4.2.A. SR 12-06-2004
l-km Li.2. R
MEMORANDUM
FROM:
Housing and Redevelopment Authority
Mayor and City Council
Catherine Mehelich, Director of Economic Developmen(#
December 6, 2004
TO:
DATE:
SUBJECT:
Consider Development Agreement and Interfund Loan
Resolutions for Downtown Revitalization Project
Attachments
. Project Planning and History
. Project Description - November 2004
. April2S, 2004 Memo Re: Proposed MetroPlains Project (ICey Points Agreement)
. Development Agreement Between City of Elk River and MetroPlains Development,
LLC
. Resolution Approving Development Agreement and Business Subsidy
. Resolution Approving Interfund Loan on Sewer Access Charge (SAC)
. Resolution Approving Interfund Loan on Water Access Charge (WAC)
. Resolution Approving Interfund Loan on Jackson Land
Issue
The HRA is asked to consider making a recommendation to the City Council on the attached
Development Agreement and related resolutions. The City Council is asked to consider
adoption of the resolutions approving the Development Agreement, Business Subsidy and
related interfund loans for the Downtown Revitalization Project. Sid Inman of Ehlers &
Associates and Mary Ippel of Briggs & Morgan will be present at the HRA and Council
meeting to discuss the agreement.
Background
In late 2001 the HRA established goals and objectives for the Downtown Revitalization
Project. Through a request-for-proposals process MetroPlains Development was selected by
the city as having the experience and initial concept that met the city's goals and objectives
and vision for downtown Elk River. In August 2002 the HRA and City Council entered into a
Preliminary Redevelopment Agreement with MetroPlains Development to refine
redevelopment concepts for portions of downtown Elk River.
Consider Development Agreement and Interfund Loans
for Downtown Revitalization Project
December 6, 2004 I IRA and City Council Meeting
Page 2 of 4
Over the past 2 years the city and developer have completed a number of steps to refIne the
project including market and fInancial feasibility srudies, community input and other steps
outlined in the attached Project Planning & History.
Summary
MetroPlains has accepted the attached Development Agreement that has been drafted based
on the key points in the attached April2S, 2004 memo and direction from the HRA and City
Council. Following is a summary of the fmal agreement as it relates to the key points:
1. Linkage between the T ackson project and the Bluff project.
The HRA and City Council have directed staff and the developer that the completion of both
Jackson and Bluff projects together are desired elements of the Downtown Revitalization
Project. The project meets the city's goal and objectives as described in the attached Project
Description. Each component of the project is described in the defmitions (Section1.1). The
development agreement provides for the City Council to formally approve the construction
plans and parking plans prior to any construction (Section 4.1).
At its November meetings it was the consensus of the HRA and Council to proceed with the
development agreement with the construction schedule outlined by MetroPlains generally as
follows:
. Winter 2004-Spring 2005
. Spring 2005
. Summer 2005
. Summer 2005
. Fall 2005
. Fall 2005
Acquisition of properties completed.
Construction of King Avenue parking lot
Construction start of Bluff Block with demolition and
environmental remediation (except for US Bank site)
Construction start of Jackson Block
US Bank vacation and demolition
Bluff Block new construction start
The development agreement includes several activities that must be completed by MetroPlains
prior to construction on the Jackson Block property (Section 4.3), including MetroPlains'
payment of the King Avenue parking lot improvement.
2. Amount of tax increment Enancin!?: assistance
The development agreement defmes "Pledged Tax Increment" that the developer would
receive up to 89% of the acrual available increment based on the lesser of the acrual market
value at the time or the market value as of the completion of the project for the purpose of
reimbursing MetroPlains for TIF eligible costs incurred based on the developer's gap in
funding. In addition, MetroPlains will receive 6% of the annual increment for the purpose of
reimbursing the cost of the King Avenue parking lot. Together current estimates indicate that
MetroPlains could receive approximately $2.3 million in TIF. The remaining 5% the city will
receive for reimbursement of administrative costs of the project. Section 5.2 outlines the
process for issuance of the TIF revenue note, also known as a "pay-as-you-go note" to the
developer. In addition, a "look back" procedure is outlined in Section 5.3 in order to ensure
that the developer will not receive any more assistance (via TIF, Sac/Wac and Jackson land)
than is necessary to make the project Enancially feasible.
Consider Development Agreement and Intcrfund Loans
for Downtown Revitalization Project
December 6, 2004 HRA and City Council Meeting
Page 3 of 4
In addition to the TIF the other forms of assistance provided by the city are estimated as
follows:
· Jackson Land
. SAC
. WAC
$ 500,000 to be based on final appraisal
$ 175,880
$ 131,910
With regard to the look back provision MetroPlains is allowed a specific amount of profit as a
percentage of total cost on the for-sale portions of the Bluff project (both the commercial and
condos will be for-sale). On the rental housing and commercial portion of the Jackson project
MetroPlains is allowed a specific amount for development fees and a return on investment
based on the preliminary sources and uses statement provided in the development agreement.
The amount of profit, return and fees is based on the key points agreement dated April 28,
2004 with the exception of the change in the Bluff Block commercial from a leasing to a for-
sale structure. The Parking Lot Note is not part of the look back calculations.
3. SAC/WAC/Park Dedication/Building Permit Fees
Within the development agreement the city is approving a reduction of the entire SAC and
WAC fees, as was conceptually approved at the August 25, 2004 joint meeting of the Elk
River Municipal Utilities Commission and City Council.
MetroPlains will pay the city park dedication and SAC and WAC fees in addition to other city
governmental fees when due. However the city will credit the estimated amounts listed above
toward the SAC and WAC fees (Section 5.7). The City will then capture 100% of any annual
inflation over the 25-year TIF district period and at 4% interest rate to reimburse itself for the
SAC, WAC and Jackson land. The state auditor requires that the City Council adopt an
interfund loan resolution for each item in order to formalize the city's intent to reimburse
itself for qualified costs of the TIF district. In addition the city will be reimbursing itself from
tax increment derived from the district for incurred qualified administrative costs (which do
not require a resolution) related to the project in the amount of $250,000.
In accordance with prior direction from the Park & Recreation Commission and City Council
the park dedication fee paid by the developer will be dedicated to park improvements in the
downtown area. There is no reduction or waiver on the park dedication fee and building
permit fees.
4. Cost of the T ackson Block
.
The development agreement identifies $500,000 as the estimated value of the Jackson Block
property. An appraisal to be completed by the developer's bank will be the final purchase
price (Section 3.4). The inflation that the city may capture over the life of the TIF district will
reimburse the city for the Jackson land.
5. Issuance of Cit;y Tax Increment Bonds
The development agreement outlines a number of conditions that would need to be met in
order for the developer to request the city to issue tax increment bonds to refund the tax
revenue note (Section 5.8). This is an option that wouldn't occur until sometime in the future.
Consider Development Agreement and Interfund Loans
for Downtown Revitalization Project
December 6, 2004 HRA and City Council Meeting
Page 4 of 4
There is no discussion or commitments for general obligation bonds in the fmal development
agreement.
6. Purchase of Bluff Block properties
The city's obligation to close on the sale of tbe Jackson Block property is conditioned, among
other things, upon tbe developer having fee title to all of the Bluff Block property. Section 3.5
outlines tbe conditions and process tbat tbe city would undertake, at its own discretion and
under limited circumstances, for the acquisition of the Bluff Block property through tbe use
of its powers of eminent domain. MetroPlains agrees to payor reimburse tbe city for all city
acquisition costs and relocation costs and expenses in connection with tbe acquisition of tbe
Bluff Block property. Staff doesn't currently anticipate this will be necessary.
7. Type of Bluff Block Project
This item was discussed in tbe April 28, 2004 key points agreement in tbat tbe city and
MetroPlains would explore tbe feasibility of otber types of projects on tbe Bluff Block if
necessary to meet tbe financing and marketing thresholds. There is no discussion of this issue
in tbe [mal development agreement, due to tbe fact tbat MetroPlains has decided tbe Bluff
Block condos and commercial units will be for-sale only.
Requested Actions
The HRA has taken tbe lead witb tbe Downtown Revitalization Project and made
recommendations to tbe City Council when necessary. The Bluff and Jackson Block projects
meet tbe HRA and City Council's primary goal and objectives of the Downtown
Revitalization Project as described in tbe attached Project Description. Therefore staff
requests tbat tbe HRA recommend tbat tbe City Council consider approval of tbe following
resolutions:
1. Resolution Authorizing Execution of A Development Agreement
The resolution autborizes tbe Mayor and City Administrator to execute tbe agreement
on behalf of tbe city. The resolution also sets wage and job goals for tbe project at
zero. The development agreement identifies tbe subsidy for each component of tbe
project and the exemptions from tbe Business Subsidy Act, witb tbe exception of tbe
Jackson Block Commercial Subsidy.
2. Resolution Approving The Terms of Internal Loan in Connection with
Downtown Phase I Tax Increment Financing District No. 22 (SAC)
3. Resolution Approving The T enns of Internal Loan in Connection with
Downtown Phase I Tax Increment Financing District No. 22 (WAC)
4. Resolution Approving The Terms of Internal Loan in Connection with
Downtown Phase I Tax Increment Financing District No. 22 (Land)
Staff requests tbat tbe City Council consider tbe HRA's recommendation in its adoption of
the above resolutions.
DoUJ1ttoUJ1t; 1(wit~ft;
City of PROJECT DESCRIPTION
Elk - --,
River - -,
NOVEMSER 2004
Enhancing Downtown Elk Rivers Role
As a Vital Retail, Commercial and Residential Area.
Primary Goal of Downtown
Revitalization Project:
The City of Elk River has partnered with MetroPlains
Development to assure the long-term viability of
downtown by making a connection to the rest of the
community and by utilizing the riverfront location.
Redevelopment will enhance downtown Elk River's
role as a residential, retail and commercial area
and also revitalize investment in the downtown
business district.
Development Objectives:
. Mixed use (residential/retail/service)
. Consideration of the historic context study results
. Strengthen connection to the community
. Traditional downtown design elements
. Brick, stucco, stone materials with visual breaks in
the building design
. Increased residential density
. Pedestrian orientation
. Increase exposure to the riverfront
. Recognize those buildings that have potential
for rehabilitation
. Replace market/economic obsolete buildings
. Multiple types of housing products (ie. town homes,
senior rental coops, market rate apartments)
. BLUFF BLOCK DEVELOPMENT
- Approx. 10,000 sq. ft. commercial on first floor
along Main SI.
- 60 to 68 units of for-sale housing
- 3 and 4 storias
- Approx. 110 bslow grade parking stalls
- Connsction to City with plaza on corner of
Main SI. and Cty. Rd. 42 and potential
connection to rivsr walk
. JACKSON BLOCK DEVELOPMENT
- Approx. 10,000 sq. ft. commercial on first floor
along Jackson Avs. and at the corner of Jackson
Avs. and Main SI.
- 32 units rental housing
- 3 stories
- Approx. 50 below grade parking stalls and
16 surlacs parking stalls
. BLUFF BLOCK DEVELOPMENT
~.......~ ~--...........
.
. JACKSON 8LOCK DEVELOPMENT
City of Elk River
Downtown Revitalization Project
Planning & Project History
1970 Elk River Central Business District Report (Nason, Wehrman, Knight &
Chapman Inc., Mpls) is developed and provides general guidelines for physical
appearance, movement patterns, and development potentials of the CBD
for years 1970-1990.
. Unify existing and new buildings for distinct unique character
. Remove traffic conflicts (eg overpass between North & South Hwy 10)
. Provide adequate parking (eg parking ramp)
. Utilize natural setting of Mississippi River (eg restaurant)
1982 Elk River Downtown Redevelopment Plan (Zack Johnson & Associates Inc.)
establishes a long-range guide for evaluating physical improvements, developing
zoning policies, establish priorities in capital improvements and identifying
redevelopment opportunities.
. Rehab buildings that City fInds architecturally & historically signifIcant (eg
establish design standards)
. Concentrate retail/office south of Hwy 10
. Concentrate service business north of Hwy 10
. Concentrate high-density residential west of Lowell
. Priority Redevelopment Areas:
- Town Square - for retail/offlce space and municipal parking
- King & Main - for offlce space
- Star News buildings to cinema building - for 2-story retail/office
1986 The City and Chamber work with the Governor's Design Team to develop an
overall plan for the CBD. The river is stressed as an amenity to focus on.
. Promote downtown as "unique historic river town"
. Link with open space & trail system
. Utilize river with restaurant/hotel/ community center
. Consider parking ramp for heavy traffIc areas
1988 The Central Business District Redevelopment Project results in a theme for CDB
fIxtures, trees, and sidewalks in the downtown area. The project is paid for via
assessments and City, HRA, and Utility funds.
Downtown Riverfront Revitalization
Planning and Project History
Page 2 of9
Elk River Riverwalk Project (Brauer & Associates Ltd, Eden Prairie) creates
riverwalk design and financial feasibility for new building proposed for Hardware
store site.
. Create more retail/service traffic via restaurant
. Generate interest in Mississippi River via boardwalk trail
. Develop design standards
1989 Following the purchase of the Hardware store site, the EDA improves the site for
use as public green space. In 2000, the EDA turns the property over the City for
parkland.
1990 Riprap is installed along the riverbank in the CBD for erosion control in 1990 and
again in 1995. The project is funded by a grant from the Sherburne County Soil and
Water Conservation District and matched by the City and HRA.
The EDA and Dr. Tony J armoluk redevelop the NE corner of Main St. and Lowell
Ave as a new dental clinic.
1992 The city demolishes the old creamery building and then assists
The chamber in 1994 in relocating their building to the site.
Parking lot at Jackson Square is improved by the HRA. In 1993 the city purchases the
BNRR parking lots for CBD patrons and the HRA improves one of the lots in 1994.
In 1995, improvements are made to the parking lot behind Kemper Drug.
1994 A Riverwalk Corridor Committee is formed to spearhead riverwalk effort. A
Riverwalk Plan (Hoisington-Koegler Group Inc.) is developed for the CBD, and is
envisioned for the beginning of a trail system along the river.
. Interpretive walk/bike trail depicting early transportation history of region
1996 The city applies for an ISTEA grant to fund the Riverwalk Project, but the application
is rejected. Phasing of the project is considered but no action is taken.
1997 HRA acquires the King and Main site and removes the existing structures. The
proposal to immediately redevelop the site with a 12,000 commercial building falls
though. A number of other concepts for the site are later proposed, but none
materialize.
1998 The HRA hires Theresa Washburn to lay the foundation for developing a downtown
plan master plan. Ms. Washburn submits the Central Business District Action Plan in
January of 1999. Implementation of the Action Plan begins but participation levels
from citizens drop.
a. Public Improvement Goals: plan to utilize river, art center, pedestrian pathway,
beautification plan
Downtown Revitalization Project
Planning and Project History
Page 3 of9
Summer
Fall
March
April
May
b. Private Improvement Goals: sign ordinance, facade improvements to highlight
historic character, interior standards, new construction to compliment historic
character
c. Activities & Events Goals: Heritage Festival, develop winter festival, develop
mural event
d. Business Activity Goal: complete market analysis
1999 The EDA, Council, and HRA review the Strategic Plan for Economic Development
and lower downtown's priority.
2000
King and Main is sold to the First National Bank of Elk River, which plans to
construct an office building on the site. Downtown is listed as a top priority at
Operation ER's October meeting.
HRA authorizes staff to complete Downtown Redevelopment Plan to identify priority
redevelopment sites and guide desired development. Plan to include inventory of
properties, conditions, vision and implementation.
2001
HRA directs staff to research details of two Main Street properties for sale (ECM
Publishers)
HRA considers information on property sale and directs staff to work with private
developers for redevelopment proposals for the site/area. Staff sends listing agent a
list of developers specializing in retail/ office mixed uSe developments.
Staff receives interest in redevelopment from property owner, Nadeau's, and interest
from two developers: KIaus-Anderson/Best & Hempel and Marly
Glines/Dynamics Design.
Joint work session between HRA, Planning Commission & River's Edge Assoc.
Staff presents results of market analysis, and assessment of building condition &
historic significance for discussion of redevelopment opportunities.
Staff request preliminary development concepts from two interested developers for
review and discussion by HRA. Riverfront property owners notified of developer
interest.
HRA authorizes the completion of new paver brick sidewalks in the CBD in
conjunction with Municipal Utilities electric line relocation project. New trash
receptacles, trees, and flowerpots added to beautify downtown.
Downtown Revitalization Project
Planning and Project History
Page 4 of9
June Joint work session with HRA, Planning Commission & River's Edge Assoc. Priority
projects and design principles ranked. Group identifies the redevelopment of ECM
Publisher/Riverfront property as a priority project.
HRA considers presentation of development concept by Best & HempeL
HRA provides feedback and requests additional information on development
concept including:
. Sufficient parking
. Amount of housing
. Sufficient land area for proposed project
. Financial feasibility
HRA directs staff to work with developer to present financial feasibility and proposal
for HRA assistance.
July Heritage Preservation Commission (HPC) recommends completion of historic
context study prior to HRA action on development proposal for downtown Elk
River.
August AMCON Construction requests information on any redevelopment opportunities.
HRA directs staff to request development proposals from broader group of
developers. HRA authorizes completion of historic context study for year 2001,
completion early 2002. Redevelopment work session with Ehlers & Assoc.
scheduled for Sept. HRA meeting.
September HRA works with Ehlers & Associates to facilitate Downtown Revitalization
Project.
October HRA develops problem statement, identifies core CBD as focus area. HRA
develops primary goal: To assure the long-term viability of downtown by making a
connection to the rest of the community and utilizing the riverfront location.
December HRA reviews preliminary design concepts and discusses development strategies.
2002
February
1" edition Downtown Revitalization Q & A Newsletter distributed via Elk River Star
News insert and at Open House.
HRA revisits design objectives, concepts, and development strategies. An Open
House was held to gather public input. Comment forms were gathered from the
public.
March
Staff mailed 98 Requests for Proposals to prospective developers.
Downtown Revitalization Project
Planning and Project History
Page 5 of9
April
May
June
July
August
2"" edition Downtown Revitalization Q & A Newsletter distributed via Elk River
Star News insert.
Pre-proposal meeting was held to provide additional details to developers wishing to
submit proposals.
Five developets submitted concept proposals for a downtown revitalization project.
Staff conducted reference checks, site visits, and preliminary interviews as part of the
initial proposal evaluation process. Ehlers & Associates provided Tax Increment
Financing projections of each concept proposal.
Carole Zellie of Landscape Research presented the HRA with the Historic Context
Study of the CBD.
HRA selected MetroPlains, TOLD, and Best & Hempel to interview and scheduled
and open house for public review and comment.
Open House is held to gather public input on development concepts of three finalist
developers. HRA & City Council completes interview of the three fInalist
developers.
HRA selects MetroPlains for which to enter into a Preliminary Redevelopment
Agreement. City Council ratifIes the HRA's selection of MetroPlains.
September HRA reviews draft of 3'd edition project Q& A newsletter.
October
Request for Proposals sent to engineering fIrms for completion of property TIF
redevelopment eligibility assessment services.
3'" edition Downtown Revitalization Q & A newsletter distributed via Elk River Star
News insert.
HRA approves Preliminary Redevelopment Agreement with MetroPlains.
HRA and City Council consensus that the HRA will be the lead agency on the
redevelopment project.
November MetroPlains selects JLG Architects for the Elk River project. MetroPlains selects
Ken Brooks of KJB Real Estate Services as the broker to contact property owners
who may be part of development concept area. City mails letter notifYing property
owners of possible contact from broker.
HRA authorizes S.E.H. to complete property TIF redevelopment eligibility
assessment services for proposed project area.
Downtown Revitalization Project
Planning and Project History
Page 6 of9
December Regular HRA meeting cancelled due to lack of pressing agenda items.
2003
January
February
March
April
May
June
June
June
June
The HRA held a joint meeting with the Heritage Preservation Commission regarding
recommendations of local historic significance in the downtown area. While the
HPC noted many of the buildings in the downtown are may have local historic
significance, the HRA directed the developer, MetroPlains, to proceed with the
original proposal area. The HRA further directed the developer to explore the
feasibility of renovation and reuse of the former Cinema Building and Dick's Main
Tap prior to including as part of the redevelopment project. MetroPlains has
indicated that the two buildings are not presently being considered in the proposed
project areas. The HRA approves a policy on interfund loans for a downtown TIF
district.
Staff provided update to HRA on the project communications and status of the tax
increment financing eligibility assessment activities.
MetroPlains requests the HRA's consideration of a 6-month extension on the
preliminary redevelopment agreement timeframe. HRA reviews draft of new
downtown district zoning standards. HRA requests revisions and a second review.
HRA approves 6-month extension of preliminary redevelopment agreement
time frame. HRA calls special meeting for June to hear MetroPlains' presentation on
redevelopment plan options.
4'h edition of Downtown Revitalization Q&A Newsletter distributed via Elk River
Star News insert. HRA considers proposal from property owner for the purchase
641 Main Street. HRA consensus to not purchase 641 Main Street at this time.
MetroPlains Development presents design concept options at the HRA Special
Meeting. HRA directs MetroPlains to proceed in taking the design concept for
Jackson Block and Bluff Block to a public open house for feedback.
Public Open House held at Lion's Park Center, 6 - 8:00 p.m. Comment forms
provided for staff to collect feedback to compile and share with the HRA and
Council.
MetroPlains Development presents design concept options at the City Council
Meeting.
City staff presents comment forms and summary at the HRA Special Meeting.
HRA directs city staff and MetroPlains to prepare a list of Development Agreement
issues that would be brought back to the HRA for consideration.
Downtown Revitalization Project
Planning and Project History
Page 7 of9
HRA approves city staff and MettoPlains to submit a Multifamily and Housing Tax
Credit application to the MN Housing Finance Agency. HRA recommends that the
City Council provide support of the MHF A application and favorable consideration
to a Letter of Understanding to ttansfer the city-owned Jackson Block property.
July
City Council approves the adoption of resolution 03-42 of support of a proposal by
MettoPlains Development, LLC to consttuct housing rental units in the City of Elk
River.
City Council approves the Letter of Understanding between the City of Elk River
and MettoPlains Development, LLC for the future sale of the city-owned Jackson
Block Property.
Members of the public, downtown business/property owners present issues and
concerns to the HRA and City Council. HRA and Council direct staff to research
and provide response to a list of issues including, but not limited to: parking,
residential tenants, and Jackson Square property.
August
HRA and Council consider city staffs research to issues and questions raised by the
public with regard to the MettoPlains redevelopment concepts.
5'h edition of Downtown Revitalization Q & A Newsletter distributed via Elk River
Star News insert.
September HRA approves recommendation to City Council to authorize staff to proceed in
submitting a Small Cities Development Progtam Grant Application to the MN
Department of Employment & Economic Development for the purpose of
obtaining grant funds for a commercial and residential rental rehabilitation, and new
residential rental consttuction in the Downtown Revitalization Project Area.
October City Council considers HRA recommendation regarding the Small Cities
Development Progtam application and calls for a public hearing on October 27,
2003 at 6:30pm at the Elk River High School Little Theater.
MettoPlains is awarded its tax credit application from MN Housing Finance Agency.
