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III. 3. Approve Resolution 531 and 530 related to the Doran Matter September 3, 2019 Hopkins HRA Report APPROVE HRA RESOLUTION 531 APPROVING THE AMENDED AND RESTATED DEVELOPMENT AGREEMENT BETWEEN THE CITY OF HOPKINS, THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF HOPKINS, DORAN 810 LLC AND DORAN 810 APARTMENTS, LLC APPROVE HRA RESOLUTION 530 APPROVING THE ISSUANCE OF, AND PROVIDING THE FORM, TERMS, COVENANTS AND DIRECTIONS FOR THE ISSUANCE OF ITS TAXABLE TAX INCREMENT REVENUE NOTE, SERIES 2018 IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $13,200,000 Proposed Action. Staff recommends that the Housing and Redevelopment Authority approve the following motion: Approve HRA Resolution 531 Approving the Amended and Restate Development Agreement between the City of Hopkins, the Housing and Redevelopment Authority in and for the City of Hopkins, Doran 810 LLC and Doran 810 Apartments, LLC and Approve HRA Resolution 530 Approving the Issuance of, and Providing the Form, Terms, Covenants and Directions for the Issuance of its Taxable Tax Increment Revenue Note, Series 2018 in an Aggregate Principal Amount not to Exceed $13,200,000. Overview: On March 4, 2016, Doran 810 LLC and Doran 810 Apartments, LLC (collectively “Doran”) and City of Hopkins and the Hopkins HRA (collectively “City”) entered into a Development Agreement regarding construction of an apartment complex and parking facility commonly known as The Moline. Pursuant to the Development Agreement, Doran agreed to construct, and the City agreed to either buy or reimburse Doran for the cost of a Grade-Level Garage (the “Garage”) which was to be utilized for parking for the Southwest LRT transit facility. Doran completed construction of the Garage on or around March 23, 2018. Notwithstanding the negotiation efforts of all of the parties regarding agreements for use and operation of the Garage, the closing on the purchase of the Garage did not occur as Doran and the Metropolitan Council were never able to come to a final agreement. On July 31, 2018, Doran served the City with a Summons and Complaint alleging, among other things, that the City breached the Purchase and Development Agreements by failing and refusing to close on Garage. On August 30, 2018, the City answered Doran’s Complaint and denied liability under the Purchase Agreement and the City also asserted Counterclaims against Doran alleging, among other things, that Doran had breached the terms of the Development Agreement thereby resulting in damage to the City. 610798v2BE295-315 To avoid the uncertainties, risks and expenses of protracted litigation, the Parties entered into a mediated settlement agreement on August 2, 2019 (the “Mediated Settlement Agreement”). Pursuant to Paragraph 2 of the Mediated Settlement Agreement, the parties have prepared the attached Addendum to the Mediated Settlement Agreement and Release which requires approval of the City, contains mutual releases between the parties, and provides for cancellation of the Purchase Agreement. City staff and the City attorney recommend that the Housing and Redevelopment Authority approve the Amended and Restated Development Agreement (via HRA Resolution 531) and approve the issuance of, and provided the form, terms, covenant and directions for the issuance of its taxable Tax Increment Revenue Note, Series 2018, in an aggregate principal amount not to exceed $13,200,000 (via HRA Resolution 530) and the HRA also authorizes the City Manager and the City attorney to take any and all additional steps and actions necessary or convenient to prepare the appropriate documents and/or agreements to facilitate the approvals set forth herein. Supporting Information: Resolution 530 and Resolution 531 ________________________________________ Scott J. Riggs Hopkins City Attorney 610798v2BE295-315 HOPKINS HOUSING AND REDEVELOPMENT AUTHORITY RESOLUTION 531 A RESOLUTION APPROVING THE AMENDED AND RESTATED DEVELOPMENT AGREEMENT BETWEEN THE CITY OF HOPKINS, THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF HOPKINS, DORAN 810 LLC AND DORAN 810 APARTMENTS, LLC WHEREAS, on March 4, 2016, Doran 810 LLC and Doran 810 Apartments, LLC (collectively “Doran”), the City of Hopkins (the “City”), and the Housing and Redevelopment Authority in and for the city of Hopkins (the “HRA”) entered into a development agreement for the development of certain property located within the City (the “Development Agreement”) along with a purchase agreement for a portion of the property that the City intended to purchase following redevelopment (the “Purchase Agreement”); and WHEREAS, on February 2, 2016, the parties to such Development Agreement executed the “First Amendment to Development Agreement” (the “First Amendment”) whereby the parties agreed to modify certain terms in the Development Agreement; and WHEREAS, the First Amendment was not recorded with Hennepin County; and WHEREAS, the parties hereby wish to approve an amended and restated Development Agreement which incorporates the changes included in the First Amendment as well as additional changes which are the product of a mediated settlement agreement between the parties (the “Amended and Restated Development Agreement”). NOW, THEREFORE, BE IT RESOLVED THAT the above-referenced recitals are incorporated herein to this Resolution. NOW, THEREFORE, BE IT FURTHER RESOLVED, that the Housing and Redevelopment Authority in and for the City of Hopkins hereby approves the Amended and 1 610654v1BE295-315 Restated Development Agreement in substantially the form as attached hereto as Exhibit A, the contents of which are incorporated herein by reference. NOW, THEREFORE, BE IT FURTHER RESOLVED THAT, the President and Executive Director and the HRA Attorney are hereby authorized and directed to take any and all additional steps and actions necessary or convenient to prepare the appropriate documents and/or agreements to facilitate the directives of the Board as provided herein in order to accomplish the intent of this Resolution. The above resolution was approved/denied by a vote of ____ to _____. Adopted by the Board of the Housing and Redevelopment Authority in and for the City of Hopkins rd this 3 day of September, 2019. ATTEST: _________________________ _______________________ President Executive Director 2 610654v1BE295-315 EXHIBIT A FORM OF AMENDED AND RESTATED DEVELOPMENT AGREEMENT A-1 610654v1BE295-315 AUTHORIZING RESOLUTION HOPKINS HOUSING AND REDEVELOPMENT AUTHORITY RESOLUTION NO. 530 RESOLUTION APPROVING THE ISSUANCE OF, AND PROVIDING THE FORM, TERMS, COVENANTS AND DIRECTIONS FOR THE ISSUANCE OF ITS TAXABLE TAX INCREMENT REVENUE NOTE, SERIES 2018 IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $13,200,000 BE IT RESOLVED BY the Housing and Redevelopment Authority in and for the City of Hopkins (the “HRA”), as follows: Section 1. Authorization; Award of Sale. 1.01. Authorization. The HRA has heretofore approved the establishment of Tax Increment Financing District No. 1-5 (the “TIF District”) within Redevelopment Project No. 1 (“Redevelopment Project”), and has adopted a tax increment financing plan for the purpose of financing certain improvements within the Redevelopment Project. Pursuant to Minnesota Statutes, Section 469.178, the HRA is authorized to issue and sell its bonds for the purpose of financing a portion of the public development costs of the Redevelopment Project. The bonds are payable from all or any portion of revenues derived from the TIF District and pledged to the payment of the bonds. The HRA hereby finds and determines that it is in the best interests of the HRA that it issue and sell its taxable Tax Increment Revenue Note, Series 2018 (the “Note”), in the aggregate principal amount of $13,200,000, for the purpose of financing certain public costs of the Redevelopment Project. 1.02. Agreement Approved; Issuance, Sale and Terms of the Note. The HRA has previously approved the Development Agreement, including the First Amendment to the Development Agreement and the Second Amendment to the Development Agreement (collectively, the “Agreement”) between the HRA and Doran 810 Apartments, LLC (the “Owner”), and authorized the Executive Director to execute the Agreement. Pursuant to the Agreement, the Note will be sold to the Owner. The Note will be dated April 30, 2018 and will bear interest at the rate of 5% per annum to the earlier of maturity or prepayment. In exchange for the HRA’s issuance of the Note to the Owner, the Owner will pay certain costs related to the Minimum Improvements (the Qualifying Costs, as defined in the Agreement) pursuant to Article IV of the Agreement. The Note will be delivered in the principal amount of $13,200,000 for reimbursement of the Owner’s costs in accordance with the terms of Article VI of the Agreement. Section 2. Form of Note. The Note will be in substantially the following form, with the blanks to be properly filled in and the principal amount and payment schedule adjusted as of the date of issue: 609588v2BE295-315 UNITED STATE OF AMERICA STATE OF MINNESOTA HENNEPIN COUNTY HOPKINS HOUSING AND REDEVELOPMENT AUTHORITY No. R-1 $13,200,000 TAXABLE TAX INCREMENT REVENUE NOTE SERIES 2018 Date Rate of Original Issue 5% April 30, 2018 The Housing and Redevelopment Authority in and for the City of Hopkins (the “HRA”), for value received, certifies that it is indebted and hereby promises to pay to Doran 810 Apartments, LLC, or its registered assigns (the “Owner”), the principal sum of $13,200,000 and to pay interest thereon at the rate of 5 percent per annum, as and to the extent set forth herein. 