HRA Report 10-10 Assignment Agreement Market Place and MainG, TY 0F
1*
September 3, 2010 HRA Report 2010-10
NOPKINS
AMENDMENT TO DEVELOPMENT AGREEMENT/ASSIGNMENT AGREEMENT —
MARKETPLACE & MAIN
Proposed Action
Staff recommends adoption of the following motion: Move to approve the Fifth Amendment
to the First Amended and Restated Contract for Private Redevelopment and the Assignment
and Assumption Agreement — Marketplace & Main.
With this motion, the agreements will be executed. It is understood that staff has the ability to
make minor modifications that do not affect the overall intent of the agreements.
Overview
In May 2009, the Hopkins HRA entered into a redevelopment agreement with Marketplace
Holdings, Inc. for the purposes of facilitating the redevelopment of the former Hopkins Honda
Body Shop building at 701 Mainstreet into a mixed-use housing over retail development
(phase 1). The project area also included two additional parcels (phase II).
The Beard Group is now ready to move ahead on the phase I project (701 Mainstreet),
securing financing through the U.S. Department of Housing & Urban Development. A
requirement of financing is that the HRA's interest be subordinate to HUD and that the
property for phase I be held by a single -purpose entity. Because the current entity,
Marketplace Holdings, Inc. also owns the land for phase Il, the land and development rights
for phase II must be assigned to a new entity.
In order to accomplish this, the HRA must approve the Fifth Amendment and the assignment
of the land and rights for development to the new entity, Marketplace Townhomes Holdings,
Inc. All obligations and responsibilities related to phase II will remain as will all obligations
associated with phase I development.
Primary Issues to Consider
This action will facilitate the financing for the phase I project while not releasing the
redeveloper of any obligations under the current agreement.
Supporting Information
• Fifth Amendment to the First Amended and Restated Contract for Private
Redevelopment
n Agreement
KerstenWerum
Director of Planning & Development
Financial Impact: $_0 Budgeted: Y/N Source:
Related Documents (CIP, ERP, etc.):
Notes:
FIFTH AMENDMENT TO FIRST AMENDED AND RESTATED CONTRACT FOR
PRIVATE REDEVELOPMENT
THIS FIFTH AMENDMENT is made effective as of the day of , 2010,
by and between the Housing and Redevelopment Authority in and for the City of Hopkins, a
public body corporate and politic (hereinafter referred to as the "Authority"), established
pursuant to Minnesota Statutes, sections 469.001-469.047 (hereinafter referred to as the "Act"),
and having its principal office at 1010 First Street South, Hopkins, Minnesota 55343, and
Marketplace Holdings, Inc., a Minnesota corporation (hereinafter referred to as the
"Redeveloper"), having its principal office at 750 Second Street Northeast, Suite 100, Hopkins,
Minnesota 55343 and amends that certain First Amended and Restated Contract for Private
Redevelopment between the Authority and the Redeveloper dated as of May 5, 2009, which First
Amended and Restated Contract for Private Redevelopment has been amended by a First
Amendment thereto dated as of January 5, 2010, a Second Amendment thereto dated as of
, 2010, a Third Amendment thereto dated as of . , 2010, and
a Fourth Amendment thereto dated as of , 2010 (which agreement as amended
is referred to herein as the "Agreement").
WHEREAS, the Authority and the Redeveloper entered into the Agreement under which
the Redeveloper and the Authority agreed to proceed to implement a proposal by the
Redeveloper to redevelop certain property in the City of Hopkins through the construction of a
mixed use retail/commercial/residential development; and
WHEREAS, Dougherty Mortgage LLC, a Delaware limited liability company
("Lender") has agreed to make a loan to the Redeveloper in the original principal amount of
(the "HUD Loan") which loan shall be insured by the Federal Housing
Administration (the "FHA") of the United States Department of Housing and Urban
Development ("HUD") under Section 232 of the National Housing Act of 1934, as amended,
pursuant to the Commitment to Insure Upon Completion dated , 2010 (FHA Project
No. ), as amended (the "FHA Commitment"). The HUD Loan will be evidenced by
that certain Mortgage Note dated , 2010 (the "HUD Note") executed by the
Redeveloper in favor of Lender in the original principal amount of the Loan and will be secured
in part by (i) that certain Mortgage dated , 2010 (the "HUD Mortgage") executed by
the Redeveloper in favor of Lender, and by (ii) the Regulatory Agreement for Multifamily
Housing Projects dated , 2010 (the "HUD Regulatory Agreement") executed by and
between Redeveloper and the Secretary of Housing and Urban Development. The HUD Note,
the HUD Mortgage, the HUD Regulatory Agreement and all other loan and security documents
executed in connection with the HUD Loan are collectively referred to herein as the "HUD Loan
Documents." As a condition to the making of the HUD Loan to the Redeveloper, Lender and
HUD require that the Agreement, to the extent applicable to and encumbering the Parcel I only,
be amended to include certain HUD provisions and that the Agreement be subordinated to the
HUD Loan and the HUD Loan Documents.
