IV.3. Approval of Development Agreement with Summit Condominium Association for Summit on 7 Housing Improvement Area; Needham
CITY OF HOPKINS
City Council Report 2025-131
To: Honorable Mayor and Council Members
Mike Mornson, City Manager
From: Revée Needham, Community Development Manager
Date: August 19, 2025
Subject: Approve Development Agreement with Summit Condominium Association
for Summit on 7 Housing Improvement Area
_____________________________________________________________________
RECOMMENDED ACTION
MOTION TO Approve Development Agreement with Summit Condominium Association,
Inc. for Summit on 7 Housing Improvement Area.
OVERVIEW
The City Council held a public hearing and first reading on April 15, 2025 establishing
the Summit on 7 Housing Improvement Area (HIA). On May 6, 2025, the City Council
approved the second reading of the HIA Ordinance and adopted the resolution to set
the HIA fees. Afterwards, a summary of the ordinance was mailed to the homeowners
with information on how to object and how to prepay the HIA fee. No objections were
received. On July 15, 2025, the City Council approved a resolution to authorize City
staff to work with its municipal advisor Ehlers and Associates to prepare for the bond
sale. There is a separate item on the August 19, 2025 agenda for the sale of bonds.
The City accepted prepayments of the housing improvement area fees until July 21,
2025. Six prepayments were received. Additional information on the Summit on 7 HIA
can be found in the linked Council Reports
The Development Agreement was drafted by Kennedy and Graven, and reviewed by
City staff and the Association. The Development Agreement outlines the roles and
responsibilities of the Association and protections for the City. These include, but are
not limited to:
• The City will issue bonds to finance the costs of the improvements
• The funds will be repaid by the homeowners over a period of 20 years
• The requirements for disbursements of the bond funds to the contractor
• The Association and homeowners must cover the administrative costs of the City
related to the housing improvement area
• The required insurance that the Association must obtain
• The required ongoing financial reporting the Association must complete each
year
• The Association must do its best to educate buyers of units about the housing
improvement fee
• The remedies for any default
Planning & Economic
Development
Full details are included within the attached Development Agreement.
SUPPORTING INFORMATION
• Development Agreement
• Hyperlink to July 15, 2025 Council Packet
• Hyperlink to May 6, 2025 Council Packet
• Hyperlink to April 15, 2025 Council Packet
• Hyperlink to March 18, 2025 Council Packet
DEVELOPMENT AGREEMENT
between
CITY OF HOPKINS, MINNESOTA
and
SUMMIT CONDOMINIUM ASSOCIATION, INC.,
Dated ______________, 2025
This document was drafted by:
Kennedy & Graven, Chartered (SBK)
150 South Fifth Street, Suite 700
Minneapolis, Minnesota 55402-1299
Telephone: (612) 337-9300
i
TABLE OF CONTENTS
Page
PREAMBLE ....................................................................................................................................................... 1
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
City Obligation; Disbursement of Proceeds
Section 3.1. Financing ..................................................................................................................... 7
Section 3.2. Conditions Precedent to Financing ............................................................................. 8
Section 3.3. Conditions Precedent to Disbursements ...................................................................... 9
Section 3.4. Requests for Disbursement .......................................................................................... 9
Section 3.5 Conditions Precedent to the Final Disbursement ...................................................... 10
Section 3.6 Deposit of Funds by Association .............................................................................. 11
Section 3.7 Application of Balances ............................................................................................ 11
Section 3.8 City Administrative and Consulting Costs ................................................................ 12
ARTICLE IV
Construction of Housing Improvements
Section 4.1. Construction of Housing Improvements ................................................................... 13
Section 4.2. Construction Plans ..................................................................................................... 13
Section 4.3. Commencement and Completion of Construction .................................................... 14
Section 4.4. Certificate of Completion .......................................................................................... 14
ARTICLE V
Insurance
Section 5.1. Insurance .................................................................................................................... 15
ARTICLE VI
Special Covenants
Section 6.1. No Warranty of Condition or Suitability, Indemnification ....................................... 17
Section 6.2. Financial Statements .................................................................................................. 17
Section 6.3. Financial Plan; Annual Reports ................................................................................. 17
Section 6.4. Records and Inspection ............................................................................................. 18
Section 6.5. Maintenance of Property; Replacement Reserve Fund ............................................. 18
Section 6.6. Covenant to Maintain Net Revenues Available for Debt Service ............................ 18
ii
Section 6.7. Assignment of Association Assets ........................................................................... 19
Section 6.8. Association to Maintain Its Existence; Conditions Under
Which Exceptions Permitted ..................................................................................... 20
Section 6.9. Prohibition Against Assignment of Agreement ........................................................ 20
Section 6.10. Notice of Fee Upon Transfer of Housing Units ........................................................ 20
Section 6.11. Experienced Property Manager ................................................................................. 20
Section 6.12. Change in Association’s Bylaws ............................................................................... 20
Section 6.13. Overdue Association Dues ........................................................................................ 21
ARTICLE VII
Events of Default
Section 7.1. Events of Default Defined ......................................................................................... 22
Section 7.2. Remedies on Default ................................................................................................. 22
Section 7.3. No Remedy Exclusive .............................................................................................. 22
Section 7.4. No Additional Waiver Implied by One Waiver ........................................................ 23
ARTICLE VIII
Additional Provisions
Section 8.1. Conflict of Interests; City Representatives Not Individually
Liable ......................................................................................................................... 24
Section 8.2. Equal Employment Opportunity ............................................................................... 24
Section 8.3. Provisions Not Merged With Deed ........................................................................... 24
Section 8.4. Titles of Articles and Sections ................................................................................... 24
Section 8.5. Notices and Demands ................................................................................................ 24
Section 8.6. Counterparts .............................................................................................................. 24
Section 8.7. Recording .................................................................................................................. 24
Section 8.8. Binding Effect ........................................................................................................... 24
Section 8.9. Amendment ............................................................................................................... 25
SIGNATURES ................................................................................................................................. S-1
EXHIBIT A Description of Property ........................................................................................... A-1
EXHIBIT B Housing Improvements ........................................................................................... B-1
EXHIBIT C Reserve Study Financial Plan .................................................................................. C-1
1
DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT is made on ____________, 2025 (the “Agreement”),
between the City of Hopkins, Minnesota, a Minnesota municipal corporation and political subdivision duly
organized and existing under its Charter and the Constitution and laws of the State of Minnesota (the “City”),
and The Summit Condominium Association, Inc., a Minnesota nonprofit corporation (the “Association”).
WITNESSETH:
WHEREAS, the City is authorized under Minnesota Statutes, Chapter 428A, Sections 11 through 21,
as amended (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 Ordinance No. 2025-1226, adopted on May 6, 2025 (the “Enabling Ordinance”), the
City Council of the City established the Summit on 7 Housing Improvement Area (the “Housing
Improvement Area”) in order to facilitate certain improvements to property known as the Summit on 7,
which property is legally described in Exhibit A attached hereto and is hereafter referred to as the “Property”;
and
WHEREAS, by Resolution No. 2025-031, adopted on May 6, 2025 (the “Fee Resolution”) the City
Council imposed a housing improvement fee on Housing Units (as hereinafter defined) in the Housing
Improvement Area in order to finance certain housing improvements in that area; 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 Association 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 the Housing Improvement Area 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:
(The remainder of this page is intentionally left blank.)
2
ARTICLE I
Definitions
Section 1.1. Definitions. In this Agreement, unless a different meaning clearly appears from the
context:
“Act” means Minnesota Statutes, Sections 428A.11 through 428A.21, as amended.