1. Payments. Principal and interest (“Payments”) are estimated to be paid on August 1, 2018, and each February 1 and August 1 thereafter to and including February 1, 2043 (“Payment Dates”), in the amounts and from the sources set forth in Section 3 herein. Payments will be applied first to accrued interest, and then to unpaid principal. Payments are payable by mail to the address of the Owner or any other address as the Owner may designate upon 30 days written notice to the HRA. Payments on this Note are payable in any coin or currency of the United States of America which, on the Payment Date, is legal tender for the payment of public and private debts. 2. Interest. Interest at the rate stated herein will accrue on the unpaid principal, commencing on the date of original issue. Interest will be computed on the basis of a year of 365 days and charged for actual days principal is unpaid. 3. Available Tax Increment. Payments on this Note are payable on each Payment Date in the amount of and solely payable from “Available Tax Increment,” which will mean, on each Payment Date, 95 percent of the Tax Increment attributable to the Redevelopment Property (defined in the Agreement) and paid to the HRA by Hennepin County in the six months preceding the Payment Date, all as the terms are defined in the Development Agreement, as amended between the HRA and Owner dated as of March 4, 2016, and further amended on February 2, 2017 and September 3, 2019 (collectively, the “Agreement”). Available Tax Increment will not include any Tax Increment if, as of any Payment Date, there is an uncured Event of Default by the Owner under the Agreement. The Owner may assign the TIF Note to a lender that provides all or part of the financing for the acquisition of the Redevelopment Property or the construction of the Minimum Improvements. 609588v2BE295-315 The HRA will have no obligation to pay principal of and interest on this Note on each Payment Date from any source other than Available Tax Increment, and the failure of the HRA to pay the entire amount of principal or interest on this Note on any Payment Date will not constitute a default hereunder as long as the HRA pays principal and interest hereon to the extent of Available Tax Increment. The HRA will have no obligation to pay unpaid balance of principal or accrued interest that may remain after the final Payment on February 1, 2043. 4. Optional Prepayment. The principal sum and all accrued interest payable under this Note is prepayable in whole or in part at any time by the HRA without premium or penalty. No partial prepayment will affect the amount or timing of any other regular payment otherwise required to be made under this Note. 5. Termination. At the HRA’s option, this Note will terminate and the HRA’s obligation to make any payments under this Note will be discharged upon the occurrence of an Event of Default on the part of the Redeveloper as defined in Article IX of the Agreement, but only if the Event of Default has not been cured in accordance with Article IX of the Agreement. 6. Nature of Obligation. This Note is a single note in the total principal amount of $13,200,000 issued to aid in financing certain public redevelopment costs and administrative costs of a Redevelopment Project undertaken by the HRA pursuant to Minnesota Statutes, Sections 469.001 through 469.047, as amended, and is issued pursuant to an authorizing resolution (the “Resolution”) duly adopted by the HRA on September 3, 2019, and pursuant to and in full conformity with the Constitution and laws of the State of Minnesota, including Minnesota Statutes, Sections 469.174 to 469.179, as amended. This Note is a limited obligation of the HRA which is payable solely from Available Tax Increment pledged to the payment hereof under the Resolution. This Note and the interest hereon will not be deemed to constitute a general obligation of the State of Minnesota or any political subdivision thereof, including, without limitation, the HRA or the city of Hopkins. Neither the State of Minnesota, nor any political subdivision thereof will be obligated to pay the principal of or interest on this Note or other costs incident hereto except out of Available 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 Note or other costs incident hereto. 