CR 99-42 Development Agreement - Valley Park Condominiums
CITY OF
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February 23, 1999 kOPK1NS Council Rpt #99-042
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DEVELOPMENT AGREEMENT - V ALLEY PARK CONDOMINIDMS
Proposed Action
Staff recommends approval of the following motion: Authorize the execution ofa development
agreement between the City of Hopkins and Valley Park Condominium Association.
With this motion, the City Manger and Mayor will be authorized to execute the agreement.
Overview
The City of Hopkins has the authority to establish housing improvement areas under the Housing
Improvement Act (1994 Minnesota Laws, Chapter 587, Article 9, Section 22 through 31).
Within a housing improvement area, the City can sell bonds to pay for various improvements to
individual housing units and common areas. Those bonds are then repaid through fees imposed
on the owners ofthe units.
The Valley Park Condominiums Board of Directors identified the improvements proposed to be
financed though the creation of a housing improvement area and held a series of informational
. owner meetings. In October 1998, the Association members voted on the proposed program
and in November submitted the required petitions. In December and January the City Council
held the required public hearings, authorized the establishment of a housing improvement area
for Valley Park and set the fees for the area. The veto period expired on February 20, 1999 with
one filed objection to the project.
The attached development agreement specifies under what terms the bond funds will be released
to the association to pay for construction costs. The agreement also provides for provisions in
the event of delinquencies in the collection of the fees.
Primarv Issues to Consider
. What is the purpose of the development agreement?
. What are the major provisions of the development agreement?
Supportinl! Information
tween the City of Hopkins and Valley Park Condominiums
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e Development Agreement
Council Rpt. 99-042
Page 2
Analvsis of the Issues
. What is the purpose of the development agreement?
The purpose of the development agreement is to outline the terms under which the City of
Hopkins will sell the bonds and disburse the funds for the Valley Park Housing Improvement
Project. It also provides the City with assurances that the Association will cover all
delinquencies in the collection of the fees, if such funds are needed to pay principal and interest
on the bonds.
. What are the major provisions of the development agreement?
The following are the major provisions of the proposed development agreement:
Conditions of disbursement of funds
Prior to the City releasing any funds for the project, the Association agrees to the following:
o Approval of the plans and specifications from the City Inspector
. o Obtain the necessary permits and licenses
o Submit a total project cost statement
o Certification that the items for which payment is requested were eligible for
reimbursement and that sufficient funds remain in the account to pay for remaining
work
o Submission oflien waivers and proof of inspection by the City Inspector.
Use offund balances
In the event there is money remaining in the project fund or excess funds generated through the
fee revenue fund, the City has the option of applying the funds to redeem the bonds, specifying
that additional housing improvements are undertaken, disbursing the funds to be held by the
Association in their replacement fund for future improvements or a combination of these options_
Construction Plans
The Association agrees to submit all construction plans to the City Building Official. The
agreement also requires the Association to notify the City in the event of significant change
orders and requires the improvements to be completed by December 31, 1999.
Insurance
The Association agrees to provide or have provided builder's risk insurance, comprehensive
general liability insurance and worker's compensation insurance during the construction of the
improvements. The Association also agrees to provide insurance against damage to the property,
. comprehensive general public liability insurance and worker's compensation insurance for the
term of the outstanding debt.
. Development Agreement
Council Rpt. 99-042
Page 3
Financial Statements. Plans and Reports
The Association agrees to provide to the City audited financial statements of the Association for
each fiscal year prepared by an independent certified public accountant. The Association also
agrees to provide and updated financial plan and a written report by an independent engineer
describing the condition of the property and the improvements each year for the term of the
bonds.
Delinquencies
The Association agrees that ifin the event the revenues in the bond fund fall below 105% of the
total principal and interest due on the bonds, the Association will provide to the City the funds
necessary to bring the fund to 105% of the funds required, If the Association fails to make the
required payment, the City has the ability to capture dues collected and owed to the Association
together with all cash, investments and securities held by the Association.
Other
In the event of default of this agreement, the Association agrees to reimburse the City for all
legal and other expenses incurred by the City.
. Alternatives
The City Council has the following alternatives relating to this issue:
. Authorize the execution of the development agreement as proposed.
. Amend the development agreement and authorize execution. With this alternative,
Council needs to review the amendments with legal council prior to approval.
. Continue for further study. Continuing this item will affect the associations ability to
obtain the short-term financing necessary for this project and will delay the start of
construction .
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. EXECUTION COpy
DEVELOPMENT AGREEMENT
Between
CITY OF HOPKINS, MINNESOTA
and
. WESTBROOKE -WEST CONDOMINIUM ASSOCIATION, INC.
d.b.a. V ALLEY PARK CONDOl\fINIUM ASSOCIATION
Dated as of: _, 1999
This document was drafted by:
KENNEDY & GRA YEN, Chartered
470 Pillsbury Center
Minneapolis, Minnesota 55402
Telephone: 337-9300
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. TABLE OF CONTENTS
Page
PREAMBLE ....... .~~~~~~~~....................... ..~................. .~~~~.... ...............~ .~~~ .~.............. P........~.. .~~_...... ......... I
ARTICLE I
Definitions
Section 1.1. Definitions . . ~. .... . . -.. - . . . .. -.. - . . . . . . . .... . . .. ........ ... . . .. . . .. ..... . . . .. .. .. . ...... ..... . . . . . . . . . . . . . ..... 2
ARTICLE II
Representations and Warranties
Section 2.1. Representations by the City........... ............................. ......... ......................... 5
Section 2.2. Representations and Warranties by the Association..................................... 5
ARTICLE III
Issuance of Bonds~ Disbursement of Proceeds
Section 3.1. Issuance of Bonds .......................................................................................... 7
Section 3.2. Conditions Precedent to Initial Disbursement .............................................. 7
. Section 3.3. Further Conditions Precedent to All Disbursements ............... ..................... 8
Section 3.4_ Requests for Disbursement ............. ....................................... ....................... 9
Section 3.5. Conditions Precedent to the Final Disbursement .......................................... 10
Section 3.6, Waiver "".~.4.~. ~............ ............ .......4...~~............ '" .............. .................... ...... ...... 10
Section 3.7. Deposit of Funds by Association .................... ..................................... u.. u... 10
Section 3.8. Application of Project Fund Balance ......................u.................................... II
Section 3.9. Application of Fee Revenues Balance .......................... ................................ II
ARTICLE IV
Construction of Housing Improvements
Section 4.1. Construction of Housing hnprovements ......... .................................. ........... 12
Section 4.2. Construction Plans .........................-.............................................................. 12
Section 4.3. Commencement and Completion of Construction ..mu...............,h...._.,_._.., 13
Section 4.4, Certificate of Completion ................ ..................u........ ...." ........ .h_...._...h_.". 13
ARTICLE V
Insurance
Section 5.1. Insurance ............................................................................................................. 14
Section 5.2. Subordination ................................................................................................ 15
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ARTICLE VI
Special Covenants
Section 6.1. No Warranty of Condition or Suitability, Indemnification "nn,n.n..'n'n".n 16
Section 6.2. Financial Statements ..~..... .~.~~~~...~. .~.~~......... ... ... ...~~...... ..... ........ ............~ .~~~.... 16
Section 6.3. Financial Plan; Annual Reports ................................__..,__,_.....___.nnnn__.mnn 17
Section 6.4. Records and Inspection ...n n n n ....... ......mn n n n n n n ...........n n .....n.. n n............ 17
Section 6.5. Maintenance of Property ..........._.nnnnnn......................_...'n".._.n....._....nmn 1 7
Section 6.6. Covenant to Maintain Net Revenues Available for Debt Service ................ 17
Section 6.7. Assignment of Association Assets n............... .......... ..... ........... .................... 18
Section 6.8. Association to Maintain its Existence; Conditions Under
Which Exceptions Permitted........ ........._..,............ ...........n..m..mmn......n.... 19
Section 6.9. Prohibition Against Assignment of Agreementnn....................................nn 19
Section 6.10. Notice of Fee Upon Transfer of Housing Unitsn.............n..................._nn__. 19
Section 6.1 1 Experienced Property Manager n n n n n n n ....mm...............................nnnn ...... 19
ARTICLE VII
Events of Default
e Section 7.1. Events of Default Defined ............................................................................ 21
Section 7.2. Remedies on Default .................................................................................... 21
Section 7.3. No Remedy Exclusive .... ...................... ........................ .............. ............ ..... 21
Section 7.4. No Additional Waiver Implied by One Waiver ......nn n n .............................. 21
ARTICLE VIII
Additional Provisions
Section 8.1. Conflict of Interests; City Representatives Not
Individually Liable.... .... ...................... ........................ ............... .............. ..... 22
Section 8.2. Equal Employment Opportunity........ ....m.........m........ ..................... .......... 22
Section 8.3. Provisions Not Merged With Deed.............................................................. 22
Section 8.4. Titles of Articles and Sections ..................................................................... 22
Section 8.5. Notices and Demands ..................................................................................... 22
Section 8.6. Counterparts.............".................,,.....,,.,,,...................,,.. "......""...........",.... 22
Section 8.7. Recording..................,..................,..,."....,..,.,.,.,.,.,..............................,...,..,.. 23
Section 8.8. Binding Effect.................".,.,. _..,.,.,......."".......,...................................,.,.,..,.. 23
Section 8.9. Amendment ................................................................................................... 23
TESTIMONIUM ................................................................................................................................ 24
SIGNATURES ...................................................................................................................................... 25
. SCHEDULE A Description of Property
SCHEDULE B Housing Improvements
SCHEDULE C Disbursement Requisition of Authorized Corporation Representative
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DEVELOPMENT AGREEMENT
THIS AGREEMENT, made on or as of the day of , 1999, by and
between the CITY OF HOPKINS, a Minnesota municipal corporation (the "City") and
WESTBROOKE-WEST CONDOMINIUM ASSOCIATION, INe., d.b.a. VALLEY PARK
CONDOMINIUM ASSOCIATION, a Minnesota nonprofit corporation (the "Association").
