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091304 EDA
Official File Copy ---- CITY OF NEW HOPE EDA MEETING City Hall, 4401 Xylon Avenue North September 13, 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 August 23, 2004 4. Resolution authorizing negotiation of an option for certain property within the Winnetka East Redevelopment (south portion of 7603 Bass Lake Road Extension) (improvement project no. 751 ) 5. Discussion and update regarding concept plans for the proposed development of 4301-4317 Nevada Avenue North (improvement project no. 734) 6. Public Hearing - Resolution authorizing the transfer of real property (5501 Boone Avenue North) (improvement project no. 776) 7. Resolution authorizing execution and delivery of a contract for private redevelopment by and between the New Hope Economic Development Authority and Project for Pride in Living, Inc. for the redevelopment of 5501 Boone Avenue North (improvement project no. 776) 8. Adjournment CITY OF NEW HOPE 4401 XYLON AVENUE NORTH NEW HOPE, MINNESOTA 55428 EDA Minutes August 23, 2004 Regular Meeting City Hall CALL TO ORDER President Collier called the meeting of the Economic Development Authority to order at 7:40 p.m. ROLL CALL Present: Don Collier, President Doug Andersen, Commissioner Sharon Cassen, Commissioner Mary Gwin-Lenth, Commissioner Absent: Steve Sommer, Commissioner APPROVE MINUTES Motion was made by Commissioner Cassen, seconded by Commissioner Andersen, to approve the Regular Meeting Minutes of August 9, 2004. Voting in favor: Collier, Andersen, Cassen, Gwin-Lenth; Voting against: None; Absent: Sommer. Motion carried. IMP. PROJECT 776 President Collier introduced for discussion Item 4, Resolution modifying the Item4 restated redevelopment plan and tax increment financing plans for redevelopment project no. I and tax increment financing districts nos. 80-2, 81-1, 82-1, 85-1, 85-2, 86-1, 02-1, 03-1 (special law) and 04-1 (special law); creating tax increment financing district no. 04-2 (special law) and adopting a tax increment financing plan relating thereto (improvement project no. 776). Mr. Kirk McDonald, community devel.opment director, stated the resolution needs to be adopted by the EDA prior to action at the city council level. This step creates the tax increment financing district related to the Project for Pride in Living project at 5501 Boone Avenue North. Mr. Jim Casserly, Krass Monroe, stated the resolution is similar to previous action taken on other TIF districts. He stated only one parcel of land is involved. The project will be undertaken in two phases with phase I, the 35- unit apartment building, being constructed this fall and phase II, a 41~unit condominium building, being constructed next year. He noted the extensive soil problems will be addressed through the use of~ilings. Mr. Casserly stated the TIF district will be a housing district and in~ housing district the 'city has the authority to make the housing more affordable. Commissioner Andersen questioned Section 5.6 of Article V that indicates EDA Meeting August 23, 2004 Page 1 the rental apartments will be 100% low-income housing tax credit development with at least 75% of the units rented to households with incomes less than 60% of the area median income. Mr. Chris Wilson, PPL, stated in order for a low income tax credit project to go forward, the project is restricted to families at 60% of median income. He cited an example of a family of four earning $45,850 meets the income qualifications. He also noted that seven to eight of the 35 units will be rented to persons qualifying for Section 8 rental assistance. Mr. Wilson stated market-rate rents are based on comparable units in the area. Commissioner Cassen inquired whether any of the terms had changed since the project was last discussed. Mr. Wilson confirmed that all conditions and terms remain the same. The total project cost is estimated at $14 million with $1.2 million in TIF assistance from the city for piling costs. The city's net profit over 25 years is projected at $2.1 million. Mr. Steve Sondrall, city attorney, reminded the EDA that the property was acquired with CDBG money. In the absence of a qualifying project, the EDA would be required to pay back the $100,000. He advised the EDA to take this funding into consideration and the fact that it does not require repayment. President Collier explained tax increment financing and that the bonds are repaid by the increased value instead of through New Hope taxpayers. Mr. Bob Sable, 5242 Quebec Avenue North, was recognized. He noted the property values are frozen when a TIF district is created. Mr. Jim Casserly, Krass Monroe, explained that the tax capacity (not taxes) is frozen through the creation of a TIF district. The new value has a new tax capacity and the old tax capacity is subtracted from it. A portion of the property tax is calculated as tax increment and is used for reimbursement of the project. He noted the city may be ,able to close the districts earlier than projected and get the properties back on the tax rolls. Mr. Casserly confirmed that the city will be able to recover its investment. EDA RESOLUTION Commissioner Gwin-Lenth introduced the following resolution and moved 04-29 its adoption "RESOLUTION MODIFYING THE RESTATED Item4 REDEVELOPMENT PLAN AND TAX INCREMENT FINANCING PLANS FOR REDEVELOPMENT PROJECT NO. 1 AND TAX INCREMENT FINANCING DISTRICTS NOS. 80-2, 81-1, 82-1, 85-1, 85-2, 86-1, 02-1, 03-1 (SPECIAL LAW) AND 04-1 (SPECIAL LAW); CREATING TAX INCREMENT FINANCING DISTRICT NO. 04-2 (SPECIAL LAW) AND ADOPTING A TAX INCREMENT FINANCING PLAN RELATING 'THERETO (IMPROVEMENT PROJECT NO. 776)." 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 EDA Meeting August 23, 2004 Page 2 thereof: Collier, Cassen, Gwin-Lenth, and the following voted against the same: Andersen; Abstained: None; Absent: Sommer; whereupon the resolution was declared duly passed and adopted, signed by the president which was attested to by the executive director. IMP. PROJECT 776 President Collier introduced for discussion Item 5, Resolution calling for Item 5 public hearing regarding a proposed transfer of real property (5501 Boone Avenue North) (improvement project no. 776). President Collier stated the resolution sets a public hearing date of September 13. EDA RESOLUTION Commissioner Gwin-Lenth introduced the following resolution and moved 04-30 its adoption "RESOLUTION CALLING FOR PUBLIC HEARING Item 5 REGARDING A PROPOSED TRANSFER OF REAL PROPERTY (5501 BOONE AVENUE NORTH IMPROVEMENT PROJECT NO. 776)." 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, and the following voted against the same: None; Abstained: None; Absent: Sommer; whereupon the resolution was declared duly passed and adopted, signed by the president which was attested to by the executive director. IMP. PROJECT 775 President Collier introduced for discussion Item 6, Resolution approving Item 6 purchase agreement - 5207 Pennsylvania Avenue North (improvement project no. 775). Mr. Kirk McDonald, community development director, stated the resolution approves the purchase agreement per the EDA's prior direction. For the record, President Collier noted the appraised value is $80,000. Commissioner Cassen noted the EDA's intent that the house be demolished and that the property be turned over to. a developer for market rate housing without the use of CDBG funds. EDA RESOLUTION Commissioner Cassen introduced the following resolution and moved its 04-31 adoption "RESOLUTION APPROVING PURCHASE AGREEMENT- Item 6 5207 PENNSYLVANIA AVENUE NORTH (IMPROVEMENT PROJECT NO. 775)." The motion for the adoption of the foregoing resolution was seconded by Commissioner Gwin-Lenth, and upon vote being taken thereon, the following voted in favor thereof: Collier, Andersen, Cassen, Gwin-Lenth, and the following voted against the same: None; Abstained: None; Absent: Sommer; whereupon the resolution~ was declared duly passed and adopted, signed by the president which Was attested to by the 'executive director. EDA Meeting August 23, 2004 Page 3 ADJOURNMENT Motion was made by Commissioner Gwin-Lenth, seconded by Commissioner Cassen, to adjourn the meeting. All present voted in favor. Motion carried. The New Hope EDA adjourned at 8:10 p.m. ectfully submitted, Valerie Leone City Clerk EDA Meeting August 23, 2004 Page 4 EDA REQUEST FOR ACTION Originating Department Approved for Agenda Agenda Section Community Development ~7 09-13-04 EDA Item No. By: Kirk McDonald, Director of CD By: A RESOLUTION AUTHORIZING NEGOTIATION OF AN OPTION FOR CERTAIN PROPERTY WITHIN THE WINNETKA EAST REDEVELOPMENT (SOUTH PORTION OF 7603 BASS LAKE ROAD EXTENSION) (IMPROVEMENT PROJECT FILE 751) REQUESTED ACTION Staff requests EDA consider of the attached resolution prepared by the city attorney authorizing the negotiation of an option to purchase in favor of the owners of 7616 55~h Avenue North (Mike and Barb Drenth) and 7608 55th Avenue North (Paul Edison). Per the attached city attorney correspondence, "The Resolution contemplates a three-way Option Agreement between Drenth/Edison (acting as a single unit for purposes of the option), the Authority and Ryland. As you know, there are a number of details that would need to be pinned down before a formal Option Agreement could be signed. The Resolution outlines the core requirements, particularly as they relate to whether Phase III does or does not go forward." BACKGROUND At the August 30 work session, the City Council directed staff to work with the city attorney on preparing a resolution to address the 'bump out'. The attached resolution authorizes the Executive Director of the EDA to enter into negotiations with the 7616 and 7608 55th Avenue North owners and outlines the conditions and requirements the option must comply with. The city attorney will be in attendance to answer any questions. Staff recommends approval of the resolution. ATTACHMENTS · Resolution and Exhibit A (subject property map) · City Attorney Correspondence (09-08-04) MOTION BY (~~ SECOND BY I:\RFA\PLANNING\Housing\East Winnetka Redevelopment\O - Bump out.doc RESOLUTION NO. 04 - RESOLUTION AUTHORIZING NEGOTIATION OF AN OPTION FOR CERTAIN PROPERTY WITHIN THE WINNETKA EAST REDEVELOPMENT (SOUTH PORTION OF 7603 BASS LAKE ROAD EXTENSION) BE IT RESOLVED by the Economic Development Authority in and for the City of New Hope (the "Authoritf') as follows: WHEREAS, on January 26, 2004, the Authority approved a Contract for Private Redevelopment (the "Contract") with The Ryland Group, Inc. (thc "Redeveloper"); and WHEREAS, the Contract contemplates the redevelopment of certain parcels of land located southeast of the intersection of Bass Lake Road and Winnetka Avenue, as more specifically defined in the Contract (thc "Redevelopment Property"); and WHEREAS, the Redeveloper is currently in title to a portion of the Redevelopment Property and is constructing "Phase I" of the redevelopment contemplated by the Contract on that land; and WHEREAS, the Authority as part of its obligations under the Contract is preparing to transfer to the Redeveloper the remainder of the Redevelopment Property so that the Redeveloper can begin construction on "Phase II" of the redevelopment contemplated by the Contract; and WHEREAS, the parcel of land commonly known as 7603 Bass Lake Road Extension is to be transferred as part of the Phase II area; and WHEREAS, the aforementioned parcel contains, at its southem end, approximately 6,450 square feet of land that creates a "bump out" in the northeast area of the Redevelopment Property, as depicted on the attached Exhibit 1; and WHEREAS, the Redeveloper intends, after acquiring the Phase II area, to plat this "bump out" section as a part of Outlot A of its Winnetka Green Plat; and WHEREAS, the Authority and the Redeveloper are currently reviewing the possibility, of entering into a second contract for private redevelopment to enable construction of a "Phase Ill" redevelopment on land located to the south of the Phase II area; and WHEREAS, it has been proposed that if Phase III does not ~o forward then the aforementioned approximately 6,450 square foot "bump out" portion of the Outlot A area (referred \.- to hereafter as the "Potential Conveyance Area") be transferred to the owners of 7616 55th Avenue and 7608 55th Avenue (collectively, the "7616 and 7608 Owners") and that an option agreement be signed outlining the terms of such potential transfer. 1 NOW, THEREFORE, BE IT RESOLVED by the Economic Development Authority in and for the City of New Hope as follows: 1. The Executive Director and his designated representatives are authorized to enter into negotiations with the 7616 and 7608 Owners to determine whether mutually-agreeable terms can be reached regarding an option on the Potential Conveyance Area. 2. As part of these negotiations, the Executive Director and his designated representatives shall regularly consult with representatives of the Redeveloper regarding the proposed option terms. 3. Terms of the option must at a minimum comply with the following conditions and requirements: a. The Option Agreement shall be deemed void if the Redeveloper does not fully assume the Agreement, in writing, upon closing of the transfer of the "Phase II" area of the Redevelopment Property from the Authority to the Redeveloper. b. The 7616 and 7608 Owners shall not be allowed to exercise their option to purchase the Potential Conveyance Area until the earlier of: (i) the date on which the Authority determines, by formal resolution, that it will not enter into a contract for private redevelopment authorizing"Phase m" construction south of the current Winnetka East Redevelopment Property area, or (ii) six (6) months after the effective date of the Option Agreement. c. The Option Agreement will automatically expire and become null and void in the event that the Authority passes a formal resolution declaring that it will enter into a contract for private redevelopment for "Phase 1II" construction south of the current Winnetka East Redevelopment Property area, provided that the "Phase III" construction area includes the land commonly known as 7616 55th Avenue and/or 7608 55th Avenue. d. The 7616 and 7608 Owners will, as a purchase price for the Potential Conveyance Area, pay a single lump sUm calculated on a per square foot basis at a rate mutually agreeable to the 7616 and 7608 Owners, the Authority and the Redeveloper (the "Purchase Price"). In the event that these parties cannot reach a mutually-acceptable per square foot rate, an Option Agreement will not be signed by the Authority. .~ e. The 7616 and 7608 Owners shall agree between themselves how to apportion responsibility for the Purchase Price, and such apportionment shall not be part of the Option Agreement terms. f. In the event that the 7616 and 7608 Owners exercise their option to acquire the Potential Conveyance Area, they shall pay a single lump sum to cover each legal, surveying or other professional services cost necessary to effectuate the transfer and the recording of the transfer. The 7616 and 7608 Owners shall further agree between themselves how to apportion the responsibility for these costs, and such apportionment shall not be part of the Option Agreement terms. g. In the event that the 7616 and 7608 Owners exercise their option to acquire the Potential Conveyance Area, the City of New Hope will waive all administrative lot split fees relating to the 7616 and 7608 Owners' division of this area. The boundary line of such division shall be agreed to by the 7616 and 7608 Owners between themselves, and the location of the boundary line dividing their interests shall not be part of the Option Agreement terms. 4. If mutually-agreeable terms are reached pursuant to this Resolution, the Executive Director and/or his designated representatives shall convert such terms into a proposed Option Agreement and present such Agreement to the Authority for review and approval. Dated the 13th day of September, 2004. Don Collier, President Attest: Daniel J. Donahue, Executive Director P:XATTORNE'P, CMI~CLIENTS\CN H~99.11313\CNH99-11313-RESOLUTION RE AUTHORIZING OUTI.OT A OPTION NEGOTIATIONS.DOC 3 EXHIBIT 1 See attached map. 4 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 law~j ensen-sondrall.com MEMORANDUM Date: 8 September 2004 VIA E-MAIL ONLY To: Kirk McDonald Community Development Director City of New Hope Shawn Siders Community Development Specialist City of New Hope From: Clarissa M. Klug Assistant City Attorney Re: Option on "Bump Out" Winnetka East Redevelopment Area (Our File # 99.11313) Enclosed is a proposed Resolution authorizing the negotiation of an option to purchase in favor of the owners of 7616 55th Avenue (Mike Drenth) and 7608 55th Avenue (Paul Edison). These are the owners of the land adjacent to the "bump out" area of the current Winnetka East Redevelopment area. The Resolution contemplates a three-way Option Agreement between Drenth/Edison (acting as a single unit for purposes of the option), the Authority and Ryland. As you know, there are a number of details that would need to be pinned down before a formal Option Agreement could be signed. The Resolution outlines the core requirements, particularly as they relate to whether Phase III does or does not go forward. As always, feel free to contact us with any questions or concerns. Enclosure , c. Steven Sondrall (by e-mail, with enclosure) Gay Greiter (by e-mail, with enclosure) P:La, ttomey\Cmk\Clients\CNH~99.11313\CNH99.11313-001-Memo re Resolution Authorizing Outlot A Option Negotiations.doc EDA REQUEST FOR ACTION Originating Department Approved for Agenda Agenda Section Community Development ~. 