
reconstruction, repair, shifting, settlements, or movement
of any portion of the improvements, a valid easement for
the encroachment and for the maintenance of the same shall
exist so long as the encroachment exists. The declaration
may provide, however, reasonable limits on the extent of
any easement created by the overlap of units, common
elements, and limited common elements resulting from such
encroachments.
(e) Right of First Refusal. The right of a unit owner to
sell, transfer, or otherwise convey his or her unit in
a condominium shall not be subject to any right of first
refusal or similar restriction. It is recommended that
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14
the declaration affirmatively provide that a unit.owner
may transfer his or her unit free of any such restriction.
(f) Leasing Restrictions. (1) All leases should be in
writing and be subject to the declaration and by-laws.
(2�)- FNMA, HUD and VA,�agree that unit owners should be
prohibited from leasing their units for an initial term
Of less than 30 days. The three organizations would not
object to a requirement that leases have a minimum initial
term of up to six months; however, they agree that no
prohibition related to the term of a lease shall apply to
a lease having an initial term exceeding six months.
While FHLMC does not have any requirements regarding
minimum lease terms, it would not object to documents
meeting the requirements of the other organizations.
4. FIRST LIEN HOLDERS, RIGHTS
(a) Notices of Action. A holder, insurer or guarantor of a
first mortgage, upon written request to the owners
association, (such request to state the name and address
of such holder, insurer or guarantor and the unit number),
will be entitled to timely written notice of:
(1) Any proposed amendment of the condominium instruments
effecting a change in (i) he bo ie f
any unit or the exclusive easement rights appertaining
thereto, (ii) the interests in the general
or limited common elements appertaining to any
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APPENDIX 24
15
Page 14 of 35
ncv;9A=LSaA7TQ.o1--A')Ar. 1 Q.....1=A'VMJM=lnn , or)r% %nni
FannieMae
Project Standards .
L.eoal Rmuiremernts
Selling Section 609.011
association must have the right to grant permits. licess.ses, and ease-
ments over the common elements for utilities, roads, and other Our_
poses necessary for the proper operation of the project.
Section 608.06 The project documents must require the owners' association to
Reserves for Replacement establish and maintain an adequate reserve fund for the replace.
ment of improvements to the common elements and those limited
common elements- that it is obligated to maiantain, The fund should
be maintained out of regular assessments for common eapensm.
Section 60&07 The pr Ject documents must require the owners' association to main -
Insurance Coverages tain hazard and flood insurance, liability insurance, and fidelity
;nom range coverages that are consistent with our sped& require.
meats, which are discussed in Chapter 7 of this Paart.
Section 608.08 The prcject dac:umeats must grant the ownerd association* -and any
Rights of Action aggrieved unit owner—the right of action against unit owners who fail
to comply with the provisions of the project documents or the ded-
sions made by the owners' association. Unit estate owners should also
be grunted similar rights of action against the owners' association.
Section wan If the project documents give the project developer or sponsor or the
Summary Abatement owners' association the right to use summary abatement or similar
means to eaforee wArla lons-agaiust the unit property or its use, they
must also require that judicial proceedings be instituted before any
items of construction can be altered or demolished.
Sactton me The project documents-must�rovide for each unit estate owner in a
Condominium Unit condominium p�+gject.tabe eck.to all the rights and duties
owneea Rights and asdoned to owners under the terms of such documents. The docn-
iatatls$ ments mast specify that„ when theta are unsold units in the project,
the developer or sponsor also egjoys the same rights and assumes the
same duties as they relate to each individual unsold unit.
Section 609.01 The prgject documents must stats .that the unit owner has an unre-
Right of Ingress stsicted right of ingress and egress to his or her unit. This right must
and Egress be perpetual so that it passes with the unit estate as transfers of own-
ership of the unit oo=. The documents must further provide that any
conveyance, encumbrance, judicid sale, or other transfer (voluntary
or involuntary) of an individual -interest in the common elements will
be void unless the unit to which that interest is allocated is also trans-
ferred.