HRA extends Preliminary Redevelopment Agteement with MettoPlains up to
January 30, 2004 to provide sufficient time to work together toward a Development
Agreement. City Council holds public hearing on the Small Cities Development
Program Grant Application and approves two resolutions regarding the grant
application.
November Staff provides project update of development agreement issues, Jackson Square title
issues, and research of parking options. The HRA directed the development team to
meet with business owners downtown to gather input on critical parking issues. The
feedback will be used by staff as part of the parking options to be presented to the
HRA at an upcoming meeting.
Downtown Revitalization Project
Planning and Project History
Page 8 of9
January
February
March
April
May
June
July
2004
Staff presents detailed parking options and an update on development agreement
issues. The HRA discussed the development agreement issues in length and
concurred that the project should include both the Jackson and Bluff Block
developments and that provisions must be made in the development agreement to
ensure both developments occur.
HRA extends Preliminary Redevelopment Agreement with MetroPlains until April 5,
2004. Staff presents fmdings and recommendations from one-to-one meetings with
business and property owners regarding project issues and parking options.
HRA holds special joint meeting with the City Council regarding the project history
and development agreement issues. The consensus of the Council and HRA was
that the two projects (Bluff Block and Jackson Block) should both occur.
City receives MN Department of Employment and Economic Development
(DEED) Small Cities Development Program (SCDP) grant for funding in the
amount of $400,000 toward the proposed new housing construction for the Jackson
Block.
MetroPlains receives a portion of their second round tax credit request from MN
Housing Finance Agency for the Jackson Block housing.
HRA approves key points to be included in a fmal Development Agreement with
MetroPlains Development, LLC.
6'h edition of Downtown Revitalization Q & A Newsletter distributed via Elk River
Star News insert.
MetroPlains closes on purchase agreement of 641 Main Street (Richard Hinrichs)
property. The relocation advisor begins contact with many of the downtown
property owners and tenants.
HRA adopts a resolution requesting that the City Council schedule a public hearing
on the proposed TIF Plan for the project. City Council adopts a resolution calling
for a public hearing on the TIF Plan for September 20, 2004.
August Staff continues to meet regularly with MetroPlains and Ehlers to discuss ongoing
project issues. A master timetable is prepared and distributed to the HRA. Planning
Commission adopts a resolution that the TIF Plan is consistent with the general
plans of the City.
September Ehlers presents TIF No. 22 Plan summary to HRA. HRA recommendation to City
Council on TIF Plan is postponed due to adding 4 new parcels to the TIF District.
Downtown Revitalization Project
Planning and Project History
Page 9 of9
City Council public hearing on the TIF Plan is rescheduled to November 1, 2004.
County and School District to be re-notified.
October
Ehlers presents revised TIF No. 22 Plan to HRA. HRA adopts resolution
recommending that the City Council approve the TIF No. 22 District and Plan.
Planning Commission and City Council approve Preliminary Plat for Jackson Block
and for Bluff Block. Planning Commission adopts resolution finding that the TIF
Plan conforms to the general plans for development and redevelopment for the city
as a whole.
November Staff requests HRA and City Council direction regarding project schedule. HRA and
City Council consensus on the following schedule:
2005
Winter/Spring
Spring
Summer
Summer
Fall
Fall
Activity
Acquisition of Bluff properties completed
Construction of King Avenue parking lot
Demolition and environmental cleanup of Bluff, except USBank
Construction start of Jackson Block
USBank vacation and demolition
Bluff Block new construction start
City Council holds public hearing on the establishment ofTIF District No. 22 and
awarding of a business subsidy. Following the public hearing the City Council
adopts resolution approving the TIF Plan.
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MEMORANDUM
TO:
MetroPlains
FROM:
City Staff
Ehlers & Associates, Inc.
Briggs and Morgan, PA
DATE:
April 28, 2004
RE:
Proposed MetroPlains Project
Two memorandums dated April 7, 2004 and April 22, 2004, to MetroPlains were
prepared by the City and it's representatives. These memorandums were based on financial data
provided to Ehlers & Associates by MetroPlains. Two memorandums dated April 16, 2004 and
April 28, 2004 were prepared by Larry Olson of MetroPlains.
This updated memorandum incorporates the comments and requests of MetroPlains that
are acceptable to City Staff, Ehlers & Associates and Briggs and Morgan and is based on
financial data submitted by MetroPlains.
Prior to the preparation of a Development Agreement in connection with the proposed
Bluff Block project and Jackson Block project we thought it would be helpful to set forth in a
memorandum certain key points to be included in the Development Agreement.
These points are as follows:
1. Linkage between the Jackson proiect and the Bluffproiect.
Concerning the linkage of the Jackson and Bluff projects and all of the provisions relating
to linkage, it is becoming increasingly apparent that the City's requirements will not pennit
construction of the Jackson Block to start before the Bluff Block. Therefore, MetroPlains is
willing to commit that Bluff Block construction will commence prior to or simultaneously with
construction of the Jackson Block.
2. Amount ona:>( increment financing assistance.
The Development Agreement will identify the amount of tax increment financing
assistance for both the Bluff and Jackson projects. Relative to the discussion about the tax
increment notes and the formation of the tax increment district(s), MetroPlains and the City
agree to consider structuring the districts within the limitations of the tax increment financing
law, to achieve maximum flexibility (i) in the permissible use of the tax increments between the
two projects; and (ii) the pledge of tax increment to the payment of the notes.
1643076vl
AP R, 30, 2004 9: 40AM
METRO, PLAINS
NO, 167
p, 3
The note(s) for the Jackson project will be issued when the construction financing for the
Bluff project closes and after the building pennit for Bluff project is issued.
The Development Agreement will contain a "look back" method for both the Bluff and
Jackson projects. With regard to the look back provision for the for-sale residential portion of
the Bluff Project, MetroPlains understands that it will be allowed a specific amount of profit tied
to a percentage of the total cost of acquiring and constructing the for-sale portion of the Bluff
Project. If after the sale of all of the units MetroPlains' profit exceeds the allowed profit, the
HRA's assistance for that portion of the project will be reduced. On the rental housing and
commercial portion of the Jackson and Bluff projects MetroPlains will be allowed development
fees and a return on equity based on a preliminary sources and uses statement. To the extent that
final costs are less than those shown in the preliminary sources and uses statement increasing
MetroPlains' return, the assistance for that portion of the project will be reduced,
The amount of profit, return and fees that the amount of tax increment financing will be
based on and the "look back" method will be based on is as follows:
Bluff Block
For-sale housing-l 0% of costs
Commercial-5% development fee, market rate leasing commissions and a 12% cash on
cash rate of return
Jackson Block
Rental Housing-12% developer fee based on costs approved by MHFA
Commercial-5% development fee, market rate leasing commissions and a 12% cash on
cash rate of return
The Development Agreement will provide that any reduction of the assistance for one of
the phases of the project will be offset by verifiable increased costs on other phases,
3. SACfW AC/Park DedicatioDiBuildinll Permit Fees.
The City is willing to reduce or waive in their entirety the SAC and WAC fees, if
necessary, to make the projects feasible, MetroPlains acknowledges that the City's utility
commission must approve these reductions or waivers. The City will not reduce park dedication
fees, building permit fees or other applicable City application and development fees that are
payable in connection with the projects. MetroPlains is not in a position to bear the tax
increment inflation risk. MetroPlains agrees that the City can recapture these amounts from tax
increments derived from inflation. The City will recommend to the Park and Recreation Board
that the park dedication fees are used for park, boardwalk, gazebo relocation and other
improvements related to the downtown redevelopment.
2
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METRO, PLAINS
NO, 167
p, 4
4. Cost of the Bluff Block.
The Development Agreement will identify the purchase price that MetroPlains must pay
to acquire the Jackson Block.
In addition to being v.illing to reduce the SAC and WAC fees, if necessary, to make the
projects feasible the City is willing to reduce the cost of the Jackson Block in its entirety if
necessary. However, the City is willing to reduce the SAC and WAC fees and the cost of the
Jackson Block only if construction of the Bluf'fBlock occurs. MetroPlains a"arees that the City
can recapture the value of the Jackson Block from tax increments derived from inflation.
5. Issuance of City Tax Increment Bonds.
The Development Agreement will state that in order to enable MetroPlains to achieve the
profit, fees and rate of return contemplated by this memorandum, the City will consider issuing
revenue or general obligation tax increment bonds to refinance the Bluff Block tax increment
revenue notes.
The City will consider issuing General Obligation Tax Increm.ent Bonds subject to the
following conditions;
. it is determined that the construction of the Bluff project will not occur without
the issuance of the bonds;
· the principal amount of the bonds will not exceed the amount of tax increment
generated by the Bluffproject;
. bonds will not be issued for the Jackson project.
. bonds will not be issued until the construction financing closes on the Bluff
proj ect;
· personal guarantees of shortfall in tax increments will be required from principals
of Metro Plains or MetroPlains' parent company, MetroPlains Properties, Inc. if determined by
Ehlers and Associates to have sufficient net worth and asset liquidity;
. no profit can be taken out of the Bluffproject by MetroPlains until the actual
market value of the completed Bluff project is determined and the actual amount tax increments
generated by the Bluffproject is established;
· if tax increments are less than expected, developer profit will be used to pay the
debt service on the bonds;
. minimum sale prices established for the Bluff housing units cannot be changed
without liRA consent.
3
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NO, 167
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6. Purchase of Bluff Block properties.
The City will not finance the acquisition of the Bluff Block properties. lfthe actual cost
of acquiring and carrying the Bluff Block properties is greater than the costs contained in the
fmancial analysis prepared by Ehlers & Associates, it is agreed that the financial analysis will be
recalculated and the City is willing to consider the reduction of SAC and WAC fees and the cost
of the Jackson Block in order to make the Bluffproject feasible.
7. Type of Bluff Block Proiect.
MetroPlains is wil!ing to proceed with the Jackson and Bluff Blocks linked. If efforts to
fmance and market the Bluff Block show that financing and marketing tbIesholds cannot be
achieved and if MetroPlains has by that time expended substantial amounts of money and time
on design, marketing and approvals, the Development Agreement wil! state that the HRA and
MetroPlains will explore the feasibility of other types of projects on the Bluff Block, including a
combination of commercial and rental (if market rate) and/or for-sale housing.
Accepted by MetroPlains this J.. q TfJ day of ~ 2004.
METROPL~SDEVELOPMENT,LLC
tfy
4
1643076vl
DEVELOPMENT AGREEMENT
BY AND BETWEEN
CITY OF ELK RIVER, MINNESOTA
AND
METRO PLAINS DEVELOPMENT, LLC
December 6, 2004
1674205v8
TABLE OF CONTENTS
Pa!!e
ARTICLE I DEFINITIONS ................................................................................................. 3
Section 1.1 Definitions............................................................................................ 3
ARTICLE II REPRESENTATIONS AND WARRANTIES.............................................. 12
Section 2.1 Representations and Warranties of the City....................................... 12
Section 2.2 Representations and Warranties by the Developer ............................ 13
ARTICLE III CONVEYANCE OF Jackson Block Property............................................... 15
Section 3.1 Purchase and Sale ofJackson Block Property ...................................15
Section 3.2 As Is Conveyance ..............................................................................16
Section 3.3 Title Review Process..........................................................................16
Section 3.4 Purchase Price....................................................................................17
Section 3.5 Acquisition of the Bluff Block Property. ...........................................17
Section 3.6 Contingencies to Closing on Jackson Block Property....................... 19
Section 3.7 Closing .................................................................................. ............. 20
Section 3.8 Closing Costs ..................................................................................... 21
ARTICLE IV CONSTRUCTION OF MINIMUM IMPROVEMENTS .............................. 22
Section 4.1 Construction Plans. ............................................................................ 22
Section 4.2 Construction of Minimum Improvements ......................................... 22
Section 4.3 Commencement and Completion of Construction............................. 23
Section 4.4 Effect of Delay. ....... ........................................................................... 24
Section 4.5 Compliance with Environmental Requirements ................................ 24
Section 4.6 Additional Responsibilities of the Developer .................................... 24
Section 4.7 Certificate of Completion ..................................................................24
ARTICLE V TAX INCREMENT ASSISTANCE; DEVELOPER PAyMENTS.............. 26
Section 5.1 Creation of Tax Increment District and Amendment of Tax
Increment Financing Plan ..................................................................26
Issuance of Tax Increment Revenue Note ......................................... 26
Reduction of Assistance..................................................................... 28
Review of Taxes ................................................................................ 29
Use of Tax Increments .......................................................................30
Business Subsidy Act............. ............................................................ 30
Developer Payments and Reimbursement ......................................... 31
Issuance of Tax Increment Revenue Refunding Bonds..................... 31
Issuance of Parking Lot Note.............................................................32
Section 5.2
Section 5.3
Section 5.4
Section 5.5
Section 5.6
Section 5.7
Section 5.8
Section 5.9
ARTICLE VI ENCUMBRANCE OF THE DEVELOPMENT PROPERTy...................... 35
Section 6.1 Encumbrance of the Development Property...................................... 35
Section 6.2 Copy of Notice of Default to Mortgagee ...........................................35
Section 6.3 Mortgagee's Option to Cure Events of Default.................................. 35
Section 6.4 Defaults Under Mortgage ..................................................................35
Section 6.5 Subordination of Agreement..............................................................35
ARTICLE VII DEVELOPER COVENANTS .......................................................................36
Section 7.1 Insurance ............................................................................................ 36
Section 7.2 Maintenance and Operation ofthe Development .............................. 36
1674205v8
TABLE OF CONTENTS
Pa!!e
ARTICLE VIII TRANSFER LIMITATIONS AND INDEMNIFICATION.......................... 37
Section 8.1 Representation as to Deve10pment.....................................................37
Section 8.2 Limitations on Transfer...................................................................... 37
Section 8.3 Indenmification.................................................................................. 38
Section 8.4 Limitation........................................................................................... 40
ARTICLE IX EVENTS OF DEFAULT AND DAMAGES ................................................41
Section 9.1 Events of Default Defined .................................................................41
Section 9.2 Developer Events ofDefault.............................................................. 41
Section 9.3 City Events of Default ....................................................................... 42
Section 9.4 City Remedies on Default.................................................................. 42
Section 9.5 Developer Remedies on Default ........................................................ 43
Section 9.6 No Remedy Exclusive........................................................................ 43
Section 9.7 No Additional Waiver Implied by One Waiver................................. 43
ARTICLE X ADDITIONAL PROVISIONS ...................................................................... 44
Section 10.1 Conflicts ofInterest............................................................................ 44
Section 10.2 Titles of Articles and Sections ........................................................... 44
Section 10.3 Notices and Demands ........................................................................44
Section 10.4 Counterparts....................................................................................... 44
Section 10.5 Law Governing .................................................................................. 44
Section 10.6 Consents and Approvals .................................................................... 45
Section 10.7 Representatives ..................................................................................45
Section 10.8 Superseding Effect.............................................................................45
Section 10.9 Relationship of Parties ....................................................................... 45
Section 10.10 Term ...................................................................................................45
Section 10.11 Venue ................................................................................................. 45
Section 10.12 Provisions Surviving Rescission or Expiration.................................. 45
EXHIBIT A BLUFF BLOCK PROPERTY .............................................................................. A-I
EXHIBIT B JACKSON BLOCK PROPERTY ......................................................................... B-1
EXHIBIT C QUIT CLAIM DEED............................................................................................ C-1
EXHIBIT D CERTIFICATE OF COMPLETION ....................................................................D-1
EXHIBIT E FORM OF TAX INCREMENT REVENUE NOTE............................................. E-1
EXHIBIT F FORM OF PARKING LOT NOTE........................................................................F-1
EXHIBIT G ELIGIBLE COSTS ............................................................................................... G-1
EXHIBIT H CONSTRUCTION SCHEDULE .......................................................................... H-1
EXHIBIT I ESTIMATED SOURCES AND USES STATEMENT ...........................................1-1
EXHIBIT J UPDATED SOURCES AND USES STATEMENT .............................................. J-1
EXHIBIT K FINAL SOURCES AND USES STATEMENT...................................................K-1
EXHIBIT L FORM OF PROFIT STATEMENT ...................................................................... L-1
EXHIBIT M FINAL PROFIT STATEMENT.......................................................................... M-1
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TABLE OF CONTENTS
Pae:e
EXHIBIT N FORM OF CASH FLOW STATEMENTS .......................................................... N-l
EXHIBIT 0 FINAL CASH FLOW STATEMENTS ................................................................ 0-1
EXHIBIT P OWNER UPGRADE OPTIONS............................................................................P-1
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DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT is made and entered into this 6th day of
December, 2004, by and between the CITY OF ELK RIVER, MINNESOTA, a municipal
corporation and political subdivision organized and existing under the laws of the State of
Minnesota (the "City"), and METROPLAINS DEVELOPMENT, LLC, a Minnesota limited
liability company (the "Developer").
RECITALS
WHEREAS, pursuant to Minnesota Statutes, Section 469.124 through 469.134, the City
has formed Municipal Development District No. 1 (the "Development District") and has adopted
a development program therefor (the "Development Program") for the Development District
which sets forth development objectives for the Development District. A major objective of the
Development Program is to foster the development of owner occupied and rental housing
facilities in the Development District;
WHEREAS, the Developer has submitted a proposal to the City in connection with the
construction in the Development District of a rental housing and owner occupied housing
development and commercial redevelopment;
WHEREAS, the Developer intends to acquire approximately one acre of real property
located in the Development District (the "Development Property"), demolish and clear the
existing structures and construct approximately 68 units of owner-occupied housing and
approximately 10,820 square feet of retail space, together with related parking facilities (the
"Bluff Block Development") on the portion of the Development Property legally described in
Exhibit A hereto (the "Bluff Block Property") and construct approximately 32 units of rental
housing and approximately 13,000 square feet of retail space, together with related parking
facilities, (the "Jackson Block Development") on the portion of the Development Property
legally described in Exhibit B hereto (the "Jackson Block Property") (the "Bluff Block
Development" and the "Jackson Block Development" being collectively referred to herein as the
"Minimum Improvements");
WHEREAS, under Minnesota Statutes, Sections 469.174 through 469.1799, as amended
(the "TlF Act"), the City is authorized to finance certain public redevelopment costs of a
municipal development district with tax increment revenues derived trom a tax increment
financing district established within such redevelopment project;
WHEREAS, the City has heretofore adopted a tax increment financing plan and created
and established the Downtown Phase I Tax Increment Financing District No. 22 as a
redevelopment tax increment district pursuant to the TIF Act (the "Tax Increment District");
WHEREAS, the City has agreed, on the terms and conditions set forth in this Agreement
to issue its Tax Increment Revenue Note (as hereinafter defined) to reimburse the Developer for
certain Eligible Costs (as herein defined) of the Minimum Improvements and to issue its Parking
Lot Note (as herein defined) to reimburse the Developer for the cost of constructing the Parking
Lot (as herein defined);
1 674205v8
WHEREAS, the City believes that the development of the Development Property, as
more fully set forth in this Agreement, is in the best interests of the residents of the City and will
facilitate the redevelopment of blighted areas in the City, and increase opportunities for owner
occupied and rental housing, and will otherwise benefit the health, safety, morals and welfare of
the residents of the City, in accordance with the public purpose and provisions of the applicable
State and local laws and requirements under the Development Program; and
NOW, THEREFORE, in consideration of the premises and the mutual obligations of the
parties hereto, each of them does hereby covenant and agree with the other as follows:
1674205v8
2
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. All capitalized terms used and not otherwise defined herein
shall have the following meanings unless a different meaning clearly appears from the context:
"Acquisition Costs" means all of the costs incurred by the Developer in connection with
the acquisition of the Development Property, including but not limited to, the purchase price paid
to acquire the Development Property, broker fees, holding costs including interest on debt
incurred to finance the acquisition, any taxes, assessments or utilities required to be provided or
paid by the Developer as a result of its acquisition of the Development Property, all costs for
appraisers, title work, legal proceedings, and any federal, State or local relocation benefits.
"Administrative Expenses" shall have the meaning given such term in the Tax Increment
Act.
"Affiliate" means any Person directly or indirectly controlling or controlled by or under
direct or indirect common control with a Person and any purchaser of all or substantially all of
the assets of such Person. For this purpose, "control" means the power to direct management and
policies, directly or indirectly, whether through ownership of voting securities, by contract or
otherwise, and the terms "controlling" and "controlled" have correlative meanings.
"Agreement" means this Development Agreement as the same may be from time to time
modified, amended or supplemented.
"Allowable Profit" means the Profit of the Developer in an amount equal to 10% of Total
Development Costs with respect to the Bluff Block Housing Project and 10% of Total
Development Costs with respect to the portion of the Bluff Block Commercial Project.
"Available Tax Increment" means the Tax Increment received and retained by the City,
less the amount of Tax Increment, if any, which the City must pay to the school district, the
County and the State pursuant to Minnesota Statutes, Sections 469.177, subds. 9, 10, and 11;
469.176, subd. 4h; and 469.175, subd. la, as the same may be amended from time to time.
"Bluff Block Commercial Project" means approximately 10,820 square feet of retail
space, together with related parking facilities, to be constructed on the Bluff Block Property.
"Bluff Block Development" means the demolition and clearance of the existing structures
located on the Bluff Block Property and the construction of the Bluff Block Housing Project and
the Bluff Block Commercial Project.
"Bluff Block Housing Project" means approximately 68 units of owner-occupied
housing, together with related parking facilities, to be constructed on the Bluff Block Property.
"Bluff Block Property" the real property legally described in Exhibit A hereto.
1674205v8
3
"Business Day" means any day except a Saturday, Sunday or a legal holiday or a day on
which banking institutions in the City are authorized by law or executive order to close.
"Cash Flow Determination Date" means the first day ofthe first month that is sixty (60)
days after both the Bluff Block Development and the Jackson Block Development are 80%
leased and/or sold or such earlier date as the City may require.
"Cash Flow Statement" means the cash flow statement provided by the Developer
pursuant to Section 5.3 and to be attached as Exhibit 0 hereto in substantially the form and
content as set forth in Exhibit N hereto, prepared by the Developer setting forth (with respect to
units for which leases have been signed) or forecasting (with respect to units for which leases
have not yet been signed; provided the Developer may assume up to 7% vacancy) the income,
expenses and debt with respect to the Jackson Block Commercial Project and the Jackson Block
Housing Project for the first fiscal year commencing on or after the Cash Flow Determination
Date.
"Certificate of Completion" means the certificate in substantially the form attached
hereto as Exhibit D signed by the City Representative certifying completion ofthe Development.
"City" means the City of Elk River, Minnesota, its successors and assigns.
"City Acquisition Costs" means all costs, expenses, fees and charges incurred by the City
associated with the acquisition by the City of the Bluff Block Property including, but not limited
to, payments for just compensation, court filing fees, court-appointed commissioners' fees,
appraisal fees and expenses, consultant fees and expenses, attorneys' fees and costs, Relocation
Costs and Expenses fees for service of process and any other cost, expense, fee and/or charge
associated with the acquisition of the Bluff Block Property.
"City Council" means the City Council of the City.
"City Documents" means the documents to be executed and/or delivered by the City at
the Closing pursuant to Section 3.7(b) of this Agreement.
"City Representative" means the Administrator of the City or his or her designee.
"Closing" means the closing on the conveyance of the Jackson Block Property by the
City to the Developer.
