CR 97-45 Development Agreement/Sales - Westbrooke Patio Homes
March 24, 1997
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Council Rpt #97-45
DEVELOPMENT AGREEMENT/SALE OF BONDS - WESTBROOKE PATIO HOMES
Pro Dosed Action
Staff recommends approval of the following motion: Adopt the following resolutions:
o Resolution number 97-27 authorizing the execution of a development agreement between the
Citv of Hopkins and the Westbrooke Patio Homes Association
o Resolution 97-33 calling for the sale of bonds
With this motion, the City Manger and Mayor will be authorized to execute the development agreement
and the bond sale will prepared for final approval on May 6, 1997.
Overview
The City of Hopkins has the authority to establish housing improvement areas under the Housing
Improvement Act (1994 Minnesota Laws, Chapter 587, Article 9, Section 22 through 31).
Within a housing improvement area, the City can sell bonds to pay for various improvements to individual
housing units and common areas. Those bonds are then repaid through fees imposed on the owners of
the units.
The Westbrooke Patio Homes Association has been working for more than two years on a capital
improvements program that is proposed to be financed though the City of Hopkins, In January and
February, the City Council held the required public hearings, authorized the establishment of a housing
improvement area for the Westbrooke Patio Homes and set the fees for the area. The veto period ended
on March 21, 1997, with only five vetoes being received.
The attached development agreement specifies under what terms the bond funds wilI be released to the
association to pay for construction costs, provides for provisions in the event of delinquencies in the
colIection ofthe fees and details how the project reserve will be released to the Association to construct
Phase II improvements. The bond sale report outlines the terms and conditions of the sale of Taxable
General Obligation Housing Improvement Area Bonds.
Primarv Issues to Consider
o What is the purpose of the development agreement?
o What are the major provisions of the development agreement?
o What are the specifics of the bond sale?
o Are there any outstanding issues as relates to this project?
SUDDortiul!: Information
o Resolution 97-27
o Development Agreement between the City of Hopkins and Westbrooke Patio Homes
Association
o Resolution 97-33
Lett
Bond Sale Report
andness
Development Agreement
Council Rpt. 97-45
Page 2
Analvsis of the Issues
o What is the purpose of the development agreement?
The purpose of the development agreement is to outline the terms under which the City of Hopkins will
sell the bonds and disburse the funds for the Westbrooke Patio Homes housing improvement project. It
also provides the City with assurances that the Association will cover all delinquencies in the collection of
the fees if such funds are needed to pay principal and interest on the bonds and sets forth certain ongoing
requirements of the Association such as yearly financial audits and financial plans, and continued
experienced property management.
o What are the major provisions of the development agreement?
The following are the major provisions of the proposed development agreement:
Issuance of Bonds: Disbursement of Proceeds
Upon issuance of bonds, the City will establish three funds: the Special Reserve Fund; the Bond Fund;
and the Administrative Fund.
The Special Reserve Fund, containing $164,000, will be released to the Association to be used for Phase
II housing improvements upon approval by the City Council. In the event the Association fails to
commence the Phase II Housing Improvements, the Special Reserve Fund wiIl be released to the City in
increments to be used, at the City's discretion, for a variety of project-related costs.
The Bond Fund will be used to pay for construction costs and the Administrative Fund will be used to
pay for costs associated with the administration of the project including a yearly fee imposed by Hennepin
County.
Prior to the City releasing any funds for the project, the Association agrees to the following:
o Approval of the construction plans and specifications from the City Inspector
o Obtain the necessary permits and licenses
o Submittal of construction contracts, a sworn construction statement and total project
cost statement
o Certification that the items for which payment is requested were eligible for
reimbursement and that sufficient funds remain in the account to pay for remaining work
o Submission of lien waivers and proof of inspection by the City Inspector.
In the event there is money remaining in the project fund or excess funds generated through the fee
revenue fund, the City has the option of applying the funds to redeem the bonds, specifYing that
additional housing improvements are undertaken, disbursing the funds to be held by the Association in
their replacement fund for future improvements or a combination of these options.
Development Agreement
Council Rpt. 97-45
Page 3
Construction
The Association agrees to subm1t all construction plans to the City Building Official for approval, that the
Association will construct the improvements in accordance to the approved plans and that construction
will be completed by December 15, 1997.
Insurance
The Association agrees to provide or have provided builder's risk insurance, comprehensive general
liability insurance and worker's compensation insurance during the construction of the improvements.
The Association also agrees to provide insurance against damage to the property, comprehensive general
public liability insurance and worker's compensation insurance for the term of the outstanding debt.
Special Covenants
The Association agrees to provide to the City with the following:
o annual audited financial statements of the Association for each fiscal year prepared by
an independent certified public accountant
o updated financial plan and a written report by an independent engineer describing the
condition of the property and the improvements each year for the term of the bonds
o written report regarding the statue of qualifYing for FHA/HUD insurance
o evidence that the Association is employing a qualified property manager
The Association agrees that ifin the event the revenues in the bond fund fall below 105% of the total
principal and interest due on the bonds, the Association will provide to the City the funds necessary to
bring the fund to 105% of the funds required. If the Association fails to make the required payment, the
City has the ability to capture dues collected and owed to the Association together with all cash,
investments and securities held by the Association.
The Association also agrees to increase the association dues by a minimum of 10% per year untll the dues
are sufficient in accordance with the financial plan to pay the Association's current operating expenses
and scheduled replacement reserve deposits. .
Events of Default
In the event of default of this agreement, the Association agrees to reimburse the City for all legal and
other expenses incurred by the City.
o What are the specifics of the bond sale?
The initial amount of bonds to be issued is $2,265,000, however, this amount will be reduced by the
amount of prepayments that are received by April 22, 1997. The bonds will be paid back through an
Development Agreement
Council Rpt. 97-45
Page 4
annual fee that will be levied and collected in the same manner as general ad valorem taxes, The annual
payments will be made for a 20-year period at an interest rate equal to 0.10% over the net interest rate on
the Bonds. The Bonds are scheduled to be sold on May 6, 1997 and will be dated June I, 1997.
o Are there any outstanding issues as relates to this project?
One of the requirements of the development agreement is that the Association agrees to maintain an
experienced property manager. Wayne Vasilis was the property manager but has left to take another
position. Doug Strandness has been the acting property manager, consultant to the Association for the
improvement project and the person hired to conduct the employment search for a replacement manager.
They have narrowed the applicants for the property manager position to three individuals, all of which
appear to be very qualified for the position. The Association anticipates making a final decision by April
7, 1997 and that a property manager will be in place by the date the bonds are sold.
Alternatives
The City Council has the following alternatives relating to this issue:
o Approve resolutions 97-27 and 97-33 authorizing the execution of the development agreement
as proposed and calling for the sale of bonds.
o Amend the development agreement and authorize execution. With this alternative,
Council needs to review the amendments with legal council prior to approval.
o Continue for further study. Continuing this item will significantly delay the start of
construction which could jeopardize completion ofthe project within the timeline that had been
previously detailed,
CITY OF HOPKINS
Hennepin County, Minnesota
RESOLUTION 97-27
RESOLUTION APPROVING DEVELOPMENT AGREEMENT
WITH WESTBROOKE PATIO HOMES ASSOCIATION, INC.
BE IT RESOLVED by the City Council ("Council") of the City of Hopkins ("City")
as follows:
Section 1. Recitals.
1.01, The City is authorized under 1994 Minnesota Laws, Chapter 587, Article
9, Sections 22 through 31 (the "Act") to establish by ordinance a housing improvement
area within which housing improvements are made or constructed and the costs of the
improvements are paid in whole or in part from fees imposed within the area,
1.02. By Resolution No. 94-55, adopted June 7, 1994, the City Council of the
City approved the Act.
1.03. By Ordinance No. 97-796, adopted February 4,1997, (the "Enabling
Ordinance"), the Council established Housing Improvement Area NO.2 in order to
facilitate certain improvements to property known as the Westbrooke Patio Homes,
referred to as the "property."
1.04. By Resolution No. 97-9, adopted February 4, 1997, (the "Fee Resolution")
the City Council imposed a housing improvement fee on Housing Units (as hereinafter
defined) in Housing Improvement Area NO.2 in order to finance certain housing
improvements in that area.
1.05. The Act authorizes the City to issue bonds in the amount necessary to
defray the expense to be incurred in making the housing improvements, which bonds
are payable primarily from proceeds of the fee imposed under the Fee Resolution and
may be further secured by the pledge of the City's full faith, credit and taxing power.
1.06. The Council has reviewed that certain Development Agreement (the
"Agreement") between the City and Westbrooke Patio Homes Association, (the
"Association"), setting out the respective obligations of the City and the Association
regarding the housing improvements and the Property.
Section 2. Agreement Approved.
2.01. The Mayor and City Manager are hereby authorized and directed to
execute the Agreement in substantially the form presented to the Council on this date,
subject to modifications that do not materially alter the City's rights and obligations
under the Agreement and that are approved by the Mayor and the City Administrator,
which approval shall be conclusively evidenced by execution of the Agreement.
2.02. The Mayor and City Manager are hereby authorized and directed to take
any and all other steps necessary or convenient in order to carry out the City's
obligations under the Agreement.
Approved by the City Council of the City of Hopkins this 1 st day of April, 1997.
Charles D. Redepenning, Mayor
ATTEST:
Terry Obermaier, City Clerk
DEVELOPMENT AGREEMENT
Between
CITY OF HOPKINS, MINNESOTA
and
WESTBROOKE PATIO HOMES
ASSOCIATION, INC.
Dated as of:
,1997
Leonard, Street & Deinard (A.'1C)
150 South Fifth Street, Suite 2300
Minneapolis, MN 55402
Telephone: 335-1672
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TABLE OF CONTENTS
PAGE
ARTICLE I . DEFINITIONS............................................................................................... 2
Section 1.1. Definitions ................ ...................................................................................................................... 2
ARTICLE 11- REPRESENTATIONS AND WARRANTIES................................................. 5
Section 2.1. Renresentations b,' the Citv ............................................................................................................ 6
Section 2.2. Renresentations and Warranties bv the Association........................................................................ 6
ARTICLE III -ISSUANCE OF BONDS; DISBURSEMENT OF PROCEEDS ...................... 7
Section 3.1. Issuance of Bonds. .......................................................................................................................... 8
Section 3.2. Conditions Precedent to Initial Disbursement................................................................................. 9
Section 3.3. Further Conditious Precedent to AIl Disbursements ....................................................................... 9
Section 3.4. Renuests for Disbursement............................................................................................................ 10
Section 3.5. Conditions Precedent to the Final Disbursement........................................................................... 11
Section 3.6 Waiver .......................................................................................................................................... 12
Section 3.7. Denosit of Funds bv Association................................................................................................... 12
Section 3.8. Anlllication of Proiect Fund Balance ........,................................................................................... 12
Section 3.9. Allnlication of Fee Revenues Balance............................................................................................ 12
Section 3.11. Investment of Snecial Reserve Fund........................................................................................... 15
Section 3.12. Report Bv Citv ........................................................................................................................... 15
ARTICLE IV - .................................................................................................................15
Section 4.1. Construction of Phase I Housin!!: Improvements ........................................................................... 15
Section 4.2. Construction Plans ....................................................................................................................... 15
Section 4.3. Commencement and Comnletion of Construction......................................................................... 16
Section 4.4. Certificate of Completion ............................................................................................................. 17
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ARTICLE V - INSURANCE.............................................................................................17
Section 5.1. Insurance...................................................................................................................................... 17
Section 5.2. Subordination......... ...................................................................................................................... 19
ARTICLE VI - SPECIAL COVENANTS...........................................................................19
Section 6.1. No Warrantv of Condition or Suitabilitv.lndemnification............................................................ 19
Section 6.2. Financial Statements .................................................................................................................... 20
Section 6.3. Financial Plan: Annual Renorts.................................................................................................... 20
Section 6.4. Records and Inspection................................................................................................................. 21
Section 6.5. Maintenance of Propertv ...................................................................................................... ........ 21
Section 6.6. Covenant to Maintain Net Revenues Available for Debt Service ................................................... 21
Section 6.7. Assil!Dment of Association Assets.................................................................................................. 23
Section 6.8. Association to Maintain its Existence............................................................................................ 24
Section 6.9. Prohibition A2ainst Assil!Dment of A2reement ............................................................................. 24
Section 6.10. Notice of Fee Upon Transfer of Housin2 Units ............................................................................ 24
Section 6.11. Repair and Replacement Policv ................................................................................................. 24
Section 6.12. Increases ip Assessments..........:.................................................................................................25
Section 6.14. FHAlHUD Insurance................................................................................................................. 25
Section 6.15 Experienced Propem- Manal!er.................................................................................................. 25
ARTICLE VII - EVENTS OF DEFAUL T...........................................................................26
Section 7.1. Events of Default Dermed ............................................................................................................. 26
Section 7. 2. Remedies on Default.................................................................................................................... 26
Section 7.3. No Remedv- Exclusive ................................................................................................................... 26
Section 7.4. No Additional Waiver Implied bv One Waiver............................................................................. 26
ARTICLE VIII- ADDITIONAL PROVISiONS.................................................................... 27
Section 8.1. Conflict of Interests: Citv Representatives Not Individuallv Liable............................................... 27
Section 8.2. Equal Emplovment Opportunitv .................................................................................................. 27
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Section 8.3. Pro,isions Not Mel1!ed With Deed................................................................................................ 27
Section 8.4. Titles of Articles and Sections.......................................................................................................27
Section 8.S. Notices and Demands.................................................................................................................... 27
Section 8.6. Countemarts ................................................................................................................................ 28
Section 8.7. Recordinl!..................................................................................................................................... 28
Section 8.8 Bindinl! Effect ............................................................................................................................... 28
Section 8.9. Amendment.................................................................................................................................. 28
Schedule A
Schedule B
Schedule C
Schedule D
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SCHEDULES
Property
Phase I Housing Improvements
Phase n Housing Improvements
Phase I Disbursement Requisition of Association's Authorized Representative
iii
DEVELOPMENT AGREEMENT
TIDS AGREE:\1ENT, made on or as of the day of April, 1997, by and between the
CITY OF HOPKINS. a Minnesota municipal corporation (the "City") and WESTBROOKE
PA no HOMES ASSOCIA nON, INC., a Minnesota nonprofit corporation (the "Association").