Page 667
a�o1�
"Oct Standards
Ma(Requirements
section 609-04 Selling
Section 609.02 Generally, the project documents cannot restrict the unit owner's
Limitations on Abtllty right to sell, transfer, or convey his or her unit. However, they may
to Sell provide for limitations that restrict occupancy to
P o3' Persons of certain
age groups, as long as the limitations are legally valid and necessary
to maintain the character of the particular project.
The project documents may provide that, in the event of a proposed
sale by a unit owns% the owners' association will be granted the right
of first refusal to putrhase the unit (or to provide a substitute buyer)
at the same price and under the same terms and conditions that
would be offered to say other purchaser, as long as
« the right to purchase is exercisable only as a means ofinsuring
Pwner-oocupancy of the unit that is being sold, or for some other
lawful purfwsa that serves the best interests of the owners'
association and fts members;
the right to pur&ase and the maruw* in Which the owners'
association exercises it comply with applicable law; and
the right to purchase may be exercised only if the owners'
association gives the unit owner written notice ofits intent to
ezercise the option within 80 days after it received the unit
owner's notice of the proposed sale and thea only if the owners'
amodatioa (or its substitute brayer) has the ability to exercise due
c teace in completing the purchase of the unit promptly and
properly.
The awne& a ssociation should not be given this right of first refusal
'with respect to any lease, sale, or transfer of a unit in connection with
a mortgage foreclosm (or the acoggmx a of a deed in lieu of
foreclosure) or with respect to any sale or transfer by the mortgage
holder or other party who acquired the unit in connection with the
faredosure or deed4n4i= .
Section 6O9M The prglect documeata must require that any lease or rental agree-
Laesing Resmiedons ment be in writing andbe suMect to the n quirementas ofthe docu-
.menta and the owas& association. They generally should not include
resirictioa>s relating to the term of any lease or rental agreement,
Secdon 609.04 The pr elect documm" cannot restrict the unit owner's right to
Restrictions on mortgage his or her unit. In addition, they cannot limit the unit
iModgaging Units ownees financing pptions by requiting the use of a specific leading
inadt atioa or a particular type of lender.
Page SBS
1MIA4
Helping people
26 April 2011
Curtis Jacobsen
New HOPE Community Development
4401 Xylon Avenue North
New Hope, MN 55428
Re:
pJ
7L
Audited Financial Statements YE 31 DEC 2010
Bass Lake Apartments, L.P.
Bass Lake Court, LP.
Boone Avenue Apartments L.P
Dear Mr. Jacobsen:
help themselves
We are submitting for your review copies of the above referenced audited financial statements for year
ending December 31, 2010. Should you have questions regarding this information please do not
hesitate to contact me directly at 612.455.5132. I will be happy to provide assistance.
Respectfully,
PpliSealberg FOR PRIDE IN LIVING, INC.
L
Asset Manager
Encl.
Affordable Housing . Employment & Job Training + Support Services a Education
Project i'r� Pride in Living • 1035 East Franklin Avenue, Minneapolis, MN 55404 • 612.455.5100 + Fax: 612.455.5141 • www.ppl-inc.org . ppl@ppl-inc.org
BASS LAKE APARTMENTS LLC
FINANCIAL STATEMENTS
WITH SUPPLEMENTAL INFORMATION
FOR THE YEARS ENDED
DECEMBER 31, 2010 AND 2009
BASS LAKE APARTMENTS LLC
FINANCIAL STATEMENTS WITH SUPPLEMENTAL INFORMATION
For the Years Ended December 31, 2010 and 2009
TABLE OF CONTEN�"TS
Independent Auditor's Report
Financial Statements:
Page
Balance sheets 2
Statements of operations and member's capital 3
Statements of cash flows 4
Notes to financial statements 5
Supplemental Information:
Schedule of MHOP units information 9
MA14ONEY
ULBRICH
CHRISTIAN'SEN
RUSS P. A.