"Closing Date" means the date on which the City conveys the Jackson Block Property to
the Developer, which date shall be the date the Developer closes on the Construction Loan, or
such later date mutually agreed to by the Parties.
"Completion Date" means the date the Certificate of Completion is executed by the City
Representative or, with respect to each component or unit of the Minimum Improvements, the
date that a comparable certificate of completion is executed with respect to such component or
unit.
1674205v8
4
"Condominium Developer" means Bluff Block, LLC, an affiliate of the Developer, its
successors and assigns.
"Construction Costs" means the capital costs of the construction of the Minimum
Improvements, including, but not limited to, the costs of labor and materials; construction
management and supervision expenses; insurance and payment or performance bond premiums;
architectural and engineering fees and expenses; usual and customary fees or costs payable to the
City or any other public body with regulatory authority over construction of the Development
(e.g. building permits and inspection fees); and all other costs chargeable to the capital account
of the Development under generally accepted accounting principles, excluding Developer's
Overhead Costs.
"Construction Loan" means the construction loan or loans to be made by the
Construction Lender to provide financing for the construction of Minimum Improvements.
"Construction Lender" means a financial institution selected by the Developer.
"Construction Plans" means the plans, specifications, drawings and related documents
for the construction of the Minimum Improvements which shall be as detailed as the plans,
specifications, drawings and related documents which are submitted to the building inspector of
the City.
"County" means Sherburne County, Minnesota.
"Debt Service Coverage Ratio" means the ratio determined by dividing the estimated
annual amount of Pledged Tax Increment to be received in a calendar year by the maximum
amount of principal and interest due in any calendar year.
"Deed" means the quit claim deed executed by the City conveying the Jackson Block
Property to the Developer, in the form attached hereto as Exhibit C.
"Developer" means MetroPlains Development, LLC, a Minnesota limited liability
company, its successors or assigns.
"Developer Event of Default" means the occurrence of an Event of Default set forth in
Section 9.2 hereof.
"Developer's Documents" means the documents to be delivered pursuant to Section
3.7(c) of this Agreement.
"Developer's Overhead Costs" means an amount during the construction and marketing
period of (i) the Jackson Block Housing Project units equal to $205,000; (ii) the Bluff Block
Housing Project units equal to $336,000; provided that such amount does not include any
amount paid to the Condominium Developer as the general contractor for the Bluff Block
Housing Project; (iii) the Jackson Block Commercial Project units equal to $60,000; and (iv) the
Bluff Block Commercial Project units equal to $70,000.
1674205v8
5
"Developer's Representative" means the President of the Developer, or his or her
designee evidenced in writing to the City.
"Development" means the Development Property and the Minimum Improvements.
"Development Property" means the Bluff Block Property and the Jackson Block
Property.
"Eligible Costs" means the costs identified on Exhibit G attached hereto.
"Event of Default" means any of the events described in Sections 9.2 or 9.3.
"Excess Profit" means the total amount of Profit received by the Developer trom Sale of
the units in the portion of the Development in which units are sold and not leased in excess of
Allowable Profit, as determined by the Profit Statements submitted by the Developer and
calculated as described in Section 5.3.
"Excess Funding" means the total amount of Funding for the portion of the Development
in which units are leased and not sold in excess of Total Development Costs of such portion of
the Development, as determined by the Sources and Uses Statement submitted by the Developer
and calculated as described in Section 5.3.
"Fair Market Value" means the estimated fair market value as determined by the "Three
Appraiser Method," whereby the Developer and the City each select an appraiser who submits a
sealed appraisal. Upon simultaneous opening of the two appraisals, Fair Market Value shall be
defined as the arithmetic average between the two appraisals, unless the two appraisals shall be
more than 5.0% apart in value. If the two appraisals are more then 5.0% apart, the two
appraisers shall jointly select a third appraiser and the Fair Market Value shall be determined as
the arithmetic average between the three appraisals. If the two appraisers cannot agree upon the
selection of a third appraiser, either the Developer or the City may submit the selection to
binding arbitration.
"Final Payment Date" means February I, 2032 or on such later date as the City receives
available Tax Increment as a result of the payment of real property taxes that were delinquent on
February I, 2032.
"Funding" means the portion of the Construction Loan, cash equity contributed by the
Developer, the Tax Increment Revenue Note, any additional assistance provided by any other
governmental entity and any other sources of funding for the Minimum Improvements as set
forth in the Sources and Uses Statement.
"Jackson Block Commercial Project" means approximately 13,000 square feet of retail
space, together with related parking facilities, to be constructed on the Jackson Block Property.
"Jackson Block Development" means the demolition and clearance of the existing
structures located on the Jackson Block Property and the construction of the Jackson Block
Housing Project and the Jackson Block Commercial Project.
1 674205v8
6
"Jackson Block Housing Project" means approximately 32 units of rental housing,
together with related parking facilities, to be constructed on the Jackson Block Property.
"Jackson Block Property" means the real property legally described in Exhibit B hereto.
"Lender" means any financial institution to which the Developer assigns its rights to
payments under the Tax Increment Revenue Note.
"Market Value" or "Market Valuation" means the market value of real property as
determined by the assessor of the County in accordance with Minnesota Statutes, Section 273.11
(or as finally adjusted by any assessor, board of equalization, commissioner of revenue, or any
court).
"Minimum Improvements" means the Bluff Block Development and the Jackson Block
Development.
"Owner Upgrades" means any improvements or upgrades in materials used in the
construction of a housing unit selected by the purchaser of such housing unit from the list
attached hereto as Exhibit P.
"Parking Lot" means the parking lot to be constructed by the City on King Avenue in
connection with the construction of the Minimum Improvements.
"Parking Lot Cost" means the cost of the Parking Lot as determined by the City based
on the awarded construction contract, third party engineering fees, contingencies and other
ordinary costs of construction. The amount of the Parking Lot Cost will not exceed $350,000
unless the City and the Developer have agreed in writing.
"Parking Lot Note" means the tax increment revenue note, in substantially the form
attached hereto as Exhibit F hereto to be issued by the City pursuant to the provisions of Section
5.9 hereof.
"Parking Lot Pledged Tax Increment" means, as of any Payment Date, 6% of the lesser
of the actual Available Tax Increment received by the City since the last Payment Date based on
the lesser of the current actual Market Value of the Minimum Improvements as determined by
the County Assessor or the County Assessor's Market Value of the Minimum Improvements as
of the January 2 immediately following the Completion Date.
"Party" means the Developer or the City, as the context may require.
"Parties" means the Developer and the City.
"Payment Date" means each February I and August I, commencing with the first
February I or August I occurring after the date of issuance of a certificate of completion for the
shell of the Bluff Block Development; provided, that if any such Payment Date should not be a
Business Day, the Payment Date shall be the next succeeding Business Day.
1674205v8
7
"Person" means any individual, corporation, partnership, joint venture, limited liability
company or partnership, association, trust, unincorporated organization, or government, or any
agency or political subdivision thereof.
"Placement Agent" means any underwriter or placement agent, cooperatively selected
by the City and the Developer, which assists the Developer in placing the Tax Increment
Revenue Note with a Lender.
"Pledged Tax Increment" means, as of any Payment Date, 89% of the actual Available
Tax Increment received by the City since the last Payment Date based on the lesser ofthe current
actual Market Value of the Minimum Improvements as determined by the County Assessor or
the County Assessor's Market Value of the Minimum Improvements as of the January 2
immediately following the Completion Date.
"Profit" means the amount by which Sales Proceeds exceed Total Development Costs of
the portion of the Development in which units are sold and not leased; provided that if the Profit
Determination Date is prior to the date of the Sale of the last unit to be sold the Developer shall
forecast Profit with respect to units which have not yet been sold based on projected Sales prices
of remaining units and in forecasting such Profits.
"Profit Determination Date" means the first day of the first month that is sixty (60) days
after both the Bluff Block Development and the Jackson Block Development are 80% leased
and/or sold or such earlier date as the City may require.
"Profit Statement" means the profit analysis provided by the Developer pursuant to
Section 5.3 and to be attached as Exhibit M hereto in substantially the form and content as set
forth in Exhibit L hereto, prepared by a firm of certified public accountants reasonably
acceptable to the City calculating the Profit, which shall detail all actual sources and uses of
funds associated with the portion of the Development in which units are sold and not leased and
which shall specifically include a schedule showing any return of equity and distribution of
Profit to the Developer.
"Rate of Return" means (i) the annual "Cash Flow after Financing" for the first fiscal
year commencing on or after the Cash Flow Determination Date as set forth in the Cash Flow
Statement divided by (ii) the "Developer Equity" as set forth in the Sources and Uses Statement
with respect to the Jackson Block Commercial Project to the extent leased and not sold.
"Refunding Bonds" means any tax increment revenue bonds issued by the City
pursuant to Section 5.8 hereof.
"Reimbursement Amount" means the Reimbursement Amount as defined in Section
5.2(a).
"Relocation Costs and Expenses" means any and all relocation assistance, services,
benefits or payments made under 42 U.S.C. g 4601, et. seq., 49 C.F.R. g 24.1 et. seq, and
Minnesota Statutes. Chapter 117.
1674205v8
8
"SAC and WAC' means the sewer access charges and water access charges with respect
to the Development Property in connection with the Minimum Improvements.
"Sale" means any sale, direct or indirect, conveyance, assignment, transfer, exchange or
other disposition of all or a part of the Developer's interest in the units of the Bluff Block
Development, to any Person other than an Affiliate.
"Sale Proceeds" means any and all consideration of any kind whatsoever, whether direct
or indirect, that is received by the Developer (or any other party that is an Affiliate of the
Developer other than broker's commissions and marketing fees in the aggregate amount of 6% of
the Sale price for each unit of the Bluff Block Housing Project paid to the Condominium
Developer or an owner or member of the Condominium Developer) for, or in connection with,
the Sale of the units in the portion of the Development in which units are sold and not leased,
excluding any amounts paid with respect to Owner Upgrades and including without limitation,
the stated purchase prices, cash, notes, and any indebtedness assumed and/or to which the units
in such portion of the Development are then subject, reimbursement of prepaid expenses,
contracts for the Developer's service and the service of an Affiliate of the Developer and
noncustomary net prorations in favor of the Developer. Notwithstanding the foregoing, if the
sale of a unit in such portion of the Development is other than an arms-lengths sale to a third
party, at the option of the City, Sale Proceeds with respect to such sale shall mean the Fair
Market Value of the transferred property less all disposition expenses reasonably approved by
the City.
"Sources and Uses Statement" means the statement provided by the Developer pursuant
to Section 5.3 and to be attached as Exhibit K hereto in substantially the form and content as set
forth in Exhibit I hereto, prepared by a firm of certified public accountants reasonably acceptable
to the City calculating the Total Development Costs and determining the final sources of
Funding, which shall detail all actual sources and uses of funds associated with each portion of
the Minimum Improvements and calculate the amount of any Excess Funding.
"State" means the State of Minnesota.
"Targeted Return" means the Rate of Return of the Developer equal to 12% with respect
to the Jackson Block Commercial Project to the extent leased and not sold.
"Tax Increment" means that portion of the real property taxes generated by the
Development Property and the Minimum Improvements which is actually remitted and retained
by the City as tax increment under the TIF Act.
"Tax Increment District" means the tax increment district commonly referred to as the
Downtown Phase I Tax Increment Financing District No. 22, as the same is amended trom time
to time.
"Tax Increment Revenue Note" or "Note" means the tax increment revenue note, in
substantially the form attached hereto as Exhibit E hereto to be issued by the City pursuant to the
provisions of Section 5.2 hereof.
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"Tax Increment Plan" means that certain Tax Increment Financing Plan, as amended,
for the Tax Increment District approved by the City Council.
"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, or the State Supreme Court.
"TIF Act" means Minnesota Statutes, Sections 469.174-469.1799, as amended, or any
successor statutes.
"Title Company" means a title company mutually acceptable to the City and the
Developer.
"Total Development Costs" means the sum of the following costs set forth on Exhibits I,
J and K, and specifically excludes the Parking Lot Cost (as defined in Section 5.9):
(i) Construction Costs, excluding any costs attributable to Owner Upgrades;
(ii) Acquisition Costs;
(iii) Architectural, engineering, legal, accounting and other professional
services fees, including but not limited to those for surveying, appraisal, financial
advisory, market feasibility, environmental and geotechnical testing and correction, title,
marketing, management services costs, registered land survey costs and any other soft
costs of construction (but excluding any Developer's Overhead Costs);
(iv) Marketing costs, reasonable broker's commissions and marketing fees in
an aggregate amount up to 6% of Sale Proceeds, to the extent actually paid to a Person or
entity other than the Developer or an Affiliate of the Developer, usual and customary
closing costs and credits, including, but not limited to title charges, survey costs, escrow
charges, recording fees, transfer taxes and reasonable attorneys' fees, special assessments
required to be paid as a condition of Sale, and reasonable prorations in favor of the
purchasers for real estate taxes not yet due and payable, if any, and other soft costs of
Sales, excluding any costs attributable to Owner Upgrades;
(v) Developer's Overhead Costs and soft costs of operations;
(vi) Construction Loan interest;
(vii) Title and Construction Loan closing costs;
(viii) Construction supervision by third parties, provided that if performed by
the Developer or an Affiliate the amount thereof considered a Total Development Cost
shall not exceed (i) 10% of Total Development Costs with respect to the Bluff Block
Housing Project; (ii) 10% of Total Development Costs with respect to the Bluff Block
Commercial Project; (iii) 10% of Total Development Costs with respect to the Jackson
Block Housing Project and (iv) 10% of Total Development Costs with respect to the
Jackson Block Commercial Project;
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(ix) Payments to the Developer for the following: development fee not to
exceed the sum of (a) 5% of Total Development Costs with respect to the leased portion
of the Jackson Block Commercial Project, (b) 12% of development costs approved by the
Minnesota Housing Finance Agency with respect to the Jackson Block Housing Project,
market rate leasing commissions on the Jackson Block Housing Project and the Jackson
Block Commercial Project and other similar fees, all of which shall be of a nature and
amount which is standard in the industry;
(x) Governmental fees, including park dedication, permit, license and utility
hook-up charges, SAC and WAC, to the extent not reduced or reimbursed;
(6) Taxes and insurance premiums during the construction period, including special
assessments;
(7) Financing fees and financing interest during the construction period;
(8) Amounts paid or payable to equity providers, other than Affiliates, regardless of
whether paid as interest, profit participation, preferred return, loan guaranty fees or otherwise.
"Unavoidable Delays" means delays, outside the control of the party claiming its
occurrence, which delay the activities contemplated by this Agreement, and which are the direct
result of (a) unusually severe or prolonged bad weather, (b) acts of God, fire or other casualty to
the Minimum Improvements, (c) litigation commenced by third parties which, by injunction or
other similar judicial action, directly results in delays, (d) acts of any federal, State or local
governmental unit which directly result in delays, (e) strikes, or other labor trouble, (f) delays in
delivery of materials for the Minimum Improvements, (g) soil conditions of the Development
Property or (h) acts of war or terrorism, not existing on the date hereof.
.. u.s. Bank Parcel" means that portion of the Bluff Block Property to be acquired by the
Developer ftom U.S. Bank, National Association, which property is located at 632 Main Street,
Elk River, Sherburne County, Minnesota.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1 Representations and Warranties of the City. The City makes the
following representations and warranties:
(a) The City is a municipal corporation and political subdivision organized and
existing under the laws of the State of Minnesota with the authority to enter into this Agreement
and carry out its obligations hereunder.
(b) The City has taken all action necessary to create the Development District and the
Tax Increment District, to adopt and approve the Development Program and Tax Increment Plan,
to approve this Agreement, and to authorize the execution and delivery of this Agreement, and
any other documents or instruments required to be executed and delivered by the City pursuant
to this Agreement.
(c) The City has elected in the Tax Increment Plan to retain 100% ofthe captured net
tax capacity of the Development Property to finance permissible expenditures under the Tax
Increment Act, and has elected that the duration of the Tax Increment District will be the
maximum duration permitted by the Tax Increment Act.
(d) The execution, delivery and performance of this Agreement, and any other
documents or instruments required pursuant to this Agreement by the City does not, and
consummation of the transactions contemplated therein and the fulfillment of the terms thereof
will not, conflict with or constitute on the part of the City a breach of or default under any
existing (i) indenture, mortgage, deed of trust or other agreement or instrument to which the City
is a party or by which the City or any of its property is or may be bound, or (ii) legislative act,
constitution or other proceeding establishing or relating to the establishment of the City or its
officers or its resolutions.
(e) There is not pending, nor to the best of the City's knowledge is there threatened,
any suit, action or proceeding against the City before any court, arbitrator, administrative agency
or other governmental authority that materially and adversely affects the validity of any of the
transactions contemplated hereby, the ability of the City to perform its obligations hereunder, or
as contemplated hereby or thereby, or the validity or enforceability of this Agreement.
(f) No member of the City Council of the City or officer of the City, has either a
direct or indirect interest in this Agreement within the meaning of Minnesota Statutes, Sections
412.311, as amended, or any successor statute.
(g) There are no purchase agreements or leases affecting the Jackson Block Property,
other than leases which shall be terminated prior to the conveyance of the Jackson Block
Property to the Developer, with any person other than the Developer, and the City will not enter
into any such agreements.
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(h) The City will cooperate fully with the Developer with respect to any litigation
commenced by third parties with respect to the activities contemplated by this Agreement.
Section 2.2 Representations and Warranties bv the Developer. The Developer
represents and warrants that:
(a) The Developer is a limited liability company organized and in good standing
under the laws of the State, is not in violation of any provisions of its organizational documents
or to the best of the Developer's knowledge the laws of said State, has the power and authority to
enter into this Agreement and has duly authorized the execution, delivery and performance of
this Agreement by proper action of its members.
(b) The Developer will construct the Minimum Improvements in accordance with the
terms of this Agreement, the Development Program and all local, State and federal laws and
regulations (including, but not limited to, environmental, zoning, energy conservation, building
code and public health laws and regulations), except for variances necessary to construct the
Minimum Improvements contemplated in the Construction Plans approved by the City.
(c) The Developer will obtain, in a timely manner, all required permits, licenses and
approvals, and will meet, in a timely manner, all requirements of all applicable local, state, and
federal laws and regulations which must be obtained or met before the Minimum Improvements
may be lawfully constructed.
(d) The execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby, and the fulfillment of the terms and conditions hereof do not
and will not conflict with or result in a breach of any of the terms or conditions of the
Developer's organizational documents, any restriction or any agreement or instrument to which
the Developer is now a party or by which it is bound or to which any property of the Developer
is subject, and do not and will not constitute a default under any of the foregoing. To the best of
the Developer's knowledge, the execution and delivery of this Agreement, the consummation of
the transactions contemplated thereby, and the fulfillment of the terms and conditions thereof do
not and will not result in a violation of any order, decree, statute, rule or regulation of any court
or of any state or federal regulatory body having jurisdiction over Developer or its properties,
including its interest in the Development, and do not and will not result in the creation or
imposition of any lien, charge or encumbrance of any nature upon any of the property or assets
of Developer contrary to the terms of any instrument or agreement to which Developer is a party
or by which it is bound.
(e) The execution and delivery of this Agreement will not create a conflict of interest
prohibited by Minnesota Statutes, Section 412.311, as amended, or any successor statute.
(t) The Developer would not construct the Minimum Improvements but for the
execution of this Agreement and the tax increment financing assistance made available
hereunder.
(g) The Developer will fully cooperate with the City with respect to any litigation
commenced by third parties with respect to the activities contemplated by this Agreement.
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(h) There are no pending or threatened legal proceedings, of which the Developer has
notice, contemplating the liquidation or dissolution of the Developer or threatening its existence,
or seeking to restrain or enjoin the transactions contemplated by the Agreement, or questioning
the authority of the Developer to execute and deliver this Agreement or the validity of this
Agreement.
(i) The Developer has not received any notice from any local, State or federal official
that the activities of the Developer or the City with respect to the Development Property mayor
will be in violation of any environmental law or regulation. The Developer is not aware of any
State or federal claim filed or planned to be filed by any party relating to any violation of any
local, State or federal environmental law, regulation or review procedure, and the Developer is
not aware of any violation of any local, State or federal law, regulation or review procedure
which would give any person a valid claim under any state or federal environmental statute.
(j) The Developer reasonably expects on the date of execution of this Agreement that
it will be able to obtain financing commitments to finance construction of the Minimum
Improvements which, together with financing provided by the City pursuant to this Agreement,
will be sufficient to enable the Developer to successfully complete the Minimum Improvements
in conformance with the Construction Plans.
(k) The Developer will cooperate fully with the City in the resolution of any traffic,
parking, trash removal or public safety problems which may arise in connection with the
construction and operation of the Minimum Improvements.
(1) The Developer expects that, barring Unavoidable Delays, the Minimum
Improvements will begin and be substantially completed on the dates set forth on Exhibit H to
this Agreement.
(m) The Developer agrees to provide the City with copies of all purchase agreements,
cancelled checks, appraisals and any other information requested by the City relating to the
acquisition of the Development Property.
(n) The Developer represents that the estimated Market Values, Construction Costs,
Acquisition Costs, projected Sales prices, Sales Proceeds, Development Costs and other
information set forth in the attached Exhibits I, L and N reflect the reasonable expectations of the
Developer.
(0) The Developer represents that it would not have been feasible to redevelop the
Bluff Block Property and construct the Bluff Block Development if the Jackson Block
Development had not been part ofthe same redevelopment project.
(p) The Developer has made its own projections of Tax Increment to be generated
from the Development and the Developer has not relied on any assumptions, calculations,
determinations or conclusions made by the City, its governing body members, officers or agents,
including the independent contractors, consultants and legal counsel, servants and employees
thereof, with respect to the foregoing.
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ARTICLE III
CONVEYANCE OF JACKSON BLOCK PROPERTY
Section 3.1 Purchase and Sale of Jackson Block Property.
(a) The City shall endeavor to obtain clear, marketable title to the Jackson Block
Property by:
(i) Obtaining quit claim deeds trom any individuals or other entities having
an interest in the Jackson Block Property; and
(ii) Vacating, pursuant to the procedures set forth m Minnesota law, any
public interest or other rights in the Jackson Block Property.
(b) To the extent the City is unable to obtain clear title to all of the Jackson Block
Property through negotiation with interested parties of record within 90 days of the date of this
Agreement, the City agrees to endeavor to acquire clear title to the Jackson Block Property
through the exercise of its powers of eminent domain, including the use of quick take, pursuant
to Minnesota law.
(c) The Developer acknowledges that the City does not warrant the successful
conclusion of any eminent domain action or vacation procedures or the accomplishment of any
particular result or timetable because of the many variables inherent in any litigation or legal
proceeding. The City shall not be liable to any party for any consequential or other damages that
may arise out of any delays due to eminent domain actions, vacation procedures, environmental
conditions, court challenges or elements outside the control of the City. .
(d) If the City is not successful in acquiring clear title to the Jackson Block Property
through eminent domain and vacation proceedings, the Developer may elect to terminate this
Agreement in its entirety or only as it relates to the Jackson Block Property. If the Developer
elects to terminate this Agreement as it relates only to the Jackson Block Property, the Developer
and City will proceed with the transactions contemplated by this Agreement related to the Bluff
Block Property and all costs incurred by the Developer related to the development of the Jackson
Block Property will be included in Total Development Costs for purposes of the analysis
required by Section 5.3.