WITl'iESSETH:
WHEREAS, the City is authorized under 1994 Minnesota Laws, Chapter 587, Article 9,
Sections 22 through 31 (the "Act") to establish by ordinance a housing improvement area within
which housing improvements are made or constructed and the costs of the improvements are paid in
whole or in part from fees imposed within the area; and
WHEREAS, by Resolution No. 94-55 adopted June 7, 1994, the City Council of the City
approved the Act; and
WHEREAS, by Ordinance No. 97-796 adopted February 4, 1997 (the "Enabling
Ordinance"), the Council established Housing Improvement Area No.2 in order to facilitate certain
improvements to property known as the Westbrooke Patio Homes, which property is legally
described in Schedule A hereto and is hereafter referred to as the "Property;" and
WHEREAS, by Resolution No. 97-9 adopted February 4, 1997 (the "Fee Resolution") the
City Council imposed a housing improvement fee on Housing Units (as hereinafter defined) in
Housing Improvement Area NO.2 in order to finance certain housing improvements in that area; and
WHEREAS, the Act authorizes the City to issue bonds in the amount necessary to defray the
expense to be incurred in making the housing improvements, which bonds are payable primarily from
proceeds of the fee imposed under the Fee Resolution and may be further secured by the pledge of the
City's full faith, credit and taxing power; and
WHEREAS, prior to adoption of the Fee Resolution by the City Council, the Association
submitted to the City a financial plan in accordance with the Act that provides for the Association to
finance maintenance and operation of the common elements in the Westbrooke Patio Homes and a
long-range plan to conduct and finance capital improvements therein; and
WHEREAS, the City believes that development of the improvements to the Property
pursuant to this Agreement, and fulfillment generally of this Agreement, are in the vital and best
interests of the City and health, safety, morals and welfare of its residents, and in accord with the
public purposes and provisions of the applicable State and local laws and requirements under which
Housing Improvement Area No.2 has been undertaken.
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WHEREAS, the Association intends to complete the housing improvements in two phases as
further described in this Agreement.
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:
ARTICLE I
Definitions
Section 1, I. Definitions. In this Agreement, unless a different meaning clearly appears
from the context:
"Act" means 1994 Minnesota Laws, Chapter 587, Article 9, Sections 22 through 3 I.
"Administrative Fund" means the fund established by the City into which interest earnings
will be deposited pursuant to Section 3, I ( c) hereof '
"Annual Debt Service" means the amount of principal and interest payable on the Bonds on
February I and August I of each year.
"Association" means Westbrooke Patio Homes Association, Inc, or its permitted successors
and assigns. .
"Association's Authorized Representative" means the property manager retained by the
Association to manage the Property.
"Agreement" means this Agreement, as the same may be from time to time modified,
amended, or supplemented,
"Bonds" means the general obligation bonds or obligations issued by the City in connection
with the Housing Improvement Area pursuant to the Act, and any bonds or obligations issued to
refund any Bonds.
"Bond Fund" means the debt service fund for the Bonds to be established under the Bond
Resolution.
"Bond Resolution" means the resolution to be approved by the Council awarding the sale and
establishing the terms of the Bonds.
"City" means the City of Hopkins, Minnesota,
"City Building Official" means Chief Building Inspector.
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"Certificate of Completion" means the certification provided to the Association, pursuant to
Section 4.4 of this Agreement
"Common Area" means the common area as defined in the Declaration.
"Completion Date" means the date of actual completion of the Housing Improvements as
certified by the City Building Official pursuant to Section 4.4 hereof.
"Construction Contract" means the contract(s) between the Contractor(s) and the Association
to complete the Housing Improvements in accordance with the Construction Plans.
"Construction Plans" means the plans, specifications, drawings and related documents on the
construction work to be performed by the Association on the Property which shall be as detailed as
the City may reasonably request to allow it to ascertain the nature and quality of the proposed
construction work.
"Contractor" means any person, including subcontractors, who shall be engaged to work on,
or to furnish materials and supplies for the Housing Improvements.
"Council" means the City Council of the City.
"County" means the County of Hennepin, Minnesota.
"Declaration" means the Declaration of Covenants, Conditions and Restrictions for
Westbrooke Patio Homes dated September II, 1973, as amended.
"Draw Request" means the form, substantially in the form of Schedule D attached hereto,
which is submitted to the City when a disbursement is requested and which is referred to in Section
3.4 hereof.
"Enabling Ordinance" means Ordinance No. 97-796 adopted by the Council on February 4,
1997, which establishes the Housing Improvement Area,
"Engineer" means Construction Consulting and Inspections, Limited, the engineers selected
by the Association to prepare or cause to be prepared the Construction Plans for the Housing
Improvements.
"Engineer's Contract" means the agreement by and between the Association and the Engineer
pertaining to preparation of the Construction Plans and supervision of construction.
"Event of Default" means an action by the Association listed in Article VII of this Agreement
"Fee" means the housing improvement fee in connection with the Phase I Housing
Improvements imposed on all Housing Units in the Housing Improvement Area pursuant to the Fee
Resolution.
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"Fee Resolution" means Resolution No, 97-9, adopted by the Council on February 4, 1997,
which imposes the Fee.
"Fee Revenues" means all proceeds of the Fee payable to the City.
"Financial Advisor" means Ehlers & Associates or any successor Independent fmancial
advisory firm retained by the City.
"Financial Plan" means the Financial Plan prepared by the Association dated January 31,
1997.
"Fiscal Year" means any year commencing January 1 and ending December 31.
"Housing Improvements" means the Phase I Housing Improvements and Phase II Housing
Improvements.
"Housing Improvement Area" means the real property located within Housing Improvement
Area No.2.
"Housing Unit" means real property and improvements thereon within the Housing
Improvement Area, consisting of one lot on which a dwelling unit is located that is occupied by a
person or persons for use as a residence.
"Independent", when used with reference to an attorney, engineer, architect, certified public
accountant, or other professional person, means a person who (i) is in fact independent, (ii) does not
have any material financial interest in the Association or the transaction to which his or her certificate
or opinion relates (other than the payment to be received for professional services rendered), and (iii)
is not connected with the City or the Association as an officer, director or employee.
"Inspecting Engineer" means the Engineer.
"Management Consultant" means a person or entity, experienced in the study and
management of multi-unit rental housing and having a favorable reputation throughout the United
States or the State of Minnesota for skill and experience in such work and, unless otherwise specified
herein, retained or employed by the Association and acceptable to the City whose acceptance shall not
be unreasonably withheld.
"Maturity Date" means the date the Bonds have been fully paid, defeased or redeemed in
accordance with their terms.
"Mortgage" means any mortgage made by the Association which is secured, in whole or in
pan, with the Property and which is a permitted encumbrance pursuant to the provisions of Section
6.9 of this Agreement.
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"Net Revenues Available for Debt Service" means, as of the date of calculation, the balance in
the Bond Fund and any other fund into which Fee Revenues have been deposited as of the date of
calculation, less the amount of fees, as estimated by the City's Financial Advisor, that are anticipated
to be payable by the City in connection with the Bonds on or before the next Payment Date to the
City's Financial Advisor, the registrar for the Bonds, and the paying agent for the Bonds.
"Payment Date" means any date on which the principal, interest and premium, if any, is due
and payable on the Bonds,
"Permitted Investments" means investment legally permitted for the City's funds.
"Phase II Development Agreement" means the development agreement described in Section
3.IO(d) hereof.
"Phase I Housing Improvements" means the improvements to the Property as set forth in
Schedule B hereof.
"Phase II Housing Improvements" means the improvements to the Property as set forth in
Schedule C hereof.
"Project Fund" means the Project Fund to be created by the Bond Resolution.
"Property" means the real property described in Schedule A of this Agreement.
"Special Reserve Fund" means the special reserve fund to be created and distributed pursuant
to Section 3.10 of this Agreement.
"State" means the State of Minnesota.
"Unavoidable Delays" means delays beyond the reasonable control of the party seeking to be
excused as a result thereof which are the direct result of strikes, other labor troubles, fire or other
casualty to the Housing Improvements or the Property, litigation commenced by third parties which,
by injunction or other similar judicial action, directly results in delays, or acts of any federal, state or
local governmental unit (other than the City in exercising its rights under this Agreement) which
directly result in delays, Unavoidable Delays shall not include delays in the Association's obtaining of
permits or governmental approvals necessary to enable construction of the Phase I Housing
Impro\"ements by the dates such construction is required under Section 4.3 of this Agreement.
ARTICLE n
Reoresentations and Warranties
Section 2.1, Representations bv the City. The City makes the following representations as
the basis for the undertakings on its part herein contained:
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(a) The City is a municipal corporation under the laws of the State and has the power to
enter into this Agreement and carry out its obligations hereunder.
(b) The undertaking of the Phase I Housing Improvements and the issuance by the
Municipality of the Bonds are authorized by the Act
(c) On January 21, 1997, after receipt of petitions by owners of at least 25 percent of the
Housing Units in the Housing Improvement Area and due publication and mailing of notice of
hearing, the Council held a public hearing on the adoption of the Enabling Ordinance and approved a
first reading thereof.
(d) On February 4, 1997, after receipt of petitions by owners of at least 25 percent of the
Housing Units in the Housing Improvement Area and due publication and mailing of notice of
hearing, the Council held a public hearing on the adoption of the Fee Resolution and adopted the Fee
Resolution and the Enabling Ordinance,
(e) The periods for .veto of both the Enabling Ordinance and the Fee Resolution have
expired without objection by owners of at least 35 percent of the Housing Units in the Housing
Improvement Area, all in accordance with the Act.
(f) To finance costs of the Phase I Housing Improvements, the City proposes to issue the
Bonds as provided in the Act, and to disburse the proceeds thereof to the Association pursuant to this
Agreement The City will initially issue Bonds in the aggregate principal amount as described in
Section 3.1 hereof and the Bonds shall be in the form and shall be subject to the terms and provisions
set forth in the Bond Resolution and the terms of this Agreement.
(g) There is no litigation pending or, to the best of its knowledge, threatened against the
City relating to the Housing Improvements or to the Bonds or questioning the powers or authority of
the City under the Act, or questioning the corporate existence or boundaries of the City or the title of
any of the present officers of the City to their respective offices.
(h) The execution, delivery and performance of this Agreement does not violate any
agreement or any court order or judgment in any litigation to which the City is a party or by which it
is bound.
Section 2.2. Representations and Warranties bv the Association. The Association
represents and warrants that:
(a) The Association is a nonprofit corporation, duly organized and in good standing under
the laws of the State of Minnesota, is not in violation of any provisions of its articles of incorporation,
bylaws or the laws of the State, is duly authorized to transact business within the State, has power to
enter into this Agreement and has duly authorized the execution, delivery and performance of this
Agreement by proper action of its board of directors.
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(b) The Association will construct, operate and maintain the Phase I Housing
Improvements in accordance \\ith the terms of this Agreement, the Financial Plan, and all local, state
and federal laws and regulations (including, but not limited to, environmental, zoning, building code
and public health laws and regulations),
(c) The Phase I Housing Improvements constitute a permitted use under applicable
zoning laws.
(d) The Association has received no notice or communication from any local, state or
federal official that the activities of the Association or the City in the Housing Improvement Area
may be or will be in violation of any environmental law or regulation (other than those notices or
communications of which the City is aware). The Association is not aware of any facts the existence
of which would cause it to be in violation of or give any person a valid claim under any local, state or
federal environmental law, regulation or review procedure.
(e) The Association will construct the Phase I Housing Improvements in accordance with
all local, state or federal energy-conservation laws or regulations.
(f) The Association 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 Phase I Housing Improvements may
be lav,fully constructed.
(g) Neither the executiOli and delivery of this Agreement, the consummation of the
transactions contemplated hereby, nor the fulfillment of or compliance with the terms and conditions
of this Agreement is prevented. limited by or conflicts with or results in a breach of, the terms,
conditions or provisions of any corporate restriction or any evidences of indebtedness, agreement or
instrument of whatever nature to which the Association is now a party or by which it is bound, or
constitutes a default under any of the foregoing.
