CR 99-70 Westbrooke Patio Homes-Development Agreement/ FHLB Application
CITY Or
.
NaPKINS Council Rpt #99-070
It March 31, 1999
WESTBROOKE PA no HOMES - DEVELOPMENT AGREEMENT/
FHLB APPLICATION
ProDosed Action
Staffrecommends approval of the following motion: Authorize the following:
. execution ofa development agreement between the City of Hopkins and Westbrooke Patio
Homes Association
. sponsorship of application to the Federal Home Loan Bank (F1ll-B)
With this motion, the City Manger and Mayor will be authorized to execute the agreement and
staffwill prepare the grant application to the FHLB. With this motion it is understood that staff
is authorized to make minor changes to the agreement that do not alter the intent.
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 Board of Directors identified the improvements proposed to be
financed though the creation of a housing improvement area and held a series of informational
owner meetings. In November 1998, the Association members voted on the proposed program
and in December submitted the required petitions to hold a public hearing regarding setting fees
for the proposed project. In December and January the City Council held the required public
hearings and set the fees for the area. The veto period expires on April 2, 1999 with two
objections to the project filed to date.
The attached development agreement specifies under what terms the bond funds will be released
to the association to pay for construction costs. The agreement also provides for provisions in
the event of delinquencies in the collection of the fees. The FHLB application is being sought to
off set the cost of the proposed project for those low to moderate income homeowners who did
not receive assistance for Phase I
Primary Issues to Consider
. What is the purpose of the development agreement?
. What are the major provisions of the development agreement?
. What are the specifics of the FHLB application?
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ent'}o{ tween the City of Hopkins and Westbrooke Patio Homes
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Kirst? Iverum, Hou, 109 Coordinator
e Development Agreement
Council Rpt. 99-070
Page 2
Analvsis of the Issues
. 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 Phase IT
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.
. What are the major provisions of the development agreement?
The following are the major provisions of the proposed development agreement:
Conditions of disbursement of funds
Prior to the City releasing any funds for the project, the Association agrees to the following:
o Approval of the plans and specifications
. o Obtain the necessary permits and licenses
o Submit a 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
Use of fund balances
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.
Construction Plans
The Association agrees to submit all construction plans to the City Building Official. The
agreement also requires the Association to notify the City in the event of significant change
orders and requires the improvements to be completed by June 30,2000.
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.
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. Development Agreement
Council Rpt. 99-070
Page 3
Financial Statements. Plans and Reports
The Association agrees to provide to the City audited financial statements of the Association for
each fiscal year prepared by an independent certified public accountant. The Association also
agrees to provide and 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.
Delinquencies
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.
Other
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.
. . What are the specifics of the FHLB application?
For the Phase I improvement project, the City of Hopkins in cooperation with Citizens
Independent Bank, was successful in obtaining grant funds through the Federal Home Loan Bank
to subsidized a portion of the cost for low and moderate income owners. Although the Flll.,B
has determined that those owners who received funds in the past would not be eligible for
additional assistance, we can apply for funds on behalf of those income eligible owners who did
not receive prior assistance.
The grant funds would be structured the same as the initial application, with each owner received
$3,000 to be applied to their portion of the project cost resulting in a lower annual fee. To date,
received 33 applications from eligible homeowners which would result in an application for
$99,000. Citizens Independent Bank has once again agreed to be the applicant, as required by
FI-ll.,B guidelines.
Alternatives
The City Council has the following alternatives relating to this issue:
. Authorize the execution of the development agreement and application as proposed.
. Amend the development agreement and authorize execution. With this alternative,
Council needs to review the amendments with legal council prior to approval.
. Continue for further study. Continuing this item will affect the associations ability to enter
. into construction contracts and will delay the start of construction.
.
DEVELOPMENT AGREEMENT
Between
CITY OF HOPKINS, MINNESOTA
and
WESTBROOKE PATIO HOMES ASSOCIATION, INC.
.
Dated as of _, 1999
This document was drafted by:
KENNEDY & ORA YEN, Chartered
470 Pillsbury Center
Minneapolis, Minnesota 55402
Telephone: 337-9300
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TABLE OF CONTENTS .
Page
PREAMBLE . . . . . . . . . .. - - - - . . . . . -. . . . . . . . . . . - - . . . . . . . . . . . . , . . . , . . . . ~. . - - - . . . . . . . . . . . . . ... ..... . . . -. . - - . . - . . . . ~ . . . .. - . . - - - - - - - - -. . . -. . - - - - - . - . . . - -. . 1
ARTICLE I
Definitions
Section 1.1. Definitions ..........................--..............-.-....--.......p.....--...-........-...................... 3
ARTICLE II
Representations and Warranties
Section 2.1. Representations by the City............ ...... ....... ...................... ........................... 7
Section 2.2. Representations and W~UTantics by the Association..................................... 7
ARTICLE III
Issuance of Bonds~ Disbursement of Proceeds
Section 3.1. Issuance of Bonds . .. . . . . . . . . . . . . . . . . . - . - . . . . . . . . . . . . . - -. - - - . . . .. .. . . . -' - . ... ~ - . - - . . .. ....... .. . . . . . . . . . . - .. 9
Section 3.2. Conditions Precedent to Initial Disbursement .............................................. 9
Section 3.3. Further Conditions Precedent to AJI Disbursement.s .................................... 10
Section 3.4. Requests for Disburscment ........ .___... ...................... ..___..................... ........ .... 1 [ .