WITNESSETH:
WHEREAS, the City is authorized under 1994 Minnesota Laws, Chapter 587, Article 9,
Sections 22 through 31 (the "Act") to establish by ordinance a housing improvement area within
which housing improvements are made or constructed and the costs of the improvements are paid
in whole or in part from fees imposed within the area; and
WHEREAS, by Resolution No. 94-55 adopted June 7, 1994, the City Council of the City
approved the Act; and
WHEREAS, by Ordinance No. 99-822 adopted January 5, 1999 (the "Enabling
Ordinance"), the Council established Housing Improvement Area No.3 in order to facilitate certain
improvements to property known as the Valley Park Condominiums, which property is legally
described in Schedule A hereto and is hereafter referred to as the "Property;" and
. WHEREAS, by Resolution No. 99-002 adopted January 5, 1999 (the "Fee Resolution") the
City Council imposed a housing improvement fee on Housing Units (as hereinafter defined) in
Housing Improvement Area No.3 in order to finance certain housing improvements in that area;
and
WHEREAS, the Act authorizes the City to issue bonds in the amount necessary to defray
the expense to be incurred in making the housing improvements, which bonds are payable primarily
from proceeds of the fee imposed under the Fee Resolution and may be further secured by the
pledge of the City's full faith, credit and taxing power; and
WHEREAS, prior to adoption of the Fee Resolution by the City Council, the Association
submitted to the City a financial plan in accordance with the Act that provides for the Association
to finance maintenance and operation of the common elements in the Valley Park Condominiums
and a long-range plan to conduct and finance capital improvements therein; and
WHEREAS, the City believes that development of the improvements to the Property
pursuant to this Agreement, and fulfillment generally of this Agreement, are in the vital and best
interests of the City and health, safety, morals and welfare of its residents, and in accord with the
public purposes and provisions of the applicable State and local laws and requirements under which
Housing Improvement Area No.3 has been undertaken.
NOW, THEREFORE, in consideration of the mutual obligations of the parties hereto, each
. of them does hereby covenant and agree with the other as follows:
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ARTICLE I
Definitions
Section 1.1. Definitions. In this Agreement, unless a different meaning clearly appears from
the context:
"Act" means 1994 Minnesota Laws, Chapter 587, Article 9, Sections 22 tlrrough 31.
"Annual Debt Service" means the amount of principal, interest and redemption premium, if any,
payable on the Bonds on any August 1 and the next succeeding February 1.
"Association" means Westbrooke-West Condominium Association, Inc., d.b.a Valley Park
Condominium Association or its permitted successors and assigns.
"Association's Authorized Representative" means Douglas P. Strandness or any successor
designated by written notice from the Association to the City.
"Agreement" means this Agreement, as the same may be from time to time modified, amended,
or supplemented.
. "Bonds" means the general obligation bonds or obligations issued by the City in connection
with the Housing Improvement Area pursuant to the Act, and any bonds or obligations issued to
refund any Bonds.
"Bond Fund" means the debt service fund for the Bonds to be established under the Bond
Resolution.
"Bond Resolution" means the resolution to be approved by the Council awarding the sale and
establishing the terms of the Bonds.
"City" means the City of Hopkins, Minnesota.
"City Building Official" means Chief Building Inspector.
"Certificate of Completion" means the certification provided to the Association, pursuant to
Section 4.4 of this Agreement.
"Completion Date" means the date of actual completion of the Housing Improvements as
certified by the City Building Official pursuant to Section 4.4 hereof.
"Construction Plans" means the plans, specifications, drawings and related documents on the
construction work to be performed by the Association on the Property which shall be as detailed as the
City may reasonably request to allow it to ascertain the nature and quality of the proposed construction
. work.
"Contractor" means any person, including subcontractors, who shall be engaged to work on, or
to furnish materials and supplies for the Housing Improvements.
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"Council" means the City Council of the City.
"County" means the County of Hennepin, Minnesota.
"Draw Request" means the form, substantially in the form of Schedule C attached hereto,
which is submitted to the City when a disbursement is requested and which is refcrred to in Section
3.4 hereof.
"Enabling Ordinance" means Ordinance No. 99-822 adopted by the Council on January 5,
1999, which establishes the Housing Improvement Area.
"Engineer" means Construction Consulting & Inspections, Ltd" the engineers selected by
the Association to prepare or cause to be prepared the Construction Plans for the Housing
Improvements.
"Engineer's Contract" means the agreement by and between the Association and the
Engineer pertaining to preparation of the Construction Plans and supervision of construction.
"Event of Default" means an action by the Association listed in Article VII of this
Agreement.
. "Fee" means the housing improvement fee imposed on all Housing Units in the Housing
Improvement Area pursuant to the Fee Resolution.
"Fee Resolution" means Resolution No. 99-002, adopted by the Council on January 5, 1999,
which imposes the Fee.
"Fee Revenues" means all proceeds of the Fee payable to the City.
"Financial Advisor" means Ehlers & Associates, Inc. or any successor Independent financial
advisory firm retained by the City.
"Financial Plan" means, collectively, the Valley Park Condominium Association Long
Term Financial Plan and Long Term Replacement Plan, each dated December 15, 1998 submitted
to the City, as amended annually pursuant to Section 6.3 hereof.
"Fiscal Year" means any year connnencing January 1 and ending December 31.
"Housing Improvement Area" means the real property located within Housing Improvement
Area NO.3.
"Housing Improvements" means the improvements to the Property as set forth in Schedule
B hereof.
. "Housing Unit" means real property and improvements thereon within the Housing
Improvement Area, consisting of a one-dwelling unit, or an apartment as described in Minnesota
Statutes, Chapter 515 or 515A, that is occupied by a person or persons for use as a residencc,
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"Independent", when used with reference to an attorney, engineer, architect, certified public
accountant, or other professional person, means a person who (i) is in fact independent, (ii) does not
have any material financial interest in the Association or the transaction to which his or her
certificate or opinion relates (other than the payment to be received for professional services
rendered), and (iii) is not connected with the City or the Association as an officer, director or
employee.
