Loading...
HRA 01/09/1992 - 6366HOUSING AND REDEVELOPMENT AUTHORITY THURSDAY, JANUARY 9, 1992 7 :30 P.M. William Burns Executive Director of HRA CITY OF FRIDLEY A G E N D A HOUSING & REDEVELOPMENT AUTHORITY MEETING THURSDAY, JANUARY 9, 1992, 7:30 P.M. Location: City Council Chambers Fridley Municipal Center 6431 University Avenue N.E. CALL TO ORDER ROLL CALL APPROVAL OF MINUTES: December 12, 1991 ACTION ITEMS: �ONSIDER APPROVAL OF DEVELOPMENT GREEMENT WITH MCGLYNN BAKERIES . . . . . . . . . . . . 1 - 1D and Agreement SENTATION BY MAXFIELD RESEARCH GROUP - CITY OF FRIDLEY HOUSING STUDY . . . . . . . . . 2 - 21 V4EVIEW WAL -MART ARCHITECTURAL PLANS . . . . . . . . . . 3 - 3G APPROVAL OF RESOLUTION DESIGNATING DEPOSITORIES FOR THE FRIDLEY HOFICIAL USING & REDEVELOPMENT AUTHORITY . . . . . . . . . . . 4 IMS AND EXPENSES . . . . . . . . . . . . . . . . . . 5 INFORMATION ITEMS: PLAZA UPDATE . . . . . . . . . . . . . . . . . . 6 DISCUSS TIP POLICIES . . . . . . . . . . . . . . . . . . 7 - 7H BUDGET . . . . . . . . . . . . . . . . . . . . . . . 8 - 8C OTHER BUSINESS ADJOURNMENT I CITY OF FRIDLEY HOUSING & REDEVELOPMENT AUTHORITY MEETING, DECEMBER 12, 1991 CALL TO ORDER: Chairperson Commers called the December 12, 1991, Housing & Redevelopment Authority minutes to order at 7:30 p.m. ROLL CALL: Members Present: Larry Commers, Duane Prairie, John Meyer, Jim McFarland Members Absent: Virginia Schnabel Others Present: William Burns, Executive Director of HRA Barbara Dacy, Community Development Director Rick Pribyl, Finance Director Paul Hansen, Accountant Jim Hoeft, HRA Attorney Sherrill Oman, Larkin, Hoffman, Daly & Lindgren Harry Yaffee, University Avenue Associates APPROVAL OF NOVEMBER 14, 1991, HOUSING & REDEVELOPMENT AUTHORITY MINUTES: MOTION by Mr. Prairie, seconded by Mr. Meyer, to approve the November 14, 1991, Housing & Redevelopment Authority minutes as written. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. 1. CONSIDER AMENDMENT TO DAIRY QUEEN LEASE: Ms. Dacy stated that in September 1991, the HRA approved the Lease Agreement with Mr. and Mrs. Don Fitch for lease of the Dairy Queen, subject to a number of items being worked out between staff and Mr. and Mrs. Fitch. Staff did that, but Mr. Fitch wanted to make some clarifications in paragraph 8 which pertains to the realignment of his drive-through once the Mississippi Street improvement project takes place. Ms. Dacy stated that when Mississippi Street is widened, there will be a median constructed that will block the frontage road intersection. That median will not allow people entering the Dairy Queen drive-through traffic to go westbound onto Mississippi Street. When HRA asked staff to initiate the acquisition process for this particular parcel 1 1/2 years ago, the proposed plan to handle this alteration was one of the first discussions with Mr. and Mrs. Fitch. The details have now been more finalized. What HOUSI_NG & REDEVELOPMENT AUTHORITY MEETING DEC. 12, 1991 —PAGE 2 will happen is that the Dairy Queen order board will be moved to the west and the driveway between Rice Plaza and the Dairy Queen will be closed because of the improvement project. The entrance to the Dairy Queen site will now be handled in two ways: Traffic going westbound on Mississippi can turn into the new 3rd Street; or traffic going eastbound can turn into 3rd Street or come to the other driveway for Rice Plaza. Traffic can come through the Rice Plaza property (the new order board will be located where the driveway used to be), cross down into the Dairy Queen property, pick up products, and go to the frontage road to go eastbound only. Otherwise, traffic can go on a new paved. driveway behind Rice Plaza to 3rd Street and then north or south. Ms. Dacy stated.that Mr. Fitch is willing to assume the cost for moving the order board, moving the timbers and rock, installing directional signage at entrances, and moving the accessory barn, dumpster, and fence at the rear of the property, as well as the striping needed on the pavement. The only thing the HRA will be responsible for is the pavement costs from the rear of the property to the new 3rd Street. Ms. Dacy stated Mr. Fitch has proposed an amendment to paragraph #8 of the Lease Agreement. She and Mr. Hoeft have worked on another version which identifies what each party is' responsible for. Ms. Dacy stated the latest information is that Anoka County will let this contract in March or April for beginning construction in May. Mr. Fitch is saying that if the project is not initiated prior to July 1, 1992, he does not need the access drive to the rear of Rice Plaza, because the lease term is until the end of November 1992 and he wants to be able to move to another site. Mr. Hoeft read the revised language to the amendment for paragraph 8: "As a consequence of the improvement project proposed for the intersection of University Avenue N.E. and Mississippi Street N.E., certain alterations may be necessary to set property in order for lessee to continue to operate his drive - through business. Said alterations may include the redesign of the drive - through lane and lessor agrees to be responsible for the pavement costs related to said redesign. Lessee shall be responsible for the relocation of a microphone menu sign, installation of directional signage, pavement striping, and relocation of the fence and accessory buildings at the rear of the property. Notwithstanding anything to the contrary above, if the improvement project proposed for the intersection of University Avenue N.E. and Mississippi Street N.E. does not commence prior to July 1, 1992, the lessee releases the lessor of any obligation to install a new driveway and any new pavement as referenced above. This does not preclude lessee from making alterations at his own expense to modify said drivethrough." HOUSING S REDEVELOPMENT AUTHORITY MEETING, DEC. 12, 1991 - PAGE 3 Mr. Meyer asked why the County could not put a cut in the median. at the service road. Ms. Dacy stated the County's traffic design criteria plus the MnDOT design criteria stipulate that the median go back a certain amount of feet from the intersection. There needs to be a certain amount of stacking for the left turn lanes turning northbound, so they will not allow a cut in the median at that location. NOTION by Mr. McFarland, seconded by Mr. Prairie, to approve the proposed amendment to paragraph #8 of the Dairy Queen Lease Agreement as outlined by legal counsel. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. 2. CONSIDERATION PROPOSED AMENDMENT TO SECOND MORTGAGE FOR SPRINGBROOR APARTMENTS: Mr. Burns stated there have been some late breaking developments on this proposed amendment to the second mortgage, and staff has not had much time to work on it. University Avenue Associates, on behalf of Springbrook Apartments, is requesting that the HRA resubordinate the $850,000 loan the HRA provided them several years ago. Currently, the loan is secured by a second mortgage, and there are personal guarantees from the owners. The proposed new second mortgage is being drafted for a smaller amount with the residuals being personally guaranteed by the owners. Mr. Burns stated staff has looked at the advantages and disadvantages of doing this. Advantages: The HRA would benefit from the restructuring of the loan. Currently, there is a balloon payment at the end of the loan in the year 2002 that amounts to about - $632,000, so the HRA is getting its money pretty late in the game under the current second mortgage agreement. Under the 'proposal Springbrook Apartments has tentatively agreed to, the HRA would have a $100,000 payment payable by the end of 1991. After 1991, there would be level billing for the remainder of the loan term. It will assist the Springbrook Apartment project to remain financially viable. As staff understands it, the owners of the project, other than with the help of the Federal Housing Administration, have been unable to receive permanent financing. ROUSING & REDEVELOPMENT AUTHORITY MEETING, DEC. 12, 1991 - PAGE 4 In reality, it is staff's opinion that the loan, under the proposed agreement, would actually be more secure than it currently is. Also, under the Federal Housing Administration refinancing program, HUD will require the owners to set aside funding in a replacement fund for the maintenance of Springbrook Apartments. That is also to the City's advantage. Disadvantages: The Federal Loan Program will allow the owners to apply for a class rate reduction on taxes that are due and payable on the property from 3.5% in 1992 to 2.3 %. The City will lose an estimated $100,000 in taxes per year. If the owners get a reduced class rate, there is also some potential that they could petition for a revision in value. However, staff is not sure whether this applies to rental subsidy property or if it applies to any property that is financed through a Federal Housing Administration program. Recommendation: Mr. Burns stated staff is recommending approval of this resubordination subject to some stipulations: 1. Formal restructuring of the loan in a manner that allows the HRA to maintain its financial position. 2. Revision of minimum assessment agreement from current $9 million to the current tax value of the property which is $13,250,000. 3. Assurance of adequate personal guarantees. 4. The HRA consider appointing a "committee" composed of 1- 2 of its members to finish negotiation and execute documents before the end of December 1991. Mr. Commers asked if there is going to be a difference in the amount under the first mortgage. Mr. Casserly stated it is his understanding there will be a larger first mortgage. The difference is about $1.1 million more. Mr. Commers asked why the HRA couldn't get paid off. Mr. Casserly stated it is his understanding that there will be no surplus funds at the end of this transaction. Mr. Commers asked what has convinced staff that the second mortgage is the way to go. HOUSING & REDEVELOPMENT AUTHORITY MEETING. DEC. 12. 1991 -_PAGE _5 Mr. Casserly stated it is the mechanics of the financing. It is driven by the amount of net operating revenues the project generates. In order to do it, the owners have to pay a whole series of fees to originate the loan, and they have to escrow a number of items which would come out of the mortgage proceeds. The existing mortgage is $14,000,000. He has not seen a settlement statement that HUD will be reviewing. Mr. Commers asked what is the proposed new subordinated mortgage amount? Mr. Casserly stated the HUD regulations would only allow a subordinated mortgage amount of about $340,000. Mr. Commers stated that means approximately $500,000 would be unsecured. Mr. Casserly stated that is correct. Mr. Commers asked the interest rate being proposed for the new subordinated mortgage. What is the HUD rate? Mr. Casserly stated the interest rate is 8 %, the same as the current rate. The HUD interest rate is.9 %. Mr. Casserly stated the subordinated mortgage the HRA presently has, has a payment of $110,000 a year starting, in June 1993. That payment runs from June 1993 to the year 2002. Right now the development agreement reads that $110,937 is payable on June 11 of each year starting in 1993 and running to 2002, whereupon $459,250 is paid. That would make total payments on the note under the development agreement of $1,457,000. Mr. Casserly stated that when the note was drafted, the note does not follow or conform to the exact terms of the development agreement. It gets involved in an arcane issue of having interest on interest, accruing interest. The way staff calculated the note was that the final payment would be $632,537, so there would be total payments of $1,630,000. There is. at least a $150,000 discrepancy that one could very legitimately discuss. The new note that is being discussed has a $100,000 payment how at the time of closing, and then semi - annual installments starting one year from now. Those semi - annual installments could range anywhere from $68,000- 72,000. Under the revised note, staff would also propose that there would be no balloon. This would then have an even amortization and the note would be paid one year earlier. Mr. Casserly stated the end result of all these adjustments is that the HRA, while it is getting approximately the same amount of gross dollars, is getting them substantially earlier. As a result, the value to the HRA of getting the dollars earlier could well be in the range of-an additional $100,000 - 125,000 in current value. In HOUSING & REDEVELOPMENT AUTHORITY MEETING, DEC. 12. 1991 - PAGE 6 other words, the present value of the payments under the revised note would be in the range of $100,000- 130,000 more than the present value of the payments under the current note. It is more to the HRA to get the money earlier and to get it in larger installments, with the chief effect being getting the first $100,000 immediately and then clearing once and for all what is accrued interest and whether it is included in principle. A new note would actually be in the amount of $852,000 after the owners paid $100,000. Mr. Commers stated the original development agreement was based upon the HRA's computation of what was going to be produced by the tax increment financing. That was the basis and the reason why the HRA entered into the original development agreement. Now that is in jeopardy. Mr. Casserly stated that is true. He knows in the assessment agreements that the market valuations that were-inserted were $9 million at completion, and it is presently at $13,250,000 market valuation. The $9 million at the regular class rate is probably roughly equivalent to the $13,000,000 at the reduced rate. Actually, even with the reduced rate of $13,000,000, they would be generating more taxes than they would be at $9 million at the full rate. There is no question that the HRA's wishes to have a minimum $9 million evaluation, and the HRA did an analysis at the time of the original development agreement of what $9 million generated in taxes. It is about 50% more in valuation. Mr. Meyer stated the $100,000 less per year in taxes than what the City is currently is receiving is a lot of money. Mr. Commers stated he was surprised that the HRA did not provide something in their original agreement that would deal with refinancing. Mr. Casserly stated they honestly did not. know at that time that they would need to do that. Mr. Burns stated University Avenue Associates is saying this deal has to close by. the end of the year. He did not understand why it has to close by the end of the year. He is also concerned about the lack of information that the City Council has had. Because of the suddenness of this development, he has not had an opportunity to have any communication with the Mayor or Council. Ms. Sherrill Oman, attorney for University Avenue Associates, apologized for the suddenness of this appearance. They came to the HRA with the concept request in August 1991. Unfortunately, they submitted a HUD application right after that on the basis of concept approval by HUD, and it has taken HUD this long to get back with some numbers. It has been out of their control, and they still do not have a commitment from HUD. G b HOUSING & REDEVELOPMENT AUTHORITY MEETING, DEC. 12, 1991 - PAGE 7 Ms. Oman stated that the question raised by Mr. Burns about why this deal has to close by the end of the year is a valid question. This project is underwritten by HUD with a Title 2 tax classification. The result of that is that the project qualifies for a mortgage in excess of $1 million more than it would otherwise qualify for. She stated the lending situation today is the worst she has ever seen. They are caught in a situation where they have to qualify for Title 2 as of January 2, 1992, which will be effective for real estate taxes payable 1993, or they have to start the underwriting process all over again and take a real risk of not getting a mortgage large enough to pay off the City's existing mortgage. In addition, they have an investor who wants to close by the end of the year. Otherwise, there will be extensive penalties and interest rate risks. Ms. Oman stated Mr. Madsen, City Assessor, raised a question about a reduced revision in valuation. The state statute that has been existence has always directed the assessor to value multi - family housing projects at full market rents regardless of whether there is any Title 2 classification. This year that statute was amended by -the Legislature to create one exception. Basically, that exception applies to non - profit owners of multi - family housing projects with rent restrictions, and there is no way they can qualify for reduced market valuation under this statute. Ms. Oman stated that regarding how the numbers were reached, it was a matter of negotiation with Nasim Qureshi, former City Manager, and City attorneys, Herrick and Newman. Mr. Meyer asked the ramifications if the HRA does not approve the second mortgage. Ms. Oman stated she did not believe there are any other sources of financing available. This cannot be delayed any longer because they would lose their Title 2 classification and would lose in excess of $1 million in mortgage. Mr. Meyer stated he.thought they should spend a little more time looking at the worst case scenario if the HRA does not give its approval. Mr. McFarland stated he did not see where the HRA had any choice. The HRA took a risk several years ago, and now the risk is back. MOTION by Mr. McFarland, seconded by Mr. Meyer, to authorize the Chairperson and Executive Director of the HRA to execute all documents necessary to allow the refinancing of the University Avenue Apartment project and the securing of the HRA loan, with the following stipulations: HOUSING & REDEVELOPMENT AUTHORITY MEETING, DEC. 12, 1991 - PAGE 8 1. Formal restructuring of the loan in a manner that allows the HRA to maintain its financial position. 2. Revision of minimum assessment agreement from current $9 million to the current tax value of the property which is $13,250,000. 3. Assurance of adequate personal guarantees. 4. The HRA appoint a "committee" of its members to finish negotiation and execute documents before the end of December 1991. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON CONNERS DECLARED THE MOTION CARRIED UNANIMOUSLY. Mr. Burns stated he will, at the very least, be reviewing the details with the HRA members over the telephone. 3. CLAIMS AND EXPENSES: OTION by Mr. Prairie, seconded by Mr. Meyer, to approve the check register (2179 -2185) dated December 5, 1991. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON CONNERS DECLARED THE MOTION CARRIED UNANIMOUSLY. 