30 EAST PLATO BOULEVARD SAINT PAUL, MN 55107-1809
TELEPHONE 651.227.6695 E 651.227.9796
To the Member
Project for Pride in Living, Inc.
Minneapolis, Minnesota
INDEPENDENT AU'DITOR'S REPORT
We have audited the accompanying balance sheets of Bass Lake Apartments LLC as of December 31,
2010 and 2009, and the related statements of operations and member's capital and cash flows for the
years then ended. These financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States
of America. Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the
financial position of Bass Lake Apartments LLC as of December 31, 2010 and 2009, and the results of
its operations and its cash flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America.
Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken
as a whole. The supplemental information on page 9 is presented for the purpose of additional analysis
and is not a required part of the basic financial statements. Such information has been subjected to the
auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial staternents taken as a whole.
• >M04wo .40.4g.
Saint Paul, Minnesota
March 11, 2011
BASS LAKE APARTMENTS LLC
BALANCE SHEETS
December 31, 2010 and 2009
ASSETS
Land
Building
Accumulated depreciation
Cash
Cash - security deposits
MHOP owner account
Accounts receivable - tenants, less allowance for doubtful
accounts of $2,500 in 2010 and $5,000 in 2009
MHOP operating subsidy receivable
Prepaid insurance
Finance fees, less accumulated amortization of
$1,533 in 2010 and $1,333 in 2009
Total assets
Long-term debt
Due to PPL
Accounts payable
Prepaid rent
Tenant security deposits
Total liabilities
2010 2009
$ 95,000 $
95,000
1,201,270
1,201,270
(358,776)
(310,725)
937,494
985,545
5,297
10,521
3,151
3,115
32,683
32,666
2,813 4,607
1,216
235 243
2,46 2,667
$ 984,140 $ 1,040,580
LIABILITIES AND MEMBER'S CAPITAL
Deferred revenue MHOP grant
Member's capital
Total liabilities and member's capital
$ 723,000 $
723,000
220
133,435
4,146
2,313
408
1,037
3,151
3,115
730,925
862,900
386,925 398,650
(133,710) (220,970)
$ 984,140 $ 1,040,580
See accompanying notes to financial statements.
2
BASS LAKE APARTMENTS LLC
STATEMENTS OF OPERATIONS AND MEMBER'S CAPITAL
For the Years Ended December 31, 2010 and 2009
Operating expenses:
Administrative
2010
2009
Revenues:
5,377
5,329
Apartment rentals
$ 69,626
$ 69,760
Less vacancies
(6,362)
(5,095)
Maintenance and operating
63,264
64,665
MHOP operating subsidy
10,482
9,827
Interest income
17
58
Other income
3,841
4,784
Total revenues
77,604
79,334
Operating expenses:
Administrative
9,274
6,808
Bad debts
5,377
5,329
Property management fee
9,012
8,675
Payroll and related costs
6,532
5,665
Maintenance and operating
23,273
15,344
Utilities
12,121
10,022
Insurance
3,076
2,754
Real estate taxes
11,023
10,292
Total operating expenses
79,688
64,889
Operating income
(2,084)
14,445
Forgiveness of payable to PPL
125,870
-
Interest expense
-
(3,218)
Amortization of deferred revenue - MHOP grant
11,725
11,725
Depreciation and amortization expense
(48,251)
(48,251)
Net income (loss)
87,260
(25,299)
Member's capital:
Beginning of year
(220,970)
(307,671)
Capital contribution from PPL
-
112,000
End of year
$ (133,710)
$ (220,970)
See accompanying notes to financial statements.
