VII.2. Approval of the First Amended and Restated Contract for Private Redevelopment between the City of Hopkins and Alatus Hopkins; Elverum
CITY OF HOPKINS
City Council Report 2024-017
To: Honorable Mayor and Council Members
Mike Mornson, City Manager
From: Kersten Elverum, Director of Planning & Development
Date: February 13, 2024
Subject: First Amended and Restated Contract for Private Redevelopment – 325
Blake Road
_____________________________________________________________________
RECOMMENDED ACTION
MOTION TO approve the First Amended and Restated Contract for Private
Redevelopment between the City of Hopkins and Alatus Hopkins.
OVERVIEW
The Alatus development at 325 Blake Road began with the Chorus apartment building,
a 100% affordable building completed November 2023. The remainder of the planned
buildings have stalled due to unfavorable market conditions including rising interest
rates, increased construction costs and delayed investing from capital markets due to
rising interest rates and their uncertainty, thereby impacting financing available for
development. Despite these conditions, the project and its location have been well-
received and Alatus has put together a proposed structure that will move the rest of the
development forward.
Additional funds were brought in through partnering with Ron Clark Construction to
develop 32 townhomes and Artessa to develop a 65-unit senior cooperative. Another
key component in securing private financing is for the City of Hopkins to provide
financing for some infrastructure including public parking and the publicly-owned street
and utilities that run through the site.
As with most developments of size, Alatus was required to build the main road and
utilities and turn them over to the City of Hopkins. Originally, a portion of these
improvements were to be financed with a $3.75 million TIF grant from the City, with the
remaining portion being privately financed. Due to the gap to finance the Chorus, the
dollars were provided to that development instead so it could proceed. In order to
incentivize private financing, the developer has requested that the City bond for the
infrastructure improvements, including public parking, and assess the principal and
interest payments to buildings C and D. More detail on the financing structure is
included in the attached memo from Stacie Kvilvang, Ehlers, our financial advisor.
Staff has found the financing request for the infrastructure improvements reasonable.
The assessments are secured through the property tax system. The City of Hopkins
has a long history of financing public improvements and assessing the cost to
Planning & Development
benefitting property owners including its annual street reconstruction projects and
Housing Improvement Areas without any default on the bond payments or the need to
use other City resources. Staff are also concerned that the project may be in jeopardy
without this assistance and would not able to move forward.
This proposed new structure was discussed at the January 16, 2024, City Council
meeting and Council members supported the request. The First Amended and
Restated Contract for Private Redevelopment reflects the willingness of the City of
Hopkins to bond for and assess the cost of the infrastructure improvements. It also
makes minor modifications to the private development, reflecting the revised unit counts
and timeline and clarifies that the utilities (water and storm sewer) are to be turned over
to the City following completion by the developer. It is important to note that the
bonding request does not increase the amount of public subsidy going towards the
development.
SUPPORTING INFORMATION
• First Amended and Restated Contract for Private Redevelopment
• Memo from Stacie Kvilvang, Ehlers
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FIRST AMENDED AND RESTATED
CONTRACT
FOR
PRIVATE REDEVELOPMENT
By and Between
CITY OF HOPKINS, MINNESOTA
and
HOUSING AND REDEVELOPMENT AUTHORITY
IN AND FOR THE CITY OF HOPKINS
and
ALATUS HOPKINS MD LLC
This document drafted by:
KENNEDY & GRAVEN, CHARTERED (SJR)
150 South Fifth Street, Suite 700
Minneapolis, MN 55402
(612) 337-9300
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TABLE OF CONTENTS
PAGE
PREAMBLE ....................................................................................................................................1
ARTICLE I
Definitions
Section 1.1. Definitions................................................................................................................2
Section 1.2. Exhibits ...................................................................................................................7
Section 1.3. Rules of Interpretation .............................................................................................7
Section 1.4. Incorporation of Recitals and Exhibits ....................................................................8
ARTICLE II
Representations and Warranties
Section 2.1. Representations by the City and the HRA ...............................................................8
Section 2.2. Representations and Warranties by the Redeveloper ...............................................9
ARTICLE III
Acquisition of Redevelopment Property; Redevelopment Assistance
Section 3.1. Acquisition of Redevelopment Property ................................................................10
Section 3.2. Issuance of Pay-As-You-Go Notes ........................................................................10
Section 3.3. Conditions Precedent to Issuance of Notes ............................................................11
Section 3.4. Potential Reduction of Assistance .........................................................................11
Section 3.5 Redeveloper Responsible for Payment of Administrative Costs ...........................13
Section 3.6. Records ..................................................................................................................13
Section 3.7. Purpose of Assistance; No Business Subsidy ........................................................13
Section 3.8. Bonds .....................................................................................................................14
Section 3.9. Special Assessments. .............................................................................................14
ARTICLE IV
Construction of Minimum Improvements
Section 4.1. Construction of Minimum Improvements .............................................................14
Section 4.2. Preliminary and Construction Plans.......................................................................14
Section 4.3. Commencement and Completion of Construction .................................................15
Section 4.4. Certificates of Completion .....................................................................................15
Section 4.5. Housing Affordability Covenants ..........................................................................16
Section 4.6. Affordable Housing Reporting ..............................................................................18
Section 4.7. City Public Improvements .....................................................................................19
Section 4.8. Homeowners’ Associations and Restrictive Covenants ........................................19
Section 4.9. Maintenance ...........................................................................................................19
Section 4.10. Reciprocal Easement and Operating Agreement ...................................................19
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ARTICLE V
Insurance
Section 5.1. Insurance ................................................................................................................20
Section 5.2 Subordination .........................................................................................................22
ARTICLE VI
Taxes; Use of Tax Increment
Section 6.1. Right to Collect Delinquent Taxes .........................................................................22
Section 6.2. Use of Tax Increment.............................................................................................22
Section 6.3. Reduction of Taxes ................................................................................................22
Section 6.4. Qualifications .........................................................................................................24
Section 6.5. Transfer Obligations ..............................................................................................24
Section 6.6. Minimum Assessment Agreement .........................................................................24
ARTICLE VII
Financing
Section 7.1. Mortgage Financing ...............................................................................................25
Section 7.2. HRA’s Option to Cure Default under Mortgage....................................................26
Section 7.3. Modification; Subordination ..................................................................................26
ARTICLE VIII
Prohibitions Against Assignment and Transfer; Indemnification
Section 8.1. Representation as to Redevelopment .....................................................................26
Section 8.2. Prohibition Against Redeveloper’s Transfer of Property
and Assignment of Agreement ...............................................................................26
Section 8.3. Release and Indemnification Covenants ................................................................28
ARTICLE IX
Events of Default
Section 9.1. Events of Default Defined .....................................................................................29
Section 9.2. Remedies on Default ..............................................................................................29
Section 9.3. Termination or Suspension of Notes......................................................................30
Section 9.4. No Remedy Exclusive............................................................................................31
Section 9.5. No Additional Waiver Implied by One Waiver .....................................................31
Section 9.6. Attorney Fees .........................................................................................................31
Section 9.7 No Cross-Default ...................................................................................................31
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ARTICLE X
Additional Provisions
Section 10.1. Conflict of Interests; Representatives Not Individually Liable .............................32
Section 10.2. Equal Employment Opportunity ............................................................................32
Section 10.3. Restrictions on Use ................................................................................................32
Section 10.4. Notices and Demands ............................................................................................32
Section 10.5. Counterparts ...........................................................................................................33
Section 10.6. Disclaimer of Relationships ...................................................................................33
Section 10.7. Amendment ............................................................................................................33
Section 10.8. Recording ...............................................................................................................34
Section 10.9. Indemnity ...............................................................................................................34
Section 10.10. Titles of Articles and Sections ...............................................................................34
Section 10.11. Governing Law; Venue ..........................................................................................34
Section 10.12. Provisions Not Merged with Deed .........................................................................34
Section 10.13. Approvals ...............................................................................................................34
Section 10.14. Termination ............................................................................................................34
Section 10.15. Public Art ...............................................................................................................34
Section 10.16. Park Dedication ......................................................................................................34
Section 10.17 Miscellaneous ........................................................................................................35
Section 10.18 Commercial Space in Phase IB – Building C and Phase ID ..................................35
Section 10.19 PUD Agreement/Subdivision.................................................................................35
Section 10.20 Rent Control Provisions .........................................................................................35
Section 10.21. Parking Rental ........................................................................................................36
TESTIMONIUM.......................................................................................................................... S-1
SIGNATURES ............................................................................................................................. S-1
EXHIBIT A LEGAL DESCRIPTION OF THE REDEVELOPMENT PROPERTY
EXHIBIT B DEPICTION OF THE REDEVELOPMENT PROPERTY AND
MINIMUM IMPROVEMENTS
EXHIBIT C PRELIMINARY PLAN DOCUMENTS
EXHIBIT D FORM OF CERTIFICATE OF COMPLETION
EXHIBIT E FORM OF NOTES AND TERMS OF NOTES
EXHIBIT F DECLARATION OF RESTRICTIVE COVENANTS
EXHIBIT G FORM OF MINIMUM ASSESSMENT AGREEMENT
EXHIBIT H FORM OF INVESTMENT LETTER
EXHIBIT I TOTAL DEVELOPMENT COSTS
EXHIBIT J SAMPLE LOOKBACK CALCULATION
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FIRST AMENDED AND RESTATED
CONTRACT FOR PRIVATE REDEVELOPMENT
This First Amended and Restated Contract for Private Redevelopment (the “Agreement”)
is made this ______ day of ____________, 2024, by and between the City of Hopkins,
Minnesota, a Minnesota municipal corporation (“City”), and Housing and Redevelopment
Authority in and for the City of Hopkins (“HRA”), each having their principal office at 1010 1st
Street South, Hopkins, Minnesota 55343, and Alatus Hopkins MD LLC, a Delaware limited
liability company, having its principal office at IDS Center, 80 South 8th Street, Suite 4155,
Minneapolis, MN 55402 (the “Redeveloper”).
WITNESSETH:
WHEREAS, the HRA previously found that there exists within the community a building
that had a blighting influence on surrounding properties and was structurally substandard due to
its poor physical condition or functional obsolescence and which, because of those conditions,
threatened the health, safety and welfare of the community; and
WHEREAS, the HRA has previously caused demolition of a building located at the
Redevelopment Property as hereinafter defined; and
WHEREAS, the HRA finds that it is in the public interest, helpful for the tax base and
beneficial for the health, safety and welfare of the community as a whole to remove vacant,
underutilized, obsolete, and structurally substandard buildings and to replace them with new life-
cycle housing and ancillary commercial uses; and
WHEREAS, the HRA finds that, due to market conditions which exist today and are
likely to persist for the foreseeable future, the private sector alone is not able to accomplish
redevelopment of the type needed within the community and, therefore, such will not occur
without public intervention; and
WHEREAS, the HRA was created pursuant to Minnesota Statutes, Sections 469.001-
469.047 (the “Act”) and was authorized to transact business and exercise its powers by a
resolution of the City Council of the City pursuant to the Act; and
WHEREAS, in order to foster the redevelopment described above, the City established its
Redevelopment Project No. 1, as defined in the Act, providing for the development and
redevelopment of certain areas located within the City (which redevelopment project is
hereinafter referred to as the “Project”), to implement the goals and objectives thereof, all
pursuant to the Act; and
WHEREAS, the Redeveloper has presented to the HRA a proposal wherein the
Redeveloper will redevelop 325 Blake Road North (the “Redevelopment Property”) through
the construction on the Redevelopment Property of multiple buildings containing
approximately 791 multi-family units, with 726 units of apartments, and 65 senior cooperative
units, with the affordability levels within each building specified below in Section 4.5;
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construction of approximately 32 for sale town homes, approximately 8,000 sq. ft. of ground
floor retail, 1,000 sq. ft. sky lounge and two (2) 4,500 sq. ft. standalone restaurant pads; with
Total Development Costs estimated to be approximately $330,000,000; and
WHEREAS, as part of its proposal the Redeveloper has requested that the HRA
create a tax increment financing district encompassing the Redevelopment Property and
use a portion of the tax increment generated from the redeveloped Redevelopment Property
to reimburse the Redeveloper for a portion of the Redeveloper's redevelopment costs; and
WHEREAS, the HRA established Tax Increment Financing District No. 1-6: 325 Blake
(a “redevelopment district”) and adopted a tax increment financing plan related thereto, all
pursuant to Minnesota Statutes, sections 469.174 through 469.1799; and
WHEREAS, the Redeveloper has proposed to redevelop the Redevelopment Property
through a project which the HRA believes is in the vital and best interests of Hopkins and the
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 for which the Project and Tax
Increment Financing District No. 1-6: 325 Blake were established; and
WHEREAS, the Redeveloper would not undertake the redevelopment of the Project
without the tax increment financing assistance described in this Agreement; and
WHEREAS, the HRA believes that the redevelopment of the Project pursuant to the
Redeveloper's proposal and the fulfillment generally of this Agreement, are in the vital and
best interests of the City and the 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 the Project has been undertaken and is being assisted.
NOW, THEREFORE, in consideration of the covenants 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 1.1. Definitions. In this Agreement the following terms shall have the meanings
given unless a different meaning clearly appears from the context:
“Administrative Costs” means the administrative expenses incurred by HRA as defined
in section 469.174, subd. 14 of the TIF Act.
“Agreement” means this Agreement, as the same may be from time to time modified,
amended, or supplemented.
“Assessor” means the county assessor of Hennepin County.
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“Available Tax Increment” means, with respect to each Phase, up to 95 percent of the
Tax Increment paid to the HRA by the County with respect to that Phase of the Redevelopment
Property, with the Minimum Improvements on that Phase.
“Certificate of Completion” means the certificate, in substantially the form attached
hereto as Exhibit D, which will be provided to the Redeveloper pursuant to Article IV of this
Agreement.
“City” means the City of Hopkins, Minnesota, a municipal corporation under the laws of
Minnesota.
“City Public Improvements” means the commencement of construction of the Spine
Road between Blake Road N and Lake Street NE and underlying utilities by December 31, 2024,
and Public Parking as hereinafter defined by December 31, 2024, to be paid by Special
Assessments as provided herein.
“Construction Plans” means the final plans for construction of each Phase of the
Minimum Improvements, which shall be submitted by the Redeveloper pursuant to section 4.2 of
this Agreement.
“County” means Hennepin County, Minnesota.
“Declaration of Restrictive Covenants” means, as to Phases IA (Building A), IIA
(Building B), and IC (Building D), the Declaration of Restrictive Covenant for each of those
Phases between the HRA and the Redeveloper in substantially the form set forth in Exhibit F
attached hereto.
“Event of Default” or “default” means an action by the Redeveloper or HRA listed in
Article VIX of this Agreement.
“Holder” means the owner of a Mortgage.
“Housing Unit” means the housing units constructed as part of the Minimum
Improvements.
“HRA Act” means the Housing and Redevelopment Authorities Act, which is codified at
Minnesota Statutes, Sections 469.001 through 469.047, as amended.
“Lender” means any lender who finances the construction or operation of a Phase of the
Minimum Improvements.
“Material Change” means a change in the Construction Plans that will have a material
adverse effect on the generation of Tax Increment from the Minimum Improvements or that
materially reduces the number of Housing Units, or a change in the exterior elements of the
applicable Phase (as hereinafter defined) that materially adversely affects the original character and
visual preference that was approved by the City and HRA.
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“Maturity Date” means, as to each Note, the date that Note has been paid in full or
terminated, whichever is earlier.
“Minimum Assessment Agreement” means, as to each Phase, the Minimum Assessment
Agreement for that Phase between the HRA, the Redeveloper, and the County assessor in
substantially the form attached hereto as Exhibit G.
“Minimum Improvements” means the City Public Improvements plus the following:
The construction of multiple buildings containing approximately 791 multi-family units,
with 726 units of apartments, and approximately 65 senior housing units in a building
organized as a cooperative, with affordability levels within each building noted in the
table below:
Bldg C
Market
Rate
Bldg D
Mixed
Income
Bldg A
LIHTC
Bldg B
Sr.
Coop
Total
%
Affordable
of TOTAL
Units
No. of Units 395 215 116 65 791 N/A
30% AMI 0 0 3 0 3 1%
50% AMI 0 0 107 0 107 13%
60% AMI 0 43 6 7 56 7%
80% AMI 0 43 0 0 43 5%
Total Affordable 0 86 116 7 209 26%
% Affordable by
Building
0% 40% 100% 11% 25%
In addition, construction of approximately 32 for-sale town homes, approximately 8,000
sq. ft. of ground floor retail, 1,000 sq. ft. sky lounge and two (2) 4,500 sq. ft. standalone
restaurant pads. Details of each component of the Minimum Improvements, hereinafter
individually designated as a separate Phase are noted below in the table.
Phase Use
Phase IA – Building
A (Lot 2, Block 2 of
Plat)
6 Story building with approximately 116 LIHTC apartments
with 100% of the units affordable at or below 60% of AMI and
approximately 77 underground and surface parking stalls. Also
includes entry plaza available for public use.
Phase IB – Building
C (Lot 4, Block 1 of
Plat)
Single building with a 14-Story component consisting of
approximately 295-units of market rate apartments with up to
15% of the units designated as hotel units, approximately 8,000
sq. ft. of ground floor retail and a 1,000 sq/ft sky lounge and a 5-
story component consisting of approximately 175-units of
market rate apartments and approximately 520 above-ground
parking stalls. Also includes gateway plaza, cascade promenade
and tower plaza available for public use.
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Phase Use
Phase IC – Building
D (Lot 3, Block 1 of
Plat)
5-Story building with approximately 215-units of mixed income
apartments in which 20% of the units (43) are affordable at or
below 60% AMI and 20% of the units (43) are affordable at or
below 80% AMI plus approximately 277 above-ground parking
stalls for residential use and approximately 151 stalls of public
parking. Also includes woonerf available for public use.
Phase ID (Lots 1
and 2, Block 1 of
Plat)
Two single-story 4,500 sq. ft. restaurant pads and greenway
commons, 1,400 sq. ft. boathouse and rental center and pavilion,
with the greenway commons and pavilion available for public
use
Phase IIA –
Building B (Lot 1,
Block 2 of Plat)
5-Story building with approximately a 65-unit senior
cooperative, in which 7 units (approximately 11%) are
affordable to persons at or below 60% AMI and approximately
151 structured parking stalls. Also includes gateway plaza
available for public use.
Phase IIB – Town
Homes (Outlot C of
Plat)
Approximately 32 for-sale town home units
Total Development Costs for all Phases of the Minimum Improvements are estimated to
be approximately $330,000,000. The Minimum Improvements are generally described
and depicted on Exhibit B attached hereto.
“Minimum Market Value” means, for all Phases collectively, $222,000,000. The
Minimum Market Value for each Phase is the amount that the Redeveloper and the HRA agree to
in the Minimum Assessment Agreement for that Phase.