4. DISCUSSION OF TIF POLICIES: Ms. Dacy stated that at the special HRA meeting in October 1991 when the EIRA reviewed its past projects and past assistance policies, she and Mr. Burns advised the HRA that the Council did ask staff to put together some TIF policies. Staff used that as an opportunity to make sure that the HRA, Council, and staff are using the same terms. Staff put together some definitions, key terms, and then put into.writing some things the HRA and Council have done in the past and tried to set some overall directions. Ms. Dacy stated the Council seemed to agree with the statements Put together by staff. The Council did raise some issues, and staff will be addressing those issues at the January 13, 1992, Council conference meeting. Staff first wanted to make sure that the HRA concurred with the policies staff has recommended to the Council. Mr. Burns stated one of the big issues raised by the Council is the cap put on captured. tax capacity. Staff suggested 15 %, and one of the Council members suggested staff do some projections regarding the major projects.in determining how much tax capacity is going to be needed to accommodate those projects. HOUSING & REDEVELOPMENT AUTHORITY MEETING, DEC. 12, 1991 - PAGE 9 Mr. Commers stated he would be concerned about why there is a need for a specific number. Ms. Dacy stated that the Council has received a lot of telephone calls about the number of tax increment districts being created, and how much of the community is tied up in tax increment? The Council does not want the percentage to limit what may have to be done with the University Avenue Gateway project, housing projects, or any other redevelopments projects. She sensed the Council feels a political responsibility to at least establish some type of informal policy, and it was the consensus of the Council that they wanted staff to come back with more information to use as a guide. She believed Council's concern is they do not want to pick a number that would constrain their flexibility to implement the goals they feel are important. Mr. Commers stated he did not necessarily quarrel with the 15 %, 125%, and 150% caps, but he still did not know why they are needed in the first place. Mr. Casserly suggested a change in wording: "If the captured tax capacity would exceed 15% by the approval of any district, then the Council and the HRA should review their tax increment program." Mr. Burns stated he believed the Council would welcome the HRA's participation and input to the TIF policies. The HRA 's next meeting is January 9, 1992, so the HRA does have another opportunity to provide some feedback before the Council conference meeting on January 13, 1992. Mr. Commers asked the Commission members to review the TIF policies for comments at the January 9, 1992, meeting. 5. STATUS REPORT ON HOUSING STUDY: Ms. Dacy stated the final draft of the Housing Study will be distributed to the HRA members before their January 9, 1992, meeting. 6. STATUS REPORT ON 1992 BUDGET PREPARATION: Ms. Dacy stated a draft 1992 budget will be prepared for the January HRA meeting. 7. STATUS REPORT ON NORTHEAST OUADRANT: Mr. Don Fitch stated that since Scott Ericson has been unable to put the project together for the northeast quadrant, he, along with some other experienced people, is in the process of putting a project together that would involve Walgreen's, the Dairy Queen, and potentially some smaller shops. a � HOUSING & REDEVELOPMENT AUTHORITY MEETING DEC. 12 1991 - PAGE 10 Mr. Fitch stated they believe that with the equity he would have in the project and the strength of the developer who will be working with him, they will not need any outside financing. Mr. Fitch stated he and the developer he is working with are wondering what the perspective is of the HRA having some type of control over all three properties (10,000 Auto Parts building and two houses) so they do not have to negotiate with all three landholders. What would the HRA's position be in terms of somehow gaining control of the two houses? Mr. Burns stated Mr. Ericson did have options on the two houses, but he believed those options have run out and that Mr. Ericson no longer has any site control over any of those properties. Mr. Commers stated the HRA cannot get involved in taking any houses at this time. Mr. Fitch stated he hopes to get this project together as quickly as possible. 8. REPORT ON ECONOMIC DEVELOPMENT CONFERENCE: Mr. Commers stated this report was.for informational purposes. Ms. Dacy stated she wanted again thank the HRA for giving her the opportunity to attend this conference. She really learned a lot, and she will be getting additional information on the costs of completing additional course work in order to achieve certification. 9. STATUS REPORT ON WAL -MART DEVELOPMENT: Ms. Dacy stated that on January 9, 1992, the HRA will need to evaluate the Wal -Mart architectural plans in order to be consistent with the .development agreement executed in 1986. The Planning Commission recommended approval of the plat requests on December 11, 1991. Staff is recommending the HRA approve the exterior architectural plans. 10. UPDATE ON RICE PLAZA: Mr. Commers asked staff to provide the HRA with a brief profit and los statement on the Rice Plaza property; that is, the gross revenues less expenses of operations. Mr. Pribyl stated that he will ask Jim Kordiak to provide that information for the next meeting. HOIISING & REDEVELOPMENT AUTHORITY MEETING. DEC. 12. 1991 - PAGE 11 ADJOURNMENT: NOTION by Mr. Prairie, seconded by Mr. Meyer, to adjourn the meeting. Upon a voice vote, all voting aye, Chairperson Commers declared the motion carried and the December 12, 1991, Housing & Redevelopment Authority meeting adjourned at 9:55 p.m. Re pectfully submitted, Ly a Saba Recording Secretary I Casserly Molzahn & Associates, Inc. 215 South 11th Street, Suite 300 • Minneapolis a Minnesota 55403 Office (612) 342 -2277 • Fax (612) 332 -4765 M E M O R A N D U M TO: City of Fridley HRA William Burns, Executive Director Barbara Dacy, Development Director FROM: James R. Casserly DATE: January 2, 1992 RE: Contract for Private Redevelopment by and between the City of Fridley HRA and McGlynn Bakeries, Inc. Attached you will find the December 20, 1991 draft of the above Contract for Private Redevelopment by and between the City of Fridley HRA and McGlynn Bakeries, Inc. (the "Agreement "). This draft, which has been the subject of many hours of discussion, contains the basic rights and responsibilities of the HRA (the "Authority ") and McGlynn Bakeries, Inc. (the "Redeveloper "). The basic concept behind the Agreement is that the Authority will reimburse the Redeveloper for qualified public improvement expenses by issuing to the Redeveloper a tax increment limited revenue note (the "Note "). A brief summary of each Article of the Agreement is provided below. INTRODUCTION (Pages 1 - 2). Provides a statement of the objectives and goals of the Authority and an affirmation that -this project supports those objectives. ARTICLE I, Definitions (Pages 3 - 5). Defines the most commonly used terms in the Agreement. Please note the definition of Minimum Improvements. Unlike most of the Authority's projects the Minimum Improvements involve the rehabilitation and substantial modification of an existing structure. To better identify the work being done we have incorporated a Schedule G (page 51). The maximum amount of tax increment eligible assistance is shown in the definition of the Note which is $701,172. The Note is attached as Schedule D on page 36. The 1 -A Note is similar to any bond that the Authority could issue. The theory of this transaction is that the Redeveloper is providing funds to the Authority so that the Authority can make qualified. expenditures (in this instance a land write- down). To raise money.for this land write -down, the Authority is borrowing money from the Redeveloper which is documented by the Note. The Note is repaid if, and only if, there is available tax increment and no continuing Event of Default. ARTICLE II. Representations and Warranties (Pages 6 - 8). This section is a statement by the parties they have the legal authority to perform the activities that are specified in the Agreement. Section 2.2(g) has the Redeveloper paying for the Authority's legal fees in the event there is an Event of Default by the Redeveloper. Section 2.2(1) contains the statement of the "But For" test as expressed by the Redeveloper. Section 2.2(j) is a very significant representation in that it requires the Redeveloper, before receiving.any annual payment on the.Note, to ,verify that in the preceding year the Redeveloper has employed an average annual equivalent of 200 full time employees. If the Redeveloper does not employ this number, then there is an Event of Default and the Redeveloper will not receive the scheduled payment of the Revenue Note. If the Redeveloper misses the minimum employment requirements for two successive years, then the Authority will have the right to terminate the Agreement which results in a cancellation of the Note (see Section 8.4). ARTICLE III, Acquisition and Conveyance of Property; Undertakings of Authority and Redeveloper (Pages.9 and 10). This section provides the mechanism for the write -down. The Authority acquires the property from the Redeveloper for the amount-of the Note ($701,172) and conveys it back to the Redeveloper for $1.00. The Authority provides the Note only after it has issued a Certificate of Completion (see Article 4.3) which is only issued after the construction of the Minimum Improvements. Section 3.4 requires the Redeveloper to make a semi - annual Development Payment of $4,591 starting February 1, 1994 and continuing until August 1, 2008. As the language indicates the Development Payment is for the incremental increase in the cost of essential services. ARTICLE IV. Construction of Minimum Improvements (Pages 11 and 12). This article states that the Redeveloper shall achieve, substantial completion of the construction of the Minimum Improvements by June 30, 1993 and, as previously indicated, a Certificate of Completion will be issued when the substantial construction has been achieved. Upon the issuance of a Certificate of Completion, the Note will be delivered. ARTICLE V,_ Insurance and Condemnation (Page 13 - 16). A technical article requiring the Redeveloper to maintain adequate insurance for the Redevelopment Property. The article further provides that if the property is destroyed or condemned, the Agreement may terminate and there will be no further payment on the Note. ARTICLE VI. Tax Increment and Assessment Agreement (Pages 17 and 18). Section 6.1 provides the Authority's pledge that it will pay the Note. However, the payments available for the Note are limited to 95% of the tax increment which is a result of the actual taxes paid on the Redevelopment Property. The 5% is retained by the Authority for administrative expenses. Section 6.3 refers to the Assessment Agreement (Schedule E, page 42) in which the Redeveloper agrees that the minimum market valuation of the property shall not be less than $3,800,000 (it is currently being assessed at $2,100,000). The Assessment Agreement remains in effect as long as there are payments on the Note. ARTICLE VII. Prohibitions Against Assignment and Transfer; Indemnification (Pages 19 - 22). These are standard provisions which put some limitations on the transfer of the Redevelopment Property. Section 7.3 provides the Authority and the City with indemnification covenants and "hold harmless" provisions. ARTICLE VIII. Events of Default (Pages 23 - 25). The Events of Default have been previously mentioned. The most significant Events of Default are the failure by the Redeveloper to construct the Minimum Improvements and to maintain the minimum employment levels. The article states how the Redeveloper is to be notified, procedures for curing an Event of Default and an agreement by the Redeveloper to pay attorney's fees and expenses (Section 8.6). ARTICLE IX... Additional Provisions (Pages 26 and 27). Section 9.2 of this article contains anti - discrimination provisions as well as the prohibition against using the�� Redevelopment Property by a "sexually oriented business". ARTICLE X, Termination of Agreement (Page 28). This article is self - explanatory. If the Redeveloper exercises its right to terminate the Agreement in accordance with Section 10.1 before a Certificate of Completion is issued, then the Redeveloper will forfeit the $15,000 it has on deposit with the Authority. The balance of the Agreement contains the signature pages (pages 29 and 30), a description of the Redevelopment Property (Schedule A, page 31), deeds conveying the Redevelopment Property from the Redeveloper to the Authority and from the Authority back to the Redeveloper (Schedule B, pages 32 and 33, and Schedule F, pages 49 and 50). The other Schedules have previously been discussed in this memo. JRC /db encl 3 1 -B 1 -C . HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF FRIDLEY COUNTY OF ANOKA STATE OF MINNESOTA RESOLUTION NO. A RESOLUTION AUTHORIZING EXECUTION AND DELIVERY OF A CONTRACT FOR PRIVATE REDEVELOPMENT BY AND BETWEEN THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY FRIDLEY AND MCGLYNN BAKERIES, INC. BE IT RESOLVED by the Board of Commissioners (the "Commissioners ") of the Housing and Redevelopment Authority in and for the City of Fridley, Minnesota (the "Authority ") as follows: Section 1. Recitals. 1.01. It has been proposed.that the Authority enter into a Contract For Private Redevelopment (the "Contract ") with McGlynn Bakeries, Inc. (the "Redeveloper "). Section 2. Findings. 2.01. The Authority hereby finds that it has approved and adopted a development program known as the Modified Redevelopment Plan for its Redevelopment Project -No. 1 (the "Redevelopment Program ")pursuant to Minnesota Statutes, Section 469.001 et seq. 2.02. The Authority hereby finds that the Contract promotes the objectives as outlined in its Redevelopment Program. 2.03. The Authority hereby finds that it has approved and adopted and the City Council has created Tax Increment Financing District No. 12 and the Authority and City Council have approved and adopted the Tax Increment Financing Plan relating thereto pursuant to Minnesota Statutes, Sections 469.174 through 469.179, inclusive, as amended and supplemented from time to time. Section 3. Authorization for Execution and Delivery. 3.01. The Chairman and the Executive Director of the Authority are hereby authorized to execute and deliver the Contract when the following condition is met: Substantial conformance of a Contract to the Contract presented to the Authority as of this date. Adopted by the Board of Commissioners of the Authority this day of , 1992. ATTEST: Executive Director 2 Chairman 1 -D December 20, 1991 CONTRACT FOR PRIVATE REDEVELOPMENT By and Between THE HOUSING AND REDEVELOPMENT AUTHORITY In and For THE CITY OF FRIDLEY, MINNESOTA And MCGLYNN BAKERIES, INC. This document was drafted by: Casserly Law Office, P.A. 215 South 11th Street Minneapolis, Minnesota 55403 TABLE OF CONTENTS Pgge ARTICLE I Definitions Section 1.1 Definitions 3 ARTICLE II Representations and Warranties Section 2.1 Representations by the Authority 6 Section 2.2 Representations and Warranties by the Redeveloper 6 ARTICLE III Acquisition and Conveyance of Property; Undertakings of Authority and Redeveloper Section 3.1 Acquisition of Redevelopment Property 9 Section 3.2 Authority Conveyance of Redevelopment Property 9 Section 3.3 Place of Document Execution, Delivery and Recording 9 Section 3.4 Development Payment 9 ARTICLE IV Construction of Minimum Improvements Section 4.1 Construction of Minimum Improvements 11 Section 4.2 Completion of Construction 11 Section 4.3 Certificate of Completion 11 ARTICLE V Insurance and Condemnation Section 5.1 Insurance 13 Section 5.2 Condemnation 16 Section 5.3 Subordination 16 ARTICLE VI Tax Increment and Assessment Agreement Section 6.1 Tax Increment Certification 17 Section 6.2 Real Property Taxes 17 Section 6.3 Assessment Agreement 18 ARTICLE VII Prohibitions Against Assignment and Transfer; Indemnification Section 7.1 Representation as to Redevelopment 19 Section 7.2 Prohibition Against Transfer of Property and Assignment of Agreement 19 Section 7.3 Release and Indemnification Covenants 21 ARTICLE VIII Events of Default Section 8.1 Events of Default Defined 23 Section 8.2 Remedies on Default 24 Section 8.3 No Remedy Exclusive 24 Section 8.4 Exclusive Remedy 24 Section 8.5 No Additional Waiver Implied 26 Section 9.6 by One Waiver 25 Section 8.6 Agreement to Pay Attorney's Fees 27 Certification 42 and Expenses 25 ARTICLE IX Additional Provisions Section 9.1 Conflict of Interests 26 Section 9.2 Restrictions on Use 26 Section 9.3 Provisions Not Merged With Deed 26 Section 9.4 Titles of Articles and Sections .26 Section 9.5 Notices and Demands 26 Section 9.6 Counterparts 27 Section 9.7 Expiration 27 ARTICLE X Termination of Agreement Section 10.1 Option to Terminate 28 Section 10.2 General Termination 28 Section 10.3 Effect of Termination 28 SIGNATURES 29 SCHEDULE A Description of Redevelopment Property 31 SCHEDULE B Redevelopment Property Deed 32 SCHEDULE C Certificate of Completion 34 SCHEDULE D Note 36 SCHEDULE E Assessment Agreement and Assessor's Certification 42 SCHEDULE F Quit Claim Deed: Redeveloper as Grantor 49 SCHEDULE G Description of Minimum Improvements 51 CONTRACT FOR PRIVATE REDEVELOPMENT THIS AGREEMENT, made on or as of the day of 19_ by and between the Housing and Redevelopment Authority in and for the City of Fridley, Minnesota (the "Authority "), a political subdivision of the State of Minnesota organized under the Constitution and laws of the State of Minnesota and McGlynn Bakeries, Inc., a Minnesota corporation (the "Redeveloper "), WITNESSETH: WHEREAS, the Board of Commissioners (the "Board ") of the Authority has determined that there is a need for development and redevelopment within the corporate limits of the City to provide employment opportunities, to provide adequate housing in the City, including low and moderate income housing and housing for the elderly, to improve the tax base and to improve the general economy of the City and the State of Minnesota; WHEREAS, in furtherance of these objectives, the Authority has established, pursuant to Minnesota Statutes, Sections 469.001 et sec. (the "Act "), the development program known as the Modified Redevelopment Plan for its Redevelopment-Project No. 1 (which program, as amended, and as it may be amended, is hereinafter referred to as the "Redevelopment Program ") in the City to encourage and provide maximum opportunity for private development and redevelopment of certain property in the City which is not now in its highest and best use; WHEREAS, major objectives in establishing the Redevelopment Program are to: 1. Promote and secure the prompt redevelopment of certain property in the Redevelopment Program, which property is not now in its highest and best use in a manner consistent with the City's Comprehensive Plan and with a minimum adverse impact on the environment, and thereby promote and secure the redevelopment of other land in the City. 2. Provide additional Redevelopment Program and th e the surrounding area, thereb y reducing unemployment and the and other human resources in employment opportunities within the City for residents of the City and improving living standards, loss of skilled and unskilled labor the City. 3. Prevent the deterioration and secure the increase of commercial /industrial property subject to taxation by the City, the Independent School Districts, Anoka County, and the other taxing jurisdictions in order to better enable such entities to pay for governmental services and programs required to be provided by them. 4. Provide for the financing and construction for public improvements in and adjacent to the Redevelopment Program necessary for the orderly and beneficial redevelopment of the Redevelopment Program and adjacent areas of the City. 5. Promote the concentration of new desirable industrial, office, and other appropriate redevelopment in the Redevelopment Program so as to maintain the area in a manner compatible with its accessibility and prominence in the City. 6. Encourage local business expansion, improvement, and redevelopment, whenever possible. 7. Create a desirable and unique character within the Redevelopment Program through quality land use alternatives and design quality in new or remodeled buildings. 