Memo - East CBD Redevelopment Project - Preliminary Development AgreementMEMORANDUM
Honorable Mayor Maxwell and Hopkins City Council Members
TO:
FROM: Kersten Elverum, HA4 rig Coordinator
DATE: October 17, 2001
SUBJECT: East CBD Redevelopment Project — Preliminary Development Agreement
Planning & Economic
Development
The purpose of the discussion regarding this item at the October 23, 2001, worksession is to
review the preliminary development agreement for the East CBD redevelopment project.
Attached is the revised agreement based on previous discussions as well as a summary of the
agreement. The agreement is still in draft form and has not been agreed to by the Cornerstone
Group.
Representatives of The Cornerstone Group will be at the meeting to talk through any issues as
relates to the agreement including the language relating to the retail leasing requirements. It is
also anticipated that the public input process will be discussed.
The preliminary development agreement is scheduled to be on the November 7, 2001, HRA
agenda so it is important that the key requirements of the agreement be resolved to both parties
satisfaction in the near future.
SUMMARY OF PRELIMINARY DEVELOPMENT AGREEMENT
BETWEEN
HOPKINS HOUSING AND REDEVELOPMENT AUTHORITY
AND
The following is a brief summary of the major terms of the above referenced preliminary
development agreement:
1. Developer. The Redeveloper is
2. Purpose of Agreement. The purpose of the Agreement is to allow the Developer an
opportunity to refine its development proposal and to submit to the Authority additional
information on the project to enable the Authority to determine whether the development is
feasible and in its best interests. During the term of the Agreement the Authority will not
negotiate with any other parties concerning the redevelopment of the site.
3. Developer Activities During Term of Agreement. During the term of the agreement
the Developer will do the following things within the following time frames:
(a) Within 45 days — provide a development schedule
(b) Within 90 days — provide a market study for the housing and retail components of
the project
complete a public review process prescribed by the Authority
submit guidelines for the leasing of the retail portion of the
development
make a determination as to whether it will be able to and
whether it wants to include the Lommen building in the project
(c) Within 30 days after the Authority approves the above information, the Developer
will provide a preliminary project proforma and a concept plan for the development
4. Authority Activities During Term of Agreement. During the term of the Agreement
the Authority will do the following:
(a) Continue to try to acquire the parcels on 7th Avenue located south of the parcels
owned by the Authority. Within 60 days the Authority will notify the Developer as to whether it
will be able to acquire any of those parcels.
(b) Refine the architectural standards for the project.
(c) Review information provided by the Developer and approve or reject that
information in writing stating reasons within 30 days after receiving it.
(d) Work with the Developer to apply for grant funds.
(e) Start negotiating a formal development agreement.
5. Formal Development Agreement. The agreement is expected to be superceded by a
formal development agreement if information provided is acceptable and it appears that the
development is feasible. The parties will work in good faith to negotiate the terms of a definitive
agreement. The Authority will not base a decision to not proceed with the project on information
that it had previously approved.
6. Term of Agreement. The term of the agreement will be for 120 days but the term can be
extended if the Developer's efforts are progressing and satisfactory or if additional time is
needed to address the Authority's concerns with information that the Developer submits under
the Agreement.
THIS AGREEMENT is made and entered into this day of , 2001, by and
between the Housing and Redevelopment Authority In and For the City of Hopkins, Minnesota,
a public body politic and corporate, (the "Authority ") with its principal office at 1010 First Street
South, Hopkins, Minnesota 55343, and , a (the
"Developer ") with its principal office at
WITNESSETH:
PRELIMINARY DEVELOPMENT AGREEMENT
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
"Project ") 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
Authority 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 Property "); and
WHEREAS, the Developer has presented to the Authority a proposal for 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 Redevelopment 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
WHEREAS, 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 Development; and (iv)
the economic feasibility and soundness of the Development has 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. Preliminary Nature of Agreement. 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 implementation 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 refine the above
referenced development proposal, and to negotiate with the Authority concerning the execution
of a formal 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 is owned by
the Authority. The parcels owned by the Authority are shown as Lots 1 -4 and Lot 7 on the
attached Exhibit A. the Authority has secured a purchase agreement to acquire Lots 5 and 6.
Lots 8, 9 and 10 are owned by a third party with whom the Authority is negotiating concerning
the purchase of such lots. To the extent that the Developer is interested in acquiring those
parcels shown as Lots 43 -46 it may do so at its own expense. During the term of this Agreement
the Authority will determine if it is able to acquire the Lots 8, 9, and 10 in whole or in part and
will inform the Developer of its determination.
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 and 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 additional
information submitted during the City's and Authority's developer selection process.
Section 2. Present Intent of Parties. It is the intention of the parties that this Agreement
document their present understanding and commitments 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 formulate 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 term 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 reasonable and customary conditions as are
determined to be appropriate by either party.
2
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.
Section 3. Developer Undertakings. (a) Within forty five days from the date of this
Agreement the Developer shall 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
various stages of construction.