“Mortgage” means any mortgage made by the Redeveloper that encumbers any Phase of
the Redevelopment Property and that is a permitted encumbrance pursuant to the provisions of
Article VII hereof.
“Note” and “Notes” means the taxable Tax Increment Revenue Notes, in substantially the
form set forth in Exhibit E, to be delivered by the HRA to the Redeveloper or its designee
pursuant to Article III of this Agreement.
“Phase” means each of the phases of the Minimum Improvements identified above in the
definition of Minimum Improvements.
“Plat” means that certain subdivision plat or map of the Redevelopment Property entitled
“Mile 14 on Minnehaha Creak,” recorded on July 12, 2022 in the official records of Hennepin
County as Document No. 5957625 (Torrens) and as Document No. 11126218 (Abstract), with
potential additional subdivision of the Property necessary for development..
“Preliminary Plans” means, as to each Phase, the preliminary plans for construction of
the Minimum Improvements on that Phase; the preliminary plans for all Phases have been
submitted by the Redeveloper and approved by the HRA and are attached hereto as Exhibit C.
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“Public Parking” means approximately 151 structured parking stalls constructed within
Phase IC to be paid with special assessments as provided herein.
“Public Redevelopment Costs” means, site preparation costs, including demolition, costs
of soil correction, and infrastructure improvements on the Redevelopment Property, costs of
constructing affordable housing, and any other costs eligible to be reimbursed with tax
increment.
“Qualifying Costs” means, as to each Phase, the cost of, site preparation, demolition,
utility installation, landscaping, grading, earthwork, footings, foundations, retaining walls, storm
water ponding, structured, underground and surface parking, and all other expenditures made by
the Redeveloper related to completion of the Minimum Improvements on that Phase, which the
HRA intends to partially reimburse through the Note for that Phase.
“Redeveloper” has the meaning set forth in the preamble of this Agreement.
“Redevelopment Assistance” means the financial assistance to be offered by the HRA to
the Redeveloper through issuance of the Notes.
“Redevelopment Plan” means the Project and the Tax Increment Financing District
No. 1-6: 325 Blake, which was approved by the HRA on December 21, 2021, and by the City on
December 21, 2021.
“Redevelopment Property” means those properties which are included in the plat of
MILE 14 ON MINNEHAHA CREEK with the exception of Outlots A and B, which will be
retained by the Minnehaha Watershed District. The Redevelopment Property is legally described
in Exhibit A attached hereto.
“HRA” has the meaning set forth in the preamble of this Agreement.
“State” means the state of Minnesota.
“Substantial Completion” means, as to each Phase, completion of the Minimum
Improvements in that Phase to a degree allowing the issuance of a Certificate of Occupancy by
the City’s building official.
“Tax Increment” means, with respect to each Phase, the tax increment, as that term is
defined in Minnesota Statutes, Section 469.174, subd. 25, that is paid to the HRA by the County
with respect to that Phase of the Redevelopment Property, including the Minimum
Improvements on that Phase.
“Tax Increment Financing District” or TIF District” means Tax Increment Financing
District No. 1-6: 325 Blake.
“TIF Act” means the Tax Increment Financing Act, which is codified at Minnesota
Statutes, sections 469.174 through 469.1799, as amended.
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“TIF Plan” means the tax increment plan for Tax Increment Financing District No. 1-6:
325 Blake, which was approved by the HRA on August 17, 2021, and by the City on August 17,
2021.
“Termination Date” means, as to each Phase, the earlier of (i) the termination of Tax
Increment Financing District No. 1-6: 325 Blake, which is estimated to be after 25 years after
the date of receipt of the first increment, or (ii) the date the Note for that Phase has been paid
through Available Tax Increment or terminated.
“Total Development Costs” means the total development costs of the Minimum
Improvements. A line-item estimate of the Total Development Costs is attached hereto as
Exhibit I, which reflects the Redeveloper’s current projections for each line-item category of
costs comprising the Total Development Costs for each applicable Phase that will receive Tax
Increment.
“Transfer” has the meaning set forth in Section 8.2(a) hereof.
“Unavoidable Delays” means delays which are the direct result of unanticipated adverse
weather conditions; pandemics (including the global pandemic commonly known as the
coronavirus or COVID-19); strikes or other labor troubles; shortages of materials or labor; fire or
other casualty to the Minimum Improvements; litigation commenced by third parties which, by
injunction or other similar judicial action, directly results in delays; or, except those of the HRA
or the City reasonably contemplated by this Agreement, any acts or omissions of any federal,
State or local governmental unit which directly result in delays in construction of the Minimum
Improvements; approved changes to the Construction Plans that result in delays; delays caused
by the discovery of any previously unknown adverse environmental condition on or within the
Redevelopment Property to the extent reasonably necessary to comply with federal and state
environmental laws, regulations, orders or agreements; unanticipated future local events
occurring within such proximity of the Redevelopment Property, and not caused by nor within
the control of the Redeveloper, having a significantly adverse impact upon the marketability and
reasonable profitability of the Minimum Improvements; and any other cause or force majeure
beyond the control of the Redeveloper which directly results in delays.
Section 1.2. Exhibits. The following exhibits are attached to and by reference made a
part of this Agreement:
Exhibit A. Legal description of the Redevelopment Property
Exhibit B. Depiction of the Redevelopment Property and Minimum Improvements
Exhibit C. Preliminary Plans
Exhibit D. Form of Certificate of Completion
Exhibit E. Form of Notes and Terms of Notes
Exhibit F. Declaration of Restrictive Covenants
Exhibit G. Form of Minimum Assessment Agreement
Exhibit H. Form of Investment Letter
Exhibit I. Total Development Costs
Exhibit J. Sample Lookback Calculation
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Section 1.3. Rules of Interpretation. (a) This Agreement shall be interpreted in
accordance with and governed by the laws of Minnesota.
(b) The words “herein” and “hereof” and words of similar import, without reference
to any particular section or subdivision, refer to this Agreement as a whole rather than any
particular section or subdivision hereof.
(c) References herein to any particular section or subdivision hereof are to the section
or subdivision of this Agreement as originally executed.
(d) Any titles of the several parts, articles and sections of this Agreement are inserted
for convenience and reference only and shall be disregarded in construing or interpreting any of
its provisions.
Section 1.4. Incorporation of Recitals and Exhibits. The Recitals set forth in the
preamble to this Agreement and the Exhibits attached to this Agreement are incorporated into this
Agreement as if fully set forth herein.
ARTICLE II
Representations and Warranties
Section 2.1. Representations by the City and the HRA. The City and the HRA make the
following representations as the basis for the undertaking on their part herein contained:
(a) The City is a Minnesota municipal corporation duly organized under the laws of
the State of Minnesota. The City has the authority to enter into this Agreement and carry out its
obligations hereunder.
(b) The HRA is a housing and economic development authority duly organized and
existing under the HRA Act. HRA has the authority to enter into this Agreement and carry out
its obligations hereunder.
(c) The individual(s) executing this Agreement and related agreements and
documents on behalf of the City or the HRA have the authority to do so and to bind the City or
the HRA by their actions.
(d) The Redevelopment Project No. 1 for the HRA is a development district within
the meaning of the Minnesota Statutes, section 469.125, subd. 9.
(e) TIF District No. 1-6: 325 Blake is a redevelopment tax increment financing
district within the meaning of the TIF Act and was created, adopted and approved in accordance
with the TIF Act. The City and the HRA have taken all required actions to create the TIF
District as a redevelopment district within Minnesota Statute 469.174, Subdivision 10 and have
adopted and approved the TIF Plan pursuant to the TIF District and TIF Act.
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(f) There are no previous agreements to which the City or the HRA is a party
pertaining to the Redevelopment Property which would preclude the parties from entering into
this Agreement or which would impede the fulfillment of the terms and conditions of this
Agreement.
(g) The activities of the City and the HRA pursuant to this Agreement are undertaken
pursuant to the Redevelopment Plan and are for the purpose of redevelopment of the
Redevelopment Property.
(h) The City and the HRA will act in a timely manner to consider all approvals
required under this Agreement and will cooperate with the Redeveloper in seeking consideration
by the City of approvals which must be granted by the City.
Section 2.2. Representations and Warranties by the Redeveloper. The Redeveloper
makes the following representations and warranties as the basis for the undertaking on its part
herein contained:
(a) The Redeveloper is a limited liability company validly existing under the laws of
the State of Delaware and authorized to do business in the State of Minnesota. The Redeveloper
has the authority to enter into this Agreement and carry out its obligations hereunder.
(b) The Redeveloper will attempt to acquire the Redevelopment Property in fee title.
(c) The persons executing this Agreement and related agreements and documents on
behalf of the Redeveloper have the authority to do so and to bind the Redeveloper by their
actions.
(d) Upon acquisition of the Redevelopment Property, the Redeveloper will demolish
the existing improvements, if any, and construct the Minimum Improvements in substantial
accordance with the terms of this Agreement, the Redevelopment Plan, the TIF Plan, the
Construction Plans and all local, State and federal laws and regulations, including, but not
limited to, environmental, zoning, building code and public health laws and regulations.
(e) The Redeveloper will apply for and use all reasonable efforts to obtain, in a
timely manner, all required permits, licenses and approvals from the HRA and the City, and will
meet, in a timely manner, the requirements of all applicable local, State, and federal laws and
regulations which must be obtained or met before the Minimum Improvements may be lawfully
constructed or used for their intended purpose. The Redeveloper did not obtain a building permit
for any portion of the Minimum Improvements before December 21, 2021, the date of approval
of the TIF Plan for the TIF District.
(f) The Redeveloper has analyzed the economics of acquisition of the
Redevelopment Property, the cost of site improvements, including installation of any necessary
utilities and demolition of the improvements currently thereon and construction of the Minimum
Improvements and concluded that, absent the Redevelopment Assistance to be offered under this
Agreement, it would not undertake this project.
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(g) Neither the execution 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 corporation or company organizational documents or
any evidence of indebtedness, agreement or instrument of whatever nature to which the
Redeveloper is now a party or by which it is bound, or constitutes a default under any of the
foregoing.
ARTICLE III
Acquisition of Redevelopment Property; Redevelopment Assistance
Section 3.1. Acquisition of Redevelopment Property. The Redeveloper is in the process
of acquiring the Redevelopment Property in fee. The HRA makes no representations to the
Redeveloper regarding the suitability of the Redevelopment Property or the Minimum
Improvements for the use and purpose intended by the Redeveloper.
Section 3.2. Issuance of Pay-As-You-Go Notes. (a) In consideration of the Redeveloper
constructing the Minimum Improvements and to finance the reimbursement of the Qualifying
Costs, subject to all terms and conditions of this Agreement, the HRA will issue and the
Redeveloper will purchase the Notes in the maximum principal amount up to $31,700,000,
collectively for all Phases, in public assistance for Qualifying Costs, in substantially the form set
forth in Exhibit E. The HRA and the Redeveloper agree that the consideration from the
Redeveloper for the purchase of the Note for each Phase will consist of the Redeveloper’s
payment of the Qualifying Costs for that Phase that are eligible for reimbursement with Tax
Increment and that are incurred by the Redeveloper in at least the maximum principal amount of
the Note for that Phase. The City provided $3,750,000 from TIF Spending Plan funds from TIF
District 2-11 in the form of a loan and provided up front to pay for Qualifying Costs as part of
the Phase IA development. In addition, the HRA will reimburse the Redeveloper with Tax
Increment generated from the Minimum Improvements for the remaining amount up to a
maximum principal amount of $27,950,000. The HRA’s financial consultant will complete an
analysis with respect to each Phase when construction is ready to commence on that Phase to
determine the amount and term of the assistance to be provided to that Phase; provided, however,
with respect to Phase IA, the HRA’s financial consultant has determined the amount of
assistance for Phase IA to be $797,500 and will be paid with 90% of the increment generated
from Phase IA over a seventeen year period. With respect to Phase IC the amount of assistance
is expected to be up to $8,000,000 and paid with 90% of the increment generated from Phase IC
over a 20-year period. Payments from TIF District 1-6: 325 Blake will be made through the
Notes issued on a pay-as-you-go basis, with one Note for each remaining Phase, assuming up to
95% of increment at the rate of the lesser of the rate of 4% per annum or the Redeveloper’s
actual mortgage financing rate. The Note for each Phase will be issued upon the City’s issuance
of a final Certificate of Occupancy for that Phase and proof of expenditure related to the
Qualifying Costs for that Phase. The HRA will deliver the Note for each Phase upon satisfaction
by the Redeveloper of all the conditions precedent with respect to that Phase specified in
section 3.3 of this Agreement. The HRA agrees that the Note for each Phase may be issued to
Redeveloper’s designee of such Phase, subject to Section 3.3 of this Agreement and if the
designee has assumed the obligations such Phase and entered into a partial assignment and
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assumption agreement with the City, the HRA, and the Redeveloper. Each Note will stand
alone, and that there will be no cross-default provision in the Notes that allows the HRA to
terminate or suspend payment under one Note with respect to a default under this Agreement
with respect to another Phase (a Phase other than the one which the Note was issued).
(b) The Redeveloper understands and acknowledges that the HRA makes no
representations or warranties regarding the amount of Available Tax Increment, or that revenues
pledged to the Notes will be sufficient to pay the principal of and interest on the Notes. Any
estimates of Tax Increment prepared by the HRA or its financial advisors in connection with the
TIF District or this Agreement are for the sole benefit of the HRA and are not intended as
representations on which the Redeveloper may rely.
(c) At the HRA’s discretion, the parcels containing Phase ID, Phase IIA – Building B
and Phase IIB – Town Homes may be decertified from the TIF district as development
commences since no assistance is required for those Phases.
Section 3.3. Conditions Precedent to Issuance of Notes. Notwithstanding anything in
this Agreement to the contrary, the HRA shall not be obligated to issue the Note with respect to a
Phase until all of the following conditions precedent have been satisfied with respect to that
Phase:
(a) The Redeveloper or its respective affiliate, subject to Article VIII hereof, has
acquired the Redevelopment Property in fee;
(b) The Redeveloper has submitted and the HRA has approved the Construction
Plans;
(i) The Redeveloper has constructed the Minimum Improvements on that
Phase and the HRA has issued the Certificate of Completion for that Phase;
(c) The Redeveloper has completed the City Public Improvements and such
Improvements have been accepted by the City.
(d) The Redeveloper has submitted evidence it has paid for the Qualifying Costs,
including paid receipts and lien waivers, for that Phase;
(e) The Redeveloper has reimbursed the HRA for all of its administrative costs
incurred in conjunction with the processing of Redeveloper’s request with respect to that Phase;
(f) The Redeveloper has submitted the Investment Letter for the applicable Phase and
Note; and
(g) There has been no Event of Default on the part of the Redeveloper which has not
been cured.
Section 3.4. Potential Reduction of Assistance. The HRA will complete a lookback for
each applicable Phase that receives TIF assistance.
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(a) Generally. The financial assistance to the Redeveloper under this Agreement is
based on certain assumptions regarding likely performance of Phase IB - Building C and
Phase IC - Building D including operating revenues, expenses and development costs of
constructing these Phases. The HRA and the Redeveloper agree that the actual financial
performance of Phase IB - Building C and Phase IC - Building D will be reviewed at the times
described in this Section, and that the amount of tax increment assistance provided under
Section 3.2 will be adjusted accordingly. The HRA and the Redeveloper further agree that, upon
execution of this Agreement, the Redeveloper shall provide the HRA and its municipal advisor
(the “Consultant”) with the Pro Forma Financial Statements showing a target Cash on Cost
Return of 7%.
(b) Definitions. For the purposes of this Section, the following terms have the
following meanings:
“Calculation Date” means the earliest of (A) 90 days after the earlier of (i) the
date of Stabilization of the either Phase; (ii) two years after the date of completion of
either Phase, as evidenced by the City’s issuance of a Certificate of Completion pursuant
to Section 3.3: or (B) at least 30 days prior to sale of either Phase.
“Cash on Cost Return” means NOI divided by the applicable Phase’s actual Total
Development Costs, calculated as set forth in the sample lookback calculation attached as
Exhibit J.
“NOI” means total annual income and other project-derived annual revenue,
including payments under the TIF Note, less Operating Expenses, which exclude debt
service payments . For purposes of the Cash on Cost Return calculation on the
Calculation Date, (i) revenue shall be based upon 95% occupancy regardless of whether
the average occupancy for the measured period is higher or lower than 95%, (ii) revenue
for periods after the Calculation Date shall be inflated by 2.5% annually, and (iii)
Operating Expenses for periods after the Calculation Date, shall be inflated by 2.5%
annually.
“Operating Expenses” means reasonable and customary expenses incurred in
operating the applicable Phase, consistent with the Pro Forma Financial Statement,
including deposits to commercially reasonable capital replacement reserves and payment
of real estate taxes, excluding debt service payments.
“Pro Forma Financial Statement” the applicable Phase’s cash flow pro forma
model financial statement projecting future returns, a summary of which is attached to
this Agreement as Exhibit J.
“Stabilization” means the calendar month-end date on which the applicable Phase
has first achieved an average occupancy of 90% during the preceding 12 calendar
months, or such earlier date as may be requested by the Redeveloper but, for purposes of
the Cash on Cost Return calculation, assuming 95% occupancy notwithstanding actual
occupancy rate as of such date.
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“Total Project Cost” means the total expenditures incurred to complete
development of the applicable Phase inclusive of land acquisition, hard construction
costs, soft costs and financing costs as approved by Redeveloper’s senior construction
debt lender.
(c) On the Calculation Dates, the Redeveloper of the applicable Phase shall deliver to
the HRA and Consultant, at a minimum, (i) the Redeveloper’s actual financial statement, in the
same form as the Pro Forma Financial Statement submitted to the HRA pursuant to clause (1)
above and showing NOI, and such other financial information as the Consultant shall reasonably
require, for trailing 12-month period preceding the Calculation Date calculated as of the
Calculation Date as provided herein and as set forth in the Pro Forma Financial Statement and
(ii) evidence, satisfactory to the HRA, of its Total Project Cost.
(d) The average annual Cash on Cost Return shall be calculated by the Consultant
based on the applicable Phase financial statement submitted to the HRA pursuant to clause (3)
above, with actual incurred Total Project Cost and all elements of NOI determined in accordance
with generally accepted accounting principles.
(e) If the average annual Cash on Cost Return does not exceed 7% over the term of
the TIF Note, the TIF Note will remain set at the principal amount established in Section 3.2.
(f) If on the Calculation Date, the average annual Cash on Cost Return exceeds 7%,
then the principal balance of the TIF Note will be reduced by an amount that results in a
stabilized average annual Cash on Cost Return equal to 7% over the term of the TIF Note (the
“Participation Amount”). The calculation for the reduction shall be completed as noted in the
TIF Lookback Calculation Example in Exhibit J and shall be based upon the present value of the
reduced number of years of TIF per the original TIF Run utilized to size the original note for the
applicable Phase. Such reduction will be effective upon delivery to the Redeveloper of a written
notice stating the Participation Amount as determined by the Consultant in accordance with this
Section, accompanied by the Consultant’s report and the Redeveloper shall deliver the TIF Note
in exchange for a new TIF Note in the principal amount reduced by the Participation Amount.
