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122898 EDA CITY OF NEW HOPE £DA AGENDA EDA Regular Meeting #11 December 28, 1998 Agenda #11 Pres/dent W. Peter Enck Commissioner Sharon Cassen Commissioner Don Co/i/er Commissioner Pat la Vine Norby Commissioner Gerald Otten 1. Call to Order 2. Roll Call 3. Approval of Minutes of December 14, 1998 4. Discussion Regarding Development of City-owned Property at 9200 49th Avenue North (Improvement Project No. 597) 5. Resolution Calling for Public Hearing to Convey Property at 5501 Boone Avenue North to Senior Outreach Services, Inc. (CareBreak) and Authorizing Preparation of Development Contract (Improvement Project No. 493) 6. Resolution Approving the Metropolitan Council's Memorandum of Understanding to Establish and Administer a Waiting List and Grievance Procedure for MHOP Units in the Bass Lake Townhome Project (Improvement Project No. 61 7. Resolution Approving Bass Lake Townhom~, Housing Development Agreement and Regulatory and Operating Agreement and Authorizing the President and Executive Director to Sign Said Agreements (Improvement Project No. 614) 8. Adjournment CITY OF NEW HOPE 4401 XYLON AVENUE NORTH NEW HOPE, MINNESOTA 55428 Approved EDA Minutes December 14, 1998 Meeting glO City Hall CALL TO ORDER President Enck called the meeting of the Economic Development Authority to order at 11:40 p.m. ROLL CALL Present: Enck, Cassen, Collier, Norby, Otten Staff Present: Sondrall, Hanson, Donahue, Leone, McDonald, French, Johnson APPROVE MINUTES Motion was made by Commissioner Otten, seconded by Commissioner Collier, to approve the EDA minutes of November 23, 1998. All present voted in favor. Motion carried. IMP. PROJECT 614 President Enck introduced for discussion item 4, Resolution Authorizing Deed to Item 4 Project for Pride in Living, Inc. for Property at 7300 Bass Lake Road. RESOLUTION Commissioner Otten introduced the following resolution and moved its adoption: EDA 98-13 "RESOLUTION AUTRO~G DEED TO PROJECT FOR PRIDE IN Item4 LIVING, INC. FOR PROPERTY AT 7300 BASS LAKE ROAD (IMPROVEMENT PROJECT NO. 614)". The motion for the adoption of the foregoing resolution was seconded by Commissioner Collier, and upon vote being taken thereon, the following voted in favor thereof; Enck, Cassen, Collier, Norby, Otten; and the following voted agaimt 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. ADJO~ Motion was made by Commissioner Collier, seconded by Commissioner Norby, to adjourn the meeting. All present voted in favor. The New Hope EDA adjourned at 11:41 p.m. Respectfully submitted, Vale~ie Leone City Clerk New Hope EDA December 14, 1998 Page I EDA FOR ACTION Origtnattng Depa~Lment Approved for A~enda Agenda Section . EDA Community Development 12-28 Item No. By, irk McDonald By:. 4 DISCUSSION REGARDING DEVELOPMENT OF C'~TY-OWNED. PROPERTY AT 9200 49TM AVENUE NORTH (IMPROVEMENT PROJECT NO. 597) Staff requests to discuss with the EDA a proposed development for the city-owned property at 9200 49th Avenue North. At the November 9 EDA meeting, staff indicated that several meetings had been conducted with Gary Nordness, President of Essence Real Estate Services, Inc., and with the owners of Contract Hardware Company, Inc., who are interested in negotiating with the City for the-purchase of the property and who have presented a concept plan that would maximize development on the site. Contract Hardware Company, Inc. is a major supplier and light manufacturer of door frames, lock sets and related hardware items. It is a privately held company formed in 1991, and 'currently the company has three locations and would consolidate all operations at the New Hope site. The company currently employs 14 people and would anticipate adding up to five new employees upon completion of their project. The company is proposing the construction of a 26,000 square foot office/warehouse facility on the site. A typical industrial office/warehouse facility of this size generates about $40,000 in property taxes per year. They have reviewed the soil conditions on the property and know. that a substantial amount of funds will be needed to make soil corrections to utilize the site. They are requesting that the City consider subsidizing the project in the form of a land wdte down for the soil corrections. They also understand the City's desire to retain an easement over a portion of the property for storm water quality purposes and are agreeable to cooperating with the City in that endeavor. City staff and the City Attorney have met with Nordness and representatives of Contract Hardware, Inc. several times over the past 1½ months to try and reach an agreement on the sale of the property. To date, no agreement has been reached, so staff is requesting direction from the EDA on how to proceed. The developers are on a fast-track timeline to construct and occupy a building by next summer and have indicated they will move on to another site not located in New Hope if an.. agreement is not reached shortly with the City. In JUne 1997, the City of New Hope purChased this vacant 2,8 acre industrial site from Clarence Brandell. The City acquired the property because a portion of the ~roperty is identified in the New Hope Surface Water Management Plan as a future potential site for a water quality pond to help improve the water quality of the large wetland north of, and adjacent to, the site. The City acquired the property to have control over the future development of the site and is interested in a potential joint- (cont'd.) MOTION BY ·/'~-"~/-~ SECOND BY RFA-O01 Request for Action Page 2 12-28-98 cooperative development (similar to Conductive Containers, Inc. on Quebec Avenue), where a development could occur in conjunction with the installation of a water quality pond. The City purchased the property for $195,000 and the City Engineer has estimated that the City would need to utilize approximately one acre of the site for ponding improvements, leaving two acres available for development. Over the past 1% years, the City has received several inquiries from industrial/commercial businesses and developers who had or have a potential interest in the property, as follows: · Shortly after the City purchased the site, the City was contacted by Upper Midwest Management Corporation, owners of the office building located just west of the site, who indicated that they may be interested in the property for a potential twin office building to match the existing building. They notified the City this past July that they were no longer interested in the site. · In March, Larry Johnson, owner of precision Machine Shop in Hopkins, submitted a Real Estate Purchase Contract to the City with an offer to purchase 1,8 acres of the property for $120,250. Johnson, who currently leases space for his business, was proposing to construct an 8,250 square foot industrial building on the site and the company has six employees. The maximum size of the one-story industrial development for the site would be. 20,000 - 30,000 square feet. The EDA took no action on the proposal, as you indicated the plan did not maximize the site and was not the highest and best use of the property in terms of valuation/real estate taxes that would be generated. In November, Johnson submitted a revised plan with a larger building (13,608 square feet) and is~ still interested in the property. Staff indicated to Johnson that the EDA had directed staff to negotiate with ERSI. · In May, a realtor from Axiom Realty, representing G&K Services, Inc., a business that processes and leases workplace uniforms, desired to register his cliept as a prospective purchaser of the property. G&K would use the site as a satellite facility as a drop-off and pick-up site for garments for processing at the company's main plant in Minneapolis, G&K needed approximately two acres of land to construct an office/warehouse building of approximately 15,000 square feet. The EDA was not necessarily receptive to this proposal because it also did not maximize the use of the site. · Within the past two months, staff has been contacted by another developer interested in the site. The cost of the property has been the major issue of dlscuuion. The City's odginal appraisal of the property was $282,000 without soil corrections. The appraisal was later reduced to $182,000 when soil conditions for a mid-sized development were taken into account. The City paid $195,000 for the property and, based on the assumption that 2/3 of the property would be utilized for development, staff anticipated selling the property for 2/3 of $t98,000, or approximately $t20,000 - $130,000. This calculation is baeed on taking the appraised value, subtracting the estimated soil correction costs and calculating the value. In the initial meeting with ERS1, the proposal was to purchase 1.88 acres of the property for $37,847.80. This offer was based on taking the appraised value of.$282,000, calculating the cost of 1.85 acres ($185,347), and subtracting estimated soil correction costs d~ $147,500 obtained by the developer. Therefore, after the initial meeting there w~s a difference of approximately $80,000 between what the City anticipated ($120,000) and the developer's offer ($40,000). Both sides agreed to re-evaluate their positions and meet again. In the second meeting the City lowered its asking price (subject to EDA approval) to $99,500. These calculations and the basis for the calculations are outlined in the City Attorney's December 8 correspondence. This asking price was based on the original appraised value ($282,000 or $2.30 per . square foot), subtracting the developer's estimated soil correction costs of $147,500, subtracting the cost of the land the City would need to construct a pond ($46,000), and adding the developer's cost for · - ponding. This pdCe was not aCceptable to the developer either, although they did agree to increase Request for Action Page 3 12-28-98 their offer to $60,000, Therefore, there is still a difference of approximately $40,000 between the City and developer. Subsequent to the last meeting, the developer, City Attorney and City Engineer have all prepared comments on their perspective of the negotiations. ERSI indicates that Contract Hardware's actual need is a 15,000 square foot building. In order to accomplish the City's goal of maximizing the use of the property, they are willing to building a 26,000 square foot b~uilding and lease .11,000 square feet. They indicate that the mitigation ponding is of no benefit to them. They are only willing to purchase 1.85 acres. If the City would agree to correct the soils on the site, Contract Hardware would agree to pay $2.30 per square foot for the property. They indicate that the benefits to the City would include full purchase pdce, ability to correct soils in conjunction with pond, maximize the property's buildable area, increase employment and increase the tax base. The City Attorney has outlined the developers two options as follows: 1. Developer purchase 1.85 acres for $60,000 and do the soil corrections; or 2. Developer purchase 1.85 acres for $185,347, however, the City complete the soil corrections. The City Attorney states that the EDA needs to decide th'e importance of controlling the development of this property. Any buyer is going to be concerned about the soil Conditions of the property. He indicates that the City needs to assess the proposed sale from a public benefit perspective rather than a purely economic perspective. He indicates that the sale would provide the City with the following public benefits: control of the site development, use of the northerly 1/3 of the property for wetland mitigation, and introduction of a new business with additional employment base and increased real estate taxes. The City Engineer is in the process of meeting with the DNR on the site to discuss wetland mitigation and restoration. He indicates there may be some economics of scale achieved if the City undertook the soil corrections and ponding improvements together. In conclusion, staff is seeking direction from the EDA on this matter and there are many factors to take into consideration. While staff is very supportive of bdnging a new business to the City, the EDA also needs to receive a fair price for the property. Staff would remind the EDA that the City has assisted a number of other businesses in the City and that this is a difficult site to develop. Regardless of whether the property is sold to Contract Hardware or not, these same issues will eventually need to be addressed. Staff is hopeful that a compromise agreement can be reached between the developer and the EDA. ~r. Kkk M~)on~ld ¢ommtJn~7 D~elopm~nt N~ Hope MN ~5~28 Dear ~ ~b ' , JENSEN SWANSON & SONDRAI L, P,A. orn s At Law 852S EDINBROOK CROSSING, STE, 201 BROOKLYN PA:RIG ~q~,SOTA S$443.1999 TEI,~HONE (612) 424-8811 · TEI,~AX (612) 493.5193 GOkDON L. WILLIAM G. MI(~L~EL R. LANLEUR M~N P. ~.~C~ December 22, 1998 BREFr A. C. ALDEN Kirk McDonald or ¢OUNSF. L New Hope Community Development Director LORF. NS Q. BRYN'ESYAD 4~01 Xylon Avenue North New Hope, MN $$428 RE: Sale Of 9200 49~ Avenue N. Our File: 99.11217 Dear Kirk: This letter isin response to Gary Nordness' December 15~' let~r regarding the sale of the referenced propervy. Basically, both the City and buyer agra this properly is worth $2.30 sq. fi if the soil condition on the propert), is corrected. Co~ soils would render the propert~y worth $282,111.00 ($2.30 x 122,657 sq. ft.). Our appraisal estimated soil corrosion at $100,000.00 reducing the propert)~'s present price to $182,000.00. Based on an actual contractor's quote provided us by the buyer we now know soil corre~ion costs may be closer to $147,000.00. This would reduc~ the propefly's act~ml value to $135,000.00. We are also faced with an additional problem relative to the current buyer. SpecifiCally, they only need 1.85 a~res of the property to conslxuct their proposed office\warehouse. Further, the enfiro $I47,000.00 soil correction cost would need to be spent on the 1 .$$ acres to render it buildable for the s~'ucoam. As a result, they only want to pay $38,000.00 for the required 1.85 a~r~ ($2.30 sq. ftx 80,$86 sq. fi- = $185,347 less $147,000= $38,347). We would retain ownership of the remaining portion of the property for wetland mitigation msultin8 from our intended conslruction of a storm water retention pond to the east of this ~. As a r~ult, we would receive no economic value from the wetland area on north. 1/3 of the propa~y. In an effor~ to complete this sale, the buyer has presanted us with two options as follows: 1. they will purchase the 1 .$$ acres for $60,000.00 and do the soil corrections; or 2. they will purchase the 1.85 acres for $185,347.00 however the CiO/will be required to do the soil corrections and guarantee a builclable !o~. The City n~eds to decide the importance of controlling the development of this real estate. ~ ~, s~.~ Any buyer is going to be extremely concerned with the soils problems associated with this ~,=~ lot. ALSO, if we want to impose a wetland easement ' over the northerly 1/3 of this lot to ~ accommodate our storm water ponding and qualiv/plans, we are going to be facing the same December 22, 1998 Page 2 issue regarding the value of the easement area to the buildable area of the property as raised by the present buyer. Specifically, all buyers are going to consider this wetland easement area worthless. The only way it is going to have value is if the soils in said area can be corrected and made suitable for building. Basically, the City has paid a premium for this area to guarantee its use as a wetland area necessitated by our mitigation requirements resulting from the needed water quality retention pond to the east. As we discussed in our December 3"~ meeting, we need to assess the proposed sale from a public benefit perspective rather than a purely economic perspective. The proposed sale would provide the City with the following public benefits: 1. ConSol of the site development; 2. use of the northerly 1/3 of the property for wetland mitigation with an agreement by the property owner to maintain the easement area and pay real estate taxes on said area; 3. Development of proposed water quality ponding area to the east according to the City Engineer's plan regarding same; 4. Introduction into the City of desirable new business entity with attendant employment base and If we simply want to maximize our economic return, I suggest we correct the soils on the site and market the property as a 2.78 acre building site. The property, as discussed, is worth $282,000.00 on this basis. However, the soil correction costs will likely be more than $147,000.00 since no consideration has been given to the correction costs for the northerly 1/3 of the property. I must defer to the City Engineer for an estimate on the soil correction costs as it relates to both the 1.85 acres needed by our proposed buyer and the 2.78 acres if we decided to market the entire property as a buildable lot. If Mark feels we can correct soils for significantly less than the buyer's estimated amount, the economic return may outweigh the risk of a soils guarantee. However, this is a policy decision that will need to be made uRimately by the City Council. If you have any other questions or comments about the content of this letter or the information developed at the December 3~ meeting please don't hesitate to contact me. Very umiy yom's, ' 80NESTRO0 ROSENE ANDERLIK ~' 6516361311 12/22/98 15:23 ~ '02/0~ NO:3~) ~S~ ~' ' ~'~' ~ ~ ~ ~ ~,l~,, ~ ~ ~n,~ c ..,n~,,~s~ Memorandum TO: Kirk McDonald FROM: M~k Hanson/Vtnce Vander Top SUB, J'EC'L": 9200 49d* Avenue (Brundell l:~)' BRA Pile No. 34-Oen DA'I~: December 22, 1998 On December 3, 1998, staff met with Odtry Nordnen of Essence Real Estat~ Services Inc. (F.,R$1) to review the purch&qe of the City owned properly at 9'200 49tb Avenue. Contract Hardware is .. proposing to conatruct.a 26,000 .qq. fl. hiildinf on 1.85 acres of the property, which includes 2.78 m,'res. The remainin$ ~reage (0,93 acru) la proposed for wetland restoration and mitigation, New Hope's Surface Water Mana~mmit Plait (NHSWMP), ms approved by Shini~e Creek Watershed, provided for & regional pond eonM3qactmd on tho entir~proporty ut 9'200 49'" Avenue (see attached). However, in an atMmpt to preserve land along 49'" Avenu~ for development, its tx~n proposed tha~ there~omd ~ for warm' quality be located in the DNR wetland (see regional water quality in a DNR Wetland weald be mot by expanding the existing wetland oeto the northerly portions of 9200 4~ Awnue, Ou Wednesday, Decemb~ 23, 1998, w~ will meet .. with Tom Hovey of the DNR to review ttds propom. In addition to tim above, Contm:t l-lardware is willin8 to purchase the property at the appraised price pM'.square foo~ ($2.:M}/sq, f t,) l~vided the .Mil co .rr~. ti0n on the sim is completed. The~fm, e, provided tht, DNIt is willing to approw a permit fOr wetland encroachment and rnitiption to ncc~mplidl the &,~tls of NHSWMP, it may bs desirable tot the City to also include soil correction with tl~ wethmd improvement,q. The~fore, thb City would undertake a poma,, irnlwovorncnt, which could include the followin~ . · Receive DNR permit for W~Jand Restoratlon/Miti~tion · Cortsm~ Relional Wster Quality ~P~nd in DNR Wetland · Rspfmd DNR Wetland onto 9"200 49m Avenue to .,,ttisfy mitigation requiremenc~.. · Correct soil for development on 9200 49"h Avenue '. 80NESTRO0 ROSENE ANDERLIK~'6:~1e.361311 12/22/96 15:~ ~ :03/~ ~:$~ . ~ ~NESTR~ ROSENE ANOERLIK W65163~!~! 12/22/98 15:23~:~/~ NO:3~ J'ENSEN SWANSON & So .NDRALL, P.A. Attor#~ys At L~e 8S25 EI)llqBaOOx CROSSinG, STL 201 BROOJO.,Ylq TF, LEI'HO~rB (612) 424-8811 · TtLtFA,X (612) 493-S193 .6.. MAi'tm P. l;)me~ 8, 1~98 Comm~y Developmem Dim:tot Ci~ of New Hog~ 4401 Xyla~ Avenne Nor~ New How, ~q $~42~ ~ ~ ~ ~ ~~ ~~ ~ ~ ~ ~ ~ v~ ~im ~r m~on December 8, 1998 Pag~ 2 The proper char~terizaiion of r~e sale of ~his property is ~o co~sider it as a sale of ~e enti~ 2.78 acres subject ~o a ponding easemen~ of app£oximalely 25,000 square fee! of which 5,000 square feet is required by Me proposed developmenl of ~he property. The property valuation should be considered as follows accordance wid~ ~e current information we have on mil correclion: 1. Original appraisal value per squ~re fo~ - $282,000 ($2.30 per square foot). 2. Adjusled value ~esulling from $147,~00 in soil correction corn. $134,.500 ($1.10 per square foot). Value of 20,000 square feet of addkioml pondir~ al $2.~0'per square fo~X - 4. Developer's cost for 6,000 square feet of required pondtn~ - $I 1,000. l:inal land value - I h~ve used the uncorrected $2.:t0 per square foot land value in i~em 3 above ~o esdma~e ~he vslue of the the soug0terly ~,'o-dlirde of the pro~'fty. This determination is me,i' in favor of reducin~ ~ purch~e of ~ property. However, if the soil correctioa corn were spread out over dee cadre pm. cel, ~be value of ~be ~lditions120,000 squ~re foot poudk~ essement could be set ss low as ~,000 tncreas~g tim Ix~ndal sales cost ~o $12:2,~0. The c~ul~km include as · co~ ~o ~ developer a required 6,000 ~tuare fool wa--r ret~don pond. However. ~ pood is not required o~ ~e property but will be con~lnicted and paid for t~ e~e Cit~ as pan o~ l~e comuuctton costs for d~e w~er qu~i~ pond east of ceiculaitou also uses ~ smaller lend size due to e~e Ci~'s ~equireme~ for an oversized pondir~ ~aseme~. This favors ~ developer as well. In concluskm, O~e real vak~e of ggs prowr~ hued ce soil correctiou coaz of $147,.~0 is $g9,~0, is requtred by ~ile proposed geveloi:m~mt. Tlgs is a belte~ to the develof~er stnce we have considered the po~fl~ co~s at d~e m~ller ~ size as set fof~ in the City [~aser's December 7, 1~ memo. If Ver~ m~l~ yom~ New Hope Cky ,.~t 98 03:55p ~e;;re~ D. Hordness (612) 486-0603 p.! ~cuz ~ F. STAT~ $~wczs, lsc. Fax Cover Sheet Pa~ (Including cover) 4 To: ~ McDonald Phone Number:. .612-531-5122 Fax Number:. 612-531-5136 From: Gm'y No~t~ Dat~: 12/1/95 RE: Information you requezt~ Re Contract Eardw~ Please call with any addigoml que~tiom, ~ Crar~ Areas o_f F~_ erfise Client Representati~ and Relocation City p;,,m~_o C~rdin~ion Sit~ Search and 8election .Ikaign Build Consulting Our goal ia to combin~ our skills , exceptional professional ae~vic~ to our clients to crm~ r~ults wlx~by all parti~a benefit Ii'you do not r~cciv~ all page, pl~as~ l~t ua know - 6~1-482-1811 C~)~RCI,4J., BROKERSICONSUI. TANT$ ~ ~8 03:SSp JoP~re~ D. Nordfless (612) 48G-0603 p.2, Appraised Value $282,000.00 $2.30 Per Square Foot Correction Proposed $ 80.000,00 $195,000.00 / 122,662 SF = $1.59 Per Square Foot allowing for $80,000.00 in soil correction costs or $80,000.001 122,662 8F - $.65 Per S~luare Foot of Land Area Contract Hardware Purchase PurChase Price 1.85 Acres = 80,586 SF 80,586 X $2.30 = $185,347.80 leas correction costs of $147,500.00 = $37,847.80 = $.31 Per Square Foot Payback-to City 20% $40,000.00 Tax Base = 8,000.00 Per Year November 17, ~998 ga lvay consl:ruc~ion County Road 75 C],aar~ar. ar, ~ Bid Includes: S.~I Corr~t~on= 2, ~aterin9 $ XS,00O.O0 1. Hlzard~l N~i~o Neural 2. Soil ~ B~D ~147 ~nce~nq ~i. bt4, I can .~ ~ach~ at the a~ve n~r. Presiden~ November 4, 1998 'Mr. Kirk McOofladd Community Oev4dopment Director Mr. Doug Sendstad Building City of New Hope 4401 Xykm Avenue North New Hope MN 55428 RE: City Owned Lot: Lot 2, Block 1, Brandell Indutt~lal Park 2nd Addition Gentlemen: We thank yau far yaur a~aima~ce in ~ peetirmt infomnalion mgamling the above cap. ned. in order t~ move tt:mm._ml in aequ~ a pmlJ,:m of the ~ul~ject and will gmvlde the City al' New Hoge a eul~tanlM ~ in tax baee. Aa w~ have dl~eueeed ~ review of the aa~ cortdlllone ~ flare discovered that in ordm' t~ utilize Ihe pmpe~ i~ will coet an ~ mneunt of money and .ubje~ ~~ ~ m t~e ~ m~d~era and the memb~ look ~ambly UpQn our me iH. treed the buldinO end become a par of your t~nmunity. Contmt l.l~rdwim Core.ny, Ir~. 28~ Hedlxrg Drive Minnetonl~ MN SS~O~ Contract Hardware Company, Inc. i~ a major supptler and light manufacturer of door framee, lock sets and related hardwlre item~. The Company servicM and suppllee major developem, ~ntractom and sulx~ntractom both locally and nationally with high end quality procluct~. Clientl will attMt tr) ~ high standards of quality and service in the industrial, commerdal and retail Indust~iet. Contm(=t Hen~ware Company, inc ii a privately held company formed in 1991 by ~ P/tnctl:)iM, J~ L ~, AHC, Edwim J. I. adwtg and Michael ' McCmnn. Cunlntly lhe Company has three io(:atk~m and weuld coneolidate all opemtiorm on the New Hope site. The Company cunlnb'y empioy~ ~4 people and would anlJciW aclding up to five new employees upon completion of the project. experienced unprKed~ growth, whim maintaining aupMb sewice and accountability 1~ ~ ~ · ~, PROPOSED . :, MULTI-TENANT I OFFICE/WA REHOUSE 9200 49TH AVE. NORTH Pm)~,Q~O NEW HOPE, MINNESOTA '~' = ~ daniels 4.9tll AVENUE NO R TH ....... \ ERICKSON/ i I I BCL APPRAISALS BJORKLUND, CARUFEL, LACHE~YER, INC. I .