Memo Oaks Of MainstreetGEN /CO®O
CITY OF HOP
MEMORANDUM
DATE: September 4, 1996
TO: / Honorable Mayor and City Council
PROM r /mJim * Kerrigan,:.Director, Planning & Economic Development
SUBJECT: Oaks of Mainstreet Project
At the September 10, 1996, work session, there will be a
continuation of the discussion concerning various issues relevant
to the Oaks of Mainstreet Project.
The main purpose of this meeting will be to discuss how to make
up the reduction in the operating reserve fund, which has
occurred because of increased project costs. In conjunction with
this discussion, staff will be working with the City Attorney's
office to discuss precedent and liability issues as relate to the
potential of having the roadways in this project public.
C I T Y OF YOPKINS
M E M O R A N D U M
DATE: August 26, 1996
TO: HRA
FROM: Jim Kerrigan, Director Planning & Economic Development
SUBJECT: The Oaks of Mainstreet Project
The present schedule for this project would have the City Council
and HRA taking final action on bond documents September 17. At
the September 3 HRA meeting, staff has scheduled time to discuss
various issues with the board. The purpose of this discussion is
to both provide an update and receive direction. Some of the
issues to be discussed include the following:
Status of the relocation agreements with existing tenants
Staff has been told there are only four individuals who have
not consented to the terms of the agreement. The relocation
agreement as drafted requires owner residents to move from the
park the later of the following:
September 30, 1996
30 days after receipt of a second payment.
The developer has stated he anticipates
making this payment in the near future in
order to start the 30 day period. If the
project was not approved on the anticipated
final review day of September 17, 1996, the
residents would be notified that the project
would not be moving forward.
For renters the agreement they are signing just states that
they must vacate the park by September 30, 1996.
Real Estate Equities has stated that all the residents that
have signed the agreement to date are aware that they may have
to find a new dwelling by the end of the month even though they
probably will not know for sure until there is final
Council /HRA action. He has stated the residents feel this
timing is acceptable and are already making alternative plans
should the project proceed forward.
BY -LAWS OF OAKS OF MAINSTREET TOWNHOMES
1. GENERAL
The following are the By -Laws of Oaks of Mainstreet Townhomes, a Minnesota
nonprofit corporation (the "Association "). The Association is organized pursuant to Section
5I5B.3 -101 of the Minnesota Common Interest Ownership Act (the "Act ") for the purpose of
operating and managing Oaks of Main Street Townhomes, a planned community created
pursuant to the Act. The terms used in these By -Laws shall have the same meaning as they have
in the Declaration of Oaks of Main Street Townhomes (the "Declaration ") and the Act.
2. MEMBERSHIP
2.1 Owners Defined. All Persons defined as Owners in Section 1.13 of the Declaration
shall be members of the Association. No Person shall be a member solely by virtue of holding a
security interest in a Unit. A Person shall cease to be a member at such time as that Person is no
longer an Owner.
2.2 Registrationsf_lhaters_andScupants. Each Owner shall register with the
Secretary of the Association, in writing, within 30 days after taking title to a Unit, (i) the name
and address of the Owners and any Occupants of the Unit, (ii) the nature of such Owner's interest
or estate in each Unit owned; (iii) the address at which the Owner desires to receive notice of any
meeting of the Owners, if other than the Unit address; and (iv) the name and address of the
secured party holding the first mortgage on the Unit, if any. The Owner shall have a continuing
obligation to advise the Association in writing of any changes in the foregoing information.
2.3 Transfers. The interests, rights and obligations of an Owner in the Association may
be assigned, pledged, encumbered or transferred, but only along with and as a part of the title to
the Owner's Unit or as otherwise specifically authorized by the Governing Documents or by law.
3. VOTING
3.1 Entitlement. Votes shall be allocated to each Unit as provided in the Declaration.
However, no vote shall be exercised as to a Unit while the Unit is owned by the Association. No
Owner shall be entitled to vote during any period when any assessment against the Owner's Unit
is past due.
3.2 Authority to Cast Vote. At any meeting of the Owners, an Owner included on the
voting register presented by the Secretary in accordance with Section 4.6, or the holder of such
Owner's proxy, shall be entitled to cast the vote which is allocated to the Unit owned by the
Owner. If there is more than one Owner of a Unit, only one of the Owners may cast the vote. If
the Owners of a Unit fail to agree as to who shall cast the vote, or fail to register pursuant to
Section 2.2., the vote shall not be cast
3.3 Voting by Proxy. An Owner may cast the vote which is allocated to the Owner's
Unit and be counted as present at any meeting of the Owners by executing a written proxy
annual meeting of the Owners, (i) the Persons who are to constitute the Board of Directors shall
be elected pursuant to Section 5, (ii) a report shall be made to the Owners on the activities and
financial condition of the Association, and (iii) any other matter which is included in the notice
of the annual meeting, and is a proper subject for discussion or decision by the Owners, shall be
considered and acted upon at the meeting,
4 3 Special Meetings Special meetings of the Owners may be called by the President
as a matter of discretion. Special meetings of the Owners shall be called by the President or
Secretary within 30 days following receipt of the written request of a majority of the members of
the Board of Directors or of Owners entitled to cast at least 25% of all the votes in the
Association. The meeting shall be held within 90 days following receipt of the request. The
request shall state the purpose of the meeting, and the business transacted at the special meeting
shall be confined to the purposes stated in the notice. The purpose for which the meeting is
requested and held must be lawful and consistent with the Association's purposes and authority
under the Governing Documents.
4.4 Notice of Meetings. At least 21, but no more than 30, days in advance of any
annual meeting of the Owners, and (subject to Section 6.3 of the Declaration) at least 7, but no
more than 30, days in advance of any special meeting of the Owners, the Secretary shall send, to
all persons who are Owners as of the date of sending the notice, notice of the time, place and
agenda of the meeting, by United States mail, or by hand delivery, at the Owner's Unit address or
to such other address as the Owner may have designated in writing to the Secretary. The notice
shall also be sent to the Eligible Mortgagee, upon request, at the address provided by the Eligible
Mortgagee. Any Eligible Mortgagee shall, upon request, be entitled to designate a representative
to be present at any meeting. Notice of meetings to vote upon amendments to the Articles of
Incorporation shall also be given separately to each officer and director of the Association.
