VII.3. 6-3 CC Item - Preliminary Development Agreement - 102 10th Ave N
CITY OF HOPKINS
City Council Report 2025-099
To: Honorable Mayor and Council Members
Mike Mornson, City Manager
From: Kersten Elverum, Director of Planning & Development
Date: June 3, 2025
Subject: Preliminary Development Agreement – 102 10th Ave N
_____________________________________________________________________
RECOMMENDED ACTION
MOTION TO approve Preliminary Development Agreement between the City of Hopkins
and Kaleidoscope – Brighter Living LLC.
OVERVIEW
Based on developer interest and a desire to put City-owned land into productive use,
the City of Hopkins issued a Request for Proposals (RFP) in October 2024 for four
development sites: 102 10th Avenue North (Lot 800) and 501 Mainstreet, 525
Mainstreet and 15 6th Avenue North. Proposals were accepted through December 20,
2024. Three proposals were received for the 102 10th Avenue North property:
• The Doran Group – Twelve 3-story rental townhomes (10% affordable at 60%
AMI)
• Amani – Twelve 3-story for-sale townhomes (all affordable at 80% AMI)
• Kaleidoscope – Fourteen 2.5-story for-sale townhomes with an emphasis on
sustainability
The proposals were reviewed by the City Council in a closed-door meeting on January
14, 2025. Clarifying questions were asked of the proposers, and the proposals were
discussed again at the February 4, 2025, closed-door City Council meeting. The City
Council identified Kaleidoscope as the preferred developer citing the overall design,
ownership model and sustainable elements as major deciding factors.
The proposal is for 14 owner-occupied townhomes, 2.5 stories in height. They would
be built to Department of Energy Zero Energy Ready Home (DOE ZEHR) certification,
all electric with an ultra-efficient district heat pump.
The City Council elected to continue discussions and take the next steps with
Kaleidoscope through a Preliminary Development Agreement (PDA). The PDA
provides the opportunity for the public to weigh in on the development proposal before
entering into a purchase agreement. The terms of the PDA include:
• Grants exclusive rights to the Developer now and for 16 months following the
execution of a Purchase Agreement
• Outlines a development review process that includes a concept review at the
Planning & Economic
Development
Hopkins Planning & Zoning Commission
• Establishes a process to establish sale price
• Commits the City/HRA to update Phase I Environmental Site Assessment
Under the Agreement, the developer will submit a Concept Review Application to be on
the July 22, 2025, Planning & Zoning Commission agenda. Prior to that meeting, there
will be a neighborhood meeting hosted by the developer that will take place 10-14 days
before the Planning Commission meeting. The concept will be brought forward to the
City Council in August. The concept review will not grant any land use approvals but
will be used to provide feedback to the developer to further refine the project.
The project proforma will be reviewed by the City’s financial advisor and environmental
site assessments will be updated. As these steps are being completed, staff and the
City Attorney will negotiate the terms of a Purchase and Development Agreement,
which will be brought to the HRA and City Council for approval, anticipated by the end
of 2025.
SUPPORTING INFORMATION
• Preliminary Development Agreement
• Concept Plan
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PRELIMINARY DEVELOPMENT AGREEMENT
THIS PRELIMINARY DEVELOPMENT AGREEMENT (the “Agreement”) is made and entered
into as of ____________, 2025, by and among the City of Hopkins, Minnesota, a Minnesota municipal
corporation (the “City”) and Kaleidoscope – Brighter Living LLC, a Minnesota limited liability company
or its affiliated successors and assigns as permitted in this Agreement (the “Developer”).
RECITALS:
A. The City has selected Developer as the preferred private developer for the Development
Project. Attached hereto as Exhibit B is Developer’s concept site plan for the Development Project (the
“Concept Plan”), which will be presented for preliminary review by the City Planning and Zoning
Commission and City Council (the “Concept Plan”) consistent with the City’s Development Review
Process as hereinafter defined.
B. The Developer is currently negotiating a definitive purchase agreement (the “Purchase and
Development Agreement”) pursuant to which City, as seller, and Developer, as purchaser, will sell and
purchase the development site located at 102 10th Ave N (the “Development Site”) and as legally described
in Exhibit A, for Developer’s development and construction of the project as set forth in the Concept Plan
(the “Development Project”).
C. The parties desire to enter into this agreement to outline the parties’ respective
expectations, rights, and obligations regarding the Development Site and the Development Project and to
provide for further investigation and refinement of a final development plan (developed through the City’s
land use approval process) for the Development Project (the “Final Development Plan”).
