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HRA 09-04 1st Ammendment to Development Agreement-Marketplace & Main 2 G�TY pF t . April 30, 2009 ti o P K, N s HRA Report 2009-04 � FIRST AMENDMENT TO DEVELOPMENTAGREEMENT - MARKETPLACE AND MAIN ' Proposed Action _ Staff reeommends adoption of the following motion: Move to approve the first amended and restated contract for:private redevelopment between the HRA and Marketplace Holdinqs Inc It is understood that with this action staff is authorized to make minor changes to the agreement that do not affect the overall intent of the agreement. Overview : The Beard Group proposed and received approvals for a mixed-use redevelopment project on � the former Hopkins Honda Body Shop and used car sales lot sites at 7 Avenue and Mainstreef. The Beard Group requested tax increment assistance to make fhe project financially feasible : : and a development agreement was approved by the HRA in February2007. At that time it was contemplated the project would be a for-sale `condominium project, 5,500 . square feet of retail space, and 13.town home units. The Beard Group spenf fwo years • marketing the project but gradually the condominium and town home markefs eroded antl it was determined the project could not move forward as a for-sale project at this time. _ ; The project has, always entailed two phases of construction - the first containing 53 housing units over 5,500 square feet of retail space, the second 13 town home units. It isfelt that the first phase of the project can move forward at this time as an apartment development and as a result the developer has requested the development agreement be modified to reflect that change. Qther changes in the project and market conditions have led-to a series of re�isions to' the agreement including the project timeline and amount of financial assistance. A summary of the major points of the modified agreement is attached to this report. : Primarv Issues to Consider . • 1Nhat are the major changes to the agreement and why are they necessary? Suaportina Information '• Summary of first ame and restated Contract for Private Redevelopment • Firs e ed a re ed Contract for Private Redevelopment Ke ten Ef rum � " Director Planning & Development ;. � Financial Irnpact: $ 0 Budgeted: Y/N Source: Related Documents (CIP ERP, etc.): Notes: 1 HRA Report 2009-04 Page 2 � � Analvsis of Issues: • What are the major changes to the agreement and why are they necessary? In addition to the change from owner-occupied condominiums to apartments, the development agreement also reflects the following modifications: Amount of assisfance The development agreement initially contemplated that both the condominium and town home developments would need financial assistance in the form of tax increment. That determination was based on preliminary cost estimates. The agreement did state that as the project was refined and the sources and uses changed, the amount of public assistance may decrease. Upon review of the latest sources and uses, the HRA's financial advisor has concluded that assistance is necessary for the apartment project but not for the town home development. The agreement recognizes that market conditions may change and allows for a final analysis to be conducted at the time the town homes development moves forward. Lookback critieria The development agreement contemplates a certain return to the developer that is � representative of the risk of the project and market norms. If the return is greater, the agreement directs that a portion of the excess is returned to the HRA. The basis for calculating that return as well as the percent allowable is amended to reflect the change in ownership (profit derived from sales versus profit from operating the project as a rental). Timing The current agreement required construction to commence on Phase I by October 31, 2008 and Phase II by May 31, 2009. The Beard Group is now proposing that Phase I construction commence by October 31, 2009 and Phase IIA by May 31, 2011, and Phase IIB by May 31, 2012. Financing and market conditions appear to be supportive of the Phase I apartment development timeline. The date for the town home development was moved out to give this market time to rebound. HRA loan The HRA provided a$900,000 loan to the developer to acquire the property. That loan was to be payble if construction was not commenced by August 31, 2008. The agreement states that loan date is changed to October 31, 2009. Alternatives: The HRA has the fiollowing alternatives as relates to this issue: • • Approve the revised agreement as proposed • Approve the revised agreement with modifications • Continue this item for further discussion. r • SUMMARY OF FIRST AMENDED AND RESTATED CONTRACT FOR PRIVATE REDEVELOPMENT BETWEEN HOPHINS HOUSING AND REDEVELOPMENT AUTHORITY AND M_ARKETPLACE HOLDINGS, INC. The following is a brief sununary of the major terms of the above referenced development agreement: l. Redeveloqer. The Redeveloper is Marketplace Holdings, Inc. � 2. Minimum Imurovements. The Redeveloper has acquired certain real property in the City and proposes to develop a 53 unit apartment building . and 5,500 square feet of commercial/retail space in the first phase of the development ("Phase I") and 13 townhouses in the second phase ("Phase II"). Phase II will be constructed in two phases, Phase IIA consisting of 7 townhouses, and Phase IIB consisting of 6 townhouses. All improvements constructed must conform to construction plans to be submitted to and approved by the Authority. 3. Timin� of Construction and Other Activities. Subject to excused delays, construction of Phase I is anticipated to commence by October 31, 2009 and to be completed by December 31, 2010. Construction of Phase IIA is anticipated to commence by May 31, 2011 • and to be completed by June 30, 2012. Construction of Phase IIB is anticipated to commence by May 31, 2012 and to be completed by June 30, 2013. In addition, the Redeveloper will secure an acceptable market study and take certain other marketing actions relating to the Phase II townhouses by May 31, 2010. 4. Public Redevelopment Costs. The Redeveloper is responsible for all aspects of constructing the project and for the initial payment of all costs of construction. However, because of the extraordinary costs of acquisition and site preparation, tax increment financing assistance is necessary to defray a portion of those costs. The Authority agrees to reimburse the Redeveloper for a portion of those costs through the issuance and payment of a tax increment revenue note ("Note") for Phase I of the development. 5. Issuance of Note. At the time that the Redeveloper closes on its financing for construction of Phase I the Authority will issue a tax increment revenue Note to the Redeveloper. Based on current financial projections relating to the development, it is anticipated that the total principal amount of the Note will be $1,000,000. The Note will accrue interest at the rate of 6.25% per year. The Note will be payable solely from 95% of the ta� increment generated from Phase I. The Authority will have no obligation to pay the Note from any other source. The Agreement does not provide for the issuance of a tax increment note for Phase II but the Authority will review the Redeveloper's financial information relating to Phase II as the Redeveloper refines its plans to determine whether tax increment assistance for Phase II is warranted. • � i 6. Authoritv Loan. At the time that the Redeveloper closed on its acquisi:tion of the ,.:,; I ' redevelopment property, the Authority made a loan to the Redeveloper in the principal amount of � $900,000 to finance a portion of the cost of acquiring the property. The Red_eveloper's ' obligation to repay the Ioan was secured by a second mortgage on the property and tl�e personal guarantees of the Redeveloper principals. The loan was to be payable by the Redevel.oper if the Redeveloper had not closed on financing and commenced construction of the first pliase of the development 6y August 31, 2008. If the Redeveloper completes construction of the first phase of the Minimum Improvements, the loan was to have been forgiven. The August 31, 2008 date for commencement of Phase I has been changed to October 1, 2009. 7. Acauisition of Phase II Land. If the Redeveloper commences construction of Phase I but not Phase II the Authority has the right to acquire the �and on which Phas.e II was to be constructed for purchase prices of $256,840 for the land on which Phase IIA is proposed to be built and for $170,560 for the ?and on which Phase IIB is proposed to be built. � � I I � _ _ � t - - - -.--�--------- -iC - _. - .... - - . - -- --... ..._ . ___ -------------- i • Apri130, 2009 FIRST AMENDED AND RESTATED CONTRACT FOR PRIVATE REDEVELOPMENT By and Between HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE • CITY OF HOPKINS and MA_RKFTPLACE HOLDINGS, INC. Dated: , 2009 This document was drafted by: BRADLEY & DEIKE, P. A. 4018 West 65 Street, Suite 100 Edina, MN 55435 Telephone: (952) 926-5337 • � I ' � TABLE OF CONTENTS ' lf� •i Pa�e PREAMBLE � ARTICLE I Definitions Section 1.1. Definitions 3 ARTICLE II Representations ' Section 2.1. Representations by the Authority '7 ! Section 2.2. Representations by the Redeveloper 8 Section 2.3. Joint Representations 8 ARTICLE III , '� Develo�ment Proposal; Public Redevelopment Costs Section 3.1. Development Froposal 9 Section 3.2. Public Redevelopment Costs 9 Section 3.3. Issuance of Note 10 Section 3.4. Conditions Precedent to Issuance of Note 12 Section 3.5. Payment of Authority's Costs 12 Section 3.6. Reduction of Assistance 12 Section 3.7. Business Subsidy Agreement 14 � Section 3.8. Authority Loan 14 Section 3.9. Authority Right to Acquire Parcel II 15 ARTICLE IV Construction of Minimum Improvements Section 4.1. Construction and Operation of Minimum Improvements 16 Section 4.2. Construction Plans , 16 Section 4.3. Commencement and Completion of Construction 17 Section 4.4. Marketing Minimum Improvements 18 � (i) _ � , __ -� -- ,, _ ___ • ARTICLE V Insurance and Condemnation Section 5.1. Insurance 19 Section 5.2. Condemnation 21 ARTICLE VI Taxes; Tax Increment Section 6.1. Real Property Taxes 22 Section 6.2. Creation of Tax Increment District 22 Section 6.3. Tax Increment 22 ARTICLE VII Mortga�e Financin� Section 7.1. Mortgage Financing 23 • Section 7.2. Limitation Upon Encumbrance of Property 23 ARTICLE VIII Prohibitions A�ainst Assi�nment and Transfer• Indemnification Section 8.1. Prohibition Against Transfer of Property and Assignment of Agreement 25 Section 8.2. Release and Indemnification Covenants 25 , Section 83. Indemnification for Relocation Claims 26 ARTICLE IX Events of Default Section 9.1. Events of Default Defined 27 Section 9.2. Authority's Remedies on Default 27 Section 9.3. No Remedy Exclusive 27 Section 9.4. No Additional Waiver Implied by One Waiver 27 • (ii) 1 i ARTICLE X � � Additional Provisions Section 10.1. Representatives Not Individually Liable 29 Section 10.2. Equal Employmerit Opportunity 29 Section 10.3. Restrictions on Use � 29 Section 10.4. Titles of Articles and Sections 29 Section 10.5. Notices and Demands 29 Section 10.6. Disclaimer of Relationships 29 Section 10.7. Modifications 29 Section 10.8. Counterparts 30 Section 10.9. Judicial Interpretation 30 ; Section 10.10. Effect of Termination 30 ! SCHEDULE A Description of Redevelopment Property SCHEDULE B Sources and Uses SCHEDULE C Description of Public Redevelopment Costs SCHEDULE D Form of Note SCHEDULE E Lookback Pro Forma SCHEDULE F Median Price / 5 Miles _ SCHEDULE G Phase I Pro Forma � I � ; � (iii) - _ i __. _,_ __ -- _ _ � FIRST AMENDED AND RESTATED CONTRACT FOR PRIVATE REDEVELOPMENT THIS AGREEMENT, made on or as of the day of , 2009, 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, 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 2nd Street Northeast, Suite #100, Hopkins, Minnesota 55343. WITNESSETH: WHEREAS, the Authority was created pursuant to the Act and was authorized to transact business and exercise its powers by a resolution