(h) Whenever any Event of Default occurs and if the City shall employ attorneys or incur
other expenses for the collection of payments due or to become due or for the enforcement of
performance or observance of any obligation or agreement on the part of the Association under this
Agreement, the Association agrees that it shall, within ten days of written demand by the City pay to
the City the reasonable fees of such attorneys and such other expenses so incurred by the City.
ARTICLE m
Issuance of Bonds: Disbursement of Proceeds
Section 3.1.
Issuance of Bonds.
(a) In order to provide funds to defray the costs of the Phase I Housing Improvements,
the City will issue the Bonds in the maximum principal amount that is supported by the Fee Revenues
1473197.4
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and will produce total funds in the amount of $1.895,000 (the "Net Project Amount"), including: (i)
proceeds of the Bonds, net of costs of issuance, administrative costs, the Special Reserve Fund and
capitalized interest through February 1, 1998; and (ii) all Fee Revenues prepaid by owners of Housing
Units in accordance with the Fee Resolution; provided that the Net Project Amount may be such
lesser amount mutually agreed by the Association and the City in the event the cost of Phase I
Housing Improvements and the total Fee is reduced in accordance with the Fee Resolution,
At closing on issuance of the Bonds, proceeds (net of capitalized interest, costs of issuance,
administrative costs and the amount deposited in the Special Reserve Fund under Section 3.10)
together with prepaid Fee Revenues, shall be deposited by the City into the Project Fund for
disbursement to the Association in accordance with the terms of this Agreement. Moneys in the
Project Fund shall be subject to withdrawal from time to time only for the purposes of paying the
costs of Phase I Housing Improvements, establishing the Special Reserve Fund or subject to any
applicable provision of law, for payments theretofore made by the Association for such costs. None
of the funds in the Project Fund shall be used for any purposes other than payment or reimbursement
of such costs of the Phase I Housing Improvements, except as otherwise provided in Section 3.9 or
Section 3.10 hereof. The City will issue the Bonds by June 1, 1997, subject to Unavoidable Delays,
the City's ability to issue the Bonds under existing laws and market conditions, and provided there are
no outstanding Events of Default under this Agreement.
(b) Under the Bond Resolution, the City will deposit into the Bond Fund capitalized
interest through February I, 1998, together with Fee Revenues in the amount necessary to pay when
due the principal, interest and premium, if any, on the Bonds. All other Fee Revenues in excess of
the amount necessary to pay when due the principal and interest on the Bonds will be deposited into a
separate revenue account to be established under the Bond Resolution and maintained by the City
until the Maturity Date. Subject to the prior pledge of Fee Revenues to payment of principal and
interest on the Bonds, the City may at its sole discretion apply funds in such revenue account: (i) to
pay registrar and paying agent fees, if any, in connection with the Bonds; (ii) to pay other
administrative costs in connection with the Bonds or the Housing Improvement Area; (iii) to pay
costs in connection with enforcement by the City of the Association's obligations under this
Agreement (provided that any such payment is subject to reimbursement by the Association pursuant
to Section 2.2(h) hereof, and nothing in this Section 3.I(b) shall be construed to require the City to
pay costs of enforcement in the first instance as provided herein); and (iv) in accordance with Section
3.9 hereof.
(c) The City and Association agree, and the Bond Resolution shall so provide, that
interest earnings on funds in the Project Fund, the Special Reserve Fund and any other revenue fund
established under the Bond Resolution, shall be deposited in and credited to the Administrative Fund.
Interest earnings on the Bond Fund will be credited to the Bond Fund.
(d) The Administrative Fund shall be disbursed by the City In its discretion for any
purpose in connection with the Housing Improvement Area.
1473197.4
8
Section 3.2. Conditions Precedent to Initial Disbursement. The obligation of the City to
make the initial disbursement hereunder shall be subject to the condition precedent that the
Association shall be in compliance with the conditions contained in Section 3.3 hereof and the further
condition precedent that the City shall have received, on or before the date of such initial
disbursement hereunder, the following:
(a) A copy of the Construction Plans, approved by the City Building Official in
accordance with Section 4.2 hereof and in detail sufficient to enable the Association to authorize
commencement of construction of the Phase I Housing Improvements, certified by the Engineer and
the Association;
(b) Copies of the Engineer's Contract, the Construction Contract, and such subcontracts as
may be reasonably requested from time to time by the City;
(c) A sworn construction statement duly executed by the Association and the Engineer
for the Phase I Housing Improvements showing estimates of all anticipated Contractors' contract or
subcontracts for specific portions of the work on the Phase I Housing Improvements and the amounts
anticipated to become due each such Contractor, including all costs and expenses of any kind incurred
and to be incurred in construction the Phase I Housing Improvements;
(d) A total project cost statement, incorporating estimates of the construction costs as
shown on the sworn construction statement described in paragraph ( c) above and setting forth all
other costs and expenses of any kind anticipated to be incurred in completion of the Phase I Housing
Improvements and sworn to by the Association to be a true, complete and accurate account of all
costs actually incurred and a reasonably accurate estimate of all costs to be incurred in the future;
(e) Copies of any licenses and permits which the Inspecting Engineer certifies as
necessary and sufficient to construct the Phase I Housing Improvements, including all foundation and
grading permits and building permits from time to time necessary for such construction.
Section 3.3. Further Conditions Precedent to All Disbursements, The obligation of the
City to make the initial disbursement hereunder and each subsequent disbursement hereunder shall be
subject to the condition precedent that the Association shall be in compliance with all conditions set
forth in Section 3.2. hereof, and the further conditions precedent that on the date of such
disbursement:
(a) The City has received a written statement from the Association's Authorized
Representative certifying with respect to each payment: (1) that none of the items for which the
payment is proposed to be made has formed the basis for any payment theretofore made from the
Project Fund; (II) that each item for which the payment is proposed to be made is or was necessary in
connection with the Phase I Housing Improvements; and (III) that following such proposed payment
sufficient moneys will remain on deposit in the Project Fund to provide for payment in full of all
remaining costs estimated to be incurred in order to complete the Phase I Housing Improvements. In
the case of any contract providing for the retention of a portion of the contract price, there shall be
paid from the Project Fund only the net amount remaining after deduction of any such portion
1473197.4
9
(b) No Event of Default under this Agreement or event which would constitute such an
Event of Default but fC)r the requirement that notice be given or that a period of grace or time elapse,
shall have occurred and be continuing.
(c) No determination shall have been made by the Inspecting Engineer that the amount of
undisbursed moneys, together with expected earnings thereon and any amount of other funds
deposited in the Project Fund by the Association or to be deposited under Section 3.7 hereof, are
insufficient to pay expenses of any kind which reasonably may be anticipated in connection with the
completion of the Phase I Housing Improvements; or if such a determination has been made and
notice thereof sent to the Association, the Association has deposited the necessary funds with the City
in accordance with Section 3,7 hereof
(d) The disbursement requirements set forth in Section 3.4 hereof have been satisfied.
(e) If requested by the City, the City shall be furnished with a statement of the
Association and of any Contractor, in form and substance satisfactory to the City setting forth the
names, addresses and amounts due or to become due as well as the amounts previously paid to every
Contractor, subcontractor, person, firm or corporation furnishing materials or performing labor
entering into the construction of any part of the Phase I Housing Improvements.
(f) No license or permit necessary for the construction of the Phase I Housing
Improvements shall have been revoked or the issuance thereof subjected to challenge before any court
or other governmental authority havirig or asserting jurisdiction thereover.
Section 3.4. Requests for Disbursement.
(a) Whenever the Association desires a disbursement to be made hereunder, which shall
be no more often than monthly. the Association shall submit to the City a Draw Request, duly
executed on behalf of the Association, setting forth the information requested therein. Disbursements
will be made the Wednesday following the first Tuesday of each month, provided the Draw Request
is received by the 20th day of the preceding month, Each Draw Request shall be limited to amounts
equal to (i) the total of such costs actually incurred and owing (or previously paid) by the Association
to the date of such Draw Request for work performed on and materials used in the Housing
Improvements, plus (ii) the cost of materials and equipment not incorporated in the Property, but
delivered to and suitably stored at the Property; less, (iii) (a) a minimum of five percent, and (b) at all
times less prior disbursements, J\"otwithstanding anything herein to the contrary, no disbursements for
materials stored at the Property will be authorized unless the Association shall provide adequate
security for such storage. Each Draw Request shall constitute a representation and warranty by the
Association that all representations and warranties set forth in this Agreement are true and correct as
of the date of such Draw Request.
(b) At the time of submission of each Draw Request, the Association shall submit the
following to the City:
147'}197.~
10
(i) A written lien waiver from each Contractor for work done and materials
supplied by it which were paid for pursuant to the next preceding Draw Request.
(ii) Such other supporting evidence as may be requested by the City to
substantiate all payments which are to be made out of the relevant Draw Request and/or to
substantiate all payments then made with respect to the Phase I Housing Improvements.
( c) If on the date a disbursement is desired, the Association has performed all of its
agreements and complied with all requirements theretofore to be performed or complied with
hereunder, including satisfaction of all applicable conditions precedent contained in Article III hereof,
upon approval by the Council the City shall make a disbursement to the Association in the amount of
the requested disbursement, or such lesser amount as shall be approved.
Section 3.5. Conditions Precedent to the Final Disbursement. The making of the final
disbursement by the City from the Project Fund shall be subject to the condition precedent that the
Association shall be in compliance with all conditions set forth in Sections 3.2 through 3.4 hereof
and, further, that the following conditions shall have been satisfied prior to the Completion Date:
(a) The Phase I Housing Improvements have been substantially completed in accordance
with the Construction Plans and Article IV hereof, and the City shall have received a certificate of
completion from the Association and the Inspecting Engineer, certifying that to the best of their
knowledge (i) work on the Phase I Housing Improvements has been completed in accordance with
the Construction Plans and all other labor, services, materials and supplies used in such work have
been paid for; (ii) the completed Phase I Housing Improvements conform with all applicable building
laws and regulations of the governmental authorities having jurisdiction over the Phase I Housing
Improvements; and (iii) lien waivers submitted to the City under Section 3.5(c) cover all labor,
services materials and supplies in connection with the Housing Improvements.
(b) The City shall have received satisfactory evidence that all work requiring inspection
by municipal or other governmental authorities having jurisdiction has been duly inspected and
approved by such authorities and by the bureau, corporation or office having jurisdiction, and that all
requisite certificates of occupancy and other approvals have been issued.
(c) The City shall have received a lien waiver from each Contractor for all work done and
for all materials furnished by it for the Housing Improvements.
Section 3.6 Waiver. The City may, in its sole discretion, without notice to or consent
from any other party, waive any or all conditions for disbursement set forth in this Article. However,
the making of any disbursement prior to fulfillment of any condition therefor shall not be construed as
a waiver of such condition, and the City shall have the right to require fulfillment of any and all such
conditions prior to authorizing any subsequent disbursement
Section 3. 7. Deposit of Funds bv Association. If the City shall at any time in good faith
determine that the amount of funds then on deposit in the Project Fund, together with expected
earnings thereon, is less than the amount required to pay all costs and expenses of any kind which
1473197.4
11
reasonably may be anticipated in connection with the completion of the Phase I Housing
Improvements and shall thereupon send written notice thereof to the Association specifying the
additional amount required to be deposited by the Association to provide sufficient funds to complete
the Phase I Housing Improvements, the Association agrees that it will, within ten (10) calendar days
of receipt of any such notice, deposit with the City the amount of funds specified in the notice and
shall authorize the City and to disburse such funds prior to disbursement of any additional proceeds of
the Bonds.
Section 3.8. Application of Proiect Fund Balance, Any amounts remaining in the Project
Fund upon completion of the Phase I Housing Improvements shall be applied in accordance with
Section 3.9 hereof.
Section 3.9. Application of Fee Revenues Balance. In the event that, (i) any balance
remains in the Project Fund upon the final disbursement therefrom for costs of the Phase I Housing
Improvements; or (ii) at any time before the Maturity Date the City has available to it Fee Revenues
(excluding the proceeds of any refunding Bonds) in the amount sufficient to redeem or defease the
Bonds in advance of their maturity, as determined by the City's Financial Advisor, the City may, in its
sole discretion:
(a) apply such excess Fee Revenues or Project Fund balance to redeem or defease all or a
any portion of the Bonds; or
(b) apply such excess Fee Revenues to pay for the Phase II Housing Improvements; or
(c) , by resolution of the Council, specify additional housing improvements (as defined in
the Enabling Ordinance) and transfer all or any portion of such excess Fee Revenues or Project Fund
balance, as the case may be, in the amount of the cost of such improvements into a project fund (the
"Supplemental Project Fund"), Amounts in the Supplemental Project Fund shall be disbursed to the
Association to pay the cost of the housing improvements specified by the City, in accordance with all
the disbursement procedures set forth in Sections 3. 2 through 3.6 hereof; or
(d) by resolution of the Council, disburse aU or any portion of such excess Fee Revenues
or Project Fund balance, as the case may be, to the Association for deposit into the replacement fund
maintained by the Association (the "Replacement Reserve Fund"). The Association shall establish
and maintain a separate subaccount in the Replacement Reserve Fund (the "Excess Revenue
Subaccount") in which excess Fee Revenues or any Project Fund balance deposited hereunder,
together with interest earnings thereon, shall be maintained. Amounts in the Excess Revenue
Subaccount of the Replacement Reserve Fund shall be expended only for housing improvements (as
defined in the Enabling Ordinance) that are selected by the Association; provided that before making
any disbursement of funds from the Excess Revenue Subaccount, the Association shall submit written
plans and cost estimates for such housing improvements to the City Building Official, which plans
shall be deemed approved unless rejected in writing by the City Building Official within 30 days after
receipt thereof:
1473197.4
12
(e) by resolution of the Council, deposit such excess Fee Reserves or Project Fund
balance into the Administrative Fund; or
(f) any combination of paragraphs (a), (b), (c), (d) and (e) above
Any balance remaining in the Supplemental Project Fund (if any) after payment of all Supplemental
Housing Improvements, and any balance remaining after the Maturity Date in the Bond Fund, the
Project Fund or any other fund into which Fee Revenues have been deposited shall be transferred by
the City to the Association for deposit into the Excess Revenue Subaccount of the Replacement
Reserve Fund. Expenditures from the Excess Revenue Subaccount shall be subject to the conditions
described in clause (c) above All covenants and obligations of the Association under this Section
shall survive the Maturity Date.