AGREEMENT:
NOW, THEREFORE, in consideration of the promises and the mutual covenants of the parties
hereinafter expressed, it is hereby agreed as follows:
1. Undertaking and Exclusive Rights. In consideration of the time, effort and expenses to be
incurred by Developer in pursuing the Development Project, the City hereby agrees that during the
negotiation of the Purchase and Development Agreement (and for a period of sixteen (16) months after any
mutual execution of the Purchase and Development Agreement (collectively the “Exclusive Period”),
Developer will have the exclusive right to make specific proposals and negotiate the terms of land use
entitlements and site plan approvals with respect to the Development Site for the Final Development Plan,
and definitive development contracts, if necessary, with the City for the development of the Development
Site and financial assistance for such Development Project (the “Final Development Contracts”).
2. Development Review Process; Coordination. Subject to the terms and conditions of this
Agreement, the City and Developer agree to consult with each other for input on development parameters
and the Final Development Plan, as well as a coordinated community engagement, and communications
strategy to supplement the City’s Development Review Process as set forth in Exhibit C. Furthermore,
each party will agree to keep the other party informed about the status of the development process for the
Development Project, including, without limitation, negotiation of the Purchase and Development
Agreement, the Final Development Contracts, if any, the status of and changes to the proposed Final
Development Plan and the status of the City entitlement approval process.
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3. Development Project. The parties acknowledge and agree that it is the parties’ collective
intent that the Development Project will consist of the development of the Development Site in a manner
consistent with the Concept Plan.
4. Purchase and Development Agreement; Acknowledgment of Purchase Price. Following
the completion of the Concept Review process as defined in the City’s codes or policies, the Developer and
City shall negotiate in good faith to reach agreement on definitive Purchase and Development Agreements
for the Development Site by December 31, 2025. The City may, at its own expense, conduct a financial
analysis of the Development Project to determine the ability to pay market value for the Development Site.
The analysis will be a basis for discussions on purchase price that will be established through negotiations
of the Purchase and Development Agreement, including potentially a to be negotiated look-back provision.
The parties agree that the Purchase and Development Agreement shall include, without limitation, the
following key terms and conditions:
(a)Developer shall conduct any and all due diligence Developer deems appropriate in its
sole discretion with respect to the Development Site commencing on the Effective Date of the
Development Agreement and continuing through sixteen (16) months.
(b)Developer and its agents may enter the Property upon reasonable advance notice to
Sellers for purposes of performing any and all inspections and tests, including minimally invasive
tests and soil borings. Among other conditions of closing to be specified in the Purchase and
Development Agreement, Developer's obligation to close is contingent on satisfying the following
conditions on or before the expiration of the Due Diligence Period:
1. Physical inspections by Developer and Developer's contractors
2. Approval of a new Phase I Environmental Site Assessment and any prior
reports.
3. Approval of ALTA survey and title commitment
4. Issuance of entitlements for the development project by the City,
determined to be acceptable in Developer's sole discretion
5. Approval of Developer and Developer's lender of financing for the
Development Project
6. Commitments for needed project equity
7. Other commercially reasonable conditions requested by the Developer.
(c) Investigations will be assisted by the City, at no cost to the City except as specified in the
following section (c)6. The City will provide all documents relevant to property value and
marketability to the Developer, including, but not limited to:
1. Environmental reports of any kind, including hazardous material surveys,
cleanup cost estimates, information about any funding sources available
to complete any remaining remediation, whether known or unknown
2. Appraisals, if any
3. Previous survey and title reports, if any
4. Previous market study, if any
5. Previous site plans for developing the parcels, if any
6. The City shall work with Developer to obtain an updated Phase I
Environmental Site Assessment at the City’s cost or funded through grants
pursued collaboratively. Developer will reimburse 100% of direct costs
incurred by the City at closing. All environmental reports shall name both
the City and Developer as reliance parties. The City and Developer agree
to work together regarding any professional services consultant agreement
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to be entered into for the Development Project.
(d) The City shall deliver the property free from any tenant interest at closing.
(e) Closing on the purchase of the Development Site must occur no later than one
hundred and twenty (120) days following the completion of the Due Diligence Period. Note this
extended period correlates with construction period. An additional sixty (60) days may be requested
upon the sole discretion of the Developer.
5. Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective heirs, personal representatives, successors, assigns and transferees.