“Administrative Costs” means the costs of legal and fiscal consultants’ fees, administration of the
City Obligation, city staff services, and inspection fees related to the Housing Improvements.
“Agreement” means this Development Agreement, as the same may be from time to time modified,
amended, or supplemented.
“Assignment” has the meaning given such term is Section 6.7 hereof.
“Association” means The Summit Condominium Association, Inc., a Minnesota nonprofit
corporation, or its permitted successors and assigns.
“Association’s Authorized Representative” means the Association President, Vice President, or
Treasurer or any successor designated by written notice from the Association to the City.
“Certificate of Completion” means the certification provided to the Association, pursuant to
Section 4.4 hereof.
“City” means the City of Hopkins, Minnesota.
“City Building Official” means the City’s chief building inspector.
“City Council” means the City Council of the City.
“City Obligation” means any general obligation bonds or other obligations issued by the City under
Section 3.1 hereof to finance the Housing Improvements pursuant to the Act, and any bonds or other
obligations issued to refund any such debt obligation issued by the City pursuant to Section 428A.16 of the
Act, the par amount of which is estimated to be $4,155,000 based on the Construction Contract amount, bond
costs, soft costs, contingency, city administrative costs and net of prepaid Fees of $437,473.
“City Obligation Resolution” means the resolution to be approved by the City Council awarding the
sale and establishing the terms of the City Obligation.
“City’s Authorized Representative” means the City Manager or a person designated in writing by
said person.
“Completion Date” means the date of actual completion of the Housing Improvements as certified by
the City Building Official pursuant to Section 4.4 hereof.
“Construction Contract” means the construction contract between the Association and the Contractor
which shall not exceed $4,260,000.
“Construction Manager” has the meaning provided in Section 4.3(b) hereof.
3
“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.
“County” means Hennepin County, Minnesota.
“Enabling Ordinance” means Ordinance No. 2025-1226, adopted by the City Council on May
6, 2025, which establishes the Housing Improvement Area.
“Event of Default” means an action by the Association listed in Article VII hereof.
“Fee” means the housing improvement fee imposed on all Housing Units in the Housing
Improvement Area pursuant to the Fee Resolution the allocation of which to each of 62 units is based on the
Common Interest Community No. 1422 (Condominium) The Summit Condominiums Restated Declaration.
“Fee Resolution” means Resolution No. 2025-031, adopted by the City Council on May 6, 2025,
which imposes the Fee.
“Fee Revenues” means all proceeds of the Fee payable to the City.
“Financial Plan” means a plan prepared by an independent third party that provides the Association’s
plan to finance maintenance and operation of the common elements of the Property and a long-range plan to
conduct and finance capital improvements to the Property through the Maturity Date. The Financial Plan
prepared by Superior Reserve Engineering & Consulting, an independent third party, dated August 16, 2022,
is set forth in Exhibit C attached hereto.
“Fiscal Year” means any year commencing January 1 and ending December 31.
“Housing Improvement Area” means the real property located within the Summit on 7 Housing
Improvement Area.
“Housing Improvements” has the meaning provided in the Enabling Ordinance and set forth in
Exhibit B attached hereto.
“Housing Unit” means a Unit, as described in Minnesota Statutes, Chapter 515B, or a Unit as
described in the Common Interest Community No. 1422 (Condominium) The Summit Condominiums
Restated Declaration.
“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 Architect” means a professional representative hired by the Association for services in
conjunction with enforcement of this Agreement.
4
“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 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 City Obligation has been fully repaid, defeased or redeemed in
accordance with their terms.
“Net Revenues Available for Debt Service” means, as of the date of calculation, the Fee Revenues
received by the City in the six (6) month period prior to the relevant Payment Date, together with the balance
of Fee Revenues previously received by the City in excess of the amounts needed to pay all prior payments
on the City Obligation.
“Payment Date” means when principal of or interest on the City Obligation is due; the Payment
Dates are currently expected to be each February 1 and August 1, commencing August 1, 2026, and
continuing through the Maturity Date.
“Property” means the real property described in Exhibit A attached hereto.
“Property Manager” means Westport Properties, Inc., a Minnesota corporation, or another entity
approved and designated by the City.
“Replacement Reserve Fund” means the reserve fund to be maintained by the Association in
accordance with Section 6.5 hereof.
“State” means the State of Minnesota.
“Unavoidable Delays” means delays beyond the reasonable control of the party seeking to be
excused as a result thereof which are the direct result of strikes, pandemics, 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 permits or governmental approvals
necessary to enable construction of the Housing Improvements by the dates such construction is required
under Section 4.3 hereof, unless such approvals are within the sole control of the City.
(The remainder of this page is intentionally left blank.)
5
ARTICLE II
Representations and Warranties
Section 2.1. Representations by the City. The City makes the following representations as the basis
for the undertakings on its part herein contained:
(a) The City is a Minnesota municipal corporation and political subdivision duly organized and
existing under its Charter and the Constitution and laws of the State and has the power to enter into this
Agreement and carry out its obligations hereunder.
(b) The undertakings of the Housing Improvements are authorized by the Act.
(c) On May 6, 2025, after receipt of petitions by owners of at least seventy five percent (75%)
of the Housing Units in the Housing Improvement Area and due publication and mailing of notice of hearing,
the City Council held a public hearing on the adoption of the Enabling Ordinance and on the adoption of the
Fee Resolution, and approved the second reading of the Enabling Ordinance and the Fee Resolution.
(d) The periods for veto of both the Enabling Ordinance and the Fee Resolution have expired
without objection by owners of at least forty-five percent (45%) of the Housing Units in the Housing
Improvement Area, all in accordance with the Act.
(e) There is no litigation pending or, to the best of its knowledge, threatened against the City
relating to the Housing Improvements or to the City Obligation 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.
(f) The execution, delivery and performance of this Agreement do 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; is not in violation of any provisions of its articles of incorporation, bylaws or the laws of the
State; is duly authorized to transact business within the State; has power to enter into this Agreement; and has
duly authorized the execution, delivery and performance of this Agreement by proper action of its board of
directors.
(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 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. The City and the Association understand and agree that the Housing Improvements, as defined in
Exhibit B attached hereto, are intended to improve certain physical conditions within the Association, and
6
that the Association makes no representations and warranties pursuant to this subsection (c) regarding any
conditions within the Housing Improvement Area or which may be discovered within the Housing
Improvement Area, and which the Housing Improvements are intended to cure.
(d) The Association will construct the Housing Improvements in accordance with all local, State
or federal energy-conservation laws or regulations.
(e) 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.
(f) 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.
(g) Whenever any Event of Default occurs and if the City shall employ attorneys, financial
advisors or other consultants, 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 (10) days of written demand
by the City pay to the City the reasonable fees of such attorneys, financial or municipal advisors or
consultants, and such other expenses so incurred by the City.
(The remainder of this page is intentionally left blank.)
7
ARTICLE III
City Obligation; Disbursement of Proceeds
Section 3.1. Financing.
(a) In order to provide financing for the Housing Improvements, the City will issue the City
Obligation pursuant to the Act. The City will issue the City Obligation in the principal amount that will
produce an amount sufficient to finance the costs of issuance of the City Obligation.
(b) The City will sell the City Obligation on or about August 19, 2025, subject to:
(i) the conditions precedent set forth in Section 3.2 hereof, ;
(ii) Unavoidable Delays; and
(iii) the City's ability to sell the City Obligation under existing laws and market conditions.