8. Encourage and provide maximum opportunity for private redevelopment of existing areas and structures which are compatible with the Redevelopment Program; and WHEREAS,.in order to achieve the objectives of the Authority and City in creating the Redevelopment Program the Authority is prepared to acquire that certain real property located in the Redevelopment Program (such real property is more particularly described in Schedule A to this Agreement) and to convey said real property to the Redeveloper for development and redevelopment in accordance with this Agreement; and WHEREAS, the Authority believes that the development and redevelopment of the Redevelopment Property pursuant to this Agreement, and fulfillment generally of the terms of this Agreement, are in the vital and best interests of the Authority and the health, safety, morals and welfare of its residents, and in accord with the public purposes and provisions of applicable federal, state and local laws under which the development and redevelopment are being undertaken and assisted; - NOW, THEREFORE, in consideration of the premises and the mutual obligations of the parties hereto, each of them does hereby covenant and agree with the other as follows: ARTICLE I Definitions Section 1.1 Definitions. In this Agreement, unless a different meaning clearly appears from the context: "Act" means Minnesota Statutes, Section 469.001 et sea. "Agreement" means this Agreement, as the same may be from time to time modified, amended, or supplemented. "Assessment Agreement" means an agreement, in the form of the agreement contained in Schedule E attached to and made a part of this Agreement, among the Redeveloper, the Authority, and the city assessor of the City, entered into pursuant to Section 6.3 of this Agreement. "Assessor's Minimum Market Value" means the agreed minimum market value of the Redevelopment Property for calculation of real property taxes as determined by the city assessor for the City pursuant to the Assessment Agreement. "Authority" means the Housing and Redevelopment Authority in and for the City of Fridley, Minnesota. "Certificate of Completion" means the certification, in the form of the certificate contained in Schedule C attached to and made a part of this Agreement, provided to the Redeveloper, pursuant to Section 4.4 of this Agreement. "City" means the City of Fridley, Minnesota. "Construction Plans" means the plans, specifications, drawings and related documents on the construction work to be performed by the Redeveloper on the Redevelopment Property. "Council" means the Council of the City. "County" means the County of Anoka, Minnesota. "Estimated Market Value" or "Market Valuation" means the market value of real property as determined by the city assessor of the City in accordance with Minnesota Statutes, Section 469.177, subd. 8 (or as finally adjusted by any assessor, board of equalization, commissioner of revenue, or any court). "Event of Default" means an event of default as defined in Section 8.1 of this Agreement. 3 "Minimum Improvements" means the improvements described in the Construction Plans and on Schedule G attached hereto. The Minimum Improvements shall be constructed by the Redeveloper and the cost of the Minimum Improvements shall be not less than $3,000,000.00. For purposes of-this Agreement, the term or phrase "construction of the Minimum Improvements" shall include the repair and rehabilitation work to be done by the Redeveloper in completing the Minimum Improvements. "Minnesota Environmental Policy Act" means the statutes located at Minnesota Statutes, Sections 116D.01 et sea., as amended. "Minnesota Environmental Rights Act" means the statutes located at Minnesota Statutes, Sections 116B.01 et sea., as amended. "National Environmental Policy Act" means the federal law located at 42 U.S.C. Sub. Sect. 4331 et sea., as amended. "Net Proceeds" means any proceeds paid by an insurer to the Redeveloper or the Authority under a policy or policies of insurance required to be provided and maintained by the Redeveloper pursuant to Article V of this Agreement and remaining after deducting all expenses (including fees and disbursements of counsel) incurred in the collection-of such proceeds. "Note" means the Limited Revenue Tax Increment Note in the maximum principal amount of $701,172, substantially in the form of Schedule D attached to this Agreement, and to be made by the Authority payable to the order of the Redeveloper and delivered by the Authority to the Redeveloper in accordance with Section 3.1 of this Agreement. "Redeveloper" means McGlynn Bakeries, Inc., a corporation organized and existing under the laws of the State of Minnesota. "Redevelopment Program" means the modified redevelopment program adopted by the Authority for its Redevelopment Project No. 1, as amended. "Redevelopment Project" means the Redevelopment Property and the Minimum Improvements. "Redevelopment Property" means the real property described in Schedule A of this Agreement. "Redevelopment Property Deed" means a quit claim deed, substantially in the form of the deed in Schedule B of this Agreement, used to convey the Redevelopment Property from the Authority to the Redeveloper. 0 "State" means the State of Minnesota. "Tax Increment" means only that portion of the real estate. taxes paid solely with respect to the Redevelopment Property (which is part of the property in the Tax Increment District) and which is remitted to the City as tax increment pursuant to the Tax Increment Act. "Tax Increment Act" means Minnesota Statutes, Sections 469.174 - 469.179 (formerly the Tax Increment Financing Act, Minnesota Statutes, Sections 273.71 - 273.78 as amended). "Tax Increment District" means Tax Increment Financing District No. 12 created by the Council in connection with the Redevelopment Program. "Tax Increment Plan" means the tax increment financing plan adopted by the Authority in connection with the creation of the Tax Increment District. "Termination Date" means the termination date of this Agreement which shall be the earliest of the following dates: (i) February 1, 2009 (the last scheduled payment date of the Note), or if prepaid, the date when the Note is prepaid in full; or (ii) the date on which this Agreement is terminated in accordance with the provisions contained in Sections 5.1(f), 5.2, 8.2(b) and Article X. "Unavoidable Delays" means delays which are the direct result of strikes, other labor troubles, unusually severe or prolonged bad weather, Acts of God, fire or other casualty to the Minimum Improvements, litigation commenced by third parties which, by injunction or other similar judicial action, directly results in delays, or acts of any federal, state or local governmental unit which directly result in delays. 5 ARTICLE II Representations and Warranties Section 2.1 Representations b the Authority. The Authority makes the following representations as the basis for the undertaking on its part herein contained: (a) The Authority is a public body duly organized and existing under the laws of the State. Under the provisions of the Act, the Authority has the power to enter into this Agreement and carry out its obligations hereunder. (b) The Authority has approved the Redevelopment Program in accordance with the terms of the Act. (c) The Authority has approved the Tax Increment District pursuant to the Tax Increment Act. (d) The Authority proposes to acquire the Redevelopment Property and convey the Redevelopment Property to the Redeveloper for uses in accordance with the Redevelopment Program and the Tax Increment Plan. (e) To finance the costs of the activities to be undertaken by the Authority, the Authority proposes to make the Note payable to the Redeveloper in accordance with the provisions of this Agreement and to pledge the Tax Increment to the payment of the principal of and interest, if any, on the Note according to its terms. (f) The Authority will cooperate with the Redeveloper with respect to any litigation commenced by third parties in connection with this Agreement. Section 2.2 Representations and Warranties by the Redeveloper. The Redeveloper represents and warrants that: (a) In the event the Redevelopment Property is conveyed to the Redeveloper, then the Redeveloper will construct and maintain the Minimum Improvements in accordance with the terms of this Agreement, the Tax Increment Plan and all applicable 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 Authority. (b) As of the date of execution of this Agreement, the Redeveloper has received no written notice or written communication from any local, state or federal official that the 0 activities of the Redeveloper or the Authority in the Development District may be or will be in violation of any environmental law or regulation. (c) The Redeveloper will construct, operate and maintain the Minimum Improvements upon the Redevelopment Property in accordance with this Agreement and all applicable local, State and Federal laws and regulations (including without limitation environmental, zoning, building code and public health laws and regulations). (d) The Redeveloper will obtain all required permits, licenses and approvals, and will meet, in a timely manner, all requirements of all applicable local, state and federal laws and regulations which must be obtained or met before the Minimum Improvements may be lawfully constructed. (e) The Redeveloper is a Minnesota corporation, organized and existing in good standing under the laws of Minnesota, is authorized to transact business in the State, has duly authorized the execution of this-Agreement and the performance of its obligations hereunder, and neither the execution and delivery of this Agreement, the consummation of the transactions contemplated hereby, nor the fulfillment of or compliance with the terms and conditions of this Agreement will constitute a breach of any obligations of the Redeveloper under the terms and conditions of any indebtedness, agreement or instrument of whatever nature to which Redeveloper is now a party or by which it is bound, which breach will materially adversely affect the ability of Redeveloper to perform its obligations under this Agreement. (f) The Redeveloper agrees that it will cooperate with the Authority with respect to any litigation commenced by third parties in connection with this Agreement. (g) Whenever any Event of Default occurs and the Authority shall employ attorneys or incur other expenses for the collection of payments due or to become due or for the enforcement or performance or observance of any obligation or agreement on the part of the Redeveloper under this Agreement, the Redeveloper agrees that it shall, within ten (10) days of written demand, accompanied by a written itemization of fees and expenses, by the Authority, pay to the Authority the reasonable fees of such attorneys and such other expenses so incurred by the Authority. (h) The financing arrangements which the Redeveloper has obtained or will obtain, to finance acquisition or construction of the Minimum Improvements, together with financing provided by the Authority pursuant to this Agreement, will be sufficient to enable the Redeveloper to successfully complete the Minimum Improvements as contemplated in this Agreement. 7 (i) The construction of the Minimum Improvements, in the opinion of the Redeveloper, would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future without the use of tax increment financing provided by the City pursuant to this Agreement. (j) Commencing in 1994 and until the Termination Date, the Redeveloper will have not less than the average annual equivalent of 200 full time employees working at the Redevelopment Project. A full time employee is defined as one who works 37 or more hours per week. Employment verification will be delivered prior to each August 1st scheduled payment of the Note and will be prepared by a certified public accountant acceptable to both the Redeveloper and the Authority. The verification period shall be for each calendar year (commencing calendar year 1993) prior to each August 1st Note payment. The Redeveloper shall be responsible for all costs of verification. 0 ARTICLE III Acquisition and Conveyance of Property: Undertakings of Authority and Redeveloper Section 3.1 Acquisition of Redevelopment Property. The Redeveloper shall convey to the Authority all right, title and interest in the Redevelopment Property under a quit claim deed, which deed shall be in substantially the form of the quit claim deed attached as Schedule F. The Authority shall accept conveyance, delivery and possession of the Redevelopment Property and in consideration of the Redeveloper constructing the Minimum Improvements and assigning all of its right, title and interest in the Redevelopment Property the Authority shall pay a sum as evidenced by the Note which the Authority shall make and deliver to the Redeveloper at the time the Authority delivers the Certificate of Completion as provided in Section 4.4. Section 3.2 Authority Conveyance of Redevelopment Property. (a) Immediately upon the City's acquisition of the Redevelopment Property in accordance with Section 3.1 of this Agreement, the Authority shall convey title to and possession of the Redevelopment Property to the Redeveloper under a quit claim deed, which deed shall be substantially in the form of the Redevelopment Property Deed attached as Schedule B to this Agreement. (b) The purchase price to be paid to the Authority by the Redeveloper in exchange-for the Redevelopment Property Deed shall be One Dollar ($1.00). Section 3.3 Place of Document _Execution, Delivery and- Recording. (a) Unless otherwise mutually agreed by the Authority and the Redeveloper the execution and delivery of all deeds, documents and the payment of any purchase price shall be made at the offices of the Authority. (b) The Redevelopment Property Deed shall be in recordable form and shall be promptly recorded in the proper office for the recordations of deeds and other instruments pertaining to said portion of the Redevelopment Property. The Redeveloper shall pay all costs including transfer taxes and recording fees for the deeds described in Sections 3.1 and 3.2 above. Section 3.4 Development Payment. The Redeveloper acknowledges that the redevelopment and operation of the Minimum Improvements and the Redevelopment Property will require expenditures to be made by the City from its general funds to 0 provide certain public services to the Minimum Improvements and the Redevelopment Property, including police and fire protection, traffic regulation, and the maintenance of streets and water, sewer and other utility services (the "Development Payment "). The Redeveloper shall pay the Development Payment for the incremental increase in the cost of essential services provided to the Minimum Improvements and the Redevelopment Property as follows: $4,591 shall be payable on February 1, 1994 and a like sum shall be payable on each August 1st and February 1st thereafter until August 1, 2008 whereupon the final payment shall be payable. 10 ARTICLE IV Construction of Minimum Improvements Section 4.1 Construction of Minimum Improvements. The Redeveloper agrees that it will construct the Minimum Improvements on the Redevelopment Property in accordance with the Construction Plans approved by the City. Section 4.2 Completion of Construction. Subject to Unavoidable Delays, the Redeveloper shall achieve substantial completion of the construction of the Minimum Improvements by June 30, 1993. All work with respect to the Minimum Improvements to be constructed or provided by the Redeveloper on the Redevelopment Property shall be in conformity with the Construction Plans. 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 such successors and assigns,.shall diligently prosecute to completion the development of the Redevelopment Property through the construction of the Minimum Improvements thereon, and that such construction shall in any event be completed within the period specified in this Section 4.2 of this Agreement subject to Unavoidable Delays. Section 4.3 Certificate of Completion. (a) Promptly after written notification by the Redeveloper to the Authority of substantial completion of the Minimum Improvements in accordance with those provisions of the Agreement relating to the obligations of the Redeveloper to construct the Minimum Improvements (including the date for completion thereof), the Authority will furnish the Redeveloper with an appropriate instrument so certifying. Such certification by the Authority shall be (and it shall-be so provided in the certification itself) a conclusive determination of satisfaction and termination of the agreements and covenants in the Agreement with respect to the obligations of the Redeveloper, and its successors and assigns, to construct the Minimum Improvements and the date for the completion thereof. (b) If the Authority shall refuse or fail to provide any certification in accordance with the provisions of this Section 4.3 of this Agreement, the Authority shall, within ten (10) days after written request by the Redeveloper, provide the Redeveloper with a written statement, indicating in adequate detail in what respects the Redeveloper has failed to complete the Minimum Improvements in accordance with the provisions of the Agreement, 11 or is otherwise in default, and what measures or acts it will be necessary, in the opinion of the Authority, for the Redeveloper to take or perform in order to obtain such certification. (c) The construction of the Minimum Improvements shall be deemed to be substantially completed when the Redeveloper has received occupancy permit(s) from the City's building inspector for substantially all portions of the Minimum Improvements which have been constructed on the Redevelopment Property, which permit(s) shall not be unreasonably withheld. 12 ARTICLE V Insurance and Condemnation Section 5.1 Insurance. (a) The Redeveloper 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. The interest of the Authority shall be protected in.,accordance with a clause in form and content reasonably satisfactory to the Authority; (ii) comprehensive general liability insurance together with an Owner's Contractor's Policy with limits against bodily injury and property damage of not less than $2,000,000 for each occurrence (to accomplish the above - required limits, an umbrella excess liability policy may be used); and (iii) workers' compensation insurance, with statutory coverage. (b) Upon completion of construction of the Minimum Improvements and prior to the Termination 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, 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 such improvements, but any such policy may have a deductible amount of not more than $25,000.00. 