Section 3.5. Redeveloper Responsible for Payment of Administrative Costs. The City
and HRA acknowledge the Redeveloper made an escrow deposit in the amount of $25,000 to pay
the Administrative Costs of the City and the HRA. The City and the HRA will use such funds to
pay “Administrative Costs,” which term means out-of-pocket costs incurred by the City and the
HRA, together with staff and consultant costs of the City and the HRA, all attributable to or
incurred in connection with the negotiation and preparation of this Agreement, the TIF Plan, and
other documents and agreements in connection with the establishment of the TIF District and
redevelopment of the Redevelopment Property, and not previously paid by the Redeveloper. The
Redeveloper shall pay all other normal and customary City fees and expenses for the approval
and construction of the Minimum Improvements. At the Redeveloper’s request, but no more
often than monthly, the HRA will provide the Redeveloper with a written report including
invoices, time sheets or other comparable evidence of expenditures for Administrative Costs and
the outstanding balance of funds deposited. At any time the deposit drops below $1,000, the
Redeveloper shall replenish the deposit in the amount of $10,000 within thirty (30) days after
receipt of written notice thereof from the HRA. If at any time the HRA or the City determines
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that the deposit is insufficient to pay Administrative Costs, the Redeveloper is obligated to pay
such shortfall within fifteen (15) days after receipt of a written notice from the HRA containing
evidence of the unpaid costs. If Administrative Costs incurred, and reasonably anticipated to be
incurred are less than the deposit by the Redeveloper, the HRA shall return to the Redeveloper
any funds not anticipated to be needed.
Section 3.6. Records. The HRA and its representatives will have the right at all
reasonable times after reasonable notice to inspect, examine and copy invoices paid by
Redeveloper and/or its general contractor relating to the Minimum Improvements and the
Qualifying Costs for which the Redeveloper will be reimbursed under the Notes.
Section 3.7. Purpose of Assistance; No Business Subsidy. The parties agree and
understand that the assistance being provided by the HRA under this Agreement does not
constitute a "business subsidy" within the meaning of the Business Subsidy Act, Minnesota
Statutes, Sections l16J.993 to l16J.995, because the assistance is being provided for development
and housing purposes and the Redeveloper's investment in the Redevelopment Property and site
preparation will exceed 70% of the County Assessor’s current year's estimated market value for
the Redevelopment Property “Business subsidy” within the meaning of Minnesota Statutes,
Sections 116J.993 to 116J.995.
Section 3.8. Bonds. The City and HRA will review all financing aspects related to the
Project and will endeavor to issue bonds if in the interest of the City and HRA if the City bonds for
the City Public Improvements and Public Parking and those bonds put the City over the bank
qualified limit, that the developer has to pay the interest differential, if any.
Section 3.9. Special Assessments. The Developer has agreed to certain Special
Assessments to fund the City Public Improvements and the Public Parking related to Phase IC
(hereinafter referred to as the “Public Phase IC Improvements”), as follows: City Public
Improvements Phase ID, $________ and Public Parking Improvements Phase IC $6,100,000.
The Developer shall not object to or contest the amount or use of such Special Assessments, and
shall enter into the City’s standard Petition and Waiver Agreement for such Public Phase IC
Improvements. As a result, the City anticipates all such Public Improvements will be timely
constructed to accommodate the Minimum Improvements when completed. The City will work
with the Developer on the timing to levy the agreed to Special Assessments on the applicable
Phase in order to be able to pay debt service on any bonds issued for the Public Improvements.
If the City determines that certain of the Public Improvements will benefit other property, the
City will, in accordance with normal city policies, assess the other benefited properties for their
appropriate share of the costs to reflect the benefit to such other property resulting from such
improvements.
ARTICLE IV
Construction of Minimum Improvements
Section 4.1. Construction of Minimum Improvements. If the Redeveloper or its affiliate
acquires the Redevelopment Property in accordance with the terms of this Agreement, the
Redeveloper or such affiliate agrees that it will construct the Minimum Improvements on the
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Redevelopment Property in accordance with the Construction Plans. The Redeveloper
acknowledges that, in addition to the requirements of this Agreement, construction of the
Minimum Improvements will necessitate compliance with other reviews and approvals by the
City and possibly other governmental agencies and, to the extent such approvals have not already
been obtained, agrees to submit all applications for and pursue to their conclusion all other
approvals needed prior to constructing the Minimum Improvements.
Section 4.2. Preliminary and Construction Plans. (a) The Redeveloper has submitted
and the City and the HRA have approved the Preliminary Plans listed in Exhibit C attached
hereto. Prior to beginning construction on the Minimum Improvements, the Redeveloper shall
submit dated Construction Plans to the City and the HRA. The Construction Plans shall provide
for the construction of the Minimum Improvements and shall be in substantial conformity with
the Preliminary Plans and this Agreement. HRA will approve the Construction Plans for each
Phase if they (1) are consistent with the Preliminary Plans; (2) conform to all applicable federal,
State and local laws, ordinances, rules and regulations; (3) are adequate to provide for the
construction of the Minimum Improvements; (4) conform to the State building code; and (5) if
there has occurred no uncured Event of Default on the part of the Redeveloper. The HRA agrees
to approve or reject each set of proposed Construction Plans for each Phase within 30 days after
it receives them. The HRA agrees to detail its reasons for disapproving any Construction Plans
and to explain which of the four criteria in the preceding sentence that it is relying on. If the
HRA does not approve or disapprove any proposed Construction Plans within 30 days after
receiving them, the HRA will be deemed to have approved them. The HRA will also be deemed
to have approved the Construction Plans if the City issues a building permit for the Minimum
Improvements. Except as otherwise set forth herein, no approval by HRA shall relieve the
Redeveloper of the obligation to comply with the terms of this Agreement, the terms of all
applicable federal, State and local laws, ordinances, rules and regulations in the construction of
the Minimum Improvements. Except as otherwise set forth herein, no approval by HRA shall
constitute a waiver of an Event of Default.
(b) If the Redeveloper desires to make any Material Change to any Construction
Plans, the Redeveloper shall submit the proposed change to the HRA for its prior written
approval. If the proposed change is consistent with the Preliminary Plans or is otherwise
acceptable to the HRA and meets all other requirements of section 4.2(a) above, the HRA shall
approve the proposed change. Such change in the Construction Plans shall be deemed approved
by the HRA unless rejected, in whole or in part, by written notice by the HRA to the
Redeveloper within twenty (20) business days after the Redeveloper submits the proposed
change for approval. The HRA agrees to set forth in detail its reasons for any rejection.
Section 4.3. Commencement and Completion of Construction. Subject to Unavoidable
Delays, the Redeveloper shall commence construction of each Phase of the Minimum
Improvements by the Commencement Date, and substantially complete construction of each
Phase by the Completion Date as set forth below. For the purpose hereof, “Commence” shall
mean beginning of physical improvement to the Property for the respective Phase, including
excavation, or footings and in the case of Phase I, mass grading other physical site preparation
work. “Complete” shall mean that the Minimum Improvements are sufficiently complete for the
issuance of a final Certificate of Occupancy.
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Phase Commencement Date Completion Date
Phase IA – Building A December 31, 2022 June 30, 2025
Phase IB – Building C December 31, 2025 June 30, 2028
Phase IC – Building D December 31, 2024 June 30, 2026
Phase ID – Rest/Common December 31, 2024 June 30, 2026
Phase IIA – Building B December 31, 2024 June 30, 2026
Phase IIB – Town Homes December 31, 2024 June 30, 2026
The Redeveloper and the HRA agree that the dates for each Phase of the construction schedule
may be revised based upon timing of actual construction schedules, financing, market conditions,
etc. Revisions to the dates of each Phase of the construction schedule shall not require approval
or further action by the HRA and may be approved administratively by staff and legal counsel,
so long as such revisions are no more than 18 months from each Phase of the construction
schedule as noted above. Any revision to the dates beyond 18 months for each Phase in the
construction schedule shall require renegotiation between the parties.
All work with respect to the Minimum Improvements to be constructed or provided by
the Redeveloper on the Redevelopment Property shall be in conformity with the Construction
Plans. The Redeveloper shall make such reports to the HRA regarding construction of the
Minimum Improvements as the HRA deems necessary or helpful in order to monitor progress on
construction of the Minimum Improvements.
Section 4.4. Certificates of Completion. (a) After Substantial Completion of the
Minimum Improvements in each Phase in accordance with the Construction Plans for that Phase
and all terms of this Agreement and at the written request of the Redeveloper, the HRA will,
within 20 days thereafter, furnish the Redeveloper with a Certificate of Completion for that
Phase in the form of Exhibit D attached hereto. The HRA agrees that the Minimum
Improvements in each Phase will be completed and the Redeveloper will be entitled to receive
and record a Certificate of Completion for that Phase when the City has issued a final Certificate
of Occupancy for the Minimum Improvements in that Phase and all site improvements in the
Phase have been substantially completed in accordance with the approved Construction Plans for
that Phase. Such certification by HRA shall be a conclusive determination of satisfaction and
termination of the agreements and covenants in this Agreement with respect to the obligations of
the Redeveloper to construct the Minimum Improvements in the relevant Phase and the dates for
the beginning and completion thereof. Following issuance of the Certificate of Completion for a
Phase pursuant to this section, the sole outstanding obligation of either Party is for the HRA to
issue the Notes and to make payments thereunder, subject to the terms of this Agreement and the
Notes.
(b) Each Certificate of Completion shall be in such form as will enable it to be
recorded in the proper County office for the recordation of deeds and other instruments
pertaining to the Redevelopment Property. If the HRA shall refuse to provide such certification
in accordance with the provisions of this section 4.4, the HRA shall promptly notify Redeveloper
of the same within 20 days following receipt of request therefor from Redeveloper and shall
provide the Redeveloper with a written statement, indicating in adequate detail in what respects
the Redeveloper has failed to complete the relevant portion of the Minimum Improvements in
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accordance with the provisions of the Agreement, or is otherwise in default of a material term of
this Agreement, and what measures or acts will be necessary, in the opinion of HRA, for the
Redeveloper to take or perform in order to obtain such certification. If the HRA fails to issue
such a written statement within such 20-day period, the HRA shall be deemed to have waived its
right to do so and shall immediately thereafter issue the Certificate of Completion to the
Redeveloper. The Redeveloper shall have 60 days following receipt of the HRA’s written
response to cure or agree to terms with HRA regarding issues to be resolved prior to the
Redeveloper obtaining a Certification of Completion from HRA.
(c) Notwithstanding any requirement to the contrary set forth in this Agreement and
the PUD Agreement, a Certificate of Completion may be issued for Building A of Phase I in the
absence of completion of the required permanent parking for Building A of Phase I, with the
permanent parking for Building A of Phase I required to be completed after such issuance of a
Certificate of Completion by ___________________________.
Section 4.5. Housing Affordability Covenants. The Redeveloper agrees that at all times
from initial occupancy of each of Phase IA – Building A, Phase IIA – Building B, and Phase IC
– Building D through the date that is 30 years from issuance of a final Certificate of Occupancy
for that Phase, the units within the applicable Phase of the Minimum Improvements shall be
reserved for occupancy by individuals and satisfy the income requirements noted in Sections
4.5(a) and (b) below. The Redeveloper and the HRA shall execute a Declaration of Restrictive
Covenants for each of Phases IA - Building A, IIA - Building B, and IC - Building D in
substantially the form set forth in Exhibit F and record such agreement against each of those
Phases. The covenants applicable to each of those Phases shall be as follows:
(a) Affordability Covenants Phase IIA – Building B: Redeveloper covenants to make
at least 10% of the Phase IIA – Building B units constructed to be “affordable” and agrees that
they are subject to the following affordability covenants:
(i) Twelve (12) cooperative Housing Units (the “Affordable Housing Units”) must be
initially sold (as a membership interest in the cooperative) to owner-occupants
with household income not to exceed 60 percent of the Minneapolis-St. Paul
metropolitan statistical area (the “Metro Area”) median income for the calendar
year in which the Redeveloper receives a Certificate of Occupancy. The
Affordable Housing Units will be equally distributed throughout the building and
floors. Each owner-occupant of the Affordable Housing Units will be required to
pay their pro rata share of ongoing operating expenses of the cooperative. Future
transfers of the Affordable Housing Units (or the membership interests in the
cooperative representing the Affordable Housing Units) will be restricted to
maintain the ability of future buyers to purchase the Affordable Housing Units at
affordable prices for thirty (30) years following the first purchase of each of the
Affordable Housing Units pursuant to the Affordable Housing Agreement
described below.
(ii) Upon or before closing on the initial sale of each Affordable Housing Unit to any
person, the Redeveloper shall deliver or cause to be delivered written evidence
satisfactory to the HRA of compliance with the covenants. Such evidence shall
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include, at a minimum, a fully executed purchase agreement and certificate of real
estate value, certification by the buyer that he or she intends to occupy the
Affordable Housing Unit, and evidence of the buyer’s household income determined
in accordance with Metropolitan Council’s affordability limits for ownership;
provided that income shall be determined as of the date of application for acquisition
financing.
(iii) The HRA and its representatives shall have the right at all reasonable times while the
covenants are in effect, after reasonable notice, to inspect, examine and copy all
books and records of the Redeveloper and its successors and assigns relating to the
covenants.
(iv) The Redeveloper shall execute with the HRA an agreement in recordable form and
satisfactory to the HRA, that substantially reflects the covenants (the “Affordable
Housing Agreement”) before the Redeveloper obtains its financing. The Affordable
Housing Agreement shall include reasonable reporting and monitoring requirements
as necessary to ensure compliance with the covenants therein, and shall be recorded
by the Redeveloper, at its cost, against the appropriate portion of the Redevelopment
Property on which the subject Affordable Housing Units are to be constructed.
Failure to enter into, record or comply with the Affordable Housing Agreement in
accordance with this Section shall be an Event of Default. If the Redeveloper fails
to comply with this Article or with the covenants of the Affordable Housing
Agreement, the Redeveloper will reimburse the HRA for any reasonable attorney
fees incurred by the HRA in an effort to gain the Redeveloper’s compliance with this
Article or with the covenants of the Affordable Housing Agreement.
b. Affordability Covenants Phase IA – Building A and IC – Building D: Redeveloper
agrees that the Minimum Improvements are subject to the following affordability covenants:
(i) The Redeveloper expects that each of Phase IA – Building A and Phase IC –
Building D will include the mix of rental housing units as noted in the table above
in the definition of “Minimum Improvements”. These units constitute
approximately 27% of the overall rental units. In addition, the Redeveloper will
apply to the applicable agencies for project-based housing choice vouchers for
Phase IA – Building A. The Redeveloper will be required to enter into a
Declaration of Restrictive Covenants for each Phase that will cause the affordable
restrictions to remain in effect for a thirty (30) year period. On the date of receipt
of a final Certificate of Occupancy for each of those Phases, the Redeveloper will
deliver an executed Declaration that Phase to the HRA in recordable form.
(ii) The Redeveloper agrees to distribute the affordable rental Housing Units among
the different rental Housing Unit types throughout the building and floors and
various unit types.
(iii) During the term of the Declaration, the Redeveloper shall not adopt any policies
specifically prohibiting or excluding rental to tenants holding
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certificates/vouchers under Section 8 of the United States Housing Act of 1937, as
amended, codified as 42 U.S.C. Sections 1401 et seq., or its successor because of
such prospective tenant’s status as such a certificate/voucher holder.
(iv) The Redeveloper will promptly notify the HRA if at any time during the term of
the Declaration the number of rental Housing Units in Phase IA, Building A or
Phase IC, Building D occupied by Qualifying Tenants (as defined in the
Declaration) or held vacant and available for occupancy by Qualifying Tenants
pursuant to the Declaration is fewer than the number required by the terms of the
Declaration.
(v) The HRA and its representatives will have the right at all reasonable times during
normal business hours while the covenants in this Section are in effect, after
reasonable notice to inspect, to examine and copy all books and records of the
Redeveloper and its successors and assigns relating to the covenants described in
this Section and in the Declaration for each of the two relevant Phases.
(vi) The Redeveloper must submit evidence of tenant incomes, showing that Phase IA
– Building A and Phase IC – Building D meet the income requirements set forth
in the Declarations for those Phases by April 1st of each year. The HRA will
review the submitted evidence related to the income restrictions and to the extent
the threshold for one of those Phases is not met, the HRA will withhold the TIF
payment for that time period with respect to that Phase.
c. Affordability Applications. The HRA and the City agree to pledge support for
any affordability application made by the Redeveloper; however, such pledge of support shall
not include any monetary commitment.
Section 4.6. Affordable Housing Reporting: At least annually, no later than April 1 of
each year commencing on the April 1 first following the issuance of the Certificate of
Completion for Phase IA – Building A or Phase IC – Building D, the Redeveloper shall provide
a report to the HRA evidencing that the Redeveloper complied with the income affordability
covenants set forth in Section 4.5 hereof during the previous calendar year with respect to each
Phase that the Redeveloper has Substantially Completed. The income affordability reporting
shall be on the form entitled “Tenant Income Certification” from the Minnesota Housing Finance
Agency (MHFA HTC Form 14), or if unavailable, any similar form. The HRA may require the
Redeveloper to provide additional information reasonably necessary to assess the accuracy of
such certification. Unless earlier excused by the HRA, the Redeveloper shall send affordable
housing reports to the HRA until the TIF District is decertified. If the Redeveloper fails to
provide the annual reporting required under this Section for any Phase, the HRA may withhold
payments of Available Tax Increment under the Note for that Phase.
Section 4.7. City Public Improvements: The Redeveloper shall construct the City
Public Improvements as defined in this Agreement in accordance with plans and specifications
approved by the City. The City may inspect the City Public Improvements as the improvements
are being constructed and the Redeveloper will dedicate the City Public Improvements to the
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City upon completion. Acceptance of all City Public Improvements shall be by City staff, in
their sole discretion, and consistent with the PUD Agreement as hereinafter defined.
Section 4.8. Homeowners’ Associations and Restrictive Covenants: The HRA
acknowledges that the Redeveloper may utilize deed restrictions, covenants, agreements,
architectural controls, homeowners’ associations (HOAs) and other means to control the use and
to ensure the maintenance of the land within the Minimum Improvements. No such instruments
shall adversely affect the rights of the City or HRA under this Agreement, without their consent,
which consent shall not be unreasonably withheld. The Redeveloper shall submit any such
instruments to the City and HRA for their review and comment.
For Phase IIB (for sale town homes) the HOA documents should have a stipulation on the
number of rental units allowed. The stipulation is at the discretion of the HOA and applicable
laws governing HOA’s and shall be submitted to the HRA for their review and comment.