(c) At the time the City Obligation is issued, it will be secured by the Fee Revenues and further
secured by the City’s full faith and credit and taxing power. The parties agree and understand that interest on
any general obligation bonds issued by the City to provide financing for the Housing Improvements will be
includable in the gross income of bondholders for purposes of federal and state income taxes, and the City
makes no warranty or representation that the City Obligation will be tax exempt under federal or State law.
The interest rate on a general obligation bond will be determined by market conditions. The City shall also
have the option to purchase its taxable general obligation bond. If the City chooses to buy the taxable general
obligation bond or if the City chooses to use internal funding, the interest rate will be no more than the
interest rates of publicly sold similarly situated bond issues (based on market information provided by the
City’s municipal advisor).
(d) The City will loan the proceeds of the City Obligation to the Association. The parties agree
and understand that the City Obligation will be repaid from Fee Revenues. The Fee will be payable in
accordance with the Fee Resolution, and will include the principal amount of the City Obligation allocated to
each unit, interest on the City Obligation, and a City administrative fee of $10.00 per Housing Unit per year
and a County administrative fee of $2.50 per Housing Unit per year, which fee may change from time to
time.
(e) The City Obligation Resolution will establish a Project Fund, a Debt Service Fund, a Cost of
Issuance Fund, and a Surplus Fund. At closing on the issuance of the City Obligation, proceeds will be
applied as follows: into the Debt Service Fund will be deposited accrued interest on the City Obligation (if
any); into the Cost of Issuance Fund will be deposited amounts necessary to pay costs of issuance of the City
Obligation (including, but not limited to, rating agency fees, the City’s bond issuance fee set forth in
Section 3.8 hereof, financial advising fees, bond counsel fee, municipal advisor fee, consulting fees, and other
costs directly related to the issuance of the City Obligation); and into the Project Fund will be deposited the
balance of proceeds of the City Obligation together with all prepaid Fee Revenues.
(f) Under the City Obligation Resolution, on each Payment Date, all Fee Revenues in excess of
the amount necessary to pay, when due, one hundred five percent (105%) of the principal of, interest and
redemption premium, if any, on the City Obligation will be applied for deposit in the Surplus Fund
established under the City Obligation 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 City Obligation, the City may
at its sole discretion apply funds in the Surplus Fund: (i) to pay registrar and paying agent fees, if any, in
8
connection with the City Obligation; (ii) to pay other Administrative Costs in connection with the City
Obligation 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 nothing in this Section 3.1(f) 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 3.7 hereof.
(g) The City and Association agree, and the City Obligation Resolution shall so provide, that
interest earnings on funds in the Debt Service Fund will be credited to the Debt Service Fund. Interest
earnings on all other funds and accounts will be credited to the Surplus Fund described in subsection (f)
above.
(h) Following the issuance of the City Obligation, no prepayment of Fee Revenues by Housing
Units will be allowed.
(i) The City may at any time, in its sole discretion, refinance the City Obligation through
issuance of a refunding City Obligation issued under the Act.
Section 3.2. Conditions Precedent to Financing. The obligation of the City to issue the City
Obligation hereunder shall be subject to the following conditions precedent:
(a) The City has received a copy of the Construction Plans, approved by the City Building
Official in accordance with Section 4.2 hereof, certified by the City Building Official and the Association.
(b) The City has received copies of the Construction Contracts, and such subcontracts as may be
reasonably requested from time to time by the City.
(c) The City has received a sworn construction statement duly executed by the Contractors for
the Housing Improvements showing estimates of all anticipated Contractors’ contract or subcontracts for
specific portions of the work on the Housing Improvements and the amounts anticipated to become due each
such Contractor, including all costs and expenses of any kind incurred and to be incurred in construction the
Housing Improvements.
(d) The City has received a total project cost statement, incorporating estimates of the
construction costs as shown on the sworn construction statement described in clause (c) above and setting
forth all other costs and expenses of any kind anticipated to be incurred in completion of the Housing
Improvements and sworn to by the Association to be a true, complete and accurate account of all costs
actually incurred and a reasonably accurate estimate of all costs to be incurred in the future.
(e) The City has received a copy of the executed contract with the Construction Manager,
approved by the City under Section 4.3(b) hereof.
(f) If the maximum annual Fee Revenues authorized by the City Council pursuant to the Fee
Resolution will not support debt service on the City Obligation in an amount adequate to produce net bond
proceeds sufficient to pay costs of issuance of the City Obligation, then the Association will first provide to
the City, a cash deposit sufficient to pay the amount of the difference between the City Obligation supported
by Fee Revenues and the amount needed to pay off the Construction Financing and pay costs of issuance of
the City Obligation.
(g) The City has received an opinion letter addressed to the City from the Association’s attorney
opining that (i) all legal requirements have been complied with in the formation of the Association; (ii) all
legal requirements have been completed that are necessary for the Association’s execution of all documents
9
relating to the financing and the Housing Improvements; and (iii) all of the documents relating to the
financing and the Housing Improvements are fully enforceable against the Association, subject to reasonable
exceptions and qualifications.
Section 3.3. Conditions Precedent to Disbursements. The obligation of the City to make
disbursements 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 3.1. 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: (i) 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; (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, and (iv) that the current balance in the Replacement Reserve Fund
meets the requirements in Section 6.5. 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.
(c) No determination shall have been made by the City’s Authorized Representative 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 3.6 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 3.6 hereof.
(d) The disbursement requirements set forth in Section 3.4 hereof have been satisfied.
(e) If requested by the City’s Authorized Representative, the City shall be furnished with a
statement of the Association and of any Contractor, in form and substance satisfactory to the City’s
Authorized Representative setting forth the names, addresses and amounts due or to become due as well as
the amounts previously paid to every Contractor, subcontractor, person, firm or corporation furnishing
materials or performing labor entering into the construction of any part of the 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 four times, the Association shall submit to the City a
Draw Request, duly executed on behalf of the Association, setting forth the information requested therein.
The City reserves the right to allow more than four disbursement requests at its discretion. 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)
10
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’s Authorized Representative:
(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.
(c) If on the date a disbursement is desired, the Association has performed all of its agreements
and complied with all requirements theretofore to be performed or complied with hereunder, including
satisfaction of all applicable conditions precedent contained in Article III hereof, the City’s Authorized
Representative 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’s Authorized Representative and the City Building Official, certifying that to the best of their
knowledge (i) work on the Housing Improvements has been completed in accordance with the Construction
Plans and all other labor, services, materials and supplies used in such work have been paid for; (ii) the
completed 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’s Authorized Representative 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’s Authorized Representative shall have received a lien waiver from each
Contractor for all work done and for all materials furnished by it for the Housing Improvements.
(d) 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’s Authorized Representative and the City Building Official, certifying that to the best of their
knowledge (i) work on the Housing Improvements has been completed in accordance with the Construction
Plans and all other labor, services, materials and supplies used in such work have been paid for; (ii) the
completed Housing Improvements conform with all applicable building laws and regulations of the
11
governmental authorities having jurisdiction over the Housing Improvements; and (iii) lien waivers submitted
to the City under Section 3.5 hereof cover all labor, services materials and supplies in connection with the
Housing Improvements.
(e) The City has received a written statement from the Association’s Authorized Representative
certifying that the current balance in the Replacement Reserve Fund meets the requirements in Section 6.5
hereof.
(f) 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.
Section 3.6. Deposit of Funds by Association. If the City’s Authorized Representative 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 such notice, deposit with the
City the amount of funds specified in the notice and shall authorize the City’s Authorized Representative to
disburse such funds prior to disbursement of any additional proceeds of the City Obligation.
Section 3.7. Application of Balances.