Scction 3.5. Conditions Precedent to the .Final Disbursement . . . . . . . - - - - - - - - ~ . ~ . . . . . . -. . . . - . - -. - -. . . . . . [2
Section 3.6. \V ai vel' - - . .. ... . . . . . . . . . - . -. - - . - - - - .. . . . - . - - - -. -. . -. -. ~ - .. - - - -.. -. -. . ... . . . ~ - - . . - - - - - - - - - - . - . . . . . . . . . .. - -. - -. . - .. . . . 12
Section 3.7. Deposit of Funds by Association ........................ ...... .................... ........___ ..... 12
Section 3.8. Application of Project Fund Balance .................................___........................ 13
Section 3.Y. Application of Fee Revenues Balance ........................___......___...................... 13
Section 3.10. Special Reserve Fund.......... ................... .......... ..................... ........................ 14
Scction 3.11. Transfer of Series ] 997 Bond Reserve ...................................-------................ 14
ARTICLE IV
Construction of Phase II Housing Improvements
Section 4.l. Construction of Phase II Housing Improvements........................................ 15
Section 4.2. Construction Plans . . . . . - -'" . . . . . .. - . . . . . . . . . . . . . .' . . . . -.. ~ . . . . . -... . . p - . . . .... . - . . ...... . .. .. . . . . . . . . . . -- 15
Section 4.3. Commencement and Completion ofConstmction ...................................... 16
Section 4.4. Certificate of Completion..................... .... ................. ......................... ...... .... 16
ARTICLE V
Insurance
Section 5.1. Insurance .................... ._~ .T....... _........... ......... ..... ......... .~~.. ..... ....~..~~~.. ........._...._ 17
Section 5.2. Subordination .............................................................................................-. 18
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. ARTI CLE VI
Special Covenants
Section 6.1. No WalTanty of Condition or Suitability, Indemnification ......................... 19
Section 6.2. Financial Statements ..................................................................................... 19
Section 6.3. Financial Plan; Annual Reports ....................................................................20
Section 6.4. Records and Inspection ................................................... ............ .................. 20
Section 6.5. Maintenance of Propcrty ... .......... ....................................... ........................... 20
Section 6.6. Covenant to Maintain Net Revenues Available for Debt Service ................ 20
Section 6.7. Assignment of Association Assets.... .................................. ....... .................. 21
Section 6.8. Association to Maintain its Existence; Conditions Under
Which Exceptions Permitted........................................... ............ .................. 21
Section 6.9. Prohibition against Assignment of Agreement............................................. 21
Section 6.10. Notice of Fee upon Transfer of Housing Units............................................. 21
Section 6.11. Experienced Property Manager ...................................................... ......... ...... 22
ARTICLE VII
Events of Default
Section 7.1. Events of Default Dcfined ............................................................................ 23
Section 7.2. Remedies on Default ...............-_................................................................... 23
. Section 7.3. No Remedy Exclusive .......... ....................... ...___.......................................... 23
Section 7.4. No Additional Waiver Implied by One Waiver............................................ 23
ARTICLE VIII
Additional Provisions
Section 8.1. Conflict of Interests; City Representatives Not
Individually Liable........... ....... ..............__.__............. .... ...............__............ ..... 24
Section 8.2. Equal Employment Opportunity ............__............... ...................... ...... __ __ ..... 24
Section 8.3. Provisions Not Merged With Deed ....__......__........... ............. ................... d... 24
Section 8.4. Titles of Articles and Sections . . . . . . . . . . . . . .. r .. . .. _ _ _ . _ . _ .. . . ~. _ . ~. a.. . . . . . . . . .. .. . . ... . . .... . . . _ . _ _ 24
Section 8.5. Notices and Demands .................................".LL._____....................................____ 24
Section 8.6. Counterparts................................................................ .................................. 24
Section 8.7. Recording......................... ........................... ................ .................... ......... ..... 25
Section 8.8. Binding Effect.................. ............................. ............. .............................. ...... 25
Section 8.9. Amendment .......................-...--...................................................................... 25
TESTIMONIUM ................................................................................................................................ 26
SIGNATURES . . . . . .. . . . . . . .. . ... .. . .... . . . . . .. .. . . . . . . . . . . . . . . . .. . .. . . . . . . . . . . ....... .... .. . . . . _ L" ...... . . . . .. . " " a" a" " " " " " " " " " " "~a a 0 a 0 _ _. _ ~ ~. . . . . 26
SCHEDULE A Description of Property
SCHEDULE B Phase IT Housing Improvements
. SCHEDULE C Disbursement Requisition of Authorized Corporation Representative
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DEVEI10PMENT AGREEMENT .
THIS AGREEMENT. made on or as (>f the day of , 19L)9, by and
bet\veen the CITY OF HOPKINS, a Minnesota municipal corporation (the "City") ~1l1 d
WESTBROOKE PATIO HOMES ASSOCIATION, INC., a Minnesota nonprofit corporation (the
II Association" l.
WITNESSETH:
WHEREAS, thc City is authori/.ed under 1994 Minnesota Laws, Chapter 5::::7, Article 9,
Sections 22 through 31 (the "Act") tu 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 p31t from fees imposed within the ~u.ea; and
WIIEREAS, hy Resolution No. 94 55 adopted June 7, 1994, the City Council of the City
approved the Act: and
\VHEREAS_ by Ordimmee No. 97-79(, adopted Fehruary 4, 1997 (the "Enabling
Ordinance"), the Council estahlished Huusing Improvement Area No.2 in order to l'acilitate certain
improvements to propcrty km)\vn as the \VestblOokc Patio Homes, which propclty is legally
desCl ibed in Schedule A hereto and is hereafter referred to as the "Property;" :.mJ
WHEREAS, the City entered into a Development Agreement with the Association dated
April 9, 1997 (the "Phase I Agreement"), pursuant to which the City issued its $1,700,000 Taxable .
(Jcncral Obligation HOLlsing Improvement Area Bonds, Series 1997B (the "Series 1997 Bonds" l, in
order to finance L'crtain improvements (the "Phase T Housing Improvements") in the I-lousing
Improvement Area; and
WHEREAS. by Ordinance No. 99-824 adopted February 16, 1999, the COLlncil amended
the Enabling Ordinance in connection with certain additional housing improvements to be
constructed and financed undcr the Enahling Ordinance.
WHEREAS. by Resolution No. 99-005 adopted February 16, 1999 (the "Fee Resolution")
the City Council imposed a housing impruvement fee on Housing Units (as hereinafter defined) in
Housing Improvement Area No. 2 in order to finance the Phase II HOLlsing Improvements (as
hereinafter defined) in that ~U"c(l; and
WHEREAS, the Ad authurizes the City to issue bonds in the amount necessary to defray
the expense to be incurred in making the Phase II Housing Improvements, which bonds ~u'e payable
primarily from proceeds of the fee imposed under the Fcc Resolution and may be further secured by
the pledge of the City's full fJith, credit and taxing power; and
WHEREAS, priur tu 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 l'inance maintenance and operation of the common elements in the Westbrooke Patio Homes and
a long-range plan to conduct ancl finance capital improvements therein; and .