~52 ANTHONY LANE SO., MINNEAPOLIS, MINNESOTA $5418 (612)78t-0005 Fax: 7~I,-7~26 BRAD BJORKLUND. REAL ESTATE APPRAISERS AL C~UFEL. RON ~CHE~A~, s~ CONSULT~T$ ~ Ci~ of New Ho~ ~1 Xylon Ave~ New H~, ~vely Summary Appraisal Report- Complete Appraisal This is a Summary Appraisal Report which is intended to comply with the reporting requirements set forth under Standards Rule 2-2(b) of the Uniform Standards of Professional Appraisal Practice for a Summary Appraisal Report. As such, it presents only sutmnaty discussions of the data, reasoning, and analyses that were used in the appraisal process to develop the appraiser9 opinion of value. Supporting documentation concerning the data, reasoning, and analysts is retained in the appraiser's tile. The depth of discussion contained in this report ia specific to the needs of the client and for the intended use stated below. Th~ appraiser ia not responsible for unauthorized use of this report. PURPOSE OF THH APPRAISAL: The purpafe of thi~ appraisal is to provicle a current mar~ value estimate of the subject real property so that the client may buy th~ site for ts water pondin$ project. M~t ~#~ is defined by th~ federal financial hx~i~ufiom regulatory agtnai~ as follows: ,'4t,.t~ mae is th~ most probable pric~ which a pmpen',/shmid bt'ins in i co~. ~tive tod open rnark~ under ail condMom r~luisi~e ro a f&ir'sale, rbe buyer and seller em:h prudently and knOwledse~y, and muminf flJe price is no~ ~ by undue s~mulus. of title from seller to buyer under condition whereby: - (2) bod~ perrim ar, well infoflned or well advbed, and ~ in whU d~ey consider rbeir (3) a turntable rime is allowed for exposure in cbc open*'mirk~ (4) payme~ is made in mnns of cash in U.S. dollars (~ in mrma of flnamial ' the sale. (soufu: ofum otdm ~ ~be c'mu~ unde~ t2 CFR, Pm 24, hbinfl (::-,f~Wnmls, M.~ Odlniticm Itl.} U'VTEREST VALUED: Fee Simple EFFECTIV]~ DAT~ OF VALUE: Date of inspection; March 7, 1997 DATE OF REPORT: March 12, 1997 APPRAISAL DEVRLOPMY.,NT ,4u'VD REPORTING pROCE~: In preparing chis appraisal, r~ apprai~. ~he property owner, Clarence Brandell. In~rviewed · Inspec2d ~ property on March 7, 1997. · Oathermd sale data on comparable land in tl~ subject's and competing n~ighborhooda. · Discussed perceptiom of value for rl~ subj~-t and other i, xlumM properties in ~be ar~ wi~h flmm owrm,. {myers. sellers arid bro~rs. ,~oil dam wu cOHeCl~d from Doug S~, Buildiu{ Official for ~ City of New Hope, ms well as Ed F. aguud, ow~r of adjacent real estate. · Completed the Sales Co~n A~ to Value. TI~ COst &lnr. o, ne To develop the opinion of valta, the al~ per~onued a complm a~nisal ptucess, as defined by the Uuifonn 9tanda.,ds of Professiouai ~ ~. This means that'no departures from Stnuds~d 1 were invoknd. HISTORY 01~ TRB ~ g{'I'ATB APPP, AI~D Mr. Brandell ~ tl~landln lg~ allot ofatax forikitiSur, Jma~ of38a~.es' Tim 2.$ acre subject parcel is all that rumins fi'om the original acreafe~which is in Mr. Brandell's Oririnally, much of tbs 28 acres was a swamp tim was nuramded by sort, peaty Mils. Sometime in the earlier years of ownership, Mr. Brandell spread fill (ufinf his bulldozer) over many parts of the land to prepare it for development. Tho subject and the parcel to the eas~ were recipients of much fill. Accordinf to Mr. Brandetl, there have been severll a~tempts to sell or develop tbs subject. Apparently, all hav~ i'alled, rjr.so-far am i.m known, ~ ham been no sale or limtin~ or tM subject in the past three yesn. Should the subject be actively lismd for ~ with a profeuional btuker, it is estimatM tl~ market~{ ~ would bm about six to tw~lw month,. LOCATION 'DESCRIlrHON The subject is located in the City of New Hope, a second tier westerly suburb of Minneapolis with a current population of about 21,~6 based on the April 1, 1995 censu~ by the Metropolitan Council. New Hope is approximately seven miles northwest of Downtown Minneapolis. The community is primarily residential in character, but there am scattered industrial distric~ and one major concentration of commercial buildings focused at the intersection of 42nd Avenue North (C.S.A.H'. #9/Rockford Road) and Winneti~ Avenue (C.$.A.H. #156). Most development in New Hope has takeu place since 1960. New Hope ha~ a council/manager plan B form of g0vernmen~, and provides it~ citizenry with good quality municipal utilities and services. F. ssentiaily ail of th~ city struts am paved, most have concrete curb and ~utter, street lights and servic~ by sanitary sewer ami water. Th~ em~ city is located in School Disuic~/t281, and M'rC bu~ rou~es am foumt the a.r~. No unummi municipal or economic influences am observed tl~ would und~y affect tl~ vaiu~ of real estate in New Hop~. Th~ economy ha~ recover~ from the recession- of 1990 and 1991. Vaa~cy is low (c.$%) in th~ industrial mark~ Wamhou~ and manufacturin~ spac.~ i.~ pr~ently renting for $3.?~ to $,$.00/sf ~ OflVa:e sp~ce is about Major ~rtatiou to th~ City i~ provid~ by Hishway 1169 .al.o~ t~ wes~riy City limits;, also by Rockford Road, Ba~ Lalm Road (C.$.A.tt. #10), Medh:im I. aim Ro~ (26th Avenue/C.$.A.I-l. gT0), ami W'~ Avemm. The~ county road~ provid~ good community accel. Th~ mbj~c~ i~ locat~t on 49~h Arum, one block es~ of its diamond large ~ 1~ in ~ ~ of~ ~ AlmtflnJ the subject to the ets~ is a one story oflV, e/wareimuse facility Graphics). W'e is · three may office buildinf, and northwes~ b aafxl~ office/~ facili~. $ou~ of the subject aclx~8 ¢9~h avenue i.q a DESCRIFI~ION OF REAL ESTATE APPRAISED Legal Description: Lot 2, Block 1, Brandell Industrial Park 2nd Addition. Parcel Identification Number: 07- l 18-21-23-(X)22 . $7,724. I6 base + $23.12 solid waste fee + $1,023.38 special asaesnnent ,= $8,770.66 Assessors Market Value. $124,0~ land only $1t~ Location - 9200 49th Avenu~ North, New Hope; in Hennepin County, M'~. T~ zip code for this area is Siz~. 474' x (260.62' + 256.~') 4. 2 -' 1-22,6~7 square feet subject to survey. Easements - Non~ observed. Streets - Th~ south Avetme is · four lam road. It Ism · 6~ foot rift-of-way in fkont of the subject, is asphalt subjw, t p~. Tltme i3w, lude ~ water and sewer, elect~ity, telephone and nanttal gas. Topograp~ - TI~ varieties of tre~ are obs~ved. Nons are very large. .- Soils - .Eight soil borin~ logs taken on the subject property, several on the adjacent parcel to the east owned by Ed Englund, a 1957 USGS Topographical Map, and the history of the SUbject (from clarence BrandeH, Th~ City of New Hope, & Ed ~) am used to map a fairly ~oed .description of the subject's soils..Boring logs and a topography map am found in tbs Addenda. II II IIII II II I ~ __ ! I I DF.~CRIPTION OF REAL ESTATE APPRAISED CONT. Soils cont. I The top soils over the entire site are fill (generally clay, soft to stiff in nature) which undulates in depth from about 2-8 feet ~low grade. These soils were added yea.m ago to I level the 'site. Under much of tl~ fill is a layer of organic material (pea0, thence aa undulating pillow of firm, fine ~xl. The fh'm soils are M,UeR the surface in the northwest corner, and follow a ridge which ~ along a liae drawu'from the northwest corner to the Icenter of the ~ast edge. This ridge of f'u'm soil~ fall~ off mo~t steeply to tl~ southeast and nonheut c. ornefl whew ther~ are d~ greate~ amounu of or'uric soii~ mi fill (above). To properly develop th~ sit~, fill and other t~or soil~ should be removed, the~c.~ repL~ with Igood softs that are properly compacted and suitable for lo~d be~rin8 purpo~e~. HIG~ AND BLvr USB Highest and I~t us~ il ~ U ~ t~sonably probabl~ ~ I~ ~ ~ ~ ~ or ~ ~ ~ 4~ A~ A ~ ~ ~ ~ p~. ' ~ si~ ~ of ~~ s~ f~ m~on wi~ a ~ of ~~ ~ ~ of ~ve~ l~om on ~ ~. ~ ~ ~ m~iv~ for ~wel~ A ~ ~ HIGHEST AND BEST USE CONT. which would need to removed to properly develop the site. Furthermore, much replacement fill would also need co be added, properly compacted, and the high water table must be dealt with. Soil correction costs magnitude are realistic. in the of $100,000 Economic conditions in th~ industrial market are good. Several sales of vacant land and improved office/industrial types of real estatz show a stable and healthy market. Vacancy is iow (lowest in n~w buildings) and r~nts ar~ slowly 'on th~ rise.' Although New Hope is fully developed communitT, thet~ l-as been a lot of new construction in adjacent Plymouth and other competing marir~ areas. MonsaSe f'mancin~ Lq'readily available to qualifxed borrowers with a 20% equity investment. Inter~st rates am between The maximally productive us~ of th~. sim is to develop it with a. r~ctangular shaped office/warehou~ building. This will best compliment the adjacent buildin~ improvements, th~r~ ar~ no foreseeable plans or conditions of tl~ economy which would adversely affect this ~ of d~velopment. With th~ worst soils bein~ mom on tbs e~st side of tt~ subject than tim west, a rec~ buildin~ footp~ should be d~veloped as much on tbe west sid~ of tbs sim as possible, and more in ? c~ntral to no~ ~ to ~ soil corrections. A ruasonable estinut~ of th~ buildm~ siz~ migS be about ~,000 squa~ feet, mesnn'in~ 1(10' x 2.qO'. Mo~t of tl~ soil corrections (wl~ pan of tbs sim would be ~ ~, a corn~ of the tmildt~ or · ( EDA FOa ACT O Originating Depa~baent Approved for Agenda Agenda SecUon Community Development__ ~ EDA 12-28-98 I Item No. ByKirk McDonald By:./'/' 5 RESOLUTION CALLING FOR PUBLIC HEARING TO CONVEY PROPERTY AT 550i BOONE AVENUE NORTH TO SENIOR OUTREACH SERVICES, INC. (CAREBREAK) AND AUTHORIZING PREPARATION OF DEVELOPMENT CONTRACT (IMPROVEMENT PROJECT NO. 493) At the November 23 EDA meeting, the EDA approved a motion directing staff to prepare a redevelopment contract for Senior Outreach Services, Inc. for the development of an adult daycare 'facility at 5501 Boone Avenue North. The next step in that process is for the EDA to conduct a public headng on the conveyance of a portion of that property to Senior Outreach Services. The City Attorney has prepared the enclosed resolution which schedules the public hearing for the January 25 meeting. The enclosed resolution does not bind the EDA to convey the property to CareBreak. Senior Outreach Services is currently working on plans that will advise the EDA as to the extent of the property it will need to complete the development. The most up-to-date information that staff has is that CareBreak will need 1.93 acres of the total 3.92 acre track of land. Staff is also currently working on a draft of the redevelopment agreement and other loan documents to implement the loan/grant program with CareBreak. It is staff's recommendation that the EDA consider the redevelopment agreement in conjunction with the conveyance of the property at the January 25 EDA meeting. Staff recommends approval of the resolution. JENSEN SWANSON & SONDRAI L, P.A. Attorneys At Line 8~5 ~Di~B'e.O~K CRo~]~c, $~. 201 ~ao~ (612) 42~11 · ~E~ (612) 49~193 Decemb~ 21, I998 Kirk McDonald Co,.-,mnity Develolm~nt Dim:tot City of Ne~ Hope 4401 Xylon Av~n,~ North l~blle ][]fm~l~ m Conslda~ Col~v~,mac~ of 5~01 ~ooae Avenne l~ropert7 fa Cm'ebrea~ Ouz Fib No.: 99.111~ Please find enclosed for comddmatJon at the December ?,8, 1998 ED& meetJni a propcwed Resolutlou Callinl for ]P~Ue ~ ~o Convey Proget~ a~ ~501 Boone A~enuc Norm m Senior Outreach Service. Inc. (Cambreak) and Authorizing Prepa~tiou of Dev~ Contzac:. My otF~e ~ be mspo~ble for publishing the P~btlc Not~ wi~ the paFer ~ ~ adoption of the e~closed RmolutJon. Also, th~= ~ dom not bind the FDA m convey tl~ prope~ to ~enJor Outreac~ SEZYMN, Inc. Tllar dec:~icm ~ not be mma~ until at~tr tl~ close of the public ttear~g on J'mmat, y 2Sss. In IJ~ lnmrbn, Senior Owzeacb Services, lng. dmnld ndv~se us of the extent of the pt'o~nx~ it Gill need to complete IW development. It's my understa~ng thnr they wffi need eJtl~r 2.27 aczm or 2.06 ac-es of ttm total 3.92 acre tragk defending on tbei~ final ~ pi&ri. It is also my u,,a,~'standlng y4xt ~ woridng with theiz conmtitnnt to ~ the req~ed propert7 and will hnve that ~nformarion prior to d~e n~t on December 2~. I wtil provide you with the ~cdevelopm~nt i~reement and other loan documents to J~plenmU the loan/grant pml~.m wiRt Ca, ebro. ak within the next two weeks so pan/es may have ample opportunJt7 to review ~ terma and condidon~ of said documents In'ior co rrm meeting o~ J~ta~ · 12/21/91~ 14:5~ $~,~TTOR~-YS -~ 5~151~ NO.72E] ~ December 21, 1~$ Page 2 If you have any questions or comnlznts, regarding ~he enclo~l Remolution please don't hesitate to contact IIle. Very lruly yours, St. even A. $ondraU J~q SW~ & ~ P.A. ~clos~e D~I ~~ KDA I~F-g_OLUTION NO. 98-.__. RESOL~ON CALLING FOR PUBLIC HEARING TO CONVEY PROPERTY AT 550! BOONE AVE, Nt~ NORTH TO SENIOR OUTREACH SERVICF.,S, INC. (CAREBREAK) AND AUTHORIZING PREPARATION O1~ DEVI~LO~ CONTRACT BE IT RESOLVED by the Economic Development Authority in and for the City of New Hope as follows: 3~=[~,~.~, the F.~onomic Development Authority in and for the City of New Hope ('EDA') is ttm fee owner of the real estate legally described an follows: Lot 2, Block 1 Service Industry Cettter 3~ Addition; E.~I;I.~.A~., the EDA adopted Resolution No. 98-08 ~t its August 10, 1998 meeting, a copy of which is amlched hereto aa Exhibit A; and ~[F,~, I~DA Resoluu~n No. 98-08 authorizes th~ sale or conveyance of the real estate to Senior Outreach Services, Inc. (heretfter "Carebreak*) on a deferred lo~/~ant program subject to Ctrebreak's development of the real estate as an adult care facility pursuant to a redevelopment contract including, but not limited to, proposed terms as indicated in EDA Resolution No, 98-08; and ~/~F,,A~, Catebreak has informed the EDA it now has its financinG in place for development of tl~ real esttte as an aduR care facility and is ready to accept the conveyance of the property; and ~d]~-~, Carebreak will not need the entire 3.92 acre parcel, and the proposed conveyance will be for tl~ south 2.06 or 2.27 acres of the "subject proper~ dependent upon Carebreak's final plans and specifications yet to'be submitted ~ the EDA; and ~, a public he~rh~ to convey the real estate to Carebreak is necessary pursuant to Minn. Stat. § 469.105 Subd. 2. NOW, THEREFORE, BE IT RESOLVED by the Economic Development Authority in and for tt~ City of New Hope, Minnesota, ~ follows: -1- 1. The City Clerk with t~e assistance of the City Attorney is aur. lxorized and directed to prepare and publish a public hearing notic~ calling for a public hearing on January 25, 1999 to convey to Senior Outreach Services, Inc. that portion of the.deScribed property required by Senior Outreach Services, Inc. to complete the development of the adult care facility subject to its final and approved site plan. 2. That the City Attorney prepare for the hnuary 25, 1999 meeting a Redevelopment Agreement and all otl~r related documents required to convey the necessary property to . Senior Outreach Servicea, In~., provided the EDA find~, after the clOSe of the public hearing, that this conveyance of property is in the beat interest of the City of New Hope and'will further the City's general plans for economic development as required by Minn. Stat. § 469.10:5. 3. That the City Manager is authorized and directed to prepare all other dOCumenrz necesaa.,-y to permit ~e EDA, on 1anuary 25. 1999, to malta ia decision on thc conveyance of thin prol~rty to Senior Outr~c,,h Servicea, Inc. after the clone of thc public hearing. Howev~, nothing in this reaolution shall bind the EDA to convey the property to Senior Outreach Servicea, Icc. and tl~ F..DA shall not make i~ decision to convey this pwperty until at~r the 1,nuary 2:5, 1999 public heating. Adopted by the Economic Development Authority ~IS 28 day of December. 1998. Attest: _ Daniel $. Donshu~, ~teeutive D~ctor .2. NEW HOPE RESOLUTION NO. 98- ~ TO CONVEY ~0~~ $~Oa O~CB ~~, ~C. FOR ~T D~Y C~ ~: .'T:~A~, r~a F. oonomic Devel~ Au~ority in a..,.d for tl~ City of New Hope (h~caf~ EDA) is tl~ ~ ~ of ~ p~ Icily ~~ u ~llows: ~t 2, m~ 1, ~ ~d~ Cm~ 3~ ~'~m':~, ~ ~~ ~~ ~ ~ly ~-for ~ ~u~ Wi~ ~ W~:~, ~r ~ S~, ~. ~ ~~ m ~ ~A ~t tt ~ 1 ~I(C)(3) ~..:-~ ~'~ ~ N~ ~ ~ f~o~: a. ~ ~h ~~, Ira. ~11 ~a~ly ~ a~ ~bmit ~ ~ C[~ ~j~ to ~ Ci~'s ap~l ~ a sim ~ ~ld~ pin f~ ~ ~. pbn. b. Any .conveyance of the prOpcx~ by the EDA to ~enior s~il be tubject ~o r~v~t3ionm-y ctn~.~e trl~ferrb~ tRk~ back to the FDA in the event SO,Jot' Outreach SaLe, cos. ~AC. fails LO &d~% d~Tcar~ {jollity. ~ reverter shall exptration of tim ~ree.y~ar implemet~tttion D~itI~ A~r~t ~n ~ ~A ~ E~ C~. ~ m ~or ~~ ~i~, ~. for ~pli~ ~ ~ ~~ ~m~ion } FOa ACTION Originating Department ~p~d for ~e~a ~da ~on Community Development '~ EDA 12-28~ Item No. ~irk McDonald ~ 6 RESOLUTION APPROVING THE METROPOLITAN COUNCIL'S MEMO~NDUM OF UNDERSTANDING TO ESTABLISH AND ADMINISTER A WAITING LIST AND GRIEVANCE PROCEDURE FOR MHOP UNITS IN THE BASS ~KE TOWNHOME PROJECT (IMPROVEMENT PROJECT NO. 614) The City ARorney has prepared the enclosed ~esolution Approving the Metropolitan Council's Memorandum of Understanding to Establish and Administer a Waitino List and ~rievan~ Procedure for MHOP Units in the Bass Lake Townhome Proje~. Since this Agreement must be signed by both the EDA and the City Council, the ~esolution needs to be considered by both bodies at the December 28 meeting. Per the City A~orney's corresponden~ and as the Council and EDA are aware, there are 12 MHOP units in the Bass Lake Townhome Proje~. Four of th~ MHOP units are designated as incentive units, the occupancy of which can be dete~in~ by the EDA. Sin~ ~e CiW already uses the procedures established by the Metropolitan Council in the Se~io~ 8 Hou~ng program, there is no reason not to use the Metropolitan Council proc~ures to administer the waiting list and g~eving process within this project as well. Also, as indicated in paragraph 7 on page 3 of the Agreement, the Metwpolitan Council will be assuming respo~sibili~ for this pro.ss at no cost to the CiW. ~e only obligation th~ Ci~ or EDA will have in connection with this ma~e¢ is an agreement to share costs wi~ the Metropolitan Council in the event a claim is made against ~ Metropolitan Council relat~ to its administration of the waiting list or grievance pro~dure f~ the N~ Ho~ in~ntiv~ units. Staff recommends ap~oval ~ ~e ~solution. JENSEN SWANSON & SONDRALL, P.A. Attorneys ~4t 8525 ]~Di~BaOOK CROSS.G, ST~. 201 BROOKLYN PAIOC, MI~N~YI'~k $S443-1999 TELgPHON~ (612)424-8811 · T~ELEF~X (612) 495-5193 GORDOI'~ L, JENStt.~e OF COUNt. ~I~c~mb~t 21, 1998 Kirir McDonald Coumnm~ Development Director C~ of New 4401 Xylon Av~ue Nm~ New Hope, MN $~28 Wa~;~ List and Grkvanee Prm:mim~ Agreement for Bass La~ Townhome Our Fib No.: 99.11200 EDA mmm~ ~ l~mpemd Rnm~ APprOVin~ the Metropolitan COunr. a's Memmndum of Undemanding m Eambli.th and Admbtbmr a Waiting Lbt and Grievance Procedure fo~ MI. IOP Unim in ~he Bass l. ak~.Tmmhon~ Project. $~ce dds Agrem~t mint be signed Basically, throe ate 12 MI=/OP Units ~n this proJe~ Four of the MHOP Units S'mce we Mready u,~ the procedures established by the Metropolitnn Council in our Section 8 Housing program, there ia no reason mx to u.~ the Metropo~ Council procedures m ad~,,~,~.r our w~a,~g ~ and gr~vtng pt-mesa within this project u wetl. Also, as indleamd in paragraph ? on pag~ 3 of the Agreement, the Metropolitan Council will be LMnm~ne_ l~[pCl~l~'bHit~ for th~ pt"ocP~8 at I~O coat to (]1~ CIty, Tbg ollJy obligation the CR~, or EDA will have in connection with this matter is an agreen~nt co sha~ COSTS with ~ Metr~xdlrm Co--~ tn the event ~ claim ts mad~ asainst the M~tro~titan Counctl relalmi to ia administration of d~e waiting list or grievance procedure for ~e New Decgmber 21, 1995 Page 2 ^s a r~uit, I would recommend the adoption of the enclosed Resolutiou by both ~be City Council a~ EDA allowing ~he 'Metropolitan Council ro administer die WSilirlg list a/Id gl'igvt~rlge procedure for MHOP Units wiCl~ ~h¢ Bass Lake Towr~on~ Project pursuant ro &e terms md condilio~s of&e amcl~ed Memorandum of Unders'mnding. Plea,se contact me i,f you l~,ve ~y quesUo~s or comments about Resolution or die Agreeme~ Very u'uly yours, 12x21x98 1~:58 YS~S.ATTOR~-YS + 5~151~ NO.~ff~B P~18 EDA RF~OLUTION NO. RESOL~ON APPROVING THE 'METROPOLITAN COUNCIL'S MEMORANDUM OF UNDERSTANDING TO ESTABLISH AND ADMINISTER A WAITING LIST AND GIHI~,VANCE PROCEDURE FOR MHOP UNITS IN THE BASS LAKE TOWNHOME PROJECT BE IT RESOLVED by th~ Economic Development Authority in and for th-- City of New Hope as follows: WttEREAS, the MianeaP°lh.. Public Ho~ing Authority ('MPHA"), the F, conomic D~elopment Authority i~ and for th~ City of New Hop= ('~DA") and the City of New HoW (City) entered into an Initial Agreement dated August 17, 1998, and amended on September 22, 1998 (collectively referred to as "Initial Agreement"), under which the MPHA, the EDA and the City agreed to cooperate in the location of twelve (12) MIiOP Units in a multifnmily housing project known an Bass Lake Townhomes (the "Development') locked within the City, and defined the relationships of MPHA and the EDA with respect to the planning, consumction, ownership and operation of the MHOP Units; and WHEREAS, pursuant to the Init/al Agreement as amended, the MPHA, the EDA and the City agreed the Incentive Unit~ will be filled pursuant to the EDA's wa/ting list ~ocedures and further agreed the EDA could request the Mm'opolitan Council to admire'stet the waiting list for the Incentive Units within th~ Development; and WHEREAS, tl~ I/DA and the City do hereby request the Metropolitan Council to administer the w~itin$ list for the Incentive Units, and the EDA and the City do h~ requ~t the Metropolitan Council to administer grievance procedures for rtl MHOP units located in the Development; and WHEREAS, the M~tropolitan Council hn_, agreed it will administer a waiting list for the Incentive Units and administer a grievance procedure for all MHOP units located in the development in accordance with the term~ and conditions of the Memorandum of Understandin8 attached to this ~lution as Exhibit A; and WHEREAS, both the New Hope City Council and the New Hope EDA hereby determines tlJat the Metropolitan Council's agreement to assume the responsibility for the administration of the waiting list and grievance procedure~ is in the best of the City of New Hope. NOW, TI~-~FO~, BE IT RF.~OLVED by the Economic Development Authority in and for the CiU' of New Hope, Minnesota, as follows: 1. That the Mayor and President of the I/DA and the Civy Manager and Executive Director of the EDA are hereby authorized and directed to sign and enter into the at~acbcd Memorandum of Understanding with tl~ Metropolitan Council for administration of Ge Incenlive Units waitin$ list and grievance procedure for all MHOP Units within the Bass Lakz Townhome developm~t. 2. That' the City Manager/Executive Director i~ authorized and directed to take all steps neceasa~ to implement the terms of the attached Mem0tandum of Understating. Adopted by the E~omic Development Authority this 28a day of Dee. ember, 1998. W. P~er F. ack, President Attest: Daniel I. Donahu~, F.,~e°l£ive DL, zc~ 12_/21/cj8 14:5~ ZS&S,~TT~t~-YS ~ 5~151~ N0.728 ~ IViF. MORANDUM OF UNDERSTANDING ADMINISTRATION OF WAITING LIST AND GRIEVANCE PROCEDURES FOR CERTAIN PUBLIC: HOUSING UNITs CITY OF NEW HOPE - BAS8 LAKI!I TOWNHOME PROJECT THIS M'EMo~~ OF UNDERSTANDING is made and entered into by and between the City of New Hope (the "City"), the F. coaomlc Development Authority in and l'or the City ol~ New Hope (~he 'EDA"), ~he Metropolitan Council (the "Council') and r, he Minneapolis Public Housint Authority (the "MPHA"). WHEREAS, the federal con.seat decree earful in settlement of Hollman v. Cisnero~, Civil No. 4-92-712 (U.S. Dist. Ct. D. Mian. 4m Div.) ('Hollman Consent Decree") provides for the funding and development of cer, ain public bousin8 units within the City of Minneapolis attd metropolitan-area suburban localtom; and ~REAS, Paragraph ~}7ofthe Hollman Consent Decree, as amended by stipulation and court order ia May 1998, provides that a portion of the public housing development uait~ made available uader the Hollman Consent Decree ('Incealive Units') may be offered to suburban jurisdictions as an incealive to accept MPHA replacemem units in those suburban jurisdictions; ~, the MPHA established the Metropolitan Hou.ninB Opportunity Program (" MI-IOP" ) purmant to which the MPHA will cooperate with suburban counties and municipalities in the construction and operation of qualified public housing units (the "MHOP Units"); and WHEREAS, the MPHA, the EDA and the City entered imo an Initial A~.em~at dated August 17, 1998. and reminded on Sepmnber il2, 1998 (collectively referred to as 'Initial ASreement'), under' wbic. h the MPHA, the ED& a. nd aha City ai/'eed to cooperate ia ~ location of melve (12) MItOP Unila ia a mulrifamily bousin~ projec~ lmown az Bass Laim Towabomes (the "Developmea~") lo~ared within the City, and defined the relationships of the MPHA and the £DA with respect ro the planaing, comtructioa, ownership and op,zration of the MHOP Units; WI-IF, RRAS, pursuant to the Initial Agreemea~ as amended, the MPHA. the lEDA.and the City agreed the Incentive Units will be filled pursuan~ to the EDA's waitin~ 1i$~ procedures and further agreed the EDA could request the Cotmcil to adrolniar,,r th~ waiting li~ for the Incentive Units within the Development; and WHEREA~, the EDA and the City have requested the Council to administer the waiting list for the Incentive Units, and d~ MPHA, the EDA and the City have requested the Council to administer grievance procedures for all MItOP units locatecl in the Development; and WHEREAS, Minnesota Statutes section 473.195 authorizes the Council to ex~rcise certain functions, rights, powers, duties, privileges, immunities ~ iimitatior~s as are provided for housing and redevelopment authorities created for municipalities; and WHEREAS, the Coun~:il administ~s a ~deral Section 8 housing assistanc~ program in certain jurisdictions located within ~he seven-county metropolitan area surrounding Minneapolis and Saint Paul, iucludinI th~ City; and WI4WRE~, to help implement the Ho/Jman Consent Decree and encourage the development of affordable housing opportunities throu/hout the seven-county mztr~U~ area, the Council is wi[li~ to adl~_ini~ter ~ waitlna~ list for tl~ hlcelltive Uni~ ill ~le Development and administer grievance procedures for all MHOP Units in the Development subject to the terms and conditions, of this agreement. NOW Tt~REFORFn in consideration of the mutual agreements and covemats contained in this agreement, the MPHA, the FDA, the City and the Council agree ss follows: MtlOP and Incentive Units 1. This agreement relates to the twelve (12) MHOP Units within the thirty-four (34) unit Development located at 7300- 7316 Bass Lake Road in New Hope, Minnesota. 