(e) If the City is successful in acquiring clear title to the Jackson Block Property, the
City shall (i) promptly vacate any public interests and rights in the Jackson Block Property
pursuant to the procedures set forth in Minnesota law and (ii) notify the Developer of the date it
has acquired clear title to, and completed the vacation of any public rights or interest in, all of the
Jackson Block Property (the "Effective Date"). Subject to the terms of this Agreement, the City
agrees to sell to the Developer, and Developer agrees to buy from the City, the Jackson Block
Property. The City and the Developer agree that the Closing on the purchase and sale of the
Jackson Block Property shall occur on the Closing Date in accordance with the further provisions
ofthis Article III.
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Section 3.2 As Is Convevance. In recognition of the significant economic
contributions which the City will make to redevelop the Jackson Block Property, the Developer
shall take the conveyance of the Jackson Block Property on an "AS IS" "WHERE IS" basis, with
all faults and defects, without any warranties, express or implied, including as to title, and the
Developer waives any claims against the City and its respective members and officers, for
indemnification, contribution, reimbursement or other payments arising under federal and state
law and the common law relating to environmental or any other condition of the Jackson Block
Property. The City has no obligation to provide evidence of title except as set forth in Section
3.3; provided, however, upon request the City will deliver to the Developer a copy of any title
commitment and related documents it has obtained with respect to the Jackson Block Property.
Without any investigation or review, the City has no knowledge of any use of the Jackson Block
Property for hazardous waste purposes, of any hazardous wastes on the Jackson Block Property
or of any underground storage tanks.
Section 3.3 Title Review Process.
(a) The Developer will direct a title insurance company of its choice (the "Title
Company") to prepare and deliver to the Developer within a reasonable time after the Effective
Date the following items (collectively the "Title Documents"): (i) a commitment for title
insurance ("Title Commitment") that sets forth the state of the title of the Jackson Block
Property, and (ii) legible copies of all exceptions to title disclosed in the Title Commitment. The
Title Commitment should be dated to be effective no earlier than the Effective Date, issued in
favor of Developer and set forth the state of title to the Jackson Block Property and all
exceptions to coverage that would appear in an ALTA Form 1970 owner's policy of title
insurance. The Developer will also cause the Title Company to issue an updated title
commitment dated not more than five (5) days before a Closing on the Jackson Block Property
("Updated Title Commitment").
(b) Before the Closing Date, the Developer will provide written notice to the City of
any exception to title or other matter shown on the Title Commitment or Updated Title
Commitment to which the Developer objects (the "Objections"). The exceptions to title or other
matters shown on the Title Commitment or Updated Title Commitment that are not Objections,
together with general real estate taxes for the year of Closing and subsequent years that are not
yet due and payable, are referred to as "Permitted Exceptions." The Developer may not object to
matters contained in the Updated Title Commitment that were previously accepted in the Title
Commitment. If the Developer fails to notify the City in writing of the Objections prior to the
Closing Date, title will be deemed accepted subject to the conditions set forth in the last issued
Title Commitment or Updated Title Commitment (as the case may be), but not subject to any
Objections previously made.
(c) The City will have a period of fifteen (15) days after receipt of written notice
trom the Developer (or within five (5) days with respect to the Updated Title Commitment) (the
"Cure Period") to provide a cure (or arrange a cure) that is reasonably acceptable to the
Developer for the Objections. The City and the Developer agree that if the expiration of the
Cure Period occurs after a scheduled Closing Date, a Closing will automatically be extended
until two (2) days after the expiration of the Cure Period. The City covenants and agrees that
prior to or at Closing it will discharge all liens, mortgages, contract for deeds, other
1674205v8
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encumbrances against the Jackson Block Property that secure any obligation of the City and any
claims filed by contractors, suppliers or workers for work performed by such claimants at the
request of or through the City (it being understood that these matters are automatically
Objections, even if the Developer has not made a specific written Objection). If the City is
unable or unwilling to provide a cure (or arrange a cure) that is reasonably acceptable to the
Developer for any Objection within the Cure Period, the Developer may, within ten (10) days
after the expiration of the Cure Period, either: (i) terminate this Agreement; (ii) maintain this
Agreement in effect and proceed to cure the Objections and the cost of curing the Objections will
be considered Total Development Costs; or (iii) maintain this Agreement in effect without
acquiring the Jackson Block Property. If the Developer fails to notify the City of such election
within the prescribed 10 day period, title will be deemed accepted subject to the conditions set
forth in the last issued Title Commitment or Updated Title Commitment (as the case may be),
including conditions to which Objections were previously made, and the City and the Developer
shall proceed to a Closing on the purchase and sale of the Jackson Block Property in accordance
with the further provisions of this Article III.
(d) If the City proceeds to acquire the Bluff Block Property as provided in Section 3.5
of this Agreement, review of title to the Bluff Block Property will be undertaken through the
same process as set forth in this Section 3.3.
Section 3.4 Purchase Price. The purchase price to be paid by Developer to the City
for the Jackson Block Property shall be an amount equal to $1.00. Its fair market value is
$500,000; provided that if the fair market value of the Jackson Block Property as determined by
the independent appraiser selected by the Construction Lender is an amount other than $500,000,
the Parties agree the fair market value shall be the value determined by such appraiser. The
purchase price shall be paid in cash on the Closing Date. The Developer shall assume or pay all
taxes, special assessments and similar governmental impacts due and payable in the year of
Closing and all future years.
Section 3.5 Acquisition of the Bluff Block Property.
(a) As set forth in Section 3.6, the City's obligation to close on the sale of the Jackson
Block Property is conditioned, among other things, upon Developer having fee title to all of the
Bluff Block Property. If the Developer shall have delivered to the City evidence acceptable to
the City that the Developer has fee title to two of the three parcels which comprise the Bluff
Block Property, and that the Developer has exhausted all reasonable efforts to negotiate the
purchase of the final parcel of the Bluff Block Property, including good faith efforts to reach an
agreement regarding the purchase with the assistance of a neutral third party mediator, the City
agrees to consider in its discretion the acquisition of the Bluff Block Property through the
exercise of its powers of eminent domain, including the use of quick take, pursuant to Minnesota
law. The Developer agrees to payor reimburse the City for all City Acquisition Costs and
Relocation Costs and Expenses in connection with the acquisition of the Bluff Block Property.
The City will not commence eminent domain proceedings until the City has received the
following:
(i)
a $50,000 cash deposit from the Developer (the "Initial Deposit");
1674205v8
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(ii) a pro fonna budget for the Minimum Improvements showing all sources
and uses of funds and a timetable, acceptable to the City, for the construction of the
Minimum Improvements;
(iii) letters of intent, commitment proposals or other evidence reasonably
satisfactory to the City, from financial institutions, subject to customary contingencies, to
provide financing for the Minimum Improvements.
(b) Within 30 days after the City receives the items required in paragraph (a) above,
the City may in its discretion file condemnation proceedings for the final parcel of the Bluff
Block Property with the District Court. The Developer acknowledges and agrees that the City
will not proceed with the eminent domain proceedings past the point at which the City is
pennitted to deposit the appraised value of the final parcel of the Bluff Block Property with the
court unless the City has received trom the Developer cash in an amount equal to the City's
estimate of the total acquisition costs of the final parcel of the Bluff Block Property less the
amount ofthe Initial Deposit (the "Developer's Deposit").
( c) The Developer acknowledges that the City does not warrant the successful
conclusion of any eminent domain action or quick take procedures or the accomplishment of any
particular result or timetable because of the many variables inherent in any litigation or legal
proceeding. The City shall not be liable to any party for any consequential or other damages that
may arise out of any delays due to eminent domain proceedings, vacation proceedings,
environmental conditions, court challenges or elements outside the control of the City.
(d) If the City elects to exercise its power of eminent domain and is not successful in
acquiring title to the final parcel of the Bluff Block Property through eminent domain
proceedings, this Agreement shall tenninate and the City shall deduct from the Developer's
Deposit all out-of-pocket costs and City Acquisition Costs and Relocation Costs and Expenses
incurred by the City in connection with the eminent domain proceedings including reasonable
attorneys' fees, and the balance of the Developer's Deposit shall be returned to the Developer;
provided that if the eminent domain proceedings are concluded unsuccessfully prior to the
Developer's Deposit being made, and the out-of-pocket costs and reasonable attorneys' fees and
City Acquisition Costs and Relocation Costs and Expenses incurred by the City in connection
with the attempted acquisition of the final parcel of the Bluff Block Property exceed the Initial
Deposit, the Developer shall pay the City the difference between the Initial Deposit and the costs
incurred by the City. If the out-of-pocket costs and City Acquisition Costs and Relocation Costs
and Expenses incurred by the City in connection with the attempted acquisition of the final
parcel of the Bluff Block Property are less than the Initial Deposit, the City shall refund the
balance of the Initial Deposit to the Developer.
(e) If the City is successful in acquiring fee title to the final parcel of the Bluff Block
Property, the City shall notify the Developer of the date it has acquired fee title to the final parcel
of the Bluff Block Property (the "Effective Date"). Subject to the tenns of this Agreement, the
City agrees to sell to the Developer, and Developer agrees to buy from the City, the final parcel
of the Bluff Block Property. The purchase price for the Bluff Block Property shall be equal to
the City Acquisition Costs and the Relocation Costs and Expenses. The City and the Developer
agree that the closing on the purchase and sale of the final parcel of the Bluff Block Property
1674205v8
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shall occur simultaneously with the Closing on the Jackson Block Property in accordance with
the further provisions of this Article III or, if this Agreement has been tenninated as it relates to
the Jackson Block Property as provided in Section 3.1(d), upon satisfaction of the conditions to
conveyance of the Bluff Block Property only.
(t) The City shall have the sole and exclusive discretion to settle or not settle any
condemnation proceeding including, but not limited to, the payment for City Acquisition Costs
and Relocation Costs and Expenses; provided, that the City will consult with the Developer
before entering into any settlement agreement related to the acquisition of the Bluff Block
Property.
Section 3.6 Continl!encies to Closinl! on Jackson Block Prooertv.
(a) Developer's Contingencies. Developer's obligation to close on the purchase of the
Jackson Block Property is expressly conditioned upon the City having perfonned all of the
obligations required to be perfonned by the City under this Agreement as of the Closing Date,
including but not limited to, delivery of all of the City's Documents described in Section 3.7(b)
hereof. In addition, the Developer's obligation to close on the purchase of the Jackson Block
Property is conditioned on the satisfaction, or waiver by the Developer, of all of the following
conditions precedent:
(i) The Developer shall have reviewed and approved title to the Jackson
Block Property as described in Section 3.3;
(ii) The Developer shall have secured financing acceptable to the Developer
for the acquisition and construction of the Minimum Improvements;
(iii) The Developer shall have satisfied itself that the enviromnental and soils
conditions on the Development Property are acceptable to the Developer for its intended
purposes; and
(iv) The Developer shall have obtained all govermnental and other approvals
that must be obtained to authorize the construction and operation of the Minimum
Improvements.
(b) City's Contingencies. The City's obligation to close on the sale of the Jackson
Block Property is expressly conditioned upon each of the following contingencies being satisfied
or waived:
(i) The Developer shall have delivered to the City a pro fonna budget for the
Minimum Improvements showing all sources and uses of funds and a timetable,
acceptable to the City for the construction of the Minimum Improvements;
(ii) The Developer shall have satisfied any contingencies of the Construction
Lender to providing the Construction Loan for the Minimum Improvements;
(iii) The Developer shall have delivered to the City evidence acceptable to the
City that the Developer and/or the City has fee title to all of the Bluff Block Property;
1674205v8
19
(iv) In accordance with Section 4.1, the Developer shall have submitted the
Construction Plans for the Minimum Improvements to the City, and the City shall have
approved the same.
(v) Developer shall have performed all of the obligations required to be
performed by Developer under this Agreement as ofthe Closing Date.
(vi) The Developer shall have delivered to the City evidence of pres ales of the
units of the Bluff Block Housing Project in the amount required by the Construction
Lender.
(vii) The Developer shall have delivered to the City all of the Developer's
Documents described in Section 3.7(c).
(c) Citv's and Developer's Options. In the event that any of the foregoing
contingencies fail to be satisfied on or before the Closing Date, the Developer or the City, as the
case may be, may:
(i) terminate this Agreement; or
(ii) waive such failure and proceed to close.
Section 3.7 Closine:.
(a) Time and Place. Subject to the terms and conditions of this Agreement, the
Closing on the purchase and sale of the Jackson Block Property shall take place on the Closing
Date and shall take place at such place which is mutually acceptable to the Parties. The City
shall deliver possession of the Jackson Block Property on the Closing Date.
(b) Citv's Documents. At the Closing, the City shall execute, where appropriate, and
deliver all of the following City's Documents:
(i) The Deed properly executed on behalf of the City and in recordable form
conveying the Jackson Block Property to the Developer ftee and clear of all
encumbrances except those accepted by the Developer.
(ii) The most current abstracts of title, if any, in the City's possession to any
portion of the Jackson Block Property which are abstract property, and any owner's
duplicate certificate of title in the City's possession to any portion thereof which is
registered property.
(iii) A non-foreign affidavit properly containing such information as is
required by Internal Revenue Code Section 1445(b)(2) and the regulations promulgated
pursuant thereto.
(iv) An affidavit of the City indicating on the Closing Date that there are no
outstanding, unsatisfied judgments, tax liens or bankruptcies against or involving the City
or the Jackson Block Property; that there has been no skill, labor or material furnished to
1674205v8
20
the Jackson Block Property for which payment has not been made or for which
mechanic's liens could be filed; and that there are no other unrecorded interests in the
Jackson Block Property.
(v) Such affidavits or other documents as may be reasonably required by the
Developer's title insurance company in order to record the Deed and to issue a title
insurance policy acceptable to the Developer as provided in Section 3.3.
( c) Developer's Documents. At the Closing, the Developer shall execute, where
appropriate, and deliver all of the following Developer's Documents:
(i) The Developer shall have delivered to the City any Phase I environmental
report for the Development Property required by the Construction Lender.
(ii) The City shall be satisfied that the Developer has obtained the
Construction Loan for the Minimum Improvements in an amount sufficient, together with
equity commitments, to complete the Minimum Improvements in conformance with the
Construction Plans.
(iii) Proof of insurance required pursuant to this Agreement.
(iv) To the extent required and obtainable as of the Closing Date,
environmental clearances, subdivision approvals, permits, and any other required
governmental approvals for the Minimum Improvements.
(v) An affidavit of Developer indicating on the Closing Date that there are no
outstanding, unsatisfied judgments, tax liens or bankruptcies against or involving the
Developer or the Bluff Block Property; that there has been no skill, labor or material
furnished to the Bluff Block Property for which payment has not been made or for which
mechanic's liens could be filed; and that there are no other unrecorded interests in the
Bluff Block Property.
(vi) Funds sufficient for payment by the Developer at Closing of the recording
charges or fees for all documents which are to be placed on record, the fee or charge
imposed by any closing agent designated by the Title Company, and any other incidental
or related closing costs.
(vii) A certificate of good standing for Developer from the Secretary of State of
the State.
Section 3.8 Closine: Costs. To the extent not already paid, the Developer shall, on the
Closing Date, pay, among other things specified to be paid in this Agreement, all fees and
expenses of third parties related to the Closing, including any and all taxes and filing fees, title
issuance commitments and all out of pocket fees and expenses of the City in connection with the
preparation of this Agreement and any purchase agreements with respect to the Jackson Block
Property, the establishment of the Tax Increment District and any other out of pocket costs of the
City, including related engineering costs. The Developer shall not be obligated to pay for City
administrative or staff costs.
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ARTICLE IV
CONSTRUCTION OF MINIMUM IMPROVEMENTS
Section 4.1 Construction Plans.
(a) Prior to the commencement of construction of the Minimum Improvements, the
Developer will deliver to the City Council the Construction Plans, a parking plan for the
construction staging period and the post construction period (the "Parking Plans") and a sworn
construction cost statement certified by the Developer and the general contractor (the "Sworn
Construction Cost Statement"). The Construction Plans and the Sworn Construction Cost
Statement will exclude matters relating to the build out of individual commercial space and the
build out of individual for sale units in the Bluff Block Housing Project. Within thirty (30) days
after receipt of the Construction Plans, the Parking Plans and the Sworn Construction Cost
Statement the City Council shall review the Construction Plans and the Parking Plans and deliver
to the Developer a written statement approving the Construction Plans and the Parking Plans or a
written statement rejecting the Construction Plans and specifying the deficiencies in the
Construction Plans and the Parking Plans. The City Council shall approve the Construction
Plans if: (i) the Construction Plans substantially conform to the terms and conditions of this
Agreement; (ii) the Construction Plans are consistent with the goals and objectives of the
Development Program; and (iii) the Construction Plans do not violate any applicable federal,
State or local laws, ordinances, rules or regulations except as set forth in approved variances
(provided, however, that a finding of no such violations does not necessarily constitute a finding
that the Construction Plans meet all requirements of such federal, State or local laws, ordinances,
rules or regulations). If the Construction Plans and/or the Parking Plans are not approved by the
City Council, then the Developer shall make such changes as the City Council may reasonably
require and resubmit the Construction Plans and/or the Parking Plans to the City Council for
approval.
(b) The approval of Construction Plans, or any proposed amendment to the
Construction Plans, by the City Council for purposes of this Agreement does not constitute a
representation or warranty by the City that any of the Construction Plans or the Minimum
Improvements comply with any applicable building code, health or safety regulation, zoning
regulation, environmental law or other law or regulation, or that the Minimum Improvements
will meet the qualifications for issuance of a certificate of occupancy, or that the Minimum
Improvements will meet the requirements of the Developer or any other users of the Minimum
Improvements. Approval of the Construction Plans, or any proposed amendment to any of the
Construction Plans, by the City will not constitute a waiver of an Event of Default. Nothing in
this Development Agreement shall be construed to relieve the Developer of its obligations to
receive approval of the Construction Plans !Tom any City department.
Section 4.2 Construction of Minimum Improvements. Subject to the terms and
conditions of this Agreement, the Developer agrees to construct the Minimum Improvements on
the Development Property in substantial conformance with the approved Construction Plans for
the Minimum Improvements. No changes shall be made to the Construction Plans for any of the
Minimum Improvements without the City's prior written approval unless such changes do not
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alter the total amount set forth in the Sworn Constmction Cost Statement for such Phase
delivered pursuant to Section 4.1 hereof by a decrease of more than five (5) percent. In no event
may any changes affect the quality, exterior design or materials included in the Constmction
Plans unless such changes are approved by City. The City agrees that its approval will not be
unreasonably withheld or delayed.
Section 4.3 Commencement and Completion of Construction.
(a) Subject to the terms and conditions of this Agreement and to Unavoidable Delays,
the Developer will commence constmction of each project of the Minimum Improvements by the
dates set forth on Exhibit H and will cause each project of the Minimum Improvements to be
substantially completed not later than the dates set forth on Exhibit H.
(b) Prior to commencement of construction of the Jackson Block Development the
Developer shall have:
(i) delivered to the City evidence acceptable to the City that the Developer
has fee title to all of the Bluff Block Property;
(ii) entered into a demolition contract for all existing improvements on the
Bluff Block Property and, other than the building on the U.S. Bank Parcel, will have
demolished any existing improvements and completed any necessary environmental
remediation with respect to such improvements;
(iii) closed on the Construction Loan for the Bluff Block Development;
(iv) entered into a construction contract for construction of the Bluff Block
Development; and
(v) paid the Parking Lot Cost to the City or deposited the Parking Lot Cost
into escrow pursuant to an escrow agreement executed by the City, the Developer and an
escrow agent providing the terms of disbursement of the escrowed funds to pay the costs
of constructing the Parking Lot and related costs; provided, the Developer shall pay any
costs of establishing the escrow account and any escrow fees.
(c) The Developer shall demolish the building on the U.S. Bank Parcel and
commence construction of the Bluff Block Development within 60 days of U.S. Bank, National
Association vacating the U.S. Bank Parcel.
(d) The Minimum Improvements will be constructed by the Developer on the
Development Property in substantial conformity with the Construction Plans approved by the
City. Prior to delivery of the Certificate of Completion referred to in Section 4.7 hereof, upon
the request of the City, the Developer will provide the City reasonable access to the
Development Property. "Reasonable access" means at least one site inspection per week during
regular business hours. During construction, marketing, leasing and sales of the Minimum
Improvements, the Developer will deliver quarterly progress reports to the City.
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(e) If the Parking Lot Cost is deposited with the City, the City shall provide an
accounting of the Parking Lot Cost and return any amount deposited by the Developer in excess
of the actual Parking Lot Cost within 60 days of payment of the Parking Lot Cost.
Section 4.4 Effect of Delav. The Developer acknowledges that if construction of any
of the Minimum Improvements is delayed or not completed, the effect of such delay or failure to
complete may be to reduce amount of Pledged Tax Increment, and there will be no compensation
by the City to Developer or any other party for any reduction in the amount available to pay the
Tax Increment Revenue Note.
Section 4.5 Compliance with Environmental Requirements. The Developer shall
comply with all applicable local, State, and federal environmental laws and regulations, and will
obtain, and maintain compliance under, any and all necessary environmental permits, licenses,
approvals or reviews. As of the date of this Agreement, the Developer has received no notice or
communication trom any local, State, or federal official that the activities ofthe Developer or the
City under this Agreement may be or will be in violation of any environmental law or regulation.
Section 4.6 Additional Responsibilities of the Developer.
(a) The Developer will construct and, until the responsibility is assumed by a
condominium association pursuant to the Minnesota Common Interest Ownership Act with
respect to the Bluff Block Development, operate and maintain, or cause to be operated and
maintained, the Minimum Improvements substantially in accordance with the terms of this
Agreement, the Development Program and all local, State, and Federal laws and regulations
(including, but not limited to zoning, building code, public health laws and regulations, except
for variances necessary to construct the Minimum Improvements contemplated in the
Construction Plans approved by the City.
(b) The Developer will obtain, in a timely manner, all required permits, licenses, and
approvals, and will meet, in a timely manner, all requirements of all applicable local, State, and
federal laws and regulations which must be obtained or met before the Minimum Improvements
may be lawfully constructed. The City makes no representations or warranties that all permits or
licenses that may be required by state and federal entities, other than the City, have been or will
be approved.
( c) The Developer will not construct any building or other structures on, over, or
within the boundary lines of any public utility easement unless such construction is provided for
in such easement or has been approved by the utility involved.
(d) The Developer, at its own expense, will replace any public facilities and public
utilities damaged during the construction of the Minimum Improvements, in accordance with the
technical specifications, standards and practices of the owner thereof.
(e) The Developer will comply with all applicable local, state and federal
environmental laws and regulations, as they relate to the Minimum Improvements.