6. Notices. Each notification required by this Agreement must be made to the project
representative. The project representatives of the parties are:
City:
Kersten Elverum, Director of Development and Planning
City of Hopkins
1010 1st Street South
Hopkins, MN 55343
Email: kelverum@hopkinsmn.com
Developer:
Kaleidoscope – Brighter Living LLC
2716 Grand Ave. S
Minneapolis, MN 55408
Attn: Jay Rajaratnam
Email: jay.rajaratnam@gmail.com
Contact information will be kept current. Contact information may be changed by a party by written
notification to the other parties.
7. Amendments. An amendment to this Agreement must be in writing and will not be
effective until it has been approved and executed by the parties. A party to this Agreement may not assign
or transfer any right or obligation hereunder without an assignment agreement executed by the parties and
the assignee.
8. Term, Termination. Notwithstanding any other provision in this Agreement to the
contrary, this Agreement may be terminated as follows: (1) the parties, by mutual written agreement, may
terminate this Agreement at any time; (2) the parties may terminate this Agreement in the event of a breach
of the Agreement by another party, upon providing 30 days’ written notice to the party, unless such breach
is cured before the expiration of said 30-day period.
9. Compliance with Laws. The parties shall exercise reasonable care to comply with
applicable federal, state, and local laws, rules, ordinances, and regulations in effect as of the date of this
Agreement.
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10. Compliance with the Minnesota Government Data Practices Act. Data provided, produced,
or obtained under this Agreement shall be administered in accordance with the Minnesota Government
Data Practices Act, Minnesota Statutes, Chapter 13. The parties shall immediately report to the other party
any requests from third parties for information relating to this Agreement. The parties agree to promptly
respond to inquiries from the other party concerning data requests.
11. Choice of Law and Venue. This Agreement shall be governed by and construed in
accordance with the laws of Minnesota. Any disputes, controversies, or claims arising under this
Agreement shall be heard in the state or federal courts of Minnesota and the parties waive any objections
to jurisdiction.
12. Non-Assignment. This Agreement may not be assigned by any party without the prior
written consent of the other parties, except that Kaleidoscope - Brighter Living LLC may assign this
Agreement or enter into the Purchase and Development Agreement to an entity or entities which are owned
in part by and managed by Janarthanan Rajaratnam.
13. Survivability. The provisions of this Agreement concerning Indemnification, Compliance
with Laws, Compliance with the Minnesota Government Data Practices Act, Audit, Choice of Law and
Venue shall survive the expiration or termination of this Agreement.
14. Severability. The provisions of this Agreement shall be severable. If any portion of this
Agreement is, for any reason, held by a court of competent jurisdiction to be contrary to law, such decision
shall not affect the remaining provisions of the Agreement.
15. Waiver. Any waiver by any party of a breach of any provision of this Agreement shall not
affect, in any respect, the validity of the remainder of this Agreement.
16. Counterparts. This Agreement may be executed in one or more counterparts or in multiple
originals, either one of which is as valid as the other and when taken together shall constitute one agreement.
[Remainder of Page Intentionally Left Blank. Signature Pages Follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.
DEVELOPER:
Kaleidoscope – Brighter Living LLC,
a Minnesota limited liability company
By:
Name: Janarthanan Rajaratnam
Its:
CITY:
City of Hopkins, Minnesota
a Minnesota municipal corporation
By:
Name: Patrick Hanlon
Its: Mayor
By:
Name: Michael Mornson
Its: City Manager
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EXHIBIT A
DEVELOPMENT SITE LEGAL DESCRIPTIONS
102 10th Ave N: PID 2411722310095, PID 2411722310094, PID 2411722310002
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EXHIBIT B
CONCEPT PLAN
The preliminary Concept Plan includes 14 housing units and ~28 parking stalls. The 2.5-story buildings
in this concept are for-sale residential townhomes. The developer may explore some variation of the
concept plan that includes the following conditions:
1. other for sale product types and/or a mix thereof (including but not limited condominiums single
family etc)
2. maintaining parking access from the alley (no curb cuts at the streets)
3. maintaining viewsheds through the site
4. similar height
5. similar density and dwelling unit count
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EXHIBIT C
DEVELOPMENT REVIEW PROCESS
June 3, 2025 City Council – Preliminary Development Agreement
June 26, 2025 Developer applies for Concept Review
July 7-11, 2025 Developer holds neighborhood meeting
July 22, 2025 City Planning & Zoning Commission – Concept Review
August 2025 City Council – Concept Review