112816 EDA Meeting Packet
EDA MEETING
City Hall, 4401 Xylon Avenue North
Monday, November 28, 2016
Commences upon adjournment of the City Council Meeting
Agenda
President Kathi Hemken
Commissioner John Elder
Commissioner Andy Hoffe
Commissioner Eric Lammle
Commissioner Jonathan London
1. Call to order – EDA Meeting of November 28, 2016
2. Roll call
3. Approval of Minutes:
September 12, 2016
4. Resolution authorizing the execution of a purchase and development agreement
with Alatus New Hope, LLC (project no. 964)
5. Adjournment
EDA Meeting
Page 1 September 12, 2016
CITY OF NEW HOPE
4401 Xylon Avenue North
New Hope, Minnesota 55428
EDA Minutes September 12, 2016
Regular Meeting City Hall
CALL TO ORDER President Hemken called the meeting of the Economic Development Authority
to order at 7:18 p.m.
ROLL CALL Present:
Kathi Hemken, President
John Elder, Commissioner
Andy Hoffe, Commissioner
Eric Lammle, Commissioner
Jonathan London, Commissioner
Staff Present:
Kirk McDonald, City Manager
Aaron Chirpich, Community Development Specialist
Scott Crocker, Police Captain
Vicki Holthaus, AEM
Valerie Leone, City Clerk
Chris Long, City Engineer
Bob Paschke, Director of Public Works
Jeff Sargent, Director of Community Development
Stacy Woods, Assistant City Attorney
APPROVAL OF
MINUTES
Item 3
Motion was made by Commissioner Hoffe, seconded by Commissioner London,
to approve the minutes of August 8, 2016. All present voted in favor. Motion
carried.
EDA LEVY
Item 4
President Hemken introduced for discussion EDA Item 4, Resolution
authorizing the proposed levy of a special benefit levy pursuant to Minnesota
Statutes, Section 469.033, subdivision 6 and approval of a preliminary budget
for fiscal year 2017.
Mr. Kirk McDonald, city manager, stated the proposed EDA levy is $200,000
which is an increase of $50,000 over last year. He explained the increase will be
used for additional funds for the scattered site housing program.
RESOLUTION 2016‐19
Item 4
Commissioner Lammle introduced the following resolution and moved its
adoption “RESOLUTION AUTHORIZING THE PROPOSED LEVY OF A
SPECIAL BENEFIT LEVY PURSUANT TO MINNESOTA STATUTES,
SECTION 469.033, SUBDIVISION 6 AND APPROVAL OF A PRELIMINARY
BUDGET FOR FISCAL YEAR 2017”. The motion for the adoption of the
foregoing resolution was seconded by Commissioner Elder, and upon vote
being taken thereon, the following voted in favor thereof: Hemken, Elder, Hoffe,
Lammle, London; and the following voted against the same: None; Abstained:
None; Absent: None; whereupon the resolution was declared duly passed and
adopted, signed by the president which was attested to by the executive
director.
EDA Meeting
Page 2 September 12, 2016
IMP. PROJECT 973
Item 5
President Hemken introduced for discussion EDA Item 5, Resolution approving
purchase and redevelopment agreement with Great Buy Homes, Inc. for the sale
of 6065 and 6067 Louisiana Avenue North (improvement project no. 973).
Mr. Aaron Chirpich, community development specialist, explained the public
hearing is to consider the sale of EDA‐owned lots at 6065 and 6067 Louisiana
Avenue North to Great Buy Homes for $110,000 ($55,000 per lot). He stated RFPs
were sent to 20 builders and three proposals were received and reviewed with
Council at the August 15 work session. He described the design attributes and
anticipated sales price of $320,000 for each house
Mr. Chirpich stated the builder has requested separate development agreements
for each lot. Mr. Chirpich noted a reimbursement not to exceed $3,500 for curb
cut related costs is included in the development agreements. He also noted
restrictive covenants will be required to ensure the homes are owner‐occupied.
Council Member Elder inquired if the city would incur any additional costs by
providing two documents. Ms. Stacy Woods, assistant city attorney, stated the
costs would be nominal (one additional recording fee). Council Member Elder
recommended the buyer assume any additional costs if they become excessive.
Mayor Hemken opened the floor for comments from the audience. There was
no one present to address the Council for the public hearing.
Mr. Kirk McDonald, city manager, indicated staff has been trying to broaden the
use of various contractors and has received positive reports regarding Great Buy
Homes.
CLOSE HEARING
Item 5
Motion was made by Commissioner Elder, seconded by Commissioner Hoffe,
to close the public hearing. All present voted in favor. Motion carried.
RESOLUTION 2016‐20
Item 5
Commissioner London introduced the following resolution and moved its
adoption “RESOLUTION APPROVING PURCHASE AND
REDEVELOPMENT AGREEMENT WITH GREAT BUY HOMES, INC. FOR
THE SALE OF 6065 AND 6067 LOUISIANA AVENUE NORTH
(IMPROVEMENT PROJECT NO. 973)”. The motion for the adoption of the
foregoing resolution was seconded by Commissioner Hoffe, and upon vote
being taken thereon, the following voted in favor thereof: Hemken, Elder, Hoffe,
Lammle, London; and the following voted against the same: None; Abstained:
None; Absent: None; whereupon the resolution was declared duly passed and
adopted, signed by the president which was attested to by the executive
director.
ADJOURNMENT Motion was made by Commissioner London, seconded by Commissioner
Lammle, to adjourn the meeting. All present voted in favor. Motion carried.
The New Hope EDA adjourned at 7:30 p.m.
Respectfully submitted,
Valerie Leone, City Clerk
I:\RFA\COMM DEV\Development\Q & R Approve Alatus Purchase and Development Agreement 11‐28‐16.docx
Request for Action
November 28, 2016
Approved by: Kirk McDonald, City Manager
Originating Department: Community Development
By: Jeff Sargent, Director
Agenda Title
Resolution Authorizing the Execution of a Purchase and Development Agreement with Alatus New Hope,
LLC. (project No. 964)
Requested Action
Staff requests the Economic Development Authority (EDA) to approve a resolution authorizing the execution
of a contract for private redevelopment with Alatus New Hope, LLC.
Policy/Past Practice
It is a past practice of the staff to get EDA approval/authorization for a development agreement with a private
third‐party owner of a land when a TIF District has been established on the property to make improvements
to the land.
Background
At the February 16, 2016, City Council work session meeting, staff presented the Council with the preliminary
term sheet for the purchase and development agreement with Alatus. Since that time, the developer has gained
access to the property to conduct further soil tests, and has also been approached by city staff for the potential
of replacing the aging lift station along 58th Avenue and burying the overhead utility lines along Bass Lake
Road from Yukon Avenue to Winnetka Avenue.
When further ground tests were performed, it was determined that the water table level was four feet higher
than originally estimated. This will result in the use of engineered foundation slabs for the construction of the
building, and would also require the building to be raised four feet higher than originally designed in order to
compensate for the water table level. These are added expenses. On September 28, 2016, the EDA approved
updated terms with the developer to cover a portion of the increased costs associated with the soil and
environmental conditions of the site and increased cost to the developer to construct the new lift station for the
city.
The added costs attributed to the modifications of the construction plans because of the water table, the
replacement of the city’s lift station and the burial of the overhead utility lines amount to $3,721,000. For this
reason, the developer requested that the terms of the purchase and development agreement be amended in
order to make the project feasible. Two main changes are requested:
1. The developer will purchase the land for $1,443,000, which is $15,600 more than originally agreed upon,
and will pay the city at the time of closing.
2. The developer would like the pay‐as‐you‐go TIF note to be increased from $4,600,000 to $6,574,000, and
for the TIF note to extend from 15 years to 23 years. It should be noted that the cost increase of the TIF
note of $1,974,000 only covers approximately half of the increased project costs of $3,721,000. The
developer will absorb the remaining costs through a reconfiguration of their business model.
Agenda Section
EDA
Item Number
4
Request for Action, Page 2
A representative from Ehlers & Associates will be in attendance at the EDA meeting to help answer any
questions that the EDA may have.
Attachments
Resolution
Ehlers Memo (11/28/16)
Purchase and Development Agreement
February 16, 2016 work session minutes
September 19, 2016 EDA minutes
NEW HOPE ECONOMIC DEVELOPMENT AUTHORITY
RESOLUTION NO. 16‐______________
RESOLUTION AUTHORIZING THE EXECUTION OF A PURCHASE AND
DEVELOPMENT AGREEMENT WITH ALATUS NEW HOPE, LLC
BE IT RESOLVED BY THE BOARD OF COMMISSIONERS OF THE NEW HOPE
ECONOMIC DEVELOPMENT AUTHORITY (the ʺAuthorityʺ) AS FOLLOWS:
WHEREAS, the Authority and the City of New Hope, Minnesota (the ʺCityʺ) have created
Tax Increment Financing District No. 11‐1 (the “District”) pursuant to the Minnesota Tax
Increment Financing Law, Minnesota Statutes, sections 469.174‐469.1794 (the “Tax Increment
Act”); and
WHEREAS, the Authority has received a proposal from Alatus New Hope, LLC (the
“Developer”) pursuant to which the Developer would construct a rental housing development
(the “Improvements”) on certain real property in the District to be conveyed by the Authority to
the Developer (the “Property”); and
WHEREAS, the Developer has also proposed that the Authority provide certain financial
assistance to the Developer using tax increment revenues from the District; and
WHEREAS, there has been presented to the Authority’s Board of Commissioners a
proposed Purchase and Development Agreement (the “Contract”) between the Authority and the
Developer setting forth the terms of the Authority’s conveyance of the Property to the Developer
and its provision of financial assistance to the Developer in connection with the construction of
the Improvements.
NOW, THEREFORE, be it hereby resolved by the Board of Commissioner of the Authority
as follows:
1.02. Execution and Performance of Contract and Issuance of the Note. The appropriate
officers of the Authority are hereby authorized to execute the Contract in substantially the form
presented to the Board of Commissioners, subject to such non‐substantive changes as may be
approved by the Executive Director and the Authority’s legal counsel, to cause the Authority’s
obligations under the Contract to be performed, including its obligation to convey the Property
to the Developer, to execute the Note at the time stated in the Contract and to issue and deliver
the Note described therein at the time provided in the Contract.
Section 2. Form of Note. The Note shall be substantially in the form contained in the
Contract, with the blanks properly filled in.
Section 3. Terms, Execution and Delivery.
3.01. Dates; Interest Payment Dates. The Note shall be dated as of the date it is issued.
Principal of and interest on the Note shall be payable to the owner of record thereof as of the close
of business on the fifteenth day of the month preceding each Scheduled Payment Date, whether
or not such day is a business day.
3.02. Registration. The Authority appoints the Executive Director as Note Registrar. The
effect of registration and the rights and duties of the Authority and the Registrar with respect
thereto shall be as follows:
(a) Register. The Registrar shall keep at his/her principal office a Note register in which
the Registrar shall provide for the registration of ownership of the Note and the registration of
transfers or exchanges of the Note.
(b) Transfer of Note. Upon surrender for transfer of the Note duly endorsed by the
registered owner thereof or accompanied by a written instrument of transfer, in form satisfactory
to the Registrar, duly executed by the registered owner thereof or by an attorney duly authorized
by the registered owner in writing, the Registrar shall authenticate and deliver, in the name of
the designated transferee or transferees, a new Note of a like aggregate principal amount and
maturity, as requested by the transferor. The Registrar may close the books for registration of any
transfer after the fifteenth day of the month preceding each interest payment date and until such
interest payment date. The Note shall not be transferred to any person other than an affiliate or
other related entity of the Developer, unless the a has been provided with an opinion of counsel,
acceptable to the Authority, that such transfer is exempt from registration and prospectus
delivery requirements of federal and applicable state securities laws.
(c) Cancellation. The Note surrendered upon any transfer shall be promptly canceled
by the Registrar and thereafter disposed of as directed by the Authority.