of the City Council of the City of Hopkins (the "City") pursuant to Section 469.003 of the Act; and � WfIEREAS, in furtherance of the objectives of the Act, the Authority has undertaken a program for the clearance and reconstruction or rehabilitation of blighted, deteriorated, deteriorating, vacant, unused, under used or inappropriately used, areas of the City, and in this connection is engaged in carrying out a redevelopment project known as the Hopkins Redevelopment Project No. 1(hereinafter referred to as the "Project") in an area (hereinafter referred to as the "Project Area") located in the City; and • WHEREAS, as of the date of this Agreement there has been prepared and approved by the Authority and the City Council of the City a redevelopment plan for the Project (which Plan is hereinafter referred to as the "Redevelopment Plan"); and WHEREAS, the Redeveloper and the Authority entered into a Contract for Private Redevelopment dated as of February 20, 2007 (the "Prior Contract") concerning the � Redeveloper's redevelopment of certain real property located within the Project Area (which real property is referred to herein as the "Redevelopment Property"); and WHE�tEAS, the Redeveloper and the Authority have determined that the development contemplated by the Prior Contract is currently not feasible given the condition of the housing and financial markets; and WHEREAS, the Redeveloper has presented to the Authority a new proposal for the development of the Redevelopment Property through the construction of a mixed use aparhnent, townhouse and retail development, which proposal involves the Authority's use of ta�c increment pursuant to this Agreement to reimburse the Redeveloper for a portion of the cost of redeveloping the Redevelopment Property; and WHEREAS, the Redeveloper has requested that the Authority assist its development by issuing tax increment revenue notes payable from a portion of the tax increment generated from its development to provide a source of funding to reimburse Redeveloper for certain public � redevelopment costs that have been or will be incurred to acquire the Redevelopment Property and to prepare the Redevelopment Property for construction of the Minimurn Improvements (as ,;;;, defined below in Article I); and � WHEREAS, the Authority has agreed, subject to the terms and conditioris of this Agreement, to issue a tax increment revenue note (the "Note") for the first phase of the Redeveloper's development and to review information to be submitted by the Redeveloper pertaining to future phases of the developer to determine whether additional financial assistance is justified; and WHEREAS, under the Prior Contract the Authority made a loan to the Redeveloper to finance a portion of the cost of acquiring the Redevelopment Property; and WHEREAS, the Authority believes that the development of the Project Asea ��ursuant to the Redeveloper's proposal and the fulfillment generally of this Agreement, are in thc� vital and best interests of the City and the health, safety, morals, and welfare of its residents, ancl in accord ! with the public purposes and provisions of the applicable State and local laws and requirements under which the Project has been undertaken and is being assisted, and is, therefore, willing to provide the financial assistance outlined herein; and I WHEREAS, the Authority and the Redeveloper have determined to amend ��rid restate the Prior Contract in its entirety through the execution of this Agreement. NOW, THEREFORE, in consideration of the premises and the mutual obligal:ions of the parties hereto, each of them does hereby covenant and agree with the other as follows: �rf: �::,� 2 __--. � � _ __ _ __ _ _ _ __ � ARTTCLE I Defmitions Section 1.1. Definitions. In this Agreement, unless a different meaning clearly appears from the context: "Act" means Minnesota Statutes, Sections 469.001-469.047, as amended. "Agreement" means this Agreement, as the same may be from time to time modified, amended, or supplemented. "Author�ty" means the Housing and Redevelopment Authority Tn and For the City of Hopkins, or any successor or assigns. "Available Tax Increment" means ninety five percent (95%) of the Tax Increment generated from Parcel I and Phase I that is received by the Authority in the six (6) month period immediately preceding a Scheduled Payment Date. Tax Increment generated from Parcel II and Phase IT does not constitute Available Tax Increment. However, if the Authority determines to issue tax increment revenue notes for Phase II, or either component of Phase II, Ta� Increment from Parcel II and Phase II wi11 be considered in determining the source of payment of such notes. • "City" means the City of Hopkins. "Construction Plans" means the plans, specifications, drawings and related documents on the construction work to be performed by the Redeveloper on the Redevelopment Property which were submitted to and approved by the City in connection with the granting of conditional use permit approval for the development of the Minimum Improvements, together with the resolution of the City Council of the City granting conditional use permit approval and any conditions contained therein. The Construction Plans sha11 also include a plan sheet and narrative describing the activities and areas of public safety .or public/private property concern and the actions to be taken by contractors to assure publi�/private property protection and public safety during demolition and construction. • "County" means Hennepin County, Minnesota. "Eligible Costs" means costs of acquisition, relocation and improvements on or adjacent to the Redevelopment Property, eligible for reixnbursement by the Authority with Tax Increment under the Tax Increment Act. "Event of Default" means an action by the Redeveloper listed in Article IX of this Agreement. "Holder" means the owner of a Mortgage. • "Loan" means the Ioan in the amount of $900,000 made by the Authority at the time that the Redeveloper acquired the Redevelopment Property. 3 i � . � z "Loan Documents" means the documents evidencing and securing the Loan, as �described �� in Section 3.8 of this Agreement. ��, "Maturity Date" means the date that the Authority's obligation to pay all tax i.ncrement revenue notes issued under this Agreement terminates or when all such notes are paid in full, whichever occurs earlier. "Minimum Improvements" means Phases I and II. I l "Mortgage" means any mortgage obtained by the Redeveloper which is secured in whole � or in part, by the Redevelopment Property and which is a permitted encumbrance pursl�ant to the ' provisions of Article VIII of this Agreement. � i "Net Proceeds" means any proceeds paid by an insurer to the Redeveloper unde;r a policy or policies of insurance required to be provided and maintained by the Redeveloper p�ursuant to I Article V of this Agreernent and remaining after deducting the applicable deductib[e and all j expenses (including fees and disbursements of counsel) incurred in the collection of such proceeds. "Note" or "Notes" means the limited revenue tax increment note or notes to be issued b Y the Authority to the Redeveloper pursuant to Section 3.2 of this Agreement. "Parcel" means either Parce.l I, Parcel IIA, or Parcel IIB. , "Parcel I" means that portion of the Redevelopment Property described a:� such on � I Schedule A and on which Phase I will be constructed. I . � "Parcel II" means Parcel IIA and Parcel II B. • ' ; i "Parcel IIA" means that portion of the Redevelopment Property described a.s such on , Schedule A and on which Phase IIA will be constructed. � ( "Parcel IIB" means that portion of the Redevelopment Property described �is such on Schedule A and on which Phase ITB will be constructed. "Phase" means Phase I, Phase IIA, or Phase IIB. "Phase I" means the construction by the Redeveloper of a mixed use apartment, and retail development consisting of approximately 53 apartments and 5,500 square; feet of retail/commercial space. "Phase II" means Phase IIA and Phase IIB. "Phase IIA" means the construction to be undertaken by the Redeveloper ori Parcel II, which is expected to consist of 7 townhouses, but is still subject to approval by the C:ity Council of the City. , � t `t _, _ - - - � - -- � . . . . .. ..-- ------------------.. _ . ... -. --.. . __..---... ------- • "Phase IIB" means the construction to be undertaken by the Redeveloper on Parcel II, which is expected to consist of 6 townhouses, but is still subject to approval by the City Council of the City. "Prior Contract" means the Contract for Private Redevelopment between the Authority and the Redeveloper dated as of February 20, 2007, which Prior Contract is amended and entirely, restated by this Agreement. "Project" xneans the Authority's Redevelopment Project No. l. "Project Area" means the real property located within the bo�ndaries of the Project. "Public Redevelopment Costs" means those Eligible Costs to be incurred by the , Redeveloper in connection with the acquisition and redevelopment of the Redevelopment Property to be reimbursed by the Authority through the issuance and payment of the Notes, which costs are described on Schedule C to this Agreement. "Redeveloper" means Marketplace Holdings, Inc., a Minnesota corporation, or its successors and assigns, or any future owners of the Redevelopment Property. "Redevelopment Property" means the real property described in Schedule A of this Agreement, consisting of Parcel I and Parcel II. • "Redevelopment Plan" means the Authority's Redevelopment Plan for the Project, as amended as of the date of this Agreement. "Scheduled Payment" means a scheduled payment of interest ancl/or principal under the Notes. "Scheduled Payment Date" means each date on which a Scheduled Payment is due under the Notes. "State" means the State of Minnesota. "Substantial Completion" means the Minimum Improvements shall be deemed substantially completed when the Project Architect issues a written notice of completion, a certificate of occupancy has been issued by the City, and the Redeveloper has provided security or other assurances reasonably satisfactory to the Authority assuring that any remaining items, . including without limitation, landscaping, will be completed. "Tax Increment" means that portion of the real property taxes paid with respect to the Redevelopment Property and Minimum Improvements which is paid by the County to the Authority, minus amounts required by law to be deducted by or paid to other governmental entities. "Tax Tncrement District" means the Authority's and the City's Tax Increment District • No. 1-4. ' S "Unavoidable Delays" means delays beyond the reasonable control of the pari:y seeking ,;,;, to be excused as a result thereof which are the result of acts of God, terrorist act��, adverse ; weather conditions, strikes, other labor troubles, delays in obtaining construction materials, machinery and/or equipment, fire or other casualty to the Minimum Improvements, litigation ; commenced by third parties which, by injunction or other similar judicial action, results in delays, or acts of any federal, state or local governmental unit (other than the Authority in � enforcing its rights under this Agreement) which result in delays. Deiays in obtaining financing and dela s caused b eneral market conditions shall not constitute Unavoidable Delays, except Y Yg . .. . . . . t Area which ffectin the Pro ec environmental issues a for dela s in obtaimn financin due to g J Y g g shall constitute Unavoidable Dela s. U on the occurrence of an Unavoidable Delay, the party Y P seeking to be excused as a result thereof shall be excused for the period of the delay if such party gives the other party written notice of the cause of the delay or interruption within thirty (30) days after its occurrence. � � . i � I i � i �;.