(a) In the event that at any time before the Maturity Date, the City has available to it Fee
Revenues (excluding amounts allocated to City or County administrative costs), together with amounts on
hand in any fund or accounts under the City Obligation Resolution, in an amount sufficient to pay in full the
principal and interest on the City Obligation in advance of their maturity (as determined by the City’s
municipal advisor), the City may, in its sole discretion:
(i) apply such excess Fee Revenues or fund balance to prepay the City Obligation and
cancel any remaining fees; or
(ii) by resolution of the City Council, disburse all or any portion of such excess Fee
Revenues or fund balance, as the case may be, to the Association for deposit into the replacement
reserve fund maintained by the Association. 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 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); 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’s
Authorized Representative, which plans shall be deemed approved unless rejected in writing by the
City’s Authorized Representative within 30 days after receipt thereof; or
(iii) any combination of clauses (i) and (ii) above.
(b) In the event that, at any time before the Maturity Date the City has available to it Fee
Revenues (excluding amounts allocated to City or County administrative costs), together with amounts on
12
hand in any fund or accounts under the City Obligation Resolution in an amount sufficient to pay in full the
principal and interest on the City Obligation in advance of its maturity (as determined by the City’s municipal
advisor), the City will apply such excess Fee Revenues and fund balances to prepay the City Obligation.
(c) Any balance remaining after the Maturity Date in the Debt Service 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 (a)(ii) above. All covenants and
obligations of the Association under this Section shall survive the Maturity Date.
Section 3.8. City Administrative and Consulting Costs. The parties agree and understand that
the Association paid an application fee of $1,000 to the City upon commencement of the process to form a
housing improvement area under the Act. The parties agree and understand that the Association paid an
escrow fee of $7,500 to the City upon commencement of the process to cover City consulting fees. The
parties agree and understand that if the City Obligation is issued, a fee of one percent (1%) of the par amount
of the City Obligation will be paid to the City to cover any administrative expense and that the City
Obligation includes an additional $57,800 in soft costs to cover City consulting fees and on-going City
Obligation expenses. The Association agrees and understands that a $10.00 per Housing Unit surcharge will
be assessed as part of the Fees to cover day to day costs of the City associated with managing the
assessments. The Association agrees and understands that to the extent the $7,500 escrow and $57,800 in
soft costs is not adequate to pay the City’s consulting fees, the City will use funds from the Project Fund to
cover these expenses.
(The remainder of this page is intentionally left blank.)
13
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 the commencement of construction of the Housing Improvements, 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 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, 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 thirty (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 thirty (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 $25,000 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 with respect to such previously approved Construction Plans, the City
Building Official shall approve the proposed change and notify the Association in writing of its approval.
Such change in the Construction Plans shall, in any event, be deemed approved by the City Building Official
unless rejected, in whole or in part, by 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.
14
Section 4.3. Commencement and Completion of Construction.
(a) Subject to Unavoidable Delays, the Association shall complete the construction of the
Housing Improvements by September 1, 2026. 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. If the completion of the construction of the
Housing Improvements is delayed due to unexpected conditions or Unavoidable Delays, the City will
work cooperatively with the Association to extend the completion date.
(b) Prior to commencement of construction, the Association shall retain a professional
construction manager (the “Construction Manager”) to supervise construction of the Housing Improvements.
Before executing a contract with the Construction Manager, the Association shall submit the name of entity
and a proposed scope of work and budget. The City’s Authorized Representative shall, within ten (10) days
after receipt, approve the Construction Manager and the scope of work or provide reasons for rejection.
(c) 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. Until construction of the Housing Improvements has been completed, the Association shall
make reports, in such commercially reasonable 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 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 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,
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.
(The remainder of this page is intentionally left blank.)
15
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) In lieu of a Builder’s Risk Policy, a Contractors’ Installation Floater Policy which
includes an endorsement covering construction of the Housing Improvements up to $500,000 at any
one time during construction, based on the provided work schedule that no more than $250,000 of
materials will be on site at any given time. The Policy will name the City and Association as
additional insured. The interest of the City shall be protected in accordance with a clause in form and
content satisfactory to the City.
(ii) During construction of the Housing Improvements the Association shall maintain,
or cause to be maintained, at its cost and expense, 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 condominium associations and that names the City as an
additional insured. The interest of the City shall be protected in accordance with a clause in form and
content satisfactory to the City.
(iii) 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 that names the City as an additional insured.
(iv) 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, at the request of the
City but no more often than annually 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 condominium associations, and that names the City as an additional insured.
(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 names 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.
16
(c) All insurance required in this Article V shall be taken out and maintained in responsible
insurance companies selected by the Association which are authorized under the laws of the State to assume
the risks covered thereby. Upon request, the Association will deposit annually with the City policies
evidencing all such insurance, or a certificate or certificates or binders of the respective insurers stating that
such insurance is in force and effect. Unless otherwise provided in this Article V 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 as to the amount of coverage in force upon the Housing Improvements.
(d) The Association agrees to notify the City immediately in the case of damage exceeding
$100,000 in amount to, or destruction of, the Property, the Housing Improvements or any portion thereof
resulting from fire or other casualty. In such event the Association will forthwith repair, 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 (the “Net Proceeds”) 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 terminate upon the earlier of the Maturity Date or termination of this Agreement.
(The remainder of this page is intentionally left blank.)
17
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 City 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, except for those that arise from the actions of the
City.
(b) The Association further agrees to indemnify and hold harmless the City, its officers and
employees against any and all losses, claims, damages or liability to which the City, its officers and
employees may become subject under any law arising out of any act, omission, representation or
misrepresentation of the Association in connection with the City Obligation 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 Maturity Date.
(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 shall provide a copy of its annual audited
financial statements for the preceding Fiscal Year, including a balance sheet and operating statements,
audited by an Independent certified public accountant to the City, by no later than May 1 of each year,
commencing May 1, 2026 and until the later of the Maturity Date or the date all excess Fee Revenues and
fund balances, if any, have been expended in accordance with Section 3.7 hereof. 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 6.01 of the Enabling Ordinance.
Section 6.3. Financial Plan; Annual Reports. The Association agrees to furnish the following to the
City, by no later than March 1 of each year commencing March 1, 2026, and until the later of the Maturity
Date or the date all excess Fee Revenues and fund balances, if any, have been expended in accordance with
Section 3.7 hereof:
18
(a) an updated Financial Plan for the Property prepared by a Management Consultant or another
property management professional acceptable to the City, in substantially the form of the Financial Plan set
forth in Exhibit C attached hereto;
(b) a written report by an Independent engineer or another property management professional
acceptable to the City, 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 adequacy of
compliance with the Association’s obligations under this Agreement; and
(c) a certificate certifying compliance with the requirements of subsection (b) above.
Section 6.4. Records and Inspection. The Association shall maintain (i) copies of federal, State,
municipal and other licenses and permits obtained by the Association relating to the operation of the Property
and the 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 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; Replacement Reserve Fund.
(a) The Association agrees that prior to the Maturity Date, 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.
(b) The Association shall maintain, at all times prior to the Maturity Date, a Replacement
Reserve Fund, the moneys in which shall be available to pay the costs of maintenance and repair of the
Property and to make any other payment that may be required under this Agreement, including without
limitation any payment to the City under Section 6.6 hereof. Prior to issuing the City Obligation under
Section 3.1 hereof, as of December 31, 2024, the balance in the Replacement Reserve Fund was
$207,739.98. By December 31, 2025 and by December 31 of each year thereafter through the Maturity Date,
the balance in the Replacement Reserve Fund shall increase in accordance with the Replacement Reserve
Fund cash flow projection (set forth in Exhibit C attached hereto). The Association shall provide
documentation showing compliance with these requirements at the time that the Financial Plan and Annual
Reports are furnished to the City as described in Section 6.3 hereof.