4.5 Quorum/Adjournment. The presence of Owners in person or by proxy, who have
the authority to cast in excess of fifty percent (50 %) of all the votes in the Association shall be
necessary to constitute a quorum at all meetings of the Owners for the transaction of any
business, except that of adjourning the meeting to reconvene at a subsequent time. Any meeting
may be adjourned from time to time, but until no longer than 15 days later, without notice other
than announcement at the meeting as initially called. If a quorum is present at the reconvened
meeting, any business may be transacted which might have been transacted at the meeting as
initially called and a quorum then been present. The quorum, having once been established at a
meeting or a reconvened meeting, shall continue to exist for that meeting notwithstanding the
departure of any Owner previously in attendance in person or by proxy. The Association may
not be counted in determining a quorum as to any Unit owned by the Association.
4.6 Voting Register. The Secretary shall have available at the meeting a list of the Unit
number, the names of the Owners and the name of the Person (in the case of multiple Owners)
authorized to cast the vote.
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the total number of Units authorized to be included in the common interest
community The term of office of any director elected to the first Board of
Directors by Owners other than the Declarant shall terminate at the same time as
those appointed by Declarant.
(b) Notwithstanding the provisions of Subsection (a), the Owners other than
Declarant shall have the right to nominate and elect not less than 33 1/3% of the
directors at a meeting of the Owners held within 60 days following the
conveyance by Declarant of 50% of the total number of Units authorized to be
included in the common interest community.
(c) The first terms of office of the directors elected by the Owners immediately
following the termination of the terms provided for in Subsection (a) shall be two
years for three of the directors and three years for two of the directors. The
nominee or nominees receiving the greatest numbers of votes shall fill the longer
terms. Each term of office thereafter shall be two years and shall expire upon the
election of a successor at a subsequent annual meeting of the Owners; provided,
that a director shall continue in office until a successor is elected. A number of
nominees equal to the number of vacancies, and receiving the greatest numbers of
votes, shall be elected, notwithstanding that one or more of them does not receive
a majority of the votes cast. A director appointed to fill an uncompleted term
shalt serve until the natural termination of that term, unless removed in
accordance with these By -Laws. There shall be no cumulative voting for
directors.
6.3 Nominations Nominations for election to the Board of Directors shall be made by
a nominating committee appointed by the Board of Directors, or from the floor at the annual
meeting or by "write -in" if authorized by the Board.
6.4 Powers. The Board of Directors shall have all powers necessary for the
administration of the affairs of the Association, and may exercise for the Association all powers
and authority vested in or delegated to the Association (and not expressly prohibited or reserved
to the owners) by law or by the Governing Documents. The powers of the Board of Directors
shall include, without limitation, the power to:
(a) adopt, amend and revoke Rules and Regulations not inconsistent with the
Governing Documents, as follows: (i) regulating the use of the Common
Elements; (ii) regulating the use of the Units, and the conduct of Owners and
Occupants, which may jeopardize the health, safety, or welfare of other Owners
and Occupants, which involves noise or other disturbing activity, or which may
damage the Common Elements or other Units; (iii) regulating or prohibiting
animals; (iv) regulating changes in the appearance of the Common Elements and
conduct which may damage the Property, (v) regulating the exterior appearance of
the Property, including, for example, balconies and patios, window treatments,
and signs and other displays, regardless of whether inside a Unit; (vi)
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provide for the indemnification of its officers, directors, and committee members,
and maintain directors' and officers' liability insurance which includes committee
members;
(n) provide for reasonable procedures governing the conduct of meetings and the
election of directors;
(m)
(o) appoint, regulate and dissolve committees;
(p) subject to the requirements of the Governing Documents and the Act, borrow
money and encumber or pledge the assets of the Association as security therefor;
exercise any other powers conferred by law or. the Governing Documents, or
which are necessary and proper for the governance of the Association.
6.5 Meetings and Notices An annual meeting of the Board of Directors shall be held
promptly following each annual meeting of the Owners. At each annual meeting of the Board,
the officers of the Association shall be elected.
(q)
(a) Regular meetings of the Board of Directors shall be held at least on a quarterly
basis, at such times as may be fixed from time to time by a majority of the
members of the Board of Directors. A schedule, or any amended schedule, of the
regular meetings shall be provided to the directors.
(b) Special meetings of the Board of Directors shall be held when called (1) by the
President of the Association, or (ii) by the Secretary within ten (10) days
following the written request of any two (2) directors. Notice of any special
meeting shall be given to each director not less than three (3) days in advance
thereof. Notice to a director shall be deemed to be given when deposited in the
United States mail postage prepaid to the Unit address of such director, or when
personally delivered, orally or in writing, by a representative of the Board of
Directors.
(c) Any director may at any time waive notice of any meeting of the Board of
Directors orally, in writing, or by attendance at the meeting, If all the directors
are present at a meeting of the Board of Directors, no notice shall be required, and
any business may be transacted at such meeting.
6.6 Duontm and Voting A majority of the members of the Board of Directors shall
constitute a quorum for the transaction of business at any meeting thereof. A quorum, once
established, shall continue to exist, regardless of the subsequent departure of any directors. Each
director shall have one vote. The vote of a majority of the directors present at any meeting at
which a quorum is present shall be sufficient to adopt any action. Proxies shall not be permitted.
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7.4 President. The President shall be the chief executive officer of the Association, and
shall preside at all meetings of the Board of Directors and the Association. The President shall
have all of the powers and duties which are customarily vested in the office of the president of a
corporation, including without limitation the duty to supervise all other officers and to execute all
contracts and similar obligations on behalf of the Association. The President shall have such
other duties as may from time to time be prescribed by the Board of Directors.
7.5 Vice President. The Vice President shall take the place of the President and
perform the duties of the office whenever the President shall be absent or unable to act. The Vice
President shall also perform such other duties as shall from time to time be prescribed by the
Board of Directors.
7.6 Secretary. The Secretary shall be responsible for recording the minutes of all
meetings of the Board of Directors and the Association. The Secretary shall be responsible for
keeping the books and records of the Association, and shall give all notices required by the
Governing Documents or the Act unless directed otherwise by the Board of Directors. The
Board of Directors may delegate the Secretary's administrative functions to a managing agent;
provided that such delegation shall not relieve the Secretary of the ultimate responsibility for the
Secretary's duties.
7.7 Treaauer. The Treasurer shall have responsibility for all financial assets of the
Association, and shall be covered by a bond or insurance in such sum and with such companies
as the Board of Directors may require. The Treasurer shall be responsible for keeping the
Association's financial books, assessment rolls and accounts and the preparation of an annual
financial report for the Association, subject to review by the Association's accountants. The
Treasurer shall cause the books of the Association to be kept in accordance with customary and
accepted accounting practices and shall submit them to the Board of Directors for its examination
upon request. The Treasurer shall cause all moneys and other monetary assets of the Association
to be deposited in the name of or to the credit of the Association in depositories designated by
the Board of Directors, shall cause the funds of the Association to be disbursed as ordered by the
Board of Directors and shall perform all other duties incident to the office of Treasurer. The
Board of Directors may delegate the Treasurer's administrative functions to a managing agent
provided that such delegation shall not relieve the Treasurer of the ultimate responsibility for the
Treasurer's duties.