3
BASS LAKE APARTMENTS LLC
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2010 and 2009
Increase (decrease) in cash
Cash flows from operating activities:
Net income (loss)
Adjustments to reconcile the net income (loss) to net
cash from operating activities:
Forgiveness of payable to FPL
Amortization of deferred revenue - M 40P grant
Depreciation and amortization
Bad debts
Changes in operating assets and liabilities:
Receivables
Prepaid insurance
Accounts payable
Accrued interest
Prepaid rent
Net cash from operating activities
Cash flows fi-om investing activities:
Withdrawal from (deposit to) reserve accounts, net
Net cash from investing activities
Cash flows from financing activities:
Repayment of long-term debt
Capital contributions from PPL
Net cash from financing activities
Net increase (decrease) in cash
Cash, beginning of year
Cash, end of year
Supplemental cash flow information:
Cash paid for interest expense
2010
$ 87,260
(125,870)
(11,725)
48,251
5,377
2009
$ (25,299)
(11,725)
48,251
5,329
(2,367)
(8,674)
8
(33)
(5,512)
(3,149)
(239)
(629)
(340)
(5,207) 4,121
(17) 1,831
(17) 1,831
(5,224)
10,521
$ 5,297
See accompanying notes to financial statements.
4
(111,200)
112,000
800
6,752
3,769
$ 10,521
$ 3,362
BASS LAKE APARTMENTS LLC
NOTES TO FINANCIAL STATEMENTS
For the Years Ended December 31, 2010 and 2009
1. ORGANIZATION
Bass Lake Apartments LLC (the Company) is a limited liability company subject to Minnesota
statutes. The sole member of the Company is Project for Pride in Living, Inc. (PPL), a
Minnesota nonprofit organization.
The Company owns and operates an 11 -unit apartment building (the Project) located in New
Hope, Minnesota. The Project was acquired in July 2002.
Four of the apartment units are participating in the Metropolitan Housing Opportunity Program
(MHDP) as described in Note 4.
The debt agreements and the MPHA development grant agreement place restrictions on the
operations and sale or disposition of the property.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates - The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those estimates.
Cash Equivalents - For purposes of the statements of cash flows, the Partnership considers all
unrestricted investment instruments purchased with original maturities of three months or less to
be cash equivalents. Escrows, reserves and tenant security deposits are not considered cash
equivalents.
Accounts Receivable Accounts receivable are stated at the amount management expects to
collect. Management reviews receivable balances periodically and establishes an allowance based
on expected collections.
Property and Equipment - Property and equipment are carried at cost. The building is
depreciated using the straight-line method over its estimated useful life of 25 years.
The Company reviews its investment in real estate for impairment whenever events or changes in
circumstances indicate that the carrying value of such property may not be recoverable. To date,
management has determined that no impairment of long-lived assets exists.
Finance Fees Finance fees are amortized over the term of the related debt using the straight-
line method.
(Continued)
5
2.
3
BASS LAKE APARTMENTS LLC
NOTES TO FINANCIAL STATEMENTS
For the Years Ended December 31, 2010 and 2009
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income Taxes - The Company's activity is included on the income tax return of PPL. The
Company is a separate legal entity for state law and bankruptcy purposes; however, under
Section 7701 of the Internal Revenue Code, the Company is disregarded for all purposes of
federal income tax law_ Accordingly, the Company is deemed part of PPL, a Section 501(c)(3)
nonprofit organization, and as such is exempt from income taxes.
LONGTERM DEBT
Long-term debt consisted of the following:
20l O 2009
Mortgage payable to New Hope Economic Development
Authority without interest. The mortgage is due June 1,
2032. $ 223,000 $ 223,000
Mortgage payable to the Hennepin County Housing and
Redevelopment Authority under the Affordable Housing
Investment Fund program without interest. If the Project is
sold before the maturity date, accrued interest of 1% per
year will be due. The mortgage is due April 25, 2033_ 150,000 150,000
Mortgage payable to Hennepin County under the HOME
Investment Partnerships program without interest. If the
Project is sold before the maturity date, accrued interest of
1% per year will be due. The mortgage is due April 25,
2033. 350,000 350,000
$ 723,000 $ 723,000
Long-term debt is secured by the Project and due in 2032 and 2033.