Section 6.6. Covenant to Maintain Net Revenues Available for Debt Service.
(a) In the event that, ten (10) business days before any Payment Date, the Net Revenues
Available For Debt Service are less than one hundred and five percent (105%) of the total principal and
interest due on the City Obligation (from all unit owners in the aggregate) on such Payment Date, the City
will provide written notice to the Association of such fact and the amount of the deficiency. Within ten (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 ten (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
19
ten (10) days after receipt of notice thereof shall entitle the City to exercise its remedies under this
Agreement, notwithstanding any cure period provided in Article VII hereof.
(b) In the event that the Association makes any payment to the City under subsection (a) above
and, ten (10) business days before any Payment Date thereafter the City determines that Net Revenues
Available for Debt Service, excluding the amount of all prior payments by the Association under
subsection (a) above, are at least one hundred five percent (105%) of the total principal and interest due on
the City Obligation on such Payment Date, the City shall promptly return to the Association the amount of
the Net Revenues Available for Debt Service in excess of the amount due on the City Obligation on that
Payment Date. Nothing in this subsection (b) shall be construed to relieve the obligation of the Association
to make any payment required under subsection (a) above.
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 fees and assessments and other income of any
type 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 fees, assessments, and Accounts are referred to collectively as the
“Association Assets.” This assignment (the “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, retain, and make appropriate payment from, of 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) Other than as described in subsection (f) below, 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) Except as otherwise described in subsection (f) below, 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 fees and
assessments from the owners of Housing Units, and apply the same for deposit in the Bond Fund. This
assignment shall be binding upon the owners 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 owners of the Housing Units. The
expenses, including any attorneys’ fees, and financial consultants’ 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.
20
(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 may or might incur under or by reason of this
assignment and from any and all claims and demands whatsoever which may be asserted against it by reason
of any alleged obligation or undertaking on its part to perform or discharge any of the terms or covenants
contained in any agreement by and among the Association and the owners of Housing Units in the Property,
except such claims and demands that arise out of the negligence or willful misconduct of the City, its officers,
employees and agents. Should the City incur any such liability, loss or damage under or by reason of this
assignment, or in the defense against any such claims or demands arising out of this assignment, the amount
thereof, including costs, expenses and reasonable attorneys’ fees, together with interest thereon at the rate of
interest on the City Obligation, shall be secured hereby, and the Association shall reimburse the City
therefore immediately upon demand.
Section 6.8. Association to Maintain Its Existence; Conditions Under Which Exceptions Permitted.
The Association agrees that, until the Maturity Date, it will maintain its existence as a nonprofit corporation
under the laws of the State; will not dissolve or otherwise dispose of all or substantially all of its assets; 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. Any assignment agreement must be approved by the City Council.
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 Minnesota Statutes, Section 515B.4-107 or any successor statute.
Section 6.11. Experienced Property Manager. At all times prior to the Maturity Date, the
Association agrees to maintain “experienced professional property management” for the Property. For
purposes of this subsection, “experienced professional management” shall mean the Property Manager, or
another property manager acceptable to the City who meets the following criteria:
(a) has demonstrated knowledge of accounting, financial reporting, budgeting and related
issues; and
(b) 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.
Section 6.12. Change in Association’s Bylaws. Until the later of the Maturity Date or the date all
excess Fee Revenues and fund balances, if any, have been expended in accordance with Section 3.7 hereof,
any changes to the Association’s bylaws must be approved by the City Council prior to approval and
adoption of the changes to the bylaws.
21
Section 6.13. Overdue Association Dues. At any time twenty percent (20%) or more of the
Association dues are past due, the Association shall notify the City with thirty (30) days.
(The remainder of this page is intentionally left blank.)
22
ARTICLE VII
Events of Default
Section 7.1. Events of Default Defined. The following will be “Events of Default” under this
Agreement and the term “Event of Default” means, whenever it is used in this Agreement, any one or more
of the following events, after the non-defaulting party provides thirty (30) days’ written notice to the
defaulting party of the event, but only if the event has not been cured within said thirty (30) days or, if the
event is by its nature incurable within thirty (30) days, the defaulting party does not, within the thirty (30) day
period, provide assurances reasonably satisfactory to the party providing notice of default that the event will
be cured and will be cured as soon as reasonably possible:
(a) Failure by the Association or the City to observe or perform any covenant, condition,
obligation, or agreement on its part to be observed or performed under this Agreement; or
(b) The Association:
(i) files any petition in bankruptcy or for any reorganization, arrangement,
composition, readjustment, liquidation, dissolution, or similar relief under the United States
Bankruptcy Act or under any similar federal or State law;
(ii) makes an assignment for benefit of its creditors;
(iii) admits in writing its inability to pay its debts generally as they become due; or
(iv) is adjudicated as bankrupt or insolvent.
Section 7.2. Remedies on Default. Whenever any Event of Default referred to in Section 7.1 hereof
occurs, the non-defaulting party may exercise its rights under this Section 7.2 after providing thirty (30) 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 (30) days or, if the Event of Default is by its nature incurable within thirty (30) days,
the defaulting party does not provide assurances reasonably satisfactory to the non-defaulting party that the
Event of Default will be cured and will be cured as soon as reasonably possible:
(a) Suspend its performance under the Agreement until it receives assurances that the defaulting
party will cure its default and continue its performance under the Agreement.
(b) 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.
(c) The City may exercise its remedies pursuant to Section 6.7 hereof.
(d) The City may seek specific performance of the obligations of the Association pursuant to
this Agreement, including without limitation payments due from the Association hereunder, or seek
damages to the extent otherwise set forth herein as to any obligation, agreement, or covenant of the
Association 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
23
now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or
power accruing upon any default shall impair any such right or power or shall be construed to be a waiver
thereof, but any such right and power may be exercised from time to time and as often as may be deemed
expedient. In order to entitle the City to exercise any remedy reserved to it, it shall not be necessary to give
notice, other than such notice as may be required in this Article VII.
Section 7.4. No Additional Waiver 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.
(The remainder of this page is intentionally left blank.)
24
ARTICLE VIII
Additional Provisions
Section 8.1. Conflict of Interests; City Representatives Not Individually Liable. The City and the
Association, to the best of their respective knowledge, represent and agree that no member, official, or
employee of the City shall have any personal interest, direct or indirect, in the Agreement, nor shall any such
member, official, or employee participate in any decision relating to the Agreement which affects his
personal interests or the interests of any corporation, partnership, or association in which he is, directly or
indirectly, interested. No member, official, or employee of the City shall be personally liable to the
Association, or any successor in interest, in the event of any default or breach by the City or for any amount
which may become due to the Association or successor or on any obligations under the 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
1502 5th St N, Hopkins, MN 55305; and
(b) in the case of the City, is addressed to or delivered personally to the City at 1010 1st Street
South, Hopkins, MN 55343, Attention: City Manager;
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.
Section 8.7. Recording. Either party may record this Agreement and any amendments thereto with
the 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.
25
Section 8.9. Amendment. This Agreement may be amended only by written agreement of the
parties hereto.
(The remainder of this page is intentionally left blank.)
S-1
IN WITNESS WHEREOF, the City and the Association have caused this Development Agreement
to be executed in their respective names and behalf as of the date and year first written above.