Section 3,10. Special Reserve Fund. Bond Proceeds in the amount of $164,000 shall be
deposited in a Special Reserve Fund maintained by the City. The Special Reserve Fund shall be
invested as directed by the City and disbursed in accordance with this Section 3. 10 for the following
uses:
(a) To transfer to the Bond Fund the amount of any deficiency described in Section 6.6(a)
in the event the Association fails to timely pay such deficiency, provided that such transfer shall not
constitute a cure of such Event of Default and the Association remains obligated to pay such amount
to the City within the cure period described in Section 7.2 hereof;
(b) To make any payment necessary to cure any Event of Default as provided in Section
7.2, provided that such payment shall not constitute a cure of any Event of Default and the
Association remains obligated to pay such amount to the City within the cure period described in
Section 7.2 hereof;
(c) To disburse to the City in the event the City Council fails to adopt a resolution under
the Act imposing housing improvement fees in connection with Phase II Housing Improvements,
solely because of any action or failure to Act by the Association (including without limitation failure
to submit or cause to be submitted a petition for such fee resolution or to submit or cause to be
submitted a financial plan for Phase II Housing Improvements with substantial Iv the same form.
content and level of detail as the Financial Plan for the Phase I Housing Improvements in accordance
with the Act), such disbursements being made in' the following amounts in accordance with the
following terms:
(i) Failure to adopt fee resolution by June I, 1999 --$32,000;
(ii) Failure to adopt fee resolution by June 1,2000 -- $65,600;
(iii) Failure to adopt fee resolution by June 1,2001 -- the balance remaining in the Special
Reserve Fund.
(d) Upon receipt of all necessary City approvals for commencement of the Phase II
Housing Improvements, including the execution of a separate development agreement for the Phase II
1473197.4
13
Housing Improvements (the "Phase II Development Agreement") the balance remammg in the
Special Reserve Fund as of the date of the Phase II Development Agreement shall be disbursed for
commencement of the Phase II Housing Improvements in accordance with the terms of Phase II
Development Agreement. The parties agree and understand the Phase II Development Agreement, if
executed shall provide that at the request of the Association and with the written consent of the City,
money in the Special Reserve Fund may be disbursed to the Association for Phase II Housing
Improvements prior to the issuance of bonds for the Phase II Housing Improvements;
(e) To disburse to the City the cost of the City's consultant described in Section 6.3(a) in
the event the Association fails to timely pay such cost, provided that such disbursement shall not
constitute a cure of such Event of Default and the Association remains obligated to pay such amount
to the City within the cure period described in Section 7.2 hereof;
(f) Notwithstanding anything to the contrary in this Section, the remaining balance in the
Special Reserve fund shall be disbursed to the Association for Phase II Housing Improvements if:
(i) the Association has taken all actions necessary for the City Council to approve
a resolution imposing housing improvement fees in connection with Phase II Housing
Improvements (including without limitation submitting or causing to be submitted a petition
for such resolution and submitting or causing to be submitted a financial plan for the Phase II
Housing Improvements with substantially the same form. content and level of detail as the
Financial Plan for the Phase I Housing Improvements in accordance with the Act), and the
City Council fails to adopt such fee resolution; and
(ii) the Association has completed Phase I Improvements in accordance with this
Agreement; and
(iii) there is no Event of Default by the Association that remains uncured; and
(iv) construction plans for the Phase II Housing Improvements to be financed with
disbursements under this paragraph have been submitted to the City and approved in
accordance with the procedures described in Article IV hereof.
Disbursements under this paragraph (f) shall be made at any time after the date the City Council fails
to approve the fee resolution, assuming compliance with all other conditions set forth above. provided
that disbursements shall be made in accordance with the terms and conditions set forth in Sections 3.2
through 3.5 of this Agreement, substituting the term "Phase II Housing Improvements" for "Phase I
Housing Improvements" wherever it appears in those Sections.
Section 3.11. Investment of Soecial Reserve Fund. Moneys in the Special Reserve Fund
shall be invested and reinvested by the City in Permitted Investments.
Section 3.12. Report Bv City. The City shall annually on or before each June 30 provide the
Association with a written statement regarding the status of the Bond Fund, Administrative Fund and
Special Reserve Fund and any other funds related to the Housing Improvement, including but not
1473197..$
14
limited to the principal balance, interest earned during the prior twelve (12) months and the total
balance all as of the prior December 31.
ARTICLE IV
Construction of Phase I Housing Improvements
Section 4.1. Construction of Phase I Housing; Improvements. The Association agrees that
it will construct the Phase I Housing Improvements on the Property in accordance with the approved
Construction Plans and at all times prior to the Maturity Date will operate and maintain, preserve and
keep the Phase I Housing Improvements or cause the Phase I Housing Improvements to be
maintained, preserved and kept with the appurtenances and every part and parcel thereof, in good
repair and condition, all in accordance with Article VI hereof.
Section 4.2.
Construction Plans.
(a) Before issuance of the Bonds, the Association shall submit the Construction Plans to
the City Building Official, who shall review such plans on behalf of the City. The Construction Plans
shall provide for the construction of the Phase I Housing Improvements and shall be in confonnity
with this Agreement, and all applicable State and local laws and regulations. The City Building
Official will approve the Construction Plans in writing if: (i) the Construction Plans conform to the
terms and conditions of this Agreement; (ii) the Construction Plans conform to all applicable federal,
state and local laws, ordinances, rules and regulations; (iii) the Construction Plans are adequate to
provide for construction of the Phase I Housing Improvements; and (iv) no Event of Default has
occurred. No approval by the City Building Official shall relieve the Association of the obligation to
comply with the terms of this Agreement, applicable federal, state and local laws, ordinances, rules
and regulations, or to construct the Phase I Housing Improvements in accordance therewith. No
approval by the City Building Official shall constitute a waiver of an Event of Default. If approval of
the Construction Plans is requested by the Association in writing at the time of submission, such
Construction Plans shall be deemed approved unless rejected in writing by the City Building Official,
in whole or in part, Such rejections shall set forth in detail the reasons therefore, and shall be made
within 30 days after the date of their receipt by the City Building OfficiaL If the City Building
Official rejects any Construction Plans in whole or in part, the Association shall submit new or
corrected Construction Plans within 30 days after written notification to the Association of the
rejection. The provisions of this Section relating to approval, rejection and resubmission of corrected
Construction Plans shall continue to apply until the Construction Plans have been approved by the
City Building OfficiaL The City Building Official's approval shall not be unreasonably withheld.
Said approval shall constitute a conclusive detennination that the Construction Plans (and the Phase I
Housing Improvements, constructed in accordance with said plans) comply to the City Building
Official's satisfaction with the provisions of this Agreement relating thereto.
(b) If the Association desires to make any material change in the Construction Plans after
their approval by the City Building Official, the Association shall submit the proposed change to the
City Building Official for approval. For the purposes of this Section, a "material change" means any
147319'4
15
change that (i) increases or decreases the total cost of the Housing Improvements by more than
$10,000, or (ii) involves any change in construction materials or design that reasonably requires
review for complia.1ce with state and local laws and regulations. If the Construction Plans, as
modified by the proposed change, conform to the requirements of this Section 4.2 of this Agreement
with respect to such previously approved Construction Plans, the City BUilding Official shall approve
the proposed change and notify the Association in writing of its approval. Such change in the
Construction Plans shall, in any event, be deemed approved by the City Building Official unless
rejected, in whole or in part, by \vritten notice by the City Building Official to the Association, setting
forth in detail the reasons therefor. Such rejection shall be made within ten (10) days after receipt of
the notice of such change. The City Building Official's approval of any such change in the
Construction Plans will not be unreasonably withheld.
Section 4.3, Commencement and Completion of Construction. Subject to Unavoidable
Delays, the Association shall complete the construction of the Phase I Housing Improvements by
December 15, 1997. All work \\ith respect to the Phase I Housing Improvements to be constructed or
provided by the Association on the Property shall be substantially in conformity with the
Construction Plans as submitted by the Association and approved by the City.
The Association agrees for itself, its successors and assigns, and every successor in interest to
the Property, or any part thereof. that the Association, and such successors and assigns, shall promptly
begin and diligently prosecute to completion the construction of the Phase I Housing Improvements
thereon, and that such construction shall in any event be commenced arid completed within the period
specified in this Section 4.3 of this Agreement Until construction of the Phase I Housing
Improvements has been completed, the Association shall make repoJ1s, in such detail and at such
times as may reasonably be requested by the City as to the actual progress of the Association with
respect to such construction,
Section 4.4. Certificate of Completion,
(a) Promptly after substantial completion of the Phasll I Housing Improvements in
accordance with those provisions of the Agreement relating solely to the obligations of the
Association to construct the Phase I Housing Improvements (including the dates for beginning and
completion thereof), the City will furnish the Association with an appropriate instrument so
certifying. Such certification by the City shall be a conclusive determination of satisfaction and
termination of the agreements and covenants in the Agreement with respect to the obligations of the
Association, and its successors and assigns, to construct the Phase I Housing Improvements and the
dates for the beginning and completion thereof. Such certification and such determination shall not
constitute evidence of compliance with or satisfaction of any obligation of the Association under
Article VI hereof.
(b) the certificate pro\ided for in this Section 4.4 of this Agreement shall be in such form
as will enable it to be recorded in the proper office for the recordation of deeds and other instruments
pertaining to the Property. If the City shall refuse or fail to provide any certification in accordance
with the provisions of this Section 4.4 of this Agreement, the City shall, within thirty (30) days after
written request by the Association, provide the Association with a written statement, indicating in
l.4i3197,4
16
adequate detail in what respects the ASsociation haS failed to complete the Housing Improvements in
accordance with the provisions of the Agreement, or is otherwise in default, and what measures or
acts it will be necessary, in the opinion of the City, for the Association to take or perform in order to
obtain such certification.
( c) The construction of the Phase I Housing Improvements shall be deemed to be
substantially completed as determined by the City Building Official, who may execute the certificate
of completion on behalf of the City.
ARTICLE V
Insurance
Section 5.1. Insurance.
(a) The Association will provide.and maintain or cause to be provided and maintained at
all times during the process of constructing the Phase I Housing Improvements an All Risk Broad
Form Basis Insurance Policy and, from time to time during that period, at the request of the City,
furnish the City with proof of payment of premiums on policies covering the following:
(i) At any time that construction is taking place at the Property, Builder's risk
insurance, written on the so-called "Builder's Risk - Completed Value Basis," in an amount
equal to one hundred percent (100%) of the insurable value of the Phase I Housing
Improvements at the date of completion, and with coverage available in nonreporting form on
the so-called "all risk" form of policy provided that the Association need not provide such
insurance at any time that the Association's existing hazard insurance policy provides
coverage equivalent to the builder's risk insurance coverage. The interest of the City shall be
protected in accordance with a clause in form and content satisfactory to the City;
(ii) Comprehensive general liability insurance (including operations, contingent
liability, operations of subcontractors, completed operations and contractual liability
insurance) together with an Owner's Contractor's Policy with limits against bodily injury and
property damage of not less than $1,000,000 for each occurrence (to accomplish the above-
required limits, an umbrella excess liability policy may be used); and
(iii) Workers' compensation insurance provided by all Contractors,
(b) Upon completion of construction of the Phase I Housing Improvements and prior to
the Maturity Date, the Association shall maintain, or cause to be maintained, at its cost and expense,
and from time to time at the request of the City shall furnish proof of the payment of premiums on,
insurance as follows:u
1473197.4
17
(i) Insurance against loss and/or damage to the Property and the Phase I Housing
Improvements under a policy or policies covering such risks as are ordinarily insured against
by similar businesses.
(ii) Comprehensive general public liability insurance, including personal injury
liability (with employee exclusion deleted), against liability for injuries to persons and/or
property, in the amount for each occurrence and for each year of $1,000,000, and shall be
endorsed to show the City as additional insured,
(iii) Such other insurance, including workers' ccmp(,nsation insurance respecting
all employees of the Association, in such amount as is customarily carried by like
organizations engaged in like activities of ccmparable size and liability exposure; provided
that the Association may be self-insured with respect to all or any part of its liability for
workers' ccmpensation.
.