(d) Improper or Unauthorized Transfer. When the Note is presented to the Registrar
for transfer, the Registrar may refuse to transfer the same until it is satisfied that the endorsement
on the Note or separate instrument of transfer is valid and genuine and the requested transfer is
legally authorized. The Registrar shall incur no liability for its refusal, in good faith, to make
transfers which it, in its judgment, deems improper or unauthorized.
(e) Persons Deemed Owners. The Authority and the Registrar may treat the person in
whose name the Note is at any time registered in the Note register as the absolute owner of the
Note, whether the Note shall be overdue or not, for the purpose of receiving payment of, or on
account of, the principal of or interest on the Note and for all other purposes, and all such
payments so made to any such registered owner or upon the ownerʹs order shall be valid and
effectual to satisfy and discharge the liability of the Authority upon the Note to the extent of the
sum or sums so paid.
(f) Taxes, Fees and Charges. For every transfer or exchange of the Note, the Registrar
may impose a charge upon the owner thereof sufficient to reimburse the Registrar for any tax,
fee, or other governmental charge required to be paid with respect to such transfer or exchange
and reasonable legal fees and other costs incurred in connection therewith.
(g) Mutilated, Lost, Stolen or Destroyed Note. In case the Note shall become mutilated
or be lost, stolen, or destroyed, the Registrar shall deliver a new Note of like amount, maturity
dates and tenor in exchange and substitution for and upon cancellation of such mutilated Note
or in lieu of and in substitution for such Note lost, stolen, or destroyed, upon the payment of the
reasonable expenses and charges of the Registrar in connection therewith; and, in the case of a
Note lost, stolen, or destroyed, upon filing with the Registrar of evidence satisfactory to it that
such Note was lost, stolen or destroyed, and of the ownership thereof, and upon furnishing to the
Registrar of an appropriate indemnity in form, substance, and amount satisfactory to it, in which
both the Authority and the Registrar shall be named as obligees. Any Note so surrendered to the
Registrar shall be canceled by it and evidence of such cancellation shall be given to the Authority.
If the mutilated, lost, stolen, or destroyed Note has already matured or been called for redemption
in accordance with its terms, it shall not be necessary to issue a new Note prior to payment.
3.03. Preparation and Delivery. The Note shall be prepared under the direction of the
Executive Director of the Authority and shall be executed on behalf of the Authority by the
manual signatures of its Executive Director and President. In case any officer whose signature,
or a facsimile of whose signature, shall appear on the Note shall cease to be such officer before
the delivery of the Note, such signature or facsimile shall nevertheless be valid and sufficient for
all purposes, the same as if such officer had remained in office until delivery. Notwithstanding
such execution, the Note shall not be valid or obligatory for any purpose or entitled to any
security or benefit under this Resolution unless and until a certificate of authentication on such
Note has been duly executed by the manual signature of an authorized representative of the
Registrar. The executed certificate of authentication on the Note shall be conclusive evidence it
has been authenticated and delivered under this resolution. When the Note have been so
executed and authenticated, it shall be delivered by the Executive Director to the Developer.
Section 4. Pledge of Available Tax Increment. The Authority hereby pledges to the payment
of the principal of and interest on the Note Available Tax Increment, as defined in the Contract.
Section 5. Certification of Proceedings.
5.01 Certification of Proceedings. The officers of the Authority are hereby authorized and
directed to prepare and furnish to the Developer certified copies of all proceedings and records
of the Authority, and such other affidavits, certificates, and information as may be required to
show the facts relating to the legality and marketability of the Note as the same appear from the
books and records under their custody and control or as otherwise known to them, and all such
certified copies, certificates and affidavits, including any heretofore furnished, shall be deemed
representations of the Authority as to the facts recited therein.
Adopted this 28th day of November, 2016.
_____________________________________
Kathi Hemken, President
Attest:
_______________________________
Kirk McDonald, Executive Director
Memo
To: Kirk McDonald – Executive Director
From: Stacie Kvilvang & Jason Aarsvold
Date: November 28, 2016
Subject: Updated Terms For Purchase and Development Agreement – Golf
Course Site
On February 16, 2016, the EDA approved the terms for a Development Agreement (DA)
with Alatus New Hope LLC. for the development of the above referenced site into 182-units
of higher-end market rate rental units. On September 19, 2016, the EDA approved updated
terms with the Developer to cover a portion of the increased costs associated with the soil
and environmental conditions of the site and increased cost to the Developer to construct a
new lift station for the City.
Following is a summary of the Development Agreement terms:
1. General
a. Purchase and Development Agreement with Alatus New Hope LLC
2. Acquisition
a. The Developer will acquire the five (5) existing parcels from the EDA for
$1,443,000 (this equates to approximately $7,900).
b. Closing will happen on or before February 28, 2017 and EDA will provide
“clean” title to the property
3. Development and Timing of Construction
a. Construction of 182 market rate apartments and related amenities and
underground and surface parking
b. Developer to construct new joint access off Bass Lake Road for the
development and the Golf Course
c. Developer to construct a new joint garbage enclosure for the development
and the Golf Couse to be located on the Golf Course property
i. Developer will store their garbage bin in their property, but will move it
to the joint trash enclosure on garbage pick-up day
d. Developer to construct a new lift station for the City adjacent to the site
Kirk McDonald
Updated Terms For Purchase and Development Agreement – Golf Course Site
November 28, 2016
Page 2
e. Must commence construction April 1, 2017 and substantial completion by
August 30, 2018
4. Platting and Zoning
a. Developer will plat property into one (1) parcel
b. Developer will prepare and obtain City approval of a planned unit development
(“PUD”) and Plat of the Property at their cost and subject to all City ordinances
and procedures
c. Developer will prepare cross access agreements for the new combined
entrance for the development and the Golf Course, and for access onto the Golf
Course property where the new trash enclosure will be constructed
5. Burial of Power and Cable Lines
a. The developer will pay for the burial of the power and cable lines from Yukon
Avenue to Winnetka Avenue
b. The EDA will reimburse the developer for $125,000 of the costs associated
with the burial of the power and cable lines
6. Park Dedication Fees
a. The developer will pay $17,700 in park dedication fees per the City’s policy
7. Payment of Authority Costs
a. Developer is required to reimburse EDA for costs of consultants in negotiating
and drafting development agreement (fiscal and legal).
8. Tax Increment
a. The EDA has created TIF district 11-1
b. The Developer will receive a pay-as-you-go note in the amount of $6.574
million
i. Term of the TIF note will be for 23 years
ii. Interest will be at the lesser of 4.50% or the Developer’s actual
financing rate
iii. Developer will receive 95% of the tax increment generated
c. The EDA will be reimbursed for the difference in their land assembly costs of
$2,363,100 ($2,250,000 was acquisition and the remainder was relocation
and demolition costs) and the purchase price by the Developer, which
equates to $920,100
i. In August 2015, the EDA approved an interfund loan to allow for this
repayment. It is estimated that it will be repaid (with interest at 4%)
within 1 ½ to 2 years after the TIF Note is done.
Kirk McDonald
Updated Terms For Purchase and Development Agreement – Golf Course Site
November 28, 2016
Page 3
9. Lookback
a. Once the project is stabilized (90% occupied), the Developer is required to
submit to the City audited financials detailing the actual Total Development
Costs (TDC), along with actual income and expenses. To the extent the
Developers annual Cash-on-Cash (COC) return (equity invested divided by
cash flow) exceeds 10%, the TIF Note amount will be reduced to reflect a
projected annual COC return of not more that 10%.
Please contact either of us at 651-697-8500 with any questions.
Draft
11-21-16
PURCHASE AND DEVELOPMENT AGREEMENT
By and Between
NEW HOPE ECONOMIC DEVELOPMENT AUTHORITY
and
ALATUS NEW HOPE, LLC
Dated as of: ____________, 2016
This document was drafted by:
BRADLEY & DEIKE, P. A.
4018 West 65th Street, Suite 100
Edina, MN 55435
Telephone: (952) 926-5337
TABLE OF CONTENTS
Page
PREAMBLE 1
ARTICLE I
Definitions
Section 1.1. Definitions 3
ARTICLE II
Representations
Section 2.1. Representations by the Authority 6
Section 2.2. Representations by the Owner 6
ARTICLE III
Authority Assistance; Issuance of TIF Note
Section 3.1. Basis for Assistance 8
Section 3.2. Issuance of Note 8
Section 3.3. Conditions Precedent to Issuance of TIF Note 8
Section 3.4. Payment of Administrative Costs 9
Section 3.5. Potential Reduction of Assistance 9
Section 3.6. Soils and Environmental Conditions 10
Section 3.7. Title 10
Section 3.8. Closing; Purchase Price 12
Section 3.9. Conditions Precedent to Conveyance of Authority Property 12
Section 3.10. Tax Increment Inter-fund Loan 13
(i)
ARTICLE IV
Construction of Improvements
Section 4.1. Construction of Improvements 14
Section 4.2. Construction Plans 14
Section 4.3. Commencement and Completion of Construction 15
Section 4.4. Certificate of Completion 16
ARTICLE V
Insurance and Condemnation
Section 5.1. Insurance 17
Section 5.2. Condemnation 18
ARTICLE VI
Taxes; Tax Increment
Section 6.1. Real Property Taxes 20
Section 6.2. Tax Increment 21
Section 6.3. Owner’s Representations Concerning TIF Note 21
Section 6.4. Assessment Agreement 22
ARTICLE VII
Mortgage Financing
Section 7.1. Mortgage Financing 23
ARTICLE VIII
Prohibitions Against Assignment and Transfer; Indemnification
Section 8.1. Prohibition Against Transfer of Property and
Assignment of Agreement 24
(ii)
Section 8.2. Release and Indemnification 25
Section 8.3. Environmental Conditions 25
ARTICLE IX
Events of Default
Section 9.1. Events of Default Defined 26
Section 9.2. Authority's Remedies on Default 26
Section 9.3. No Remedy Exclusive 26
Section 9.4. No Additional Waiver Implied by One Waiver 27
Section 9.5. Costs of Enforcement 27
ARTICLE X
Additional Provisions
Section 10.1. Representatives Not Individually Liable 28
Section 10.2. Restrictions on Use 28
Section 10.3. Titles of Articles and Sections 28
Section 10.4. Notices and Demands 28
Section 10.5. Disclaimer of Relationships 28
Section 10.6. Modifications 29
Section 10.7. Counterparts 29
Section 10.8. Judicial Interpretation 29
Section 10.9. Business Subsidy Act 29
Section 10.10. Miscellaneous 29
Section 10.11. Termination 30
Section 10.12 Estoppel Certificates 30
SCHEDULE A Description of Property
SCHEDULE B TIF Note
SCHEDULE C Deed
SCHEDULE D Assessment Agreement
SCHEDULE E Access Easement
SCHEDULE F Access Agreement
SCHEDULE G Owner Pro Forma
(iii)
1
PURCHASE AND DEVELOPMENT AGREEMENT
THIS AGREEMENT, made on or as of the ___ day of _____________, 2016, by and
between the New Hope Economic Development Authority, a public body politic and corporate
under the laws of the State of Minnesota (hereinafter referred to as the "Authority"), and having
its principal office at City Hall, 4401 Xylon Avenue North, New Hope, Minnesota 55428, and
Alatus New Hope, LLC, a Minnesota limited liability company (hereinafter referred to as the
"Owner"), having its principal office at U.S. Bancorp Center, 800 Nicollet Mall, Suite 2850,
Minneapolis, Minnesota 55402.