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 13 cost of the Minimum Improvements (excluding foundation and excavation costs and costs of underground flues, pipes, drains and other uninsurable items) and equipment, and may be determined from time to time at the request of the Authority, but not more frequently than once every five years, by an insurance consultant or insurer, selected and paid for and approved by the Authority. All policies evidencing insurance required by this subparagraph (i) with respect to the Minimum Improvements shall be carried in the names of the Redeveloper, the Redeveloper's Mortgagee and the Authority as their respective interests may appear and shall contain standard clauses which provide for Net Proceeds of insurance resulting from claims per casualty thereunder to the Minimum Improvements which are equal to or less than $750,000.00 for loss or damage covered thereby to be made payable directly to the Redeveloper and /or its Mortgagee, and Net Proceeds from such claims in excess of $750,000.00 to be made payable jointly to the Redeveloper, its Mortgagee and the Authority. The Authority, the Redeveloper and its mortgagee shall jointly agree on the amount of settlement. (ii) Comprehensive general pubic liability insurance, including personal injury liability, against liability for injuries to persons and /or property, in the minimum amount for each occurrence and for each year of $2,000,000.00, and shall be endorsed to show the Authority as additional insured. (c) All insurance required in Article V of this Agreement shall be taken out and maintained in responsible insurance companies selected by the Redeveloper which are authorized under the laws of the State to assume the risks covered thereby. The Redeveloper will deposit annually with the Authority policies evidencing all such insurance, or a certificate or certificates or binders of the respective insurers stating that such insurance is in force and effect. Unless otherwise provided in this Article V of this Agreement each policy shall contain a provision that the insurer shall not cancel nor modify it without giving written notice to the Redeveloper and the Authority at least thirty (30) days before the cancellation or modification becomes effective. Not less than fifteen (15) days prior to the expiration of any policy, the Redeveloper shall furnish the Authority evidence satisfactory to the Authority that the policy has been renewed or replaced by another policy conforming to the provisions of this Article V of this Agreement, or that there is no necessity therefor under the terms hereof. In lieu of separate policies, the Redeveloper may maintain a single policy, blanket or umbrella policies, or a combination thereof, having the coverage required herein, in which event the Redeveloper shall deposit with the Authority a certificate or certificates of the respective insurers as to the amount of coverage in force upon the Minimum Improvements. 14 (d) The Redeveloper agrees to notify the Authority immediately in the case of damage exceeding $100,000.00 in amount to, or destruction of, the Minimum Improvements or any portion - thereof resulting from fire or other casualty. In the event that any such damage does not exceed $750,000.00, the Redeveloper will forthwith repair, reconstruct and restore the Minimum Improvements to substantially the same or an improved condition or value as it existed prior to the event causing such damage and, to the extent necessary to accomplish such repair, insurance relating to such damage received by the Redeveloper shall be applied to the payment or reimbursement of the costs thereof. Net Proceeds of any insurance relating to such damage up to $750,000.00 shall be paid directly to the Redeveloper. In the event the Minimum Improvements or any portion thereof are destroyed by fire or other casualty and the damage or destruction is estimated -to equal or exceed $750,000.00, then the Redeveloper within one hundred and twenty (120) days after such damage or destruction, shall proceed forthwith to repair, reconstruct and restore the damaged Minimum Improvements to substantially the same condition or utility value as existed prior to the event causing such damage or destruction and, to the extent necessary to accomplish such repair, reconstruction and restoration, the Redeveloper, its Mortgagee and the Authority will apply the Net Proceeds of any insurance relating to such damage or destruction received by its Mortgagee and the Authority to the payment or reimbursement of the costs thereof. Any Net Proceeds remaining after completion of construction shall be disbursed to the Redeveloper. (e) If the Redeveloper is in compliance with the terms and conditions of this Agreement and the Redevelopment Property Deed, then any Net Proceeds of insurance relating to such damage or destruction received by the Authority shall be released from time to time by the Authority to the Redeveloper upon the receipt of: (i) A certificate of an authorized - representative of the Redeveloper specifying the expenditures made or to be made or the indebtedness incurred in connection with such repair, reconstruction and restoration and stating that such Net Proceeds, together with any other moneys legally available for such purposes, will be sufficient to complete such repair, construction and restoration; and (ii) If Net Proceeds equal or exceed $750,000.00 in amount, the written approval of such certificate by an independent engineer. The Redeveloper shall complete the repair, reconstruction and restoration of the Minimum Improvements, whether or not the Net Proceeds of insurance received by the Redeveloper for such purposes are sufficient to pay for the same. Any Net Proceeds 15 remaining after completion of such repairs, construction and restoration shall be remitted to the Redeveloper. (f) In lieu of its obligation to reconstruct the Minimum Improvements as set forth in Section 5.1.(d), the Redeveloper shall have the option of forgoing the remaining scheduled payments due under the Note. If the Redeveloper elects not to reconstruct the Minimum improvements and thereby forgoes the remaining scheduled payments due under the Note, this Agreement shall terminate and all net proceeds of insurance shall be paid and assigned directly to the Redeveloper. 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 City) prior to the Termination 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 such portion of the condemnation Award as is necessary to reconstruct the Minimum Improvements (or, in the event only a part of the Minimum Improvements has been taken, then to reconstruct such part) within the District; or (b) forgo the remaining scheduled payments on the Note. If the Redeveloper elects not to reconstruct the Minimum Improvements and thereby forgoes the remaining scheduled payments due under the Note, this Agreement shall terminate and the Redeveloper shall be entitled to keep all of any Condemnation Award. Section 5.3 Subordination. Notwithstanding anything to the contrary contained herein, the rights of the Authority with respect to the receipt and application of the proceeds of insurance shall be subject to and subordinate to the rights of any holder of any mortgage with respect to the Redevelopment Property as of the date hereof or any mortgage which is permitted under Article VII of this Agreement or any mortgage with respect to the Redevelopment Property after completion of construction of the Minimum Improvements. 16 ARTICLE VI Tax Increment and Assessment Agreement Section 6.1 Tax Increment Certification. Pursuant to the Plan, the Authority has pledged and shall appropriate the Tax Increment to the payment of the principal of and interest on the Note, said payment to be made in accordance with the terms and provisions as stated in the Nate except as provided below: (a) For the duration of the Note in which the real estate tax payments reflect the Assessor's Minimum Market Value in accordance with the Assessment Agreement, 95% of the Tax Increment (the "Available Tax Increment ") shall be pledged and appropriated for the payment of the Note. (b) If the Available.Tax Increment is not adequate to pay any installment of the Note, such unpaid portion shall be deemed to have been paid in full, shall not be a debt or obligation of any kind of the City or the Authority and shall not constitute a default under the terms of the Note. Section 6.2 Real Property Taxes. (a) Prior to the Termination Date, the Redeveloper shall pay when due, prior to the attachment of penalty, all real property taxes payable with respect to the Redevelopment Property subsequent to execution of the Redevelopment Property Deed. (b) The Redeveloper agrees that prior to the Termination Date it will not take any of the following actions to the extent that such actions would result in a reduction of the Market Valuation of the Redevelopment Property below the amounts specified in Section 6.3: (i) seek administrative review or judicial review of the applicability of any property tax statute determined by any Tax official to be applicable to the Redevelopment Property or raise the inapplicability of any such property tax statute as a defense in any proceedings, including delinquent tax proceedings; (ii) seek administrative review.or judicial review of the constitutionality of any property tax statute determined by any Tax official to be applicable to the Redevelopment Property or raise the unconstitutionality of any such property tax statute as a defense in any proceedings, including delinquent tax proceedings; (iii) cause a reduction in the Assessed Market Value of the Redevelopment Property below the Assessor's Minimum Market Value, as provided in Section 6.3, through: (A) willful destruction of the Redevelopment Property or any part thereof; (B) willful refusal to reconstruct damaged or destroyed property as required by Section 5.1 of this Agreement; (C) a request to the city assessor of the City or the county assessor of the County to reduce the Assessed Market Value of all or any portion of the Redevelopment Property; (D) a 17 petition to the board of equalization of the City or the board of equalization of the County to reduce the Assessed Market Value of all or any portion of the Redevelopment Property; (E) .a petition to the board of equalization of the State or the commissioner of revenue of the State to reduce the Assessed Market Value of all or any portion of the Redevelopment Property; (F) an action in a District Court of the State or the Tax Court of the State pursuant to Minnesota Statutes, Chapter 278, or any similar State or federal law, seeking a reduction in the Assessed Market Value of the Redevelopment Property; (G) an application to the commissioner of revenue of the State requesting an abatement of real property taxes pursuant to Minnesota Statutes, Chapter 270, or any similar State or federal law; and (H) any other proceedings, whether administrative, legal or equitable, with any administrative body within the City, the County, or the State or with any court of the State or the federal government. The Redeveloper shall not, prior to the Termination Date, apply for a deferral of property tax on the Redevelopment Property pursuant to Minnesota Statutes, Section 469.181, or.any similar law. Section 6.3 Assessment Agreement. The Redeveloper shall agree to, and with the Authority shall execute, as a condition precedent to the Authority's delivery of the Redevelopment Property Deed, an Assessment Agreement pursuant to the provisions of Minnesota Statutes, Section 469.177, Subdivision 8, specifying the Assessor's Minimum Market Value for the Redevelopment Property for calculation of real property taxes. The aggregate amount of the Assessor's Minimum Market Value shall not be less than $3,800,000 by January 2, 1993. The minimum market value set forth in an Assessment Agreement is herein.referred to as the "Assessor's Minimum Market Value." Nothing in an Assessment Agreement shall limit the discretion of the assessor to assign a market value to the property in excess of such Assessor's Minimum Market Value nor prohibit the Redeveloper from seeking through the exercise of legal or administrative remedies a reduction in such market value for property tax purposes, provided however, that the Redeveloper shall not seek a reduction of such market value below the Assessor's Minimum Market Value in any year so long as the Assessment Agreement shall remain in effect. The Assessment Agreement shall remain in effect until the Termination Date. 18 ARTICLE VII Prohibitions Against Assignment and Transfer; Indemnification Section 7.1 Representation as to Redevelopment. The Redeveloper represents and agrees that its purchase of the Redevelopment Property, and its other undertakings pursuant to this Agreement, are, and will be used, for the purpose of redevelopment of the Redevelopment Property and not for speculation in land holding. The Redeveloper further recognizes that, in view of (a) the importance of the redevelopment of the Redevelopment Property to the general welfare of the Authority, and (b) the substantial financing and other public aids that have been made available by the Authority for the purpose of making such redevelopment possible, the qualifications and identity of the Redeveloper are of particular concern to the Authority. The Redeveloper further recognizes that it is because of such qualifications and identity that the Authority is entering into this Agreement with the Redeveloper, and, in so doing, is further willing to accept and rely on the obligations of the Redeveloper for the faithful performance of all undertakings and covenants hereby by it to be performed. Nothing in this Section 7.1 shall prevent a transfer of or change in the ownership of the Redeveloper provided that the Redeveloper remains the owner of the Redevelopment Property. Section 7.2 Prohibition Against Transfer of Property and Assignment of Agreement. Also, for the foregoing reasons the Redeveloper represents and agrees that prior to the Termination Date: (a) Except for the purpose of obtaining financing necessary to enable the Redeveloper or any successor in interest to the Redevelopment Property, or any part thereof, to perform its obligations with respect to making the Minimum Improvements under this Agreement, and any other purpose authorized by this Agreement, 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 Redevelopment Property or any part thereof or any interest therein, or any contract or agreement to do any of the same, without the prior written approval of the Authority unless the Redeveloper remains liable and bound by this Redevelopment Agreement in which event the Authority's approval is not required. Any such transfer shall be subject to the provisions of this Agreement. Notwithstanding the foregoing, the Redeveloper may transfer the Redevelopment Property to any corporation controlling, controlled by, or under common control with the Redeveloper or to any corporation or entity controlled by parties or their heirs who presently control the Redeveloper. 19 (b) In the event the Redeveloper, upon transfer or assignment of the Redevelopment Property or any portion thereof, seeks to be released from its obligations under this Agreement, - the Authority shall be entitled to require, except as otherwise provided in this Agreement, as conditions to any such release that: (i) Any proposed transferee shall have the qualifications and financial responsibility, in the reasonable judgment of the Authority, necessary and adequate to fulfill the obligations undertaken in this Agreement by the Redeveloper. (ii) Any proposed transferee, by instrument in writing satisfactory to the Authority and in form recordable among the land records, shall, for itself and its successors and assigns, and expressly for the benefit of the Authority, have expressly assumed all of the obligations of the Redeveloper under this Agreement and agreed to be subject to all of the conditions and restrictions to which the Redeveloper is subject; provided, however, that the fact that any transferee of, or any other successor in interest whatsoever to, the Redevelopment Property, or any part thereof, shall not, for whatever reason, have assumed such obligations or so agreed, and shall not (unless and only to the extent.otherwise specifically provided in this Agreement or agreed to in writing by the Authority) deprive the Authority of any rights or remedies or controls with respect to the Redevelopment Property or any part thereof or the construction of the Minimum Improvements; it being the intent of the parties as expressed in this Agreement that (to the fullest extent permitted at law and in equity and excepting only in the manner and to the extent specifically provided otherwise in this Agreement) no transfer of, or change with respect to, ownership in the Redevelopment Property or any part thereof, or any interest therein, however consummated or occurring, and whether voluntary or involuntary, shall operate, legally or practically, to deprive or limit the Authority of or with respect to any rights or remedies or controls provided in or resulting from this Agreement with respect to the Minimum Improvements that the Authority would have had, had there been no such transfer or change. (iii) Any and all instruments and other legal documents involved in effecting the transfer of any interest in this Agreement or the Redevelopment Property governed by this Article VII, shall be in a form reasonably satisfactory to the Authority. In the absence of specific written agreement by the Authority to the contrary, no such transfer or approval by the Authority thereof shall be deemed to relieve the Redeveloper, or any other party bound in any way 20 by this Agreement or otherwise with respect to the construction of the Minimum Improvements, from any of its obligations with respect thereto. In the event the foregoing conditions are satisfied then the Redeveloper shall be released from its obligation under this Agreement, as to the portion of the Redevelopment Property that is transferred, assigned or otherwise conveyed, and all of the Redeveloper's rights and benefits under this Agreement, including the Note and any payments due thereunder, shall inure and accrue to the benefit of the transferee. (c) The Redeveloper or any successor in interest to the Redevelopment Property shall be permitted to obtain financing in any amount and to grant or convey a mortgage interest in the Redevelopment property as a permitted encumbrance for the purpose of equipping, furnishing or further improving the Redevelopment Property in connection with the conduct and operation of its business from and upon the Redevelopment Property, and shall be permitted to assign the Note as collateral security for the repayment of a mortgage. Section 7.3 Release and Indemnification Covenants. (a) The Redeveloper covenants and agrees that the City and 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 City and 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 Minimum Improvements, except for any loss resulting from negligent, willful or wanton misconduct of any such parties. (b) Except for any negligent or willful misrepresentation or any negligent, willful or wanton misconduct of the following named parties, the Redeveloper agrees to protect and defend the City and the Authority and the governing body members, officers, agents, servants and employees thereof, now or forever, and further agrees to hold the aforesaid harmless from any claim, demand, suit, 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 Improvements. (c) The City and the Authority and the 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 Property or Minimum Improvements due to any act of negligence of any person, other than the negligence and misconduct of City and the 21 Authority employees or those employed or engaged by the City and the Authority. (d) All covenants, stipulations, promises, agreements and obligations of the City and the Authority contained herein shall be deemed to be the covenants, stipulations, promises, agreements and obligations of the City and the Authority and not of any governing body member, officer, agent, servant or employee of the City and the Authority in the individual capacity thereof. 