( c) All insurance required in Article V of this Agreement shall be taken out and
maintained in responsible insurance ccmpanies selected by the Association which are authorized
under the laws of the State to assume the risks covered thereby, Upon request, the Association will
deposit annually with the City policies evidencing all such insurance, or a certificate or certificates or
binders of the respective insurers stating that such insurance is in force and effect. Unless otherwise
provided in this Article V of this Agreement each policy shall ccntain a provision that the insurer
shall not cancel nor modify it in such a way as to reduce the coverage provided below the amounts
required herein without giving writtel) notice to the Association and the City at least thirty (30) days
before the cancellation or modification beccmes effective, In lieu of separate policies, the
Association may maintain a single policy, blanket or umbrella policies, or a combination thereof,
having the ccverage required herein, in which event the Association 8hall deposit with the City a
certificate or certificates of the respective insurers as to the amount of coverage in force upon the
Housing Improvements.
(d) The Association agrees to notify the City immediately in the case of damage
exceeding $100,000 in amount to, or destruction of, the Property, the Housing Improvements or any
portion thereof resulting from fire or other casualty, In such event the Association will forthwith
repair, reccnstruct and restore the Housing Improvements to substantially the same or an improved
condition or value as it existed prior to the event causing such damage and, to the extent necessary to
acccmplish such repair, reccnstruction and restoration, the Association will apply the Net Proceeds of
any insurance relating to such damage received by the Association to the payment or reimbursement
of the costs thereof.
The Association shall complete the repair, reconstruction and restoration of the Housing
Improvements and the Property, whether or not the Net Proceeds of insurance received by the
Association for such purposes are sufficient to pay for the same. Any :'Jet Proceeds remaining after
completion of such repairs, construction and restoration shall be the property of the Association.
( e) The Association and the City agree that all of the insurarlce provisions set forth in this
Article V shall terminate upon the earlier of the Maturity Date or termination of this Agreement.
1473197.4
18
Section 5.2. Subordination. Notwithstanding anything to the contrary contained in this
Article. V, the rights of the City with respect to the receipt and application of any proceeds of
insurance shall. in all respects, be subject and subordinate to the rights of any lender holding a
mortgage on a Housing Unit
ARTICLE VI
Special Covenants
Section 6. L No Warrantv of Condition or Suitability. Indemnification.
(a) The City does not make any warranty, either express or implied, as to the desigiJ. or
capacity of the Phase I Housing Improvements, as to the suitability for operation of the Phase I
Housing Improvements or that they will be suitable for the Association's purposes or needs, The
Association releases the City from, agrees that the City shall not be liable for, and agrees to hold the
City, its Council and its respective officers and employees, harmless against, any claim, cause of
action, suit or liability for any loss or damage to property or any injury to or death of any person that
may be occasioned by any cause whatsoever pertaining to the Phase I Housing Improvements or the
Property or the use thereof
(b) The Association further agrees to indemnify and hold harmless the City its officers
and employees, against any and all losses, claims, damages or liability to which the City its officers
and employees, may become subject under any law arising out of any act, omission, representation or
misrepresentation of the Association in connection with the issuance and sale of the Bonds and the
canying out of the transactions contemplated by this Agreement, and to reimburse the City, its
officers and employees, for any out-of-pocket legal and other expenses (including reasonable counsel
fees ) incurred by the City, its officers and employees, in connection with investigating any such
losses, claims, damages or liabilities or in connection with defending any actions relating thereto.
The City agrees, at the request and expense of the Association, to cooperate in the making of any
investigation in defense of any such claim and promptly to assert any or all of the rights and
privileges and defenses which may be available to the City. The provisions of this Section shall
survive the payment and redemption of the Bonds.
(c) All covenants, stipulations, promises, agreements and obligations of the City
contained herein shall be deemed to be the covenants, stipulations, promises, agreements and
obligations of the City and not of any governing body member, officer, agent, servant or employee of
the City in the individual capacity thereof.
Section 6.2. Financial Statements. The Association agrees to furnish to the City, by no
later than 120 days after the end of each Fiscal Year, beginning with Fiscal Year 1996, until the later
of the Maturity Date and the date all excess Fee Revenues and Project Fund balance, if any, have
been expended in accordance with Section 3.9 hereof, a copy of the annual audited financial
statements of the Association for the preceding Fiscal Year, including a balance sheet and operating
1473197.4
19
statements, audited by an Independent certified public accountant. Such financial statements shall be
accompanied by a separate written statement from such Independent certified public accountant
preparing such report that such Independent accountant has obtained no knowledge uf any d~fault by
the Association in the fulfillment of any of the terms, covenants, provisions or conditions of this
Agreement or if such accountant shall have obtained knowledge of any such default the accountant
shall disclose in such statement the default and the nature thereof, but such accountant shall not be
liable directly or indirectly to any party for failure to obtain knowledge of any default. The
Association and the City agree and understand that compliance with this Section constitutes
compliance with Section 7.01 of the Enabling Ordinance.
Section 6.3. Financial Plan: Annual Reoorts, The Association agrees to furnish to the
City, by no later than 120 days after the end of each Fiscal Year until the later of the Maturity Date
and the date all excess Fee Revenues and Project Fund balance, if any, have been expended in
accordance with Section 3.9 hereof:
(a) an updated Financial Plan for the Property prepared by a Management Consultant
acceptable to the City, in substantially the form of the Financial Plan dated January 31, 1997 and
providing plans for capital improvements to the Property and projected Association dues through the
Maturity Date. The updated Financial Plan shall include a schedule for the replacements reserves
required to maintain the Common Areas and the other portions of the Property which the Association
is obligated to maintain pursuant to the Declaration, The Financial Plan shall also include the
proposed increases in assessments payable by Owners of the Housing Units. The City shall have
thirty (30) days after receipt to approve or reject the updated Financial Plan, which approval shall not
be umeasonably withheld or denied. If the City rejects the updated Financial Plan the City shall give
written reasons for the rejection to the Association and the Association shall submit a revised updated
Financial Plan to the City which the City shall review and approve or reject within ten (10) days.
The above procedure shall be followed until the City approves the updated Financial Plan, provided
that if the City reasonably withholds its approval and does not approve a updated Financial Plan
within six (6) months the City may engage a consultant to prepare an updated Financial Plan and the
Association shall reimburse the City for reasonable costs incurred by the consultant in the preparation
of the updated Financial Plan.
(b) a written report by an Independent engineer describing the physical condition of the
Property and the Housing Improvements as of the end of the preCeding Fiscal Year, with detail
sufficient to enable the City to evaluate compliance with the Financial Plan, the Reserve Plan and the
Association's obligations under this Agreement.
(c) a written report regarding the status of qualifying for FHA/HUD insurance for the
Housing Units in accordance with Section 6,14 hereof, the expected date for approval, if known, and
any known impediments to obtaining such qualification.
(d) Evidence of compliance with Section 6. I 5 including a wpy of the written contract or
agreement with the property manager and the property manager's resume.
147319''''
20
Section 6.4. Records and Insoection." The AssoCiation shall maintain (i) copies of federal,
state, municipal and other licenses and permits obtained by the Association relating to the operation
of the Property and the Phase I Housing Improvements, (ii) financial books and records reflecting the
operations of the Property and the Phase I Housing Improvements, and (iii) all other documents,
instruments, reports and records required by any provision of this Agreement or the Financial Plan or
by law relating to the Propeny or the affairs of the Association. The City shall have the right to
inspect all such materials, except any materials made private or confidential by federal or state law or
regulation, and the Property at all reasonable times and to make such copies and extracts as it may
desire. At the request of the City the Association shall furnish to the City, at the Association's
expense, a copy of any such materials which are required by the City in the performance of its duties
under this Agreement, the Enabling Ordinance, the Fee Resolution or the Act.
Section 6.5. Maintenance of Prooertv. The Association agrees that so long as the Bonds
are outstanding, the Association will keep or cause to be kept the Property, and the Phase I Housing
Improvements in good repair and good operating condition at its own cost. The Association shall
make all repairs, replacements and improvements to the Property specified in the Financial Plan, as
such plan may be amended in accordance with Section 6.3 hereof,
Section 6.6. Covenant to Maintain Net Revenues Available for Debt Service,
(a) In the event that thirty (30) business days before any Payment Date, the Net Revenues
Available For Debt Service are or will be less than 105 percent of the total principal and interest due
on the Bonds on such Payment Date, the City will provide written notice to the Association of such
fact and the amount of the deficiency.. Within 10 days after receipt of such notice of deficiency in Net
Revenues Available for Debt Service, the Association shall be liable for and shall pay the City such
deficiency. Failure on the part of the City to provide the notice of the deficiency at the time specified
herein shall not relieve the Association of its obligation to make the required payment 10 days after
the actual notice of the deficiency is provided by the City to the Association, Failure on the part of
the Association to make the required payment under this Section within 10 days after receipt of notice
thereof shall entitle the City to exercise its remedies under this Agreement, notwithstanding any cure
period provided in Article VII hereof.
(b) In the event that the Association makes any payment to the City under Section 6.6(a)
and, 10 business days before any Payment Date thereafter the City determines that Net Revenues
Available for Debt Service, excluding the amount of all prior payments by the Association under
Section 6.6(a), are at least 105 percent of the total principal and interest due on the Bonds on such
Payment Date, the City shall promptly return to the Association the amount of the prior payment,
without interest thereon provided that the Association has reimbursed the City for any disbursements
made out of the Special Reserve Fund pursuant to Section 3.IO(a), (b) or (e). Nothing in this Section
6.6(b) shall be construed to relieve the obligation of the Association to make any payment required
under Section 66(a) hereof.
1473197,4
21
Section 6.7. Assignment of Association Assets.
(a) As security for the Association's obligations under Section 6.6 hereof, the Association
does hereby bargain, sell, assign and set over unto the City, all the dues, fees and assessments and
other income of any type (the "Dues") owing to the Association from owners of Housing Units in the
Property, together with all cash. investments and securities of any type held by the Association now
or hereafter in any operating or reserve accounts (the "Accounts"). The Dues and Accounts are
referred to collectively as the "Association Assets". This assignment shall constitute a perfected,
absolute and present assignment provided that the Association may. so long as no Event of Default
with respect to Section 6.6 hereof occurs, collect and retain all Association Assets.
The provisions of this Section 6.7 are intended to be a mere license in favor of the Association
and a mere deferral of the City's exercise of its perfected, absolute and present rights hereunder, and
shall not be construed to be a future assignment thereof.
(b) The Association hereby covenants and warrants to the City that the Association has
not executed any prior assignments of any Association Assets, nor has it performed any act or
executed any other instrument that might prevent the Association from operating under any of the
terms and conditions of this assignment or that would limit the Association in such operation.
( c) The Association hereby agrees that, so long as the Association's obligations under
Section 6,6 hereof remain outstanding the Association will not, without the written consent of the
City, make any other assignment, pledge or other disposition of any of the Association Assets, or
consent in any assignment of same; and any such acts, if done without the written consent of the City,
shall be null and void.
(d) Upon the occurrence of an Event of Default with respect to Section 6.6 hereof, the
City shall have the right to withdraw funds from, and liquidate any securities in any Accounts, and
collect the Dues from the owners of Housing Units, and apply the same for deposit in the Bond Fund.
This assignment shall be binding upon the occupants of Housing Units in the Property from the date
of filing by the City in the office or offices where this Agreement is filed that an Event of Default
under Section 6.6 hereof has occurred and is continuing and service of a copy of the notice upon the
occupants of the Housing Units, The expenses, including any attomey's fees, reasonably incurred
pursuant to the powers herein contained shall be deemed to be immediately due and payable by the
Association to the City and shall be secured hereby. The City shall not be liable to account to the
Association for any action taken pursuant hereto other than to account for any Association Assets
actually received by the City.
(e) The City shall not be obligated to perform or discharge, nor does it undertake to
perform or discharge, any obligation, duty or liability under any agreement between the Association
and o\,ners of Housing Units in the Property, and the Association hereby agrees to defend and
indemnify the City and hold it harmless for any and all liability, loss or damage which it mayor
might incur under or by reason of this assignment and from any and all claims and demands
whatsoever which may be asserted against it by reason of any alleged obligation or undertaking on its
part to perform or discharge any of the terms or covenants contained in any agreement by and among
1473197.4
22
the Association and the owners of Housing Units in the'Property, except such claims and demands
that arise out of the negligence or willful misconduct of the City, its officers, employees and agents.
Should the City incur any such liability, loss or damage under or by reason of this assignment, or in
the defense against any such claims or demands arising out of this assignment, the amount thereof,
including costs, expenses and reasonable attorneys' fees, together with interest thereon at the rate of
interest on the Bonds, shall be secured hereby, and the Association shall reimburse the City therefore
immediately upon demand.
(t) In order to facilitate the Association obtaining short-tenn financing for the Housing
Improvements before issuance of the Bonds, the City agrees to subordinate its rights under this
Section during the period of such short-tenn financing, subject to such reasonable terms and
conditions as the City and the short-term lender mutually agree in writing,
Section 6.8, Association to Maintain its Existence. The Association agrees that, so long as
the Bonds are outstanding, it will maintain its existence as a nonprofit corporation under the laws of
Minnesota; will not dissolve or otherwise dispose of all or substantially all of its assets; and will not
consolidate with or merge into another corporation or permit one or more other corporations to
consolidate with or merge into it.