Section 4.7 Certificate of Completion. The Developer shall notify the City when the
construction of all of the Minimum Improvements has been completed. The City shall, within 14
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days after such notification, inspect the Minimum Improvements in order to determine whether
the Minimum Improvements have been constructed in substantial conformity with the
corresponding approved Construction Plans. If the City determines that the Minimum
Improvements have not been constructed in substantial conformity with the approved
Construction Plans, the City shall, within 28 days after the Developer's notification of
completion of construction, deliver a written statement to the Developer indicating in adequate
detail the specific respects in which the Minimum Improvements have not been constructed in
substantial conformity with the approved Construction Plans and the Developer shall promptly
remedy such deficiencies. If the City determines that the Minimum Improvements have been
constructed in substantial conformity with the applicable approved Construction Plans, the City
shall furnish to the Developer a Certificate of Completion in the form attached hereto as Exhibit
D certifying the completion of the Minimum Improvements. The Certificate of Completion
issued for the Minimum Improvements shall conclusively satisfy and terminate the agreements
and covenants of the Developer in the Deed to construct the Minimum Improvements. The
Developer may cause the Certificate of Completion to be recorded in the proper office for
recordation of deeds and other instruments pertaining to the Development Property.
If requested by the Developer, the City will issue Certificates of Completion for each
separate component or phase of the Minimum Improvements upon completion of such
component or phase. Also, the City will issue a Certificate of Completion and, if necessary in
connection with any mortgage financing, a letter to the applicable mortgage lender regarding the
applicability of the terms of this Agreement, for each unit of the Bluff Block Housing Project at
the time of closing on the sale of such unit to an individual purchaser ofthe unit.
The issuance of a Certificate of Completion shall not be construed to relieve the
Developer of any approval required by any City department in connection with the construction,
completion or occupancy of any of the Minimum Improvements.
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ARTICLE V
TAX INCREMENT ASSISTANCE; DEVELOPER PAYMENTS
Section 5.1 Creation of Tax Increment District and Amendment of Tax
Increment Financinl!: Plan. The City has taken all necessary actions to create and establish the
Tax Increment District. The Developer shall pay to the City, upon execution of this Agreement,
all out of pocket costs and expenses of the City, including fees of Briggs and Morgan,
Professional Association and Ehlers & Associates, incurred in connection with this Agreement
and the creation of the Tax Increment District to the extent those fees exceed the payments
previously made by the Developer.
Section 5.2 Issuance of Tax Increment Revenue Note.
(a) The City shall reimburse the Developer for the Eligible Costs actually incurred
and paid by the Developer in an amount up to the Reimbursement Amount (as defined below)
through the issuance of the City's Tax Increment Revenue Note in substantially the form attached
to this Agreement as Exhibit E, subject to the following conditions:
(i) The Note shall be dated, issued and delivered when requested by the
Developer but not prior to the Closing on the Jackson Block Property and the closing on
the Construction Loan for the Bluff Block Development. The principal amount is
currently estimated to be $3,093,563, but the actual principal amount of the Tax
Increment Revenue Note shall be determined at the time the Tax Increment Revenue
Note is issued based on the gap in Funding determined according to the updated
estimated sources and uses statement delivered by the Developer at the time issuance of
the Tax Increment Revenue Note is requested and to be attached as Exhibit J hereto (the
"Reimbursement Amount"). The principal amount may be reduced as provided in
Section 5.3. The City makes no assurances that the Pledged Tax Increment will be
sufficient to pay the entire principal of and interest on the Tax Increment Revenue Note.
(ii) No interest shall accrue on the principal amount of the Tax Increment
Revenue Note prior to the date the Developer has proved to the City that it has incurred
and paid Eligible Costs in an amount equal to the Reimbursement Amount. The unpaid
principal amount of the Tax Increment Revenue Note shall bear simple non-
compounding interest from the date the Developer has proved to the City that it has
incurred and paid Eligible Costs in an amount equal to the Reimbursement Amount, at
6.50% per annum. Interest shall be computed on the basis of a 360 day year consisting of
twelve (12) 30-day months.
(iii) The principal amount of the Note and the interest thereon shall be payable
solely from the Pledged Tax Increment which is hereby pledged to the payment of the
Tax Increment Revenue Note.
(iv) On each Payment Date and subject to the provisions of the Tax Increment
Revenue Note, the City shall pay, against the principal and interest outstanding on the
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Tax Increment Revenue Note, the amount of the Pledged Tax Increment received by the
City during the preceding 6 months. All such payments shall be applied first to accrued
interest and then to reduce the principal ofthe Note.
(v) The Tax Increment Revenue Note shall be a special and limited obligation
of the City and not a general obligation of the City, and only Pledged Tax Increment shall
be used to pay the principal and interest on the Tax Increment Revenue Note. If, on any
Payment Date, the Pledged Tax Increment for the payment of the accrued and unpaid
interest on the Tax Increment Revenue Note is insufficient for such purposes, the
difference shall be carried forward, without interest accruing thereon, and shall be paid if
and to the extent that on a future Payment Date there is Pledged Tax Increment in excess
of the amounts needed to pay the accrued interest then due on the Tax Increment
Revenue Note.
(vi) The City's obligation to make payments on the Tax Increment Revenue
Note on any Payment Date or any date thereafter shall be conditioned upon the
requirement that (A) there shall not at that time be an Event of Default that has occurred
and is continuing under this Agreement and (B) this Agreement shall not have been
rescinded pursuant to Section 9.4( c).
(vii) The Tax Increment Revenue Note shall be governed by and payable
pursuant to the additional terms thereof, as set forth in Exhibit E. In the event of any
conflict between the terms of the Tax Increment Revenue Note and the terms of this
Agreement, the terms of this Agreement shall govern. The issuance of the Tax Increment
Revenue Note pursuant and subject to the terms of this Agreement, and the taking by the
City of such additional actions as bond counsel for the Tax Increment Revenue Note may
require in connection therewith, are hereby authorized and approved by the City.
(b) The Developer understands that the Tax Increment Revenue Note will not be
registered or otherwise qualified for sale under the securities laws and regulations of the State or
under the Federal securities laws or regulations, the Tax Increment Revenue Note will not be
listed on any stock or other securities exchange, and the Tax Increment Revenue Note will not
carry a rating from any rating service.
(c) Any assigrnnent by the Developer of the Tax Increment Revenue Note must be to
a single entity and must be approved in writing by the City. The City acknowledges that the
Developer may, after the Profit Determination Date and the Cash Flow Determination Date,
assign the Tax Increment Revenue Note to a Lender, or a Placement Agent, acting as the servicer
of any Lender, or assign participations in the Tax Increment Revenue Note to multiple parties
(the "Participants") with one primary Noteholder and the Developer acknowledges that the City
will require, as a condition of its consent to the assigrnnent to any Lender, Placement Agent or
Participant, that such Lender and each Participant be a "qualified financial institution" within the
meaning of the regulations promulgated under the Securities Act of 1933, as amended, and
deliver a letter of investment intent in a form satisfactory to the City or that such Placement
Agent represent that it will not sell or grant participation in the Tax Increment Revenue Note in
amounts less than $100,000 or to any entity that is not a "qualified financial institution" or
without obtaining a letter of investment intent in a form satisfactory to the City. Any offering
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material prepared by the Developer or any Placement Agreement in connection with the
Developer's assignment of the Tax Increment Revenue Note to any Lender must be reviewed and
approved by the City; provided that the City will make no representations or warranties with
respect to the information contained in any such offering material.
(d) If and to the extent Available Tax Increments collected in any year are in excess
of the Pledged Tax Increment and the Parking Lot Pledged Tax Increment, the excess shall be
retained by the City.
Section 5.3 Reduction of Assistance.
(a) The Developer shall maintain books and records relating to the financing,
construction, leasing and sales of the Minimum Improvements in accordance with generally
accepted accounting principles consistently applied.
(b) On or before the later of the Cash Flow Determination Date or the Profit
Determination Date, the Developer shall, at its sole expense but as a Total Development Cost,
cause a certified public accountant acceptable to the City to have prepared and delivered to the
City a Sources and Uses Statement, a Profit Statement with respect to the Bluff Block
Development and a Cash Flow Statement with respect to the Jackson Block Development. The
Developer shall also furnish such additional documentation as the City may reasonably request.
Within thirty (30) days of receipt, the City shall notify the Developer of any necessary
adjustments. Within thirty (30) days after the Developer provides a revised Sources and Uses
Statement, Profit Statement and/or Cash Flow Statement(s) to the satisfaction of the City, or
within thirty (30) days of the original receipt thereof if the City requires no adjustments, the City
shall notify the Developer in writing whether the Sources and Uses Statement, Profit Statement
and Cash Flow Statements are determined by it to be acceptable.
(c) Within thirty (30) days of the acceptance of the Sources and Uses Statement,
Profit Statement and Cash Flow Statement by the City, if the Rate of Return for the Jackson
Block Commercial Project is at or above the Targeted Return and the Developer has received a
development fee at least equal to 12% of development costs approved by the Minnesota Housing
Finance Agency with respect to the Jackson Block Housing Project, the Developer shall pay to
the City the lesser of (i) the sum of the Excess Funding and the Excess Profit, if any, and (ii) the
amount of SAC and WAC reimbursed to the Developer pursuant to Section 5.7(a) plus the
difference between the fair market value of the Jackson Block Property as set forth in Section 3.4
and the purchase price of the Jackson Block Property paid by the Developer. To the extent the
Developer fails to pay such amount to the City, the City may apply Available Tax Increments to
reimburse itself for such amount and no amount shall be payable under the Tax Increment
Revenue Note until the City has been fully reimbursed. Such amounts paid to the City shall be
credited against the payments otherwise due under the Tax Increment Revenue Note.
(d) To the extent the sum of the Excess Funding and the Excess Profit exceeds the
amount paid by the Developer to the City pursuant to Section 5.3(c), the Reimbursement
Amount, and correspondingly the principal amount of the Tax Increment Revenue Note, shall be
reduced by the difference between (i) the sum of the Excess Funding and the Excess Profit and
(ii) the amount paid by the Developer to the City pursuant to Section 5.3(c) and within thirty (30)
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days of the payment made by the Developer pursuant to Section 5.3(c), the City shall notify the
Developer of any reduction in the Reimbursement Amount.
(e) To the extent the Sources and Uses Statement indicates the gap in Funding with
respect to any of the Minimum Improvements is greater than estimated at the time of the
issuance of the Tax Increment Revenue Note, the difference between the estimated gap and the
actual gap shall offset any Excess Profit or Excess Funding with respect to any other portion of
the Minimum Improvements.
(f) The City shall execute and deliver to the Developer an amendment to the Tax
Increment Revenue Note indicating any adjustment to the Reimbursement Amount.
Section 5.4 Review of Taxes. The Developer acknowledges that the sole source of
money to make the payments on the Tax Increment Revenue Note is Available Tax Increment
derived from the Development Property and Minimum Improvements and pledged by the City to
the payment thereof. The Developer further acknowledges that any of the following actions
taken by the Developer or a purchaser of a housing unit could reduce the Available Tax
Increment below the amount necessary to pay a portion or all of the payment due on the Tax
Increment Revenue Note.
(a) Initiation of administrative or judicial review of the applicability of any tax statute
determined by any Tax Official to be applicable to the Development Property or the Minimum
Improvements.
(b) Initiation of administrative or judicial review of the constitutionality of any tax
statute determined by any Tax Official to be applicable to the Development Property or the
Minimum Improvements.
(c) A reduction in the real property taxes paid with respect to the Development
Property and the Minimum Improvements through intentional actions such as terminating the
business activity conducted on the Development Property, demolishing a portion or all of the
Minimum Improvements, seeking a reduction in the assessed Market Value of the Minimum
Improvements through any request, petition, claim, or other proceeding to or before the City
assessor, the County assessor, the board of equalization of the City, County, or State, the
Commissioner of Revenue of the State, any district court of the State, the Tax Court ofthe State,
or any federal district court.
(d) Any application for an abatement or deferral of real property taxes under any
applicable statute of the State.
(e) Other actions or events outside the control of the Developer or outside the control
of the City, including a reduction in the Market Value of the Development Property and the
Minimum Improvements that are made without a request or petition of the Developer, a
reduction in the tax classification of the Development Property and the Minimum Improvements
under Minnesota Statutes, Section 273.13, or any successor statute, a reduction in the local tax
rates applicable to the Development Property and the Minimum Improvements, or any change to
the method of taxing real property that has the effect ofreducing the revenues derived from such
taxes.
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(f) Failure of the Developer to commence and complete all of the Minimum
Improvements.
Section 5.5 Use of Tax Increments. The City shall be free to use the Tax Increment,
other than the Pledged Tax Increment and the Parking Lot Pledged Tax Increment herein pledged
to the payment of the Tax Increment Revenue Note, the Parking Lot Note and any Refunding
Bonds, for any other purpose for which the Tax Increment may lawfully be used pursuant to
applicable provisions of the Minnesota law.
Section 5.6 Business Subsidv Act.
(a) 22% of the principal amount of the Tax Increment Revenue Note and $190,400 of
the reduction of SAC and WAC is applicable to the Bluff Block Housing Project (the "Bluff
Block Housing Subsidy") and 3% of the principal amount of the Tax Increment Revenue Note
and $89,600 of the reduction of SAC and WAC plus 40% of the reduction below fair market
value of the purchase price of the Jackson Block Property is applicable to the Jackson Block
Housing Project (the "Jackson Block Housing Subsidy"). The Bluff Block Housing Subsidy and
the Jackson Block Housing Subsidy granted to the Developer pursuant to this Agreement is
assistance for housing and therefore the provisions of Minnesota Statutes, Section 116J.993 to
116J.995 (the "Business Subsidy Law") do not apply.
(b) The County assessor estimates the current year fair market value of the Bluff
Block Property to be Six Hundred Seventy-One Thousand Four Hundred Dollars ($671,400).
The Developer represents that the cost of site development for the Bluff Block Property will be
not less than Two Hundred Thousand Dollars ($200,000.00). The purchase price for the Bluff
Block Property is not expected to be less than One Million Nine Hundred Twelve Thousand
Seven Hundred Fifty Dollars ($1,912,750). 70% of the principal amount of the Tax Increment
Revenue Note and $12,623 of the reduction of SAC and WAC is applicable to the Bluff Block
Commercial Project (the "Bluff Block Commercial Subsidy"). Based upon these estimates and
representations, the Developer represents that because the purchase price and cost of site
development for the Bluff Block Property will equal seventy percent (70%) or more of the
assessor's current year's estimated fair market value of the Bluff Block Property and the Bluff
Block Commercial Subsidy does not constitute a "business subsidy" and therefore the provisions
of the Business Subsidy Law do not apply.
(c) 5% of the principal amount of the Tax Increment Revenue Note and $15,167 of
the reduction of SAC and WAC plus 60% of the reduction below fair market value of the
purchase price of the Jackson Block Property is applicable to the Jackson Block Commercial
Project (the "Jackson Block Commercial Subsidy"). The Jackson Block Commercial Subsidy
granted to the Developer pursuant to this Agreement is a subsidy subject to the provisions of the
Business Subsidy Law.
(d) The Tax Increment District is a redevelopment district and the public purpose of
the Jackson Block Commercial Subsidy is to encourage the redevelopment of an area of the City
which is already built up, to help prevent the emergence of blight, to provide employment
opportunities to improve the tax base and to encourage the construction of adjacent housing
facilities in the City. After holding a public hearing November 1,2004, the City has determined
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that creation and retention of jobs is not a goal of the Jackson Block Commercial Subsidy for this
project and consequently has set the wage and job goals (the "Goals") hereunder at zero.
(e) Because the Goals are set at zero, the Developer is not subj ect to the prepayment
provisions of the Business Subsidy Law.
(f) To the extent required by the Minnesota Department of Employment and
Economic Development, the Developer agrees to (i) report its progress on achieving the Goals to
the City until the later of the date the Goals are met or two years trom the date which is the
earlier of the Completion Date or the date the Developer occupies the Jackson Block
Commercial Project (the "Benefit Date"), or, if the Goals are not met, until the date the Jackson
Block Commercial Subsidy is repaid, (ii) include in the report the information required in
Minnesota Statutes, Section 116J.994, Subdivision 7 on forms developed by the Minnesota
Department of Employment and Economic Development, and (iii) send completed reports to the
City. The Developer agrees to file these reports no later than March 1 of each year commencing
March 1,2005, and within 30 days after the deadline for meeting the Goals. The City agrees that
if it does not receive the reports, it will mail the Developer a warning within one week of the
required filing date. Ifwithin 14 days of the post marked date of the warning the reports are not
made, the Developer agrees to pay to the City a penalty of $1 00 for each subsequent day until the
report is filed up to a maximum of$I,OOO.
(g) The Developer agrees to continue operations of the Jackson Block Commercial
Project within the City for at least five (5) years after the Benefit Date.
(h) In addition to the subsidies provided herein, the Developer or an affiliate has
received a loan from the City of a Community Development Block Grant from the Minnesota
Department of Employment & Economic Development, a loan from the Minnesota Housing
Finance Agency and a loan trom the Greater Minnesota Housing Fund in connection with the
construction of the Minimum Improvements which the Parties anticipate will be applied to the
Jackson Block Housing Project.
(i) MetroPlains Properties, Inc. is the parent corporation of the Developer.
Section 5.7 Developer Pavments and Reimbursement.
(a) The Developer agrees to pay the City governmental fees, including park
dedication, permit, license and utility hook-up charges and SAC and WAC when due; provided
that the City shall credit $175,880 towards the SAC and $131,910 towards the WAC payable by
the Developer. Any SAC and WAC charged with respect to the Bluff Block Commercial Project
or the Jackson Block Commercial Project based on the anticipated use thereof shall be paid by
the Developer when determined by the City and made due and payable.
(b) The Developer agrees to pay the City Acquisition Costs and Relocation Costs and
Expenses when required by this Agreement or pursuant to State or Federal law, and, to the extent
the City is obligated to make any such payment, the Developer agrees to reimburse the City.
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Section 5.8 Issuance of Tax Increment Revenue Refundin!! Bonds.
(a) The Parties understand and agree that the Developer's willingness to undertake its
activities under this Agreement was predicated on the understanding that the Developer would
achieve the Allowable Profit and receive the developer fees and the Targeted Rate of Return
contemplated by this Agreement. The Parties also understood at the time of execution of this
Agreement that in order to achieve such Allowable Profit and receive such developer fees and
such Targeted Rate of Return it might be necessary for the City to issue tax increment bonds to
refund the Tax Increment Revenue Note (the "Refunding Bonds") and that if such bonds are
issued after the Completion Date costs of financing could be reduced, thereby enhancing the
financial feasibility of the Development. Therefore, the City agrees, to the extent permitted by
law that, at the prior written request of the Developer, but no earlier than the Profit
Determination Date, to use its best efforts to issue Refunding Bonds subject to the following
conditions:
(i) The principal amount of the Refunding Bonds shall be based on a Debt
Service Coverage Ratio as is necessary to sell the Refunding Bonds at par. The principal
amount of the Refunding Bonds will not exceed the lesser of (i) the amount that can be
amortized using the Pledged Tax Increment generated by the Minimum Improvements
and (ii) the amount necessary after reasonable transaction costs, reserves and capitalized
interest to create net proceeds equal to the outstanding principal balance of the Tax
Increment Revenue Note so long as the total aggregate debt service payable with respect
to the Refunding Bonds does not exceed the total aggregate debt service that would have
been payable over the term ofthe Tax Increment Revenue Note;
(ii) The legal authority of the City to issue such Refunding Bonds and pledge
the Available Tax Increment at the time of the Developer's request; and
(iii) The ability of any Placement Agent to market the Refunding Bonds.
(b) The Developer acknowledges that the maximum amount the City will pledge to
repay the Tax Increment Refunding Bonds is the Pledged Tax Increment generated by the
Minimum Improvements, and that the City will determine, in its sole discretion, the principal
amount of the Refunding Bonds to be issued. In determining the principal amount of the
Refunding Bonds to be issued, the City will consider, among other things, the Market Values of
the completed Minimum Improvements. In addition and if feasible, the City will issue separate
Refunding Bonds for each ofthe components of the Development.
(c) The terms and conditions of the Refunding Bonds will be set forth in a resolution
to be adopted by the City Council of the City (the "Bond Resolution"). In the event of a conflict
between the terms and conditions hereof and the terms and conditions of the Bond Resolution,
the terms and conditions of the Bond Resolution shall prevail.
Section 5.9 Issuance of Parkin!! Lot Note.
(a) When requested by the Developer, but not prior to the Closing on the Jackson
Block Property and the closing on the Construction Loan for the Bluff Block Development, the
City shall commence construction of the King Avenue parking lot provided that:
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(i) A contract for the construction of Parking Lot has been awarded and the
Parking Lot Cost has been detennined; and
(ii) The Developer has deposited cash with the City in the amount of the
Parking Lot Cost.
(b) The City shall reimburse the Developer for the Parking Lot Cost actually paid by
the Developer as further provided in Section 5.9(c).
(c) The City shall reimburse for the costs identified in Section 5.9(b) through the
issuance of the City's Parking Lot Note in substantially the fonn attached to this Agreement as
Exhibit F, subject to the following conditions:
(i) The Note shall be dated, issued and delivered when the conditions set
forth in Section 5.9(a) have been satisfied. The principal amount is not subject to
reduction pursuant to Section 5.3.
(ii) The unpaid principal amount of the Parking Lot Note shall bear simple
non-compounding interest the date of issuance of the Note at 6.50% per annum. Interest
shall be computed on the basis of a 360 day year consisting of twelve (12) 30-day
months.
(iii) The principal amount of the Note and the interest thereon shall be payable
solely from the Parking Lot Pledged Tax Increment which is hereby pledged to the
payment of the Parking Lot Note.
(iv) On each Payment Date and subject to the provisions of the Parking Lot
Note, the City shall pay, against the principal and interest outstanding on the Parking Lot
Note, the amount of the Parking Lot Pledged Tax Increment received by the City during
the preceding 6 months. All such payments shall be applied first to accrued interest and
then to reduce the principal of the Note.
(v) The Parking Lot Note shall be a special and limited obligation of the City
and not a general obligation of the City, and only Parking Lot Pledged Tax Increment
shall be used to pay the principal and interest on the Parking Lot Note. If, on any
Payment Date, the Parking Lot Pledged Tax Increment for the payment of the accrued
and unpaid interest on the Parking Lot Note is insufficient for such purposes, the
difference shall be carried forward, without interest accruing thereon, and shall be paid if
and to the extent that on a future Payment Date there is Parking Lot Pledged Tax
Increment in excess of the amounts needed to pay the accrued interest then due on the
Parking Lot Note.
(vi) The City's obligation to make payments on the Parking Lot Note on any
Payment Date or any date thereafter shall be conditioned upon the requirement that (A)
there shall not at that time be an Event of Default that has occurred and is continuing
under this Agreement and (B) this Agreement shall not have been rescinded pursuant to
Section 9.4(c).
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(vii) The Parking Lot Note shall be governed by and payable pursuant to the
additional terms thereof, as set forth in Exhibit F. In the event of any conflict between
the terms of the Parking Lot Note and the terms of this Agreement, the terms of this
Agreement shall govern. The issuance of the Parking Lot Note pursuant and subject to
the terms of this Agreement, and the taking by the City of such additional actions as bond
counsel for the Parking Lot Note may require in connection therewith, are hereby
authorized and approved by the City.