WITNESSETH:
WHEREAS, The Authority is a municipal economic development authority organized and
existing pursuant to the Constitution and laws of the State of Minnesota and is governed by its
Board of Commissioners (the "Board"); and
WHEREAS, the Authority and the City of New Hope, Minnesota (the “City”) have
established within the City Redevelopment Project No. 1 pursuant to Minnesota Statutes,
Sections 469.001 - 469.047, providing for the development and redevelopment of certain areas
located within the City (which redevelopment project is hereinafter referred to as the "Project");
and
WHEREAS, the Authority and the City have further established Tax Increment Financing
District No. 11-1 within the Project pursuant to Minnesota Statutes, Sections 469.174-469.179
(which tax increment financing district is hereinafter referred to as the "Tax Increment District");
and
WHEREAS, the Tax Increment District is a redevelopment tax increment financing
district intended to facilitate the redevelopment of real property located in the City containing
blighted conditions and substandard buildings and improvements; and
WHEREAS, pursuant to Minnesota Statutes, Section 469.176, subdivision 4, tax
increment derived from the Tax Increment District may be used in accordance with the tax
increment financing plan created in connection with the establishment of the Tax Increment
District to pay the public redevelopment costs of the Project; and
WHEREAS, the Owner has presented to the Authority a proposal pursuant to which the
Owner will acquire from the Authority certain real property owned by the Authority within the
Project (which property is hereinafter referred to as the "Property" and is more particularly
described in Schedule A annexed hereto and made a part hereof) and construct thereon a 182-
unit market rate apartment building with underground parking; and
WHEREAS, the Owner has as a part of its proposal requested that the Authority provide
certain financial assistance to aid in its development, without which such development would not
be possible; and
2
WHEREAS, Authority believes that the development activities proposed by the Owner
are in the best interest of the City and its residents and in accord with the public purposes and
provisions of applicable federal, state and local laws under which the Project is being undertaken
and assisted;
NOW THEREFORE, in consideration of the premises and the mutual obligations of the
parties hereto, each of them does hereby covenant and agree with the other as follows:
3
ARTICLE I
Definitions
Section 1.1. Definitions. In this Agreement, unless a different meaning clearly appears
from the context:
"Act" means Minnesota Statutes, Sections 469.001-469.047, as amended.
"Agreement" means this Agreement, as the same may be from time to time modified,
amended, or supplemented.
“Assessment Agreement” means the agreement in the form attached to this Agreement as
Schedule D.
“Authority” means the New Hope Economic Development Authority, a public body
politic and corporate, its successors and assigns.
“Available Tax Increment” means, with respect to a Scheduled Payment Date, as defined
in the TIF Note, ninety five percent (95%) of the Tax Increment received by the Authority in the
six (6) month period preceding such Scheduled Payment Date.
“Board” means the Authority’s Board of Commissioners.
"City" means the City of New Hope, Minnesota.
"Construction Plans" means the site plan, utility plan, grading and drainage plan,
landscape plan, elevations drawings and related documents on the construction work to be
performed by the Owner on the Property which have been or will be submitted for approval by
the Board, together with the resolution of the Board approving such plans and the plans,
specifications, drawings and related documents on the construction work to be performed by the
Owner on the Property which are to be submitted to the building inspector of the City.
"County" means Hennepin County, Minnesota.
“Deed” means the deed in the form of Schedule C attached hereto.
"Event of Default" means an action by the Owner listed in Article IX of this Agreement.
"Improvements" means the improvements to be constructed by the Owner on the
Property, consisting of, as of the date of this Agreement (but subject to modifications required by
or approved by the Authority), a four story market rate apartment community containing 182
units, together with related improvements.
4
"Local Time" means Standard or daylight savings time in effect on the date in question in
the time zone in which the Property is located.
“Minimum Market Value” means the market value for tax purposes of the Property and
Improvements established by the Assessment Agreement.
"Net Proceeds" means any proceeds paid by an insurer to the Owner or the Authority
under a policy or policies of insurance required to be provided and maintained by the Owner
pursuant to Article V of this Agreement and remaining after deducting all expenses (including
fees and disbursements of counsel) incurred in the collection of such proceeds.
"Owner" means Alatus New Hope LLC, a Minnesota limited liability company, its
successors and assigns.
“Permitted Encumbrances” means the provisions of the Deed and this Agreement:
reservations of minerals or mineral rights to the State of Minnesota; public utility, roadway and
other easements which will not adversely affect the development and use of the Property
pursuant to the Owner’s Construction Plans; building laws, regulations and ordinances consistent
with the Improvements; restrictions, covenants and easements of record that do not materially
adversely affect the development and use of the Improvements and are reasonably acceptable to
the Owner; and exceptions to title to the Property which are not objected to by Owner upon
examination of the title evidence delivered to the Owner pursuant to the terms of this Agreement.
"Project" means the Authority's Redevelopment Project No. 1.
"Project Area" means the real property located within the boundaries of the Project.
"Project Plan" means the redevelopment plan adopted in connection with creation of the
Project.
“Property” means the real property described as such on the attached Schedule A.
"Reimbursable Costs" means the costs to be reimbursed by the Authority to the Owner as
described in Article III of this Agreement, which costs consist of a portion of the cost of
constructing the Improvements, including without limitation, the costs of acquiring the Property,
and other costs that may be reimbursed under the Act and the Tax Increment Act.
"State" means the State of Minnesota.
"Tax Increment" means that portion of the real property taxes paid with respect to the
Property and Improvements that is remitted to the Authority as tax increment pursuant to the Tax
Increment Act, minus deductions required by law.
"Tax Increment Act" means the Tax Increment Financing Act, Minnesota Statutes,
Sections 469.174-469.1794, as amended and as it may be further amended from time to time.
5
"Tax Increment District" means Tax Increment Financing District No. 11-1 created by the
Authority and City within the Project Area.
“Tax Increment Plan” means the tax increment financing plan adopted by the Authority
in connection with its creation of the Tax Increment District, which plan together with the
information and findings contained therein is hereby incorporated herein and made a part hereof
by reference.
"Termination Date" means the latest of the following dates: (i) the date that the Note is
paid in full or terminated; (ii) the date that this Agreement is terminated; or (iii) the date that the
Interfund Loan described in Section 3.11 has been paid in full.
"TIF Note" means the Taxable Limited Revenue Tax Increment Note to be issued by the
Authority pursuant to Section 3.2 of this Agreement, which TIF Note shall be in the form of the
TIF Note attached to this Agreement as Schedule B, with all blanks filled in and approved by the
Authority and the Owner.
"Unavoidable Delays" means delays which are the direct result of acts of God, acts of
nature, acts of terrorism, inability to obtain necessary materials, unforeseen adverse weather
conditions, strikes, other labor troubles, fire or other casualty to the Improvements, litigation
commenced by third parties which, by injunction or other similar judicial action, directly results
in delays, acts of any federal, state or local governmental unit, and which directly results in
delays, or any other matter beyond the reasonable control of the party claiming the delay.
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ARTICLE II
Representations
Section 2.1. Representations by the Authority. The Authority makes the following
representations as the basis for the undertaking on its part herein contained:
(a) The Authority is a municipal economic development authority organized and
existing under the laws of the State. Under the laws of the State, the Authority has the power to
enter into this Agreement and to perform its obligations hereunder.
(b) The Authority owns the Property, acquired the same in accordance with all
applicable laws and there has either been no legal challenge to the Authority's acquisition of the
Property or the time for such legal challenge has expired.
(c) The Authority will cooperate with the Owner with respect to any litigation
commenced with respect to the Project Plan, Project, or Improvements and in the Owner's
acquisition of any permits or other approvals required in connection with the construction of the
Improvements.
(d) The Authority has received no notice or communication from any local, state or
federal official that the activities of the Owner or the Authority in the Project Area may be or
will be in violation of any environmental law or regulation. The Authority is aware of no facts
the existence of which would cause it or any portion of the Authority Property to be in violation
of any local, state or federal environmental law, regulation or review procedure.
(e) Neither the execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby, nor the fulfillment of or compliance with the terms and
conditions of this Agreement is prevented, limited by or conflicts with or results in a breach of,
the terms, conditions or provisions of any restriction or any evidences of indebtedness,
agreement or instrument of whatever nature to which the Authority is now a party or by which it
is bound, or constitutes a default under any of the foregoing
(f) To the best of the Authority's knowledge, there is no litigation, pending or
threatened, regarding the Authority Property or challenging the validity of this Agreement.
(g) The Authority will not issue any further obligations that are payable from or
secured by the Available Tax Increment prior to the date that the TIF Note has been paid in full,
or terminated in accordance with its terms, without the prior written consent of the Owner, which
may be given or withheld in the sole discretion of the Owner.
(h) To the best of the Authority’s knowledge, the Tax Increment District is a
“redevelopment district” within the meaning of Minnesota Statutes, Section 469.174 subdivision
10, and was created, adopted and approved in accordance with the terms of the Act. The
Authority will take no action to impair the collection of the Tax Increment from the Tax
Increment District.
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Section 2.2. Representations by the Owner. The Owner represents that:
(a) The Owner is a limited liability company duly organized and authorized to transact
business in the State, is not in violation of any provisions of its articles of organization, member
control agreement or the laws of the State, has power to enter into this Agreement and has duly
authorized the execution, delivery and performance of this Agreement by proper action of its
members.
(b) The Owner will construct the Improvements in accordance with the terms of this
Agreement and all local, state and federal laws and regulations (including, but not limited to,
environmental, zoning, building code and public health laws and regulations), except for
variances necessary to construct the improvements contemplated in the Construction Plans
approved by the Authority.
(c) The Owner has received no notice or communication from any local, state or
federal official that the activities of the Owner or the Authority in the Project Area may be or
will be in violation of any environmental law or regulation. The Owner 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. In the event that it is necessary to take any action to obtain
any necessary permits or approvals with respect to the Property under any local, state or federal
environmental law or regulation, the Owner will be responsible for taking such action.
(d) Subject to issuance thereof by the City, the County, the State or the United States,
as applicable, the Owner will obtain, in a timely manner, all required permits, licenses and
approvals, and will meet, in a timely manner, all requirements of all applicable local, state and
federal laws and regulations which must be obtained or met before the Improvements may be
lawfully constructed.
(e) Neither the execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby, nor the fulfillment of or compliance with the terms and
conditions of this Agreement is prevented, limited by or conflicts with or results in a breach of,
the terms, conditions or provisions of any restriction or any evidences of indebtedness,
agreement or instrument of whatever nature to which the Owner is now a party or by which it is
bound, or constitutes a default under any of the foregoing.
(f) The Owner will cooperate with the Authority with respect to any litigation
commenced with respect to the Project Plan, Project, or Improvements.
(g) The Owner could not and would not proceed with the construction of the
Improvements absent the financial assistance being provided by the Authority pursuant to this
Agreement.
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ARTICLE III
Issuance of Note; Conveyance of Property
Section 3.1. Basis for Assistance. The Authority has acquired the Property for the purpose
of facilitating its redevelopment through private development. The Property contained certain
blighted conditions and substandard buildings and Improvements. The Authority has caused the
buildings and improvements to be demolished and removed from the Property. The Authority is
willing to convey the Property to the Owner in order to allow the Owner to construct the
Improvements on the Property. In addition, the Authority has determined that construction of the
Improvements would not be financially feasible absent the provision of certain public financial
assistance. Therefore, in consideration for the Owner’s agreement to undertake the development
of the Improvements and its agreement to construct as a part of the Improvements certain
amenities that the Authority deems necessary and desirable, the Authority is willing to defray a
portion of the Owner’s costs of construction of the Improvements through the issuance and the
payment of the TIF Note.
Section 3.2. Issuance of TIF Note. The Authority agrees to defray a portion of the
Owner’s cost of constructing the Improvements through the issuance of the TIF Note. The costs
to be reimbursed by the Authority through the issuance of the TIF Note are referred to herein as
the “Reimbursable Costs”. The Reimbursable Costs consist of a portion of the cost of
constructing the Improvements. The issuance of the Note shall occur when the conditions set
forth in Section 3.3 have been satisfied. The principal amount of the Note will be equal to the
Owner’s actual Reimbursable Costs incurred and paid by the Owner, but in no event to exceed
$6,574,000. If the Owner’s documented Reimbursable Costs for such items are less than
$6,574,000 then the principal amount of the TIF Note shall be such lesser amount. The TIF Note
shall be in the form of the TIF Note attached to this Agreement as Schedule B, with all blanks
properly completed. Interest at the rate of the lesser of four and one half percent (4.50%) or the
rate of financing on the Owner’s construction financing for the Improvements shall accrue on the
principal amount of the TIF Note from the date of its issuance up to February 1, 2019, and such
accrued interest shall be added to the principal amount of the TIF Note on the first day of each
February and August after its issuance up to and including February 1, 2019. From and after
February 1, 2018, until the TIF Note is terminated or paid in full, simple non-compounding
interest at the rate of the lesser of four and one half percent (4.50%) per annum or the rate per
annum of financing on the Owner’s construction financing for the Improvements shall accrue
with respect to the principal amount of the TIF Note.