WHEREAS, the City believes that development of tbe improvements to the Property
pursuant tu this Agreement, and fulfillment generally of this Agreement, 3l.e in the vital and best
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. 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.
NOW, THEREFORE, in consideration of the mutual obligations of the parties hereto, each
of them does hereby covenant and agree with the other as follows:
.
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ARTICLE I .
Definitions
Section I. I . Definitiuns. In this Agreement, unless a different meaning clearly appears
frum the t.:untext:
"Act" means 1994 Min nesota Laws, Chapter 5S7, Article 9, Sections 22 through 3 I.
"Annllal Debt Service" means the amount of principal. interest and redemption premium, if
any, payable on the Bonds on any August 1 and the next succeeding February l.
"Association" means \Vestbrooke Patio llumes Association, Inc. or its permitted successors
and assigns.
"Assoeiation's Authorized RepresentJtive " means Douglas P. Strandness or any sllccessor
designated by written notice from the Association to the City.
"Agreement" me<lns this Agreement, as the same may be frum time tu tiTHe modified,
amended, or supplemented.
"Bonds" means the gener~ll obligation honds or ohligations issued hy the City under Section
3. [ hereof to finance the Phase II 1 lousing Improvements pursuant to the Act. and any bonds or
ubligatiuns issued to refund any Bonds. .
"Bond Fund'" me~ms the debt service fund for the Bonds to he established under the Bond
Resulution.
"Bund 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.
"Certificate of Compktion" means the certification provided to the Association, pursuant tu
Section 4.4 of this Agreement.
"(:omplctiol1 Date" means the date of i:lctl1al completion of the Phase II Housing
Improvements as certified by the City Building Official pursuant to Section 4.4 hereof
"Construction Plans" means the plans, specifications, urawings 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 fumish materials and supplies for the Phase II Housing Improvements.
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. "Council" means the City Council of the City.
"County" means the County of Hennepin, Minnesota.
"Draw Request" means the form, substantiaIJy in the form of Schedule C attached hereto,
which is submitted to the City when a disbursement is requested and which is refelTed 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, as amended by Ordinance No. 99-824
adopted by the Council on Febmary 16, 1999.
"Engineer" means Construction Consulting and Inspections, Ltd., the engineers selected by
the Association to prepare or cause tu be prepared the Constmction Plans for the Phase II 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 constmction.
"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 Jl Housing
. Improvements imposed on all Housing Units in the Housing Improvement Area pursuant to the Fee
Resolution.
"Fee Resolution" means Resolution No. 99-005, adopted by the Council on February 16,
1999, which imposes the Fee.
"Fee Revenues" means all proceeds of the Fee payable to the City.
"Financial Advisor" means Ehlers & Associates, Inc. or any successor Independent financial
advisory firm retained by the City.
"Financial Plan" means the name of plan, dated ,ftl7.-1A;:./"vt7 7 , ] 999 submitted to the
City, as amended annually pursuant to Section 6.3 hereof. !
"Fiscal Year" means any year commencing January I and ending December 31.
"Housing Improvement Area" means the real property located within Housing bnprovement
Area No.2.
"Housing Unit" means real property and improvements thereon within the Housing
Improvement Area, consisting of a one-dwelling unit, or an apartment as described in Minnesota
Statutes, Chapter 515 or SI5A, 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
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certificate or Op1l11On relates (other than the payment to be received for professional services .
rendered). and (iii) is nut 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 111 the 5t lld Y and
management of condominium housing and having a favorahle reputation tlu-oughout the llnitcd
States ()r the State of Minnesota for skill and experience in such work and, unless otherwise
specified herein, retained or employed by the Association and :1cceptable to the City whose
acceptance shall not be unreasonably withheld.
"Maturity Date" means the date the Bonds have heen fully paid, c1efcascd or redeemed in
:1ccorelance with their terms.
"Murtgage" means any mortgage m~lde by the Association which is secured, in whole or in
p:1rL with the Property and which is a permitted encumbr~mce pursuant to the provisions of Section
h.9 (11' this Agreement.
"Net Revenues A vailahle for Debt Service" means, as of the date of calculation, the balance
in the Bond Fund and any uther fund inlO which Fcc Revenues have been deposited as of the date of
calculation, less the Jmuunt of fees, ~IS estirnated by the City's Financial Advisor, that are
anticipated tp he 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 Bonels. .
"Payment Date" means any date on which the principal, interest amI redemption premium, if
any, is due and payable on the Bonds.
"Phase 1 Agreement" me:1ns the Development Agreement between the City and the
Association dated April 9. 1997.
"Phase II Housing Tmprovements" means the Phase II housing improvements to the
Property as set forth in Schedule B hereof.
"Project Fund" means the Project Fund to he created by the Bond Resolution.
"Property" means the real property describL'd in Schedule A of this Agreement.
"Series 1997 Bonds" means the City's S I ,700,000 Taxable General Obligation Housing
Improvement Area Bonds, Series 1997B.
"Special Reserve Fund" has the meaning set forth in Section 3.10 hereof.
"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 Phase 1I Housing Improvements, litigation commenced by third parties which, by
injunction or other simil:u. judicial action. directly results in delays, or acts of any federal, state or
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. local govemmental 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 pennits or govemmental approvals necessary to enable construction of the Phase IT Housing
improvements by the dates such construction is required under Section 4.3 of this Agreement.
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ARTICLE II
Representations and \Varranties .
Section 2.1. Representations by the Citv. The City makes the following representations as
the basis felr the undertakings on its part herein contained:
(a) The City is a municipal ClH-poration under the Jaws of the State and has the power to
enter into this Agreement and CatTY out its ohligations hereunder.
(b) The undertaking of the Phase U Housing Improvements and the issuance by the City
of l he Bonds arc authorized by the Act.
(c) On Tuesday. Janu~u.y Il). 19C)CJ, after due publication and mailing of notice of
hearing. the Cuuncil held a public hearing on the adoption of Ordinance No. 99 824. amending the
Enabling Ordinance and approved a first reading thereof.