�� 6 � I -- II - - -- - ;; - - ---- - � , _ • ARTICLE II Representations Section 2.1. Representations bv the Authoritv. The Authority makes the follQwing representations as the basis for the undertaking on its part herein contained: (a) The Authority is a municipal housing and redevelopment authority organized and existing under the Act. Under the laws of the State, the Authority has the power to enter into this Agreement and to perform its obligations hereunder. (b) To the best of the Authority's knowledge and belief the Project is a "redevelopment project" within the meaning of the Act and was created, adopted and approved in accordance with the terms of the Act. (c) The Authority will, at no cost to the Authority, cooperate with the Redeveloper with respect to any litigation commenced with respect to the Project or Minimum Improvements. (d) Except for facts disclosed in any environmental assessment or report prepared on behalf of the Authority or the Redevelopex, the Authority has received no notice or communication from any local, state or federal official that the activities of the Redeveloper or the Authority in the Project Area may be or will be in violation of any • environmental law or regulation or any other local, state or federal laws or regulations, and the Authority, to the best of its knowledge, is aware of no facts the existence of which would cause it to be in violation of any local, state or federal environmental law, regulation or review procedure. (e) The Authority has, to the best of its knowledge, taken all action necessary to create the Project and has taken all action necessary to approve this Agreement and to authorize the execution and delivery of this Agreement. (� The execution, delivery and perforinance of this Agreement by the Authority does not, and constmunation of the transactions contemplated herein and the fulfillment of the terms hereof will not conflict with or constitute on the part of the Authority a breach of or default under any existing. (i) indenture, mortgage, deed of trust or other agreement or instrument to which the Authority is a party or by which the Authority or any of its property is or may be bound, or (ii) legislative act, constitution or other proceeding establishing or relating to the establishment of the Authority or ifs officers or its resolutions. (g) There is not pending, nor to the best of the Authority's knowledge is there threatened, any suit, action or proceeding against the Authority before any court, arbitrator, administrative agency or other governmental authority that materially and adversely affects the validity of any of the transactions contemplated hereby, the ability • of the Authority to perform its obligations hereunder, or as contemplated hereby, or the validity or enforceability of this Agreement. 7 � I i ' Section 2.2. Rebresentations bv the Redeveloper. The Redeveloper represent,� that: ,<;:,� . i (a) The Redeveloper is a corporation duly organized and authorized to transact business in the State, is not in violation of any provisions of its �uticles of incorporation, bylaws, or the laws of the State, has power to enter into this ��greement , and has duly authorized the execntion, delivery and performance of this Agre;ement by � proper action of its board of directors. � (b) The Redeveloper will construct the Minimum Improvements in accordance with the terms of this Agreement, the Redevelopment 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), except for variances necessary to construct the improvements contemplated in the Construction Plans.: approved by the Authoriiy. , (c) Except for facts disclosed in any environmental assessment or report prepared on behalf of the Authority or the Redeveloper, the Redeveloper has rE;ceived no notice or comrnunication from any local, state or federal official that the activ:ities of the Redeveloper or the Authority in the Project Area may be or will be in violation of any environmental law or regulation, and the Redeveloper, to the best of its knowledge, is aware of no facts the existence of which would cause it to be in violation of any local, state or federal environmental law, regulation or review procedure. (d) The Redeveloper will, at no cost to Redeveloper, cooperatf� with the �,:� . Authority with respect to any Iitigation commenced with respect to the Rede:velopment Plan, Project, or Minimum Improvements. Section 2.3. Joint Representations. The Authority and the Redevel�per each acknowledge and represent to each other the following: (i) that the Redeve�oper';� proposed development was initiated solely by the Redevelaper; (ii) that the scope and plan of the Redeveioper's proposed development was undertaken solely by the Redeveloper; (iii) that the Authority did not require the seller of the Redevelopment Property to sell the Redf,velopment Property to the Redeveloper; (iv} that the Authority did not d'zrectly or indirectly represent to the seller of the Redevelopment Property that it wauld use its powers of eminent domain against the seller if the seller refused to sell the Redevelopment Property to the Redeveloper; ��nd (v) the Authority is not contractually or otherwise obligated to use its powers of eminent d��main with respect to any aspect of the Redeveloper's proposed development. ' I • � E f f g _ : : - � � � . - --- - • ARTICLE III Develonment Proposal; Public Redevelonment Cos�s Section 3.1. Development Proposal. (a) The Redeveloper entered into a purchase agreement under which it acquired the Redevelopment Property. Pursuant ta the Prior Contract, the Redeveloper closed on its puxchase of the Redevelopment Property. Because of the cost of acquiring the Redevelopment Property, demolition of existing improvements and preparation of the Redevelopment Property for construction of the Minimum Improvements, the Authority acknowledges that some financial assistance is necessary to make the Redeveloper's proposed development feasible. The Authority has analyzed the Redeveloper's pro forma relating to the development of Phase I and has determined that in order to encourage and assist the Redeveloper's development, the Authority agrees that it will issue and pay the Note in accordance with its terms to reimburse the Redeveloper for its payment of certain costs related to the acquisition and preparation of Paxcel I for development of Phase I, all as is more specifically provided in this Agreement. The obligation of the Authority to issue the Note is specifically subject to the satisfaction of all of the conditions set forth in this Agreement, including, without limitation, Section 3.4 hereof. The Authority agrees that as the Redeveloper further refines its plans and cost estimates for Phase II the Authority will review information provided by the Redeveloper to determine whether tax increment assistance, through the issuance of tax increment revenue notes payable from the Tax Increment generated by Phase II, is necessary and appropriate. • (b) Prior to the demolition of the bnildings located on such property, the Redeveloper agrees that it will maintain the Redevelopment Property so as to minimize safety and security issues and to make the existing improvements as aesthetically attractive as reasonably possible. Section 3.2. Public Redevelopment Costs. (a) The Authority agrees that it will reimburse the Redeveloper for the payment of certain costs in connection with the acquisition and redevelopment of Parcel I of the Redevelopment Property (the "Public Redevelopment Costs"). The Public Redevelopment Costs are described on the attached Schedule C. The Authority agrees that it will reimburse the Redeveloper for the Public Redevelopment Costs, using Available T� Incxement on a pay-as- � you-go basis, through the issuance and payment of the Note as provided in this Agreement. (b) The Redeveloper shall be solely responsible for all aspects of constructing the Minimusn Improvements. The Authority's reimbursement of the Redeveloper for the Public Redevelopment Costs shall be accomplished through the Authority's issuance and delivery of the Note to the Redeveloper. The issuance of the Note will be authorized by the Authority in a resolution adopted by the Authority's Board of Commissioners. If the Redeveloper is not in default under the terms of this Agreement, fiha Note wi11 be issued at the time that the Redeveloper closes on its financing for construction of Phase I; provided that no interest sha11 accrue with respect to the principal amount of the Note and no payments shall be made under the Note until the Redeveioper has provided to the Authority documentation in such form as the � Authority shall require demonstrating that the Redeveloper has incurred and paid Public Redevelopment Costs at least equal to the principal amount of the Note. The principal amount of 9 I the Note has been estimated, based on preliminary financial information submittE;d to the �,,,., Authority by the Redeveloper, as the amount necessary to make the development of Phase I ,,, financially feasible. Based on such financial information, the parties estimate that the principal amount of the Note for Phase I will be $1,000,000. In no event will the principal amount of the Note for Phase I exceed $1,000,000. The actual principal amount of the Note shall be determined at the time of the issuance of the Note based on updated financial infor.mation as required by the Authority to determine the financial assistance needed by the Redevelo�>er. (c) The Authority has reviewed preliminary financial data submitted by the Redeveloper related to Phase II. Based on that data and current market conditions affecting the marketing of Phase II, the Authority has determined that it is not necessary to provide tax increment financial assistance for Phase II. The Authority agrees that as the Redeveloper further refines its plans for Phase II it will review financial data submitted by the Rede��eloper to determine whether changes in the data or in market conditions makes the provision of additional assistance for Phase II necessary. Therefore, the Redeveloper will upon request by the Authority provide updated financial data related to Phase II as the Redeveloper refines its Pha:;e II plans and the Authority will review such data to determine if additional assistance is warranted. The Authority's analysis wi11 be undertaken by entering the data provided by the Redeve;loper into the form of pro forma attached to this Agreement as Schedule G. The Authority will determine the acceptable level of return to the Redeveloper based on market conditions existing ;�t the time that the Redeveloper secures financing for construction of Pha�e II. The permitted levf;l of return will be the same approximate return required by developers of similar developme-nts in the Minneapolis/St. Paul Metropolitan Area, as determined by the Authority. If requested by the Redeveloper, the Authority will undertake separate fmancial analyses of Phases ITA and IIB. If '� � the Authority issues a tax increment revenue note for Phase II, or separate notes for 'Phases IIA and IIB, the Authority and the Redeveloper will enter into an amendment to this .Agreement reflecting that such notes are being issued and containing provisions similar to the pr��visions in this Agreement relating to the issuance of the Note. The decision to issue a tax increment revenue note or notes for Phase II is in the sole discretion of the Authority. Section 3.3. Issuance of Note (a) The Authority's reimbursement of the Redeveloper for the Public Redf,velopment Costs for Phase I shall be through the issuance of the Note which shall occur at the tinle stated in Section 3.2 of this Agreement. The Note shall be substantially in the form of the Nc�te attached to this Agreement as Schedule D, with a11 blanks properly filled in. The Note sha11 be dated as of the date of its issuance and shall be payable together with simple non-compoundin�; interest at the rate of six and one quarter percent (6.25%) per year from the later of: (i) the date of the issuance of the Note; or (ii) the date that the Redeveloper has provided acceptable documentation , that it has paid the Public Redevelopment Costs for which the Note is being issued, until the Note is paid in full or terminated. Interest shall be computed on the basis of a 360-day year of , twelve (12) 30-day months. If not paid earlier, the Note shall terminate on