Section 3.3. Conditions Precedent to Issuance of TIF Note. Notwithstanding anything to
the contrary contained herein, the Authority's obligation to issue the TIF Note shall be subject to
satisfaction, or waiver in writing by the Authority, of all of the following conditions precedent:
(a) no Event of Default by Owner shall have occurred under this Agreement and be
continuing;
(b) the Owner shall have closed on financing sufficient to pay all costs to be incurred in
connection with the construction of the Improvements;
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(c) the Owner shall have paid the Reimbursable Costs as described in Section 3.2 of
this Agreement and shall have provided to the Authority such documentation of
such costs as the Authority shall reasonably request; and
(d) the Owner shall have completed construction of the Improvements.
Section 3.4. Payment of Administrative Costs. The Owner will reimburse the Authority
for all out-of-pocket costs incurred by the Authority in connection with review and analysis of
the development proposed under this Agreement, development of the Tax Increment Plan for the
Tax Increment District; and the negotiation of this Agreement and any related agreements and
documents (collectively, the “Administrative Costs”). The Administrative Costs include fees
paid to attorneys, the Authority’s financial advisor, and any planning and engineering consultants
retained by the Authority or City in connection with the construction of the Improvements. As
security for the Administrative Costs, the Owner deposited with the Authority the amount of
$20,000, and the Authority shall pay the Administrative Costs from such funds. If the total
Administrative Costs exceed $20,000, the Owner remains responsible for such excess costs, and
must pay such costs to the Authority within 10 days after receipt of a written invoice from the
Authority describing the amount and nature of the costs to be reimbursed. After the Note has
been issued and the certificate of completion referenced in Section 4.4 has been executed and
delivered, and all the Administrative Costs related to such actions have been paid, the Authority
will refund to the Owner any portion of the balance from the $20,000 deposit (if any) that is not
needed to cover the Administrative Costs through such reimbursement date. Notwithstanding
anything to the contrary herein, the Owner remains obligated to pay the Administrative Costs
after issuance of such certificate of completion, including the costs of any amendments to this
Agreement or to the TIF Note.
Section 3.5. Potential Reduction of Assistance. (a) On the Calculation Date, as defined
below, the amount of the tax increment finance assistance provided pursuant to this Agreement
will be subject to adjustment based on a target Cash on Cash Return, as defined below, of
10%. By the Calculation Date, the Owner must deliver to the Authority’s municipal advisor
evidence of its Cash on Cash Return. The Cash on Cash Return shall be calculated by the
Authority’s municipal advisor based on the Owner’s pro forma financial statement submitted to
the Authority’s municipal advisor, a summary of which pro forma is attached to this Agreement
as Schedule I (the “Pro Forma”).
If the Cash on Cash Return exceeds 10%, then the principal amount of the TIF Note issued
to the Owner will be reduced to an amount that results in a stabilized Cash on Cash Return equal
to 10% over the term of the TIF Note, in which case the Owner shall deliver the TIF Note to the
Authority in exchange for a new TIF Note in the adjusted principal amount upon the Authority’s
written request.
(b) For the purposes of this Section, the following terms have the following
meanings:
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“Calculation Date” means 60 days after the earliest of (i) the date of Stabilization, as
defined below, of the Improvements; (ii) the date of any transfer of the Improvements (provided
that the Owner and the Authority may agree that the Calculation Date will occur prior to the
actual transfer); or (iii) two years after the date of completion of the Improvements, as evidenced
by the City’s issuance of a final certificate of occupancy.
“Cash Flow” means Net Operating Income less debt service with respect to the first
mortgage loan.
“Cash on Cash Return” means Cash Flow divided by the sum of Owner’s actual equity,
which excludes any grants or City, Authority, Federal or State funds received by the Owner, and
the principal amount of the TIF Note.
“Net Operating Income” means total rent and other project-derived revenue, including
payments under the TIF Note, less Operating Expenses in accordance with the Pro Forma.
“Operating Expenses” means reasonable and customary expenses incurred in operating the
Property in accordance with the Pro Forma, including deposits to capital replacement reserves.
“Stabilization” is defined as the first date upon which both of the following have occurred:
(1) the apartments within the Improvements have achieved 90% occupancy for three consecutive
months; and (2) real estate taxes have been fully assessed on the completed Improvements.
Section 3.6. Soils and Environmental Conditions. The Owner acknowledges that the
Authority makes no representations or warranties as to the environmental conditions existing on
the Property or as to the condition of the soils on the Property or its fitness for construction of the
Improvements. The Owner shall have the right to enter upon the Property to undertake such
environmental and soil tests as the Owner deems necessary to determine the condition of the
Property. The Authority shall furnish the Owner with all test results and environmental
assessments that it has in its possession relating to the Property. The Owner has completed its
testing and analysis of the Property and has determined that the environmental and soil
conditions existing on the Property are acceptable. If the Owner closes on the conveyance of the
Property to the Owner, the Owner shall be deemed to accept the Property in its "as is" condition
and the Authority shall have no further responsibility to the Owner for any defects in the
condition of the Property.
Section 3.7. Title. (a) Within ten (10) days after the date of this Agreement (the
"Commitment Delivery Date"), the Authority shall obtain and furnish to the Owner a
commitment for the issuance of an owner's policy of title insurance for the Property issued by
Commercial Partners Title, LLC ("Title Company"), naming the Owner as the proposed insured
party in the amount of $1,443,000 (the "Commitment"), together with any survey of the Property
in the possession of the Authority. The Commitment shall include legible copies of all
documents referenced therein, instruments and matters shown as exceptions or referenced
therein. Within forty five (45) days after the date of this Agreement, the Owner shall obtain and
deliver to the Authority a current land title survey of the Property prepared and certified by a
registered land surveyor licensed in the State of Minnesota and satisfactory to the Owner's lender
and the Title Company (the "Survey"; the Commitment and the Survey, as amended and revised
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from time to time may be referred to herein as the "Title Evidence"). The Authority and the
Owner contemplate that construction of the Improvements will require a re-plat of the Property.
The parties will cooperate to agree upon and finalize a re-plat of the Property by December 31,
2016.
(b) The Owner shall have until and through thirty (30) days following the
Commitment Delivery Date to notify the Authority of specific objections that the Owner has to
the Title Evidence (the "Title Review Period"). Upon expiration of said Title Review Period, if
the Owner has not notified the Authority of any unacceptable items in Commitment (including
the underlying documents) and the Survey, the Owner shall be deemed to have accepted all
exceptions to title referenced in the Commitment and all matters shown on the Survey, and such
accepted exceptions shall be included in the term "Permitted Exceptions" as used herein. Any
objection and the Authority's response thereto shall be made pursuant to this Section 3.7(b). In
the event the Owner does object to any matters shown in the Commitment (including any
exception documents) or the Survey within the Title Review Period, the Authority shall have a
period of ten (10) days, commencing on the thirty-first (31st) day after the Commitment Delivery
Date and ending at 5:00 p.m. Local Time on the tenth (10th) day thereafter (the "Election
Period"), to notify the Owner of the steps, if any, the Authority intends to take to cure the
objections to title and survey made by the Owner. A title objection shall be deemed to be cured
if the title insurer agrees to issue an endorsement to the owner's title insurance and lender's title
insurance policies and the Owner and its lender agree that such endorsement constitutes a cure.
The parties understand and agree that, without any objection thereto being made by the Owner,
the Authority shall have the obligation to remove or cause to be removed, at Closing, all liens
that can be satisfied by the payment of money, whether consensual or otherwise, affecting the
Property; but provided further that the Authority shall not be obligated to remove any liens
created by the Owner in the course of the Owner's due diligence investigations. In the event that
the Authority is unable to cure the Owner's objections prior to the expiration of the Election
Period, the Authority shall notify the Owner in writing of such fact prior to the expiration of the
Election Period. In such event, or if the Authority shall fail to provide any such notice to the
Owner, the Owner shall have until ten (10) days prior to the Closing Date (as defined in Section
3.8(a) below within which to either waive the Owner's objections in writing and accept title to
the Property subject to the matters which the Authority has been unable to cure, or terminate this
Agreement in writing, in which case any deposits made by the Owner to the Authority shall be
returned to the Owner and neither the Authority nor the Owner shall have any further obligation
hereunder, except as to those obligations provided for herein which are stated to survive
termination of this Agreement. If the Owner does not so waive such objections in writing or so
terminate this Agreement in writing the Owner shall be deemed to have waived the Owner's
objections and accepted the Property subject to the matters which the Authority has been unable
or unwilling to eliminate and such accepted exceptions shall be included in the term "Permitted
Exceptions". Notwithstanding the foregoing, nothing herein shall prohibit the Owner from
objecting to new title matters or new survey matters first appearing on title or the Survey after
the initial issuance of each of the same. In such case, the parties shall proceed as though the
period beginning on the day after the date after the Owner receives (a) any revised Commitment
showing a new title matter; or; or (b) a revised survey showing a new survey matter and ending
five (5) days thereafter is the Title Review Period as to any such matter(s). The Election Cure
Period shall be three (3) days, and, after the expiration of the Title Review Period, and the Owner
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shall then have three (3) days after the expiration of the Election Cure Period to either (x)
terminate this Agreement and receive a refund of all deposits to the Authority; or (y) proceed to
Closing without diminution of the Purchase Price. The Authority shall have no obligation to
exercise its powers of eminent domain to clear defects in the title to the Property. The cost of
obtaining the title insurance commitment and the cost of title insurance policies in favor the
Owner and its lender shall be borne by the Owner. In the event of any termination of this
Agreement pursuant to this Section 3.7(b), the parties agree that they shall execute an agreement
in recordable form evidencing the cancellation of this Agreement.
(c) The Authority shall voluntarily take no actions to encumber title to the Property
between the date hereof and the date on which the Deed is delivered to the Owner.
Section 3.8. Closing; Purchase Price. (a) Subject to the conditions precedent set forth
in Section 3.9 of this Agreement, the Authority agrees to sell the Property to the Owner as
provided in this Section 3.8. Closing on the conveyance of the Property to the Owner (the
“Closing”) shall occur within thirty (30) days after the date that the conditions precedent
contained in Section 3.9 have been satisfied or waived, but in no event later than February 28,
2017.
(b) At Closing. the Authority shall deliver to the Owner: (i) a Deed duly executed and
acknowledged conveying to the Owner marketable title to the Property subject only to Permitted
Encumbrances; and (ii) such other customary documents as are required by the title company
issuing the title commitment and title policy to be executed and delivered to effectuate the
closing on the conveyance of the Property.
(c) All closing costs associated with the Closing will be paid by the Owner.
(d) The purchase price to be paid by the Owner shall be $1,443,000 and shall payable
in full at the Closing.
Section 3.9. Conditions Precedent to Conveyance of the Property. The Authority’s
obligation to sell and the Owner’s obligation to purchase the Property shall be subject to
satisfaction of the following conditions precedent:
(a) The Owner having secured financing or provided to the Authority evidence
reasonably satisfactory to the Authority of its ability to secure financing sufficient for the
acquisition of the Property and the construction of the Improvements.
(b) The Owner having reviewed and approved, or waived any objections to, title to the
Property pursuant to Section 3.7 of this Agreement.
(c) The City having issued a building permit for the Improvements to the Owner.