2. The twelve MltOP Units consist of eight (g) MPHA replacement housing units for Minneapolis residents and four (4) IncenUve Units, nil of which are made available under the Hollman Consent Decree. The twelve bfHOP Units are not physically identified and ' float" throughout the Development depending upon vacancies tud availability. Waiting List A~tton 3. The MPHA ia responsible for maintaining ~ld admini~terin8 the waiting list for the eight MPHA MHOP replacement housing units according ~ the MPHA'$ own ..waiting list policies. : 4. The wait'ina list for the four Incentive Units will be administered by the Council according to the waitin~ list policies identified in Exhibit A of this agreemeng, which is attached to and incorporated into this agreement. The waiting list policies identified in Exhibit A shall conform to and be administered consistent with the requirements of the l.[ollm,~ Consent · Decree, applicable provisions of 24 C.F.R. Parts 5, 8, 913, 960 and 966, and applicable Fair Housing and Equal Opportunity laws and regulations. As provided in Exhibit A, 14:59 .TS&S,i~TT(:~Rt,lb-YS + 5~151::~6 NO.'72~ ~ names of applicant families on the waiting list shall be provided m the Owner to fill vacancies of Incentive Units according £o the following priorities: (a) applicant families currently on the Council's Section 8 waiting list who are identified as currently residing in the City; Co) applicant families residing in any community who-are currently on the Council's Section 8 waiting list; a~ (c) applicant families on It public housing waiting list specific to the City. The Council will advertise for applications for a public housing waiting list sp~ciPically for the City if it becomes reasonably evident priorities (a) and (b) will not provkic a sufficient number of applicant families to fill Incentive Unit vacancies in a thnely manner. $. The owner of the Devclopmen~ ("Owner") is responsible for managing all the units at the Development, including ali MHOP Units. The Owner is responsible for selecting applicant families and for carryin~ our such other administrative fuacriorm as (but not limited to) applicant interviews and screenir~, verification, determination of suitability for admission, unit assigmnem, execution of leases, terllalnsgOllS and evictiotls, l~h~t tile Council is informed of s v~.ant Inceutiv¢ Unit by the Owner, the Council will provide tlie Owner names of families on the Incentive Unit waiting list. Thc Council is uot responsible for selecting applican~ families for unit occupancy, applicant in*.erviews and screening, verifications, d~tmminations of suitability for admission, unit assignments, execution of leases, termination, evictions or other administrative functions that are the respousibility of the Development Owner. Grievance Procedures 6. The Council will adminismr ~rievance procedures for all twelve MHOP Units located in the Developmem according to the grievance pwcedures identified in Exhibit B of tiffs a~cement, which is au:ached m and inco~ into this aS, Teemed. The ~t'ievance procedures in Exh~it B shall couform ro ami b~ administered consistent with thc requirements of applicabl~ U.S. Deparmient of Housin~ and Urban Development regulations. Ael,-i,~ls~-atlvc and Other Expenses and Costs 7. Except as provided in ~hs 8 and 9 of this agreem, ent, the Council will administer the Incentive Unit wsitins list and the grievance procedur, es for ail MHOP uuim located in thc Development at its own cost and will not charge the City, the EDA or the MPHA any adminis~ative fees for admiais~rin$ the wa/ting list and the gricvanr~ procedures. The Council ~eset~es the fiSht to request administrative ~ or cost reimbursement the City, the EDA and the MPHA if the Council determines it no longer can assume the expenses and costs associated with its administration of the waitin~ list and grievan~ procedures, Any t*umre a~eements to charge administrative fees or seek cost reimbursements stt~ll be made by written amendments to .this agreement pursuant to Paragraph 1 l, 8. In consideration for ~he Council's a~reement to administer r. he waiting list and grievance procedures for Incentive Units at no cost the City and the EDA agree to share equally with the Council any costs or expenses, including attorneys fees and adverse awards, Re Council may incur as a result of any claims, actions or litigation asainst d~e Council related to i~s administration of the waitinl~ list and llrievance procedures for Incentive Units. In 'consideration for ~e Council's a/,reemcu~ r~ administer grievance procedures for MPHA MHOP Units at no cost the MPHA agrees to.share equally with r. he Council any costs or expenses, including alxomeys fees and adverse award~, the Council may incur as a resul! of any claims, ~ctions or litigaLion against the Council rela~zd Wim adminislration of ~he/rievance procedures for MPHA MI-lOP Unirz. 10. //xcept ~s provided in Para~rapb, s 8 ami 9, the City, fl~e h'DA, the MPHA and the Council shall remain responsible for their own actions and omissions re~ardin8 the MHOP Units which are the subject o/'.~his a/reement. Nothing in ~is al~'eement shall coasfitute a- waver by the Ci~, the EDA, fl~ MPHA or d~ Council of andy immunities or limits ~ liabilivy coaferred on ~ Civy, the lEDA, die MPHA or ~he Council by Mizmesot~ Statures Chapter 466 or ad,er applicable state or federal law. Amendments and Tezminatien 11. This atreemen! and a~y of im provisions may be chart/ed or modified by mutual a~reements of the parties. Such chan~cs, modifications or amendments shall be effecfiYe only on th~ execution of wriv. en amendment(s) si~ued by the authorized representatives of the City, the lEDA, Ge MPHA and the Council. Changes ~o the waiLiz~g list policieS and /,rievance procedures contaira~d in Exhibits A sad B shall be made by writ/eh amendmenm of this streemem. 12. This I~eement shsll constitute so loni ss the MHOP Units remain public housin/units or ual:il ~.i$ a~reement is ~lninat~ by ~e parties, whichever occurs earlier. Any par~ may terminar, e this a~reemeal for any ressou upon ninety (90) caleadar days wriV, cn notice to die other parties. IN WITNF.,S~ WHIiREOF, ~he CID/, the I/DA, die MPHA and die Council have caused this a~eemer~ to be execula--d by their d~ly auIhorized representatives. This asreement is effccdve on the dar~ when flits a~reemeni is fmally cxecul~! by all parties. CITY OF NEW HOPE I~'N~,APOLIS PUBLIC HOUSII~G AUTHOiUTY IN AND FOR THE CITY By: . OF M]~N~,APOLIS ~. Peter Enck Its Mayor By: Date: R~chard Burstad, 'Chair '" Date: By: By: baniel J. D°nabue Cora. McCorvey, EXecutive Director Its Cit7 Manager Date: .. Date: ECONOMIC DEYELOPMENT METROPOLITAN COUNCIL .AI.rI'IIORITY ~ ~ POIt ~ CITY OF NEW HOl~ Y es si soten Regional Admin~tratof ~. Peen' Enck' ......... Date: Its Executive Db-ector Dare: EDA RF UE T FOR ACTION Originating Depa~;,,,ent Approved for Agenda Agenda Section EDA Community Development 2~-9 8~ 12- Item No. By'Kirk McDonald By:, 7 ! RESOLUTION APPROVING BASS LAKE TOWN,HOME HOUSING DEVELOPMENT AGREEMENT AND REGULATORY AND OPERATING AGREEMENT AND AUTHORIZING THE PRESIDENT. AND EXECUTIVE DIRECTOR TO SIGN SAID AGREEMENTS (IMPROVEMENT PROJECT NO. 614) The City Attorney has prepared the enclosed Resolution Approving Bass Lake Townhome Housing Development Agreement and Regulatory and Operating Agreement and Authorizing the President and Executive Director to Sign Said Agreements. - Per the City Attorney's correspondence, this resolution is basically a housekeeping item, despite the length of the Agreements attached to the Resolution. The Housing Development Agreement essentially reconfirms the Redevelopment Agreement with PPg The 'document requires PPL to construct the proposed development in accordance with the plans and specifications already submitted. It further limits PPL's ability to change an item in the construction plan which would result in an addition of over $5,000 in the development costs. It further requires development of the project to commence on or before May 1, 1999. The Agreement requires PPL to develop and operate twelve (12) MHOP units for the term of the Annual Contributions Contract (ACC) (the term of thiscontract is 40 years). The Housing Development Agreement indicates the public assistance provided to PPL as a developer with said assistance being the lessor amount of the certified cost of the project or $1,356,480. These funds will be distributed to PPL in aCcordance with a Disbursement Agreement of which the Minnesota Public Housing Authority (MPHA), the EDA and PPL will be the parties. Also, the Housing Development Agreement requires the MHPA, the EDA and PPL to enter into the Operating and Regulatory Agreement also attached to this Resolution. This Agreement simply establishes the operating subsidy which will be paid .to PPL on an annual basis. As previously discussed, these agreements also limit the City's right to collect real estate taxes on the 12 public housing units to 5% of the "shelter rents" for the term of the ACC. PPL representatives have indicated that this amount will equal about $2,000. A summary of the terms of both agreements is attached at the erfd of this request and the City Attorney .can provide further explanation of these agreements at the meeting, if the EDA so desires. Staff ~ecommends approval of the resolution, which approves both agreements. ! JENSEN SWANSON & SONDRALL, P.A. Attorneys At Law 8525 EDINBROOK CROSSING, STE. 201 BROOKLYN PARK, MINNESOTA 55443-1999 TELEPHONE (612) 424-8811 · TELEFAX (612) 493-5193 GORDON L. JENSEN* WILLIAM G. SWANSON STEVEN A. $ONDRALL MARTIN P. MALECHA December 21, 1998 c. ALDEN PEARSON~f Kirk McDonald OF COUNSEL LORENS Q. I~RYNESTAD COn'll~l. mJty Development Director City of New Hope 4401 Xylon Avenue North New Hope, MN 5542g Re: Resolution Approving Bass Lake Townhome Housing Development Agreement and Regulatory and Operating Agreement Our File No.: 99.11200 Dear Kirk: Please find enclosed proposed Resolution Approving Bass Lake Townhome Housing Development Agreement and Regulatory and Operating Agreement and Authorizing the President and Executive Director to Sign Said Agreements for consideration at the December 28, 1998 ED A meeting. Basically, this Resolution is a housekeeping item despite the length of the Agreements attached to the Resolution. The Housing Development Agreement essentially reconfirms our Redevelopment Agreement with PPL. The document requires PPL to construct the proposed development in accordance with the plans and specifications already submitted. It further limits PPL's ability to change any item in the construction pian which would result in an addition of over $:5,000 in the development costs. It further requires development of the project to commence on or before May 1, 1999. It also require~ PPL to develop and operate twelve (12) MHOP units for the term of the .Annual ContrilRItion~ Contract (ACC). It's my understanding the term of this contract is 40 year~. Aiso, the Housing Development Agreement indicates the public assistance provided to PPL as a developer with said assistance being the lessor amount of the certified cost of the project or $1,356,480. These funds will be distributed to PPL in accordance with a Disbursement Agreement of which the M~',amesota Public Housing Authority (MPHA), the EDA and PPL will be the parties. Also, the Housing Development Agreement requires the MPHA, the EDA and PPL to enter into the Operating and Regulatory Agreement also attached to this Resolution. This Agreement simply establishes the operating subsidy which will be paid to PPL on an annual basis. Keep in mind these agreements also limit the City's right to collect real estate taxes on the 12 public housing units to 5% of the "shelter rents" for the term of the · ~,~ ~ t~ s~i,~,, ACC. It is my understanding based on Past conversations with Lisa Kugler that this Mir~o~S~ B~ amount will equal about $2,000. Assagi~ion tQualified ADR N~u*~l December 21, 1998 Page 2 If you have any further questions or comments regarding the enclosed Resolution, the Housing Development Agreement or the Regulatory and Operating Agreement please don't hesitate to contact me. Very truly yours, Steven A. Sondrall JENSEN SWANSON & SONDRALL, P.A. Enclosures cc: Valerie Leone P:\A umml*~\~A~i.~-t~',~ 112~0- KitII02.11~'. ~ll:l EDA RESOLUTION NO. 98- RESOLUTION APPROVING BASS LAKE TOWNHOME HOUSING DEVELOPMENT AGREEMENT AND REGULATORY AND OPERATING AGREEMENT AND AUTHORIZING THE PRESIDENT AND EXECUTIVE DIRECTOR TO SIGN SAID AGREEMENTS BE IT RESOLVED by the Economic Development Authority in and for the City of New Hope as follows: WHEREAS, the Economic Development Authority has entered into an August 17, 1998 Initial Agreement as amended September 22, 1998 with the Minneapolis Public Housing Authority ("MPHA") which agreement basically defines the relationship between the MPHA, the EDA and Project for Pride in Living, Inc. (hereinafter "PPL") with respect to the planning, construction, ownership and operation of 12 MHOP units within a 34 unit rental town. home development at 7300-7316 Bass Lake Road known as the Bass Lake Townhome development; and WHEREAS, the Initial Agreement further indicates the MPHA and EDA will cooperate to submit a proposal to HUD for development funds, to assist PPL in the development, construction and operation of eight (8) replacement and four (4) incentive MHOP units of housing; and WHEREAS, the Initial Agreement requires the EDA, MPHA and PPL to enter into a Housing Development Agreement to establish design specifications for the units, confirm amenities in and around the development, establish a float system for the MHOP units within the development rather than specify specific units and require PPL to execute a Regulatory and Operating Agreement and provide a Declaration of Restrictive Covenants relating to the operation of the development; and WHEREAS, the attached Housing Development Agreement and Regulatory. and Operating Agreement attached hereto as Exhibits A and B are now prepared and ready for execution by the respective authorized officials of the MPHA, EDA and PPL. NOW, THEREFORE, BE IT RESOLVED by the Economic Development Authority in and for the City of New Hope, Minnesota, as follows: 1. The Housing Development .Agreement and Regulatory and Operating Agreement in the forms attached hereto as Exhibits A and B are hereby approved. -1- 2. That the President and Executive Director are hereby authorized and directed to sign the Housing .Development Agreement and the Regulatory and Operating Agreement as proposed in the attached Exhibits A and B. 3. That the Executive Director is hereby authorized and directed to take all appropriate steps necessary to implement the terms and conditions of the Housing Development Agreement and Regulatory and Operating Agreement. Adopted by the Economic Development Authority this 28th day of December, 1998. W. Peter Enck, President Attest: Daniel J. Donahue, Executive Director P:\A~lo~Cal~ I~haio~ R~ AI~ ~ I=k T~nimt.~v~t -2- HOUSING DEVELOPMENT AGREEMENT By and Between ~ MINNEAPOLIS PUBLIC HOUSING AUTHORITY IN AND FOR ~ CITY OF MINNEAPOLIS and BASS LAKE TOWNHOMES LIMITED PARTNERSlqTP and THE ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR THE CITY OF NEW HOPE This document was drafted by: HOLMES & GALEY, LTD. One Financial Plaza, Suite 1200 Minneapolis, Minnesota $5402 (612) 288-9300 · (612) 288-9400 (fax) D :~dlqN 12.~O 17~(3C$~DEVAGR. DOC HOUS l:lq'O DEVELOPML:~brT AGRP-'~-~'f~: NT M~A/Nk'W HOPE ED^ BA~a ~ TOWl,,'HOI,~F:a LIMITF~D pAR't'NERZI-~P TABLE OF CONTENTS PARTIES ........................................................... - 1 RECITALS ............................................................................................................................ 2 ARTICLE I Definitions Section 1.1. Definitions ........................................................................................................... 2 ARTICLE H Representations and Warranties Section 2.1. General Representations ................................................................. ~ ..................... 5 Section 2.2. Representations and Warranties ofthe MPHA ...................................................... 5 Section 2.3. Representations and'Warranties of the EDA ......................................................... 5 Section 2.4. Representations and Warranties by the Owner ............. , ........................................ 5 ARTICLE III The Development Section 3.1. Description ............................................................................................ :. ............. 8 Section 3.2. Construction ........................................................................................................ 8 Section 3.3. Construction Plans ............................................................................................... 8 Section 3.4. Commencement and Completion of Construction ................................................. 9 Section 3.5. Certificate of Completion ................................................................................... 10 ARTICLE IV The Public Housing Units Section 4.1. Described Section 4.2. Interchangeable Units ......................................................................................... 11 ARTICLE V Public Assistance .. Section 5.1. Funds Description .............................................................................................. 12 Section 5.2. Development Funds ............................................................................................ '12 D:Rv~CNI2.e~I'AD(~$XDIiVAOKDOC ' i HOU$1/q~ DE'~"ELOt~ENT AGENT MPt4AR~W MOPE EDA BA~$ LAKE TOWNZ.{OME3 LIMITED pARTNE~I-~ Section 5.3. Operating Subsidy .............................................................................................. 12 Section 5.4. Payments in Lieu of Taxes .................................................................................. 13 Section 5.5. Payment Limitations ........................................................................................... 13 ARTICLE VI Additional Regulatory Requirements Section 6.1. Additional Regulatory Requirements .................................................................. 14 ARTICLE VII Mort~aee Financine Section 7.1. Mortgage Financing md/or Equity ....................................... ' .............................. 16 Section 7.2. Authorities' Option to Cure Default on Mortgage ............................................... 16 ARTICLE VIII Insurance Section 8.1. Insurance ........................................................................................................... 17 Section 8.2. Damage or Destruction ...................................................................................... 18 ARTICLE IX Encumbrances; Sale; Indemnification Section 9.1. Encumbrances .................................................................................................... 20 Section 9.2. Sale ..................................................................................................................... 20 Section 9.3. Indemnification .................................................................................................. 20 ARTICLE X Events of Default Section 10.1. Event of Default Defined .................................................................................... 22 Section 10,2. Remedies Upon Default .................................... '~ ................................................ 22 Section 10.3. Igo Remedy Exclusive ........................................................................................ 22 Section 10.4. No Additional Waiver Implied by One Waiver .................................................... 22 D:'~Lx,~q 12.~01 '3,1X~$xI)£¥AOR. IX~ ii aOUSmO ~SVSLOt'~m A~U.~.'~m BA~3 LAKE TO~'I-[Ol~fl!3 LIM~TF~ p,A,~.Tt. Wr2~l'f~ ARTICLE XI Additional Provisions Section 1 I. 1.Duration of Agreement ....................................................................................... 23 Section 11.2. Assignment ........................................................................................................ 23 Section 11,3. Recording of Agreement ................................................................................... .23 Section 11.4. Amendment ........................................................................................................ 23 Section 11,5. Authorities ....................................................................................... : ................. 23 Section 11.6. Conflict of Interests; MPHA and EDA Representatives Not Individually Liable ....................................................................................... 23 Section 11.7. No Merger .......................................................................................................... 24 Section 11.8. Notices and Demands ......................................................................................... 24 Section 11.9. Counterparts ...................................................................................................... 24 Section 11.10. Law Governing .................................................................................................. 24 Section 11.11. Severability ................................................................................... : .................... 25 TESTIMONIUM SIGNA.TUlt, E S EXIqTBIT A Legal Description ExIqTRIT B Declaration of Restrictive Covenants EXI4mlT C Certificate of Completion EXHIBIT D Title Insurance Commitment D:~,f~N 12_q~01 '2q~0C,q~.¥AGR, I~C ~ HOL~KN'~ DEVE,LOP~ M~I4.A/lqEW HOPE P. DA BASS ~ TOWNHOME$ LIMI'I"P-~ PAlq.TNE~HIP BASS LAKE TOWNHObfE. S LIMITED PARTNERSHIP BY: PROJECT FOR PR[DE I~ LIVING, ENC. ITS GENERAL PARTNER By. Its STATE OF ~SOTA ) COUNTY OF .) On this day of , 19 , before me, a notary public, personally appeared , the of Project for Pride in Living, Inc., the general partner of Bass Lake Townhomes Limited Partnership, a Minnesota limited partnership, named in the foregoing instrument and acknowledged said instrument on behalf of the partnership. Notary Public D:XMI'CN I 7.5x0 t '/~EX:XZ$~DEVAOR.EXX~ HOU$1NO DEVI!Z.OPM~NT AO~ MPHA/NEW HOPll EDA BA$3 LAKIt TOWNHOME$ ~ pP. ltTNEI~HIP REGULATORY AND OPERATING AGREEMENT BY, BETWEEN AND AMONG ~ blINNEAPOLIS PUBLIC HOUSING AUTHORITY IN AND FOR THE CITY OF MINNEAPOLIS, ECONOMIC DEVELOPMENT AUTHORITY 131' AND FOR ~ CITY OF NEW HOPE, AND BASS LAKE TOWN'HOMES LEH1TED PARTNERSgTP Dated: ,19 This document drafted by: HOLMES & GALEY, L~D. 1200 One Financial Plaza 120 South Sixth Street Minneapolis, MN 55402 (612) 2SS-9300 (612) 288-9400 (Fax) D :~,~N'lq 125~01 'ADCX2~,R&OAGR. DO~ REGULATORY AND OPE/La.'r'I:NG AGRF~F.M~I'~ MPHA,, NEW HOPE EDA, BA~$ ~ TOWNHOI',~ $ TABLE OF CONTENTS REGULATORY AND OPERATING AGREEM2ENT Page PREAMBLE ARTICLE I Definitions Section 1,1 Definitions ........................................................................................................... 2 ARTICLE II Authority Units Section 2.1. Owner Commitment ............................................................................................. 4 Section 2.2. Authority Units Described ........................ · ............................................................ 4 Section 2.3. Casualty and Condemnation ................................................................................. 4 Section 2.4. Excess Insurance Proceeds ................................................................................... 4 ARTICLE III Operation of Authority Units Section 3.1. Legal Compliance ................................................................................................. (5 Section 3.2. Administrative Flexibility ...................................................................................... (5 Section :3.3. Management ..................................................................................... ~ ................... (5 Section 3.4. Waiting Lists ........................................................................................................ 