Section 4.9. Maintenance: The Redeveloper and the HRA agree that the Redeveloper or
HOA shall be responsible for all maintenance (including snow and ice removal) and repair costs
associated with the private improvements on that Phase including:
• Driveways, service drives, and surface parking stalls.
• Parking structure
• Sidewalks
• Streetlights
• Landscaping
• Streetscape improvements
• Storm water ponding
• Bicycle Parking
• Plazas
• Pavilion
• Cascade promenade
• Greenway commons
Redeveloper and the HOAs shall not be responsible for the maintenance and repair of the
Spine Road.
Section 4.10. Reciprocal Easement and Operating Agreement: The Redeveloper and
City will enter into a mutually acceptable reciprocal easement and operating agreement (the
“REOA”) or other easement agreements to include, without limitation, the following key terms:
(a) Redeveloper and/or City responsibility for maintenance and operation of the
private applicable Phase of the Minimum Improvements, road network, and other City Public
Improvements, with such costs being allocated to and among Redeveloper, the City and/or any
other owners of each Phase of the Minimum Improvements;
(b) perpetual public access easements and perpetual drainage and utility easements, in
each case, over the applicable City Public Improvements and at no cost to the City;
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(c) perpetual license or public access easements for greenway commons, pavilion
plazas, and cascade promenade or other private areas that provide public benefit that the City and
Redeveloper deem appropriate; and
(d) provisions providing for enforcement of all terms and conditions of the REOA.
ARTICLE V
Insurance
Section 5.1. Insurance.
(a) The Redeveloper will provide and maintain or cause to be provided and
maintained at all times during the process of constructing the Minimum Improvements an All
Risk Broad Form Basis Insurance Policy and, from time to time during that period, at the request
of the HRA, furnish the HRA with proof of payment of premiums on policies covering the
following:
(i) 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 Minimum Improvements at the date of completion, and with
coverage available in nonreporting form on the so-called “all risk” form of policy. The
interest of the HRA must be protected in accordance with a clause in form and content
satisfactory to the HRA;
(ii) Commercial general liability insurance (including operations, contingent
liability, operations of subcontractors, completed operations and contractual liability
insurance) together with a Protective Liability Policy with limits against bodily injury and
property damage of not less than $2,000,000 for each occurrence (to accomplish the
above-required limits, an umbrella excess liability policy may be used). The HRA must
be listed as an additional insured on the policy; and
(iii) Workers’ compensation insurance, with statutory coverage.
(b) As to each Phase, upon completion of construction of the Minimum
Improvements in that Phase and prior to the Maturity Date of the Note for that Phase, the
Redeveloper must maintain, or cause to be maintained, at its cost and expense, and from time to
time at the request of the HRA will furnish proof of the payment of premiums on, insurance as
follows:
(i) Insurance against loss and/or damage to the Minimum Improvements on
that Phase under a policy or policies covering the risks as are ordinarily insured against
by similar businesses.
(ii) Commercial general public liability insurance, including personal injury
liability (with employee exclusion deleted), against liability for injuries to persons and/or
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property, in the minimum amount for each occurrence and for each year of $2,000,000,
and must be endorsed to show the HRA as an additional insured.
(iii) Other insurance, including workers’ compensation insurance respecting all
employees, if any, of the Redeveloper, in an amount as is customarily carried by like
organizations engaged in like activities of comparable size and liability exposure;
provided that the Redeveloper may be self-insured with respect to all or any part of its
liability for workers’ compensation.
(c) All insurance required in this Article V must be taken out and maintained in
responsible insurance companies selected by the Redeveloper which are authorized under the
laws of the State to assume the risks covered thereby. Upon request, the Redeveloper will
deposit annually with the HRA policies evidencing all the insurance, or a certificate or
certificates or binders of the respective insurers stating that the insurance is in force and effect.
Unless otherwise provided in this Article V each policy must contain a provision that the insurer
will 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 Redeveloper and the HRA at least
sixty (60) days before the cancellation or modification becomes effective. In lieu of separate
policies, the Redeveloper may maintain a single policy, blanket or umbrella policies, or a
combination thereof, having the coverage required herein, in which event the Redeveloper will
deposit with the HRA a certificate or certificates of the respective insurers as to the amount of
coverage in force upon the Minimum Improvements.
(d) The Redeveloper agrees to notify the HRA immediately in the case of damage
exceeding $500,000 in amount to, or destruction of, the Minimum Improvements or any portion
thereof resulting from fire or other casualty. In the event this type of damage or destruction
occurs, the Redeveloper will forthwith repair, reconstruct and restore the Minimum
Improvements to substantially the same or an improved condition or value as it existed prior to
the event causing the damage and, to the extent necessary to accomplish the repair,
reconstruction and restoration, the Redeveloper will apply the Net Proceeds of any insurance
relating to the damage received by the Redeveloper to the payment or reimbursement of the costs
thereof.
The Redeveloper will complete the repair, reconstruction and restoration of the Minimum
Improvements, whether or not the Net Proceeds of insurance received by the Redeveloper is
sufficient to pay for the same. Any Net Proceeds remaining after completion of the repairs,
construction and restoration will be the property of the Redeveloper.
(e) Notwithstanding anything to the contrary contained in this Agreement, in the
event of damage to the Minimum Improvements in excess of $100,000 and the Redeveloper
fails, subject to Unavoidable Delays, to complete any repair, reconstruction or restoration of the
Minimum Improvements within eighteen (18) months from the date of damage or such later time
as reasonably determined by the HRA if the Redeveloper commences restoration within such
eighteen (18) month period and diligently prosecutes the same to completion, the HRA may, at
its option, terminate the Note or Notes for the damaged Phase or Phases as provided in
Section 9.3(b) hereof. If the HRA terminates the Note for a Phase, the termination will
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constitute the HRA’s sole remedy under this Agreement as a result of the Redeveloper’s failure
to repair, reconstruct or restore the Minimum Improvements in that Phase. Thereafter, the HRA
will have no further obligations to make any payments under the Note for that Phase.
(f) The Redeveloper and the HRA agree that all of the insurance provisions set forth
in this Article V will terminate upon the termination of this Agreement.
Section 5.2. Subordination. The HRA and the City hereby subordinate all rights of their
rights to receive or apply any insurance proceeds to the rights of any Holder of a Mortgage
allowed under Article VII of this Agreement.
ARTICLE VI
Taxes; Use of Tax Increment
Section 6.1. Right to Collect Delinquent Taxes. The Redeveloper acknowledges that the
HRA is providing substantial aid and assistance in furtherance of the redevelopment through
issuance of the Notes. The Redeveloper understands that the Tax Increments pledged to
payment of the Notes are derived from real estate taxes on the Redevelopment Property, which
taxes must be promptly and timely paid. To that end, the Redeveloper agrees for itself, its
successors and assigns, in addition to the obligation pursuant to statute to pay real estate taxes,
that it is also obligated by reason of this Agreement to pay before delinquency all real estate
taxes assessed against the Redevelopment Property and the Minimum Improvements. The
Redeveloper acknowledges that this obligation creates a contractual right on behalf of the HRA
to sue the Redeveloper or its successors and assigns to collect delinquent real estate taxes and
any penalty or interest thereon and to pay over the same as a tax payment to the county auditor.
In any such suit, the HRA shall also be entitled to recover its costs, expenses and reasonable
attorney fees.
Section 6.2. Use of Tax Increment. Except as provided for in this Agreement, the
HRA shall be free to use any Tax Increment it receives from the County with respect to TIF
District No. 1-6: 325 at Blake for any purpose for which such increment may lawfully be used
under the TIF Act and the HRA shall have no obligations to the Redeveloper with respect to the
use of such Tax Increment.
Section 6.3. Reduction of Taxes. The Redeveloper agrees that after the date of certification
of the Tax Increment District and prior to completion of the Minimum Improvements on each
Phase, it will not cause a reduction in the real property taxes paid in respect of that Phase through:
(A) willful destruction of the Minimum Improvements on that Phase or any part thereof (except for
the demolition of structures required for construction of the Minimum Improvements); or (B)
willful refusal to reconstruct damaged or destroyed property pursuant to Section 5.1 hereof.
The Redeveloper also agrees that, with respect to each Phase, it will not, prior to the
Maturity Date of the Note for that Phase: (i) seek exemption from property tax for that Phase; (ii)
convey or transfer or allow conveyance or transfer of that Phase to any entity that is exempt from
payment of real property taxes under State law; or (iii) seek or agree to any reduction of the
assessor’s estimated market value to below the Minimum Market Value for that Phase. If
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Redeveloper brings a petition challenging a Market Value determination exceeding the minimum
value established in a Minimum Assessment Agreement, the Redeveloper must inform the HRA
of such petition. The HRA will pay principal and interest on the each Note only to the extent of
Available Tax Increment attributable to the minimum value of the relevant Phase until final
resolution of such petition. Upon resolution of Redeveloper’s tax petition, any Available Tax
Increment deferred and withheld will be paid, without interest thereon, to the extent payable
under the assessor’s final determination of Market Value.
Notwithstanding the foregoing, the HRA acknowledges that the Redeveloper intends to
apply for 4d tax classification for 100% of Phase IA – Building A and 20% of the units on
Phase IC-Building D, as defined in Minnesota Statute 273.13, Subd. 25(e), for purposes of the
property taxes imposed against the Minimum Improvements.
The Redeveloper may, as to each Phase, at any time following the issuance of the Certificate
of Completion for that Phase, seek through petition or other means to have the Assessor’s Estimated
Market Value for that Phase reduced to not less than the Minimum Market Value for that Phase.
Such activity must be preceded by written notice from the Redeveloper to the HRA indicating its
intention to do so.
Upon receiving such notice, or otherwise learning of the Redeveloper’s intentions, the HRA
may suspend or reduce payments due under the Note with respect to the relevant Phase except for
the portion of such payments from Available Tax Increment, as defined in the Note for that Phase,
based on the Minimum Market Value as described in the Minimum Assessment Agreement for that
Phase, until the actual amount of the reduction in market value is determined, whereupon the HRA
will make the suspended payments less any amount that the HRA is required to repay the County as
a result any retroactive reduction in market value of that Phase. If the Redeveloper fails to notify
the HRA of the tax petition, the HRA shall have the right to withhold all payments of principal and
interest on the Note with respect to the relevant Phase until the Redeveloper’s challenge is resolved.
Upon resolution of the Redeveloper’s tax petition, any Available Tax Increment deferred and
withheld under this Section shall be paid, without interest thereon, to the extent payable under the
assessor’s final determination of market value.
During the period that the payments are subject to suspension, the HRA may make partial
payments on the Note, from the amounts subject to suspension, if it determines, in its sole and
absolute discretion, that the amount retained will be sufficient to cover any repayment which the
County may require.
The HRA’s suspension of payments on a Note pursuant to this Section shall not be
considered a default under Article IX hereof.
Section 6.4. Qualifications. The Redeveloper understands and acknowledges that all
Public Redevelopment Costs must first be paid by or on behalf of the Redeveloper and will be
reimbursed from Available Tax Increment pursuant to the terms of the Notes. The HRA makes
no representations or warranties regarding the amount of Tax Increment, or that revenues
pledged to the Notes will be sufficient to pay the principal of the Notes. Any estimates of Tax
Increment prepared by the HRA or its financial advisors in connection with the TIF District or
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this Agreement are for the benefit of the HRA, and are not intended as representations on which
the Redeveloper may rely. In the event of legislative changes reducing the tax rate classification
of certain qualified low-income rental housing under Minnesota Statutes, Section 273.13,
subd. 25(e), the Redeveloper expressly agrees and acknowledges that the HRA may adjust the
principal amount of the Notes to reflect such reduction. The parties agree that they will work in
good faith to determine the appropriate amount of such reduction, it being the intent that the
aggregate effect of such changes (i.e., the projected expense savings to the Redeveloper
attributable to the reduction to the annual tax liability with regard to the Project and the projected
income reduction to the Redeveloper attributable to the reduction in the amount of payments
under the Notes) will be revenue-neutral to the Redeveloper. If the principal amount of the
Notes is reduced pursuant to this Section 6.4, and there is subsequently a legislative change
which increases the tax rate classification (i.e., the legislation giving rise to the reduction is
repealed), the HRA shall adjust the principal amount of the Notes to reflect such increased tax
burden in the same manner as the reduction aforesaid; provided, however, that any such increase
be limited to the aggregate amount by which the principal balance of the Notes was previously
reduced pursuant to this Section 6.4. Public Redevelopment Costs exceeding the principal
amount of the Notes are the sole responsibility of Redeveloper.
Section 6.5. Transfer Obligations. Notwithstanding anything herein to the contrary, the
parties acknowledge and agree that upon Transfer of any Phase to another person or entity, the
Redeveloper will remain obligated under this Article VI hereof, unless the Redeveloper is released
from such obligations with respect to that Phase in accordance with the terms and conditions of
Section 8.2(b) or 8.3 hereof.
Section 6.6. Minimum Assessment Agreement.
(a) On or about the date of completion of each Phase, the Redeveloper shall execute a
Minimum Assessment Agreement for the Phase pursuant to Section 469.177, subdivision 8 of the
TIF Act, specifying an assessor’s minimum market value for that Phase with the Minimum
Improvements constructed thereon.
Redeveloper and HRA will enter into a Minimum Market Value Assessment Agreement
(MAA) setting a minimum property tax value for the rental portions of the various Phases as
noted below:
[STACIE TO REVIEW AND REVISE]
Phase Amount Date
Phase IB – Building C $106,650,000 January 2, 2029 for payable 2030
Phase IC – Building D $55,900,000 January 2, 2027 for payable 2028
Phase IA – Building A $26,680,000 January 2, 2025 for payable 2026
The Redeveloper and the HRA agree that the dates for the applicable Phase MAA may be
revised based upon timing of actual construction schedules and that the final MAA amounts may
be revised based upon current market valuations provided by the County Assessor. Revisions to
the dates of the applicable Phase MAA and execution thereof shall not require approval or
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further action by the HRA and can be completed administratively by staff and legal counsel, so
long as such revision is no more than 18 months from the applicable Phase MAA as noted in the
above schedule. Any revisions to the dates beyond 18 months for the applicable Phase MAA
shall require renegotiation between the parties. Revisions to the MAA amounts shall not require
approval or further action by the HRA and can be completed administratively by staff and legal
counsel.
The Minimum Assessment Agreement for each Phase shall terminate as to that Phase on
the Termination Date for that Phase.
(b) The Minimum Assessment Agreements shall be substantially in the form attached
hereto as Exhibit G. Nothing in a Minimum Assessment Agreement shall limit the discretion of the
assessor to assign a market value to the property in excess of such assessor’s minimum market value
nor prohibit the Redeveloper from seeking through the exercise of legal or administrative remedies
a reduction in such market value for property tax purposes, provided however, that the Redeveloper
shall not seek a reduction of such market value below the assessor’s minimum market value in any
year so long as such Minimum Assessment Agreement shall remain in effect. The Minimum
Assessment Agreements shall remain in effect for the period described in Exhibit G.
ARTICLE VII
Financing
Section 7.1. Mortgage Financing.
(a) Before commencement of construction of the Minimum Improvements, the
Redeveloper must submit to the HRA or provide access thereto for review by HRA staff,
consultants and agents, evidence reasonably satisfactory to the HRA that Redeveloper has
available funds, or commitments to obtain funds, whether in the nature of mortgage financing,
equity, grants, loans or other sources sufficient for payment of the Minimum Improvements,
provided that any lender or grantor commitments shall be subject only to such conditions as are
normal and customary in the commercial lending industry. The commitments may be submitted
as short term financing, long term mortgage financing, a bridge loan with a long term take-out
financing commitment, or any combination of the foregoing.
(b) If the HRA finds that the financing is sufficiently committed and adequate in
amount to pay the costs specified in paragraph (a) then the HRA will notify the Redeveloper in
writing of its approval. Such approval will not be unreasonably withheld and either approval or
rejection will be given within twenty (20) days from the date when the HRA is provided the
evidence of financing. A failure by the HRA to respond to the evidence of financing will be
deemed to constitute an approval hereunder. If the HRA rejects the evidence of financing as
inadequate, it will do so in writing specifying the basis for the rejection. In any event the
Redeveloper will submit adequate evidence of financing within ten (10) days after any rejection.
Section 7.2. HRA’s Option to Cure Default under a Mortgage. In the event that there
occurs a default under any Mortgage authorized pursuant to Section 7.1 of this Agreement, to the
extent the Redeveloper is aware of such default, the Redeveloper shall cause the HRA to receive
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copies of any notice of default received by the Redeveloper from the holder of such Mortgage.
Thereafter, to the extent permitted by the Holder of any Mortgage, the HRA shall have the right,
but not the obligation, to cure any such default on behalf of the Redeveloper within such cure
periods as are available to the Redeveloper under the Mortgage documents. In the event there is
an event of default under this Agreement, the HRA will transmit to the Holder of any Mortgage a
copy of any notice of default given by the HRA pursuant to Article IX hereof.
Section 7.3. Modification; Subordination. In order to facilitate the securing of other
financing, the HRA agrees to subordinate its rights under this Agreement provided that such
subordination shall be subject to such reasonable terms and conditions as the HRA and Holder
mutually agree in writing. Notwithstanding anything to the contrary herein, any subordination
agreement must include the provision described in Section 7.2 hereof.
ARTICLE VIII
Prohibitions Against Assignment and Transfer; Indemnification
Section 8.1. Representation as to Redevelopment. The Redeveloper represents and
agrees that its purchase of the Redevelopment Property, and its other undertakings pursuant to
the Agreement, are, and will be used, for the purpose of development of the Redevelopment
Property and not for speculation in land holding.
Section 8.2. Prohibition Against Redeveloper’s Transfer of Property and Assignment of
Agreement. The Redeveloper represents and agrees that, as to each Phase, until either the
issuance of the Certificate of Completion for the Minimum Improvements in that Phase or the
Termination Date for that Phase, as applicable:
(a) Except as specifically described in this Agreement, the Redeveloper 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 lease, or any trust or power, or transfer in any other mode or form of
or with respect to this Agreement or the Redevelopment Property or any part thereof or any
interest therein, or any contract or agreement to do any of the same, to any person or entity
(collectively, a “Transfer”), without the prior written approval of the HRA’s board of
commissioners. The term “Transfer” does not include, with respect to each of Redeveloper’s
permitted transferee and/or assignee of Redeveloper: (i) a mortgage made or granted by way of
security for, and only for, the purpose of obtaining construction, interim or permanent financing
necessary to enable the Redeveloper or any successor in interest to any Phase or to construct the
Minimum Improvements or component thereof; (ii) any lease, license, easement or similar
arrangement entered into in the ordinary course of business related to operation of the Minimum
Improvements; (iii) acquisition of a controlling interest in Redeveloper or its successor and/or
assignee by another entity or merger of Redeveloper or its successor and/or assignee with
another entity; (iv) any sale, conveyance, or transfer in any form to any affiliate of Redeveloper
or its successor and/or assignee; (v) a transfer to a third party if the Redeveloper or its successor
and/or assignee is unable to commence construction by the date provided in Section 4.3 hereof
and the HRA terminates this Agreement pursuant to Section 9.2(b) hereof; or (vi) transfers of
membership interests or other ownership interests in the Redeveloper or its successor and/or
assignee, pursuant to the Redeveloper’s operating agreement or partnership agreement. The
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HRA acknowledges that the Redeveloper or its successor and/or assignee may assign or sell the
Note for a Phase to a Lender or another party. For all assignments of a TIF Note, the HRA shall
require an Investment Letter from the assignee in the form set forth in EXHIBIT H.