Interest has been recorded using the stated rates of the various mortgage notes. Several mortgage
.notes have stated interest rates which are less than the prevailing market rates. Interest on these
mortgage notes has not been imputed because the rate is at the governmental agency's customary
lending rate.
(Continued)
6
BASS LAKE APARTMENTS LLC
NOTES TO FINANCIAL STATEMENTS
For the Years Ended December 31, 2010 and 2009
3. LONGTERM DEBT (Continued)
Several of the debt agreements and the MHOP agreement place restrictions on the operation of
the Project, which include the following:
Rental rates must be approved by lenders.
Tenants must meet certain income limitations to qualify for occupancy in the Project.
Transfer or sale of the Project is subject to lender approval.
4. MHOP DEVELOPMENT GRANT AND OPERATING SUBSIDY
The Minneapolis Public Housing Authority (MPHA) provided the Company a grant of $469,000
for the rehabilitation of 4 public housing units under the Metropolitan Housing Opportunity
Program (MHDP). The grant is recorded as deferred revenue and is being recognized as revenue
over the 40 year term of the grant using the straight-line method.
The Company has entered into a Declaration of Restrictive Covenants with the MPHA which
requires the Company to operate the 4 public housing units in accordance with the agreement for
40 years beginning in 2003.
The Company also entered into a Regulatory and Operating Agreement providing for the
maintenance and operation of the 4 public housing units and the payment of operating subsidy by
MPHA. The Company is required to establish an Operating Subsidy Reserve Account (the
MHOP Owner Account) in the initial amount of $31,000. Any excess of operating subsidy plus
tenant rents over expenses relating to the 4 units must be deposited to the reserve. Withdrawals
from the reserve are subject to the Regulatory and Operating Agreement with MPHA.
5. RELATED PARTY TRANSACTIONS
PPL is the property management agent for the Project. PPL is reimbursed for payroll and
provides accounting support and other related management functions as defined in the
agreement.
During 2010, PPL began a process of internal restructuring, see Note 7. As a result, it was
decided to forgive $125,870 in liabilities the Company owed to PPL.
(Continued)
7
5.
G
7.
BASS LAKE APARTMENTS LLC
NOTES TO FINANCIAL STATEMENTS
For the Years Ended December 31, 2010 and 2009
RELATED PARTY TRANSACTIONS (Continued)
The Company had the following transactions with PPL:
CONTINGENCIES
The Company's sole asset is the Project. The Company's operations are concentrated in the New
Hope, Minnesota multifamily real estate market. In addition, the Company operates in a heavily
regulated environment. The operations of the Company are subject to rules and regulations of
federal, state and local governmental agencies. Changes may occur with little notice or
inadequate funding to pay for the related costs to comply with a change.
SUBSEQUENT EVENTS
PPL has restructured the ownership of certain wholly owned subsidiaries in 2011. The new
owner of this entity will be PPL Properties, a new nonprofit corporation controlled by the Board
of PPL.
Management has evaluated subsequent events through March 11, 2011, the date on which the
financial statements were available for issue, and identified no further significant events or
transactions to disclose_
E:1
2010
2009
Fees charged to expense:
Property and asset management fees
$ 9,012
$ 8,675
Maintenance fees
3,248
3,126
Repairs contracts fees
684
493
Other miscellaneous
948
820
Amounts due to PPL
220
133,435
CONTINGENCIES
The Company's sole asset is the Project. The Company's operations are concentrated in the New
Hope, Minnesota multifamily real estate market. In addition, the Company operates in a heavily
regulated environment. The operations of the Company are subject to rules and regulations of
federal, state and local governmental agencies. Changes may occur with little notice or
inadequate funding to pay for the related costs to comply with a change.
SUBSEQUENT EVENTS
PPL has restructured the ownership of certain wholly owned subsidiaries in 2011. The new
owner of this entity will be PPL Properties, a new nonprofit corporation controlled by the Board
of PPL.