CITY OF HOPKINS, MINNESOTA
By
Patrick Hanlon, Mayor
By
Mike Mornson, City Manager
STATE OF MINNESOTA )
) SS.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this ____ day of __________, 2025, by
Patrick Hanlon, the Mayor of the City of Hopkins, Minnesota, a Minnesota municipal corporation and
political subdivision duly organized and existing under its Charter and the Constitution and laws of the State
of Minnesota, on behalf of the City.
____________________________________
Notary Public
STATE OF MINNESOTA )
) SS.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this ____ day of __________, 2025, by
Amy Domeier, the City Clerk of the City of Hopkins, Minnesota, a Minnesota municipal corporation and
political subdivision duly organized and existing under its Charter and the Constitution and laws of the State
of Minnesota, on behalf of the City.
____________________________________
Notary Public
S-2
Execution page of the Association to the Development Agreement, dated as of the date and year first written
above.
THE SUMMIT CONDOMONIUM ASSOCIATION,
INC.
By
Its
STATE OF MINNESOTA )
) SS.
COUNTY OF __________ )
The foregoing instrument was acknowledged before me this ____ day of __________, 2025, by
________________________, the _______________________ of The Summit Condominium Association,
Inc., a Minnesota nonprofit corporation, on behalf of the Association.
____________________________________
Notary Public
A-1
EXHIBIT A
DESCRIPTION OF PROPERTY
Original Underlying Description. The Original Declaration established Common Interest Community No.
1422, Hennepin County, Minnesota, under the name The Summit Condominiums. It is a condominium
(and not a planned community or cooperative), and is not subject to a master association. The underlying
real estate included within this CIC was legally described in the Original Declaration as follows:
Lot 1, Block 1, Crossroads, Hennepin County, Minnesota.
Present Description. The real estate included in this CIC is now legally described as follows:
Units 200 through 205, inclusive, 207 through 213, inclusive;
Units 300 through 305, inclusive, 307 through 313, inclusive;
Units 401 through 405, inclusive, 407 through 413, inclusive;
Units 500 through 505, inclusive, 508 through 513, inclusive;
Units 600 through 605, inclusive;
Units 700 through 705, inclusive,
The Summit Condominiums, Common Interest Community No. 1422, Hennepin County,
Minnesota.
B-1
EXHIBIT B
HOUSING IMPROVEMENTS
Housing Improvements: The ordinance specifies the “Housing Improvements” that will be
constructed in the Housing Improvement Area and financed with the Housing Improvement Fee. Those
improvements are defined as follows:
(a) roof replacement,
(b) façade and siding replacement,
(c) renovation of balconies,
(d) replacement of windows,
(e) replacement of doors, and
(f) if all the contingency is not used, the following improvements may be completed: replacement of common
area carpeting, repainting of common areas, replacement of the driveway and parking lot pavement.
C-1
EXHIBIT C
RESERVE STUDY FINANCIAL PLAN
Full Reserve Study
Update
Hopkins, Minnesota
August 16, 2022
Reference Number: 160193
The Summit Condominiums Association, Inc.
888-688-4560
www.superiorreserve.com
Page 1
August 29, 2022
Table of Contents
Property and Study Summary 1.101
Property Engineering Review 1.201
Reserve Study Overview 1.301
Funding Plan Overview 1.401
Financial Analysis Chart 1.402
30 Year Expenditure Summary 1.403
Reserve Budgets 2022-2052 1.404
Financial Information (provided)1.501
Credentials 1.601
Limiting Conditions 1.701
Reserve Component List Engineering
Data Section
Replacement
Year (red font if in
5 years or less)
Age
(N/A = not
available)
Useful
Life
(years)
Remaining
Useful Life
(years)
Replacement
Cost without
Inflation
% Included
(blue font if less
than 100%)$ Included Flexibility
Exterior Building Components
Lighting - Building Exterior 2.381 2029 original 25 7 $11,900 100% $11,900 deferrable
Masonry Restoration 2.421 2024 original 20 2 $14,000 100% $14,000 deferrable
Painting - Fiber Cement Siding (!) 2.431 2023 original 10 1 $91,000 100% $91,000 firm
Roof - East 2.461 2025 original 20 3 $244,000 100% $244,000 firm
Roof - West (!) 2.462 2026 original 20 4 $213,600 100% $213,600 firm
Roof - East Storage 2.463 2022 original 20 0 $70,900 100% $70,900 firm
Roofs - Lobby and Northwest Terraces 2.464 2024 original 20 2 $33,600 100% $33,600 firm
Metal Siding Restoration (!) 2.767 2023 original 10 1 $15,000 100% $15,000 deferrable
Windows - Common 2.981 2044 original 40 22 $7,000 100% $7,000 deferrable
Window Guards 2.982 2054 original 50 32 $22,000 100% $22,000 deferrable
Interior Building Components
Carpet - Hallways and Misc. Common Areas (!) 3.101 2023 N/A 15 1 $57,000 100% $57,000 deferrable
Carpet - Stairs and Elevator Lobbies 3.102 2029 2021 8 7 $37,000 100% $37,000 deferrable
Ceiling Tiles, Grid and Lighting - Interior Common Areas 3.141 2044 original 40 22 $37,400 100% $37,400 deferrable
Elevator Cab Finishes (!) 3.181 2032 varies 25 10 $19,000 100% $19,000 deferrable
Exercise Equipment (33% every 5 years)3.221 2025 varies 5 3 $6,400 33%$2,112 discretionary
Lighting - Interior Common Areas (!) 3.421 2045 2015 30 23 $15,000 100% $15,000 deferrable
Mailboxes 3.541 2054 original 50 32 $14,260 100% $14,260 deferrable
Painting - Interior Common Areas (!) 3.601 2023 N/A 10 1 $48,000 100% $48,000 discretionary
Painting - Stairs (!) 3.602 2026 2014 12 4 $19,500 100% $19,500 discretionary
Party Room Renovation 3.662 2034 original 30 12 $37,000 100% $37,000 deferrable
Rest Room Renovation (!) 3.701 2034 original 30 12 $9,000 100% $9,000 deferrable
Tile - Foyer and Lobby 3.781 2044 original 40 22 $9,600 100% $9,600 deferrable
Building System Components
Air Handling Units - Package Units (common areas) 4.181 2029 original 25 7 $14,400 100% $14,400 deferrable
Air Handling Units - Package Units (hallways) 4.182 2029 original 25 7 $31,800 100% $31,800 deferrable
Elevator Traction Controls and Equipment 4.401 2039 original 35 17 $225,000 100% $225,000 deferrable
Fire Alarm System 4.421 2034 original 30 12 $40,300 100% $40,300 firm
Generator 4.431 2034 original 30 12 $52,000 100% $52,000 deferrable
Intercom and Entry System 4.501 2050 2020 30 28 $9,900 100% $9,900 deferrable
Lighting - Exit 4.561 2034 original 30 12 $3,520 100% $3,520 deferrable
Pumps - Domestic Water 4.641 2024 original 20 2 $36,600 100% $36,600 deferrable
Fire Suppression System - Controls 4.661 2034 original 30 12 $32,000 100% $32,000 deferrable
Fire Suppression System - Pump 4.661 2064 original 60 42 $106,000 100% $106,000 firm
Surveillance System - Cameras 4.701 2027 varies 12 5 $15,000 100% $15,000 discretionary
Water Heaters (!)4.801 2037 2017 20 15 $17,000 100% $17,000 firm
The Summit Condominiums Association, Inc.