"Inspecting Engineer" means the Engineer.
"Management Consultant" means a person or entity, experienced in the study and
management of condominium housing and having a favorable reputation throughout the United
States or the State of Minnesota for skill and experience in such work and, unless otherwise
specified herein, retained or employed by the Association and acceptable to the City whose
acceptance shall not be unreasonably withheld.
"Maturity Date" means the date the Bonds have been fully paid, defeased or redeemed in
accordance with their terms.
"Mortgage" means any mortgage made by the Association which is secured, in whole or in
part, with the Property and which is a pennitted encumbrance pursuant to the provisions of Section
6.9 of this Agreement
. "Net Revenues Available for Debt Service" means, as of the date of calculation, the balance
in the Bond Fund and any other fund into which Fee Revenues have been deposited as of the date of
calculation, less the amount of fees, as estimated by the City's Financial Advisor, that are
anticipated to be payable by the City in connection with the Bonds on or before the next Payment
Date to the City's Financial Advisor, the registrar for the Bonds, and the paying agent for the Bonds.
"Payment Date" means any date on which the principal, interest and redemption premium, if
any, is due and payable on the Bonds.
"Project Fund" means the Project Fund to be created by the Bond Resolution.
"Property" means the real property described in Schedule A of this Agreement
"State" means the State of Minnesota.
"Unavoidable Delays" means delays beyond the reasonable control of the party seeking to
be excused as a result thereof which are the direct result of strikes, other labor troubles, fire or other
casualty to the Housing Improvements, litigation commenced by third parties which, by injunction
or other similar judicial action, directly results in delays, or acts of any federal, state or local
governmental unit (other than the City in exercising its rights under this Agreement) which directly
result in delays. Unavoidable Delays shall not include delays in the Association's obtaining of
pennits or governmental approvals necessary to enable construction of the Housing Improvements
. by the dates such construction is required under Section 4.3 of this Agreement.
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ARTICLE II
Representations and Warranties
Section 2.1. Representations by the City. The City makes the following representations as
the ba<;is for the undertakings on its part herein contained:
(a) The City is a municipal corporation under the laws of the State and has the power to
enter into this Agreement and carry out its obligations hereunder.
(b) The undertaking of the Housing Improvements and the issuance by the Municipality
of the Bonds are authorized by the Act.
(c) On December 15, 1998, after receipt of petitions by owners of at least 25 percent of
the Housing Units in the Housing Improvement Area and due publication and mailing of notice of
hearing, the Council held a public hearing on the adoption of the Enabling Ordinance and approved
a first reading thereof.
(d) On January 5, 1999, after receipt of petitions by owners of at least 25 percent of the
Housing Units in the Housing Improvement Area and due publication and mailing of notice of
hearing, the Council held a public hearing on the adoption of the Fee Resolution and adopted the
. Fee Resolution and the Enabling Ordinance.
(e) The periods for veto of both the Enabling Ordinance and the Fee Resolution have
expired without objection by owners of at least 35 percent of the Housing Units in the Housing
Improvement Area, all in accordance with the Act.
(f) To finance costs of the Housing Improvements, the City proposes to issue the Bonds
as provided in the Act, and to disburse the proceeds thereof to the Association pursuant to this
Agreement. The City will initially issue Bonds in the aggregate principal amount as described in
Section 3.1 hereof and the Bonds shall be in the form and shall be subject to the terms and
provisions set forth in the Bond Resolution and the terms of this Agreement.
(g) There is no litigation pending or, to the best of its knowledge, threatened against the
City relating to the Housing Improvements or to the Bonds or questioning the powers or authority
of the City under the Act, or questioning the corporate existence or boundaries of the City or the
title of any of the present officers of the City to their respective offices.
(h) The execution, delivery and performance of this Agreement does not violate any
agreement or any court order or judgment in any litigation to which the City is a party or by which it
is bound.
Section 2.2. Representations and Warranties by the Association. The Association
represents and warrants that:
. (a) The Association is a nonprofit corporation, duly organized and in good standing
under the laws of the State of Minnesota, is not in violation of any provisions of its articles of
incorporation, bylaws or the laws of the State, is duly authorized to transact business within the
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State, has power to enter into this Agreement and has duly authorized the execution, delivery and
performance of this Agreement by proper action of its board of directors.
(b) The Association will construct, operate and maintain the Housing Improvements in
accordance with the terms of this Agreement, the Financial Plan, and all local, state and federal
laws and regulations (including, but not limited to, environmental, zoning, building code and public
health laws and regulations, the City stormwater management plan and watershed district
requirements).
(c) The Housing Improvements constitute a permitted use under any applicable zoning
laws.
(d) The Association has received no notice or communication from any local, state or
federal official that the activities of the Association or the City in the Housing Improvement Area
may be or will be in violation of any environmental law or regulation (other than those notices or
communications of which the City is aware). The Association is aware of no facts the existence of
which would cause it to be in violation of or give any person a valid claim under any local, state or
federal environmental law, regulation or review procedure.
(e) The Association will construct the Housing Improvements in accordance with all
local, state or federal energy-conservation laws or regulations.
. (f) The Association will obtain, in a timely manner, all required permits, licenses and
approvals, and will meet, in a timely manner, all requirements of all applicable local, state and
federal laws and regulations which must be obtained or met before the Housing Improvements may
be lawfully constructed.
(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 corporate restriction or any evidences of indebtedness,
agreement or instrument of whatever nature to which the Association is now a party or by which it
is bound, or constitutes a default under any of the foregoing.
(h) Whenever any Event of Default occurs and if the City shall employ attorneys or
incur other expenses for the collection of payments due or to become due or for the enforcement of
performance or observance of any obligation or agreement on the part of the Association under this
Agreement, the Association agrees that it shall, within ten days of written demand by the City pay
to the City the reasonable fees of such attorneys and such other expenses so incurred by the City.
.
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ARTI CLE III
Issuance of Bonds~ Disbursement of Proceeds
Section 3.1. Issuance of Bonds. (a) In order to provide funds to defray the costs of the
Housing Improvements, the City will issue the Bonds in the maximum principal amount that is
supported by the Fee Revenues and will produce total funds in the amount of $1,429,650 (the "Net
Project Amount"), including: (i) proceeds of the Bonds, net of costs of issuance, administrative
costs and capitalized interest through February 1,2000; and (ii) all Fee Revenues prepaid by owners
of Housing Units in accordance with the Fee Resolution; provided that the Net Project Amount may
be such lesser amount mutually agreed by the Association and the City in the event the cost of
Housing Improvements and the total Fee is reduced in accordance with the Fee Resolution.
At closing on issuance of the Bonds, proceeds (net of capitalized interest, costs of issuance
and administrative costs) together with prepaid Fee Revenues, shall be deposited by the City into
the Project Fund for disbursement to the Association in accordance with the terms of this
Agreement. Moneys in the Project Fund shall be subject to withdrawal from time to time only for
the purposes of paying the costs of Housing Improvements, or subject to any applicable provision
of law, for payments theretofore made by the Association for such costs, None of the funds in the
Project Fund shall be used for any purposes other than payment or reimbursement of such costs of
Housing Improvements, except as otherwise provided in Section 3.9 hereof. The City will issue the
. Bonds by August 1, 1999, subject to Unavoidable Delays and the City's ability to issue the Bonds
under existing laws and market conditions.