(b) If the Redeveloper seeks to effect a Transfer of any Phase or other part of the
Redevelopment Property requiring the approval of the HRA after the issuance of the Certificate
of Completion for that Phase, the HRA shall be entitled to require as conditions to such Transfer
that:
(1) any proposed transferee shall have the qualifications and financial
responsibility, in the reasonable judgment of the HRA, necessary and adequate to fulfill
the obligations undertaken in this Agreement by the Redeveloper as to the portion of the
Redevelopment Property to be transferred; and
(2) Any proposed transferee, by instrument in writing satisfactory to the HRA
and in form recordable in the public land records of the County, shall, for itself and its
successors and assigns, and expressly for the benefit of the HRA, have expressly assumed
all of the obligations of the Redeveloper under this Agreement as to the portion of the
Redevelopment Property to be transferred and agreed to be subject to all the conditions
and restrictions to which the Redeveloper is subject as to such portion; provided,
however, that the fact that any transferee of, or any other successor in interest whatsoever
to, the Redevelopment Property, or any part thereof, shall not, for whatever reason, have
assumed such obligations or so agreed, and shall not (unless and only to the extent
otherwise specifically provided in this Agreement or agreed to in writing by the HRA)
deprive the HRA of any rights or remedies or controls with respect to the Redevelopment
Property, the Minimum Improvements or any part thereof or the construction of the
Minimum Improvements; it being the intent of the parties as expressed in this Agreement
that (to the fullest extent permitted at law and in equity and excepting only in the manner
and to the extent specifically provided otherwise in this Agreement) no transfer of, or
change with respect to, ownership in the Redevelopment Property or any part thereof, or
any interest therein, however consummated or occurring, and whether voluntary or
involuntary, shall operate, legally, or practically, to deprive or limit the HRA of or with
respect to any rights or remedies on controls provided in or resulting from this Agreement
with respect to the Redevelopment Property that the HRA would have had, had there
been no such transfer or change. In the absence of specific written agreement by the
HRA to the contrary, no such transfer or approval by the HRA thereof shall be deemed to
relieve the Redeveloper, or any other party bound in any way by this Agreement or
otherwise with respect to the Redevelopment Property, from any of its obligations with
respect thereto.
(3) Any and all instruments and other legal documents involved in effecting
the transfer of any interest in this Agreement or the Redevelopment Property governed by
this Article VIII, shall be in a form reasonably satisfactory to the HRA.
(c) If the conditions described in paragraph (b) are satisfied then the Transfer will be
approved and the Redeveloper shall be released from its obligation under this Agreement, as to
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the portion of the Redevelopment Property that is transferred, assigned, or otherwise conveyed.
The provisions of this paragraph (c) apply to all subsequent transferors, assuming compliance
with the terms of this Article VIII.
Section 8.3. Release and Indemnification Covenants.
(a) The Redeveloper releases from and covenants and agrees that the HRA and its
respective governing body members, officers, agents, servants and employees thereof will not be
liable for and agrees to indemnify and hold harmless the HRA and its respective governing body
members, officers, agents, servants and employees thereof against any loss or damage to
property or any injury to or death of any person occurring at or about or resulting from any
defect in the Minimum Improvements.
(b) Except for any willful misrepresentation or any willful or wanton misconduct of
the following named parties, the Redeveloper agrees to protect and defend the HRA and its
respective governing body members, officers, agents, servants and employees (the “Indemnified
Parties”) thereof, now or forever, and further agrees to hold the aforesaid harmless from any
claim, demand, suit, action or other proceeding whatsoever by any person or entity whatsoever
arising or purportedly arising from this Agreement, or the transactions contemplated hereby or
the acquisition, construction, installation, ownership, maintenance and operation of the Minimum
Improvements.
(c) Except for any negligence of the Indemnified Parties (as defined in clause (b)
above), and except for any breach by the Indemnified Parties of their obligations under this
Agreement, the Indemnified Parties shall not be liable for any damage or injury to the persons or
property of the Redeveloper or its officers, agents, servants or employees or any other person
who may be about the Redevelopment Property or Minimum Improvements due to any act of
negligence of any person.
(d) All covenants, stipulations, promises, agreements and obligations of the HRA
contained herein will be deemed to be the covenants, stipulations, promises, agreements and
obligations of the HRA and not of any governing body member, officer, agent, servant or employee
of the HRA in the individual capacity thereof.
ARTICLE IX
Events of Default
Section 9.1. Events of Default Defined. “Event of Default” means any one or more of
the following events, after the non-defaulting party provides sixty (60) days’ written notice to the
defaulting party of the event, but only if the event has not been cured within said sixty (60) days
after written notice of default has been tendered or, if the event is incurable within sixty (60)
days, the defaulting party does not, within the sixty (60) day period, provide assurances
reasonably satisfactory to the non-defaulting party that the event will be cured as soon as
reasonably possible:
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(a) Failure by the Redeveloper to acquire the Redevelopment Property in accordance
with Article III of this Agreement, unless the failure is caused by an Unavoidable Delay;
(b) Failure by the Redeveloper to seek approvals from the City and other entities
necessary in order to construct the Minimum Improvements, unless the failure is caused by an
Unavoidable Delay;
(c) Failure by the Redeveloper to commence and complete construction of the
Minimum Improvements pursuant to the terms, conditions and limitations of Article IV of this
Agreement, including the timing thereof, unless such failure is caused by an Unavoidable Delay
or waived by the Redeveloper and HRA;
(d) Failure by the Redeveloper to provide and maintain any insurance required to be
provided and maintained by Article V;
(e) If the Redeveloper shall file a petition in bankruptcy, or shall make an assignment
for the benefit of its creditors or shall consent to the appointment of a receiver;
(f) Failure by the Redeveloper to reimburse the HRA for its administrative expenses
associated with the processing of Redeveloper’s requests, or to make the necessary escrow
deposits pursuant to Section 3.4;
(g) Sale of the Redevelopment Property or the Minimum Improvements, or any
portion thereof, by the Redeveloper in violation of Article VIII of this Agreement; or
(h) Failure by either party to observe or perform any material covenant, condition,
obligation or agreement on its part to be observed or performed under this Agreement.
Section 9.2. Remedies of Default. Whenever any Event of Default referred to in
Section 9.1 hereof occurs, the non-defaulting party may exercise its rights under this Section 9.2
only if the Event of Default has not been cured within sixty (60) days of the non-defaulting
party’s tender of a notice of default or, if the Event of Default is incurable within sixty (60) days,
the defaulting party does not provide assurances reasonably satisfactory to the non-defaulting
party that the Event of Default 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) Cancel and rescind or terminate the Agreement.
(c) Upon a default by the Redeveloper, the HRA may suspend payments under the
Notes or terminate the Notes and the TIF District, subject to the provisions of Section 9.3 hereof.
(d) Upon failure by Redeveloper to timely commence or complete construction of the
Minimum Improvements in accordance with Section 4.3 hereof, subject to the notice and cure
periods set forth herein, the HRA may terminate this Agreement; provided, however, that
notwithstanding anything herein to the contrary, the HRA acknowledges and agrees that it shall
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have no remedy of specific performance with regard to the Redeveloper’s obligation to
commence the construction of the Minimum Improvements.
(e) 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.
Raymond James Tax Credit Fund XX L.L.C., a Florida limited liability company, its
successors and/or assigns and any other investors (collectively, the “Investor Limited Partner”),
the limited partner or non-managing member of the Redeveloper’s respective affiliate that owns
or will own title to the respective Phases of the Development Property shall have the right, but
not the obligation, to cure any default of the Redeveloper hereunder and such cure shall be
deemed to have been made by the Redeveloper.
The Lender with respect to each Phase shall have the right, but not the obligation, to cure
any default of the Redeveloper hereunder and such cure shall be deemed to have been made by
the Redeveloper.
Section 9.3. Termination or Suspension of Notes. After the HRA has issued its
Certificate of Completion for each Phase of the Minimum Improvements, the HRA may exercise
its rights under Section 9.2(c) hereof with respect to that Phase only for the following Events of
Default:
(a) the Redeveloper fails to pay real estate taxes or assessments on that Phase of the
Redevelopment Property or any part thereof when due, and the taxes or assessments have not
been paid, or provision satisfactory to the HRA made for their payment, within sixty (60) days
after written demand by the HRA to do so; or
(b) the Redeveloper fails to comply with the Redeveloper’s obligations to operate and
maintain, preserve and keep that Phase of the Minimum Improvements or cause the
improvements to be maintained, preserved and kept with the appurtenances and every part and
parcel thereof, in good repair and condition, pursuant to Sections 4.1 and 5.1(e) hereof; provided
that, upon failure to comply with the obligations under Section 4.1 or 5.1(e) hereof, if uncured
after sixty (60) days’ written notice to the Redeveloper of the failure, the HRA may only suspend
payments under the Note for that Phase until the Redeveloper complies with said obligations. If
the Redeveloper fails to comply with said obligations for a period of eighteen months, the HRA
may terminate the Note with respect to that Phase; or
(c) the Redeveloper fails to comply with the affordability covenants provided in
Section 4.5 hereof with respect to that Phase.
Section 9.4. No Remedy Exclusive. No remedy herein conferred upon or reserved to the
HRA, the Redeveloper is intended to be exclusive of any other available remedy or remedies, but
each and every remedy will be cumulative and will 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
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omission to exercise any right or power accruing upon any default will impair any right or power
or will be construed to be a waiver thereof, but any right and power may be exercised from time
to time and as often as may be deemed expedient. In order to entitle the HRA to exercise any
remedy reserved to it, it will not be necessary to give notice, other than the notices already
required in Sections 9.2 and 9.3 hereof.
Section 9.5. No Additional Waiver Implied 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, the waiver will be limited to the particular breach so waived and will not be deemed
to waive any other concurrent, previous or subsequent breach hereunder.
Section 9.6. Attorney Fees. Whenever any Event of Default occurs (as determined by a
final court or administrative order or Redeveloper admissions) and if the HRA 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
Redeveloper under this Agreement, the Redeveloper agrees that it shall, within ten (10) days of
written demand by the HRA, pay to the HRA the reasonable fees of such attorneys and such
other reasonable expenses so incurred by the HRA.
Section 9.7. No Cross-Default. Notwithstanding anything to the contrary set forth in this
Agreement, no Event of Default by the Redeveloper, its permitted transferees, and/or assignees
for one Phase (a “Phase Redeveloper”) shall constitute an Event of Default by a Phase
Redeveloper for any other Phase. No Phase Redeveloper shall be responsible for the actions or
obligations of any other Phase Redeveloper. None of the obligations under this Agreement are
joint and several obligations of the Phase Redevelopers, and the City or the HRA may not seek
any remedies against a Phase Redeveloper whose actions did not give rise to an Event of Default.
An Event of Default by a Phase Redeveloper shall not limit, impair, or revoke the rights of any
other Phase Redeveloper under this Agreement or the respective Note issued or to be issued to
such non-defaulting Phase Redeveloper.
ARTICLE X
Additional Provisions
Section 10.1. Conflict of Interests; Representatives Not Individually Liable. To the best
of Redeveloper’s knowledge, no member, official, or employee of the HRA shall have any
personal financial interest, direct or indirect, in this Agreement, nor shall any such member,
official, or employee participate in any decision relating to the Agreement which affects his or
her personal financial interests or the interests of any corporation, partnership, or association in
which he or she is, directly or indirectly, interested. No member, official, or employee of the
HRA shall be personally liable to the Redeveloper, or any successor in interest, in the event of
any default or breach or for any amount which may become due or on any obligations under the
terms of this Agreement.
Section 10.2. Equal Employment Opportunity. The Redeveloper, for itself and its
successors and assigns, agrees that during the construction of the Minimum Improvements
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provided for in this Agreement, it will comply with all applicable equal employment and
nondiscrimination laws and regulations.
Section 10.3. Restrictions on Use. The Redeveloper agrees that through the Termination
Date for each Phase it will use the Minimum Improvements in that Phase for only such uses as
permitted under the City’s land use regulations. Further, the Redeveloper agrees that, prior to the
Maturity Date with respect to each Phase, the Redeveloper, and such successors and assigns, shall
use that Phase solely for the development of multifamily housing in accordance with the terms of this
Agreement, and shall not discriminate upon the basis of race, color, creed, sex or national origin in
the sale, lease, or rental or in the use or occupancy of the Redevelopment Property or any
improvements erected or to be erected thereon, or any part thereof.
Section 10.4. Notices and Demands. Except as otherwise expressly provided in this
Agreement, any notice, demand, or other communication under the Agreement or any related
document by either party to the other shall be sufficiently given or delivered if it is dispatched by
registered or certified United States mail, postage prepaid, return receipt requested, or delivered
personally to:
(a) in the case of the Redeveloper:
Alatus Hopkins MD LLC
IDS Center
80 South 8th Street, Suite 4155
Minneapolis, MN 55402
Attn: Robert Lux
and with copies to:
Winthrop & Weinstine, P.A.
225 South Sixth Street, Suite 3500
Minneapolis, MN 55402
Attn: John M. Stern
(b) in the case of the City:
City of Hopkins, Minnesota
1010 1st Street South
Hopkins, MN 55343
Attn: City Manager
with a copy to:
Kennedy & Graven, Chartered
150 South 5th Street, Suite 700
Minneapolis, MN 55402
Attn: Scott J. Riggs
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(c) in the case of the HRA:
(d) in the case of the Investor Member
of Borrower:
(e) With a copy to:
Housing and Redevelopment Authority in
and for the City of Hopkins
1010 1st Street South
Hopkins, MN 55343
Attn: Executive Director
Raymond James Tax Credit Fund XX
L.L.C.
c/o Raymond James Affordable Housing
Investments, Inc.
880 Carillon Parkway
St. Petersburg, FL 33716
Attn: Steven J. Kropf, President
Nixon Peabody LLP
Exchange Place
53 State Street
Boston, MA 02109
Attn: Nate Bernard, Esq.
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 10.4.
Section 10.5. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall constitute one and the same instrument.
Section 10.6. Disclaimer of Relationships. The Redeveloper acknowledges that nothing
contained in this Agreement nor any act by the HRA or the Redeveloper shall be deemed or
construed by the Redeveloper or by any third person to create any relationship of third-party
beneficiary, principal and agent, limited or general partner, or joint venture between HRA and
the Redeveloper.
Section 10.7. Amendment. This Agreement may be amended only by the written
agreement of the parties.
Section 10.8. Recording. The HRA intends to record this Agreement among the land
records of Hennepin County, Minnesota and the Redeveloper agrees to pay for the cost of
recording same.
Section 10.9. Indemnity. The Redeveloper hereby agrees that the HRA, and its
governing body members, officers, agents, and employees shall not be liable for, and hereby
agrees to indemnify and hold harmless the same, against any loss or claims arising under this
Agreement, except for losses or claims arising out of the acts or omissions of the HRA, and its
governing body members, officers, agents, and employees.
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Section 10.10. Titles of Articles and Sections. Any titles of the several parts, articles,
and sections of this Agreement are inserted for convenience of reference only and shall be
disregarded in construing or interpreting any of its provisions.
Section 10.11. Governing Law; Venue. This Agreement shall be construed in
accordance with the laws of Minnesota. Any dispute arising from this Agreement shall be heard
in the State or federal courts of Minnesota, and all parties waive any objection to the jurisdiction
thereof, whether based on convenience or otherwise.
Section 10.12. Provisions Not Merged With Deed. None of the provisions of this
Agreement are intended to or will be merged by reason of any deed transferring any interest in
the Redevelopment Property and any deed will not be deemed to affect or impair the provisions
and covenants of this Agreement.
Section 10.13. Approvals. Unless otherwise specified, any approval required by the
HRA or the City under this Agreement may be given by the HRA staff or City staff, and any
approval by either the HRA or the City will be deemed to be the approval of both the HRA and
the City. Except where this Agreement expressly provides otherwise, each part agrees not to
unreasonably withhold, condition, or delay any approval or consent required of it under this
Agreement.
Section 10.14. Termination. This Agreement terminates as to each Phase on the
Termination Date for that Phase, except that termination of this Agreement does not terminate,
limit or affect the rights of any party that arise under this Agreement before the Termination
Date.
Section 10.15. Public Art. Redeveloper is obligated to expend at least $250,000, exclusive
of artwork funded via a Livable Communities Demonstration Grant, for public artwork to be placed
in prominent locations on the Property, on the exterior of the Minimum Improvements as set forth
in the Planned Unit Development Agreement (“PUD”) for the Property. Prior to the commission of
the public artwork, the public artwork shall be approved by the City, which approval shall not be
unreasonably withheld. The artwork shall be installed prior to issuance of the Certificate of
Occupancy for the applicable Phase.
Section 10.16. Park Dedication. The Redeveloper will pay applicable park dedication
fees to the City at the time of issuance of a building permit for any applicable Phase. The City
agrees that when a building permit is pulled for any Phase, the Redeveloper’s park dedication
payment (which may be required by the City in lieu of land dedication) will be calculated based
on the City’s park dedication fees that are in existence as of the effective date of this Agreement
and, unless otherwise agreed to by the parties in the future, said payments shall be made at the
time of issuance of a building permit for the applicable Phase, as the case may be. The current
park dedication fee for multiple family residential subdivisions is $3,000 per unit while the
commercial fee is an amount equal to five (5) percent of the fair market value of the commercial
land as estimated by the county assessor. Park dedication fees are typically due with final plat
approval.
Section 10.17. Miscellaneous.
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(a) No transfer of the Redevelopment Property or this Agreement without City and
HRA consent which will not be unreasonably withheld;
(b) Redeveloper will retain a management company with experience in the
management of multifamily rental housing developments, subject to reasonable approval by the
HRA;
(c) The City and Redeveloper have applied and received a Metropolitan Council
TOD Grant of $1,250,000. The City and Redeveloper expect to apply for Hennepin County
TOD Grant funding and MN DEED Redevelopment Grant funding as well. These grants have
been accounted for in the Redevelopers Proforma. Any other future grants beyond these for any
future applicable Phase that are received will reduce the principal amount of the Note for the
applicable Phase.
Section 10.18. Commercial Space in Phase IB – Building C and Phase ID. The intent is
to create opportunities for neighborhood serving commercial space for small businesses
including minority owned or operated, and locally or regionally owned or operated businesses.