(d) On Tuesday, February 10. I qyC). after receipt of petitions by owners of at least 25
percent of the Huusing 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 Lhc Fee Resolution and
;l(lopted the Fee Resolution anu the amendment to (he Enabling Ordinance.
(el The periods for veto of hoth the Enabling Ordinance amendment 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.
(0 To finance costs of the Phase n Housing Improvements, the City proposes to issue
the Bonds as provided in the Act and tu disburse the proceeds thereof to the Association pursuant
to lhis Agreement. The City will initially issuc Bonds in the aggregate principal amoLlnt as
described in Section 3.1 hereof and the Bonds shall be in the form <md shall be subject to the terms
and provisions set fC)jth in the Bond Resolution ~lllcl the terms of this Agreement.
(gl There is no litigation pending or. to the best of its knowledge, threatened against tbe
City relating to the Phase II Housing Improvemenls 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. ddivery ~1l1d performance of this Agreement do nut violate any
agreement ur any court order or judgment ill any litigation to which the City is a party or by which it
is bound.
Section 2.2. Representations and 'vVarranties by 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 St:lte of Minnesota, is nllt in violation of any provisions of its articles of
incorporation, bylaws or the laws of the Slate, is duly authorized to transact business within lhe .
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. 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.
(b) The Association will construct, operate and maintain the Phase II Housing
Improvements in accord,mce with the tenns 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, the City stormwater management pliln and
watershed district requirements).
( c) The Phase II Housing Improvements constitute a permitted use under any 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 aware of no 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 II 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 II Housing
Improvements may be lawfully constructed.
(g) Neither the execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby, nor the fulfiJlment 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 attomeys and such other expenses so incuned by the City.
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ARTICLE III .
Issuance of Bonds; Disbursement of Proceeds
Section 3. I. Issuance of Bonds. (a) hl order to provide funds to defray the costs l)f the
Phase II Housing Improvements. the City will issue the Bonds in the maximum principal amount
that is supported by the Fee Revenues ~md will produce total funds in the amount of $3.196.300
(the "Net Project Amount"), inc ]uding: (i) proceeds of the Bonds, net uf costs ur issuance.
administrative costs, amounts dep()sited in the Special Reserve Fund and capitalized interest
through Febru<u-y L2000; and (ii) all Fcc Revenues prepaid by owners of Housing Units in
accordance with the Fcc Resolution: provided that the Net Project Amount may be such lesser
amount Illutually agreed by the Association and the City in the event the cost of Phase U Housing
Improvements and the tot a] Fee is reduced in accordance with the Fcc Reso]ution.
At closing on issuallce of the Bonds, proceeds will be applied as follows: into the Bond
Fund will be deposited capitalized interest through Febrnal)' 1, 2000 together with accrued interest
Oil the Bonds: into the Administration Fund will be deposited costs of issuance and a City
administrative fee in the amount of .'5 I 0,000; into the Special Reserve Fund will be deposited the
alllount specified in Section 3.10 hereoL and intu the Project Fund will he deposited the balance of
proceeds of the Bonds together with prepaid Fcc Revenues and the amount transferred from the
Series I9lJ7 Bonds in accordance with Section J. I I hereof. Moneys in the Project Fund shall be
suhject t() \vithdrawal from time to time only for the purposes of paying the costs of Phase IT
Huusing Improvements, or subject to any applicable provision of law, for payments theretofore .
made by the Association for such costs. None or the funds in the Project Fund shall be used for any
purpuses uther than payment or reimbursement of such costs of Phase n HOLlsing Improvements.
The City will issue the Bonds by Septemher I. I 99LJ, subject to Unavoidable Delays and the City's
ability to issue the Bonds under existing la\NS and market conditions.
(b) Under the Bond Resolution, all Fee Revenues in excess of the amount necessary 10 pay
when due the principal, interest ;.tnd redemption premium, if any. on the Bonds will be dep~)sited
into a separate revenuc account to Ix: established under the Bond Resolution and maintained by the
City until the Maturity Date. Subject to the prior pledge of Pee Revenues to payment of principal
and interest on the Bonds. the City may at its sole discretion apply funds in such revenue account:
(i) tp pay registrar and paying agent fees, if any. in connection with the Bonds; (il) 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 reimhursement by the Association
pursuant to Section 2.2(h) hereoL and nothing in this Section 3.I{bJ 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 Bond Fund and the Project Fund will be credited to the respective fund
from which the interest was derived. Interest eamings on all other funds <md accounts will be
credited to the surplus revenue account described in Section 3. I (h). .
Section 3.2. Conditions Precedent to lr1iti;}l Disbursement. The obligation of the City to
make the initial disbursement hereunder shall be subject to the conclition preccucnt that the
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. Association shall be in compliance with the conditions contained in Section 3.3 hereof and the
further condition precedent that the City shaH have received, on or before the date of such initial
disbursement hereunder, the following:
(a) A copy of the Construction PI lli1 S, approved by the City Building Official in
accordance with Section 4.2 hereof and in dctail sufficient to enable the Association to authorize
commencement of construction of the Phase II 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 swom construction statement duly executed by the Association and the Engineer
for the Phase II Housing Improvements showing estimates of all anticipated Contractors' contract or
subcontracts for specific portions of the work on the Phase II Housing Improvements and the
amounts anticipated to become due cach such Contractor, including all costs and expenses of any
kind incurred and to be incuITed in construction the Phase n Housing Improvements;
(d) A total project cost statement, incorporating estimates of the constmction costs as
shown on the sworn constmction statement described in paragraph (d) above and setting forth all
other costs and expenses of any kind anticipated to be incurred in completion of the Phase II
Housing Improvements and swam 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 inctmed in the
. future;
(e) Copies of any licenses and permits which the Inspecting Engineer certifies as
necessa.ry and sufficient to constmct the Pha.se II 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
f0l1h in Section 3.2. hereof, and the further condition precedent that on the clate of such
dis bursement:
(a) The City has received a written statement from the Association's Authorized
Representative certifying with respect to each payment: (D that none of the items for which the
payment is proposed to be made has fonned 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 II Housing Improvements; and (Ill) that following such proposed
payment sufficient moneys will remain 011 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 II 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.