February l, 2033, the �,' year following the year in which the Tax Increment District terminates. ; (b) The Redeveloper makes the following representations to the Authority with � respect to the issuance of the Note to the Redeveloper: ,�; ; � I � � 10 � I , I , , , - __ _ - i � (i) The Redeveloper has not relied on any representations of the Authority, or any of its officers, agents, or employees, and has not relied on any opinion of any attorney of the Authority, as to the Federal or State income tax consequences relating to the purchase and ownership of the Note by the Redeveloper. (ii) The Redeveloper is sufficiently knowledgeable and experienced in financial and business matters, including the purchase and ownership of obligations of a nature similar to the Note, ta be able to evaluate the risks and merits of the purchase and ownership of the Note. The Redeveloper has been made aware of the security for the Note and the proposed uses of the proceeds of the Note, and has received the cooperation of the Authority in undertaking any due diligence that the Redeveloper has deemed necessary or appropriate. (iii) The Redeveloper understands that the Available Tax Increment is the sole source of money that is pledged and wi11 be available for the payments due under the Note; that the Authority is not under any obligation to repuxchase the Note from the Redeveloper under any circumstances; that the Note is not a general obligation of the Authority or the City; and that, if the Available Tax Increment is not sufficient to make the payments due under the Note in full, no right wi11 exist to have taxes levied by the Authority or City for the payment of the unpaid amounts due under the Note. � (iv) The Redeveloper understands that the Available Tax Increment necessary to pay the Note has been estimated assuming that the market value of Phase I will be at least $7,852,500 as of January 2, 2011. In the event, among other things, that the Redeveloper fails to complete Phase I in a timely manner the Available Tax Increment may be inadequafe to pay total principal of and interest on the Note. � (v) The Redeveloper unde.rstands that the Note is not registered or otherwise qualified for sale or transfer under the securities laws and regulations of the State or under the Federal securities laws or regulations, the Note is not listed on any stock or other securities exchange, and the Note will carry no rating from any rating service. (vi) The Redeveloper has conducted its own investigation regarding the projected Tax Increment from the Redeveloper's development and acknowledges that any estimates of Tax Increment prepared by or on behalf of the Authority or City were intended for the Authority's or City's use only and have not been and � will not be relied upon by the Redeveloper. (c) The Redeveloper shall not be entitled to sell, transfer or assign the Note to any person or entity, other than an affiliate of the Redeveloper controlled by the Redeveloper, without the Authority's prior written consent which shall not be unreasonably withheld or , delayed. The Authority understands, however, that the Redeveloper is contemplating to either pledge or sell, and assign the Note to obtain financing for construction of Phase I and will permit 11 f � � , , I I such pledge or sale and assignmen� if fhe Redeveloper's lender or note purchaser executes and ,;,;; deiivers to tiie Authority a certification in a form acceptable to the Autharity containing the �.�.� representations concerning the limited nature of the source of payment of the Note se;t forth in subsection (b) above and such other representations as the Authority may reasonably require. Section 3.4. Conditions Precedent to the Issuance of the Note. (a) The Authority's obligation to issue the Note to the Redeveloper shall be subject to the satisfaction, or waiver by the Authority in vvriting, of all of the following conditions precedent: (i) there shall not exist an uncured Event of Default under this Agreement; (ii) the Construction Plans for Phase I of the Minimum Improvements shall have been approved by the City, the planning cominission for the; City and any other governmental agency other than the City and the Authority whose approval is required in order for the Redeveloper to construct and operate Phase I; (iii) the Authority shall have been furnished with evidencf,, in such form as the Authority may require, demonstrating that the Redevelopet• owns fee title to the Redevelopment Property free from all defects and encumbrances that would prevent the construction and use by the Redeveloper of the Minimum Improvements; and ` � (iv) the Redeveloper shall have closed on financing suffici��nt to pay �,,,,� ; the costs of constructing and marketing Phase I. � If all of the above conditions are not satisfied, or waived in writing by both parties by k August 31, 2009, with respect to Phase I, or if any condition required ta be satisfied prior to such date has not been satisfied or waived in writing by both parties by the date it is required to be satisfied, then this Agreement may be term:inated by either party by giving writter.� notice of � termination to the oiher party, upon which tlus Agreement will terminate, subject to Section , 10.10 of this Agreement. Section 3.5. Pavment of Authoritv's Costs. The Redeveloper shall be resp��nsible for the payment of a11 costs of the Authority and City, whether incurred prior to or after the date of this Agreement, for attorneys and consultants relative to the analysis of the Recleveloper's ' proposed development and all costs related to the negotiation and preparation of this E�greement, the Loan Documents, and any other agreement xelated to Redeveloper's proposed development„ and all other costs related to this transaction. The Authority will provide the Redeveloper with invoices showing the costs payable by the Redeveloper and within thirty (30) days th�,reafter the ' Redeveloper shall pay to the Authority the amount of such costs. � Section 3.6. Reduction of Assistance. (a) The financial assistance to the Redeveloper ' under this Agreement related to Phase I is based in part on certain assumptions regar�ding likely costs and expenses associated with constructing Phase I as described on Schedu:�e E. The Authority and the Redeveloper agree that those assumptions will be reviewed at: the times described in this Section, and that the amount of Tax Increment assistance provided under `�'" '� Sections 3.2 and 3.3 will be adjusted accordingly. � I ; 12 i � -- I-_ � - , _ -� • (b) For the purposes of this Section, the following terms have the following definitions: "Calculation Date" means 60 days after the earliest of (i) the date of Stabilization for Phase I; (ii) the date of any transfer in whole or in part of Phase I; or (iii) three years after the date of completion of Phase I, as evidenced by the City's issuance of a final certificate of occupancy. "Net Operating Income" means all net rental income from Phase I received in the last fiscal year prior to the Calculation Date, subject to the following adjustments: (i) if Phase I has not reached Stabilization as of the Calculation Date, income will be calculated as the sum of actual rent, from both the apartments and the reta.il, garage, storage lockers and miscellaneous income plus assumed rent, garage, storage lockers and miscellaneous income for the space needed to reach 93% lease-up at rates equal to the average rent and gaxage and storage locker income from actual leases and miscellaneous income as of the Calculation Date; (ii) from that total will be deducted actual fees, operating and management expenses (if Stabilization has occurred) or estimated fees, operating and management expenses as if Phase I was 93% leased (if Stabilization has not occurred). � "Stabilization" rneans that 93% of Phase I is leased. (c) Lookback Calculation. On the applicable Calculation Date, the • Redeveloper shall de�liver to the Authority reasonable evidence based on the Net Operating Income of its actual annualized cumulative internal rate of return (the "IRR") from the Apartments, calculated as of the applicable Calculation Date, along with the estimated annualized cumulative IRR from Phase I assuming a sale in the tenth year after the date of issuance of the certificate of occupancy for Phase I. The IRR shall be calculated based on equity, revenues and expenses in substantially in the format of the lookback pro forma attached as Schedule E hereto. The Redeveloper agrees to provide to � the Authority any background documentation reasonably related to the financial data, upon written request from the Authority. The Authority may, by written request, require Redeveloper to deliver to the Authority a written certificate of a certified public accountant, without a full audit of the Redeveloper's books, regarding total redevelopment costs and revenues, to be provided at Redeveloper's expense. The amount by which the IRR exceeds twenty percent (20%) shall be referred to as the "Excess Percentage." The Excess Percentage, multiplied by Redeveloper's equity in Phase I(as calculated for purposes of determining the IRR), is the "Participation Amount." If the Authority determines that there is a Participation Amount, the Authority - shall deliver written notice to the Redeveloper stating the Participation Amount. Within ten (10) days after the Authority's delivery of such written notice the Redeveloper shall be liable for and shall pay to the Authority the amount of the Participation Amount. The obligation of the Redeveloper to pay such amount shall be secured by the personal guarantees of William H. Beard, Paul M. Gamst, Thomas A. Gump and Ronald G. Mehl, • which guarantees sha11 be executed at the time of the issuance of the Note. 13 Section 3.7. Business SubsidX A�reement. The Authority has determined that the �,: financial assistance being provided to the Redeveloper does not constitute a busines,� subsidy ,� because it qualifies for an exemption pursuant to Minnesota Statutes, section 116J.993, subd. , 3(17). Section 3.8. Authority Loan. In order to assist the Redeveloper in fina,ncing its acquisition of the Acquisition Property the Authority made the Authority Loan to the Redeveloper. The terms of the Authority Loan are as follows: (a) The principal amount of the Authority Loan was $900,000. The Authority Loan was made at the time that the Redeveloper closed on its acquisition of the Redevelopment Property. No interest accrues on the principal amount of the Authority Loan, provided that if the Authority loan is not paid in full when due, interest �at the rate of seven and one half percent (7.5%) per year shall accrue on the unpaid principal amount of the Authority Loan until the principal amount of the Authority Loan and all accrued interest has been paid in full. All payments on the Authority Loan are to be applied first to accrued interest and then to the principal amount of the Authority Loan. 'The entire principal amount of the Authority Loan and all accrued and unpaid interest is in any event be due and payable on October l, 2008, if by such date the Redeveloper has not closed on financing and commenced construction of Phase I. The entire principal amount of the Authority Loan and all accrued interest is also be due and payable in the event that there occurs an Event of Default by Redeveloper that is not cured withiri the time permitted by Section 9.2 of this Agreement. The Authority and the Redevelop��r agree to execute such agreements and instruments necessary to change the October 1, 2008 due � date on the Loan to October 1, 2009. (b) The Redevelopex's obligation to repay the Authority Loan is ev:idenced by a promissory note and such other instruments and agreements as were required by the Authority to be executed by the Redeveloper at the time of the making of the� Authority Loan (which instruxnents and agreements together with the mortgage and guaxantees referenced below and any other documents required by the Authority in conn��ction with the Authority Loan are collectively referred to herein as the "Authc►rity Loan Documents"). The promissory note and such other instruxnents and agreeme�lts are in a i commercially reasonable form prescribed by the Authority. i (c) The Redeveloper's obligation to repay the Authority Loan zs secured by a � mortgage granted by Redeveloper and encumbering the Redevelopment Pro�perty. The ` lien of such mortgage was required to only be subject to and subordinatE, to a f rst mortgage granted by Redeveloper to a lender providing financing to ��cquire the Redevelopment Property. The Authority agrees that it will subordinate its r.nortgage to the following: (d} The Redeveloper's obligation to repay the Authority Loan is s��cured by a joint and several guarantee executed by the following persons and entities: William H. Beard, Paul M. Gamst, Thomas A. Gump and Ronald G. Mehl. The Redev�loper shall cause said guarantors to execute an instrument, in a form prescribed by the Authority, by �,; � . 