(b) Under the Bond Resolution, the City will deposit into the Bond Fund capitalized interest
through February 1, 2000, together with Fee Revenues in the amount necessary to pay when due the
principal, interest and redemption premium, if any, on the Bonds. All Fee Revenues in excess of
the amount necessary to pay when due the principal, interest and redemption premium, if any, on
the Bonds will be deposited into a separate revenue account to be established under the Bond
Resolution and maintained by the City until the Maturity Date. Subject to the prior pledge of Fee
Revenues to payment of principal and interest on the Bonds, the City may at its sole discretion
apply funds in such revenue account: (i) to pay registrar and paying agent fees, if any, in connection
with the Bonds; (ii) to pay other administrative costs in connection with the Bonds or the Housing
Improvement Area; (iii) to pay costs in connection with enforcement by the City of the
Association's obligations under this Agreement (provided that any such payment is subject to
reimbursement by the Association pursuant to Section 2.2(h) hereof, and nothing in this Section
3.1 (b) shall be construed to require the City to pay costs of enforcement in the first instance as
provided herein); and (iv) in accordance with Section 3.9 hereof.
(c) The City and Association agree, and the Bond Resolution shall so provide, that interest
earnings on funds in the Project Fund, the Bond Fund, and any other revenue fund established
under the Bond Resolution, shall be deposited in and credited to the respective fund from which the
interest wa.<; derived,
. Section 3.2. Conditions Precedent to Initial Disbursement. The obligation of the City to
make the initial disbursement hereunder shall be subject to the condition precedent that the
Association shall be in compliance with the conditions contained in Section 3.3 hereof and the
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. further condition precedent that the City shall have received, on or before the date of such initial
disbursement hereunder, the following:
(a) A copy of the Construction Plans, approved by the City Building Official in
accordance with Section 4.2 hereof and in detail sufficient to enable the Association to authorize
commencement of construction of the Housing Improvements, certified by the Engineer and the
Association;
(b) Copies of the Engineer's Contract, the Construction Contract, and such subcontracts
as may be reasonably requested from time to time by the City;
(c) A sworn construction statement duly executed by the Association and the Engineer
for the Housing Improvements showing estimates of all anticipated Contractors' contract or
subcontracts for specific portions of the work on the Housing hnprovements and the amounts
anticipated to become due each such Contractor, including all costs and expenses of any kind
incurred and to be incurred in construction the Housing Improvements;
(d) A total project cost statement, incorporating estimates of the construction costs as
shown on the sworn construction statement described in paragraph (d) above and setting forth all
other costs and expenses of any kind anticipated to be incurred in completion of the Housing
hnprovements and sworn to by the Association to be a true, complete and accurate account of all
. costs actually incurred and a reasonably accurate estimate of all costs to be incurred in the future;
(e) Copies of any licenses and permits which the Inspecting Engineer certifies as
necessary and sufficient to construct the Housing hnprovements, including all foundation and
grading permits and building permits from time to time necessary for such construction.
Section 3.3. Further Conditions Precedent to All Disbursements. The obligation of the City
to make the initial disbursement hereunder and each subsequent disbursement hereunder shall be
subject to the condition precedent that the Association shall be in compliance with all conditions set
forth in Section 3.2. hereof, and the further condition precedent that on the date of such
disbursement:
(a) The City has received a written statement from the Association's Authorized
Representative certifying with respect to each payment: (1) that none of the items for which the
payment is proposed to be made has formed the basis for any payment theretofore made from the
Project Fund; (II) that each item for which the payment is proposed to be made is or was necessary
in connection with the Housing Improvements; and (III) that following such proposed payment
sufficient moneys will remain on deposit in the Project Fund to provide for payment in full of all
remaining costs estimated to be incurred in order to complete the Housing Improvements. In the
case of any contract providing for the retention of a portion of the contract price, there shall be paid
from the Project Fund only the net amount remaining after deduction of any such portion.
. (b) No Event of Default under this Agreement or event which would constitute such an
Event of Default but for the requirement that notice be given or that a period of grace or time
elapse, shall have occurred and be continuing.
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(c) No determination shall have been made by the Inspecting Engineer that the amount
of undisbursed moneys, together with expected earnings thereon and any amount of other funds
deposited in the Project Fund by the Association or to be deposited under Section 3.7 hereof, are
insufficient to pay expenses of any kind which reasonably may be anticipated in connection with
the completion of the Housing Improvements; or if such a determination has been made and notice
thereof sent to the Association, the Association has deposited the necessary funds with the City in
accordance with Section 3.7 hereof.
(d) The disbursement requirements set forth in Section 3.4 hereof have been satisfied.
(e) If requested by the City, the City shall be furnished with a statement of the
Association and of any Contractor, in form and substance satisfactory to the City setting forth the
names, addresses and amounts due or to become due a<; well as the amounts previously paid to
every Contractor, subcontractor, person, firm or corporation furnishing materials or performing
labor entering into the construction of any part of the Housing Improvements.
(f) No license or permit necessary for the construction of the Housing Improvements
shall have been revoked or the issuance thereof subjected to challenge before any court or other
governmental authority having or asserting jurisdiction thereover.
Section 3.4. Requests for Disbursement. (a) Whenever the Association desires a
. disbursement to be made hereunder, which shall be no more often than monthly, the Association
shall submit to the City a Draw Request, duly executed on behalf of the Association, setting forth
the information requested therein. Disbursements will be made the Wednesday following the first
Tuesday of each month, provided the Draw Request is received by the 20th day of the preceding
month. Each Draw Request shall be limited to amounts equal to (i) the total of such costs actually
incurred and owing (or previously paid) by the Association to the date of such Draw Request for
work performed on and materials used in the Housing Improvements, plus (ii) the cost of materials
and equipment not incorporated in the Property, but delivered to and suitably stored at the Property;
less, (iii) (a) a minimum of five percent, and (b) at all times less prior disbursements.
Notwithstanding anything herein to the contrary, no disbursements for materials stored at the
Property will be authorized unless the Association shall provide adequate security for such storage.
Each Draw Request shall constitute a representation and warranty by the Association that all
representations and warranties set forth in this Agreement are true and correct as of the date of such
Draw Request.
(b) At the time of submission of each Draw Request, the Association shall submit the
following to the City:
(i) A written lien waiver from each Contractor for work done and materials
supplied by it which were paid for pursuant to the next preceding Draw Request.
(ii) Such other supporting evidence as may be requested by the City to
. substantiate all payments which are to be made out of the relevant Draw Request and/or to
substantiate all payments then made with respect to the Housing Improvements.
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(c) If on the date a disbursement is desired, the Association has performed all of its
agreements and complied with all requirements theretofore to be performed or complied with
hereunder, including satisfaction of all applicable conditions precedent contained in Article ill
hereof, upon approval by the Council the City shall make a disbursement to the Association in the
amount of the requested disbursement, or such lesser amount as shall be approved_
Section 3.5. Conditions Precedent to the Final Disbursement. The making of the final
disbursement by the City from the Project Fund shall be subject to the condition precedent that the
Association shall be in compliance with all conditions set forth in Sections 3.2 through 3.4 hereof
and, further, that the following conditions shall have been satisfied prior to the Completion Date:
(a) The Housing Improvements have been substantially completed in accordance with
the Construction Plans and Article IV hereof, and the City shall have received a certificate of
completion from the Association and the Inspecting Engineer, certifying that to the best of their
knowledge (i) work on the Housing Improvements has been completedin accordance with the
Construction Plans and all other labor, services, materials and supplies used in such work have been
paid for; (ii) the completed Housing Improvements conform with all applicable building laws and
regulations of the governmental authorities having jurisdiction over the Housing Improvements;
and (iii) lien waivers submitted to the City under Section 3.5(c) cover all labor, services materials
and supplies in connection with the Housing Improvements.
. (b) The City shall have received satisfactory evidence that all work requiring inspection
by municipal or other governmental authorities having jurisdiction has been duly inspected and
approved by such authorities and by the bureau, corporation or office having jurisdiction, and that
all requisite certificates of occupancy and other approvals have been issued.
(c) The City shall have received a lien waiver from each Contractor for all work done
and for all materials furnished by it for the Housing Improvements.
Notwithstanding anything to the contrary in this Article ill, the City shall not disburse the
amount deposited into the Project Fund from Fee Revenues pursuant to Section 3.1(b) hereof until
the date such Fee Revenues are deposited in the Project Fund, subject to compliance by the
Association with all other requirements of this Section.