.
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(bl No Event of Default under tlli\ Agreement or event which would constitute such an .
Event of Default but for the requirement that notice he given or that a period of grace or time
el:1psc, shall have occurred and be cuntinuing.
(C) No determination shaH 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 hereoL are
insufficient to pay expenses uf any kind which reasonably may be anticipated in connection with
the completion of the Phase IT Housing Improvements: or if such a determination has been made
and notice thereof sent to the Associ::ltion, the Association has deposited the necessary funds with
the City 1Il accordance with Section 3.7 hereo!".
(d) The disbursement requircI1ll'nts 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
Assnciation and of any Contractor, in form and suhstance satisfactory to the City setting forth the
names, addresses and amounts due or tu become due as well as the amounts previously paid to
every Contractor, subcontractor, person, firm m corporation furnishing materials or performing
labor entering into the construction of any parr of the Phase II Housing Improvements.
(ff No license or penl1it necessary for the constmction of the Phase 11 Housing
Improvements shall have been revoked or the issuance thereof subjected to challenge before any
court ur uther govemmcntal authority having or asserting jurisdiction thereover.
Section 3.4. Requests for Dishursement. (a) Whenever the Association desires a .
dishursement to be made hereunder, which shall be no more often than monthly, the Association
shall submit to the City a Draw Requcst, July l'Xecuted 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 sh~.dl 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 011 and materials used in the Phase II Housing Improvements, plus (ii) the cost of
materials and equipment not incorporated ill 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.
Not\vithstanding anything herein to the cllntr~U)', no disbursements for materials stored at the
Property will be authorized unless the ^ssociation shall provide adequate security for such storage,
Each Draw Request shall constitute a representation and WaITanty by the Association that all
representations and warranties set forth in this Agreement are true and correct as of the date of sLlch
Draw Request.
(0) At the time of submission of each Draw Request, the Association shall submit the
following to the City:
(i) A written lien waiver from each Contractor for work done and materials
supplied by it which were raid for pursuant to the next preceding Draw Request.
.
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. (ii) Such other Supp0l1ing evidence as may be requcsted by the City to
substantiate all payments which are to be made out of the relevant Draw Requcst and/or to
substantiate all payments then made with rcspect to the Phase IT 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 perfonned or complied with
hereunder, including satisfaction of all applicable conditions precedent contained in Article ill
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 shalJ 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 folJowing conditions shall have been satisfied prior to the Completion Date:
(a) The Phase II Housing Improvements have been substantially completed in
accordance with the Constmction 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 un the Phase IT Housing Improvcments has been completed in
accordance with the Constmction Plans and all other labor, services, materials and supplies used in
such work have becn paid for; (ii) the completed Phase II Housing Improvements conform with all
applicable building laws and regulations of the governmental authorities having jurisdiction over
. the Phase II 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 Phase II Housing
Improvements.
(b) The City shall have received satisfactory evidence that all work requiring inspection
oy municipal or other govcmmental 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 Phase II Housing Improvements.
Notwithstanding anything to the contrary in this Article Ill, the City shall not disburse the
amount deposited into the Project Fund from Fee Revenues pursuant to Section 3. J (b) hereof until
the date such Fee Revenues are deposited in the Project Fund, subject to compliance by the
Association with all other requirements of this Section.
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 constmed 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 disoursement.
. Section 3.7. Deposit of Funds by 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
5J B-154027 12
HP110-58
rca.-;;mahly may be anticipated in connection with the completion of the Phase [[ Housing .
Improvements and shall thereupon send written nutice thereof to the Association specifying the
additional amount required to be deposited hy the Association to provide sufficient funds to
complete the Phase II Housing: Improvements, the Association agrees that it will, within ten (10)
calendar days of receipt of any such n()lice. deposit with lhe City the amount of funds specified in
the notice and shall authorize lhe City to disburse such funds prior to disbursement of :.my
additional proceeds of the Bonds.
Sedi()n 3.t), Application of Project Fund Balance. Any amounts remaining in the Project
Fund upon completion of the Phase II Housing Improvements shall be applied in accordance with
Section 3.9 hereof.
Section 3.9. Application 01' Fee Revenues or Fund Balance. In the event that, (i) any
balance remains in the Project Fund upon the final disbursement therefrom for costs of the Phase II
I-lousing Improvements: or (ii) at any lime before the Maturity Date the City has available to it Fee
Revenues (ex.cluding the proceeds of any refunding Bonds), together with amounts un hancl in any
funds or accounts under the Bond Resolution, in the amount sufficient to redeem or defease the
Bonds in advance uf their maturity, as determined by the City's Financial Advisor, the City may, in
its sole discretion:
la} apply such excess Fcc Revenues or fund balance to redeem or defease all or a any
portiun uf the Bonds: or
(b) by resolution of the Council, specify additional Phase II Housing Improvements (as .
defined in tbe Enabling Ordinance) and trans fer all or any portion of such ex.eess Fee Revenues or
Pwject 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 disbursl'd to the Association to pay the cost of the Phase II housing improvements specified by
the City, in accordance with all the disbursement procedures set forth in Sections 3.2 through 3.6
hereof: or
Ie) by resolution of the Council. disburse all or any portion of such excess Fcc
Revenues or Project Fund balance, as the case may be, to the Association for deposit into the
replacement fuml maintained by the Association (the "Replacement Reserve Fund"). The
Assuciation shall establish and maintain a separate subaccount in the Replacement Reserve Fund
(the "Excess Revenue Subaccount") in which excess Fee Revenues or any 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 Phase II 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 Phase II 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; or
(d) any combination of paragraphs (a), (b) and (c) above.
Any balance remaining in the Supplemental Project Fund (if any) after payment of all .
