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062804 EDA --- OFFICIAL FILE COPY CITY OF NEW HOPE EDA MEETING City Hall, 4401 Xylon Avenue North June 28, 2004 President Don Collier Commissioner Doug Andersen Commissioner Sharon Cassen Commissioner Mary Gwin-Lenth Commissioner Steve Sommer 1. Call to order 2. Roll call 3. Approval of regular meeting minutes of June 14, 2004 4. Resolution authorizing mortgage to New Hope Alano Group, inc. for property at 7550 Bass Lake Road (A.C. Carlson building) (improvement project no. 723) 5. Resolution approving purchase agreement for 9101 36th Avenue North (improvement project no. 772) 6. Resolution authorizing execution and delivery of a contract for private redevelopment by and between the New Hope Economic Development Authority and Foundation Land Development, LLC for the redevelopment of the former Frank's Nursery property at 5620 Winnetka Avenue North (improvement project no. 733) 7. Adjournment CITY OF NEW HOPE 4401 XYLON AVENUE NORTH NEW HOPE, MINNESOTA 55428 EDA Minutes June 14, 2004 Regular Meeting City Hall CALL TO ORDER President Collier called the meeting of the Economic Development Authority to order at 7:41 p.m. ROLL CALL Present: Don Collier, President Doug Andersen, Commissioner Sharon Cassen, Commissioner Mary Gwin-Lenth, Commissioner Steve Sommer, Commissioner APPROVE MINUTES Motion was made by Commissioner Andersen, seconded by Commissioner Gwin- Lenth, to approve the Regular Meeting Minutes of May 24, 2004. All present voted in favor. Motion carried. IMP. PROJECT 724 President Collier introduced for discussion Item 4, Resolution modifying the Item 4 restated redevelopment plan for redevelopment project no. 1 and the tax increment financing plans for tax increment financing districts nos. 80-2, 81-1, 82-1, 85-1, 85- 2, 86-1, 02-1, 03-1 (special law) and 04-1 (special law) (improvement project no. 724). Mrl Kirk McDonald, director of community development, stated the EDA needs to approve the resolution making recommendations to the city council prior to the public heating at the city council meeting. Mr. McDonald stated the modification to the East Winnetka Tax Increment~ Financing District will allow inclusion of the CVS Pharmacy redevelopment project. He noted that CVS/Bear Creek Capital have not requested any financial assistance from the city for the project. The purpose of creating the district is to allow excess revenues generated from this project to be "pooled" and utilized on other redevelopment projects in the area, including the Ryland Home development. He stated the excess TIF revenues could also be used for public improvements at the CVS site such as a new public sidewalk and the burial of overhead utilities. Mr. McDonald explained that upon completion of the CVS Pharmacy redevelopment, it is anticipated that the city's tax base will increase by approximately $1,400,000. EDA RESOLUTION Commissioner Sommer introduced the following resolution and moved its adoption 04-22 "RESOLUTION MODIFYING THE RESTATED REDEVELOPMENT Item4 PLAN FOR REDEVELOPMENT PROJECT NO. 1 AND THE TAX INCREMENT FINANCING PLANS FOR TAX INCREMENT FINANCING DISTRICTS NOS. 80-2, 81-1, 82-1, 85-1, 85-2, 86-1, 02-1, 03-1 (SPECIAL LAV~ AND 04-1 (SPECIAL LA~') (IMPROVEMENT PROJECT NO. 724)?' The motion for the adoption of the foregoing resolution was seconded by Commissioner Cassen, and upon vote being taken thereon, the following voted in favor thereof: Collier, Andersen, Cassen, Gwin-Lenth, Sommer, and the following voted against the same: None; Abstained: None; Absent: None; whereupon the resolution was declared duly passed and adopted, signed by the president which was attested to by the executive director. EDA Meeting June 14, 2004 Page 1 ADJOURNMENT Motion was made by Commissioner Gwin-Lenth, seconded by Commissioner Andersen, to adjourn the meeting. All present voted in favor. Motion camed. The New Hope EDA adjourned at 7:45 p.m. Re~ectfully submiged, Valerie Leone City Clerk EDA Meeting June 14, 2004 Page 2 EDA REQUEST FOR ACTION Originating Department ~ Approved for Agenda Agenda Section Community Development ~ I 6-28-04 EDA ~ Item No: By: Kirk McDonald By: 4 RESOLUTIO~ AUTHORIZING MORTGAGE TO NEW HOPE ALANO GROUP, INC. FOR PROPERTY AT 7550 BASS LAKE ROAD (A.C. Carlson Building) (IMPROVEMENT PROJECT NO. 723) REQUESTED ACTION Staff is recommending that the EDA approve the attached resolution prepared by the city attorney approving a loan to the New Hope Alano Group, Inc. to facilitate its acquisition of the A. C. Carlson property at 7550 Bass Lake Road for relocation purposes due to the Ryland Homes redevelopment project. The city attorney will be present to review this matter with the EDA. POLICY/PAST PRACTICE The City Council and EDA have approved gap financing loans in the past, most recently to Universal Color Lab on 42nd Avenue, to facilitate business expansion and relocation within the city. BACKGROUND At the May 10, 2004, EDA meeting, the EDA discussed a gap loan request by Alano and approved a motion directing staff to proceed with preliminary loan terms. Please refer to additional background information provided in that request. The city attorney, director of finance, and community development staff met with Alano representatives to discuss acceptable terms of the loan agreement. The city attorney prepared the attached resolution and loan agreement documents as a result of that meeting. Staff is recommending approval of the resolution approving the loan documents. Approval of these documents is critical to keep the relocation of the Alano facility and the construction of the new A. C. Carlson building moving forward. ATTACHMENTS · Resolution · City Attorney Correspondence · Loan Documents · Gap Analysis · Correspondence, · Map MOTION BY (.~/Q'~/~4..~ SECOND BY III I hRFA\planning\livable communitiesXQ&R-Alano-AC Carlson EDA RESOLUTION NO. 04- RESOLUTION AUTHORIZING MORTGAGE TO NEW HOPE ALANO GROUP, INC. FOR PROPERTY AT 7550 BASS LAKE ROAD (A .C. Carlson Building) WHEREAS, the New Hope Alano Group, Inc. CAlano") is a Minnesota corporation, currently located at 7615 Bass Lake Road, and WHEREAS, at its current location, Alano maintains its administrative offices and provides a general meeting location, squad meeting locations and other Alcoholics Anonymous (AA) support benefits and services for its __ members, and WHEREAS, the New Hope EDA has initiated an eminent domain proceeding' to acquire by condemnation Alano's property at 7615 Bass Lake Road pursuant to the EDA's authority under Minn. Stat. {}469.101. The purpose of the condemnation is to transfer the Alano property to a developer for residential construction/redevelopment within the City. It is intended that the Alano property will become part of a larger plat of land which will be redeveloped with approximately 175 new residential market-rate housing units estimated to add approximately $31 million dollars of new land value to the City's tax base, and WHEREAS, as a result of the EDA's condemnation action Alano will need to relocate its administrative offices and meeting facilities to a new location at a cost which will exceed the equity Alano presently has in its existing facility, and WHEREAS, Alano is attempting to purchase certain improved real estate at 7550 Bass Lake Road in the City of New Hope ("Property"), with plans to renovate the Property and move its AA meeting facilities and administrative offices to the Property (collectively the "Project", also designated by the City of New Hope as Improvement Project __), and WHEREAS, the Property to be acquired by Alano is directly across the street from .its existing property and currently owned and occupied by the A.C. Carlson company, a New Hope business engaged in the retail sale of home appliances, and WItEREAS, the A.C. Carlson Company is selling the Property to develop with a new and larger commercial building a vacant piece of land it owns in New Hope on Bass Lake Road a short distance west of the Property for the purpose of expanding its home appliance retail sales business, and WHEREAS, the EDA and the City believe Alano provides an important social service to the residents of New Hope by providing alcohol and chemical dependency guidance, support and education.not otherwise available in New Hope and are desirous of keeping the Alano facilities in New Hope, and WHEREAS, assisting Alano with the finance and purchase of this Property will further benefit New Hope's economic development by also assisting the A.C. Carlson Company's development of other New Hope vacant land with a new commercial building also adding to New Hope's tax base, and WHEREAS, assisting Alano with the purchase of the Property is deemed by the EDA as required relocation assistance benefits under state and federal law, and WHEREAS, financing for the purchase and improvement of the Property by Alano shall come fi.om the condemnation proceeds/equity in its current property at 7615 Bass Lake Road, and WHEREAS, in order for the purchase and improvement of the Property to go forward, Alano needs an additional SJ~',000.00, and WltEREAS, the completion of the Alano Project will be in the best interests of the New Hope EDA and the City and will further the City's general plan of economic development by permitting the development of 175 new residential units on land partially owned by Alano and which could not go forward without the EDA's acquisition of the Alano property, by assisting A.C. Carlson Company to develop vacant land in the City with a new commercial building to expand its growing retail appliance sales business keeping said business in the City and by keeping Alano's AA facilities and services within the City, and WHEREAS, Alano is requesting a loan of $170,000.00 fi.om the EDA, and WHEREAS, such a loan is authorized by Minn. Stat. §469.090 to 469.108 and Minn. Stat. §469.192, and WHEREAS, the loan shall accrue interest at a rate of (__%) percent per annum based on a 30 year amortization period and a final balloon after years, and WI-IEREAS, the loan will be further secured by a First Mortgage upon the Property plus an Assignment of Leases and Rents, as well as a Guaranty by the New Hope Alano Group, Inc., and WHEREAS, other terms and conditions of the loan are as set forth in the Mortgage, Security Agreement and Fixture Financing Statement attached hereto as Exhibit A, the Mortgage Note attached hereto as Exhibit B, the Assignment of Rents and Leases attached hereto as Exhibit C, and the Guaranty attached hereto as Exhibit D, and NOW, THEREFORE, BE IT RESOLVED by the Economic Development Authority in and for the City of New Hope as follows: 1. That all of the foregoing recitals are incorporated herein by reference. 2. That the loan to New Hope Alano Group, Inc. in the amount of $170,000.00 as detailed above is hereby approved, conditioned upon the execution of the appropriate documents attached hereto as Exhibits A, B, C and D by the New Hope Alano Group, Inc. and further conditioned upon the execution of any other supporting documents required by the attorneys for EDA. 3. That the President and Executive Director are authorized and directed to sign the Mortgage and other loan documents attached hereto as Exhibits A, B, C and D and are further authorized and directed to sign any additional documents required to complete the loan. Adopted by the Economic Development Authority in and for the City of New Hope this 28th day of June, 2004. Don Collier, Chairman Attest: Daniel J. Donahue, Executive Director P:~Attomey~SAS\l Client Files~ City of New HopeX99-11276(Alano)~resolution authori~ng mortgage-AC Carlson bldg.doc JENSEN & SONDRALL, P.A. Attorneys At Law 8525 F~DINBROOK CROSSING, STE. 201 BROOKLYN PARK, MINNESOTA 55443-1968 TELEPHONE (763) 424-8811 · TELEFAX (763) 493-5193 e-mail law~j ensen-$ondrall.com DOUGLAS J. DEBNER2 GORDON L. JENSEN~ GLEN A. NORTON STEvEN A. SONORALL June 23, 2004 STACY A. WOODS OF COUNSEL VIA E-MAIL TO kmcdonald~ci.new-hope.mn.us LORENS Q. BRYNESTAD AND BY REGULAR U.S. MAIL Kirk McDonald Community Development Director City of New Hope 4401 Xylon Avenue North New Hope, MN 55428 Re: EDA Resolution Authorizing Mortgage To New Itope Alano Group, Inc. For Property At 7550 Bass Lake Road Our File No.:99.11276 Dear Kirk: Please find enclosed for consideration at the June 28th EDA Meeting the referenced resolution relating to the EDA's proposed $170,000.00 loan to the New Hope Alano Group. Also attached are the following documents that will need to be signed by New Hope Alano Group in connection with the loan as exhibits to the resolution: 1. Mortgage Note, 2. Mortgage, Security Agreement and Fixture Financing Statement, 3. Assignment of Leases and Rents, and 4. Guaranty. In connection with this loan, we still need to determine the interest rate, the term of the loan and the charge for late payments on the loan. Please see the first page of the Mortgage Note in connection with these issues. The New Hope Alano Group will also need to provide me with the name, address, telephone number and title of the individual that will sign the documents and 'can accept notices on behalf of the corporation. I will also need a corporate resolution from the New Hope Alano Group verifying said individuals haVe authority to act on behalf of the corporation and their corporate attorney's Opinion letter indicating the corporation is acting lawfully and within its authority by entering into this agreement with the EDA. ~Real Property Law Please let me know if you have any questions regarding the attached resolution or other documents Specialist Certified By The Minnesota State associated therewith. Bar Association :Admitted in Iowa Very truly yours, June 23, 2004 Page 2 Steven A. Sondrall, City Attorney, City of New Hope JENSEN & SONDRALL, P.A. sas~j ensen-sondrall.com Enclosure(s) cc: Valerie Leone P:XAttomeyXSAS\I Client FilesL2 City of New Hope\99-11276(Alano)\ltr K. McDonald re resolution auth mortgage, doc MORTGAGE NOTE $170,000.00 New Hope, Minnesota ., 2004 FOR VALUE RECEIVED, the undersigned, the NEW HOPE ALANO GROUP, INC., a Minnesota corporation (hereinafter "Borrower"), promises to pay to the order of ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR THE CITY OF NEW HOPE ("Lender"), (Lender and any holder of this Note from time to time are each hereafter sometimes referred to as "Holder") at its business address, 4401 Xylon Avenue North, New Hope, Minnesota 55428, or at sUch other place as may be designated in writing by the holder hereof, the principal sum of One Hundred Seventy Thousand and 00/100 Dollars ($170}000.00); together with interest thereon at the rate of __ percent (~%) per annum from the date hereof, computed on the unpaid principal balance from time to time, in monthly installments as follows: monthly installments of $ with the first payment due one month after the date of this Note and all subsequent payments due on the same date of each succeeding month until the last installment, when any remaining principal balance and all accrued interest shall be paid in full. The last installment shall be a balloon payment. All payments received hereunder shall be applied first to the payment of interest and then to reduction of principal. This Note may be prepaid in full or in part at any time without penalty. If any installment is paid more than fifteen (15) days after the due date thereof, the Borrower shall pay a late charge of percent (__%)of the installment to cover the expenses of collection. This Note is secured by a Mortgage, Security Agreement and Fixture Financing Statement of even date herewith ("Mortgage") upon real property situated in Hennepin County, Minnesota. All of the terms and conditions contained in the Mortgage which are to be kept and performed by Borrower are hereby made a part of this Note and to the same extent and with the same force and effect as if they were fully set forth herein; and Borrower covenants and agrees to keep and perform them, or cause them tobe kept and performed, sthctly in accordance with their terms. Time is of the essence hereof. In the event of a default in the payment of any principal or interest due hereunder or in the payment or performance of anything by Borrower to be paid or performed under any of the terms and conditions in this Note or in the Mortgage, the Holder at its option and without further notice, demand or presentment for payment to Borrower or others, may declare immediately due and payable the unpaid principal balance and interest accrued thereon, together with any reasonable attorneys' fees incurred by Holder in collecting or enforcing payment thereof, whether