Section 6.9. Prohibition Against Assignment of Agreement. The Association represents
and agrees that prior to the Maturity Date the Association has not made or created and will not make
or create or suffer to be made or created any total or partial sale, assignment, conveyance, or any trust
or power, or transfer in any other mode or fonn of or with respect to the Association's rights, interests
or obligations under this Agreement o.r any part thereof, or any contract or agreement to do any of the
same, without the prior written approval of the City.
Section 6.10. Notice of Fee Upon Transfer of Housing Units. The Association agrees that it
will use its best efforts to ensure that owners of each Housing Unit upon which a Fee is imposed
under the Fee Resolution provide notice of the Fee to prospective buyers or transferees upon any sale
or transfer of the Housing Unit. Such efforts by the Association shall include, but are not limited to
ensuring that Housing Unit owners include a description of the Fee in a disclosure certificate provided
to the purchaser substantially in the form required by Minnesota Statutes, Section 515B.4-107
regardless of whether such statute applies to the Housing Unit. The Association shall amend the
Declaration as necessary to require the owners of each Housing Unit to provide such disclosure.
Section 6. I 1. Repair and Replacement Policv. On or before March 1, 1998 the Association
must adopt a detailed repair and replacement policy for the Common Area and other portions of the
Property which the Association is obligated to maintain pursuant to the Declaration, The repair and
replacement policy must be consistent with the terms of the Declaration and the Declaration must be
amended prior to the date set forth above, if necessary, to conform to the repair and replacement
policy. The repair and replacement policy must detail the division for repairs and replacements
between the Association and the owners of the Housing Units.
Section 6.12. Increases in Assessments. The Association agrees to increase the assessments
payable pursuant to the Declaration by owners of Housing Units by at least ten percent (10%) per
1473197.4
23
year as permitted by the Declaration until the Assessments are sufficient in accordance with the
Financial Plan to pay the Project's current operating expenses, replacement reserves in accordance
with the approved Financial Plan and any deferred maintenance not otherwise scheduled to be
completed as part of the Phase I Housing Improvements or Phase II Housing Improvements. The
Association shall give the City \>Titten notice the first time that the Association intends to increase the
assessments by less than ten percent (10%). Such notice shall be submitted with the updated
Financial Plan in accordance with Section 6.3(a) hereof and the City shall approve or reject the
proposal to reduce or eliminate the assessments increase in the same manner that the City approves or
rejects the updated Financial Plan, provided that the City shall not unreasonably withhold approval of
the Association's decision regarding assessments.
Section 6.13. Intentionally Omitted
Section 6. 14. FHA/Hl.;TI Insurance. The Association agrees to use all reasonable efforts to
qualify for FHA/HUD mortgage insurance for the Housings Units. In determining whether to take
the steps necessary to qualify for such insurance the Association may take into consideration the out-
of-pocket costs and administrative costs that would be incurred in qualifying for such insurance. In
no event shall the Association be required to incur any environmental testing or remediation costs or
to construct any improvements, other than the Housing Improvements, to qualify for FHA/HUD
mortgage insurance.
Section 6.15 Exoerienced Propertv Manae:er. So long as the Bonds are outstanding, the
Association agrees to maintain --experienced professional property management" for the Property,
For purposes of this subsection "experienced professional property management" shall mean a full
time property manager who meets the following criteria:
(i) has at least five years of executive property management experience,
including experience with multi-unit residential housing;
(ii) has experience working with boards and membership organizations;
(iii) has demonstrated knowledge of maintenance and construction issues;
(iv) has demonstrated knowledge of accounting, financial reporting, budgeting and
related issues; and
(v) does not have an ownership interest in any Housing Unit and is not the
spouse, child, parent or sibling of anyone who has an ownership interest.
ARTICLE vn
Events of Default
Section 7, 1. Events of Default Defined. 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
1473197.4
24
(unless the context otherwise provides),..any failure by any party to observe or perform any other
covenant, condition, obligation or agreement on its part to be observed or performed hereunder.
Section 7, 2. Remedies on Default. Whenever any Event of Default referred to in Section
7.1 of this Agreement occurs, the non-defaulting party may exercise its rights under this Section 7.2
after providing thirty days wrinen notice to the defaulting party of the Event of Default, but only if
the Event of Default has not been cured within said thirty days or, if the Event of Default is by its
nature incurable within thirty days, the defaulting party does not provide assurances reasonably
satisfactory to the non-defaulting party that the Event of Default will be cured and will be cured as
soon as reasonably possible:
(a) Suspend its performance under the Agreement until it receives assurances that the
defaulting party will cure its default and continue its performance under the Agreement.
(b) Use any balance in the Special Reserve Fund to cure the event of Default.
(c) Take whatever action, including legal, equitable or administrative action, which may
appear necessary or desirable to collect any payments due under this Agreement, or to enforce
performance and observance of any obligation, agreement, or covenant under this Agreement.
Section 7.3. No Remedv Exclusive. No remedy herein conferred upon or reserved to the
City or Association is intended to be exclusive of any other available remedy or remedies, 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 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 VII.
Section 7.4. No Additional Waiver Imolied by One Waiver. In the event 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.
ARTICLE VITI
Additional Provisions
Section 8.1, Conflict of Interests: City Representatives Not Individuallv Liable. The City
and the Association, to the best of their respective knowledge, represent and agree that no member,
official, or employee of the City shall have any personal interest, direct or indirect, in the Agreement,
nor shall any such member, official. or employee participate in any decision relating to the
Agreement which affects his personal interests or the interests of any corporation, partnership, or
1473197..1
25
association in \\lhich he is, directly or indirectly, interested. No member, official, or employee of the
City shall be personally liable to the Association, or any successor in interest, in the event of any
default or breach by the City or for any amount which may become due to the Association or
successor or on any obligations under the terms of the Agreement
Section 8.2. Equal Emolovment Oooortunitv. The Association, for itself and its successors
and assigns, agrees that during the construction of the Housing Improvements provided for in the
Agreement it will comply v.ith all applicable federal, state and local equal employment and
non-discrimination laws and regulations.
Section 8.3. Provisions Not Merged With Deed. None of the provisions of this Agreement
are intended to or shall be merged by reason of any deed transferring any interest in the Property and
any such deed shall not be deemed to affect or impair the provisions and covenants of this
Agreement
Section 8.4. 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 8.5. Notices and Demands. Except as otherwise expressly provided in this
Agreement, a notice, demand, or other communication under the Agreement by either party to the
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)
Association at
in the case of the Association, is addressed to or delivered personally to the
, Attention: ; and
(b) in the case of the City, is addressed to or delivered personally to the City at 1010 First
Street, Hopkins, Minnesota 55343, Attention: City Clerk.
or at such other address with respect to either such party as that party may, from time to time,
designate in writing and forward to the other as provided in this Section.
Section 8.6, Countemarts. This Agreement may be executed in any number of
counterparts, each of which shall constitute one and the same instrument
Section 8.7. Recording. The City shall record this Agreement and any amendments
thereto with the Hennepin County Recorder or Registrar of Titles. The Association shall pay all costs
for recording.
Section 8.8 Binding Effect This Agreement shall inure to the benefit of and shall be
binding upon the City and the Association and their respective successors, heirs and assigns.
Section 8.9.
the parties hereto.
Amendment. This Agreement may be amended only by written agreement of
1473197.4
26
IN WffNESS WHEREOF, the City has caused this Agreement to be duly executed in its
name and behalf a.1d its seal to be hereunto duly affixed and the Association has caused this
Agreement to be duly executed in its name and behalf on or as of the date first above written.
CITY OF HOPKINS, MINNESOTA
By
Its Mayor
By
Its City Manager
STATE OF MINNESOTA )
) 55.
COUNTY OF )
The foregoing instrument was acknowledged before me this day of
1997 by and the Mayor and City
Manager, respectively, of the City of Hopkins, Minnesota, a municipal corporation, on behalf of the
City.
Notary Public
1473197.4
27
WESTBROOKE PATIO HOMES
ASSOCIATION, me.
By
Its
By
Its
STATE OF MINNESOTA )
) ss.
COUNTY OF )
The foregoing instrument was acknowledged before me this day of
, 1997 by and _ of
WES1BROOKE PATIO HOMES ASSOCIATION, INC., a Minnesota nonprofit corporation, on
behalf of the corporation.
Notary Public
1473197.4
28
1473197.3
SCHEDULE A
PROPERTY
Block I and 2, and Outlot A, Westbrooke Patio Homes, Hennepin County, Minnesota
A-I
1473197.3
SCHEDULE B
PHASE I HOUSING IMPROVEMENTS
Replace roofs, including gable areas, on 40 buildings
Extend soffits on main buildings
Remove fireplace chimney housings and add rain collars
Install gutters and downspouts
Install draft walls in attics, insulate, and reroute exhaust vellts
Replace flat roofs on garage buildings
C-I
1473197.3
SCHEDULE C
PHASE II HOUSING IMPROVEMENTS
Building exteriors
Driveway and parking improvements
C-I
SCHEDULE D
DISBURSEMENT REQUlSmON OF
ASSOCIA nON'S AUTHORIZED REPRESE"JTA TIVE
TO: City of Hopkins
1010 First Street
Hopkins, MN 55343
DISBURSEMENT DIRECTION
The undersigned Authorized Representative ofWestbrooke Patio Homes Association, Inc., a
Minnesota nonprofit corporation (the "Association"), hereby authorizes and requests you to disburse
from the Project Fund held by you pursuant to the Development Agreement between the City of
Hopkins, Minnesota and Westbrooke Patio Homes Association, Inc., dated as of
, 1997 (the "Agreement" ), the following amount to the following person and
for the following proper Housing Improvements cost and purpose:
1. Amount:
2. Payee:
3. Purpose:
all as defined and provided in said Agreement. The undersigned further certifies that (i) none of the
items for which payment is proposed to be made has formed the basis for any payment theretofore
made from the Project Fund, and (ii) each item for which the paym(mt is proposed to be made is or
was necessary in connection with the Phase I Housing Improvements, and (iii) the amount of funds to
remain on deposit in the Project Fund following this disbursement is currently estimated to be
sufficient to pay all future costs of Phase I Housing Improvements.
Dated:
Association's Authorized Representative
0-1
1473197.4
CITY OF HOPKINS
Hennepin County, Minnesota
RESOLUTION 97-33
RESOLUTION Providing FOR THE SALE OF $2,265,000 TAXABLE GENERAL
OBLIGATION HOUSING IMPROVEMENT AREA BONDS, SERIES 1997B
A. WHEREAS, the City of Hopkins, Minnesota, has heretofore determined that it
is necessary and expedient to issue the City's $2,265,000 Taxable General Obligation
Housing Improvement Area Bonds, Series 1997B (the "Bonds"), to finance the
construction of various improvements in Housing Improvement Area No. 1 in the City;
and
B. WHEREAS, the City has retained Ehlers and Associates, Inc., in Minneapolis,
Minnesota ("Ehlers"), as its independent financial advisor for the Bonds and is
therefore authorized to solicit proposals in accordance with Minnesota Statutes,
Section 475.60, Subdivision 2(9);
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of
Hopkins, Minnesota, as follows:
1. Authorization: Findinas, The City Council hereby authorizes Ehlers to solicit
proposals for the sale of the Bonds.
2. Meetina: Proposal Ooenina. The City Council shall meet at the time and place
specified in the Terms of Proposal attached hereto for the purpose of
considering sealed proposals for, and awarding the sale of the Bonds. The City
Clerk, or designee, shall open proposals at the time and place specified in such
Terms of Proposal.
3, Terms of Proposal. The terms and conditions of the Bonds and the sale thereof
are fully set forth in the "Terms of Proposal" attached hereto and hereby
approved and made a part hereof.
4. Official Statement. In connection with said sale, the officers or employees of the
City are hereby authorized to cooperate with Ehlers and participate in the
preparation of an official statement for the Bonds and to execute and deliver it
on behalf of the City upon its completion.
Adopted by the City Council of the City of Hopkins this 1 st day of April, 1997.
Charles D. Redepenning, Mayor
ATTEST:
Terry Obermaier, City Clerk
BOND SALE REPORT
$2,265,000*
Taxable General Obligation Housing Improvem nt
Area Bonds, Series 1997B
City of Hopkins, Minnesota
March 25, 1997
e Ehl rs and Ass ciates, Inc.
G.O. Housing Improvement Area Bonds, Series 1997B
OVERVIEW
This report describes the proposed plan for the City of Hopkins to issue
$2,265,000* Taxable General Obligation Housing Improvement Area
Bonds, Series 1997B.' This report has been prepared by Ehlers and
Associates, in consultation with City Staff and bond counsel. This
report deals with:
.
Purpose and components of bond issue.
.
Structure.
.
Other considerations in issuing bonds.
.
Market conditions.
.
Issuing process.
PURPOSE
The $2,265,000 Taxable General Obligation Housing Improvement
Area Bonds, Series 1997B (the "Bonds") are being issued pursuant to the
provisions of 1994 Minnesota Laws, Chapter 587, Article 9, Sections 22
through 31 (the "Housing Improvement Act") and Minnesota Statutes
Chapter 475. On June 7, 1994, the City Council adopted Resolution
#94-55 approving the special legislation and making it effective.