Section 3.6. Waiver. The City may, in its sole discretion, without notice to or consent from
any other party, waive any or all conditions for disbursement set forth in this Article. However, the
making of any disbursement prior to fulfillment of any condition therefor shall not be construed as a
waiver of such condition, and the City shall have the right to require fulfillment of any and all such
conditions prior to authorizing any subsequent disbursement.
Section 3.7. Deposit of Funds by Association. If the City shall at any time in good faith
determine that the amount of funds then on deposit in the Project Fund, together with expected
earnings thereon, is less than the amount required to pay all costs and expenses of any kind which
. reasonably may be anticipated in connection with the completion of the Housing Improvements and
shall thereupon send written notice thereof to the Association specifying the additional amount
required to be deposited by the Association to provide sufficient funds to complete the Housing
Improvements, the Association agrees that it will, within ten (10) calendar days of receipt of any
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such notice, deposit with the City the amount of funds specified in the notice and shall authorize the
City to disburse such funds prior to disbursement of any additional proceeds of the Bonds.
Section 3.8, Application of Project Fund Balance. Any amounts remaining in the Project
Fund upon completion of the Housing Improvements shall be applied in accordance with Section
3.9 hereof.
Section 3.9. Application of Fee Revenues Balance. In the event that, (i) any balance
remains in the Project Fund upon the final disbursement therefrom for costs of the Housing
Improvements; or (ii) at any time before the Maturity Date the City has available to it Fee Revenues
(excluding the proceeds of any refunding Bonds) in the amount sufficient to redeem or defcase the
Bonds in advance of their maturity, as detennined by the City's Financial Advisor, the City may, in
its sole discretion:
(a) apply such excess Fee Revenues or Project Fund balance to redeem or defease all or
a any portion of the Bonds; or
(b) by resolution of the Council, specify additional housing improvements (as defined
in the Enabling Ordinance) and transfer all or any portion of such excess Fee Revenues or Project
Fund balance, as the case may be, in the amount of the cost of such improvements into a project
fund (the "Supplemental Project Fund"). Amounts in the Supplemental Project Fund shall be
e disbursed to the Association to pay the cost of the housing improvements specified by the City, in
accordance with all the disbursement procedures set forth in Sections 3.2 through 3.6 hereof; or
(c) by resolution of the Council, disburse all or any portion of such excess Fee
Revenues or Project Fund balance, as the case may be, to the Association for deposit into the
replacement fund maintained by the Association (the "Replacement Reserve Fund"). The
Association shall establish and maintain a separate subaccount in the Replacement Reserve Fund
(the "Excess Revenue Subaccount") in which excess Fee Revenues or any Project Fund balance
deposited hereunder, together with interest earnings thereon, shall be maintained. Amounts in the
Excess Revenue Subaccount of the Replacement Reserve Fund shall be expended only for housing
improvements (as defined in the Enabling Ordinance) that are selected by the Association; provided
that before making any disbursement of funds from the Excess Revenue Subaccount, the
Association shall submit written plans and cost estimates for such housing improvements to the
City Building Official, which plans shall be deemed approved unless rejected in writing by the City
Building Official within 30 days after receipt thereof; or
(d) any combination of paragraphs (a), (b) and (c) above.
Any balance remaining in the Supplemental Project Fund (if any) after payment of all Supplemental
Housing Improvements, and any balance remaining after the Maturity Date in the Bond Fund, the
Project Fund or any other fund into which Fee Revenues have been deposited shall be transferred
by the City to the Association for deposit into the Excess Revenue Subaccount of the Replacement
. Reserve Fund. Expenditures from the Excess Revenue Subaccount shall be subject to the
conditions described in clause (c) above. All covenants and obligations of the Association under
this Section shall survive the Maturity Date,
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ARTICLE IV
Construction of Housing Improvements
Section 4.1. Construction of Housing Improvements. The Association agrees that it will
construct the Housing Improvements on the Property in accordance with the approved Construction
Plans and at all times prior to the Maturity Date will operate and maintain, preserve and keep the
Housing Improvements or cause the Housing Improvements to be maintained, preserved and kept
with the appurtenances and every part and parcel thereof, in good repair and condition, all in
accordance with Article VI hereof.
Section 4.2. Construction Plans. (a) Before issuance of the Bonds, the Association shall
submit the Construction Plans to the City Building Official, who shall review such plans on behalf
of the City. The Construction Plans shall provide for the construction of the Housing
Improvements and shall be in conformity with the this Agreement, and all applicable State and
local laws and regulations. The City Building Official will approve the Construction Plans in
writing if: (i) the Construction Plans conform to the terms and conditions of this Agreement; (ii) the
Construction Plans conform to all applicable federal, state and local laws, ordinances, rules and
regulations; (iii) the Construction Plans are adequate to provide for construction of the Housing
Improvements; and (iv) no Event of Default has occurred. No approval by the City Building
Official shall relieve the Association of the obligation to comply with the terms of this Agreement,
e applicable federal, state and local laws, ordinances, rules and regulations, or to construct the
Housing Improvements in accordance therewith. No approval by the City Building Official shall
constitute a waiver of an Event of Default. If approval of the Construction Plans is requested by the
Association in writing at the time of submission, such Construction Plans shall be deemed
approved unless rejected in writing by the City Building Official, in whole or in part. Such
rejections shall set forth in detail the reasons therefore, and shall be made within 30 days after the
date of their receipt by the City Building OfficiaL If the City Building Official rejects any
Construction Plans in whole or in part, the Association shall submit new or corrected Construction
Plans within 30 days after written notification to the Association of the rejection. The provisions of
this Section relating to approval, rejection and resubmission of corrected Construction Plans shall
continue to apply until the Construction Plans have been approved by the City Building Official.
The City Building Official's approval shall not be unreasonably withheld. Said approval shall
constitute a conclusive determination that the Construction Plans (and the Housing Improvements,
constructed in accordance with said plans) comply to the City Building Official's satisfaction with
the provisions of this Agreement relating thereto.
(b) If the Association desires to make any material change in the Construction Plans
after their approval by the City Building Official, the Association shall submit the proposed change
to the City Building Official for approval. For the purposes of this Section, a "material change"
means any change that (i) increases or decreases the total cost of the Housing Improvements by
more than $5,000, or (ii) involves any change in construction materials or design that reasonably
requires review for compliance with state and local laws and regulations. If the Construction Plans,
. as modified by the proposed change, conform to the requirements of this Section 4.2 of this
Agreement with respect to such previously approved Construction Plans, the City Building Official
shall approve the proposed change and notify the Association in writing of its approval. Such
change in the Construction Plans shall, in any event, be deemed approved by the City Building
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Official unless rejected, in whole or in part, by written notice by the City Building Official to the
Association, setting forth in detail the reasons therefor. Such rejection shall be made within ten
(10) days after receipt of the notice of such change. The City Building Official's approval of any
such change in the Construction Plans will not be unreasonably withheld.
Section 4.3. Commencement and Completion of Construction. Subject to Unavoidable
Delays, the Association shall complete the construction of the Housing Improvements by December
31, 1999. All work with respect to the Housing Improvements to be constructed or provided by the
Association on the Property shall be in conformity with the Construction Plans as submitted by the
Association and approved by the City.
The Association agrees for itself, its successors and assigns, and every successor in interest
to the Property, or any part thereof, that the Association, and such successors and assigns, shall
promptly begin and diligently prosecute to completion the construction of the Housing
Improvements thereon, and that such construction shall in any event be commenced and completed
within the period specified in this Section 4.3 of this Agreement. Until construction of the Housing
Improvements has been completed, the Association shall make reports, in such detail and at such
times as may reasonably be requested by the City as to the actual progress of the Association with
respect to such construction.