The HRA and Redeveloper agree to collaborate to accomplish the goal of providing up to 50% of
the 17,000 square feet of Commercial Space available to these users, with a minimum
requirement of 40%. The outcomes of the collaboration will be outlined in a business plan
approved by City staff and the Redeveloper.
Section 10.19. PUD Agreement/Subdivision. The City and HRA and the Redeveloper
have entered into a PUD Agreement and intend to enter into an amended PUD Agreement (as
amended, the “PUD Agreement”) regarding the redevelopment of the Redevelopment Property,
subdivision of the Redevelopment Property, planning and zoning approvals related to the
Redevelopment Property, and improvements to be made by the Redeveloper to the Redevelopment
Property, which such PUD Agreement is incorporated by reference into and made a part of this
Agreement as if fully set forth herein.
All defined terms of the PUD Agreement shall have the same meaning in this Agreement
and all other requirements of the PUD Agreement as to the Minimum Improvements and the
Construction Plans shall be satisfied and adhered to by the Redeveloper as if such requirements
were fully set forth in this Agreement.
Section 10.20. Rent Control Provisions. The City, HRA and Redeveloper agree that any
rental units within any phase at the Redevelopment Property shall be excluded from any future
adopted rent control provisions.
Section 10.21. Parking Rental. The Redeveloper intends to rent parking spaces in the
underground garage to tenants in Buildings B, C, and D of the Minimum Improvements for
approximately $75 to $150 per parking space per month initially. The Redeveloper agrees that
the monthly rental rate charged for each underground parking space will be the same for all
tenants of the applicable Phase within the Minimum Improvements. The Redeveloper agrees
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that it will not charge rent for parking spaces in the underground garage to tenants in Building A
of the Minimum Improvements.
(The remainder of this page is intentionally left blank.)
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IN WITNESS WHEREOF, the City, the HRA and the Redeveloper have caused this
Agreement to be duly executed in their names and behalves on or as of the date first above
written.
CITY OF HOPKINS, MINNESOTA:
By:
Patrick Hanlon
Its: Mayor
By:
Michael Mornson
Its: City Manager
STATE OF MINNESOTA )
) ss.
COUNTY OF HENNEPIN )
The foregoing instrument as acknowledged before me this _____ day of ____________,
2024, by Patrick Hanlon, the Mayor for the City of Hopkins, Minnesota, a Minnesota municipal
corporation, respectively, on behalf of the City.
____________________________________
Notary Public
STATE OF MINNESOTA )
) ss.
COUNTY OF HENNEPIN )
The foregoing instrument as acknowledged before me this _____ day of ____________,
2024, by Michael Mornson, the City Manager for the City of Hopkins, Minnesota, a Minnesota
municipal corporation, respectively, on behalf of the City.
____________________________________
Notary Public
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HOUSING AND REDEVELOPMENT
AUTHORITY IN AND FOR THE CITY
OF HOPKINS:
By:
Patrick Hanlon
Its: Chair
By:
Michael Mornson
Its: Executive Director
STATE OF MINNESOTA )
) ss.
COUNTY OF HENNEPIN )
The foregoing instrument as acknowledged before me this _____ day of ____________,
2024, by Patrick Hanlon, the Chair of the Housing and Redevelopment Authority in and for the
City of Hopkins, a public body corporate and politic under the laws of Minnesota, on behalf of
the Housing and Redevelopment Authority.
____________________________________
Notary Public
STATE OF MINNESOTA )
) ss.
COUNTY OF HENNEPIN )
The foregoing instrument as acknowledged before me this _____ day of ____________,
2024, by Michael Mornson, the Executive Director of the Housing and Redevelopment Authority
in and for the City of Hopkins, a public body corporate and politic under the laws of Minnesota,
on behalf of the Housing and Redevelopment Authority.
____________________________________
Notary Public
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REDEVELOPER:
ALATUS HOPKINS MD LLC, a Delaware limited
liability company
By: ____________________________
Christian B. Osmundson
Its: Vice President
STATE OF MINNESOTA )
) ss.
COUNTY OF __________ )
The foregoing instrument was acknowledged before me this ______ day of
____________, 2024, by Christian B. Osmundson, the Vice President of Alatus Hopkins MD
LLC, a Delaware limited company, on behalf of the company.
__________________________________
Notary Public
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EXHIBIT A TO
REDEVELOPMENT AGREEMENT
LEGAL DESCRIPTION OF REDEVELOPMENT PROPERTY
A portion of the property legally described below:
Lots 1, and 2, Block 1, Mile 14 On Minnehaha Creek, Hennepin County, Minnesota.
Lots 3 and 4, Block 1, Mile 14 On Minnehaha Creek, Hennepin County, Minnesota.
Lots 1 and 2, Block 2, Mile 14 On Minnehaha Creek, Hennepin County, Minnesota.
Outlot C, Mile 14 On Minnehaha Creek, Hennepin County, Minnesota.
(Torrens Property, Certificate of Title Numbers 1547004, 1547005, 1547006, 1547007,
1547008, 1547009 and 1547012)
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EXHIBIT B TO REDEVELOPMENT AGREEMENT
DEPICTION OF THE REDEVELOPMENT PROPERTY
AND MINIMUM IMPROVEMENTS
All Depictions of the Redevelopment Property and Minimum Improvements are on file
and available at City Hall.
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EXHIBIT C TO
REDEVELOPMENT AGREEMENT
PRELIMINARY PLAN DOCUMENTS
All preliminary plan documents are on file and available at City Hall.
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EXHIBIT D TO
REDEVELOPMENT AGREEMENT
FORM OF CERTIFICATE OF COMPLETION
WHEREAS, City of Hopkins, Minnesota, a Minnesota municipal corporation (“City”),
and Housing and Redevelopment Authority in and for the City of Hopkins, corporate and politic
under the laws of Minnesota (“HRA”), and Alatus Hopkins MD LLC, a Delaware limited liability
company, formed under the laws of Minnesota (the “Redeveloper”), have entered into a certain
Contract for Private Redevelopment (the “Agreement”) dated the ____ day of ____________,
202___, and recorded in the office of the County Recorder and Registrar in Hennepin County,
Minnesota, as Document No. __________, which Agreement contained certain covenants and
restrictions regarding completion of the Minimum Improvements, as defined in the Agreement;
and
WHEREAS, the Redeveloper has performed said covenants and conditions in a manner
deemed sufficient by the HRA to permit the execution and recording of this certification.
NOW, THEREFORE, this is to certify that all construction of the Minimum
Improvements specified to be done and made by the Redeveloper has been completed and the
covenants and conditions in the Agreement have been performed by the Redeveloper, and the
County Recorder in Hennepin County, Minnesota, is hereby authorized to accept for recording
and to record the filing of this instrument, to be a conclusive determination of the satisfactory
termination of the covenants and conditions relating to completion of the Minimum
Improvements and the expiration of certain obligations contained in the Agreement to the extent
expressly provided for therein. Unless otherwise expressly provided in the Agreement,
Redeveloper shall be deemed to have satisfied its obligations under the Agreement.
Dated: _______________, 202__.
CITY OF HOPKINS, MINNESOTA:
By:
Its: Mayor
By:
Its: City Manager
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STATE OF MINNESOTA )
) ss.
COUNTY OF HENNEPIN )
The foregoing instrument as acknowledged before me this _____ day of ____________,
202__, by ____________ and ____________, the Mayor and City Manager, for the City of
Hopkins, Minnesota, a Minnesota municipal corporation, respectively, on behalf of the City.
____________________________________
Notary Public
HOUSING AND REDEVELOPMENT
AUTHORITY IN AND FOR THE CITY
OF HOPKINS:
By:
______________________________
Its: Chair
By:
______________________________
Its: Executive Director
STATE OF MINNESOTA )
) ss.
COUNTY OF HENNEPIN )
The foregoing instrument as acknowledged before me this _____ day of ____________,
202__, by ________________ and ________________________, the Chair and Executive
Director of the Housing and Redevelopment Authority in and for the City of Hopkins, a public
body corporate and politic under the laws of Minnesota, respectively, on behalf of the Housing
and Redevelopment Authority.
____________________________________
Notary Public
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EXHIBIT E TO
CONTRACT FOR PRIVATE DEVELOPMENT
FORM OF NOTES AND TERMS OF NOTES
HOUSING AND REDEVELOPMENT AUTHORITY
IN AND FOR THE CITY OF HOPKINS
Section 1. Form of Notes. The Notes will be in substantially the following form,
with the blanks to be properly filled in and the principal amount and payment schedule adjusted
as of the date of issue:
UNITED STATE OF AMERICA
STATE OF MINNESOTA
HENNEPIN COUNTY
HOUSING AND REDEVELOPMENT AUTHORITY
IN AND FOR THE CITY OF HOPKINS
No. R-1 $________
TAXABLE TAX INCREMENT REVENUE NOTE
SERIES 202_
Date
Rate of Original Issue
___% __________ [INSERT DATE]
Housing and Redevelopment Authority in and for the City of Hopkins (“HRA”), for
value received, certifies that it is indebted and hereby promises to pay to Alatus Hopkins MD
LLC, a Delaware limited liability company, or its registered assigns (the “Owner”), the principal
sum of $____________ and to pay interest thereon at the rate of ___ percent per annum, as and
to the extent set forth herein.
1. Payments. Principal and interest (“Payments”) are estimated to be paid on
August 1, 20__, and each February 1 and August 1 thereafter to and including February 1, 20__
(“Payment Dates”), in the amounts and from the sources set forth in Section 3 herein. Payments
will be applied first to accrued interest, and then to unpaid principal.
Payments are payable by mail to the address of the Owner or any other address as the
Owner may designate upon 30 days written notice to HRA. Payments on this Note are payable
in any coin or currency of the United States of America which, on the Payment Date, is legal
tender for the payment of public and private debts.
2. Interest. Interest at the simple non-compounded rate stated herein will accrue on
the unpaid principal, commencing on the date of original issue. Interest will be computed on the
basis of a year of 360 days and charged for actual days principal is unpaid.
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3. Available Tax Increment. Payments on this Note are payable on each Payment
Date in the amount of and solely payable from “Available Tax Increment,” which will mean, on
each Payment Date, ___ percent of the Tax Increment attributable to the Redevelopment
Property (defined in the Agreement) and paid to the HRA by Hennepin County in the six months
preceding the Payment Date, all as the terms are defined in the Contract for Private
Redevelopment between the HRA and Owner dated as of ______________, 202___ (the
“Agreement”). Available Tax Increment will not include any Tax Increment if, as of any
Payment Date, there is an uncured Event of Default by the Owner under the Agreement. At the
sole discretion of the HRA, they may provide payment on the Note from other sources.
The HRA will have no obligation to pay principal of and interest on this Note on each
Payment Date from any source other than Available Tax Increment, and the failure of the HRA
to pay the entire amount of principal or interest on this Note on any Payment Date will not
constitute a default hereunder as long as the HRA pays principal and interest hereon to the extent
of Available Tax Increment. The HRA will have no obligation to pay unpaid balance of
principal or accrued interest that may remain after the final Payment on February 1, 20___.
4. Optional Prepayment. The principal sum and all accrued interest payable under
this Note is prepayable in whole or in part at any time by HRA without premium or penalty. No
partial prepayment will affect the amount or timing of any other regular payment otherwise
required to be made under this Note.
5. Termination. At the HRA’s option, this Note will terminate and the HRA’s
obligation to make any payments under this Note will be discharged upon the occurrence of an
Event of Default on the part of the Redeveloper with respect to the relevant Phase applicable to
this Note [a default with respect to any other Phase will not allow the HRA to terminate
payments under this Note] as defined in Section 9.1 of the Agreement, but only if the Event of
Default has not been cured in accordance with Section 9.2 of the Agreement.
6. Nature of Obligation. This Note is a single note in the total principal amount of
$____________ issued to aid in financing certain public redevelopment costs and administrative
costs of a Redevelopment Project undertaken by the HRA pursuant to Minnesota Statutes,
Sections 469.001 through 469.047, as amended, and is issued pursuant to the resolution (the
“Resolution”) duly adopted by the HRA on December 21, 2021, and pursuant to and in full
conformity with the Constitution and laws of the State of Minnesota, including Minnesota
Statutes, Sections 469.174 to 469.179, as amended. This Note is a limited obligation of the HRA
which is payable solely from Available Tax Increment pledged to the payment hereof under the
Resolution. This Note and the interest hereon will not be deemed to constitute a general
obligation of the State of Minnesota or any political subdivision thereof, including, without
limitation, the HRA or the City of Hopkins, Minnesota. Neither the State of Minnesota, nor any
political subdivision thereof will be obligated to pay the principal of or interest on this Note or
other costs incident hereto except out of Available Tax Increment, and neither the full faith and
credit nor the taxing power of the State of Minnesota or any political subdivision thereof is
pledged to the payment of the principal of or interest on this Note or other costs incident hereto.
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7. Estimated Tax Increment Payments. Any estimates of Tax Increment prepared by
the HRA or its financial advisors in connection with the TIF District or the Agreement are for the
benefit of the HRA, and are not intended as representations on which the Owner may rely.
The HRA MAKES NO REPRESENTATION OR WARRANTY THAT THE
AVAILABLE TAX INCREMENT WILL BE SUFFICIENT TO PAY THE PRINCIPAL OF
AND INTEREST ON THIS NOTE.
8. Registration and Transfer. This Note is issuable only as a fully registered note
without coupons. As provided in the Resolution, and subject to certain limitations set forth
therein, this Note is transferable upon the books of the HRA kept for that purpose at the principal
office of the Executive Director of the HRA as Registrar, by the Owner hereof in person or by
the Owner’s attorney duly authorized in writing, upon surrender of this Note together with a
written instrument of transfer satisfactory to the HRA, duly executed by the Owner. Upon the
transfer or exchange and the payment by the Owner of any tax, fee, or governmental charge
required to be paid by the HRA with respect to the transfer or exchange, there will be issued in
the name of the transferee a new Note of the same aggregate principal amount, bearing interest at
the same rate and maturing on the same dates.
This Note will not be transferred to any person other than an affiliate, or other related
entity, of the Owner unless the HRA has been provided with an investment letter in a form
substantially similar to the investment letter submitted by the Owner or a certificate of the
transferor, in a form satisfactory to the HRA, that the transfer is exempt from registration and
prospectus delivery requirements of federal and applicable state securities laws.
Notwithstanding the foregoing, Owner may grant, pledge and assign to any lender, to secure full
payment and performance of its obligations under the loan, all of Owner’s right, title and interest
in and to this Note. The HRA consents to the assignment of this Note to
__________________________________________________, a Minnesota nonprofit
corporation without the execution of an investment letter.
IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions, and things
required by the Constitution and laws of the State of Minnesota to be done, to exist, to happen,
and to be performed in order to make this Note a valid and binding limited obligation of the
HRA according to its terms, have been done, do exist, have happened, and have been performed
in due form, time and manner as so required.
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IN WITNESS WHEREOF, the board of commissioners of the Housing and
Redevelopment Authority in and for the City of Hopkins, has caused this Note to be executed
with the manual signatures of its Chair and Executive Director, all as of the Date of Original
Issue specified above.
HOUSING AND REDEVELOPMENT
AUTHORITY IN AND FOR THE CITY OF
HOPKINS
Chair Executive Director
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REGISTRATION PROVISIONS
The ownership of the unpaid balance of the within Note is registered in the bond register
of the Executive Director of the HRA, in the name of the person last listed below.
Date of Registration Registered Owner Signature of HRA Executive Director
Alatus Hopkins MD LLC, a
Delaware limited liability
company
IDS Center
80 South 8th Street, Suite 4155
Minneapolis, MN 55402
Federal Tax ID #
______________
[End of Form of Note]
Section 2. Terms, Execution and Delivery.
2.01. Denomination, Payment. The Note will be issued as a single typewritten note
numbered R 1.
The Note will be issuable only in fully registered form. Principal of and interest on the
Note will be payable by check or draft issued by the Registrar described herein.
2.02. Dates; Interest Payment Dates. Principal of and interest on the Note will be
payable by mail to the owner of record thereof as of the close of business on the fifteenth day of
the month preceding the Payment Date, whether or not the day is a business day.
2.03. Registration. The HRA hereby appoints the Executive Director to perform the
functions of registrar, transfer agent and paying agent (the “Registrar”). The effect of
registration and the rights and duties of the HRA and the Registrar with respect thereto will be as
follows:
(a) Register. The Registrar will keep at their office a bond register in which the
Registrar will provide for the registration of ownership of the Note and the registration of
transfers and exchanges of the Note.
(b) Transfer of Note. Upon surrender for transfer of the Note duly endorsed by the
registered owner thereof or accompanied by a written instrument of transfer, in a form
reasonably satisfactory to the Registrar, duly executed by the registered owner thereof or by an
attorney duly authorized by the registered owner in writing, the Registrar will authenticate and
deliver, in the name of the designated transferee or transferees, a new Note of a like aggregate
principal amount and maturity, as requested by the transferor. Notwithstanding the foregoing,
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the Note will not be transferred except (1) to any person other than an affiliate, or other related
entity, of the Owner unless the HRA has been provided with an investment letter in a form
substantially similar to the investment letter submitted by the Owner or a certificate of the
transferor, in a form satisfactory to the HRA, that the transfer is exempt from registration and
prospectus delivery requirements of federal and applicable state securities laws, or (2) to any
lenders of the note holder’s to secure full payment and performance of its obligations under a
loan. The HRA consents to an assignment of the Note to
_____________________________________, a Minnesota nonprofit corporation, without the
execution of an investment letter. For all other assignments, the HRA shall require an
investment letter from the assignee. The Registrar may close the books for registration of any
transfer after the fifteenth day of the month preceding each Payment Date and until the Payment
Date.
(c) Cancellation. The Note surrendered upon any transfer will be promptly cancelled
by the Registrar and thereafter disposed of as directed by the HRA.
(d) Improper or Unauthorized Transfer. When the Note is presented to the Registrar
for transfer, the Registrar may refuse to transfer the same until they are satisfied that the
endorsement on the Note or separate instrument of transfer is legally authorized. The Registrar
will incur no liability for their refusal, in good faith, to make transfers which they, in their
judgment, deem improper or unauthorized.
(e) Persons Deemed Owners. The HRA and the Registrar may treat the person in
whose name the Note is at any time registered in the bond register as the absolute owner of the
Note, whether the Note is overdue or not, for the purpose of receiving payment of, or on account
of, the principal of and interest on the Note and for all other purposes, and all the payments so
made to any registered owner or upon the owner’s order will be valid and effectual to satisfy and
discharge the liability of the HRA upon the Note to the extent of the sum or sums so paid.
(f) Taxes, Fees and Charges. For every transfer or exchange of the Note, the
Registrar may impose a charge upon the owner thereof sufficient to reimburse the Registrar for
any tax, fee, or other governmental charge required to be paid with respect to the transfer or
exchange.