If all of the conditions precedent to the conveyance of the Property have not been
satisfied by February 28, 2017, the Authority shall have the right to terminate this Agreement by
giving written notice of termination to the Owner, upon which this Agreement shall terminate
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and the Authority and Owner shall execute an instrument in recordable form evidencing such
termination.
Section 3.10. Tax Increment Interfund Loan. (a) The Authority has acquired the
Property and the City and the Authority have incurred certain costs to prepare such property for
redevelopment, including environmental remediation, demolition of buildings and site clearance.
After Owner’s payment of the Deferred Land Amount for the Property there will remain
unreimbursed costs incurred by the City and the Authority in the approximate amount of
$920,100 (the “Authority Costs”). Subject to all the terms and conditions of this Agreement,
upon the conveyance of the Property to the Owner, the City and the Authority will forego receipt
of the Authority Costs and the Authority Costs will remain outstanding. The City and the
Authority shall reserve the right to collect such Authority Costs through the Interfund Loan, as
described in Section 3.9(b) below.
(b) The Authority will treat the amount of the Authority Costs as an interfund loan
(the “Interfund Loan”) within the meaning of Section 469.178, Subdivision 7 of the Tax
Increment Act. The terms of the Interfund Loan are described in a resolution adopted in August,
2015, (the “Loan Resolution”). Until the TIF Note has been paid in full, or terminated in
accordance with its terms, the Interfund Loan will be payable only from Tax Increment received
by the Authority that is in excess of Available Tax Increment, and under no circumstances shall
the Owner or any successor or assign of the Owner, have any responsibility for payment of the
Interfund Loan or any portion thereof.
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ARTICLE IV
Construction of Improvements
Section 4.1. Construction of Improvements. The Owner agrees that it will construct the
Improvements on the Property in accordance with the approved Construction Plans and at all
times prior to the Termination Date will operate and maintain, preserve and keep the
Improvements or cause the Improvements to be maintained, preserved and kept with the
appurtenances and every part and parcel thereof, in good repair and condition.
Section 4.2. Construction Plans. (a) The Owner has submitted and the City and the
Authority have approved a site plan for the construction of the Improvements (the "Site Plan").
All Construction Plans for the Improvements shall be consistent with the approved Site Plan.
The Construction Plans shall provide for the construction of the Improvements and shall be in
conformity with this Agreement, the Site Plan approved by the Authority, and all applicable state
and local laws and regulations. The Authority shall approve the Construction Plans in writing if,
in the reasonable discretion of the Authority: (i) the Construction Plans conform to the terms and
conditions of this Agreement; (ii) the Construction Plans are consistent with the Site Plans
previously submitted to the Authority; (iii) the Construction Plans conform to all applicable
federal, State and local law, ordinances, rules and regulations; (iv) the Construction Plans are
adequate to provide for the construction of the Improvements; (v) the Construction Plans do not
provide for expenditures in excess of the funds which will be available to the Owner for the
construction of the Improvements, including, without limitation, construction loan proceeds; and
(vi) no Event of Default by the Owner has occurred. No approval by the Authority under this
Section 4.2 shall relieve the Owner of the obligation to comply with the terms of this Agreement
or applicable federal, state and local laws, ordinances, rules and regulations, or to construct the
Improvements. No approval by the Authority shall constitute a waiver of an Event of Default.
Such Construction Plans shall, in any event, be deemed approved unless rejected in writing by
the Authority, in whole or in part. Such rejection shall set forth in detail the reasons therefor, and
shall be made within thirty (30) days after the date of their receipt by the Authority. 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 or until this Agreement is terminated. The Authority's approval shall not be
unreasonably withheld. Notwithstanding any other provisions of this Agreement, the issuance by
the City of a building permit for the construction of the Improvements shall constitute the
approval of the Construction Plans by the City and the Authority as provided herein.
(b) If the Owner desires to make any material change in any Construction Plans after
their approval by the Authority, the Owner shall submit the proposed change to the Authority for
its approval. For purposes of this Agreement, a “material change” means a change that changes
the size, nature or exterior appearance of the Improvements or that substantially reduces the
value of the Improvements. If the Construction Plans, as modified by the proposed change,
conform to the requirements of this Section 4.2 of this Agreement with respect to such
previously approved Construction Plans, the Authority shall approve the proposed change and
notify the Owner in writing of its approval. Any requested change in the Construction Plans
shall, in any event, be deemed approved by the Authority unless rejected, in whole or in part, by
15
written notice by the Authority to the Owner, setting forth in detail the reasons therefor. Such
rejection shall be made within ten (10) days after receipt of the notice of such change.
(c) City approval of the Improvements will occur as a part of a planned unit
development process. The Owner acknowledges that it will be required to enter into a planned
unit development agreement containing the terms and conditions of the planned unit
development approval subject to the Owner’s reasonable approval.
Section 4.3. Commencement and Completion of Construction. (a) Subject to
Unavoidable Delays, the Owner shall commence construction of the Improvements by April 1,
2017, or on such other date as the parties shall mutually agree. Subject to Unavoidable Delays,
the Owner shall complete the construction of the Improvements by August 31, 2018. All work
with respect to the Improvements to be constructed or provided by the Owner on the Property
shall be in conformity with the Construction Plans as submitted by the Owner and approved by
the Authority, and as may be modified as provided in Section 4.2 above.
(b) Until construction of the Improvements has been completed, the Owner shall
make construction progress reports, at such times as may reasonably be requested by the
Authority, but not more than once a month, as to the actual progress of the Owner with respect to
such construction.
(c) The construction of the Improvements will result in a shared access over the
Property to the Improvements and to the City’s golf course. Therefore, at the time that the
Authority conveys the Property to the Owner the Owner will execute a perpetual non-exclusive
easement over the Property providing such access to the golf course. Such easement will be in
the form attached hereto as Schedule E.
(d) As a part of its construction of the Improvements the Owner will construct a new
trash enclosure on the City’s golf course. Such trash enclosure will serve both the golf course
and the Improvements. The location and nature of such enclosure will be as shown on the
Owner’s approved Construction Plans. The City and the Owner will enter into an access
agreement allowing the Owner to access and use the trash enclosure, which access agreement
will be in the form attached to this Agreement as Schedule F.
(e) The Owner will pay to the City a park dedication fee in the amount of $17,700 in
connection with the development of the Improvements.
(f) As part of construction of the Improvements the Owner will, at its sole cost and
expense, install a municipal utility lift station. The design and location of the lift station will be
agreed upon by the City and the Owner during the process of developing plans for the
construction of the Improvements.
(g) The Owner will bury the existing power lines located between Yukon Avenue and
Winnetka Avenue. The Authority agrees to reimburse the Owner for up to $125,000 of the cost
of such work.
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Section 4.4. Certificate of Completion. (a) Promptly after completion of the
Improvements in accordance with those provisions of this Agreement relating solely to the
obligations of the Owner to construct the Improvements, and upon request by the Owner, the
Authority will furnish the Owner with a Certificate of Completion for the Improvements in a
form acceptable for recording in the County Recorder’s Office or the Office of the Registrar of
Titles. The Certificate of Completion shall be furnished to the Owner within ten (10) business
day after request by the Owner, and shall conclusively satisfy and terminate the agreements and
covenants in this Agreement of the Owner, and its successors and assigns, to construct the
Improvements. Such certification and such determination shall not constitute evidence of
compliance with or satisfaction of any obligation of the Owner to any Holder of a Mortgage, or
any insurer of a Mortgage, securing money loaned for construction of the Minimum
Improvements, or any part thereof.
(b) If the Authority shall refuse or fail to provide a Certificate of Completion in
accordance with the provisions of this Section 4.4 of this Agreement, the Authority shall, within
ten (10) business day after written request by the Owner for the Certificate of Completion,
provide the Owner with a written statement, indicating in adequate detail in what respects the
Owner has failed to complete the 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
Owner to take or perform in order to obtain the Certificate of Completion.
(c) The construction of the Improvements shall be deemed to be completed when the
City has issued a final certificate of occupancy for the Improvements (or when the Owner would
be entitled to a certificate of occupancy if it requested one), and when all conditions imposed in
connection with the City’s approval of the Owner’s development, including the establishment of
any completion escrow, if necessary, have been satisfied.
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ARTICLE V
Insurance and Condemnation
Section 5.1. Insurance.
(a) The Owner will provide and maintain at all times during the process of
constructing the Improvements and, from time to time at the request of the Authority, 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%) of the
insurable value of the Improvements at the date of completion, and with coverage available
in nonreporting form on the so called "all risk" form of policy;
(ii) Commercial general liability insurance (including operations, contingent
liability, operations of subcontractors, completed operations, including contractual liability
insurance), naming the Authority as an additional insured, 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
(iii) Worker's compensation insurance, with statutory coverage and employer's
liability protection.
The policies of insurance required pursuant to clauses (i) and (ii) above shall be in form and
content reasonably satisfactory to the Authority and shall be placed with financially sound and
reputable insurers licensed to transact business in the State, the liability insurer to be rated A or
better in Best's Insurance Guide. The policy of insurance delivered pursuant to clause (i) above
shall contain an endorsement by the insurer to in favor of the Authority to give not less than
thirty (30) days' advance written notice to the Authority in the event of cancellation of such
policy or change affecting the coverage thereunder.
(b) Upon completion of construction of the Improvements and prior to the Termination
Date, the Owner shall maintain, or cause to be maintained, at its cost and expense, and from time
to time at the request of the Authority shall furnish proof of the payment of premiums on,
insurance as follows:
(i) Insurance against loss and/or damage to the Improvements 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, all risk
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 the
Improvements, but any such policy may have a deductible amount of not more than
$10,000. No policy of insurance shall 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
18
Authority. The term "full insurable replacement value" shall mean the actual replacement
cost of the Improvements (excluding foundation and excavation costs and costs of
underground flues, pipes, drains and other uninsurable items) and equipment, and shall be
determined from time to time at the request of the Authority, but not more frequently than
once every three years, by an insurance consultant or insurer, selected and paid for by the
Owner and approved by the Authority.
(ii) Comprehensive general public liability insurance, including personal injury
liability (with employee exclusion deleted), and automobile insurance, including owned,
non-owned and hired automobiles, against liability for injuries to persons and/or property,
in the minimum amount for each occurrence and for each year of $2,000,000.00.
(iii) Such other insurance, including worker's compensation insurance respecting
all employees of the Owner, if any, in such amount as is customarily carried by like
organizations engaged in like activities of comparable size and liability exposure; provided
that the Owner may be self-insured with respect to all or any part of its liability for
worker's compensation.
(c) All insurance required in Article V of this Agreement shall be taken out and
maintained in responsible insurance companies selected by the Owner which are authorized
under the laws of the State to assume the risks covered thereby.
(d) The Owner agrees to notify the Authority immediately in the case of damage as to
which the cost to repair exceeds $100,000, or destruction of, the Improvements or any portion
thereof, as to which the cost to repair exceeds $100,000, resulting from fire or other casualty. In
the event of any such damage, the Owner will forthwith repair, reconstruct and restore the
Improvements to substantially the same or an improved condition or value as existed prior to the
event causing such damage and, to the extent necessary to accomplish such repair, reconstruction
and restoration, but subject to the rights of Owner’s lenders, the Owner will apply the proceeds
of any insurance relating to such damage received by the Owner to the payment or
reimbursement of the costs thereof.
The Owner shall complete the repair, reconstruction and restoration of the Improvements,
whether or not the Net Proceeds of insurance received by the Owner for such purposes are
sufficient to pay for the same. Any proceeds remaining after completion of such repairs,
construction and restoration shall be retained by the Owner.
If the Owner fails to fulfill its obligations to repair, reconstruct and restore the Improvements
within a reasonable time after the occurrence of the damage, the Authority shall be entitled
terminate the TIF Note and shall be entitled to Net Proceeds of insurance to the extent of the
unpaid balance of the Interfund Loan under Section 3.11.