7.8 Cnpyensatiog. Except as authorized by a vote of the Owners at a meeting thereof,
officers of the Association shall receive no compensation for their services in such capacity. An
officer, or other Owner or Occupant may, upon approval by the Board of Directors, be retained
by the Association and reasonably compensated for goods and services furnished to the
Association in an individual capacity. Officers may be reimbursed for out -of- pocket expenses
incurred in the performance of their duties.
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assessment upon prior written notice thereof to the Owner, and the entire unpaid
balance of the assessment and late charges shall become due and payable upon the
date stated in the notice unless all past due amounts, including late charges, costs
of collection and fines, are paid prior to said date.
(b) The Board of Directors shall have the right and duty to attempt to recover all
assessments for Common Expenses, together with any charges, attorneys' fees or
expenses relating to the collection thereof.
(c) Upon written request of an Owner or an Eligible Mortgagee of such Unit, notice
of a default of more than thirty (30) days in payment of any assessment or
installment of an assessment for Common Expenses or any other default in the
performance of obligations by the Owner shall be given in writing to such Eligible
Mortgagee.
(d) The rights and remedies referred to herein shall in no way limit the remedies
available to the Association under the Declaration or by law.
8.4 Foreclosure of Liens for 1 Jnpaid Assessments. The Association has the right to
foreclose a lien against a Unit for assessments imposed by the Association, as more fully
described in the Declaration and the Act.
8.5 Records The Board of Directors shall cause to be kept at the registered office of
the Association, and at such other place as the Board of Directors may determine, records of the
actions of the Board of Directors, minutes of the meetings of the Board of Directors, minutes of
the meetings of the Owners of the Association, names of the Owners and Eligible Mortgagees,
and detailed and accurate records of the receipts and expenditures of the Association. All
Association records, including receipts and expenditures and any vouchers authorizing payments,
shall be available for examination by the Owners and the Eligible Mortgagees upon reasonable
notice and during normal business hours. Separate accounts shall be maintained for each Unit
setting forth the amount of the assessments against the Unit, the date when due, the amount paid
thereon and the balance remaining unpaid.
8.6 Enforcement of Obligations. All Owners and Occupants and their guests are
obligated and bound to observe the provisions of the Governing Documents, the Rules and
Regulations and the Act. The Association may impose any or all of the charges, sanctions and
remedies authorized by the Governing Documents, the Rules and Regulations or by law to
enforce and implement its rights and to otherwise enable it to manage and operate the
Association.
9. AMENDMENTS
These By -Laws may be amended, and the amendment shall be effective, upon the
satisfaction of the following conditions:
11.6 No Corporate Seal. The Association shalt have no corporate seal.
11.7 Fiscal Year, The fiscal year of the Association shall be as determined by the
Board of Directors.
The undersigned hereby executes these By -Laws and certifies that they were adopted by
Oaks of Mainstreet Townhomes, a non- profit corporation incorporated under the laws of the
State of Minnesota, effective as of the date hereof.
Dated this day of , 1969.
OAKS OF MAIN STREET TOWNHOMES
By:
Its:
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•TC3 164527
F ROM DID
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MANAGEMENT AGREEMENT
THE OAKS OF MAWSTREET, LLC,
("
REAL ESTATE EQUITIES MANAGEMENT COMPANY
/MAsteal
for Townhome Units Ioested at
Dated: September , t996
DRAFT S/25ro6
.FROM OWO (SUNI08. 25' 96 20:45/ST. 20:42/NO. 3560539826 P 5/28
a company deeetmined by the AGENT.
2.4 To pay, to the Operating Fund established under that certain Indenture of Trust,
dated as of September 1, 1996, between the Housing and Redevelopment Authority in and For
the City of Hopkins (the "Authority"), and First Trust National Association, as trustee, an amount
equal to the difference between revenues projected to be realized if the Promises are occupied at
ninety percent (90%) of projected occupancy (as set forth on Exhibit A set attached hereto) and
actual revenues, within fifteen (15) days after • ritten demand by the Authority. For purposes of
detamining occupancy hereunder, a Unit is occupied when subject to an existing lease or has been
sold.
3. THE OWNER AGREES:
To give the AGENT the following authority and powers (a11 or any of which may be exorcised
in the name of the OWNER) and agrees to assume all menses in connection therewith:
3.1 To advertise tire or any part thaeot to display signs thereon and to tent
the sine; to cause re Ora of prospective tennis to be investigated; to sign leases for tams
not in excas of [three (3)), yeas and to renew and/or cancel the existing leases and prepare and
execute the new leases with' additional charge to the OWNER; provided, however, that the
AGENT may collect from tenants all or any of the following: a fate rent administrative charge,
a non-negotiable check charge, credit report See, a subleasing administrative charge and/or
broker's commission and need not account for such charges and/or commission to the OWNER;
to terminate tenancies and to sign and save such notices as we deemed needful by the AGENT;
to institute and prosecute actions to oust talents and to recover possession of the Premises; to sue
for and recover rant; and, when expedient, to settle, compromise, and release such actions or suits,
or reinstate such tenancies. OWNER shall reimburse AGENT for all expenses of litigation
including attorneys' fees, filing bees, and court costs which AGENT does not recover from
tenants. AGENT may select the attorney of its choice to handle such litigation_
3.2 To hire, discharge, and pay all engineers, janitors, and other employees; to make
or cause to be made all ordinary repairs and replacematb necessmy to preserve the Premises in
its pavan condition and for the operating efficiency thereof and all alterations required to comply
with lease requisemarts, and to do decorating on the Premises; to negotiate corhtnhcts for
nonrecurring items not exceeding S5,000 and to enter into agreements for sit necessary repairs,
maintenance, minor alterations, and utility services and to purchase supplies and pay all bills.
AGENT shall secure the approval of the OWNER for any alterations of expenditures in excess
of 55,000 for any one item, accept monthly or recurring operating char/lee end emergency repairs
in excess of the maximum, it in the opinion of the AGENT, such repairs arc necessary to protect
the propaty from damage or to maintain services to the tenants as called for by their tenancy.
3.3 To collect rents and/or assessments and otter items duc or to become due and give
receipts therefor and to deposit all funds collated hereunder in the AGENT'. custodial account.