22 ARTICLE VIII Events of Default I- Section 8.1 Events of Default Defined. The following shall be "Events of Default" under this Agreement and the term "Event of Default" shall mean, whenever it is used in this Agreement (unless the context otherwise provides), any one or more of the following events: (a) Failure by the Redeveloper to pay when due any payments or to provide any funds required to be paid or provided under Article III or Article VI of this Agreement. (b) Failure by the Redeveloper to provide employment verification and to maintain the level of employment required by Section 2.2(j). (c) Failure by the Redeveloper to provide and maintain any insurance required to be provided and maintained by Section 5.1 of this Agreement or failure by the Redeveloper to reconstruct the Minimum Improvements when required pursuant to Section 5.1 of this Agreement. (d) Failure by the Redeveloper to complete construction of the Minimum Improvements pursuant to the terms, conditions and limitations of Article IV of this Agreement. (e) Failure by the Redeveloper to substantially observe or perform any covenant, condition, obligation or agreement on its part to be observed or performed hereunder. (f) The Redeveloper shall: (i) file any petition in bankruptcy or for any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under the United States Bankruptcy Code or under any similar federal or state law; or (ii) make an assignment for the benefit of its creditors; or (iii) admit.in writing its inability to pay its debts generally as they become due; or (iv) be adjudicated as bankrupt or insolvent; or if a petition or answer proposing the adjudication of the Redeveloper as a bankrupt or its reorganization under any present or future federal bankruptcy act or any similar federal or state law shall be filed in any court and such 23 petition or answer shall not be discharged or denied within ninety (90) days after the filing thereof; or a receiver, trustee or liquidator of the Redeveloper or of the Redevelopment Property, or part thereof shall be appointed in any proceeding brought against the Redeveloper and shall not be discharged within ninety (90) days after such appointment, or if the Redeveloper shall consent to or acquiesce in such appointment. Section 8.2 Remedies on Default. Whenever any Event of Default referred to in Section 8.1. of this Agreement occurs, the Authority may take any one or more of the following actions after providing thirty 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 days, or if the Event of Default is by its nature incurable within said thirty day period, and the Redeveloper fails to provide the Authority with written assurances, deemed satisfactory in the reasonable discretion of the Authority, that the Event of Default will be cured as soon as reasonably possible: (a) Suspend its performance under this Agreement until it receives assurances from the Redeveloper, deemed adequate by the Authority, that the Redeveloper will cure its default and continue its performance under this Agreement. (b) Terminate this Agreement. (c) Withhold the Certificate of Completion. Section 8.3 No Remedy Exclusive. 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 VIII. Section 8.4 Exclusive Remedy. If an Event of Default as described in Section 8.1(b) of this Agreement occurs as a result of the Redeveloper's failure to employ an average annual equivalent of 200 full time employees for any calendar year during the term of this Agreement, the Authority's sole and exclusive remedy shall be to withhold all payments of principal and interest due under the Note for such year, but such remedy shall not result in the termination of the Agreement, the cancellation of the Note or the forfeiture of any payments due under the Note for any other calendar year in which the Redeveloper has complied with the minimum employment requirements of Section 2.2(j) of this Agreement. However, if the Redeveloper fails to employ an average annual equivalent of 200 full time 24 employees with respect to any two successive calendar years during the term of this Agreement, then the Authority shall have the right to terminate this Agreement. Section 8.5 No Additional Waiver Implied by One Waiver. In the event any agreement contained in this Agreement should be breached by either party and thereafter waived by the other party, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other concurrent, previous or subsequent breach hereunder. Section 8.6 Agreement to Pay Attorney's Fees and Expenses. Whenever any Event of Default occurs and the Authority shall employ attorneys or incur other expenses, such fees and expenses shall be paid in accordance with Section 2.2(g) of this Agreement. 25 ARTICLE IX Additional Provisions Section 9.1 Conflict of Interests. No member, official, or employee of the Authority shall have any personal interest, direct or-indirect, in the Agreement, nor shall any such member, official or employee participate in any decision relating to the Agreement which affects his personal interests or the interests of any corporation, partnership, or association in which he is, directly or indirectly, interested. Section 9.2 Restrictions on Use. (a) The Redeveloper shall not discriminate upon the basis of race, color, creed, sex or national origin in the sale, lease, or rental or in the use or occupancy of the Redevelopment Property or any improvements erected or to be erected thereon, or any part thereof. (b) The Redeveloper shall not allow any use or occupancy of the Redevelopment Property or Minimum Improvements by a "Sexually Orientated Business" as defined in Ordinance No. 965 of the City's Code. Section 9.3 Provisions Not Merged With Deed. None of the provisions of this Agreement are intended to or shall be merged by reason of any deed transferring any interest in the Redevelopment Property and any such deed shall not be deemed to affect or impair the provisions and covenants of this Agreement. Section 9.4 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 9.5 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, transmitted by facsimile, delivered by a recognized overnight carrier, or delivered personally; and (a) in the case of the Redeveloper, is addressed to or delivered personally to the mailing or delivery address the Redeveloper will, from time to time, furnish to the Authority. The mailing address of the Redeveloper as of the date of this Agreement is as follows: 26 McGlynn Bakeries, Inc. One McGlynn Drive Chanhassen, MN 55317 Attention: Chief Financial Officer (b) in the case of the Authority, is addressed to or delivered personally to the Housing and Redevelopment in and for the City of Fridley, Minnesota, or at such other address as the City may, from time to time, designate in writing and forward to the Redeveloper. The present mailing address of the Authority as of the date of this Agreement is as follows: The Housing and Redevelopment Authority in and for the City of Fridley 6431 University Avenue Northeast Fridley, Minnesota 55432 Section 9.6 Counterparts. This Agreement is executed in any number of counterparts, each of which shall constitute one and the same instrument. Section 9.7 _Expiration. This Agreement shall expire on its Termination Date. 27 ARTICLE X Termination of Agreement Section 10.1 Option to Terminate. The Redeveloper may, at its option, terminate this Agreement at any time by giving ten (10) days' written notice thereof to the Authority. Section 10.2 General Termination. This Agreement shall also terminate on its Termination Date. Section 10.3 Effect of Termination. If this Agreement is terminated pursuant to the provisions of this Article X, then this Agreement and the Note shall be null and void. 28 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 on or as of the date first above written. THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF FRIDLEY, MINNESOTA By Its Chairman And by Its Executive Director STATE OF MINNESOTA ) )ss COUNTY OF ANOKA ) On this day of , 199_ before me, a notary public within and for Anoka Count y, personally appeared and to me personally known who by me duly sworn, did say that they are the Chairman and Executive Director of the Housing and Redevelopment Authority in and for the City of Fridley, Minnesota, a political subdivision of the State of Minnesota, and acknowledged the foregoing instrument on behalf of said Authority. Notary Public This is a signature page to the Redevelopment Agreement dated as of , by and between the Housing and Redevelopment Authority In and For the City of Fridley, Minnesota and McGlynn Bakeries, Inc. 29 MCGLYNN BAKERIES, INC. By By STATE OF MINNESOTA ) )ss COUNTY OF HENNEPIN ) Its Its On this day of , 199_ before me, a notary public within and for Hennepin County, personally appeared and , the and , respectively, of McGlynn Bakeries, Inc., a Minnesota corporation, and acknowledged the foregoing instrument on behalf of said corporation. Notary Public This is a signature page to the Redevelopment Agreement dated as of , by and between the Housing and Redevelopment Authority In and For the City of Fridley, Minnesota and McGlynn Bakeries, Inc. 30 SCHEDULE A DESCRIPTION OF REDEVELOPMENT PROPERTY That part of Lot 4, Block 4, COMMERCE PARK, according to the recorded plat thereof, Anoka County, Minnesota lying east of the following described line: Beginning at a point on the north line of said Lot 4, distant 15.00 feet east of the northwest corner of said Lot 4; thence southerly parallel with the west line of said Lot 4, to the south line of said Lot 4 and there terminating. And the south 54.70 feet of Lot 3, Block 4, COMMERCE PARK, according to the recorded plat thereof, Anoka County, Minnesota lying east of the following described line: Beginning at a point on the north line of said Lot 3, distant 205.00 feet east of the northwest corner of said Lot 3; thence southerly to a point on the south line of said Lot 3, distant 125.00 feet east of the southwest corner of said Lot 3 and there terminating. 31 SCHEDULE B PROPERTY DEED THIS INDENTURE, between the Housing and Redevelopment Authority in and for the City of Fridley, Minnesota a municipal corporation (the "Grantor "), and McGlynn Bakeries, Inc., a Minnesota corporation (the "Grantee "). WITNESSETH, that Grantor, in consideration of the sum of One Dollar ($1.00) and other good and valuable consideration the receipt whereof is hereby acknowledged, does hereby convey and quit claim to the Grantee, its successors and assigns forever, all the tract or parcel of land lying and being in the County of Anoka and State of Minnesota described as follows: LEGAL DESCRIPTION That part of Lot 4, Block 4, COMMERCE PARK, according to the recorded plat thereof, Anoka County, Minnesota lying east of the following described line: Beginning at a point on the north line of said Lot 4, distant 15.00 feet east of the northwest corner of said Lot 4; thence southerly parallel with the west line of said Lot 4, to the south line of said Lot 4 and there terminating. And the south 54.70 feet of Lot 3, Block 4, COMMERCE PARK, according to the recorded plat thereof, Anoka County, Minnesota lying east of the following described line: Beginning at a point on the north line of said Lot 3, distant 205.00 feet east of the northwest corner of said Lot 3; thence southerly to a point on the south line of said Lot 3, distant 125.00 feet east of the southwest corner of said Lot 3 and there terminating. The Seller /Grantor certifies that the Seller /Grantor does not know of any wells on described.real property. 32 IN WITNESS WHEREOF, the Grantor has caused this deed to be duly executed in its behalf by its Chairman and Executive Director this day of , 199 THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF FRIDLEY, MINNESOTA By Its By Its STATE OF MINNESOTA ) )ss COUNTY OF ANOKA ) On this day of , 199_ before me, a notary public within and for Anoka County, personall y appeared and to me personally known who by me duly sworn, did say that they are the Chairman and Executive Director of the Housing and Redevelopment Authority in and for the City of Fridley, Minnesota, a political subdivision of the State of Minnesota, and acknowledged the foregoing instrument on behalf of said Authority. This instrument was drafted by: Casserly Law Office, P.A. 215 South 11th Street Minneapolis, Minnesota 55403 33 Notary Public SCHEDULE C CERTIFICATE OF COMPLETION WHEREAS, the Housing and Redevelopment Authority in and for the City of Fridley, Minnesota, a Minnesota municipal corporation (the "Authority ") and McGlynn Bakeries, Inc., a Minnesota corporation (the "Redeveloper ") have entered into a Contract for Private Redevelopment (the "Agreement ") dated , 199_, regarding certain real property referred to in the Agreement as the "Redevelopment Property" located in Redevelopment Project No. 1 in the City; and WHEREAS, the Agreement contains certain conditions and provisions requiring the Redeveloper to construct improvements upon the Redevelopment Property (hereinafter referred to and referred to in the Agreement as the "Minimum Improvements "); and WHEREAS, Section 4.3 of the Agreement requires the Authority to provide an appropriate instrument promptly after the substantial completion (as defined in the Agreement) of the Minimum Improvements so certifying said substantial completion; NOW, THEREFORE, in compliance with said Section 4.3 of the Agreement, this is to certify that the Redeveloper has substantially completed the Minimum Improvements in accordance with the conditions and provisions of the Agreement relating solely to the obligations of the Redeveloper to construct the Minimum Improvements (including the dates for beginning and completion thereof), and this certification shall be a conclusive determination of satisfaction and termination of the agreements and covenants in the Agreement with respect to the obligations of the Redeveloper, and its successors and assigns, to construct the Minimum Improvements and the dates for the beginning and completion thereof. Dated: , 19 34 THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF FRIDLEY, MINNESOTA By By STATE OF MINNESOTA ) )ss COUNTY OF ANOKA ) Its Its On this day of , 199_ before me, a notary public within and for Anoka County, personally appeared and to me personally known who by me duly sworn, did say that they are the Chairman and Executive Director of the Housing and Redevelopment Authority in and for the City of Fridley, Minnesota, a political subdivision of the State of Minnesota, and acknowledged the foregoing instrument on behalf of said Authority. This instrument was drafted by: Casserly Law Office, P.A. 215 South 11th Street Minneapolis, Minnesota 55403 35 Notary Public SCHEDULE D $701 ,172 UNITED STATES OF AMERICA STATE OF MINNESOTA COUNTY OF ANOKA THE HOUSING AND REDEVELOPMENT AUTHORITY In and For THE CITY OF FRIDLEY LIMITED REVENUE TAX INCREMENT NOTE (MCGLYNN PROJECT) The Housing and Redevelopment Authority in and for the City of Fridley (the "Authority "), hereby acknowledges itself to be indebted and, for value received, promises to pay to the order of McGlynn Bakeries, Inc., a Minnesota corporation, or it registered assigns (the "Registered Owner ") solely from the source, to the extent and in the manner hereinafter provided, the principal amount of this Note, being Seven Hundred One Thousand One Hundred Two Dollars ($701,172.00) (the "Principal Amount "), together with interest thereon from August 1, 1992 at a rate of nine and one -half percent (9.5 %), on the dates (the "Scheduled Payment Dates") set forth on the Payment Schedule attached as Exhibit A hereto and in the amounts stated thereon (the "Scheduled Payments "). This note shall be payable in semiannual installments commencing on August 1, 1994, and on the 1st day of February and August thereafter until and including February 1, 2009. Upon 30 days' prior written notice from the Authority to the Owner, the Principal Amount is subject to prepayment at the option of the Authority in whole or in part on any Scheduled Payment Date. 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 Registered Owner and mailed to the Registered Owner at its postal address within the United States which shall be designated from time to time by the Registered 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 "Program "). 36 THE NOTE IS NOT A GENERAL AUTHORITY OR THE STATE OF MINK CITY, THE AUTHORITY, THE STATE THEREOF SHALL BE LIABLE ON THE OUT OF ANY FUNDS OR PROPERTIES AS DEFINED BELOW. OBLIGATION OF THE CITY, THE ESOTA (THE "STATE "), AND NEITHER THE NOR ANY POLITICAL SUBDIVISION NOTE, NOR SHALL THE NOTE BE PAYABLE OTHER THAN AVAILABLE TAX INCREMENT, The Scheduled Payment of this Note due on any Scheduled Payment Date is payable solely from and only to the extent that the Authority shall have received as of such Scheduled Payment Date, "Available Tax Increment" which is defined in the Contract for Private Redevelopment between the Authority and the Registered Owner (the "Agreement ") as tax increment received as of a Scheduled Payment Date with respect to certain real property described in the attached Exhibit B (hereinafter referred to as the "Redevelopment Property ") which real property is located within the City's Tax Increment Financing District No. 12. The Authority shall pay on each Scheduled Payment Date to the Registered Owner the lesser of the Available Tax Increment and the Scheduled Payment due hereon on that date. To the extent that on any Scheduled Payment Date the Authority is unable to make the. total Scheduled Payment due on such date as a result of its having received as of such date insufficient Available Tax Increment, such failure shall not constitute a default under this Note and any such deficiency or unpaid portion shall be deemed to have been paid in full. On February 1, 2009, the maturity date of this Note, any unpaid portion shall be deemed to have been paid in full. 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 from any funds except the Available Tax Increment, and then only to the extent and in the manner herein specified. The Authority makes no representation or covenant, express or implied, that the revenues described herein will be sufficient to pay, in whole or in part, the amounts which are or may otherwise become due and payable hereunder. The Authority's payment obligations hereunder shall be further conditioned on the fact that there shall not at the time have occurred and be continuing an Event of Default under the Agreement, and, further, if pursuant to the occurrence of an Event of Default under the Agreement the Authority elects to terminate the Agreement, the Authority shall have no further debt or obligation under this Note whatsoever. Reference is hereby made to the provisions of the Agreement for a fuller statement of the obligations of the Redeveloper and of the rights of the Authority thereunder, and said provisions are hereby incorporated by reference into this Note to the same extent as though set out in 37 full herein. The execution and delivery of this Note by the Authority, and the acceptance thereof by the Redeveloper, as the initial Registered Owner hereof, shall conclusively establish this Note as the "Revenue Note" (and shall conclusively constitute discharge of the City's obligation to issue and deliver the same to the Redeveloper) under the Agreement. The Registered Owner shall never have or be deemed to have the right to compel any exercise of any taxing power of 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 registering this Note shall be liable personally hereon by reason of the issuance or registration hereof or otherwise. 