Section 4.4. Certificate of Completion. (a) Promptly after substantial completion of the
e Housing Improvements in accordance with those provisions of the Agreement relating solely to the
obligations of the Association to construct the Housing Improvements (including the dates for
beginning and completion thereof), the City will furnish the Association with an appropriate
instrument so certifying. Such certification by the City shall be a conclusive determination of
satisfaction and termination of the agreements and covenants in the Agreement with respect to the
obligations of the Association, and its successors and assigns, to construct the Housing
Improvements and the dates for the beginning and completion thereof. Such certification and such
determination shall not constitute evidence of compliance with or satisfaction of any obligation of
the Association under Article VI hereof.
(b) The certificate provided for in this Section 4.4 of this Agreement shall be in such
form as will enable it to be recorded in the proper office for the recordation of deeds and other
instruments pertaining to the Property. If the City shall refuse or fail to provide any certification in
accordance with the provisions of this Section 4.4 of this Agreement, the City shall, within thirty
(30) days after written request by the Association, provide the Association with a written statement,
indicating in adequate detail in what respects the Association has failed to complete the Housing
Improvements in accordance with the provisions of the Agreement, or is otherwise in default, and
what measures or acts it will be necessary, in the opinion of the City, for the Association to take or
perform in order to obtain such certification.
(c) The construction of the Housing Improvements shall be deemed to be substantially
completed as determined by the City Building Official, who may execute the certificate of
. completion on behalf of the City.
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ARTICLE V
Insurance
Section 5.1. Insurance. (a) The Association will provide and maintain or cause to be
provided and maintained at all times during the process of constructing the Housing Improvements
an All Risk Broad Form Basis Insurance Policy and, from time to time during that period, at the
request of the City, furnish the City with proof of payment of premiums on policies covering the
following:
(i) Builder's risk 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 Housing 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
City shall be protected in accordance with a clause in form and content satisfactory to the
City;
(ii) Comprehensive general liability insurance (including operations, contingent
liability, operations of subcontractors, completed operations and contractual liability
insurance) together with an Owner's Contractor's Policy with limits against bodily injury
and property damage of not less than $1,000,000 for each occurrence (to accomplish the
. above-required limits, an umbrella excess liability policy may be used); and
(iii) Workers' compensation insurance provided by all Contractors.
(b) Upon completion of construction of the Housing Improvements and prior to the
Maturity Date, the Association shall maintain, or cause to be maintained, at its cost and expense,
and from time to time at the request of the City shall furnish proof of the payment of premiums on,
insurance as follows:
(i) Insurance against loss and/or damage to the Property and the Housing
Improvements under a policy or policies covering such risks as are ordinarily insured
against by similar businesses.
(ii) Comprehensive general public liability insurance, including personal injury
liability (with employee exclusion deleted), against liability for injuries to persons and/or
property, in the amount for each occurrence and for each year of $1,000,000, and shall be
endorsed to show the City as additional insured.
(iii) Such other insurance, including workers' compensation insurance respecting
all employees of the Association, in such amount as is customarily carried by like
organizations engaged in like activities of comparable size and liability exposure; provided
that the Association may be self-insured with respect to all or any part of its liability for
. workers' compensation.
(c) All insurance required in Article V of this Agreement shall be taken out and
maintained in responsible insurance companies selected by the Association which are authorized
under the laws of the State to a<;sume the risks covered thereby. Upon request, the Association will
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deposit annually with the City policies evidencing all such insurance, or a certificate or certificates
or binders of the respective insurers stating that such insurance is in force and effect. Unless
otherwise provided in this Article V of this Agreement each policy shall contain a provision that the
insurer shall not cancel nor modify it in such a way as to reduce the coverage provided below the
amounts required herein without giving written notice to the Association and the City at least thirty
(30) days before the cancellation or modification becomes effective. In lieu of separate policies, the
Association may maintain a single policy, blanket or umbrella policies, or a combination thereof,
having the coverage required herein, in which event the Association shall deposit with the City a
certificate or certificates of the respective insurers a<; to the amount of coverage in force upon the
Housing Improvements.
(d) The Association agrees to notify the City immediately in the case of damage
exceeding $100,000 in amount to, or destruction of, the Property, the Housing Improvements or any
p0l1ion thereof resulting from fire or other casualty. In such event the Association will forthwith
repair, reconstruct and restore the Housing Improvements to substantially the same or an improved
condition or value as it existed prior to the event causing such damage and, to the extent necessary
to accomplish such repair, reconstruction and restoration, the Association will apply the Net
Proceeds of any insurance relating to such damage received by the Association to the payment or
reimbursement of the costs thereof.
. The Association shall complete the repair, reconstruction and restoration of the Housing
Improvements and the Property, whether or not the Net Proceeds of insurance received by the
Association for such purposes are sufficient to pay for the same. Any Net Proceeds remaining after
completion of such repairs, construction and restoration shall be the property of the Association.
(e) The Association and the City agree that all of the insurance provisions set forth in
this Article V shall tenninate upon the earlier of the Maturity Date or termination of this
Agreement.
Section 5.2. Subordination. Notwithstanding anything to the contrary contained in this
Article V, the rights of the City with respect to the receipt and application of any proceeds of
insurance shall, in all respects, be subject and subordinate to the rights of any lender under a
Mortgage approved pursuant to Section 6.9 of this Agreement.
.
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ARTICLE VI
Special Covenants
Section 6.1. No Warranty of Condition or Suitability, Indemnification. (a) The City does
not make any warranty, either express or implied, as to the design or capacity of the Housing
Improvements, as to the suitability for operation of the Housing Improvements or that they will be
suitable for the Association's purposes or needs. The Association releases the City from, agrees that
the City shall not be liable for, and agrees to hold the City, its Council and its respective officers
and employees, harmless against, any claim, cause of action, suit or liability for any loss or damage
to property or any injury to or death of any person that may be occasioned by any cause whatsoever
pertaining to the Housing Improvements or the Property or the use thereof.
(b) The Association further agrees to indemnify and hold harmless the City its officers and
employees, against any and all losses, claims, damages or liability to which the City its officers and
employees, may become subject under ,my law arising out of any act, omission, representation or
misrepresentation of the Association in connection with the issuance and sale of the Bonds and the
carrying out of the transactions contemplated by this Agreement, and to reimburse the City, its
officers and employees, for any out-of-pocket legal and other expenses (including reasonable
counsel fees) incurred by the City, its officers and employees, in connection with investigating any
such losses, claims, damages or liabilities or in connection with defending any actions relating
. thereto. The City agrees, at the request and expense of the Association, to cooperate in the making
of any investigation in defense of any such claim and promptly to assert any or all of the rights and
privileges and defenses which may be available to the City. The provisions of this Section shall
survive the payment and redemption of the Bonds.
(c) All covenants, stipulations, promises, agreements and obligations of the City contained
herein shall be deemed to be the covenants, stipulations, promises, agreements and obligations of
the City and not of any governing body member, officer, agent, servant or employee of the City in
the individual capacity thereof.
Section 6.2. Financial Statements. The Association agrees to furnish to the City, by no later
than 120 days after the end of each Fiscal Year until the later of the Maturity Date and the date all
excess Fee Revenues and Project Fund balance, if any, have been expended in accordance with
Section 3.9 hereof, a copy of the annual audited financial statements of the Association for the
preceding Fiscal Year, including a balance sheet and operating statements, audited by an
Independent certified public accountant. Such financial statements shall be accompanied by a
separate written statement from such Independent certified public accountant preparing such report
that such Independent accountant has obtained no knowledge of any default by the Association in
the fulfillment of any of the terms, covenants, provisions or conditions of this Agreement or if such
accountant shall have obtained knowledge of any such default the accountant shall disclose in such
statement the default and the nature thereof, but such accountant shall not be liable directly or
indirectly to any party for failure to obtain knowledge of any default. The Association and the City
. agree and understand that compliance with this Section constitutes compliance with Section 7.01 of
the Enabling Ordinance.