(d) The Developer understands that the Parking Lot Note will not be registered or
otherwise qualified for sale under the securities laws and regulations of the State or under the
Federal securities laws or regulations, the Parking Lot Note will not be listed on any stock or
other securities exchange, and the Parking Lot Note will not carry a rating from any rating
service.
(e) Any assignment by the Developer of the Tax Increment Revenue Note must be to
a single entity and must be approved in writing by the City. The City acknowledges that the
Developer may, after the Profit Determination Date and the Cash Flow Determination Date,
assign the Parking Lot Note to a Lender, or a Placement Agent, acting as the servicer of any
Lender, or assign participations in the Tax Increment Revenue Note to multiple parties (the
"Participants") with one primary Noteholder and the Developer acknowledges that the City will
require, as a condition of its consent to the assignment to any Lender, Placement Agent or
Participant, that such Lender and any Participant be a "qualified financial institution" within the
meaning of the regulations promulgated under the Securities Act of 1933, as amended, and
deliver a letter of investment intent in a form satisfactory to the City or that such Placement
Agent represent that it will not sell or grant participation in the Parking Lot Note in amounts less
than $100,000 or to any entity that is not a "qualified financial institution" or without obtaining a
letter of investment intent in a form satisfactory to the City. Any offering material prepared by
the Developer or any Placement Agreement in connection with the Developer's assignment of the
Parking Lot Note to any Lender must be reviewed and approved by the City; provided that the
City will make no representations or warranties with respect to the information contained in any
such offering material.
(f) If and to the extent Available Tax Increments collected in any year are in excess
of the Parking Lot Pledged Tax Increment, the excess shall be retained by the City.
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ARTICLE VI
ENCUMBRANCE OF THE DEVELOPMENT PROPERTY
Section 6.1 Encumbrance of the Development Propertv. Neither the Deveioper nor
any successor in interest to the Developer (other than purchasers of the units in the Bluff Block
Housing Project) will engage in any financing or any other transaction creating any mortgage or
other encumbrance or lien upon the Development Property, or portion thereof, whether by
express agreement or operation oflaw, or suffer any encumbrance or lien to be made on or attach
to the Development Property except only for the purpose of obtaining funds to the extent
necessary for financing the costs of the Minimum hnprovements (including, but not limited to,
land and building acquisition, labor and materials, professional fees, real estate taxes,
construction interest, organization and other indirect costs of development, costs of constructing
the Minimum hnprovements, and an allowance for contingencies). The restriction on financing
and other transactions contained in this section shall terminate on the Completion Date.
Section 6.2 CODY of Notice of Default to Mortl!al!ee. If the City delivers any notice
or demand to the Developer with respect to any Event of Default under this Agreement, the City
will also deliver a copy of such notice or demand to the mortgagee of any mortgage on the
Development Property (a "Mortgage") at the address of such mortgagee provided to the City in a
written notice ttom the Developer or the mortgagee.
Section 6.3 Mortl!al!ee's Option to Cure Events of Default. Upon the occurrence of
an Event of Default, the mortgagee under any Mortgage will have the right, at its option, to cure
or remedy such Event of Default.
Section 6.4 Defanlts Under Mortl!al!e. The Developer will use its best efforts to
obtain an agreement ttom any mortgagee under a Mortgage that, in the event the Developer is in
default under any Mortgage, the mortgagee, within ten (10) days after it becomes aware of any
default and prior to exercising any remedy available to it due to such default, will notify the City
in writing of (i) the fact of default; (ii) the elements of default; and (iii) the actions required to
cure the default. If, within the time period required by the Mortgage, the City cures any default
under the Mortgage, the mortgagee will pursue none of its remedies under the Mortgage based
on such default.
Section 6.5 Subordination of Al!reement. In order to facilitate the obtaining of
financing for the construction of the Minimum hnprovements, the City agrees to execute a
subordination agreement in form and substance acceptable to the City to subordinate the
provisions of this Development Agreement and the Deed to the documents executed in
connection with the Construction Loan.
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ARTICLE VII
DEVELOPER COVENANTS
Section 7.1 Insurance. The Developer will provide and maintain or cause to be
maintained at all times and, from time to time at the request of the City, furnish the City with
proof of payment of premiums on insurance of amounts and coverages normally held by
businesses engaged in activities similar to those of the Developer.
Section 7.2 Maintenance and Ooeration of the Develooment. The Developer will
at all times during the term of this Agreement operate and maintain the Development in a safe
and secure way and in compliance with this Agreement and all federal, State and local laws,
regulations, rulings and ordinances applicable thereto. Developer shall pay all of the reasonable
and necessary expenses of the operation and maintenance of the Development, including all
premiums for insurance insuring against loss or damage thereto and adequate insurance against
liability for injury to persons or property arising from the Development as required pursuant to
this Agreement. Developer shall not knowingly cause any person working in or attending the
Development for any purpose, or any owner of a housing unit, to be exposed to any hazardous or
unsafe condition; provided that Developer shall not be in default hereunder if it has required the
contractors employed by Developer to perform work on the Development to take such
precautions as may be available to protect the persons in and around the Development from
hazards arising from the work, and has further required each such contractor to obtain and
maintain liability insurance protecting against liability to persons for injury arising from the
work. The expenses of operation and maintenance of the Development shall be borne solely by
Developer. The foregoing provisions shall apply to the Developer for only so long as the
Developer or an Affiliate is the owner of the Development and only as to such portions of the
Development which the Developer or an Affiliate owns.
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ARTICLE VIII
TRANSFER LIMITATIONS AND INDEMNIFICATION
Section 8.1 Representation as to Development. The Developer represents to the
City that its purchase of the Development Property, and its other undertakings under this
Agreement, are for the purpose of developing owner occupied and rental housing and
commercial facilities, and not for the purpose of speculation in land holding. The Developer
acknowledges that, in view of the importance of the development of the Development Property
to the general welfare of the City, and the substantial financing and other public aids that have
been made available by the City for the purpose of making such development possible, the
qualifications and identity of the Developer are of particular concern to the City. The Developer
further acknowledges that the City is willing to enter into this Agreement with the Developer
because of the qualifications and identity ofthe Developer.
Section 8.2 Limitations on Transfer.
(a) The Developer may, without prior written notice to the City, sell, assign, convey
or transfer in any other mode or manner, all or a portion of this Agreement, the Development
Property, or the Minimum hnprovements to the Construction Lender providing the Construction
Loan for the Minimum Improvements.
The Developer also may, in the regular course of business and without prior written
notice to the City, sell, assign, convey, lease or transfer in any other mode or manner the
following:
(i) to an individual unit purchaser, a unit of the Bluff Block Housing Project
or the Bluff Block Commercial Project for which a certificate of occupancy has been
issued;
(ii) to a tenant, a unit of the Jackson Block Housing Project or Jackson Block
Commercial Project if a certificate of occupancy has been issued for such project;
(iii) all or any part of the Development Property and/or all or part of the
Minimum Improvements, where such action is necessary to secure easements or other
encumbrances necessary for the Minimum hnprovements.
Except as specifically allowed under this Section and Article VI, the Developer will not
sell, assign, convey, lease or transfer in any other mode or manner this Agreement, the
Development Property or the Minimum Improvements, or any interest therein, without the
express written approval of the City. Notwithstanding the foregoing, so long as the Developer
remains liable for the performance of the Developer under this Agreement, the Developer may
transfer such portions of the Development Property as are necessary to allow the following
parties to develop the following components of the Development:
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Proiect
Transferee
Bluff Block Housing Project
Bluff Block, LLC
Jackson Block Housing Project
MDI Limited Partnership #70
Bluff Block Commercial Project
Bluff Block, LLC
Jackson Block Commercial Project
(b) Except as provided in Subsection (a) of this Section, the City shall be entitled to
require, as conditions to any approval of any sale, assigmnent, conveyance, use or transfer
requiring City approval under this Section that:
(i) Any proposed transferee shall have the qualifications and financial
responsibility, as determined by the City, necessary and adequate to fulfill the obligations
undertaken in this Agreement by the Developer;
(ii) Any proposed transferee, by instrument in writing satisfactory to the City
and the City and in form recordable among the land records shall, for itself and its
successors and assigns, and expressly for the benefit of the City have expressly assumed
all of the obligations of the Developer under this Agreement and agreed to be subject to
all the conditions and restrictions to which the Developer is subject.
(iii) There shall be submitted to the City for review all instruments and other
legal documents involved in effecting transfer, and if approved by City, its approval shall
be indicated to the Developer in writing;
(iv) The Developer and its transferee shall comply with such other conditions
as the City may find desirable in order to achieve and safeguard the purposes of the TIF
Act and this Agreement; and
(v) In the absence of specific written agreement by the City to the contrary, no
such transfer or approval by the City thereof shall be deemed to relieve the Developer or
any other party bound in any way by this Agreement or otherwise with respect to the
construction of the Minimum Improvements, from any of its obligations with respect
thereto.
( c) All restrictions on transfer of the Development, or any portion thereof, shall
terminate at the time that the City has issued a Certificate of Completion for the Development.
Section 8.3 Indemnification.
(a) The Developer releases from and covenants and agrees that the City, its governing
body members, officers, agents, including the independent contractors, consultants and legal
counsel, servants and employees thereof (hereinafter, for purposes of this Section, collectively
the "Indemnified Parties") shall 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
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person occurring at or about or resulting trom any defect in the Development to the extent not
attributable to the gross negligence or intentional misconduct of the Indemnified Parties.
(b) Except for gross negligence or intentional misconduct of the Indemnified Parties,
the Developer agrees to indemnify the Indemnified Parties, now and forever, and further agrees
to hold the aforesaid harmless from any claims, demands, suits, costs, expenses (including
reasonable attorneys' fees) actions or other proceedings whatsoever by any person or entity
whatsoever arising or purportedly arising trom the actions or inactions of the Developer (or if
other persons acting on its behalf or under its direction or control) under this Agreement, or the
transactions contemplated hereby or the acquisition, construction, installation, ownership, and
operation of the Development; including, without limitation, any claim by a land owner or tenant
located on the Development Property to be entitled to Relocation Costs and Expenses; provided,
that this indemnification shall not apply to the warranties made or obligations undertaken by the
City in this Agreement.
(c) Except as set forth in Section 3.2, the City makes no warranties or representations
regarding, nor does it indemnify the Developer with respect to, the existence or nonexistence on
or in the vicinity of the Development Property or anywhere within the Tax Increment District of
any toxic or hazardous substances or wastes, pollutants or contaminants (including, without
limitation, asbestos, urea formaldehyde, the group of organic compounds known as
polychlorinated biphenyls, petroleum products including gasoline, fuel oil, crude oil and various
constituents of such products, or any hazardous substance as defined in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), 42 US.C. ~~
961-9657, as amended) (collectively, the "Hazardous Substances"). The foregoing disclaimer
relates to any Hazardous Substance allegedly generated, treated, stored, released or disposed of,
or otherwise placed, deposited in or located on or in the vicinity of the Development Property or
within the Tax Increment District, as well as any activity claimed to have been undertaken on or
in the vicinity of the Development Property that would cause or contribute to causing (1) the
Development Property to become a treatment, storage or disposal facility within the meaning of,
or otherwise bring the Development Property within the ambit of, the Resource Conservation and
Recovery Act of 1976 ("RCRA"), 42 US.C. ~ 691 et seq., or any similar state law or local
ordinance, (2) a release or threatened release of toxic or hazardous wastes or substances,
pollutants or contaminants, trom the Development Property within the meaning of, or otherwise
bring the Development Property within the ambit of, CERCLA, or any similar state law or local
ordinance, or (3) the discharge of pollutants or effluents into any water source or system, the
dredging or filling of any waters or the discharge into the air of any emissions, that would require
a permit under the Federal Water Pollution Control Act, 33 D.S.C. ~ 1251 et seq., or any similar
state law or local ordinance. Further, the City makes no warranties or representations regarding,
nor does the City indemnify the Developer with respect to, the existence or nonexistence on or in
the vicinity of the Development Property or anywhere within the Tax Increment District of any
substances or conditions in or on the Development Property that may support a claim or cause of
action under RCRA, CERCLA or any other federal, state or local environmental statutes,
regulations, ordinances or other environmental regulatory requirements, including without
limitation, the Minnesota Environmental Response and Liability Act, Minnesota Statutes,
Chapter l15C. The City makes no representations or warranties regarding the existence of any
above ground or underground tanks in or about the Development Property, or whether any above
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or underground tanks have been located under, in or about the Development Property and have
subsequently been removed or filled.
(d) The Developer waives any claims against the City, and its Council members and
officers, for indemnification, contribution, reimbursement or other payments arising under
federal and state law and the common law or relating to the environmental condition of the land
comprising the Development Property.
Section 8.4 Limitation. All covenants, stipulations, promises, agreements and
obligations of the City or the Developer contained in this Agreement shall be deemed to be the
covenants, stipulations, promises, agreements and obligations of the City or the Developer,
respectively, and not of any governing body member, officer, agent, servant or employee of the
City or the Developer in the individual capacity thereof.
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ARTICLE IX
EVENTS OF DEFAULT AND DAMAGES
Section 9.1 Events of Default Defined. Subject to applicable cure periods, the
following shall be "Events of Default" under this Agreement and the term "Event of Default"
shall mean whenever it is used in this Agreement anyone or more of the following events:
Section 9.2 Developer Events of Default. The following shall be Developer Events
of Default:
(a) subject to Unavoidable Delays, the Developer shall fail to begin construction of
the Minimum Improvements and to proceed with due diligence to satisfactorily complete each of
the Minimum Improvements as provided in Section 4.3 and by the date set forth on Exhibit H
attached hereto, and such failure to begin, or proceed with due diligence to complete, the
construction of the Minimum Improvements shall not be cured within 30 days after written
notice to do so. Notwithstanding the foregoing, if the default reasonably requires more than
thirty (30) days to cure, such default shall not constitute an Event of Default, provided that the
curing of the default is promptly commenced upon receipt by the Developer of the notice of the
default, and with due diligence is thereafter continuously prosecuted to completion and is
completed within a reasonable period of time, and provided that Developer keeps the City well
informed at all times of its progress in curing the default; provided in no event, other than as a
result of Unavoidable Delays, shall such additional cure period extend beyond 180 days;
(b) subject to Unavoidable Delays, the Developer shall default in or violate its
obligations with respect to the construction of the Minimum Improvements (including the nature
and the date for the completion thereof), or shall abandon or substantially suspend construction
work, and any such default, violation, abandomnent or suspension is not cured, ended or
remedied within 30 days after written demand by the City so to do. Notwithstanding the
foregoing, if the default reasonably requires more than thirty (30) days to cure, such default shall
not constitute an Event of Default, provided that the curing of the default is promptly
commenced upon receipt by the Developer of the notice of the default, and with due diligence is
thereafter continuously prosecuted to completion and is completed within a reasonable period of
time, and provided that Developer keeps the City well informed at all times of its progress in
curing the default; provided in no event, other than as a result of Unavoidable Delays, shall such
additional cure period extend beyond 180 days;
( c) there is, in violation of Article VIII of this Agreement, any conveyance or other
transfer of the Development Property or any part thereof, and such violation is not cured within
30 days after written demand by the City to the Developer;
(d) subject to Unavoidable Delays, failure by Developer to observe or perform any
other covenant, condition, obligation or agreement on its part to be observed or performed under
this Agreement, and the continuation of such failure for a period of thirty (30) days after written
notice of such failure from the City. Notwithstanding the foregoing, if the default reasonably
requires more than thirty (30) days to cure, such default shall not constitute an Event of Default,
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provided that the curing of the default is promptly commenced upon receipt by the Developer of
the notice of the default, and with due diligence is thereafter continuously prosecuted to
completion and is completed within a reasonable period of time, and provided that Developer
keeps the City well informed at all times of its progress in curing the default; provided in no
event, other than as a result of Unavoidable Delays, shall such additional cure period extend
beyond 180 days; or
(e) the Developer shall (i) file any petition in bankruptcy or for any reorganization,
arrangement, composition, readjustment, liquidation, dissolution, or similar relief under the
United States Bankruptcy Act of 1978, as amended or under any similar Federal or State law; or
(ii) make an assignment for the benefit of its creditors; or (ii) become insolvent or adjudicated a
bankrupt; or if a petition or answer proposing the adjudication of Developer, as a bankrupt or its
reorganization under any present or future Federal bankruptcy act or any similar Federal or State
law shall be filed in any court and such petition or answer shall not be discharged or denied
within ninety (90) days after the filing thereof; or a receiver, trustee or liquidator of Developer,
or of the Development, or part thereof, shall be appointed in any proceeding brought against
Developer, and shall not be discharged within ninety (90) days after such appointed, or if
Developer shall consent to or acquiesce in such appointment.
(t) the Developer shall fail to pay any of the costs described in Article III of this
Agreement.
Section 9.3 City Events of Default. Subject to Unavoidable Delays, the failure of the
City to observe or perform any covenant, condition, obligation or agreement on its part to be
observed or performed under this Agreement, and the continuation of such failure for a period of
thirty (30) days after written notice of such failure from any party hereto shall be an Event of
Default for the City. Notwithstanding the foregoing, if the default reasonably requires more than
thirty (30) days to cure, such default shall not constitute an Event of Default, provided that the
curing of the default is promptly commenced upon receipt by the City of the notice of the
default, and with due diligence is thereafter continuously prosecuted to completion and is
completed within a reasonable period of time, and provided that the City keeps the Developer
well informed at all times of its progress in curing the default; provided in no event, other than as
a result of Unavoidable Delays, shall such additional cure period extend beyond 180 days.
Section 9.4 City Remedies on Default. Whenever any Developer Event of Default
occurs, the City may take anyone or more of the following actions:
(a) Suspend performance under this Agreement until it receives assurances from the
Developer, deemed adequate by the City, that the Developer will cure its default and continue its
performance under this Agreement.
(b) Withhold the Certificate of Completion for the Minimum Improvements.
(c) The City may cancel and terminate the Agreement.
(d) Take whatever action at law or in equity may appear necessary or desirable to the
City to collect any payments due under this Agreement, or to enforce performance and
observance of any obligation, agreement, or covenant of the Developer under this Agreement.
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Section 9.5 Developer Remedies on Default. Whenever any Event of Default occurs
by the City, the Developer may suspend its performance under this Agreement and/or take
whatever action at law or in equity may appear necessary or desirable to the Developer to
enforce performance and observance of any obligation, agreement, or covenant of the City under
this Agreement.
Nothing in this Agreement shall entitle the Developer to make any claim against the City
for any damages whatsoever and the Developer's remedies are strictly limited to the foregoing.
Section 9.6 No Remedv Exclusive. No remedy herein conferred upon or reserved to
the City or the Developer is intended to be exclusive of any other available remedy or remedies
unless otherwise expressly stated, but each and every such remedy shall be cumulative and shall
be in addition to every other remedy given under this Agreement or now or hereafter existing at
law or in equity or by statute. No delay or omission to exercise any right or power accruing upon
any default shall impair any such right or power or shall be construed to be a waiver thereof, but
any such right and power may be exercised from time to time and as often as may be deemed
expedient. In order to entitle the City or the Developer, to exercise any remedy reserved to it, it
shall not be necessary to give notice, other than such notice as may be required in this Article X.
Section 9.7 No Additional Waiver Implied bv One Waiver. If any agreement
contained in this Agreement should be breached by either Party and thereafter waived by the
other Party, such waiver shall be limited to the particular breach so waived and shall not be
deemed to waive any other concurrent, previous or subsequent breach hereunder.
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ARTICLE X
ADDITIONAL PROVISIONS
Section 10.1 Conflicts of Interest. No member of the City Councilor other official of
the City shall have any financial interest, direct or indirect, in this Agreement, the Development
Property or the Minimum Improvements, or any contract, agreement or other transaction
contemplated to occur or be undertaken thereunder or with respect thereto, nor shall any such
member of the governing body or other official participate in any decision relating to the
Agreement which affects his or her personal interests or the interests of any corporation,
partnership or association in which he or she is directly or indirectly interested. No member,
official or employee of the City shall be personally liable to the City in the event of any default
or breach by Developer or successor or on any obligations under the terms of this Agreement.
Section 10.2 Titles of Articles and Sections. Any titles of the several parts, articles
and Sections of the Agreement are inserted for convenience of reference only and shall be
disregarded in construing or interpreting any of its provisions.
Section 10.3 Notices and Demands. Except as otherwise expressly provided in this
Agreement, a notice, demand or other communication under this Agreement by any party to any
other shall be sufficiently given or delivered if it is dispatched by registered or certified mail,
postage prepaid, return receipt requested, or delivered personally, and
(a) in the case of Developer, is addressed to or delivered personally to Developer at
in the case of the Developer is addressed to or delivered personally to:
MetroPlains Development, LLC
1600 University Avenue, Suite 212
St. Paul, MN 55104-3825
(b) in the case of the City is addressed to or delivered personally to the City at:
City of Elk River, Minnesota
Elk River City Hall
13065 Orono Parkway
Elk River, MN 55330-5600
or at such other address with respect to any such party as that party may, trom time to
time, designate in writing and forward to the other, as provided in this Section.
Section 10.4 Counterparts. This Agreement may be executed III any number of
counterparts, each of which shall constitute one and the same instrument.
Section 10.5 Law Governinl!. This Agreement will be governed and construed in
accordance with the laws of the State of Minnesota.
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Section 10.6 Consents and Auurovals. In all cases where consents or approvals are
required hereunder, such consents or approvals shall not be unreasonably conditioned, delayed or
withheld. All consents or approvals shall be in writing in order to be effective.
Section 10.7 Representatives. Except as otherwise provided herein, all approvals and
other actions required of or taken by the City shall be effective upon action by the City
Representative. All actions required of or taken by Developer shall be effective upon action by
the Developer Representative.
Section 10.8 Suuersedinl! Effect. This Agreement reflects the entire agreement of the
Parties with respect to the matters covered herein, and supersedes in all respects all prior
agreements of the Parties, whether written or otherwise, with respect to such matters.
Section 10.9 Relationshiu of Parties. Nothing in this Agreement is intended, or shall
be construed, to create a partnership or joint venture among or between the Parties, and the rights
and remedies of the Parties shall be strictly as set forth in this Agreement.
Section 10.10 Term. The term of this Agreement shall be effective from the day and
year first above written until the earlier of (a) the date this Agreement is terminated pursuant to
Section 9.4(c) payment in full of the Tax Increment Revenue Note or any Refunding Bonds, or
(c) the date that the City is no longer receiving Available Tax Increment with respect to
termination of the Tax Increment District.
Section 10.11 Venue. All matters, whether sounding in tort or in contract, relating to the
validity, construction, performance, or enforcement of this Agreement shall be controlled by and
determined in accordance with the laws of the State of Minnesota, and the Developer agrees that
all legal actions initiated by the Developer or City with respect to or arising from any provision
contained in this Agreement shall be initiated, filed and venued exclusively in the State of
Minnesota, Sherburne County, District Court and shall not be removed therefrom to any other
federal or state court.
Section 10.12 Provisions Survivinl! Rescission or Exuiration. Section 8.3 shall
survive any rescission, termination or expiration of this Agreement with respect to or arising out
of any event, occurrence or circumstance existing prior to the date thereof.
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IN WITNESS WHEREOF, the City and Developer have caused this Agreement to be
duly executed in their names and on their behalf, all on or as ofthe date first above written.