09-13-04 EDA Item No. By: Kirk McDonald, Director of CD By:~_~ 5 Shawn Siders, CD Specialist d~ ~- DISCUSSION AND UPDATE REGARDING CONCEPT PLANS FOR THE PROPOSED DEVELOPMENT OF 4301-4317 NEVADA AVENUE NORTH (IMPROVEMENT PROJECT NO. 734). REQUESTED ACTION Staff requests EDA discussion and direction regarding the proposed six-Unit townhome (2 triplexes) development at 4301-4317 Nevada Avenue North. Northwest Community Revitalization Corporation (NCRC), the owner of 4301 Nevada Avenue North and contract purchaser of 4317 Nevada Avenue North has developed the enclosed plans. Per the direction of the EDA, the plans deviate slightly from what was originally proposed, as two of proposed Units are handicap accessible, rather than one. Staff is seeking preliminary approval of the proposed concept so NCRC can proceed with developing the necessary documents to receive planning approval. Once those approvals have been granted, the property at 4317 Nevada Avenue North will be transferred to NCRC for $1.00, per the sale/development agreement that was approved by the coUncil on April 26, 2004. Ms. Kristine Madson, executive director of NCRC, and Mr. Gene Nicolleli, project architect, will be in attendance at this meeting. POLICY/PAST PRACTICE City goal #2 is to emphasize the maintenance and redevelopment of commercial and residential properties within the city. The coUncil has been addressing the residential portion of this goal through the city's many housing activities, which include but not limited to, partnering with non-profit housing developers for the development of property within the city. Annually, the city allocates federal Community Development Block Grant (CDBG) funding specifically targeted for scattered site housing projects of this nature. BACKGROUND In August 2003, the city completed the purchase of 4317 Avenue North. The property was acquired through the city's scattered site housing program using federal CDBG funds which primarily benefits low to moderate-income households. This development is CDBG eligible and the property was recently demolished. On June 23, 2003, the EDA declined a proposal from Master Development (Frar~s Nursery site developer). At that time, the developer proposed the demolition of the existing single-family homes at 4301-17 Nevada MOTION BY SECOND BY / I: \ RFA \ PLANNING \ Housin~ \ 4317 \ Q-NCRC Conce~t Plan A~l>roval.doc Request for Action Page 2 September 13, 2004 Avenue North and replacing them with the construction of twelve market rate townhomes. The developer sought $200,000 of assistance from the city. Because of the proposed density and financial assistance request, the EDA declined the proposal from Master Development. NCRC acquired the property at 4301 Nevada Avenue North in February 2004 and is in the process of seeking demolition bids for that housing unit. NCRC has been successful in obtaining funding to support this CDBG eligible project. Hennepin County HOME has awarded $294,000 of support to the project as well as $50,000 of CDBG funding from the Consolidated Pool. On April 26, 2004, the New Hope City Council approved a sale/development contract with NCRC for the concept development of six affordable owner-occupied zero lot line twin homes (3 twinhomes) or townhomes (2 triplexexs), on the combined site. At that meeting, staff and NCRC indicated that one of those units would be accessible. The council directed staff and NCRC to develop a proposal that would make two of those units accessible. Since that time, NCRC has retained the services of a new architect, and the proposal has been revised to include two accessible units. In order to accommodate the proposed redevelopment, NCRC will be required to file a rezoning request from the R-1 "Residential" Zoning District to a Planned Unit Development (PUD), in order to accommodate the greater density of six units. The applicant will also seek two minor variances for required lot size. The total lot area required for six townhomes is 30,000 square feet. The two lots combined are 29,705 square feet. Therefore, a variance requesting an adjustment of 295 square feet will be necessary. Finally, a rear yard setback variance to accommodate the accessible units will be necessary. If this concept plan is approved by the EDA, NCRC and its architect will initiate the process of seeking the necessary approvals. NCRC has indicated that it expects to begin construction during winter 2004 and the units will be ready for marketing and sale by spring/summer 2005. NCRC has also made accommodations for the future redevelopment of the site at 4415 Nevada Avenue North. The enclosed packet includes a sketch illustrating how the property at 4415 Nevada Avenue North would be incorporated into the proposed townhome community at 4301-17 Nevada Avenue North. REOUEST FOR ACTION Staff recommends that the EDA give preliminary approval to the attached concept plan for the properties located at 4301-17 Nevada Avenue North for the following reasons: · The New Hope Comprehensive Plan Update recommends redevelopment of the poor condition, low- density residential land along Nevada Avenue North between 42na Avenue North and 45~ Avenue North. · Based on the 2004 tax levy, the combined site will generate an additional $4,766.09 in tax revenue annually. · The proposed zero lot line townhomes will provide New Hope residents with an alternative type of housing. · The units will be affordable to moderate-income first time owners (80% median income). · The units will be owner occupied. · Two of the units will be handicap accessible. · The project as proposed is CDBG eligible and CDBG funds were used to acquire and demolish the site. Request for Action Page 3 September 13, 2004 · A portion of the CDBG contribution from the city will be returned to the city in program income. This may be used for future CDBG eligible projects. · Hennepin County HOME and CDBG Consolidated Plan funds have been awarded in the combined amount of $344,000. The applications require a city contribution. · The proposed concept plan maximizes efficiency of the land and its topography, while providing open space amenities and enough parking to accommodate this development. · Each unit will have a two-car garage with additional parking spaces provided on site for visitor parking. · The two car garages will not face Nevada Avenue North. · The plan incorporates an overall design for the properties located at 4301, 4317 and 4415 Nevada Avenue North. · A limited number of minor variances to the city's code will be required for the proposed redevelopment. · The proposed concept plan is in compliance with what was presented to the EDA on April 26, 2004. ATTACHMENTS · Project Description from NCRC · Nevada Avenue Townhomes Concept Plan · Floor Plan - Handicap Accessible Unit · Elevation Plan for unit facing Nevada Avenue North · Nevada Avenue North Adjoining Property photographs · Concept Plan for 4301, 4317 and 4415 Nevada Avenue North (proposed if NCRC acquires 4415 Nevada Avenue North and obtains necessary approvals) · Location Map Provided in April 26, 2004 Council Packet · Development Contract · Resolution approving Development Contract · Funding recommendations from Hennepin County Home and CDBG Consolidated Pool NEVADA TOWN HOMES Background: In 2003 the City of New Hope acquired the property at 4317 Nevada Avenue North. In 2004 the Northwest Community Revitalization Corporation (NCRC) acquired the adjacent property at 4301 Nevada Avenue North. These properties are within a target area for redevelopment. The city's Comprehensive Plan Update includes a strategy to "Actively pursue the redevelopment of the poor condition, low density residential land along Nevada Avenue between 42nd Avenue and 45th Avenue. Medium density residential alternatives area suggested for this area." The city has offered to sell 4317 Nevada Avenue North to NCRC for $1.00, pending design approvals and meeting other city requirements. The two properties will be combined, the two existing structures razed (one has been demolished and the other will be in the near future) and six new town home or twin home units will be constructed. Two of the units will be handicapped accessible. Current Activities: NCRC has hired an architect, Gene Nicolelli, after issuing a Request for Proposals (RFP) for architectural services. He has provided preliminary drawings of the site, a model floor plan of an accessible unit and an elevation. · NCRC is in the process of seeking contractors for soil/environmental testing that is required and for the demolition of the buildings at 4301 Nevada Avenue. RFPs have been issued. · NCRC has been awarded $294,000 in HOME funds from Hennepin County, and the City of Robbinsdale has received $50,000 in CDBG funds to be used for this project. The City of New Hope's contribution in the sale of 4317 Nevada to NCRC for $1.00 is also significant. · Mr. Nicolelli and Kristine Madson, the Executive Director of NCRC, met with city staff and a civil engineer to review the preliminary site plan. The plan itself was well received. NCRC will be seeking three minor variances for the project based on this meeting: 1. Rezoning from R-1 to a Planned Unit Development (PUD) in order to accommodate the higher density; 2. The lot area requirement for six units is 30,000 square feet, and the site is 29,705 square feet. A variance for 295 feet will be needed; 3. The setback is slightly less than the city requires. A variance for this will also be needed. The design that is being proposed makes efficient use of the site and its topography. The variances that are sought are minor, and the design actually exceeds some c!ty requirements such as green space and parking area. The proposed design requires only one curb cut, and garages will not face Nevada Avenue. There is sufficient space for emergency vehicles to access the site. NEVADA TOWN HOMES SITE DATA LOT AREA Lot Area Required: 5,000 sq. ft. X 6 units = 30,000 square feet Actual Lot Area: = 29,705 square feet OPEN SPACE Open Space Required: 40% X 29,705 sq. ft. = 11,882 square feet Open Space Provided: = 13,537 square feet PARKING Parking Required: 2.5 spaces/unit = 15 total spaces Minimum 1 covered space 1.5 open spaces Parking Provided: = 16 total spaces 12 covered spaces 4 open spaces Snow removal for ddveway and parking court will be transferred off site. BUILDING DATA 6 TOTAL UNITS Plan 'A' 2 units - one story, two bedroom, one bath, accessible unit Plan 'B' 1 unit - two story, three bedroom, two bath, middle unit Plan 'C' 2 units - two story, three bedroom, two bath, end unit with basement Plan 'D' 1 unit - two story, three bedroom, two bath middle unit with basement TWO BUILDING TYPES Building I Slab-on-grade Building II Basement with tuck under parking EXTERIOR BUILDING FEATURES 5:12 pitched roof Combination of hip and gable asphalt shingle roofs Combination of two different styles and colors of vinyl siding Metal cladding at window, corner trim and architectural details with accent color Vinyl single hung and sliding windows . Brick and/or cultured stone as a texturedl accent in selective areas Metal cladding at fascia and soffits having accent color that matches trim III ! ©~ Ill 0 III 7:" o '1 0 0 III III EDA · REQUEST FOR ACTION Originating Department Approved for Agenda Agenda Section Community Development .~-~ .~l 09-13-04 EDA By: Kirk McDonald, Director of CD~ Item No. Shawn Siders, CD Specialist By: 6 PUBLIC HEARING: RESOLUTION AUTHOR/ZING THE TRANSFER OF REAL PROPERTY (5501 BOONE AVENUE NORTH) (IMPROVEMENT PROJECT NO. 776) REQUESTED ACTION This is a public hearing to consider the attached resolution approving the sale of the property located at 5501 Boone Avenue North to Project for Pride in Living, Inc. (PPL), for $1.00. After a brief staff presentation and the taking of public comments, staff recommends that the EDA approve a motion closing the public hearing and then adopt the resolution. POLICY/PAST PRACTICE City goal #2 is to emphasize the maintenance and redevelopment of commercial and residential properties within the city. The EDA has been addressing the residential portion of this goal through the city's many housing activities, including coordinating with potential developers on the sale and development of city- owned property. The EDA has previously entered into contracts for private redevelopment with developers to facilitate improvements in the city. BACKGROUND .At its meeting of August 23, 2004, the EDA approved a resolution scheduling a public hearing in this matter for its meeting of September 13, 2004. At its meeting of March 23, 2004, the EDA approved a term sheet between Project for Pride in Living, Inc. and the city of New Hope.- The EDA will also consider a resolution approving a development agreement for the property located at 5501 Boone Avenue North at its meeting of September 13, 2004. FUNDING Total acquisition cost was $376,764.00. The city used $100,000.00 in CDBG funding to assist in the original acquisition of the site. The original EDA investment was $276,764.00. The original EDA investment will be reimbursed through the increment generated from the proposed $14.5 million development. ATTACHMENTS Resolution - Location Map Public Hearin~ Notification · ' / / TO: I: \ RFA \ PLANNING \ Housin~ \ 5501 Boone \ Q- PPL Pub Hearin~ Sale of ProDert RESOLUTION NO. 04 - RESOLUTION AUTHORIZING THE TRANSFER OF REAL PROPERTY (5501 BOONE AVENUE NORTH) WHEREAS, the Economic Development Authority in and for the City of New Hope (the "EDA") is currently the owner of that certain real property located at 5501 Boone Avenue North (the "Property"); and WHEREAS, the EDA has reviewed various proposals over time regarding the feasibility of redeveloping the Property into a more productive use; and WHEREAS, the EDA has determined that transfer of the Property to Project for Pride in Living, Inc. ("PPL") would further both the EDA's objectives and the objectives of the City of New Hope in creating a Restated Redevelopment Plan for Redevelopment Project No. 1 in the City of New Hope and, therefore, is in the best interests of the City of New Hope and its people; and WHEREAS, the EDA has additionally determined that such transfer of the Property would further the EDA's general plan of economic development for the City; and WHEREAS, the EDA has on this date held a public hearing on transfer of the Property, which heating was preceded by notice to the public in accordance with Section 469.105 of the Minnesota Statutes and at which hearing taxpayers were allowed to present testimony regarding the transfer. NOW, THEREFORE, BE IT RESOLVED by the Economic Development Authority in and for the City of New Hope as follows: 1. In light of the nature of the use proposed for the Property, it is hereby determined that transfer of the Property to PPL will positively impact upon the improvement of the City of New Hope and the business and the facilities of the EDA in general. 2. Transfer of the Property at private sale is authorized pursuant to the terms and conditions proposed in the Contract for Private Redevelopment between the EDA and PPL as presented to the EDA on this date (the "Contract"), which terms and conditions may be amended by the President and the Executive Director fi.om time to time within the authorit~ extended to them by the applicable resolution or resolutions regarding the Contract provided that the'~erms and conditions at all times include a statement of the use that PPL will be allowed to make of the Property. 3. The EDA considers transfer of the Property pursuant to the above-outlined terms and conditions to be in the public interest and to further the aims and purposes of Sections 469.090 to 469.108 of the Minnesota Statutes. 4. The President and the Executive Director are hereby authorized and directed to take whatever actions are necessary or advisable to accomplish the transfer of Property as authorized by this Resolution. Dated the 13th day of September, 2004. Don Collier, President Attest: Dan Donahue, Executive Director 2 ~i ~ ~ ~ .... ~_.~ ~ ~ ........~ ~ : ~ ~ ~12~ ='15 ~'' ............... ~ "~ ,,.~ ~/ / *-~L_~ .~-' ~ .~ -~ ...~ ; ~ ~ ~ ~'~ ~ ~ 870 " .... - ~ ~ ~ " ~ ~7 ~ ......... -~ ~,~ ~ '-.. ..... ~.~ 87~ ~ 56~ . ~ ...... NO~TH . ,~, ~_.~: j ~ ~ ~ ~ ~ HOSTERMAN -' i ~ ~ JR HIGH SCHOOL i ~ RIDGE .... .,.. < ~ .... ", ~PUBLIC ~ ' '"'~, ~',, WORKS i' APART- i ~ ,, + ....... NOR~ ~ ~2e ~27 ~ ~2~ ~27 ~ ~ ........ ~.: _/ ~ CA~E ~~ ~ ~ ~7 ~ ~ CENTE~ ':"*, ":'"', .-,"/ ,~ ] ~o ~ ~ 54TH AVE N C. P. ~L -: ........... ~ ........................ r--~ .... .-. 