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Section 6.3. Financial Plan; Annual Reports. The Association agrees to furnish to the City,
by no later than 120 days after the end of each Fiscal Year until the later of the Maturity Date and
the date all excess Fee Revenues and Project Fund balance, if any, have been expended in
accordance with Section 3.9 hereof:
(a) an updated Financial Plan for the Property prepared by a Management Consultant
acceptable to the City, in substantially the form of the Financial Plan and providing plans for capital
improvements to the Property through the Maturity Date;
(b) a written report by an Independent engineer describing the physical condition of the
Property and the Housing Improvements as of the end of the preceding Fiscal Year, with detail
sufficient to enable the City to evaluate compliance with the Financial Plan and the Association's
obligations under this Agreement.
Section 6.4. Records and Inspection. The Association shall maintain (i) copies of federal,
state, municipal and other licenses and pennits obtained by the Association relating to the operation
of the Property and the Housing Improvements, (ii) financial books and records reflecting the
operations of the Property and the Housing Improvements, and (iii) all other documents,
instruments, reports and records required by any provision of this Agreement or the Financial Plan
or by law relating to the Property or the affairs of the Association. The City shall have the right to
inspect all such materials, except any materials made private or confidential by federal or state law
e or regulation, and the Property at all reasonable times and to make such copies and extracts as it
may desire. At the request of the City the Association shall furnish to the City, at the Association's
expense, a copy of any such materials which are required by the City in the performance of its
duties under this Agreement, the Enabling Ordinance, the Fee Resolution or the Act.
Section 6.5. Maintenance of Property. The Association agrees that so long as the Bonds are
outstanding, the Association will keep or cause to be kept the Property and the Housing
Improvements in good repair and good operating condition at its own cost. The Association shall
make all repairs, replacements and improvements to the Property specified in the Financial Plan, as
such plan may be amended in accordance with Section 6.3 hereof.
Section 6.6. Covenant to Maintain Net Revenues Available for Debt Service. (a) In the
event that, 10 business days before any Payment Date, the Net Revenues Available For Debt
Service are less than 105 percent of the total principal and interest due on the Bonds on such
Payment Date, the City will provide written notice to the Association of such fact and the amount
of the deficiency. Within 10 days after receipt of such notice of deficiency in Net Revenues
Available for Debt Service, the Association shall be liable for and shall pay the City such
deficiency. Failure on the part of the City to provide the notice of the deficiency at the time
specified herein shall not relieve the Association of its obligation to make the required payment 10
days after the actual notice of the deficiency is provided by the City to the Association. Failure on
the part of the Association to make the required payment under this Section within 10 days after
receipt of notice thereof shall entitle the City to exercise its remedies under this Agreement,
. notwithstanding any cure period provided in Article vn hereof.
(b) In the event that the Association makes any payment to the City under Section 6.6(a)
and, 10 business days before any Payment Date thereafter the City determines that Net Revenues
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A vail able for Debt Service, excluding the amount of all prior payments by the Association under
Section 6.6(a), are at least 105 percent of the total principal and interest due on the Bonds on such
Payment Date, the City shall promptly return to the Association the amount of the prior payment,
without interest thereon. Nothing in this Section 6.6(b) shall be construed to relieve the obligation
of the Association to make any payment required under Section 6.6(a) hereof.
Section 6.7. Assignment of Association Assets. (a) As security for the Association's
obligations under Section 6.6 hereof, the Association does hereby bargain, sell, assign and set over
unto the City, all the dues, fees and assessments and other income of any type (the "Dues") owing to
the Association from owners of Housing Units in the Property, together with all cash, investments
and securities of any type held by the Association now or hereafter in any operating or reserve
accounts (the "Accounts"). The Dues and Accounts are referred to collectively as the "Association
Assets". This assignment shall constitute a perfected, absolute and present assignment, provided
that the Association may, so long as no Event of Default with respect to Section 6.6 hereof occurs,
collect and retain all Association Assets.
The provisions of this Section 6.7 are intended to be a mere license in favor of the
Association and a mere deferral of the City's exercise of its perfected, absolute and present rights
hereunder, and shall not be construed to be a future assignment thereof.
(b) The Association hereby covenants and warrants to the City that the Association has not
. executed any prior assignments of any Association Assets, nor has it performed any act or executed
any other instrument that might prevent the Association from operating under any of the terms and
conditions of this assignment or that would limit the Association in such operation.
(c) The Association hereby agrees that, so long as the Association's obligations under
Section 6.6 hereof remain outstanding the Association will not, without the written consent of the
City, make any other assignment, pledge or other disposition of any of the Association Assets, or
consent in any assignment of same; and any such acts, if done without the written consent of the
City, shall be null and void.
(d) Upon the occurrence of an Event of Default with respect to Section 6.6 hereof, the City
shall have the right to withdraw funds from, and liquidate any securities in any Accounts, and
collect the Dues from the owners of Housing Units, and apply the same for deposit in the Bond
Fund. This assignment shall be binding upon the occupants of Housing Units in the Property from
the date of filing by the City in the office or offices where this Agreement is filed that an Event of
Default under Section 6.6 hereof has occurred and is continuing and service of a copy of the notice
upon the occupants of the Housing Units. The expenses, including any attorney's fees, reasonably
incurred pursuant to the powers herein contained shall be deemed to be immediately due and
payable by the Association to the City and shall be secured hereby. The City shall not be liable to
account to the Association for any action taken pursuant hereto other than to account for any
Association Assets actually received by the City.
. (e) The City shall not be obligated to perform or discharge, nor does it undertake to
perform or discharge, any obligation, duty or liability under any agreement between the Association
and owners of Housing Units in the Property, and the Association hereby agrees to defend and
indemnify the City and hold it harmless for any and all liability, loss or damage which it mayor
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might incur under or by reason of this assignment and from any and all claims and demands
whatsoever which may be a'iserted against it by reason of any alleged obligation or undertaking on
its part to perform or discharge any of the terms or covenants contained in any agreement by and
among the Association and the owners of Housing Units in the Property, except such claims and
demands that arise out of the negligence or willful misconduct of the City, its officers, employees
and agents. Should the City incur any such liability, loss or damage under or by reason of this
assignment, or in the defense against any such claims or demands arising out of this a<;signment, the
amount thereof, including costs, expenses and reasonable attorneys' fees, together with interest
thereon at the rate of interest on the Bonds, shall be secured hereby, and the Association shall
reimburse the City therefore immediately upon demand.
(D In order to facilitate the Association obtaining short-term financing for the Housing
Improvements before issuance of the Bonds, the City agrees to subordinate its rights under this
Section during the period of such short-term financing, subject to such reasonable terms and
conditions as the City and the short-term lender mutually agree in writing.
Section 6.8. Association to Maintain its Existence; Conditions Under Which Exceptions
Permitted. The Association agrees that, so long as the Bonds are outstanding, it will maintain its
existence a<; a nonprofit corporation under the laws of Minnesota; will not dissolve or otherwise
dispose of all or substantially all of its assets; and will not consolidate with or merge into another
. corporation or permit one or more other corporations to consolidate with or merge into it.
Section 6.9. Prohibition Against Assignment of Agreement. The Association represents
and agrees that prior to the Maturity Date the Association has not made or created and will not
make or create or suffer to be made or created any total or partial sale, assignment, conveyance, or
any trust or power, or transfer in any other mode or form of or with respect to the Association's
rights, interests or obligations under this Agreement or any part thereof, or any contract or
agreement to do any of the same, without the prior written approval of the City.
Section 6.10. Notice of Fee Upon Transfer of Housing Units. The Association agrees that
it will use its best efforts to ensure that owners of each Housing Unit upon which a Fee is imposed
under the Fee Resolution provide notice of the Fee to prospective buyers or transferees upon any
sale or transfer of the Housing Unit. Such efforts by the Association shall include, but are not
limited to ensuring that Housing Unit owners include a description of the Fee in each disclosure
certificate provided to the purchaser as required under Milll1esota Statutes, Section 515B A-I 07 or
any successor statute.
Section 6.11. Experienced Property Manager. So long as the Bonds are outstanding, the
Association agrees to maintain "experienced professional property management" for the Property.
