Memo - East CBD Redevelopment Agreement
Economic Development
MEMORANDUM
TO : Honorable Mayor and City Council
FROM:f4im Kerrigan, Director Planning & Economic Development
DATE: October 2, 2001
SUBJECT: East ceo Redevelopment Agreement
The next step in moving forward with this project is to prepare a preliminary development
agreement. This document will detail various activities to be completed by both the
Cornerstone Group and the HRAlCity over the next approximately 120 days. Based upon
everything being completed satisfactorily, a development agreement would then be
entered into.
The purpose of having the October 9 work session is to have a round table discussion
concerning what the Council feels is important to be included within this agreement. In
previous discussions with the Council, it seems the major issues have been the following:
. Uses within the retail space
Quality and type of residential units
. Exterior design of the project
Cornerstone has stated that they want to have the agreement structured so that if they
meet the various standards identified within the preliminary development agreement, the
City will enter into a development agreement for the project.
Attached is a draft agreement. Staff will provide an overview of what is included within this
agreement.
Attachment
PRELIMINARY DE'VELOPMENT AGREEMENT
THIS AGREE:MENT is made and entered i.nto this _ day of , 2001, by and
between the Housing and Red.evelopment Authority In and For the City of Hopkins, Minnesota~
a public body politic and corporate, (the "A.uthority") with its principal office at 1010 First Street
South, Hopkins, Minnesota 55343, and , a _ (the
uDeveloper") with its principal office at
WITNESSETH:
WHEREAS, in furtherance of the objectives of the Minnesota Statutes, sections 469.001-
.047 (the "Act"), the Authority has undertaken a program for the clearance and reconstruction or
rehabilitation of blighted, deteriorated, deteriorating, vacant, unused, under used or
inappropriately used, areas of the City, and in this connection is engaged in carrying out a
redevelopment project known as Redevelopment Project No.1 (hereinafter referred. to as the
IIProjectlt) in an area (hereinafter referred to as the "Project Area") located in. the City of
Hopkins, Minnesota (the "City"); and
WHEREAS, as of the date of this Agreement there has been prepared and approved by the
A:uthority and the City Council of the City a redevelopment plan for the Project (which Plan is
hereinafter referred to as the "Redevelopment Plan"); and
.
WHEREAS, the Developer has proposed to acquire certain real property currently owned
by the Authority in the Project Area and certain property that may be acquired by the Authority
(which real property is collectively referred to herein as the "Redevelopment Propertyll); and
WHEREAS, the Developer has presented to the Authority a proposal fOT the
redevelopment of the . Redevelopment Property through the construction of a mixed use
residential and retail development (the "Development"), which proposal involves the Authority's
conveyance of the Red.evelopment Property to the Developer for a purchase price that is less than.
the costs incurred by the Authority in. acquiring such property; and
WHEREAS, the Authority's Board of Commissioners has reviewed the Developer's
development proposal and desires to enter into this Preliminary Development Agreement to
allow the Developer to further refine its proposal and to negotiate with the Authority concerning
the Authority's participation in and approval of the proposed Development; and.
Wl.lEREAS, the Authority and. the Developer intend to proceed with the Development if:
(i) a satisfactory agreement can be reached regarding the purchase price to be paid by the
Developer to acquire the Redevelopment Property; (ii) satisfactory financing for the
Development can. be secured; (iii) agreement can be reached on the design of the Development
and the types and mix of tenants that will occupy the retail portion of the Develppment; and (iv)
the economic feasibility and soundness of the Development and other necessary preconditions
have been determined to the satisfaction of the parties.
, .
.
NOW, THEREFORE, in consideration of the covenants and obligations of the parties
hereto, the Authority and the Developer hereby agree.as follows:
Section 1. Prelimina"Q' Nature of Aweement. The Authority and the Developer agree that
this Agreement is intended to be preliminary in nature. Before the Authority and the Developer
can make a decision on whether to proceed with the iInplementation of the Developer's
development proposal, it will be necessary to assemble and consider information relative to the
design., economics and other aspects of the Development. The purpose of this Agreement is to
allow the Developer an opportunity to assemble such necessary information, to refme ilie above
referenced development proposal, and to negotiate with the Authority concerning the execution
of a fonnal redevelopment contract (the "Contract") which, if executed, will set forth the rights
and responsibilities of the Authority and the Developer with respect to the Development.
The proposed Development involves the use of real property some of which i.s owned by
the Authority. The remaining property is owned by thi.rd parties with whom the Authority is
negotiating concerning the purchase of such owners' properties. During the term of this
Agreement the Authority will determine if it is able to acquire the additional property in whole or
in part and will inform the Developer of its determination. The parcels of property that may be
included in the Development are shown on Exhibit A to this Agreem.ent.