3.4 To handle tenants' security deposits and to comply, on the OWNER's bebag with
applicable state or local laws concerning the AGENT's responsibility for security deposits and
interest thereon, if any.
33 To execute and file all returns and other instruments and do and perform all acts
required of the OWNER as an employer with respect to the Premises under the Federal insurance
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of the AGENT to comply with all applicable state or federal tabur laws. The OWNEIt's
obligation under this paragraph 4.3 shall include the payment of all settlements, judgments
damages; liquidated damages, penalties, forfeitures, back pay awards, cent costs, litigation
expedsc, and attorneys' foes.
4.4 To give adequate advance written notice to the AGENT if the OWNER desires
that the AGENT make payment, out of the proceeds from the premises, of mortgage indebtedness,
general tmtaa, special assessments, or fire, steam bona; or any other insurance premiums. In 00
event shall the AGENT be required to advance its on Monty in payment of any such
indebtedness, tees: assessments, or Premiums.
5. THE OWNER, AGREES TO PAY THE AGENT EACH MONTH:
5.1 FOR MANAGEMENT: montfiiy, as amount equal to five patent (5 %) of the monthly
gross receipts from the operation of the Premises daring the period this Agreement remains in full force
and effect. Gross receipts are all coupe received from the operation of the Premises including, but not
limited to, rents, parking fees, deposits, laundry income, and fees; provided that such Management fees
Audi be deferred to the mart that the oy of the unsold Units is less than ninety-five paeans
(95%) of projected occupancy tastes (as set forth on Milt A attached henna) in an amount equal to the
difference between 95% of projected revenues and actual revenues. For purposes of determining
occupancy here mder, a Unit is occupied when subject to an existing lease or has bees sold. Management
fees deferred pursuant to this section, plus any amounts paid by the AGENT pursuant to Section 2.4
hereof, dual) be paid, monthly, with interest thereon at the rate of ten percent (10%) per annum. to the
extent of the total of the amount deferred haeunda plus any amount paid pursuant to Section 2.4, from
gross receipts received in excess of 100% of projected revenues (calculated on a cumulative basis from
the first availability of the Premises for lease thruugh the cdculatton date).
5.2 APARTMENT LEASING: Upon the execution haste the sure of 82,500.00 as a set -up
fan fm the lease unarkctiug program, and monthly, commencing Novemba
9
1 1996 ami ending Fern
1, 1997, an amount equal to 51,71 5.75, provided that such payments shall be
when ail available (Le., unsold) Townhouses are leased.
6. IT IS MUTUALLY AGREED THAT:
6.1 The OWNER aptsasly withholds from the AGENT any power or authority to make any
structural changes in any building or to make any other major alterations or additions in or to any such
building or equipment therein, or to incur any expense chargeable to the OWNER other than expenses
related to exercising the express powers above vested in the AGENT without the prior written direction
of the Owner, a ccept such 'maggoty repairs as may be required because of danger to life or property or
which are immediately necessary for the prdavation and safety of the Premises or the safety of the
tenants and occupants thereof or ate required to avoid the suspension of any necessary service to the
Premises.
6.2 The AGENT does not assume and is given no responsibility for compliance of any
building on the Premises or any equipment therein with the requirements of any statute, ordinance, law,
or regulation of any governmental body or of any public authority or official thereof laving jurisdiction,
except to notify the OWNER promptly or forward to the OWNER promptly any complaints, warnings,
notices, or summonses received by it relating to such matters. The OWNER represents that to the best
of its lmowledge the Premises and such equipment comply with all such requirements and authorizes the
AGENT to disclose the ownership of the Premises to any such officials and agrees to indemnify and hold
4
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IN WPI'NESS WHEREOF, the parties hereto have axed or caused to be affixed their respective
Signatures this _ day of September, 1996
OWNER:
THE OAKS OF MAINSTREET, LLC
By
Its
AGENT:
REAL ESTATE EQUITIES MANAGEMENT COMPANY
By
Its
6
•aarn MUMVOxAG .rata- 3s4.vm7
11.101 oD
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RESIDENTIAL REAL ESTATE PURCHASE AGREEMENT
This Agreement dated September , 1996 is between The Oaks of Mainstreet, I.LC ("Seller")
having its principal office at 325 Cedar Street, 400 Degree of Honor Building, Saint Paul, MN 55101 and
TJ &W RESIDENTIAL, INC. MAW") having its principal office at 844 Swallow Street, Deerfield, IL
60015.
WHEREAS the Seller dashes to secure a loan for the construction of a certain propaty described
hmein from the Rousing and Redeveloptna,t Authority in and for the City of Hopkins (the "Lender'), and
the Seller will use this Agreement for the purpose of obtaining a loan of the net proceeds of the 5
HmSingDcvebpmetO rasRenenueBaads(Oaks ofMainnr sPtoject), Taxable Series 1996A,
S Unlimited Tax General Obligation Bonds (Oaks of Mainstreet Project), Taxable Sales
199613, S General Obiigstiom Tax Increment Bonds, Series 199612 and S General
Obligation Taxable Tax Increment Bends, Series 1996D (collectively, the 'Bonds"), which will be used
for the construction of 66 townhomes (dm "Townhomee) on the property bearing the legal description
attacked hereto in the tide report (the "Project Site")
WBE REAS die Seller and TI &W wish to enter into this Redderthl Real Estate Purchase
Agreement tAgreement" for up to 33 of the Townhones (the "Unsold Townhomes');
NOW THEREFORE, in consideration of the foregoing premises, the mutual covenants of thc
parties contained herein and good and valuable consideration, receipt and sufficiency of which is hereby
acknowledged by the panics, the Seller and TJ &W, through their authorized tepraentatives, hereby eater
into this Agreement subject to thc following terms and conditions:
j. DEFINITIONS
1.1 APPRAISED VALUE: The fair market value of a Unsold Townhomes as determined by
a FNMA approved appniaor in accordance with industry standards.
l .2 LOAN AMOUNT: The amount the Lender 1s wiping to advance the Soper, not to exceed
go% of Appraised Value
1.3 PURCHASE PRICE: The amount TAW will pay to the Sella for the Unsold
Townhomes.
1.4 SCHEDULED CLOSING DATE: [The fourth anniversary of the date of this Agreement],
Mite it is anticipated TJ&W wail close on the Unsold Townhomes in the event any of such Townhomes
remain unsold to a Third Party Buyer.
1.5 u ' - TIvE DATE OF THIS AGREEMENT: The Effective Date of this Agreement
shall be the date that the Seller's Loin is closed with the Lender, tarovided_ however, if the Seller does
not close on a Loan within forty - five (45) days (extendible at the discretion of TI &W), Son the Date of
this Agreement, this Agreomart shall terminate.