Section 5.2. Condemnation. In the event that title to and possession of the Improvements or
any material part thereof shall be taken in condemnation or by the exercise of the power of
eminent domain by any governmental body (other than the City or the Authority) or other person
prior to the Termination Date, the Owner shall, with reasonable promptness after such taking,
19
notify the Authority as to the nature and extent of such taking. Upon receipt of any
condemnation award, but subject to the rights of Owner’s lenders, the Owner shall elect to either:
(a) use the entire condemnation award to reconstruct the Improvements (or, in the event only a
part of Improvements have been taken, then to reconstruct such part) within the Project Area; or
(b) retain the condemnation award, less the unpaid balance of the Interfund Loan under Section
3.11 which shall be paid to the Authority, whereupon in the event that a substantial portion of the
Property and Improvements have been taken, the Authority's obligations under the TIF Note
shall terminate as of the date of the taking.
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ARTICLE VI
Taxes; Tax Increment; Assessment Agreement
Section 6.1. Real Property Taxes. The Owner shall pay or cause to be paid when due and
prior to the imposition of penalty all real property taxes and installments of special assessments
payable with respect to the Property after the Owner acquires the Property. In addition, the
Owner agrees that prior to the Termination Date: (1) it will not seek administrative or judicial
review of the applicability of any tax statute determined by any Tax Official to be applicable to
the Improvements or the Property or raise the inapplicability of any such tax statute as a defense
in any proceedings, including delinquent tax proceedings; (2) it will not seek administrative or
judicial review of the constitutionality of any tax statute determined by any tax official to be
applicable to the Improvements or the Property or raise the unconstitutionality of any such tax
statute as a defense in any proceedings, including delinquent tax proceedings; and (3) it will not
cause a reduction in the Minimum Market Value of the Improvements through:
(a) willful destruction of the Improvements or any part thereof;
(b) willful refusal to reconstruct damaged or destroyed property pursuant to
Section 5.1(d) of this Agreement;
(c) a request to the County assessor to reduce the assessed value of the Property
below the Minimum Market Value of all or any portion of the Property or Improvements;
(d) a petition to the board of equalization of the County to reduce the assessed value
of the Property below the Minimum Market Value;
(e) a petition to the board of equalization of the State or the commissioner of revenue
of the State to reduce the assessed value of the Property below the Minimum Market Value;
(f) an action in a district court of the State or the tax court of the State seeking a
reduction in the assessed value of the Property below the Minimum Market Value;
(g) an application to the commissioner of revenue of the State or to any local taxing
jurisdiction requesting an abatement of real property taxes regarding the Property or
Improvements;
(h) any other proceedings, whether administrative, legal or equitable, with any
administrative body within the County or the State or with any court of the State or the federal
government regarding a reduction in the assessed value of the Property below the Minimum
Market Value; or
(i) a transfer of the Property or Improvements, or any part thereof, to an entity
exempt from the payment of real property taxes under State law.
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Notwithstanding anything contained in this Section 6.1 or elsewhere in this Agreement to the
contrary, the Owner may contest real property taxes assessed in excess of the Minimum Market
Value of the Improvements. The Owner shall notify the City and Authority of any
administrative or judicial review affecting the Improvements or the Property. In such event, the
Authority will continue to make payments under the TIF Note to the Owner based upon the value
stated in the Assessment Agreement, with any additional Tax Increment available for payment
being withheld from Owner until such time that the administrative or judicial review affecting
the Improvements or the Property is finally determined. The Owner shall not, prior to the
Termination Date, apply to any taxing jurisdiction for a deferral or abatement of property tax on
the Property or Improvements.
Section 6.2. Tax Increment. Subject to the limitations contained in the TIF Note, the
Authority hereby pledges to the payment of the TIF Note the Available Tax Increment. Tax
Increment received by the Authority in excess of Available Tax Increment shall be the
Authority’s property and, the Authority shall be free to use such excess Tax Increment for any
purpose for which such Tax Increment may be used under the Tax Increment Act.
Section 6.3. Owner’s Representations Concerning TIF Note. The Owner makes the
following representations to the Authority with respect to the issuance of the TIF Note:
(a) The Owner has not relied on any representations of the Authority, or any of its
officers, agents, or employees, and has not relied on any opinion of any attorney of the
Authority, as to the federal or State income tax consequences relating to the ownership of the
TIF Note by the Owner.
(b) The Owner is sufficiently knowledgeable and experienced in financial and
business matters, including the purchase and ownership of obligations of a nature similar to the
TIF Note, to be able to evaluate the risks and merits of the purchase and ownership of the TIF
Note. The Owner has been made aware of the security for the TIF Note and the proposed uses of
the proceeds of the TIF Note, and has received the cooperation of the Authority in undertaking
any due diligence that the Owner has deemed necessary or appropriate.
(c) The Owner understands that the portion of the Tax Increment pledged to the
payment of the TIF Note pursuant to this Agreement is the sole source of money that is pledged
and will be available for the payments due under the TIF Note; that the Authority is not under
any obligation to repurchase the TIF Note from the Owner under any circumstances; that the TIF
Note is not a general obligation of the Authority; and that, if the Tax Increment pledged to the
payment of the TIF Note pursuant to this Agreement is not sufficient to make the payments due
under the TIF Note in full, no right will exist to have taxes levied by the Authority or the City for
the payment of the unpaid amounts due under the TIF Note.
(d) The Owner understands that the Tax Increment necessary to pay the TIF Note has
been estimated assuming that the Improvements will have certain market values on certain dates.
All estimates of Tax Increment that have been prepared by or on behalf of the Authority have
been done for the Authority’s use only and neither the Authority nor its consultants shall have
liability to the Owner if the actual Tax Increment is less than the amounts estimated. In the
22
event, among other things, the Owner fails to complete the Improvements in a timely manner or
the market value of the Improvements does not reach certain levels, the Tax Increment pledged
to the payment of the TIF Note may be inadequate to pay the total principal of and interest on the
TIF Note.
(e) The Owner understands that the TIF Note is not registered or otherwise qualified
for sale or transfer under the securities laws and regulations of the State or under federal
securities laws or regulations, the TIF Note is not listed on any stock or other securities
exchange, and the TIF Note will carry no rating from any rating service.
Except as provided in this Agreement, including, without limitation Section 8.1 below,
the TIF Note may not be transferred to any third party without the prior written approval of the
Authority.
Section 6.4. Assessment Agreement.
(a) At the time of the Closing on the conveyance of the Property to the Owner, the
Owner shall, with the Authority, execute an Assessment Agreement pursuant to Minnesota Statutes,
Section 469.177, subd. 8, specifying an assessor’s Minimum Market Value for the Improvements.
The amount of the minimum Market Value of the Improvements shall be $27,300,000 as of January
2, 2019, and each January 2 thereafter, notwithstanding the status of construction by such dates.
(b) The Assessment Agreement shall be in the form attached as Schedule D with all
blanks properly completed. Nothing in the Assessment Agreements shall limit the discretion of the
assessor to assign a market value to the property in excess of such Minimum Market Value. The
Assessment Agreement shall remain in force for the period specified in the Assessment Agreement.
23
ARTICLE VII
Mortgage Financing
Section 7.1. Mortgage Financing. On or before January 31, 2017, the Owner shall
provide to the Authority evidence of a term sheet or other evidence reasonably satisfactory to the
Authority for mortgage financing sufficient for construction of the Improvements. If the
Authority finds that the mortgage financing is adequate in amount to provide for the construction
of the Improvements, and subject only to such conditions as the Authority approves, such
approval not to be unreasonably withheld, delayed or conditioned, then the Authority shall notify
the Owner in writing of its approval. Such approval shall not be unreasonably withheld and
either approval or rejection shall be given within fourteen (14) days from the date when the
Authority is provided the evidence of mortgage financing. The issuance of a building permit for
the Improvements by the City shall be deemed to evidence the Authority's approval under this
Section. If the Authority rejects the evidence of mortgage financing as inadequate, it shall do so
in writing specifying in reasonable detail the basis for the rejection. In any event, the Owner
shall submit adequate evidence of mortgage financing within thirty (30) days after such rejection.
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ARTICLE VIII
Prohibitions Against Assignment and Transfer, Indemnification
Section 8.1. Prohibition Against Transfer of Property and Assignment of Agreement. The
Owner represents and agrees that the Owner has not made or created and, prior to the completion
of the Improvements, will not make or create, or suffer to be made or created, any total or partial
sale, assignment, conveyance, or lease, or any trust or power, or transfer in any other mode or
form of or with respect to this Agreement or the Property or any part thereof or any interest
herein or therein, or any contract or agreement to do any of the same, other than to residential
tenants in the ordinary course of business, without the prior written approval of the Authority,
which approval shall not be unreasonably withheld or delayed. Notwithstanding the foregoing,
the Owner may transfer the Property, the Improvements, the TIF Note and/or assign its interest
in this Agreement to an entity affiliated with the Owner or one of the Owner’s owners, and, after
completion of the Improvements, to any entity that purchases the Property and the
Improvements, provided that, in each instance, such new entity executes an instrument in a form
acceptable to the Authority by which it assumes and agrees to perform the Owner’s obligations
under this Agreement. Any such assignment or transfer shall relieve the Owner of any liability
under this Agreement. In addition, the TIF Note may be assigned to a lender as collateral for any
loan made to the Owner.
Section 8.2. Release and Indemnification Covenants.
(a) The Owner releases from and covenants and agrees that the Authority, the City and
the governing body members, officers, agents, servants and employees thereof shall not be liable
for and agrees to indemnify and hold harmless the Authority, the City, and the governing body
members, officers, agents, servants and employees thereof against any loss or damage to
property or any injury to or death of any person occurring at or about or resulting from any
defect in the Improvements.
(b) Except for any willful misrepresentation, any willful or wanton misconduct or
gross negligence of the following named parties, the Owner agrees to protect and defend the
Authority, the City, and the governing body members, officers, agents, servants and employees
thereof, now or forever, and further agrees to hold the aforesaid harmless from any claim,
demand, suit, action or other proceeding whatsoever by any person or entity whatsoever arising
or purportedly arising from this Agreement, or the transactions contemplated hereby or the
acquisition, construction, installation, ownership, and operation of the Improvements.
(c) The Authority, the City, and the governing body members, officers, agents,
servants and employees thereof shall not be liable for any damage or injury to the persons or
property of the company or its officers, agents, servants or employees or any other person who
may be about the Property or Improvements due to any act of negligence of any person.
(d) All covenants, stipulations, promises, agreements and obligations of the Authority
contained herein shall be deemed to be the covenants, stipulations, promises, agreements and
25
obligations of the Authority and not of any governing body member, officer, agent, servant or
employee of the Authority in the individual capacity thereof.
(e) Nothing in this Section or Section 8.3 will be construed to limit or affect any
limitations on liability of the City or Authority under State or federal law, including without
limitation, Minnesota Statutes Sections 466.04 and 604.02.
(f) The liability of the Owner under this Agreement shall be limited to the Owner and
its assets. No member, officer or employee of the Owner shall be personally liable to the
Authority or to the City, or any successor in interest, in the event of any default or breach by the
Owner or for any amount which may become due to the Authority or the City or any successor in
interest or on any obligations under the terms of this Agreement.
Section 8.3. Environmental Conditions. (a) The Owner acknowledges that the Authority
makes no representations or warranties as to the condition of the soils of the Property or the
fitness of the Property for construction of the Minimum Improvements or any other purpose for
which the Owner may make use of such property, and that the assistance provided to the Owner
under this Agreement neither implies any responsibility by the Authority for any contamination
of the Property nor imposes any obligation on the Authority to participate in any cleanup of the
Property.