The Developer has proposed to construct a Development consisting of retail space on the
first floor of the project fronting on Main Street, three floors of owner-occupied housing above
the retail an.d four floors of housing fronting on Seventh Avenue South, all as is shown on the
proposal. submitted by the Developer to the City dated June 4, 2001, together with additi.onal
information submitted during the City's and Authority's developer selection process.
Section 2. Present Intent of Partie~. It is the intention of the parties that this Agreement
docWll.ent their present understanding and clommitments and that if the following conditions can
be fulfilled to the satisfaction of the Authority and the Developer that the parties will proceed in
an. attempt to fonnulate a mutually satisfactory Contract:
(a) the Developer demonstrates the feasibility of the Development as proposed;
(b) the Developer provides such documentation regarding the economic feasibility of
the Development as the Authority may wish to receive during the tenn of this
Agreement;
(c) the completion of all undertakings required by this Agreement in a .satisfactory and
timely manner; and
(d) the satisfaction of such other conditions as are determined to be appropriate by
either party.
The Contract (together with any other agreements entered into between the parties hereto
contemporaneously therewith) when executed will supersede all understandings and obligations
of the parties hereunder.
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Section 3. Developer Undertakings. (a) Within ninety days from the date of this
Agreement the Developer shall do the follo\ving:
(i) The Developer will submit to the Authority a proposed schedule for all phases of
the Development, including without limitation, the timing of the closing on
financing and the variou,s stages of constrUction.
(ii) The Developer will secure a study prepared by of the market
feasibility of the Development; provided, that by , 2001, the Developer
will enter into a contract to obtain such study. The Authority shall have the right to
approve the scope of the study. W~ ~
(Hi) The Developer shall complete a process directed by the Authority that will allow'
input by other goven1mental agellcies and the public into the design of the
Development. The Authority expects that organizations and groups that will be
consulted will include) but not necessarily be limited to, the I-meA, the Historical
Society, adjacent property owners, the City's Design Committee and Planning and
Zoning Commission.
(iv) The Developer shall submit to the Authority for its approval guidelines to be
followed in leasing the retail portion of the Development. Such guidelines will
describe the types and mix of tenants that will occupy the Development. The
Developer agrees it will make every effort to secure retail tenants whose businesses
are complementary to each other. The Developer agrees that at least 01'0 of
the space will be leased to retail, as opposed to service oriented, businesses. At
least one restaurant of at least _ square feet will be
included. The following uses will not be permitted in the Development: adult
establishment, adult motion picture theater, adult novelty business or bookstore)
amusement devise establishment, auto sales and\or lease, bar-tavern, cabinet,
electrical, heating, plumbing, upholstery or air conditioning sales or service shop,
fix-it shop, liquor store, open sales lot, pawn shop, drive-thru restaurant, auto
repair, warehouse, taxi terminal or tattoo parlor. If the above terms are defined in
the City's zoning ordinances, the tenns shall have the meaning contained therein.
(b) Within one hundred and twenty days after the date of this Agreement, the Developer shall
do the following: '
(i) The Developer shall submit to the Authority a preliminary project proforma
detailing all costs of the Development and the sources and uses of all funds to be
raised to finance the Development, including justification for the purchase price
proposed. to be paid by the Developer to acquire the Redevelopment Property.
(ii) The Developer will submit tOI the Authority a concept plan for the Development
showing the size, nature and location of the proposed Development, including
parking, lan.dscaping and other exterior improvenlents and elevations drawings of
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the Development. The Developer will also submit to the Authority information .
showing the interior design of the residential units to be part of the Development.
The design of the Development will be consistent with the City's and the
Authority's architectural standards that are being prepared for this Development. A
copy of the standards in their current form are attached to this Agreement as
Exhibit B. The Developer understands that the standards are not final and will
change during the term of this Agreement and agrees to comply with the final
standards.
(iii) The Developer will obtain and provide to the Authority preliminary letters of intent
from retail tenants for the retail portion of the Development.
(c) During the term of this Agreement the Developer agrees to the following:
(i) The Developer will meet with the owner of the property located directly south of
the proposed Development to coordinate site design of the Development.
(ii) The Developer will provide to the Auth.ority monthly status reports on its activities
un.der this Agreement and will attend such meetings of the City Council and the
Authority's Board of Conunissioners as may be requested.
(iii) The Developer will cooperate with the Authority in the. Authority's efforts to
acquire the remainder of the property needed for the Development.
All of the activities described above shall be performed at the sole expense of the
Developer.
Section 4. Authority Undertakinis. During the term of this Agreement, the Authority will
undertake the following:
(a)
(b)
(c)
(d)
The Authority win continue its efforts to acquire those portions Of~ th.