suit be brought or not, and all other sums due by Borrower hereunder or under the Mortgage anything herein or in the Mortgage to the contrary notWithstanding, and payment thereof may be enforced and recovered in whole in or in part at any time by one or more of the remedies provided to Holder in this Note or in the Mortgage. The remedies of Holder as provided herein and in the Mortgage shall be cumulative and concurrent and may be pursued singly, successively or together, at the sole discretion of Holder, and may be exercised as often as occasion therefore shall occur; and the failure to exercise any such right or remedy shall in no event be construed as a waiver or release thereof. Borrower waives presentment for payment} demand, notice of demand, notice of nonpayment or dishonor, protest and notice of protest of this Note, and all other notices in connection with the delivery, acceptance, performance, default or enforcement of the payment of this Note. Holder shall not be deemed by any act of omission or commission to have waived any of its rights or remedies hereunder unless such waiver is in writing and signed by the Holder, and then only to the extent specifically set forth in the writing. A waiver with reference to one event shall not be construed as continuing or as a bar to or waiver of any right or remedy as to a subsequent 2 event. All agreements herein are expressly limited so that in no contingency or event whatsoever shall the mount paid or agreed to pay to the Holder for the use, forbearance or detention of the money to be advanced hereunder exceed the highest lawful rate permissible under applicable usury laws. If fi.om any circumstances whatsoever fulfillment of any provision hereof at the time performance of such provisions shall be due, shall involve transcending the limit of validity prescribed by law which a court of competent jurisdiction may deem applicable hereto, then the obligation to be fulfilled shall be reduced to the limit of such validity and if fi.om any circumstance the Holder shall ever receive as interest an amount which would exceed the highest lawful rate, such amount which would be excessive interest shall be applied to the reduction of the unpaid principal balance due hereunder and not to the payment of interest. This instrument shall be governed by and construed according to the laws of the State of Minnesota. IN WITNESS WHEREOF, Borrower, intending to be legally bound hereby, has duly executed this Note the day and year first-above written. New Hope Alano Group, Inc., a Minnesota corporation By. Its By. Its PSAttomey~SAS\l Client Files~2 City of New Hope\99-11276(Alano)\170k mortgage note-AC Ca-lson bldg doc MORTGAGE, SECURITY AGREEMENT AND FIXTURE FINANCING STATEMENT THIS MORTGAGE is made this __ day of ,2004, between the New Hope Alano Group, Inc., a Minnesota corporation ("Mortgagor"), and ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR CITY OF NEW HOPE with a business address at 4401 Xylon Avenue North, New Hope, MN 55428 ("Mortgagee"). WlTNESSETH: WHEREAS, Mortgagor is justly indebted to Mortgagee in the principal sum of One Hundred Seventy Thousand Dollars ($170,000.00), with interest thereon, until paid, pursuant to which Mortgagor has executed a Mortgage Note of even date herewith ("Note"), payable to the order of Mortgagee at its office aforesaid, or at such other place as the holder thereof may designate in writing, said principal sum being payable as set forth in the Note with interest at the rate set forth therein, to which Note reference is hereby made; NOW, THEREFORE, THIS MORTGAGE WITNESSETH: That Mortgagor, in consideration of the premises and for the purpose of securing (1) payment of said indebtedness as in the Note provided, (2) payment of all other monies secured hereby, and (3) the performance of all the covenants, conditions, stipulations and agreements herein contained, does by these presents grant, bargain, sell and convey to Mortgagee, its successors and assigns, forever, the premises described in paragraphs A through D hereof and to hold all said property ("Mortgage Premises"), together with the possession and right of possession thereof, unto Mortgagee, its successors and assigns forever. A. REAL PROPERTY The "Real Property" conveyed hereby shall include the real estate and premises located in Hennepin County, Minnesota, described as follows: See Exhibit A attached. Together with all buildings, structures and improvements now standing, or at any time hereafter constructed or placed upon the above described real property, or any part thereof, including all rights, privileges, interests, easements, tenements, hereditaments and appurtenances thereto; and Together with all machinery, apparatus, equipment, fittings and fixtures of every kind and nature whatsoever, affixed, attached or annexed to the premises and used in connection with the operation of the premises now owned or hereafter acquired by Mortgagor and the proceeds thereof ("Fixtures"), and all of the right, title and interest of Mortgagor in and for any Fixtures which may be subject to any security agreement superior to the lien of this Mortgage, Security Agreement and Fixture Financing Statement ("Mortgage"). It is understood and agreed that the aforesaid Fixtures are part of the premises and appropriated to the use of the premises and, regardless of the manner in which they may or may not be attached, affixed or annexed to the premises, shall for purposes of this Mortgage be deemed conclusively to be Fixtures and therefore a part of the real estate conveyed in this Mortgage. B. PERSONAL PROPERTY Mortgagor, in and for the same consideration, also by these presents grants to Mortgagee, it successors and assigns, a security interest in and to all personal property now owned or hereafter acquired by Mortgagor and used in connection with the construction, operation and maintenance of the Improvements on said Mortgage Premises, including, but not limited to, all building materials, furniture, furnishings, appliances, equipment, insurance proceeds, plans and specifications, surveys, drawings and other personal property now or hereafter owned by Mortgagor, or in which Mortgagor now or hereafter has an interest, and all inVentory of Mortgagor on the premises and the proceeds thereof. C. RENTS, LEASES AND PROFITS As further security for payment of the indebtedness and performance of the obligations, covenants and agreements secured hereby, Mortgagor hereby transfers, sets over and assigns to Mortgagee all leases, rents, issues and profits of the premises from time to time accruing, whether under leases or tenancies, now existing or hereafter created. D. JUDGMENTS AND AWARDS As further security for the payment of the indebtedness and performance of the obligations, covenants and agreements secured hereby, Mortgagor hereby transfers, sets over and assigns to Mortgagee all judgments, awards of damages and settlements hereafter made resulting from condemnation proceedings, or the taking of the Mortgage Premises or any part thereof under the poxver of eminent domain, or for any damage (whether caused by such taking or otherwise) to the Mortgage Premises or the improvements and fixtures thereon or any part thereof, or to any rights appurtenant thereto, including any award for change of grade of streets. ARTICLE I GENERAL COVENANTS, AGREEMENTS AND WARRANTIES Section 1.1 Right and Authority to Mortgage~ Mortgagor represents, warrants and covenants that it is the owner in fee simple of the Mortgage Premises; that it has good right and lawful authority to mortgage and pledge the same as provided for herein; that the Mortgage Premises are free from all liens and encumbrances, except those permitted encumbrances specifically set forth in Exhibit "B" attached and hereby made a part hereof ("Permitted Encumbrances"); that Mortgagee shall quietly enjoy and possess the same; that Mortgagor will warrant and defend the title to the Mortgage Premises against all claims and demands of others; that all buildings and improvements now or hereafter located on the Mortgage Premises are, or will be, located entirely within the boundaries of the Mortgage Premises. Section 1.2 Payment of Indebtedness. Mortgagor Will promptly and fully pay each and every installment of principal and interest on the Note; Mortgagor will pay promptly all other sums secured hereby when the same shall become due and payable; and Mortgagor shall perform and observe all of the covenants, terms and provisions contained herein, and those contained in the Note and in any other instrument given as security for payment of the debt secured hereby. Mortgagor will also promptly and fully pay each installment of principal and interest on the promissory notes secured by those mortgages set forth on Exhibit B attached hereto, and will perform all other agreements and covenants to be performed by it under those mortgages set forth on said Exhibit B. Section 1.3 Maintenance and Repair of the Mortgage Premi.qe~ Mortgagor agrees that it will keep and maintain the Mortgage Premises in good condition and repair and that it shall not commit waste or misuse. Mortgagor further agrees to comply with all laws, ordinances, regulations, restrictions and covenants affecting the Mortgage Premises and their use and will promptly repair or restore any buildings, improvements or structures now or hereafter located on the Mortgage Premises which may become damaged or destroyed. Mortgagor agrees that it will not remove or demolish any building or structure now or hereafter erected on the Mortgage Premises.- Section 1.4 Payment nf Prior lJiens and Enet~mhrances. Mortgagor agrees to pay promptly all operating costs and expenses of the Mortgage Premises; to keep the Mortgage Premises free fi.om mechanics' or materialmen's liens and any other lien not specifically subordinated to the lien of this Mortgage; to keep the Mortgage Premises flee fi.om levy, execution or attachment; to pay immediately all indebtedness which may be secured by mortgage, lien or charge on the Mortgage Premises that is superior to or equal to the lien of this Mortgage, except indebtedness secured by those Mortgages listed on the attached Exhibit B; and, at Mortgagee's request, to give Mortgagee satisfactory evidence of such payment and discharge. Section 1.5 Payment of Taxes. As,qe~sment~ and Chargeq. Mortgagor will pay when the same is due and before any penalty attaches, all taxes, assessments, water charges, sewer charges, and other fees, taxes, charges and assessments of every kind and nature whatsoever assessed or charged against or constituting a lien on the Mortgage Premises or any interest therein or upon the indebtedness secured hereby ("Taxes and Assessments") and will upon demand furnish to Mortgagee proof of payment of any such Taxes and Assessments. Section 1.6 Prnteetinn of Seenrity. Mortgagor agrees to promptly notify Mortgagee of and to appear in and defend any suit, action or proceeding that maY affect the value of the Mortgage Premises, the indebtedness secured hereby or the rights or interest of Mortgagee hereunder, including, but not limited to, eminent domain, insolvency, code enforcement, or arrangements or proceedings involving a bankruptcy or decedent. Mortgagee may elect to appear in or defend any such action or proceeding and may disburse such stuns and take such action as is necessary to protect Mortgagee's interest including, but not limited to, entry upon the Mortgage Premises to make repairs. Mortgagor agrees to indemnify and reimburse Mortgagee for any and all loss, damage, expense or cost, including reasonable attorneys' fees, arising out of or incurred in connection with any suit, action or proceeding. Section 1.7 ~. (a) So long as the Indebtedness remains unpaid, the Mortgagor shall, at its own cost, maintain with insurers of recognized responsibility acceptable to the Mortgagee, insurance coverage on its physical assets and against other business risks in such amounts and of such types as are customarily carded by entities similar in size and nature, and in the event of acquisition of additional property, real or personal, or of incurrence of additional risks of any nature, increase such insurance coverage in such manner and to such extent as prudent business judgment and present practice would dictate; and in the case of all policies covering property mortgaged or pledged to Lender or property in which Lender shall have a security interest of any kind whatsoever, other than those policies protecting against casualty liabilities to strangers, all such insurance policies shall provide that the loss payable thereunder shall be payable to the Borrower and Lender as their respective interests may appear, all said coverage to be shown on an Acord 25 Certificate of Insurance. Insurance coverage shall specifically include hazard and fire insurance on any improvements insuring against loss by fire, hazards included in the term "extended coverage", loss by vandalism or malicious mischief, and such other hazards, casualties and contingencies as may be required by the Mortgagee, on the basis of replacement cost without a co-insurance clause, in an amount sufficient to prevent the Mortgagor from becoming a co-insurer or any loss thereunder and at least equal to the sum of the unpaid balance of the Indebtedness and all amounts secured by any senior mortgage or other lien' which exists from time to time against the Mortgaged Property (to which the Mortgagee does not necessarily consent) or such additional amounts and for such periods as may be required by the Mortgagee. The Mortgagor shall pay all premiums on insurance required hereunder by making payment directly to the insurer. The Mortgagee shall have the right to hold the policies and renewals thereof, and the Mortgagor shall promptly furnish to the Mortgagee all such policies, renewals thereof, renewal notices and all paid-premium receipts received by it. All policies of insurance and any and all refimds of unearned premiums are hereby assigned to the Mortgagee as additional security for the payment of the Indebtedness secured hereby. In the event of foreclosure of this Mortgage, all right, title and interest of the Mortgagor in and to any insurance policies then in force shall pass to the purchaser at the foreclosure sale. (b) The policies of all such insurance shall have loss payable provisions in favor of and in form acceptable to the Mortgagee, shall provide for at least thirty (30) days prior to written notices of cancellation, termination or modification thereof to the Mortgagee, shall permit Mortgagee to make premium payments to prevent cancellation, and shall provide that no act or negligence of the Mortgagor or of any occupant of the Mortgaged Property, and no occupancy or use of the Mortgaged ProPerty for purposes more hazardous than permitted by the terms of the policy, will affect the validity or enforceability of such insurance as against Mortgagee. In the event of loss under such insurance the Mortgagor shall give prompt notice to the insurance carrier and the Mortgagee; Mortgagor shall duly make proof of loss, and shall immediately furnish to Mortgagee a copy of such proof of loss. The Mortgagee is authorized and empowered to collect and receive all insurance proceeds, and if no Event of Default has occurred under this Mortgage, it will apply such proceeds to the restoration of the Property and make disbursements thereof accordingly. Any insurance proceeds not so applied shall be applied to the payment of the Indebtedness. ARTICLE II UNIFORM COMMERCIAL CODE Section 2.1 ,qecuriW Agreement. It is agreed by the parties that this Mortgage shall constitute a security agreement as defined in the Uniform Commercial Code ("Code"), and Mortgagor hereby grants to Mortgagee a security interest within the meaning of the Code in favor of Mortgagee on all personal property, rents, issues, profits, leases, proceeds thereof, judgments and awards ("Collateral") that are included in the Mortgage Premises. Section 2.2 Fixture Filing. It is intended that this Mortgage shall be effective as a financing statement filed as a fixture filing from the date of its filing in the real estate records of the county where the Mortgage Premises are located with respect to those items of Collateral described in this Mortgage that are, or are to become, Fixtures related to the real estate mortgaged herein. The name of the record owner of said real estate is the Mortgagor set forth in page one of this Mortgage. Information concerning the security interest created by this instrument may be obtained from