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 form, time, and manner as required by law. This Note may be assigned but upon such assignment the assignor shall promptly notify the Executive Director of the Authority at the offices of the Authority by registered mail, and the assignee shall surrender the same to the Authority either in exchange for a new fully registered note or for transfer of this Note on the registration records for the Note maintained by the Authority. Each such assignee shall take this Note subject to the foregoing condition and subject to all provisions stated or referenced herein. The Authority has elected to issue this Note as a non -tax exempt obligation and accordingly does not anticipate that the interest on this Note is or will be generally exempt from federal or state income taxes, and the Authority makes no representation or covenant with respect to any such exemption. IN WITNESS WHEREOF, the Authority has caused executed by the manual signatures of its Chairman Director and has caused this Note to be dated Chairman This instrument was drafted by: Casserly Law Office, P.A. 215 South 11th Street Minneapolis, Minnesota 55403 38 this Note to be and Executive , 199 Executive Director CERTIFICATE OF It is hereby certified that the foregoing Note, as originally issued on , 199_, was on said date registered in the name of McGlynn Bakeries, Inc., a Minnesota corporation, and that, at the request of said Registered Owner of this Note, the undersigned has this day registered this Note as to principal and interest on the Note in the name of such Registered Owner, as indicated in the registration blank below, on the books kept by the undersigned for such purposes. Name of Registered Owner McGlynn Bakeries, Inc. Date of Registration W 199_ Signature of Executive Director DATE August 1, 1994 February 1, 1995 August 1, 1995 February 1, 1996 August 1, 1996 February 1, 1997 August 1, 1997 February 1, 1998 August 1, 1998 February 1, 1999 August 1, 1999 February 1, 2000 August 1, 2000 February 1, 2001 August 10, 2001 February 1, 2002 August 1, 2002 February 1, 2003 August 1, 2003 February 1, 2004 August 1, 2004 February 1, 2005 August 1, 2005 February 1, 2006 August 1, 2006 February 1, 2007 August 1, 2007 February 1, 2008 August 1, 2008 February 1, 2009 EXHIBIT A PAYMENT SCHEDULE 40 PAYMENT $42,805 42,805 44,249 44,249 45,715 45,715 47,203 47,203 48,713 48,713 50,246 50,246 51,802 51,802 53,381 53,381 54,984 54,984 56,611 56,611 58,262 58,262 59,938 59,938 61,639 61,639 63,366 63,366 65,119 65,119 EXHIBIT B DESCRIPTION OF REDEVELOPMENT PROPERTY That part of Lot 4, Block 4, COMMERCE PARK, according to the recorded plat thereof, Anoka County, Minnesota lying east of the following described line: Beginning at a point on the north line of said Lot 4, distant 15.00 feet east of the northwest corner of said Lot 4; thence southerly parallel with the west line of said Lot 4, to the south line of said Lot 4 and there terminating. And the south 54.70 feet of Lot 3, Block 4, COMMERCE PARK, according to the recorded plat thereof, Anoka County, Minnesota lying east of the following described line: Beginning at a point on the north line of said Lot 3, distant 205.00 feet east of the northwest corner of said Lot 3; thence southerly to a point on the south line of said Lot 3, distant 125.00 feet east of the southwest corner of said Lot 3 and there terminating. 41 SCHEDULE E ASSESSMENT AGREEMENT and ASSESSOR'S CERTIFICATION By and among THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF FRIDLEY, MINNESOTA MCGLYNN BAKERIES, INC. and CITY ASSESSOR OF THE CITY OF FRIDLEY This Document was drafted by: Casserly Law Office, P.A. 215 South 11th Street Minneapolis, Minnesota 55403 612- 342 -2277 42 ASSESSMENT AGREEMENT THIS AGREEMENT, made on or as of the day of , 199_, by and among The Housing and Redevelopment Authority in and for the City of Fridley (the "City "), of the State of Minnesota, McGlynn Bakeries, Inc., a Minnesota corporation (the "Redeveloper "), and the City Assessor of the City of Fridley (the "Assessor "). WITNESSETH, that WHEREAS, on or before the date hereof the Authority and the Redeveloper have entered into a Contract for Private Redevelopment (the "Redevelopment Contract ") regarding certain real property located in the City of Fridley, legally described on Exhibit A attached hereto and made a part hereof, pursuant to which the Authority is to convey certain property, to the Redeveloper (the "Redevelopment Property "); and WHEREAS, it is pursuant to said Redevelopment Contract the Redeveloper has agreed to rehabilitate an existing manufacturing facility (the "Minimum Improvements ") upon the Redevelopment Property; and WHEREAS, the Authority and Redeveloper desire to establish a minimum market value.for said Redevelopment Property and the Minimum Improvements constructed thereon, pursuant to Minnesota Statutes, Section 469.177, Subdivision 8; and WHEREAS, the Authority and the Assessor have reviewed the preliminary plans and specifications for the Minimum Improvements and have inspected the Redevelopment Property; NOW, THEREFORE, the parties to this Agreement, in consideration of the promises, covenants and agreements made by each to the other, do hereby agree as follows: 1. The minimum market value as of January 2, 1993 which shall be assessed for the Redevelopment Property described in Exhibit A, with the Minimum Improvements constructed thereon, for ad valorem tax purposes, shall not be less than Three Million Eight Hundred Thousand Dollars ($3,800,000). 2. The minimum market value herein established shall be of no further force and effect and this Agreement shall terminate on the Termination Date of the Redevelopment Contract which is defined in Article I of the Redevelopment Contract and shall be no later than February 1, 2009. 3. This Agreement shall be promptly recorded by the Redeveloper who shall pay all costs of recording. 43 4. Neither the preambles nor provisions of this Agreement are intended to, nor shall they be construed as, modifying the terms of the Redevelopment Contract between the Authority and the Redeveloper. S. This Agreement shall inure to the benefit of and be binding upon the parties hereto and the respective successors and assigns of the parties. 6. Each of the parties has authority to enter into this Agreement and to take all actions required of it, and has taken all actions necessary to authorize the execution and delivery of this Agreement. 7. In the event any provision of this Agreement shall be held invalid and unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. 8. The parties hereto agree that they will, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements, amendments and modifications hereto, and such further instruments as may reasonably be required for correcting any inadequate, or incorrect, or amended description of the Redevelopment Property or the Minimum Improvements, or for carrying out the expressed intention of this Agreement, including, without limitation, any further instruments required to delete from the description of the Redevelopment Property such part or parts as may be included within a separate assessment agreement. 9. Except as provided in Section 7 of this Assessment Agreement, this Agreement may not be amended nor any of its terms modified except by a writing authorized and executed.by all parties hereto. 10. This Agreement may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. 11. This Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota. 44 THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF FRIDLEY, MINNESOTA By By STATE OF MINNESOTA ) )ss COUNTY OF ANOKA ) Its Its On this day of , 199_ before me, a notary public within and for Anoka County, personall y appeared and to me personally known who by me duly sworn, did say that they are the and respectively, of the Housing and Redevelopment Authority in and for the City of Fridley, Minnesota, and acknowledged the foregoing instrument on behalf of said city. Notary Public 45 MCGLYNN BAKERIES, INC. By By STATE OF MINNESOTA ) )ss COUNTY OF HENNEPIN ) Its Its On this day of , 199_ before me, a notary public within and for Hennepin County, personally appeared and , the and , respectively, of McGlynn Bakeries, Inc., a Minnesota corporation, and acknowledged the foregoing instrument on behalf of said corporation. Notary Public W CERTIFICATION BY CITY ASSESSOR The undersigned, having reviewed the plans and specifications for the improvements to be constructed and the market value assigned to the land upon which the improvements are to be constructed, and being of the opinion that the minimum market value contained in the foregoing Agreement appears reasonable, hereby certifies as follows: The undersigned Assessor, being legally responsible for the assessment of the above described property, hereby certifies that the market value assigned to such land and improvements upon completion of the improvements to be constructed thereon shall not be less than Dollars ($ ) until termination of this Agreement. City Assessor for the City of Fridley STATE OF MINNESOTA ) )ss COUNTY OF ANOKA ) The foregoing instrument was acknowledged before me this day of , 199_, by , the City Assessor of the City of Fridley. Notary Public 47 . EXHIBIT A LEGAL DESCRIPTION OF REDEVELOPMENT PROPERTY That part of Lot 4, Block 4, COMMERCE PARK, according to the recorded plat thereof, Anoka County, Minnesota lying east of the following described line: Beginning at a point on the north line of said Lot 4, distant 15.00 feet east of the northwest corner of said Lot 4; thence southerly parallel with the west line of said Lot 4, to the south line of said Lot 4 and there terminating. And the south 54.70 feet of Lot 3, Block 4, COMMERCE PARK, according to the recorded plat thereof, Anoka County, Minnesota lying east of the following described line: Beginning at a point on the north line of said Lot 3, distant 205.00 feet east of the northwest corner of said Lot 3; thence southerly to a point on the south line of said Lot 3, distant 125.00 feet east of the southwest corner of said Lot 3 and there terminating. 48 SCHEDULE F UIT CLAIM DEED: REDEVELOPER AS GRANTOR THIS INDENTURE, between McGlynn Bakeries, Inc., a Minnesota corporation (the "Grantor "), and the Housing and Redevelopment Authority in and for the City of Fridley, Minnesota, a municipal corporation (the "Grantee "). WITNESSETH, that Grantor, in consideration of the sum of One Dollar ($1.00) and other good and valuable consideration the receipt whereof is hereby acknowledged, does hereby-convey and warrant to the Grantee, its successors and assigns forever, all the tract or parcel of land lying and being in the County of Anoka and State of Minnesota described as follows: LEGAL DESCRIPTION That part of Lot 4, Block 4, COMMERCE PARK, according to the recorded plat thereof, Anoka County, Minnesota lying east of the following described line: Beginning at a point on the north line of said Lot 4, distant 15.00 feet east of the northwest corner of said Lot 4; thence southerly parallel with the west line of said Lot 4, to the south line of said Lot 4 and there terminating. And the south 54.70 feet of Lot 3, Block 4, COMMERCE PARK, according to the recorded plat thereof, Anoka County, Minnesota lying east of the following described line: Beginning at a point on the north line of said Lot 3, distant 205.00 feet east of the northwest corner of said Lot 3; thence southerly to a point on the south line of said Lot 3, distant 125.00 feet east of the southwest corner of said Lot 3 and there terminating. The Seller /Grantor certifies that the Seller /Grantor does not know of any wells on described real property. 49 9 T MCGLYNN BAKERIES, INC. By By STATE OF MINNESOTA ) )ss COUNTY OF HENNEPIN ) Its Its On this day of , 199_ before me, a notary public within and for Hennepin County, personally appeared and , the and , respectively, of McGlynn Bakeries, Inc., a Minnesota corporation, and acknowledged the foregoing instrument on behalf of said corporation. This instrument was drafted by: Casserly Law Office, P.A. 215 South 11th Street Minneapolis, Minnesota 55403 50 Notary Public SCHEDULE G OF MINIMUM IMPROVEMENTS 51 2 Community Development Department HOUSING AND REDEVELOPMENT AUTHORITY City of Fridley DATE: December 31, 1991 TO: William Burns, Executive Director of the HRA FROM: Barbara Dacy, Community Development Director SUBJECT: Presentation of Housing Study; Maxfield Research Group I am pleased to present to you and the Housing & Redevelopment Authority "The Fridley Housing Market: A Study of Condition and an Assessment of Needs ". Enclosed in the packet is the executive summary and full report of the study prepared by Maxfield Research Group. Lee Maxfield and Mary Bujold will be present at Thursday's meeting to present the major findings of the report. Maxfield Research Group is also tentatively scheduled to present the findings of the study to the City Council on January. 13, 1992. After that presentation, a process needs to be established whereby the City's goals are identified and then implementing policies and strategies are agreed upon. The following items will be necessary to take place: 1. Identification of a process to identify housing goals. 2. Establish housing goals for 5, 10, and 15 year increments. 3. Contact key financial institutions within the community and immediate area to determine interest in participating in programs. 4. Identify appropriate federal and state programs to meet the goals identified by the community. Also, identify and create local programs to meet housing goals which cannot be met by outside funding sources. Also attached to this memo are examples of existing programs that are now occurring which are addressing some of the issues identified in the study. For example, Pat Wolfe, the Housing Specialist, and her counterpart from Columbia Heights, are conducting a "Landlord Workshop" on January 22, 1992. The purpose of the workshop is to review key issues and processes for landlords. It will not only cover the Section 8 housing program, y � 2 -A Housing Study December 31, 1991 Page 2 but other important issues such as effective property management, discrimination, eviction procedures, etc. Establishing this type of relationship with existing landlords is a key recommendation of the Maxfield study. Also attached is a notice from Anoka County regarding the availability of HOME funds. HOME funds is a new federal program enabling communities to establish first time home buyer or single family rehabilitation programs. Finally, Lisa Campbell has written a memo regarding the Minnesota Housing Finance Agency's two new programs to address blighted single family structures. A key aspect to a number of these federal and state programs is the relationship with local lenders. The City of Fridley needs to establish this relationship as soon as possible, and also identify which programs would best meet the needs identified by the community. Recommendation The purpose of Thursday's meeting is to have the consultant review its findings, and receive general reaction from the HRA. After the City Council presentation on January 13, 1992, staff will present a recommendation as to the next steps in the process at the February meeting. BD /dn M -91 -919 O H z .. E x� N O 4A A N o, x 00 x� -�I $4 O r-1 oa U N � rr 4-1� N O rn to 0% = O N N N N A cd � � 3 h .o �w 'd O 3 ?+ 4J O -rl 0 c -.A. s 3 o •�Q -a'- C "o k N (a 04 $4 O Ob N co .,4 `n 44r'. 71� > 0 A ,, . Nv 41 .-. rA A.9 •, N • o x h oc - 0� w -a`� v x n 4J N (n o w0b N ON r-4 ?+ G A 4J o �' $4 r-I tr to tv '0 �J4� Of�•''I � O .,� 0 N N cd 30 Ora N �• °• fib' - `j�... �O '1b, Utr -� 00 >s >A� o'd �'O , �x xro by a,�� •.x asp .rj 'i7 rn �a 0 4 o 3 U Clio rn H ao 4J En ,'d o�a� a�4 P. Ln O rl .. � N -u u • N 1 -.A. s 3 o •�Q -a'- C "o k N (a 04 $4 O Ob N co .,4 `n 44r'. ,, . Nv v rA A.9 •, N x Al o x h o. 4)f� 3 O10 Sit � • 4J U U 4-1 > cd 11 .NUO (d r-4 ?+ G A � 4J A $4 r-I !b, tv '0 -r4 U to N% N '"'1 4 O A 0 N N cd co 30 Ora N �• °• fib' O to �� G by z 3 ko t` .rj 'i7 rn 0 4 o 3 U Clio .� �ro o�a� a�4 P. •• wo O N N U tAk.0to -f ON V o U N Id la .• .. .. ••q 4 040 to N O U +1 to N 41 N M id O H Q&--1 rO 0 Z a CJ ca E- 3 04 ?o�p couv P M�h'H E SOtP 2 -C COUNTY OF ANOKA Urban Anoka County Communal Development Block Grant COURTHOUSE ANOKA, MINNESOTA 55303 612 - 421 -4760 December 9, 1991 Ms. Barbara Dacy, Planning Coordinator City of Fridley 6431 University Avenue N.E. Fridley, Minnesota 55432 Re: 1992 HOME Funds Dear Barbara: Anoka County will have access to approximately $500,000 for low income housing activity in late >i Marchtor-April�'ofe4992VAlthough we do not yet have the complete regulations or instructions, I want to pass along the basic information to prepare you to act quickly should you want too apply for funding. We will have only a maximum of 75 days from the date HUD notifies us of funding to deliver our plan for use of the funds. We could get notice as early as this week. Since we are part of a four - county consortium, the application timeframe must include the time required for consortium approval process after the Anoka County Board of Commissioners approves our submission, all within 75 days of HUD notice. I.+ "V – 0 The regulations to date are aliowing_acquisition, rehabilitation. site o,��LL�� �,u ►�, ��, �� aa�s�ixn3 �o oryx�ae ror_anoraaoie owner -0ccupied or rental housing. This' does not include emergency shelters. Anoka County has not been approved for new construction except for special needs which include large families, persons with disabilities and Th SRO's. ese uses are subject to conditions which have not yet been distributed. There are also restric*.ions sin wto m s se — All of the u^i:s assisted wiii i ti ie HOME funds must be occupied by low income households (for a family of four, a maximum of $38,000) We can cover part of the cost of a mixed use building where some of the units are for qualifying households as long as the percentage of the project costs funded by HOME does not exceed the percentage of low /moderate units. At least 90% of the households we assist must have incomes below 60 °� of median for the metropolitan area ($28 500 for a family of fours. There is also a requirement that at least 2 ° of the beneficiaries of each inddual project be households with incomes of no more an 50 ° or a median ($23.750 fora family of four _ Affirmative Action / Equal Opportunity Employer 2 -D Page 2. HUD rules call for a 15% funding reservation to qualified Community Housing Development o Organizations . I have attached a copy of a Minnesota�ousing artners publication a explains the qualification for a CHDO. Beyond that reservation, I expect this to be a competitive process where applications will be ranked based on established criteria. I do not know exactly hqw the ranking will work yet but can offer you some things to consider. Our CHAS has established priority for large families single persons, persons with disabilities, and first time home uyers. iven the s uggish housing economy and epressed prices, this could be a good time to provide homebwer assistance, likely as downgavment or closing cost subsidies. The other initiatives will depend on the project applications received. Evaluation criteria may Include the total number served, cost per household, the affordability, total cost of the project, site control, experience of the developer, other funding sources, fit with CHAS priorities, and project feasibility. Again, all of this Information is very basic and will surely be augmented when the rules are published. I hope it Is sufficient to allow you to begin a planning process If you Intend to submit an application. If you are Interested in submitting a HOME project application, please call me so I can send one when available. I'll be happy to answer any questions you may have at this point if you would like to call me at 421 -4760, extension 1178. Sincerely, JOAnn O. Wright Community Development Manager JOW:sw Enclosures cc: County Human Services Barbara Wold Julie Brunner Edna Holum 2 -E a° Community Development Department PtANNwGDmsioN City of Fridley DATE: December i6, 1991 TO: Varbara Dacy, Community Development Director FROM: Lisa Campb441planning Associate SUBJECT: Minnesota Housing Finance Agency's Request for Proposals: The Single Family Capital Reserve Program and Blighted Residential Property Acquisition and Rehabilitation Program As per your request, I have reviewed the Request for Proposals from the Minnesota Housing Finance Agency for the Single Family Capital Reserve Program and the Blighted Residential Property Acquisition and Rehabilitation Program. This review involved reading the materials provided by the MHFA and attending a technical assistance meeting conducted by the MHFA on December 11, 1991. The purpose. of both programs is to affect the preservation and rehabilitation . of existing housing throughout Minnesota. Findings The purpose of the locally identified izat is to preservation and rehabilitation of existing sing a family housing stock and to provide single family home ownership opportunities. Under this program, appropriated funds (MHFA) would be leveraged with market rate capital (i.e. FNMA, GNMA, the lender's portfoQlio, the FHA 203(k), etc.) . The appropriated funds may be leveragXith market rate capital through first mortgage participation or interest -free second mortgage participation. See Attachment A for examples of how these financing options would work. Appropriated funds may not exceed 201 of the f nan -c ng- a ender and the ac governmental unit must Jointly apply for this p_ rogram. er significan program requirements include, but are not limited to: the second mortgage is not assumable; the total rehabilitation may not exceed 30% of the value of the property; participants must be low to moderate income persons who are first -time home buyers, households with children, minority or disabled. 