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 law~jensen-sondrall.com MEMORANDUM Date: 8 September 2004 To: Kirk McDonald Community Development Director City of New Hope Shawn Siders Community Development Specialist City of New Hope From: Clarissa M. Klug Assistant City Attorney Re: PPL Project: Resolution Authorizing Transfer of Land (Our File # 99.11309) Enclosed for the EDA's September 13th public heating is a proposed Resolution authorizing the transfer of 5501 Boone Avenue North to Project for Pride in Living, Inc. Private sale of this property by way of terms and conditions accel~table to the EDA is authorized under Minnesota Statutes Section 469.105, provided that certain requirements are met in connection with adopting those terms and conditions. Those requirements relate to: (1) notifying the public of a hearing (which has been done) (2) taking any taxpayer testimony that may be offered at the hearing, and (3) determining that the sale will advance the objectives of the Authority. We have included within the enclosed draft a number of findings/statements mirroring the text of Section 469.105 so that the EDA has a permanent record that the various applicable requirements have been met. This Resolution may be presented either before or after the EDA's review of the corresponding Contract for Private Redevelopment (the "Contract"). The enclosed draft does, however,.hssume that both documents will be before the EDA on the 13th. If Contract presentation is delay~l for some reason, please let us know and we will revise the enclosed Resolution text accordingly. c. Steve Sondrall (with encl.) Gay Greiter (with encl.) P: ~Artomey\Cmk\Client s\CNI-B99-I 1309\CNH99.11309-005-Memo to Kirk McDonald and Shawn Siders r~ Resolution Authorizing Property Transfer.doc NOTICE OF PUBLIC HEARING ON A PROPOSED SALE/CONVEYANCE OF REAL PROPERTY IN THE CITY OF NEW HOPE (5501 BOONE AVENUE N.) NOTICE IS HEREBY GIVEN, that the Economic Development Authority in and for the City of New Hope (the "EDA") will meet in the Council/Commissioners' Chambers in the New Hope City Hall, 4401 Xylon Avenue N., New Hope on the 13th day of September, 2004, at 7 o'clock p.m. (or as soon thereafter as the matter may be heard) to hear, consider and pass upon all written or oral objections, if any, to a proposed sale/conveyance of the following described property to Project for Pride in Living, Inc.: 5501 Boone Avenue N. (PID No. 06-118-21-34-0021) Lot 2, Block 1, Science Industry Center 3rd Addition All persons desiring to be heard in connection with the consideration of this proposed transaction are requested to be present at this hearing and to make their comments or objections, if any, to the proposal. The public may see the terms and conditions of the proposal at the offices of the EDA, located at City Hall, 4401 Xylon Avenue N., New Hope, Minnesota 55428. The EDA will at this hearing meet to decide if the sale/conveyance is advisable. Accommodations such as sign language interpreter or large printed materials are available upon request at least 5 working days in advance. Please contact City Clerk Valerie Leone (telephone (763) 531-5117, TDD number (763) 531-5109) to make arrangements. Dated the 26th day of August, 2004. s/Daniel J. Donahue Daniel J. Donahue EDA Executive Director (Published in the New Hope-Golden Valley Sun-Post on the 26th day of August, 2004.) EDA ! REQUEST FOR ACTION Originating Department Approved for Agenda Agenda Section Community Development C'N~. 09-13-04 EDA Item No. By: Kirk McDonald, Director of CD By: 7 Shawn Siders, CD Specialist A RESOLUTION AUTHORIZING EXECUTION AND DELIVERY OF A CONTRACT FOR PRIVATE REDEVELOPMENT BY AND BETWEEN THE NEW HOPE ECONOMIC DEVELOPMENT AUTHORITY AND PROJECT FOR PRIDE IN LMNG, INC. FOR THE REDEVELOPMENT OF 5501 BOONE AVENUE NORTH. (IMPROVEMENT PROJECT NO. 776) ' REQUESTED ACTION Staff requests that the EDA approve the attached resolution regarding a private redevelopment contract between the EDA and Project for Pride in Living, Inc., prepared by Krass Monroe, the city's financial consultant. If approved, this development agreement will facilitate the construction of a thirty-five (35) unit affordable rental apartment building as well as a forty-one (41) unit market rate, owner occupied condominium building. This development addresses the life cycle housing goals component outlined in the city's Comprehensive Plan. This development agreement is drafted in accordance with the provisions of the term sheet which was approved by the EDA at its meeting of May 10, 2004. Mr. James Casserly with Krass Monroe will review the details of this development agreement with the EDA. POLICY/PAST PRACTICE City goal #2 is to emphasize the maintenance and redevelopment 'of commercial and residential properties within the city. The EDA has been addressing the residential portion of this goal through the city's many housing activities, including coordinating with potential developers on the sale and development of city- owned property. The EDA has previously entered into contracts for private redevelopment with developers to facilitate improvements in the city. BACKGROUND The property located at 5501 Boone Avenue North and a portion of the property located at 5425 Boone Avenue North was acquired in 1993, through eminent domain proceedings. It w0s anticipated that an adult daycare facility would be constructed on the site. That project did not proceed a~d the land has been vacant since it was acquired. / ' l'j , I:\RFA\PLANNING\Hoosin~\5$01 Boone\Q-PPL da aprv[.doc ~ Request for Action Page 2 September 13, 2004 On June 17, 2003, city staff received the initial development proposal from PPL, Inc. for the possible development of the site located at 5501 Boone Avenue North. At its meeting of June 23, 2003, the developer proposed the construction of two buildings which would contain seventy (70) housing units. The first building would consist of thirty-five (35) affordable rental units. The other would consist of thirty-five (35) market rate, owner occupied condominium units. At that meeting, the EDA directed the developer to consider adding additional market rate, owner occupied condominium units so that the number of owner occupied units is greater than the number of rental units. The developer responded to this request and proposed the construction of forty-one (41) market rate, owner occupied condominium units. On October 27, 2003, the EDA directed staff to proceed with a financial/tax increment finance analysis for the project located at 5501 Boone Avenue North. The proposal for which the financial analysis would be modeled assumed the construction of thirty-five (35) affordable rental units and forty-one (41) market rate, owner occupied condominium units. Of those thirty-five affordable rental units, it was proposed that eight of the units would be income restricted to those families that were at or below 30% of the Area Median Income (AMI). That proposal stipulated that those units would be Section 8 eligible. Based on the findings of the financing/tax increment financing analysis prepared by Krass Monroe, the EDA directed staff to proceed with developing preliminary terms for an agreement between the EDA and PPL, Inc. That action was taken by the EDA at its meeting of March 22, 2004. In that regard, the EDA approved the term sheet that had been developed by city staff and its consultants on May 10, 2004. The term sheet stipulated that the development would include the construction of thirty-five (35) affordable rental units and forty-one (41) market rate, owner occupied condominium units. On July 26, 2004, the New Hope City Council conditionally rezoned the property located at 5501 Boone Avenue North. Once the conditions of the approval set forth by the council had been addressed, the property will be rezoned from ! "Industrial" to R-4 "High Density Residential." The findings of the council at that time indicated that this rezoning is in accordance with the goals and principles of the city's Comprehensive Plan and the high-density residential designation is consistent with the adjoining land uses. The EDA approved a resolution which modified the restated redevelopment plan and tax increment financing plans for the project located at 5501 Boone Avenue North at its meeting of August 23, 2004. At that meeting, there were questions regarding the disbursement of the tax revenues levied in the tax increment finance (TIF) district. The city's financial consultant, Krass Monroe, P.A. has prepared two memoranda which are.attached for your convenience. Those memoranda highlight the financial advantages of establishing the TIF district. Mr. James R. Casserly and Ms. Gay Greiter in a memorandum dated September 8, 2004 note that the property is currently tax exempt and will be taxable once the property is transferred to PPL, ~a~c. Once developed, the property will generate approximately $163,964 in annual tax revenue. If the prope~ were to be developed as either a commercial/industrial project, it would generate approximately $90,000 in annual tax revenue. ~Mr. Casserly and Ms. Greiter indicate that a portion of the proceeds from the TIF district will be used to reimburse the city for the original land acquisition cost, plus interest as well as provide approximately $14,000 annually to assist the city with its redevelopment programs in administration fees. Finally, it is noted that any inflationary increases in market value will allow the TIF district to be decertified more quickly. Request for Action Page 3 September 13, 2004' Mr. Greg D. Johnson and Mr. James R. Casserly, in a memorandum dated September 8, 2004 note that each taxing jurisdiction will receive a portion of the property taxes on the value of the land. The distribution of revenue for each taxing district is as follows: Property Tax Distribution - Estimate for 2008 City $1,858 1.1% County $1,790 1.1% School District (TC Levy) $1,296 0.8% Other Jurisdictions $284 0.2% School District (MV Levy) $17,814 10.9% City Admin Fees $14,092 8.6% City Land Reimbursement $28,386 17.3% Project Expenses $98,~ 60.0% Total Annual Property Taxes $163,964 100.0% It is anticipated that the first full year of taxes being paid on the fully developed property will be 2008 and the enclosed analysis is predicated upon the entire project being built-out by that time. In 2008, given the current tax levy, the project will generate approximately $163,964 in annual tax revenue. Messrs. Johnson and Casserly note that over the projected life of the TIF district, PPL will require less than half of the total taxes paid for its project expenses, due to inflation. There were also questions regarding the terms of the agreement with PPL, Inc. and whether or not the proposed development has deviated from what was approved by the EDA at prior meetings. In response to those inquiries, Messrs. Steve Cramer and Christopher Wilson with PPL, Inc. provided the city with a breakdown of the number and type of units, the proposed rents as well as the income restrictions for each type of unit. A copy of that letter is attached for reference. PPL, Inc. has summarized the rental rates for the units at the 5501 Boone Avenue North development. The monthly rental rates have been compared to other apartment complexes in New Hope. In general, the rental rates that Will be charged at 5501 Boone Avenue North are comparable to other apartment complexes in the area. The following table is an excerpt from the above referenced letter forwarded to the city from PPL, Inc. Competitive Rental Developments in New Hope* 1 Bedroom 2 Bedroom 3 Bedroom 4 Bedroom Continental Apartments $670 $760-$790 N/A N/A Continental Village $635-$655 $745-$755 N/A N/A~ Pheasant I~ark Apartments - $600-$810 $820-$905 $1145-$1165 N/A~' 5501 Boone Avenue North N/A $715-$890 $920-$1090 $1060-$1285 * Data Compiled by PPL from Maxfield Research and phone interviews Request for Action Page 4 September 13, 2004 REOUEST FOR ACTION Staff recommends that the EDA approve the Development Agreement between the EDA and PPL, Inc. for the following reasons: · The proposal conforms to the original term sheet that was previously approved by the EDA. · The original EDA site cost of $276,764 will be reimbursed through the increment generated from the proposed $14.5 million development. · As requested by the EDA, the ownership portion of the proposal was increased by six (6) units for a total of forty-one (41) ownership units. These provide additional needed life-cycle housing options per the city's Life Cycle Housing Study prepared in 1997. · The thirty-five (35) affordable rental units will assist in the replacement of existing affordable units that may eventually be displaced due to other redevelopment activities in the city. · The property is currently tax-exempt and does not contribute to the city's general fund. · The proposed land use is compatible with the adjoining land uses. The proposed development is in compliance with the goals and principles of the city's Comprehensive Plan. FUNDING The 10% administrative fee provided by annual taxes in the payment stream will cover the cost of administering the TIF District. ATTACHMENTS · Memorandum from J. Casserly & G. Johnson - September 8, 2004 · Memorandum from J. Casserly & G. Greiter - September 8, 2004 · PPL, Inc. Letter - September 3, 2004 · Resolution · Development Agreement NEW HOPE ECONOMIC DEVELOPMENT AUTHORITY COUNTY OF HENNEPIN STATE OF MINNESOTA RESOLUTION NO. A RESOLUTION AUTHORIZING EXECUTION AND DELIVERY OF A CONTRACT FOR PRIVATE REDEVELOPMENT BY AND BETWEEN THE NEW HOPE ECONOMIC DEVELOPMENT AUTHORITY AND PROJECT FOR PRIDE IN LIVING, INC. FOR THE REDEVELOPMENT OF 5501 BOONE AVENUE NORTH BE IT RESOLVED by the New Hope Economic Development Authority (the "EDA") as follows: Section 1. Recitals. 1.01 It has been proposed that the EDA enter into a Contract for Private Redevelopment (the "Contract") with Project for Pride in Living, Inc. ("PPL") to convey to PPL and redevelop the City-owned property at 5501 Boone Avenue North (the "Site"). 1.02 The EDA has duly noticed and held a public hearing pursuant to Minnesota Statutes, Section 469.105, Subd. 2 relating to the EDA's proposed sale of the Site to PPL. Section 2. Findings. 2.01 The EDA hereby finds that the Contract promotes the objectives as outlined in its Restated Redevelopment Plan for Redevelopment Project No. 1 established pursuant to Minnesota Statutes, Section 469.001 et seq. 2.02 The EDA hereby finds that it has approved and adopted Tax Increment Financing District No. 04-2 and the EDA has approved and adopted the Tax Increment Financing Plan relating thereto pursuant to Minnesota Statutes, Sections 469.174 through 469.1799, inclusive, as amended and supplemented from time to tim~ 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~I\DOC\EDA RESOL AUTHG EXEC OF REDEV AGR,DOC KRASS MONROE, P.A. ATTORNEYS AT LAW Gay Greiter, Esq. James R. Casserly, Esq. Email: ggreiter~assrnonroe, com Email: jcasserly~Jcrassmonroe, com Direct (952) 885-4393 Direct (952) 885-1296 MEMORANDUM To: City of New Hope Attn: Kirk McDonald, Community Development Director From: Gay Greiter, Esq. James R. Casserly, Esq. Date: September 8, 2004 Re: 5501 Boone Avenue N. - Summary of Redevelopment Agreement with PPL Our File No. 10048-21 At your request, we have prepared the following summary of the principal terms of the Authority's proposed redevelopment agreement with Project for Pride in Living, Inc. (PPL) for the Council's review at the September 23, 2004 meeting. One of us will attend the meeting and will be available for questions. ~' Conveyance of Land to PPL The Authority will convey the site to PPL at a closing on September 15, 2004, provided that PPL has secured financing for the Apartment Project. The closing may be extended to October 15, 2004 by agreement of both parties. ~ City Assistance The Authority will provide a grant of up to $550,000 for the Apartment Project and up to $650,000 for the Condo Project as follows: · The Apartment Project Grant will be provided when site improv,ements begin. · The Condo Project Grant will be provided in two parts: (1) Up to $150,000 for grading and ponding when those activities begin, provided PPL also advances $50,000 for such costs, and (2) the balance when-pilings or foundation construction begins. 