The Bonds are being used for finance the first phase of improvements to
the Housing Improvement Area No.2 (the "Area"). Before issuing the
Bonds, the City will enter into an agreement with the Westbrooke Patio
Homes Association to provide $1,865,000 to make the following
improvements:
It is anticipated that the size of the bond issue will be less that $2,265.000. The SIZe will be reduced prior to
or at the time of the sale to account for prepaid fees received by the City.
Page I
G.O. Housing Improvement Area Bonds, Series 1997B
. Replace roofs, including gable areas.
. Extend soffits on main buildings.
. Remove fireplace chimney housing and replace rain collars.
. Install gutters and downspouts
. Install draft walls in attics, insulate and reroute exhaust vents
. Replace flat roofs on garage buildings.
A more complete description of the project can be found in the Plan for
Housing Improvement Area No.2.
Pursuant to the Housing Improvement Act, the City initiated the
process for the housing improvement area after receiving a petition
representing over 35% of the property owners in the Area. The City
created Housing Improvement Area No.2 (the "Area) by ordinance
pursuant to the procedures in the Housing Improvement Act.
Following the establishment of the Area, the City adopted a resolution
imposing fees needed to pay for the improvements proposed in the Area.
Property owners did not exercise the right to veto either the ordinance
or the resolution.
Financing these projects requires a bond issue in the amount of
$2,265,000. The proposed finance plan consists of the following
sources and uses of funds:
Sources
Par Amount of Bonds
Total Sources
$2,265,000
$2,265,000
Uses
Proposed Improvements
Local Administration
Reserve Fund
Discount Allowance
Capitalized Interest
Finance Related Expenses
Other
Total Uses
$1,895,000
10,000
164,000
40,770
113,250
40,000
1,980
$2,265,000
Page 2
G.O. Housing Improvement Area Bonds, Series 1997B
SECURITY, STRUCTURE AND REPAYMENT
The Bonds are general obligations of the City, backed by its full faith,
credit and taxing powers to repayment. Revenue to pay debt service will
come from the fees levied and collected on properties in the Area. The
fee is authorized by the Housing Improvement Act to finance
improvements in housing improvement areas. The City has adopted a
resolution imposing fees against each housing unit in the Area.
Prior to the issuance of the Bonds, owners of each unit have been given
the option to prepay their fee. The amount of prepaid fees collected
prior to the sale of the Bonds will be used to reduce the amount of
borrowing.
The fees unpaid on the remaining units will be paid in equal annual
installments over a 20-year period at an interest rate equal to 0.10%
over the net interest rate on the Bonds. Following the sale of the
Bonds, the annual fee for each unit will be certified to the County for
collection in the years 1998 through 20 I 7, The fees will be levied and
collected in the same manner as general ad valorem taxes. The County
will include the fees on the property tax statements.
The finance plan includes a "reserve fund" in the amount of $164,000.
The reserve fund serves two purposes. In the short-term, the reserve
provides the City with protection against non-payment of fees and other
performance issues identified in the Development Agreement. The
money in the reserve is also intended to provide the Association with an
incentive to undertake phase 2 of the improvement plan. The
Development Agreement describes the conditions that allow the money
in the reserve fund to be used on phase 2 improvements.
The Bonds would be sold May 6, 1997 and be dated June 1, 1997. The
first interest payment on the Bonds will be February 1, 1998, and
semiannually thereafter on August 1 and February 1. Principal on the
Bonds will be due on February 1 in the years 1999 through 2018.
The Bonds have been structured to create relatively constant annual
debt service payments and to match the anticipated flow of fee revenue.
The projected debt service and flow of funds can be found in Exhibit 1.
Page 3
G.O. Housing Improvement Area Bonds, Series 1997B
RATING REVIEW
Moody's Investors Service will be asked to rate this issue. The City
currently has an "AI" rating on its outstanding general obligation
bonds. Moody's gave this rating to the initial housing improvement
area bond issue in 1995. The rating was most recently reviewed in
December 1996 in conjunction with G.O. Tax Increment Bonds for
County Road 3. Since that time, two events have occurred that will
affect the rating review process for this issue. On January 7, Moody's
instituted a new rating scale. Also, Moody's has experienced a
significant turnover of staff that have dealt with Minnesota issuers. It is
likely that we will not deal with a rating analyst with previous
experience with Hopkins. Both of these factors will be considered in
conducting the rating process for this issue.
We are also evaluating merits of adding a rating from Standard & Poor's
Corp. We had not completed our evaluation at the time of this report.
A specific recommendation will be presented to the City Council on
April 1 in conjunction with calling for the sale of the Bonds.
CONTINUING DISCLOSURE
New regulations of the Securities and Exchange Commission on the
continuing disclosure of municipal securities apply to long-term
securities with an aggregate principal amount of $ I ,000,000 or more.
Because the aggregate amount of this issue is over $1,000,000 and the
City has more than $10,000,000 in total municipal obligations
outstanding, you will be obligated to comply with Full Continuing
Disclosure requirements as required by paragraph (b)(5) of Rule 15c2-12
promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934. You will be required to provide
certain financial information and operating data relating to the City
annually and to provide notices of the occurrence of certain material
events. The specific nature of the Undertaking, as well as the
information to be contained in the notices of material events will be set
forth in the Continuing Disclosure Certificate that you will enter into at
the time of closing for this issue.
Page 4
G.O. Housing Improvement Area Bonds, Series /997B
You are responsible for reporting any of the material events listed
below and in the Undertaking.
I. Principal and interest payment delinquencies;
2. Non-payment related defaults;
3. Unscheduled draws on debt service reserves reflecting
financial difficulties;
4. Unscheduled draws on credit enhancements reflecting
financial difficulties;
S. Substitution of credit of liquidity providers, or their
failure to perform;
6. Adverse tax opinions or events affecting the tax-exempt
status of the securities;
7. Modification to rights of holders of the Securities;
8. Securities calls;
9. Defeasances;
10. Release, substitution or sale of property securing
repayment of the Securities;
II. Rating changes;
12. Failure to provide annual financial information as
required; and
13. Other material events.
OTHER CONSIDERATIONS
Following is a summary of key factors in the finance plan:
. We recommend the following call feature: Bonds maturing February
1, 2007 and thereafter will be subject to prepayment at the
discretion of the City on February I, 2006.
. These bonds are taxable and, therefore, not exempt from State or
Federal income taxes. The issuance of the Bonds will not affect the
City's annual limit on bank qualified bonds or bonds eligible for the
smaller issuer exemption from arbitrage rebate.
. The Bonds will be global book entry with a Banker's Trust Company in
Des Moines, Iowa designated as the paying agent. As "paperless" bonds,
you will avoid the costs of bond printing and annual registrar
charges. The Paying Agent will invoice you for the interest semi-
Page 5
G.O. Housing Improvement Area Bonds, Series 1997B
annually and on an annual basis for the principal coming due. You
will be charged only for paying agent/transfer agent services provided
by the bank.
MARKET CONDITIONS
The graph on the following page shows the trends in the Bond Buyer's
20-Year G.O. Index (BEl) since 1990. After falling during the last half
of 1996, interest rates have remained relatively constant over the past
several months. The current BBI of 5.78% is slightly higher than 5.66%
BEl for the week in December of the last bond sale.
8.00%
7.50%
Bond Buyer's Index
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Page 6
ISSUING PROCESS
GO. Housing Improvement Area Bonds, Series I997B
Following is a tentative schedule for the steps in the issuing process.
Apri12,1997
Week of Apri121, 1997
Apri124,1997
Week of May 5, 1997
May 6, 1997
Week of June 2, 1997
City Council adopts resolution calling for the
sale of the Bonds
Submit draft Official Statement to the City and
rating materials to Moody's Investors Service for
credit rating
Distribute Official Statement
Receive credit rating
Bond sale
Bond closing
N,\MINNSOTA\HOPKlNS\97.2BONDIPRESALE
Page 7
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Resolution No.
Council Member
introduced the following resolution and moved its adoption:
Resolution Providing for the Sale of
$2,265,000 Taxable General Obligation Housing Improvement Area Bonds, Series 1997B
A. WHEREAS, the City Council of the City of Hopkins, Minnesota, has determined that it is necessary
and expedient to issue the City's $2,265,000 Taxable General Obligation Housing Improvement Area
Bonds, Series 1997B (the "Bonds"), to finance the construction of various improvements in Housing
Improvement Area No. 1 in the City; and
B. WHEREAS, the City has retained Ehlers and Associates, Inc., in Minneapolis, Minnesota ("Ehlers"),
as its independent financial advisor for the Bonds and is therefore authorized to solicit proposals in
accordance with Minnesota Statutes, Section 475.60, Subdivision 2(9);
NOW, THEREFORE, BE IT RESOLVED by the City Council of City of Hopkins, Minnesota, as
follows:
1. Authorization: Findings. The City Council hereby authorizes Ehlers to solicit proposals for the sale
of the Bonds.
2. Meetin~: Prooosal Ooenin~. The City Council shall meet at the time and place specified in the Terms
of Proposal attached hereto for the purpose of considering sealed proposals for, and awarding the sale
of the Bonds. The City Clerk, or designee, shall open proposals at the time and place specified in
such Terms of Proposal.
3. Terms of Prooosal. The terms and conditions of the Bonds and the sale thereof are fully set forth in
the "Terms of Proposal" attached hereto and hereby approved and made a part hereof.
4. Official Statement. In connection with said sale, the officers or employees of the City are hereby
authorized to cooperate with Ehlers and participate in the preparation of an official statement for the
Bonds and to execute and deliver it on behalf of the City upon its completion.
The motion for the adoption of the foregoing resolution was duly seconded by Council Member
and, after full discussion thereof and upon a vote being taken thereon, the
following Council Members voted in favor thereof:
and the following voted against the same:
Whereupon said resolution was declared duly passed and adopted.
Dated this _ day of
,1997.
City Clerk
(SEAL)
TERMS OF PROPOSAL
$2,265,000*
TAXABLE GENERAL OBLIGATION HOUSING IMPROVEMENT AREA BONDS,
SERIES 1997B
CITY OF HOPKINS, MINNESOTA
Sealed proposals for the purchase of $2,265,000* Taxable General Obligation Housing Improvement Area Bonds,
Series 1997B (the "Bonds") of the City of Hopkins, Minnesota (the "City") will be received at the offices of Ehlers and
Associates, Inc., 2950 Norwest Center, 90 South Seventh Street, Minneapolis, Minnesota, until II :00 A.M., Central
Time, on May 6, 1997, when they will be opened, read and tabulated for presentation to the City Council. The
proposals will be presented to the City Council for consideration for award at a meeting to be held in the City at 7 :30
P.M., Central Time, on the same date. The Bonds will be general obligations of the City for which the City will pledge
its full faith, credit and taxing powers. The proposal offering to purchase the Bonds upon the terms specified herein
and most favorable to the City will be accepted unless all proposals are rejected.
Pumose
The Bonds are being issued pursuant to 1994 Minnesota Laws, Chapter 587, Article 9, Sections 22-31, and Minnesota
Statutes, Chapter 475, and will be issued to provide funds for the purpose of financing improvements in the City's
Housing Improvement Area No, I,
Dates and Maturities
The Bonds will be dated June 1, 1997 as the date of original issue, will be issued as fully registered Bonds in the
denomination of $5,000 each, or any integral multiple thereof, and will mature on February 1 in the following years
and amounts:
Year Amount Year Amount Year Amount
1999 $55,000 2006 $85,000 2013 $145,000
2000 55,000 2007 90,000 2014 155,000
2001 60,000 2008 100,000 2015 165,000
2002 65,000 2009 105,000 2016 180,000
2003 70,000 2010 115,000 2017 195,000
2004 75,000 2011 125,000 2018 210,000
2005 80,000 2012 135,000
*It is anticipated that the size of the bond issue will be less that $2,265,000. The size will be reduced prior to or at the
time of the sale to account for prepaid fees received by the City.
Interest Pavment Dates and Rates
Interest will be payable on February 1 and August 1 of each year, commencing February I, 1998, to the registered
owners of the Bonds appearing of record in the bond register as of the close of business on the 15th day (whether or
not a business day) of the immediately preceding month. Interest will be computed upon the basis of a 360-day year
of twelve 30-day months and will be rounded pursuant to rules of the MSRB. All Bonds of the same maturity must
bear interest from date of issue until paid at a single, uniform rate, not exceeding the rate specified for Bonds of any
subsequent maturity. Each rate must be expressed in an integral multiple of 5/1 00 or 1/8 of 1%.
Redemption
At the option of the City, Bonds maturing on or after February 1,2007 shall be subject to prior payment on February
1, 2006 or any date thereafter, at a price of par and accrued interest.
Redemption may be in whole or in part of the Bonds subject to prepayment. If redemption is in part, the selection of
the Bonds remaining unpaid to be prepaid shall be at the discretion of the City. If only part of the Bonds having a
common maturity date are called for prepayment, the City will notify DTC of the particular amount of such maturity
to be prepaid. DTC will detennine by lot the amount of each participant's interest in such maturity to be redeemed and
each participant will then select by lot the beneficial ownership interest in such maturity to be redeemed.