CITY OF ELK RIVER, MINNESOTA
By
Mayor
By
Administrator
STATE OF MINNESOTA )
) ss
COUNTY OF SHERBURNE)
The foregoing instrument was acknowledged before me this _ day of
2004, by , the Mayor and , the Administrator of the
City of Elk River, Minnesota, a municipal corporation and politic subdivision organized and
existing under the Constitution and laws of the State of Minnesota, on behalf of said City.
Notary Public
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METROPLAINS DEVELOPMENT, LLC,
A Minnesota limited liability company
By
Its
STATE OF MINNESOTA )
) ss
COUNTY OF SHERBURNE)
The foregoing instrument was acknowledged before me this _ day of
, 2004, by , the of MetroPlains
Development, LLC, a Minnesota limited liability company on behalf of said company.
Notary Public
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EXHIBIT A
BLUFF BLOCK PROPERTY
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EXHIBIT B
JACKSON BLOCK PROPERTY
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EXHIBIT C
QUIT CLAIM DEED
Corporation Partnership or Limited Liability Company
to Corporation, Partnership or Limited Liability Company
No delinquent taxes and transfer entered; Certificate
of Real Estate Value ( ) filed ( ) not required
Certificate of Real Estate Value No.
County Auditor
by
Deputy
STATE DEED TAX DUE HEREON: $
Date: ,2004
(Reserved for recording data)
FOR VALUABLE CONSIDERATION, the City of Elk River, Minnesota, a municipal
corporation and politic subdivision, (the "Grantor") hereby conveys and quitclaims to
MetroPlains Development, LLC, a limited liability company organized under the laws of the
State of Minnesota, the real property in Sherburne County, Minnesota, described as follows:
See Attached Exhibit A
together with all hereditaments and appurtenances belonging thereto.
Grantor's delivery of this Deed and conveyance of title, and Grantee's acceptance of this Deed
and title to the Property, are expressly subject to: (I) the tenus and conditions and the rights of
the Grantor and the obligations of the Grantee under that certain Development Agreement by and
between Grantor and Grantee dated December _' 2004 (the "Development Agreement"), (2)
minerals and mineral rights reserved by the State of Minnesota; and (3) real estate taxes and
special assessments due and payable in 2004 and subsequent years, and (4) applicable zoning
laws, ordinances and all other local, state, regional and federal laws and regulations.
The Grantor does not know of any wells located on the described real property.
1674205v8
C-l
CITY OF ELK RIVER, MINNESOTA
By
Mayor
By
Administrator
STATE OF MINNESOTA )
) ss
COUNTY OF SHERBURNE)
The foregoing instrument was acknowledged before me this _ day of
2004, by , the Mayor and , the Administrator of the
City of Elk River, Minnesota, a municipal corporation and politic subdivision organized and
existing under the Constitution and laws of the State of Minnesota, on behalf of said City.
NOTARIAL STAMP OR SEAL (OR OTHER SIGNATURE OF PERSON TAKlNG
TITLE OR RANK) ACKNOWLEDGMENT
Tax statements for the real property described
in this instrument should be sent to (include
name and address of Grantee)
THIS INSTRUMENT WAS DRAFTED BY:
BRIGGS AND MORGAN
Professional Association
2200 First National Bank Building
St. Paul, Minnesota 55101
1674205v8
C-2
EXHIBIT D
CERTIFICATE OF COMPLETION
WHEREAS, the City of Elk River, Minnesota (the "Grantor"), a municipal corporation
and politic subdivision of the State of Minnesota, by a Deed recorded in the Office of the County
Recorder or the Registrar of Titles in and for the County of Sherburne and State of Minnesota, as
Deed Document Number , has conveyed to MetroPlains Development,
LLC, a Minnesota limited liability company (the "Grantee") in the County of Sherburne and
State of Minnesota, the following legally described property to wit:
See Attached Exhibit A
and
WHEREAS, said Deed incorporated and contained certain covenants and restrictions set
forth in an Development Agreement dated December _, 2004 executed by and between the
Grantor and the Grantee (the "Development Agreement"); and
WHEREAS, the Grantee has to the present date 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 construction of the Minimum Improvements
specified to be done and made by the Grantee have been completed and the above covenants of
the Grantee and conditions in said Development Agreement with respect to the construction of
the Minimum Improvements have been performed by the Grantee, and the County Recorder or
the Registrar of Titles in and for the County of Sherburne and State of Minnesota is hereby
authorized to accept for recording and to record the filing of this instrument, to be a conclusive
determination of the satisfaction of the obligations of the Grantee with respect to the construction
of the Minimum Improvements. Any remaining obligations under the Development Agreement
shall be solely contractual obligations of the Grantee, its successors and assigns under the
Development Agreement, shall not run with nor be a lien against the Property and no owner of a
housing unit shall be obligated under the Development Agreement.
I 674205v8
D-I
IN WITNESS WHEREOF, the City has caused this Certificate of Completion to be
executed with by its duly authorized officer as of the _ day of 20 .
CITY OF ELK RIVER, MINNESOTA
By
Mayor
By
Administrator
STATE OF MINNESOTA )
) ss
COUNTY OF SHERBURNE)
The foregoing instrument was acknowledged before me this _ day of
20_, by , the Mayor and , the Administrator of the
City of Elk River, Minnesota, a municipal corporation and politic subdivision organized and
existing under the Constitution and laws of the State of Minnesota, on behalf of said City.
Notary Public
1674205v8
D-2
EXHIBIT E
FORM OF TAX INCREMENT REVENUE NOTE
No. R-l
$
UNITED STATES OF AMERICA
STATE OF MINNESOTA
COUNTY OF SHERBURNE
CITY OF ELK RIVER, MINNESOTA
TAX INCREMENT REVENUE NOTE, SERIES 200_
(METROPLAINS DEVELOPMENT, LLC PROJECT)
The City of Elk River, Minnesota (the "City"), hereby acknowledges itself to be indebted
and, for value received, hereby promises to pay the amounts hereinafter described (the "Payment
Amounts") to MetroPlains Development, LLC, a Minnesota limited liability company or its
registered assigns (the "Registered Owner"), the principal of
Dollars ($ ), but only in the manner, at the times, trom the sources of revenue, and
to the extent hereinafter provided.
The principal amount of this Note shall equal trom time to time the principal amount
stated above, as reduced to the extent that such principal shall have been paid in whole or in part
pursuant to the terms hereof. This Note is issued pursuant to that certain Development
Agreement, dated as of December _, 2004, as the same may be amended from time to time
(the "Development Agreement"), by and between the City and MetroPlains Development, LLC,
a Minnesota limited liability company (the "Company"). The unpaid principal amount hereof
shall bear simple non-compounding interest trom the date the Developer has proved to the City
that it has incurred and paid Eligible Costs (as defined in the Development Agreement) in an
amount equal to the principal amount of this Note at the rate of six and fifty hundredths percent
(6.50%) per annum. Interest shall be computed on the basis of a 360-day year of twelve (12) 30-
day months.
The amounts due under this Note shall be payable on each February I and August I,
commencing with the first February I or August I occurring after the date of issuance of this
Note or, if the first should not be a Business Day (as defined in the Development Agreement) the
next succeeding Business Day (each, a "Payment Date"). On each Payment Date, the City shall
pay by check or draft mailed to the person that was the Registered Owner of this Note at the
close of the last business day preceding such Payment Date an amount equal to the Pledged Tax
Increment (as hereinafter defined) received by the City during the six month period preceding
such Payment Date. All payments made by the City under this Note shall first be applied to
accrued interest and then to principal. If Pledged Tax Increments are insufficient to pay any
accrued interest due, such unpaid interest shall be carried forward without interest.
The Payment Amounts due hereon shall be payable solely from 89% of the actual
Available Tax Increment received by the City since the last Payment Date based on the lesser of
the current actual Market Value of the Minimum Improvements (as defined in the Development
1674205v8
E-I
Agreement) as determined by the County Assessor or the County Assessor's Market Value of the
Minimum Improvements as of the January 2 immediately following the Completion Date (the
"Pledged Tax Increment"). "Available Tax Increment" means the portion of the real property
taxes generated by the Development Property (as such term is defined in the Development
Agreement) which Development Property is located within the Downtown Phase I Tax
Increment Financing District No. 22 which is actually remitted and retained by the City as tax
increment pursuant to the provisions of Minnesota Statutes, Sections 469.174 through 469.1799,
as the same may be amended or supplemented trom time to time (the "Tax Increment Act").
This Note shall terminate and be of no further force and effect following February 1, 2032 or
such later date as the City receives Available Tax Increment as a result of the payment of real
property taxes that were delinquent on February, 2032 (the "Final Payment Date") or any date
upon which the City shall have terminated the Development Agreement under Section 9.4(c)
thereof, or on the date that all principal and interest payable hereunder shall have been paid in
full, whichever occurs earliest. This Note may be prepaid in whole or in part at any time without
penalty.
The City makes no representation or covenant, express or implied, that the Pledged Tax
Increments will be sufficient to pay, in whole or in part, the amounts which are or may become
due and payable hereunder.
The City's payment obligations hereunder shall be further conditioned on the fact that no
Developer's Event of Default under Section 9.2 of the Development Agreement shall have
occurred and be continuing at the time payment is otherwise due hereunder, but such unpaid
amounts shall become payable, without interest accruing thereon in the meantime, if said Event
of Default shall thereafter have been cured; and, further, if pursuant to the occurrence of an
Event of Default under the Development Agreement the City elects to cancel and rescind the
Development Agreement, the City shall have no further debt or obligation under this Note
whatsoever. Reference is hereby made to all of the provisions of the Development Agreement,
for a fuller statement of the rights and obligations of the City to pay the principal of this Note
and the interest thereon, and said provisions are hereby incorporated into this Note as though set
out in full herein.
THIS NOTE IS A SPECIAL, LIMITED REVENUE OBLIGATION OF THE CITY
AND IS PAYABLE BY THE CITY ONLY FROM THE SOURCES AND SUBJECT TO
THE QUALIFICATIONS STATED OR REFERENCED HEREIN. THIS NOTE IS NOT
A GENERAL OBLIGATION OF THE CITY OF ELK RIVER, MINNESOTA, AND
NEITHER THE FULL FAITH AND CREDIT NOR THE TAXING POWERS OF THE
CITY ARE PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF OR INTEREST
ON THIS NOTE AND NO PROPERTY OR OTHER ASSET OF THE CITY, SAVE AND
EXCEPT THE ABOVE-REFERENCED TAX INCREMENTS, IS OR SHALL BE A
SOURCE OF PAYMENT OF THE CITY'S OBLIGATIONS HEREUNDER.
The Registered Owner shall never have or be deemed to have the right to compel any
exercise of any taxing power of the City or of any other public body, and neither the City nor any
person executing or registering this Note shall be liable personally hereon by reason of the
issuance or registration thereof or otherwise.
1674205v8
E-2
This Note is issued by the City in aid of financing a project pursuant to and in full
confonnity with the Constitution and laws of the State of Minnesota, including the Tax
Increment Act.
This Note may be assigned only with the prior written consent of the City. In order to
assign the Note, the assignee shall surrender the same to the City either in exchange for a new
fully registered note or for transfer of this Note on the registration records for the Note
maintained by the City. Each pennitted assignee shall take this Note subject to the foregoing
conditions and subj ect to all provisions stated or referenced herein.
IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions, and things
required by the Constitution and laws of the State of Minnesota to be done, to have happened,
and to be perfonned precedent to and in the issuance of this Note have been done, have
happened, and have been perfonned in regular and due fonn, time, and manner as required by
law; and that this Note, together with all other indebtedness of the City outstanding on the date
hereof and on the date of its actual issuance and delivery, does not cause the indebtedness of the
City to exceed any constitutional or statutory limitation thereon.
1674205v8
E-3
IN WITNESS WHEREOF, the City of Elk River, Minnesota, by its City Council, has
caused this Note to be executed by the manual signatures of its Mayor and Administrator and has
caused this Note to be issued on and dated ,200_
CITY OF ELK RIVER, MINNESOTA
By
Its Mayor
By
Its Administrator
I 674205v8
E-4
CERTIFICATION OF REGISTRATION
It is hereby certified that the foregoing Note, as originally issued on
200_, was on said date registered in the name of MetroPlains Development, LLC, a Minnesota
limited liability company, and that, at the request of the Registered Owner of this Note, the
undersigned has this day registered the Note in the name of such Registered Owner, as indicated
in the registration blank below, on the books kept by the undersigned for such purposes.
NAME AND ADDRESS OF
REGISTERED OWNER
DATE OF
REGISTRATION
SIGNATURE OF
ADMINISTRATOR
MetroPlains Development, LLC
1600 University Avenue, Suite 212
St. Paul, MN 55104-3825
,200
1674205v8
E-5
EXHIBIT F
FORM OF PARKING LOT NOTE
No.R-1
$
UNITED STATES OF AMERICA
STATE OF MINNESOTA
COUNTY OF SHERBURNE
CITY OF ELK RIVER, MINNESOTA
TAX INCREMENT REVENUE NOTE, SERIES 200_
(METROPLAINS DEVELOPMENT, LLC PARKING LOT PROJECT)
The City of Elk River, Minnesota (the "City"), hereby acknowledges itself to be indebted
and, for value received, hereby promises to pay the amounts hereinafter described (the "Payment
Amounts") to MetroPlains Development, LLC, a Minnesota limited liability company or its
registered assigns (the "Registered Owner"), the principal of
Dollars ($ ), but only in the manner, at the times, from the sources of revenue, and
to the extent hereinafter provided.
The principal amount of this Note shall equal from time to time the principal amount
stated above, as reduced to the extent that such principal shall have been paid in whole or in part
pursuant to the terms hereof. This Note is issued pursuant to that certain Development
Agreement, dated as of December _, 2004, as the same may be amended from time to time
(the "Development Agreement"), by and between the City and MetroPlains Development, LLC,
a Minnesota limited liability company (the "Company"). The unpaid principal amount hereof
shall bear simple non-compounding interest from the date of this Note at the rate of six and fifty
hundredths percent (6.50%) per annum. Interest shall be computed on the basis of a 360-day
year of twelve (12) 30-day months.
The amounts due under this Note shall be payable on each February I and August I,
commencing with the first February I or August I occurring after the date of issuance of this
Note or, if the first should not be a Business Day (as defined in the Development Agreement) the
next succeeding Business Day (each, a "Payment Date"). On each Payment Date, the City shall
pay by check or draft mailed to the person that was the Registered Owner of this Note at the
close of the last business day preceding such Payment Date an amount equal to the Parking Lot
Pledged Tax Increment (as hereinafter defined) received by the City during the six month period
preceding such Payment Date. All payments made by the City under this Note shall first be
applied to accrued interest and then to principal. If Pledged Tax Increments are insufficient to
pay any accrued interest due, such unpaid interest shall be carried forward without interest.
The Payment Amounts due hereon shall be payable solely from 6% of the actual
Available Tax Increment received by the City since the last Payment Date based on the lesser of
the current actual Market Value of the Minimum Improvements (as defined in the Development
Agreement) as determined by the County Assessor or the County Assessor's Market Value of the
Minimum Improvements as of the January 2 immediately following the Completion Date (the
J674205v8
F-l
"Pledged Tax Increment"). "Available Tax Increment" means the portion of the real property
taxes generated by the Development Property (as such term is defined in the Development
Agreement) which Development Property is located within the Downtown Phase I Tax
Increment Financing District No. 22 which is actually remitted and retained by the City as tax
increment pursuant to the provisions of Minnesota Statutes, Sections 469.174 through 469.1799,
as the same may be amended or supplemented from time to time (the "Tax Increment Act").
This Note shall terminate and be of no further force and effect following February 1, 2032 or
such later date as the City receives Available Tax Increment as a result of the payment of real
property taxes that were delinquent on February, 2032 (the "Final Payment Date") or any date
upon which the City shall have terminated the Development Agreement under Section 9.4(c)
thereof, or on the date that all principal and interest payable hereunder shall have been paid in
full, whichever occurs earliest. This Note may be prepaid in whole or in part at any time without
penalty.
The City makes no representation or covenant, express or implied, that the Pledged Tax
Increments will be sufficient to pay, in whole or in part, the amounts which are or may become
due and payable hereunder.
The City's payment obligations hereunder shall be further conditioned on the fact that no
Developer's Event of Default under Section 9.2 of the Development Agreement shall have
occurred and be continuing at the time payment is otherwise due hereunder, but such unpaid
amounts shall become payable, without interest accruing thereon in the meantime, if said Event
of Default shall thereafter have been cured; and, further, if pursuant to the occurrence of an
Event of Default under the Development Agreement the City elects to cancel and rescind the
Development Agreement, the City shall have no further debt or obligation under this Note
whatsoever. Reference is hereby made to all of the provisions of the Development Agreement,
for a fuller statement of the rights and obligations of the City to pay the principal of this Note
and the interest thereon, and said provisions are hereby incorporated into this Note as though set
out in full herein.
THIS NOTE IS A SPECIAL, LIMITED REVENUE OBLIGATION OF THE CITY
AND IS PAYABLE BY THE CITY ONLY FROM THE SOURCES AND SUBJECT TO
THE QUALIFICATIONS STATED OR REFERENCED HEREIN. THIS NOTE IS NOT
A GENERAL OBLIGATION OF THE CITY OF ELK RIVER, MINNESOTA, AND
NEITHER THE FULL FAITH AND CREDIT NOR THE TAXING POWERS OF THE
CITY ARE PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF OR INTEREST
ON THIS NOTE AND NO PROPERTY OR OTHER ASSET OF THE CITY, SAVE AND
EXCEPT THE ABOVE-REFERENCED TAX INCREMENTS, IS OR SHALL BE A
SOURCE OF PAYMENT OF THE CITY'S OBLIGATIONS HEREUNDER.
The Registered Owner shall never have or be deemed to have the right to compel any
exercise of any taxing power of the City or of any other public body, and neither the City nor any
person executing or registering this Note shall be liable personally hereon by reason of the
issuance or registration thereof or otherwise.
1674205v8
F-2
This Note is issued by the City in aid of financing a project pursuant to and in full
confonnity with the Constitution and laws of the State of Minnesota, including the Tax
Increment Act.
This Note may be assigned only with the prior written consent of the City. In order to
assign the Note, the assignee shall surrender the same to the City either in exchange for a new
fully registered note or for transfer of this Note on the registration records for the Note
maintained by the City. Each permitted assignee shall take this Note subject to the foregoing
conditions and subject to all provisions stated or referenced herein.
IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions, and things
required by the Constitution and laws of the State of Minnesota to be done, to have happened,
and to be performed precedent to and in the issuance of this Note have been done, have
happened, and have been performed in regular and due form, time, and manner as required by
law; and that this Note, together with all other indebtedness of the City outstanding on the date
hereof and on the date of its actual issuance and delivery, does not cause the indebtedness of the
City to exceed any constitutional or statutory limitation thereon.
1674205v8
F-3
IN WITNESS WHEREOF, the City of Elk River, Minnesota, by its City Council, has
caused this Note to be executed by the manual signatures of its Mayor and Administrator and has
caused this Note to be issued on and dated , 200_
CITY OF ELK RIVER, MINNESOTA
By
Its Mayor
By
Its Administrator
1674205v8
F-4
CERTIFICATION OF REGISTRATION
It is hereby certified that the foregoing Note, as originally issued on
200_, was on said date registered in the name of MetroPlains Development, LLC, a Minnesota
limited liability company, and that, at the request of the Registered Owner of this Note, the
undersigned has this day registered the Note in the name of such Registered Owner, as indicated
in the registration blank below, on the books kept by the undersigned for such purposes.