Mortgagee, as secured party, at its address as set forth on page one of this Mortgage. This document covers goods which are or are to become Fixtures. Section 2.3 Representation and Agreements. Mortgagor warrants to Mortgagee as follows: (a) Mortgagor is or will be (in the case of property not yet acquired) the true and lawful owner of Collateral mentioned in any financing statement, subject to no liens, charges, security interests or encumbrances other than the lien hereof, and the liens previously disclosed by written notice to Mortgagee; (b) The Collateral is to be used .by Mortgagor solely for business purposes, being installed upon the Mortgage Premises for Mortgagor's own use or as the equipment and furnishings leased or furnished by Mortgagor, as landlord, to tenants of the Mortgage Premises; (c) The Collateral will be kept at the buildings comprised on the Mortgage Premises and will not be removed there from without the consent of Mortgagee, and the same may be affixed to any such building but will not be affixed to any other real estate; (d) Unless stated otherwise in this Mortgage and except for the interest of those mortgagees set forth in the attached Exhibit Bi the only persons having any interest in the Collateral are Mortgagor, Mortgagee and the tenants (whose interests, if any, are subordinate to the rights of Mortgagee) and no financing statement covering any such property and any proceeds thereof is on file in any public office except as set forth herein; (e) The remedies of Mortgagee hereunder are cumulative and separate, and the exercise of any one or more of the remedies provided for herein or under the Code shall not be construed as a waiver of any of the other rights of Mortgagee, including having such Collateral deemed a part of the realty of any foreclosure; (f) If notice to any party of the intended disposition of the Collateral is required by law in a particular instance, such notice shall be deemed commercially reasonable if given at least ten (10) days prior to such intended disposition and may be given by mail at the address herein specified, either separately or as a part of the notice given to foreclose the real property or may be given by private notice if such parties are known to Mortgagee; (g) The filing of a financing statement pursuant to the Code shall never impair the stated intention of this Mortgage that all equipment, personal property and Fixtures comprising the Collateral are, and at all times and for all purposes and all proceedings, both legal or equitable, shall be regarded as part of the Mortgage Premises hereunder, regardless of whether such item is physically attached to the real property or any such item is referred to or reflected in a financing statement; (h) Mortgagor will, on demand, furnish all financing statements that may from time to time be required by Mortgagee to establish and perfect the priority of Mortgagee's security interest in such Collateral; and (i) Mortgagor shall give advance written notice of any proposed change in Mortgagor's name, identity or structure and will execute and deliver to Mortgagee prior to or concurrently with such change all additional financing statements that Mortgagee may require to establish and perfect the priority of Mortgagee's security interest. ARTICLE III EVENTS OF DEFAULT Section 3.1 ~. It shall be an "Event of Default" under this Mortgage if: (a) Mortgagor shall fail to pay when due any principal, interest or any other amount due hereunder or under the Note, whether at the stated maturity date or on a date fixed for the payment of any installment or otherwise or shall fail to comply with the provisions of Section 1.2 hereof; (b) Mortgagor shall default under, fail to comply with or fail to perform any of the terms, conditions or covenants of the Note, this Mortgage, or any other instrument securing the Note; (c) Mortgagor shall fail to pay when due any other indebtedness secured hereby; (d) Any representation or warranty made by or on behalf of Mortgagor in connection with the application for and/or closing of the loan evidenced by the Note proves to have been false or misleading in any material respect; (e) Mortgagor shall default in the performance of any obligation contained in any documents evidencing any other indebtedness owed to Mortgagee or relating thereto; (f) Mortgagor shall sell, transfer, convey or further encumber the Mortgage Premises; (g) A custodianship, trusteeship, receivership or assignment for the benefit of creditors shall be imposed upon Mortgagor or the Mortgage Premises (or a substantial part thereof) or shall be filed by or against Mortgagor or any other person or petitioner for debtor's relief under any state or federal bankruptcy, reorganization or insolvency and the same shall not be discharged within a period of sixty (60) days; (h) Mortgagor or any maker, guarantor or surety of the Note shall be adjudicated incompetent or die and satisfactory provisions are not made for the substitution of the liability of said party's estate for the repayment of the indebtedness secured hereby; or (g) There is any change in the partnership structure of Mortgagor, whether voluntary or involuntary. Section 3.2 Mortgao~ee's Right ira Ft~reelo.~e, If an Event of Default shall occur, Mortgagee may immediately and without further notice to Mortgagor declare the entire unpaid principal balance of the Note, together with all other indebtedness secured hereto, to be immediately due and payable, and, thereupon, all of such unpaid principal balance of the Note, together with all accrued interest thereon and all other indebtedness secured hereby, shall be and become immediately due and payable, and Mortgagor hereby authorizes and fully empowers Mortgagee to foreclose this Mortgage by judicial proceedings or by advertisement with full authority to sell the Mortgage Premises and convey the same to the purchaser in fee simple, all in accordance with and in the manner prescribed by law; and out of the proceeds arising from the sale in foreclosure, to retain the principal and interest due on the Note and the indebtedness secured hereby, together with all sums of money as Mortgagee shall have expended or advanced pursuant to this Mortgage or pursuant to statute together with interest thereon as herein provided and all costs and expenses of such foreclosure, including lawful attorneys' fees; the balance after payment of all said sums, if any, to be paid to the persons entitled thereto by law. Section 3.3 Receiver. If an Event of Default shall occur, Mortgagee shall be entitled, as a matter of right, without notice and without giving bond and without regard to the solvency or insolvency of Mortgagor, or waste of the Mortgage Premises or adequacy of the security of the Mortgage Premises for the indebtedness secured hereby, to apply for the appointment of a receiver in accordance with law, who shall collect the rents and all other income of any kind, manage the Mortgage Premises so as to prevent waste, execute leases within or beyond the period of receivership, pay all expenses for normal maintenance of the Mortgage Premises, perform the terms of this Mortgage and apply the rents, issues and profits in the following order: (a) Payment of the fees of said receiver; (b) Application of any tenants' security deposits as required by Minn_ ~qtat. §504.20, if applicable; (c) Payment when due of prior or current real estate taxes or special assessments with respect to the Mortgage Premises; (d) Payment of periodic escrow payments for such taxes or special assessments, if required by this Mortgage or those mortgages listed on Exhibit B attached hereto; (e) Payment when due of the premiums for insurance of the type required by this Mortgage, or if required by this Mortgage or those mortgages listed on said Exhibit B, payment of the periodic escrow for the payment of said insurance premiums; (f) Keeping of the covenants required of lessor or licensor pursuant to Minn_ Stat, {}504.18, Subd. 1, if applicable; and (g) As provided in the Assignment of Leases and Rents executed by Mortgagor as further security for the indebtedness secured hereby (whether included in this Mortgage or separate instrument), including, but not limited to, applying the same to the cost and expenses of receivership, including attorneys' fees, to the repayment of the indebtedness secured hereby and to the operation, maintenance, upkeep and repair of the Mortgage Premises, including payment of taxes on the Mortgage Premises and payment of premiums of insurance on the Mortgage Premises. Mortgagor does hereby irrevocably consent to such appointment of receiver. Section 3.4 Right,~ ITnder the Ilniform Commercial Code. In addition to the rights available to a mortgagee of real property, Mortgagee shall have all rights, remedies and recourse available to a secured party under the Code, including the right to proceed under the provisions of the Code governing default, as to any personal property which may be included in the Mortgage Premises or which may be deemed non-realty in a foreclosure of this Mortgage or to proceeds of such personal property. Section 3.5 Right to I'}[qeontinne Proeeeding,~. In the event Mortgagee shall have proceeded to invoke any right, remedy or recourse permitted under this Mortgage and shall thereafter elect to discontinue or abandon the same for any reason, Mortgagee shall have the unqualified right to do so and in such event Mortgagor and Mortgagee shall be restored to their former positions with respect to the indebtedness secured hereby. This Mortgage of the Mortgage Premises and all the rights, remedies and recourse of Mortgagee shall then continue as if the same had not been invoked. Section 3.6 Acknowledgment of Waiver of Hearing Before Sale. Mortgagor understands and agrees that upon the occurrence of an Event of Default under the terms of this Mortgage, Mortgagee has the right, inter alia, to foreclose this Mortgage by advertisement pursuant to Minn_ Stat. Chapter 580, as hereafter amended, or pursuant to any similar or replacement statute hereafter enacted; that if Mortgagee elects to foreclose by advertisement, it may cause the Mortgage Premises, or any part thereof., to be sold at public auction; that notice of such sale must be published for six (6) successive weeks at least once a week in a newspaper of general circulation and that no personal notice is required to be served upon Mortgagor. Mortgagor further understands that upon the occurrence of such Event of Default, Mortgagee may also elect its rights under the Code and take possession of the Personal Property and dispose of the same by sale or otherwise in one or more parcels provided that at least ten (10) days' prior notice of such disposition must be given, all as provided for by the Code, as hereafter amended or by any similar or replacement statute hereafter enacted. Mortgagor further understands that under the Constitution of the United States and the Constitution of the State of Minnesota it may have the right to notice and hearing bef,ore the Mortgage Premises may be sold and that the procedure for foreclosure by advertisement described above does not insure that notice will be given to Mortgagor and neither of said procedures for foreclosure by advertisement nor the Code requires any heating or other judicial proceeding. MORTGAGOR HEREBY RELINQUISHES, WAIVES AND GIVES LIP ANY CONSTITUTIONAL RIGHTS IT MAY HAVE TO NOTICE AND HEARING BEFORE SALE OF THE MORTGAGE PREMISES AND EXPRESSLY CONSENTS AND AGREES THAT THE MORTGAGE PREMISES MAY BE FORECLOSED BY ADVERTISEMENT AND THAT THE PERSONAL PROPERTY MAY BE DISPOSED OF PURSUANT TO UNIFORM COMMERCIAL CODE, ALL AS DESCRIBED ABOVE. MORTGAGOR ACKNOWLEDGES THAT IT IS REPRESENTED BY LEGAL COUNSEL; THAT BEFORE SIGNING THIS DOCUMENT, THIS PARAGRAPH AND MORTGAGOR'S CONSTITUTIONAL RIGHTS WERE FULLY EXPLAINED BY SUCH COUNSEL AND THAT MORTGAGOR UNDERSTANDS THE NATURE AND EXTENT OF THE RIGHTS WAIVED HEREBY AND THE EFFECT OF SUCH WAIVER. ARTICLE IV OTHER PROVISIONS Section 4.1 All Notices. All notices provided for herein shall be in writing and shall be deemed to have been given when delivered personally or when deposited in the United States mail, registered or certified, return receipt requested, postage Prepaid, addressed as f.ollows, or otherwise as the respective parties hereto may give notice in writing from time to time, to-wit: If'to Mortgagor: New Hope Alano Group, Inc. c/o If to Mortgagee: Economic Development Authority in and for City of New Hope 10' 4401 Xylon Avenue North New Hope, MN 55428 Section 4.2 C..hait. g_fl.CLa~. The loan secured by this Mortgage is intended by the parties to be a Minnesota loan, 'and this Mortgage is made and executed under the laws of the State of Minnesota and is intended to be governed by the laws of that state, without giving effect to those provisions of law relating to choice of law. Section 4.3 ~q~ece.qsor.q and A.~.qignq. This Mortgage and each and every covenant, agreement or other provision herein contained shall be binding upon Mortgagor and its heirs and assigns and shall inure to the benefit of Mortgagee and its successors and assigns. Section 4.4 ~tahiliI~. The unenforceability or invalidity of any provisions hereof shall not render any other provision or provisions herein contained unenforceable or invalid. Section 4.5 Caption~ and I-Ieading.q. The captions and hearings of the various sections of this Mortgage are for convenience only and are not to be construed to confine or limit in any way the scope or intent of the provisions hereof. Whenever the contents require or permit, the singular shall include the plural, and the plural shall include the singular, and the masculine, feminine and neuter genders shall be freely interchangeable. Section 4.6 Relea.qe of Mortgage. When all indebtedness secured hereby has been paid, this Mortgage and all assignments herein contained shall be void and this Mortgage shall be released by Mortgagee at the cost and expense of Mortgagor; otherwise, it shall remain in full force and effect. Section 4.7 I-lazardonq Materials. Mortgagor covenants, represents and warrants to Mortgagee, its successors and assigns, that during the Mortgagor's ownership of the Property, the operation of said Property has not violated and is not currently violating any federal, state or local law, regulation, ordinance or requirement governing Hazardous Materials; that the Property is not listed in the United States Environmental Protection Agency's National Priorities List of Hazardous Waste Sites nor any other list, schedule, log, inventory or record of Hazardous Materials or hazardous waste sites, whether maintained by the United States Government or any state or local agency, and that the building improvements do not contain any formaldehyde, urea or asbestos, except as may have been disclosed in writing to the Mortgagee by the Mortgagor at the time of execution and delivery of this Mortgage. The Mortgagor agrees to indemnify and reimburse 'the Mortgagee, its successors and assigns, for any breach of these representations and warranties and fi-om any loss, damage, expense or cost arising out of or incurred by Mortgagee which is the result of a breach of, misstatement of or misrepresentation of the above covenants, representations and warranties, together with all attorneys' fees incurred in connection with the defense of any action against the Mortgagee arising out of the above. These covenants, representations and warranties shall be deemed continuing covenants, representations and warranties for the benefit of the Mortgagee, including any purchaser at a mortgage foreclosure sale, any transferee of the title of the Mortgagee or any subsequent purchaser at a foreclosure sale, and any subsequent owner of the Property and shall survive any foreclosure of the Mortgage and any acquisition of title by Mortgagee or anyone claiming through or under the Mortgage as the title of the Mortgagee. The amount of all such indemnified loss, damage, expense or cost, shall bear interest thereon at the rate of interest in effect on the Note and shall become so much additional indebtedness, secured by this Mortgage and shall become immediately due and payable in full on demand of the Mortgagee, its successors and assigns. Said indemnity shall only apply in connection with the conditions which were in existence, in whole or in part, prior to the date on which Mortgagee acquires possession and title to the Property and shall not apply in connection with liability of the Mortgagee due to action taken by it or its assigns while it was Mortgagee. Section 4.8 Entire Agreement. The Note, this Mortgage, the Guaranty and all other instruments securing the Note ("Loan Documents") contain the entire agreement between Mortgagor and Mortgagee relating to or connected with the loan to Mortgagor secured hereby. Any other agreements relating to or connected with the loan secured hereby not expressly set forth in the Loan Documents are null and void and superseded in their entirety by the provisions of the Loan Documents. IN TESTIMONY WHEREOF, Mortgagor has caused these presents to be executed as of the date first above written. New Hope Alano Group, Inc., a Minnesota corporation By Its By Its STATE OF MINNESOTA ) ) SS. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this __ day of ,2004, by and the and of the New Hope Alano Group, Inc., a Minnesota corporation under the laws of Minnesota, on behalf of said corporation. 12 Notary Public THIS DOCUMENT WAS DRAFTED BY: Jensen & Sondrall, P.A. Attorneys at Law 8525 Edinbrook Crossing, #201 Brooklyn Park, MN 55443 (763) 424-8811 P:\Attome)qSAS\l Client Ffles~2 City of New HopeL99-11276(Alano)hnortgage-AC Carlson bldg. doc All in Hennepin County, Minnesota. EXHIBIT Permitted Encumbrances EXHIBIT I All in Hennepin County, Minnesota. ASSIGNMENT OF LEASES AND RENTS THIS AGREEMENT is made this __ day of ., 2004, by the NEW HOPE ALANO GROUP, INC., a Minnesota corporation, party of the first part, its successors and assigns (the "Borrower") to the ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR THE CITY OF NEW HOPE, party of the second part, its successors and assigns (the "Lender"). WHEREAS, Borrower has this day executed to the Lender a Loan Note in the principal sum of One Hundred Seventy Thousand and 00/100 Dollars ($170,000.00); and WHEREAS, as further security for the payment of the principal balance and interest coming due on said Note and the full and complete performance of the covenants, agreements and promises contained in the Note, Borrower wishes to assign to Lender all of Borrower's right, title and interest in the Lease(s) hereinafter described; NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by Borrower, Borrower hereby grants, transfers and assigns to Lender: 1. All of the Borrower's interest in and to the "Leases". The term "Leases" as used in this Assignment shall be deemed to include any and all of the leases now or hereafter placed during the term of this Assignment upon the land (the "Land") and the improvements (the "Improvements") (the Land and the Improvements, hereinafter collectively, the "Project") covered by that certain Mortgage, Security Agreement and Fixture Financing Statement (the "Mortgage") of even date herewith executed by the Borrower to the Lender, the Land being more fully described in Exhibit "I" attached hereto and made a part hereof. 2. All rents, income, receipts and revenue arising from the Lease(s) and all renewals and extensions thereof. The Lease(s) and all rents, income, issues, benefits, proceeds and revenues assigned hereby are hereinafter sometimes collectively referred to as "Collateral". THIS ASSIGNMENT is made for the purpose of providing additional security for the Note, and shall secure: A. The payment of the principal sum, interest and any other indebtedness evidenced by the Note (as said Note may hereafter be extended, renewed and modified) of even date herewith executed by Borrower, payable to the Lender in the original principal sum of One Hundred Seventy Thousand and 00/100 Dollars ($170,000.00) and secured by the Mortgage. B. The payment of all other sums with interest thereon being due and payable to the Lender under the provisions of this Assi~rnent or of the Note, the Mortgage, or any other instruments evidencing, securing, or concerning the Note (hereinafter the Note, the Mortgage, this Assignment and said other instruments are sometimes collectively referred to as the "Loan Documents"). C. The performance and discharge of each and every obligation, covenant and agreement of the Borrower contained in' the Loan Documents. II. THE BORROWER COVENANTS with the Lender (i) to Observe and perform all the obligations imposed upon the lessors under any Lease(s) and not to do or permit to be done anything to impair the Lender's security (ii) not to collect any of the rent, revenue, or income arising or accruing under any Lease(s) or from the Project materially in advance of the time when the same shall become due; (iii) except for an assignment subject to the terms of this Assignment, not to execute any other assignments of lessors' interest in any Lease(s) or assignments of rents arising'or accruing from the Lease(s) or from the Project; (iv) not to subordinate the Lease(s) to any encumbrances or to permit, consent or agree to such subordination without the Lender's prior written consent; (v) not to materially alter, modify or change the terms of any Lease(s) or give any consent or exercise any option required or permitted by such terms without the prior written consent of the Lender; (vi) not to cancel or terminate any Lease(s) or to accept a surrender thereof or to convey, transfer, suffer or permit a conveyance or transfer of the Project or portion thereof or of any 2 interest therein so as to effect, directly or indirectly, proximately or remotely, a termination or diminution of the obligations of, lessees thereunder; (vii) not to alter, modify or change the terms of any guaranty of any Lease(s) or cancel or terminate such guaranty without the prior written consent of the Lender; (viii) at the Lender's request to execute and deliver all such further assurances and assignments in the Project as the Lender shall from time to time reasonably require, including without limitation assignments of leases not yet executed; (ix) to keep any Lease(s) free from any liens, encumbrances or security interests whatsoever and (x) to maintain any Lease(s) in full forCe and effect, to enforce all Lease(s) in accordance with their terms, to appear in and defend any action or proceeding arising under or in any manner connected with any of the Collateral and to give prompt written notice to the Lender of any claim of material default under any Lease(s) together with a true and complete copy of any such claims. III. THIS ASSIGNMENT is made on the following terms, covenants and conditions: 1. So long as (a) there shall exist no default by the Borrower in the timely payment of the indebtedness secured by the Mortgage or in the performance of any other obligation, covenant or agreement set forth in the Loan Documents or in the Lease(s) to be performed by the Borrower, (b) none of the statements, representations or warranties made or furnished to the Lender by or on behalf of the Borrower with respect to the Loan Documents be untrue or incomplete in any material respect as of the date made and (c) the Project is not subject to garnishment, levy, attachment or lien, then in such event the Borrower shall have the right to collect at the time of, but not prior to, the date provided for the payment thereof, all rents, income, receipts, revenue and Proceeds arising under all Lease(s) or fi.om the Project described therein and to retain, use and enjoy the same. 2. Upon or at any time after default in the timely payment of the indebtedness secured by the Mortgage or default in the performance of any obligation, covenant or agreement set forth in the Loan Documents or any Lease(s), or if any of the statements, representations or warranties made or furnished to the Lender by or on behalf of the Borrower with respect to the Loan Documents be untrue or incomplete in any material respect as of the date made, or if the Project is subjected to 3 garnishment, levy, attachment or lien, then in any such event the Lender, without in any way waiving such default, may at its option without notice and without regard to the adequacy of the security for the indebtedness secured by the Mortgage, either in person or by agent, with or without bringing any action or proceeding, or by a receiver appointed by a court, take possession of the Project or any portion thereof, have, hold, manage, lease and operate the same on such terms and for such period of time as the Lender may deem appropriate and, either with or without taking possession of the Project in its own name, demand, sue for or otherwise collect and receive all rents, revenue and income of the Project, including those past due and unpaid with full power to make from time to time all alterations, renovations, repairs or replacements thereto or thereof as may seem proper.to the Lender and to apply such rents, income and profits to the following items in the following order of priority: (a) to payment of all reasonable fees of the' receiver, if any, approved by the court; (b) to the repayment when due of all tenant security deposits, if any, with interest thereon, pursuant to the provisions of Minnesota Statutes §504.20; (c) to payment of all delinquent or current real estate taxes and special assessments payable with respect to the Project, or if the Mortgage requires periodic escrow payments for such taxes and assessments, to the escrow payments then due; (d) to payment of all premiums then due for the insurance required by the provisions of the Mortgage, or if the Mortgage requires periodic escrow payments for such premiums, to the escrow payments then due; (e) to Payment of expenses incurred for normal maintenance of the Project; and (f) to payment of the indebtedness secured by the Mortgage, together with all costs and attorneys' fees, in such order or priority as to any of the items mentioned in this paragraph as the Lender in its sole discretion may determine, any statute, law, custom or Use to the contrary notwithstanding. The exercise by the Lender of the options granted it in this paragraph and the collection of the rents, income and profits and the application thereof as herein provided shall not be considered a waiver of any default of the Borrower under the Loan Documents. 3. The Lender shall not be liable for any loss sustained by the Borrower resulting from the Lender's failure to let the Project after default or from any other act or omission of the Lender in manag/ng the Project after default unless such loss is caused by the willful misconduct and bad faith of the Lender. The Lender shall not be obligated to perform or discharge any obligation, duty or liability under any Lease(s) or under or by reason of this Assignment and the Borrower shall, and does hereby agree to, indemnify the Lender for, and to hold the Lender harmless from, any and all liability, loss or damage which may or might be incurred under any Lease(s) or under or by reason of this Assignment and from any and all claims and demands whatsoever which may be asserted against the Lender by reason of any alleged obligations or undertakings on its part to perform or discharge any of the terms, covenants or agreements contained in any Lease(s). Should the Lender incur any such liability under any Lease(s) or under or by reason of this Assignment or in defense of any such claims or demands, the amount thereof, including costs, expenses and reasonable attorneys' fees, shall be secured hereby and by the Mortgage, and the Borrower shall reimburse the Lender for such amounts immediately upon demand. It is further understood that this Assignment shall not operate to place responsibility upon the Lender either for the control, care, management or repair of the Project or for the carrying out of any of the terms and conditions of any Lease(s); neither shall this Assignment operate to make the Lender responsible or liable for any waste committed on the Project by the tenants or any other parties, or for any dangerous or defective condition of the Project, or for any negligence in the management, upkeep, repair or control of the Project resulting in loss or injury or death to any tenant, licensee, employee or stranger. 4. Upon payment in full of the indebtedness secured by the Mortgage, this Agreement shall become and be void and of no effect, but the affidavit, certificate, letter or statement of any officer, agent or attorney of the Lender showing any part of the indebtedness to remain unpaid shall be and constitute conclusive evidence of the validity, effectiveness and continuing force of this Assignment and any person may, and is hereby authorized to, rely thereon. The Borrower hereby authorizes and directs any lessees named in any Lease(s) or any other or future lessee or occupant of the Project, upon receipt fi'om the Lender of written notice to the effect that the Lender is then the holder of the Note and the Mortgage and that a default exists thereunder or under the Assignment, 5 ~[o pay over to the Lender all rents, revenues and income arising or accruing under any Lease(s) or from the Project and to continue so to do until otherwise notified by the Lender. 5. The Lender may take or release other security for the payment of said indebtedness, may release any party primarily or secondarily liable therefor and may apply any other security held by the Lender to the satisfaction of such indebtedness without prejudice to any of the Lender's rights under this Assignment. 6. Nothing contained in this Assignment and no act done or omitted by the Lender pursuant to the powers and rights granted to the Lender hereunder shall be deemed to be a waiver by the Lender of the Lender's rights and remedies under the Loan Documents. This Assignment is made and accepted without prejudice to any of the rights and remedies possessed by the Lender under the terms thereof. The right of the Lender to collect said indebtedness and to enforce any other security held by the Lender may be exercised by the Lender either prior to, simultaneously with, or subsequent to any action taken by the Lender hereunder. 7. In case of any conflict between the terms of this Assignment and the terms of the Mortgage, the terms of this Assignment shall prevail, but whenever possible, the provisions hereof shall be deemed supplemental to and not in derogation of the provisions of the Mortgage. 8. Neither this Assignment nor any provisions hereof, may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against whom enforcement of the change~ waiver, discharge or termination is sought. 9. Whenever the singular or plural number, or the masculine, feminine or neuter gender is used herein, it shall equally include the other. 10. This Assignment shall be governed by and interpreted in accordance with the laws of the State of Minnesota. 11. Time is of the essence in this Assignment. THIS ASSIGNMENT, together with the covenants and warranties herein contained, shall inure to the benefit of the Lender and any subsequent holder of the Note and the Mortgage and shall be binding upon the Borrower and the Borrower's successors and assigns and any subsequent owner of the Project. IN WITNESS WHEREOF, the Borrower has caused this Assignment to be duly executed as of the day and year first above written. New Hope Alano Group, Inc. By Its By. Its STATE OF MINNESOTA ) ) SS. COUNTY OF ) On this __ day of ,2004, before me, a Notary Public within and for said County, personally appeared and , to me personally known, who being each by me duly sworn, did say that they are the and ., respectively, of the New Hope Alano Group, Inc., a Minnesota corporation, named as Borrower in the foregoing instrument; and said individuals acknowledge said instrument to be the free act and deed of said corporation. Notary Public THIS INSTRUMENT DRAFTED BY: Jensen & Sondrall, P.A. 8525 Edinbrook Crossing, Suite 201 Brooklyn Park, MN 55443 (763) 424-8811 P:ka, ttomeyXSAS\l Client File~x2 City of New Hope\99-11276(Alano)Xassignment of rents and le. ases-A.C.Carlson btdg.doc Gl JAR ANTY (Including Subordination) New Hope, Minnesota THIS GUARANTY, made and entered into this ~ day of ,2004, by New Hope Alano Group, Inc., a Minnesota corporation (hereinafter referred to as the "Guarantors"), to the ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR THE CITY OF NEW HOPE, (hereinafter referred to as the "Lender"). RECITALS: A. The New Hope Alano Group, Inc., a Minnesota corporation (hereinafter referred to as the "Debtor"), which is the owner of certain real estate located in the County of Hennepin, State of Minnesota, (hereinafter referred to as the "Premises"). B. The Debtor and the Lender agree that the Lender will make a mortgage loan ("Loan") to the Debtor in the principal amount of One Hundred Seventy Thousand and No/100 Dollars ($170,000.00) which Loan is evidenced by a Loan Note of even date herewith fi.om the Debtor to the Lender (hereinafter referred to as the "Note") to be disbursed pursuant to a Loan Agreement of even date. C. To secure payment of the Note, the Debtor has executed and delivered to the Lender a Mortgage, Security Agreement and Fixture Financing Statement of even date herewith (hereinafter referred to as the "Mortgage"), and an Assignment of Leases and Rents of even date herewith (hereinafter referred to as the "Assignment of Leases"), covering the Premises. E. In order to induce the Lender to make the Loan and accept the Note, the Mortgage and Assignment of Leases and as additional security for the Loan and all monies to be advanced under the Note, the Mortgage and the Assignment of Leases, and performance of all obligations specified in the Loan Agreement, the Guarantors have agreed to give this Guaranty. NOW, THEREFORE, in consideration of the premises, the Guarantors hereby covenant and agree with the Lender as follows: 1. The Note, the Mortgage, the Assignment of Leases and Loan Agreement are hereby made a part of this Guaranty by reference thereto with the same force and effect as if fully set forth herein (said documents are sometimes hereafter referred to collectively as the "Loan Documents"). 