14 -- --- - - _ . , ; ,- _ _ __ - -- • which they reaffirm the Guaranty Agreement dated as of Apri1 9, 2007, confirming that their guarantees remain fully in effect with respect to the amended Authority Loan. (e) At the time that the Redeveloper completes construction of Phase I, the Authority Loan shall be forgiven in its entirety. Section 3.9. Authoritv Right to Acc�uire Parcel II. In the event that the Redeveloper proceeds with the construction of Phase I but does not comply with its obligations to market and construct Phase IIA or Phase IIB as required by this Agreement, the Authority shall have the right to purchase Parcel IIA for a purchase price of $255,840 and Parcel IIB for a purchase price of $170,560. The Redeveloper shall be obligated to convey the applicable portion of Parcel II to the Authority free and clear of all liens and encumbrances other than those which the Authority specifically approves in writing. If the pre-development f nancing amounts for Parcel IIA or Parcel IIB exceeds the amounts stated in Section 3.8(c), the Redeveloper shall obtain the consent, in a writing approved by the Authority, to such purchase of the applicable Parcel II by the Authority by all mortgagees and other lien holders with an interest in the applicable portion of Parcel II. The Redeveloper's securing of such consents shall be an additional condition precedent to the Authority's obligation to issue the Note. . • 15 ARTICLE IV � Construction of Minimum ImArovements Section 4.1. Construction and O�eration of Minimum Improvements_ The. Redeveloper agrees that it will construct the Minimum Improvements on the Redes�elopment Property in accordance with the approved Construction Plans, together with any� changes approved by the Authority and any changes not requiring the Authority's approval, and at all times prior to the Maturity Date will operate and maintain, preserve and keep the Minimum. Improvements or cause the Minimuxn Improvements to be maintained, preserved and kept with the appurtenances and every part and parcel thereof, in good repair and condition. Section 4.2. Construction Plans. (a) The Authority's willingness to assist the Redeveloper as provided in this Agreement is predicated upon and subject to the Red��veloper's agreement that it will construct the Minimum Improvemerits and that the Minimum Improvements will be of such quality and nature as will satisfy the Authority's and C:iiy's goals for the redevelopment of the Redevelopment Property. The City has granted all approvals necessary for the construction of Phase I and a planned unit development agreement fbr Phase I has been executed but needs to be amended to reflect the change in the nature of Phase I. Construction Plans far Phase II have not been approved by the City and such appro��al will be granted or denied in accordance with the City's planned unit development process. The Redeveloper agrees to enter into an amendment to the planned unit development agrE;ement for Phase I by May 31, 2009. The Redeveloper shall submit to the Authority and Cit3- complete applications for site plan, planned unit development, variances, vacations, plat and other � ' approvals necessary in connection with the development of Phase II so as to enable tb.e City and , Redeveloper to enter into a planned unit development agreement governing Phase II by August � 31, 2011. Failure by the Redeveloper to enter into planned unit development agreemelits by such i dates shall constitute an Event of Default. ; (b) Within a period of time that will allow the Redeveioper to satisfy thf, conditior� I � contained in Section 3.4(a)(iii) for Phase II, taking into account the time necessary fot• review by � the Authority, the Redeveloper shall provide to the Authority and the City for their xeview and � approval Construction Plans for Phase II and documentation necessary to obtain a11 other � approvals that must be obtained prior to the construction and operation of Phase II. The � Construction Plans and other documentation shall provide for the construction of Plaase TI and � shall be in conformity with this Agreement, and ail applicable state and local. laws and ' regulations. The Authority shall approve the Construction Plans and other docum.entation in I writing if, in the sole discretion of the Authority, the proposed Phase II, including t:he building � materials proposed to be used, are of such a nature and quality as to justify the .Authority's conveyance of the Redevelopment Property and if they are consistent with the provisions of this � Agreement. Such Construction Plans and other documentation shall, in any event, be deemed ; approved by the Authority, but not the City, unless rejected in writing by the Authoril.y, in whole � or in part within thirty (30) days after the date of their receipt by the Authority. � i (c) Nothing in this Agreement shall be deemed to relieve the Redeve:loper of its j obligation to comply with the requirements of the City's normal construction permitting process. � i + I 16 : , � _ ' __� -:: • (d) If the Redeveloper desires to make any material change in any Construction Plans after their approval by the Authority, the Redeveloper shall submit the proposed change to the Authority for its approval. If the Construction Plans, as modified by the proposed change, conform to the requirements of this Agreement and such changes do not materially alter the nature, quality or exterior appearance of the Minimum Improvements, the Authority sha11 approve the proposed change and notify the Redeveloper in writing of its approval. Any requested change in the Construction Plans shall, in any event, be deemed approved by the Authority unless rejected, in whole or in part, by written notice by the Authority to the Redeveloper, setting forth in detail the reasons therefore. Such rejection shall be made within ten (10) days after receipt of the notic� of such change. (e) The Redeveloper agrees to construct the apartment component of Phase I in such manner as to enable the conversion of individual rental units to condominiums. ( fl The Redeveloper agrees that it will design and construct Phase II so that the completed . market values of the townhouse units in Phase II will be not less than 100% of the median price of homes within a 5 mile radius of the Redevelopment Properiy described on the attached Schedule F (g) The Redeveloper has undertaken certain site work on the Redevelopment Property and will cooperate with the Authority in its efforts to obtain the release of grant funds under the Hennepin County Transit Oriented Grant obtained by the City and Authority. Without limiting � the foregoing, the Redeveloper will provide to the Authority invoices and proof of payment of costs of the types tlie Hennepin County Transit Oriented Grant was secured to pay. The Hennepin County Transit Oriented Grant funds when released to the City or Authority will be the property of the City or Authority and will not be used to pay costs of the Redeveloper's development. Section 4.3. Commencement and Completion of Construction. Subject to Unavoidable Delays, the Redeveloper shall commence construction of Phase I by October 31 2009, and complete construction of Phase I by December 31, 2010, or on such other date as the parties may agree. Subject to Unavoidable Delays, the Redeveloper shall comrnence construction of Phase IIA by May 31, 2011, and complete constxuction of Phase IIA by June 30, 2012, or on such other date as the parties may agree. Subject to Unavoidable Delays, the Redeveloper shall commence construction of Phase IIB by May 31, 2012, and complete construction of Phase IIB by June 30, 2013. All work with xespect to the Minimum Improvements to be constructed or provided by the Redeveloper on the Redevelopment Property shall be in conformity with the Construction Plans, � together with any changes approved by the Authority and any changes not requiring the Authority's approval, as submitted by the Redeveloper and approved by the Authority. The Redeveloper agrees for itself, its successors and assigns, and every successor in interest to the Redevelopment Property, or any part thereof, that the Redeveloper, and its successors and assigns, shall promptly begin and diligently prosecute to completion the redevelopment of the Redevelopment Property through the construction of the Minimum � Improvements thereon, and that such construction shali in any event be commenced and completed within tha period specified in this Section 4.3 of this Agreement and subject to Unavoidable Delays and/or mutual agreement of the parties hereto. Until construction of the . 17 , . I Minimum Improvements has been Substantially Completed, the Redeveloper shall make ,�; :;,, construction progress reports,.at such times as may reasonabiy be requested by the Autl��ority, but not more than once a month, as to the actual progress of the Redeveloper with respe<:t to such construction. Upon Substantial Compietion of the Minimurn Improvements and upon request by ' the Redeveloper, the Authori�y shall provide to the Redeveloper a certificate in recordable form stating that the obiigations of the Redeveloper with respect to the construction of the �Vlinimum Improvements under this Agreement have been satisfied. Section 4.4. Marketin� Minimum Improvements. The Authority's willingne:;s to enter into this Agreement and to perform its obligations herein was predicated on the Redf;veloper's agreement that it would make certain efforts to market the Minimum Improvements. Redeveloper's ability to secure financing to construct the Minimum Improvements is �iependent on the Redeveloper being able to pre-sell a certain number of residential units in Phase II. Therefore, the Redeveloper agrees that no later than May 31, 2010, it will secure a market study from a consultant acceptable to the Authority showing that the market will support the ;sale of the Phase II town homes. Also, by May 31, 2010, the Redeveloper will enter into a contract with a rnarketing frm experienced in marketing town homes of the type proposed for Phas�� II under which the Redeveloper will retain such firm to market either Phase IIA or Phase IIB. �� inally, by May 31, 2010, the Redeveloper will establish an on-site sales office to market either the Phase II� or the Phase IIB tovvn homes. �� 18 .: . - , --- , � _ _ __ • ARTICLE V Insurance and Condemnation Section 5.1. Insurance (a) The Redeveloper or its contractors will provide and maintain at all times during the process of constructing the Minimum Improvements and, from time to time at the request of the Authority, furnish the Authority with proof of payment of premiums on: (i) Builder's risk insurance, written on the so-called "Builder's Risk — Completed Value Basis," in an amount equal to one hundred percent (100%) of the insurable value of the Minimum Improvements at the date of completion, and with coverage available in nonreporting form on the so called "all risk" form of policy; (ii) Comprehensive general liability insurance (including operations, contingent liability, operations of subcontractors, completed operations, Broadening Endorsement including contractual liability insurance) together with an Owner's