7. Estimated Tax Increment Payments. Any estimates of Tax Increment prepared by the HRA or its financial advisors in connection with the TIF District or the Agreement are for the benefit of the HRA, and are not intended as representations on which the Owner may rely. THE HRA MAKES NO REPRESENTATION OR WARRANTY THAT THE AVAILABLE TAX INCREMENT WILL BE SUFFICIENT TO PAY THE PRINCIPAL OF AND INTEREST ON THIS NOTE. 8. Registration and Transfer. This Note is issuable only as a fully registered note without coupons. As provided in the Resolution, and subject to certain limitations set forth therein, this Note is transferable upon the books of the HRA kept for that purpose at the principal office of the Executive Director of the HRA as Registrar, by the Owner hereof in person or by the Owner’s attorney duly authorized in writing, upon surrender of this Note together with a written instrument of transfer satisfactory to the HRA, duly executed by the Owner. Upon the transfer or exchange 609588v2BE295-315 and the payment by the Owner of any tax, fee, or governmental charge required to be paid by the HRA with respect to the transfer or exchange, there will be issued in the name of the transferee a new Note of the same aggregate principal amount, bearing interest at the same rate and maturing on the same dates. This Note will not be transferred to any person other than an affiliate, or other related entity, of the Owner unless previously approved in writing by the HRA. 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 exist, to happen, and to be performed in order to make this Note a valid and binding limited obligation of the HRA according to its terms, have been done, do exist, have happened, and have been performed in due form, time and manner as so required. IN WITNESS WHEREOF, the board of commissioners of the Housing and Redevelopment Authority in and for the City of Hopkins, has caused this Note to be executed with the manual signatures of its President and Executive Director, all as of the Date of Original Issue specified above. HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF HOPKINS President Executive Director 609588v2BE295-315 REGISTRATION PROVISIONS The ownership of the unpaid balance of the within Note is registered in the bond register of the Executive Director of the HRA, in the name of the person last listed below. Date of Registration Registered Owner Signature of the HRA Executive Director April 30, 2018 Doran 810 Apartments, LLC _____________________ _____________________ _____________________ Federal Tax ID #_________ \[End of Form of Note\] Section 3. Terms, Execution and Delivery. 3.01. Denomination, Payment. The Note will be issued as a single typewritten note numbered R-1. The Note will be issuable only in fully registered form. Principal of and interest on the Note will be payable by check or draft issued by the Registrar described herein. 3.02. Dates; Interest Payment Dates. Principal of and interest on the Note will be payable by mail to the owner of record thereof as of the close of business on the fifteenth day of the month preceding the Payment Date, whether or not the day is a business day. 3.03. Registration. The HRA hereby appoints the Executive Director to perform the functions of registrar, transfer agent and paying agent (the “Registrar”). The effect of registration and the rights and duties of the HRA and the Registrar with respect thereto will be as follows: (a) Register. The Registrar will keep at their office a bond register in which the Registrar will provide for the registration of ownership of the Note and the registration of transfers and exchanges of the Note. (b) Transfer of Note. Upon surrender for transfer of the Note duly endorsed by the registered owner thereof or accompanied by a written instrument of transfer, in form reasonably satisfactory to the Registrar, duly executed by the registered owner thereof or by an attorney duly authorized by the registered owner in writing, the Registrar will authenticate and deliver, in the name of the designated transferee or transferees, a new Note of a like aggregate principal amount and maturity, as requested by the transferor. Notwithstanding the foregoing, the Note will not be transferred except to any person other than an affiliate, or other related entity of the Owner unless the HRA has provided its prior written consent to such transfer. The Registrar may close the books for registration of any transfer after the fifteenth day of the month preceding each Payment Date and until the Payment Date. 609588v2BE295-315 (c) Cancellation. The Note surrendered upon any transfer will be promptly cancelled by the Registrar and thereafter disposed of as directed by the HRA. (d) Improper or Unauthorized Transfer. When the Note is presented to the Registrar for transfer, the Registrar may refuse to transfer the same until they are satisfied that the endorsement on the Note or separate instrument of