8000 NORMAN CENTER DRIVE, SUITE 1000 · MINNEAPOLIS, MINNESOTA 55437-1178 TELEPHONE 952/885-5999 · FACSIMILE 952/885-5969 www. krassrnonroe.com · No more than $350,000 of Authority assistance is to be used for ponding and grading. · Final project costs will be reviewed upon project completion to make sure all of the assistance given was needed. PPL's developer, fee on each Project is subject to a dollar cap for this purpose. Any surplus assistance for one Project is not to be applied to the other Project. Obligations of the Authority and PPL The Authority and PPL have the following obligations: The Authority a~ees to: · Create a tax increment financing district (akeady done) · Convey the site to PPL "as is" · Provide marketable title to the site · Provide water and sewer to the edge of the site PPL agrees to: · Demonstrate ability to finance project construction · Obtain necessary rezoning, permits and approvals and observe other governmental requirements, including bonding · Pay customary City fees for approvals and construction · Build 35 Apartments and 41 Condos according to approved construction plans · Maintain required builder's risk, comprehensive general liability and workers' compensation insurance · Qualify initial Condo buyers and Apartment residents on an ongoing basis with respect to applicable income restrictions and comply with reporting requirements · Manage the Apartment Project for at least five y6ars and obtain City approval for any change in management IfPPL fails to construct the Projects on a timely basis, the Authority may elect to take back the portion of the site that underlies the uncompleted Project or Projects. Construction Timing · Apartments -- commence construction on 9/15/04; completion bT 7/31/06 · Condos -- commence construction on 4/15/05; completion by 12/,51/06 G:\WPDATAWtNEW HOPE'~21\COR\MCDONALD GG 01 CONTRACT SUMM. DOC · Page 2 09/08/2004 14:12 F~T 9;2 885 5969 [PASS ~O~OE ~]002 KRASS MONROE, P.A. ATTORNEYS AT LAW · j.mes IL cassedy · GayGreitm'. Es~ MEMORANDUM To: City of New Hope Attn: Kirk McDonald, Comm. Dev. Dir. Daryl Sulander, Finance Director Daniel Donahue, City Manager. From: James R. Casserly, Esq. Gay Greiter, Esq. Date: September 8, 2004 Re: PPL / Boone Our File No. 10048-21 You have asked us 1~ provide you with a bdef overview of the financial advantages to the City of New Hope for proceeding with the PPL project. Briefly they are as follows: · The property owned by the EDA is currently tax-exempt. When it is transferred to PPL it will be revalued and PPL will pay taxes on the market value of l~e land. · PPL's use of the property meets the requirements of flSe $100,000 CDBG Grant provided by Hennepin County. As a result, this amount does not have to be returned to Hennepin County. · A tax increment district will be established to assist with the eligible project expenses. One of the expenses is the City's land cost which will now be recovered with interest from the tax increment district. · Taxes for the completed project are estimated to be $163,964. From that amount the school district would receive, using the current market value levy, the sum of $17,814. - · The other taxing jurisdictions will be receiving a portion of the property taxes on the va)ue of the land. This Js noted above and is further described in the attached memo dated September 8, 2004 by Greg D. Johnson of our office. 8000 NORMAN CENTER DP, NE, SUITE 1000 · MINNEAPOUS, MINNESOTA TELEPHONE !~Z/81~5~. FACSIMILE 952/885~g69 09/08/2004 14:12 FA/ 952 885 5969 ~,SS ~0~0; ~]003 · Any increase in the local tax rate is not considered to be tax increment and wfJl go to the local taxing jurisdictions, · The EDA will receive over $14,000 a year to assist the City with its redevelopment programs. · Any inflationary increases in market value will allow the tax increment district to be decertified more quickly. · Any futura market value referendums will not contribute to tax increment receipts but go directly to the levying jurisdiction. · Any commercial/industrial use generates approximately 55% of the local property taxes anticipated for the residential uses. (Local C/i taxes would be approximately $90,000 versus the $164,000 for residential). We have substantial supporting documentation we can provide for the above analysis. Please let us know if you would like a more detailed report. JRC/jlt attachment G:\WPDAT^W~NEW HOPE~I~..~RW#:ZX~NAI.D SUI.,N~IDER DONAHUE DS.DOC · Page 2 09/08/2004 14:12 FA,T. 952 885 5969 ~,.~kSS ~ONROE ~004 KRASS MONROE, P.A. ATTORNEYS AT LAW · Jam~ R. Casse'ly m Greg D..Jehnson, CPA F_ma//:/,-=~edt~je~rsmg~roe. _=pm~ Vo/ce ~a/I f~2) ~'S-~ MEMORANDUM To: City of New Hope Attn: Kirk McDonald, Comm. Dev. Dir. Daryl Sulander, Finance Director Daniel Donahue, City Manager. From: Grog D. Johnson, CPA James R. Casserly, Esq. Date: September 8, 2004 Re: PPL / Boone - Distribution Our File No. 10048-21 Given the current tax rates and levies, we anticipate in 2008 (the first year of full taxes) that 60% of the property taxes would be used for project expenses. The total tax bill of $163,964 would be distributed as follows. Currently the property pays $0 taxes Property Tax Distribution - Estimate for 2008 1 City 1,858 1.1% 2 County 1,790 1.1% 3 School District (TC levy) 1,296 0,8% 4 Other Jurisdictions 284 0.2% 5 School District (MV levy) 17,814 10.9% 6 City Admin Fees 14,092 8.6% 7 City Land Reimbursement 28,386 17.3% 8 Project Expenses 98,4~.~. 60.0% *' Total Annual Property Taxes 163,964 100.0% Over the projected life of the TIF District, PPL will require less than half. of the total taxes paid for its project expenses, due to inflation. Any increased tax increrr~nt resulting from inflation will be available to. reduce the life of the TIF District and pay off any obligations for this project. See the attached pie chart for a graphic, al depiction of the distribution of taxes. Please review and let us know if you have any questions on this analysis. G:~N PQATA~NEW PIO~E'~21~;~ SLII.N~DER EX:3NAHUE 04.DOC 8000 NORMAN CENTER DRIVE, SUITE 1000 ,, UINNEAPOU6, MINNESOTA 5.~437-1178 ' ' TELEPHONE I~J885-5999. FACSIMILE g52/88~ City of New Hope -PPL Project Annual Distribution of Taxes-' First Full Year School District (TC low) 0.8% School District (MV lew) 10.9% County 1.1% City Admin Fees B.6% Other Jurisdictions 0,2% Project Expenses City Land Reimbursemenl 60.0% 17.3% city 1,1% Prepared by Krass Monroe, P.A. 09/01/2004 WED 16:22 FAI 612 813 0160 CONI IECTION5 TO WORK 002/003 ~ildi~ ~r~' ~r over 30 ye~ August 30, 2004 Kirk McDonald Community Development DireCtOr City of l~lew Hope *. 4401 Xylon Ave N New Hope, MN 55428 . Dear Mr. McDonald, . At the August 23r° City Council Meeting, Council Members raised some '- questions concerning the terms of our agreement with the City and the use of the term "market rate" in describing most of the units in the rental .portion of thc project. Let us begin by saying that, in our view, nothing/substantial has changed in the structure of the rental project since the'. Council. approved the term sheet. The mix of tax credit,' Section tS and MARIF units has been the same for over a year, though the County is requiring us to lower the income restrictions on six units by 'i0%. The unit mix did change as the building went from three to four stories. Two, two-bedroom units became three bedroom units and one, four-bedroom unit became a three-bedroom unit for a net gain of onebedroom. The square footage of the building has, however, remained essentially the same, so, again, our feeling is that the project is basically the same as proposed last year. '. The following is a complete table of rents and income restri~ions for our a )artment ~ject at 5501 Boqne Avenue: Income UnE # of Rent Restriction Rental Type DU (% of AMI) . Program Sub-program Subsidy Low Inoome 2BE 11 $715 Housing Tax 60% Credit (l-ITC) - - 3BP, 7 $~)2° 6o% HTO - - 4BR 3 $1,060, 60% HTC - 3BR 3 ~920 50% HTC - 4BR 3 $1,060 ~0% i-ITC . Project-based 4 $8~0 .... 30% HTC 'MARIF (2 units) ~eu-tion Project-based 3BR 2 $1,090 30% P~oject-based 4BR 2 $I ,285 30% HTC M'~IF (1 unit) *~ectiqn 8- 3~; 'Resldeni pays 30% of their monthly Income toward rent and $.8 pays the..difference. If Ihere is no $.8 In ~e pro,leer. ~ere ~i[I be only 4 MARIF unils: ol~er 4 will ~o up th' $0% of AMI. __ ', Aff~ordabl~ Houalng & (~,--mJnity DcwJQprmmt Employment & JOD Training l~atll Developmellt Human Services Project ~r Pdd~ I~ Ll~d~g o 103~ E. Franklin Avenue ', Minneapolis, MN 5§40~ · ~12.455.5100 ,, FAX:G~L2.455.SJ.0'l ,, ~.pl31-inc.orG · ppl~ppl-ifle.org 09/01/2004 WED 16:22 FAX 612 813 0160 CONNECTIONS TO WORK 003/003 The following table c, ompares rents at 5501 Boone Avenue with nearby apartments and illustrates that our rents are comparable to or above the market rents in the city and that we offer larger units that aren't readily available in thc area. A comparable development with larger units would be our Bass Lake Court property and rents for the three and four bedroom units at Boone Avenue Apartments are about $200 per month higher than there. Competitive Rental Develo 3manta in New Hope Continental Apartments $§70 $760- $790 Continental Village $635- $745- $655 .. $755 Pheasant Park $600- $820- $1145- Apartments $610 $905 $11 §5 5501 Boone Ave' $715- $920- $1060- $890 $1090 ,$,1285 *Data c~ompiled by PPL from Max'field Re;earoh and phone interviews. However, although the rents are consistent with the market, our financing restricts our potential tenants to families earning less than 60% of the area median in~'ome (AMI). HUD defines these families as "low income,' so the development agreement and other documents pertaining to the project will use similar language. In Hennepin County, 60% of the AMI for a family of four is $46,020 annually. We certainly apologize for any misunderstanding and it was not our intention to be misleading in any way. Hopefully our responses to the Council at the meeting and this letter have answered these questions about the project. We very much value our continued relationship with the City of New Hope and are looking forwa~ to starting construction on this project. ~r~mer~~'~ ~Christopher Wilson Executive Director Development Manager CONTRACT FOR PRIVATE REDEVELOPMENT THIS AGREEMENT, made as of the 13th day of September, 2004, by and between the Economic Development Authority in and for the City of New Hope (the "Authority"), a public body corporate and politic (the "Authority"), having its principal offices at 4401 Xylon Avenue North, New Hope, Minnesota 55428, and Project for Pride in Living, Inc., a Minnesota nonprofit corporation (the "Redeveloper"), having offices at 1035 East Franklin Avenue, Minneapolis, Minnesota 55404. WITNESSETH: WHEREAS, the Authority is a political subdivision of the State of Minnesota and is governed by a Board of Commissioners (the "Board"); WHEREAS, in furtherance of the Authority's objectives, there has been established a Restated Redevelopment Plan for Redevelopment Project No. 1 (the "Project Area") in the City of New Hope, Minnesota (the "City") to encourage and provide maximum opportunity for private development and redevelopment of certain property in the City which is not now in its highest and best use; WHEREAS, as of the date of this Agreement the Restated Redevelopment Plan has been prepared and approved, and the Project Area has been established pursuant to Minnesota Statutes, Sections 469.001 through 469.047 and 469.090 through 469.108; WHEREAS, in connection with the Project Area the City Council of the City intends to create a housing tax increment financing district (the "Tax Increment District") pursuant to Minnesota Statutes Section 469.174 et seq. (the "Tax Increment Act"); WHEREAS, in connection with the establishment of the Tax Increment District the Council will approve a tax increment financing plan and will forward it to the County of Hennepin for certification of the original net tax capacity; WHEREAS, the Authority currently owns land within the proposed Tax Increment District (the "Redevelopment Property") and, in order to achieve the objectives of the Restated Redevelopment Plan, the Authority is willing to convey the Redevelopment Property to the Redeveloper subject to the Redeveloper proceeding with construction in accordance with this Agreement and the Restated Redevelopment Plan; WHEREAS, the Redeveloper plans to construct a building with 35 low to moderate income apartment units (the "Apartment Project") and a building with 41 market-rate owner-occupied condominium units (the "Condo Project") on the Redevelopment Property. The Redevelopment Property requires extensive soil correction, including ponding and pilings. Because of the high costs of site preparation and underground parking below both buildings, the Redevelopment Property would not be developed without tax increment assistance; ~' WHEREAS, the major objectives in establishing the Project Area are to: 1. Promote and secure the prompt development or redevelopment of certain property in the Project Area, which property is not now in productive use or in its highest and best use, in a manner consistent with the City's comprehensive plan and with a minimum adverse impact on the environment and thereby promote and secure the development of other land in the City. 2. PromOte and secure additional employment opportunities within the Project Area and the City for residents of the City and surrounding area, thereby improving living standards, reducing unemployment and the loss of skilled and unskilled labor and other human resources in the City. 3. Secure the increased valuation of property subject to taxation by the City, County, School District and other taxing jurisdictions in order to better enable such entities to pay for governmental services and programs required to be provided by them. 4. Provide for the financing and construction of public improvements in and adjacent to the Project Area necessary for the orderly and beneficial development or redevelopment of the Project Area and adjacent areas of the City. 5. Promote the concentration of new desirable residential, commercial, office and other appropriate development or redevelopment in the Project Area so as to maintain the area in a manner compatible with its accessibility and prominence in the City. 6. Encourage local business expansion, improvement, development or redevelopment whenever possible. 7. Create a desirable and unique character within the Project Area through quality land use alternatives and design quality in new and remodeled buildings. 8. Encourage and provide maximum opportunity for private development or redevelopment of existing areas and structures which are compatible with the Restated Redevelopment Plan. 9. Create viable environments which would upgrade and maintain housing stock, maintain housing health and safety quality standards, and maintain and strengthen individual neighborhoods. 10. Stimulate private activity and investment to stabilize and balance the City's housing supply. 11. Eliminate code violations and nuisance conditions that adversely affect neighborhoods. 12. Revitalize property to create a safe, attractive, comfortable, convenient and efficient area for residential use. 13. Recreate and reinforce a sense of residential place and security which creates neighborhood cohesiveness through City investment in neighborhood infrastructure and public improvements, including landscaping, park improvements, local street modifications to reduce traffic impacts, street repaying, curb and gutter replacement, and streetlight updating. ';~ 14. Encourage infill development and redevelopment that is compatible in use and scale with surrounding neighborhoods. 2 15. Rehabilitate the existing housing stock and preserve existing residential neighborhoods wherever possible. 16. Demolish and reconstruct, where necessary, aging residential buildings to preserve neighborhoods. 