2. The Guarantors hereby unconditionally and absolutely, guarantee to Lender the due and prompt payment, and not just the collectibility, of the principal and interest and late charges and all other indebtedness, if any, on the Note, when due, whether at maturity, pursuant to mandatory or optional prepayments, by acceleration or otherwise all at the times and places and at the rates described in, and otherwise according to the tenor of the Note, the Mortgage and the Assignment of Leases. 3. The Guarantors further hereby unconditionally and absolutely guarantee to Lender the due and prompt performance by the Debtor of all duties, agreements and obligations of the Debtor contained in the Note, the Mortgage, the Assignment of Leases, and Loan Agreement respectively, and the due and prompt payment of all costs incurred, including attorneys' fees, in enforcing the payment and performance of the Note, the Mortgage, the Assignment of Leases, Loan Agreement and this Guaranty (the payment and performance of the items set forth in Paragraphs 2 and 3 of this Guaranty being hereinafter collectively referred to as the "Indebtedness Guaranteed"). 4. The Guarantors hereby agree that the Lender may from time to time without notice to or consent of the Guarantors and upon such terms and conditions as the Lender may deem advisable without affecting this Guaranty (a) release any maker, surety or other person liable for payment of all or any part of the Indebtedness Guaranteed; (b) make any agreement extending or otherwise altering the time for or the terms of payment of all or any part of the Indebtedness Guaranteed; (c) modify, waive, compromise, release, subordinate, resort to, exercise or refrain from exercising any right the Lender may have hereunder, Under the Note or any other Loan Document given for the Indebtedness Guaranteed; (d) accept additional security or guarantees of any kind; (e) endorse, transfer or assign the Note, and other Loan Documents to any other party; (f) accept from Debtor or any other party partial payment or payments on account of the Indebtedness Guaranteed; (g) from time to time hereafter further loan monies or give or extend credit to or for the benefit of the Debtor; (h) release, settle or compromise any claim of the Lender against the Debtor, or against any other person, firm or corporation whose obligation is held by the Lender as collateral security for the Indebtedness Guaranteed. 5. The Guarantors hereby uncOnditionally and absolutely waive (a) any obligation on the part of the Lender to protect, secure or insure any of the security given for the payment of the Indebtedness Guaranteed; (c) any of the security given for the payment of the Note; (d) notice of acceptance of this Guaranty by the Lender; (e) notice of presentment, demand for payment, notice of nonperformance, protest, notices of protest and notices of dishonor, notice of nonpayment or partial payment; (f) notice of any defaults under the Note or in the performance of any of the covenants and agreements contained therein or in any other Loan Document given as security for the Note; (g) any limitation or exculpation of liability on the part of the Debtor whether contained in the Note or otherwise; (h) the transfer or sale by the Debtor or the diminution in value thereof of any security given for the Indebtedness Guaranteed; (i) any failure, neglect or omission on the part of the Lender to realize or protect the Indebtedness Guaranteed or any security given therefore; (j) any right to insist that the Lender prosecute collection of the Note or resort to any instrument or security given to secure the Indebtedness Guaranteed or to proceed against the Debtor or against any other guarantor or surety prior to enforcing this Guaranty; provided, however, at its sole discretion the Lender may either in a separate action' or an action pursuant to this Guaranty pursue its remedies against the Debtor or any other guarantor or surety, without affecting its rights under this Guaranty; (k) notice to the Guarantors of the existence of or the extending to the Debtor of the Indebtedness Guaranteed, (1) any order, method or manner of application of any payments on the Indebtedness Secured hereby; or (m) any right to insist Lender disburse the full principal amount of the Note to Debtor or the order, method, manner or amounts disbursed under the Note. 6. Without limiting the generality of the foregoing, the Guarantors will not assert against the Lender any defense of waiver,' release, discharge in bankruptcy, statute of limitations, res judicata, statute of frauds, anti-deficiency statute, fraud, ultra vires acts, usury, illegality or unenforceability which may be available to the Debtor in respect of the Note or any other Loan Document, or any setoff available against the Lender to the Debtor whether or not on account of a related transaction, and the Guarantors expressly agree that they shall be and remain liable for any deficiency remaining after foreclosure of any mortgage or security interest securing the Note, notwithstanding provisions of law that may prevent the Lender fi.om enforcing such deficiency against the Debtor. The liability of the Guarantors shall not be affected or impaired by any voluntary or involuntary dissolution, sale or other disposition of all or substantially all the assets, marshalling of assets and liabilities, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of, or other similar event or proceeding affecting the Debtor or any of its assets and that upon the institution of any of the above actions, at the Lender's sole discretion and without notice thereof or demand therefor, the Guarantors' obligations shall become due and payable and enforceable against the Guarantors, whether or not the Indebtedness Guaranteed is then due and payment. The Guarantors further agree that no act or thing, except for payment in full, which but for this provision might or could in law or in equity act as a release of the liabilities of the Guarantors hereunder shall in any way affect or impair this Guaranty and the Guarant°rs agree that this shall be a continuing, absolute and unconditional Guaranty and shall be in full force and effect until the Indebtedness Guaranteed has been paid in full. 7. The Guarantors agree that all indebtedness, liability or liabilities now or at any time or times hereafter owing by Debtor to the Guarantors are hereby subordinated to the Indebtedness Guaranteed and any payment of indebtedness of the Debtor to the Guarantors, if the Lender so requests, shall be received by the Guarantors as trustee for the Lender on account of the Indebtedness Guaranteed. The Guarantors agree that the payment of any amount or amounts by the Guarantors pursuant to this Guaranty shall not in any way entitle the Guarantors whether at law,. in equity or otherwise to any right to participate in any security held by the Lender for the payment of the Indebtedness Guaranteed, any right to direct the application or disposition of any such security or any right to direct the enforcement of any such security. Performance by the Guarantors under this Guaranty shall not entitle the Guarantors to be subrogated to any of the Indebtedness Guaranteed or to any security therefor, unless and until the full amount of the Indebtedness Guaranteed has been fully paid. 8. The Guarantors agree this Guaranty is executed in order to induce the Lender to make and disburse the Loan and with the intent that it be relied upon by the Lender in making and disbursing the Loan. Disbursement of any part of the Loan without any further actiOn or notice, shall constitute conclusive evidence of the reliance hereon by the Lender. This Guaranty shall mn with the Note and other Loan Documents and without the need for any further assignment of this Guaranty to any subsequent holder of the Note or the need for any notice to the Guarantors thereof. Upon endorsement or assignment of the Note to any subsequent holder, said subsequent holder of the Note may enforce this Guaranty as if said holder had been originally named as Lender hereunder. 9. The Guarantors consent to be sued in any jurisdiction in which the Debtor may be sued as well as the Guarantors' principal place of business and residence and in the State where this Guaranty is executed. 10. No right or remedy herein conferred upon or reserved to the Lender is intended to be exclusive of any other available remedy or remedies but each and every remedy shall be cumulative and shall be in addition to every other remedy given under this Guaranty or now or hereafter existing at law or in equity. No waiver, amendment, release or modification of this Guaranty shall be established by conduct, custom or course of dealing, but only by an instrument in writing duly executed by the Lender. 11. This Guaranty is delivered in and made in and shall in all respects be construed pursuant to the laws of the State of Minnesota. 12. This Guaranty, and each and every part hereof, shall be binding upon the Guarantors and upon their heirs, administrators, representatives, executors, successors and assigns and shall inure to the benefit of each and every future .holder of the Note, including the heirs, administrators, representatives, executors, successors and assigns of the Lender. 13. The promises and agreements herein shall be construed to be and are hereby declared to be joint and several in each and every particular and shall be fully binding upon and enforceable against any or all of such parties or persons, and neither the death nor release of any person or party to this Guaranty shall affect or release the joint and several liability of any other person or party. IN WITNESS WHEREOF, the Guarantors have executed this Guaranty as of the day and year first above written. New Hope Alano Group, Inc., a Minnesota corporation By Its By Its STATE OF MINNESOTA ) )ss COUNTY OF ) The foregoing instrument was acknowledged before me this __ day of , 2004, by and ., the and of New Hope Alan Group, Inc., a Minnesota corporation, on behalf of said corporation. Notary Public THIS INSTRUMENT DRAFTED BY: Jensen & Sondrall, P.A. 8525 Edinbrook Crossing, Suite 201 Brooklyn Park, MN 55443 (763) 424-8811 P:L4.ttomeykSAg\l Client Fiies~. City of New Hopek99-11276(Alano)t,guamnty. A.C. Carlson bldg.doc :. !mI il.~J, ' ' ~ T~ :~/ m , ..... ~: ~m ) ~ ~ m ....... ._ ; i--! i ~ : m ~ .... ~ ............. · m SeTH :' : ~~ · , , ............. ~ ~ ~ ~ 7621 ~ ~ ~ CATHOLIC .......... ~ · ~;: '~ '~; ; CHURCH ........ ~ - / J ~ · ; . ~ ~ Z(~ ~ ~z~ ~ ~ ~4: :" ~; ~ ~~L DR. New Hope Alano Sources-Uses Sourcss Proceeds from sale of building $ 465,0(X).00 Less: Closing Costs $ Plus: Loan Proceeds $ 150,000.00 Relocation Benefit - Moving Expense (Net) $ 15,000.00 Relocation Benefit - RE Taxes $ 10,000.00 Total Sources $ 640,000.0~). Cost of New Building $ (600,000.00) RE Taxes - AC Carlson Site $ (12.000.00) Temporary Location C0s~- $ i5,000.00i Remodelin¢l Costs: Cost of Permits Parking Lot $ ?,. Emergency exits' $ Ceilings .$ Lighting Electrical Walls meeting rooms/office ~: .o ,~ -, .,17', Smoking lounge Kitchen Total Remodeling Costs $ 44,000.00) Total Uses $ (666,000, 00) N~ Sources-Uses $ .(2,6,000. ,00) Remodeling Costs: Remodeling Cost Breakdown Cost of Permits .- -- All 1,000.00 Add another Cost of Permits 1,000.00 Destruction of old 1,000.00 Grading 1,000.00 Repavement 1,000.00 Retaining wall 1,000.00 Re-striping 6,000.00 Parking Lot lo, ooo. oo Bathrooms Ail 15,000.00 Add another - Bathrooms 15,000,00 Emer,qency exits Add another Emergency exits Ail 4,000.00 Add another Ceilings 4,000.00 LiQhtina Add another Lighting Add another Electrical 3,000,00 Walls .meet~n~ rooms/office All 8,000.00 Add another Wall~ meeting room~/office Ail 3,000.00 Add another Smoking room 3,000.00 Kitchen All - Add another - Kitchen 1 New Hope Alano Sources-Uses Proceeds from sale of building $ 465,000.00 Less: Closing Costs $ Subtotal $ - $ 465,000.00 Plus: Loan Proceeds $ 150,000.00 Relocation Benefit - Moving Expense (Net) $ 15,000.00 Relocation Benefit - RE Tax. es $ 10,000.00 Total Sources ~ $ 640,,000.00 Uses Cost of New Building $ (1600.000.0011 RE Taxes - AC Carlson Site $ (12.000.00) Closing Costs -.~__ $ (5.000.00) Temporary Location Costs $ (5,000.00) Subtotal $ (822.000.00) Remodelinl:! Costs: Cost of Permits $ ( Parking Lot Bathrooms ~i ,, 'l" '-','"'-' '"" .... Emergency exits $ Ceilings Lighting Electrical Walls meeting rooms/offios $ (5, DOD. O0' Smoking lounge Kitchen Total Remodeling Costs $ ('24~00Q00) Total Uses $ ('646,000.00) urces-Uses $ (S,000.00) New Hope Alano Sources-Uses Proceeds from sale of building $ 465,000.00 Less: Closing Costs $ Subtotal $ $ 465,000.00 Plus: Loan Proceeds $ 150,000.00 Relocation Benefit- Moving Expense (Net) $ 15,000.00 Relocation Benefit - RE Taxes $ 10,000.00 Total Sources $ 640~000.00 Cost of New Building $ !600.000.00) RE Taxes -AC Cadson Site $ (12,000.00) Closing Costs ...._ $ (3.000.00) Temporary Location Costs $ (3..000.00) Subtotal $ (618,000,00) Remodelino Costs: Cost of Peri.ts $ Parking Lot Bathrooms Ceilings $ Lighting .$ Electrical .$ Wails meeting rooms/~ $ (6,E;,05.00) Smoking lounge Kitchen Total Remodeling Costs $ f24,000.00~ Total Uses $ (642,000,00) Net Sources-Uses $ (2,000.00~ New Hope Alano Sources-Uses Proceeds from sale of building $ 465,000.00 Less: Closing Costs $ Subtotal $ $ 465,000.00 Plus: Loan Proceeds $ 175,000.00 Relocation Benefit - Moving Expense (Net) $ 15,000.00 Relocation Benefit - RE Taxes $ 10,000.00 Total Sources $ 665,000.00 Uses Cost of New Building $ (600,000.00) RE Taxes - AC Cadson Site $ < 12,00Q 00) Closing Costs -.....~ .$ (4.000.00) T~ Location Costs $ (5.00000) Subtotal $ (621.000.00) Remodelin¢l Costs: Cost of Perrnits $ ,; 'i.t';,0O. Partdng Lot $ (. I 0, £,g5.0,3;¢ Emergency ex, ts Ceilings $ Lighting Electrical $ ('3,50~:;,, Walls meeting rooms/office $ Smoking room $ I~tchen Total Remodeling Costs $ (44,000, Total Uses $ (665,000.00) Net ,~ources-Uses , $ New Hope Alano Group, Inc. "Gap Analysis" Income Statement Average Projected ProForma 99 - '02 2003 Year Income: Member Pledges $ 22,210 $ 22,394 $ 22,400 Room Rents 14,951 14,314 15,000 Increase Room Rents Coffee ~ 6,855 6,800 6,900 General Meeting Donations 1,418 1,600 1,700 Net Income from events, book sales, bequests, etc. 1,123 1,358 1,000 Loss of abnormal bequest Total lncome $ 46,656 $ 46~466 $ 47,000 Expenses: Building operating expenses, services & repairs $ 13,478 $ 13,745 $ 12,100 Newer Facility UUlifies & Phone 11,916 12,134 13,200 Increasing Energy Prices Coffee 3,385 4,613 4,600 Insurance 3,147 2,000 2,000 General & Administrative 3,416 1,722 1,800 Contributions 1,200 1,600 1,600 Conventions 1,321 1,421 1,400 Miscellaneous 535 1,320 900 interest Expense 723 4,411 * Does not include mortgage T°talExpenses $ 39,120 $ 42,966 $ 37,600 Annual amount available for debt service $ 7,435 $ 3,500 $ 91400 Debt service coverage ratio 1.20 1.20 1.00 Maximum annual debt service $ 6,196 $ 2,917 $ 9,400 Maximum Mortgage ~.7%/30ym. $ 77,609 $ 36,536 $ 154,600 Equity available from sale of property $ 465,000 $ 465,000 $ 465,000 Prope~tyPumhaseBudget $ 542,609 $ 501,536 $ 619,600 New Hope Aiano Group, Inc. 7615 BASS LAKE ROAD · NEW HOPE, MINN. 5542~1 PHONE: 537-3546 4 May 2004 Mr. Ken Doresky Community Deveiopment Speeiaiis~ Ci.ty of New Ho.