7 Section 3.5. Managing Agent Responsibilities.. 7 Section 3.6. Lease Forms .................................................................................. /. ..................... 7 Section 3.7. .Grievance Procedures ........................................................................................... 7 ARTICLE IV Development Operating Subsidy Section 4.1. Further Definitions ..... i ......................................................................................... 9 Section 4.2. Operating Budget Submittals ........ 10 Section 4.3. Payment of Operating Subsidy ........................... ": ................................................ ! 1 Section 4.4: Development Operating Subsidy Cap ................................................................. I 1 Section 4.5. Segregated Account ........................................................................................... 12 Section 4.6. Monthly Operating Reports ................................................................................ 13 Section 4.7. Audited Financials and Supplemental Data ......................................................... 13 Section 4.8. Post-Year Adjustments ................................................................... : ................... 13 Section 4.9 Vacancy Adjustment .......................................................................................... 14 Section 4.10. Incidental Development Income ......................................................................... 14 Section 4.11. Future Legislation ...... i ....................................................................................... 14 D:',.MI~/I 2.f~017',DOC S'~v,~OAGR.IX)C i R,EGr,,,,'~TO~,Y ~ OP,~ATII, IO A~RE,~MI~NT I~,/PHA, I,~.W HOPI~ ED~ BA~$ ~ TowIqHoI~fl/$ ARTICLE V Development Operating Subsidy Reserve Section 5.1. Establishment of Reserve and Accounts .............................................................. 15 Section 5.2. Investments ........................................................................................................ 15 Section 5.3. Floor Level Adjustments.. ................................................................................... 15 Section 5.4. Voluntary Replenishment of Reserve .................................................................. 15 Section 5.5. Owner Surplus Cash Contribution ...................................................................... 16 Section 5.6 Utilization of Reserve ................................... . ..................................................... 16 ARTICLE VI Owner Remedies Section 6.1. Limited Owner Obligation .................................................................................. 18 Section 6.2. Relationship to Separate Agreements ................................................................. 18 Section 6.3, Remedies When Vacancy ................................................................................... 18 Section 6.4, Remedies When No Vacancy .............................................................................. 19 Section 6.5. M2PHA Failure to Elect ....................................................................................... 2 ARTICLE Non-Discrimination and Other Federal Requirements Section 7.1. Non-Discrimination and Other Federal Requh'ements ......................................... 22 ARTICLE VIII Owner Default Section 8.1. Defined .............................................................................................................. 23 Section 8.2. Notification ........................................................................................................ 23 Section 8.3. MPHA Remedies ............................................................................................... 23 ARTICLE IX Disclaimer of Relationships Section 9.1. No Assignment of ACC ................................................................. '. .................... 24 Section 9.2. No Third Party Beneficiary ....... : ......................................................................... 24 ARTICLE X Miscellaneous Section 10.1. Binding Obligation ........................................................ ~. .................................... 25 Section 10.2. Assignment ........................................................................................................ 25 Section 10.3. No Waiver ......................................................................................................... 25 Section 10.4. Amendment ........................................................................................................ 25 Section 10.5. Notice ................................................................................................................ 25 Section 10.6. Law Governing ..................................... ' .. 26 MPH~ N~W~ HOI~ Section 10.7. Severability ........................................................................................................ 26 Section 10.8. Headings and Titles ............................................................................................ 26 TESTI2vlONIUM SIGNATURES EXHTBIT A Development Site EXHIBIT B Dispute Resolution Procedures EXHIBIT C Development Operating Subsidy Cap Worksheet EXHVglT D Management Agreement MPH~ I~'~W HOPE F~A, BA~$ LAK~ ~OW'~IOME$ REGULATORY AND OPERATENG AGREEMENT AGREEI~IENT made tkis ~ day of . . , 19__ by, between and among the MINNEAPOLIS PUBLIC HOUSING AUTHORITY IN AND FOR ~ CITY OF ~NGNNEAPOLIS, a public body corporate and politic, organized and e,,dsfing under the laws of the State of Nfinnesota (the "NfPHA"), the ECONO,MIC DEVELOPMENT AUTHORITY IN AND FOR THE CITY OF NEW HOPE, a punic body corporate and politic, organized and ex. isting under the laws of Minnesota (the "EDA") (together with the NfPHA sometimes called the "Authorities") and the. BASS LAKE TOWNHOM2ES LIMITED PARTNERSlilP, a Minnesota limited partnership ("Owner"). The M?~ and the United States Department of. Housing and Urban Development ("HUD") are parties to an Annual Contributions Contract ("ACC") pursuant to which the MPHA has been granted funding for the demolition and replacement of 770 units of low rent public housing pursuant to Section 5 of the United States Housing Act of 1937, as amended (the "Act"), and pursuant to the terms of that certain Consent Decree entered in settlement of Hollman et al. vs. Cisneros et al, U.S.D.C. (Minn. Dist., 4th Div.) Civil Case No. 4-92-712. As a part of its effort to locate replacement units in areas of nonconcentration as to race and poverty throughout the Minneapolis-St. Paul Metropolitan area it has entered into a joint powers agreement with the EDA for the purpose of seeking inclusion of replacement units in the Owner's multifamily housing project to be constructed within the City of New Hope, Minnesota (the "Development"). The Development is to be a mixed-income community consisting of 34 units. Twelve (12) units shall be set aside and maintained as "public housing," as defined in Section 3Co) of the Act, and eligible to receive the benefit of operating subsidies by HUD pursuant to Section 9 of the Act for the term of the ACC. Owner intends that the 22 other units of the Development will be operated and maintained as Tax Credit Units. NOW, TFrEREFORE, the parties hereto agree as follows: D:~M2,IIq t 25\0t'hI:X~$',g.&OAGR. DOC I ~K~GUI.~.'rOR.¥ ,kN'D OPEII.a.'rlNG AGR.F,~M2EN"r ~,~[-[A, N'F_.,W HOPE FDA, ARTICLE I Definitions Section 1.1. Definitions. As used herein, the following terms shall have the following meanings: "ACC" shall mean the Consolidated Annual Contributions Contract between HUD and the MPHA dated April 10, 1971, as amended from time to time including, specifically, as amended by a Mixed-Finance Amendment dated , 19__. "Act" shall mean the United States Housing Act of 1937, as amended from time to time, and any successor legislation. "Authority Units" shall mean the dwelling units in the Development operated and maintained from time to time as "public housing" units in accordance with the Act, the ACC, and this Agreement. "Consent Decree" shall mean the Order of the United States District Court, District of Minnesota in the action entitled Hollman et al vs. Cisneros et al, Civil Action No. 4-92-712, which provides, among other things, for the development of 770 public housing units in the Minneapolis- St. Paul metropolitan area and for priority occupancy by certain families relocated or displaced from demolished public housing in Minneapolis. "Development" shall mean the 34-unit rental housing development to be constructed and operated by Owner, during the term of the ACC, on the Development Site. "Development Fiscal Year" shall mean the 'fiscal year of the Owner, irrespective of whether such fiscal year coincides with the MPHA Fiscal Year. "Development Site" shall mean the real property upon which the Development will be constructed, as more particularly described in Exhibit A hereto. "Development Operating Subsidy" shall mean that part of the Operating Subsidy received by the MPHA fi.om HUD which the MPHA shall pay to the Owner pursuant to this Agreement. "Development Operating Subsidy Reserve" shall mean the trust, account established by the Owner pursuant to Article V hereof' and consisting of an Owner Account and a Public Account to which contributions made by the Owner, MPHA and EDA to their respective accounts, shall fund shortfalls in Development Operating Subsidy. "Fair Market Rent" shall 'mean the maximum allowable rent permitted to be charged under Section 8 of the Act. "Housing Agreement" shall mean the Housing Development Agreement dated ,19m by and between the EDA, the lV[PHA and the Owner. D:~N'I 2.~) 1 'AIZX)C 5~v,~OAOR.IiX3C 2 I~OUI.ATORY Ax,Z) OPF. JtATI240 MPHA, 1,,~W HOPE ED& BA.q$ ~ TOWNHOkiF.~ "Incentive' Authority Units" shall mean four (4) Authority Units which are not subject to the waiting list requkements of the Consent Decree. "Lender" shall mean the lender under a first mortgage loan secured by the Owner's interest in the Development Site obtained by Owner to assist in financing the construction of the Development. Upon the date hereof and so long as the MI-IFA Mortgage remains outstanding, Lender shall mean "NfH~FA." "MHFA Mortgage" shall mean that Minnesota Housing Finance Agency New Construction Tax Credit Mortgage Loan Program Mortgage dated , 1998, which provides first mortgage financing for the Development. "MI-IFA Regulatory Agreement" shall mean that certain Minnesota Housing Finance Agency New Construction Tax Credit Program Regulatory Agreement dated , 1998. "MPHA Fiscal Year" shall mean the MPHA's October 1 through SePtember 30 fiscal year, used for purposes of calculating the Operating Subsidy received by the MI~HA pursuant to Section 9 of the Act. "Managing Agent" shall mean the managing agent named in the Management Agreement, or any successor managing agent of the Development named from time to time and approved by MH2FA, pursuant to the MH3'A Regulatory Agreement, and the Authorities as provided herein. "Management Agreement" shall mean the agreement governing management of the Development to be entered into between the Owner and the Mana~ng Agent pursuant to Section 3.3 hereof. "Operating Subsidy" shall mean financial payments provided to the MPHA. by HUD pursuant to Section 9 of the Act or pursuant to any successor legislation providing for project- based or tenant-based operating or rental assistance in respect of units in public housing developments or eligible occupants thereof. "Proposal" shall mean the MPHA and EDA proposal for the Development approved by HUD. "Replacement Authority Units" shall mean those eight (8) Authority Units which are subject to the waiting list requirements of the Consent Decree. "Restrictive Covenant" shall mean the covenants and restrictions contained in that certain Declaration of Restrictive Covenants granted by the Owner which shall run with the land obligating the party and any successors in title, including any successor who acquires title to the Owner's estate by foreclosure of a mortgage, to maintain and operate the Authority Units in compliance with all applicable requirements of the Act, the ACC and this Agreement during the period required by law. "Tax Credit Units" shall mean 22 units in the Development to be operated and maintained as qualified low-income units under Section 42 of the Internal Revenue Code for a period of not .less than the compliance period and any extended use period (as such terms are defined in said Section 42 of the Internal Revenue Code, as the same may be amended from time to time). D:kMlqH 12.~01 'AD(i)C~OAGR.DC~C 4 REGULATORY AND OPERATI~(~ AGRF..~, ~lqT Mi~HA, 1,,'EW HOPE EDA, BA~$ ~ TOWI,~OME$ ARTICLE II Authority Units Section 2.1. Owner Commitment. During the term of this Agreement, but subject to Aa-ticle VI hereof, Owner will continuously set aside txvetve (12) units of the Development, having a total of 42 bedrooms and having initially the unit size distribution set forth below, for occupancy by public housing-eligible households at rents and subject to all other conditions of the Act, the ACC and the Consent Decree. Provided that the Owner continues operating the public housing units in accordance with the Act, the ACC and the Consent Decree, and in accordance with the terms of this Agreement, such units shall be eligible to receive the benefits of Operating Subsidy. Consistent 'with the requirements currently applicable to public housing, a unit shall not lose its status as an Authority Unit solely because the income of the tenant residing therein rises above the applicable public housing income limit; any such unit shall be governed by rules generally applicable to units occupied by over-income tenants in the public housing program (subject to such modifications in lease and occupancy terms as are permitted hereunder). Section 2.2. Authority_ Units Described. The Authority Units shall initially comprise the following mixture of unit sizes and descriptions: 3 BR 6 4 BR 6 Owner may change the specific units designated as Authority Units at any time provided that (a) the number of bedrooms contained in the Authority Units remains 42, (b) if such change is to be made with respect roan occupied Authority Unit, the tenant of such unit shall have the same rights with respect to occupancy and rent as applied prior to removal of the unit's designation as an Authority Unit, and (c) the Authority Units shall at all times, to the extent feasible, be scattered evenly throughout the Development, and shall not be concentrated in any particular area or areas within the Development, except that the four-bedroom Authority Units shall float throughout the rehabilitated buildings of the Development and the three-bedroom Authority Units will float throughout the new construciion of the Development. Section 2.3. Casualty and Condemnation. In the event of a casualty loss or taking by eminent domain, Owner shall apply the proceeds of such casualty loss or condemnation to the rebuilding of the units, and units representing the same bedroom mix described above to the e~ent possible, shall be set aside as Authority Units. Section 2.4. Excess Insurance Proceeds. In the event of'(a) a casualty, (b) a decision by the Lender to apply insurance proceeds to the first mortgage loan rather than reconstruction of units, and (c) the existence of excess insurance proceeds, such excess insurance proceeds shall be deposited in the Public Account of the Development Operating Subsidy Reserve. D:~ilqN 12510 ITq~(X~$'4t~.OAGR. DO~ 5 REGULATORY AND OPER.ATI~I'G AGR.F.F-MENT MPHA. N"~W HOPE F. DA. BA~$ ~ ToWNHOlv~ ARTICLE Operation of Authority Units Section' 3.1. Legal Compliance. Owner shall maintain and operate the Authority Units in compliance with all applicable requirements of the Act, I--RYD regulations thereunder, and the applicable regulations and policies of the Authority, and in accordance with the ACC (including any waivers granted pursuant thereto)', the Consent Decree, and this Agreement. In the event of any conflict among the foregoing authorities, the ACC (including any waivers granted pursuant thereto) shall control (to the extent permitted by law). Notwithstanding the Owner's agreement to perform substantial obligations and responsibilities with regard to the Authority Units pursuant hereto, and the agreement of the EDA to assist in carrying out certain functions and responsibilities, the MPHA remains accountable to HUD for performance of such functions under and pursuant to the ACC and must monitor the performance of the Owner and the EDA to assure compliance therewith; provided, however, that the MPHA shall be entitled to rely upon the truth _and accuracy ofigormation provided to it by the Owner or the EDA. Section 3.2. Administrative Flexibilit3f.. Authorities and Owner acknowledge that the goal of achieving long-term sustainability of the Development as a mixed-income community will be enhanced by administrative procedures and terms and conditions of occupancy which reduce 'discernible distinctions in maintenance and operation, and conditions of continued occupancy., between the Authority Units and other units in the Development to the greatest extent feasible while assuring that the Authority Onits are available to house families who meet the occupancy objectives of the Authorities. Sections 3.3 to 3.7 of this Article III enumerate certain respects in which operating procedures and other requirements as to the Authority Units will differ from those in effect with respect to public housing units owned by the MPHA. The Authorities and Owner agree that, if experience demonstrates a need for or the desirability of further departures from standard procedures applicable to PHA-owned public housing, they will consult with each other regarding such further modifications and will take such further implementing steps as they agree to be advisable, including, as appropriate, requests to HUD for revision or waiver of regulations necessary to permit the Authorities to undertake measures that enhance the long-term viability of the Development, or requests to implement statutory revisions made by Congress from time to time affecting either public housing in general or public housing located within privately- owned mixed-income communities in particular. Section 3.3. Management. Owner will retain a managing agent for the Development, including the Authority Units (the "Managing Agent"), pursuant to a management agreement (the "Management Agreement") as required by Section 5 of the NIl-IFA Regulatory Agreement. The Management Agreement shall be in the form attached hereto as Exhibit D, except to the extent modification thereof is approved by MHFA, pursuant to the MHFA Regulatory Agreement, and the Authorities. The initial management agent shall be Project for Pride in Living, Inc. The Owner may change management agents only as provided in the MHFA Regulatory Agreement, with the consent of the Authorities, so long as the Mt~A Regulatory Agreement remains outstanding. At such time as the MI-IFA Regulatory Agreement is no longer outstanding, the management agent will be subject to written approval by the Authorities and HUD, provided that if the MPHA and EDA fail to agree upon the discharge or hiring of a Managing Agent, the EDA's judgment shall be final. The Managing Agent will be responsible to Owner for management of the D:~"N I ~ I T,.INDC:5',R.~OAQ~.. DO~ 6 R.~Gt:~...ATORY A.ND OPF..RA'rLN'G MPI. iA. N'F..W HOPE F. DA. I~A~$ ~ TOWlCHOIvlF~ Authority Units in accordance with the terms of this Agreement and ail applicable requirements referenced in Section 3.1 hereof. The Management Agreement ,,,,'ill contain appropriate provisions providing access by the Authorities, upon request therefor, to books and records maintained by the Managing Agent with respect to the Development, and pursuant to which the Owner may be required to terminate the Management Agreement and the appointment of the Managing Agent thereunder, subject to appropriate judicial re,Aew in any court of competent jurisdiction, if the Authorities determine that the Managing Agent has violated, breached, or failed to comply with any provision of, or obligation under, this Agreement (including, without limitation, by reason of its violation, breach or failure to comply with any governing law, regulation, or agreement referenced in Section 3.1 or Article VIII hereof). Section 3.4. Waiting Lists. The Authorities shail create, maintain and manage the waiting list or lists for occupancy to the Authority Units in accordance with the Consent Decree and ail applicable laws and regulation. Upon request of the Managing Agent, the EDA shall supply the names of potentially eligible tenants to the Managing Agent as more fully described in the Management Agreement. The waiting list or lists policy created by the Authorities is subject to HUD approval. Section 3.5. Managing Agent Responsibilities. The Authorities delegate to Owner, subject to re-delegation to the Managing Agent, the following administrative functions in connection with admission of applicants to occupancy of the Authority Units: applicant screening, income and data verification, income recertification, record maintenance, unit assignment, execution of leases and terminations, ail in accordance with criteria and procedures approved by the Authorities. Screening criteria and procedures proposed by the Managing Agent with respect to the Authority Units will not necessarily be identical to those utilized by the MPHA with respect to MPHA- owned public housing but will, to the maximum extent permissible under applicable HUD requirements and the ACC, be consistent with those utilized by the Managing Agent with respect to other units of the Development; provided, however, that such procedures shall at all times be fair and evenhanded and shall not be more stringent as they relate to Replacement Authority Unit applicants than the Incentive Authority Unit applicants or other applicants. The MPHA shall have the fight to monitor the procedures and results of the Managing Agent's activities in tbJs regard. The EDA Shall establish procedures for informal and formal review of eligibility or suitability determinations for applicants for admission to the Authority Units consistent with HUD regulations. Section 3.6. Lease Forms. Tenant leases executed with respect to AuthoritY Units will be on form attached to the Management Agreement as Exhibit E, subject to HTdD approval, if required, of variations from the requirements of 24 CFR Par~.~. 966, Subpart A, as amended or replaced from time to time. Such leases shall accommodate the remedies available to the Owner pursuant to Section 6.3 and 6.4 hereof. Section 3.7. Grievance Procedures. The EDA will establish a tenant grievance'procedure for residents of the Authority Units in compliance with the requirements of Section 6(k) of the Act and consistent, to the maximum extent feasible, with the intent stated in Section 3.2 above. Such procedures will provide for such informal and formal hearings as set forth in the HUD regulations. The Authorities will seek HUD approvai, to the extent required, of variations fi'om the requirements of 24 CFR Part 966, Subpart B, as amended or replaced from time to time. D:~.~vL-NNI 2.~017kI::K)C$~,R&OAGR. I~X2 7 R~Gr,.'LATOR Y A.x.'~ OPE. RATING MPHA, N'.'F.W HOPI~ F~DA, BA31t LAK~ TOWNI-IOMI[$ ARTICLE IV Development Operatin~ Subsidy Section 4.1. Further Definitions. As used herein: (a) "Allowed Development Expenses" shall mean all necessary and reasonable operating expenses of the Development for any period, including: (i) all ordinary and necessary expenses of operations of the Development shown as line items on Form HUD-92547-A (Budget Worksheet), exclusive of(A) the amount by which real estate taxes attributable, to the Authority Units exceed the amount of the payment in lieu of taxes, for so long as under Minnesota law the Authority Units are entitled to payment in lieu of tax treatment, (B) debt service requirements of any lender (including the Authorities) and (C) utility expenses which are the direct responsibility of the tenant. If the MPHA and HUD approve the borrowing of funds .for repairs, replacements or improvements not funded from the Development reserve for replacements established in Section 3.C.