NAME AND ADDRESS OF
REGISTERED OWNER
DATE OF
REGISTRATION
SIGNATURE OF
ADMINISTRATOR
MetroPlains Development, LLC
1600 University Avenue, Suite 212
St. Paul, MN 55104-3825
,200_
1674205v8
F-5
1674205v8
EXHIBIT G
ELIGIBLE COSTS
Acquisition Costs of the Bluff
Block Property
Relocation Costs and Expenses
Demolition
Site Improvements
G-l
EXHIBIT H
CONSTRUCTION SCHEDULE
Commencement of Substantial
Construction Completion of
Construction
Bluff Block Housing Project Within 60 days Within 425 days after
after the U.S. Bank Commencement of
parcel is vacated Construction
Bluff Block Commercial Project Within 60 days Within 425 days after
after the U.S. Bank Commencement of
parcel is vacated Construction
Jackson Block Housing Project Within 45 days Within 425 days after
after Closing on Commencement of
Jackson Block Construction
Property
Jackson Block Commercial Project Within 45 days Within 425 days after
after Closing on Commencement of
Jackson Block Construction
Property
1674205v8
H-l
EXHIBIT I
ESTIMATED SOURCES AND USES STATEMENT
1674205v8
1-1
Page 1 of4
Land Acquisition
Site Work-Environmental, and Improvements $
Total Acquisition $
Rehabilitation/New Construction
~b!il:!If~"~~!I' ',' ,<, ", ,', "',
Commercial Construction and Tenant Improverr
Contin enc
E:::!1;!11!i1i!!!i!Lxi!f.:
1,912,750
200,000
2,112,750
8,592,638
...';....~~O;i:XJ~;
1,691,630
Architectural and Engineering
Total Architectural/En ineerin
Sale Fees and Marketin
Total marketing
Interim Costs
Financin Fees and Expenses
Total Car in Costs
Environmental Consultants
Total S ecial Consultants
Related Costs
Total Financing Costs
Condo Documents-Attorne and Survey
Total Title and Recordin
Total Other Soft Costs
Total Project Cost
$
355,000
355,000
11.90%
1.24%
13.14%
53.45%
2.18%
10.52%
2.65%
0.00%
0.00%
0.95%
69.74%
2.21%
2.21%
5.31%
5.31%
5.21%
0.45%
5.65%
0.00%
0.00%
0.68%
0.68%
0.74%
0.74%
2.53%
2.53%
100.00%
Total Proceeds
Pro"eet Cost
Allowable Profit
$
853,758
853,758
Metro Plains Development Agreement Proformas
$
$
$
836,888
71,800
908,688
$
109,000
109,000
$
119,000
119,000
$
$
406,000
16,077,237
$
$
$
Page 4 of 4
First Mort9age-lMIR
DEED Funds
Greater Minnesota Funds
Local Donations
% OF TOTAL
19.94%
7.43%
3.72%
0.02%
Partner Investment
Equity Gap
TOTAL SOURCES
63.37%
0.87%
100.00%
TOTALS
1 ,073.025
400.000
200.000
1
3,409.835
46,716
5,380,577
DEMO- SITE PREP 0.00 0.00% 0
CONSTRUCTION COSTS 118,429
BUilDING/LAND IMPROVEMENTS 70.43% 3,789.736
Contingency 150,589
SOFT COSTS
PROFESSIONAL SERVICES
Architectural, Engineering & Professional Fees 2.93% 157,500
APPRAISALS 0
INSURANCE 0
ACCOUNTING 0
CITY FEES 0
Park Dedication 70,400.00
REAL ESTATE TAXES 0
COST OF ISSUANCE
Interim Costs 5.45% 293,046
Financing fees and expenses 2.37% 127,768
Related Costs 1.50% 80,469
Syndication Costs 15,000 15,000
PERMANENT LOAN 0
ACCRUED EXPENSES 0
LETTERS OF CREDIT 0
CLOSING COSTS 0
PROJECT MANAGEMENT
CASH ACCOUNTS 2.85% 153,378
Total Soft Costs 1,440,251
TOTAL USES 100.00% 5,380,577
Metro Plains Development Agreement Proformas
1674205v8
EXHIBIT J
UPDATED SOURCES AND USES STATEMENT
[To be provided prior to issuance of Tax Increment Revenue Note]
I-I
EXHIBIT K
FINAL SOURCES AND USES STATEMENT
[To be provided on Profit Determination Date]
1674205v8
K-l
EXHIBIT L
FORM OF PROFIT STATEMENT
1674205v8
L-l
Page 1 of4
Land Acquisition
Site Work-Environmental, and Improvements $
Total Acquisition $
Rehabilitation/New Construction
i~~Si~'~t'liIjjmiii9,iLi" "'"" ,', 'n""""H',' '''i'',',i
Commercial Construction and Tenant ImprovelT
Total Construction costs
Architectural and Engineering
Total Arc~itectural/Engineerin
Sale Fees and Marketin
Total marketing
Interim Costs
Financin Fees and Expenses
Total Carrying Costs
Environmental Consultants
Total Special Consultants
Related Costs
Total Financing Costs
Condo Documents-Attorney and Survey
Total Title and Recording
Total Other Soft Costs
Total Project Cost
1,912,750
200,000
2,112,750
$
11,213,041
11.90%
1.24%
13.14%
53A5%
2.18%
10,52%
2,65%
0.00%
0,00%
0,95%
69.74%
2.21%
2.21%
5,31%
5.31%
5.21%
OA5%
5.65%
0,00%
0.00%
0.68%
0.68%
0.74%
0.74%
2,53%
2.53%
100.00%
imlilllii
Total Sale Price of Units
Commercial Sale
Total Proceeds
Project Cost
Allowable Profit
$
355,000
355,000
Metro Plains Development Agreement Proformas
$
853,758
853,758
$
$
$
836,888
71,800
908,688
$
109,000
109,000
$
119,000
119,000
$
$
406,000
16,077,237
$
$
17,127,152
16,077,237
EXHIBIT M
FINAL PROFIT STATEMENT
[To be provided on Profit Determination Date]
1674205v8
M-l
EXHIBIT N
FORM OF CASH FLOW STATEMENTS
1674205v8
N-l
Page 2 of4
Jackson Block - Commercial
TOTALS
1,092,525
364,175
1,456,700
4.52%
100,00%
68,995
1,525,695
Demolition 0.00 0.00% 0
Relocation 0.00 0.00% 0
CONSTRUCTION COSTS 1,014,000
Shops Shell 78.00 66.46% 1,014,000
TENANT IMPROVEMENTS 0
SOFT COSTS
PREDEVELOPMENT COSTS 62,000
Architect & Civil 4.06% 62,000
CONSTRUCTION COSTS 0
INTEREST EXPENSE 0
GOVERNMENTAL FEES 2,385
Park Dedication 0.16% 2385
LEGAL. Borrower 0 0
REAL ESTATE TAXES 0 0
FINANCING 147,603
Interim Costs 4.48% 68,378
Financing fees and expenses 2.72% 41,425
Related Costs 1.49% 22,800
Syndication Costs 0.98% 15,000
LEASING $0.00 0 0
PROMOTION COSTS 0 0
Project Reserves, Leasing Commissions
CONTINGENCY
7.83%
3.08%
119,395
46,996
119,395
46,996
Total Soft Costs
511,695
TOTAL USES
100.00%
1,525,695
Metro Plains Development Agreement Proformas
TYPE
TOTAL
SQ, FT.
13,000
13,000
ANNUAL
REVENUE
169,000
169,000
o
o
169,000
Retail
Total Rental Income
Total Other Income
13,000
ilft.,g"
Private Debt:
Amount of Bond-Loan
Term Of Bond-Loan
Rate of Bond-Loan
Monthly Payment
Annual Payment
1 ,092,525
20
6.75%
8,307
99,686
1iI_!,!'II','!~
., ,1.", '" "",],,!u'
YEAR 2006 2007 2008 2009 2010
Rental Revenue 0,00% 0,00% 0,00% 0,00% 0,00%
Other Income 0.00% 0.00% 0.00% 0.00% 0.00%
Expenses 0.00% 0.00% 0.00% 0.00% 0.00%
Vacanc 7,00% 7.00% 7.00% 7,00% 7.00%
MONTHS OPERATIN 12
Retail 169,000 169,000 169,000 169,000 169,000
Total Rental 91,000 91,000 91,000 91,000 91,000
Gross Revenue 260,000 260,000 260,000 260,000 260,000
Vacancies 11,830 11,830 11,830 11,830 11,830
Effective Income 248,170 248,170 248,170 248,170 248,170
CAM 91,000 91,000 91,000 91,000 91,000
Capital Exp/Reserve 6,500 6,500 6,500 6,500 6,500
MISC 5,000 5,000 5,000 5,000 5,000
TOTAL EXPENSES 102,500 102,500 102,500 102,500 102,500
NET OPERATING INCOME 145,670 145,670 145,670 145,670 145,670
ABATEMENT PAYMENTS 0 0 0 0 0
CASH FLOW AVAIL. FOR DEBT SERVICE 145,670 145,670 145,670 145,670 145,670
DEBT SERVICE (-) - Private 99,686 99,686 99,686 99,686 99,686
DEBT SERVICE (-) - Cit 0 0 0 0 0
CASH FLOW AFTER FINANCING 45,984 45,984 45,984
R8i11l!!li!~'ii!I~':I!\I~liIsLL..mjiil
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RETURN ON IN~ES.-AVERAGE 12.63% 12.63% 12.63% 12,63% 12.63%
Page 3 of4 Metro Plains Development Agreement Proformas
EXHIBIT 0
FINAL CASH FLOW STATEMENTS
[To be provided on Cash Flow Detennination Date]
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EXTRACT OF MINUTES OF MEETING
OF THE CITY COUNCIL OF THE
CITY OF ELK RIVER, MINNESOTA
HELD: December 6, 2004
Pursuant to due call and notice thereof, a meeting of the City Council of the City of Elk
River, Sherburne County, Minnesota, was duly called and held at the City Hall in said City on
Monday, the 6th day of December, 2004, at 6:30 o'clock p.m.
The following members were present:
and the following were absent:
Member
adoption:
introduced the following resolution and moved its
RESOLUTION AUTHORIZING EXECUTION OF
A DEVELOPMENT AGREEMENT
A. WHEREAS, MetroPlains Development, LLC (the "Developer") has requested
that the City of Elk River, Minnesota (the "City") assist with the financing of certain costs of
acquiring approximately one acre of real property located in the City, demolishing and clearing
the existing structures thereon and constructing approximately 68 units of owner-occupied
housing and approximately 10,820 square feet of retail space, together with related parking
facilities (the "Bluff Block Development") and constructing approximately 32 units of rental
housing and approximately 13,000 square feet of retail space, together with related parking
facilities, (the "Jackson Block Development"), to be undertaken by the Developer in the City
(collectively, the "Project").
B. WHEREAS, the Developer and the City have determined to enter into a
Development Agreement providing for the City's assistance for the Project (the "Agreement").
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Elk River,
Minnesota, as follows:
1. The City Council hereby approves the Agreement in substantially the form
submitted, and the Mayor and Administrator are hereby authorized and directed to execute the
Agreement on behalf of the City.
2. The approval hereby given to the Agreement includes approval of such additional
details therein as may be necessary and appropriate and such modifications thereof, deletions
therefrom and additions thereto as may be necessary and appropriate and approved by the City
officials authorized by this resolution to execute the Agreement. The execution of the
17lJ762vl
Agreement by the appropriate officer or officers of the City shall be conclusive evidence of the
approval of the Agreement in accordance with the terms hereof.
3. In accordance with the provisions of Minnesota Statutes, Sections l16J.993 to
116J.995 (the "Business Subsidies Act"), the City has determined that the public purpose of the
Project is to encourage the redevelopment of an area of the City which is already built up, to help
prevent the emergence of blight, to provide employment opportunities, to improve the tax base
and to encourage the construction of adjacent housing facilities in the City. After holding a
public hearing November 1, 2004, the City has determined that creation and retention of jobs is
not a goal of the Business Subsidy for this project and consequently hereby sets the wage and job
goals for the Proj ect at zero as set forth in the Agreement.
The motion for adoption of the foregoing resolution was duly seconded by member
and, after full discussion thereof, and upon a vote being taken thereof, the
following voted in favor thereof:
and the following voted against same:
Adopted this 6th day of December, 2004.
Mayor
Attest:
City Clerk
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2
STATE OF MINNESOTA
COUNTY OF SHERBURNE
CITY OF ELK RIVER
I, the undersigned, being the duly qualified and acting Clerk of the City of Elk River,
Minnesota, DO HEREBY CERTIFY that I have carefully compared the attached and foregoing
extract of minutes with the original minutes of a meeting of the City Council of the City held on
the date therein indicated, which are on file and of record in my office, and the same is a full,
true and complete transcript therefrom insofar as the same relates to a Resolution Authorizing
Execution of a Development Agreement.
WITNESS my hand as such Clerk of the City Council of the City of Elk River,
Minnesota this _ day of December, 2004.
City Clerk
JJlJ762vl
3
RESOLUTION APPROVING THE TERMS OF INTERNAL LOAN IN
CONNECTION WITH DOWNTOWN PHASE I TAX INCREMENT
FINANCING DISTRICT NO. 22 (SAC)
BE IT RESOLVED by the City Council (the "Council") of the City of Elk River,
Minnesota (the "City"), as follows:
Section 1.
Background.
(a) The City has heretofore approved the establishment of Downtown Phase I Tax
Increment Financing District No. 22 (the "TIP District") within its Municipal Development
District No. I (the "Development District"), and has adopted a tax increment financing plan for
the purpose of financing certain improvements within the TIF District.
(b) The City has determined to pay for certain costs (the "Qualified Costs") identified
in the TIP Plan consisting of the costs of the sewer access charges ("SAC") for the Bluff Block
Development and the Jackson Block Development, as defined in the Development Agreement,
dated as of December 6, 2004, between the City and MetroPlains Development, LLC (the
"Development Agreement"), which costs will be financed on a temporary basis from the City's
Sewer Fund.
(c) Under Minnesota Statutes, Section 469.178, Subd. 7, the City is authorized to
advance or loan money from the City's general fund or any other fund from which such advances
may be legally made, in order to finance the Qualified Costs.
(d) The City intends to reimburse itself for the Qualified Costs trom tax increments
derived trom the TIP District in accordance with the terms of this resolution (which terms are
referred to collectively as the "Interfund Loan").
Section 2.
Terms ofInterfund Loan.
(a) The City shall repay to the City fund trom which the Qualified Costs are initially
paid, the principal amount of approximately $175,880 together with interest at 4.00% per annum
from the later of December 6,2004 or the date payment of the SAC is due trom the Developer.
(b) Principal and interest ("Payments") shall be paid semi-annually on each February
1 and August 1 commencing with the first February I or August 1 occurring after the date of
issuance of a certificate of completion for the shell of the Bluff Block Development to and
including the earlier of (a) the date the principal and accrued interest of the Interfund Loan is
paid in full, or (b) the date of last receipt of tax increment trom the TIP District ("Payment
Dates") which Payments will be made in the amount and only to the extent of City Pledged Tax
Increment as hereinafter defined. Payments shall be applied first to accrued interest, and then to
unpaid principal.
(c) Payments on this Interfund Loan are payable solely trom "City Pledged Tax
Increment," which shall mean, on each Payment Date, 4% of the actual Available Tax Increment
(as defined in the Development Agreement) received by the City since the last Payment Date
plus any Tax Increment received by the City since the last Payment Date generated by the excess
1713778vl
of the current actual Market Value of the Minimum hnprovements as determined by the County
Assessor over the County Assessor's Market Value of the Minimum Improvements as of the
January 2 immediately following the Completion Date and applied on a prorata basis with other
interfund loans of the City secured in whole or in part with such City Pledged Tax Increment.
Payments on this Interfund Loan are subordinate to any outstanding or future bonds, notes or
contracts secured in whole or in part with such City Pledged Tax Increment, and are on parity
with any other outstanding or future interfund loans secured in whole or in part with such City
Pledged Tax Increment.
(d) The principal sum and all accrued interest payable under this Interfund Loan are
pre-payable in whole or in part at any time by the City without premium or penalty. No partial
prepayment shall affect the amount or timing of any other regular payment otherwise required to
be made under this Interfund Loan.
(e) This Interfund Loan is evidence of an internal borrowing by the City in
accordance with Minnesota Statutes, Section 469.178, Subd. 7, and is a limited obligation
payable solely from City Pledged Tax Increment pledged to the payment hereof under this
resolution. This Interfund Loan and the interest hereon shall not be deemed to constitute a
general obligation of the State of Minnesota or any political subdivision thereof, including,
without limitation, the City. Neither the State of Minnesota, nor any political subdivision thereof
shall be obligated to pay the principal of or interest on this Interfund Loan or other costs incident
hereto except out of City Pledged Tax Increment, and neither the full faith and credit nor the
taxing power of the State of Minnesota or any political subdivision thereof is pledged to the
payment of the principal of or interest on this Interfund Loan or other costs incident hereto. The
City shall have no obligation to pay any principal amount of the Interfund Loan or accrued
interest thereon, which may remain unpaid after the final Payment Date.
(f) The City may amend the terms of this Interfund Loan at any time by resolution of
the City Council, including a determination to forgive the outstanding principal amount and
accrued interest to the extent permissible under law.
Section 3. Capitalized Terms. Capitalized terms not otherwise defined in this resolution are
deemed to have the meanings given in the Development Agreement.
Section 4.
Effective Date. This resolution is effective upon the date of its approval.
Adopted this 6th day of December, 2004.
Mayor
ATTEST:
City Clerk
17IJ778vl
2
RESOLUTION APPROVING THE TERMS OF INTERNAL LOAN IN
CONNECTION WITH DOWNTOWN PHASE I TAX INCREMENT
FINANCING DISTRICT NO. 22 (WAC)
BE IT RESOLVED by the City Council (the "Council") of the City of Elk River,
Minnesota (the "City"), as follows:
Section 1.
Background.
(a) The City has heretofore approved the establishment of Downtown Phase I Tax
Increment Financing District No. 22 (the "TIF District") within its Municipal Development
District No. I (the "Development District"), and has adopted a tax increment financing plan for
the purpose of financing certain improvements within the TIP District.
(b) The City has determined to pay for certain costs (the "Qualified Costs") identified
in the TIP Plan consisting of the costs of the water access charges ("WAC") for the Bluff Block
Development and the Jackson Block Development, as defined in the Development Agreement,
dated as of December 6, 2004, between the City and MetroPlains Development, LLC (the
"Development Agreement"), which costs will be financed on a temporary basis trom the City's
Water Fund.
(c) Under Minnesota Statutes, Section 469.178, Subd. 7, the City is authorized to
advance or loan money from the City's general fund or any other fund trom which such advances
may be legally made, in order to finance the Qualified Costs.
(d) The City intends to reimburse itself for the Qualified Costs trom tax increments
derived from the TIP District in accordance with the terms of this resolution (which terms are
referred to collectively as the "Interfund Loan").
Section 2.
Terms of Interfund Loan.
(a) The City shall repay to the City fund trom which the Qualified Costs are initially
paid, the principal amount of $131,910 together with interest at 4.00% per annum from the later
of December 6,2004 or the date payment of the WAC is due trom the Developer.
(b) Principal and interest ("Payments") shall be paid semi-annually on each February
1 and August 1 commencing with the first February I or August 1 occurring after the date of
issuance of a certificate of completion for the shell of the Bluff Block Development to and
including the earlier of (a) the date the principal and accrued interest of the Interfund Loan is
paid in full, or (b) the date of last receipt of tax increment from the TIF District ("Payment
Dates") which Payments will be made in the amount and only to the extent of City Pledged Tax
Increment as hereinafter defined. Payments shall be applied first to accrued interest, and then to
unpaid principal.
(c) Payments on this Interfund Loan are payable solely trom "City Pledged Tax
Increment," which shall mean, on each Payment Date, 4% of the actual Available Tax Increment
(as defined in the Development Agreement) received by the City since the last Payment Date
plus any Tax Increment received by the City since the last Payment Date generated by the excess
17JJ878vl
of the current actual Market Value of the Minimum Improvements as determined by the County
Assessor over the County Assessor's Market Value of the Minimum Improvements as of the
January 2 immediately following the Completion Date and applied on a prorata basis with other
interfund loans of the City secured in whole or in part with such City Pledged Tax Increment.
Payments on this Interfund Loan are subordinate to any outstanding or future bonds, notes or
contracts secured in whole or in part with such City Pledged Tax Increment, and are on parity
with any other outstanding or future interfund loans secured in whole or in part with such City
Pledged Tax Increment.
(d) The principal sum and all accrued interest payable under this Interfund Loan are
pre-payable in whole or in part at any time by the City without premium or penalty. No partial
prepayment shall affect the amount or timing of any other regular payment otherwise required to
be made under this Interfund Loan.
(e) This Interfund Loan is evidence of an internal borrowing by the City in
accordance with Minnesota Statutes, Section 469.178, Subd. 7, and is a limited obligation
payable solely trom City Pledged Tax Increment pledged to the payment hereof under this
resolution. This Interfund Loan and the interest hereon shall not be deemed to constitute a
general obligation of the State of Minnesota or any political subdivision thereof, including,
without limitation, the City. Neither the State of Minnesota, nor any political subdivision thereof
shall be obligated to pay the principal of or interest on this Interfund Loan or other costs incident
hereto except out of City Pledged Tax Increment, and neither the full faith and credit nor the
taxing power of the State of Minnesota or any political subdivision thereof is pledged to the
payment of the principal of or interest on this Interfund Loan or other costs incident hereto. The
City shall have no obligation to pay any principal amount of the Interfund Loan or accrued
interest thereon, which may remain unpaid after the final Payment Date.
(f) The City may amend the terms of this Interfund Loan at any time by resolution of
the City Council, including a determination to forgive the outstanding principal amount and
accrued interest to the extent permissible under law.
Section 3. Capitalized Terms. Capitalized terms not otherwise defined in this resolution are
deemed to have the meanings given in the Development Agreement.
Section 4.
Effective Date. This resolution is effective upon the date of its approval.
Adopted this 6th day of December, 2004.
Mayor
ATTEST:
City Clerk
1713878vl
2
RESOLUTION APPROVING THE TERMS OF INTERNAL LOAN IN
CONNECTION WITH DOWNTOWN PHASE I TAX INCREMENT
FINANCING DISTRICT NO. 22 (LAND)
BE IT RESOLVED by the City Council (the "Council") of the City of Elk River,
Minnesota (the "City"), as follows:
Section 1.
Background.
(a) The City has heretofore approved the establishment of Downtown Phase I Tax
Increment Financing District No. 22 (the "TIP District") within its Municipal Development
District No. 1 (the "Development District"), and has adopted a tax increment financing plan for
the purpose of financing certain improvements within the TIF District.
(b) The City has determined to pay for certain costs (the "Qualified Costs") identified
in the TIP Plan consisting of the costs of the Jackson Block Property for the Jackson Block
Development, both as defined in the Development Agreement, dated as of December 6, 2004,
between the City and MetroPlains Development, LLC (the "Development Agreement"), which
costs will be financed on a temporary basis from City funds available for such purposes.
(c) Under Minnesota Statutes, Section 469.178, Subd. 7, the City is authorized to
advance or loan money from the City's general fund or any other fund from which such advances
may be legally made, in order to finance the Qualified Costs.
(d) The City intends to reimburse itself for the Qualified Costs from tax increments
derived from the TIF District in accordance with the terms of this resolution (which terms are
referred to collectively as the "Interfund Loan").
Section 2.
Terms ofInterfund Loan.
(a) The City shall repay to the City fnnd from which the Qualified Costs are initially
paid, the principal amonnt of approximately $500,000 together with interest at 4.00% per annum
from the later of December 6,2004 or the date of the sale of the Land.
(b) Principal and interest ("Payments") shall be paid semi-armually on each February
1 and August 1 commencing with the first February 1 or August 1 occurring after the date of
issuance of a certificate of completion for the shell of the Bluff Block Development (as defined
in the Development Agreement) to and including the earlier of (a) the date the principal and
accrued interest of the Interfund Loan is paid in full, or (b) the date of last receipt of tax
increment from the TIF District ("Payment Dates") which Payments will be made in the amount
and only to the extent of City Pledged Tax Increment as hereinafter defined. Payments shall be
applied first to accrued interest, and then to unpaid principal.
(c) Payments on this Interfund Loan are payable solely from "City Pledged Tax
Increment," which shall mean, on each Payment Date, 4% ofthe actual Available Tax Increment
(as defined in the Development Agreement) received by the City since the last Payment Date
plus any Tax Increment received by the City since the last Payment Date generated by the excess
of the current actual Market Value of the Minimum Improvements as determined by the County
1713879vl
Assessor over the County Assessor's Market Value of the Minimum Improvements as of the
January 2 immediately following the Completion Date and applied on a prorata basis with other
interfund loans of the City secured in whole or in part with such City Pledged Tax Increment.
Payments on this Interfund Loan are subordinate to any outstanding or future bonds, notes or
contracts secured in whole or in part with such City Pledged Tax Increment, and are on parity
with any other outstanding or future interfund loans secured in whole or in part with such City
Pledged Tax Increment.
(d) The principal sum and all accrued interest payable under this Interfund Loan are
pre-payable in whole or in part at any time by the City without premium or penalty. No partial
prepayment shall affect the amount or timing of any other regular payment otherwise required to
be made under this Interfund Loan.
( e) This Interfund Loan IS evidence of an internal borrowing by the City in
accordance with Minnesota Statutes, Section 469.178, Subd. 7, and is a limited obligation
payable solely from City Pledged Tax Increment pledged to the payment hereof under this
resolution. This Interfund Loan and the interest hereon shall not be deemed to constitute a
general obligation of the State of Minnesota or any political subdivision thereof, including,
without limitation, the City. Neither the State of Minnesota, nor any political subdivision thereof
shall be obligated to pay the principal of or interest on this Interfund Loan or other costs incident
hereto except out of City Pledged Tax Increment, and neither the full faith and credit nor the
taxing power of the State of Minnesota or any political subdivision thereof is pledged to the
payment of the principal of or interest on this Interfund Loan or other costs incident hereto. The
City shall have no obligation to pay any principal amount of the Interfund Loan or accrued
interest thereon, which may remain unpaid after the final Payment Date.
(f) The City may amend the terms ofthis Interfund Loan at any time by resolution of
the City Council, including a determination to forgive the outstanding principal amount and
accrued interest to the extent permissible under law.
Section 3. Capitalized Terms. Capitalized terms not otherwise defined in this resolution are
deemed to have the meanings given in the Development Agreement.
Section 4.
Effective Date. This resolution is effective upon the date of its approval.
Adopted this 6th day of December, 2004.
Mayor
ATTEST:
City Clerk
1713879vl
2