NOW, THEREFORE, the Authority and Redeveloper do hereby agree that:
1. All capitalized terms used herein shall have the meanings given to such terms in
the Agreement.
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2. As to Parcel I, the following additional provisions shall apply:
ARTICLE XI
PARCEL I - HUD REQUIREMENTS
This Article XI is applicable to and shall be enforced only with regard to Parcel I and the
rights, duties and obligations of the parties under this Agreement with regard to the
Parcel I, and development, operation and use of the Minimum Improvements located on
Parcel I.
Section 11.1. Notwithstanding anything in this Agreement to the contrary,
except the requirements in 26 U.S.C. 42(h)(6)(E)(ii), this Agreement is expressly
subordinate to (i) the HUD Note, (ii) the HUD Mortgage, (iii) the HUD Regulatory
Agreement, and (iv) all other documents executed by the Redeveloper, Lender and/or
HUD in connection with the HUD Note in connection with Parcel I; and is subordinate to
all applicable HUD mortgage insurance (and Section 8 of the U.S. Housing Act of 1937,
if applicable) regulations and related administrative requirements. In the event of any
conflict between the provisions of this Agreement and the provisions of applicable HUD
regulations, related HUD administrative requirements, or HUD Loan Documents, the
HUD regulations, related administrative requirements or HUD Loan Documents shall
control.
Section 11.2. In the event of foreclosure or transfer of title by deed in lieu of
foreclosure of Parcel I, any and all land use covenants contained herein encumbering
and/or applicable to the Parcel I shall automatically terminate except those requirements
set out in 26 U.S.C. 42(h)(6)(E)(ii).
Section 11.3. Failure to comply with the covenants contained herein
encumbering and/or applicable to Parcel I will not serve as a basis for default on any of
the HUD Loan Documents.
Section 11.4. The covenants contained in this Agreement encumbering and/or
applicable to Parcel I are not included in any of the HUD Loan Documents.
Section 11.5. Enforcement of the covenants contained herein encumbering
and/or applicable to Parcel I will not result in any claim against Parcel I, the proceeds
from the HUD Mortgage, any reserve or deposit required by HUD in connection with the
HUD Mortgage transaction, or the rents or other income from Parcel I other than from
available Surplus Cash, as defined in the HUD Regulatory Agreement.
Section 11.6. So long as Parcel I is subject to a mortgage insured or held by
HUD, no amendment shall be made to this Agreement without the prior written consent
of HUD.
Section 11.7. This Agreement may not be foreclosed upon or sold, transferred,
assigned or pledged, without the prior written of consent of HUD of such foreclosure,
conveyance, assignment or pledge.
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Section 11.8. With regard to Parcel I only, no action shall be taken in accordance
with the rights granted herein or prohibiting the Redeveloper or any of its successors or
assigns from taking any action except in strict accordance with the U.S. Housing Act of
1937 (the "Housing Act"), applicable mortgage insurance regulations, the HUD Loan
Documents, or applicable public housing regulations under Sections 5 and 9 of the
Housing Act, or if applicable, Section 8 of the Housing Act and the regulations
thereunder.
Section 11.9. The covenants contained in this Agreement encumbering and/or
applicable to Parcel I shall not be construed to conflict with any applicable HUD
mortgage insurance regulation, applicable public housing regulations, or Section 8 of the
Housing Act and the regulations thereunder.
Section 11.10. The terms and conditions of Article XI supersede the terms of the
Agreement with regard to Parcel I only, and, should there be any conflict or inconsistency
between Article XI and the Agreement as enforced and encumbering Parcel I, the terms
and conditions of Article XI shall prevail.
3. All other provisions of the Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the Authority has caused this Fifth Amendment to be duly
executed in its name and behalf and the Redeveloper has caused this Fifth Amendment to be duly
executed in its name and behalf on or as of the date first above written.
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SIGNATURE PAGE
TO
FIFTH AMENDMENT TO FIRST AMENDED AND RESTATED
CONTRACT FOR PRIVATE REDEVELOPMENT
HOUSING AND REDEVELOPMENT
AUTHORITY IN AND FOR THE
CITY OF HOPKINS
STATE OF MINNESOTA )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this day of ,
2010, by and the
and of the Housing and
Redevelopment Authority In and For the City of Hopkins, a public body politic and corporate
under the laws of the state of Minnesota.