Supplemental Phase II Housing Improvements, and any balance remaining after the Maturity Date
Slll-l <;4(127 13
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. in the Bond Fund, the Special Reserve Fund, the Project Fund, or any other fund into which Fee
Revenues have been deposited shall be transfelTcd 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 3.1O. Special Reserve Fund. Bond proceeds in the amount of $20,000 shall be
deposited in a Special Reserve Fund maintained by the City. The Special Reserve Fund may 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;
(b) To make any payment necessary to cure any Event of Default as provided in Section
7.2, or
(c) 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 any disbursement from the Special Reserve Fund under this Section does not
constitute a cure of the Event of Default and the Association remains obligated to pay to the City.
within the cure period described in Section 7.2 hereof, the amount necessary to restore the balance
. in the Special Reserve Fund to $20,000.
Section 3. 11. Transfer of Series 1997 Bond Reserve. Upon issuance of the Bonds, the City
shall deposit into the Project Fund the balance of funds in the special reserve account established
under the resolution awarding sale of the Series 1997 Bonds, all in accordance with Section 3.1 O( d)
of the Phase I Agreement.
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ARTICLE IV .
Construction uf Phase II Huusing Improvement~
Section -1-.1. Construction of Phase 11 Housing Improvements. The Association agrees that
it will construct the Phase n 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,
prese! ve and keep the Phase II Housing Improvements or cause the Phase II I-lousing Improvements
to be maintained. preserved and kept with the appurtenances and eveIY part and parcel thereof, in
good repair and condition, all in accurdance with Articlc VI hereof.
Section 4.2. Construction Plans. (a) Befure issuance of the Bonds. the Association shall
submit the Construction Plans to the City Building Ufficial. who shall review such plans on hehalf
of the City. The Construction Plans shaH provide for the construction of the Phase 11 Housing
Improvements and shall be in conformity \\iith 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 tn all applicable federaL state and local laws. ordinances. rules and
regulations: (iii) the Constmction Plans ,u.e ,1dequate to provide for construction of the Phase II
I-lousing Improvements: and (iv) no Event of Default has occurred. No approval by the City
Building Official shall relieve the Association of the ohligation to comply with the tCl1m of this
Agreement. applicable federal, stale and local laws, ordinances, rules and regulations. or to
construct the Phase 11 lIousing 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 appruved unkss rejected in \vriting 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
arrer the date of their receipt hy 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 clays after written n"tification to the Association of the rejection. The provisions of
this Section relating to approvaL rejectiun and resubmission of conected 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
l'onstitute a conclusive detennination that the Construction Plans (and the Phasc II Housing
Improvements, constructed in accordance with said pLms) comply to the City Building Official's
satisfaction with the provisions of this Agreement relating thereto.
(b) Jf the Association desires tu 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"
mcans any change that (i) increases or deCI"Cases the total cost of the Phase II Housing
Improvements by morc than $5,000, or (ii) involves any change in constmction materiaJs or design
that reasonably requires review for compliance with state and local laws and regulations. U'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 previousJy 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 Construdi()n Plans shall, in any event, be deemed approved by the
City Building Official unless rejected. in whole or in part, by written notice by the City Building
SJB-10;4027 15
HP II u-~~
. 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 Constmction. Subject to Unavoidable
ays, the Ass9ciation shall complete the construction of the Phase II Housing Improvements by
[ 30 "':~~ All work with respect to the Phase n HOllsing Improvements to be
nstructed or provided by the Association on the Property shall be 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 Sllccessors and assigns, shall
promptly begin and diligently prosecute to completion the construction of the Phase II Housing
Improvements thereon, and that such construction shall in any event be commenced and completed
within the period specified in this Section 4.3 of this Agreement. Until construction of the Phase II
Housing Improvements has been completed, the Association shall make reports, 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
Phase n Housing Improvements in accordance with those provisions of the Agreement relating
solely to the obligations of the Association to construct the Phase II Housing Improvements
. (including the dates for beginning and completion thereof), the City will furnish the Association
with an appropriate instmment so certifying. Such certification by the City shall be a conclusive
deternunation of satisfaction and tennination of the agreements and covenants in the Agreement
with respect to the obligations of the Association, and its successors and assigns, to constmct the
Phase II Housing Improvements and the dates for the beginning and completion thereof Such
ce11ification and such detennination shall not constitute evidence of compliance with or satisfaction
of any obligation of the Association under Article VI hereof.
(b) The certificate provided 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 adequate detail in what respects the Association has failed to complete the Phase II
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 constmction of the Phase II 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.
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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 II 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) Builder's risk II1surance, 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 IT Housing Irnprovements at the elate of completIon, ;md with
coverage available in 110nrcporting form all the so-called "all risk" form of policy. 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 all Owner's Cuntractor's Policy with limits against bodily injury
and property damage of not less than S I.noo.uoo for each occurrence (to accomplish the
above-required limits. an umbrella exccss liability policy may be used); and
(iii) Workers' compensation insurance provided by all Contractors. .
(11) Upon completion of construction or the Phase IT Housing Improvements and prior tu
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:
(i) Insurance :.igainst loss and/or damage to the Property and the Phase II
I-lousing Improvements under a policy or policies covering such risks as are ordin~u.ily
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' compensation insurance respecting
all employees of the Association, in SLlch amount as is customarily carried by like
organizations engaged in like activities of comparable size and liability exposure; provided
that the Association may be self-insured with respect to all or any part of its liability for
workers' compensation.
(c) All insurance required in Article V of this Agreement shall be taken out anu .
maintained in responsible insurance companies selected by the Association which are authorized
under tbe laws of the State to assume the risks covc:rcd thereby. Upon request, the Association will
deposit annually with the City policies evidencing all such insurance, or a certificate or certificates
SJ B- I ;.,11:.'7 17
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. 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 contain 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 written notice to the Association and the City at least thirty
(30) days before the cancellation or modification becomes effective. In lieu of separate policies, the
Association may maintain a single pulicy, blanket or umbrella policies, or a combination thereof,
having the coverage required herein, in which event the Association shall deposit with the City a
celiificate or certificates of the respective insurers as to the amount of coverage in force upon the
Phase 11 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 Phase II Housing
Improvements or any portion thereof resulting from fire or other casualty. In such event the
Association will fOlthwith repair, reconstruct and restore the Phase n 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 accomplish such repair, reconstruction 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 Phase n
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 Net 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 insurance provisions set forth in
this Article V shall terminate upon the earlier of the Maturity Date or telmination of this
Agreement.