(3) of the MI-IFA Regulatory Agreement (which approval shall not be unreasonably withheld), then the debt service requirements for such borrowing shall be included in Allowed Development Expenses. Authority Unit Expenses (as hereinafter defined) shall be reduced by any amounts contributed by the Authorities, on a grant basis, for repairs, replacements or improvements of the AuthOrity Units, up to the amount of the Authorities' share (based on the Authority Percentage, as hereinafter defined) of debt service requirements for any such borrowing for similar repairs, replacements or improvements to units other than the Authority Units; (ii) management fees payable pursuant to the Management Agreement; (iii) legal expenses associated w/th the operation, of Development and accounting and audit expenses, including tax return preparation expenses, permitted to be charged as project expenses pursuant to the MHFA Regulatory Agreement, so long as it remains outstanding, and then the HUD Handbook 4370.2 REV-I, Financial Operations and Accounting Procedures for Insured Multifamily Projects, or any successor thereto; and (iv) reserves for replacements and for any other purposes, as required by the Lender and approved by the MPHA. Co) "Authority Percentage" shall mean the higher of: (i) the number of Authority Units, divided by the total number of units in the Development; or (ii) the net rentable square feet of the Authority Units, divided by the net rentable square feet of all units of the Development. Any change in the "Authority Percentage" resulting from a change in the composition of the units comprising the Authority Units permitted by Article II hereof shall become effective for the MPHA Fiscal Year following the year in which such changes occur. D:',MI'41g I ~ l ~ $~OAGR. DOC ~ R.EGULATORY .~.h'D OPF. R.AT'I:NG AGRE.F_-M~NT LiPHA. N.'.'.~W HOPE EDA~ BASS LA.K~ ToWNHOM~$ (c) "Authority Unit Expenses" shall mean (i) Allowed Development Expenses, multiplied by the Authority Percentage, plus (ii) the portion of any payment in lieu of real estate taxes to be paid in respect of the Authority Units, if any, made by the Owner and not directly by the Authority, plus (iii) amounts payable to Authority Unit occupants as utility reimbursement (i.e., "negative rent"); provided, however, that if any line item expense shall be included in Estimated Authority Unit Expenses on the basis of a percentage other than the Authority Percentage pursuant to the second sentence of Section 4.2(a) hereof, such expense shall be included in Authority Unit Expenses on the basis of the same percentage; Uniis,(d) "Authority Unit Income" shall mean all income received in respect of Authority including tenant rents ("Tenant Kent" as defined in 24 CFR 913.102) and any other sources of income anticipated in respect of Authority Units, including all types of revenue shown as line items on Form HUD 92547-A, b'ut exclusive of operating subsidy. (e) "Estimated Allowed Development Expenses," "Estimated Authority Unit Expenses," and "Estimated Authority Unit Income" shall mean the estimated amounts of such items for any period determined in accordance with Section 4.2 hereof'. Section 4.2. Operating Budget Submittals. Not later than 90 days prior to the anticipated date of first availability for occupancy of any unit of the Development, and not later than the first day of ~'une preceding any subsequent MPHA Fiscal Year, the Owner shall submit to the MPHA its proposed Operating Budget for the following MPHA Fiscal Year (or, in the case of the year in which first availability for occupancy occurs, the remainder thereof). The Operating Budget shall project Estimated AlloWed Development Expenses, Estimated Authority Unit Expenses, and Estimated Authority Unit Income for the Subject period, subject to the 'following conditions: (a) Estimated Allowed Development Expenses shall be reasonably within industry standards for similar housing type, materials and location. The MPHA may comment upon and propose changes to the Estimated Allowed Development Expenses set forth in the Operating Budget submitted by the Owner, but the Owner shall not be required to reduce any estimated expense below industry standards for such expenditure reasonably anticipated by the Owner for the period provided, however: (i) the portion of any line item within the Estimated Allowed Development Expenses including in Estimated Authority Unit Expenses shall be altered fi.om the Authority Percentage if either the MPHA or the Owner demonstrates satisfactorily that allocation of such item: to the Authority Units on the basis of the Authority Percentage is inappropriate (e.g., marketing and ad~ertising costs, if such relate solely or preponderantly to the Tax Credit Units); and (ii) if the MPHA and Owner disagree about whether the Estimated Allowed Development Expenses, or any line-item therein, are consistent with industry standards, the Owner's estimate shall be utilized for budget purposes, but the MPHA - may institute the dispute resolution procedures described in Exhibit B hereto. Co) For the period in which first occupancy of the Development is anticipated to occur, Estimated Authority Unit Income shall be determined on the basis of assumed tenant D A,%,~'N ~'N 12~01 TDOC$~R~OAGR. DOC l 0 R~G~'LATOR¥ AND OPF~,ATTN~ I~ff~HA. NEW HOPE FDA. BASS LAKE TO~N'HOM~$ rent collections for each unit size equal to the average tenant rent collections for all units of comparable size owned and administered by the MPHA in the most recent annual or semiannual period for which such statistics are available at the time of Owner's submission of the Operating Budget for such period to the NfPI--L&.. For each subsequent MI'HA Fiscal Year, Estimated Authority Unit Income shall be determined on the basis of the aggregate tenant rents actually collected for all Authority Units during the first nine months of the preceding N'fPHA Fiscal Year. Notwithstanding the foregoing,'with respect to any MPHA Fiscal Year, Owner and the MMHA may agree to project Estimated Authority Unit Income at a level different from that which would otherwise be established pursuant to the preceding sentence, taking into account (i) the reasonably anticipated level of incomes of tenants anticipated to be admitted to the Authority Units during such period, based on anticipated turnover and the admissions policies referenced in Section 3.5 hereof, and (ii) reasonably anticipated increases in income levels of existing tenants based on tenant participation in employment training and other supportive services programs. Section 4.3. payrnent of Operating Subsidy. (A) Between the date upon which the Authority Units are substantially complete and available for occupancy, as described in Section 3.4(c) of the Housing Agreement, and the date upon which ninety-five percent (95%) of the Authority Units become first occupied, the MPHA shall pay operating costs of the Authority Units from the Initial Operating Deficit line item of the Development budget. During such period, all rental income received by the Owner from the Authority Units shall be delivered to the MPHA for deposit in said Initial Operating Deficit account. (B) During each MPHA Fiscal Year at, er the end of the Initial Operating Period, the MPHA shall pay to the Owner a Development Operating Subsidy equal to the lesser of(a) (i) Estimated Authority Unit Expenses for such period less (ii) Estimated Authority Unit Income for the period or Co) the Development Operating Subsidy Cap (such amount with respect to any period being referred to herein as the "Development Operating Subsidy Requirement"). The M2PHA shall pay to Owner, on the first day of each month of an MPHA Fiscal Year, oneitwelf~h (1/12) of the Development Operating Subsidy Requirement for such MI'HA Fiscal Year; provided, however, that Owner and the NfPHA may agree, upon determination of the Operating Budget and Development Operating Subsidy Requirement for any MPHA Fiscal Year, to provide for lump sum or unequal monthly payments for such year. Section 4.4. Development Operating Subsidy Cap. The Development Operating Subsidy Cap shall be determined annually as follows: (a) On or before September 15 of each year the lVfPHA shall determine, in accordance with its budget submittals to HUD (i) th~ total number of available public housing units which are then subject to the ACC, (ii)'~he distribution of such units by number of bedrooms and (iii) the total Operating Subsidy for such units approved by HUD for the following lVfPHA Fiscal Year, exclusive of that portion of the Operating Subsidy allocable to accounting costs. (b) The MPHA shall multiply the number of units of each bedroom size by the number of rooms per unit using the following Minnesota Housing Finance Agency table of rooms per unit and add the products for each bedroom size in order to calculate (i) the total ID:'~h-N'NI2$"017~IXX2S~OAOR'I;X~ 1 I RtiOUI. ATORY AND OPF. RA'rlNO AGR.F..F.M~NT MPI4.& N~_W HOP£ F. JDA. BAgS ~ TOWNHOMES number of rooms existing' in the MPHA inventory and (ii) the total number_of rooms in the Authority Units: Unit .Size Rooms per Unit 0 3,5 1 3.5 2 4.5 3 6.0 4 7.0 (c) The MPHA shall divide the total Operating Subsidy approved by HUD for the following MPHA Fiscal Year by the total number of rooms determined under Section 4.4(b)(i) hereof to determine an average subsidy per room per year for all MPHA units. (d) The MPHA shall multiply the average subsidy per room determined under Section 4.4(c) times the number of rooms in the~Authority Units determined under Section 4.4 (b)(ii) which shall constitute the Development Operating Subsidy Cap for the following MPHA Fiscal Year. (e) On or before December 15 of each year the NfPHA shall submit to HUD its post-year audit with respect to the preceding MPHA FisCal Year. On or before February 1 of each succeeding year the MPHA shall take into account all HUD-approved post-year adjustments in MPHA Operating Subsidy and shall recalculate the Development Operating Subsidy Cap pursuant to Section 4.4 above (the "Recalculated Development Operating Subsidy Cap"). The calculations required by this Section 4.4 shall be made on the form attached hereto as Exhibit C and shall be mailed to the Owner and the EDA on or before October 1, the beginning of the lV[PHA Fiscal Year. Section 4.5. Se~egated Account. All payments of Development Operating Subsidy received from the MPHA, plus all payments, if any, made to Owner from the Development Operating Subsidy Reserve (as hereinafter defined), shall be deposited by Owner in a Development-wide operating account maintained, so long as the MI-~A Regulatory Agreement is in effect, as required by the lVII-IFA Regulatory Agreement, and subsequent thereto, in a financial institution whose deposits are insured by an agency of the Federal Government; provided, however, that at all times the funds shall be invested in a manner consistent with bftnnesota Statues, Section 469.12, Subdivision 1, paragraph 16. Owner shall also cause all receipts in respect of Development units, including tenant rents and other revenues (but exclUsive of tenant security deposits), to be deposited into the Development-wide operating account and shall make all Allowed Development Expenses disbursements therefrom. Section 4.6. Mgnthly Operating Reports. Monthly operating budget and expense reports shall be prepared on forms supplied by the MPHA and submitted by the .Owner to the MPHA on or before the twentieth (20th) of each calendar month showing activity for the previous month. Not later than 60 days .after the end of each successive quarterly period commencing with the r~-,~,fl, m'l ~,.01?~xx:sm,~o^o~tl:XX2 1 2 calendar quarter in which first oCcupancy of the Development occurs, Owner shall deliver to the Authorities, separately with respect to the Authority Units and with respect to the Development (including the Authority Units), itemized statements of income and expenses, prepared on an accrual basis, in form substantially comparable to Form HUD-92410 (Statement of Profit and Loss), certified by the chief financial officer of the Managing General Partner of Owner, for the quarterly period and from the be,ginning of the Development fiscal Year to the end of such quarterly period. Section 4.7. Audited Financials and Supplemental Data. Not later than March 1 of ea6h year, Owner shall deliver to the Authorities a copy of the audited financial statements of Owner for such year and the period then ended, prepared in accordance with generally accepted accounting principles and accompanied by the report of independent public accountants thereon, together with a copy of any additional financial statements or reports delivered by Owner to its partners. Such financial statement shall be accompanied by supplemental data, together with the report of independent public accountants thereon, which shall show on a-cash basis for such period (a) actual income from the Authority Units, (b) actual expenditures for Authority Unit Expenses, (c) the amount of Development Operating Subsidy received by Owner, showing separately amounts received from the Authorities and amounts withdrawn from the Development Operating Subsidy Reserve, (d) the balance of the Development Operating Subsidy Reserve at the end of the period, and (e) aggregate stated lease rents and the amounts thereof uncollected from Authority Units for which no eviction actions have been commenced ("Supplemental Data"). If Owner shall fail to deliver such financial statements and Supplemental Data to the Authorities, the Authorities shall have the fight to retain an independent auditor to conduct an audit of the financial statements of the Owner and to charge the reasonable cost thereof to the Owner. Section 4.8. Post-Year Adjustments. If the Supplemental Data provided pursuant to Section 4.7 above shall show that the sum of the amounts described in clauses (a) and (c) of Section 4.7 shall exceed the amount described in clause (b) thereof, the Owner shall immediately forward the amount of such excess 'to the Public Account of the Development Operating Subsidy Reserve. If the Supplemental Data shall show that the sum of the amounts described in clauses (a) and (c) shall be less than the amount described in clause (b), the MI)HA shall immediately reimburse the Owner for the amount of such deficit, provided that total Development Operating Subsidy payable by the Mt)HA for such preceding year shall not exceed the Recalculated Development Operating Subsidy Cap. If the Supplemental Data shall show that the amount described in clause (a) alone shall exceed the amount described in clause (b), the excess shall be deposited immediately by the Owner in the Public Account in the Development. Operating Subsidy Reserve. Section 4.9. Vacancy Adjustment. Separately and ind"pendently from the reconciliation provided for under Section 4.8 above, the Owner shall contribute to the Development Operating Subsidy Reserve, not later than March 1 of each year, the amount, if any, of Development Operating Subsidy received by Owner during such period attributable to any Authority Unit for a period in which such Authority Unit was vacant for more than 90 days, provided that such period of vacancy shall not be attributable to any action or omission by the Authorities. For purposes of this provision: I~EGL,rLATOR¥ AND OPFmR.A'["I2'40 AGENT NEW HO~)£ .r~.D& B.a.S LAK~ TO~rNIqOIO~S (a) an Authority Unit shall be deemed vacant 0) commencing on the first day for which rent is not charged for the unit following termination or expiration of its occupancy as an Authority Unit, and (ii) ending 'on the day preceding the first day for which rent is charged for such unit based on re-occupancy as an Authority Unit, or the first day for which rent is charged for occupancy as an Authority Unit of a different unit which was not previously occupied as an Authority Unit, whichever shall first occur; and (b) the amount of Development Operating Subsidy attributable to a unit for a period in which such unit was vacant more than ninety (90) days shall be determined by multiplying the amount of Development Operating Subsidy received by Owner during such year, as reported pursuant to Section 4.3 above, by the product of (x) the net rentable square feet of _ such unit, divided by the net rentable square feet of all Authority Units (including such vacant unit), multiplied by (y) the number of days in excess of ninety (90) during which such unit is Vacant, divided by 365. Section 4.10. Incidental Development Income. Separately 'and independently fi.om the reconciliation provided for under Section 4.8 above, the Owner shall contribute to the Public Account of the Development Operating Subsidy Reserve, not later than March I of each year, 12/74 of all incidental income derived from the operation of the Development to the extent it is derived from charges applied to both Authority Units and Tax Credit Units. Incidental income shall include, but not be limited to (I) vending and laundry machine income and (2) income received fi.om rental of parking spaces, garage spaces and commercial space. Section 4.11. Future Legislation. Subject to remedies provided in Article VI hereof, nothing contained herein shall prevent or diminish the full application to the Authority Units of any legislation enacted after the date hereof which provides for the termination of operating subsidies under Section 9 of the Act or of other Federal project-based assistance to public housing developments, including, without limitation, any provision thereof releasing or .otherwise modifying occupancy or tenant rent restrictions previously applicable to units in such developments. D:'qvlI, INI 2&01'gDi3C..~,R~OAGR. DOC 14 R.1B3ULATORY AND OPF~RATI140 AGR.F.,F. MI/IqT MPI4.& ~h'I/W HOPI/F.,DA. B,-~$ LAKI! TOWNHOMI/;~ ARTICLE V Development Operating Subsidy Reserve Section 5.'1. Establishment of Reserve and Accounts. Pr/or to initial occupancy of each Authority Unit, the Owner will establish a separate trust account known as the "Development Operating Subsidy Reserve"), consisting of two separate accounts in a financial institution chosen by the Owner and acceptable to the NfPHA whose deposits are insured by an agency of the Federal Government (the "Escrow Agent"). For so long as the Nfl-IFA Regulatory Agreement remains in effect, the Development Operating Subsidy Reserve shall remain on deposit with MHFA pursuant to the MI-IFA Regulatory Agreement Government; provided, however, that.at all- times the funds shall be invested in a manner consistent with Minnesota Statues, Section 469.12, Subdivision 1, paragraph 16. One account shall be designated the "Owner Account" and the Owner shall deposit therein an amount not less than $5,940 for each Authority Unit (the "Initial Owner Deposit"), which represents an amount equal to three times the estimated annualized amount of the Development Operating Subsidy Requirement determined pursuant to Article IV hereof with respect to the MPHA Fiscal Year in which first occupancy of the Development occurs. Additional deposits to the Development Operating Reserve by the Owner shall be deposited and maintained as provided herein. All funds in the Owner's Account shall remain funds of the Owner, but shall be held in trust by the Escrow. Agent, and shall be held and applied in accordance with the terms and conditions hereof. All deposits to the Development Operating Subsidy Reserve made by any public entity, except as otherufise provided herein, shall be deposited in an account known as the "Public Account," shall remain the funds of the entity making such contributions and shall be held and applied in accordance with the terms and conditions hereof. Interest earnings in the Development. Operating Reserve shall be allocated to the Owner's Account and Public Account in accordance with their respective balances. When a withdrawal is authorized or required by the terms of this Agreement, such withdrawal shall be made first from the Public Account and then, if the Public Account has been exhausted, from the Owner Account. Section 5.2. Investme,nt~. The Escrow Agent shall be directed by the Owner to invest and re-invest funds held in the Development Operating Subsidy Reserve in investments permitted for the general funds of the MPHA, except that during the period that the MHFA Regulatory Agreement remains outstanding, th-~ investment shall be pursuant to the terms of the MI-IFA Regulatory Agreement Government; provided, however, that at all times the funds shall be invested in a manner consistent with Minnesota Statues, Section 469.12, Subdivision 1, paragraph 16. Income from investments shall be retained in the Development Operating Subsidy Reserve and shall be deemed part thereof. Section 5.3. Floor Level Adjustments. As used hereinaiSer, the term "Floor Level" shall mean, initially, the amount required by Section 5. l to be held in the Development Operating Subsidy Reserve as of the date of first occupancy of each public housing unit. The "Floor Level" amount shall be adjusted annually, following delivery of the annual financial statements furnished pursuant to Section 4.7 hereof, to an amount equal to three times the difference between actual annual Authority. Unit Income and actual annual Authority Unit Expenses as shown in such financial statements. The MPHA and the Owner shall jointly give notice to the Escrow Agent of R.~G~,'L.ATOR Y A.'~,'D OPF~LAI'IlqG. AOR.F..gkM~NT HOPE ~A. ~ASS ~ TOWlqHOMF~ adjustments in the Floor Level as promptly and practicable following the calculation of such adjustments. Section 5.4. Voluntau Replenis. hment of Reserve. If at any time the amount in the Development Operating Subsidy Reserve shall be below the Floor Level as a consequence of either (a) adjustment to the Floor Level. pursuant to Section 5.3 or (b) payments authorized to be made therefrom pursuant to this Agreement, the Escrow Agent shall notify the M2PHA, the EDA and the Owner in writing of such fact and of the amount of such deficit (the "Upper Floor Level Shortfall"). Within ninety (90) days following' receipt of such notice, the MPHA andYor the EDA may, but shall not be obligated to pay to the Escrow Agent, for deposit into the Development Operating Subsidy Reserve, from any funds legally available therefor (which may include Operating Subsidy or other public housing or nonpublic housing funds) the amount of the Upper Floor Level Shortfall. To the extent such deposit (a) replaces funds previously withdrawn from the Owner's Account of the Development Operating Subsidy Reserve and not previously replaced and (b) do not cause the Floor Level of the Development Operating Subsidy Reserve to be exceeded, such deposit shall be credited to the Owner's Account. To the ex'tent Such deposit (a) is in excess of funds previously withdrawn from the Owner's Account of the Development Operating Subsidy Reserve and not previously replaced or (b) causes the Floor Level of the Development Operating Reserve to be exceeded, such deposit shall be credited to the Public Account of the Development Operating Subsidy Reserve. Section 5.5. Owner Surplus Cash Contribution. (a) If at any time the amount in the Development Operating Subsidy Reserve shall fall below seventy-five percent (75%) of the Floor Level, the Escrow Agent shall (a) notify the MPHA, the EDA and the Owner in writing of such fact, and (b) five (5) days before the end of the next following Development Fiscal Year notify the MI>HA, the EDA and the Owner in writing of the amount by which the then balance of the Development Operating Subsidy Reserve is less than seventy-five percent (75%) of its Floor Level (the "Mid Floor Level Shortfall"). At the end of such next following Development Fiscal Year the Owner shall deposit into the'Owner's Account of the Development Operating Subsidy Reserve the lesser of (i) the amount of the Mid Floor Level Shortfall or (ii) fifty percent (50%) of the surplus cash from the Development. For purposes of this Section 5.5, "surplus cash" shall mean funds available for distribution to those having a beneficial interest in the development pursuant to Section 9 of the MH~A Regulatory Agreement. (b) There shall be deducted from any amount payable' by the Owner pursuant to Section 5.5(a), with respect to the applicable DevelopmeOt Fiscal Year, an amount equal to the difference between (i) the rental income received by the Owner from a Development unit occupied by a tenant with a Section 8 certificate by operation of Section 6.4(c), and (ii) the rental income which would have been received by the Owner from such Development unit without the operation of Section 6.4(c). Section 5.6. UtilizatiOn of Reserve. If (a) by the tenth day of any month (i) the IV[PI-IA shall not have paid' to Owner the full amount of the scheduled installment of the Development Operating Subsidy Requirement due for such month or (ii) the amount of Development Operating Subsidy paid by the M~PHA is less than the amount by which the Estimated Authority Unit ~f~H.~ N'~w ~oe£ rr.o& ~A~S ~ TOW~O~a~S Expenses for such period exceed the Estimated Authority Unit Income for such period or (b) the MPHA shall not have fully reimbursed the Owner for the amount of the actual deficit described in the second sentence of Section 4.8 hereof, the Owner shall be, authorized to request a disbursement in the amount of the deficiency from the Development Operating Subsidy Reserve. The Escrow Agent shall make such disbursement upon receipt of a certification from the Owner as to the failure of the MPHA to fulfill the conditions described in subc[auses (a) and (b) of this Section 5,6 and shall immediately noti~ the MPHA of the amount of the withdrawal from and balance in the Development Operating Subsidy Reserve. D:k-MNNI ~ 17',DOC $',R&OAOI~DCC 17 ~OU~,TO~ Y *.