Management has evaluated subsequent events through March 11, 2011, the date on which the
financial statements were available for issue, and identified no further significant events or
transactions to disclose_
E:1
SUPPLEMENTAL INFORMATION
BASS LAKE APARTMENTS LLC
SCHEDULE OF MHOP UNITS INFORMATION
For the Year Ended December 31, 2010
Revenues and Expenditures for MHOP Units:
Revenues received:
Tenant rents $ 15,650
Other 1,470
Total revenues received 17,120
Allowed operating expenses using 40.45% MHOP Percentage:
Administrative
5,732
Property management fee
2,966
Asset management fee
680
Payroll and related costs
1,752
Maintenance and operating
10,304
Utilities
4,903
Payment in lieu of taxes
542
Insurance
1,244
Total allowed operating expenses
28,123
Deficiency of revenues received over allowed expenses $ (11,003)
MHOP Development Operating Subsidy:
For the year ended December 31, 2010 $ 10,482
Development Operating Subsidy Reserve Activity:
Owner Public
Account Account
Balance, December 31, 2009 $ 32,666 $ -
Interest 17 -
Balance, December 31, 2010 $ 32,683 $ -
Aggregate Stated Monthly Lease Rents for MHOP Units $ 1,304
Rents Receivable (Prepaid) for MHOP Units at December 31 $ 58
See independent auditor's report.
9
PROJECT NO. 776
Tax Increment Districts
5445 Boone Condos
Res. 04-152 8/23104 Resolution Modifying The Restated Redevelopment Plan And Tax Increment Financing
Plans For Redevelopment Project No. 1 And Tax Increment Financing Districts Nos. 80-2,
81-1, 82-1, 85-1, 85-2, 86-1, 02-1, 03-1 (Special Law) And 04-1 (Special Law); Creating Tax
Increment Financing District No. 04-2 (Special Law) And Adopting A Tax Increment
Financing Plan Relating Thereto (Improvement Project No. 776)
EDA Res. 04-29 8/23104 Resolution Modifying The Restated Redevelopment Plan And Tax Increment Financing
Plans For Redevelopment Project No. 1 And Tax Increment Financing Districts Nos. 80-2,
81-1, 82-1, 85-1, 85-2, 86-1, 02-1, 03-1 (Special Law) And 04-1 (Special Law); Creating Tax
Increment Financing District No. 04-2 (Special Law) And Adopting A Tax Increment
Financing Plan Relating Thereto (Improvement Project No. 776
EDA Res. 04-30 8/23/04 Resolution Calling For Public Hearing Regarding A Proposed Transfer Of Real Property
(5501 Boone Avenue North Improvement Project No. 776)
EDA Res 04-33 9/13104 Public Hearing - Resolution authorizing the transfer of real property (5501 Boone Avenue
North) (improvement project no. 776)
EDA Res 04-34 9/13104 Resolution authorizing execution and delivery of a contract for private redevelopment by
and between the New Hope Economic Development Authority and Project for Pride in
Living, Inc. for the redevelopment of 5501 Boone Avenue North (improvement project no.
776)
EDA Res, 04-36 11/8/04 Resolution approving financial guarantee of the Hennepin County Housing and
Redevelopment Authority affordable housing incentive fund program in the 5501 Boone
Avenue North development project (improvement project no. 776)
Res. 07-109 7/23/07 Resolution releasing the letter of credit for the Linden Place Apartment project and
transferring outstanding amounts to the Linden Park Condominium project letter of
credit (Improvement Project No. 776)
Res. 07-02 9/10/07 Resolution authorizing signatures for Certificate of Completion and Release of Forfeiture
related to the Linden Park Condominiums, a project by PPL (Project for Pride in Living)
at 5445 Boone Avenue North (improvement project no. 776)
Res, 08-34 2/25/08 Resolution authorizing a letter of credit reduction for Linden Park Condominiums, 5445
Boone Avenue North, PPL petitioner (improvement project 776)