Section 5.2. S ubordinati on. Notwithstanding anything to the contrary contained in this
AIticle 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 under a
Mortgage approved pursuant to Section 6.9 of this Agreement.
.
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ARTICLE VI .
Special Covenants
Section 6. I. Nu Warranty of Cundition or Suitability, Indemnification. (a) The City does
not make any wan-;1I1ty, either express or implied, as to the design or capacity of the Phase II
Housing Improvements, as to the suitability for operation of the Phase n Housing Improvements or
that they will be suitable for the Association's purplscs or needs. The Association releases the City
from. agrees that the City shaJl not be liable for, and agrees to hold the City, its Council and its
respcctiw officers and employees. harmless ,'gainst, any clairn, cause of action, suit or liahility for
any loss lll" damage to property or any injury to or death of any person that may he occasioned by
any cause whatsoever pertaining to the Phase IT Housing Improvements or the Property or the use
thereof.
(b) The Association further agrees to indemni fy and hold harmless the City its officers and
employees, against any and all losses, claims, damages or liability to which the City its otTicers and
employees, may become subject under any law arising out of any act, omission, representation or
III i srepresentation of the Association in L'unnccti on \1/ itlt the issuance and sale of the 80nds and the
carrying out of the transactions contemplated hy this Agreement, and to reimburse the City, its
officers and employees, for any out-of-pocket legal and other expenses (including reasonahle
counsel fees) incurred by the City. its officers and employees, in connection with investigating any
slIch lusses, claims, damages ur liabilities or in connection with defending any actions relating
thereto. The City agrees, at the request and expense of the Association, to cooperate in thc 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 uf this Section shall
survive the payment and redemption of the Bonds.
(c I All L'ovenants, stipulations, promises, agreements and obligations of the City contained
herein shall he deemed to be the covenants, stipulations, promises, agreements and obligations of
the City and not of any governing body member, officer, agent, servant or emplojee of the City in
the individual capacity thereof.
Section 6.2. Financial Statements. The Association agrees to furnish tu the City, hy no later
than 120 days after the end of each Fiscal Ye,U" until the later of the Maturity Date and the clate 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 VeaL including a balance sheet and operating statements. audited hy an
Independent certified public accountant. Such financial statements shall be accompanied by a
separate \vritten statement from such Independent certified public accountant preparing such report
that such Independent accountant has obtained no knowledge of any default 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 thereuf, 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. .
<;.113-1 ~-111::7 19
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. Section 6.3. Financial Plan; Annual Reports. The Association agrees to fumish 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 Propelty prepared by a Management Consultant
acceptable to the City, in substantially the form of the initial Financial Plan and providing plans for
capital improvements to the Property through the Maturity Date;
(h) a written report by an Independent engineer describing the physical condition of the
Propelty and the Phase II Housing Improvements as of the eml of the preceding Fiscal Year. with
detail sufficient to enable the City to evaluate compliance with the Financial Plan and the
Association's obligations under this Agreemenl.
Section 6.4. Records and Inspection. The Association shall maintain (i) copies of federal,
state, municipal and other licenses and pelmits obtained by the Association relating to the operation
of the Propelty and the Phase II Housing Improvements, (ii) financial books and records reflecting
the operations of the Property and the Phase II 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 Property 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
perfOlmance of its duties under this Agreement, the Enabling Ordinance, the Fee Resolution or the
Act.
Section 6.5. Maintenance of Property. The Association agrees that so long as the Bonds arc
outstanding, the Association will keep or cause to be kept the Property and the Phase II Housing
Improvements in good repair and good operating condition at its own cost. The Association shall
make all repairs, replacements and improvements to the Propelty 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, 10 business days before any Payment Date, the Net Revenues Available For Debt
Service are 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
A vailable 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
SJB-l54027 20
H PI HI-5R
1\ VGilabk for Debt Service, excluding the amount of all prior payments by the ^ssociation under .
Sel'lion 6.6(a). arc at least 105 percent of the total principal and interest due on the Bonds on such
Payment OGte, the Ci t Y shall promptly return to the AssociGtion the alllount of the prior paymcnt,
without interest thereon. Nothing in this Section (-iJi(h) shall he construed to relieve the obligation
of the Association to make any payment required under Section 6.6( a) hereof.
Section 0.7. Assignment of Association Assets. (a) The Association has previously
assigned to the City all "Assuciation Assets" as defined in Section 6.7 of the PhGse I Agreement, as
security for the Association's obligations with under Section 6.6 of the Phase 1 Agreement
regarding debt serve on the Series 1997 Bonds. The City and Association Ggrcc and understand that
the assignment set forth in Section 6.7 of the Phase I Agreement is hereby amended such that the
Ass\xiatioll Assets secure the Association's ohligations under Section 6.6 of this Agreement in
Gddition to, and on a parity basis with. the Assuciation' s obligations under Section 6.6 of the Phase
[ Agreement.
(b) The Association hereby covenants and warrants to the City that the Assllciation has !lot
executed any prior assignments of any Association Assets except the prior assignment in favor of
the City under Sectiun 6.7 of the PhGse I Agreement. nor has it performed any act or executed any
other instrument that might prevent the Association from operGting under any of the terms and
conditions of this assignment or that would limit the Association in slIch operation.
(c) In order to facilitate the Association obtaining sh0l1-term financing for the Phase 11
Housing Improvements before issuance of the Bonds. the City agrees to suburdinGte its rights under
this Section during the period of such short-term financing, subject to such reasonable tem1S and .
c(Hlditions as the City and the short-term lender rnutually agree in writing,
Section 6.8. Association to Maintain its Existence: Conditions Under Which Exceptions
Permitted. The Association agrees that. so long as the Bonds Gre outstGncling, it will maintain its
existence as a nonprofit corporation under the laws of Minnesota; will not dissulve or otherwise
dispose uf all or substGntiGlly all of its assets; and will not consolidate with or merge into another
corporation or permit one or more other corporations to eonsolidGte with or merge into it.
Section 6,9, Prohibition Against ^sSiQllmcllt 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 m partial sale, assignment, cOl1veYGl1ce, or
any trust or power, or transfer in any other mode or form of or with respect to the Association's
rights. interests or obi igGtions under this Agreement or any part thereof, or any contract or
agreement to do any of the same, without the prior \vritlen approval of the City.