17. Removal of substandard structures. WHEREAS, under the Tax Increment Act, the Authority is authorized to finance certain costs of projects with tax increment revenues derived from a tax increment financing district established within the Project Area; WHEREAS, in order to achieve the objectives of the Authority and City in creating the Project Area and in adopting the Restated Redevelopment Plan, the Authority is prepared to provide assistance in accordance with this Agreement; and WHEREAS, the Authority believes that the development and redevelopment of the Project Area pursuant to this Agreement, and fulfillment generally of the terms of this Agreement, are in the vital and best interests of the Authority and the health, safety, morals and welfare of its residents, and in accord with the public purposes and provisions of applicable federal, state and local laws under which the development and redevelopment are being undertaken and assisted; NOW, THEREFORE, in consideration of the premises and the mutual obligation of the parties hereto, each of them does hereby covenant and agree with the other as follows: ARTICLE I Definitions Section 1.1. Definitions. In this Agreement, unless a different meaning clearly appears from the context: "Act" means Minnesota Statutes, Section 469.001 et seq. "Agreement" means this Agreement, as the same may be from time to time modified, amended, or supplemented. "Apartment Project Grant" means a grant of $550,000 to be furnished to the Redeveloper by the Authority for the Apartment Project pursuant to Section 3.1. "Apartment Project" means a building to be constructed with 35 units of 2, 3 and 4 bedrooms of low/moderate income rental housing with surface and underground parking. The Apartment Project will be a 100% low-income housing tax credit project with at least 75% of the units rented to households with incomes of no more than 60% of area median income. "Authority" means the Economic Development Authority in and for the City of New Hope or any successor or assigns. "Certificate of Completion" means the certification, in the form of the certificate contained in Schedule C, to be provided to the Redeveloper pursuant to Section 4.3. "City" means the City of New Hope, Minnesota, or its successors or assigns. "Closing Date" means the date set forth in Section 3.3(b) for the conveyance by the Authority of the Redevelopment Property to the Redeveloper. "Condo Project Grant" means a grant of up to $650,000 to be furnished to the Redeveloper by the Authority for the Condo Project pursuant to Section 3.1. "Condo Project" means a building to be constructed with 41 units of market-rate, owner-occupied 1-, 2- and 3-bedroom condominiums with surface and underground parking. "Construction Plans" means the plans, specifications, drawings and related documents on the construction work to be performed by the Redeveloper on the Redevelopment Property which (a) will be as detailed as the plans, specifications, drawings and related documents which are submitted to the building official of the City, and (b) will include at least the following for each building: (1) site plan; (2) foundation plan; (3) floor plan for each floor; (4) elevations (all sides); (5) faqade a~nd landscape plan; (6) cross sections (length and width) and (6) such other plans or supplements to the fiSregoing plans as the Authority may reasonably request. "Council" means the Council of the City. "County" means the County of Hennepin, Minnesota. "Declarations of Restrictive Covenants and Prohibition Against Tax Exemption" or"Declarations of Restrictive Covenants" means the restrictive covenants substantially in the form of Schedule E for the Apartment Project and Schedule F for the Condo Project. "Eligible Public Expenses" means all of the costs and expenses incurred by the City or the Authority in connection with the Redevelopment Project which are eligible to be paid or reimbursed with Tax Increment under Minnesota Statutes Section 469.176, including the Apartment Project Grant and the Condo Project Grant. "Minimum Improvements" means the Apartment Project and the Condo Project. "Minnesota Environmental Rights Act" means Minnesota Statutes, Sections 116B.O1 et seq., as amended. "Mortgage" means any mortgage or security agreement in which the Redeveloper has granted or acquiesced in a security interest in the Redevelopment Property, or any portion thereof, or any improvements constructed thereon, and which is a permitted encumbrance pursuant to the provisions of Article VIII. "Party" means either the Redeveloper or the Authority, as the context may require. "Plan" means, collectively, (i) the Restated Redevelopment Plan adopted by the Authority and approved by the City for Redevelopment Project No. 1, and (ii) the Tax Increment Plan. "Project Area" means Redevelopment Project No. 1, as amended, established in accordance with the Act. "Public Improvements" means water mains and laterals and sanitary sewer mains to the edge of the Redevelopment Property, to be constructed by the Authority. "Redeveloper" means Project for Pride in Living, Inc., a Minnesota nonprofit corporation, and its permitted successors and assigns. "Redevelopment Project" means the Redevelopment Property and the Minimum Improvements. "Redevelopment Property" means the real property owned by the Authority described in Schedule _~. "Redevelopment Property Deed" means a quitclaim deed substantially in the form of the deed attached as Schedule B used to convey title to the Redevelopment Property from the Authority to the Redeveloper. , "Site Improvement~" means the site improvements described on Schedule D as qualified improvements of the Redevelopment Property. "State" means the State of Minnesota. "Tax Increment" means the real estate taxes paid with respect to the Redevelopment Property which is remitted to the Authority as tax increment pursuant to the Tax Increment Act. "Tax Increment Act" means the 'Tax Increment Financing Act, Minnesota Statutes, Section 469.174 et seq., as amended. "Tax Increment District" means Tax Increment Financing District No. 4, which was approved by the Authority and by the Council of the City pursuant to the Tax Increment Act. "Tax Increment Plan" means the tax increment financing plan adopted by the Authority and approved by the City in connection with the creation of the Tax Increment District. "Tax Official" means any City or County assessor; County auditor; City, County or State board of equalization, the commissioner of revenue of the State, or any State or federal district court, the tax court of the State, the State Court of Appeals or the State Supreme Court. "Termination Date" means the earliest of(i) December 31, 2032, (ii) the date of any termination of this Agreement in accordance with the provisions of Article V or (iii) the date upon which all Eligible Public Expenses have been fully reimbursed. "Unavoidable Delays" means delays which are the result of strikes, acts of terrorism, casualties to the Minimum Improvements, the Redevelopment Property or the equipment used to construct the Minimum Improvements, delays related to financing, delays which are the result of governmental actions or changes in plans, delays which are the result of judicial action commenced by third parties, citizen opposition or action affecting this Agreement or adverse weather conditions or acts of God. ARTICLE II Representations, Warranties and Covenants Section 2.1. Representations, Warranties and Covenants b,y the Authority. The Authority makes the following representations as the basis for the undertaking on its part herein contained: (a) The Authority is a public body duly organized and existing under the laws of the State. Under the provisions of the Act, the Authority has the power to enter into this Agreement and carry out its obligations hereunder. (b) The Authority has approved the Plan in accordance with the terms of the Act. (c) The Authority will undertake, in good faith, to comply with all statutory requirements of the Tax Increment Act relating to the creation of the Tax Increment District. ' (d) To finance'the costs of certain activities to be undertaken by the Redeveloper, the Authority proposes, in accordance with the provisions' of this Agreement, to provide assistance to the Redeveloper in accordance with the terms of this Agreement. 6 (e) The Authority will cooperate with the Redeveloper with respect to any litigation commenced by third parties in connection with this Agreement. (f) The Authority makes no representation, guarantee, or warranty, either express or implied, that the Redevelopment Property will be suitable for the Redeveloper's purposes or needs and hereby assumes no responsibility or liability as to the Redevelopment Property or its condition (whether regarding soils, pollutants, hazardous wastes or otherwise), except as stated below. The Authority will deliver the Redevelopment Property to the Redeveloper in the following condition: (i) The Authority will have performed the Public Improvements; and (ii) The Redevelopment Property will have direct access to Boone Avenue. (g) The Authority will ensure that dirt storage on the Redevelopment Property relating to the construction of Woodbridge Cooperative will not interfere with the Redeveloper's ability to perform its obligations hereunder. Section 2.2. Representations, Warranties and Covenants by the Redeveloper. The Redeveloper represents and warrants that: (a) The Redeveloper is a corporation organized under the laws of the State of Minnesota and has duly authorized the execution of this Agreement and the performance of its obligations hereunder. None of the execution and delivery of this Agreement, the consummation of the transactions contemplated hereby, nor the compliance with the terms and conditions of this Agreement would result in a breach of the terms of any agreement or instrument of whatever nature to which the Redeveloper is a party or by which it is bound. (b) Subject to Unavoidable Delays, the Redeveloper will construct, operate and maintain the Minimum Improvements in accordance with the terms of this Agreement, the Plan and all local, state and federal laws and regulations (including, but not limited to, environmental, zoning, building code and public health laws and regulations). (c) The Redeveloper will cooperate with the Authority to rezone the Redevelopment Property. (d) As of the date of execution of this Agreement, the Redeveloper has received no notice or communication from any local, state or federal official that the activities of the Redeveloper or the Authority in the Project Area may be or will be in violation of any environmental law or regulation. (e) As of the date of execution of this Agreement, the Redeveloper is aware of no facts, the existence of which would cause it to be in violation of any local, state or federal environmental law, regulation or review procedure or which would give any person a valid claim~'under the Minnesota Environmental Rights Act. ';- (0 The Redeveloper will, within one hundred twenty (120) days after the date of this Agreement for the Apartment Project and within one (1-) year after the date of this Agreement for the Condo Project, use its best efforts to obtain, in a timely manner, all required permits, licenses and approvals, and will meet, in a timely manner, all requirements of all applicable local, state and federal laws and regulations which must be obtained or met before the Minimum Improvements may be lawfully constructed. (g) The Redeveloper will pay the normal and customary City fees and expenses for the approval and construction of the Redevelopment Project including, but not limited to, bonding requirements, building permit fees, state surcharges, sewer accessibility charges (SAC), water accessibility charges (WAC) and park dedication fees. (h) The Redeveloper agrees that it will cooperate with the Authority and will indemnify the Authority against all costs, including the costs of defense incurred by the Authority through an attorney reasonably acceptable to the Authority and Redeveloper, with respect to any litigation commenced by third parties in connection with Redeveloper's failure to perform according to the terms and conditions of this Agreement. (i) The financing arrangements which the Redeveloper has obtained or will obtain to finance construction of the Minimum Improvements, together with financing provided by the Authority pursuant to this Agreement, will be sufficient to enable the Redeveloper to successfully complete the Minimum Improvements as contemplated in this Agreement. (j) The construction of the Minimum Improvements, in the opinion of the Redeveloper, would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future without the use of tax increment financing provided by the City pursuant to this Agreement. (k) Until the Termination Date, the Redeveloper will maintain the Apartment Project as rental housing in accordance with the provisions of Minnesota Statutes, Section 469.174 Subd. 11 and Section 469.1761 Subd. 3, which require that the Apartment Project or a portion thereof be occupied by persons or families of low or moderate income. (1) On February 1 of each year, commencing February 1, 2006 and continuing until the Termination Date, the Redeveloper will certify to the Authority that it is in compliance with those provisions of Minnesota Statutes referred to in Section 2.2(k). The reporting forms used by the Redeveloper for certification to the Authority will be as prescriber[ by the Authority and will include the forms used by the Minnesota Housing Financing Agency ("MHFA") to verify eligibility for tax exempt housing revenue bonds or housing tax credits, which includes at least MHFA Form LINC-14 (Tenant Income Certification) and MHFA Form LINC-13 (Cumulative Compliance Report). (m) The Redeveloper will act as manager of the Apartment Project for at least five (5) yeai's. The Redeveloper will obtain the written approval of the Authority for any successor manager, which approval shall not be unreasonably withheld. (n) The Redeveloper will ensure that the Condo Project initially qualifies as owner occupied housing in accordance with the provisions of Minnesota Statutes, Section 469.17~Subd. 11 and Section 469.1761 Subd. 2, which require that 95% of the units be initially purchased and occupied by persons or families of low or moderate income. (o) Once acquired by the Redeveloper, the R~development Property will not become exempt from the levy of ad valorem property taxes, or any statutorily authorized alternative, and any improvements of any kind constructed on the Redevelopment Property will similarly not become exempt until the Termination Date. (p) The Redeveloper agrees, notwithstanding the provisions of Article VI, that it will not assign, convey or lease any interest in the Redevelopment Property or any portion thereof, or this Agreement or any portion thereof, to any mx-exempt entity under the U.S. Internal Revenue Code of 1986, as the same may be amended from time to time, without the prior written approval of the Authority (whose approval will be conditioned upon the Redeveloper obtaining an agreement upon terms reasonably satisfactory to the Authority from its assignee or lessee to make payments in lieu of mx). (q) The Redeveloper will execute, and will also cause the homeowners' association for the Condo Project to execute, appropriate maintenance and easement agreements relating to playground use and pond maintenance. ARTICLE III Undertakings of Authority and Redeveloper; Conveyance of the Redevelopment Property Section 3.1. Payment of Grants to Redeveloper. (a) As consideration for the execution of this Agreement and the construction of the Apartment Project and the Condo Project by the Redeveloper and subject to the further provisions of this Agreement: (i) Apartment Project Grant. The Authority will irrevocably commit to provide a grant of up to $550,000 when the Redeveloper begins Site Improvements. (ii) Condo Project Grant. The Authority will irrevocably commit to provide a grant of up to $650,000 as follows: (A) Up to $150,000 for grading and 13onding at the time the Redeveloper begins those activities for both Projects, provided that the Redeveloper also advances $50,000 for the Condo Project grading and ponding, and (B) The balance of the Condo Project Grant will be provided: (1) when the Redeveloper begins pilings and the remaining Site Improvements for the Condo Project (if pilings for the Apartment Project and for the Condo Project were constructed in separate phases) or (2) when foundation construction begins (if pilings for both of the Apartment Project and Condo Project were done at one time). The Redeveloper will perform grading and ponding for both Projects at the same time. In no event shall more than $350,000 of Authority assistance be used for ponding and grading both Projects. (b) If a portion of the Site Improvement costs that must be incurred to construct the Apartment Project are more properly attributable to the Condo Project, such costs will nonetheless be counted as a portion of the Apartment Project Grant if the Condo Project is not completed (and will not result in an increase in the amount of the Apartment Project Grant). If both Projects are completed, such costs will be allocated appropriately between the Projects for purposes of the assistance review set forth in Section 3.6. Section 3.2. Limitation on Undertaking of the Authori _ty. The Authority will have no obligation to the Redeveloper under this Agreement to furnish the Grants if the Authority, at the time a Grant is to be delivered, is entitled under Section 5.2 to exercise any of the remedies set forth therein as a result of an Event of Default which has not been cured. If the Authority has not exercised its remedies under Section 5.2 and ifa Grant is withheld due to an Event of Default which is later cured, such Grant will be delivered after such Event of Default has been cured. Section 3.3. Conveyance of the Redevelopment Property_. (a) Title. The Authority will convey title to, and possession of, the Redevelopment Property to the Redeveloper by the Redevelopment Property Deed. The conveyance of title to the Redevelopment Property pursuant to the Redevelopment Property Deed will be subject to all of the conditions, covenants, restriction, and limitations imposed by this Agreement and the Redevelopment Properly Deed. The Redevelopment Property Deed will be in recordable form and will be promptly recorded. The Redeveloper will pay all costs for such recording except the state deed transfer tax, if applicable. (b) Time of Conveyance. Subject to Unavoidable Delays, the Authority will execute and deliver to the Redeveloper the Redevelopment Property Deed for the Redevelopment Property on September 15, 2004, or on such later date as the Authority and the Redeveloper shall mutually agree in writing, but in no event later than October 15, 2004 (the "Closing Date"). The Redeveloper will take possession of the Redevelopment Property on the Closing Date. (c) Price and Payment. Unless otherwise mutually agreed by the Authority and the Redeveloper, the execution and delivery of all closing documents and the payment of the Purchase Price will be made at the principal offices of the Authority. The price to be paid by the Redeveloper for the