Redevelopment Property that it does not own. Within sixty days of the date of this ~
Agreement, the Authority will notify the Developer as to which parcels of propert>;
it will be able to make available for use in the design and construction of
Development.
The Authority and City will, in consultation with the Developer, continue to refme
the architectural standards referenced in 3(b )(ii) above.
The Authority will analyze the information provided by the Developer pursuant to
Section 3 to determine the feasibility of the Development and whether proceeding
with the Development is in the public's best interest.
The Authority will work with the Developer to apply for grants and funds from
other public agencies to enhance the financial feasibility of the Development.
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(e) The Authority will cause to be prepared drafts of the Contract.
Section S. N~iotiation of Contract. During the term of this Agreement, the Authority and
the Developer shall proceed with the negotiation of a Contract relative to the Development. The
decision to enter into a Contract shall be in the sole discretion of each of the parties.
Section 6. Effect of Approvals. No approval given by the Authority hereWlder or in
connection herewith shall be deemed to constitute an approval of the development for any
purpose other than as stated herein and ,the process outlined in this Agreement shall not be
deemed to supersede any concept review, conditional use permit, vacation, subdivision, or other
zoning or planning approval process of the Authority or the City relative to the development of
real estate.
Section 7. Authority Costs. In consideration Authority covenants under this Agreement,
the Developer agrees that it will pay all out-of-pocket costs incurred by the Authority or City,
including, without limitation, all fees owed to the Authority's or City's traffic, development,
fiscalJ environmental and other consultants, and all attorneys' fees incurred'by the Authority or
City in connection with the negotiation and preparation this Agreement, the Contract and all
related documents, or in enforcing the Deve~loper' s obligations to pay costs which it is obligated
to pay under this Agreement. The Developer shall not be responsible to pay the Authority's
costs incurred in connection with the Authority's acquisition of the Redevelopment Property.
All of the Authority's and City's attorneys and consultants shall be under contract with the
Authority or City, unless the Authority or City otherwise agree in writing. The Authority will
provide to the Developer requests for payment of the costs incurred by the Authority or the City
from time to time accompanied by statements or invoices documenting such costs. Such costs
shall be payable by the Developer to the Authority or to the parties to whom such amounts are
due within twenty one days after request by the Authority. The Developer's obligations under
this Section shall survive termination of this, Agreement to the extent costs were incurred prior to
the date of termination or to the extent that costs are incurred to enforce the Developer's
obligations under this Section.
Prior to incurring costs subject to payment or reimbursement by the Developer under this
Section, the Authority will try to obtain proposals from its consultants and attorneys describing
the hourly rate or other basis on which the costs will be incurred and, if possible, an estimate of
the costs to be incurred. A failure to obtain such proposals or the exceeding of the cost estiJnates
shall not relieve the Developer of its obligation to pay the costs incurred.
Section 8. Modifications. This Agreement may be modified and the term hereof may be
extended only through written amendments hereto signed by all parties to this Agreement.
Section 9. Tenn of Agreement. Exclusive Negotiations. This Agreement shall be effective
for a period of one hundred and twenty days from the date hereof; provided, that if at the end of
such period the Developer requests an extension of the term of this Agreement and the Authority
determines that the Developer's efforts under this Agreement are progressing and are satisfactory
to the Authority in other respects the Authority will look favorably on a request for a sixty day
extension. If for any reason a Contract has not been entered into by the parties within the term of
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this Agreement or any mutually approved extension thereof: this Agreement shall be null and
void and, subject to Section 7, neither party shall have any liability or obligations to the other.
During the term of this Agreement, the Authority agrees that it will negotiate exclusively
with the Developer concerning the developlnent of the Redevelopment Property.
Section 10. Severabilitx. If any portion of this Agreement is held invalid by a court of
competent jurisdiction, such decision shall not affect the validity of any remaining portion of this
Agreement.
Section 11. N'otices. Notice, demand, or other communication from one party to the other
shall be deemed effective if sent by certified mail, postage prepaid., return. receipt requested or
delivered personally to a party at i.ts address in the first paragraph of this Agreement, or at such
other address as such party may designate in writing to the other party.
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IN WITNESS WHEREOF, the Authority has caused this Agreement to be duly executed
in its name and behalf and the Developer lIas caused this Agreement to be duly executed in its
name and behalf on or as of the date first above written.
HOUSING AND REDEVELOPMENT
AUTHORITY IN AND FOR THE CITY
OF HOPKINS
By
Its Chairman
By
Its Executive Director
By
Its
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EXHIBIT A
Redevelopment Property
EXHIBIT B
Architectural Standards
TOTAL P.ll2l