(!) See Property Engineering Review Page 1.201 Page 2
August 29, 2022
Reserve Component List Engineering
Data Section
Replacement
Year (red font if in
5 years or less)
Age
(N/A = not
available)
Useful
Life
(years)
Remaining
Useful Life
(years)
Replacement
Cost without
Inflation
% Included
(blue font if less
than 100%)$ Included Flexibility
Garage Components
Air Handling Unit - Garage 5.107 2044 original 40 22 $54,000 100% $54,000 deferrable
On-Grade Concrete Floor Renovation 5.321 2034 original 30 12 $25,000 100% $25,000 discretionary
Doors and Operators - Main (1 of 2 every 10 years)5.371 2024 varies 10 2 $13,400 50%$6,700 deferrable
Door and Operator - 2 Stall 5.372 2034 original 30 12 $20,000 100% $20,000 deferrable
Exhaust System - Garage Sensors 5.421 2034 2014 20 12 $4,000 100% $4,000 deferrable
Exhaust System - Garage Fans and Louvers 5.421 2044 original 40 22 $10,000 100% $10,000 deferrable
Heaters - Garage (!) 5.491 2044 original 40 22 $7,800 100% $7,800 deferrable
Lighting - Garage (!) 5.521 2044 2014 30 22 $6,600 100% $6,600 deferrable
Site Components
Concrete Curbs and Gutters (20% with repaving)6.121 2028 original 25 6 $25,000 20%$5,000 deferrable
Concrete Sidewalks and Aprons 6.181 2044 original 40 22 $27,000 100% $27,000 deferrable
Irrigation System 6.521 2044 original 40 22 $18,000 100% $18,000 discretionary
Landscape (5% every 5 years)6.541 2024 original 5 2 $49,000 5%$2,450 discretionary
Light Poles and Fixtures 6.601 2044 original 40 22 $32,000 100% $32,000 deferrable
Pavement - Crack Repair and Patch 6.641 2024 2020 4 2 $3,300 100% $3,300 firm
Pavement - Seal Coat and Stripe (!) 6.641 2024 2020 4 2 $5,700 100% $5,700 discretionary
Pavement Replacement - Parking Areas 6.661 2028 original 25 6 $112,000 100% $112,000 deferrable
Retaining Wall - Masonry 6.901 2039 original 50 17 $7,700 100% $7,700 deferrable
(!) See Property Engineering Review Page 1.201 Page 3
August 29, 2022
1.101
Location:Hopkins, Minnesota
Property type:multi story condominium
Number of residential buildings:2 joined buildings
Number of homes:62
Number of stories:7 (east) and 5 (west)
Year of construction:
Date of inspection:August 16, 2022
Date of previous inspection:December 5, 2016
Type of service:reserve study update
Update Study with Site Visit
Length of analysis:30 years
$73,434
The Summit Condominiums Association, Inc.
Property and Service Summary
balconies, metal siding, fiber cement siding,
masonry veneer, multiple roof levels
hallways, lobby, party room, exercise room, rest
room, garage parking
water heaters, elevator
asphalt parking areas, landscape
replacement of carpet in elevator lobbies and stairs
painting (and repairs) of fiber cement siding,
replacement of hallway carpet, replacement of roofs
Exterior features:
Interior features:
Building system features:
Site features:
Completed projects:
Upcoming projects:
garage
west building
east building
hallway
Level of service:
2022 budgeted reserve
contribution:
2023 recommended reserve
contribution:
2004 (structure of east building is older "Hopkins
House")
$118,400 = increase of $44,966 ($60.44 per home
per month)
Page 4
August 29, 2022
1.201
Property Engineering Review
During our inspection of your property, we identify the following repairs and improvements that the
property should consider:
Actionable recommendations - near term actions on these items will minimize future costs and
maintain the comfort and security (See “Pages with Engineering Data” for more information where
applicable):
We observed “tenting” of the west roof membrane, or shrinking of the roof membrane over time. This
dimensional change in the membrane creates additional forces on roof seams and flashing details
resulting in failure when the forces become too great. The property should monitor these conditions
and repair the roof if/when failure occurs.
We observed that the metal siding flashing is not lapped which allows for water penetration through the
butt joint. Remediation requires a short piece of flashing to lap the butt joint. Also, the channel at the
base of the metal siding traps water. Its only escape is to flow through the joints at the ends. Clogging
of the channel with debris could result in flooding and potential leaks. We recommend drilling drain
holes in the channel to allow the water out.
The light level in the interiors is low. For safety reasons, the property should consider increasing the
lighting level by installing higher output bulbs (verify the fixtures are designed appropriately). See the
following website for a recommendation of appropriate lighting levels:
https://www.gsa.gov/node/82715.
We observed damaged interior hallway and stair paint and walls at the corners. The property could
install metal corner guards to minimize damage to the finishes.
Caulk is missing in the rest room between the sink backsplash and wall. Caulk at this location would
minimize the potential for water damage to the wall. The property should caulk the backsplash.
Package shelving is obstructing access to the lobby HVAC unit. In addition, the space in front of the unit
in the closet is being used for storage. These conditions inhibit maintenance of the unit which will
decrease its useful life. The property should remove the items in the closet and install a package
shelving unit with wheels.
The heater in the east mechanical room that houses the water heater, fire pump, etc. was running
during our inspection in August. Operation of the heater was not necessary and was causing
overheating of the roof, which in turn resulting in the exhaust fan running. The property should either
replace or install a thermostat on the heater.
The exhaust flue for the garage gas heaters should have an upward rise of ¼” per foot to allow for
proper flow and minimize safety hazards from dangerous fumes. The exhaust flues in the garages are
Page 5
August 29, 2022
1.202
sloped downward. This condition creates a hazardous situation for users of the garages and accelerates
deterioration of the ductwork. The property should adjust the exhaust to slope upward. At a minimum,
the property should install sensors near the exhaust to detect carbon monoxide leaks and inspect the
flues monthly for corrosion.
Green ideas - Opportunities for energy efficiency and best practices for sustainability. Acting on
these recommendations will provide significant cost savings (See “Pages with Engineering Data” for
more information where applicable):
The elevator cab lights operate continuously. Install occupancy sensors to eliminate light operation
when not in operation (potential savings of 80% on elevator cab light usage). The following link provides
additional information: http://www.eciamerica.com
The property could install touchless sensors on mechanical and exercise room light switches (or on the
lights themselves) to minimize fixture operation. Touchless sensors minimize the spread of germs, and
minimize soiled and scuffed wall surfaces. Touchless sensors are inexpensive:
http://www.homedepot.com/b/Electrical-Dimmers-Switches-Outlets-Motion-Sensors/N-
5yc1vZc32r/Ntk-Extended/Ntt-light+switch?Ntx=mode+matchpartialmax&NCNI-5.
The interior common area lights operate continuously. Consider installing occupancy sensors to
minimize fixture operation or installing light dimmers to minimize energy use during off peak hours. For
safety reasons, maintain a minimum light level at all times. Our experience indicates properties typically
have one out of two lights operate continuously and the remaining are on sensors. Check with local
code for specific requirements. The following manufacturer provides these products:
http://www.xeleum.com/stairwell-low-occupancy-1.
Consider the following efficiencies for the rest room: Install a motion sensor on the light switch to
minimize fixture operation. Replace the faucet with an automatic shut off to use up to 70% less water.
Automatic shut offs also minimize the spreading of germs. Install a low flow aerator on the faucet to
use approximately 30% less water.
The property could install high-performance doors (HPD) in the garage. These doors operate faster
resulting in minimized heat loss and maximize security of the building.
The light level in the garage is excessive. For energy efficiency, the property should consider decreasing
the lighting levels by installing lower output bulbs. See the following website for a recommendation of
appropriate lighting levels: https://www.gsa.gov/node/82715.