For purposes of this subsection, "experienced professional management" shall mean a full time
property manager who meets the following criteria:
(i) has at least five years of executive property management experience,
. including experience with multi-unit residential housing;
(ii) has experience working with boards and membership organizations;
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. has demonstrated knowledge of maintenance and construction issues;
(iii)
(iv) has demonstrated knowledge of accounting, financial reporting, budgeting
and related issues; and
(v) does not have an ownership interest in any Housing Unit and is not the
spouse, child, parent or sibling of anyone who has an ownership interest.
.
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.
ARTICLE VII
Events of Default
Section 7.1. Events of Default Defined. The following shall be "Events of Default" under
this Agreement and the term "Event of Default" shall mean, whenever it is used in this Agreement
(unless the context otherwise provides), any failure by any party to observe or perform any other
covenant, condition, obligation or agreement on its part to be observed or performed hereunder.
Section 7.2. Remedies on Default. Whenever any Event of Default referred to in Section
7.1 of this Agreement occurs, the non-defaulting party may exercise its rights under this Section 7.2
after providing thirty days written notice to the defaulting party of the Event of Default, but only if
the Event of Default has not been cured within said thirty days or, if the Event of Default is by its
nature incurable within thirty days, the defaulting party does not provide assurances reasonably
satisfactory to the non-defaulting party that the Event of Default will be cured and will be cured as
soon a<; 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) Take whatever action, including legal, equitable or administrative action, which
. may appear necessary or desirable to collect any payments due under this Agreement, or to enforce
performance and observance of any obligation, agreement, or covenant under this Agreement.
Section 7.3. No Remedy Exclusive. No remedy herein conferred upon or reserved to the
City or Association is intended to be exclusive of any other available remedy or remedies, but each
and every such remedy shall be cumulative and shall be in addition to every other remedy given
under this Agreement or now or hereafter existing at law or in equity or by statute. No delay or
omission to exercise any right or power accruing upon any default shall impair any such right or
power or shall be construed to be a waiver thereof, but any such right and power may be exercised
from time to time and as often as may be deemed expedient. In order to entitle the City to exercise
any remedy reserved to it, it shall not be necessary to give notice, other than such notice as may be
required in this Article VD.
Section 7.4. 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, such waiver shall be limited to the particular breach so waived and shall not be deemed to
waive any other concurrent, previous or subsequent breach hereunder.
.
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. ARTICLE VIII
Additional Provisions
Section 8.1. Conflict of Interests; City Representatives Not Individually Liable. The City
and the Association, to the best of their respective knowledge, represent and agree that no member,
official, or employee of the City shall have any personal interest, direct or indirect, in the
Agreement, nor shall any such member, official, or employee participate in any decision relating to
the Agreement which affects his personal interests or the interests of any corporation, partnership,
or m;sociation in which he is, directly or indirectly, interested. No member, official, or employee of
the City shall be personally liable to the Association, or any successor in interest, in the event of any
default or breach by the City or for any amount which may become due to the Association or
successor or on any obligations under the terms of the Agreement.
Section 8.2. Equal Employment Opportunity, The Association, for itself and its successors
and assigns, agrees that during the construction of the Housing Improvements provided for in the
Agreement it will comply with all applicable federal, state and local equal employment and non-
discrimination laws and regulations.
Section 8.3. Provisions Not Merged With Deed. None of the provisions of this Agreement
are intended to or shall be merged by reason of any deed transferring any interest in the Property
. and any such deed shall not be deemed to affect or impair the provisions and covenants of this
Agreement.
Section 8.4. Titles of Articles and Sections. Any titles of the several parts, Articles, and
Sections of the Agreement are inserted for convenience of reference only and shall be disregarded
in construing or interpreting any of its provisions.
Section 8.5. Notices and Demands. Except as otherwise expressly provided in this
Agreement, a notice, demand, or other communication under the Agreement by either party to the
other shall be sufficiently given or delivered if it is dispatched by registered or certified mail,
postage prepaid, return receipt requested, or delivered personally; and
(a) in the case of the Association, is addressed to or delivered personally to the
Association at Rockford Inc., 7025 France A venue South, Edina, Minnesota 55435, Attention:
Project Manager; and
(b) in the case of the City, is addressed to or delivered personally to the City at 1010
First Street, Hopkins, Minnesota 55343, Attention: City Clerk.
or at such other address with respect to either such party as that party may, from time to time,
designate in writing and forward to the other as provided in this Section.
Section 8.6. Counterparts. This Agreement may be executed in any number of
. counterparts, each of which shall constitute one and the same instrument.
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.
Section 8,7. Recording. Either party may record this Agreement and any amendments
thereto with the Hennepin County Recorder or Registrar of Titles. The Association shall pay all
costs for recording.
Section 8.8 Binding Effect. This Agreement shall inure to the benefit of and shall be
binding upon the City and the Association and their respective successors, heirs and assigns.
Section 8.9. Amendment. This Agreement may be amended only by written agreement of
the parties hereto.
.
.
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. IN WITNESS WHEREOF, the City has caused this Agreement to be duly executed in its
name and behalf and its seal to be hereunto duly affixed and the Association has caused this
Agreement to be duly executed in its name and behalf on or as of the date first above written.
CITY OF HOPKINS, MINNESOTA
By
Its Mayor
By
Its City Manager
STATE OF MINNESOTA )
) 55.
COUNTY OF )
. The foregoing instrument was acknowledged before me this _ day of ,
]999, by Charles Redepenning and Steve Mielke, the Mayor and City Manager, respectively, of the
City of Hopkins, Minnesota, a municipal corporation, on behalf of the City.
Notary Public
.
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.
WESTBROOKE-WEST CONDOMINillM
ASSOCIATION, INC, d,b.a. V ALLEY PARK
CONDOMINIUM ASSOCIA nON
By
Its
By
Its
ST A TE OF MINNESOTA )
) SS.
COUNTY OF )
. The foregoing instrument was acknowledged before me this day of ,
1999, by and , the
and of W estbrooke- West
Condominium Association, Inc., d.b.a. Valley Park Condominium Association, a Minnesota
nonprofit corporation, on behalf of the corporation.
Notary Public
.
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.
SCHEDULE A
PROPERTY
Condominium No. 459, Valley Park Condominium, Hennepin County, Minnesota.
.
.
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. SCHEDULE B
HOUSING IMPROVEMENTS
Replacement of Mansard Roofs
Replacement of Patio Doors and Upper Patio Door Railings
Replacement of Downspouts
Redesign and Upgrading of Building Entrances
Repair and Painting of Stucco Timbers
Temporary Sidewalks and Barricades, Demolition of Old Trash Sheds, and Related
Rehab of Garages
Construction of New Trash/RecycJing Buildings
Rebuilding of Parking Lots
Replacement of Concrete Sidewalks
.
.
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.
SCHEDULE C
DISBURSEMENT REQUISITION OF
ASSOCIA TION'S AUTHORIZED REPRESENT A TIVE
TO: City of Hopkins
10 10 First Street
Hopkins, MN 55343
DISBURSEMENT DIRECTION
The undersigned Authorized Represen tati ve of W estbrookc- W cs t Condominium
Association, Inc., d.b.a Valley Park Condominium Association, a Minnesota nonprofit corporation
(the "Association"), hereby authorizes and requests you to disburse from the Project Fund held by
you pursuant to the Development Agreement between the City of Hopkins, Minnesota and
Westbrooke-West Condominium Association, Inc., d.b.a. Valley Park Condominium Association,
dated as of , 199_ (the "Agreement"), the following amount to the following person
. and for the following proper Housing Improvements cost and purpose:
1. Amount
2. Payee:
3. Purpose:
all as defined and provided in said Agreement. The undersigned further certifies that (i) none of the
items for which payment is proposed to be made has formed the basis for any payment theretofore
made from the Project Fund, and (ii) each item for which the payment is proposed to be made is or
was necessary in connection with the Housing Improvements, and (iii) the amount of funds to
remain on deposit in the Project Fund following this disbursement is currently estimated to be
sufficient to pay all future costs of Housing Improvements.
Dated:
Association's Authorized Representative
.
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