(g) Mutilated, Lost, Stolen or Destroyed Note. In case the Note becomes mutilated or
is lost, stolen, or destroyed, the Registrar will deliver a new Note of like amount, maturity dates
and tenor in exchange and substitution for and upon cancellation of the mutilated Note or in lieu
of and in substitution for the Note lost, stolen, or destroyed, upon the payment of the reasonable
expenses and charges of the Registrar in connection therewith; and, in the case the Note lost,
stolen, or destroyed, upon filing with the Registrar of evidence satisfactory to it that the Note was
lost, stolen, or destroyed, and of the ownership thereof, and upon furnishing to the Registrar of
an appropriate bond or indemnity in form, substance, and amount satisfactory to it, in which both
the HRA and the Registrar will be named as obligees. The Note so surrendered to the Registrar
will be cancelled and evidence of the cancellation will be given to the HRA. If the mutilated,
lost, stolen, or destroyed Note has already matured or been called for redemption in accordance
with its terms, it will not be necessary to issue a new Note prior to payment.
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2.04. Preparation and Delivery. The Note will be prepared under the direction of the
Executive Director and will be executed on behalf of the HRA by the signatures of its Chair and
Executive Director. In case any officer whose signature appears on the Note ceases to be the
officer before the delivery of the Note, the signature will nevertheless be valid and sufficient for
all purposes, the same as if the officer had remained in office until delivery. When the Note has
been so executed, it will be delivered by the HRA to the Owner following the delivery of the
necessary items delineated in Section 3.3 of the Agreement.
Section 3. Security Provisions.
3.01. Pledge. The HRA hereby pledges to the payment of the principal of and interest
on the Note all Available Tax Increment as defined in the Note. Available Tax Increment will be
applied to payment of the principal of and interest on the Note in accordance with the terms of
the form of Note set forth in Section 2 of this resolution.
3.02. Bond Fund. Until the date the Note is no longer outstanding and no principal
thereof or interest thereon (to the extent required to be paid pursuant to this resolution) remains
unpaid, the HRA will maintain a separate and special “Bond Fund” to be used for no purpose
other than the payment of the principal of and interest on the Note. The HRA irrevocably agrees
to appropriate to the Bond Fund in each year Available Tax Increment. Any Available Tax
Increment remaining in the Bond Fund will be transferred to the HRA’s account for the TIF
District upon the payment of all principal and interest to be paid with respect to the Note.
Section 4. Certification of Proceedings.
4.01. Certification of Proceedings. The officers of the HRA are hereby authorized and
directed to prepare and furnish to the Owner of the Note certified copies of all proceedings and
records of the HRA, and the other affidavits, certificates, and information as may be required to
show the facts relating to the legality and marketability of the Note as the same appear from the
books and records under their custody and control or as otherwise known to them, and all the
certified copies, certificates, and affidavits, including any heretofore furnished, will be deemed
representations of the HRA as to the facts recited therein.
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EXHIBIT F
DECLARATION OF RESTRICTIVE COVENANTS
THIS DECLARATION OF RESTRICTIVE COVENANTS, dated _________________,
202__ (the “Declaration”), by ALATUS HOPKINS MD LLC, a Delaware limited liability company
(the “Redeveloper”), is given to HOUSING AND REDEVELOPMENT AUTHORITY IN AND
FOR THE CITY OF HOPKINS, a public body corporate and politic under the laws of Minnesota
(the “HRA”).
RECITALS
WHEREAS, the HRA and Redeveloper entered into that certain Contract for Private
Development, dated _______________, 2022, filed _____________, 202__ in the Office of the
County Recorder for Hennepin County as Document No. _________, and in the Office of the
Registrar of Titles for Hennepin County as Document No. __________ (the “Contract”); and
WHEREAS, pursuant to the Contract, the Redeveloper is obligated to cause construction of
__________________________ (the “Project”) on the property described in EXHIBIT A hereto
(the “Redevelopment Property”), and to cause compliance with certain affordability covenants
described in Section 4.5 of the Contract; and
WHEREAS, Section 4.5 of the Contract requires that the Redeveloper cause to be executed
an instrument in recordable form substantially reflecting the covenants set forth in Section 4.5 of the
Contract; and
WHEREAS, the Redeveloper intends, declares, and covenants that the restrictive covenants
set forth herein will be and are covenants running with the Redevelopment Property for the term
described herein and binding upon all subsequent owners of the Redevelopment Property for the
term described herein, and are not merely personal covenants of the Redeveloper; and
WHEREAS, capitalized terms in this Declaration have the meaning provided in the Contract
unless otherwise defined herein.
NOW, THEREFORE, in consideration of the promises and covenants hereinafter set forth,
and of other valuable consideration, the receipt and sufficiency of which is hereby acknowledged,
the Redeveloper agrees as follows:
1. Term of Restrictions.
(a) Occupancy and Rental Restrictions. The term of the occupancy restrictions set forth
in Section 3 and the term of rent restrictions set forth in Section 4 of this Declaration will commence
on the date a Certificate of Occupancy is received from the City of Hopkins, Minnesota (the “City”)
for the Project. The period from commencement to termination is the “Qualified Project Period.”
(b) Termination of Declaration. This Declaration will terminate upon 30 years after the
date a Certificate of Occupancy is received for the Project.
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(c) Removal from Real Estate Records. Upon termination of this Declaration, the HRA
will, upon request by the Redeveloper or its assigns, file any document appropriate to remove this
Declaration from the real estate records of Hennepin County, Minnesota.
2. Project Restrictions.
(a) the Redeveloper represents, warrants, and covenants that:
(i) All leases of units to Qualifying Tenants (as defined in Section 3(a)(i)
hereof) will contain clauses, among others, wherein each individual lessee:
(1) Certifies the accuracy of the statements made in its application and
Eligibility Certification (as defined in Section 3(a)(ii) hereof); and
(2) Agrees that the family income at the time the lease is executed will
be deemed substantial and material obligation of the lessee’s tenancy; that the lessee
will comply promptly with all requests for income and other information relevant to
determining low or moderate income status from the Redeveloper or the HRA, and
that the lessee’s failure or refusal to comply with a request for information with
respect thereto will be deemed a violation of a substantial obligation of the lessee’s
tenancy.
(ii) the Redeveloper will permit any duly authorized representative of the HRA
to inspect the books and records of the Redeveloper pertaining to the income of Qualifying
Tenants residing in the Project.
3. Occupancy Restrictions. The Redeveloper represents, warrants, and covenants that:
(a) Qualifying Tenants. From the commencement of the Qualified Project Period, ___ -
percent (___%) of the rental Housing Units will be occupied (or treated as occupied as provided
herein) or held vacant and available for occupancy by Qualifying Tenants. Qualifying Tenants
means those persons and families who are determined from time to time by the Redeveloper to have
combined adjusted income that does not exceed _____ percent (___%) or ____ percent (_0%) of the
Area Median Income (“AMI”) for the applicable calendar year. For purposes of this definition, the
occupants of a residential unit will not be deemed to be Qualifying Tenants if all the occupants of
such residential unit at any time are “students,” as defined in Section 151(c)(4) of the Internal
Revenue Code of 1986, as amended (the “Code”), not entitled to an exemption under the Code. The
determination of whether an individual or family is of low or moderate income will be made at the
time the tenancy commences and on an ongoing basis thereafter, determined at least annually. If
during their tenancy a Qualifying Tenant’s income exceeds one hundred forty percent (140%) of the
maximum income qualifying as low or moderate income for a family of its size, the next available
unit (determined in accordance with the Code and applicable regulations) (the “Next Available Unit
Rule”) must be leased to a Qualifying Tenant or held vacant and available for occupancy by a
Qualifying Tenant. If the Next Available Unit Rule is violated, the Unit will not continue to be
treated as a Qualifying Unit.
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(b) Certification of Tenant Eligibility. As a condition to initial and continuing
occupancy, each person who is intended to be a Qualifying Tenant will be required annually to sign
and deliver to the Redeveloper a Certification of Tenant Eligibility substantially in the form attached
as EXHIBIT B hereto, or in any other form as may be approved by the HRA (the “Eligibility
Certification”), in which the prospective Qualifying Tenant certifies as to qualifying as low or
moderate income. In addition, the person will be required to provide whatever other information,
documents, or certifications are deemed necessary by the HRA to substantiate the Eligibility
Certification, on an ongoing annual basis, and to verify that the tenant continues to be a Qualifying
Tenant within the meaning of Section 3(a) hereof. Eligibility Certifications will be maintained on
file by the Redeveloper with respect to each Qualifying Tenant who resides in a Project unit or
resided therein during the immediately preceding calendar year.
(c) Lease. The form of lease to be utilized by the Redeveloper in renting any units in
the Project to any person who is intended to be a Qualifying Tenant will provide for termination of
the lease and consent by the person to immediate eviction for failure to qualify as a Qualifying
Tenant as a result of any material misrepresentation made by the person with respect to the
Eligibility Certification.
(d) Annual Report. The Redeveloper covenants and agrees that during the term of this
Declaration, it will prepare and submit to the HRA on or before January 31 of each year, a
certificate substantially in the form of EXHIBIT C hereto, executed by the Redeveloper, (a)
identifying the tenancies and the dates of occupancy (or vacancy) for all Qualifying Tenants in the
Project, including the percentage of the dwelling units of the Project which were occupied by
Qualifying Tenants (or held vacant and available for occupancy by Qualifying Tenants) at all times
during the year preceding the date of the certificate; (b) describing all transfers or other changes in
ownership of the Project or any interest therein; and (c) stating, that to the best knowledge of the
person executing the certificate after due inquiry, all the units were rented or available for rental on
a continuous basis during the year to members of the general public and that the Redeveloper was
not otherwise in default under this Declaration during the year.
(e) Notice of Non-Compliance. The Redeveloper will immediately notify the HRA if at
any time during the term of this Declaration the dwelling units in the Project are not occupied or
available for occupancy as required by the terms of this Declaration.
4. Rent Restrictions. For at least thirty years following the date the Project is placed in
service, the rents for ____ percent (_0%) of the units and ___ percent (___%) of the units in the
Project must not exceed ____ percent (_0%) or ___percent (___%) of the Area Median Income for
the applicable calendar year. For each unit that the Redeveloper agrees to accept Section 8 vouchers
for, such unit shall be deemed to meet the rent restrictions set forth in this Section 4.
5. Transfer Restrictions. The Redeveloper covenants and agrees that the Redeveloper
will cause or require as a condition precedent to any conveyance, transfer, assignment, or any other
disposition of the Project prior to the termination of the Rental Restrictions and Occupancy
Restrictions provided herein (the “Transfer”) that the transferee of the Project pursuant to the
Transfer assume in writing, in a form acceptable to the HRA, all duties and obligations of the
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Redeveloper under this Declaration, including this Section 4, in the event of a subsequent Transfer
by the transferee prior to expiration of the Rental Restrictions and Occupancy Restrictions provided
herein (the “Assumption Agreement”). The Redeveloper will deliver the Assumption Agreement to
the HRA prior to the Transfer.
6. Enforcement.
(a) The Redeveloper will permit, during normal business hours and upon reasonable
notice, any duly authorized representative of the HRA to inspect any books and records of the
Redeveloper regarding the Project with respect to the incomes of Qualifying Tenants.
(b) The Redeveloper will submit any other information, documents or certifications
requested by the HRA which the HRA deems reasonably necessary to substantial the Redeveloper’s
continuing compliance with the provisions specified in this Declaration.
(c) The Redeveloper acknowledges that the primary purpose for requiring compliance
by the Redeveloper with the restrictions provided in this Declaration is to ensure compliance of the
property with the housing affordability covenants set forth in Section 4.5 of the Contract, and by
reason thereof, the Redeveloper, in consideration for assistance provided by the HRA under the
Contract that makes possible the construction of the Minimum Improvements (as defined in the
Contract) on the Redevelopment Property, hereby agrees and consents that the HRA will be entitled,
for any breach of the provisions of this Declaration, and in addition to all other remedies provided
by law or in equity, to enforce specific performance by the Redeveloper of its obligations under this
Declaration in a state court of competent jurisdiction. The Redeveloper hereby further specifically
acknowledges that the HRA cannot be adequately compensated by monetary damages in the event
of any default hereunder.
(d) The Redeveloper understands and acknowledges that, in addition to any remedy set
forth herein for failure to comply with the restrictions set forth in this Declaration, the HRA may
exercise any remedy available to it under Article IX of the Contract.
7. Indemnification. The Redeveloper hereby indemnifies, and agrees to defend and
hold harmless, the HRA from and against all liabilities, losses, damages, costs, expenses (including
reasonable attorneys’ fees and expenses), causes of action, suits, allegations, claims, demands, and
judgments of any nature arising from the consequences of a legal or administrative proceeding or
action brought against them, or any of them, on account of any failure by the Redeveloper to
comply with the terms of this Declaration, or on account of any representation or warranty of the
Redeveloper contained herein being untrue.
8. Agent of the HRA. Upon any default hereunder, after first providing the
Redeveloper with a reasonable amount of time to cure such default, the HRA will have the right to
appoint an agent to carry out any of its duties and obligations hereunder, and will inform the
Redeveloper of any agency appointment by written notice.
9. Severability. The invalidity of any clause, part or provision of this Declaration will
not affect the validity of the remaining portions thereof.
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10. Notices. All notices to be given pursuant to this Declaration must be in writing and
will be deemed given when mailed by certified or registered mail, return receipt requested, to the
parties hereto at the addresses set forth below, or to any other place as a party may from time to time
designate in writing. The Redeveloper and the HRA may, by notice given hereunder, designate any
further or different addresses to which subsequent notices, certificates, or other communications are
sent. The initial addresses for notices and other communications are as follows:
To the HRA: Housing and Redevelopment Authority
in and for the City of Hopkins
1010 1st Street South
Hopkins, MN 55343
Attn: Executive Director
With a copy to: Scott J. Riggs
Kennedy & Graven, Chartered
150 South 5th Street, Suite 700
Minneapolis, MN 55402
To the Redeveloper: Alatus Hopkins MD LLC
IDS Center
80 South 8th Street, Suite 4155
Minneapolis, MN 55402
Attn: Robert Lux
With Copies to: Winthrop & Weinstine, P.A.
225 South Sixth Street, Suite 3500
Minneapolis, MN 55402
Attn: John M. Stern
11. Governing Law. This Declaration is governed by the laws of the State of Minnesota
and, where applicable, the laws of the United States of America.
12. Attorneys’ Fees. In case any action at law or in equity, including an action for
declaratory relief, is brought against the Redeveloper to enforce the provisions of this Declaration,
the Redeveloper agrees to pay the reasonable attorneys’ fees and other reasonable expenses paid or
incurred by the HRA in connection with the action.
13. Declaration Binding. This Declaration and the covenants contained herein will run
with the real property comprising the Project and will bind the Redeveloper and its successors and
assigns and all subsequent owners of the Project or any interest therein, and the benefits will inure to
the HRA and its successors and assigns for the term of this Declaration as provided in Section 1(b)
hereof.
[The remainder of this page has been left intentionally blank.]
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IN WITNESS WHEREOF, the Redeveloper has caused this Declaration of Restrictive
Covenants to be signed by its respective duly authorized representatives, as of the day and year first
written above.
REDEVELOPER:
ALATUS HOPKINS MD LLC
By: ____________________________
____________________________
Its: ____________________________
STATE OF MINNESOTA )
) ss.
COUNTY OF __________ )
The foregoing instrument was acknowledged before me this ______ day of
____________, 202__, by __________________________, the ____________ of Alatus
Hopkins MD LLC, a Delaware limited company, on behalf of the company.
__________________________________
Notary Public
THIS INSTRUMENT WAS DRAFTED BY:
Kennedy & Graven, Chartered (SJR)
150 South 5th Street, Suite 700
Minneapolis, MN 55402
(612) 337-9300
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This Declaration is acknowledged and consented to by:
HOUSING AND REDEVELOPMENT
AUTHORITY IN AND FOR THE CITY
OF HOPKINS:
By:
______________________________
Its: Chair
By:
______________________________
Its: Executive Director
STATE OF MINNESOTA )
) ss.
COUNTY OF HENNEPIN )
The foregoing instrument as acknowledged before me this _____ day of ____________,
202__, by ________________ and ________________________, the Chair and Executive
Director of the Housing and Redevelopment Authority in and for the City of Hopkins, a public
body corporate and politic under the laws of Minnesota, respectively, on behalf of the Housing
and Redevelopment Authority.
____________________________________
Notary Public
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EXHIBIT A TO DECLARATION OF RESTRICTIVE COVENANTS
Legal Description
[INSERT LEGAL DESCRIPTION]
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EXHIBIT B TO DECLARATION OF RESTRICTIVE COVENANTS
Certification of Tenant Eligibility
(INCOME COMPUTATION AND CERTIFICATION)
Project: [Address]
Owner:
Unit Type: ______ 1 BR _____ 2 BR _____ 3 BR ____4 BDRM
1. I/We, the undersigned, being first duly sworn, state that I/we have read and
answered fully, frankly and personally each of the following questions for all persons (including
minors) who are to occupy the unit in the above apartment development for which application is
made, all of whom are listed below:
Name of
Members of the
Household
Relationship
To Head of
Household
Age
Place of
Employment
_____________ _____________ ___ _________________
_____________ _____________ ___ _________________
_____________ _____________ ___ _________________
_____________ _____________ ___ _________________
_____________ _____________ ___ _________________
Income Computation
2. The anticipated income of all the above persons during the 12-month period
beginning this date,
(a) including all wages and salaries, overtime pay, commissions, fees, tips and
bonuses before payroll deductions; net income from the operation of a business or
profession or from the rental of real or personal property (without deducting expenditures
for business expansion or amortization of capital indebtedness); interest and dividends; the
full amount of periodic payments received from social security, annuities, insurance
policies, retirement funds, pensions, disability or death benefits and other similar types of
periodic receipts; payments in lieu of earnings, such as unemployment and disability
compensation, worker’s compensation and severance pay; the maximum amount of public
assistance available to the above persons; periodic and determinable allowances, such as
alimony and child support payments and regular contributions and gifts received from
persons not residing in the dwelling; and all regular pay, special pay and allowances of a
member of the Armed Forces (whether or not living in the dwelling) who is the head of the
household or spouse; but
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(b) excluding casual, sporadic or irregular gifts; amounts which are specifically
for or in reimbursement of medical expenses; lump sum additions to family assets, such as
inheritances, insurance payments (including payments under health and accident insurance
and workmen’s compensation), capital gains and settlement for personal or property losses;
amounts of educational scholarships paid directly to the student or the educational
institution, and amounts paid by the government to a veteran for use in meeting the costs of
tuition, fees, books and equipment, but in either case only to the extent used for these types
of purposes; special pay to a serviceman head of a family who is away from home and
exposed to hostile fire; relocation payments under Title II of the Uniform Relocation
Assistance and Real Property Acquisition Policies Act of 1970; foster child care payments;
the value of coupon allotments for the purchase of food pursuant to the Food Stamp Act of
1964 which is in excess of the amount actually charged for the allotments; and payments
received pursuant to participation in ACTION volunteer programs, is as follows:
$_____________.