~ O~.'m'~O ^m,,m~ ~PHA. 1,mW HOPZ rr..D A. BaSS na~ ro~O~ ARTICLE VI OWner Remedies Section 6.1. Limited Owner Obligation. It is of the essence of this Agreement that during the term of the ACc, Owner will maintain and operate the number and type of dwelling units in the Development stated in Article II hereof as public housing units in accordance with all applicable requirements of the Act, the Consent Decree, and the ACC; provided, however, that if Authority Unit Income, plus any form of governmental operating or rental assistance received in respect of the Authority Units (including, without limitation, withdrawals from the Development Operating Subsidy Reserve or other contributions by the Authorities) shall be less than Authority Unit Expenses, the Owner shall at no time be required to contribute, from its own funds (except as set forth in Section 5.5) toward Authority Unit Expenses in order to preserve the character of the number of units stated in Article II as public housing units. Section 6.2. Relationship to. Separate Agreements. The obligations of the Owner with respect to the Authority Units are separate from other obligations which may arise under the Development Agreement or as a result of some or all of the other units in the Development being Tax Credit Units. Accordingly, Owner remedies provided herein are not intended to diminish or otherwise effect such other obligations. Section 6.3. Remedies When Vacancy. If at the time ora vacancy in an Authority Unit the balance of the Development Operating Subsidy Reserve is determined to be less than its Floor Level, the Owner shall notify the MPHA and HUD of such fact and, if the last Supplemental Data delivered to the MPHA pursuant to Section 4.7 is more than one-hundred eighty (180) days old, shall deliver to the MPHA and HUD with such notice Supplemental Data updated through the last month end. Within ten (10) days of receipt of such notice, the Owner, the EDA, the MPHA and HUD shall confer regarding the course of action to pursue with respect to the Authority Units. The MPHA shall, within thirty (30) days of receipt of such notice (the "Section 6.3 Option Date"), exercise one or more of the following options: (a) Replenish the Development Operating Subsidy Reserve to its Floor Level. To the extent such a deposit (a) replaces funds previously withdrawn from the Owner's Account of the Development Operating Subsidy Reserve and not previously replaced and (b) does not cause the Floor Level of the Development Operating Subsidy Reserve to be exceeded, such deposit shall be credited to the Owner's Account. To the extent such deposit (a) is in excess of funds previously withdrawn from the Owner's Account of the Development Operating Subsidy Reserve and not previously replaced or...~(b) causes the Floor Level of the Development Operating Reserve to be exceeded, such depdsit shall be credited to the Public Account of the Development Operating Subsidy Reserve; (b) Agree to and provide such Operating Subsidy in excess of the Development Operating Subsidy Cap necessary to assure the Owner that no further withdrawals from the Operating Reserve will be required; (c) Authorize the Owner to select a qualified public housing applicant for such vacant Authority Unit with income sufficient to afford rent in an amount which will pi'event RJ/G[,%ATORY A.,'qD OPERAI"[~q'O AGRE.EMERT D: ~MZ'~2q 12.,~1 '/'xI~$xR~:OAGR. 1202 18 ~,~ N~w HOPE ED& I~,-~ ~ Tow~lo~$ the Authority Unit Expense from exceeding the Authority Unit Income (including Development Operating Subsidy). Such selection shall first be attempted within the priorities established by the Consent Decree and other waiting list criteria; provided that if such a tenant cannot be so identified or'selected, the Owner shall be authorized to select such a tenant notwithstanding Consent Decree priorities, other waiting list criteria or percentage of family income required to meet said rental obligation; (d) Notify the Owner of such other option agreed upon by the MPHA and HUD as will reasonably assure the Owner that sufficient funds will be received with respect to the Authority Units so that further withdrawal from the Development Operating Subsidy Reserve Fund will be avoided. Section 6.4. Remedies When No Vacancy. If the balance of the Development Operating Subsidy Reserve is determined to be less then fifty percent (50%) of the Floor Level and no vacancy in Authority Units exists, the Owner shall notify the MPHA and HUD of such fact and, if the last Supplemental Data delivered to the MPHA pursuant to Section 4.7 is more than one- hundred eighty (180) days old, shall deliver to the MPHA and HUD with such notice Supplemental Data updated through the last month end. Within ten (10) days of receipt of such notice, the Owner, the EDA, the MPHA and HUD shall confer regarding the course of action to pursue with respect to the Authority Units. The MPHA shall, within thirty (30) days of receipt of such notice (the "Section 6.4 Option Date"), exercise one or more of the following options: (a) Replenish the Development Operating Subsidy Reserve so that it remains above the seventy-five percent (75%) of its Floor Level, To the extent such a deposit (a) replaces funds previously withdrawn from the Owner's Account of the Development Operating Subsidy Reserve and not previously replaced and (b) does not cause the Floor Level of the Development Operating Subsidy Reserve to be exceeded, such deposit shall be credited to the Owner's Account. To the extent such deposit (a) is in excess of funds previously withdrawn from the Owner's Account of the DeVelopment Operating Subsidy Reserve and not previously replaced or (b) causes the Floor Level of the Development Operating Reserve to' be exceeded, such deposit shall be credited .to the Public Account of the Development Operating Subsidy Reserve; Co) Agree to and provide such Operating Subsidy in excess of the Development Operating Subsidy Cap necessary to assure the Owner that no further withdrawals from the Operating: Reserve will be required; (c) Notify the Owner that the MPHA intends tOk.make available to the tenants of a specified number of Authority Units (not to exceed five, in the aggregate, at any time) Section 8 certificates, whereupon the Owner shall agree not to exercise the remedy provided by Section 6.4(e) but shall continue to operate the Authority Units, drawing upon the Development Operating Subsidy Reserve as necessary, until vacancies occur in reasonably comparable Tax Credit Units. As such vacancies occur, (i) the Owner shall convert the vacant non Authority Unit to an Authority Unit ("Converted Authority Unit"), which Converted' Authority Unit shall replace an existing Authority Unit ("Replaced Authority Unit"), (ii) the Replaced Authority Unit shall be converted to a Section 8 unit, .(iii) the MPHA shall provide the existing tenant of the Replaced Authority Unit with a Section 8 D: ~.,f~'q'N ! 25xo [ 7~XZ)C 5"~.~..O AG ~,..]~(X: ]. ~ R.F..OL~.a~TORY AND OPF. im. ATINO AORF...F.M~NT MPHA..~;w HOF~ F.~A. BA~ LA~ TOWNHOME~ certificate, (iv) the Owner shall lease the Replaced Authority Unit to the existing tenant thereof at the Fair Market Rent and (v) the Owner shall lease the Converted Authority Unit pursuant to Section 6.3(c); (d) Notify the Owner of such other option agreed upon by the MPHA and HUD as will reasonably assure the Owner that sufficient funds u'ill be received with respect to the Authority Units so that further withdrawal from the Development Operating Subsidy Reserve Fund will be avoided; or · (e) If in the sole judgment of the MPHA no other remedy contemplated by this Section 6.4 is reasonably available to prevent the Authority Unit Expenses from exceeding the Authority Unit Income (plus available Development Operating Subsidy), notify the Owner that it may elect not to renew_ existing Authority Unit leases at the end of their then current term, beginning with the Incentive Authority Units, and relet such Authority Units in accordance with the provisions of Section 6.3(c). Authority Unit tenants whose leases are not renewed pursuant to this provision shall be given not less than sixty (60) days' advance written notice to vacate by Owner. In such event, the bfPHA shall make all reasonable effort to relocate such tenant to another public housing unit owned by the MPHA. Such effort shall include: (i) making up to two (2) offers of the first available and suitable M~PHA units to such tenant, without regard to Consent Decree or other waiting list priorities or criteria. The MPHA shall use its best efforts to provide such tenant with thirty (30) days' written notice of the availability of a suitably sized unit. Such tenant's written response to such notice must be received by the MPHA within five (5) days of receipt. If such tenant rejects the first unit offered, the M~HA shall again offer the next available, suitably sized unit to such tenant and such tenant shall have five (5) days of receipt of such second notice to deliver to the MPHA written acceptance of such offer. Rejection of said second offer or failure to respond to an MPHA notice shall relieve the MPHA of any further best efforts obligation; and (ii) offering such tenant a Section 8 certificate, if one is available to the Section 6.5. MPHA Failure to Elect. Failure by the-MPHA to notify the Owner of the selection of an option described in Section 6.3 on or before the Section 6.3 option Date shall constitute MPHA approval of the option described in Section 6.3(c). Failure by the MPHA to notify the Owner of the selection of an option described in Section 6.4 on or before the Section 6.4 Option Date shall constitute MPHA approval of the option described in Section 6.4(e). ARTICLE VII Non-Discrimination and Other Federal Requirements Section 7.1. Non-Discrimination and .Other Federal Requirements. Owner will comply with all applicable requirements of the following, as the same may be amended fi-om time to time: (a) The Fair Housing Act, 42 U.S.C. 3601-19, and regulations issued thereunder, 24 CFR Part 100; Executive Order 1 I063 (Equal Opportunity in Housing) and regulations issued thereunder, 24 CFR Part 107; the fair housing poster regulations, 24 CFR Part 110, and'advertising guidelines, 24 CFR Part 109. (b) Title VI of' the Civil Rights Act of 1964, 42 U'.S.C. 2000d, and regulations issued thereunder relating to nondiscrimination in housing, 24 CFR Part 1. (c) Age Discrimination Act of 1975, "42 U.S.C. 6101-07, and regulations issued thereunder, 24 CFR. Part 146. (d) Section 504 of the Rehabilitation Act of 1973, 29 U.S.C. 794, and regulations issued thereunder, 24 Part 8; the Americans with Disabilities Act, 42 U.S.C. 12181-89, and. regulations issued thereunder, 28 CFR Part 361 (e)~ Section 3 of the Housing and Urban Development Act of 1968, 12 U.S.C. 1701u, and its implementing regulations at 24 CFR Part 135. ARTICLE Owner Default Section 8.1. Defined. A default by Owher under this Agreement shall occur if (a) Owner violates, breaches, or fails to comply with any provision of, or obligation under, this Agreement (including, without limitation, by reason of its violation, breach, or failure to comply with any governing law, regulation, or agreement referenced in Section 3.1 hereof); or (b) Owner asserts or demonstrates an intention to violate, breach or fail to comply with any such provision or obligation. A default by owner which is attributable to an action or omission, or assertion or demonstration of an intended action or omission, of the Managing Agent shall be deemed a. default by Owner for purposes of this Article. Section 8.2. Notification. Upon a determination by the Authorities that a default by Owner has occurred, the Authorities shall notify Owner of (a) the nature of the default, (b) the actions required to be taken by Owner to cure the default, and (c) the time within which Owner shall respond with a showing that all required actions have been taken, which period of time shall be not less than that reasonably necessary to affect a cure. If the default or alleged default is attributable to the Managing Agent, the Authorities shall .give a copy of such notice to the Managing Agent. Section 8.3. MPHA Remedies. If Owner (or, as applicable, the Managing Agent) fails to respond or take corrective action to the satisfaction of the Authorities, the Authorities shall have the right to (a) Withhold further operating subsidy payments until such time such corrective action is taken. All operating subsidy payments so withheld shall be forfeited by the Owner and retained by the MPHA and such withholding and forfeiture shall not constitute an event of default with respect to any agreement between the Owner and the MPHA which would excuse the continued operation of the MHOP Units as public housing units in accordance with the ACC and Declaration of Restrictive Covenants. (b) Exercise any remedy available to it by reason of the nature of such default under and in accordance with the terms of this Agreement, the Housing Agreement or the ACC, to institute the dispute resolution procedure set forth in Exhibit B hereto, or to seek appropriate relief in any court having jurisdiction, including but not limited to specific performance or injunctive relief. D:,~,r~ m,ot mx:s,a.~oAo~.mx: 22 R..~.GI.,'LATGit. Y AlqD OPF..R~T'L'"qO AGR.F~.MI~'N'T Mt~H.-~..',,'I~W HOPE F,.D& I~ASS ~ TOWlCI-tOMIi$ ARTICLE IX Disclaimer of Relationships Section 9.1. No Assignment of ACC. The Authorities and Owner acknowledge that any transfer of public housing development grant funds by the MPHA to Owner shall not be or be deemed to be an assignment of grant funds, and Owner shall not succeed to any fights or benefits of the MPHA under the ACC, or attain any privileges, authority, interests, or rights in or under the ACC. Sectio~t 9.2. NO Third Party Beneficiary~-. Nothing. contained in-the ACC or in any agreement between the Authorities and Owner, nor any act of HUI~- or the Authofities~ shall be deemed oF construed to creat~ any relationship of third-party beneflcia~ pfinzip~ and~: agent~: limited or generat~ partnershiP~ jo~it venture, or any ass~ciatio~-or.- .' _ _ ._ ~. betw~ea~.aral~-t_I~_~.:as, pro'tided tmd~: y:._. __ '.:.~ _~ ~-:~.~:"~- '_ -- : ~ ' ¥;"-iY~---'- .... -'; '~ ~ ~-£9~--_: -_;~4~.~~ f~:k;- = ___~'~~. --~-~" --~:.-~ MPlt~ N~W HO~ ~.DA. BASS I. AI~ TO~S ARTICLE X bliscellaneous Section 10.1. Binding Obligation. This Agreement shall continue in full force and effect during the entire term of the ACC, or for such shorter period during wi'rich the Authority Units shall be required by law or by the ACC to be set aside, and maintained and operated, as public housing. Through the recording of a Declaration of Restrictive Covenants, the obligations and restrictions contained herein shall run with the land and bind all future owners and encumbrancers thereof. Section 10.2. Assignment. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of each of the parties; provided, however, that Owner may not assign its interest in the Agreement without the prior written consent of the Authorities and HUD, which shall not unreasonably be withheld. The Authorities shall have the right to assign their interests in this Agreement, including the right of the M~HA to assign its interest in the ACC, without the consent of the Owner. Section 10.3. No Waiver~ No delay or omission by either party in exercising any right or remedy available hereunder shall impair any such right or remedy or constitute a waiver thereof in the event of any subsequent occasion giving rise to such right or availability of remedy, whether ora similar or dissimilar nature. Section 10.4. Amendment. This Agreement may not be amended except by an instrument in writing signed on behalf&each of the parties and approved by HUD. Section 10.5. Notice. Any notice or other communication given or made pursuant to this Agreement shall be in writing and shall be deemed given if (a) delivered personally or by courier, (b) telecopied, (c) sent by overnight express delivery, or (d). mailed by registered or certified mail (return receipt requested), postage prepaid, to a party at its respective address set forth below (or at such other address as.shall be specified by the party by like notice given to the other party): To the MPHA: Minneapolis Public Housing Authority in and for the City of Minneapolis 1001 North Washington Avenue , Minneapolis, Minnesota 55401 Attention: Executive Director To the EDA: Economic Development Authority in and for the City of New Hope 4401 Xylon Avenue North New Hope, Minnesota 55428-4898 Attention: Executive Director D:'~.glqN125'~ I'J'~X~C;~q~.OAGI~.I~K~C . 24 ltJiGIJI,.ATORY AlqD OPF..R,.A'I"I!qO M~H.A. lq'E,W HOl~g El)A, BA.q$ LAKE To the Owner: Bass Lake Townhomes Limited Partnership 2516 Chicago Avenue South Minneapolis, Minnesota 55404 Attention: Steve Cramer All such notices and other communications shall be deemed given on the date of personal or local courier delivery, telecopy transmission, deliver7 to overnight courier or express delivery service, or deposit in the United States Mail, and shall be deemed to have been received (a) in the case of personal or local courier delivery, on the date of such delivery, (b) in the case oftelecopy, upon receipt of electronic confirmation thereof, (c) in the case of delivery by overnight courier or express delivery service, on the date following dispatch, and (d) in.the case of mailing, on the date specified in the return receipt therefor. Section 10.6. Law Governing. This Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota applicable to contracts made and to be performed therein. Section 10.7. Severability. If any provision of this Agreement is declared void or otherwise unenforceable, that provision shall be deemed to have been severed from this Agreement and the remainder of this Agreement shall otherwise remain in full force and effect. Section 10.8. Headings and Titles. Any titles or headings 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. D:XlO~'lq 12S~ 17q:)OC$'4qAOAGR. BOC 2 5 REGULATORY AND OPE~q. ATL~O AGR, E~,MF,.NT ~ NI/W NC)Pt/F. DA. BASS ~ TOWlqHOMI/S IN WITNESS WItEREOF, the parties have executed this Agreement as of the date first written above. blINNEAPOLIS PUBLIC HOUSING AUTHORITY IN AND FOR THE C~Y OF bllN'NEAPOLIS By: Richard Brustad Its Chairman And by: Cora McCorvey Its Executive Director STATE OF MINNESOTA COUNTY OF On this ~ day of , 19 , before me, a notary public, personally appeared Richard Bmstad and Cora McCorvey, the Chairman and Executive Director, respectively, of the Minneapolis Public Housing Authority in and for the City of Minneapolis, a public body corporate and politic under the laws of the State of Minnesota (the "MPHA"), named in the foregoing instrumem and acknowledged said instrument on behalf of the MPHA. Notary Public D: ,M!'4N 12_o,01 '/'qZK~ $',P,.&. O AGR. IiX~ R.IiGUI..ATO~.Y A.',,'D OPF. R.AT'INO MI:II.& NF..W HOPF.. F~DA, BASS LAK~ TOWNI..IOM~$ ECONOM'IC DEVELOPM~ENT AUTHORITY IN AND FOR THE CITY OF NEW HOPE By: Its: And by Its STATE OF MINNESOTA ) COUNTY oF ,) On this ~ day of , 19 , before me, a notary public, personally appeared and , the and .. , respectively, of the Economic Development Authority in and for the City of New Hope, a public body corporate and politic under the laws of the State of Minnesota (the "ED,A,"), named in the foregoing instrument and acknowiedsed said instrument on behalf of the EDA. Notary Public D:'~d~q'N l~t ~OAOR.I:X:)C R~GULATORY AiqD oPEi~TIIq'O A~ MPHA, l~W HOPE IDA BASS LA~ TOV~'II'IOM~ BASS LAKE TOWNt~OMES LIMITED PARTNERSIqIP BY: PROJECT FOR PRIDE kN LIVING, 12qC. ITS GENERAL PARTNER By: Its: STATE OF MXNNESOTA ) COUNTY OF ) On this day of , 19. , before me, a notary public, personally appeared , the of Project for Pride in Living, Inc., the general partner of Bass Lake Townhomes Limited Partnership, a Minnesota limited partnership, named in the foregoing instrument and acknowledged said instrument on behalf of the partnership. Notary Public D:XMlqN'I 2,q'~ 1 ?,DCC$'dl&OAGR.DOC RIiGIJ[.ATORY A,xlD OPF. R. ATI~'G MPHA. NEW HOI~ ED& BASS LAKJi TOWNI.{OM~S HOUSE~'G DEVELOPbFENT AGREEbFENT THIS AGREEMENT, made this __ day of , 19_ by, between, and among the M~VEAPOLIS PUBLIC HOUSiNG AUTHORITY IN AND FOR THE CITY OF MINNEAPOLIS, a public body corporate and politic under the laWs of the State of Minnesota (hereinafter referred to as the "~HA"), BASS LAKE TOWNI-IO~fES LI~M~ITED PARTNERSHIP, a Minnesota limited partnership (hereinafter referred to as the "Owner"), and the Economic Development Authority in and for the City of New Hope, a public body corporate and politic under the laws of the State of Minnesota (hereinafter referred to as the "EDA"). WITNESSETH: WI--I~REAS, the parties to this Agreement have participated in negotiations concerning a 34-unit multi-family housing facility (the "Development") to be constructed in the City of New Hope, Minnesota; and WHEREAS, the MPHA and the United States Department of Housing and Urban Development ("HUD") are parties to a Mixed-Finance Amendment to Consolidated Annual Contributions Contract dated . .. , 19__ (the "ACC Amendment") pursuant tO which the MPHA has been granted funding for Public Housing Units within Mixed-Finance Developments throughout the Minneapolis-St. Paul metropolitan area; and WHEREAS, the IVIPHA and the EDA have entered into that certain Initial Agreement dated November 19, 1997 for the purpose of seeking the inclusion of Public Housing Units within the Development; and WHEREAS, the parties to this Agreement have proposed to include twelve (12) Public Housing Units within the Development and to fund the development of the twelve (12) Public Housing Units in accordance with the terms and conditions of this Agreement. WHEREAS, the lVI~HA, EDA and the Owner have entered into a Regulatory and Operating Agreement dated , 19_ (the "Regulatory Agreement") providing for the maintenance and operation of the Public Housing Units and the payment of operating subsidy by the lVIPHA. .\ 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: D:kMNN I ?.5~017~X~$~DEVAGR. I~ 1 HOU$11q~ DEVF, LOPM~,"qT AGR.E.EM~ N'r ~fi~H~ ,~I~W HOPE BASS ~ TO~NHO~.n~$ LLMrf?_D PA~I'NF-~I ARTICLE I Definitions Section 1.1. Definitions. In this Agreement, unless a different meaning clearly appears from the context: "-Ac.t" means the United States Housing Act of 1937, as amended. "Authorities" means the MPHA and the EDA collectively. "Agreement" means this Agreement, as the same may be from time to time modified, amended, or supplemented. "ACC" means the Annual Contributions Contract between the MPHA and HUD. "ACC Amendment" means the Mixed-Finance Amendment to Consolidated Annual Contributions Contract between the MPHA and HUD which define the terms of Mixed Finance Developments. "Certified Costs" means the Owner's cost of constructing twelve (12) Public Housing Units, which shall equal (i) the sum of all site acquisition, relocation, demolition, construction and equipment, on-site utilities, non-dwelling facilities, construction period insurance premiums and other costs necessary to develop the Development, (ii) divided by 90 (the number of bedrooms in the Development), (iii) multiplied by 42 (number of Public Housing Unit bedrooms). "City" means the City of New Hope, Minnesota. "ConstruCtion Plans" means the Construction Plans submitted in connection with Article IV of the Contract. "Cooperation Agreement" means the agreement between the MPHA, the .ED& and the County exempting the Public Housing Units from property taxes and providing for payments in lieu of taxes (PILOT). "County" means the County of Hennepin, Minnesota. "Development" means the 34-unit multi-family housing facility to be constructed upon the Development Site, which shall contain twelve (12) Public Housing Units. "Development Cost Budget" means the line item budget approved by the MPHA and HUD for the construction and development of the Public Housing Units. D:',MI~I 1 ~..gDI 7%DOCSXDEVAGR.DOC 2 HOU$INO DEVELOPMENT A(3R.F..E.MENT MPIa, A/NEW HOPE F-DA BA~$ LAKE TOWNI-IOMES LIMITED pART'NEI~I'{I~ "Development Funds" means funds derived by the NIPHA from HUD and to be paid to the Owner for Certified Costs of twelve (12) pUblic Housing Units within the Development. "Development Site" means the property legally described in Exhibit A to this Agreement upon which the Development will be constructed. "EDA" means the EconOmic Development Authority in and £or the City o£New Hope. "Event of Default" means an action by the Parties as provided in Article X of this Agreement. "Fund" means Family Housing Fund. "HUD" means the United States Department of Housing and Urban Development. "Initial Operating Deficit Account" means an account maintained by the M~HA during the Initial Operating Period into which all rental income from the Public Housing Units is deposited and from which expenses of the Public Housing Units are paid. "Initial Operating Period" or "lOP" means the period between (i) the date on which construction of the Public Housing Units is substantially complete and they become available for occupancy, and (ii) the beginning of the next quarter of the MPHA's fiscal year. "Management Agreement" means the agreement between the Owner, the EDA, the MPHA and Project for Pride in Living, Inc., or any approved successor management company, for the management of the Development, including the Public Housing Units. "Mortgage" means that certain first mortgage made by the Owner, as mortgagor, and . Minnesota Housing Finance Agency, as mortgagee, or any successor mortgage which is secured, in whole or in pan, by the Development Site and which is a permitted encumbrance pursuant to Section 9. I. "lVlHFA" means ~he lVlinnesota Housing Finance Agency. "MPHA" means the Minneapolis Public Housing Authority in and for the City of Minneapolis. .,: "Mixed Finance Development" means the development of Public Housing Units through the use of both public and private f'mancing in accordance with HUD regulations and the ACC Amendment. "Net Proceeds" means any proceeds paid by an insurer to Owner or the Authorities under a policy or policies of inSUrance required to be provided and maintained by the Owner pursuant to D:~4N 12~01T~C~DgYAOItDC~ 3 HOU$1NO D~-%T. LOPS~I~rT BA~$ LAK~ TOWNHO~S Lnv~TED Article VIII and remaining after deducting all expenses (including fees and disbursements of counsel) incurred in the collection of such proceeds. "Operating Subsidy" means funds derived by the ~HA fi.om HUD to be paid.to the Owner to reimburse the Owner for all or a part of the difference between the cost of operating and income derived from the Public Housing Units. "Owner" means Bass Lake Townhomes Limited Partnership, a Minnesota limited partnership having its principal office at 2516 Chicago Avenue South, Mirmeapolis, Minnesota 55404, Attention: Steve Cramer. "Parties" mean the MPHA, the ED& and the Owner collectively. "Public Assistance" means the total financial assistance paid to the Owner by the MPHA in accordance with Article V of this Agreement for the purPose of funding the development and operation of the Public Housing Units. "Public Housing Units" means the twelve (12) residential units within the Development that will be reserved for Iow-income public housing pursuant to this Agreement and the Regulatory Agreement and will be eligible to receive both the Public Assistance under this Agreement and the Operating Subsidy under the Regulatory Agreement. "Regulatory Agreement" means the agreement by, between, and among the Parties setting forth the rights and obligations, of each with respect to the day-to-day operation of the Public Housing Units and the operating subsidy payable by the MPHA in connection therewith. "Restrictive Covenant" means the Declaration of Restrictive Covenants attached as Exhibit B to this Agreement which obligates the Owner to operate and maintain the Public Housing Units in accordance with the Act, the ACC, the ACC Amendment and all federal, state and local laws and regulations. "State" means the State of Minnesota. "Unavoidable Delays" means delay in the performance of obligations hereunder due to acts of God, acts of the public enemy, acts of the federal government, acts of the other party, fire, floods, epidemics, quarantine restrictions, strikes, freight emb~goes, unusually severe weather or delays of subcontractors due to such causes or any other cause l~eyond the reasonable control of a party. D:$tlq'N 12.