Contractor's Policy with limits against bodily injury and property damage of not less than $1,000,000.00 for each occurrence (to accomplish the above-required limits, an umbrella excess liability policy may be used); and • (iii) Worker's compensation insurance, with statutory coverage and _ employer's liability protection. ` The policies of insurance required pursuant to clauses (i) and (ii) above shall be in form and content reasonably satisfactory to the Authority and shall be placed with financially sound and reputable insurers licensed to transact business in the State, the liability insurer to be rated A or better in Best's Insurance Guide; provided, that the Redeveloper shall have the right to self-insure to satisfy said requirements with the written approval of the Authority. The policy of insurance delivered pursuant to clause (i) above shall contain an agreement of the insurer to give not less than thirty (30) days' advance written notice to the Authority in the event of cancellation of such policy or change affecting the coverage thereunder. (b) Upon completion of construction of the Minimum Improvements and prior to the Maturity Date, the Redeveloper shall maintain, or cause to be maintained, at its cost and expense, and from time to time at the request of the Authority shall furnish proof of the payment of premiums on, insurance as follows: (i) Insurance against loss and/or damage to the Minimum Improvements under a policy or policies covering such risks as are ordinarily insured against by similar businesses, including (without limiting the generality of • the foregoing) fire, extended coverage, all risk vandalism and malicious mischief, boiler explosion, water damage, demolition cost, debris removal, and collapse in an amount not less than the full insurable replacement value of the Minimum �19 Improvements, but any such policy may have a deductible amount of not more �;, than $50,000.00. No policy of insurance shall be so written that the proceeds thereof will produce less than the minimum coverage required by the �preceding sentence, by reason of co-insurance provisions or otherwise, without the prior consent thereto in writing by the Authority. The term "full insurable replacement value" shall mean the actual replacement cost of the Minimum Improvements (excluding foundation and excavation costs and costs of underground fliies, pipes, drains and other uninsurable items) and equipment, and shall be determined from time to time at the request of the Authority, but not more frequently than once every three years, by an insurance consultant or insurer, selected and p,aid for by the Redeveloper and approved by the Authority. (ii) Comprehensive general public liability insurance, including personal injury liability (with employee exclusion deleted), and automobile insurance, including owned, non-owned and hired automobiles, against liability for injuries to persons and/or property, in the minimum amount for each . occurrenee and for each year of $1,000,000.00. (iii) Such other insurance, including worker's compensation insurance respecting all employees of the Redeveloper, in such amount as is cizstomarily carried by like organizations engaged in like activities of comparablf� size and liability exposure; provided that the Redeveloper may be self-insured with respect to all or any part of its liability for worker's compensation. ;,; (c) � All insurance required in Article V of this Agreement sha11 be taken out � and maintained in responsible insurance companies selected by the Redevelaper which are authorized under the laws of the State to assume the risks covered thereby. (d) The Redeveloper agrees to notify the Authority immediately in �the case of damage exceeding $25,000 in amount to, ar destruction of, the Minimum Im��rovements or any portion thereof resulting from fire or other casualty. In the event oi.' any such damage, the Redeveloper will, upon receipt of the consent of its lender(s)„ forthwith repair, reconstruct and restore the Minimum Improvements to substantially tlie same or an improved condition or value as existed prior to the event causing such dam,age and, to the extent necessary to accomplish such repair, reconstruction and restoration, the Redeveloper will apply the Net Proceeds of any insurance relating to suc,h damage received by the Redeveloper to the payment or reimbursement of the costs thereof. Upon the receipt of the consent of its lender(s) the Redeveloper sha�l complete the repair, reconstruction and restoration of the Minimum Improvements, whethe�- or not the Net Proceeds of insurance received by the Redeveloper for such purposes are sufficient to pay for the same. Any Net Proceeds remaining after completion of such repairs, construction and restoration shall be remitted to the Redeveloper. Subject to the limitation contained in Section 9.2, in the event of substantial or total destruction of the Minimum Improvements, the Redeveloper may elect t�� not repair ,,;, � 2Q � - -- --- - - - , --- ; :, . ,. ..- � -- - :,--- „ -- :__ _ _ • or reconstruct the Minimum Improvements, in which case the Authority may, as its sole remedy, terminate its obligations under the Note. (e) The Authority agrees that its rights under this Section relative to the application of Net Proceeds of insurance provided under Section 5.1(a)(i) and (b)(i) and • as provided in Section 5.1(d) shall be subordinate to the rights of a Holder of a Mortgage approved by the Authority; provided, that the Authority's right to terminate the Note for a violation of the Redeveloper's obligations under this Section shall not be subordinated to � the rights of a Holder. . (� The provisions of this Article V shall terminate with respect to any residential unit of the Minimum Improvements at such time as that unit is sold to an individual purchaser thereof. Section 5.2. Condemnation. In the event that title to and possession of the Minimum Improvements or any material part thereof shall be taken in condemnation or by the exercise of the power of eminent domain by any governmental body or other person (except the Authority) prior to the Maturity Date, the Redeveloper shall, with reasonable promptness after such taking, notify the Authority as to the nature and extent of such taking. Upon receipt of any Condemnation Award, the Redeveloper shall elect to either: (a) use the entire Condexnnation Award to reconstruct the Minimum Improvements (or, in the event only a part of Minimum Improvements have been taken, then to reconstruct such part) within the Project Area; or (b) retain the Condemnation Award whereupon in the event that a substantial portion of the • Redevelopment Property and Minimum Improvements have been taken, the Authority's obligations under this Agreement and, subject to the limitation contained in Section 9.2, the Note shall terminate as of the date of the Condemnation taking. � 21 ARTICLE VI , ��,:�; Taxes: Taz Increment Section 6.1. Real Properiv Taxes. The Redeveloper shall pay or cause to be paid when I due and prior to the imposition of penalty all real property taxes and installments of special ; assessments payable with respect to the Redevelopment Property. The provisions of tliis section , shall terminate with respect to any residential unit of the Minimum Improvements at su.ch time as ' that unit is sold to an individual purchaser thereof. ; Section 6.2. Creation of Tax Increment District. The Redevelopment Property is located in the Tax Increment District. The Tax Increment District has been creafed in ' accordance with State law and that, after modifying the Tax Tncrement Plan for the Tax ; Increment District, it will have the legal authority to spend the T� Increment in accor�iance with f this Agreement. However, it does not warrant the same to the Redeveloper. The R��developer � has caused to be undertaken on its behalf a review of all actions taken by the City and the I Authority in creating the Tax Tncrement District and in approving this Agreemerit and has � determined to its satisfaction that the Authority's actions under this Agreement are authorized by � law. Section 6.3. Tax Increment. The Authority agrees to pledge to the payment ��f the Note the Available Tax Increment. ;,.,;, � 22 _ :� .:::.::...::... : -- - i - , _, _ _ ---- _ - _ - • ARTICLE VII Mortgage Financing Section 7.1. Mortga�e Financin�. Before the Redeveloper commences construction of Phase I and no later than August 31, 2009, the Redeveloper shall submit to the Authority evidence that it has closed on financing sufficient for the construction of Phase I. Before the Redeveloper commences construction of either Phase IIA or Phase IIB, and no later than the dates for commencement of such construction under Section 4.3, the Redeveloper shall submit to the Authority evidence that it has closed on financing sufficient for the construction of such portion of Phase II. If the Authority finds that the financing is sufficiently committed, adequate in amount to provide for the construction of the Minimum Improvements, and subject only to such conditions as the Authority approves then the Authority shall notify the Redeveloper in writing of its approval. Such approval shall not be unreasonably withheld and either approval or rejection shall be given within ten (10) days from the date when the Authority is provided the evidence of financing, or the financing shall be deemed approved. If the Authority rejects the evidence of financing as inadequate, it shall do so in writing specifying the basis for the rejection. In any event the Redeveloper shall submit adequate evidence of financing within thirty (30) days after such rejection. Section 7.2. Limitation U�on Encumbrance of Property. Prior to the completion of a Phase, as certified by the Authority, neither the Redeveloper nor any successor in interest to the Redevelopment Property, or any part thereof, shall engage in any financing or any other • transaction creating any mortgage or other encumbrance or lien upon the Parcel on which the Phase is to be built, whether by express agreement or operation of law, or suffer any encumbrances or lien to be made on or attach to the Redevelopment Property, except: (a) for the purposes of obtaining funds only to the extent necessary for pre-development purposes and constructing the Minimum Improvements (including, but not limited to, land and building acquisition, including the purchase price paid, labor and materials, professional fees, real estate taxes, construction interest, organizational and other indirect costs of development, costs of constructing the Minimum Improvements, and an allowance for contingencies); and (b) only upon the prior written approval of the Authority, which approval shall not be unreasonably withheld or delayed. For the purposes of such mortgage financing as may be made pursuant to the Agreement, the Redevelopment Property may, at the option of the Redeveloper (or successor in interest), be divided into several parts or parcels, provided that such subdivision, in the reasonable opinion of the Authority, is not inconsistent with the purposes of this Agreement and is approved in writing by the Authority. Notwithstanding anything to the contrary herein contained, Redeveloper shall have the right to contest by appropriate legal proceedings diligently prosecuted any mechanics', materialmen's or other liens or claims for lien upon the Redevelopment Property, and no such liens shall constitute an Event of Default hereunder; if, but only if: (a) Redeveloper shall forthwith give notice of any such lien to the Authority at the time the same shall be asserted; • 23 i I � I I (b) Redeveloper shall diligently prosecute the contest of any such lien by ,;;,, appropriate legal proceedings having the effect of staying the foreclosure or forfeiture of the Redevelopment Property; and (c) Redeveloper shall pay such lien if and to the extent that any sucYi lien shall be determined adverse to the Redeveloper. ��.�� i i ' � �i . I i . �:;:� � . 