1.6 SEASONAL ADJUSTMENT: (RESERVED]
1.7 LOAN: the loan of net proceeds of the Bonds to the Seller by the Larder for the purpose
of constructing andlor carrying the Townbomes until sold
(SUN)08. 25' 96 20:48/ST. 20: 42/NO. 3560539826 P ) 2/23
based upon the difference between a higher revised Purchase Price and the original Purchase
Price. In the event of a decrease in the revised Purchase Price, TJ &W would not be obligated to
refund any portion of fees already collected. My such changes as provided for in this paragraph
must be made in writing to TJ &W; et,
b) to declare an Event of Default as set forth in paragraph 2.29
2.4 APPRAISED VALUE: The tots( Appraised Value for the Towmhomes shown on Exhibit
A shall be � ollars.
23 PURCHASE PRICE: The TJ&W Purchase Price shall be: eighty percent (SO%) of the
appraised value of the Unsold Townhomes.
2.6 SCHEDULED CLOSING DATE: (The fourth anniversary of the date of this Agreement)
2.7 CLOSING AGENT: The Closing spat shall be
22 ESCROW AGENT: The escrow agent, if any, shall be and all
parties shall execute any such escrow instructions as necessary.
2.9 CLOSING/ESCROW AGENT: Any moneys deposited with the closing and/or escrow
agent is deposited with the understanding that said agent (a) is not * party to this contract and does not
assume to have any liability for performance of any signaroryy (b) has the right to requite a written release
of liability of said agent which authorized the disbursement of funds held in escrow; (c) is not liable fbr
Serest cn funds held except as of arvise provided herein. If any signatory unreasonable fails to deliver
promptly the documents described in 2.9(b), then such signatory shall be liable to the other signatories;
(d) shall deliver the &w the Sella owes to TJ &W ands paragraph 2.25 hereof, in accordance with the
schedule (e) shall hold all such fees delivered by the Sella to the escrow agent in an interest-beating
escrow account, with interest on said fees payable to the Seller.
2.10 PAYMENT OF CASH AT CLOSING: On the data as provided in paragraph 2.19, TJ &W
will close on the Unsold Townhomes with the Seller by payment of the Purchase Price in cash, less art
amount equal to one and ore -balf pa (1.5%) of the Purchase Prier (as payment of fees pursuant to
1 2.25). At diming TJ &W will take clear tide and fee simple. In the event that there are any clouds on
tutu, TJ &W has the option of either:
a) granting the Seller fourteen (14) days to remove any clouds on title or
b) declaring at Event of Default.
2.11 EARNEST MONEY: TJ &W shall deposit no earnest money for this transaction.
2.12 EVIDENCE OF TITLE, CONVEYANCE OF TITLE, TITLE INSURANCE: Seller shall
furnish to TJ &W at Seller's expense an ALTA Policy of Title insurance. or its equivalent, issued by a titdo
company acceptable table to TJ &W. Said Title Policy shall be delivered upon the Sella signing this Agreement,
and the Seller shall update the tick twenty (20) business days prior to closing and shall present evidence
of said update search to TJ &W. The update to the Title Policy shall contain a broad form mechanics lien
covetagc provision which insures ova liens known and unknown, If such a broad form mechanics lien
coverage is not available, then the policy shall amain the most compechensive mechanics lien coverage
3
• €ROM op (SUNI08. 25' 96 20:49/ST. 20:42/NO. 3560539826 P 14/28
2.I8 CERTIFICATE OP OCCUPANCY: [TO RENEGOTIATED WITH TJ &W:) [The Seller
shall provide to TJ &W a oettfieate of occupancy. or its equivalent, within one hundred eighty (180) days
of the effective date of this Agreement Upon learning that such Certificate of Occupancy (or its
egaivaba) ("the Certificate") will not be received by day 180,) then TJ &W shall either:
a) Contact the Lender to determine if the Lender will amend the duration of the
construction loan by at minimum an amount equal to the additional time needed to obtain the
Certificate. If Lender commits 0 extend time for Sella to complete home and will etend
TARN Scheduled Closing Date per paragraph 2.I9, then TJ &W will extend the date allowable
for Sella to obtain the Catificda, and will extend TJ &W's scheduled Closing Date by an equal
amp plus any required Seamed Adjustment TJ&Wwi I charge Seiler: fee clone half of one
percent (0394) of the Lean Amount for each such extension. Should tic Leads elect not to
amend, TJ&W ban the tinder at its sole discretion to terminate this Agreement, wider TJ&W being
relieved of all its obligations, emnesa or implied, with no refund or reimbursemept of any fees
paid to TJ &W by the Sella.
b) Declare an Event of Default pa paragraph 2.29.
2.19 CLOSING: The closing of the sale shall take place on abe date which is TJ &W's
Scheduled Closing Date, unless extended per paragraph 2.18. In the evert the closing does not occur
within fifteen (15) days of this date, for reasons outside of TJ&W's control, TJ &W shall have the option
to terminate this Agreement. If the scheduled closing date shall fall on a legal holiday or weekend then
closing shall take place on the first day thereafter which is not a weekend or holiday. Closing shall take
place at the office of the closing agent, or elsewhere as may be agreed upon by both the Seller and TJ &W.
Should Sella desire to extend TJ &W's Closing Dee past the Scheduled Closing Date (or as
previously extaedad pa paragraph 2.1g), and Lender agrees to gram Sella such an extension, provided
TJ &W receives written notification of such extension by the Leads, TJ &W bas the right at its sole
discretion, based upon a review of then cpaent market conditions and the Unsold Townbomes'
marketability, to amend this Agreement for a period of ninety (90) days, given that Seller notifies TJ &W
forty -five (45) days in advance that such an extension is desired. In addition, TJ &W retains the right to
grant more than one such extension, in each rase requiring forty -five (45) days notice that such additional
extensions are desired by Seller. Such extension mad be granted by tiro Lender and communicated to
TJ &W at least thirty (30) days prior to the scheduled TJ&W dosing date, or the Sella will reimburse
TJ &W for any and all menses incurred in the preparation for' the scheduled closing, including but not
limited to title and Sul fives. TJ &W is under no obligation, either expressed or implied, to extend
the Closing Date.