~01 ')~XiX2S\DEVAGR.EKIC 4 HOUSlIqG DEVELOPMENT AGR.;.F--MENT MPHA/N'EW HOPE EDA BA~$ L.AK~ TOW~-iOMF~ LII~'T~D ARTICLE Representations and Warranties Section 2.1. General Representations. The Parties to this Agreement acknowledge and understand that the purpose of this Agreement is to provide for the development of the Public Housing Units within the Development in accordance with the terms hereof and the ACC Amendment and all federal and state laws and regulations. Section 2.2. Representations and Warranties of the MPHA The MtaHA represents and warrants the following: (a) The MPHA is a public body corporate and politic duly organized and existing under the laws of the State. ' (b) The MPHA is a party to the ACC Amendment which grants HUD funding to the MPHA for the development and operation of Public Housing Un/ts in Mixed Finance Developments. (¢) The MPHA shall provide Public Assistance to the Owner in accordance with the provisions of this Agreement and the ACC Amendment. (d) This Agreement constitutes a valid and binding obligation upon the MPHA and is enforceable according to its terms. Section 2.3. Representations and Warranties of the EDA. The EDA represents and warrants the following: (a) The EDA is a public body corporate and politic duly organized and existing under the laws of the State. (b) This Agreement constitutes a valid and .binding obligation upon the EDA and is enforceable according to its terms. Section 2.4. Rel~resentations and Warranties .by the (~_wne.r. The Owner represents and warrants the following: (a) The Owner is a Minnesota limited partnership.duly organized andin good standing under the laws of the State, is not in violation of any provisions of its partnership agreement or, to the best of its knowledge, the laws of the State or federal government, and has all necessary power and authority to enter into this Agreement and to carry out its obligations l~ereunder. D:Xl~qlq 12~OI ZDOCSXDEVAOR.DC~ 5 HOU$ l~'O DE VF. LOPM~N'r AGR.EF-MENT MiRA/NEW HOPE FDA BASS LAY-~ TOWNHOM~$ LIMITED PAR'rN'~%$~[I~ (b) The Owner will construct, or cause to be constructed, the Development 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 regul~.tions), as contemplated in Construction Plans approved by the Authorities. (c) The Owner has received no notice or communication from any local, State or federal official that the activities of the Owner, the Ml'HA, or the EDA with respect to the Development may be or will be in violation of any environmental law or regulation. The Owner is aware of no facts the e.,dstence of which would cause it to be in violation of any local, state or federal environmental law, regulation or review procedure or which would give any person a valid claim under the Minnesota Environmental Policy Act or the Minnesota Environmental Rights Act with respect to the Development Site. (d) The Owner will use all reasonable efforts to obtain, in a timely manner, all required permits, licenses and approvals, and 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 Development and the Public Housing Units 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 material 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 Authorities with respect to any litigation commenced with respect to this Agreement or the Development. (g) The Owner has full authority and financial capacity to execute and perform this Agreement to completion. (h) The Owner will comply with the requirements s,.e.t forth in the ACC Amendment as they relate to the development of the Public Housing Units and the eligibility and payment of Public Assistance to the Owner in connection therewith. (i) The Development constitutes a permitted use under the zoning ordinances of the City. (j) Upon execution of this Agreement, the Owner will execute the Restrictive Covenant and the Kegulatory Agreement. D:'~vl2',{'l~ 12.~'~ 1 "~',I~F. VAOP.. DO(Z (~ HOU$INO DI~VELOPM~NT AGR.W.7..M~N'T Nfl'HA/NEW HOPE F..DA BA.~$ LAKE TO',,VNI-{OME$ (k) In the event that there occurs an Event of Default by the Owner under the terms of this Agreement and the 1VIPHA and/or the EDA incurs legal fees or other costs or expenses in connection with the enforcement of any term or provision of this Agreement or the recovery of any damages as a result of the Event of Default, the Owner agrees that it will, upon demand by the IVIPHA and/or the EDA, pay the amount of such costs and expenses, including reasonable attorneys' fees. (I) The Owner possesses or will possess fee simple title to the Development Site, free and clear of any encumbrances except for the encumbrances set forth in Section 9.1 hereof. D:q~4'N 129~ t 7qiX:~S{D~.V AOR.D(~ 7 HOU$INO DEVF-/,OIa.%4F-,~ ~W-t..aJN~W HOPE EDA ARTICLE The Development Section 3.1. Description. The Development consists of a 34-unit multifamily, rental, housing project for families to be constructed upon the Development Site located on Brickyard Street in the City of New Hope, Minnesota. Section 3.2: Construction. The Owner agrees that it will construct, or cause to be constructed, the Development on the Development Site in accordance with the approved Construction Plans and at all times prior to the termination of the ACC Amendment will operate and maintain, preserve and keep the Development or cause the Development to be maintained, preserved and kept with the appurtenances and every part and parcel thereof, in good repair and condition. Section 3.3. Construction Plans. (a) The Development and all of the units therein shall comply with the design and construction standards for public housing units set forth in 24 CFR 941.203. Co) The Owner shall submit Construction Plans to the Authorities for the proposed Development within thirty (30) days of the Agreement Date. The Construction Plans shall provide for the construction of the Development and shall be in conformity with this Agreement. and all applicable State and local laws and regulations. The Authorities shall approve the Construction Plans in writing if, in the reasonable discretion of the Authorities: (i) the Construction Plans conform to the terms and conditions of this Agreement; (ii) the Construction Plans conform to all applicable federal, State and local law, ordinances, rules and regulations, (iii) the Construction Plans are adequate to provide for the construction of the Development and (iv) the Construction Plans shall comply with Section 3.3 hereof. Such Construction Plans shall, in any event, be deemed approved unless rejected in writing by the Authorities, in whole or in part, within twenty (20) days at~er their receipt by the Authorities. Any rejection shall set forth in detail the reasons therefor, and shall be made within twenty (20) days after the receipt of the Construction Plans by the Authorities. If the Authorities rejects the Construction Plans in whole or in part, the Owner may subrnit new or corrected Construction Plans within thirty (30) days at, er written notification to the Owner of the rejection. The provisions of this Section relating to approval, rejection and resubmission of corrected Construction Plans shall continue to apply' until the Construction Plans have been approved by the Authorities or until this Agreement has been terminated pursuant to the terms hereof. Approval by the Authorities shall not be unreasonably withheld. Said approval shall constitute a conclusive determination that the Construction Plans (and the Development, if constructed in D:'~IiN'NI2.S~ I 'AI:XX:$',DEVAGR.DOC 8 KOUSI2NG DEVELOPMENT A~R.E~MENT MPEAJN~W HOPE F. DA BASS ~ accordance with said plans) comply with the provisions of this Agreement relating thereto. (c) The Owner shall submit to the Authorities for their approval any substantial changes of single items over $5,000 in the Construction Plans. The Authorities shall approve changes in the Construction Plans in wTiting if, in the reasonable discretion of the Authorities: (a) the changed Construction Plans conform to the terms and conditions of this Agreement; (b) the changed Construction Plans conform to all applicable federal, State and local law, ordinances, rules and regulations; (c) the changed Construction Plans are adequate to provide for the construction of the Development; (d) the changed Construction Plans comply with Section 3.3. hereof, (e) the changed Construction Plans do not provide for expenditures in excess of the funds available to the Owner for the construction of the Development; and (f) no Event of Default has occurred. No approval by the Authorities of changes to the Construction Plans shall relieve the Owner of the obligation to comply with the terms of this Agreement, applicable federal, state and local laws, ordinances, rules and regulations, or to construct the Development. Such changed Cohstruction Plans shall, in.any event, be deemed approved unless rejected in writing by the Authorities, in whole or in part within ten (10) days of receipt. Any rejection shall set forth in detail the reasons therefore. Approval by the Authorities shall not be unreasonably withheld. Said approval shall constitute a conclusive determination that the changed Construction Plans (and the Development, if' constructed in accordance with said plans) comply with the provisions of this Agreement relating thereto, Section 3.4. Commencement and Completion of Construction. (a) Subject to Unavoidable Delays, the Owner shall complete the construction of the Development. on or before May 1, 1999. All work with respect to the Development to be constructed or provided by the Owner on the Development Site shall be in conformity with the Construction Plans as submitted by the Owner and approVed by the Authorities. During the construction of the Development, the Owner shall make available to the Authorities such inspection opportunities and project information, including cost certifications, as they may from time to time request. (b) The Owner afll'ees for itself, its successors an'~! assigns, and every successor in interest to the Development Site, or any part thereof, that the Owner, and such successors and assigns, shall promptly besin and diligently prosecute to.completion the development of the Development Site through the construction of the Development thereon, and that such construction shall in any event be commenced and completed within the .period specified in this Section 3.4, subject to Unavoidable Delays. Until construction of the Development has been completed, the Owner shall make reports, in such detail and at such times as may reasonably HOUSING DEVELOPMENT AGRF..~M~NT MPHA/NIiW HOI~ F. DA BAS3 LAF~ TOWNHO~$ LL%ffTED pA~TN~P~I4~ be requested by the Authorities as to the actual progress of the Owner with respect to such construction. (c) The Owner agrees to notify the l%ff~HA in writing (a) when the Public Housing Units become substantially complete and available for occupancy, and (b) when 95% of the Public Housing Units first become occupied. For purposes of this subclause "substantially complete" shall mean upon the later of (a) the issuance of the Certificate of Completion by the Authorities, or (b) the issuance of a certificate of occupancy by the City. During the lOP, operating expenses for the Public Housing Units will be paid by the MPHA from the Initial Operating Deficit Account to the extent contained as a line item of the Development Cost Budget. The Owner will submit all rental income from the Public Housing Units to the MPHA for deposit into the Initial Operating Deficit Account. Section 3.5. Certificate of Completion. (a) It is the intention of the Authorities to rely upon the inspections, punch lists, cost certifications and other lender directives 0fthe MI-IFA throughout the construction and rehabilitation phase. The Owner shall forward to the Authorities, or cause the MI-IFA to forward to the Authorities, copies of all written communications to the Owner regarding these matters. Promptly after substantial completion of the Development in accordance with those provisions of the Agreement relating solely to the obligations of the Owner to construct the Development (including the dates for beginning and completion thereof), the Authorities will furnish the Owner with a Certificate of Completion in the form attached hereto as Exhibit C so certifying. Such certification by the Authorities shall be a conclusive determination of satisfaction and termination of the agreements and covenants in the Agreement with respect to the obligations of the Owner, and its successors and assigns, to construct the Development and the dates for the beginning and completion thereof. Such certification and such determination shall not constitute evidence of compliance with ongoing obligations under this Agreement or satisfaction of any obligation of the Owner to any Holder of a Mortgage, or any insurer of a Mortgage, securing money loaned to finance the Development, or any part thereof. (b) Ii'the Authorities shall refuse or fail to provide any certification in accordance with the provisions of this Section 3.5, the Authofiti~ shall, within thirty (30) days after written request by the Owner, provide the Owner with a written statement, indicating in adequate detail in what respects the Owner has failed to complete the Development in accordance with the provisions of the Agreement, or is otherwise in default, and what measures or acts will be necessary, in the opinion of the Authorities, for the Owner to take or perform in order to obtain such certification. HOU$~G DEVELOPMEIqT AGP,~_~ENT M~HA~'EW HOPE BASS LAKE TOWlqHOlvfl~$ LLMITED PA~TNEI~HI~ ARTICLE IV The Public Housing Units Section 4.1. Described. Upon completion of the Development, and for the term of the ACC, the Owner shall set-aside twelve (12) Public Housing Units within the Development for the term of the ACC Amendment. Six Public Housing Units will be four-bedroom units located in the rehabilitated fourplex buildings and six Public Housing Units will be three-bedroom units located in the new construction townhomes. Section 4.2. Interchangeable Units. Any unit within the Development.shall be eligible to constitute a Public Housing Units at any given time, at the Owner's discretion, provided: (a) The Public Housing Units to be reserved within the Development shall consist of 6 three-bedroom units and 6 four-bedroom units; (b) The Public Housing Units shall be comparable to the non-Public Housing Units with respect to size, location, internal and external appearance and amenities; and (c) The four-bedroom units being utilized as the Public Housing Units shall float throughout the rehabilitated buildings of the Development and the three-bedroom units will float throughout the new construction of the Development. *fl~HA/NEW HOI~ KDA B~S LAKIi TO~F~.,[0ME~ LLMITED pA~I"I~ ARTICLE V Public Assistance Section 5.1. Funds Description. The funds payable to the Owner with respect to the development and operation of t.he twelve (12) Public Housing Units consists of the following components: (a) The lesser of(a) the Certified Costs or (b) $1,356,480; (b) Operating subsidy in accordance with the Regulatory Agreement. Section 5.2. Development Funds. (a) Payment. The Development Funds described in Section 5. l(a) of this Agreement shall be disbursed pursuant to the following terms: (i) The MPHA shall pay the amount set forth in Section 5.1(a) to the Owner during construction pursuant to that certain Disbursement Agreement dated , 19__, to which the MPHA, EDA and Owner are parties. (ii) The Owner shall deposit in the "Operating Subsidy Reserve" provided for in Article V of the Regulatory Agreement, an amount equal to three (3) years' estimated Operating Subsidy, which shall be payable in accordance therewitk (iii) The Development Funds paid to the Owner pursuant to this Article V shall be used only for eligible costs actually incurred by the Owner with respect to the Public Housing Units as provided in the ACC Amendment. (b) Payment ¢ondit/om. Payment of Development Funds as provided in this Article V is conditioned upon each of the £ollowing: (i)The approval by HUD of ali evidentiary materials required to be provided under the ACC Amendment, including this Agreement. (ii) The satisfaction of all conditions precedent to the MPHA's authority to draw down the Public Assistance from HUD, as provided in the ACC Amendment. D:~'4N t ~%01 'ADOCSXD£VAGR.DOC 12 Housn~o DS~O~m~ MPHAINEW HOPE FDA BA&S LAKll TOWNHO~C~$ LL~.ffrE~ (iii) The Owner's compliance with the terms and conditions of this Agreement, including the regulatory requirements set forth in Article VI. No payment of'Public Assistance shall be .required if' there easts an Event of'Default. (iv) The written approval by HUD of the MPHA's proposal for the development and operation of the Public Housing Units provided for in this Agreement. (v) For final payment, the issuance of Certificate of Completion by the Authorities pursuant to Section 3.5. Section 5.3. Operating .Subsidy.. Simultaneously with the execution of this Agreement, the parties hereto have entered into the Regulatory Agreement. The MPHA shall pay to the Owner the Operating Subsidy in accordance with the Regulatory Agreement. Section 5.4. Payments in Lieu of Ta:<es. Minnesota Statutes, § 469.040 provides for the exemption of the Public Housing Un/ts from property taxation and that payments in lieu of taxes in the amount of five percent (5%) of "shelter rents," as defined therein, be paid as though property taxes. Owner shall make the appropriate calculations and shall remit such payments in lieu of taxes at such times and in such manner as though such payments were property taxes, except the obligation to do so shall be a direct and personal obligation of the Owner. A copy of each paYment shall be mailed to the EDA. Failure by the Owner to timely remit such payments or notify the EDA thereof shall constitute a default hereunder. Section 5.5. Payment Limitations. (a) The payment of Public Assistance to the Owner shall not be deemed to be an assignment of the grant funds paid by HUD to the MPHA, and the Owner shall not succeed to any rights or benefits of the MPHA under the ACC Amendment or the ACC, or attain any privileges, authority, interests, or rights under the ACC Amendment or the ACC. Co) Nothing contained in the ACC Amendment, the ACC, or in any agreement or contract between the Parties, nor any act of HUD or the Parties, shall be deemed or construed to create any relationship of third-party beneficiary, principal and agent, limited or 8eneral partnership, joint venture, or any association or relationship involving HUD, except between I2iI. JD and the lV[PHA as provided under the ACC Amendment and the ACC. BA~$ ~ TOWNHO.%ffi$ LL-~'TF.D ARTICLE VI Additional Regulatory Requirements Section 6.1. Additional Re~latory Requirements. The Development shall be subject to and the Owner shall comply with the following regulatory requirements and shall provide evidence of such compliance as deemed necessary by the MPHA: (a) The labor and wage requirements set forth in the Davis-Bacon Act, 40 U.S.C. 276a et seq. The Owner shall provide such records and information as reasonably requested by the EDA in order to confirm Owner's compliance with this clause. (b) All Federal statutory, regulatory, and executive order requirements applicable to public housing and the activities undertaken by the Owner under this Agreement pertaining to civil rights, equal opportunity, and nondiscrimination, as those requirements now exist, or as they may be enacted, promulgated, or amended fi.om time to time. Such requirements include, but are not limited to, the following: (i) The Fair Housing Act, 42 U.S.C. 3601-19, and regulations issued thereunder, 24 CFR Part 100; Executive Order 11063 (Equal Opportunity in Housing) and regulations issued thereunder, 24 CFR Part 107; the fair housing poster regulations, 24 CFR Part 110, and advertising guidelines, 24 CFR Part 109. (ii) Title VI of the Civil Rights Act of 1964, 42 U.S.C. 2000d, and regulations issued thereunder relating to nondiscrimination in housing, 24 CFR Part 1. (iii) Age Discrimination Act of 1975, 42 U.S.C. 6101-07, and regulations issued thereunder, 24 CFR Part 146. (iv) Section 504 of the Rehabilitation Act of 1973, 29 U.S.C. 794, and regulations issued thereunder, 24 Part 8; the AmeriCans with Disabilities Act, 42 U.S.C. 12181-89, and regulations issued thereunder, 28 CFR Part 36; and the elderly and handicapped requirements of Section 209 of the Housing and Community DevelopmentYAct of 1974. (v) Section 3 of the Housing and Urban Development Act of I968, 12 U.S.C. 170 l u, and its implementing regulations at 24 CFR Part 135. (c) In the event that any other federal, state, or local government assistance is received, or can reasonably be expected to be received, by the Owner with respect to the Public Housing Units within the Development in addition to the Public MPHA/NEW HOPE EDA BA~S ~ TOWNHOMI/$ LLNff'/'F.D PARTNF..R~'~P Assistance under this Agreement, the Owner shall comply with the requirements or' Section 102 of the Housing and Urban Development Reform Act of 198.9. (d) The Uni£orm Relocation and Property Acquisitions Act in the event there are any "displaced persons," as that term is defined therein, as a result or'the Development. (e) 24 CFR §§ 941.202, 941.203, 941.205, 941.207, 941.208, 941.209, 941.306, 941.401,941.402, 941.403, and 941.404. ARTICLE VII blort~a~e Financin~ Section 7.1. Mortgage Financing and/or Equity_. (a) Prior to commencement of construction of the Development, the Owner shall provide to the Executive Directors of the Authorities evidence of one or more commitments for mortgage financing or equity, or both, which is sufficient for the construction of the Development. Such commitments may be provided as short term financing, long term mortgage financing, a bridge loan with a long term take- out financing commitment, or any combination of the foregoing. Such commitment or commitments for short term or long term mortgage financing shall be subject only to such conditions as are normal and customary in the mortgage banking industry. (b) The Executive Dffectors of the Authorities, together with such legal and financial advisors to the Authorities as the Executive Directors shall choose, shall review such information as is submitted pursuant to Section TI(a). If the Executive Directors of the Authorities find that the financing and/or equity is sufficiently committed and adequate in amount to provide for the construction of the Development, then the Authorities 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 fifteen (15) days from the date when the Authorities are provided the evidence thereof. A failure by the Authorities to respond to such evidence of financing shall be deemed to constitute an approval hereunder. If the Authorities rejects the evidence of financing as inadequate, it shall do so in writing specifying the basis for the rejection. In any event, the Owner shall provide adequate evidence of financing prior to commencement of construction of the Development. Section 7.2. Authorities' Option to Cure Default on Mortgage. In the event that there occurs a default under any Mortgage, the Owner shall cause the Authorities to receive copies of any notice of default received by the Owner from the holder of such Mortgage. Thereafter, the MPHA or the EDA shall have the right, but not the obligatior~,to cure any such default on behalf of the Owner within such cure periods as are available to the Owner under the Mortgage documents. D:xlviHN 12~01'~IiX~$XDfiVAGR. IiKXI ! 