transfer is legally authorized. The Registrar will incur no liability for their refusal, in good faith, to make transfers which they, in their judgment, deems improper or unauthorized. (e) Persons Deemed Owners. The HRA and the Registrar may treat the person in whose name the Note is at any time registered in the bond register as the absolute owner of the Note, whether the Note is overdue or not, for the purpose of receiving payment of, or on account of, the principal of and interest on the Note and for all other purposes, and all the payments so made to any registered owner or upon the owner’s order will be valid and effectual to satisfy and discharge the liability of the HRA upon the Note to the extent of the sum or sums so paid. (f) Taxes, Fees and Charges. For every transfer or exchange of the Note, the Registrar may impose a charge upon the owner thereof sufficient to reimburse the Registrar for any tax, fee, or other governmental charge required to be paid with respect to the transfer or exchange. (g) Mutilated, Lost, Stolen or Destroyed Note. In case the Note becomes mutilated or is lost, stolen, or destroyed, the Registrar will deliver a new Note of like amount, maturity dates and tenor in exchange and substitution for and upon cancellation of the mutilated Note or in lieu of and in substitution for the Note lost, stolen, or destroyed, upon the payment of the reasonable expenses and charges of the Registrar in connection therewith; and, in the case the Note is lost, stolen, or destroyed, upon filing with the Registrar of evidence satisfactory to it that the Note was lost, stolen, or destroyed, and of the ownership thereof, and upon furnishing to the Registrar of an appropriate bond or indemnity in form, substance, and amount satisfactory to it, in which both the HRA and the Registrar will be named as obligees. The Note so surrendered to the Registrar will be cancelled and evidence of the cancellation will be given to the HRA. If the mutilated, lost, stolen, or destroyed Note has already matured or been called for redemption in accordance with its terms, it will not be necessary to issue a new Note prior to payment. 3.04. Preparation and Delivery. The Note will be prepared under the direction of the Executive Director and will be executed on behalf of the HRA by the signatures of its President and Executive Director. In case any officer whose signature appears on the Note ceases to be the officer before the delivery of the Note, the signature will nevertheless be valid and sufficient for all purposes, the same as if the officer had remained in office until delivery. When the Note has been so executed, it will be delivered by the HRA to the Owner following the satisfaction of all terms of the Agreement. Section 4. Security Provisions. 4.01. Pledge. The HRA hereby pledges to the payment of the principal of and interest on the Note all Available Tax Increment as defined in the Note. Available Tax Increment will be 609588v2BE295-315 applied to payment of the principal of and interest on the Note in accordance with the terms of the form of Note set forth in Section 2 of this resolution. 4.02. Bond Fund. Until the date the Note is no longer outstanding and no principal thereof or interest thereon (to the extent required to be paid pursuant to this resolution) remains unpaid, the HRA will maintain a separate and special “Bond Fund” to be used for no purpose other than the payment of the principal of and interest on the Note. HRA irrevocably agrees to appropriate to the Bond Fund in each year Available Tax Increment. Any Available Tax Increment remaining in the Bond Fund will be transferred to the HRA’s account for the TIF District upon the payment of all principal and interest to be paid with respect to the Note. Section 5. Certification of Proceedings. 5.01. Certification of Proceedings. The officers of the HRA are hereby authorized and directed to prepare and furnish to the Owner of the Note certified copies of all proceedings and records of the HRA, and the other affidavits, certificates, and information as may be required to show the facts relating to the legality and marketability of the Note as the same appear from the books and records under their custody and control or as otherwise known to them, and all the certified copies, certificates, and affidavits, including any heretofore furnished, will be deemed representations of the HRA as to the facts recited therein. Section 6. Effective Date. This resolution will be effective upon full execution of the Agreement. Adopted by the board of commissioners of the Housing and Redevelopment Authority in and for rd the City of Hopkins, this 3 day of September, 2019. President Executive Director 609588v2BE295-315