Section 6,10. Notice of Fee Upon Transfer of Housing Units. The Association agrees thGt
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 Zlfe not
limited to ensuring that Housing Unit uwners inducle a description of the Fee in each disclosure
certificate provided to the purchaser as required under Minnesota Statutes, Section 515 B.4-1 07 or-
any successor statute, .
::;)[\-15111:'7 21
J-IPlllJ-5S
. Section 6.11. Experienced PrupClty Manager. 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 management" shall mean a full time
property manager who meets the following criteria:
0) has at least five years of executive property management experience,
including experience with multi-unit residential housing:
Oi) 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.
.
.
5)13-154027 22
HP110-5~
ARTICLE VII .
Events of Default
Section 7.1. Events of Default Ddincd. The following shall be "Events of Default" under
this Agreement and the: krm "Event of DeCault" shall mean, whenever it is used in this Agreement
(unless the context otherwi se 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 refelTecl to in Section
7.1 uf this Agreement occurs, the non-defaul ting p<u.t y may exercise its rights uncler this Section 7.2
after providing thirty days written notice to the defaulting pany of the Event of Default, but only if
the Ewnt 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 reasonahly
c;atisfactory to the non defaulting party that the Event of Default wiJl be cured and will be cured as
soon as reasonably possible:
( <If Suspend its performance under the Agreement until it receives assurances that the
deJaulting party will cure its default and continue jts performance under the Agreement.
(1:"n Take whatever actiun. including legal, equitable or administrative actiun, which
may appear necessary or desirable to collect any payments due under this Agreement, or to enforce
performance and observance of any obligatiun. agreement, or covenant under this Agreement.
Section 7.3. Nu Remedy Exclusive. No remedy herein confcn-ed 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 evelY other remedy given
under this Agreement or now or hereafter existing at law or in equjty or hy statute. No delay or
omission to exercise any right or power accruing upon any default shall impair any such right or
puwer or shall be eonstmed 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 VlT.
Section 7.+. No Additional Waiver Implied bv One Waiver. In the event allY 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 allY other concunent, previous or subsequent breach hereunder.
.
SJ D-154027 23
HI'IIII-S;-;
. ARTICLE VIII
Additional Provisions
Section 8.1. Conflict of Interests; City Representatives Not Individually 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 association in which 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 tenns of the Agreement.
Section 8.2. Equal Employment Opportunity. The Association, for itself and its successors
and assigns, agrees that during the construction of the Phase II Housing Improvements provided for
in the Agreement it will comply wjth all applicable federal, state and local equal employment and
non-discrimjnation iaws ~md 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
lli1d any such deed shall not be deemed to affect or impair the provisions and covenants of this
Agreement.
. Section 8.4. Titles of Atticlcs and Sections. Any titles of the several parts, Alticlcs, 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, retum receipt requested, or delivered personally; and
(a) in the case of the Association, is addressed to or delivered personally to the
Association at1317 Wagon Wheel Road, Hopkins, Minnesota 55343, Attention: Project Manager;
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 fOlward to the other as provided in this Section.
Section 8.6. Coun terparts. This Agreement may be executed in any number of
counterparts, each of which shall constitute one and the same instmment.
.
516-154027 24
HPll 0 58
SectIon S.7. Recurding. The City ~hall record this Agreement and any amendments therdo .
vvith the Hennepin COllnty Recorder or Registrar of Titles. The Association shall pay all costs for
recorcling.
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. Amendment. This Agreement may be amended only by written agreement of
the parties hereto.
.
.
SlB-154027 25
HPllll-5~
. IN WITNESS WHEREOF, the City has caused this Agreement to be duly executed in its
name and behalf and 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 M.li1ager
ST ATE OF MlNNESOT A )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this ~ day of
1999 hy Charles Reclepenning and Steve Mielke, the Mayor and City Manager, respectively, of the
. City of Hopkins, Minnesota, a municipal corporation, on behalf of the City.
Notary Public
.
SJ B-154027 26
HPllO-58
WESTBROOKE PATIO HOMES ASSOCrATrON, INC .
By
Its
By
Its
STATE OF MrNNESOTA )
)
COUNTY OF )
The foregoing instrument was acknowledged before me this clay of
1 L)L)9. bv and , the
and of Westhwukc
Patio Homes Association, Inc., a Minnesota nonprofit corporation, on behalf of the corporation.
.
Notary Puhlic
.
SJTJ-15.j027 27
H1'110-58
. SCHEDULE A
PROPERTY
Block 1 and 2, Westhrooke Patio Homes, Hennepin County, Minnesota.
.
I
.
SJIlR63-/2 A-I
HPllO-~R
.
SCHEDULE B .
PHASE II HOUSING IMPROVEMENTS
Street anu drive replacement, including parking
Curb, gutter and concrete
Drainage and utility, including storm drains, retaining wall replacement,
silt
fencing, 5<1ni tary se\\'er work
Landscaping repairs and corrections
Building exteriors: residing
Fencing, including privacy and patio fences, deck railings
Replace gas meter b()]]ards
rurnace duct chasing modifications
Contingency, including wall repairs, insulation and sheathing
.
.
S.T;::',~!':;:. 7-' B-1
EP-l -[I": - -1 Q
.
. SCHEDULE C
DISBURSEMENT REQUISITION OF
ASSOCIA TION'S AUTHORIZED REPRESENTATIVE
TO: City of Hopkins
1010 First Street
Hopkins, MN 55343
DISBURSEMENT DIRECTION
The undersigned Authorized Representative of Wcstbrooke Patio Homcs Association, Lnc.,
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
, 1<)99 (the "Agreement"), the following amount to the following person and for the
. following proper Phase II 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 mack bas formed the basis for any payment theretofore
made from the Project Fund, and (ii) each item for which the payment is proposed to be made is or
was necessary in connection with the Phase II Housing Improvements, and (iii) the amount of funds
to remain on deposit in the Project Fund following this disbursement is cUlTcntly estimated to be
sufficient to pay all future costs of Phase II Housing Improvements.
Dated:
Association's Authorized Representative
'.
SJB~6372 C-l
HPllO-48