conveyance of the Redevelopment Property from the Authority to the Redeveloper will be One Dollar ($1.00), the Purchase Price. Section 3.4. Conditions Precedent to Conveyance. The obligation of the Authority to convey the Redevelopment Property to the Redeveloper will be subject to the following conditions precedent: (a) On the Date of Closing, the Redeveloper is in material compliance with all of the terms and provisions of this Agreement; (b) The Redeveloper has secured the financing necessary to construct the Apartment Project; (c) The Redeveloper has executed the Declarations of Restrictive Covenants; and (d) The Redeveloper has paid the Purchase Price. Section 3.5. Taxes and Special Assessments. The Authority will pay all real estate taxes and all special assessments pending or levied prior to the year of closing on the Redevelopment Property. Real estate taxes and installments of special assessments payable in the year of closing will be prorated as of the Date of Closing based on the Parties' respective period of ownership. Subsequent to the year of 10 closing the Redeveloper will pay all real estate taxes and special assessments on the Redevelopment Project. Section 3.6. Assistance Review. (a) The Parties intend for the Grant for each Project to not exceed the amount necessary to cover Project costs not defrayed by sales proceeds (in the case of the Condo Project), grant and loan proceeds and other revenue sources, including Community Development Block Grants. Following completion of each Project: (i) Apartment Project. Any excess funds received by the Redeveloper above the actual total costs of utility construction, site preparation and construction will be invested in the Project in the form of additional amenities. The Redeveloper's Developer Fee for the Apartment Project may not exceed $630,000, of which at least $100,000 shall be deferred and paid from the cash flow from the Apartment Project. (ii) Condo Project. Following the sale and closing on all Condo units, the Redeveloper will provide to the Authority an accounting of grants received, gross sales revenue and the total actual costs of site preparation, construction and sales expenses. Such accounting shall include a sworn statement in a form reasonably acceptable to the Authority signed by the Redeveloper's project architect or construction manager and indicating that the indicated costs have been incurred. Any excess of grants and sales revenues over such costs will be reimbursed to the Authority. The Redeveloper's Developer Fee for the Condo Project may not exceed $450,000. (b) Each Project will be treated on a stand-alone basis for purposes of the maximum amount of each Grant to be furnished by the Authority and for purposes of this Section. Thus, surplus revenue on one Project will be disposed of as provided in subparagraph (a) above and will not be applied to any shortfall with respect to the other Project. (c) Third-party payments and soft costs (such as for planning, financing, legal, architectural and engineering) will be included in Project costs for purposes of this Section. Such payments and costs shall not be counted as Developer Fee even if paid to or incurred by. the Redeveloper or an affiliate of the Redeveloper, as long as such payments and charges are reasonable and within normal and customary industry standards. ARTICLE IV Construction of Minimum Improvements Section 4.1. Construction of Minimum Improvements. The Redeveloper shall construct and pay for all Site Improvements described in Schedule D. The Redeveloper will cogstmct the Minimum Improvements on the Redev. elopment Property in accordance with Construction Plans approved by the City. 11 Section 4.2. Preliminary Plans and Construction Plans. (a) Preliminary Plans. Prior to the commencement of construction of the Minimum Improvements, the Redeveloper shall submit Preliminary Plans to the Authority consisting of typical floor plans and sketches of the typical exterior and interior of the proposed Minimum Improvements which illustrate the size and character of the proposed buildings. The Preliminary Plans shall not be inconsistent with this Agreement or any applicable state and local laws and regulations, insofar as said consistency may be determined at said preliminary stage. If approval of the Preliminary Plans is requested in writing by the Redeveloper at the time of submission thereof to the Authority, the Authority shall approve or reject (in whole or in part) such Preliminary Plans in writing within thirty (30) days after the date of receipt thereof. If no written rejection is made within said thirty (30) days, the Preliminary Plans shall be deemed approved by the Authority. Any rejection shall set forth in detail the reasons therefor. If the Authority rejects the Preliminary Plans, in whole or in part, the Redeveloper shall submit new or revised Preliminary Plans within a reasonable time after receipt by the Redeveloper of the notice of rejection. The provisions of this Section relating to approval, rejection and resubmission of new or revised Preliminary Plans shall continue to apply until the Preliminary Plans have been approved by the Authority. The Authority's approval of the Preliminary Plans shall not be unreasonably withheld. (b) Construction Plans. Prior to the Redeveloper's commencement of construction of each Project, the Redeveloper shall submit to the Authority Construction Plans for the Minimum Improvements in that Project. The Construction Plans shall provide for the construction of the Minimum Improvements and shall be in conformity in all material respects with this Agreement, the Preliminary Plans, and all applicable state and local laws and regulations. The Authority shall approve the Construction Plans in writing if: (i) the Construction Plans conform in all material respects to the terms and conditions of the Preliminary Plans and this Agreement; (ii) the Construction Plans conform to all applicable federal, State and local laws, ordinances, rules and regulations; (iii) the Construction Plans are adequate to provide for the construction of the Minimum Improvements; (iv) the Construction Plans do not provide for expenditures in excess of the funds available to the Redeveloper for the construction of the Minimum Improvements; and (v) no Event of Default has occurred and is continuing. No approval by the Authority shall relieve the Redeveloper of the obligation to comply with the terms of this Agreement and applicable federal, State and local laws, ordinances, rules and regulations, or to construct the Minimum Improvements in accordance therewith. No approval by the Authority shall constitute a waiver of any Event of Default. Upon the Redeveloper's submittal of the Construction Plans to the Authority, such Construction Plans shall be deemed approved unless rejected in writing by the Authority, in whole or in part, within thirty (30) days after the date of their receipt by the Authority. Such rejection shall set forth in detail the reasons therefor. If the Authority rejects any ConstrUction Plans in whole or in part, the Redeveloper shall submit new or corrected Construction Plans within a reasonable time after written notification to the Redeveloper of the rejection. The provisions of this Section relating to approval, rejection and resubmission of corrected Construction Plans shall continue to apply until the C4nstmction Plans have been approved by the Authority. The Authority's approval shall not be unreaso'iiably withheld. Said approval shall constitute a conclusive determination that the Construction Plans (and the Minimum Improvements relating thereto, if constructed in accordance with said plans) comply with the provisions of this Agreement relating thereto. The Construction Plans shall not be rejected due to any objection which could have been raised upon review of the Preliminary'Plans and corrected more economically at that time. 12 (c) ~. If the Redeveloper desires to make any material change in the Preliminary Plans or Construction Plans after their approval by the Authority, then the Redeveloper shall submit the proposed change to the Authority for its approval. If the Preliminary Plans or Construction Plans, as modified by the proposed change, conform to the requirements of this Section 4.2 with respect to such previously approved Construction Plans, the Authority shall approve the proposed change and notify the Redeveloper in writing of its approval. Such change in the Preliminary Plans or Construction Plans shall, in any event, be deemed approved by the Authority unless rejected in writing by the Authority, in whole or in part, within thirty (30) days after receipt of the notice of such change, setting forth in detail the reasons therefor. Section 4.3. Completion of Construction. (a) Subject to Unavoidable Delays, the Redeveloper will achieve substantial completion of the construction of the Minimum Improvements as follows: (i) Apartment Project. Begin Site Improvements on or about September 15, 2004; completion of the Apartment Project by July 31, 2006. (ii) Condo Project. Begin construction of building on or about April 15, 2005; completion of the Condo Project by December 3 l, 2006. Site Improvements shall be constructed timely so as to permit building construction to begin as scheduled. (b) All work with respect to the Minimum Improvements to be constructed or provided by the Redeveloper on the Redevelopment Property will be in conformity with the Construction Plans. (c) The Redeveloper agrees for itself, its successors and assigns, and every successor in interest to the Redevelopment Property, or any part thereof, that the Redeveloper, and such successors and assigns, will diligently prosecute to completion the development of the Redevelopment Property through the construction of the Minimum Improvements thereon, and that such construction will in any event be completed within the period specified in this Section. Section 4.4. Certificate of Completion. (a) Promptly after completion of the Minimum Improvements for each building in accordance with the provisions of this Agreement relating to the obligations of the Redeveloper to construct such improvements (including the date for completion thereof), the Authority will furnish the Redeveloper with a Certificate of Completion for such Building in substantially the form attached as Schedule D. The Certificate of Completion shall be a conclusive determination and conclusive evidence of the satisfaction and termination of the agreements and covenants in this Agreement and in the Redevelopment Property Deed with respect to the obligations of the Redeveloper and its successors and assigns, to construct the Minimum Improvements for each building and the date for the completion there4f. (b) If the Authority believes the Redeveloper has failed to complete the Minimum Improvements as to any building for which a Certificate of Completion is requested by the Redeveloper, the Authority shall, within thirty (30) days after such written request by the Redeveloper, provide the Redeveloper with a written statement, indicating in adequate detail in what respects the Authority believes the Redeveloper has failed to complete the Minimum Improvements in accordance with the provisions of 13 this Agreement, and what measures or acts will be necessary, in the opinion of the Authority, for the Redeveloper to take or perform in order to obtain a Certificate of Completion. (c) The construction of the Minimum Improvements for each building shall be deemed to be completed in accordance with the Redeveloper's obligations hereunder when the City has issued a certificate of occupancy for any individual residential unit of that Building. ARTICLE V Events of Default Section 5.1. Events of Default Defined. Whenever it is used in this Agreement, the term "Event of Default" will mean any one or more of the following events: (a) Failure by the Redeveloper to complete the Minimum Improvements pursuant to the terms, conditions and limitations of this Agreement. (b) The holder of any Mortgage on the Redevelopment Property or any improvements thereon, or any portion thereof, commences foreclosure proceedings and such proceedings proceed to a sale as a result of any default under the applicable Mortgage documents. (c) Failure by the Redeveloper to substantially observe or perform any other covenant, condition, obligation or agreement on its part to be observed or performed under this Agreement. (d) If the Redeveloper: (i) files any petition in bankruptcy or for any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under the United States Bankruptcy Act of 1978, as amended or under any similar federal or state law; or (ii) makes an assignment for the benefit of its.creditors; or (iii) admits in writing its inability to pay its debts generally as they become due; or (iv) is adjudicated as bankrupt or insolvent; or if a petition or answer proposing the adjudication of the Redeveloper, as bankrupt or its reorganization under any present or future fede.ral bankruptcy act or any similar federal or state law is filed in any court and such petition or answer is not discharged or denied within ninety (90) days after the filing thereof; or a receiver, trustee or liquidator of the Redeveloper, or of the Minimum Improvements, or part thereof, is appointed in any proceeding brought against the Redeveloper, and is not discharged within ninety (90) days after such appointment, or if the Redeveloper consents to or acquiesces in such appointment. .,' Section 5.2. Remedies on Default. Whenever any Event of Default referred to in Section 5.1 occurs and is continuing, the Authority may take any one or more of the following actions after providing thirty (30) days' written notice to the Redeveloper, but only if the Event of Default has not been cured within said thirty (30) days or if the Redeveloper is not making its best efforts to cure a default which cannot be cured within thirty (30) days: 14 (a) The Authority may suspend its performance under this Agreement until it receives assurances from the Redeveloper, deemed adequate by the Authority, that the Redeveloper will cure its default and continue its performance under this Agreement. (b) The Authority may cancel and rescind this Agreement. (c) The Authority may withhold a Certificate of Completion. Section 5.3. Revesting Title in Authority Upon Happening of Event Subsequent to Conveyance to Redeveloper. In the event that subsequent to conveyance of the Redevelopment Properly to the Redeveloper and prior to receipt by the Redeveloper of a Certificate of Completion: (a) Subject to Unavoidable Delays, the Redeveloper fails to carry out its obligations with respect to the construction of the Minimum Improvements (including the nature and the date for the initiation and completion thereof), or abandons or substantially suspends construction work, and any such failure, abandonment, or suspension is not cured, ended, remedied or assurances reasonably satisfactory to the Authority made within sixty (60) days after written demand from the Authority to the Redeveloper to do so; or (b) The Redeveloper fails to pay any real estate taxes or assessments on any portion of the Redevelopment Property which has been conveyed to the Redeveloper when due (which taxes or assessments the Redeveloper is responsible for hereunder), or creates, suffers, assumes, or agrees to any encumbrance or lien on the Redevelopment Property which is unauthorized by this Agreement, or suffers any levy or attachment to be made, or any materialmen's or mechanics' lien, or any other unauthorized encumbrance or lien to attach, and such taxes or assessments are not paid, or the encumbrance or lien removed or discharged or provision reasonably satisfactory to the Authority made for such payment, removal, or discharge, within thirty (30) days after written demand by the Authority to do so; provided, that if the Redeveloper first notifies the Authority of its intention to do so, it may in good faith contest any mechanics' or other lien filed or established and, in such event, the Authority will permit such mechanics' or other lien to remain undischarged and unsatisfied during the period of such contest and any appeal, but only if the Redeveloper provides the Authority with a bank letter of credit, a statutory lien bond as provided by Minnesota Statutes or other security in the amount of the lien, in a form satisfactory to the Authority pursuant to which the bank or other obligor will pay to the Authority the amount of any lien in the event that the lien is finally determined to be valid. During the course of such contest the Redeveloper will keep the Authority informed respecting the status of such defense; or (c) There is, in violation of Article VI, any transfer of the Redevelopment Property or any part thereof, or anY change with respect to the identity of the parties in control of the Redeveloper and such violation is not cured within sixty (60) days after written demand by the Authority to the Redeveloper; Then the Authority will hav.e the right to re-enter and take possession of the Redevelopment Property and to terminate (and revest