24 - _ - _ _ . _ -- - _ _ _ __ __ �,:. . , i � : i �� ,_ • ARTICLE VIII Prohibitions A�ainst Assi�nment and Transfer, Indemnification Section 8.1. Prohibition Aga.inst Transfer of Pro�erty and Assignment of Agreement. Except as noted below, the Redeveloper represents and agrees that prior to the completion of construction of a Phase, the Redeveloper 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 lease, or any trust or power, or transfer in any other mode or form of or with respect to this Agreement or the Parcel on which the Phase is to be built or any part thereof or any interest herein or therein, or any contract or agreement to do any of the same, without the prior written approval of the Authority, which approval shall not be unreasonably withheld or delayed. Provided, however, that the foregoing restriction will not apply to any one or more of the following: (a) Granting a First Mortgage, security interest or other lien upon the Redevelopment Property for purposes of obtaining financing as contemplated herein including, without limitation, the financing anticipated under Article VII of this Agreement. (b) Sales of residential units to individual purchasers. (c) Leases of apartment units to individual residents. • (d) A sale or lease of all or any portion of the approximately 5,500 square feet of comrnercial space to retail or commercial tenants or users in the ordinary course of business after the completion of the Minimum Improvements. In the absence of specific written agreement by the Authority to the contrary, no such transfer or approval thereof by the Authority shall be deemed to relieve the Redeveloper, or any other party bound in any way by this Agreement or otherwise with respect to the construction of the Minimum Improvements, from any of its obligations with respect thereto, nor shall Redeveloper or any other party bound by this Agreement be released from any obligations hereunder without the written release by the Authority Section 8.2. Release and Indemnification Covenants. (a) The Redeveloper releases from and covenants and agrees that the Authority and the governing body members, officers, agents, servants and employees thereof shall not be liable for and agrees to indemnify and hold harmless the Authority and the governing body members, officers, agents, servants and employees thereof against any loss or damage to property or any injury to or death of any person occurring at or about or resulting from any defect in the Min'imum Improvements, other than caused by the wiliful misconduct or gross negligence of the Authority or its governing body members, officers, agents, servants and employees. • (b) Except for any willful misrepresentation, any willful or wanton misconduct, or any grossly negligent actions of the following named parties, the Redeveloper agrees to protect and defend the Authority and the City and the governing 25 body members, officers, agents, servants and employees thereof, now or forf;ver, and further agrees to hold the aforesaid harmless from any claim, demand, snit, action or � other proceeding whatsoever by any person or entity whatsoever arising or purportedly arising from this Agreement, or the transactions contemplated hereby or the acquisition, construction, installation, ownership, and operation of the Minimum Improveme:nts. (c) The Authority and fke governing body members, officers, agents, servants and employees thereof shall not be liable for any damage or injury to the persons or property of the Redeveloper or its officers, agents, servants or employees or any other person who may be about the Redevelopment Pxoperty or Minimum Improver.nents due to any act of negligence of any person other than the Authority or its goverrung body members, off cers, agents, servants and employees. (d) All covenants, stipulations, promises, agreements and obligations of the Authority contained herein shall be deemed to be the covenants, stipulations, promises, agreements and obligations of the Authority and not of any governing body member, officer, agent, servant or employee of the Authority in the individual capacity thereof. Section 8.3. Indemnification for Relocation Claims. Without limiting ;�ny other provision of this Agreement, the Redeveloper hereby agrees to protect and defend the Authority and the City and the governing body members, officers, agents, servants and employe��s thereof, now or forever, and further agrees to hold the aforesaid harmless from any claim, denaand, suit, action or other proceeding whatsoever by any person or entity whatsoever for relocatian benefits or assistance under State or federal law as a result of the Redeveloper's or the p.uthority's �; i activities under this Agreement. �� I � I � ! � I i i � i � '� 26 - .- � _ ' :.�,. . , - - - -- : � --- - _ _ __ � ARTICLE IX Events of Default Section 9.1. Events of Default Defined. The term "Event of Default" shall mean, whenever it is used in this Agreement (unless the context otherwise provides), subject to Unavoidable Delays, any failure by Redeveloper to substantially observe or perform any material covenant, condition, obligation or agreement on its part to be observed or performed hereunder or under the Authority Loan Documents. Section 9.2. Authority's Remedies on Default. Whenever any Event of Default by Redeveloper referred to in Section 9.1 of this Agreement occurs, the Authority may suspend its performance under the Agreement and the Note until it receives assurances from the Redeveloper, deemed reasonably adequate by the Authority, that the Redeveloper will cure its default and continue its performance under the Agreement and may take any one or more of the following actions after providing thirty (30) days written notice to the Redeveloper 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 incapable of being cured within said thirty (30) days and the Redeveloper has not provided to the Authority evidence reasonably satisfactory to the Authority that the Event of Default will be cured and will be cured as soon as reasonably possible: (a) Terminate the Agreement andlor the Note. • (b) Take whatever action, including legal, equitable or administrative action, which may appear necessary or desirable to the Authority to collect any payments due under this Agreement, or to enforce performance and observance of any obligation, agreement, or covenanf of the Redeveloper under this Agreement. (c) Declare the Authority Loan immediately due and payable. (d) Exercise any xemedies specified in the Authority Loan Documents. After Substantial Completion of Phase !, the Authority shall no longer have the right to terminate the Note or to withhold payments under the Note as a remedy on account of the occurrence of an Event of Default under this Agreement. Section 9.3. No Remedv Exclusive. No remedy herein conferred upon or reserved to the Authority or Redeveloper 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 oth�r remedy given under this Agreement or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Authority or the Redeveloper 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 IX. • Section 9.4. No Additional Waiver Implied bv One Waiver. In the event any agreement contained in this Agreement should be breached by either party and thereafter wa.ived 27 by the other party, such waiver shall be limited to the particular breach so waived anol shall not ,;. be deemed to waive any other concurrent, previous or subsequent breach hereunder. ,,:,� �,,,, � 28 -- . � .,_ _ ,...... .. .. , _ -- __ - -_ :� - • ARTICLE X Additional Provisions Section 10.1. Representatives Not Individually Liable. No member, official, or employee of the Authority sha11 be personally liable to the Redeveloper, or any successor in interest, in the event of any default or breach or for any amount which may become due to the Redeveloper or successor on account of any obligations under the terms of the Agreement. Section 10.2. Equal Emplo�ment O,�portunitv. The Redeveloper for itself and its successors and assigns, agrees that during the construction of the Minimum 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 10.3. Restrictions on Use. The Redeveloper agrees for itself, and its successors and assigns, and every successor in interest to the Redevelopment Property, or any part thereof, that the Redeveloper, and such successors and assigns, shall until the Maturity Date devote the Redevelopment Property to, and only to and in accordance with, the uses specified in the Redevelopment Plan and this Agreement. Section 10.4. 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 10.5. 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 Redeveloper, is addressed to or delivered personally to the Redeveloper at its principal office at 750 2nd Street Northeast, Suite #100, Hopkins, Minnesota 55343; and (b) in the case of the Authority, is addressed to or delivered personally to the Authority at 1010 First Street South, Hopkins, Minnesota 55343, 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 10.6. Disclaimer of Relationships. The Redeveloper acknowledges that nothing contained in this Agreement nor any act by the Authority or the Redeveloper shall be deemed or construed by the Redeveloper or by any third person to create any relationship of third-party beneficiary, principal and agent, limited or general partner, or joint venture between the Authority and the Redeveloper and/or any third party. • Section 10.7. Modifications. This Agreement may be modified solely through written amendments hereto executed by the Redeveloper and the Authority. 29 Section 10.8. Counter�arts. This Agreement may be executed in any ntunber of � counterparts, each of which shall constitute one and the same instrument. Section 10.9. Judicial Interpretation. Should any provision of this Agreemerrt require judicial interpretation, the court interpreting or construing the same shall not apply a presumption that the terms hereof shall be more strictly construed against one party by reason of tlie rule of construction that a document is to be construed more strictly against the party whe� itself ar through its agent or attorney prepared the same, it being agreed that the agents and attorneys of both parties have participated in the preparation hereof. Section 10.10. Effect of Termination. In the event that this Agreement is t��rminated pursuant to any provision hereof or by court order, all provisions hereof shall termin�ite except that the Redeveloper's representations and agreements under Section 2.2, Section 3.5 (with respect to costs incurred prior to such termination) and Section 8.2 and the Authority's representations under Section 2.1 shall survive such termination and any cause of acti��n arising hereunder prior to such termination shall not be affected. i � � 30 -�- - - -- - - - ; � : -- „ _ _ .,,... , � - _ . IN WITNESS WHEREOF, the Authority has caused this Agreement to be duly executed in its name and behalf and the Redeveloper has caused this Agreement to be duly executed in its name and behalf on or as of the date first above written. HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF HOPHINS By By 112ARKF.TPLACE HOLDINGS, INC. _ By STATE OF MINNESOTA ) • )SS. COUNTY OF ) The foregoing instrument was acknowledged before me this day of , 2009, b �d , 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 STATE OF MINNESOTA ) )SS. COUNTY OF ) The foregoing instrument was acknowledged before me this day of , 2009, b , the of MARKETPLACE HOLDINGS, INC., a Minnesota corporation, on behalf of the corporation. Notary Public • 31 SCHEDULE A p� ��, Description of Redevelopment Property Phase I(Approzimatelv 53 auartments and 5,500 square feet of retail): Lot 1, Block 1 Phase II-A (7 for-sale townhomes): Lot 1, Block 2 � Phase II-B (6 for-sale townhomes): � Lot 2 Block 1 I � i Phase II-B Phase I Phase II-A � I � �, � s � �,� � ��,�: �� ,. �, ;;NN ;.w `�'� ` �� "� � � ��' � � �, �� ' �" u E 1 � . `" � �` � f Y;� � � `° � . - �"��c� a :w £ � ��' s 3��`� � � °� R 3 � �. f E � , �Y ,�,�: 2 C 'T a �� . �: � .� . � � r � °�- � ` �� a � � �� 7 . �, �' �p , � � � r� y '��. � �.� �� ` �`� �'� � �-' �' � „•.'�i`� �� . �'`� �-.a,� =g:a � � � a. G �-. r s A ��_ �,r � �, � �' � � � �_ .