6 HOUSE~G DEVELOPMENT Mi:~HA/NIiW HOPE BA~$ LAK.~ TO--OMItS L~I~D ARTICLE VIII Insurance Section 8.1. Insurance. The Owner shall agree to provide and maintain at all times from the date of its possession of property which comprises the Development Site and thereafter throughout the period of this Agreement the insurance coverages set forth in this section, and to othemvise comply with the provisions that follow. (a) Builders' Risk. Builders' Risk InSurance, written on a Completed Value coverage form (non-reporting), in an amount equal to one hundred percent (100%) of the insurable value of the Development at the date of completion. Such coverage shall become effective concurrent with the beginning of the process Of construction, and shall continue until replaced by the permanent all risk Property Insurance described below. Coverage shall be provided on an "all risk" basis. (b) Workers' Compensation. Workers' Compensation insurance in compliance with all applicable statutes. Such policy shall include Employer's Liability coverage in at least such amount(s) as are customarily provided in workers' compensation policies issued in Minnesota. The Owner shall further agree to require all contractors and subcontractors involved in the project to maintain Workers' Compensation insurance in compliance with all applicable statutes, and to monitor (by. requirements for and review of Certificates of Insurance or by other reasonable means) the compliance of such contractors and subcontractors with such Workers' Compensation insurance requirements. (c) Genera~....Liability. Occurrence-Based Commercial General Liability insurance, providing coverage on an "occurrence", rather than on a "claims made" basis, which policy shall include coverage for the Completed Operations Hazard, and which shall also include a Broad Form General Liability Endorsement GL 0404 (Insurance Services Office form designation), or an equivalent form (or forms), so long as such equivalent form (or forms) affords coverage which .is in all material respects at least as broad. The Owner shall agree to maintain total liability policy limits of at least $1,000,000, applying to liability for Bodily Injury, Personal Injury,. and Property Damage, which total lid'dts may be satisfied by the limits afforded under its Occurrence-Based Commercial General Liability Policy (which Policy is to include the Broad Form Endorsement coverage specified above), or by such Policy in combination with the limits afforded by an Umbrella Liability Policy (or policies); provided, however, that the coverage afforded under any such . Umbrella Liability Policy shall be at least as' broad as that afforded by the underlying Occurrence-Based Commercial General Liability Policy (including Broad Form coverage). B~$$ ~ TOW'N~-iOMJi$ LII~ll'I'F.D pAB. TN'~R~iq~P Such Occurrence-Based Commercial General Liability Policy and Umbrella Liability Policy (or policies) may provide aggregate limits for some or all of the coverages afforded thereunder, so long as such aggregate limits have not, as of the date of the Owner's possession of the Development Site, been reduced to less than the total required limits stated above, and further, that the Umbrella Liability Policy provides coverage from the point that such ag~egate limits in the underlying Occurrence-Based Commercial General Liability Policy become reduced or exhausted. An Umbrella Policy which "drops down" to respond immediately over reduced underlying limits, or in place of exhausted underlying limits, but subject to a deductible amount, shall be acceptable in this regard so long as such deductible amount does not cause the Owner's total deductible for each occurrence to exceed the amount shown in the provision immediately below. The Owner's liability insurance coverage may be subject to a deductible (or "retention" or similar provision) requiring the Owner to remain responsible for a stated amount of each covered loss. · (d) Property_ Insurance. All risk property insurance in an amount not less than the full insurable replacement value of the Development. The term "full insurable replacement value" shall mean the actual replacement cost of the Development · (excluding foundation and excavation costs and costs of underground flues, pipes, drains, and other items customarily omitted from replacement cost valuation for insurance purposes), without deduction for depreciation. Net Proceeds of insurance shall be paid as required by the Mortgage and related documents. Section 8.2. Damage or Destruction. (a) In the event of damage to the Development which permanently diminishes the total number of residential units: (i) thirty-five percent (35%) of the remaining units, in as near as practicable the same bedroom mix as the original Development, shall constitute Public Housing Units; and (ii) thirty-five percent (35%) of the Net Proceeds payable to the Owner shall be paid to the MPHA for the purpose of constructing or. acquiring replacement Public Housing Units. Co) In the event of partial or total destruction of the Development and the application of Net Proceeds to the reconstruction thereof, the ratio of Public Housing Units to other units, including bedroom mix, shall be the same in the reconstructed development as in the original development, (c) In the event of total destruction and the application of Net Proceeds to the Mortgage rather than to reconstruction, thirty-five percent (35%) oi' the Net Proceeds shall be paid to the MPHA for' the purpose of constructing or acquiring replacement Public Housing Units. ARTICLE IX Encumbrances; Sale; Indemnification Section 9.1. Encumbrances. The Public Housing Units shall not be encumbered, except for (a) the Mortgage, (b) the Declaration of Restrictive Covenants, (c) such security interests as shall be required by the EDA, the Fund and the MHFA, as a part of any loan or grant to the Development, and (d) such title matters as are set forth in the title insurance commitment attached hereto as Exhibit D. Section 9.2. Sale. There shall be no disposition of the Public Housing Units during and for a period often (10) years after the end of the period in which the Public Housing Units receive operating subsidy under the Regulatory Agreement. Section 9.3. Indemnification. (a) The Owner shall release from and covenants and agrees that the Authorities and the governing body members, officers, agents, servants and employees thereof shall not be liable for and agrees to defend, indemnify and hold harmless the Authorities, and the governing body members, officers, agents, servants and employees thereof against any loss or damage to property or any damages, injury to, or death of any person occurring at or about or resulting from the acquisition of, and from any defect in the construction and operation of the Development, provided, however, that this release and indemnification shall not apply to an entity or individual named in this paragraph if the loss, damage, injury or death was caused by such entity or individual. (b) Except for any misrepresentation or breach of any covenant hereunder or any willful or wanton misconduct or negligence of the following named parties, the Owner agrees to protect and defend the Authorities 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 Development. (c) The Authorities 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 Owner or its officers, agents, servants or employees or any other person who may be on or about the Development, due to any act of negligence of any person or entity other than the Authorities and the governing body members, officers, agents, servants and employees thereof'. (d) All covenants, stipulations, promises, agreements and. obligations of the Authorities contained herein shall be deemed to be the covenants, stipulations, promises, agreements and obligations of the Authorities and not of any governing body member, officer, agent, servant or employee of the Authorities in the individual capacity thereof. (e) As a condition of the indemnification covenant, the Owner shall have the fight to defend any claim or suit for any loss or damage to property or any damages, injury to, or death of any person occurring at or about or resulting from the acquisition of, from any defect in the construction and operation of the Development, provided, however, that this fight to defend shall not apply to an entity or individual named in Section 9.3(a), if the loss, damage, injury or death was caused by .such entity or individual. D:~lq 12.~1 ~IiX)C~D~-VAGR. I~ ~ 1 HOU$1~TG DI~VELOP.M~ AGRF.~N'I' MPHA/I~W HOI~B F. DA ARTICLE X Events of Default Section 10.1. Event of Def'ault Defined. Event of Default shall mean any failure by any party to this Agreement to observe or perform any covenant, condition, obligation or agreement to be observed or performed on its part under this Agreement or according to any governing law, regulation, or other agreement referenced herein. Section 10.2. Remedies Upon Default. (a) Upon the occurrence of an Event of Default, the non-defaulting pm-t-y shall notify the defaulting party of: (i) the nature of the default; (ii) the actions required to cure the default; and (iii) the time within which the defaulting party shall respond with a showing that all required actions to cure the default have been taken. (b) If the defaulting party falls to respond or take corrective action to the satisfaction of the non-defaulting party within thirty (30) days of' receipt of such notice, the non-defaulting party shall have the right to exercise any remedy available to it by reason of the default, if any, including legal and equitable remedies available in any court having proper jurisdiction. The MPHA and EDA shall have the right to exercise any remedies available under the ACC Amendment_ and/or the ACC. Section 10..3. No Remedy Exclusive. No remedy conferred in this Article X is intended to be exclusive of any other available remedy or remedies. Each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or herea~er existing at law or in equity. No delay or omission to exercise any remedy accruing upon any default shall impair any such remedy or be construed to be a waiver thereof. Any such remedy may be exercised from time to time and as often as may be deemed expedient. Section 10.4. NO Additional Waiver Implied by One Waiver. In the event any default under this Agreement shall be waived by the non-defaulting party, such waiver shall be limited to the particular default so waived and shall not be deemed to waive any other coneu'rrent, previous, or subsequent default. \\ D:~.INN12.s~l '/~X~C~DEVAOR.DOC 22 HOUS~O DE','U.OPm~ n~35 ~ TO~/14HOI~i~S LI~41TKD ARTICLE XI Additional ProvisiOns Section 11.1. Duration of Agreement. This Agreement shall continue in full force and eff'ect for the entire term of the ACC Amendment or for such shorter period as may be agreed to by the Parties in writing and consented to by HUD. Section 11.2. Assignment and Release. (a) This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the Parties, provided, .the Owner may not sell or assign its fights or obligations under this Agreement without the prior written consent of the MPHA, the EDA and HUD. Such consent shall not be unreasonably withheld. (b) In the event that HUD agrees to enter into an annual contributions contract directly with the EDA, which said contract includes Development Funds and/or Operating Subsidy for the Public Housing Units, simultaneously with the execution of said contract the MPHA shall be forever released from all responsibilities and obligations contained in this Agreement, without further action of the parties hereto, and this Agreement shall exist solely as an agreement between the Owner and the EDA. Section 11.3. Recording of Agreement. This Agreement and/or any other document containing the ongoing obligations of the parties described herein may be recorded by the MPHA with the County Recorder and/or Registrar of Titles for the County of Hennepin. The Parties understand and acknowledge that terms and conditions of this Agreement, or such other document containing the ongoing obligations of the parties described herein, including the requirements with respect to Public Housing Units, shall run with the land for the entire term of this Agreement as set forth in Section I 1.1. Section 11.4. Amendment. This Agreement may be modified or amended only by a written instrument signed on behalf'of each of the Parties. Section 11.5. Authorities. Each of the Parties war[,ants that it has full authority to execute this Agreement, and each individual signing this Agi'eement on behalf of the Parties warrants that he/she has full. authority to sign on behalf of the party he/she represents and binds such party by such signature. Section 11.6. Conflict of Interest,; 1M~PHA and EDA Representatives Not Individually Liable. No member, official, or employee of the Mi)HA or the EDA shall have any personal interest, direct or'indirect, in this Agreement, nor shall any such member, official, or employee participate in any decision relating to this Agreement which affects his/her personal interests or ~,~I4.A/'NIiW HOPE EDA BASS ~ TOWNHOI,.fl~S L1Nffl'ED PAR.~HIi~ the interests of any corporation,, partnership, or association in which he/she is, directly or indirectly, interested. No member, official, or.employee of the MPHA or the EDA shall be personally liable to the Owner, or any successor in interest, in the event of any default or breach by the MPHA or the EDA or for any amount which may become due to the Owner or successor or on any obligations under the terms of this Agreement. Section 11.7. No Merger. None of the provisions of this Agreement are intended to or shall be merged by reason of any deed transferring any interest in the Development Site and any such deed shall not be deemed to affect or impair the provisions and covenants of this Agreement. Section 11.8. Notices and Demands. Except as otherwise expressly provided in this Agreement, any notice, demand, or other communication under this Agreement between the Parties shall be deemed given if: (i) delivered personally or by courier; (ii) telecopied with proof of transmission; or (iii) sent by overnight express delivery or registered or certified mail, postage prepaid, return receipt requested to the party at the following respective address (or at such other address with respect to each party as that party may, from time to time, designate in writing and forward to the other parties as provided in this Section): To the MPHA: Minneapolis Public Housing Authority in and for the City of Minneapolis 1001 North Washington Avenue Minneapolis, Minnesota 55401 Attention: Executive Director To the EDA: Economic Development Authority in and for the City of New Hope 4401 Xylon Avenue North New Hope, MN 55428-4898 Attention: Executive Director To the Owner: Bass Lake Townhomes Limited Partnership 2516 Chicago Avenue South Minneapolis, lvfmnesota 55404 Attention: Steve Cramer All such notices and other communications shall be de..e, med to be received on the date of receipt thereof by the party to which such notice or communication is directed. Section 11.9. Counterparts. This Agreement may be executed in any. number of counterparts, each of which shall constitute one and the same instrument. Section 11.10. Law Governing. This Agreement will be governed and construed in accordance with the laws of the State of Minnesota. Section-II.Il. S'everabili_ty. If any provision of this Agreement is declared void or othervhse unenforceable, that provision shall be deemed to have been severed from this Agreement and the remainder of this Agreement shall otherwise remain in full force and effect. D:~lql2~01 ?~X~.~DEVAOR.DOC~ 2~ IqOU$1~C} DIlV~LOPMElqT AOII~F~.x.~NT MI~'E~V I-IOPE F. DA BA~$ ~ TOWI~ttOl~ffi~ LI~tlTED pARI'NEI~Iql~ IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. MINNEAPOLIS PUBLIC HOUSING AUTHORITY IN AND FOR THE CITY OF MINNEAPOLIS By. Richard Brustad Its Chairman And by Cora McCorvey Its Executive Director STATE OF MINNESOTA ) ) ss COUNTY OF .) On this ~ day of , 19 , before me, a notary public, personally appeared Richard Brustad and Cora McCorvey, the Chairman and Executive Director, respectively, of the Minneapolis Public Housing Authority in and for the City of Minneapolis, a public body corporate and politic under the laws of the State of Minnesota (the "MPHA"), named in the foregoing instrument and acknowledged said instrument on behalf of the MPHA. Notary Public .\ D:~llq'~i 7.5~! ?~Xi)C~DI~-VAGR.IiXiX: HOUSinG DI~-V~.OFMK/iT AGR~ffilCI' ECONOMIC DEVELOPM_ENT AUTHORITY IN AND FOR THE CITY OF NEW HOPE By I~s And by. Its STATE OF MINNESOTA ) ) ss COUNTY OF ) The foregoing instrument was acknowledged before me this day of , 19 , by and ., tM and .... respectively, of the Economic Development Authority in and for the City of New Hope, a public body corporate and politic under the laws of the State of Minnesota, on behalf of such public body. Notary Public ;JQc-22-98 08:59A lisa kuglmr 824 8672 SUMMARY OF TERM8 OF REGULATORY AND OPERATING AGREEMENT BETWEEN PPL BASS LAKE COURT LIMITED PARTNERSHIP~ MIHNEAPOLIS PUBLIC HOUSING AUTHORITY AND NEW HOPE EDA An/de T- Definitions Defloifion~ of the peri/es ~ad term~ used in the ap'eemeat An/cie TI - Authority Unite Deecribe~ the 12 units which will be opemin8 u public bousins; an? 6 three-i~room end any 6 thst PPL musl operate this housiqt in ~ with th~ A,nusi Contrilxd]o~ Contr~ (ACC) between HUD and MPHA. Provides th~ i~them b a loss or condemnagon tim proceeds, will be used to rebuild the mlire projecl with tjx: ssme oftl~ parti~ to the 4~'eemeot. Kequires the c~mo~ o~wmtit~ to PPL ;dl of the tem~ m~ketiul; mid ~S rash. Thes8 tadr~ m'e to be done ~ordins to tl~ publi; housin$ rules mid dM] [lot be more m-inSem titm tho~ wbi& 8pp]~ to other uDits in the development. The EDA is requb~ to ~-t up a p'iev4mce procedure to bern, comphim, about temnt ~creenins ;md eviction. [This is bein__.8 delqpted to the Met Cotmci].] Arti~e IV - l:)~elopxrl~t Operatin$ Subsidy . MPHA makes a monthly p&~x:m to the project to cover tl~ differen~ between the allowable puMi~ housins unit share ofopnragns expenses and pub~i~ housinS temm rent. The allowable share of operatin8 expenses is tim ~ of th~ percemse of publio homing units to all traits or the square footas~ ofpublio housin8 units to tim square footage of the entire developing. This p~y the =mire de,it up to & m~imum c~p, whi~ is bmmd oothe 8mourn ofo~ ~d~gidy subsidy each momh fred adjustments are made si the end of each fiscal yem', MPHA must pay PPL's estirmied mmual opemfins subsidy if it is below the cap amount. IfMPHA challenges PPI,'s proposed ammai budset there is ~ dispuM resolution procedure, essemial~y non-bindin8 mediation. Article V - Development Operafin8 Subsidy Reserve This reserve account is mandamd to he paid by the developer fi, om development fhndin& It is usod to pay the Opermin8 deficit for the public homin8 units ifMPHA pays late or if the MPHA amoum is insufficient. It is calculated as three times the MPHA's esfimatcd annual subsidy. [Duri~ the 20 years ofthe MI-IFA mortsaSe, the MI-IFA hoMs this accoma.] The arnouni in this accou~ is adjusmd annually. There csa be volunury conUilmtions to this reserve by my partY. Dec-22-98 08:59A' lisa kug~e~ 824 8672 P.~O~ ffthc mount falls below 75% of three times the annual subsidy, the owner is required to replenish it compictcl~ or to at least put in a minimum of 50% of'the dism*butable cash flow of the projc~. Article VI - Oumer Remedies The essence of thc a~'eement is that PPL will operate the twelve units under the public housing ruJcs, ffth¢ operating subsidy is below the minimum required, PPL or any other party can replenish the account or PPL can select from the waiting list a tenant with a higher income, to increase thc income to the project, ffthere is no vacancy, MPHA can provide Section 8 certificates to · munbcr of thc public housing tenants, thus raisins the income from those units. If' deficits continue, MPHA can choose to end the leases of public housin$ tenants and relocate them to other public housing or provide them with Section 8 certificates. As soon as financial~ possible, PPL must return to renting to public housing tenants using the ordinary waitin procedure. Article VU - Non-Discrimination and Other Federal'Requirements PPL must comply with the Fair Housins Act. the Civ~ Rights Act, A~c Discrimination, the ADA and Section 3 of the Housing and Urban Development Act ofl965. Article VUI - Owner Dcfimit If PPL violates the terms ofth~ Operatin8 and Regulatory A~ement or asserts or demonstrates its intention to violate it~ and fkils to curc such dcfault after written notice, MPHA may withhold future operatin$ subsidy payments, use the dispute meditation proced~ or initiate a request for Article IX- Disclaixner of Relationships Specifie~ that the ~ of operating subsidy funds does not constitute an as~igrnrnent of grant fimds or of the ACC and PPL ¢~m~ot succeed to any of the MPHA's rights under the ACC. No third-party beneficiary, principal and agent, limited or lpmeral pextnership or joint venture relationship shall have been created between any of the parties, or the parties and HUD. Article X- ~ The usual - creation ofbindins obligation, as~gnm~ to succes~r and assigns, amendment only in writing, addresses for notice and service, usc of captions for convenience only. ~ bac-22-98 08:59A lisa kugler 824 8672 P.02 SUMMARY OF TERM8 OF HOUSING DEVELOPMENT AGREEMENT BETWEEN PPL BASS LAKE COURT LIMITED PARTNERSHIP, MINNEAPOLIS PUBLIC HOUSING AUTHORITY AND NEW HOPE EDA Article t - Defmitons Definitions of the parties and terms used in the aSreement Article II - Representations and Warranties The parties state their legal status and their authority to enter into the agreement. PPL agrees to construct the development and to act in accordance with the agreements and applicable laws. PPL. alFegs that no'notice or'environmental law or regulation has been received and that PPL is not aware of'any such violation. Article IH - The Development Describes the development, includinl~ number of units and construction plans. PPL agrees to comply with the public housing design and congtrucfion standards, and get a building permit. Any change order over $$,000 must be approved by both MPHA and New Hope EDA if such change can be built, meets ali laws, and if'there are funds available. Such approval is contingent upon there being no default by PPL under the agreement. Completion date is included. Article IV - The Public Housing Units Specifies any six three-bedroom and six four-bedroom units can he occupied by the public bousin~ tenams. Article V- Public Assistance Specifies the payment of $1,:~$6,480 or certified costs, whichever is ies~ Specifies the dislxtrsement process sludl be in accordance with a disbutseme~ aipeement. Specifies that MPHA shall ~ pay PPL an operating subsidy when the units are occupied and that these 12 units pay only PILOT taxes. Article VI- Additional Rel~ul~ory Requirements PPI, must comply with D~vin, Bacon (Prevailing Wa~es), Fair Housing Act, Americans with Di~bilities Act (ADA), Uniform Relocation Act (URA) and rmmy other federal statutes. Article VII - Mortlp~ F'mancin8 PPL must prove that other financing commlttaent~ are in place tO..pay for the entire cost of the project and ensure that lVflq-IA and FDA receive notices if' financing is in default. PPL must provide Builders Risk., Wofltem Compensation and General Liability Insurance in specified amounts for itself and its contractors. In the event of damage ot destruction, 33% (l 2/34) of rebuilt units shall be public housing units (up to the 12 units) or, if'the project is not rebuilt, that percentage of'the ~unda aiven to MPI-IA. Article IX- Encumbrances:, Sale; Indemnification Allows the mortgages and Declemfions of Restrictive Covenants to be filed and indemnifies M_PI-IA and EDA members, staff and agents.