in the Authority) the estate conveyed by the Redevelopment Property Deed to the Redeveloper, it being the intent of this provision, together with other provisions of the Agreement, that the conveyance of the Redevelopment Property to the Redeveloper will be made upon, and that the Redevelopment Property Deed will contain a condition subsequent to the effect that in the event of any default on the part of the Redeveloper and failure on the part of the Redeveloper to remedy, end, or 15 abrogate such default within the period and in the manner stated in such subdivisions, the Authority at its option may declare a termination in favor of the Authority of the title, and of all the rights and interests in and to the Redevelopment Property conveyed to the Redeveloper, and that such title and all rights and interests of the Redeveloper, and any assigns or successors in interest to and in the Redevelopment Property, will revert to the Authority, but only if the events stated in Section 5.3(a), (b) or (c) have not been cured within the time periods provided above. Notwithstanding anything to the contrary contained in this Section, the Authority will have no fight to re- enter or retake title to and possession of any part of the Redevelopment Property for which a Certificate of Completion has been issued or if the Authority has subordinated its rights to the holder of a Mortgage as provided for in Section 7.3. Section 5.4. Resale of Reacquired Property; Disposition of Proceeds and Earnest Money. Upon the revesfing in the Authority of title to the Redevelopment Property as provided in Section 5.3, the Authority will have no further responsibility to the Redeveloper hereunder. The Authority may sell or otherwise devote the Redevelopment Property to such other uses as the Authority may in its sole discretion determine, without reimbursement of any sums paid by the Redeveloper to the Authority under this Agreement. Section 5.5. No Remedy Exclusive. No remedy herein conferred upon or reserved to the AUthority is intended to be exclusive of any other available remedy or remedies, but each and every such remedy will be cumulative and will be in addition to every other remedy given under this Agreement or now or hereafter existing at law, in equity or by statute. No delay or omission to exercise any right or power accruing upon any default will impair any such right or power or will be construed to be a waiver thereof, but any such fight and power may be exercised from time to time and as often as may be deemed expedient. Section 5.6. No Implied Waiver. In the event any agreement contained in this Agreement should be breached by any Party and thereafter waived by any other Party, such waiver will be limited to the particular breach so waived and will not be deemed to waive any other concurrent, previous or subsequent breach hereunder. Section 5.7. Agreement to Pay Attorney's Fees and Expenses. Whenever any Event of Default occurs and the Authority employs attorneys or incurs other expenses for the collection of payments due or to become due or for the enforcement or performance or observance of any obligation or agreement on the part of the Redeveloper herein contained, the Redeveloper agrees that it will, on demand therefor, pay to the Authority the reasonable fees of such attorneys and such other expenses so incurred by the Authority. ARTICLE VI Prohibitions Against Assignment and Transfer '"' Section 6.1. Representation as to Redevelopment. The Redeveloper represents and agrees that its purchase of the Redevelopment Property, and its other undertakings pursuant to this Agreement, are, and will be used, for the purpose of redevelopment of the Redevelopment Property and not for speculation in land holding. The Redeveloper further recognizes that, in view of (a) the importance of the 16 redevelopment of the Redevelopment Property to the general welfare of the Authority, and (b) the substantial financing that will be made available by the Authority for the purpose of making such redevelopment possible, the qualifications and identity of the Redeveloper are of particular concern to the Authority. The Redeveloper further recognizes that it is because of such qualifications and identity that the Authority is entering into this Agreement with the Redeveloper, and, in so doing, is further willing to accept and rely on the obligations of the Redeveloper for the faithful performance of all undertakings and covenants hereby by it to be performed. Section 6.2. Prohibition Against Transfer of Property and Assignment of Agreement. (a) Also, for the foregoing reasons the Redeveloper represents and agrees that prior to the date of the Certificate of Completion as provided in Section 4.4, except for the purpose of obtaining financing necessary to enable the Redeveloper or any successor in interest to the Redevelopment Properly, or any part thereof, to perform its obligations with respect to constructing the Minimum Improvements, the Redeveloper has not made or created and will not make or create or suffer to be made or created any total or partial sale, assignment, conveyance, or lease, or any trust or power, or transfer in any other form of this Agreement or the Redevelopment Property or any part thereof or any interest therein, or any contract or agreement to do any of the same, without the prior written approval of the Authority, unless the Redeveloper remains liable and bound by this Redevelopment Agreement in which event the Authority's approval is not required. Any such transfer will be subject to the provisions of this Agreement. (b) This Section 6.2 does not apply to (i) leases made between the Redeveloper and tenants of the Apartment Project, (ii) purchase agreements between the Redeveloper and purchasers of units in the Condo Project, or (iii) assignment or transfer of this Agreement or the Redevelopment Property in whole or in part to one or more entities wholly-owned or controlled by the Redeveloper. With respect to the Apartment Project, the Redeveloper may lend the proceeds of the Apartment Project Grant to an entity wholly-owned or controlled by the Redeveloper in connection with an assignment or transfer permitted by clause (iii). ARTICLE VII Insurance and Condemnation Section 7.1. Insurance. (a) The Redeveloper will provide and maintain at all times during the process of constructing the Minimum Improvements and, from time to time at the request of the Authority, will furnish the Authority with proof of payment of premiums on: (i) builder's risk insurance, written on the so-called "Builde~r's Risk -- Completed Value Basis," in an amount equal to one hundred percent (100%) of the insurable Yalue of the Minimum Improvements at the date of cOmpletion, and with coverage available in nonreporting form on the so- called "all risk" form of policy. The interest of the Authority will be protected in accordance with a clause in form and content reasonably satisfactory to the Authority; 17 (ii) comprehensive general liability insurance together with an Owner's Contractor's Policy with limits against bodily injury and property damage of not less than $2,000,000 for each occurrence (to accomplish the above-required limits, an umbrella excess liability policy may be used); and (iii) workers' compensation insurance, with statutory coverage. (b) Upon completion of construction of the Apartment Project and prior to the Termination Date, the Redeveloper will maintain, or cause to be maintained, at its cost and expense, and from time to time at the request of the Authority will furnish proof of the payment of premiums on, insurance as follows: (i) Insurance against loss and/or damage to the Apartment Project under a policy or policies covering such risks as are ordinarily insured against by similar businesses, including (without limiting the generality of the foregoing) fire, extended coverage, vandalism and malicious mischief, boiler explosion, water damage, demolition cost, debris removal, and collapse in an amount not less than the full insurable replacement value of such improvements, but any such policy may have a deductible amount of not more than $25,000. No policy of insurance will be so written that the proceeds thereof will produce less than the minimum coverage required by the preceding sentence, by reason of co-insurance provisions or otherwise, without the prior consent thereto in writing by the Authority. The term "full insurable replacement value" will mean the actual replacement cost of the Apartment Project (excluding foundation and excavation costs and costs of underground flues, pipes, drains and other uninsurable items) and equipment, and may be determined from time to time at the request of the Authority, but not more frequently than once every five (5) years, by an insurance consultant or insurer, selected and paid for and approved by the Authority. All policies evidencing insurance required by this subparagraph (i) will be carried in the names of the Redeveloper, the Redeveloper's Mortgagee and the Authority as their respective interests may appear and will contain standard clauses which provide for net proceeds (the amount remaining after the deduction of expenses incurred in the collection of such proceeds, the "Net Proceeds") of insurance resulting from claims per casualty thereunder to the Apartment Project which are equal to or less than $1,000,000 for loss or damage covered thereby to be made payable directly to the Redeveloper and/or its Mortgagee, and Net Proceeds from such claims in excess of $1,000,000 to be made payable jointly to the Redeveloper, its Mortgagee and the Authority. The Authority, the Redeveloper and its Mortgagee will jointly agree on the amount o.f settlement. (ii) Comprehensive general public liability insurance, including personal injury liability and liability for injuries to persons and/or property, in the minimum amount for each occurrence and for each year of $2,000,000, which will be endorsed to show the Authority as additional insured. (c) All insurance required by this Article will be taken out and maintained in responsible insurance companies selected by the Redeveloper which are authorized under the laws of the State to assume the risks covered thereby. The Redeveloper will deposit annually with the Authority policies evidencing all such insurance, or a certificate or certificates or binders of the respective insurers stating that such insurance is in force and effect. Unless otherwise provided in this A .r~icle, each policy will contain a provision that the insurer will not cancel nor modify it without giving~"written notice to the Redeveloper and the Authority at least thirty (30) days before the cancellation or modification becomes' effective. Not less than fifteen (15) days prior to the expiration of any policy, the Redeveloper will furnish the Authority with evidence satisfactory to the Authority that the policy has been renewed or replaced by another policy conforming to the provisions of this Article, or that there is no necessity therefor under the terms hereof. In lieu of separate policies, the Redeveloper may maintain a single 18 policy, blanket or umbrella policies, or a combination thereof, having the coverage required herein, in which event the Redeveloper will deposit with the Authority a certificate or certificates of the respective insurers as to the amount of coverage in force upon the Minimum Improvements. (d) The Redeveloper agrees to notify the Authority immediately in the case of damage exceeding $100,000 in amount to, or destruction of, the Apartment Project or any portion thereof resulting from fire or other casualty. In the event that any such damage does not exceed $750,000, the Redeveloper will forthwith repair, reconstruct and restore the Apartment Project to substantially the same or an improved condition or value as it existed prior to the event causing such damage and, to the extent necessary to accomplish such repair, insurance relating to such damage received by the Redeveloper will be applied to the payment or reimbursement of the costs thereof. Net Proceeds of any insurance relating to such damage up to $750,000 will be paid directly to the Redeveloper. If the Apartment Project or any portion thereof is destroyed by fire or other casualty and the damage or destruction is estimated to equal or exceed $750,000, then the Redeveloper, within one hundred and twenty (120) days after such damage or destruction, will proceed forthwith to repair, reconstruct and restore the Apartment Project to substantially the same condition or value as existed prior to the event causing such damage or destruction and, to the extent necessary to accomplish such repair, reconstruction and restoration, the Redeveloper, its Mortgagee and the Authority will apply the Net Proceeds of any insurance relating to such damage or destruction received by its Mortgagee and the Authority to the payment or reimbursement of the costs thereof. Any Net Proceeds remaining after completion of construction will be disbursed to the Redeveloper. If the damage exceeds seventy percent (70%) of th e County assessor's assessed value, the Redeveloper may elect not to rebuild if all Eligible Public Expenses are or have been fully reimbursed, from Net Proceeds of insurance or otherwise. (e) If the Redeveloper is in compliance with the terms and conditions of this Agreement, then any Net Proceeds of insurance relating to such damage or destruction received by the Authority will be released from time to time by the Authority to the Redeveloper upon the receipt of: (i) A certificate of an authorized representative of the Redeveloper specifying the expenditures made or to be made or the indebtedness incurred in connection with such repair, reconstruction and restoration and stating that such Net Proceeds, together with any other moneys legally available for such purposes, will be sufficient to complete such repair, construction and restoration; and (ii) If Net Proceeds equal or exceed $750,000 in amount, the written approval of such certificate by an independent engineer. The Redeveloper will complete the repair, reconstruction and restoration of the Apartment Project, whether or not the Net Proceeds of insurance received by the Redeveloper for such purposes are sufficient to pay for the same. Any Net Proceeds remaining after completion of such repairs, construction and restoration will be remitted to the Redeveloper. Section 7.2. Condemnation. In the event that rifle to and possessBn of the Minimum ImProvements or any material part thereof is taken in condemnation or by the exercise of the power of eminent domain or deed in lieu of condemnation, by any governmental body or other person (except the City or the Authority) prior to the Termination Date, the -Redeveloper will, with reasonable promptness after such taking, notify the Authority as to the nature and extent of such taking. Upon receipt of any condemnation award the Redeveloper will use such portion of the condemnation award as is necessary to 19 reconstruct the Minimum Improvements (or, in the event only a part of the Minimum Improvements has been taken, then to reconstruct such part) within the Tax Increment District. Section 7.3. Subordination. Notwithstanding anything to the contrary contained herein, the fights of the Authority with respect to the receipt and application of the proceeds of insurance or condemnation will be subject to and subordinate to the rights of any holder of any Mortgage with respect to the Redevelopment Property. ARTICLE VIII Additional Provisions Section 8.1. Conflict of Interest. No member, official, or employee of the Authority will have any personal interest, direct or indirect, in the Agreement, nor will any such member, official or employee participate in any decision relating to the Agreement which affects his personal interests or the interests of any corporation, partnership, or association in which he is, directly or indirectly, interested. Section 8.2. Restrictions on Use. The Redeveloper will not discriminate upon the basis of race, color, creed, sex or national origin in the sale, lease, or rental or in the use or occupancy of the Redevelopment Property or any improvements erected or to be erected thereon, or any part thereof. Section 8.3. Titles of Articles and SeCtions. Any titles of the several parts, Articles and Sections of the Agreement are inserted for convenience of reference only and will be disregarded in construing or interpreting any of its provisions. Section 8.4. Notices and Demands. Except as otherwise expressly provided in this Agreement, a notice, demand, or other communication under this Agreement by either Party to the other will be sufficiently given or delivered if it is dispatched by registered or certified mail, postage prepaid, return receipt requested, transmitted by facsimile, delivered by a recognized overnight courier or delivered personally to the following addresses: Redeveloper: Project for Pride in Living, Inc. 1035 East Franklin Avenue Minneapolis, MN 55404 Fax: (612) 455-5101 Attention: Steve Cramer, Executive Director with a copy to: Halleland Lewis Nilan Sipkins & Johnson P.A. 220 South 