Upon receipt of a copy of a Purchase Contract bawaa Sella and a Third Petty Buyer with
respect to an Unsold Towohome, then this Agreement automatiadly is eatardcd until thirty (30) days after
the Scheduled Closing Date of the Third Party Purchase, provided however this Third Party Purchase is
scheduled to close within one bumdredtwenty (120) days of TJ &W's Scheduled Closing Date vpro rated
however, dais Third Party Purchase must close within one hundcad twenty (120) days of TJ &W's
Scheduled Closing Dau.
In the eve of any Sale to a Third Party Buyer or to the Sella that does not close, TJ &W's
Closing Date automatically is extended by the amount of time the Unsold Townhouse was under contract,
plus ninety (90) days, plus a Seasonal Adjusfneat if TJ &W deems such adjustment appropriate.
5
-PROM ODD (SUN)08. 25' 96 20:51 /ST. 20:42/N0. 3560539826 P 16/28
refund or reimbutsemesd of any fees paid to TJ &W by the Seller. This agreement automatically
terminates when the Townhomn are entirely sold and closed with Third Party Buyers.
b) BY TI&W f If Lender named in paragraph 2.35 sells, assigns or exchanges the
Loan to my party, TJ &W shell have the right but not the obligation to terminate this Agreement,
with there being no refimd or - reimbursement. of any fees paid to TJ&W by the Seller.
2.25 SELLER'S FEES TO TJ&W: Sella bas agreed to pay TJ &W up to throe percent (31/4)
of the Pwthase Pries (paring iaph 2.5), in= amount equal to S , in consideration for
"visaing to eater into *is contract. These tea are duc rand owing as follows: one and ono -half percent
(L5%) on the Effective Date (paragraph 1.5) of this Agreement and one and one -half percent (1.5Ys) on
the Closiog Date. Sella warants that Leader agrees to fimd the fast half of tbi r he directly to TI &W
as past of Lender's ceased= lam to Seller. Other fees which may be due and owing to TJ&W ether
the Etfbettve Date of hit Ageranee% ash as but not limited to those noted in 12.15, Certificate of
Occupancy, or in parageapit 227, Obligation to Market, shall be Paid directly to Tl &W by Vie.
2.26 UAW RIGHT TO AUDIT: TJ &W reserves the right to audit the records of Sella
peataiuingto the canapuetioc of the Townhomesupon even (7) days prior notice, during reasonable hours
at TJ &W's expense, in order to vaify the quality of construction to specification, and to insure
compliance with this Agament. Sella shall provide TAW with a detailed list of the materials to be used
i4 construction, and TI &W shall have the right to inspect the construction at its discretion.
2.27 OBLIGATION TO MARKET: During the period this A,geement is in ferrcc, the Seller
is required to use its best eliurts to sell thc Town/tomes to Third Party Buyers. Provided, however, if after
one hundred twenty (120) -days from the date of receipt of the Catifs:ate of Occupancy for the
Townhomes, the Unsold Townhomes arc not actively being marketed and priced to sell by TI &W's
Scheduled Closing Data and either listed in the local MIS by a Realtor acceptable to TI &W, or the Sella
is offering cooperation with selling agents with a commission split that is typical for the sea, TJ &W has
the right, at its option, to direct the marketing of the Unsold Townhomes, including changes in advatising,
ptonrot ion, asking price and/or selection of an agent for listing provided that TJ &W has no right
baarnder to direct the marketing of any Unsold Trwmbome that is subject to a lease.
Should Sella desire tbatooe armory Townhomes be builta be a Model Home, and Scila dcaires
it not be for sale Immediately, Seller shall contra TJ &W and Seller and TJ &W shall aver to a specific
Mat$ding Plea, including but not limited to timing for eventual sale of the home, and anticipated market
posing as per above. All marketing and sales web are to be paid by the Seller.
At a point one hundred twenty (120) days from the date where TJ &W would he obligated to close
On tire Unsold Townhomes (per paragraph 2.19), whether or not the home has been used as a Model,
TI &W and/or its agent has the option to develop a Critical House Piro which must be followed by the
Sella. When TI &W has creased this option, g offers presented to the Seller by a potential Third Party
Buyer must be presented to TI&W for review. TJ&W may demand that any offer presented by a potential
Third Party Buyer trust be accepted. If the Sella does not accept the offer, after a demand by TJ &W
pursuant to this paragraph, TJ &W may declare an Event of Default per paragraph 2.29. The Critical House
Plan will include but not be limited to actions such as ehangcs in listing agent, price, incentives, or
:physical changes (such as color scheme) for each thirty (30) day period ranaining until MUM' s purchase
.data
that meet TI &W's stated requirement at the sole cost and expense of the Sella.
231 REPRESENTATIONS AND WARRANTIES: Sella represents and warrants that as of
the effective date of this Agreement, it bolds:
a) title in fee simple to the Project Site, or will bold said title by TI &W's scheduled
Closing Date, and,
b) as of closing rhea will be no unrecorded liens, aaseasments, or Uniform
Commacial Code Security inmom against the Unsold Townhomes.
232 NON-FOREIGN AFFIDAVITS: Sella shall deliver to TJ &W at closing. an affidavit
ratifying the Sella is not a `foreign person" as defined in Title 26 U.S.C., Section 1445(0(3).
2.33 EXECUTIONOF DOCUMENTS: Seller and Seller's attorney anew tepresmsstive shad
wreaths and deliver at closing all documents which may be reasonably inquired to be accounted by TI &W
or any lending Meffi fieo, file company or closing agent.
2.34 NOTICES: All notices doll be in writing and effective what dative ed either in person
or via certified mail, return receipt requested, at the addresses shown in the opening paragraph of this
Apeman.
2.35 ASSIGNMENT: The parties hereto agree that the Seller may at any time assign this
Agreement to the Lcnda. Sella shall notify TJ &W, in writing, within five (5) business days of such
assignment. In event of default by Sella on loan provided by Lender, this Agreement automatically
becomes assigned to Lender, without affecting the rights or obligations of TJ &W.
If at any time during the tam of this Agreement the Loan from Lender to Sella is in default for
any reason. that the rights of Seller, but not the obligations, shalt, upon written notice to bath parties from
Lends, be assigned to Lender. Notwithstanding an assipmtnt pursuant to this paragraph 2.35 the rights,
duties and obligations of TJ &W shall remain in frill force and effect.
In addition, in event of default under the Loan. TJ &W at Lender's discretion and with Lends
paying typical Seller's expenses, will take ova marketing of the Unsold Townhomes until it is sold or
until such time as TJ &W is obligated to purchase under the tans «12.19, or elects to purchase in Event
of Default pa 12.29.
2.36 FINANCING CONTINGENCY: This Agreement is contingent on Seller obtaining aLoan
from the Lender.