Notice of such call shall be given by mailing a notice thereof by registered or certified mail at least thirty (30) days prior
to the date fixed for redemption to the registered owner of each Bond to be redeemed at the address shown on the
registration books.
Book Entrv Format
The Bonds will be designated in the name of Cede & Co., as nominee for The Depository Trust Company ("DTC"),
New York, New York. DTC will act as securities depository for the Bonds, and will be responsible for maintaining
a book-entry system for recording the interest of its participants and the transfers of interests between its participants.
The participants will be responsible for maintaining records regarding the beneficial interests of the individual
purchasers of the Bonds. So long as Cede & Co. is the registered owner of the Bonds, all payments of principal and
interest will be made to the depository which, in turn, will be obligated to remit such payments to its Participants for
subsequent disbursement to the beneficial owners of the Bonds,
Paying Agent
The City has selected Bankers Trust Company in Des Moines, Des Moines, lA, to act as paying agent (the "Paying
Agent"). The City will pay the charges for Paying Agent services. The City reserves the right to remove the Paying
Agent and to appoint a successor.
Delivery
Within 40 days after the sale, the Bonds will be delivered without cost to the original purchaser at DTC. On the day
of closing, the City will furnish to the purchaser the opinion of bond counsel hereinafter described, appropriate
arbitrage certifications and a certificate verifying that no litigation in any manner questioning the validity of the Bonds
is then pending or, to the best knowledge of officers of the City, threatened. Payment for the Bonds must be received
by the City at its designated depository on the date of closing in immediately available funds,
2
Legal Opinion
An opinion as to the validity of the Bonds and the exemption from taxation of the interest thereon will be furnished
by Kennedy & Graven, Chartered, of Minneapolis, Minnesota, bond counsel to the City, and will accompany the
Bonds. The legal opinion will state that the Bonds are valid and binding general obligations of the City enforceable
in accordance with their terms, except to the extent to which enforceability may be limited by Minnesota or United
States laws relating to bankruptcy, reorganization, moratorium or creditors' rights generally.
Tvpe of Proposal
Proposals for not less than $2,224,230 plus accrued interest on the principal sum of $2,265,000 from date of original
issue of the Bonds to date of delivery must be filed with the undersigned prior to the time of sale. Proposals must be
submitted to Ehlers and Associates, Inc, either:
I) In a sealed envelope to Ehlers and Associates, Inc, as described herein;
2) A facsimile submission to Ehlers and Associates, Inc., Financial Advisors, Facsimile Number: (612) 339-0854;
or
3) Electronically via PARITY, in accordance with PARITY Rules of Participation and this notice of sale, within
a one-hour period prior to the time of sale, but no proposals will be received after the time established above
for receiving proposals. If any provisions in this notice are conflicting with those PARITY Rules of
Participation, this sale notice shall control. The normal fee for use of PARITY may be obtained from
PARITY, and such fee shall be the responsibility of the bidder. For further information about PARITY,
potential bidders may contact the financial advisor to the issuer, Ehlers and Associates, Inc., 2950 Norwest
Center, 90 South Seventh Slreet, Minneapolis, Minnesota 55402, Telephone (612) 339-8291, or PARITY at
100 - 116th Avenue SE, Suite 100, Bellevue, Washington 98004, Telephone (206) 635-3545. The Issuer and
Ehlers and Associates, Inc. assume no liability if there is a malfunction of PARITY,
Proposals must be submitted to Ehlers and Associates, Inc. as described above and must be received prior to the time
established above for the opening of proposals, Each proposal must be unconditional except as to legality.
A good faith deposit (the "Deposit") in the amount of $45,300, or a financial surety bond complying with the provisions
below, must be submitted with each proposal. The Deposit must be in the form of a certified or cashiers check or bank
draft or a wire transfer of funds to Resource Bank & Trust Company, of Minneapolis, Minnesota, ABA #09-10-0550-6
for further credit to Ehlers and Associates, Inc., Bond Issue Escrow Account #850-788-1, Attn: Dawn Oberle, or a
financial surety bond. The Deposit will be retained by the City as liquidated damages if the proposal is accepted and
the bidder fails to comply therewith. The Deposit will be returned to the Purchaser at the closing for the Bonds.
Proposals for the Bonds should be addressed to:
Terry Obermaier, City Clerk
City Hall
1010 First Street
Hopkins, MN 55343
If a financial surety bond is used, it must be from an insurance company licensed to issue such a bond in the State of
Minnesota, and preapproved by the City. Such bond must be submitted to Ehlers and Associates, Inc. prior to the
opening of the proposals. Such bond must identify each bidder whose deposit is guaranteed by such financial surety
bond. If the Bonds are awarded to a bidder using a financial surety bond, then that purchaser is required to submit
its Deposit to Ehlers and Associates, Inc. in the form of a certified or cashier's check or wire transfer as instructed by
Ehlers and Associates, Inc. not later than 3:00 P.M., Central Time, on the next business day following the award. If
3
such deposit is not received by that time, the financial surety bond may be drawn by the City to satisfy the deposit
requirement. In the event the purchaser fails to comply with the accepted proposal, said amount will be retained by
the City, No proposal can be withdrawn after the time set for receiving proposals unless the meeting of the City
scheduled for award of the Bonds is adjourned, recessed, or continued to another date without award of the Bonds
having been made.
Award
The Bonds will be awarded to the bidder offering the lowest interest rate to be determined on a true interest cost (TIC)
basis, The City's computation of the interest rate of each proposal, in accordance with customary practice, will be
controlling. In the event of a tie, the sale of the Bonds will be awarded by lot. No oral proposal will be considered,
and the City reserves the right to reject any and all proposals and to waive any informality in any proposal.
CUSIP Numbers
The City will assume no obligation for the assignment or printing of CUSIP numbers on the Bonds or for the
correctness of any numbers printed thereon, but will permit such numbers to be printed at the expense of the purchaser,
if the purchaser waives any delay in delivery occasioned thereby,
Information From Purchaser
The successful purchaser will be required to provide, in a timely manner, certain information relating to the initial
offering prices of the Bonds necessary to compute the yield on the Bonds pursuant to the provisions of the Internal
Revenue Code of 1986, as amended.
Continuing Disclosure
In order to permit bidders for the Bonds and other participating underwriters, in the primary offering of the Bonds, to
comply with paragraph (b )(5) of Rule I 5c2- I 2 promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934 (the "Rule"), the Issuer will covenant and agree, for the benefit of the registered
holders and beneficial owners from time to time of the outstanding Bonds, in the resolution awarding the sale and
prescribing the terms of the Bonds, to provide annual reports of specified information and notice of the occurrence of
certain events. The Issuer is the only "obligated person" in respect of the Bonds within the meaning of the Rule for
the purposes of disclosing information on an ongoing basis. A description of the undertaking is set forth in the Official
Statement. Failure of the Issuer to enter into an undertaking substantially similar to that described in the Official
Statement would relieve the successful bidder of its obligation to purchase the Bonds. The Issuer has complied in all
material respects with any undertaking previously entered into by it under the Rule.
Official Statement
Underwriters may obtain a copy of the Official Statement by request to the City's Financial Advisor prior to the
proposal opening. The Syndicate Manager will be provided with 75 copies of the Final Official Statement within seven
business days of the proposal acceptance. Additional copies of the Final Official Statement will be available at a cost
of $10.00 per copy.
Information for bidders and proposal forms may be obtained from the undersigned or from the City's Financial Advisor,
Ehlers and Associates, Inc., 2950 Norwest Center, 90 South Seventh Street, Minneapolis, Minnesota 55402, telephone
(612) 339-8291.
4
The City reserves the right to reject any and all proposals, and to waive informalities and to adjourn the sale,
BY ORDER OF THE CITY COUNCIL
Terry Obermaier, City Clerk
City Hall
10 10 First Street
Hopkins, MN 55343
If proposals are delivered to Ehlers and Associates, Inc., the good faith deposit, payable to the City, shall be retained
in the offices of Ehlers and Associates, Inc. with the same effect as if delivered to the City. Alternatively, bidders may
wire the good faith deposit to Resource Bank & Trust Company, Minneapolis, Minnesota, A.B.A. #09-10-0550-6
Attention: Dawn Oberle for credit to Ehlers and Associates, Inc. Bond Issue Escrow Account, #850-788-1. The City
and any bidder who chooses to so wire the good faith deposit hereby agree irrevocably that Ehlers and Associates, Inc.
shall be the escrow holder of the good faith deposit wired to such account subject only to these conditions and duties:
I) All income eamed thereon shall be retained by the escrow holder as payment for its expenses; 2) If the proposal is
not accepted, Ehlers and Associates, Inc, shall, at its expense, promptly return the good faith deposit amount to the
losing bidder; 3) If the proposal is accepted, the good faith deposit shall be returned to the purchaser at the closing; 4)
Ehlers and Associates, Inc. shall bear all costs of maintaining the escrow account and returning the funds to the bidder;
5) Ehlers and Associates, Inc. shall not be an insurer of the good faith deposit amount and shall have no liability
hereunder except if it willfully fails to perform, or recklessly disregards, its duties specified herein; and 6) FDIC
insurance on deposits within the escrow account shall be limited to $100,000 per bidder.
5
WESTBROOKE
PATIO HOMES ASSOCIATION
1317 Wagon Wheel Rd.
Hopkins, MN 55343
(612) 936-9692
Fax: (612) 938-2731
March 27, 1997
To:
City Council,
City of Hopkins
From:
Board of Directors and Advisory Committee,
Westbrooke Patio Homes Association
Re:
City Bond Financing for Capital Improvement Program, Phase I: Replacement of
Roofs and Related Work
As you are aware, the Westbrooke Patio Homes Association has been working for several years on
the Capital Improvement Program for the Patio Homes. Under Phase I of the Program, the
Association will:
Extend the building soffits, reroof the buildings, and install gutters and downspouts.
Install smoke draft walls in the attics, seal attic bypasses, make needed changes to the exhaust
venting, and upgrade the attic insulation.
Reroof the garages, and replace the decks and fences on some of the garage roofs.
The Association is very grateful to the City of Hopkins, the City Council and the City staff for all of
your support and assistance with this Program and most especially, for the bond financing which the
City will be providing to fund the Program. At this point, the Association respectfully requests that
the City Council take the last step in the approval process for the bond financing and approve the
proposed development agreement at the Council's April I st meeting.
We do understand that several last minute questions have arisen and we would like to address them.
1_ Review and Approval of the Program by Association Members. Before petitioning the City
for financing assistance with the Program, the Association went through a lengthy approval
process with its members. There were special meetings of the members held on March 9 and
August 22, 1996, to provide indepth information on the Program and obtain members' input
on such issues as the design of the improvements.
The Program was the major topic of discussion at the annual meeting of the Association on
October 19, 1996. After that meeting, members were given 30 days during which to cast
their vote for or against the Program. During that time, 7 information meetings were held.
On November 18, 1996, the votes were authenticated and tabulated by a CPA firm. The final
vote was four to one in favor of the Program.
A COMMUNITY OF 328 PATIO HOMES
This level of support for the Program by Association members was evident during the two
public hearings held by the Council. At the first hearing, only two members argued against
the Program, and at the second hearing, no one spoke against it. We agree that the Program
is not supported by 100% of our Association members. However, it is clear that the vast
majority of our members do support the Program and want to go forward now with it. They
recognize that we can no longer delay confronting the serious physical problems that exist at
the Patio Homes_
2. ~. During the whole process of planning the rehab work which will be undertaken as part
of the Program, the cost of the Program has been one of the most difficult issues that we have
struggled with. The physical problems that we face are serious, and it will cost a significant
amount of money to correct them.
We have worked to produce the most cost effective solution possible for those physical
problems. That solution involves not only resolving the design issues involved, but also
identifYing qualified contractors who will provide top quality work at a reasonable price. In
bidding the work, we received proposals from ten contractors on the various parts of the
work (some contractors bid on more than one part of the work), and we will be entering into
contracts with four of those contractors to do the work. We are comfortable that we have
received very competitive prices from these contractors, and that they will do very good work
for us. The information on the bids and the bidding process is open to the City and to any
Association member.
3. General Manager. In working with the City on the bond financing for the Program, the
Association has committed to maintaining professional management for the Patio Homes.
One year ago, we hired our first general manager, Mr. Wayne Vasilis. Mr. Vasilis
accomplished a great deal for us before he accepted a better position in February. While we
regretted losing the services of Mr. Vasi1is, we have proceeded with the process of hiring a
new general manager. We have narrowed our search to three highly qualified candidates, aI1
of whom could do an excellent job for us. We have provided the City staff with their
resumes, and we expect to ~e our hiring process and formally offer the position to one
of the candidates within the next ten days. During the interim, Mr. Douglas Strandness has
been assisting us as acting general manager.
We hope that the above provides you with the information that you need to approve the development
agreement on April I st. We will be available at that time to provide any additional information that
may be needed and to answer any questions. .
We are moving in an orderly manner towards an April 14th construction start. The construction
process has been finalized with the contractors, the first buildings that will be worked on have been
identified, and we are ready to give notice to the residents of those buildings, outlining for them how
the work will proceed. A delay at this point would be difficult to deal with. As a result, we do hope
that you will be comfortable aproving the development agreement on April 1st.
Thank you for your continuing interest and support.