(b) Without limiting its obligations under Section 8.2 of this Agreement, the Owner
further agrees that, except for any misrepresentation or any misconduct or affirmative act by the
Authority or the City and except for any breach by the Authority of its obligations under this
Agreement, the Owner will indemnify, defend, and hold harmless the Authority, the City, and
their governing body members, officers, and employees, from any claims or actions arising out
of the presence, if any, of hazardous wastes or pollutants existing on or in the Property, unless
and to the extent that such hazardous wastes or pollutants are present as a result of the actions or
omissions of such parties. Nothing in this section will be construed to limit or affect any
limitations on liability of the City or Authority under State or federal law, including without
limitation, Minnesota Statutes Sections 466.04 and 604.02.
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ARTICLE IX
Events of Default
Section 9.1. Events of Default Defined. The term "Event of Default" shall mean, whenever
it is used in this Agreement (unless the context otherwise provides):
(a) any failure by Owner to observe or perform any covenant, condition, obligation or
agreement on its part to be observed or performed hereunder; or
(b) if, before issuance of the certificate of completion for the Improvements, the
Owner shall
(i) file any petition in bankruptcy or for any reorganization, arrangement,
composition, readjustment, liquidation, dissolution, or similar relief under the United
States Bankruptcy Act or under any similar federal or State law, which action is not
dismissed within sixty (60) days after filing; or
(ii) make an assignment for benefit of its creditors; or
(iii) admit in writing its inability to pay its debts generally as they become due;
or
(iv) be adjudicated a bankrupt or insolvent.
Section 9.2. Authority's Remedies on Default. Whenever any Event of Default by Owner
referred to in Section 9.1 of this Agreement occurs, the Authority may immediately suspend its
performance under this Agreement and/or the TIF Note until it receives assurances from the
Owner, deemed adequate by the Authority, that the Owner will cure its default and continue its
performance under this Agreement and may take any one or more of the following actions after
providing sixty (60) days written notice to the Owner of the Event of Default, but only if the
Event of Default has not been cured within said sixty (60) days, or such longer period of time as
the Authority may reasonably determine if the Event of Default is of a nature that it cannot be
cured in thirty (30) days:
(a) Terminate this Agreement and/or the TIF Note.
(b) Take whatever action, including legal, equitable or administrative action, which
may appear necessary or desirable to the Authority to collect any payments due under this
Agreement, or to enforce performance and observance of any obligation, agreement, or covenant
of the Owner under this Agreement.
Section 9.3. No Remedy Exclusive. No remedy herein conferred upon or reserved to the
Authority or Owner is intended to be exclusive of any other available remedy or remedies, but
each and every such remedy shall be cumulative and shall be in addition to every other remedy
given under this Agreement or now or hereafter existing at law or in equity or by statute. No
27
delay or omission to exercise any right or power accruing upon any default shall impair any such
right or power or shall be construed to be a waiver thereof, but any such right and power may be
exercised from time to time and as often as may be deemed expedient. In order to entitle the
Authority or the Owner to exercise any remedy reserved to it, it shall not be necessary to give
notice, other than such notice as may be required in this Article IX.
Section 9.4. No Additional Waiver Implied by One Waiver. In the event any agreement
contained in this Agreement should be breached by either party and thereafter waived by the
other party, such waiver shall be limited to the particular breach so waived and shall not be
deemed to waive any other concurrent, previous or subsequent breach hereunder.
Section 9.5. Costs of Enforcement. Whenever any Event of Default occurs and the
Authority shall employ attorneys or incur other expenses for the collection of payments due or to
become due or for the enforcement of performance or observance of any obligation or agreement
on the part of the Owner under this Agreement, the Owner agrees that it shall be liable for the
reasonable fees of such attorneys and such other expenses so reasonably incurred by the
Authority.
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ARTICLE X
Additional Provisions
Section 10.1. Representatives Not Individually Liable. No member, official, or employee
of the Authority shall be personally liable to the Owner, or any successor in interest, in the event
of any default or breach or for any amount which may become due to Owner or successor or on
any obligations under the terms of the Agreement.
Section 10.2. Restrictions on Use. The Owner agrees for itself, and its successors and
assigns that the Owner, and such successors and assigns, shall until the Termination Date devote
the Property to, and only to and in accordance with, the uses specified in this Agreement.
Section 10.3. Titles of Articles and Sections. Any titles of the several parts, Articles, and
Sections of the Agreement are inserted for convenience of reference only and shall be
disregarded in construing or interpreting any of its provisions.
Section 10.4. Notices and Demands. All notices or communications, required or desired to
be given hereunder shall be in writing, sent to the addresses specified below and shall be deemed
effective and received (a) upon personal delivery; (b) five (5) days after deposit in the United
States mail, certified mail, return receipt requested, postage prepaid; (c) one (1) business day
after deposit with a national overnight air courier, fees prepaid, to the Authority or the Owner, as
the case may be, or (d) via email at rclux@alatusllc.com, as to the Owner, and _____________
as to the Authority; provided however that if the sending party does not receive a return email
acknowledging receipt of the email notice within 24 hours after the same has been sent, the
sending party will also provide notice pursuant to either (a) or (c) above. Either party may
designate an additional or another address upon giving written notice to the other party at the
address for notices below, or as previously changed. Attorneys for either party may give or
receive notices for such party. For the purposes of this Agreement, "business day" shall mean a
day which is not a Saturday, a Sunday or a legal holiday of the State of Minnesota.
(a) if to the Owner, at U.S. Bancorp Center, 800 Nicollet Mall, Suite 2850,
Minneapolis, Minnesota 55402,
(b) if to the Authority, at City Hall, 4401 Xylon Avenue North, New Hope,
Minnesota 55428.
Or at such other address with respect to either such party as that party may, from time to time,
designate in writing and forward to the other as provided in this Section.
Section 10.5. Disclaimer of Relationships. Nothing contained in this Agreement nor any
act by the Authority or the Owner shall be deemed or construed by any person to create any
relationship of third-party beneficiary, principal and agent, limited or general partner, or joint
venture among the Authority, the Owner, and/or any third party.
29
Section 10.6. Modifications. This Agreement may be modified solely through written
amendments hereto executed by the Owner and the Authority.
Section 10.7. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall constitute one and the same instrument.
Section 10.8. Judicial Interpretation. Should any provision of this Agreement require
judicial interpretation, the court interpreting or construing the same shall not apply a presumption
that the terms hereof shall be more strictly construed against one party by reason of the rule of
construction that a document is to be construed more strictly against the party who itself or
through its agent or attorney prepared the same, it being agreed that the agents and attorneys of
both parties have participated in the preparation hereof.
Section 10.9. Business Subsidy Act. Because the Authority’s assistance to the Owner’s
development is being made available for the purpose of developing housing, the assistance does
not constitute a business subsidy within the meaning of Minnesota Statutes, sections 116J.993 to
116J.995.
Section 10.10 Miscellaneous.
(a) Gender; etc. Words of any gender used in this Agreement shall be held and
construed to include any other gender, and words in the singular number shall be held to include
the plural, unless the context otherwise requires.
(b) Binding Effect. The terms, provisions and covenants and conditions contained in
this Agreement shall apply to, inure to the benefit of, and be binding upon, the parties hereto and
upon their respective heirs, legal representatives, successors and permitted assigns, except as
otherwise herein expressly provided.
(c) Captions. The captions inserted in this Agreement are for convenience only and
in no way define, limit or otherwise describe the scope or intent of this Agreement, or any
provision hereof, or in any way affect the interpretation of this Agreement.
(d) Estoppel. Each party agrees that, at any time and from time to time, within ten
(10) days after the request of the other party, to sign and deliver to the other party, or such other
party's designee, an estoppel certificate in a form reasonably satisfactory to the sending party and
the receiving party.
(e) Time. Any period of time described in this Agreement by reference to a number
of days includes Saturdays, Sundays, and any holiday of the State of Minnesota. Any period of
time described in this Agreement by reference to a number of business days does not include
Saturdays, Sundays, or any holiday of the State of Minnesota. If the date or last date to perform
any act or to give any notice is a Saturday, Sunday, or holiday of the State of Minnesota, that act
or notice may be timely performed or given on the next succeeding business day.
(f) Severability. If any clause or provision of this Agreement is illegal, invalid or
unenforceable under present or future laws effective during the Agreement Term, then and in
30
that event, it is the intention of the parties hereto that the remainder of this Agreement shall not
be affected thereby, and it is also the intention of the parties to this Agreement that in lieu of
each clause or provision of this Agreement that is illegal, invalid or unenforceable, there be
added as a part of this Agreement a clause or provision as similar in terms to such illegal, invalid
or unenforceable clause or provision as may be possible and be legal, valid and enforceable.
(g) Waiver of Jury Trial; Jurisdiction. EACH OF THE AUTHORITY AND THE
OWNER HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION
RELATING TO THIS AGREEMENT. This Agreement shall be enforced in any United States
District Court for the District of Minnesota or state court of the State of Minnesota sitting in
Hennepin County, and the parties consent to the jurisdiction and venue of any such court and
waives any argument that venue in such forums is not proper or convenient.
(h) Complete Agreement. This Agreement and the exhibits and schedules attached
hereto contains all of the agreements and understandings relating to the subject matter herein and
therein. This Agreement and the exhibits and schedules attached hereto supersede any and all
prior agreements and understandings between the Authority and the Owner and alone expresses
the agreement of the parties.
(i) Governing Law. This Agreement, the rights of the parties hereunder and the
interpretation hereof shall be governed by, and construed in accordance with, the internal laws of
the State of Minnesota, without giving effect to conflict of laws principles thereof.
(j) Time of Essence. Time shall be of the essence as to this Agreement and each and
every provision hereof.
Section 10.11 Termination. This Agreement shall be null and void on the Termination
Date, provided, that Sections 8.2 and 8.3 shall survive any rescission, termination or expiration
of this Agreement with respect to or arising out of any event, occurrence or circumstance
existing prior to the date thereof.
Section 10.12. Estoppel Certificates. The Authority agrees it will, from time to time upon
reasonable prior written request by the Owner, execute and deliver to the Owner and such other
parties as the Owner may reasonably designate, within ten (10) business days following the request
therefor, written certification, if true, that (a) this Agreement is unmodified and in full force and
effect (or if there have been modifications, that the same are in full force and effect as modified), (b)
that to the knowledge of the Authority there are not defaults under this Agreement (or specifying
any claimed defaults), (c) certifying as to the status of completion of the Improvements, and (d) the
outstanding principal amount of the TIF Note.
31
IN WITNESS WHEREOF, the Authority has caused this Agreement to be duly
executed in its name and behalf and the Owner has caused this Agreement to be duly executed in
its name and behalf on or as of the date first above written.
NEW HOPE ECONOMIC
DEVELOPMENT AUTHORITY
By: _______________________
Name: _________________
Title: _________________
By: _______________________
Name: _________________
Title: _________________
STATE OF MINNESOTA )
) SS.
COUNTY OF ___________)
The foregoing instrument was acknowledged before me this _______day of ________,
2016, by ___________________ and ____________________, the President and Executive
Director of the New Hope Economic Development Authority, a public body politic and
corporate, on behalf of the Authority.
_____________________________________
N o t a r y P u b l i c
32
ALATUS NEW HOPE, LLC
By: Alatus Yukon LLC
Its Managing Member
By: ________________________
Robert C. Lux
I t s P r e s i d e n t
STATE OF MINNESOTA )
) SS.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this _________ day
of_____________, 2016, by Robert C. Lux, the President of Alatus Yukon, LLC, a Minnesota
limited liability company, the managing member of Alatus New Hope LLC, a Minnesota limited
liability company, on behalf of the limited liability companies.