~ 440i Xyion Avenue North New Hope M2q 55428 Re: New Hope Alano Group, Inc. - possible purchase of land and bu/lding at 7550 Bass Lake Road (AC Carison property) Dear Mr. Dores~: On 14 April 2004, New Hope Alano Group, Inc., expressed its interest in the above referenced property as a P°tennally vaable soiunon to our relocanon difficult/es. We have recently heard from the property, owner and understand we may be able to reach a workable solution. Althou~ we are excited at the ~ssibili~ of being able to relocate so close to home, we have not lost sight of the significant hurdles we must clear before we can conclude such a transaction. One of our foremost concerns, as we have previously apprised the City, is the significant ~p between the proceeds available fi'om the sale of our present facility and the purchase price for a comparable new "home". To that end, weare writing flxis letter to request some financial assistance from the City; specifically in the form ora low-interest loan of $150,000. We do not believe we cam reach an agreement with AC Carlson absent such help. Enclosed for your review, please find a copy of our most recent ~o~forma, supporting both the need for de loan to close our fundi~ gap and demonstrating our orga~iT~tion's ability to service the debt. Please let us know if you require further information or would like to meet with us to address any specific questions you might have. .. Very o s, Building Committee New Hope Alano Group, Inc. Where there is New Hope through Sobriety EDA RE( UEST FOR ACTION Originating Department Approved for Agenda Agenda Section Community Development r-'~ '\6-28-04 EDA B¥.'~ Item5 No. By: Kirk McDonald RESOLUTION APPROVING PURCHASE AGREEMENT 9101 36TH AVENUE NORTH (iMPROVEMENT PROJECT NO. 772) REQUESTED ACTION Staff is recommending that the EDA approve the attached resolution prepared by the city attorney approving the purchase agreement for the deteriorated, abandoned, single-family home at 9101 36th Avenue North. The city attorney will be present to discuss this matter. POLICY/PAST PRACTICE The City Council and EDA acquire deteriorated properties throughout the city on an as-needed basis as part of the city's scattered site housing program. This program helps to maintain a good housing stock in the city and meets the. goals stated in the Comprehensive Plan and City Plan. BACKGROUND Please refer to the background information on this prOperty provided in the May 24 Council packet, as it is not the intention to replicate all of that information in this request. At the May 24 Council meeting, the City Council authorized staff to negotiate for the purchase of this property with the intent to demolish the structure and sell the parcel to a private developer via a selection process for a market rate up-scale home, with the city having approval of the plans. This matter is now being considered by the EDA because the property would be purchased with EDA funds. Per the attached letters of correspondence, the city met. with the broker representing the bank and made an offer of $36,000 (land value less estimated demolition costs). That offer was not accepted by the bank and they were prepared to list on the MIS for $69,900, b.ut said they would sell to the city for $62,000. Staff did not want to lose out on the opportunity to acquire the Property, therefore, the city manager authorized a counter offer of $46,000. The bank accepted that offer and the attached resolution approves the purchase agreement at that price. There may be another offer pending on the property, which the city attorney can discuss, but staff is recommending proceeding with the approval of the agreement. Staff has obtained two estimates for demolition (attached) which range from $7,875 to $10,000. I \RFA\planning~housin~9101 36th~Q-aprv ~urchase a~reement ,, , Request for Action Page 2 6-28-04 Staff recommends approval of the resolution. .ATTACHMENTS · Resolution '· Purchase Agreement · City Attorney CorreSpondence · Demolition Quotes · Maps CITY oF NEW HOPE EDA RESOLUTION NO. 04 - RESOLUTION APPROVING PURCHASE AGREEMENT 9101 36th Avenue North BE IT RESOLVED, by the Economic Development Authority in and for the City of New Hope (EDA) as follows: WHEREAS, New Hope City staff have been in contact with ("Owner"), Owner of certain real estate known as 9101 36t~ Avenue North (the "Property"); and WHEREAS, the Owner has acquired title to the Property by a mortgage foreclosure sale from the previous owners and is desirous of selling the property as soon as practical without incurring any further rehab costs or expenses given the current deteriorated condition of the single family home located on the Property, and WHEREAS, the Property is currently unoccupied and not habitable resulting from severe water damage that occurred at the property; and WHEREAS, the Hennepin County Assessor has determined the Property's 2004 vacant land value is $46,000.00 for real estate taxes payable in 2005, and WHEREAS, the current condition of the existing single family home on the property will require it to be demolished and removed from the Property at a cost estimated to equal or exceed $10,000.00, and WHEREAS, the Owner is willing to sell the Property to the EDA for its 2004 vacant land value of $46,000.00 as set forth in the Purchase Agreement attached hereto as Exhibit A and incorporated herein by reference with the understanding this is an "AS IS" sale and the EDA will assume all responsibility for the demolition and removal of the single family structure from the property; and WHEREAS, the EDA hereby approves the Purchase Agreement attached as Exhibit A, subject to the review and approval by the City Attorney of proper title evidence and other terms relating to the closing on the sale of the property, it being in the best interest of the EDA to purchase the Property from the Owners for the sum of $46,000.00, with other terms and conditions as set forth in the Purchase Agreement and to redevelop the Property in accordance with the City's scattered site housing program and policy. NOW, THEREFORE, BE IT RESOLVED by the Economic Development Authority in and for the City of New Hope as follOws: 1. That the above recitals are incorporated herein by reference; 2. That the purchase of the Property by the New Hope EDA from for the sum of $46,000.00, with other terms and conditions as set forth in the Purchase Agreemem attached hereto as Exhibit A, is approved. 3. The Presidem, Executive Director and New Hope City staff are authorized and directed to sign all appropriate documents, and to take whatever additional actions are necessary or desirable, to complete the purchase of the Property in accordance with the Purchase Agreement attached hereto as Exhibit A. Dated the 28t~ day of June, 2004. Don Collier, President Attest: Daniel J. Donahue, Executive Director P:\Attorney\SAS\l Client Files\2 City of New Hope\99.11311(9101 36th)\Reso Approv PA-9101 36th Avenue.d~c PURCHASE AGREEMENT Th~s form epsmve~ by t~e Minnesota .a~ssecla'Jon C 2D~ Mmn~ A~euon ~ R~L~. Edlne. 6. b~CHEC~/ CASH I NO~ a~ earnest meney to ~e depo~iteo uponac~eptance ~f Pu~hasa Ag~eme~t by all pa~ie~, on 7. before thl third b~ness day aher aucep~nce, Iff the t~st accqu~t of II~ing broker but to be ~turned ~ Burr If Pur~ase e. Agreement is not accepted by Seller. Seed earnes~ mDney Is pert pa~ment f~r the ~urc~ase of the proDer~y IoceteO 9. ~t~tAd~re~s:. ~101 3~HAvenue N~ 10 C~ ~ N~ ~ Cou~ of Hennep~n S~ of Minn~ota, 11. Legally desc~befl as: Len~ ~oe~, ~ ~nfe~ ~th P1~9t1821~01 12, t3, tn~udlng afl ~xturee on ~e ~t~in9 0m~, ff any, ~ned W 5e~er a~ us~ and I~ted on ~ p~rty, m~dmg ~ not trait~ ~: Careen bul~, 14, p[an~, ehrubs and ~es; sto~ aaa~, sto~ doom, screens and awnings; ~n~ s~a~es, blln~s. ~eme ann cumin an~ erape~ ~s; 15, lighting fi~urea an~ ~ulbs; ~lumbtng fixtures, water heater, ~eatlng plan~ (w~h any ~utnefa, ~nks, atokem an~ ~lhef ae~e~ 16. connection lhefewith), ~uili-in air.cond[Uonlng aauioment, electronic air filler, water sof:ene~ OWNED I RENTED ~ NONE, ~llt-I~ 17, humiO~er and ~ehumldl~eC tl~u~ gas ~nk en~ ~n~la f~ ~e ~mpe~ of Seller), sump pumg; a~ched te~lslon anmnna. ~ble ~/a~ and 18, wiring: BUlLT, IN~: d~was~e~, garbage dlsDos~s, trash ~mpae~. o~na, c~k-too s~es, mlc~ave e~ns. ~ood fane. intercoms: 19, ~ACHED:~r~eting;mi~m:ga~penemanda~n~i~;sm~d~te~;~a~een~andh~a~a~m;AND;~ne~wm~ 20. pe~onal p~per~:.~one 21, 26. a~d~ ~~ ,-- ~8~on~~ ~/.'~' ~"~, ~'he ~ate of cJ°slng, ey financing in a;cordan~e ~it~ ~ at~ached ~en~um; 30. (If an~ ts 15 N~, t~e clesmg ~ Buyer~ pmDe~, ff a~y, may s~l~ ~fe= Su~r's abit~ to o~in financing, if financing is apo~cabla.) 31. This Pur~ase ~. ~ an~ Is IS, said ~n~l~on ~sll be ~l~d no later ~aR NA ,20 . If sa~ ~n~lla~on ~ not oD~inea 33. by Raid dale, l~s Pu~ase A~ement snarl b~me null and ~ld. Burr and Sel~r snel~ immediately s~n a Cen~lla~n ~ Pumhase ~. ~lt~[lng afl eam~t m~n~ paid hemunde~m ae refunded ~ Burr.) ~~ubject to a Vacant Land AdOeneum. (If answer is IS, see attached A~enaum.) This Purohase Agreement 37. Thi* Pu~ase Agreement subject to a~ Inspection Addendum. (.~r ane~r i~ Is, see a~che~ Addendum.) ~. DEED~ARK~LE ~E: ~Don pe~o~n~ by Buyer, Sell~ shaft dellv~ a Wa~n~ De~ or ~e~ ~p~fal or LlmJ~d Wa~ ~eed 39. ~nad in bys~use, i~any, ~n~yFng me.amble flue, ~b~ ~: ~ ~, (Al ~u~l~ing an= zoning la~, o~lnanees, s~te an~ ~eaerat regulations: (Bi restrl~lons raletlng to uae or improvement of the 41. property.without effecfi~ ~aiture provleiona; (C) reaR.etlon of any mineral rights by t~e S{ate of Minnesota: (D) ~tlUty and 42. drainage ease~e~ which do n~ inte~are with existing imDm~ments; (El rlgh~ ef tenant,: as follows (unless soecifled, not 43. eubje= ~ tenan~es): ~ ~. (~ omem (mu~ be apec~~ ; ~. BUYER SHALL PAY~~I~ELLER SHALL P~on ~a~ o[ closing a~y defe~e~ rea~ ea[s[e taxes re.D-, G~een Acres, etc.) or special 46. ~aea~en~, ~aflt ~ W~ ~ required as a ~ult ~ ~e c~sing ~is 47. eu~e AND S[LLSn 8HA~ PRO~TE Aa OF THE ~TE OF CLOSING I~HALL ~y ON DATE -. -.....~ .,,~ 49, BUrR S~LL AS~UME_~ELLER~ . ........... SHKLL PAY~. ea~ ~ ~st~g eli ot~er s~iat ass~smen~ lev~ed aa Of the date of this 50. BUYER I~=~.HALL PROVIDE FOR PA~~c~, ..,sment. pending as of the ~ate af t~s Agmem.nt ~HA~ ~SUME 51. ~r improvements t~at have been a~er~ by any assessing authorities. (Seller's prevision for payment shall be 52. ~ment ~ ~ ef~ ~2) times the ~emamd a~unt ~e aase~me~ ~ ~ as ~u~ed by BuSes tender.) 53. Burr shall pay a~ un,aid s~=la~ ,sse,sm~n~ ~bte tn the y~r ~ll~ing closing and ~ere~er. ~e ~a~eni of which ~ not Offie~iae 57. receiver by Se~er a~er ~e data of ~ie Agreement e~d b~ore el~ing wUI ~ pmvlde~ ~ Burr ~mediamly, If notice o~ a pending ~. ep~ ~t ~ ~ ~ ~e d~ ~ t~ A~ent and on ~ b~ me da~ ~ G~, t~n ~ ~rl~e may ag~ in wr~g, on ~ 8 ~. ~r[y mw ~m ~ls ~e~ ~em ~lt an~ ~. Burr end Sel~r ahab ~m~mm~ sign a Cad.eon oe Pumh~e ~me~[ =~ang ~. ~mest mo~ ~ h~under to ~ r~ed ~ Burr. MN:~I PURCHASE AGREEMENt' 63. Page 2 64, TITLE & EXAMINATION; Within a reasonable time attar acoeotance of this Agreement, Seller sha:l orovtoe 65. evidence of title, which shall include proper searches covering bankruI3tcias, state anc~ fedora! judgments and hens, and levie~ ~nd pending S~ecial ~sessments to Buyer or Buyer's aesignated title service provider, as to~low~: 67. If Drope~ is abstract. Seller s~alt ~de either (1) a ~mmitment lot an owher's Oot~cy of ~tle insu~nce on a current 68. ALTA ~rm Iss~ ~ an i~su~r I~nse~ ~ ~ ~ in~mn~ ~ Minne~. S~lar s~l~ pay ~e c~ of an ~n~s ~1~, ~c~uding 70. t~e additional cost of oetalning a simultaneously issued owner's po[l~ If a lenders 0olicy is obtained (~uy~' 71. shall pay the premium and t~e tltte examination ~e ~r t~e len~et~ ool{cy): ~ ~2', ;' :;~:,~[ .~; ~,; ..... ;;;~; :; 73. If proper~ is Torrens, Seller s~all orovlde, at Suit's option eno toques[, either (1) e Reg{s~ered Prooer~ Abstrac: 74. (RPA) certtfled to date; or (2) a commitment for an owner's policy of title insurance on a cu~nt ALTA form Issued 75, an insurer licensed to write t~tJe insurance in Minnesota. Seller shall be msoonsibie ~ 0ay, under eltbe~ option, only 76. t~ose cos~ neoessa~ to prepare the RPA or commitment. Buyer Shall at B~er's option, DaY ~r either the Attorney's 77. O~nlon or ~e ~le I~n~ ~mmi~ and e~mtn~on ~e, 78. Seller shall use Seller's Dost effo~ to provide marketable title by the date of ~iostng. In the event Seller has not provide~ ma~e~e title by ~e date of closing, Se~ler ;~all ha~ a~ additional 30 days to make title rear.table o~, 80, t~e alternative, Buyer may waive title defects by written notice ~ Seller. tn audition to the 30-~ay extension, 81. B~yer a~d Seller may by mutua{ agreement fu~her extend the closing ~ate. LacKing such extension, either party 82. may ~eclere this Purchase Agreement nuJl end void; neither pa~y shall be liable for damages hereunder to the other. 83. Bwer a~ Seaer shall Immedlat~y sign a Can~llab~ of Pu~se Agme~ dimcti~ all ~t mon~ paid ~emun~r to be ~n~ ~ Ewer. 85. SUBDIVISION OF LAND; If this sale constitutes o~ feaul~es e aubdivision af land owned by Seller, Selie~ shall aB. all s~bdivision expenses and obtain all necessa~ governmen[at approvals..Seller ~nts ~at ~e legal description of aT. the ~eal property to be conveyed has been or wtl~ be approved ~ recording as ef the date of closing. Seller wa~nts 88, that the buildings am or will be constructed entirely within the bounda~ lines o~ t~e proDe~y. Seller warrants aa. t~et there is a right of ac~ss to the pmper~ from a public dght-of-way, These warranties shall su~l~ the aallve~ of 90, t~e ~ or ~ ~r Seller warrants that prior to the closing, payment In full will ~ave been maae ~r all labor, materials, machinery, 92. fixtures or to~ls furnished wlthln the 120 days i~medi~tely preceding the c[osing in connection wi[h al~mfion ~ m~ ~ a~ ~m on, ~ Imp~t ~, the properS. Seller warrants that Seller ~as net received any ~elice from any governmental a~horlty as to condemnation 95. proceedings, violation of any law, ordinance or regulation, If the property is subJec~ ~o restrictive covenants, Seller warrants t~et Seller has not received any notice from any person or authorlt~ as to a breach of the ~nants, Any 97. s~h ne~es ~e~d ~ S~ler w~ ~ ~ ed ~ Burr imm~iamly SelJer eg~ ~ all~ ma~na~ a~ ~ ~e ~p~ ~ p~an~ ~ any ;u~s ~ i~ons ag~ to ~min. ~. ~SK OF LOSS: lf ~ ~ a~ l~ ~ ~mage to ~ ~ ~ ~ da~ h~f and ~e ~te of ~esi~ fer e~ r~, i~luding lDO. fire, vandalism, flood, ea~hquake or act of Ged, the risk of loss snail be on Seller. ff the =rope~ is destroyed t01, or substantially damaged befDre the closing date, ~hls Purchase Agreement s~al; become null and void, 102, ~uy~s ~n. ~W~ and ~e~ler shall Im~teiy s{gn ~ Can.[tab{on of Pu~ase Agre~ent d~ng ~1{ ~n~ ~ey ~aid nemu~er 103, to be ~nded to B~er. 104. ~ME OF ESSENCE; Ti~ ~ of ~e ~n~ In th~ Pumhase Ag~nL 105, ENTIRE AGREEMENT: This Purchase Agreemenl, any affached exhibits and any a;0enda or amendmen~ signed I~6. by the ~artles shall cens~tute the entire agreement between Salter and 5uyer ~n~ supersedes any ether wrl~en or 107. oral agreements baleen Seller and Buyer. ~is Pumhase Agreement =an be m~i~ed or ~nceled only In ~ltlng signed by 108. Seller and Burr or ~ operation of law. Al[ m~e~ su~ am deem~ ~ ~ Unl~ S~t~ ~ency for pareses =f ~16 109. 110. ~ay at 111. ~C~ANCE: B~r antietam.s a~ agm~ ~at ~ls P~mha~ Agent is ~b~ct to ~n~ ~ Seller in w~ng. The del~ 112. ~ aa papem a~d ~es s~ll 0e ~ade et the listing bmke~ o~ 113. DEFAULT: If Burr de~ul~ in a~ of ~e ag~men~ ~n, Se~e~ m~ ~ ~ls Pur~e~ ~r~ and pay~n~ 114. hereunder may be ~etained by Seller as liquidated damages, if this Punch.se Agreement is not I15. to,minuted, Buyer or Selle~ may see~ a~ual damages for brea¢~ of this Agreement or specific ~erfotmance of thi~ 116. Agreement; and, as to specific pedo~ance, auoh a~ien must be commenced within six (~) monks afte~ suoh flg~t of 117. ~aon 118. NO~CE REGARDING PREDA~RY OFFENDER INFORMA~ON= Intimation regardfng the p~edatory offender regi~ 119. and pe~ons registered with the preda~ offende~ ~gis~ under MN Statute, 243,166, may be obtained ~ co~ta~ting 120. the Io~al law enforoement offices tn the ~mmuniW where the ~toperty is located, or the Minnesota Depa~ment of 121. Cor~s ~ (~I) ~42~2~, ~ ~ ~e ~e~ ~ C~o~ W~ e~ ~ JU~.IB.~ 11:47AM R~ALTY HOUS~ ~I~ ~.~7~ P.6~11 PURCHASE AGREEMENT A~ N~h ~. ~ ~,~ ~- ~/~, ~ 124. ~u~r 6~RO~ F~F CL~ 42~ / ~'f NONE mai ~ ~ due a~ ~ble )~ ~e ~r ~ . 