6th Street, Suite 600 Minneapolis, MN 55402-4501 Fax: (612) 338-7858 Attention: Ronald B. Peterson, Esq. 20 Authority: City of New Hope 4401 Xylon Avenue North New Hope, MN 55428 Fax: (763) 531-5136 Attention: Daniel J. Donahue, City Manager with a copy to: Krass Monroe, P.A. 8000 Norman Center Drive, Suite 1000 Minneapolis, MN 55437-1178 Fax: (952) 885-5969 Attention: James R. Casserly, Esq. Section 8.5. Indemnification of Authori _ty. (a) The Redeveloper releases from and covenants and agrees that the Authority, the City and its governing body members, officers, and agents, including independent contractors, consultants and legal counsel, servants and employees thereof(hereinafter, for purposes of this Section, collectively the "Indemnified Parties") will not be liable for and agrees to indemnify and hold harmless the Indemnified Parties against any loss or damage to property or any injury to or death of any person occurring at or about or resulting from any defect in the Minimum Improvements or the Redevelopment Property. (b) Except for any willful misrepresentation or any willful or wanton misconduct of the Indemnified Parties, the Redeveloper agrees to protect and defend the Indemnified Parties, now and forever, and further agrees to hold the Indemnified Parties harmless from any claim, demand, suit, action or other proceeding whatsoever by any person or entity whatsoever arising or purportedly arising from the actions or inactions of the Redeveloper (or of other persons acting on its behalf or under its direction or control) under this Agreement, or the construction, installation, ownership, and operation of the Minimum Improvements or the Redevelopment Property; provided, that this indemnification will not apply to the warranties made or obligations undertaken by the Authority in this Agreement. (3) All covenants, stipulations, promises, agreements and obligations of the Authority contained herein will be deemed to be the covenants, stipUlations, promises, agreements and obligations of the Authority and not of any governing body member, officer, agent, servant or employee of the Authority. Section 8.6. Counterparts. This Agreement is executed in any number of counterparts, each of which will constitute one and the same instrument. Section 8.7. Law Governing. This Agreement will be governed and construed in accordance with the laws of the State. Section 8.8. Subordination of Rights Under thi~ Agreement. In order to.facilitate the obtaining of financing of the Redevelopment Project, the Authority agrees to subordinat['its rights under this Agreement at any time and from time to time with the following exceptions: (i) The Declarations of Restrictive Covenants and Prohibition Against Tax Exemption, and (ii) Sections 2.2(0) and (p). 21 ARTICLE IX Termination of Agreement Section 9.1. Termination. This Agreement shall terminate upon its Termination Date and the discharge of all of the Authority's and Redeveloper's respective obligations hereunder, but no such termination shall terminate the applicability of Section 5.7 or any indemnification or other rights or remedies arising hereunder due to any Event of Default which occurred and was continuing prior to such termination. Section 9.2. Effect of Termination. Upon a termination of this Agreement pursuant to this Article IX, this Agreement shall be null and void and neither Party shall have any further obligations or liabilities hereunder except as specifically stated in this Agreement. Upon such termination the Redeveloper and Authority shall deliver to each other such documents as may be necessary to evidence the termination of this Agreement. IN WITNESS WHEREOF, the Authority has caused this Agreement to be duly executed in its name and behalf and the Redeveloper has caused this Agreement to be duly executed as of the date first above written. G:\WPDATA\N\NEW HOPE~I\DOC\REDEV AGREEMENT V4.DOC 22 Date: ., 2004 ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR THE CITY OF NEW HOPE By Don Collier Its President By. Daniel J. Donahue Its Executive Director STATE OF MINNESOTA ) )ss COUNTY OF HENNEPIN ) On this ~ day of ,2004, before me, a notary public within and for Hennepin County, personally appeared Don Collier and Daniel J. Donahue, to me personally known who by me duly sworn, did say that they are the President and Executive Director, respectively, of the Economic Development Authority in and for the City of New Hope, and acknowledged the foregoing instrument on behalf of said Authority. Notary Public Authority Signature Page -- Contract for Private Redevelopment 23 Date: ,2004 PROJECT FOR PRIDE IN LIVING, 1NC. By Its By Its STATE OF ) )ss COUNTY OF ) On this __ day of ,2004 before me, a notary public within and for County, personally appeared and to me personally known who by me duly sworn, did say that they are the and , respectively, of Project for Pride in Living, Inc., a Minnesota nonprofit corporation, and acknowledged the foregoing instrument on behalf of said corporation. Notary Public Redeveloper Signature Page ~ Contract for Private Redevelopment 24 SCHEDULE A LEGAL DESCRIPTION OF REDEVELOPMENT PROPERTY Lot 2, Block 1, Science and Industry Center 3rd Addition 25 SCHEDULE B REDEVELOPMENT PROPERTY DEED THIS INDENTURE, made this __ day of ., 2004, between the Economic Development Authority in and for the City of New Hope, a public body corporate and politic under the laws of Minnesota (the "Grantor"), and Project for Pride in Living, Inc., a Minnesota nonprofit corporation (the "Grantee"). WITNESSETH, that Grantor, in consideration of the sum of One Dollar ($1.00) and other good and valuable consideration the receipt whereof is hereby acknowledged, does hereby convey and quit claim to the Grantee, its successors and assigns forever, all the tract or pamel of land lying and being in the County of Hennepin and State of Minnesota described as follows: Lot 2, Block 1, Science and Industry Center 3rd Addition together with all hereditaments and appurtenances belonging thereto, Grantor covenants and represents that: Grantee has committed to construct certain improvements and Grantor has a right of re- entry in accordance with Sections 4.3 and 5.3, respectively, of the Contract for Private Redevelopment by and between the Economic Development Authority in and for the City of New Hope and Project for Pride in Living, Inc. dated as of September 13, 2004. The completion of the improvements and the release of the right of re-entry will be evidenced by the recording of the Certificate of Completion and Release of Forfeiture attached as Exhibit 1 to this deed. 26 IN WITNESS WHEREOF, the Grantor has caused this deed to be duly executed in its behalf by its President and its Executive Director as of the day and year written above. ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR THE CITY OF NEW HOPE By Its President By Its Executive Director STATE OF MINNESOTA ) ) ss COUNTY OF HENNEPIN ) On this ~ day of , 2004 before me, a notary public within and for Hennepin County, personally appeared and to me personally known who by me duly sworn, did say that they are the President and Executive Director, respectively, of the Economic Development Authority in and for the City of New Hope, a public body corporate and politic under the laws of Minnesota, and acknowledged the foregoing instrument on behalf of said Authority. Notary Public This instrument was drafted by: Krass Monroe, P.A. 8000 Norman Center Drive, Suite 1000 Minneapolis, MN 55437-1178 27 SCHEDULE C CERTIFICATE OF COMPLETION AND RELEASE OF FORFEITURE WHEREAS, the Economic Development Authority in and for the City of New Hope, a body corporate and politic under the laws of Minnesota (the "Grantor"), by a Deed recorded in the Office of the County Recorder or the Registrar of Titles in and for the County of Hennepin and State of Minnesota, as Deed Document Number , has conveyed to Project for Pride in Living, Inc., a Minnesota nonprofit corporation (the "Grantee"), the following described land in County of Hennepin and State of Minnesota, to-wit: Lot 2, Block 1, Science and Industry Center 3rd Addition WHEREAS, said Deed contained certain covenants and restrictions, the breach of which by Grantee, its successors and assigns, would result in a forfeiture and right of re-entry by Grantor, its successors and assigns, said covenants and restrictions being set forth in said Deed; and WHEREAS, said Grantee has performed said covenants and conditions insofar as it is able in a manner deemed sufficient by the Grantor to permit the execution and recording of this certification; NOW, THEREFORE, this is to certify that all building construction and other physical improvements specified to be done and made by the Grantee have been completed and the above covenants and conditions in said Deed have been performed by the Grantee therein and that the provisions for forfeiture of title and right to re-entry for breach of condition subsequent by the Grantor therein is hereby released absolutely and forever insofar as it applies to the land described herein, and the County Recorder or the Registrar of Titles in and for the County of Hennepin and State of Minnesota is hereby authorized to accept for recording and to record this instrument, and the filing of this instrument will be a conclusive determination of the satisfactory termination of the covenants and conditions of the contract referred to in said Deed, the breach of which would result in a forfeiture and right of re-entry. 28 Date: ,2004 ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR THE CITY OF NEW HOPE By. Its President By Its Executive Director STATE OF MINNESOTA ) )ss COUNTY OF HENNEPIN ) On this ~ day of , 2004 before me, a notary public within and for Hennepin County, personally appeared and to me personally known who by me duly sworn, did say that they are the President and Executive Director, respectively, of the Economic Development Authority in and for the City of New Hope, a public body corporate and politic under the laws of Minnesota, and acknowledged the foregoing instrument on behalf of said Authority. Notary Public 29 SCHEDULE D SITE IMPROVEMENTS · Survey (the Authority will provide any surveys in its possession) · Title work · Platting · Piling and other soils correction · Environmental testing and remediation · Grading and import/export of soil in accordance with City-approved grading plans · Sanitary sewer from City mains Water mains and stubs on the site · Storm sewers and storm water system elements (ponds, pipes, infiltration system) both on and off site according to the approved site plan, including extension of the storm water main into the existing pond Landscaping according to City-approved landscape plans · Pedestrian improvements pursuant to City-approved site plans Retaining walls and fences · Underground parking with 35 stalls under the Apartment Project and 41 stalls under the Condo Project 30 SCHEDULE E DECLARATION OF RESTRICTIVE COVENANTS AND PROHIBITION AGAINST TAX EXEMPTION (Apartment Project) This Declaration is made and executed as of the 13th day of September, 2004 by Project for Pride in Living, Inc., a Minnesota nonprofit corporation ("Declarant"). RECITALS A. Declarant is fee owner of the premises located in the County of Hennepin, State of Minnesota described on Exhibit A attached hereto (the "Property"). B. The Economic Development Authority in and for the City of New Hope, a public body corporate and politic (the "Authority") has entered into a Contract for Private Redevelopment dated as of September 13, 2004 (the "Redevelopment Agreement") with thc Declarant. Thc Redevelopment Agreement provides for certain assistance, financial and otherwise, to be provided by the Authority in connection with the construction by thc Declarant of an affordable apartrncnt building on the Property. NOW, THEREFORE, in consideration of thc foregoing, Declarant, for itself and its successors and assigns, docs hereby declare that the Property will bc owned, used, occupied, sold and conveyed subject to the following covenants and restrictions: 1. No part of the Property or improvements constructed thereon shall become tax exempt from the levy of ad valorem property taxes, or any statutorily authorized alternative, until December 31, 2032. 2. The covenants and restrictions herein contained will run with the title to the Property and will be binding upon all present and future owners and occupants of the Property; provided, however, that the covenants and restrictions herein contained will inure only to the benefit of the Authority and may be released or waived in whole or in part at any time, and from timel~o'time, by the sole act of the Authority, and variances may be granted to the covenants and restrictions herein contained by the sole act of the Authority. These covenants and restrictions will be enforceable only by the Authority, and only the Authority will have the right to sue for and obtain an injunction, prohibitive or mandatory, to prevent the breach of the covenants and restrictions herein contained, or to enforce the performance or observance thereof. 3. The covenants and restrictions herein contained will remain in effect until December 31, 2032 and thereafter will be null and void. 4. If any one or more of the covenants or restrictions contained in this Declaration are held to be invalid or enforceable, the same will in no way affect any of the other provisions of this Declaration, which will remain in full force and effect. 31 PROJECT FOR PRIDE IN LIVING, INC. By Its By Its STATE OF ) )ss COUNTY OF ) On this ~ day of ,2004 before me, a notary public within and for County, personally appeared and to me personally known who by me duly sworn, did say that they are the and , respectively, of Project for Pride in Living, Inc., a Minnesota nonprofit corporation, and acknowledged the foregoing instrument on behalf of said corporation. Notary Public This Instrument Drafted By: KRASS MONROE, P.A. 8000 Norman Center Drive, Suite 1000 Minneapolis, MN 55437-1178 (612) 885-5999 32 SCHEDULE F DECLARATION OF RESTRICTIVE COVENANTS AND PROHIBITION AGAINST TAX EXEMPTION (Condo Project) This Declaration is made and executed as of the 13th day of September, 2004 by Project for Pride in Living, Inc., a Minnesota nonprofit corporation ("Declarant"). RECITALS A. Declarant is fee owner of the premises located in the County of Hennepin, State of Minnesota described on Exhibit A attached hereto (the "Property"). B. The Economic Development Authority in and for the City of New Hope, a public body corporate and politic (the "Authority") has entered into a Contract for Private Redevelopment dated as of September 13, 2004 (the "Redevelopment Agreement"), with the Declarant. The Redevelopment Agreement provides for certain assistance, financial and otherwise, to be provided by the Authority in connection with the construction by the Declarant of a condominium building on the Property. NOW, THEREFORE, in consideration of the foregoing, Declarant, for itself and its successors and assigns, does hereby declare that the Property will be owned, used, occupied, sold and conveyed subject to the following covenants and restrictions: 1. No part of the Property or improvements constructed thereon shall become tax exempt from the levy of ad valorem property taxes, or any statutorily authorized alternative, until December 31, 2032. 2. The covenants and restrictions herein contained will run with the title to the Property and will be binding upon all present and future owners and occupants of the Property; provided, however, that the covenants and restrictions herein contained will inure only to the benefit of the Authority and may be released or waived in whole or in part at any time, and from time to time, by the sole act of the Authority, and variances may be granted to the covenants and restrictions herein contained by the sole act of the Authority. These covenants and restrictions will be enforceable only by the Authority, and only the Authority will have the right to sue for and obtain an injunction, prohibitive or mandatory, to prevent the breach of the covenants and restrictions herein contained, or to enforce the performance or observance thereof. 3. The covenants and restrictions herein contained will remain in effect until December 31, 2032 and thereafter will be null and void. 4. If any one or more of the covenants or restrictions contained in this~Declaration are held to be invalid or enforceable, the same will in no way affect any of the other provisions of this Declaration, which will remain in full force and effect. 33 PROJECT FOR PRIDE IN LIVING, INC. By Its By Its STATE OF ) )ss COUNTY OF ) On this __ day of , 2004 before me, a notary public within and for County, personally appeared and to me personally known who by me duly sworn, did say that they are the and , respectively, of Project for Pride in Living, Inc., a Minnesota nonprofit corporation, and acknowledged the foregoing instrument on behalf of said corporation. Notary Public This Instrument Drafted By: KRASS MONROE, P.A. 8000 Norman Center Drive, Suite 1000 Minneapolis, MN 55437-1178 (612) 885-5999 34