Notary Public
DOCS -#3328084-V2
SIGNATURE PAGE
TO
FIFTH AMENDMENT TO FIRST AMENDED AND RESTATED
CONTRACT FOR PRIVATE REDEVELOPMENT
MARKETPLACE HOLDINGS, INC.,
A Minnesota corporation
Its:
STATE OF MINNESOTA )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this day of ,
2010, by , the of Marketplace Holdings, Inc., a
Minnesota corporation, on behalf of the corporation.
Notary Public
DOCS -#3328084-V2
ASSIGNMENT AND ASSUMPTION AGREEMENT
This Assignment and Assumption Agreement is made and entered into this
day of , 2010, by the Housing and Redevelopment Authority In and For the City of
Hopkins, Minnesota, a public body politic and corporate under the laws of the State of
Minnesota (the "Authority"), Marketplace Holdings, Inc., a Minnesota corporation (the
"Assignor") and Marketplace Townhomes Holdings, LLC, a Minnesota limited liability
company (the "Assignee").
WITNESSETH
WHEREAS, the Assignor and the Authority entered into a First Amended and Restated
Contract for Private Redevelopment dated May 5, 2009, which has been amended by a First
Amendment thereto dated as of January 5, 2010, a Second Amendment thereto dated as of
, 2010, a Third Amendment thereto dated as of , 2010, and
a Fourth Amendment thereto dated as of , 2010 (which agreement as amended
is referred to herein as the "Agreement"), providing for the redevelopment by Assignor of certain
real property located within the City of Hopkins, Minnesota (the "Redevelopment Property"),
which Agreement is incorporated herein and made a part hereof by reference; and
WHEREAS, the Agreement provides that the Assignor will develop the improvements to
be constructed on the Redevelopment Property in two phases, Phase I consisting of 53
apartments and 5,500 square feet of retail/commercial space, and Phase IIA anticipated to consist
of approximately 7 townhouses; and
WHEREAS, the Assignor is in the process of securing financing for the construction of
Phase I and the Assignor's lender has required that, as a condition to making a construction loan
for Phase I, Assignor transfer its interest in that portion of the Redevelopment Property on which
Phase IIA will be constructed to a separate entity; and
WHEREAS, the Agreement requires the Authority's approval of any transfer of any
portion of the Redevelopment Property on which a Phase is to be built prior to the completion of
construction of the Phase; and
WHEREAS, the Assignor desires to transfer to Assignee the portion of the
Redevelopment Property on which Phase IIA will be built ("Parcel IIA") and to assign to
Assignee its rights and obligations under the Agreement as it relates to Parcel IIA; and
WHEREAS, the Authority is willing to permit the transfer of Parcel IIA and assignment
of the provisions of the Agreement relating to Parcel IIA but only on the terms and conditions
contained in this Assignment and Assumption Agreement.
NOW, THEREFORE, the parties hereto do hereby agree as follows:
Section 1. All capitalized terms contained herein that are not defined in this
Assignment and Assumption Agreement shall have the meanings of such terms as defined in the
Agreement.
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Section 2. Assignor hereby assigns to Assignee all of Assignor's right, title and
interest in and to the Agreement as it relates to Phase IIA and Parcel IIA. Assignee agrees to
assume and perform all of Assignee's obligations and responsibilities under the Agreement
relating to Phase IIA and Parcel IIA. Such assignment and assumption shall only be effective if
and when Assignor conveys Parcel IIA to Assignee, notice of which shall be promptly furnished
to the Authority. The Assignor and Assignee agree that they will be jointly and severally liable
with respect to the repayment of the Authority Loan and agree to execute such documents as are
reasonably required to effectuate that agreement.
Section 3. Assignor shall be released from all obligations and responsibilities under
the Agreement relating to Phase IIA and Parcel IIA. Assignor shall remain liable for all of the
Redeveloper's obligations under the Agreement relating to Phase I and Parcel I. The Note to be
issued pursuant to the Agreement for Phase I shall be issued to the Assignor and the Assignee
shall have no rights with respect to the Note.
Section 4. The Authority hereby consents to the conveyance of Parcel IIA to
Assignee and to the assignment of the Agreement as it relates to Phase IIA and Parcel IIA to
Assignee.
Section 5. All of the other terms and provisions of the Agreement shall remain in full
force and effect.
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IN WITNESS WHEREOF, the parties have executed this Agreement on or as of the date
first above written.
HOUSING AND REDEVELOPMENT
AUTHORITY IN AND FOR THE CITY
OF HOPKINS
By_
Its
By—
Its
MARKETPLACE HOLDINGS, INC.
By—
Its
y—Its
By_
Its
MARKETPLACE TOWNHOMES
HOLDINGS, LLC
By—
Its
By_
Its
y—
Its
STATE OF MINNESOTA )
)SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this day of , 2010,
by and , the
and of the Housing and Redevelopment Authority In and For the City of
Hopkins, a public body politic and corporate, on behalf of the Authority.
Notary Public
DOCS -#3328098-v2