126. ~oa~ dam ~ ~, ~e mai ~s ~ld ~ell, if ~, ~ aflJu~ ~ ~e ~ ~i~ ~m. ~tler wa~ ~ ~ an~ 127. paveale ~ ~he ~r.2~ ~II ~FUL~ ~ I NON* home.aa ~s~c~ton. ~ pa~- or nom~aa ~ass~c~on is ciffied, 128, Seller ag~ ~ p~ B~r et citing $ 0.0~ 12g. t~ ~ n~-~mesmed mai e~te ~x~. Burr agrees ~ p~ a~ mmaini~ oal~ of n~ome~aa ~s ~n ~ b~me 130, d~ and ~ble. ~ sha~ pay ~l ~ ~ ~e and ~b~ in ~e ~a~ fol~ ~l~ng ~d ~r, ~ pa~t ~ wh~ 131. n~t otherwise herein provided, No represen~tians are made concerning the amount o~ sub~quent reel estate taxes, 132. POSSESSION: S~ter sha~l deli~r po~e~i~ M ~e D~ n~ ~r ~a~ _lmm~t~iv after 133. All intent homeowners ~o~on du~, mn~ and all ~es f~ ~ ~ler, ~ s~er, ei~a~ an~ naomi g~ ~e~l be 134, baden ~e parB~ as of da~ of ~osing. Bu~ ~11 ~ Seller ~r mm~g ga~o~ ot ~el oll er liquid ~t~eum gas ~ ~e ~ of 135, cl~ing, ~ ~e ~ ~ the ta~ ~l ~ Sdier. Seller a~e~ to m~ A~ D~RIS AND ALL PERSO~L ~OPE~ NOT INCLUDED ~36. HEREIN f~m t~e ~pe~ by p~on 137, EN~RO~ENTAL CONCERNS: To ~e Best of Sellers kn~tedge, them am no haze~ous substan~s or unde~und stooge 13B. mn~ ~pt ~r~n ~ted: B~er ~ ~o~. ~r ~n inde~e~ 139, ~140~ ' S~RW~T~E PROPE~ ~ ~DI~Y OR ~IRE~Y ~NNE~ED~: 141, C~S~Y~ ~NO I CI~WA~S ~NO ,143. ~~GREES m PROmDE, IF ~QmRED BYmE~MS OFTH~ PURC~E AGREEME~ OR BY 1~. ~OR~ AND/OR ~NDE~ A UCENS~ INS~R'S S~TIC ~ INSPE~ ~RT OR N~CE INDICA~NG 145. THE S~M ~MPLIES ~ ~PLI~BLE REGU~ONS. ~: A V~ ~R~ OF ~MPLIANCE FOR ~ 146. S~M MAY SA~ THIS OBM~TION, ~G IN UN~ 1~ TO 1~ ~L ~L~A~ 5~R TO U~D~ R~AIR O~ 147. REPLACE THE SEPTIC SYSTEM, UNLESS OTHERWISE AGREED TO IN THIS PURCHASE AGREEMENT~ 148. BUrR HAS RECEN~ THE ~LL DISC~SURE ~A~E~ ~ A ~A~ME~T~T NO ~L ~l~S ON ~E PROPE~ ~4g, AND A S~C SY~. DISCLOSURE ~A~M~ ORA ~A~E~ATNO SE~C S~M ~S ON 7 7~S ~ 150. PR~. AS REQUI~ BY MINNES~A ~A~. 151. S~ ~ THAT CE~ NR~D~I~G, H~NG, ~MBtNG ~D WtR~G ~~D L~D O~ 152. SAID PROPE~BE IN WORKING ORDER ON DA~ OF CLOSING, E~NOTED IN THIS AGREEMENT~ ~ 153. BUYER H~ ~E RIG~~LK-~ROUGH ~ OF ~E P~~R TO CLOSI~, TO E~USH T~T ~E 1~. PROPE~ IS I~BST~~ME COND~ION~ DATE OF PUt'SE AG~MENT. ~ AGR~ 155. TO N~I~ ~R IMM~ANGES FROM ANY PRIOR REP~SE~A~ON~ 156. RE~RDI~ ~ PHYSl~ COND~O~. 158. WA~ IN B~E~ ~GE ~SED BY W~K ~ ICE BUI~ROOF OF THE PROPE~, AND B~E R~IE~ 159~NG STA~ BY S~L~R: ~ ' 162. DISCLOSU~ ~ION FO~M. BUrR HAS ~I~D THE INSPE~ON ~RTS, IF ~QUIRED BY MUNICIPAl. 165. The ~l~ Ho~ 166. Is Sell~ A~ / B~ Ag~t I Dual Ag~t / 167. 168. THIS NO~ DOES N~ SA~ MINNE$~A ~A~ AGENC~ DI~LOSURE R~U;R~E~S. Bm~er mp~ ~t~ Sel~s) ~d ~e B~S) ~ ~e ~ i~ ~~~ ~c~ ~es a dual ~e~ This ~L~~~~~~ ~ ~m~ ~t a~ as a'duat ~ent in ~ 180. (3) within me lim~n~ ~e sate lel. wit~ t~e kn~edge ~~e~ and 182, salespe~o~ m a~ ~ d~ ~ 163. - PURCHASE AGREEMENT ' '1 ~'. Page 4 Dam I ACKNOWLEDGE THAT I HAVE RECEIVED AND HAD THE OPPORTUNITY TO REVIEW THE ARBITRATION DISCLDSURE AND 194. 195. 197. Attached ara other addenda which am made a part of this ~utchgs6 Agreement. (Enter tota~ numDer of pages of this Purchase I~8, Agr~ment, including addenda, on line ~o [2) o~ page ~ (1),} 200. auth~e ~e Ils~ng bm~ ~ w~mw ~aid pmpe~ f~m ~th ~ ~. en~ ~nd~l Sit ~ 2D2. I ~ve m~ewed all pagea of ~is Pumhase Agr~menL 204. Coun~ro~er A~l~um. 205. X X ~ ($elle~g Signore) (Datel 206.X (B~e~ (Date) (Sellers Pfi~a0 Nome) (a~'s P~nte~ Nome) 207. X X 208. X X (selle~'a rrintK Name) (guyots PflM~ Name) 210, X x 211. ~INAL ACCEPTANCE 212. ~lS IS A ~Y DINGING CONT~ B~N BUYERS &ND 213. ~ YOU DE,RE LEGAL OR TAX ~CE~ CONSULT AN APPROPRIA~ PROFESelO~L MN:PA..4 (10/O3) Addendum ~ Pu~ase A~m~ Dictum of In~ on L~d Pa)hr and Lead-B~ ~int Ha~s AdU~flum ~ Pur~am Agme~z ~een ~ ~ dated ~u~ an~ ~ol 36[h A~nue N~ New Ho~, MN S~ion h Lead Warning ~ement Eve~ pu~aser of any in~emst in m~entiai r~l p~e~ on ~ic~ a re~denEat a~lh~ ~s DuEt ~or ~ ~978 is no~fied ~et ~uch prope~ may present ex~um ~ lead from read.seed ~tnt ~ may piece young ch/ldmfl at ~K of so.loping lea~ p~sentng, LeaO polkaing m ~u~g children may p~u~ ~rmanent neu~i~l ~a~e~ inc~ding ~e~ml p~blems, end impaire~ mem~ LeaE ~i~n~g at~ 0~ r~idefltl~ mai prope~ Is fe~ut~ ~ p~de the buyer ~th any Info~a~on on lead-~ased In~t~ns in t~ ~elle~ ~e~iOn and notl~ t~e burr of any ~own lea~ased paint fla~fds. A risk esse~ment or in~e~on fo~ ~ible lead~ paint flaza~s is ~mme~ed p~r ~ ~llefs Disctosum (in.al) (a) Pms~ o~ le~ ~im an~or lead~ paint ha~s ~ Seller has no k~w~d~ of lea~as~ ~l~ an~or I~bm~ ~1~ h~s in the ~o~ing. ~ (b) R~s and m~ a~iiable ~ ~ I~r (~k one ~ S~ler has p~Med the pumb~ ~th a~ ~lfa~e ~ ~d m~ De. thing m ~a~ paint en~or I~d~a~d paint ~ S~I~ has ~ r~ Or ~s ~lnlng to ~ad~ paint an~ t~d.Das~ ~lnt ~zams ~n the h°~ino. (c) PumPer h~ ~ed ~es ~ ali i~aam ~ un~r ~) a~ve. (d) Pum~ has m~ ~e pamphl~ ~te~ Your Family ~m Lead 1~ Your H~e. ~ R~eived a l~dey o~i~ (or mutably agreed upon ~riod to ~ndu~ a ask assessment or ins~on for the Dresen~e of lead-based paint and/or lead-based, paint hazards ~ Waived the opoo~nl~ to ~du~ a risk assessment or nsoectlon for the presence of lead-based paint and/or /~ Real e~te licensee ha; Jn~or~e~ the seller or the seller's obligations un, er 42 U.S.C. 4852(~) The ~l]ow~ng ~s ~ve ~d ~e ~for~on above an~ ~, to me ~st of ~lr knowledge, ~at ~ lnfo~a~on ~r~ided Dy ~e S~on Ih ~ntingen~ final on~ ~x unaer ~a~Ao~o~ le~r fo) JlJ~.18.L:~E~4 11:48RM F~E:PLTY HOUSE E:I)!~ H0.374 ARBIT~TION DISCLOSURE AND ~SIDENTIAL REAL PROPER~ ARBff~TION AGREEMENT ~3, Mrmn~ ~e~on of REALTOR~. E~, MN ARB~TION DISCL~URE You have the Hght t~ ch~se w~e~er ~ have an~ disp~es about ~e ~hy~t~l ~nd~n ~ ~e p~pe~ selling derided by blndi~ arblff~ion or by a ~uA of law, By agr~ing to binding a~t~n you give up your rigM to go to cou~ By signing ~he RESIDENTIAL R~L PROPER~BI~TION AGREEM~ ~ARB[~ON AGREEMENt) ~low, ~u agree binding arbitration under the Residential Real Prope~ Arb~ration System ["Arbitratio~ Sys[em'~ administered Constm~lan A~it~tlon So.ices, Inc. (CAS) and endomed by ~e Minnesota Association of RE~TORS~ (M~). The ARBIT~TION AGREEME~is enfo~ble only E it Is sJg~d by all buyem, sellem, and li~ns~s reddening and ~e buyer. The ~B~ATION AGREEME~ is nat ~ of t~ pumhase ~reem~t. Your pur~ase ag~ment ~11 still be valid whirr ar n~ you sign ~e A~I~TION AGREEME~. The ~ltm~on Sy~em is a pilate disp~e r~lutlon sy~em ~red as an a~mative to ~e ~u~ symem. It is not government s~n~md. ~S an~ ~e MAR Jointly adopt the roles ~ ~vem ~e ~ltmtlon S~em. CAS and the MAR am not affiliated. Under ~e ~BITRATION AG~EME~you mu~ u~ ~e a~aon ~i~s of CAS. Ail disDu~s about or m~ng m ~e ph~i~l ~nd~ton of ~e pmpe~ am sub)~ m a~i~on under the A~IT~TION AGREEME~. This includes claims of fraud, m~mpm~n~5on, wa~n~ a~ negl~en~. No~ing in ~is Agreement lim~ other Hgh~ you may have under Minneso~ ~ 327A (s~ new home ~na~) or under D~v~e ~n~ ~r ~n~ ~emge. An agre~e~ to a~itmte a~s not prevent a ~ ~m ~n~c~g ~e Minn~o~ Depa~nt of Comme~, ~e smt~ agen~ that regulates the reat e~te profe~ion, a~ut li~nsee ~mDlian~ w~ ~te ~w. ~e aeministr~e fee ~r the A~flon System varies de~nding ~ ~e amoun~ of ~e claim, but E is mom ~an initial ~u~ filing fees. In some ~ses, ~n~llation ~u~ is ~eaper ~an a~i~aflon, ~e maximum claim al]o~d in ~nciliation ~u~ Is $7,5~. ~ amoum is s~je~ ~ ~tum change, tn some ~s~, it is quic~r and less ex~nsive to e~l~te disputes ~an to go m ~u~ but · e time m file your ~alm and pm~ear~g dis~ve~ hg~ am IImE~. The Hght ~ appel an a~i~r's a~ is ~ limited ~m~md ~ ~e rtgM to appeal a ~u~ d~s~n. A ~uest ~r a~l~flon ~t be filed wi~in 24 moths of the d~ ~f the closing on the prope~ or else the claim ~ot ~ pursued, In some ~ses of ~ud, a ~u~ or a~i~tor may e~d the 24 mesh Ilml~on period provided heroin. A pa~ who wan~ ~ a~Emte a disuse fi~es a Demand, a~g ~ ~e ap~opdate adminis~ve f~, w~ CAS. C~ no.es the o~er pa~, ~o may file a res~n~, CAS ~rks wEh ~e ~es ~ ~le~ and ap~int an a~ltm~r ~ hear and decide t~ dispute. A thm~a~mtor panel ~11 be ap~tnted In.aaa of a sidle arb~r ~ ~e ~ue~ of any pa~, The pa~ requesting a panel must ~y an aadi~ona~ f~. ~Emtom have ba~gmunas ~ law, ~al es~e. a~i~m, e~ineedng, ~ns~cfion ~aon healings am u~ally held a~ ~e ~ome s~. Paff~es em no~fl~ abo~ the healing at least 14 da~ in aden.. A ~ ~y ~ mpm~nted by a lawyer at ~e healing E he or she gNes 5 da~ advance no, ce ~ the o~er may present evidence, including docume~ or te~mony by ~messes. ~e arb~mr must make any ~a~ wl~in 30 aa~ ~m ~e final hea~ng date. The awa~ must be in wrlang and may pm~de any m~dy ~e a~r ~nsidem just a~ ~ui~ble t~at Is w~hln the s~ of the ~ies' agreement. ~e a~itm~r d~ n~ ~ve ~ make findings of ~M ~at exp~in denying an ~ard, ~e arbit~or may require ~ ~ ~o d~s not ~mvail ~ ~y ~e admini~e f~. ~is Arb~fion Disclosure prairies only a general des~ion ~e A~tion S~m and a general o~lew of the Arb~n Sys~m roles. For spedfl~ In~at~n regaling ~e admi~a~ve fee, pl~se ~ ~ Fee S~ule I~ In ~e CAS Rules. ~ples of ffia A~fi~ S~m roles am a~llable from ~S by ~lling (800) ~-8119 E~. 509 or on ~e web at ~,~s-usa.o~ or ~ ~ur REALTOR~, If ~u have any ques~ns about arbi~t~n, ~ll CAS at (800) 777~119 ~. 5~ or ~consult a ~S IS~ ~, V~U~A~A~ ~ ~~ DI~U~ IN ~ ~ ~ING ~SlDEN~AL RE~ PROPER~ ARBff~TION AG~EM ENT For the pmpe~ I~d ~ 9101 3~ Avenue N~h Ci~ ~.New Ho~ , Co~ of ~enne~n State of Minn~om. Any disp~e b~e~ ~e undoings, ~f ~em, aborn or mlaang to t~ ph~i~l ~nd~on of ~e pm~ ~ver~ by the be s~ed.by ~indmg amazon. C~s~on ~n Se~s, Inc. s~ll be ~e ami~aon se~ pm~der. ~e roles, in e~m at the ama me ~mand ~r amitm~on is fil~, a~opmd by ~n~m~ion ~on Se~, Inc. and the Minnes~ A~o~ation R~LTOR~all govern ~e pm~ing(s). ~is agreement shall su~ive ~e deliv~ of ~e de~ ~ ~n~ct ~r de~ in ~e ~1~4= a~eemenL Th~:~ent Is on~ enfor.able if al ~m~..llem an~ ,,~m.es replanting or assi.ng the buyem and ~e R~l~e ~E R~IDE~AL R~L PROPE~~ON AG~MENT ~ A LE~Y BINDING B~EN BU~R~ mE.R8 ~D UOENSE~. I~ YQU D~I~ LE~ ~OE CONSULT A ~N:~ (~3) WAIVER OF SELLER'S DISCLOSURE REQUIREMENTS FOR RESIDENTIAL REAL PROPERTY A~N'D HOLD ~SS AGREEME~'r ("Waiver and Hold Harmless Agreement") S~llcr: Owner ofl~.ccord - Cite "Property") Buy~ desks m p~ch~ ~e ended ~w ~ SeU~ ~ Buyer. Effecfi~ on Jan~ 1, 2~3, M~c~ law ~q~ ~t the S~l~ ei~ p~c ~ ~o~e~ve buy~ of s~gle-f~ly ~g~l r~ ~o~ ~ a ~ ~sclo~ of~ ~ fa~ p~g to adv~ p~si~] ~e phy~ ~fion of~c ~ pr~ by a q~ifled ~i~ p~. ~c law ~o p~m ~c Sdlcr ~d ~e Buy~ to waive ~ose ~clos~ pw~sions. Bu~ (~ ~e ~ mo~) di~l~e pmvisi~s set fo~ ~ sc~o~ 513.52 m 513.~ of~e M~esom S~m~ ~mt~ pus~ w the pm~ions of~ 513.60 of~ M~eso~ S~m~ ~ ~g ~e above ~d ~. Burr ac~owl~gcs ~ Burr h~ ~n Ov~ ~ ~pic o~o~iw m ~k ~ ~vi~ of Buy~'s o~ cho~ leg~ ~umel coning ~e a~k ~e ~p~ ~e ~n~ ~ ~ A~m~ BW~ h~c~ s~ei~ly ho[~ Sdl~ h~l~ fo~ ~y cl~m or c~ m~e ~ Buy~, set fo~ I ~o~ 513.52 ~ 513.60 s~o~ 513.52 ~ 513.60 of~e Mi~om pw~dcd h~cin, ~c A~e~nt ~sio~ ~ W~v~ ~d Hold Ha~i A~eem~t h~, suc~ss~ ~s~s, ag~m, w ~e uycr: Sc~er: By: Its: B. uv. er(s) and Btt~er(s) ~4~ent acknawled~e that they are. aware that due to possible water damage and/or e~:cesslve moisture mold, m~ldew...a~td/or other microscopic organisms ma~, be present within the subject property., B. uverfs).and BuFer(s) Agent are aware that ~pos~re to ee .r~n species ol~.mpld ma~ pose serious health riskst partic, u_lar, ly. in individuals with immtme s~tem deficiencies, allergies or__r_e.vpirator~, problems. and youn£, children and elderl~ personr To the best of Seller's knowledge~ no tests ~ave been performed and no inves~g~gion undertaken in eonneetlon with mold, fttn~,al sl~ores, or an~ other microscopic organisms that ma~ be present within the sttb[~ propertF.' Btty. er(s) and/Buyers(s) Agent acknowledged the properl beln£ sold and. eortve~ed "~IS IS; Bttveff$) and Bwrerfs) A~ent ftt.rtll.~.r_a~kntm, led~e that under the terms of the Contract of. Sal~ B~. eff$) have had, or still htr~e kad~ prior to eiosinll, full and timel.v opportunity to make a complete inst!.e, ction of the sub[eet propertyr inaluding anF environmental insp~_~tlon or. in~extigation of_the subiect ~rovertv. Bttverfs) and BtoTerfs) A~ent a~ree that the purchase price of the property reflects the a~,reed t~.._n_valtte of the ~ropenv 'A~ IS ~ including the aforementioned ScIL-r has no~ made and do~s no: ~nlcc any ~pr~ or impl/cd r~n~atafi~n or warranty of any k/nd with ~ m tt~ ~-nvironm~ntal condition of fl~ s~b./e~ gmp~y or wh~a~- k is in comp~c with any local state, o~ fcderal ~nv/xonmen~al law, code, or standard. Buya.,/s) and Buyer(s) Ag~at hereby agree not to any clnlm aga/n~ $clla, or/~s Agents for any violation of any such hw~, codea, standard~ or for cost /n conducting/nvest/ga~/ons ~an~ w ~wh htwa, cod~ or .~mdarch. In add/fion, Buyer(s) and Buyer{s) Agent ~ to fully and forever release, d/schargc and hold tumnles$ SeUer, hs ag~, employes, and repres~amfiv~s from and aga/nst any clalm*: damages, lossea, costa or ~xp~ses of any ~d susl~cd or ari~/ng d/rectly o~ i,a~.~fly from or ia coan~ion w/th any kaown or unknown coca--on of th~ gwg~ny. Buyer Date Buyer Ag,--ai Dam AGENCY RECATIONSHIPS IN REAL ESTATE TRANSACTIONS · ~IINNESO~A L~W REQUIRES that early in any reiationshii), Teal e~m b=~ ~ ~}~pe~ dis~ ~ ~=u~ ~ ~e ofagen~ mD~e~on or rela~onship ~ey ~m,m The ~ila~ op~ons am li~d be~, ~ ~ not a ~n~. This Is an agen~ dta~osum ~rm only. E.you desire mp~en~en, you mu~ en~r I~ a when ~mct ack.trig m state law (e II~ng ~ntm~ ~r a b~r mp~e~on ~n~ct). ~nfii su~ ama as ~ ~ to en~r In~ a ~en ~m ~r m~en~fion, ~u ~ll be tma~ es a c~mer an~ ~1 ~t m~Ne any m~on ~m ~e bm~r or ~l~pemon. The bm~r or salesDemon wiJ~ be a~ing as a Faell~r {~e ~mgm;h V below), un,ess me ~er ~ ~]esDe~on is representing a~er ~a~ as de~dbed bel~. ACKN~EDGME~: I~e a~Jedge th~ I~e h~e b~n p~ted ~b ~e b~ow-descHb~ o~on& ~e undem~nd ~at u~l I~e ~ signed a ~pmse~flon ~n~, ~e am not repressed ~ the broker/ seles~mon. I~e undem~nd th~ w~e~ consent is ~aimd for a d~l ~en~ relationship. THIS IS A DISCLOSURE ONLY, NOT A CONTRACT FOR REPRESENTATION. (______...Seller's Broker:. A broker who lists a pmi)erty, ora salespersorl who is licensed to the listing broker, mi)resents the Seller end ac~ on bel~alf of the Seller. A Sailor's broker owes to the Seller the fiduciary duties described t)elow,r~ The broker must also disclose ~ the Buyer material facts as de, ned in Minnesota Statutes. se~en 82.1 g7. s~divislon 6, of which the broker is aware that could adversely and sign~canfly affect the Buyer's use or enjoyment of the property. If a broker or workJr?g with a Buyer as a customer is repressing the Seller, he or silo 11lust act i~ the Seller's best interest and must tell the Seller any Information disclosed to him or her, e..Ycer][confidertliaJ information acquired in a facattator r~at~onship (see paragrac~h V below). In t~at case, Ihs Buyer will nOt be represented and w~l not reoerve adwca and counsel fTom the broker or salesperson. Ii, Subagent; A broker or salesperson who is working with a Buyer but represents I~e Seller. In this case, the Buyer is the broker's customer and Is not represented hy thst I~rOker. If a broker or salesperson worlung with a BtJyer as a customer is representing the Seller, he or she must act In the Seller's best interest and must tell tt~e Seller any information that is disclosed to him or her. In tha: case, the Buyer will not be represented and will not receive aovice and counsel from the broker or salesperson. Ill. Buyer's Broker:. A Buyer may enter into an agreement for the brcUcer or salesperson to represent and act on behalf of the Buyer. The broker may represent the Buyer only, and not the Seller, even if he or she Is being I)aid in whole or in pall by the Seller. A Buyer's broker owes to the Buyer the fiduciary duties described bel~v.C;~ Th~ broker must disclose to the Buyer material fac~s as defined Jn Minnesota Statutes, so. oil 82.197. subdivision 6, of which the brc~er is aware that could adversely and significantly affect the Buyer's use or enjoyment of the property. If a broker or salesl~erson working with a Seller as a customer is representing the Buyer, he or she must act in the Buyer~ best imerest and must tell the Buyer any information disclosed to him or lief, except confidential information acquired in a facilitator relationship (see peragral:)h V below), In that case, the Seller will not I:)e represented and will not receive advice and counsel from the broker or selespemon, IV, Dual Agency - Broker Representing both Seller and Buyer:. Dual agency occurs when one broker or salesperson represents ~ parties to a transacfior~, or w'nen two salespersons licensed to the same broker each represerlt a betty to the transaction. Dual agency requires the informed consent of ali parties, and means that the broker and salespemon owe the same duties to the Seller and the Buyer. This role limits the level of representation the broker and salespersons can provide, and prohibits them from acting exclusively for either party. In a dual agency, confidential information about price, tan'ns and motivation for i)ursuing a transaction will be kept confidential unless one party instructs the broker or salesperson in writing to disclose spec'dic information about him m' her. Other information will be shared. Dual agerlt~ may rtot advocate for one i)arty to the ds~'irnent of ~ other,;3) Within the IImltatl(~ne described above, dual age,.ts owe to both Seller al~d Buyer the fiduciary duties described below.