(b) Within ninety from the date of this Agreement the Developer shall do the
following:
(i)
The Developer will secure and submit to the Authority a study prepared by
of the market feasibility of the Development, including both the
residential and the retail components; 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.
(ii) The Developer shall complete a process directed by the Authority that will allow
input by other governmental agencies and the public into the design of the
Development. The Developer acknowledges that it has received a description of
the process to be followed and a list of the government bodies, public agencies and
groups to be involved.
(iii) 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 acknowledges that the types of tenants in the Development is extremely
important to the City and the Authority. The Developer agrees it will make every
effort to secure retail tenants whose businesses are complementary, as opposed to
competitive, to each other and to other businesses located in the downtown area.
The Developer agrees that at least 80% of the space will be leased to retail, as
opposed to service oriented, businesses. At least one upscale full service restaurant
with a full liquor license offering printed menus, wait staff and with evening hours
of operation of at least square feet will be included. The following are some
examples of the types of tenants the Authority and City would like to have located
in the Development : . The following are uses that 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, fast food restaurant, auto repair, warehouse, taxi
terminal or tattoo parlor. If the above terms are defined in the City's zoning
ordinances, the terms shall have the meaning contained therein.
3
(iv) The Developer will notify the Authority of whether it intends and will be
able to acquire Lots 43 -46 as shown on the attached Exhibit A from its current
owner. Such acquisition will be at the sole cost of the Developer and will not
increase the Authority' s financial participation in the Development. If the
Developer notifies the Authority that it will acquire such lots it shall also at such
time provide to the Authority a site plan and other drawings showing how such lots
will be incorporated into the Development.
(c) Within thirty days after the Authority notifies the Developer that it approves the
information provided under Section 3(a) and (b) 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 to the Authority a concept plan for the Development
showing the size, nature and location of the proposed Development, including
parking, landscaping and other exterior improvements and elevations drawings of
the Development. The Developer will also submit to the Authority information
showing the interior design of samples 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.
(d) 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 Authority monthly status reports on its activities
under this Agreement, including its efforts to acquire any properties needed for the
Development and its negotiations with potential tenants, and will attend such
meetings of the City Council and the Authority's Board of Commissioners as may
be requested.
(iii) The Developer will cooperate with the Authority in the Authority' s efforts to
acquire Lots 8, 9, and 10 as shown on the attached Exhibit A.
All of the activities described above shall be performed at the sole expense of the
Developer.
4
Section 4. Authority Undertakings. During the term of this Agreement, the Authority will
undertake the following:
(a) The Authority will continue its efforts to acquire Lots 8, 9 and 10 as shown on
Exhibit A. Within sixty days of the date of this Agreement, the Authority will
notify the Developer as to which of such parcels of property it will be able to make
available for use in the design and construction of the Development.
(b) The Authority will, in consultation with the City and the Developer, continue to
refine the architectural standards referenced in 3(b)(ii) above.
(c) 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. Within thirty days after the
Authority is provided information required to be submitted by the Developer under
Section 3, the Authority will notify the Developer if the Authority approves such
information or if the Authority does not approve the information or finds the
information to be insufficient the Authority will inform the Developer in writing of
the basis for its decision. Following the Developer's receipt of the Authority's
notification the Developer will have an additional thirty days to submit new or
corrected information that satisfies the Authority's concerns. If the Authority finds
that the Developer is diligently acting to supply additional or corrected information
it agrees that it will grant reasonable extensions of the term of this Agreement to
permit such information to be supplied.
(d) 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.
(e) Upon its receipt and approval of information to be provided under Section 3(a) and
(b) the Authority will cause to be prepared drafts of the Contract and begin
negotiating the execution of the Contract with the Developer.
Section 5. Negotiation of Contract. If the Developer supplies all information required by
this Agreement in a timely manner and such information is approved by the Authority, the
Authority and the Developer will work in good faith to negotiate the Contract. Although the
decision to enter into the Contract rests in the discretion of the parties, the Authority agrees that it
will not base a decision to not enter into a Contract with the Developer upon any information that
it had previously approved under this Agreement.
Section 6. Effect of Approvals. No approval given by the Authority hereunder 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.
5
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,
fiscal, 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 Developer' 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 within thirty 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 use its best efforts to obtain proposals from its consultants and
attorneys describing the hourly rate or other basis on which the costs will be incurred and an
estimate of the costs to be incurred. A failure to obtain such proposals or the exceeding of the
cost estimates 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. Term 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
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 development of the Redevelopment Property.
Section 10. Severability. 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. Notices. 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 its address in the first paragraph of this Agreement, or at such
other address as such party may designate in writing to the other party.
6
IN WITNESS WHEREOF, the Authority has caused this Agreement to be duly executed
in its name and behalf and the Developer has caused this Agreement to be duly executed in its
name and behalf on or as of the date first above written.
8
HOUSING AND REDEVELOPMENT
AUTHORITY IN AND FOR THE CITY
OF HOPKINS
By
Its Chairman
By
Its Executive Director
By
Its
EXHIBIT A
Redevelopment Property
EXHIBIT B
Architectural Standards
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