2 -F Minnesota Housing Finance Agency's Request for Proposals December 16, 1991 Page 2 The MHFA hopes to distribute 60% of the funds to the Twin Cities NSA and 40% may be reserved for Greater Minnesota. The deadline for applying is January 31, 1992. The purpose of the Blighted Residential Property Acquisition and Rehabilitation Program is to provide improvement of blighted properties wn specificall designated geographic nei�=�oruhoodss�: e properties may be sng a amid its o one o f The grant recipients will then use the appropriated funds to provide revolving loans or grants to eligible parties for the improvement of blighted properties. Eligible activities under this program are limited to: financing acquisition and /or demolition of blighted property; providing gap financing-for rehabilitation; or gap financing for construction of new housing on blighted - property. In the case of the two gap financing activities, the properties must be sold upon-completion to a low- moderate income person or family. Funds will be awarded to cities in the form of grants and must be expended by December 31, 1993. The spending deadline only includes the initial grant amount. The minimum grant size is $30.000 and -the is $350,000. Neighborhood boundaries and what constitutes „blig may a defined by the city. Eligible mortgagors include a nbn- profit or cooperative housing corporation, a limited profit or limited dividend entity, or a builder. The deadline for applying is January. 31,_1992_,._ Recommendation In the draft copy of the Maxfield housing study, rehabilitation of Fridley's existing housing stock was identified repeatedly as a housing need in Fridley. • As work is finalized on the housing study, it is likely that the issue of rehabilitation financing will emerge; however, it is not likely that the final copy of the housing study will be completed and evaluated prior to January 31, 1992. It does not seem realistic to expect the City to be in a position to apply for either of these programs at this time. Both of these programs are innovative rehabilitation financing tools. The City may choose to apply one of these approaches with its own or other sources of income in the future. LC: Is Attachment M -91 -896 1 Initial Purchase Price Amount of Rehab Total Project Maximum Mortgage (conventional at 95% LTV) Example 1 Participation Loan $30,000 $10,000 $40,000 $38,000 � y $30,400 $7,600 ®9% ®0% (Ys x S) + (I x s /f) -Note Rate (9% x 80%) + (20% x 3/8 %)- (.09 x .80) + (.20 x.00375)- .072 + .00075 -.07275 or 7.275% $38,000 ® 7.275 0/6, 30 years $259.87 Attachment A 1 2 -G Example 2 2nd Mortgage Loan $30,000 $10,000 $40,000 $38,000 $301400 $7,600 ®9°/630 year ®00/630 year $244.61 $0 5i DATE: November 22, 1991 TO: Interested Parties FROM: James J. Solem Commissioner SUBJECT: Announcement and Request for Proposals; The Single Family Capital Reserve Program and the Blighted Residential Property Acquisition and Rehabilitation Program The Minnesota Housing Finance Agency (MHFA) is currently in the process of implementing two unique financing programs which may be of interest to you. The two programs are the Single Family Capital Reserve Program and the Blighted Residential Property Acquisition and Rehabilitation Program. The underlying premise of both programs is to effect the preservation and rehabilitation of the existing housing stock throughout Minnesota. MHFA is hereby soliciting your proposal to participate in either, or both of these new programs. THE SINGLE FAMILY CAPITAL RESERVE PROGRAM: The Single Family Capital Reserve Program was established by the 1991 Legislature which appropriated $1,650,000 for the program. The purposes of the program are to effectively use those appropriated funds to meet locally identified neighborhood revitalization goals. pertaining to the: preservation and rehabilitaWg of the AY��t�nn_ Single family housin stock and to rovlde single famil homeownershi -o ortunitie& —» Local governments and /or nonprofit ousing organizations and local mo gage lenders may jointly apply to participate in the program. Under the program, local lenders will ,originate t "purchase /rehabilitation° first mo a9 sources;'may in Jude FNMA; rt a e loans usln m C ital from their "traditional° sources These'tradltion GNMA, their own portfolio, the FHA 203(k).program, the MHFA Purchase Plus Program (which is,a variation of the FHA 203(k) program), et6� -The appropriated program funds will be leveraged with that market rate capital to provide" greater 'affordabiIity' and flexibility in the origination of those mortgage loans. Complete details and information regarding the program will be sent to you if you request an application packet. THE BLIGHTED RESIDENTIAL PROPERTY ACQUISITION AND REHABILITATION PROGRAM: The Blighted Residential Property Acquisition and Rehabilitation Program was also established by the 1991 Legislature which appropriated $1,750,000 for the program. 400 Sibley Street, Suite 300, St. Paul, Minnesota 55101 (612) 296 -7608 Telecopier (612) 296 -8139 TDD (612) 297.2361 Equal Opportunity Housing and Equal Opportunity Employment 2 -1 -2- acquiring and/.or rehabilitating a property, and the market value of that property upon sale. Furthermore, funds from this program may be used to provide gap financing for the construction of new housing on a site where a blighted property was demolished. In this instance, gap financing is the difference between the sum of the cost of acquiring and/or demolishing and constructing new housing on the site and the market value of the property upon sale. It should be noted, that these program funds may not be used as the primary source of financing, rehabilitation or new construction on these properties. Rather, these funds. may only be used to provide gap financing as described above. Complete -details and information regarding the program will be sent to you upon request of an application packet. Cities may make loans and grants to a wide variety of individuals and organizations involved with housing and it is MHFA's intention to encourage and support innovative approaches to the improvement of the housing stock within designated neighborhoods. The appropriated funds from these programs may be used in conjunction with other local, state and /or federal programs, as appropriate. Interested parties may apply to participate in either, or both of the above programs. However, you must request and complete a separate application packet for each program. To further explain the programs and the application process, MHFA will conduct a series of informational meetings throughout the state. The times, dates and locations of those meetings are enclosed. IMMIROMMOSE F11 MHFA believes there is a natural connection two programs. While it is not contact -ine represe`nta'tives- iistea- D-8�ow to-- liscuss any questions you may, have regarding the respective programs, or to request an application packet for the programs. Questions regarding the Single Family Capital Reserve Program may be directed to Bruce Strong at (612) 297 -3131 and questions pertaining to the Blighted Residential Property Acquisition and Rehabilitation Program may be directed to Reed Erickson at (612) 296 -8843. You may also call toll -free at 1- 800 - 652 -9747 and ask for "Home ". Neighborhood preservation and rehabilitation of the existing housing stock has been identified as a pressing public policy concern for the 1990s. Both of these new programs have been uniquely designed to address this need. We invite you to participate with the Agency in these important initiatives. Should you have any further questions, please don't hesitate to contact the representatives listed. Thank you for your cooperation and consideration in this matter. 3 I _ Community Development Department HOUSING AND REDEVELOPMENT AUTHORITY City of Fridley DATE: December 31, 1991 TO: William Burns, Executive Director of the HRA FROM: Barbara Dacy, Community Development Director SUBJECT: Review Wal -Mart Architectural Plans Background There were two development agreements executed with Vantage Properties, Inc. regarding the development of the property located at the northwest corner of 83rd and University Avenues. The purpose of the City's contract with Vantage Properties, Inc. was to.establish controls regarding the "quality" of the development. The purpose of the HRA's contract with Vantage Properties, Inc. was to provide for the legal basis to provide soil correction assistance. The HRA development contract required that the developer meet the terms and conditions of the City's contract. The maximum amount of assistance identified in the HRA's development contract was $100,000. On January 8, 1987, the HRA released $100,000 to Vantage Properties, Inc. after they completed the soil correction work. After the Wholesale Club was constructed, Vantage Properties, Inc. subdivided the property into two lots and sold both lots to Wembly Investment Company. The City and, Vantage then executed an amendment to the original development agreement (dated July 30, 1987) whereby development on the remaining parcel would be tied to the existing building via a pedestrian walkway coupled with a landscaped pedestrian plaza. Because a lot line was created, two buildings could not be attached because of building code requirements. A stipulation of the amended agreement stated that any future development proposals submitted by the owners which did not meet this criteria shall be subject to review and approval of the Planning Commission and City Council. On December 11, 1991, the Planning Commission considered a preliminary plat to replat. the property into one lot, eliminating the previous two lots, and to consider a special use permit for a 3 -A Wal -Mart Architectural Plans December 31, 1991 Page 2 garden center affiliated with the Wal -Mart building. Wal -Mart is proposing construction of a 116,000 square foot retail facility immediately adjacent to Sam's Club. The Planning Commission recommended approval of both requests subject to several stipulations. Proposed Development Ouality Attached is the excerpt of the City's development agreement which required that building materials and the design be of "quality" development. In addition, the agreement required that "distinctive" landscaping was to be installed. The Wal -Mart building is proposed to be constructed of masonry block with brick veneer accents. The existing Sam's Club is .constructed of pre -cast concrete panels with brick veneer accents. The Wal -Mart building will have brick veneer around the entrances. The front of the building, or the east side, will be constructed of split -face, medium grey block and split -face light gray block toward the top of the wall. There will be red, white, and blue accents along the middle of• the wall which will also complement the blue color scheme of the Sam's Club. The materials are consistent with those proposed in the original development agreement. For the garden center that is to be located at the north side of the building, Wal -Mart is proposing continuation of the rock face concrete block with wrought iron rails over 50% of the surface. Typically, Wal -Mart constructs chain link fencing; however, the Planning Commission stipulated that an upgraded appearance met the "quality" criteria in the development agreement. Wal -Mart has hired BRW Inc. as, its consultant for development of the property and KKE Architects as the architect for the development. Members of both firms will be present at Thursday's meeting to present larger colored elevation boards showing the proposed development and examples of the building materials. Recommendation The proposed architectural plans are consistent with the terms identified in the development agreement and also complement the existing Sam's Club. Staff recommends that the HRA recommend to the City Council approval of the exterior architectural plans. BD /dn M -91 -920 ffim-Alm I:r Avmri^, r-,. ),.,4nU 31VIS -_-n,*%:-:AV AiIS83AINn - 3 —I- - 71 a: ---------- I. mm so J of ir - - - - lm - -i.: - - - - - - --- - - - - ---------- 0 it ---- -------------- fit, ffim-Alm I:r Avmri^, r-,. ),.,4nU 31VIS -_-n,*%:-:AV AiIS83AINn - 3 —I- - 71 a: ---------- I. mm so J of ir - - - - lm - -i.: - - - - - - --- - - - - ass Nei It 0 fill SITE PLAN 0 it ---- -------------- ca ass Nei It 0 fill SITE PLAN 3-C MANOR DRIVE Az OUTLOT It LUND Y AVE N.E.% (wit 00Y. Oft tj. <- T-I 2- OUTLOT 10) - •..-....."_ . . . "Cpl. 40 OUTLOT 13 TA), 2 t OUTLOT 12 VANTAGE e-,' QC-'- COMPANIES run) ADD. U) i UA . LOCATION MAP \' \\ 20-1 ORPORATE LIMITS OF 7r-- 4 - J4 23 04 29, wi uapl F ST. N.E. s. MANOR DRIVE Az OUTLOT It LUND Y AVE N.E.% (wit 00Y. Oft tj. <- T-I 2- OUTLOT 10) - •..-....."_ . . . "Cpl. 40 OUTLOT 13 TA), 2 t OUTLOT 12 VANTAGE e-,' QC-'- COMPANIES run) ADD. U) i UA . LOCATION MAP 4 rE Pfi a 61 MANOR DRIVE Az OUTLOT It LUND Y AVE N.E.% (wit 00Y. Oft tj. <- T-I 2- OUTLOT 10) - •..-....."_ . . . "Cpl. 40 OUTLOT 13 TA), 2 t OUTLOT 12 VANTAGE e-,' QC-'- COMPANIES run) ADD. U) i UA . LOCATION MAP YL ARTICLE IV Company's Obligations Se-Otion-4.1. Construction of Minimum Improvements. The )mpank_;...age _s that it will construct the Minimum npro*- pep�n the Development Property in conformance with ie apiftoV Ltonstruction Plans S4 Xonstruction Plans. ';City shall have no obligation to the Company to t ction pursuant to any provision of this Ag unt il such time as the Company has submitted Co., e r on ,;PI-ans to the City, which plans may be sub- mi, arat4ly for each phase and the City has approv dd "uch Construction Plans. The City shall aPpX-,ov6;;1t,be Construction Plans if: (a) the Construction PL &S d, pli-, .form..to the provisions of this Agreement, the Reif Vel'O­p'­!M_­en Plans, the Development Plan, the Dey.e'16pment Quality Plan and to all applicable federal, StE sari= 3oea1, ordinances, rules and regulations; henstrvction Plans shall include a landscaping P. 11 be acceptable to the City and which shadhlde by the ­-bibulevards to be sprinkled and maintained atagany and (c) no Event of Default has (bV.-- _'-If'.the*Co_m-pany desires to make any change in the .Construction Plans after their approval by the City, company shall submit the proposed change to the City f or rejection pursuant to this Section. A,bpo.sed change in the Construction Plans shall be d46ed-approved_unless rejected by the City in writing within i0 days of submission thereof with a statement of thi'-city-'s reasons for such rejection. h S-:-t- ril - ction Plans submitted by the Company to .*--,he ty s1ka,11 provide for a "Quality" development. Por-g'murp-o-ses I df`T-this Agreement "Quality" shall be deemed 'meter's such as selection of materials and the ir u'isj3 and/oi r application in such a way as to create 11 t a 1,1p4tive, architectural and aesthetically pleasing ding, its occupants or passers-by. Ive the use of materials and ;*,mm ss, architecturally designed precast glass curtain wall, granite, special- ments and distinctive landscaping. clude the-nature and style of develop- he Development Quality Plan. 4-1 3-D 7 3 -E Section 4.3. Commencement and Completion of Construction. Subject to Unavoidable Delays, the - Company shall commence construction of the Minimum Improvements to be constructed on Parcel I within 120 days of execution of this Agreement and on Parcel II within 60 months of execu- tion of this Agreement or on such other date as the Parties shall mutually agree in writing. Subject to Unavoidable Delays, the Company shall have substantially completed the construction of the Minimum Improvements on Parcel I within 9 months of the date of this Agreement and on Parcel IY within 72 months of the date of this Agreement. Section 4.4. Uses. It is agreed that on the Southeast Parcel there shall not be located or constructed any busi- ness or building that engages in automotive or motor vehicle repairs or service, or that sells gasoline, fuels or motor vehicle parts. Section 4.5. Setback. It is agreed that the "setbacks" (as used in the Fridley Zoning Code) for Parcels 1--and II along the service road and 81st Avenue shall be as indicated in the Development Plan. All other-setbacks shall be as provided in the Fridley Zoning Code. Section 4.6. Billboard. It is agreed that the bill- board currently leased to Naegele and located adjacent to University Avenue on the Development Property shall be removed at no expense to the City on or before December 31, 1986. 4 - 2 .r,..r,��.�_ -� x=11 !�? ^ n /1 r .—. i-,•� J.