3. If any of the persons described above (or whose income or contributions was
included in item 2) has any savings, bonds, equity in real property or other form of capital
investment, provide:
(a) the total value of all such assets owned by all such persons: $____________;
(b) the amount of income expected to be derived from such assets in the 12
month period commencing this date: $_______________; and
(c) the amount of such income which is included in income listed in item 2:
$__________.
4. (a) Will all of the persons listed in item 1 above be or have they been full-time
students during five calendar months of this calendar year at an educational institution (other
than a correspondence school) with regular faculty and students?
Yes _________________ No ________________
(b) Is any such person (other than nonresident aliens) married and eligible to file
a joint federal income tax return?
Yes _________________ No ________________
THE UNDERSIGNED HEREBY CERTIFY THAT THE INFORMATION SET FORTH
ABOVE IS TRUE AND CORRECT. THE UNDERSIGNED ACKNOWLEDGE THAT THE
LEASE FOR THE UNIT TO BE OCCUPIED BY THE UNDERSIGNED WILL BE
CANCELLED UPON 10 DAYS WRITTEN NOTICE IF ANY OF THE INFORMATION
ABOVE IS NOT TRUE AND CORRECT.
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Head of Household
Spouse
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FOR COMPLETION BY OWNER
(OR ITS MANAGER) ONLY
1. Calculation of Eligible Tenant Income:
(a) Enter amount entered for entire household in 2 above: $__________
(b) If the amount entered in 3(a) above is greater than $5,000, enter the greater
of (i) the amount entered in 3(b) less the amount entered in 3(c) or (ii) 10% of the amount
entered in 3(a): $__________
(c) TOTAL ELIGIBLE INCOME (Line 1(a) plus Line 1(b)): $__________
2. The amount entered in 1(c) is less than or equal to 60% of median income for the
area in which the Project is located, as defined in the Declaration. 60% is necessary for status as a
“Qualifying Tenant” under Section 3(a) of the Declaration.
3. Number of apartment unit assigned: ___________.
4. This apartment unit was ____ was not ____ last occupied for a period of at least
31 consecutive days by persons whose aggregate anticipated annual income as certified in the above
manner upon their initial occupancy of the apartment unit was less than or equal to 60% of Median
Income in the area.
5. Check as applicable: _______ Applicant qualifies as a Qualifying Tenant (tenants of
at least __ units must meet), or ____ Applicant otherwise qualifies to rent a unit.
THE UNDERSIGNED HEREBY CERTIFIES THAT HE/SHE HAS NO KNOWLEDGE OF
ANY FACTS WHICH WOULD CAUSE HIM/HER TO BELIEVE THAT ANY OF THE
INFORMATION PROVIDED BY THE TENANT MAY BE UNTRUE OR INCORRECT.
ALATUS HOPKINS MD LLC, a Delaware limited
liability company
By: ____________________________
____________________________
Its: ____________________________
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EXHIBIT C TO DECLARATION OF RESTRICTIVE COVENANTS
Certificate of
Continuing Program Compliance
Date: ___________________
The following information with respect to the Project located at 325 Blake Road, Hopkins,
Minnesota (the “Project”), is being provided by Alatus Hopkins MD LLC, a Delaware limited
liability company, formed under the laws of Minnesota (the “Owner”) to the Housing and
Redevelopment Authority in and for the City of Hopkins, a public body corporate and politic
under the laws of Minnesota (“HRA”), pursuant to that certain Declaration of Restrictive
Covenants, dated _________________, 202__ (the “Declaration”), with respect to the Project:
(A) The total number of residential units which are available for occupancy is
120. The total number of these units occupied is _________________.
(B) The following residential units (identified by unit number) are currently
occupied by “Qualifying Tenants,” as the term is defined in the Declaration (for a total of
____units):
1 BR Units:
2 BR Units:
3 BR Units:
(C) The following residential units which are included in (B) above, have been
re-designated as units for Qualifying Tenants since _______________, 20___, the date on
which the last “Certificate of Continuing Program Compliance” was filed with the HRA by
the Owner:
Unit
Number
Previous Designation
of Unit (if any)
Replacing
Unit Number
___________ _________________ _________________
___________ _________________ _________________
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(D) The following residential units are considered to be occupied by Qualifying
Tenants based on the information set forth below:
Unit
Number
Name of Tenant
Number of
Persons
Residing in
the Unit
Number of
Bedrooms
Total Adjusted
Gross Income
Date of Initial
Occupancy
Rent
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(E) The Owner has obtained a “Certification of Tenant Eligibility,” in the form
provided as EXHIBIT B to the Declaration, from each Tenant named in (D) above, and each
such Certificate is being maintained by the Owner in its records with respect to the Project.
Attached hereto is the most recent “Certification of Tenant Eligibility” for each Tenant
named in (D) above who signed such a Certification since ______________, 20___, the date
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on which the last “Certificate of Continuing Program Compliance” was filed with the HRA
by the Owner.
(F) In renting the residential units in the Project, the Owner has not given
preference to any particular group or class of persons (except for persons who qualify as
Qualifying Tenants); and none of the units listed in (D) above have been rented for
occupancy entirely by students, no one of which is entitled to file a joint return for federal
income tax purposes. All of the residential units in the Project have been rented pursuant to
a written lease, and the term of each lease is at least twelve (12) months.
(G) The information provided in this “Certificate of Continuing Program
Compliance” is accurate and complete, and no matters have come to the attention of the
Owner which would indicate that any of the information provided herein, or in any
“Certification of Tenant Eligibility” obtained from the Tenants named herein, is inaccurate
or incomplete in any respect.
(H) The Project is in continuing compliance with the Declaration.
(I) The Owner certifies that as of the date hereof, 40% of the residential
dwelling units in the Project are occupied or held open for occupancy by Qualifying
Tenants, as defined and provided in the Declaration.
(J) The rental levels for each Qualifying Tenant comply with the maximum
permitted under the Declaration.
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IN WITNESS WHEREOF, I have hereunto affixed my signature, on behalf of the Owner,
on ____________________, 202__.
ALATUS HOPKINS MD LLC, a Delaware limited
liability company
By: ____________________________
____________________________
Its: ____________________________
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EXHIBIT G
FORM OF MINIMUM ASSESSMENT AGREEMENT
[This Minimum Assessment Agreement shall be updated from this generic
form for each Phase of the Minimum Improvements.]
THIS MINIMUM ASSESSMENT AGREEMENT, made on or as of the ____ day of
____________, 2021 (the “Minimum Assessment Agreement”), is between the Housing and
Redevelopment Authority in and for the City of Hopkins, a public body corporate and politic
under the laws of Minnesota (the “HRA”), and Alatus Hopkins MD LLC, a Delaware limited
liability company, formed under the laws of Minnesota, (the “Redeveloper”).
WITNESSETH
WHEREAS, the HRA and the Redeveloper have entered into that certain Contract for
Private Development, dated _______________, 202__ (the “Contract”), regarding the acquisition of
property, the construction of multiple buildings containing approximately 800 multi-family units,
with 688 units of apartments, and 112 senior cooperative units with affordable levels within each
building; construction of 33 for sale town homes, 8,000 sq. ft. of ground floor retail, 1,000 sq. ft.
sky lounge and two (2) 4,500 sq. ft. standalone restaurant pads (the “Minimum Improvements”),
affordable to households as set forth in the Contract, to be constructed on property legally
described in Exhibit A (the “Redevelopment Property”); and
WHEREAS, the HRA and the Redeveloper desire to establish a minimum market value for
the Redevelopment Property and the Minimum Improvements to be constructed thereon, pursuant
to Minnesota Statutes, Section 469.177, subdivision 8; and
WHEREAS, the HRA and the County Assessor (the “Assessor”) have reviewed the
preliminary plans and specifications for the Minimum Improvements and have inspected such
improvements;
NOW, THEREFORE, the parties to this Minimum Assessment Agreement, in consideration
of the promises, covenants and agreements made by each to the other, do hereby agree as follows:
1. All capitalized terms used herein and not otherwise defined have the definition given
such terms in the Contract.
2. The minimum market value which shall be assessed for ad valorem tax purposes for
the Redevelopment Property, together with the Minimum Improvements constructed thereon, shall
be $__________ or such lesser amount as established by the applicable assessing agency as of
January 2, 20__, notwithstanding the progress of construction by such date, until January 2, 20__.
3. The minimum market value which shall be assessed for ad valorem tax purposes for
the Redevelopment Property, together with the Minimum Improvements constructed thereon, shall
be $___________ or such lesser amount as established by the applicable assessing agency as of
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January 2, 20__, notwithstanding the progress of construction by such date, and as of each January 2
thereafter until termination of this Minimum Assessment Agreement under Section 4 hereof.
4. The minimum market value herein established shall be of no further force and effect
and this Minimum Assessment Agreement shall terminate on the earlier of (i) date the principal of
and interest on the Tax Increment Revenue Note delivered to the Redeveloper by the HRA
pursuant to the terms of Contract is paid in full; or (ii) the date the Tax Increment Financing
District No. 1-6 established by the HRA and the City of Hopkins, Minnesota is decertified. The
HRA shall execute a certificate or affidavit upon the occurrence of a termination event referred to in
this Section 4 indicating that this Minimum Assessment Agreement has terminated and shall supply
such certificate to the Redeveloper for recording.
5. This Minimum Assessment Agreement shall be promptly recorded by the HRA.
The Redeveloper shall pay all costs of recording.
6. Neither the preambles nor provisions of this Minimum Assessment Agreement are
intended to, nor shall they be construed as, modifying the terms of the Contract.
7. This Minimum Assessment Agreement shall inure to the benefit of and be binding
upon the successors and assigns of the parties.
8. Each of the parties has authority to enter into this Minimum Assessment Agreement
and to take all actions required of it, and has taken all actions necessary to authorize the execution
and delivery of this Minimum Assessment Agreement.
9. In the event any provision of this Minimum Assessment Agreement shall be held
invalid and unenforceable by any court of competent jurisdiction, such holding shall not invalidate
or render unenforceable any other provision hereof.
10. The parties hereto agree that they will, from time to time, execute, acknowledge and
deliver, or cause to be executed, acknowledged and delivered, such supplements, amendments and
modifications hereto, and such further instruments as may reasonably be required for correcting any
inadequate, or incorrect, or amended description of the Redevelopment Property or the Minimum
Improvements or for carrying out the expressed intention of this Minimum Assessment Agreement.
11. This Minimum Assessment Agreement may not be amended nor any of its terms
modified except by a writing authorized and executed by all parties hereto.
12. This Minimum Assessment Agreement may be simultaneously executed in several
counterparts, each of which shall be an original and all of which shall constitute but one and the
same instrument.
13. This Minimum Assessment Agreement shall be governed by and construed in
accordance with the laws of the State of Minnesota.
(The remainder of this page is intentionally left blank.)
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IN WITNESS WHEREOF, the HRA and the Redeveloper have caused this Minimum
Assessment Agreement to be executed in their respective corporate names by their duly authorized
officers, all as of the date and year first written above.
HOUSING AND REDEVELOPMENT
AUTHORITY IN AND FOR THE CITY
OF HOPKINS:
By:
______________________________
Its: Chair
By:
______________________________
Its: Executive Director
STATE OF MINNESOTA )
) ss.
COUNTY OF HENNEPIN )
The foregoing instrument as acknowledged before me this _____ day of ____________,
202__, by ________________ and ________________________, the Chair and Executive
Director of the Housing and Redevelopment Authority in and for the City of Hopkins, a public
body corporate and politic under the laws of Minnesota, respectively, on behalf of the Housing
and Redevelopment Authority.
____________________________________
Notary Public
This document was drafted by:
KENNEDY & GRAVEN, CHARTERED (SJR)
150 South 5th Street, Suite 700
Minneapolis, MN 55402
Telephone: (612) 337-9300
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REDEVELOPER:
ALATUS HOPKINS MD LLC, a Delaware limited
liability company
By: ____________________________
____________________________
Its: ____________________________
STATE OF MINNESOTA )
) ss.
COUNTY OF __________ )
The foregoing instrument was acknowledged before me this ______ day of
____________, 202__, by __________________________, the __________________ of Alatus
Hopkins MD LLC, a Delaware limited company, on behalf of the company.
__________________________________
Notary Public
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CERTIFICATION BY COUNTY ASSESSOR
The undersigned, having reviewed the plans and specifications for the improvements to be
constructed and the market value assigned to the land upon which the improvements are to be
constructed, hereby certifies as follows: the undersigned Assessor, being legally responsible for the
assessment of the above-described property, hereby certifies that the market values assigned to the
land and improvements are reasonable.
ASSESSOR FOR HENNEPIN COUNTY
By
STATE OF MINNESOTA )
) ss.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this ___ day of ____________,
202___, by _________________, the County Assessor of Hennepin County, Minnesota.
Notary Public
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EXHIBIT A TO MINIMUM ASSESSMENT AGREEMENT
LEGAL DESCRIPTION
[INSERT LEGAL DESCRIPTION]
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EXHIBIT H TO
REDEVELOPMENT AGREEMENT
FORM OF INVESTMENT LETTER
To Housing and Redevelopment Authority in and for the City of Hopkins (“HRA”)
Attention: Executive Director
Dated: __________________, 202___
Re: $__________ Tax Increment Revenue Note (Alatus Hopkins MD LLC TIF Project No. 1-6) -
325 Blake
The undersigned, as Purchaser of $_________ in principal amount of the above-
captioned Tax Increment Revenue Note (the “Note”), approved by the Board of Commissioners
of the Housing and Redevelopment Authority in and for the City of Hopkins on ___________,
202__, hereby represents to you and to Kennedy & Graven, Chartered, Minneapolis, Minnesota,
as legal counsel to the HRA, as follows:
1. [For First Purchaser - We understand and acknowledge that the Note is
delivered to the Purchaser on this date pursuant to the Contract for Private Redevelopment by
and between the HRA and the Purchaser dated September 1, 2022 (the “Agreement”)] [For All
Subsequent Owners of Note – We acknowledge receipt of the Tax Increment Revenue Note
(Alatus Hopkins MD LLC TIF Project No. 1-6) - 325 Blake, in the principal amount of
$_________].
2. The Note is payable as to principal and interest solely from Available Tax
Increment pledged to the Note, as defined therein.
3. We have sufficient knowledge and experience in financial and business matters,
including purchase and ownership of municipal obligations, to be able to evaluate the risks and
merits of the investment represented by the purchase of the above-stated principal amount of the
Note.
4. We acknowledge that no offering statement, prospectus, offering circular or other
comprehensive offering document or disclosure containing material information with respect to
the HRA and the Note has been issued or prepared by the HRA, and that, in due diligence, we
have made our own inquiry and analysis with respect to the HRA, the Note and the security
therefor, and other material factors affecting the security and payment of the Note.
5. We acknowledge that we have either been supplied with or have access to
information, including financial statements and other financial information, to which a
reasonable investor would attach significance in making investment decisions, and we have had
the opportunity to ask questions and receive answers from knowledgeable individuals concerning
the HRA, the Note and the security therefor, and that as reasonable investors we have been able
to make our decision to purchase the above-stated principal amount of the Note.
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6. We have been informed that the Note (i) is not being registered or otherwise
qualified for sale under the “Blue Sky” laws and regulations of any state, or under federal
securities laws or regulations, (ii) will not be listed on any stock or other securities exchange, and
(iii) will carry no rating from any rating service.
7. We acknowledge that the HRA and Kennedy & Graven, Chartered, as legal
counsel to the HRA, have not made any representations or warranties as to the status of interest
on the Note for the purpose of federal or state income taxation.
8. We represent to you that we are purchasing the Note for our own account and not
for resale or other distribution thereof, except to the extent otherwise provided in the Note or as
otherwise approved in writing by the HRA.
9. All capitalized terms used herein have the meaning provided in the Agreement
unless the context clearly requires otherwise.
10. The Purchaser’s federal tax identification number is ____________
11. We acknowledge receipt of the Note on the date hereof.
IN WITNESS WHEREOF, the undersigned has executed this Investment Letter as of the
date and year first written above.
REDEVELOPER:
ALATUS HOPKINS MD LLC, a Delaware limited
company
By: ____________________________
____________________________
Its: Chief Manager
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EXHIBIT I
TOTAL DEVELOPMENT COSTS
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EXHIBIT J
SAMPLE LOCKBACK CALCULATION
MEMORANDUM
TO: Mike Mornson – City Manager
FROM: Stacie Kvilvang - Ehlers
DATE: November 15, 2023
SUBJECT: City Bonding for Public Parking and Infrastructure – 325 Blake
Alatus has been working with capital equity partners and lenders to move forward construction of Building D
(Mixed-income) and Buliding C (Mid Rise). Due to the current interest rate environment, construction costs
and limited capital investors, financing multi-family projects anywhere in the metropolitan area has become
increasing difficult and thus many projects have been put on hold or retracted all together.
Alatus approached the City to see if they would consider issuing general obligations bonds to provide the
capital needed to pay for public costs associated with the development. The bonds would be 100% assessed
to the property and be the responsibility of Alatus as the property owner to repay. Specifically, the bond
proceeds would be used to pay for the public parking element being constructed as part of Building D (to serve
the retail planned for site E, overflow parking for any other buildings constructed and for general public use of
the amenities in the area) totaling approximately $6 million and the remaining roads, utilities, sidewalks for the
overall development, totaling of approximately $7 million. This would benefit the project and likely be the only
way for the project to move forward in 2024 by:
1. Providing capital to the project at a rate lower than private lenders (+-5% vs. 7.75% to 8.75%)
2. Reducing the amount needed in private financing from lenders at the higher interest rate, thus reducing
overall debt service payments, and
3. Reduce the capital needed from the equity investors who require a higher return
In 2021, the City approved providing up to $31.7 million in pay-as-you-go (PAYGO) TIF to the overall
development. In order to make the debt service on the bonds for the parking ramp tie to the annual TIF
payment, this would require the bonds and the PAYGO TIF note to be issued for 20 years vs. the 15 years as
originally anticipated. Infrastructure bonds for street construction would be issued with a 15-year term. Issuing
the bonds and providing 20 years of TIF on Building D versus 15, will not increase the overall assistance
approved to be provided to the development of up to $31.7 million (infrastructure and ramp bonds are loans vs.
subsidies since they are repaid by the development).
The City has in the past issued bonds for private development to pay for public infrastructure and/or public
redevelopment costs including the Super Valu campus (both roads and parking ramps) and the City’s annual
road reconstruction projects. We view the issuance of these bonds to be low risk since they are assessed to
the property, just like annual road reconstruction projects.
We have discussed these options with the City Attorney and Bond Counsel and are comfortable that if the
Council is agreeable to proceed, we can structure the bonds and their repayment to be low to no risk for the
City. In addition, we will continue to work with Alatus on refining the cost allocable to the various elements to
assure we issue the least amount of debt.
Please contact me at 651-697-8506 with any questions.