TJ &W RESIDENTIAL, INC. THE OAKS OF MAINSTREET,LLC
BY:
Duly Authorized Agent Duly Authorized Agent
DATED: DATED:
BY:
(SUN) 08.25' 96 20:52/ST. 20:42/NO. 3560539826 P 18/28
9
12 612 448 4676
WILSON DEVL SVC
08/21/96 11:57
6.) ADDITIONAL PERSONAL PROPERTY: The following additional personal property is Included
with the manufactured Itereelrecreational vehicle: Oist 20 appliances, furnishings, stonge buildinp,
exterior improvemmns, as on an attaehman to this Amount:Mt
7.) TRANSFER/TITLE FEES; Purchaser will pay all transfer and title foci involved in the salt
S.) REMOVAL 01 MANUFACTURED 1101111FOOSSILSSIONS: The manubdured home and any
personal property remaining after the date of closing/possession is the property of the Pumhaser. If the
Owner/Sella intends ea remove the marmfariund home or any of petsmal property denxibed previously
in this Agreement. the Owner/Selkr shall have made arrangements for the removal of the manufactured
home and MI personal property and shall have physically gemmed the manufactured home and all
personal property on or before the closing/possession dale listed below.
9.) CLOSINGIPOSSESSION: The pasties contemplate that dm dosing will take place on the later of
September 30. 1996. or 30 days alter receipt of Payment 2 (as outlined previous in this Agtemnent) and
Owner/Seller agrees to deliver possession of the manufactured home/recreationvehicle to Purchaser on
that date.
10.) DESTRUCTION OF UNIT: DI THE EVENT THIS PROPERTY IS DESTROYED OR
• SUBSTANTIALLY DAMAGED BY PME OR ANY CAUSE BEFORE WE CLOSING DATE, THIS
AGRI3EMENT SHALL BECOME NULL AND YOIIL AT THE PURCHASER'S onion.
_Qua of Main St
(Owner/San) (Purchneo
(Owneraeller)
Hopkins )411 PA
( D tc )
(Purchaser) (Date)
nne.
AUG 21 96 10:18AM
•
1
. ,
tr 612 448 4676
W ILSON DEVL SVC 08/21/96 11 56
2. 1 havevoluntarily submitted an oiler to sell my property to the Purchaser. I have been
informed and understand that if I am unable to reach a voluntary agreement with the
Purchaser, the Purchaser will nod acquire my property and I will not be forced to sell
my property to the Purchaser. the City of Hopkins, or the Hopkins Housing and
Redevelopment Authority.
3. On met with a tepresentrtive of Wilson
Development Services (the "Relocation Consultant to discuss with me the !aviation
benefits available to me under the Oalinance. The Uniform Mt was also exphdued to
me. I understand that dm stlocatton benefits available to displaced peaces under the
Ordinance and the Uniform Act are as listed in Anachment 1 to this Agreement.
4. In consideration for the Purchaser's purchase of my property, I hereby waive any and
all rights and claims to rights for nilocation assistance, services, payments, benefits, and
notices that may be available to me. !understand that the City of Hopkins and the Hopkins
Housing and Redevelopment Authority intend to tub on this Ameemod and would not
proceed to participate in the Purchaser's intended project if I did not enter into this
Agreement.
THEREFORE, I also waive and release the Purchaser, the City of Hopkins and the City of Hopkins
Housing and Redevelopment Authority from •any claims to rights for the relocation assistance, services.
payments, benefits and notices under OW Ordinance and/or ate Uniform Act.
This waiver shall expire on the earlier of December 31, 1996, or upon written notice from the Purchaser
terminating this Agreement, unless by that date the Purchaser has entered into a written agreement to buy
the subject property from me. As evidence of Use Purchaser's intent to buy, and my intent to sell the
subject property, I have aimed into the attached Purchase Agreanent and understand that it is part of this
Agreement.
•
Witness Owner
The Oaks of Mainsheet, Inc.
fry:
Its: Anent
AUG 21 1 4710:18PM
Hopkins Waiver 2
RENTAL WAIVER AGRELMZNT
08/21/96 11:52 AUG 21 'sg'" ie :15Rti
We the =arrayed, , an the legal
tenants of the property loaded at
Hopkins, Minnesota.
Wecatify that we are responsi a for the tent payment at the above- re:(ereoad property and that we are in
good sanding under our renal agreement
We certify that the information we lave provided to obtain the payment from the Oaks of Main Street,
Inc. (Purchaser) is Mc and accurate.
We hereby agree to and request to divide any payments raoeived from the Purchaser. We hereby certify
that we are the only persons eligible for payment at this property and that are no other previous or
current oavpantsttcnants/owrets of this property that shall request payment from the purchaser or
interfere with this Agrocn ent.
On we met with a representative of Wilson
Development Services (the "Relocation Consultant ") to discuss with us the relocation benefits available to
us under the Ordinance. The Uniform AA was also explained to me. 1 understand that the relocation
benefits available to displaced persons under the Ordinance and the uniform Act are as listed in
Attachment i to this Agreement-
In consideration for the Purchasers payment, of S we hereby waive any and
all rights and claims to rights for relocation assistance, services, payments, benefits and notices that would
have been available to as, had a public agency acquired the properly. We understand that the City of
Hopkins and the Hopkins Housing and Redevelopment Authority intend to rely on this Agreement and
would not proceed to participate in the Purchaser's imcnded project if I did not enter into this Agreement.
TENANT PAYMENT
Payment Nt 1 Purchaser has given to the Tenant a pallid( moving allowance $30Q recelpt of which is
hereby acknowledged by Tenant. Purchaser agrees to use best effort to roan aeommiunent for the
necessary financing (the City bond financing) and to execute alt documents required to consununate such
financing. If Purchaser cannot seam t a commitment for such financing, this agreement shall btxome mull
and voice The partial moving allowance paid by Purchaser herein shall be retained by the Tenant.
HopkMs Waiver
August 29, 1996
' -MG 30 '96 12 :14Pt1 EFLERS & ASSOCIATES P.z /e
ill Elders and km.
LEADERS III PURtie FINANCE
Mr. Jim Kerrigan
City of Hopkins
1010 First Street
Hopkins, MN 55343
Dear Tim:
As was discussed at the August 20, 1996, meeting of the Hopkins Housing and Redevelopment Autharity
(HRA), the HRA has scheduled a review the Oaks of Mainstreet financing on September 3, 1996, in
anticipation of BRA and City Council final approval of the financing for the project on the September
17th meeting. Please note that the September 17th meeting is contingent upon the developer meeting a
number of requirements, which, if not met, could result in a delay in final consideration.