✓ 'b 3 -F liir � 'e VANTAGE COMPANIES • FRIDLEY TES, INC. ST. PAUL, MNNESOTA EXHIBIT V VANTAGE COMPANIES - FRIDLEY POPE ASSOCIATES, WC. ST. PAM MINNESOTA 2/t9 /aG �C f i $l ! I main :u. Ivy M, ZP T 777 1 _ I o� R T 1 t/ IY 8 iY ' a S I 6 r 1 1 • 1 ispij � -'� - •1•- -• 7 , I� ea dM • • J •-• -0 n� 1 1.1 i 1 •' s - -r trees ,w,.,,lls �.o ,� umversilr are. COv CD z A C5 2 O w y D m L r r rr• Pope A oInc Y�NTAGE COAVAMES VV MAer. �of...wl. 3 -G z RESDI,UJ'IDrT MD. HIM - 1992 Y:1" // :'• li: / �� '1511 � r1 • IJi 1 Y::• • IT IS HEREBY RESOLVED that the Fridley State Bank is hereby designated as a depository for the funds of this corporation. IT IS FURTHER RESOLVED that checks, drafts or other withdrawal orders issued against the funds of this corporation on deposit with said bank shall be signed by two of the following: Richard D. Pribyl, Finance Director - Treasurer William W. Burns, Executive Director /City Manager David J. DuBord, Assistant Finance Director and that said bank is hereby fully authorized to pay and change to the account of this corporation any checks, drafts, or other withdrawal orders. BE IT FUG RESOLVED that all transactions, if any, relating to deposits, withdrawals, re- discounts and borrowings by or on behalf of this corporation with said bank prior to the adoption of this resolution be, and the same hereby are, in all things ratified, approved and confirmed. BE IT FURnM RESOLVED that any bank or savings and loan may be used as depositories for investment purposes so long as the investments comply with authorized investments as set forth in Minnesota Statutes. BE IT FURTHER RESOLVED that the signatures of two of the following named City employees are required for withdrawal of HRA investment funds from savings and loan associations: Richard D. Pribyl, Finance Director - Treasurer William W. Burns, Executive Director /City Mgr. David J. DuBord, Assistant Finance Director BE IT FURTHER RESOLVED that any brokerage firm may be used as a depository for investment purposes so long as the investments comply with the authorized investments as set forth in Minnesota Statutes. PASSED AND ADOPTED BY THE HOUSING AND REDEVELOPMENT AUIHORITY OF THE CITY OF FRIDLEY THIS DAY OF , 1992. n 5 -A TO: FRIDLEY H.R.A. FROM: CITY OF FRIDLEY RE: BILLING FOR OPERATING EXPENSES FOR DECEMBER, 1991 AND DECEMBER 1991 ADMINISTRATIVE EXPENSES. DECEMBER ADMINISTRATIVE PERSONAL SERVICES DECEMBER ADMINISTRATIVE OVERHEAD TOTAL ADMINISTRATIVE BILLING OPERATING EXPENSES: PHOTOS ECONOMIC RECOVERY GRANT HEARING - FUNDING MCGLYNNS SIGNS - FOR LEASE DECEMBER MANAGEMENT FEE ELECTRICITY SNOW PLOWING - 10 -31 THROUGH 11 -02 SNOW PLOWING - 11 -15 THROUGH 11 -30 TOTAL OPERATING EXPENSES FOR DECEMBER 13,108.08 252.25 13,360.33 94.86 19.22 63.21 57.51 211.83 26.97 455.00 620.00 1.548.60 TOTAL EXPENDITURES $14,908.93 DATE 01/03/92 CITY OF FRIDLEY - HEA PAGE I PRDGR M P0o8 CHECK RUN BATCH # :0012 DESCRIPTION DECK REGISTER 002 H RA VENDOR DISC. INV # PO /INV # SEQ # PCNT AMQUNT ACCT NL9IBER 2186 **** CHECK- PREPAID Km F00026 FRIDLEY STATE BANK INVESTMENT 00480 -01 mm TOTAL VENDORt 2187 will CHECK - PREPAID BDO065 RAW, GUZY & STEFFEN, LTD. NOV. LEGAL SERVICES 00481 -01 NOV. LEGAL SERVICES 00481 -02 IPDHIYO.0000 11,000.00 DR701 -10400 122,000.00 CR701 -10100 $ 122,000.00 1PDHGXO.0000 IPDHI'10.0000 TOTAL VENDOR 2188 CHECK- PREPAID tff F00072 FIRST TRUST B014D PMT. 00482 -01 1PDHIGOO.0000 am TOTAL VENDOR 2189 Hip CHECK - PREPAID FOD023 FRIDLEY, CITY OF 416.50 DR450 -20200 416.50 CR450 -10100 263.50 DR460 -20200 263.50 CR460 -10100 # 680.00 324,565.00 MM -20200 324,565.00 CR383 -10100 $ 324,565.00 JOB NMBR MESSAGES INVESTMENTS, AT COST CASH ACCOUNTS PAYABLE CASH ACCOUNTS PAYABLE CASH DEC EXPENSES 00483 -05 1PDHGU0.0000 57.51 DR450-20200 ACCOUNTS PAYABLE 57.51 CR450 -10100 CASH DEC EXPENSES 00483 -06 IPDHH00.0000 211.83 DR450 -20200 ACCOUNTS PAYABLE 211.83 CR450 -10100 CASH DEC EXPENSES 00483 -07 IPM M.0000 26.97 DR450 -20200 ACCOUNTS PAYABLE 26.97 CR450 -10100 CASH DEC EXPENSES 00483-08 1PDHH70.0000 455.00 DR450 -20200 ACCOUNTS PAYABLE 455.00 CR450 -10100 CASH DEC EXPENSES 00483 -09 IPDHfiA0.0000 620.00 DR450 -20200 ACCOUNTS PAYABLE 620.00 CR450 -10100 CASH DEC EXPENSES 00483 -02 IPDHIIO.0000 94.86 DR460 -20200 ACCOUNTS PAYABLE 94.86 CR460 -10100 CASH DEC PERSONAL SERVICES 0048`1 -01 1PDHIP0.0000 13,360.33 DR460 -20200 ACCOUNTS PAYABLE 13,360.33 CR460 -10100 CASH DEC EXPENSES 00483 -03 1PDHISO.0000 19.22 DR460 -20200 ACCOUNTS PAYABLE 19.1 CR460 -10100 CASH DEC EXPENSES 00483 -04 IPDHIVO.0000 63.21 DR460 -20200 ACCOUNTS PAYABLE 63.21 CR460 -10100 CASH ffH TOTAL VENDOR $ 14,908.93 IIRR TOTAL NUMBER OF CHECKS KITTEN : 0(0000 ! TOTAL DOLLARS FOR CHECKS WRITTEN : $ 462,153.93 LAST CHECK NUMBER : 002185 r o� 0 I: .. W Q r a W U Q 8 A 0 8 `801�iaA 28 A N T r } f� O I.- O 0o co N S I <G CD 0 0 a r N 0. CR ao s3 Cd i:' r• �'i a OD �jIN c p o oNi t� �.9 iev48w8V coo a � 1fJ°?i, �' Z Te�hpp cV �C $ �8p ��vj r �D Of a � »<8ID Ia88� pp �3 � tO0 : � N � O N N r N r r N �- r pp � � N N d o r IA O lrJ (� p pip N 2 O N A T OR US p p N P. co 2 r co Of ao CQ C4 �. a ado a co a ri r� m W S cW7 Z z in 2 ¢ U c J V O a a S p Q z Z AFL Z Z U Z C 9 OF h- O p- cc 7 V I Community Development Department D HOUSING AND REDEVELOPMENT AUTHORITY City of Fridley DATE: December 6, 1991 TO: William Burns, Executive Director of HRAA` A FROM: Barbara Dacy, Community Development Director BIIBJECT: Discussion of TIF Policies Background The City Council asked staff to prepare TIF policies prior to proposing additional modifications to the redevelopment plan and creation of tax increment districts. Attached is the information that was presented to the City Council at its conference meeting on November 25, 1991. I would like to make the same presentation to the HRA as was given to the City Council. In general, the City Council concurred with the proposed policies but wanted additional information and adjustments as follows: 1. Councilmember Billings suggested that we evaluate projections from potential projects before considering a percent cap on captured tax capacity from tax increment districts. 2. Councilmember Jorgenson requested information from other cities regarding total percent of total captured tax capacity. 3. Councilmember Billings- wanted to clarify the policy regarding local government aid. He suggested that the City state the policy as: "City funds should not suffer as a result of HRA funding for a project." The Council will discuss the above follow -up information at its Council conference meeting on January 13, 1992. The HRA should discuss the proposed policies and provide additional direction in order to review that with the Council at its January 13, 1992, meeting. BD: Is M -91 -877 r � Community Development Department HOUSING AND REDEVELOPMENT AUTHORITY City of Fridley DATE: November 20, 1991 TO: William Burns, City Manager, FROM: Barbara Dacy, Community Development Director SUBJECT: Proposed Tax Increment Financing Policies Discussion of TIF policies should be discussed by the City Council in the following order: 1. Definition of terms 2. Discussion of General Guidelines 3. Chart entitled "Developer Assistance" and "HRA Redevelopment Costs I. Definitions. For the purposes of the Council's discussion, it is critical that all participants are using the same definition for key terms. These are as follows: A. Cost versus a subsidy 1. Cost is the amount of money needed to acquire land, prepare the site, or construct public improvements. 2. A subsidy is the amount of assistance to a developer that allows the - developer to acquire the site below its fair market value. B. Redevelopment versus Economic Development 1. Redevelopment usually refers to improved and /or blighted properties. 2. Economic development usually refers to unimproved properties. C. "But -For Test" 1. Where does it come from? M.S. 469.175, Subd. 3(2) 7-Av I Proposed Tax Increment Financing Policies November 20, 1991 Page 2 2. The "But -For Test" is as follows: "That the proposed development or redevelopment in the opinion of the municipality would not reasonably be expected to occur solely through private investment within the reasonable foreseeable future and therefore the use of tax increment financing is deemed necessary." D. Eligible Expenses 1. Land acquisition 2. Site work including demolition /site clearance, grading/ back - filling /compaction of fill, erosion control, and paving; include costs of base construction up to laying of asphalt 3. Utility hook -up 4. Traffic control lights /signs 5. Relocation 6. Landscaping on public right -of -ways 7. Public right -of -way costs including lighting, signage, driveway aprons, curbs, sidewalks, and boulevards 8. Interest cost during construction period of eligible expenses 9. Administrative costs -including supervision, contractors fees, inspection fees, and overhead 10. Consultant's fees including architectural /design, engineering, financial consulting, and legal /bond counsel 11. City assessments, including sanitary sewer, storm sewer, streets, and any costs listed above that are assessable 12. Contingency 13. Interest rate buy -down for housing only E. Project Costs are the cost of land, building, and equipment that are incurred within the first year from the start of project construction. 7 -C Proposed Tax Increment Financing Policies November 20, 1991 Page 3 II. General Guidelines. To follow is a draft list of general guidelines which we believe address key points discussed by the City Council and the HRA. These guidelines, in conjunction with the chart in the following section, will help guide the community in achieving its redevelopment goals. A. TIF policies are not goals, but are guidelines only. B. The subsidy should be proportional to the size of the project. C. Every district should be self- supporting; however, in certain areas the HRA's redevelopment-costs may greatly exceed the.value of tax increment revenues generated in projects that fulfill redevelopment goals (i.e. housing rehabilitation projects or redevelopment from commercial to residential). D. The City should not incur any losses as a result of the HRA assisting a project. E. Any developer /user must justify the requested assistance ( "But -For Test "). F. Whenever possible, the HRA should recapture its subsidy from the project. G. The captured tax capacity shall not exceed 15% of the total tax capacity. H. Pooling of TIF revenues is desirable as a means of accomplishing difficult redevelopment goals (i.e. housing rehab). I. Wherever possible, the amount of TIF assistance for a- project should be limited through the use of alternative financial incentives e.g. SBA 504 financing, industrial revenue bonds, or economic recovery fund grants. J. The amount of TIF given to any project must be related to the contribution of the project to the City's redevelopment goals including creation and retention of jobs, enhancing the tax base, preserving the decline of tax values, eliminating blight and deteriorated properties, or meeting affordable housing /other housing objectives. K. Developers and users should demonstrate the financial feasibility of the project. 7 =D Proposed Tax Increment Financing Policies November 20, 1991 Page 4 III. Attached is a matrix identifying maximum percentages of project cost to be considered for economic development districts and redevelopment districts. The HRA has adopted an application process for submission of sources and uses statements, proformas, and an application fee. If the project meets the goals of the redevelopment program, the HRA can utilize either a grant, loan, or pay -as- you -go grant to assist the project. IV. The Chart entitled "Redevelopment Costs" identifies a guideline for the City to use in determining the maximum amount of redevelopment costs to be incurred for industrial, commercial /office, or housing projects. Reference general guidelines C and H. There may be cases where districts will need to use increment from other districts. Where this happens, we suggest a maximum cap of 125% for industrial and commercial /office redevelopment projects and 150% for housing redevelopment projects. BD:ls M -91 -843 A H CA rn a W rn a W a W W A W O U3 H z 0 H x V a, M P4 O ri N N rd (D P4 s~ a� w O a� N A U -rl O 1~ O U W >s as I v.j N N O 4J 4-) N �49 9 9 1 Rf 43 m O\O O\0 0\O o Ln LO in P4 x U U 3-1 -rl 0\0 0\0 eM to in in `w O O v 43 O\0 0\O 0\0 in in mLC) A H -rl 0\0 0\0 0\0 In in in Ln H O x cd U 044 P W 0 \0 0\0 0 \0 O in to Ln ri O U ri -rl 14 4-) 0\0 0 0 \0 Ul LO In In H b H O as I v.j N N O 4J 4-) N �49 9 9 1 Rf 43 N S-1 1`1 O 1 b P4 m 4J W O U i-3 U N O O+ O V a P4 N N 0 O N U f4 N P4 r-I rA 4 W H O z 7 -E • m E-f W O U Ei 7 W a O a W Q a i, r.. bi Q N O x N U -rl W W O U N 0 U N -rl N 'd H b i-1 N .CUcd O N 4-) N � OA b � � N Zf -•-� N N O P. N N A too U N 6 L q D U rl -rl b $ N .CUB O N� N rd r-I 90 A td � td N rd -r-1 -00> .0 0 m N 00 N N V 4j 0\0 �1 ANIn0 NONi~ C] U C-1 -rl •O $4 N 4 U 0 O N N 1~ O A N r: N -U :1 �A cd � N N O )~ N N A V 0 \0 74 A N to U N O N 9 7 -F ` 7-G ; ma I ° n a to m i o o °° l o Q s Z 2 z 2 2 2 2 Z N p Z Z Z Z } } }} m m m w = LL.QwO ©_ O _ Y Y Y Y U m m m V U U U U U U V o 3 i f/1 Q S [t ca a) co Q (L Q Q t - cn O i i o� to a co co in o co co 'Q y Y 16 m 6 m O m 0 m U U W O O U i gO i W g} I o tt IL Z ' m O Q ¢a co v r W U} 1 O O O O i0 Q Q W IL i CI m c a aw a� cac� cac� Goo o 00 Q CO uai ' w CD ooi o 0 0 W o ° Qw} c a E O N ° i �A c < z , �V 3 _ c F ; 00 C4 40 a� ccoo Goo o E a w Go o> o o o o� $ c m m U Q o> U. m O C ~ 1 T cis c ` v # a C m cc cc U '2 O = ° M T t N = c L a o v i 4 � C m N in cm is v p O O p O Y m c o • t; ti pO m m m = o m �e m OE E iu Li n —��' vwjE cE D O o $ o Z p a °A m U } m m �u c pp W e a m Y N o r $ ? tE "E QE `=0 & zE E OC OE O r 8 _ CO E � N � Y Z o a o o vi��y r m 8 o v� $Q °z¢ 312 a,Y, g¢ �a c cc o¢ Zoe 0 O c $ LL a co v o co Go C2 z 1 Jill Jtr In City of Fridley Redevelopment Areas and Tax Increment Districts 1 ll A- I 1/v Z--s Xz� I 2 MTHMMI p� y��- L a� ate_ Parcels within Tax Increment Districts Redevelopment Area Number 1 444- City of Fridley Redevelopment Areas �� , °� �- �,}..;.- .•U.I;;,�;,,s -. ,_f 1 and Tax Increment Districts 1. �'' t.c;'��:'•; �, LOS J '' S: ono_ •�i': °:�— ' >Q °. °�� > SD ❑ 1J U `-_ti' IL LA in o B, U I S ��•'� I.pKE•o,s' V y TT Tit + �� _° _� "_ t sue• CppE j Q� �, ;. arla z t E _ Parcels within Tax Increment Districts + I a'11� t �;�;. ; ® - Redevelopment Area Number 1 0 Community Development Department HOUSING AND REDEVELOPMENT AUTHORITY City of Fridley DATE: December 31, 1991 TO: William Burns, Executive Director of the HRA FROM: Barbara Dacy, Community Development Director SUBJECT: Draft 1992 HRA Budget pre - Regular Meeting Workshop As we did last year, we have scheduled a pre - regular meeting workshop to discuss the 1992 BRA draft budget. The workshop is proposed to begin at 6:00 p.m. in Conference Room A. A box lunch dinner will be prepared. Revenues The Finance Department is in the process of finalizing the projected cumulative balance of all increment from all of the districts minus debt service requirements, school district referendum refunds, and HRA operating expenses. The full work sheet will be distributed on Thursday evening. ExRenditures The first attachment is an overview of expenditures since 1989 by categories. The 1991 budget allocated approximately $2,620,955 of expenditures; however, we are estimating that only $1,828,463 will be expended. The reason for the 30% under - expenditure is because the Mississippi Street improvement project did not occur in 1991 (estimated $635,000 of capital outlay). Further, the HRA did not spend as much on the school district turn -back as originally budgeted. In 1991, about $200,000 was allocated and only $172,254 was spent. Further, there were several savings in contract bids (Lake Pointe maintenance agreement) and other categories of Other Services and Charges. The draft 1992 budget proposes a 3% increase in total expenditures from the 1991 budget. The major increase is in the Other Services and Charges category. The reason for the increase is a larger estimated proposed TIF turnback to the school districts ($376,000) and a one -time computer charge of $15,000 and possible tenant space improvements at Rice Plaza of another $15,000. S -A Draft 1992 HRA Budget December 31, 1991 Page 2 The estimated TIF turnback of $376,000 is an estimated maximum. The turnback should not exceed that amount, and as in the case of 1991, could be less than that. As a result of the City's recent computer software and hardware acquisition, a one -time computer charge of $15,000 is included for 50% of the initial software cost, 2% of the hardware cost. The HRA financial statements alone constitute an extensive accounting system. According to Rick Pribyl, the proposed $15,000 charge is a reasonable cost for a mini - computer system which is larger than the personal micro- computer. The HRA has also benefitted over the years because it has not been charged any type of expense for computer work. Beginning in 1993, the HRA will be charged an annual maintenance cost of approximately $1,630 for the mini - computer. As there was last year, the HRA will continue to be charged the micro - computer maintenance charge of about $700 (see attached memo from Dawn Weigel). In regards to the Rice Plaza expenditures, we are in the process of analyzing three options: 1. Maintaining the status quo at Rice Plaza; 2. Demolishing the building; 3. Gradual phasing out of tenants over the next 12 months. What we hope to accomplish with this analysis is evaluating our ongoing expenses, Kordiak's contract, taxes, insurance, maintenance, versus the revenues received from the building. On Thursday evening, we will have completed this analysis and will be able to present a recommendation regarding one of these three options. If the choice is to gradually phase out tenants or demolish the building in 1992, then the $15,000 tenant improvement cost could be deleted from the proposed budget. Summary The proposed budget is a draft budget. The HRA needs to consider the revenue side of the budget, as well as discuss staff's recommendation on the future of Rice Plaza. After discussion on Thursday night, we will finalize the budget according to HRA direction and present it for adoption at the February meeting. BD /dn M -91 -921 6 a O a W V 0 z oX r-) W w O r� I2S' r ri ON U •� Q U ~Q O dP W Gl N !T o� T% 0) 9 H ro V ri -rl 01 N r-I W ONON O1 OD W (T O f-1 01 ro rn U � 14 'rl ro M O � a Ln O r- U � OD N Vi 4-) N ro 3 s~ O ro 00 00 00 b Ln t` M � � 4V)- v ro or-i o 0 a �' N U G Oa A i-1 V 41 o .qro V 4-) � � 3 > b O O r. E~-1 0 0) U U ro � �0 ro s~ O W � 'I') P4 ro 'd ro o O rob s~ 0 �ro U r ^ rI O N Ln r-I v /1 to I\ �r\ dP dP dP dP dP oWj 40 In d' %0 N M 4-) v • rI w O � N O O co 111 In aNi crop H ro la 0-ri Ln LO o o le o kb M C1 r- 1% M %C Ln M -0 O ri 1O l� r♦ � ti) o 0 nro H N r- In %0 1- co M rn r co co H m N N M O 40 d' r- N co O co In In 1- tp N r-I M r-I r-I co ri rl [, M O1 M M to O1 r-I In 1- r-I In j N r-I 01 10 01 C1 !, r-I 40 co OD O Ln � n r�i N N O O Co Oo N 01 co I. ON %O .0 In O1 N co N Cl) t` d' M co 1� d' r-I In N N N I_ C%J% 1w r-I H M 01 d' d' 40 N l� N co H M d' 1C d' O M r- 1C N In N% OD cn% 10 d' l- o rl Q7 rl rl M W (T O f-1 01 ro rn U � 14 'rl ro M O � a Ln O r- U � OD N Vi 4-) N ro 3 s~ O ro 00 00 00 b Ln t` M � � 4V)- v ro or-i o 0 a �' N U G Oa A i-1 V 41 o .qro V 4-) � � 3 > b O O r. E~-1 0 0) U U ro � �0 ro s~ O W � 'I') P4 ro 'd ro o O rob s~ 0 �ro U r ^ rI O N Ln r-I v to 0) b U r-I dl .,i 4-) U w O � r-I aNi crop H ro la 0-ri H r-I kb 4 -w a xu A H CO a U) ti) o 0 nro W (T O f-1 01 ro rn U � 14 'rl ro M O � a Ln O r- U � OD N Vi 4-) N ro 3 s~ O ro 00 00 00 b Ln t` M � � 4V)- v ro or-i o 0 a �' N U G Oa A i-1 V 41 o .qro V 4-) � � 3 > b O O r. E~-1 0 0) U U ro � �0 ro s~ O W � 'I') P4 ro 'd ro o O rob s~ 0 �ro U r ^ rI O N Ln r-I v 8 -C CITY OF FRIDLEY MEMORANDUM, TO: RICHARD D. PRIBYL, FINANCE DIRECTOR FROM: DAWN WEIGEL, MIS COORDINATOR SUBJECT: iIIiA MINI - COMPUTER ALLOCATIONS DATE: MAY 30, 1991 In calculating the computer allocation to be charged to the HRA, the following assumptions were used: 1) Disk space and CPU hardware useage of the mini - computer was calculated at 2 %, 2) GMBA software licensing was calculated at 50% because HRA uses a complete set of these programs, and 3) the prices used were based on the HTE /IBM price bid for computer hardware, software and services. LIRA MINI - COMPUTER ALLOCATIONS Based on Acceptance of HTE /IBM Bid 2% of initial hardware cost @$150,353 $ 3,005 50% of initial software cost @$23,000 11,500 Total Initial Cost $14,505 2% of annual hardware maintenance @$18,443 75 50% of annual software maintenance @$3,110 1,555 Total Annual Cost 1,630 Paul Hansen was given figures associated with micro- computers used for HRA tasks. The following are new figures to be used for 1992: HRA MICRO - COMPUTER ALLOCATIONS Based on State Contract Maintenance 100% of 1 PC maintenance used by Paul and Lynn $250 100$ of 1 printer maintenance used by Paul and Lynn 1558 2 toner cartridges for the printer 5 2 packages of paper for the printer Total Annual Cost $703