_____________________________________
N o t a r y P u b l i c
SCHEDULE A
Description of Property
The Property consists of the parcels of property located in Hennepin County, Minnesota with the
following tax property identification numbers:
0611821420008
0611821420009
0611821420010
0611821420011
0611821420012
SCHEDULE B
UNITED STATES OF AMERICA
STATE OF MINNESOTA
COUNTY OF HENNEPIN
NEW HOPE ECONOMIC DEVELOPMENT AUTHORITY
TAXABLE LIMITED REVENUE TAX INCREMENT NOTE
(ALATUS NEW HOPE, LLC PROJECT)
The New Hope Economic Development Authority (the "Authority"), hereby acknowledges
itself to be indebted and, for value received, promises to pay to the order of Alatus Yukon, LLC,
a Minnesota limited liability company, or its permitted assigns (the "Owner"), solely from the
source, to the extent and in the manner hereinafter provided, the principal amount of this Note,
being ____________________________ Dollars ($______________) (the "Principal Amount"),
commencing on August 1, 2019, and continuing on each February 1 and August 1 thereafter up
to and including February 1, 20__ (the "Scheduled Payment Dates"). Interest at the rate of
_____________________ percent (______%) per annum shall accrue from the date of this Note
on the Principal Amount and shall be added to the Principal Amount on each February 1 and
August 1 up to and including February 1, 2019. From and after February 1, 2019, simple non-
compounding interest at the rate of _________________ percent (___%) shall accrue on the
outstanding Principal Amount until this Note has been paid in full or terminated in accordance
with its terms. Interest shall be computed on the basis of a 360 day year consisting of twelve
(12) thirty (30) day months. This Note is the Note defined in that certain Purchase and
Development Agreement dated as of ___________, 2016, between the Authority and the Owner
(the “Contract”).
Each payment on this Note is payable in any coin or currency of the United States of
America which on the date of such payment is legal tender for public and private debts and shall
be made by check or draft made payable to the Owner and mailed to the Owner at its postal
address within the United States which shall be designated from time to time by the Owner.
The Note is a special and limited obligation and not a general obligation of the Authority,
which has been issued by the Authority pursuant to and in full conformity with the Constitution
and laws of the State of Minnesota, including Minnesota Statutes, Section 469.178, subdivision
4, to aid in financing a "project", as therein defined, of the Authority consisting generally of
defraying certain public redevelopment costs incurred and to be incurred by the Owner within
and for the benefit of the Authority’s Redevelopment Project No. 1 (the "Project").
THIS NOTE IS A SPECIAL AND LIMITED AND NOT A GENERAL
OBLIGATION OF THE AUTHORITY PAYABLE SOLELY OUT OF AVAILABLE TAX
INCREMENT, AS DEFINED BELOW, AND NEITHER THE STATE, THE CITY OF
NEW HOPE, NOR ANY POLITICAL SUBDIVISION OF THE STATE, SHALL BE
LIABLE ON THIS NOTE, NOR SHALL THIS NOTE BE PAYABLE OUT OF ANY
FUNDS OR PROPERTIES OTHER THAN AVAILABLE TAX INCREMENT.
The scheduled payment of this Note due on any Scheduled Payment Date is payable
solely from and only to the extent that the Authority shall have received in the six (6) month
period preceding such Scheduled Payment Date "Available Tax Increment". For purposes of this
Note, Available Tax Increment with respect to any Scheduled Payment Date shall mean ninety
five percent (95%) of the Tax Increment, as defined in the Contract, that has been received by
the Authority in the six (6) month period preceding a Scheduled Payment Date. Available Tax
Increment constitutes a portion of the real property taxes paid with respect to that certain real
property described on the attached Exhibit A (hereinafter referred to as the “Property”).
The Authority shall pay on each Scheduled Payment Date to the Owner the lesser of: (i)
the Available Tax Increment; or (ii) the amount remaining to be paid under this Note. On the
earlier of: (i) the date that this Note has been paid in full; or (ii) February 1, 20__, which is the
last Scheduled Payment Date, after making the payment due on such date, the Authority’s
payment obligations under this Note shall terminate and this Note shall no longer be an
obligation of the Authority. All payments made by the Authority shall be applied first to accrued
interest and then to the Principal Amount of this Note. The Authority may, at its option, prepay
this Note in whole or in part at any time at a price of the outstanding Principal Amount plus
accrued and unpaid interest.
The Authority’s obligations herein are subject to the terms and conditions of the Contract.
Upon the occurrence of an Event of Default as provided in Section 9.1 of the Contract, which
Contract is incorporated herein and made a part hereof by reference, the Authority’s payment
obligations hereunder shall be suspended and, upon expiration of all applicable cure periods
provided for in Section 9.2 of the Contract, this Note may be terminated by the Authority. Upon
such termination, the Authority’s obligations to make further payments hereunder shall be
discharged. Such termination may be accomplished by the Authority’s giving of written notice
to the then registered owner of this Note, as shown on the books of the Authority.
This Note shall not be payable from or constitute a charge upon any funds of the
Authority, and the Authority shall not be subject to any liability hereon or be deemed to have
obligated itself to pay hereon from any funds except Available Tax Increment, and then only to
the extent and in the manner herein specified.
The Owner shall never have or be deemed to have the right to compel any exercise of any
taxing power of the Authority or of any other public body, and neither the Authority nor any
director, commissioner, council member, board member, officer, employee or agent of the
Authority, nor any person executing or registering this Note shall be liable personally hereon by
reason of the issuance or registration hereof or otherwise.
This Note shall not be transferable or assignable, in whole or in part, by the Owner
without the prior written consent of the Authority, which consent shall not be unreasonably
withheld, except that the Owner shall have the right to (a) assign this Note to an affiliate or to
buyer in accordance with Section 8.1 thereof; and (b) assign this Note to a lender as collateral for
any loan made to the Owner. This Note is issued pursuant to Resolution _____ of the Authority
and is entitled to the benefits thereof, which resolution is incorporated herein by reference.
IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions, and things
required by the Constitution and laws of the State of Minnesota to be done, to have happened,
and to be performed precedent to and in the issuance of this Note have been done, have
happened, and have been performed in regular and due form, time, and manner as required by
law; and that this Note, together with all other indebtedness of the Authority outstanding on the
date hereof and on the date of its actual issuance and delivery, does not cause the indebtedness of
the Authority to exceed any constitutional or statutory limitation thereon.
IN WITNESS WHEREOF, the New Hope Economic Development Authority, by its
Board of Commissioners, has caused this Note to be executed by the manual signatures of the
_____________ and the _____________ of the Authority and has caused this Note to be dated
_____________, 20___.
________________________________ _______________________________
EXHIBIT A TO NOTE
Description of Property
The Property consists of the parcels of property located in Hennepin County, Minnesota with the
following tax property identification numbers:
0611821420008
0611821420009
0611821420010
0611821420011
0611821420012
SCHEDULE C
SCHEDULE C
QUIT CLAIM DEED
THIS INDENTURE, between the New Hope Economic Development Authority,
Minnesota, a public body politic and corporate under the laws of the state of Minnesota (the
"Grantor"), and Alatus New Hope, LLC, a Minnesota limited liability company (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 grant,
bargain, quitclaim and convey 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, to-wit (such tract or parcel of land is hereinafter referred to as the "Property"):
See Exhibit A Attached Hereto
To have and to hold the same, together with all the hereditaments and appurtenances
thereunto belonging in any wise appertaining, to the said Grantee, its successors and assigns,
forever,
The Grantor certifies that the Grantor does not know of any wells on the subject property.
IN WITNESS WHEREOF, the Grantor has caused this Deed to be duly executed in its
behalf by its President and Executive Director this ______ day of ______________, 2016.
NEW HOPE ECONOMIC
DEVELOPMENT AUTHORITY
By: _________________________________
Its: President
By: _________________________________
Its: Executive Director
STATE OF MINNESOTA)
)ss.
COUNTY OF HENNEPIN)
The foregoing instrument was acknowledge before me this ____ day of _________,
2016, by __________________________ and ___________________, the President and
Executive Director of the New Hope Economic Development Authority, a public body politic
and corporate organized and existing under the laws of the state of Minnesota, on behalf of the
Authority.
____________________________________
Notary Public
This instrument was drafted by:
BRADLEY & DEIKE, P.A.
4018 West 65th Street, Suite 100
Edina, Minnesota 55435.
Exhibit A to Quit Claim Deed
Description of Property
SCHEDULE D
Assessment Agreement
______________________________________________________________________________
ASSESSMENT AGREEMENT
and
ASSESSOR'S CERTIFICATION
By and among
NEW HOPE ECONOMIC DEVELOPMENT AUTHORITY,
ALATUS NEW HOPE, LLC,
and
COUNTY ASSESSOR OF THE COUNTY OF HENNEPIN
______________________________________________________________________________
This document was drafted by:
BRADLEY & DEIKE, P.A.
4018 West 65th Street, Suite 100
Edina, Minnesota 55435
THIS AGREEMENT, dated as of this ____ day of _______, 2016, by and between the
New Hope Economic Development Authority, a body politic and corporate (the "Authority") and
Alatus New Hope, LLC, a Minnesota limited liability company (the "Owner").
WITNESSETH: that:
WHEREAS, on or before the date hereof the Authority and the Owner entered into that
certain Purchase and Development Agreement (the "Development Agreement") regarding certain
real property located in the City of New Hope, hereinafter referred to as the Property and legally
described in Exhibit A hereto; and
WHEREAS, it is contemplated that pursuant to said Development Agreement the Owner
will construct a market rate apartment building on the Property; and
WHEREAS, the Authority and Owner desire to establish a minimum market value for
said land and the improvements to be constructed thereon, pursuant to Minnesota Statutes,
Section 469.177, Subdivision 8; and
WHEREAS, the Authority and the County Assessor for the County of Hennepin have
reviewed the preliminary plans and specifications for the improvements which it is contemplated
will be erected.
NOW, THEREFORE, the parties to this Agreement, in consideration of the promises,
covenants and agreements made by each to the other, do hereby agree as follows:
1. Commencing on January 2, 2019, and continuing on each assessment date
thereafter until the termination date stated in paragraph 2 below, the minimum market value
which shall be assessed for the land described in Exhibit A and the above described
improvements shall be not less than Twenty Seven Million Three Hundred Dollars
($27,300,000), notwithstanding incomplete construction of the above described improvements.
2. This Agreement shall terminate in its entirety on the Termination Date, as defined
in the Development Agreement.
3. This Agreement shall be promptly recorded at the expense of the Owner.
4. Neither the preambles nor provisions of this Agreement are intended to, nor shall
they be construed as, modifying the terms of the Development Agreement between the Authority
and the Owner.
5. This Agreement shall inure to the benefit of and be binding upon the successors
and assigns of the parties.
NEW HOPE ECONOMIC
DEVELOPMENT AUTHORITY
By: ________________________________
Its President
By: ________________________________
Its Executive Director
STATE OF MINNESOTA )
) S S .
COUNTY OF ___________)
The foregoing instrument was acknowledged before me this _______day of ________,
2016, by ___________________ and ____________________, the President and Executive
Director of the New Hope Economic Development Authority, a public body politic and
corporate, on behalf of the authority.
_____________________________________
Notary Public
A L A T U S N E W H O P E L L C
By: Alatus Yukon LLC
Its Managing Member
By: _________________________
Robert C. Lux
I t s P r e s i d e n t
STATE OF MINNESOTA )
) SS.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this _________ day
of_____________, 2016, by Robert C. Lux, the President of Alatus Yukon LLC, a Minnesota
limited liability company, the managing member of Alatus New Hope LLC, a Minnesota limited
liability company, on behalf of the companies.
CERTIFICATION BY COUNTY ASSESSOR
The undersigned, having reviewed the plans and specifications for the improvements to
be constructed and the market value assigned to the land upon which the improvements are to be
constructed, and being of the opinion that the minimum market value contained in the foregoing
Agreement appears reasonable, hereby certifies as follows: The undersigned assessor, being
legally responsible for the assessment of the above described property, certifies that the market
values assigned to such land and improvements are reasonable.
____________________________________
County Assessor for the County
of Hennepin
STATE OF MINNESOTA)
)ss.
COUNTY OF )
The foregoing instrument was acknowledged before me this ______ day of
___________, 2016, by the County Assessor for the County of Hennepin.
____________________________________
Notary Public
EXHIBIT A
Legal Description of Land
SCHEDULE E
Access Easement
SCHEDULE F
Access Agreement
SCHEDULE G
Owner Pro Forma