The property has seal coated the asphalt pavement in the past. It is our professional opinion that seal
coating asphalt pavement does not extend the useful life of the pavement. Seal coats do not add
structural strength to the pavement. Seal coating is also a source of environmental contamination.
Many properties opt to save money by *not* seal coating their pavement. If the property decides to
Page 6
August 29, 2022
1.203
seal coat for aesthetic reasons, avoid the use of coal tar based pavement seal coats as they pollute
waterways. Instead, consider a slurry coat of asphaltic emulsion to provide a sacrificial wearing surface
to the pavement. Also, if the property chooses to seal coat, we recommend applying the seal coat in the
spring rather than the fall. Snow removal equipment wears the seal coat. Application in the spring will
provide the maximum visual enjoyment from a fresh seal coat.
The following address provides links to incentives and rebates for energy conservation in your area:
http://www.dsireusa.org/
Engineering solutions - reference this information for proper scope of work and best outcome on
upcoming projects (See “Pages with Engineering Data” for more information where applicable):
The property reports a history of leaks at the façade, including at unit 505. We did not have access to
any of the unit interiors or balconies to observed these conditions. The normal life cycle of a multi-story
building requires periodic and normal maintenance including painting, replacement of caulk, repairs and
partial replacements of components that have experienced accelerated deterioration. The reserve
study from 2016 noted loose panels, loose fasteners and paint deterioration, metal siding flashing that is
not lapped and metal siding channels that trap water. The reserve study at that time did not report
leaks. That reserve study recommended painting of the façade and related repairs in 2018. It is our
understanding that the property has not conducted that recommended work. During our most recent
inspection we observed loose panels, loose fasteners, paint, caulk and siding deterioration, and lack of
flashing atop horizontal surfaces. Siding deterioration is most notable at horizontal intersections with
metal siding. Manufactures of fiber cement siding often recommend gaps of approximately two inches
from horizontal surfaces. In many locations the siding is in direct contact with the horizontal surface,
prolonging contact with moisture resulting in accelerated deterioration. The property could trim the
siding at these locations to adhere to the clearance guidelines of the manufacturer. Horizontal trim
pieces atop the fiber cement panels rely on caulk rather than metal flashing to prevent water
penetration behind the joint. We observed deterioration of this caulk joint that greatly increases the
potential for water infiltration. Installation of flashing at these locations is likely not feasible. Instead,
the property should plan for periodic replacement of the caulk at these joints.
Prior to an invasive inspection to determine the cause of the leaks, we recommend the property first
conducts normal maintenance to the building including painting, replacement of caulk, repairs, partial
replacements of components that have experienced accelerated deterioration and reasonable
modifications to the original installation to improve upon component longevity, such as trimming the
siding at horizontal surfaces. Once this normal, periodic and planned work is complete, it is possible
that a percentage of the leaks will subside. At that time, the property could conduct an invasive
inspection, such as a water test and/or removal of façade components in the vicinity of the leak,
knowing confidently that the cause of the leaks is not due to deferred maintenance. Approaching the
resolution to the leaks in this order (first conducing normal maintenance followed by an invasive
investigation for those leaks that might continue) is more reasonable than to first conduct an invasive
Page 7
August 29, 2022
1.204
Figure 1: Rust at welded connection
investigation and then conduct the normal maintenance as it is possible that the invasive investigation
could identify the cause of the leaks to be deferred maintenance.
It is our understanding that the balconies are the responsibility of the
homeowners. The metal components of the balconies include
galvanized steel framing and prefinished metal railings. Neither of
these components require periodic painting. We did observe that the
welded connections of the galvanized steel framing exhibits rust, likely
due to the loss of the protective coating during the welding process.
Homeowners could have the balcony connections painted to prevent
continued rusting.
Replacement of all the metal siding is not likely during the next 30
years. Instead, we recommend periodic restorations to include inspections and minor repairs.
The carpet is deteriorated and at the end of its useful life. For carpet replacement: 1) Use a nylon fiber
as it is durable, resilient and stain resistant. 2) Berber (loop) or angle cut piles with woven patterns are
ideal for high traffic areas. 3) Mid tone colors are ideal to hide traffic patterns and stains.
Implementation of these repairs and improvements could increase the useful life of the components,
minimize operating costs and provide guidance at the time of component replacement.
Page 8
August 29, 2022
1.301
Reserve Study Overview
This reserve study is a physical and financial analysis of your property that determines what
components of your property will eventually require either major repairs or restoration, or complete
replacement. Large, one-time contributions (special assessments) for these projects can be eliminated
with development of a reserve through relatively smaller annual contributions. The physical analysis
determines the existing quantities, conditions, useful lives and costs of the components. The financial
analysis determines the existing financial situation of your property and the reserves necessary to offset
the future expenses.
Reserve Component
Components in this reserve study meet the following requirements:
• responsibility of the property
• limited useful life expectancy
• predictable remaining useful life expectancy
• above a minimum threshold cost
Components that do not fulfill the above requirements are not included in this study.
30 Year Analysis
The analysis for this reserve study encompasses the next 30 years. The components of the property age
each year. Those who enjoy the use of each component are financially responsible for what they
enjoyed. This length of an analysis is necessary to analyze the aging of nearly all the major components
of the property. The expectation is not that the current Owners, Board of Directors and/or
Management will be present at the property in 30 years. Rather, the future analysis aids in determining
the most accurate current contribution for the aging components.
Funding Method
The funding method of this reserve study utilizes the cash flow method. With the cash flow method,
contributions to the reserve fund are designed to offset variable annual expenditures. We experiment
with different contribution scenarios until an ideal scenario is discovered to offset reserve expenditures.
All expenses and contributions are pooled together. Our experience indicates that the cash flow method
typically results in lower overall contributions than the component method, which typically segregates
funds.
Funding Goal
The funding goal of this reserve study is to maintain a reserve balance above a minimum threshold
during the years of major expenditures. We assume a contingency reserve balance of not less than
Page 9
August 29, 2022
1.302
approximately ten percent (10%) of the expenditures in the threshold funding year (The year the
reserve balance is at its lowest point. See Funding Plan Page 1.401 for the identification of this year).
The property can determine if they prefer a higher or lower contingency.
The ideal situation is when the threshold funding year is in the last year of the analysis. This provides
the maximum amount of time that the property can save up for major expenses. A critical situation is
when the threshold funding year is in the first few years of the analysis. This situation requires major
initial reserve contributions to offset near term expenditures.
Funding
This reserve study assumes an ideal situation where all future costs are offset by annual contributions to
the reserve fund. We understand that this is not always possible. Our experience suggests that major
projects are funded through multiple means such as partially through the reserve fund and partial
through either additional assessments or bank loans. The specific funding of the projects is determined
by the property at the time of the event (this is not something we can forecast). The goal of the
property should be to follow the recommended funding plan outlined in this reserve study. If the
recommended reserve contributions are not feasible as determined by the Board of Director’s
judgment, this reserve study should then be used, at a minimum, to justify the need for an increase over
the current reserve fund contribution.
Flexibility
The time of replacement for each component involves a varying degree of deduction. To help
understand the criticality of each replacement time, we provide the following replacement flexibility
guide:
firm - Replacement time has little, if any, flexibility. Deferring the replacement time
would have an adverse effect on the property.
deferrable - Replacement time has limited flexibility. Continually deferring the
replacement time would eventually have an adverse effect on the property and raise
aesthetic concerns.
discretionary - Replacement time has flexibility. Continually deferring the replacement
time would either raise aesthetic concerns or the component does not affect the
functionality of the property. The replacement costs for certain discretionary expenses
can vary greatly as they are subject to improvements and expansions as desired by the
property.
Page 10
August 29, 2022