� �,'� � ��,. � t � � � � �LN F �• �. �''� � � 3 �'�� t°. ��a' , a�� ' � � ; - .� � �"�",« � °� ; - �, ,� � d � �� ''�'' � � � E�� : � �� , h � �f � � ;�� , � � � �� '�, � �� .� � ��y -� : ` �, �`b.� �, � -�_� � � ' '` �s . �., � � , � , � �` 3 �� c� �� ..�� " ��" "`� � ` P vf. : ' �,� , : .. ts ' ` �„� �, � 2 � A�dLL z: �, ..��, F� ��+.z aYs , �� a � �.: � .� � � :. , . _ -<. � � � _ � . � y �,� � 3ar . `l,w'�; �'� � a �' 'a ``' \ 4?'. . _ ,.. . .�� : . � ' .. '' x ,. •. �' �� n7a . �( �.. c '�' # 6 � � . > �� z_ y � t ' „ � ` F �,� � . �� '�� T � „ , . ; , ; �: � " , �.� r � �,°. . ,,.':+ , s s ,. 3 , ,. , . . .... . . :, ...;�«:'.: � c;� ° . . - . . � . ,�.. fi::!1 • A-1 - --- -- _ , ....�..., .. :: , , , ,� � SCHEDULE B Sources and Uses The following Sources and Uses of funds are an estimate on the date of the Agreement. The Sources and Uses are subject to change; an example of which would be the lender's final underwriting of the loan. Phase I — Apartments (estimate) Sources of Funds: DoughertyMortgage LLC - HUD 221D4 Loan $ 7,850,000 Tax Increment Financing 930,000 Met-Council Clean Up Grant 155,640 Deferred Development Fee 1,084,948 HRA Loan - City of Hopkins 900,000 Developer Equity 94 Total Source of Funds $ 10,920,683 Uses of Funds• • Land Acquisition $ 211 600 Land Cost (Portion) 900,000 Construction Costs 6,885,700 Construction Loan 755,011 Cash Accounts 594,100 Professional Services 291,508 Closing Costs 34,366 Cost of Financing 163,450 Develo er Fee 1,084,948 Total Use of Funds $ 10,920,683 Phase IIA Phase IIB • SCHEDULE C ,�r a� �N��' Description of Public Redevelopment Costs Land acquisition Site preparation Other costs legally payable with tax increment as determined by the Authority � � i , � --- ------- ,- __ __ _ _::.,,. . . .. ; , - _ __ . �� , • SCHEDULE D Form of Note U1�TITED STATES OF AMERICA STATE OF MINNESOTA COUNTY OF HENNEPIN HOUSING AND REDEVELOPMENT IN AND FOR THE CITY OF HOPHINS LIMITED REVENUE TAX INCREMENT NOTE (MARKETPLACE & MAIN PROJECT) The Housing and Redevelopment Authority In and For the City of Hopkins, Minnesota (the "Authority"), hereby acknowledges itself to be indebted and, for value received, promises to pay to the order of Marketplace Holdings, Inc., a Minnesota limited liability company, or its permitted assigns (the "Owner"), solely from the source, to the extent and in the manner hereinafter provided, the principal amount of this Note, being � Dollars ($ ) (the "Principal Amount"), said amount, together with interest as hereinafter described, to be paid commencing on 1, , and continuing on each 1 and 1, thereafter to and including l, .(the "Scheduled Payment Dates"). This Note is the Note defined in that certain First Amended and Restated Contract for Private Redevelopment dated as of , 2009, between the Authority and • the Owner (the "Contract"). The Authority shall have no obligation to make any payment hereunder and no interest shall accrue on the Principal Amount of this Note until the Authority has delivered to the Owner a certificate certifying that certain conditions precedent set forth in Section 3.2 of the Contract have been satisfied or waived, which certificate shall be attached to this Note. Interest at the rate of six and one quarter percent (6.25%) per annum (the "Rate") shall accrue from the date of such certification (the "Certification Date") until the earlier of the date that this Note is paid in full or the termination of the Authority's Tax Increment Financing District No. 1-4 (the "District). The term of this Note shall continue until the entire Principal Amount of and interest under this Note have been paid or until February 1, 2033, whichever is earlier. Each payment on this Note is payable in any coin or currency of the United States of America which on the date of such payment is legal tender for public and private debts and shall be made by check or draft made payable to the Owner and mailed to the Owner at its postal address within the United States which shall be designated from time to time by the Owner. The Note is a special and limited obligation and not a general obligation of the Authority, which has been issued by the Authority pursuant to and in full conformity with the Constitution and laws of the State of Minnesota, including Minnesota Statutes, Section 469.178, subdivision 4, to aid in financing a"project", as therein defined, of the Authority consisting generally of defraying certain public redevelopment costs incurred and to be incurred by the Authority within and for the benefit of its Redevelopment Project No. 1(the "Project"). • � � � � I THIS NOTE IS A LINIITED OBLIGATION OF THE AUTHORITY AND NOT A �� i DEBT OF THE CITY OF HOPKINS OR THE STATE OF MINNESUTA (THE "STATE"), AND NEITHER THE CITY, THE STATE NOR ANY POLITICAL ; SUBDIVISION THEREOF SHALL BE LIABLE ON THE NOTE, NOR SHALL THIS NOTE BE PAYABLE OUT OF ANY FUNDS OR PROPERTIES OTHER THAN THE AVAILABLE TAX INCREMENT, AS DEFINED BELOW. The Scheduled Payment of this Note due on any Scheduled Payment Date is payable solely from and only to the extent of Available Tax Increment, which consists of a portion of the real property taxes received. as tax increment by the Authority with respect to the Authority's Tax Increment Financing District No. 1-4. Available Tax Increment, �vith respect to each Scheduled Payment Date, shall have the meaning given to such term in the Contract. This Note is issued in one denomination. The Authority shall not be in default under this Note for failure to make a payment under this Note and no interest shall accrue with respect to such payment not made until a date thirty (30) days after the Anthority receives written demand for such payment from the Owner; provided, that the Authority shall endeavor to make all payments when due or as soon as possible after receipt of the Owner's written demand. The Authority shall pay on each Scheduled Payment Date to the Owner the Available Tax Increment. Payment shall be first applied to accrued interest and then to the Principal Amount. If not terminated sooner pursuant to the terms of this Note or the Contract, on � + February 1, 2033, the Authority's payment obligations under this Note shall terminate and this � Note shall no longer be an obligation of the Authority. � The Authority's obligations herein are subject to the terms and conditions of the Contract. Subject to Section 9.2 of the Contract, the Authority's payment obligations hereunder shall be suspended and this Note may be terminated by the Authority upon the occurrence of an Event of � Default as provided in Section 9.1 of the Contract, which Contract is incorporated herein and made a part hereof by reference. Upon such termination, the Authority's obligations to make further payments hereunder sha11 be discharged. Such termination may be accomplished by the Authority's giving of written notice to the then registered owner of this Note, as shown on the books of the Authority. This Note shall not be payable from or constitute a charge upon any funds of the Authority, and the Authority shall not be subject to any liability hereon or be deemed to have obligated itself to pay hereon frorn any funds except the Available Tax Increment, and then only to the extent and in the manner herein specified. The Owner shall never have or be deemed to have the right to compel any exercise of any taxing power af the Authority or of any other public body, and neither the Authority nor any director, commissioner, council member, board member, officer, employee or agent of the Authority, nor any person executing or re.gistering this Note shall be liable personally hereon by reason of the issuance or registration hereof or otherwise. ,,;;;,, - - -- ::�:: _ , - � - __ - - -- . __ . This Note shall not be transferable or assignable, in whole or in part, by the Owner without the prior written consent of the Authority, which consent shall not be unreasonably withheld or delayed. This Note is issued pursuant to Resolution of the Authority and is entitled to the benefits thereof, which resolution is incorporated herein by reference. IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions, and things required by the Constitution and laws of the State of Minnesota to be done, to have happened, and to be performed precedent to and in the issuance of this Note have been done, have happened, and have been performed in regular and due from, time, and manner as required by law; and that this Note, together with all other indebtedness of the Authority outstanding on the date hereof and on the date of its actual issuance and delivery, does not cause the indebtedness of the Authority to exceed any constitutional or statutory limitation thereon. IN WITNESS WI�REOF, the Housing and Redevelopment Authority In and For the City of Hopkins, by its Commissioners, has caused this Note to be executed by the manual signatures of the and the of the Authority and has caused this Note to be dated , 200_. • • ' � ' EXHIBIT A TO NOTE "'�� . Description of Redevelopment Property j � Phase I(Anurogimatelv 53 anartments and 5,500 square feet of retail): � ; . Lot 1, Block 1 ,� '� Phase II-A (7 for-sale townhomes): Lot 1, Block 2 Phase II-B (6 for-sale townhomes): Lot 2 Block 1 Phase II-B Phase I Phase II-A � �� h, � � � �� 3 � �., � � ' k .°�'x �� '�4 . � �.'�"` # �� . .cf / 1 �} p b `p E £ �� . E'0. � 1 1 � t � �. 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' I��,pulatfa�s i$8,�i83 195,'!45 48t�,��7 187,1�? Ghang� {# Nu#nBri�a!} �,�62 ��,10'7 -2,5ti1 C��itp8 (°la F'et'Get�t} 3.4°!a »2.�°fa -1,5°k Anttual Changa (FF Num�rs�afi � -638 -5�p Anrruai Ctta►t�e �°fa P�rr,ent} VJ _.�.�.�..� 0.3'l0 -�.3°l0 -p.3¢Ja Haus�h�lds � 79.92'� �35,925 � 85,179 _ �,76?� �Yrange� (# tJtstnericat} � -7Q7 -4� � Chan9e i PerCentl 7.5°J� -0.99'0 -�3.5"J� Anr�uai Ghan�e {# T�utn�ri�al) 6{Jf7 -93 -$3 1�h#ltlaf �h€3ltgt3{°Ia F'ErG�TIf} Q.B�'o -i>,1°' -t1,1°/a Nled3an Aqs � 3fi.7 95.ti 42.5 43.6 ,�1Y6i.'�g!! �'{OtiSE#h9�d ,''aiZFt i),I30 2.24 2.2t7 2.17 N18dtan k1au��aotd lnccarn� �46,293 $t�s,55� $�'3,8�� 79.�96 ,4verage Mot�s�htrld ir�ctame `�' ,�73 $8�,445 $96�t� $1t33,�02 lM�di�n Iiam� Y�stue t$� .,..�,.�. � Si8�,496 52�;309. ' �33t7��? Kiwrrer t�caupied Nou�iag Un#L� ��3,�567 &8.9°:b 59,577 89,3°� 58,858 58.�6 S&,98+� 68.3�10 R�nter Ocattpie# Hc�using Unit� 24,87f} �i.9?Yc 28,�d$ $tY�7°J� ; �8,62t �9.1%0 . 2&,37� 3i,9� H.'SLk99flflCi3fi VI/ t F'@i50tR 2$,1� 32�8°�a 2�,241 34.3'�/0 � 28�97.� 3v:3"/a Horasaholdswt�Persans 31.�}�3 3�.9°l� 3#},2�4 3�.S�Ya �;1.7d# 3a�3�da tl�nsaholds w13-6 Ferscrns 25,44� 29:G% 2�},53� �8.$� 24,Q�7 28.3"/� i°tOUSShotds w16t �+ersiar�s 1.263 9 �°�b 1,15+3 4.A�Jc 5,C�9� �.3°fa • Fopula43on �.573.6Cp7 3,i}�9{I,925 3.27�.8J5 3,��9,993 Gh�ngd (# 3,4umer1ca13 A3��518 2�2,8841 559,9$8 G�tage � �IO PL�GEI7E� �T.�I�JO $.7°!v A.��o Annual Cha»gs {#� Numeric�l� �43,552 32,835 31,838 mM Annual �hanq� (g� R�ta�tt't:� 1.7�,'0 9.1°fa i.�t°/a Hc+usehotds 9?3,22& 1,152,$fi9 1,268,�t16 1,��9,2�� Change (# N�americat} 17�,� 4 94,D37 fi2,39U ��i�tl�� {°j P�PG2C1t'� i$.6°�'a 9.�.1a 5.7`�a ,�ttuat C�fange {t# PlurneriCat) t 7,$��4 14,2�5 �t4,A7B {innuaS Cfiaage t'�n P�rc�nt) !.8 9.�°Jc 7.�!°14 �...�.. .. Nlettian Ac�e . 3�.� 34.9 37.fl 3$.0 Average Hausaltcald Si�e� {1.00 ` 2.58 2.53 �.61' M��1aan Hous�h+aid in�om� ��7,3?1 a56,751 �67,��6 �7'4 Average �tous�hutd trwccsme S.�#3,599 $67,�� 8t},517 �8� Metiian Home V�tu� {�} �(1 $14�,524 $233.6fl9 �28�,7�1� C?wner G}ccup3�� Nt�usit� �t°�its &71.�4$ 6�.5�°fo 836..i2$ 7�.59b_ 938,�66 1A.1 �la 1,f}£}3 74,9�fo ..� �tentert7cc�pied Naxasing llni#s 3Q5,9T$ 31.0°fo Si6>�i3 29:5�k 328.74c� �5.9b,� 33�a,Sfr� 2�.9g�C �friaSStttrl$S Wt1 PeYSPn 3D7,t,�"r4 x�.8�'lio- 3d3,t2D 27.$^� 368�1'1 27.59'a . »causeno�n� wr z �ersona �z�,sos sz,r� ��o,�aa az..a� ��a;s3s �z.z� Mousehoids wf 3-S Patsons d28,�47 37.��5 �7�,835 3�.dd� �99;6a7 37,3� i'ttlu3ehnid$ W16+ P�`SOt3s 4i1,3St} �,�SG 4D,b{f$ 3.��'a �t3,�dS2 3�:�sfo 1'�OpU�dtiCet'# 7.3�fo &.5�1a �a.8°,la �.5�10 i^tos�sahotds 8.�°/a 7.5°la €i.7°t� �.3°�0 ""Str�zrct: Cl�r+t�s �� `ft �� .<.... � µ 7�d (4�1i8J ' �r�3•ri�{�i111fi�troctxtly � Page 1 of 3 •