To facilitate discussions on September 3rd, our firm was asked to provide an update and
recommendation to the BRA. This letter is intended to provide the latest information and our
suggestions for improving the project. In our opinion, the September 3rd meeting is the best opportunity
for the HRA to provide input to the project prior to final documents being prepared.
Changes in Project - Summary
Below is a short list of actual and proposed changes in the project since May which are addressed in this
letter.
1. Proposed tax - exempt long -term bonds and City ownership of roads
2. Increases in costs and rates
3. Slight increases in expected sales prices and lease prices
4. Regulatory agreement on income limits for 30% of units
5. Inability to lock -in mortgage rate for lease - to-own buyer in advance
6. Reduction in cash flow for project
7. Guaranteed buyout of the units and required reserves
Project Sources and Uses
Sources of financing, at the current time, would include the following:
Taxable Revenue Bonds, Series A (Shat Term -Paid from lease and sale of units) $3,815,000
Taxable G.O. Tax Increment Bonds, Series B (Short-tens - Paid from sale and TIE) 3415,000
Taxable G.O. Tax lncnsmem Bonds, Series C (Long -term - Paid from TIP) 1,105,000
interest Earnings on Conshuction Fund 153,000
Developer Equity (repaid to developer, if project performs) 400 OOQ
Total $9,188,000
Mso attached at Exhibit 1 is the uses of bond proceeds including detail on the construction costs,
1 OFFICES IN MINNEAPOLIS, MN AND BROOKFIELD. WI
2950 Nor;rest Center • 90 South Seventh Street . Minneapolis, MN 55402 - 4100
Telephone 612 -339 -8291: FAX 612.339.0854
'-AUG 30 '96 12 :14PM EHLERS & ASSOCIATES . P.3 /8
acquisition costs, costs of issuance and reserves: The Series A revenue bonds would have a first call
upon the tease revenues and sale revenues of the project The Series B short-term G.O. bonds would be
paid from tax increment, and after project revenues and sale proceeds after the debt payments on the
revenue bonds and operating costs. In apneral the PIRA should recognize that the risks to the Citv
associated with the oroject 'would be nearlylhe came if the entire project were financed by general
phliption hands, Both the revenue bonds and short-term G.O. bonds would have a life of no more than
five years and could be prepaid at any time prior to the five years. The long-term G.O. will be paid from
tax Increment front the owner - occupied units over the next 20 years.
Two significant changes have occurred since May regarding the sources of financing for the project. The
first change is that costs have increased over the past throe months in a variety of categories including
construction, interest costs, and costs of issuance. The second change in the project is that the interest
rates have increased since May, which has decreased cash flow for the project.
A major proposed change is that a portion of the G,O. long -term bonds be split into a taxable and atax-
exempt series of bonds. The tax -exempt series of bonds would be possible because the costs would be
attributed to the public improvements within the road rights -of -way. The advantage of this proposal is
that substantiat interest savings arc possible. To receive the tax - exempt rates, the City would need to
own the road rights -of- way, even though the townhouse association would be responsible for
maintaining them.
If the City did allow for public ownership of the roads, the sources and uses of funds would be as
follows:
Taxable Revenue Bonds, Series A (Short Term -Paid from lease and sale of units) $3,745,000
Taxable G.O. Tax Increment Bonds, Series B (Short-term - Paid from sale and TIF) 3,745,000
G.O. Tax Increment Bonds, Series C (Long -term - Paid from TIF) 725,000
Taxable G.O. Tax Increment Bonds, Series D (Long -term - Paid from TIF) 500,000
Interest Earnings on Construction Fund 154,000
Developer Equity (repaid to developer, if project performs)
Total $9,169,000
Even though the total costs of the project did not change significantly, the end result in cash flow to the
project at the end of five years does increase with city ownership of the land by approximately 3150,000.
Programmatic Issues
The sales prices on average have been increased by the developer by an average of approximately 52,000
and the lease costs have increased slightly from our May review of the project. The units will range in
price from $110,000 to $125,000 for the 40 two bedroom units and S125,000 to $140,000 for the 26 three
bedroom units with an overall average value of $120,000.
The significant portion of the market for the townhomes is anticipated to be individuals and families in
the "first -time homebuyer" category, many of whom are expected to take advantage of the lease -to -own
program offered by the developers of the project. In Exhibit 2 is a chart of incomes expected to be
necessary to pre qualify as a lease-to -own resident of the development as prepared by the developer.
•
¢P
S•. 1
th
bil' t 1 c -i, int
time of initial ncnmancv for a mnrtpge utilized two or three yjrs later k no longer available at a
reasonable cost This means that when lease - to-own buyers are ore- oualified for the unit and interest
AUG 30 '96 12:15PM EItERS & ASSOCIATES
the financing and security,for the oroiect;
P.5 /8
1. R are Rik s f S h rtf 11 lb us to 1.1 neol I hails. The developer must deposit at closing or take a
reduced fee at closing, an amount of funds which under our pro forma assumptions results in $600,000
ending balance after all short-term bonds are paid. Under current cost estimates, the additional funds
necessary would be approximately 5340,000 above the existing 5600,000 initially deposited into the
reserve, if the City did not own the street. If city ownership did occur for the streets, the amount required
to be deposited would be approximately $180,000 more than the 5600,000 currently expected.
Therefore, the public ownership of the roads would save approximately $160,000.
The amounts required from the developer could increase or decrease at closing depending upon final
interest rates or costs. Also, if the final appraisal from the company agreeing to buyout the units is Less
than the proposed values by the developer, the 5600,000 would need to be increased proportionately.
These funds would be treated like the equity from the developer and would be repaid at the end of the
five year period, if funds were available.
2 Reduce Risk of Units Not Leasing The guarantee of the developer should be clarified to assure
that if lease revenues on a monthly basis are less than projected at 95% projected occupancy or operating
expenses are higher than expected at anytime during the five years of the project, the developer will
deposit additional funds with the trustee and the developer will be repaid only after all obligations are
paid. Repayment could include the rate of interest actually earned on the funds on deposit. If the funds
are not deposited within the designated time, the developer would forfeit rights to the property and all
contracts would be assigned to the trustee.
3. Reduce Tong -Term Rands Rick Tax increment, to the extent any is available after paying all
obligations after five years, would first fund a one year debt service reserve for the long - term tax
increment bonds, before paying any city administrative costs or unexpected project costs.
We hope that this letter helps in the HRA and City's evaluation of the project. Thank you for the
opportunity to assist in this project
Sincerely,
i�
Mark Ruff
Financial Advisor
Sid Inman
Financial Advisor