~a Dual agents must disclose to. Buyers material facts as defined in Minnesota Statutes. section 82.197, subdivislo~ 6, of which the broker is aware that (]ould adversely end significar~ly affect the Buyer's use or enjoyment of the property. V. Fac. iii .tetor. A b~..ker or salesperson who performs services for a Buyer. a Sel~er, or both but does not represent either in a hcluc~ary cepac, ity as a Buyers Broker, Sellers Broker or Dual Agent. THE FACILITATOR BRO)(I~R OR SALESPERSON DOES NOT OWE ANY PARTY ANY OF THE FIDUCIARY DUTIES LISTED BELOW, EXCEPT CONFIDENTIALITY, UNLESS THOSE DUTIES ARE INCLUOED Itl A WRI'FI'EN FACILITATOR SERVICES AGREEMENT. Ti~e facilitator broker or salesperson owes the duty of confiden~ality to the party but owes no other duty t~ the party excep~ those du~es required W law or con.ned in a wfil~en facilitator services agreement, if any. In the evenl a fa~lilator broker or salesperson, working with a Buyer, shows a property listed by the facilitator broker or salesperson, then the facilitator broker or salesperson must act as a Seller's Broker (see paragraph I above), in the event a facilitator broker or working with e Seller, acGepta a showing of the property by a Buyer being represented by the facilitator broker or salesperson, then the facilitater broker or salesperson must act as a Buyer's Broker (see paragraph II above). This disclosure Is required by law in ally l~ansacfion involving property occuplecl Or inter?decl to be oCcuplect I:)y one to four families as their residence. The lklucla~ ~utles mentioned el~we am listed ~l~ a~ ha~ ~a f~l~ menni~s: L~. bm~rl~p~ ~l act o~ In ~ient(s)' Ob~ience - ~rt~iss~n ~1 ~ o~ aE ~ien~s)' la~ Disc~su~ - ~lsal~ will d~cl~e ~ ~e~(s) a~ mattel ~ of ~i~ b~sal~pe~on ~s k~e~e ~ich might ~sonaMy ~em ~e ol~nt~ flg~ and In~e~. ~nfi~entiall~ - b~rlae~s~rsofl ~ ~ep ~ie~s)' ~de~ ~J~ ~u~ dis~um ~ m~Hal ~ ~ Bu~), Rea~b~ ~m. bm~l~on ~11 USe ~as~a~e ~ase pm~ II~ed ~ ~ ii MN:~C~IS~I (~2) ~ge I JqdM.iS.~ ll:~SP~ REALTY HOUSE_ EDI~q MO.B?~ P.B~'Ii AGENCY' RELATIONSHIPS IN REAL ESTATE TRANSACTIONS NOTICE REGARDING PREDATORY OFFENDER INFORMATION Information regarding ~e predatory offender registry and persons registered w/th the predatory ofl~nder registry under Minnesota Statutes, secUon 243,166, may be obtained by contacting b~e local law enforcement o,~ces in Be cornmuni~' wtle~e the property is located, or the Minnesota Depart~ent of Corrections at (651) 642-0200. or from the Depa~ment cf Correct~ons web Site at www,corr.state,mn.us. MN:AGCYDISC,-2 (8/02) Page 2 JENSEN & SONDRALL, P.A. Attorneys At Law 8525 EDINBROOK CROSSING. STE. 201 BROOKLYN PARK~ MINNESOTA 55443-1968 TELEPHONE (763) 424-8811 · TELEFAX (763) 493-5193 e-mail, iaw~jensen-sondrall.com DOUGLAS J. DEBNgR2 GORDON L. JENSEN~ GLEN A. NORTON STEVEN A. SONDRALL STACY A. WOODS VIA FACSIMILE AT (952)84,4-1520 AND BY REGULAR MAIL OF COuNsEL LORENS Q. BRYNESTAD May 29, 2004 Mr. Garth Johnson Realty House 5120 Edina Industrial Blvd. Minneapolis, MN P.E: City of New Hope/Acquisition of 9101 36th Avenue North Our File: 99.11311 Dear Mr. Johnson: It was our pleasure to meet with you on May 28, 2004 regarding the City of New Hope's possible acquisition of the property at 9101 36t~ Avenue North. The meeting was also attended by Kirk McDonald New Hope's Community Development Director and Ken Doresky the Community Development Specialist. This letter will confirm the outcome of the meeting. We advised you at the meeting the New Hope City Council has authorized us to negotiate with you and your client concerning acquiring this property. We also discussed the condition of the property and the likelihood the home on the property cannot be saved and will need to be demolished. We further discussed and agreed the cost to demolish the home may cost'S10,000.00 or more and is actually depreciating the market value of the property. Finally, we discussed the underlying land value of the property as vacant. Hennepin County has determined the 2004 land value for taxes payable in 2005 is $46,000.00. Enclosed is a copy of the printout from the County's web site indicating this assessment. There is no current private appraisal of the property and it was decided at this time not to obtain one. With the forgoing facts in mind, we believe the City Council would be willing to purchase this property from your client for $36,000.00. This figure was derived at by subtracting from the County's $46,000.00 2004 land value the minimum $10,000.00 expense for potential demolition costs of the home on the property. If your client is willing to accept this offer, we would like to prepare a purchase agreement and present it to the City Council at their earliest possible meeting. As we informed you, our Council meets every 2ua and 4th Mondays of the month. ~RealPropertyLaWspecialist Certified By We also discussed the Code Compliance Inspection Report with our Building Inspector. We The Minnesota State anticipate this report will be completed the week of May 31st and we will provide you with a copy Bar Association :Admittedinlowa of said report as soon as possible after it is completed. As a side note, the City's Building Department intends to be very aggressive with code compliance issues on any attempt to rehab the existing home on this property. If the City acquires the property, it will be our intent to demolish the existing home to guarantee the construction of a new home on the property. Jun ~ 8, 2004 Page 2 Please present this offer to your client and advise at your earliest convenience as to their response to our offer. Also, if I have not accurately set out in this letter what we discussed at our meeting or you have any additional comment or questions concerning our offer please don't hesitate to contact me. I will wait to hear from y°u. Very truly yours, Steven A. Sondrall, City Attorney, City of New Hope JENSEN & SONDRALL, P.A. sas~jensen-sondrall.com Enclosure(s) cc: Kirk McDonald Ken Doresky P:\AttomeyX. SAS\t Client FilesL2 City of New HopeL09.11311(9101 36th)\Itr to bank's realtor re purchase offer.doc · JUN. 17.2004 B: 56AM REALTY HOusE EDINA- MO. HOUSE FAX TRANSMISSION Garth Johnson, Broker, CRS REO Sales and Asset Management REOMAC - Member REO.com - Member REONETWORICcOm - Member REO Realtors of Minnesota - Member (877) 804-15t 21 (952) 844-1520 Fax (952) 844-1511 direct 24 hrs. E-mad:" -- gjohnson(~thereaityhouse.com Websites: garthjohnson.com and homesbygarth.com D:e: ~ No of.pages: 5 ..... Co:~Subject: ~ )C~,,//~/4/,~ ~, Minneapolis, MN 65439 .TUN, 17. :~004 8:561::1P1 IREAL. TY HOUSE F'D]'I',I~ NO..._R.~5 P. Mr. e.,s~.lo~,-~on . i~ I $120 ~ lndustfinl Blvd. t, 'i RE: CRy of N~w HnpetAcquislfl~ of Om' J~l,e: 99.1131;1 It was our pl~mm to m~et with you on May ~, 205t re~xt'ding th, ~ of New possible ~quisJflon. of ~ pml~fl~ it 9101 36~ A~ue NozOt, The meeting was also att~ndcd by Ktck ~Donald Now Hope's Comnmnity Dt~pment DiEecto~ end ~eu ,/~)or~_~ the Wo advised you it tho zneett~ tho New l~tnp~ ~Coun~ las attthomed m to n~gotiatc with you and.your ~/~ent concom~ tcqulfl~ this pr0p~rt~. We also dhc~sse~ the ~nlition of' property nd the likelihood tho hnn~ on tho pp~et~ ~ann~t t~ nwd and will need to b~ dnmolishcd, We funl~r dtsamed and egt'e~ tho ',.CO~ m d~moll,h ~ home m~y ~sr $10,000.00 value for tax. payaSle in 200~ Is $g6,0O0.00,,,,~nclnsed Is a ~ of the ptttgnut f~ctm the Cotmys web sit~ lndioating this as8ossn-,m~t. The~ ~s no mrtemt private appraisal af -..tm ptopcrty end it w~ derided a~ this time nnt to obtain one. , ~' t~ W~ thc forgoing fins in w~ ~ Cotmoil would be willing tn purchase p~ from your client ~6,000.00. 'ilium wes derived ax by subu*acring ~om the Com~;'s $46,000.00 ~.004valug $I0,000,00 expense for lx~ easts of the hom~ on the to accept this o~et, we wauM like tn prepare a pu..dme aanmment and Council et tludr ~_d~est possible meeting. As we informed you, our O~mcfl meats Mondays of tbs month. ~ ~ We al~o d~cussed dm Code Compliance Repog with our Buildb2g lnfrp~tor. We Csnilbd By ~,M~uousm, anti~ ~.q report will b~ complot~ May 3].a and we will provide you with l:~spamnent intends to bc vcry sggzesslve gomplhncc issues on nay attempt m Attorneys At Law 8525 EDINBROOK CROSSING, STE. 201 BROOKLYN PARK, MINNESOTA 55443-1968 TELEPHONE (763) 424-8811 · TELEFAX (763) 493-5193 e-mail iaw@jensen-sondrall, com DOUGLAS J. DEBNER2 GOP. DON L. JENSEN~ GLEN A. NORTON SX~n~ n. SO~a~.L VIA FACSIMILE AT (952)844-1520 sr~,cv n. Woo~s AND BY REGULAR MAIL oFco= % Lo~,s Q. I~RYNF. Sr~ -b4ay-~, 2004 Mr. Garth Johnson Realty House 5120 Edina Industrial Blvd. Minneapolis, MN RE: City of New Hope/Acquisition of 9101 36~ Avenue North Our File: 99.11311 Dear Mr. Johnson: This letter is in response to your June 17, 2004 fax transmitted to myself and Kirk McDonald regarding your client's counteroffer on the referenced property. The City has authorized me to inform you it will increase its offer to purchase the referenced property to $46,000.00. Basically, this new offer would constitute an "as is" purchase of the property at its 2004 assessed land value of $46,000.00 as determined by Hennepin County for real estate tax purposes. The City will assume the additional cost of demolishing the structure located on the property. This appears to be a fair compromise given the fact it'S unlikely a buyer on the open market will be able to rehab the existing home and the demolition cost for the home may well exceed $10,000.00. I recall you suggested at our meeting a buildable lot in this location of New Hope might sell for $55,000.00. As a result, it also seems unlikely this property would sell for more than $46,000.00 if you assume it will be purchased as a "tear down" for new construction based on your own valuation of "construction ready" vacant land and the cost of demolition. Please submit this offer to your client and advise me of their response. I will wait to hear from you. Very truly y~ 'yen 3,. Sondr~ll, City Attorney, City of New Hope JENSEN & SONDRALL, P.A. ~Real Property Law Specialist Certified By sas@jensen-sondrall.com The Minnesota State Bar Association :Admitted in iowa Cc~Kirk McDonald P:~,.aomey~ASXt Clot Fil~2 Civj of I~w Ho~\99.115~ i(~101 36th)~:om~ff~ in' bank's JENSEN & SONDRALL, P.A. Attorneys ,,It Law 8525 EDINBROOK CROSSING, STE. 201 BROOKLYN PARK, MINNESOTA 55443-1968 TELEPHONE (763) 424-8811 · TELEFAX (763) 493-5193 e-mail law~jensen-sondrall.com DOUGLAS J. DEBNERz GO,ON L. JENSENt June 22, 2004 GLEN A. NORTON S~WN n. SO~L VIA E-MAIL TO kmcdonald@ci.new-hope.mn.us sTncv n. WooDs AND BY REGULAR U.S. MAIL oF COVSSEL Kirk McDonald LORENS Q. BRYNESTA~ Community Development Director City of New Hope 4401 Xylon Avenue North New Hope, MN 55428 Re: Resolution Approving Purchase Agreement For 9101 36a~ Avenue North Our File No.: 99.11311 Dear Kirk: Please find enclosed for consideration at the June 28, 2004 EDA meeting a proposed Resolution Approving Purchase Agreement for 9101 36t~ Avenue North. I will also be sending you by fax a purchase agreement prepared by the real estate agent for the owner in connection with this sale which should be attached to the resolution as Exhibit A. As we discussed, I did receive a phone call yesterday from the agent for the owner and was advised the 'home owner behind this property is also interested in making a purchase offer for this property. The agent advised me he was obligated to speak with this prospective buyer about his proposed offer. As a result, the purchase offer attached to the resolution may be withdrawn depending on the seriousness of this other prospective buyer. Despite this fact, I recommend we put this matter on the agenda for consideration by the EDA and see what happens. I am also providing you with a copy of the letter I sent the owners agent abut the EDA's desire to purchase this Property per the attached resolution. My letter clearly indicates we will not get into a bidding struggle with the other buyer, but that we are serious about the removal of the single family structure now 'on the property. Contact me if you have any other questions or comments about this matter. Ve trulyy~ rs, 5teven .~. Sond~all, Esq. JENSEN & $ONDRALL, P.A. sas@jensen-sondrall.com 'Real Property Law Enclosure(s) Specialist Certified By The Minnesota State Bar Association CC: Valerie Leone ZAdmitted in Iowa P:\Attorney\SAS\l Client Filesk2 City of New Hope\99.11311(9101 36th)\ltr K. McDonald re reso. approving PA.doc JUN- 17-2004 10:59 FROM: NEW HOPE PUBLIC WORK ?635926??6 TO: ?635315136 P. 1 ~n~ofl R~ ~ ~~ ~ 910I 36~ A~. 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" '~ 35TH AVENUE ~x ~s4.2 ~ NORTH 979.5 i [9 z 34 1/2 , EDA REQUEST FOR ACTION Originating Department Approved for Agenda Agenda Section Community Development ¢ 06-28-04 EDA y..,~ Item No. .By: Kirk McDonald, Director of CD B 6 Amy Baldwin, CD Assistant A RESOLUTION AUTHORIZING EXECUTION AND DELIVERY OF A CONTRACT FOR PRIVATE REDEVELOPMENT BY AND BETWEEN THE NEW HOPE ECONOMIC DEVELOPMENT AUTHORITY AND FOUNDATION LAND DEVELOPMENT, LLC FOR THE REDEVELOPMENT OF 'THE FORMER FRANK'S NURSERY PROPERTY (IMPROVEMENT PROJECT NO. 733). REQUESTED ACTION Staff recommends that the EDA approve the attached resolution, which'approves the attached contract for private redevelopment with Foundation Land Development, LLC for the former Frank's Nursery redevelopment site at 5620 Winnetka Avenue North, located in the Livable Communities study area. POLICY/PAST PRACTICE The EDA has previously entered into contracts for private redevelopment with developers to facilitate improvements in the city. This agreement will facilitate the construction of 44 owner-occupied, market rate townhomes units in the Livable Communities area and address life cycle housing goals outlined in the Comprehensive Plan. BACKGROUND The EDA intially approved the redevelopment agreement for this project with 'Armory Development at its April 26, 2004 meeting. As discussed at the June 21, 2004 work session, Armory Development is requesting to transfer the redevelopment contract to a new developer who will construct the same project as previously approved. The new developer is Foundation Land Development, LLC or Jim Deanovic, an experienced developer who has completed many successful development projects. Staff does not have any issue with the change in developers and recommends approval of the resolution. ATTACHMENT · Resolution MOTION BY /~ ~'/~'l · SECOND BY ..... I:\RFA\PLANNING\LivabIe Communities\Q-5620' Wtka developer chan~e.doc NEW HOPE ECONOMIC DEVELOPMENT AUTHORITY COUNTY OF HENNEPIN STATE OF MINNESOTA RESOLUTION NO. A RESOLUTION AUTHORIZING EXECUTION AND DELIVERY OF A CONTRACT FOR PRIVATE REDEVELOPMENT BY AND BETWEEN THE NEW HOPE ECONOMIC DEVELOPMENT AUTHORITY AND FOUNDATION LAND DEVELOPMENT, LLC FOR THE REDEVELOPMENT OF THE FORMER FRANK'S NURSERY PROPERTY BE IT RESOLVED by the New Hope Economic Development Authority (the "EDA") as follows: Section 1. Recitals. 1.01 It has been proposed that the EDA enter into a Contract for Private Redevelopment (the "Contract") with Foundation Land Development, LLC (the "Redeveloper") to redevelop the former Frank's Nursery site at 5620 Winnetka Avenue North. Section 2. Findinqs. 2.01 The EDA hereby finds that the Contract promotes the objectives as outlined in its Restated Redevelopment Plan for Redevelopment Project No. 1 established pursuant to Minnesota Statutes, Section 469.001 et seq. 2.02 The EDA hereby finds that it has approved and adopted Tax Increment Financing District No. 04-1 (Special Law) and the EDA has approved and adopted the Tax Increment Financing Plan relating thereto pursuant to Minnesota Statutes, Sections 469.174 through 469.1799, inclusive, as amended and supplemented from time to time. Section 3. Authorizations. 3.01 The President and the Executive Director (the "Officers") are hereby authorized to execute and deliver the Contract when the following condition is met: Substantial conformity to the Contract presented to the EDA as of this date with such additions and modifications as those Officers may deem desirable or necessary as evidenced by the execution thereof. Adopted by the EDA this day of ,2004. Don Collier, PreSident ATTEST: Daniel J. Donahue, Executive Director G:\WPDATA\N\NEW HOPE\13\DOC\EDA RESOL AUTHG EXEC OF REDEV AGR V2.DOC